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IBM Makes a Billion-Dollar Bet on Medical Imaging

The deal is the biggest yet for IBM's Watson Health business unit.


IBM said today that it has reached a deal to spend $1 billion to acquire Merge Health, a publicly held medical imaging company based in Chicago.

Big Blue says it wants to combine Merge’s capabilities in processing and handling medical and diagnostic images with its Watson cognitive computing platform. It hopes to harness Watson’s abilities to glean insights from large bodies of data — Merge’s systems are in use at 7,500 hospitals and clinics in the U.S. — to analyze images and help doctors and researchers make new discoveries.

IBM reckons that medical images make up about 90 percent of medical data gathered overall, and there’s really no meaningful way to analyze them except in the context of the individual patient being treated. There’s more to be learned for the benefit of branches of medical science including cardiology, orthopedics and ophthalmology if there’s a way to collect and examine thousands of images at a time looking for meaningful patterns, the thinking goes.

Merge posted about $212 million in revenue last year and a loss of around $5.3 million; it has 800 or so employees.

The deal amounts to IBM’s third significant acquisition — and by far the biggest — since launching its Watson Health business unit earlier this year. In April it did two small deals for Phytel and Explorys, two health care data companies. It has also been making outside investments in health care companies using Watson, including participation in a $22 million funding round for Welltok.

Watson, you’ll recall, is the computer that a few years back beat human champions of the TV game show “Jeopardy!” It’s designed to ingest huge troves of data and then answer humans’ questions in natural language.

Correction: The article has been revised to correct the spelling of Welltok.

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