IBM Corp. is selling a number of software products and other assets from its Watson Health business to private equity firm Francisco Partners.

The deal’s announcement today comes about a year after reports first emerged that IBM was considering selling Watson Health. Last February, the Wall Street Journal reported that executives had at one point also weighed taking the unit public through a merger with a blank-check company.

The Journal reported in February that Watson Health had annual revenues of about $1 billion. Additionally, the unit is said to have been unprofitable at the time. A more recent report published by Axios earlier this month cited sources as saying that IBM was seeking to receive at least $1 billion for the unit.

IBM and Francisco Partners didn’t disclose the acquisition’s financial terms in their announcement today. However, they did detail what assets will change hands.

Francisco Partners is buying the Watson Health unit’s Health Insights platform, which helps healthcare organizations analyze the data they generate as part of their operations. The private equity firm is also acquiring a number of software products for processing medical images as well as the Clinical Development, Social Program Management and Micromedex product lines. 

Not all the offerings that Francisco Partners is buying are software solutions. The acquisition also encompasses MarketScan, a collection of healthcare datasets that IBM provides for use in research initiatives.

The sale will enable IBM to focus more of its efforts on its strategy to boost revenue growth by gaining additional market share in the hybrid cloud and artificial intelligence segments. In a similar move, IBM last November spun off its managed infrastructure services business. The business is now an independent company, Kyndryl Holdings Inc., that’s listed on the Nasdaq stock exchange.

The healthcare and technology services markets both continue to be a focus for IBM. The company’s Red Hat subsidiary, for example, has a substantial presence in the healthcare sector with its software products. In the technology services segment, IBM has made a number of acquisitions over recent quarters to expand its cloud consulting offerings. 

“Today’s agreement with Francisco Partners is a clear next step as IBM becomes even more focused on our platform-based hybrid cloud and AI strategy,” said Tom Rosamilia, senior vice president of IBM Software. “IBM remains committed to Watson, our broader AI business, and to the clients and partners we support in healthcare IT. Through this transaction, Francisco Partners acquires data and analytics assets that will benefit from the enhanced investment and expertise of a healthcare industry focused portfolio.”

The deal doesn’t represent the first time that Francisco Partners is buying assets from a major enterprise technology supplier. In 2016, the company bought Dell Technologies Inc.’s Quest Software and SonicWall subsidiaries together with Elliott Management. Quest Software was recently sold to another investment firm, Clearlake Capital Group, for a reported $5.4 billion.

“Partnering with corporations to execute divisional carve-outs has been a core focus of Francisco Partners,” said Francisco Partners Principal Justin Chen. “We look forward to supporting the talented employees and management team, helping the standalone company focus on growth opportunities to realize its full potential, and delivering enhanced value to customers and partners.”

IBM and Francisco Partners expect to complete the acquisition in the second quarter. From there, the private equity firm will turn the acquired Watson Health assets into a standalone company that’s set to be led by the current management team.

Image: Patrick/Flickr