IBM Is Selling Watson Health to a Private Equity Firm

IBM is selling its Watson Health data and analytics business, the final step in the company’s retreat from what it once called a “moonshot” venture to improve health care, helping save lives and trim medical costs.

The business is being sold for an undisclosed price to Francisco Partners, a private investment firm, the companies announced on Friday.

Watson Health was set up as a separate business in 2015. IBM then spent more than $4 billion to acquire companies with medical data, billing records and diagnostic images on hundreds of millions of patients.

IBM has been trying to find buyers for the Watson Health business for more than a year. And it was seeking a sale price of about $1 billion, The Wall Street Journal reported last year.

IBM had been winding down the business. In 2000, the company discontinued two products designed for cancer diagnosis — Watson for Genomics and Watson for Oncology, developed with another early collaborator, the Memorial Sloan Kettering Cancer Center.

Since Arvind Krishna became chief executive in 2000, IBM has been tightening the focus of its business and shedding operations.

Last November, IBM spun out its big back-office technology support and services business, which has yearly revenue of $19 billion. That business, called Kyndryl, has had lower profit margins and growth prospects than areas that are IBM’s current focus, cloud computing and artificial intelligence. IBM retained a stake of just under 20 percent in Kyndryl.

IBM executives described the sale of the Watson Health assets as part of that broader strategy. Tom Rosamilia, senior vice president in charge of IBM’s software business, said the move was “a clear next step as IBM becomes even more focused on our platform-based hybrid cloud and AI strategy.”

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