Washington Uncertainty May Give GE an Unhealthy Glow
January 20 2017 - 12:47PM
Dow Jones News
By Charley Grant
Add General Electric to the list of businesses concerned about
the risks from health policy uncertainty.
Chief Executive Jeffrey Immelt noted on the fourth-quarter
earnings conference call that the U.S health-care business faces
some risks as a result. G.E. reported overall sales of $33.1
billion, which fell short of analyst forecasts, and adjusted
earnings of 46 cents a share, which matched consensus.
President Donald Trump has vowed to repeal the Affordable Care
Act without spelling out precisely what will replace it. Until the
new administration more clearly spells out its policy goals, it
remains unclear whether the number of Americans without insurance
will decline.
That has the potential to delay or alter plans of GE's customers
to purchase costly hospital equipment such as mammography
systems.
The good news for shareholders: GE's health-care business has a
global presence and its forecast was fairly upbeat for non U.S.
businesses. Mr. Immelt added that the ACA's status is a potential
future risk and not currently affecting sales. The fourth-quarter
numbers bear that out -- health sales grew 3% from a year earlier
to $5.1 billion. Operating profit in the segment of just over $1
billion was up 10%.
Still, the issue matters for GE -- health-care is the company's
third-largest business by sales. And while Mr. Immelt indicated
that the troubled oil-and-gas segment has bottomed, there is a risk
that a health-care stumble would offset that positive momentum.
Changes to American health-care policy might be the biggest
issue for investors in the health-care sector to follow this year.
GE gives credence to the notion that investors will be better off
if those changes come sooner rather than later.
Write to Charley Grant at charles.grant@wsj.com
(END) Dow Jones Newswires
January 20, 2017 12:32 ET (17:32 GMT)
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