07.27.09
$17.4 Billion ($183B total)
KEY EXECUTIVES:
Jeffrey R. Immelt, Chairman and CEO
John Dineen, President and CEO, GE Healthcare
Michael Jones, VP, Business Development
Mark L. Vachon, President and CEO, GE Healthcare Americas
Omar S. Ishrak, President and CEO, GE Healthcare Systems
Peter McCabe, President and CEO, Surgery
Peter Ehrenheim, President and CEO, Life Sciences
NO. OF EMPLOYEES: 46,000 (323,000)
GLOBAL HEADQUARTERS: Fairfield, Conn.
"2008 was a tough year, and we expect 2009 to be even tougher." Those are frank words to hear from the CEO of a publicly traded, multinational corporation. In this case, when the company is as industrially and globally diverse as General Electric, the reality of the statement is particularly chilling.
NO. OF EMPLOYEES: 46,000 (323,000)
GLOBAL HEADQUARTERS: Fairfield, Conn.
"2008 was a tough year, and we expect 2009 to be even tougher." Those are frank words to hear from the CEO of a publicly traded, multinational corporation. In this case, when the company is as industrially and globally diverse as General Electric, the reality of the statement is particularly chilling.
With sales for 2008 close to $200 billion—$183 billion (6 percent growth), to be precise—some may be inclined to think the company would have a broad enough base to weather most economic storms.
True, for the most part. Though the financial turmoil of the latter part of 2008 and beginning of 2009 surprised even the most experienced industrialists—including GE’s Chairman and CEO Jeffrey Immelt.
The company’s overall net earnings for 2008 were $17.4 billion compared with net earnings of $22.2 billion in 2007. Earnings per share from continuing operations were $1.78, down 19 percent from last year’s $2.20.
“The liquidity challenge I reported in last year’s letter has become a global financial meltdown,” he wrote in his annual report letter to shareholders. “In 2008, we worked hard to keep the company safe and to anticipate how the financial crisis would impact our businesses. In the past, I believed that our diversified portfolio would protect us in all kinds of economic cycles. But we never anticipated a global financial system failure and its continuing economic fallout. The macro-environment has been brutal. The losses in the whole financial services industry are projected to be at least $2 trillion. The lending capacity that has come out of the system is somewhere between $5 trillion and $10 trillion. We have now entered an economic recession across most of the world.”
Immelt added that performance of certain units—including the healthcare division—helped to bolster overall bottom-line results, though he predicted the diagnostic imaging business could have “a very tough year” in the United States due to reimbursement challenges and hospital cost pressures.
True, for the most part. Though the financial turmoil of the latter part of 2008 and beginning of 2009 surprised even the most experienced industrialists—including GE’s Chairman and CEO Jeffrey Immelt.
The company’s overall net earnings for 2008 were $17.4 billion compared with net earnings of $22.2 billion in 2007. Earnings per share from continuing operations were $1.78, down 19 percent from last year’s $2.20.
“The liquidity challenge I reported in last year’s letter has become a global financial meltdown,” he wrote in his annual report letter to shareholders. “In 2008, we worked hard to keep the company safe and to anticipate how the financial crisis would impact our businesses. In the past, I believed that our diversified portfolio would protect us in all kinds of economic cycles. But we never anticipated a global financial system failure and its continuing economic fallout. The macro-environment has been brutal. The losses in the whole financial services industry are projected to be at least $2 trillion. The lending capacity that has come out of the system is somewhere between $5 trillion and $10 trillion. We have now entered an economic recession across most of the world.”
Immelt added that performance of certain units—including the healthcare division—helped to bolster overall bottom-line results, though he predicted the diagnostic imaging business could have “a very tough year” in the United States due to reimbursement challenges and hospital cost pressures.
One of the results of the tougher year were layoffs at the company’s Waukesha, Wisc., facility in June last year. Citing a drop in diagnostic imaging sales, GE Healthcare had to let go of approximately 400 employees.
GE Healthcare, based in Chalfont St. Giles, United Kingdom, makes diagnostic imaging equipment, such as magnetic resonance imaging (MRI), ultrasound and computed tomography scanners. The company also makes cardiology diagnostic equipment, as well as contrast agents used in imaging procedures. In addition, GE Healthcare manufactures clinical equipment such as patient monitors and ventilators; develops life-sciences technology for drug discovery; makes clinical and financial management software for healthcare providers; and provides a range of services from consulting to equipment financing for hospitals.
Despite the gloom and doom of the fourth quarter, GE Healthcare’s overall revenues came in ahead of 2007, increasing marginally by 2 percent to $17.4 billion. Profits did slide, however, by 7 percent from approximately $3.1 billion in 2007 to $2.9 billion in 2008.
