IBM will sell the healthcare data and analytics assets of its Watson Health business to investment firm Francisco Partners as part of a deal the two companies announced Friday morning.
Financial terms of the sale, expected to close in Q2, were not disclosed. But Axios had reported earlier this month that Big Blue had been hoping to fetch about $1 billion.
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, the company said in a statement.
Terms of the agreement call for Watson Heath to operate as a standalone company and the current management team to continue serving existing clients. IBM said the sale will allow it to become more focused on its cloud and AI strategy, as it pins its business on computing services provided via the internet.
Ironically, Watson Health had, at one time, been seen as showcasing the company’s shift into cloud services. Launched in 2015, the Watson Health business promised to use AI to manage care and analyze diagnostic tests and other health data.
IBM invested heavily in the business unit, making $4 billion in acquisitions in less than 12 months, and established a dedicated headquarters in Manhattan’s Silicon Alley. Biopharma, medtech and pharmacy giants, from Apple and Epic to Johnson & Johnson and Medtronic, lined up to leverage its cognitive insights.
Cancer was Watson’s first major area of focus in the healthcare arena. A treatment-adviser tool, designed to produce drug regimens tailored to individual patients, was envisioned for use by oncologists, and Memorial Sloan Kettering Cancer Center signed on to train Watson’s machine learning for that purpose.
But despite ambitious pronouncements by former IBM CEO Ginni Rometty and copious amounts of marketing, the tool never lived up to its promise. In 2017, after a high-profile split with the University of Texas MD Anderson Cancer Center, more doctors, investors and healthcare companies began questioning Watson Health’s actual knowledge of medicine.
IBM saw an opportunity to market the Watson cognitive computing system, and healthcare became a centerpiece. Today, Watson Health remains a cautionary tale, not only for those working with external data scientists to consider building their own informatics teams, but for the danger of technology hype over healthcare substance.