Cerner, headquartered in Kansas City, Mo., announced the deal in August and said adding Siemens Health Services, a Malvern, Pa.-based subsidiary of German technology and electronics conglomerate Siemens, would help move it beyond electronic health records and expand its other growing health IT niches like revenue-cycle management, population health, diagnostics and imaging.
Cerner gets FTC's OK to buy Siemens Health
Gene Mannheimer, an analyst at Topeka Capital Markets who follows Cerner, said the acquisition improves Cerner's long-term value. Additionally, it is possible Cerner can retain about 60% of Siemens' hospital client base, which would help in its ongoing market-share battle with Verona, Wis.-based competitor Epic Systems Corp.
“In general, the (EHR) market in the U.S. is fairly tapped out, and Cerner is quite frankly tired of losing to Epic,” Mannheimer said in an email. “(Cerner) is trying to get its swagger back by buying Siemens and solidifying its position as the largest pure-play health IT company.”
The transaction is expected to close in the first quarter of 2015. When it does, Cerner will have about $4.5 billion in annual revenue, more than 20,000 employees in 30-plus countries and about 18,000 customers.
Cerner now must focus on a smooth integration, analysts say.
“The key for this transaction is execution—Cerner's focus on both re-invigorating growth as well as right-sizing the Siemens cost base,” said Michael Cherny, a managing director at investment research firm ISI Group.
Cerner's stock opened higher on the approval news but then retreated in midday trading. Cerner's shares have had their peaks and valleys this year, now standing up almost 7% year-to-date. They peaked in February, after the company reported a healthy 2013 and predicted 2014 revenue would be as high as $3.4 billion.
Follow Bob Herman on Twitter: @MHbherman
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