IBM Acquires Truven Health For $2.6 Billion

International Business Machines’s (NYSE:IBM) push in cloud computing continues with the acquisition of Truven Health, a health analytics company, for $2.6 billion. ^[1] The company plans to integrate  Truven Health’s capabilities with its Watson high performance computing and analytics platform, which is an artificial intelligence system capable of answering questions posed in natural language. This is the fourth major purchase for Watson Health since the unit was established in 2014. Earlier purchases include Phytel, Explorys and Merge Health. In this note, we explore the acquisition

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Truven Health Acquisition To Boost IBM’s Watson Health Solutions

Truven Health Analytics aims to improve healthcare quality and access while reducing cost.  It has solutions for health care service providers (Hospitals, Physicians etc), Payers (Employers etc), Government and Life Sciences verticals.

With this acquisition, IBM gets access to Truven’s cloud-based data repository, 2500 employees and 8500 clients. Some of its clients include U.S. federal and state government agencies, employers, health plans, hospitals, clinicians and life sciences companies. ^[2]

Upon completion of the acquisition, IBM’s health cloud will house one of the world’s largest and most diverse collections of health-related data, representing an aggregate of approximately 300 million patient lives acquired from three companies.

At present, we have a $154 Trefis price estimate for IBM, which is about 16% higher than the current market price.

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1. IBM Watson Health Announces Plans to Acquire Truven Health Analytics for $2.6B, Extending Its Leadership in Value-Based Care Solutions, 18^th February 2016 [↩]
2. From Truven Health website [↩]