Daily News: October 29, 2012

GE Capital Releases Middle-Market CFO Survey


GE Capital has released the findings of its latest semi-annual Middle Market CFO Survey. In general, CFOs in the healthcare industry have grown significantly more optimistic about their industry and the overall economy since the last issuance of the survey (Q1/12).

Darren Alcus, president and chief executive officer, GE Capital, Healthcare Financial Services, said: “While the Supreme Court’s affirmation of the majority of the Affordable Care Act has removed a portion of the uncertainty facing the healthcare industry, the CFO survey illustrates the fundamental challenges facing the industry. The majority of healthcare CFOs surveyed look forward to improved industry growth and increased revenues, but they also expect profits to remain relatively the same as 2011, potentially indicating margin pressure due to reform. Faced with increased growth but potentially tight profits, it is not surprising that healthcare survey participants lead all industries in considering financing to support ongoing working capital needs.”

HEALTHCARE OVERVIEW

Healthcare respondents have revenues of $117 million and an employee count of 820, on average. Unless otherwise noted, data comparisons are being made to the last wave of the GE Capital U.S. Mid-Market CFO Survey executed in the first quarter of 2012.

  • Current sentiment – Healthcare CFOs had the largest uptick in sentiment regarding the health of their industry (5.8, up from 5.2), while remaining unchanged about the current state of the U.S. economy (4.5). Retail overtook healthcare as the industry with the lowest level of optimism about their industry.

  • Economic growth – Healthcare CFOs are shifting their expectations for the U.S. economy from growth to stable over the next 12 months. Fifty-three percent expect the economy to remain the same, a 29-percentage point increase, while 33% expect the U.S. economy to grow, a decrease of 29 percentage points.

  • Industry growth – Healthcare is the only industry to increase expectations for industry growth over the next 12 months (38%, up 13 percentage points). The overall average is 30%.

  • Top business concerns – Healthcare and transportation CFOs lead all industries (87%) concerning the impact healthcare costs will have on business performance, the number one concern across all industries.

  • Profits – Forty-seven percent expect profits to remain the same this year versus last year. Twenty-five percent expect profits to decrease, down nine percentage points.

  • Revenues – Forty-nine percent expect their revenues to increase in 2012 versus the previous year, a drop of seven percentage points.

  • Long-term growth – Healthcare CFOs showed the greatest decrease in likelihood to downsize over the next 1-3 years, going from 23% in the first quarter to 12% today. Forty-six percent expect to be in a moderate growth phase, an increase of 18 percentage points.

  • Hiring – Fifty-four percent expect to hire in the next 12 months, down 20 points.

  • Additional financing – Thirty-five percent are considering additional financing over the next 12 months to support equipment needs, up nine points. Twenty-eight percent are considering additional financing for working capital, up 11 points.

    In the third quarter of 2012, GE Capital surveyed the chief financial officers (CFOs) of 500 U.S. middle-market companies across seven distinct industries to ascertain their views on the U.S. economy and their outlook on a variety of important economic, industry and business-level issues, including growth expectations and financing needs.

    This is GE Capital’s sixth U.S. Mid-Market CFO Survey. Earlier surveys were completed in the first and third quarters of 2010, 2011 and 2012.

    The CFOs who were surveyed were drawn from an independent report produced by The Dun and Bradstreet Corporation. The respondents consisted of middle-market companies with revenue ranging from $50 million to $1 billion, except for the trucking industry where revenues range from $15 million to $1 billion.

    The CFOs represent companies with average annualized revenue of $124 million and have a workforce of approximately 735 employees.

    The survey encompassed seven industries:

  • Food, beverage and agribusiness (102)

  • General manufacturing (101)

  • Healthcare (92)

  • Metals, mining and metals fabrication (50)

  • Retail (51)

  • Technology and business services (52)

  • Transportation (52)

    To read the survey summary, click here.