Oracle to Acquire Healthcare Tech Giant Cerner for $28.3 Billion
Confirming recent reports, Oracle Corp. announced today that it has reached an agreement to acquire healthcare technology provider Cerner Corp. for about $28.3 billion.
Oracle’s $28.3 billion offer is about $95 per share. Cerner shares rose nearly 1% in trading today, while Oracle shares fell more than 4%.
Kansas City-based Cerner provides electronic health record, or EHR, software that healthcare organizations like hospitals use to manage patient medical data. The company is a leading player in the EHR market, with revenue of $5.5 billion last year. Cerner also offers a range of specialist applications in addition to its EHR software that are used by hospitals to manage care delivery, perform business administration tasks and analyze operational data to find ways to increase efficiency. .
Oracle has big plans for the acquisition. The database maker said it would integrate its Voice Digital Assistant product with Cerner’s software to help healthcare professionals access patient data faster.
Elaborating, Oracle’s Executive Chairman and Chief Technology Officer, Larry Ellison, said the company aims to “provide our overworked healthcare professionals with a new generation of easier-to-use digital tools that enable access information via a hands-free voice interface to secure cloud-based applications. »
Oracle believes there is an opportunity to help healthcare organizations operate more efficiently and thereby improve patient care. “This next generation of medical information systems promises to reduce the administrative workload on our healthcare professionals, improve patient privacy and outcomes, and reduce overall healthcare costs,” said Ellison said.
As part of Cerner’s software enhancement plan, Oracle will move software maker EHR’s systems to its public cloud platform. “This can be done very quickly because Cerner’s largest enterprise and most important clinical system is already running on Oracle Database,” said Mike Sicilia, executive vice president of Oracle’s Vertical Industries business.
The plan, the companies said today, is for Cerner to use Oracle’s cloud infrastructure and resources to accelerate the pace of product development initiatives. Oracle highlighted its artificial intelligence capabilities as another asset that can help Cerner customers operate more efficiently.
Commercially, Oracle plans to make Cerner a “huge additional revenue growth engine” for years to come. In its most recent quarterly earnings report, Cerner reported a 7% year-over-year increase in revenue, which helped boost sales to $1.36 billion. Oracle intends to accelerate software provider EHR’s growth rate by bringing its products to more countries.
“This is exactly the growth strategy we adopted when we purchased NetSuite – except Cerner’s revenue opportunity is even greater,” said Safra Catz, CEO of Oracle. NetSuite Inc. is a business application maker that Oracle acquired in 2016 for $9.3 billion. The deal was the second largest acquisition in the company’s history up to that point.
“Oracle’s acquisition of Cerner can be a game to get a firm foothold in the emerging healthcare cloud opportunity,” commented Paddy Padmanabhan, Founder and CEO of growth strategy firm Damo Consulting. and digital transformation who works with healthcare organizations as well as technologies. companies. “Cerner is a leading provider of EHRs and healthcare is in the early stages of moving to the cloud.”
Oracle expects to complete the acquisition next year. The company’s proposed acquisition of Cerner is the second major healthcare purchase by a leading technology company this year. Previously, Microsoft Corp. had signed a $19.7 billion deal to acquire Nuance Communications Inc., whose medical note dictation software is used by a large percentage doctors in the United States
The acquisitions continue a broader trend of major enterprise technology vendors focusing more on vertical industries.
Last year, Salesforce.com Inc. introduced a range of specific vertical solutions called Industry Clouds. Industry Clouds combine the functionality of the company’s existing products with niche capabilities aimed at specific industries. More recently, this September Snowflake Inc. introduced a specific vertical solution designed for companies in the financial sector.
Vertical industries have also become a priority among major public cloud operators. Amazon Web Services Inc. this year introduced Amazon FinSpace, a data processing service for the financial industry. Google LLC cloud business in July made its debut Healthcare Data Engine, a solution that facilitates the processing of medical data by healthcare organisations.
Oracle expects the Cerner acquisition to be immediately accretive to its adjusted earnings in the first full year after closing. The $28.3 billion offered by Oracle represents a significant premium to the roughly $23 billion that Cerner the penalty last week, before the first reports on the acquisition were published. The high bonus underscores the key role Cerner foresees in Oracle’s growth plans.
“Cerner has been a leader in the digitization of medical care and now is the time to realize the true promise of this work with care delivery tools that get information to the right caregivers at the right time,” said the president. and Cerner CEO David Feinberg. “Joining Oracle as a dedicated industry business unit provides an unprecedented opportunity to accelerate our work modernizing electronic health records, improving the caregiver experience, and delivering more connected patient care, high quality and efficient.”