GE HealthCare Technologies (GEHC -0.22%), a spinoff from General Electric, is due to report first-quarter earnings on April 25. The stock is up more than 46% so far this year, and the company is using artificial intelligence (AI) to improve healthcare efficiencies.
A lot of companies are throwing around the AI buzzword these days, as it seems to be good for drawing investors' interest. However, there are healthcare companies that are applying machine learning in nearly every part of their business, and GE HealthCare is one such example.
Looking for growth through mergers and acquisitions
In January, shortly after splitting off from GE, GE HealthCare bought the French company Impactis, which uses computed tomography (CT) interventional guidance to help surgeons. The process uses CT to guide needles in a wide range of procedures. In April, GE HealthCare said it is developing CT-navigation to give clinicians real-time 3D CT images to guide stereotactic needs for biopsies, drainage, therapeutics, and other applications.
In February, the company bought Caption Health, a private company that uses AI to help in conducting ultrasound scans, through various Caption AI applications. The idea is that the applications make ultrasound exams easier and faster, allowing a broader group of professionals to do basic echocardiograms.
At the time of the purchase, Caption Health CEO Steve Cashman said the combination will enable clinicians to diagnose diseases earlier. "This will ultimately help us reduce costs and enhance care," Cashman said.
Separating from the competition
There is plenty of competition for GE HealthCare's products, and other companies might be able to make their medical equipment for less. Where GE HealthCare shines, though, is by developing integrated systems for those products.
Take, for example, its ultrasound machines. The use of ultrasound for diagnosis dates back to 1942, so the technology is hardly new.
However, GE's latest ultrasound launch, the ViewPoint 6, includes enhancements to cybersecurity, new tables and graphs, and better reporting through mapping. The rise in labor costs for hospitals is driving devices such as the ViewPoint 6 to improve workflow and documentation of ultrasound exams in the emergency room.
GE HealthCare is also using AI to improve its MRI systems. In November, it introduced Signa Experience, a platform of four connected technologies that improve MRI scanning, led by the Signa One platform that uses intelligent automation. The system includes AI applications to improve MRI images and shorten scanning time.
The company also recently launched a new asset management and network supervision solution, ReadySee. It is designed to use data to better understand devices and infrastructure that hospitals use, along with beefing up cybersecurity protocols to protect patient health information.
The intersection of integrated systems that can use data, through machine learning, to improve the functionality of medical equipment is what GE HealthCare sees as its strength.
GE HealthCare CEO Peter Arduini told medical technology news website MedTech Dive last year:
I think it's about 97% of the data collected in a hospital today really isn't used. We look at that as a stacked-up gold mine that's out there. And if we can help unlock that, even if I don't own that data, or even directly access it, but use it to make better decisions, it's a win for patients. It's a win for the institutions, and ultimately, it'll be a win for our value creation for shareholders.
On April 20, the company got clearance from the Food and Drug Administration for its Carescape Canvas patient monitoring platform. The standardized platform can be adapted to individual patient needs using smart parameter technology.
A strong start
GE HealthCare still has to adapt to being its own company, and it will, for a while at least, have expenses pertaining to its new situation. For example, last year, net income fell to $1.9 billion compared to $2.2 billion in 2021.
However, the company is off to a good start in increasing revenue. In the company's first quarterly report since its spinoff, it said it had $18.3 billion in sales in 2022, up 4.3%.
The company operates in four segments: imaging, ultrasound, patient care solutions, and pharmaceutical diagnostics. The first three all saw revenue gains in the fourth quarter, led by 11% growth, year over year, for imaging, thanks to better sales of the company's molecular imaging, computed tomography, and magnetic resonance systems.
GE HealthCare forecast organic revenue to rise between 5% and 7% this year, and that was before its acquisitions of Impactis and Caption Health. It also said it expected annual adjusted earnings per share (EPS) between $3.60 and $3.75, compared to adjusted EPS of $3.38 in 2022.
Developing long-term relationships with customers
Medical equipment can be expensive, but GE HealthCare's use of AI is allowing its machines to adapt, and the technology is helping healthcare facilities cut down on labor costs. The company's integrated systems will encourage customer loyalty because they extend the period before equipment becomes obsolete.
GE HealthCare isn't a small company -- it has around 50,000 employees -- and it is executing a strategy for growth that its investors and customers can understand. Though it is operating as a new company, it brings with it all the advantages and experience of being part of GE prior to that.
