IBM (NYSE: IBM) says it will buy medical imaging technology firm Merge Healthcare for $1 billion. Big Blue plans to incorporate the technology into its rapidly expanding its supercomputing driven, cloud based Watson Health initiative.
The Merge technology platform gives Watson”the ability to ‘see’ by bringing together Watson’s advanced image analytics and cognitive capabilities with data and images obtained from Merge,” IBM declared in the acquisition announcement.
Merge is already used at some 7,500 U.S. healthcare sites and many leading clinical research institutes and pharmaceutical firms, according to IBM.
So what’s the end game?
“The vision is that these organizations could use the Watson Health Cloud to surface new insights from a consolidated, patient-centric view of current and historical images, electronic health records, data from wearable devices and other related medical data, in a HIPAA-enabled [electronic medical records] environment,” IBM said.
The deal is not cheap. The $1 billion price includes debt and values Merge (Nasdaq: MRGE) at $7.13 – a 32 percent premium over its stock close of Wednesday, notes financial news website Seeking Alpha.
The acquisition is the third announced by IBM since launching Watson Health earlier this year. Previous buys were of Phytel and Explorys. Phytel deals with population health data; Explorys offers healthcare intelligence.
IBM Chair and CEO Ginni Rometty is banking heavily on Watson supercomputer technology through health and other initiatives to turn around IBM’s financials. Big Blue is on a 13-consecutive-quarter revenue losing streak.
Watson health also has struck several partnerships, including deals with Apple, Johnson and Johnson, Medtronic and CVS.
“As a proven leader in delivering healthcare solutions for over 20 years, Merge is a tremendous addition to the Watson Health platform. Healthcare will be one of IBM’s biggest growth areas over the next 10 years, which is why we are making a major investment to drive industry transformation and to facilitate a higher quality of care,” said John Kelly, senior vice president, IBM Research and Solutions Portfolio, in a statement.
“Watson’s powerful cognitive and analytic capabilities, coupled with those from Merge and our other major strategic acquisitions, position IBM to partner with healthcare providers, research institutions, biomedical companies, insurers and other organizations committed to changing the very nature of health and healthcare in the 21st century. Giving Watson ‘eyes’ on medical images unlocks entirely new possibilities for the industry.”
IBM employs several thousand people at its campus in RTP.
