Merge Healthcare is IBM’s Latest Billion-Dollar Acquisition



IBM announces the takeover of Merge Healthcare

On August 6, 2015, IBM (IBM) announced the acquisition of Merge Healthcare for $1 billion. Merge Healthcare provides the software for managing and processing medical images.

Merge Healthcare is the latest company to join IBM’s acquisition portfolio. Merge’s acquisition is expected to be finalized by the end of 2015. As a part of the buyout deal, IBM will pay $7.13 per share to Merge’s shareholders. The offered price of $7.13 is a 32% premium to Merge’s closing price on August 6, 2015. Merge is IBM’s third acquisition in 2015 in cloud-based data healthcare. IBM aims to integrate Merge Healthcare with its Watson Health Unit, which it launched in April 2015.

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Watson Health Cloud

The Watson Health Cloud is an open source platform that enables care providers and researchers to share and analyze health data. This information-sharing platform should facilitate insights into trends so that individual and overall patient outcomes can be improved. Until now, Watson has been focused on understanding natural language processing. However, now it aims to extend its expertise to understand video and images, which is where Merge Healthcare will fit in.

With medical imaging added to Watson’s expertise, it would be able to see more patterns and aid in the interpretation of results. Merge’s medical imaging technology is used in medical fields that include cardiology, radiology, eye care, and orthopedics.

Compared with its peers—Microsoft (MSFT), Google (GOOG), and Oracle (ORCL)—IBM holds the largest number of patents in the artificial intelligence (or AI) space. The technology giant holds more than 500 patents in AI.

To learn more about IBM’s interest in AI, please read Why IBM Is Aggressively Pursuing Deep Learning and AI.

Merge Healthcare earnings results

On July 21, 2015, Merge Healthcare posted its fiscal 2Q15 results with revenues and non-GAAP EPS of $65.6 million and $0.09 per share, respectively. It beat analyst expectations on the revenue and EPS front by $1.71 million and $0.03 per share, respectively.

To gain diversified exposure to IBM, you can invest in the Technology SPDR ETF (XLK). XLK invests 3.51% of its holdings in IBM.


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