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GE taps Morgan Stanley to sell healthcare-IT assets

  • Morgan Stanley advises GE on potential asset sale
  • Healthcare IT:~$440 mln revenue; $150 mln EBITDA
  • Process: strategics, limited group of sponsors expected

General Electric has hired Morgan Stanley to explore selling a group of healthcare-IT assets, according to people familiar with the matter.

The process remains in its initial stages, as just last week GE’s new chief, John Flannery, vowed to sell billions of dollars of assets in a restructuring.

Marketing materials have already been distributed to some potential suitors, the people said. The process is expected to include primarily strategics and a select group of private equity groups, one of the people said.

The healthcare-IT division that Boston’s GE will look to exit accounts for revenue and EBITDA of $442 million and $153 million, respectively, the people said.

The portfolio in healthcare IT encompasses a hodgepodge of assets that make up its enterprise financial management, ambulatory care management and workforce management units, they said.

The enterprise financial management operations contribute more than half the division’s top line, about $235 million in revenue, they said.

These units include GE’s Centricity healthcare-IT-software systems, which offer electronic data interchange and revenue-cycle-management services. Centricity also provides electronic-medical-record software for ambulatory practices.

The healthcare-IT portfolio also encompasses API Healthcare, which GE bought from Francisco Partners in January 2014. API helps hospitals and medical clinics manage their workforces and track patients.

Possible buyers could include healthcare strategics the likes of AllScripts and Cerner, as well as bulge-bracket PE groups like Thoma Bravo or Vector Capital that specialize in carveouts, sources speculated.

The expected asset sales are presumably among many, after GE’s Flannery last week disclosed plans to overhaul the company.

After GE cut its 2017 forecast and posted quarterly earnings well below expectations, Flannery pledged steps to significantly reduce costs. Specifically, on the company’s Q3 conference call he said the company planned to exit $20 billion of assets over one to two years.

“Everything is on the table and there have been no sacred cows,” the CEO told investors on the call.

The Wall Street Journal reported Thursday that GE was exploring options for the GE transportation division.

A spokeswoman for GE Healthcare said the unit “continuously evaluates market opportunities so cannot provide comment on speculation.”

Morgan Stanley didn’t immediately return a request for comment.

Action Item: Learn more about GE’s healthcare IT portfolio here: www3.gehealthcare.com/en/products/categories/healthcare_it

Photo courtesy of millionsjoker/iStock/Getty Images

Update: This article has been updated with comment from GE Healthcare.