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Francisco Partners recovers remains of IBM’s Watson Health unit – TechCrunch

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In what must be considered a disappointing ending, IBM today sold the data assets of its Watson Health unit to private equity firm Francisco Partners. The two companies did not share the purchase price, but previous reports pegged the value at around $1 billion.

Under the terms of the deal, Francisco takes over various elements of the unit, including Health Insights, MarketScan, clinical development, social program management, Micromedex, and imaging software offerings. This gives Francisco Partners a wide range of health data under its umbrella.

When IBM created Watson Health in 2015, it hoped to dominate the vertical by building the unit around a data-driven strategy. To that end, he started picking up health data companies, starting with Phytel and Explorys.

He then spent $1 billion on Merge Healthcare and wrapped up his spending by buying Truven Health Analytics the following year for $2.6 billion. Although the company had high hopes that Watson Health would help push its artificial intelligence push, the unit did not produce the results it hoped for and when Arvind Krishna replaced Ginni Rometty as CEO in 2019, he had different priorities.

Francisco Partners plans to create a new standalone company with these assets, and in a somewhat surprising move given that the split hasn’t worked out as hoped, the company plans to keep the same management team in place, at least for the time being. moment.

Justin Chen, director of Francisco Partners, said they plan to provide the new company with additional support to help realize its potential. “Partnering with companies to execute divisional carve-outs has been a primary focus of Francisco Partners. We look forward to supporting the talented employees and management team, helping the self-sustaining company focus on growth opportunities to realize its full potential, and delivering added value to customers and partners,” a- he said in a statement.

IBM is making the sale just as the healthcare industry is heating up. Last year, Oracle bought health records company Cerner for $28 billion and Microsoft bought Nuance Communications in a deal valued at nearly $20 billion. Although both deals are pending regulatory approval, it shows just how much big business values ​​the healthcare industry.

As a result, it’s a decision that clearly surprised Patrick Moorhead, principal analyst at Moor Insights & Strategy. “I’m very surprised because the puck is heading towards more vertical solutions. I guess this also potentially shows how poorly the unit was working.

Either way, the deal is closed pending regulatory approval and is expected to close in the second quarter. Since sensitive health data is involved in this transaction, the deal may come under further scrutiny.


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