Why is the 10-billion-yuan core business that GE Healthcare is considering selling losing money?
In January 2023, GE HealthCare was officially spun off from General Electric and listed independently, opening a brand new chapter as an independent company.
At that time, it held a huge business portfolio covering imaging, ultrasound and patient care solutions, and ambitiously told Wall Street about the second growth of the century-old industrial giant in the era of precision medicine.
However, at its recent Q2 earnings call, GE HealthCare acted out of character and considered seeking to sell its PSC (Patient Care Solutions) business, with the total target valuation possibly reaching billions of dollars.
PCS is not a marginal branch of GE HealthCare. It covers four major product lines: patient monitoring, diagnostic cardiology, maternal and infant care, and anesthesia, involving a series of the most common and indispensable life support products in hospitals such as monitors, anesthesia machines, ventilators, and maternal and infant care equipment, serving tens of thousands of medical institutions around the world.
For this medical technology giant that recorded revenue of 20.625 billion U.S. dollars in 2025, PCS accounts for about 15% of its annual revenue. Its final fate will directly affect the future capability boundary of GE HealthCare.
After more than three years of independent operation, why did GE HealthCare decide to divest this once core segment decisively?
Behind the move to abandon the red ocean and return to the high-precision and cutting-edge fortress, a systematic reshaping of the value logic of the global medical technology industry has been slowly unfolding.
01
What problems exist in the field where PCS is located?
Once, patient monitoring and life support devices were the rock-solid cash cows for large medical technology companies. The market demand is rigid, and brand stickiness is strong. Once hospitals adopt a certain brand of monitoring network on a large scale, the switching cost is extremely high.
But today, this once solid position is being eroded from three directions at the same time.
First, the technical barriers of PCS's subordinate businesses have collapsed, and hardware manufacturing is sliding towards low-margin assembly business.
The core sensors, algorithms and modular design of technologies such as patient monitoring, basic anesthesia, and respiratory support have become industry common knowledge assets after decades of dissemination and talent flow.
When the technology window of a field closes and products are highly convergent in function, interface and operation experience, competition will inevitably slide from innovation differentiation to pure price competition.
Whether it is medical groups in developed countries suffering from cost control pressure, or new hospitals in developing countries that are expanding rapidly, the balance of procurement decisions is increasingly tilting towards the hard indicator of "the lowest total life cycle cost".
As a result, the hardware manufacturing of PCS globally is increasingly showing industrial characteristics of "high maturity, high assembly, and low gross margin", taking a completely different path from high-precision and cutting-edge equipment such as imaging and radiotherapy.
Second, the "demand cliff" in the post-pandemic era and the structural pressure of global medical cost control.
The COVID-19 pandemic once brought an unprecedented demand tsunami to the PCS business. Hospitals in developed countries in Europe and America and emerging market countries frantically hoarded ventilators and monitors under panic buying.
However, the peak of emergency procurement is often the freezing point of normalized demand.
After the pandemic, hospitals around the world are generally faced with the dilemma of idle equipment and high channel inventory, and new procurement orders have plummeted off a cliff.
At the same time, global medical cost control has become a new normal. The continuous political attention to medical costs in the United States, the budget tightening of public hospital systems in Europe, and the implementation of the global value-based medical concept are all systematically squeezing the willingness of medical institutions to pay for the "brand" of mature equipment.
As basic life support equipment, PCS has unsurprisingly become the primary target of this round of capital expenditure cuts.
Finally, the entry of emerging players at home and abroad is also systematically reshaping the price ceiling.
For example, Chinese manufacturers such as Mindray and BMC Medical, relying on their advantages of deep supply chain, cost control capability and rapid iterative engineering, are rapidly sinking in the global low and mid-end markets such as Europe, Latin America, Southeast Asia and the Middle East.
Under increasingly fierce competition, the equipment involved in PCS has generally seen a systematic price decline.
In the largest product categories such as monitors and basic anesthesia workstations, the reference prices for global bidding continue to decline, and the overall profitability of the industry has declined accordingly.
Under the superimposition of three layers of pressure, GE HealthCare's PCS business lost momentum. From 2023 to 2025, the related revenue dropped from 3.142 billion U.S. dollars to 3.086 billion U.S. dollars, with a cumulative decrease of 56 million U.S. dollars in two years.
Entering 2026, the pressure further expanded, and the second-quarter revenue dropped to 675 million U.S. dollars, a year-on-year decrease of 13.3%.
In the fourth quarter of 2025, the PCS division's EBIT was 74 million U.S. dollars, with an EBIT margin of 9.0%; by the second quarter of 2026, the division's EBIT had turned to a loss of 26 million U.S. dollars, and the EBIT margin fell to -3.8%.
In GE HealthCare's official description, the decline in performance is attributed to "operational and order delivery challenges": memory chip inflation, rising freight costs, and geopolitics in the Middle East disrupting logistics.
