GE Healthcare Technologies (NASDAQ:GEHC) is considering making its second-biggest acquisition as its stock continues its downward spiral.
The company is in talks to buy Sofie Biotechnology in a $1 billion deal from its founders and Trilantic, a private equity company that emerged from Lehman Brothers.
This purchase, if it goes through, will help to boost its pharmaceutical diagnostics division, which supplies agents and chemicals used in scans. Sofie makes radioactive chemicals used in cancer scans.
The buyout will be the second-biggest one since becoming an independent company after being spun off from General Electric (NYSE:GE). Its previous acquisition was Intelarad, which it spent $2.3 billion. Intelerad provides a cloud-based medical imaging solution.
Unlike GE Aerospace (NYSE:GE) and GE Vernova (NYSE:GEV), GE Healthcare has struggled since its spin-off. Its stock has slumped by over 32% from its all-time high and is up by just 1.48% from the day it went public. Most recently, the stock has dropped for 12 consecutive days.
The most recent results showed that GE Healthcare’s business has largely stalled. Its revenue rose by 3.5% in the second quarter to $5.3 billion, with its free cash flow being $68 million.
Most of its revenue came from its advanced imaging solutions, which made over $3.77 billion, up by 5% YoY. It was followed by the pharmaceutical diagnostics division, which made $843 million. On the other hand, its patient care solutions revenue tumbled by 13% to $675 million, pushing management to explore strategic alternatives.
Benzinga data shows that analysts predict that GE Healthcare’s annual revenue will rise by 5.3% this year to $22.72 billion. Also, most analysts have a bullish outlook for the company, with Wells Fargo having a target of $85.
Citigroup has a target of $75, while the average estimate among analysts is $77, up by 21% from the current level. Nelson Peltz’s Trian Fund Management has also taken a $200 million stake in the company and is expected to push changes to improve its performance.
Image: Shutterstock
Login to comment