GE revealed plans to spin off its healthcare business into a standalone enterprise June 26, concluding a yearlong strategic review of the company's operations and financial strength.
Here are five things to know:
1. Kieran Murphy, president and CEO of GE Healthcare, will remain as head of business. He said in the company's June 25 announcement that by operating "as an independent global healthcare business, we will have greater flexibility to pursue future growth opportunities, react quickly to changes in the industry and invest in innovation," and that the company "will build on strong customer demand for integrated precision health solutions and great technology with digital and analytics capabilities as we enter our next chapter."
2. With the move, GE aims to reward shareholders and strengthen the company's balance sheet by reducing debt, building up cash and further shrinking GE Capital. Shareholders will receive 80 percent of the value of the company's healthcare business as a tax-free distribution.
3. A GE spokesperson told Becker's Hospital Review June 26 the company will "continue to focus on delivering precision health and improving clinical, operational and patient outcomes for our customers, offering great technology, underpinned by leading digital and analytics capabilities."
4. Officials expect the transition to take between 12 and 18 months to complete. Rumors of the potential split began surfacing in October 2017. Fitch Ratings does not anticipate the move to affect the company's rating. The decision to spin off its healthcare business affects the company's diversification, earnings and cash flow, but these negative effects on GE's credit profile are mitigated by an expected reduction in debt and pension liabilities.
5. With the spinoff, GE's business will focus on aviation, power and renewable energy. Veritas Capital, a private equity firm, announced its intent to purchase GE's healthcare business in April for $1.05 billion.
Editor's note: This article was updated at 11:45 a.m. June 26 to include additional information from Fitch Ratings.