IBM to buy Merge Healthcare for $1B

IBM, Armonk, N.Y., has just made a big move in the area of advanced image analytics, announcing that it has acquired the Chicago-based Merge Healthcare, a provider of software for managing and processing medical images, for $1 billion.

Merge's technology platforms are used at more than 7,500 U.S. healthcare sites, as well as at leading clinical research institutes and pharmaceutical firms around the world to manage a growing body of medical images. The vision is that these organizations could use the IBM Watson Health Cloud to surface new insights from a consolidated, patient-centric view of current and historical images, electronic health records (EHRs), data from wearable devices and other related medical data, in a HIPAA-enabled environment, according to an IBM news release on the announcement. Watson will gain the ability to “see” by bringing together Watson’s own advanced image analytics and cognitive capabilities with data and images obtained from Merge Healthcare, IBM officials say.

“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,” John Kelly, senior vice president, IBM Research and Solutions Portfolio, said 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 21^st century. Giving Watson ‘eyes’ on medical images unlocks entirely new possibilities for the industry.”

In April, when the new Watson Health unit was launched, IBM said, “IBM Watson Health is creating a more complete and personalized picture of health, powered by cognitive computing. Now individuals are empowered to understand more about their health, while doctors, researchers, and insurers can make better, faster, and more cost-effective decisions.” It was at that time when IBM said it was acquiring both the Dallas-based Phytel and the Cleveland-based Explorys, in a combination that senior IBM executives said held great potential for the leveraging of data capabilities to transform healthcare.

Now, with this acquisition, Merge's clients could compare new medical images with a patient's image history as well as populations of similar patients to detect changes and anomalies. Insights generated by Watson could then help healthcare providers in fields including radiology, cardiology, orthopedics and ophthalmology to pursue more personalized approaches to diagnosis, treatment and monitoring of patients, IBM officials say.

Under terms of the transaction, Merge shareholders would receive $7.13 per share in cash, for a total transaction value of $1 billion, according to IBM officials. The closing of the transaction is subject to regulatory review, Merge shareholder approval, and other customary closing conditions, and is anticipated to occur later this year.