GE Healthcare is looking to cut debt, bring down costs and pursue tuck-in acquisitions after it spins off from GE in January, The Wall Street Journal reported Dec. 8.
In the coming three years, GE Healthcare said its finance goals will be to pursue organic revenue growth in the mid-single digits, adjust earnings before interest and tax margin in the high teens to 20 percent, and have a free cash flow conversion of more than 85 percent.
Four key financial moves the company is looking to complete, according to Helmut Zodl, finance chief of GE Healthcare:
- Reduce the number of stock keeping units, or SKUs — code numbers assigned to each piece of inventory — and configurations to streamline product lines and reduce costs.
- Improve its working capital and lower logistics costs; for example, by relying less on air freight by shipping more products by sea, truck or railroad.
- Look at its real estate holdings and target over 100 sites.
- Look for potential tuck-in acquisitions such as second source-suppliers so GE Healthcare can get parts at a better price.
In recent weeks, GE Healthcare has also sold $8.25 billion in bonds and agreed to an additional $2.5 billion credit facility.
This leaves the company with a ratio between net debt and earnings before interest, tax, depreciation and amortization of roughly 2.5 times, meaning GE Healthcare will have slightly higher debt ratios than other companies within the medical technology industry, according to the report.