Is Buying General Electric Company (GE) a Smart Health Care Play?

Page 1 of 2

Investors can have the blinders on to some extent when it comes to health care. Biotech and pharmaceutical stocks get the most buzz, but plenty of other companies that do business in the health care industry could be worthy of consideration. Buying General Electric Company (NYSE:GE) stock, for example, probably isn’t on many investors’ radar screens as a health-care play, but should it be? Let’s take a look.

General Electric Company (NYSE:GE)

Bringing good things to life
While General Electric Company (NYSE:GE) is a massive conglomerate spanning multiple industries, its General Electric Company (NYSE:GE) Healthcare segment claims an important place within the company. Healthcare ranks as the fourth-largest segment overall in terms of revenue and the third-largest industrial segment.

Source: Company 10-K report.

General Electric Company (NYSE:GE) Healthcare posted 2012 revenue of $18.3 billion. Its products include a wide variety of medical equipment such as magnetic resonance imaging — or MRI — platforms, ultrasound systems, surgical imaging systems, patient monitoring technology, and many others. The business segment goes beyond just medical equipment, though. General Electric Company (NYSE:GE) Healthcare also sells electronic medical record systems, clinical consumable products, and technology used in drug discovery.

On the medical equipment front, General Electric Company (NYSE:GE) Healthcare has a handful of major rivals. Koninklijke Philips NV (ADR) (NYSE:PHG) and Siemens AG (ADR) (NYSE:SI) stand out as two of the leading competitors. Both, like GE, are conglomerates that boast large health care business segments. Both Koninklijke Philips NV (ADR) (NYSE:PHG) and Siemens AG (ADR) (NYSE:SI) market many of the same types of medical imaging equipment that GE does.

GE Healthcare also claims one of the top spots in the world of electronic medical records. The Centers for Medicare and Medicaid Services, or CMS, reported recently that the company ranked in the No. 5 spot for Meaningful Use attestations needed for health care providers to receive federal incentives. Only two publicly traded companies placed higher than GE Healthcare — Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) and Quality Systems, Inc. (NASDAQ:QSII)’s NextGen Healthcare unit.

Imagination at work?
Just being big doesn’t necessarily make a company a good investment. Are we letting our imaginations run wild by even considering buying GE stock as a health care play? Maybe.

Page 1 of 2