GE's turnaround strategy is becoming clear.

The company announced plans on Tuesday to spin off its health-care unit and separate its stake in oil services company Baker Hughes over the next two to three years. GE will focus its operations on the aviation, power and renewable energy businesses.

“Today marks an important milestone in GE’s history. We are aggressively driving forward as an aviation, power and renewable energy company — three highly complementary businesses poised for future growth. We will continue to improve our operations and balance sheet as we make GE simpler and stronger,” CEO John Flannery said in a statement. “We are confident that positioning GE Healthcare and BHGE outside of GE’s current structure is best not only for GE and its owners, but also for these businesses, which will strengthen their market-leading positions and enhance their ability to invest for the future, while carrying the spirit of GE forward.”

GE said it will maintain its current quarterly dividend until it spins off its health-care unit. The company will then adjust the dividend “in line with industrial peers.”

Flannery later said on an investor call the company will likely lower its "aggregate" dividend once the health-care spinoff is finished.

GE shares rose 7.76 percent Tuesday, marking its best day since April 10, 2015. Its stock is down 27 percent this year through Monday and has declined by 54 percent over the past year.

The company also plans to reduce its net debt by about $25 billion by 2020 and generate $500 million or more in corporate cost savings by the end of 2020.

The CEO also told CNBC on Tuesday, "We are finished" when he was asked whether GE will be making any other restructuring moves.

Moody's Investors Service reaffirmed its A2 rating and its negative outlook for GE's debt after the company's announcements.

GE's "ratings outlook remains negative as continued weakness in earnings and cash flows are expected through 2019 and into 2020," the ratings firm said in a release.

The turnaround plan comes on the same day GE will be removed from the iconic Dow Jones Industrial Average, a position it has held since 1907.

But GE investors may take solace in the recent history of stock price outperformance from the companies booted from the Dow. The most recent removal before General Electric soundly outperformed the S&P 500 in the year after getting booted, according to CNBC data.

AT&T shares rose 15 percent in the 12 months after it was replaced by Apple in 2015 versus the S&P 500's 2 percent decline in the same time period.

Here is the full press release from GE:

GE Focuses Portfolio for Growth and Shareholder Value Creation

June 26, 2018

Company to focus on Aviation, Power and Renewable Energy

Healthcare to become standalone company; GE expects to monetize 20% and distribute remaining 80% of GE Healthcare to shareholders tax-free

Plans to fully separate Baker Hughes, a GE company (BHGE)

Strengthening the balance sheet: Clear path to reduce debt by $25 billion, achieve Industrial net debt to EBITDA of less than 2.5x by 2020 and further de-risking GE Capital

Businesses as center of gravity: Leaner corporate structure with $500+ million in savings

Plans to maintain current quarterly dividend through completion of Healthcare separation

Larry Culp to succeed Jack Brennan as lead director

Company to host a call with investors at 8:30 am ET

BOSTON – 26 June 2018: GE (NYSE: GE) today announced the results of its strategic review. GE will focus on Aviation, Power and Renewable Energy, creating a simpler, stronger, leading high-tech Industrial company. In addition to the pending combination of its Transportation business with Wabtec, GE plans to separate GE Healthcare into a standalone company, pursue an orderly separation from BHGE over the next two to three years, make its corporate structure leaner and substantially reduce debt. GE’s Board of Directors unanimously approved the plans announced today.

John Flannery, chairman and CEO of GE, said, “Today marks an important milestone in GE’s history. We are aggressively driving forward as an aviation, power and renewable energy company—three highly complementary businesses poised for future growth. We will continue to improve our operations and balance sheet as we make GE simpler and stronger.”

Flannery continued, “GE Healthcare and BHGE are excellent examples of GE at its best—anticipating customer needs, breaking barriers through innovation and delivering life-changing products and services. Today’s actions unlock both a pure-play healthcare company and a tier-one oil and gas servicing and equipment player. We are confident that positioning GE Healthcare and BHGE outside of GE’s current structure is best not only for GE and its owners, but also for these businesses, which will strengthen their market-leading positions and enhance their ability to invest for the future, while carrying the spirit of GE forward.”

GE of the Future

GE will be a focused high-tech industrial company that will be easier for investors to follow and measure with a significantly improved balance sheet to support its remaining businesses:

GE Aviation continues to be a leader in the aviation industry. GE technology powers two out of every three commercial departures around the world and GE’s global installed base includes more than 65,000 engines.

GE’s energy strategy, driven by GE Power and GE Renewable Energy, is based on offering a full range of energy solutions across the electricity value chain that bring affordable, reliable, efficient energy to businesses and consumers. GE powers more than one-third of the world’s electricity and has a valuable installed base of approximately 7,000 gas turbines, with a track record of increasing productivity.

GE will continue to invest for the future and lead in innovative technologies like additive manufacturing and digital to lead the next wave of industrial productivity.

