Investment firm Francisco Partners has completed the acquisition of IBM’s Watson Health business announced in January and rebranded it as a new standalone company called Merative.
IBM had built the business in part through acquisitions such as Truven Health Analytics, Phytel, Explorys, and medical imaging company Merge Healthcare, but had trouble building a healthcare AI business to match its early ambitions, analysts said.
Headquartered in Ann Arbor, Michigan, Merative will be led by CEO Gerry McCarthy, who has been in healthcare information technology for 30 years, most recently serving as CEO of eSolutions, a Francisco Partners portfolio company, which exited to Waystar in October 2020. Prior to eSolutions, McCarthy was president of TransUnion Healthcare and an executive at McKesson.
Merative’s products will be organized into six product families, including Health Insights; MarketScan; Clinical Development; Social Program Management and Phytel; Micromedex, and Merge Imaging solutions. The company said Francisco Partners’ investment will provide Merative with significant resources and opportunities for new investment, acquisitions, partnerships, and growth.
“Merative has market leading products, top clients and talented leadership,” said McCarthy in a statement. “With the commitment, support and deep experience of Francisco Partners, we will invest heavily in expanding the reach of these products as we continue to work with clients to improve healthcare delivery, decision making and performance.”
Investment firms True Wind Capital and Sixth Street also are investing in Merative.
Paul Roma, general manager of the Watson Health business, will be transitioning to senior advisor to Francisco Partners.
San Francisco-based Francisco Partners has made previous investments in healthcare technology. Some current and past investments in the sector include Availity, eSolutions, Capsule, GoodRx, Landmark, QGenda, Trellis, and Zocdoc.