BlackBerry Buys Minority Stake In Healthcare IT Firm

BlackBerry Ltd said on Tuesday it bought a minority stake in privately held healthcare IT firm NantHealth, a move that offers a glimpse into the type of niche markets the smartphone maker is targeting as it attempts to engineer a turnaround.

Waterloo, Ontario-based BlackBerry, a pioneer in the smartphone industry, has fallen on hard times as its market share has waned in recent years. As the company attempts to stem losses and remain relevant it is now focused on expanding its services segment that caters to the needs of large clients like banks, law firms and government agencies, among others.

BlackBerry’s Chief Executive John Chen, who took the reins at the company less than six months ago, sees healthcare as one of the sectors in which the company has an advantage, due to a heightened focus on patient privacy and BlackBerry’s vast array of networks that can manage and secure data on mobile devices.

“BlackBerry’s capabilities align closely with NantHealth’s,” said Chen in a statement on Tuesday. “This investment represents the type of forward-looking opportunities that are vital to our future.”

The financial terms of the deal itself were not disclosed, but NantHealth said it does not seek any further funding from BlackBerry beyond its current investment.

The two companies are now working together to develop a new smartphone tailored to the needs of the healthcare sector. The device is likely to get launched late in 2014 or early in 2015, said Jim Mackey, BlackBerry’s head of corporate development and strategic planning, in an interview.

“We do plan to make the device available for all, but it will be optimized for viewing 3D images and CT scans,” said Mackey, adding that the device will also be usable as a regular smartphone, allowing users to view movies, play games or access consumer applications.

He said the deal with NantHealth exemplifies BlackBerry’s focus on the regulated industries such as healthcare.

NANTHEALTH INVESTMENT

California-based NantHealth, whose cloud-based platform is already set up at about 250 hospitals and connects more than 16,000 medical devices, said it sees the tie-up with BlackBerry allowing it to expand its base of services.

“Security and privacy is tantamount to us and to patients,” said NantHealth’s founder Patrick Soon-Shiong. “BlackBerry’s expertise is incredibly valuable to NantHealth as we expand our platform and make it available for wider deployment through a secure mobile device.”

Soon-Shiong, a surgeon and businessman, who made billions of dollars selling his two former companies American Pharmaceutical Partners and Abraxis BioScience, said BlackBerry’s current focus on services and enterprise clients made it an ideal partner.

BlackBerry’s new CEO Chen has rapidly moved to cut costs, bolster the balance sheet and build a team focused on addressing the needs of its major clients that rely on its secure networks to manage mobile communication devices on their networks.

The Canadian company, which has lost most of the smartphone market to Apple’s iPhone and gadgets powered by Google Inc’s Android operating system, has laid off some 9,500 employees, or more than half its workforce since 2011, as it has rushed to cut costs in the face of mounting losses.

Chen, who was credited with having turned around enterprise software maker Sybase Inc in the late 1990s, has now decided to focus less on the consumer market and more on BlackBerry’s core audience of corporate and government clients and their employees – many of whom have for long eschewed touch screen smartphones in favor of BlackBerry’s physical keyboard devices.