IBM sells Watson Health assets to investment firm Francisco Partners

After struggling to grow the business unit and turning its focus to higher-margin businesses, IBM finally sells parts of Watson Health.
Written by Stephanie Condon, Senior Writer

IBM is selling parts of its Watson Health Unit to the global investment firm Francisco Partners, the companies confirmed Friday. The deal is expected to close in the second quarter of this year. Terms were not disclosed. 

Under the agreement, Francisco Partners will acquire specific healthcare data and analytics assets that are part of the Watson Health business. These include data sets and products like Health Insights, MarketScan, Clinical Development, Social Program Management, Micromedex and imaging software offerings.

Francisco Partners plans to turn these assets into a standalone company under the current management team. They'll serve their existing clients in life sciences, provider, imaging, payer and employer, and government health and human services sectors.

Watson Health was once one of IBM's "strategic imperatives," but it struggled to grow and faced criticism that the cognitive computing platform was costly and hard for customers to implement. In 2018, IBM laid off a percentage of its Watson Health workforce.

Once Arvind Krishna took the helm as IBM CEO in 2020, he turned his focus to higher-margin businesses like AI and cloud.

"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," Tom Rosamilia, SVP of IBM Software, said 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."

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