IBM is seeking to sell its Watson Health division again, with a potential price tag of $1 billion, Axios reported on Wednesday.
Sources familiar with the situation told the outlet’s Sarah Pringle that the company had engaged BofA Securities late last year to find a buyer, with bids due this week.
WHY IT MATTERS
On the heels of Oracle’s big-ticket $28 billion Cerner buy, IBM appears to be heading in the opposite direction, seeking to move out of the healthcare-focused space.
Despite the initial hype around Watson’s potential clinical capabilities – and IBM’s multi-billion-dollar acquisitions of Merge Healthcare, Phytel, Explorsys and Truven Health Analytics – the company has faced numerous challenges trying to bring its AI-powered decision support to healthcare.
And as Pringle reports, Watson Health continues to lose money, so any new owner – which could include a strategic buyer or one of a handful of private equity firms, according to Axios – will have to find a path to profitability.
IBM reportedly aims to pick a winning bidder by the end of January.
THE LARGER TREND
The rumors of an attempted sale aren’t new.
The Wall Street Journal reported on a potential move back in February 2021, amidst IBM’s renewed mission to focus on its hybrid cloud business and other artificial intelligence applications.
“The logic of a successful platform is that it attracts large scale networks of users with its simplicity and that its whole is greater than the sum of its parts,” an analyst from Rock Health told Healthcare IT News at the time.
“Amidst digital health’s raging platform wars, this potential exit could be seen as a cautionary tale that bundling a wide range of assets around one tech stack is not the same as platform building,” they continued.
All in all, 2021 was a big year for mergers and acquisitions, and 2022 is already shaping up to be another exciting one.
ON THE RECORD
“Healthcare always is going to turn out to be more subtle, as well as more regulated for the right reasons, than it is in other areas,” said IBM CEO Arvind Krishna to Axios‘ Ina Friend this past year. “And to me, that’s natural. It is a decision that may impact somebody’s life or death. You’ve got to be more careful.
“So in healthcare, it turns out maybe we were too optimistic,” he said.
Kat Jercich is senior editor of Healthcare IT News.
Email: [email protected]
Healthcare IT News is a HIMSS Media publication.
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