In another move to refashion itself as a digital industrial company, General Electric has agreed to sell the information technology component of its healthcare division to private equity firm Veritas Capital for $1.05 billion.
Since taking over as GE’s chief executive, John Flannery has said he planned to exit at least $20 billion of businesses. The deal with Veritas announced Monday involves financial management, ambulatory care, and workforce management software assets comprising GE Healthcare’s value-based care unit.
“We’re confident this business will flourish under Veritas Capital, while GE Healthcare will continue to significantly invest in core digital solutions, such as smart diagnostics, connected devices, AI and enterprise imaging, that will drive precision health for our customers,” GE Healthcare CEO Kieran Murphy said in a news release.
Veritas invests in companies that provide critical products and services, primarily technology and technology-enabled solutions, to government and commercial customers. Its recent investments include Truven Health Analytics and Verscend Technologies.
The entire management team of the GE information technology business and its 1,300 employees will be going to Veritas.
“We see a tremendous opportunity to invest in this business and partner with management to take advantage of a $9 billion market that continues to benefit from favorable sector trends, particularly a real and urgent need to digitalize our healthcare system,” Veritas CEO Ramzi Musallam said.
As a standalone business under Veritas’ ownership, the value-care division would “have the opportunity to further revitalize our product portfolio and pursue complementary acquisitions to better serve patients, providers and payers,” said Jon Zimmerman, the unit’s general manager.
According to The Motley Fool, a sale or spinoff of the entire $19 billion healthcare division would fit GE’s “overarching objective to become a truly digital industrial company while maximizing value for shareholders.”
“Healthcare is arguably not a good fit in terms of management’s current direction,” the publication said, noting that “Cutting production costs and generating synergies in aviation, power and oil and gas have constituted the key operational focus of the company in recent years.”