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(CNN) IBM said Friday that it will sell off the healthcare data and analytics assets housed under its Watson Health unit to private equity firm Francisco Partners.

The deal signals that IT giant IBM is stepping back from its ambitions in the healthcare space as it focuses on building hybrid cloud computing capabilities, an effort that has accelerated since Arvind Krishnatook over the CEO position in 2020.

IBM stood up Watson Health as a separate business unit in 2015 with the goal of using data to help doctors, researchers and insurers solve some of healthcares biggest problems. The company invested in a series of deals to acquire healthcare data, and took on challenges ranging from improvingdiabetes careto overhauling cancer treatment.

But the bold bet didnt pan out. The Wall Street Journalreported nearly a year agothat Watson Health generated around $1 billion in annual revenue and no profit, and that IBM was considering selling the business.

The healthcare tech space has also become increasingly competitive. Google in 2019confirmed a partnershipwith Ascension, one of the nations largest nonprofit health systems, to collect and analyze patient health data. Last April, Microsoftspent $16 billionto buy healthcare AI developer Nuance to pair with its Microsoft Cloud for Healthcare business. And last month, Oracle said it would acquire healthcare software firm Cerner for $28.3 billion.

The Watson Health sale has been anticipated for quite some time, Paddy Padmanabhan, CEO of healthcare and tech advisory firm Damo Consulting, said in an email. IBM was clearly not gaining much traction in the healthcare market while others such as Google and Microsoft have pulled ahead.

Watson Health was borne out of IBMs largerWatsoneffort, which aims to use artificial intelligence to solve a range of problems for businesses and consumers fromcreating a computer that can debate humanstogetting sports fans engaged in big events. IBM remains committed to its other Watson projects, Tom Rosamilia, senior vice president of IBM Software, said in a statement.

Under Krishna, IBM has been working to transform itself from a legacy IT services provider to a modern cloud business, a strategy boosted by its 2018 acquisition of open source software provider Red Hat, which Krishna helped broker. The company is making a big play in hybrid cloud a setup wherein companies may use multiple clouds in addition to on-premises servers. In late 2020, IBM announced it hadset aside $1 billionto invest in getting other companies onto its hybrid cloud platform. A month later, IBMannounced the spin-offof a quarter of the company to focus on the cloud.

The terms of IBMs agreement with Francisco Partners were not disclosed. Watson Healths current management team is expected to remain in place at the new entity, according to the two companies.

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