GEHC Stock Gains Following Buyout Completion to Boost Its PDx Arm

GE HealthCare Technologies Inc. GEHC, yesterday, announced the completion of its acquisition of the remaining 50% stake in Nihon Medi-Physics Co., Ltd (“NMP”) from Sumitomo Chemical, giving it full ownership. The intent to acquire the remaining 50% stake in NMP was announced in December 2024.

GE HealthCare acquired Amersham plc in 2004 and subsequently held a 50% stake in NMP.

As part of GE HealthCare, NMP is expected to enhance patient access to next-generation radiopharmaceuticals that enable the detection and diagnosis of disease in Japan.

The latest move is expected to significantly strengthen GE HealthCare’s Pharmaceutical Diagnostics (PDx) segment, thus boosting its business in the niche space.

Likely Trend of GEHC Stock Following the News

Following the announcement, shares of the company gained nearly 0.9% till yesterday’s trading.

Historically, the company has gained a high level of synergies from its partnerships. We expect market sentiment on the stock to remain positive around this announcement too.

GE HealthCare currently has a market capitalization of $36.91 billion. It has an earnings yield of 5.8%, better than the industry’s 0.3%. In the last reported quarter, GEHC delivered an earnings surprise of 15.1%.

Rationale Behind GE HealthCare’s Acquisition

NMP’s product portfolio includes GE HealthCare radiopharmaceuticals, which are used to enable molecular imaging across neurology, cardiology and oncology procedures.

Per GE HealthCare’s estimates, Japan is currently on track to become a key player in the $7 billion molecular imaging global market and a center of excellence for Asian markets. GE HealthCare’s management believes that the addition of NMP will likely expand its existing footprint and offerings in Japan, where its contrast media and medical devices are widely used to enable imaging procedures across the country.

As part of GE HealthCare, NMP is expected to play a key role in bringing its deep expertise and scale to global innovators looking to bring next-generation radiopharmaceuticals to the Japanese market and beyond.

GE HealthCare expects this transaction to be neutral to adjusted earnings per share in year one and accretive thereafter.

Industry Prospects in Favor of GEHC

Per a report by Data Bridge Market Research, the global radiopharmaceuticals market was valued at $15.31 billion in 2023 and is anticipated to reach $25.33 billion by 2031 at a CAGR of 6.5%. Factors like advancements in nuclear medicine and increasing applications in both diagnostic and therapeutic sectors, and the growing prevalence of chronic diseases are likely to drive the market.

Given the market potential, the latest acquisition is expected to provide a significant boost to GE HealthCare’s business.

GE HealthCare’s Notable Development

In February, GE HealthCare reported its fourth-quarter 2024 results, wherein it recorded an uptick in its top line on both reported and organic basis. Per management, this was partly driven by its PDx business.

GEHC’s Share Price Performance

Shares of the company have lost 8.5% in the past year against the industry’s 10.9% rise and the S&P 500’s gain of 8.3%.

GE HealthCare’s Zacks Rank & Key Picks

Currently, GEHC carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are Cardinal Health, Inc. CAH, Cencora, Inc. COR and Boston Scientific Corporation BSX.

Cardinal Health, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 9.5%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cardinal Health’s shares have gained 23.6% against the industry’s 2.4% decline in the past year.

Cencora, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 12.1%. COR’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 4.9%.

Cencora has gained 14.8% against the industry’s 15.6% decline in the past year.

Boston Scientific, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.3%.

Boston Scientific’s shares have rallied 49.1% compared with the industry’s 10.9% growth in the past year.

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This article originally published on Zacks Investment Research (zacks.com).

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