Oracle acquires Cerner for $28.3B

Oracle acquires Cerner for $28.3B

20 December 2021

Published in Healthcare IT News

Press Release PR Newswire

The database giant says it plans to expand the company’s global footprint as it invests big in healthcare – the “largest and most important vertical market in the world.”

By Mike Miliard December 20, 2021

As first reported this past week, Oracle Corporation and Cerner Corp. have agreed to a deal where the company will acquire the Kansas City-based digital health giant in an all-cash deal for $95 per share.

The acquisition of Cerner, founded in 1979, is the biggest-ever for Oracle.

WHY IT MATTERS
With the $28.3 billion transaction, “Oracle’s corporate mission expands to assume the responsibility to provide our overworked medical professionals with a new generation of easier-to-use digital tools that enable access to information via a hands-free voice interface to secure cloud applications,” said Larry Ellison, the company’s cofounder, chairman and CTO, in a statement.

The acquisition will be accretive to Oracle’s earnings on a non-GAAP basis in the first full fiscal year after closing, and the database giant sees Cerner as “a huge additional revenue growth engine for years to come as we expand its business into many more countries throughout the world,” said Oracle CEO Safra Catz.

Cerner’s shares were up about 1% on Monday morning on the news, while Oracle’s were down more than 3%.

With the deal, expected to close in 2022, Cerner will become a dedicated business unit within Oracle, which says it plans to maintain the company’s longtime presence in the Kansas City area “while utilizing Oracle’s global footprint to reach new geographies faster.”

Specifically, the two companies say they see big opportunities to expand cloud, AI and machine learning applications for Cerner’s healthcare clients. Oracle says its goal is to deliver “zero unplanned downtime in the medical environment.”

“Oracle’s Autonomous Database, low-code development tools, and Voice Digital Assistant user interface [enable] us to rapidly modernize Cerner’s systems and move them to our Gen2 Cloud,” said Mike Sicilia, executive VP of vertical industries at Oracle.

“This can be done very quickly, because Cerner’s largest business and most important clinical system already runs on the Oracle Database. No change required there. What will change is the user interface. We will make Cerner’s systems much easier to learn and use by making Oracle’s hands-free Voice Digital Assistant the primary interface to Cerner’s clinical systems.”

THE LARGER TREND
The companies point to a recent Mayo Clinic study showing that physicians spend one to two hours on electronic health records and documentation for every hour spent face-to-face with patients.

They say the addition of Oracle’s cloud-based resources, specifically its focus on usability and voice tools, will “dramatically reduce the amount of time that medical providers spend dealing with systems and increase the time they spend directly caring for patients.”

Industry observers see the logic in the deal, but are taking a wait-and-see view of how it will play out.

“Oracle has been slow to tap into the cloud opportunity landscape relative to other big tech firms, and the Cerner acquisition may provide the boost it needs to become a strong contender in an emerging space with significant headroom for growth,” said Paddy Padmanabhan, founder and CEO of Damo Consulting.

“Oracle’s ERP products have a considerable footprint in the healthcare space, especially health systems, so adding a dominant EHR platform to the portfolio may make sense on the face of it,” he said. “However, ERP and EHR are entirely different in their applications, and Oracle definitely does not have a background on the clinical workflow space that is critical for an EHR platform player.”

“While the deal’s benefits are somewhat obvious for Oracle, it’s not clear what it means for Cerner,” he added. “Cerner has reportedly struggled to grow in the core EHR space and has had executive turnover that has slowed the business. More recently, the company has also started dabbling in the data monetization space using its repository of patient medical information.

“In a sense, Cerner was already looking at life beyond EHR, and this acquisition may be the next big step in that journey. The question may be whether Cerner will lose its identity altogether once it is merged with Oracle or whether it will remain a strong independent brand.”

ON THE RECORD
“Cerner has been a leader in helping digitize medical care and now it’s time to realize the real promise of that work with the care delivery tools that get information to the right caregivers at the right time,” said Cerner CEO Dr. David Feinberg in a statement.

He noted that the combined companies have “an unprecedented opportunity to accelerate our work modernizing electronic health records, improving the caregiver experience, and enabling more connected, high-quality and efficient patient care.”

“Working together, Cerner and Oracle have the capacity to transform healthcare delivery by providing medical professionals with better information – enabling them to make better treatment decisions resulting in better patient outcomes,” said Ellison

 

Leave a Reply

Your email address will not be published. Required fields are marked *