The more challenging climate did not keep the company from making some strategic partnerships and key acquisitions.
GE Healthcare partnered in May 2008 with Biosense Webster Inc., a Diamond Bar, Calif.-based division of Johnson & Johnson, to develop real-time ultrasound imaging for use in electrophysiology procedures.
Electrophysiology focuses on treating abnormal heart rhythms that, according to the American Heart Association, account for 20 percent of heart disease deaths. Ablation, in which an electrophysiologist eliminates the tissues of the heart contributing to a disturbance, has a high success rate (84 to 87 percent) but, because of the complexity and length of the procedure, it is performed somewhat infrequently. The two companies have had a long-standing partnership.
The companies hope to create new imaging solutions for intra-cardiac therapies, augmenting current technologies with new real-time visualization of the cardiac anatomy and therapy catheters.
In October, GE joined forces with yet another medial device powerhouse. GE partnered with Natick, Mass.-based Boston Scientific Corp. to create improved intravascular ultrasound (IVUS) workflow between the GE Healthcare Innova cardiovascular X-ray system and the Boston Scientific iLab ultrasound imaging system.
The Innova System helps physicians visualize fine vessels, place stents and perform critical procedures. Cardiologists in the cardiac cath lab use it when performing procedures to view and treat potential coronary artery blockages that could cause heart attacks or other serious cardiovascular damage. Boston Scientific’s iLab can be installed directly into the cardiac catheterization lab or radiology suite alongside the GE Innova X-ray system, enabling physicians to more readily incorporate IVUS technology into their procedures.
With IVUS, a tiny catheter is inserted into the heart or into a vessel where high-frequency sound waves reflect off tissue or vessel walls. The reflected sound waves create a cross-sectional image from within the vessel or heart to aid in visualizing vessel and heart structure.
Among GE’s acquisitions for the year was Totowa, N.J.-based Vital Signs, which produces medical devices in the anesthesia, respiratory, sleep therapy and emergency medicine markets. GE paid $860 million for the firm in July 2008. GE also acquired Image Diagnost International GmbH in Munich, Germany, a provider of information technology systems used in the diagnosis of breast cancer. Terms of the February 2008 deal were not disclosed.
To bolster its reach in emerging markets, GE Healthcare expanded operations in China with a $25 million investment to create a medical device manufacturing company called Xinhua GE Medical Systems, which will focus on X-ray and other imaging equipment. China-based Shinva Medical will own a 51-percent stake in the company. Shinva currently manufactures a variety of medical technology throughout China.
In July 2008, GE Healthcare got new leadership. John Dineen was named president and CEO. Dineen is a 23-year GE veteran. Since 2005, he had been president and CEO of GE Transportation. Dineen succeeded Joseph Hogan, who took a position outside the company as CEO of Zurich, Switzerland-based ABB. Hogan joined GE in 1985.
In June this year, General Healthcare division announced plans to invest $6 billion by 2015 for lower-cost medical equipment and care around the world, at the same time increasing earnings at its medical systems and bioscience division. The program rivals GE corporate’s “ecoimagination” marketing campaign and product development initiative into green technologies. The company calls it “healthymagination.” Roughly $3 billion will be spent in the next six years on healthcare innovation that will help deliver improved care at lower cost.
In addition, the company plans $2 billion of financing and $1 billion in related GE technology and content to drive healthcare information technology and health in rural and underserved areas. According to GE officials, the company will launch at least 50 basic products tailored to rural or emerging markets, such as the lightweight portable electrocardiograph machines the company has developed for India.
According to industry analysts, it’s unlikely that such low-cost products will boost the company's lackluster earnings in the near term.
GE executives, however, believe the strategy will position them to benefit from healthcare-related stimulus spending and global population trends over the long haul.
Hospitals are slashing costs and budgeting fewer purchases of GE’s core products, such as MRI machines and CT scanners. In the first quarter, revenues for the healthcare unit were down 9 percent from the year before, with profits down 22 percent.
During a recent earnings call to discuss the company’s first quarter results, CEO Immelt said: “We had real headwind in healthcare, as that market is proving to be very difficult, particularly in the U.S.”
GE Healthcare, based in Chalfont St. Giles, United Kingdom, makes diagnostic imaging equipment, such as magnetic resonance imaging (MRI), ultrasound and computed tomography scanners. The company also makes cardiology diagnostic equipment, as well as contrast agents used in imaging procedures. In addition, GE Healthcare manufactures clinical equipment such as patient monitors and ventilators; develops life-sciences technology for drug discovery; makes clinical and financial management software for healthcare providers; and provides a range of services from consulting to equipment financing for hospitals.
