General Electric's (GE 1.12%) healthcare business today announced the acquisition of Prismatic Sensors, a Swedish start-up company focused on photon-counting computed tomography (PCCT) detectors. 

In plain English, PCCT technology offers the potential for better visualization in GE's CT scanners. GE's press release quoted Norbert Pelc, an emeritus professor of radiology at Stanford University, as saying: "I expect the impact on the CT field will be large, for example, improved dose efficiency, particularly for low dose acquisitions and for applications that benefit from tissue specificity.' 

A CT scanner..

A patient going into a CT scanner. Image source: Getty Images.

What the deal means to investors

Given that imaging contributed more than half of GE Healthcare's $16.7 billion revenue (excluding the now-divested biopharma business) in 2019, and imaging is also its biggest target market ($19 billion in equipment orders in recent years), it's crucial for GE to invest in order to stay ahead of fierce competitors such as Siemens Healthineers and Philips.

As such, the deal should be taken as a sign of management's determination to invest for growth now that the high-growth biopharma business has been divested to Danaher.

In terms of the overall investment proposition for the industrial conglomerate, the deal adds support to the idea that GE Healthcare will continue to generate low- to mid-single-digit revenue growth and $1.2 billion-plus in free cash flow. Both are needed to help support turnarounds at power and renewable energy and a recovery at GE Aviation. All told, if the deal leads to commercial applications that win market share for GE in CT scanners, then it's definitely a big plus for shareholders all around. 

The deal price was undisclosed, and is expected to close by January 2021.