IBM has agreed to sell healthcare data and analytics assets that are part of its Watson Health business to investment firm Francisco Partners for an undisclosed sum.
The Armonk, N.Y.-based company said the assets acquired by Francisco Partners include extensive and diverse data sets and products, including Health Insights, MarketScan, Clinical Development, Social Program Management, Micromedex, and imaging software offerings.
IBM (NYSE: IBM) initially explored putting IBM Watson Health up for sale in early 2021, seeking approximately $1 billion. IBM had built the business in part through acquisitions such as Truven Health Analytics, Phytel, and medical imaging company Merge Healthcare.
“Today’s agreement with Francisco Partners is a clear next step as IBM becomes even more focused on our platform-based hybrid cloud and AI strategy,” said Tom Rosamilia, senior vice president of IBM Software, in a statement. “IBM remains committed to Watson, our broader AI business, and to the clients and partners we support in healthcare IT. 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.”
San Francisco-based Francisco Partners has made previous investments in healthcare technology. Some current and past investments in the sector include Availity, eSolutions, Capsule, GoodRx, Landmark, QGenda, Trellis, and Zocdoc.
Noting that they have experience in such divisional carve-outs, Francisco executives said the current management team will continue in similar roles in a new stand-alone company, serving existing clients in life sciences, provider, imaging, payer and employer, and government health and human services sectors.
“We have followed IBM’s journey in healthcare data and analytics for a number of years and have a deep appreciation for its portfolio of innovative healthcare products,” said Ezra Perlman, co-president at Francisco Partners, in a statement. “IBM built a market leading team and provides its customers with mission critical products and outstanding service.”
The transaction is expected to close in the second quarter of this year.
The M&A market for healthcare companies continues to strengthen in 2022 ahead of projected increases in US capital gains taxes. There is unprecedented capital in market, the lowest interest rates in US history and strong acquirer motivations for high quality healthcare companies. Across the continuum of care, buyers and investors are looking for well established, profitable businesses and offering strong valuations and options for management.
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