Despite the gloom and doom of the fourth quarter, GE Healthcare’s overall revenues came in ahead of 2007, increasing marginally by 2 percent to $17.4 billion. Profits did slide, however, by 7 percent from approximately $3.1 billion in 2007 to $2.9 billion in 2008.
The more challenging climate did not keep the company from making some strategic partnerships and key acquisitions.
GE Healthcare partnered in May 2008 with Biosense Webster Inc., a Diamond Bar, Calif.-based division of Johnson & Johnson, to develop real-time ultrasound imaging for use in electrophysiology procedures.
Electrophysiology focuses on treating abnormal heart rhythms that, according to the American Heart Association, account for 20 percent of heart disease deaths. Ablation, in which an electrophysiologist eliminates the tissues of the heart contributing to a disturbance, has a high success rate (84 to 87 percent) but, because of the complexity and length of the procedure, it is performed somewhat infrequently. The two companies have had a long-standing partnership.
The companies hope to create new imaging solutions for intra-cardiac therapies, augmenting current technologies with new real-time visualization of the cardiac anatomy and therapy catheters.
In October, GE joined forces with yet another medial device powerhouse. GE partnered with Natick, Mass.-based Boston Scientific Corp. to create improved intravascular ultrasound (IVUS) workflow between the GE Healthcare Innova cardiovascular X-ray system and the Boston Scientific iLab ultrasound imaging system.
The Innova System helps physicians visualize fine vessels, place stents and perform critical procedures. Cardiologists in the cardiac cath lab use it when performing procedures to view and treat potential coronary artery blockages that could cause heart attacks or other serious cardiovascular damage. Boston Scientific’s iLab can be installed directly into the cardiac catheterization lab or radiology suite alongside the GE Innova X-ray system, enabling physicians to more readily incorporate IVUS technology into their procedures.
With IVUS, a tiny catheter is inserted into the heart or into a vessel where high-frequency sound waves reflect off tissue or vessel walls. The reflected sound waves create a cross-sectional image from within the vessel or heart to aid in visualizing vessel and heart structure.
Among GE’s acquisitions for the year was Totowa, N.J.-based Vital Signs, which produces medical devices in the anesthesia, respiratory, sleep therapy and emergency medicine markets. GE paid $860 million for the firm in July 2008. GE also acquired Image Diagnost International GmbH in Munich, Germany, a provider of information technology systems used in the diagnosis of breast cancer. Terms of the February 2008 deal were not disclosed.
To bolster its reach in emerging markets, GE Healthcare expanded operations in China with a $25 million investment to create a medical device manufacturing company called Xinhua GE Medical Systems, which will focus on X-ray and other imaging equipment. China-based Shinva Medical will own a 51-percent stake in the company. Shinva currently manufactures a variety of medical technology throughout China.
In July 2008, GE Healthcare got new leadership. John Dineen was named president and CEO. Dineen is a 23-year GE veteran. Since 2005, he had been president and CEO of GE Transportation. Dineen succeeded Joseph Hogan, who took a position outside the company as CEO of Zurich, Switzerland-based ABB. Hogan joined GE in 1985.
In June this year, General Healthcare division announced plans to invest $6 billion by 2015 for lower-cost medical equipment and care around the world, at the same time increasing earnings at its medical systems and bioscience division. The program rivals GE corporate’s “ecoimagination” marketing campaign and product development initiative into green technologies. The company calls it “healthymagination.” Roughly $3 billion will be spent in the next six years on healthcare innovation that will help deliver improved care at lower cost.
In addition, the company plans $2 billion of financing and $1 billion in related GE technology and content to drive healthcare information technology and health in rural and underserved areas. According to GE officials, the company will launch at least 50 basic products tailored to rural or emerging markets, such as the lightweight portable electrocardiograph machines the company has developed for India.
According to industry analysts, it’s unlikely that such low-cost products will boost the company's lackluster earnings in the near term.
GE executives, however, believe the strategy will position them to benefit from healthcare-related stimulus spending and global population trends over the long haul.
Hospitals are slashing costs and budgeting fewer purchases of GE’s core products, such as MRI machines and CT scanners. In the first quarter, revenues for the healthcare unit were down 9 percent from the year before, with profits down 22 percent.
During a recent earnings call to discuss the company’s first quarter results, CEO Immelt said: “We had real headwind in healthcare, as that market is proving to be very difficult, particularly in the U.S.”
Of the new initiative, Immelt was more bullish: “Healthcare is an important industry that is challenged by rising costs, inequality of access and persistent quality issues,” he said. “Healthcare needs new solutions. We must innovate with smarter processes and technologies that help doctors and hospitals deliver better healthcare to more people at a lower cost.”