General Electric Co.’s (NYSE:GE) healthcare unit could be set for significant profit growth as countries like China spend more on healthcare and medical equipment.
GE Healthcare president John Dineen told analysts that his operation could see 10 percent profit growth for 2011 on revenue growth of 5 to 10 percent a year.
The segment is poised for global trends of decreasing costs and improving care, Dineen said, according to The Wall Street Journal. Dineen said China and India, the world’s largest countries by population, are are in a “flat-out buildup.” Last year, GE Healthcare predicted that operating profits would increase 5 to 10 percent annually as revenue grew 3 to 5 percent. GE now expects its healthcare sales to grow at a 20 percent compound annual rate through 2015 in China. This is up from about $900 million in 2009, according to the newspaper.
The GE unit posted a $118 million, or 15 percent, profit slide last year, as hospitals scaled back orders in a wait-and-see approach, but it fared much better in following quarters.
GE Healthcare outperformed its parents’ earnings for its latest fiscal quarter. GE Co. posted net earnings of $1.98 billion, or 29 cents per diluted share, on revenue of $35.89 billion during the three months ended Sept. 30. That compares with net earnings of $2.42 billion, or 22 cents per diluted share, on revenue of $37.80 billion during the same period last year, the company reported. The healthcare segment posted net earnings of $581 million on revenue of $4.0 billion during the three months ended Sept. 30. That compares with net earnings of $508 million on revenue of $3.80 billion during the same period last year. Healthcare was the only GE unit to have year-over-year revenue growth.
GE Healthcare’s sales growth has been paralleled by a broadening of the company’s portfolio. Though physiology and radiology products comprise the majority of the unit’s offerings, diagnostics and healthcare IT have piqued the GE operation’s interest lately. GE is in the process of acquiring molecular diagnostics firm Clarient Inc. (NSDQ:CLRT) and it launched a cloud-based electronic medical record product in June.