GE has reported a 27% increase in organic profits at its healthcare division in a quarter driven by ventilator sales and imaging volumes.
The conglomerate said global healthcare procedure volumes were relatively stable for the second quarter in a row, although it faced some regional variability as providers postponed procedures due to COVID-19.
GE expects its overall business to grow in 2021 but warned changes to the pace of healthcare recovery and growth could affect its forecast.
GE's healthcare unit benefited from both COVID-19 related sales as well as some easing of the strict lockdowns and the massive pullback of non-COVID procedures earlier in the year.
Healthcare revenues came in at $4.8 billion in the fourth quarter. That represents a 15% decline in revenue versus the fourth quarter of 2019, but the comparison is skewed by the $21.4 billion sale of the biopharma unit to Danaher. On an organic basis, healthcare revenue grew 6%. GE attributed the organic growth to sales of its Carescape R860 ventilators and imaging and ultrasound volumes.
Talking to investors on a fourth quarter results conference call, CFO Carolina Dybeck Happe set out the headwinds and tailwinds faced by GE's healthcare division over the final three months of the year.
"The healthcare systems market remained dynamic with elevated demand in COVID-19 related equipment offset by softer demand for non-pandemic products," Happe said. "Regionally, public healthcare markets such as Europe and China have been stronger than private markets, particularly the U.S., India and Latin America."
Order growth improved sequentially but nonetheless lagged the sales increase. Organically, orders rose 1% to almost $5 billion. The growth reflects a small increase at the healthcare systems division, driven by strength in Europe and China, offset by slight decline at the pharmaceutical diagnostics division.
GE expects its overall business, which spans well beyond healthcare, to achieve low-single-digit sales growth in 2021. The forecast is partly based on the assumption that healthcare scans will return to pre-COVID-19 levels and pharmaceutical diagnostics demand will rebound. The company plans to support the recovery by investing in its healthcare systems business.
While GE has provided guidance, unlike some pureplay medtech companies, its forecast is subject to variables that could cause the actual figures to differ. GE listed the timing of healthcare recovery and growth among the key variables.