IBM Watson HealthEmpowering Heroes. Transforming

Health.

Deborah DiSanzo

General Manager, IBM Watson Health

35th Annual J.P. Morgan Healthcare ConferenceJanuary 11, 2017

Forward Looking Statements

Certain statements contained in this presentation may constitute forward-looking statements within the meaning of the Private

Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company’s current assumptions regarding

future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could

cause actual results to differ materially, including the following: a downturn in the economic environment and client spending

budgets; the company’s failure to meet growth and productivity objectives; a failure of the company’s innovation initiatives; risks

from investing in growth opportunities; failure of the company’s intellectual property portfolio to prevent competitive offerings and

the failure of the company to obtain necessary licenses; cybersecurity and data privacy considerations; fluctuations in financial

results; impact of local legal, economic, political and health conditions; adverse effects from environmental matters, tax matters

and the company’s pension plans; ineffective internal controls; the company’s use of accounting estimates; the company’s ability

to attract and retain key personnel and its reliance on critical skills; impacts of relationships with critical suppliers; product quality

issues; impacts of business with government clients; currency fluctuations and customer financing risks; impact of changes in

market liquidity conditions and customer credit risk on receivables; reliance on third party distribution channels and ecosystems;

the company’s ability to successfully manage acquisitions, alliances and dispositions; risks from legal proceedings; risk factors

related to IBM securities; and other risks, uncertainties and factors discussed in the company’s Form 10-Qs, Form 10-K and in

the company’s other filings with the U.S. Securities and Exchange Commission (SEC) or in materials incorporated therein by

reference. The company assumes no obligation to update or revise any forward-looking statements. These charts and the

associated remarks and comments are integrally related, and are intended to be presented and understood together.

2

IBM Leadership in AI and Health:

More than a Decade in Development

3

IBM

enables an

“evidence-based

healthcare

eco-system”

Cognitive test

case results

in creation of

Watson

7,000employees

Over 10,000clients & partners

2005 2010 2012 2014 2015

2008 2011 2013 20162014

Global Trends Drive Momentum for IBM Watson HealthUnprecedented Shifts in R&D, Access, Delivery & Engagement

4

Dynamic Delivery

Environment

50%Expected alternative payments from

the Centers of Medicare and

Medicaid by 20184

75%+Percentage of patients expected to

use digital health services in the

future5

90KExpected shortage of

physicians by 20206

Value Versus Volume

$47 trillionEstimated global economic impact of

chronic disease by 20307

100’sApprox. amount of decisions a

person living with Type 1 Diabetes

makes a day9

$3 trillion Estimated U.S. healthcare spending8

Data Explosion

150+ exabytesAmount of healthcare data today1

Over 230Kactive clinical trials2

80% Healthcare data that comes from

unstructured data sources3

Efficient and Effective

R&D

< 10%Amount of drugs currently in

development that make it to market12

$2.6BAverage costs to develop a new

pharma drug11

1 in 10Clinical Trials in cancer that are shut

down due to lack of participation10

Sources: 1: NCBI. Big data analytics in healthcare: promise and potential 2: ClincalTrials.gov 3: NIH 4:CMS 5: McKinsey Healthcare’s Digital Future July 2014 6: AAMC Report The Complexities of Physician Supply and Demand:

Projections from 2014 to 2025 7: WEF Global Economic Burden Non-Communicable Diseases 8: Health Affairs, Team analysis 9: OpenAps.org 10: Bio- Clinical Development Success Rates 2006-2015 11:Bipartisan Policy Center 12:

Journal of Health Economics Volume 47, May 2016

Significant Opportunity

5Source: Health Affairs, Team analysisNote: Numbers estimated for 2020

360 billion total IT and healthcare

market opportunity

Imaging:Unnecessary tests

Oncology:Variability of Care

Life Sciences:Failed Clinical Trials

2 trillionwaste in Industry

Government: Fraud, Waste and Abuse

8 trillionindustry size

better experience

better outcomes

lower cost

Value Based Care:Cost of Chronic Disease

IBM Watson Health Breadth, Depth and Scale

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7,000employees globally

Nearly 9,000patients reached by Oncology offerings

Over 10,000 clients and partners

Working globally within a Quality Management System

Nearly 100cognitive health patents filed in 2016

Watson Health at work

IBM Watson Health is Clearly Differentiated in the Industry

7

Cloud Content Cognitive Collaboration

Built Healthcare Cloud and an Extensive Data Repository

8

1.2Mmedical

abstracts

3B+ reference

points

4M+drug

patents

40M+research

documents200M+

lives

100M+patient records

30B+images

Analytics/

Insights

Platform

Image

Analytics

Cognitive

Knowledge

Platform

HIPAA Enabled/

GxP-CompatiblePurpose Built for

Health Data

Business Continuity/

Resiliency

End-to-End

SecurityContinuous

Updates

Creating Innovative Cognitive Solutions with Watson APIs

9

Highly Adaptable

Cognitive API Services

Natural Language

Processing Technology

Highly Domain-specific

Annotation and CurationDeep Learning

Technology

Sequence Learning

Capabilities

Next Generation Program Integrity

Health & Human Services

Social Program Management

GOVERNMENT

Watson Imaging for cardiac disease

Cognitive Breast Advisor

Voice to Report (V2R) for Cardiologists and

Radiologists

IMAGING

Watson for Patient Safety

Clinical trials

Watson for Drug Discovery

LIFE SCIENCES

Watson for Genomics

Watson for Oncology

Clinical Trial Matching for Oncology

ONCOLOGY &

GENOMICS

Next GenerationPopulation

Health Suite

Next Generation Payer Analytics

Next Generation Provider Portable

Analytics

VALUE BASED CARE

Offerings in developmentOfferings currently available Offerings available; additional cognitive integration in process

Watson Genomics from Quest Diagnostics

Collaboration: It Takes an Ecosystem to Transform Healthcare

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Partners Clients

z

Alliances

Watson for Patient Safety

Watson for Drug Discovery

Watson Health Medical Imaging Collaborative

Sugar.IQ with Watson Population Health Management

Partial list of partners, alliances and clients

Empowering Researchers to Combat ALS

11Source: (2016) Sessions 1 - 11, Amyotrophic Lateral Sclerosis and Frontotemporal Degeneration, 17:sup1, 1-80, DOI: 10.1080/21678421.2016.1231971

“Watson accomplished exactly what we hoped it

did. It could identify and predict things that we

ourselves had no idea were linked to this disease.”

Dr. Robert Bowser, Barrow Neurological Institute, as told to

Arizona Science and Innovation Magazine

Empowering the Oncology Community for Cancer Care

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Genomics

OncologyClinical

Trial

Matching

Watson Health’s oncology clients span more than 35 hospital systems

Empowering Healthier Communities

13

In the London Borough

of Harrow, Social Care

accounts for some

35% of Council

spending and the cost

of an ageing population

could soon exceed all

other council spending.

IBM Watson Health is in the World Today Making a Difference

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Cloud Content Cognitive Collaboration

Images: Dr. Robert Bowser, Barrow Neurological Institute; Dr. Ned Sharpless; UNC Lineberger Comprehensive Cancer Center; Dr. Ricardo Cury, Baptist Hospital of Miami

IBM Watson HealthEmpowering Heroes. Transforming Health.

Deborah DiSanzo

General Manager, IBM Watson Health

35th Annual J.P. Morgan Healthcare ConferenceJanuary 11, 2017