IBM Corp. has launched a new effort to sell its Watson Health division, Axios reported on Wednesday, and the company is said to be hoping the unit will fetch more than $1 billion. 

Word that IBM plans to sell Watson Health first emerged last February. At the time, the Wall Street Journal reported that the unit had annual revenue of about $1 billion but was operating at a loss. Watson Health sells healthcare technology solutions, including analytics tools, artificial intelligence models and clinical datasets, that can be used in medical research initiatives, among other offerings. 

Last February, when IBM’s plans to offload Watson Health first became public, the company was reportedly evaluating several options. IBM is said to have considered not only selling the unit but also taking it public through a merger with a blank-check company. That initial effort to sell Watson Health was reportedly paused at one point, but has now been restarted. 

IBM is reportedly hoping to sell Watson Health for more than $1 billion. This suggests that the transaction might fetch less than the more than $4 billion IBM is said to have spent to create the division. Watson Health’s product portfolio consists in part of solutions that IBM obtained through acquisitions, most notably the $2.6 billion purchase of Truven Analytics Inc. in 2016.

IBM would retain a significant presence in the healthcare sector following a potential future sale of Watson Health. The company’s products, including the software offerings of its Red Hat subsidiary, are widely used among healthcare organizations.

IBM has reportedly hired BofA Securities Inc. to help it find a buyer for Watson Health. Currently, one “strategic buyer” and multiple private equity firms are said to be involved in the sale process. According to Axios, bids for Watson Health were set to be submitted on Tuesday and IBM hopes to select the winner this month.

Previously, IBM spun off its managed infrastructure services unit into an independent company. The spinoff was carried out as part of a long-term effort on IBM’s part to boost revenue by doubling down on areas such as cloud computing and artificial intelligence. Selling Watson Health could enable the company to direct yet more resources to its growth efforts. 

IBM has set a medium-term goal of achieving a mid-single-digit revenue growth rate. To support its growth plans, the company has made multiple acquisitions over the past year. In November, IBM bought startup ReaQta BV, which provides a cybersecurity platform that helps companies block hacking attempts targeting their hybrid cloud  environments and other technology assets. Earlier, IBM acquired cloud application optimization specialist Turbonomic Inc. in a deal reportedly worth as much as $2 billion.

IBM’s longer-term growth strategy also includes investments in the development of emerging technologies. Quantum computing is one of the areas that the company is prioritizing. IBM in November debuted its newest 127-qubit quantum chip and, by 2023, hopes to build systems featuring more than 1,000 qubits.

IBM’s quantum technology is drawing interest from, among other customers, organizations in the healthcare sector. The company last March announced plans to establish a research center called the Discovery Accelerator in collaboration with the Cleveland Clinic. As part of the partnership, IBM plans to supply Cleveland Clinic with a quantum computer featuring more than 1,000 qubits.

Photo: IBM