IBM announced today that it has sold its Watson Health data and analytics assets to private equity firm Francisco Partners. The highly anticipated sell-off includes data sets and analytics products such as Health Insights, MarketScan, Clinical Development, Social Program Management, Micromedex and imaging software offerings.
IBM Software SVP Tom Rosamilia called the sale a move to align the company with its “hybrid cloud and AI strategy,” rather than a signal that the company has given up on its massive AI platform Watson, or its health care IT business more broadly.
But it’s difficult not to see the sale as a failure of IBM’s big bet on Watson to usher health care into the AI age. From the start over a decade ago, IBM touted the health care analytics capabilities of Watson, its massive AI platform. In 2015, when the company launched its Watson Health division, it did so with gusto — snapping up other health data and analytics providers and partnering with hospitals and big names like Apple, Johnson & Johnson and Medtronic.
Then, just a few years later in 2018, reports emerged of layoffs at IBM’s acquired health units including data analytics company Truven, medical imaging company Merge and patient management company Phytel.
Phytel engineers told IEEE Spectrum at the time that Phytel’s customer base was split nearly in half from 150 clients to 80 after IBM acquired the company. “Smaller companies are eating us alive,” said one staff member. “They’re better, faster, cheaper. They’re winning our contracts, taking our customers, doing better at AI,” the engineer told the publication.
The IBM sale stands in stark contrast to Oracle’s recent $28.3 billion acquisition of health data and technology company Cerner, a deal that in many ways revolves around what Watson Health promised: spinning massive amounts of unstructured health data into algorithmic models and insights to advance medicine and help improve day-to-day health care and hospital operations — all in the cloud. That deal could create its own set of challenges for Oracle.
The IBM transaction is expected to close in Q2 of this year, subject to regulatory clearances. Financial terms were not disclosed.