If completed, the deal would end Watson Health's over six-year run as IBM's first dedicated industry-specific business unit. Over the years, IBM made a number of acquisitions in radiology and healthcare as it sought to assemble a business that would realize the potential of AI for medical applications.
Under the definitive agreement announced January 21, Francisco Partners will acquire Watson Health's datasets and products, such as its diagnostic imaging software, Health Insights analytics software, MarketScan research databases, Clinical Development data management systems for contract research organizations and medical device companies, Social Program Management software for government agencies, and Micromedx clinical decision-support software, according to IBM and Francisco Partners.
The planned sale will enable IBM to become even more focused on its platform-based hybrid cloud and AI strategy, according to Tom Rosamilia, senior vice president for IBM Software.
"IBM remains committed to Watson, our broader AI business, and to the clients and partners we support in healthcare IT," Rosamilia said in a statement. "Through this transaction, Francisco Partners acquires data and analytics assets that will benefit from the enhanced investment and expertise of a healthcare industry focused portfolio."
The unit will continue on as a stand-alone company, and the current management team will remain in similar roles. For Francisco Partners, the acquisition is the firm's latest investment in healthcare technology companies; the company's previous investments have included firms such as Availity, eSolutions, Capsule, GoodRx, Landmark, QGenda, Trellis, and Zocdoc.
Financial terms were not formally disclosed, but the deal was worth more than $1 billion, according to a report by Bloomberg. The sale is expected to be completed in the second quarter and is subject to customary regulatory clearances. The new firm will continue to serve existing clients in the life sciences, provider, imaging, payer and employer, and government health and human service sectors, IBM and Francisco Partners said.
Watson Health was launched by IBM in 2015 with the goal of applying the Watson AI technology to enable personalized healthcare. It housed several IBM healthcare acquisitions, including PACS and imaging software developer Merge Healthcare, population health company Phytel, cloud-based healthcare intelligence vendor Explorys, and Truven Health Analytics.
Rumors of a sale of Watson Health had swirled for some time, first in early 2020 and then resuming again earlier this month.
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