Francisco Partners completes acquisition of IBM Watson Health's data and analytics business

by John R. Fischer, Senior Reporter | July 07, 2022
Business Affairs Health IT
Francisco Partners has completed its acquisition of IBM Watson Health's data and analytics business.
Global investment firm Francisco Partners has completed its acquisition of IBM Watson Health’s healthcare data and analytics assets.

The companies announced the sale back in January, with Francisco Partners taking various parts of the business, which it will build a stand-alone company around called Merative. The new business will be based in Ann Arbor, Michigan, and its products will be organized into six categories, including Health Insights, MarketScan, Clinical Development, Social Program Management and Phytel, Micromedex, and Merge Imaging solutions.

Merative will serve the life sciences, provider, imaging, health plan, employer, and government health and human services sectors. Francisco Partners plans to help it grow through investments, acquisitions, and partnerships. “We appreciate IBM’s work in developing this business, and our ownership will help Merative drive crucial focus in executing on organic and inorganic growth strategies,” said Ezra Perlman and Justin Chen, of Francisco Partners.

Already investing in the new business are True Wind Capital, a private equity firm in San Francisco that invests in leading technology companies; and Sixth Street, a global investment firm that uses long-term flexible capital and data-enabled capabilities to create solutions for companies across all stages of growth.

Merative will be led by CEO Gerry McCarthy, who recently served in the same role for eSolutions and has 30 years' experience in healthcare information technology. Paul Roma, who served as general manager of Watson Health business, will become senior advisor to Francisco Partners.

The current management team will continue serving in similar roles, and Francisco Partners will retain IBM’s management team for data and analytics. While a price was not disclosed, previous reports say that IBM was aiming for a $1 billion sale, as it strives to exit the healthcare market entirely, something it has been trying to do for years. Back in 2020, it sold ActionOI, CareDiscovery, and Market Expert to group-purchasing organization Vizient.

It also unsuccessfully attempted to sell off the whole business last year as part of new CEO Arvind Krishna’s plans to streamline the company and focus on being more competitive in the cloud computing market. It considered, at the time, selling the business to a private-equity firm or industry player, or merging it with a blank-check company.

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