IBM to Acquire Truven Health Analytics for $2.6 Billion

IBM has agreed to purchase Truven Health Analytics for $2.6 billion (roughly Rs. 17,858 crores), its fourth acquisition in less than a year aimed at expanding in the business of combing through health-related data. The shares rose the most in three years.

Closely held Truven provides cloud-based data management and analytics to more than 8,500 health-care clients, including hospitals, insurers and government agencies, the companies said Thursday in a statement. The deal is expected to be completed later this year, they said. Veritas Capital, a New York-based private equity firm, currently owns Truven, according to IBM.

The acquisition of Ann Arbor, Michigan-based Truven will be IBM's biggest purchase in the three years under Chief Executive Officer Ginni Rometty. IBM has invested heavily in data and technology to improve its analytics offerings to the health-care industry, centered on its Watson Health business unit. Watson technology uses machine learning algorithms to provide prescriptive and predictive analyses. With more data, these algorithms work better and can provide more useful insights.

"Most of the data in health-care is in disparate databases," Deborah DiSanzo, General Manager at IBM Watson Health, said in an interview. "The strategy of IBM is to bring this data together and democratize it so that both IBM and our ecosystem of partners can build health solutions on top of it."

IBM rallied 5.7 percent to $133.31 at 10:16 a.m. in New York. The shares had declined 8.4 percent this year through Wednesday.

The success of Watson which Rometty has called her moonshot is integral to IBM's future as the company struggles to reverse sales declines for the past 15 consecutive quarters. The Armonk, New York-based company last year bought Merge Healthcare for $1 billion (roughly Rs. 6,868 crores) to gain medical-imaging data and technology. IBM also acquired health-care big data analytics provider Explorys and population health technology seller Phytel.

After integrating Truven's data from about 215 million individuals, IBM will have amassed various kinds of health-related information from 300 million patients, the company said. IBM intends to use the data from Truven, Merge Healthcare, Explorys and Phytel to focus on creating insights into value-based care, which the US has been shifting toward and allows patients to pay for health-care based on outcomes.

All areas in health-care are "converging around value-based health-care delivery," Truven CEO Mike Boswood said in an interview. "As part of Watson Health, we will be able to far more effectively contribute to how those changes are implemented."

© 2016 Bloomberg L.P.