IBM still seeking a buyer for Watson Health

ARMONK, NY – IBM may be close to finding a buyer for IBM Watson Health, with hopes of fetching more than $1 billion, according to the Axios online news service. IBM now wants out of healthcare, after spending billions to stake its claim, just as rival Oracle is moving big into the sector via its $28 billion bet for Cerner.

IBM first explored a sale of the division in early 2021, with Morgan Stanley leading the process. The Wall Street Journal reported at the time that the unit was generating roughly $1 billion in annual revenue but was unprofitable. Sources say it continues to lose money.

In late 2021, IBM engaged BofA Securities to find a buyer for Watson Health. Bids were due earlier this month, according to one source who says IBM hopes to select the winner by month’s end.

One strategic buyer and several private equity firms are said to be in the mix.

IBM has spent more than $4 billion to build Watson Health via a series of acquisitions. The business now includes healthcare data and analytics business Truven Health Analytics, population health company Phytel, and medical imaging business Merge Healthcare.

IBM and BofA declined to comment, but in a discussion with Ina Fried last year for “Axios on HBO,” IBM CEO Arvind Krishna (pictured) acknowledged the perception that sometimes the company has promised more than it has delivered.

“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,” Krishna said. “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.”