However, for highly standardized products such as monitors and anesthesia equipment, the problem runs deeper than the supply chain: the more standardized the equipment, the harder it is for enterprises to pass on additional costs to hospitals, and the profit ceiling of the pure hardware model is hitting the top.
02
Why does GE HealthCare consider selling PCS?
If the deterioration of the external environment explains why PCS is difficult to operate, then GE HealthCare's own choices reveal why it is heading to the transaction market.
The core logic lies in strategic focus: concentrating resources to develop high-end precision medical business.
Financial data shows that in Q2 2026, GE HealthCare's overall revenue increased by 5.7%, with Advanced Imaging Solutions and Pharmaceutical Diagnostics businesses growing by 7.9% and 15.6% respectively.
PCS revenue decreased by 13.3% year-on-year, and the division's EBIT turned from profit to loss. In the same period, GE HealthCare's overall revenue increased by 5.7%, and the Advanced Imaging Solutions and Pharmaceutical Diagnostics businesses grew by 7.9% and 15.6% respectively.
GE HealthCare Q2 Revenue and Profit Data (Billion USD)
It can be seen from the data that in GE HealthCare's existing business matrix, fields such as CT, magnetic resonance, molecular imaging, as well as high-end ultrasound, pharmaceutical diagnostics, and nuclear medicine have high technical barriers, difficult clinical substitution, and more considerable gross margins.
In contrast, PCS has significant gaps with the above businesses in terms of technical complexity, competition pattern and profit margin.
Within the same group, high-barrier businesses are expanding while low-barrier businesses are shrinking, and this differentiation is directly reflected in the efficiency of resource allocation.
Retaining PCS can not only provide synergy for the core business, but also may disperse the management's investment in high-priority fields such as imaging AI and integrated diagnosis and treatment.
The second consideration is at the capital level.
The capital market values the combination of growth and profitability when valuing a company.
The PCS business accounted for about 15% of the group's revenue in 2025, which is not a small volume, but its growth is flat and its profit margin is low, which drags down the overall profitability of the group and also limits the valuation space of the company as a "high-precision medical technology platform".
Divesting it, even if sold at a moderate price, will immediately bring in billions of dollars in cash return.
This sum of money can be used for M&A and reinforcement in advantageous fields such as imaging, or for increasing investment in AI and digital R&D to maximize capital efficiency.
The third factor is the actual pressure of supply chain and geopolitical risks.
PCS products are highly dependent on localized manufacturing close to the market, localized supply chains and fast-response service networks.
Against the backdrop of the fragmentation of the global supply chain and the rise of protectionism, continuing to maintain a PCS manufacturing and service system spanning multiple regions and facing fierce competition from local competitors means continuously bearing high operational risks.
Rather than passively responding, it is better to sell the business when it still has scale and market position, so that it can exert its residual value in a more suitable capital and cost structure.
Externally, there is the structural deterioration of the market environment; internally, there is a strong desire for strategic focus; the capital market has hard valuation constraints; and geopolitics has the practical need for asset-light transformation. Under the reality, GE HealthCare's decision to make a painful divestment is inevitable.
03
GPS are simultaneously making subtraction adjustments
GE HealthCare's approach is not an isolated case. In the same period, the other two players of GPS are also carrying out business adjustments in similar directions.
For example, Philips is carrying out large-scale restructuring of its Sleep & Respiratory Care business. It once occupied a leading position in the world in this field, but the large-scale recall initiated due to the risk of sound insulation foam degradation of ventilators has caused a significant impact on its brand reputation and financial status.
At present, Philips has completely restructured this business unit, some product lines have been substantially withdrawn or are seeking divestment, and it has clearly shifted its strategic focus to high-value in-hospital fields such as "image-guided therapy" and "health technology".
Its adjustment logic is similar to that of GE HealthCare: when the technical barrier of a business declines, the risk no longer matches the return, and it is difficult to establish an irreplaceable competitive advantage, exit is a rational choice.
Siemens Healthineers has also made substantial adjustments to its in-vitro diagnostics business.
This diagnostics segment was once one of the important businesses of Siemens Healthineers, but with the intensifying competition in the global in-vitro diagnostics market and rising price pressure, the company chose to close some low-profit production bases, cut redundant positions, screen product lines, and concentrate resources to develop high-growth, high-profit niche segments.
At the same time, Siemens Healthineers continues to increase its investment in Varian (radiotherapy) and medical imaging artificial intelligence.
While making subtraction in the fiercely competitive mature businesses, it is making addition in fields with high technical barriers, further betting on digital intelligent healthcare.
In general, any business with mature technology, fierce competition and meager profit has been or is being added to the divestment list of industry giants.
In the downward economic cycle, the global medical technology industry will inevitably shift from scale-driven to value-driven. Abandoning the "large and comprehensive" equipment coverage model and strengthening the "precision and deep" technological attribute has become an inevitable move.
This article is from the WeChat official account Arterial Network (ID: vcbeat), written by Zhao Hongwei, published with authorization from 36Kr.