Oracle Makes Biggest Acquisition With Cerner Purchase

Oracle has returned to its traditional acquisition behaviour and confirmed reports it is to acquire Missouri-based Cerner.

Under the terms of the deal, Texas-based Oracle has made all-cash offer for $95.00 per share, or approximately $28.3 billion in equity value.

Cerner is a supplier of health IT services, and is best known as an electronic medical records provider in the United States.

Healthcare move

The deal is the most expensive of any Oracle’s 125 plus acquisitions it has made since it was founded in 1977.

“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 Larry Ellison, Chairman and Chief Technology Officer at Oracle.

“With this acquisition, 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 Ellison.

“This new generation of medical information systems promises to lower the administrative workload burdening our medical professionals, improve patient privacy and outcomes, and lower overall healthcare costs,” said Ellison.

“Healthcare is the largest and most important vertical market in the world – $3.8 trillion last year in the United States alone,” added Oracle CEO Safra Catz. “Oracle’s revenue growth rate has already been increasing this year – Cerner will be a huge additional revenue growth engine for years to come as we expand its business into many more countries throughout the world. That’s exactly the growth strategy we adopted when we bought NetSuite – except the Cerner revenue opportunity is even larger.”

The deal means that Cerner’s newly installed CEO David Feinberg could soon be out of a job, just months after he joined the firm.

David Feinberg had only left the Google Health division in August this year, when Alphabet disbanded it, and he joined Cerner as CEO and President.

“Cerner has been a leader in helping digitise medical care and now it’s time to realise the real promise of that work with the care delivery tools that get information to the right caregivers at the right time,” said Feinberg.

“Joining Oracle as a dedicated Industry Business Unit provides an unprecedented opportunity to accelerate our work modernizing electronic health records (EHR), improving the caregiver experience, and enabling more connected, high-quality and efficient patient care,” said Feinberg. “We are also very excited that Oracle is committed to maintaining and growing our community presence, including in the Kansas City area.”

Cerner is the largest seller of electronic health record software in the United States after Epic Systems.

In 2019, Cerner had named Amazon Web Services as its preferred cloud provider and said the two companies were collaborating on AI services for health companies.

Contracts permitting, Cerner will likely be moving over to the Oracle cloud sometime soon.

Oracle acquisitions

It is fair to say that Texas-based Oracle has a reputation as being a highly acquisitive company.

Indeed, it is said to have acquired over 125 companies since it was founded in 1977.

Some of its most expensive purchases are listed below.

Oracle has previously acquired Peoplesoft for $10.3 billion in 2005; Siebel Systems for $5.8bn in 2006; Hyperion Corp for $3.3bn in 2007; BEA Systems for $8.5bn in 2008; Sun Microsystems for $7.4bn in 2009; Micros Systems for $5.3bn in 2014; and NetSuite for $9.3bn in 2016, to name but a few.

And it should be noted that Oracle recently posted a net loss of $1.25bn, compared to a profit of $2.44bn in the same year ago quarter.

Acquisitions tend to help improve the buyer’s financial performance.

Indeed, Oracle stated the Cerner acquisition will be immediately accretive to it’s earnings, and “will contribute substantially more to earnings in the second fiscal year and thereafter.”

“Cerner will be a huge additional revenue growth engine for Oracle for years to come as Oracle expands Cerner’s business into many more countries throughout the world,” said Oracle.

The software giant said it intends to maintain and grow Cerner’s community presence, including in the Kansas City area, while utilising Oracle’s global footprint to reach new geographies faster.

There were no details about possible job losses.