GE is making fundamental changes to how it will run the company. The new GE Operating System will result in a smaller corporate headquarters focused primarily on strategy, capital allocation, talent and governance. It will result in better execution, increased speed and is expected to generate at least $500 million in corporate savings by the end of 2020. Under the new GE Operating System, most resources and services traditionally held at the headquarters level will be realigned to the businesses.

GE is targeting an Industrial net debt-to-EBITDA ratio of less than 2.5 times and a long-term A credit rating. GE also plans to reduce Industrial net debt by approximately $25 billion by 2020 and maintain more than $15 billion of cash on the balance sheet.

GE expects to maintain its current quarterly dividend, subject to Board approval, until GE Healthcare is established as an independent entity. At that time, the new GE Healthcare Board of Directors will determine GE Healthcare’s dividend policy, which GE expects to reflect healthcare industry practices. Also at that time, the GE Board expects to adjust the GE dividend with a target dividend policy in line with industrial peers.

Creating GE Healthcare as a Standalone, Pure-Play Company

Kieran Murphy, president and CEO of GE Healthcare, will continue to lead GE Healthcare as a standalone company, maintaining the GE brand.

“GE Healthcare’s vision is to drive more individualized, precise and effective patient outcomes. As an independent global healthcare business, we will have greater flexibility to pursue future growth opportunities, react quickly to changes in the industry and invest in innovation. We will build on strong customer demand for integrated precision health solutions and great technology with digital and analytics capabilities as we enter our next chapter,” said Mr. Murphy.

Flannery added, “GE Healthcare is an industry leader with financial strength, global scale and cutting-edge technology. Our talented Healthcare team will continue delivering precision health solutions, building on our heritage of technology innovation that delivers patient outcomes.”

GE Healthcare recorded over $19 billion in revenues in 2017 and posted five percent revenue growth and nine percent segment profit growth in the same year. The business provides medical imaging (including contrast agents), monitoring, biomanufacturing and cell therapy technology, leveraging deep digital, artificial intelligence and data analytics capabilities. Its products and services are valued by customers in 140 countries around the world.

GE expects to generate cash from the disposition of approximately 20% of its interest in the Healthcare business and to distribute the remaining 80% to GE shareholders through a tax-free distribution. The structure, sequence and timing of these transactions will be determined and announced at a later date, but are expected to be completed over the next 12 to 18 months. GE Healthcare will conduct business as usual throughout this process, continuing to serve its partners and customers.

BHGE

GE plans to fully separate its 62.5% interest in BHGE in an orderly manner over the next two to three years. BHGE’s full stream offering brings together equipment, services and digital solutions to help its customers be more productive—a unique and powerful value proposition in a changing market. The separation will provide BHGE with enhanced agility and the ability to focus on leading in the oil and gas industry.

GE Capital

GE continues to work to make GE Capital smaller and more focused on supporting its core industrial businesses. The company intends to materially shrink the balance sheet of GE Capital targeting sales of $25 billion in energy and industrial finance assets by 2020. The company is assuming an approximately $3 billion capital contribution to GE Capital in 2019. In addition, the company is actively exploring options to reduce its insurance exposure.

Lead Director Transition

GE also announced that the Board’s independent directors have completed the previously announced lead director transition, electing Larry Culp, former CEO of Danaher, to succeed Jack Brennan, who is completing his last term on the Board. The change is effective today. Mr. Culp will also chair the Board’s Management Development and Compensation Committee. He joined the GE Board as an independent director earlier this year.

Flannery said, “As lead director, Jack has been an incredibly valuable partner and advisor to GE through economic cycles, changes to our business and our most recent leadership transition. I would like to thank him for his advice and stewardship through a period of significant change for GE. He has been especially helpful over the last year as we have conducted our review of the company and developed our plan to position GE for the future.”

Flannery added, “Larry’s track record on strategy development and execution, capital allocation and talent make him well suited to take on this role. I appreciate his clarity, transparency and business-first philosophy, and I believe his leadership will be invaluable to GE as we enter our next chapter.”

Simpler, Stronger GE

Today’s announcements follow a series of changes GE has made in the past year. With the announced sales of Distributed Power, Industrial Solutions, and Value-Based Care, and pending combination of its Transportation business with Wabtec, GE’s $20 billion divestiture target is substantially complete.

Flannery concluded, “GE’s mission and technology change the lives of billions of people around the world. We will now move forward with purpose to make our company simpler and stronger and accelerate growth across our businesses. I’m confident that today’s actions, in conjunction with other changes we have already made, will produce improved operating results and increased shareholder value going forward. We are focused on executing the strategy and implementing the structure we’ve laid out today to position our businesses for future growth.”

Conference Call and Webcast

The Company has scheduled an investor conference call to discuss today’s announcement. The call will begin today at 8:30 a.m. Eastern Time, the content of which is not part of this press release. A slide presentation providing summary financial and statistical information that will be discussed on the call will also be posted to the Company’s website and available for real-time viewing at ge.com/investor. The conference call will be broadcast live via a webcast and can be accessed by visiting the Events and Reports page on the Company’s website at: ge.com/investor. An archived version of the webcast will be available on the website after the call.