Skip to main content
Sister Publication Links
  • ESG: THE IMPLEMENTATION IMPERATIVE
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Digital Health
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Transformation
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Unwell in America
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Supply Chain
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Information Technology
December 20, 2021 10:15 AM

Oracle to buy Cerner for $28.3 billion

Jessica Kim Cohen
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Cerner_fullsize_AP_i.jpg
    Kris Tripplaar/Sipa USA

    Oracle on Monday said it plans to acquire electronic health records giant Cerner in a deal valued at $28.3 billion.

    The Austin, Texas-based tech giant will acquire Kansas City, Missouri-based Cerner through an all-cash tender offer of $95 per share in a transaction expected to close in 2022. The transaction is subject to certain regulatory approvals and closing conditions, including Cerner stockholders agreeing to sell a majority of Cerner's outstanding shares as part of Oracle's offer.

    Cerner's shares closed at $90.49 Monday after opening at $90. The company's shares opened at $90.92 on Friday after closing at $79.49 on Thursday, following reports that evening that Oracle was in talks to purchase Cerner. Oracle's shares have dropped on the news, closing at $91.64 Monday.

    Oracle's shares had opened at $97.69 on Friday after closing at $103.22 on Thursday.

    It marks Oracle's largest acquisition to date, beating a roughly $10 billion price tag that Oracle paid for enterprise software company PeopleSoft in 2005.

    Once the transaction closes, Cerner will become a business unit within Oracle.

    Cerner will be Oracle's "anchor asset" as it expands into healthcare, according to a news release issued by Oracle and Cerner.

    Oracle's healthcare product portfolio already includes tools it sells to insurers, providers and public health systems.

    "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 Larry Ellison, Oracle's chairman and chief technology officer, in the news release.

    "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 Dr. David Feinberg, Cerner's president and chief executive officer, in the news release. He said the acquisition will help to "accelerate" Cerner's work to modernize EHRs.

    Feinberg, who joined Cerner earlier this year after leading Google Health and Geisinger Health, has said he wants Cerner to focus on developing tools that make EHRs—frequently cited as a driver of physician burnout—easier to use and outfitting them with analytics tools that support patient care.

    Cerner sells EHR systems and other enterprise software to healthcare organizations including the Veterans Affairs Department. The company's top competitor in the EHR space is Epic Systems, with Epic accounting for 31% of the U.S. hospital market last year, followed by Cerner at 25%, according to KLAS Research.

    Cerner, like other EHR vendors, in recent years has also sought to diversify its business beyond EHRs, with tools and services that leverage patient data.

    Cerner executives since 2019 have been talking about transitioning the company from an EHR-focused organization to a "platform organization" that ties in third-party products and technology like artificial intelligence.

    "EHR itself has become a very penetrated market," said Stephanie Davis, a senior research analyst who covers healthcare technology at investment bank SVB Leerink. "Any further expansion away from just being an EHR play and into being a broader healthcare platform is going to require some [research and development] muscle."

    Oracle officials said they plan to apply the company's resources, infrastructure and cloud capabilities to speed product development at Cerner and create tools that use AI to improve patient outcomes. The companies will also add Oracle's voice assistant technology into Cerner's clinical systems, which can help to reduce administrative burden, they said.

    Oracle officials also said the company plans to expand Cerner into new international markets.

    "The geographic expansion … is the biggest advantage for [Cerner]," said Brad Haller, a partner in the mergers and acquisitions practice at consulting firm West Monroe. "Oracle already has the infrastructure set up in these other geographies for local hosting of data."

    Oracle, once the deal closes, will move Cerner's systems to its cloud data centers.

    Oracle did not respond to a request for comment on what the acquisition will mean for Cerner's partnership with Amazon Web Services—Cerner in 2019 had named AWS its preferred cloud provider. The company did not immediately respond to requests for comment on what Feinberg's role would be at Oracle and whether there are expected layoffs.

    A Cerner spokesperson declined to provide information beyond the news release.

    Oracle has been eyeing Cerner for a while. Court documents released in 2004 amid an antitrust case that the Justice Department pursued against Oracle's purchase of PeopleSoft revealed eight other companies that Oracle had been considering acquiring at the time—including Cerner.

    Oracle today has a limited healthcare presence, Haller said. Its main foothold in healthcare is in back-office functions, like its enterprise resource planning software.

    But acquiring Cerner moves the company into provider- and patient-facing clinical systems.

    Cerner is a "huge additional revenue growth engine" for Oracle, said Safra Catz, Oracle's CEO, in the news release. He said the revenue opportunity with acquiring Cerner is larger than NetSuite, a company that Oracle bought for $9.3 billion in 2016.

    The deal is expected to be immediately accretive to Oracle's earnings in the first full fiscal year after the transaction closes.

    "It's a well-known fact that Oracle was slow to embrace the shift toward the cloud," falling behind competitors like Amazon's AWS and Microsoft's Azure, said Paddy Padmanabhan, CEO of Damo Consulting. "This may put them on the map, at least as it relates to healthcare," as Cerner is also in the midst of migrating its applications to the cloud, he said.

    Hospitals and health systems in recent years have been moving applications and data to the cloud to cut costs and develop new tools with AI and other emerging technologies.

    "Healthcare is in the early stages of migration to the cloud, relative to other sectors," Padmanabhan said. "For Oracle, the timing could be very good—if they're able to get in early with all of Cerner's clients, for instance, on their cloud migration journeys."

    2021 has been a massive year for mergers and acquisitions in digital health. There were 203 deals reported in the first three quarters of the year, according to data from Modern Healthcare's Digital Health Business & Technology, up from 132 M&A deals in the first three quarters of last year and 125 transactions in the same period of 2019.

    Athenahealth, another competitor to Cerner, last month announced plans to be acquired by two private-equity firms for $17 billion.

    The Oracle-Cerner deal would mark the largest transaction to date in the healthcare technology sector, compared to Microsoft's planned $19.7 billion purchase of Nuance Communications and Teladoc Health's $18.5 billion merger with Livongo last year, according to a note from SVB Leerink.

    Cerner posted $1.5 billion in revenue for 2021's third quarter, up 7.2% year-over-year, and $224.9 million in operating earnings, down from $411.8 million in the year-ago period.

    Oracle reported $10.4 billion in revenue for the second quarter of its fiscal 2022, its most recently reported period, up 5.7% year-over-year. The company reported a $824 million operating loss for the quarter, compared to $3.6 billion in operating income reported in the same period of its fiscal 2021.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Judy_Faulkner_Epic_HIMSS17_edit_i.jpg
    Epic outlines what's ahead for patient portal, Cosmos
    Cerner_fullsize_AP_i.jpg
    Cerner to pay $1.8M to resolve racial discrimination allegations
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Health IT Strategist (HITS) Newsletter: Sign up for the latest IT and medical technology news delivered 3 days a week (M, W, F).
     
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Digital Health
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Unwell in America
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Supply Chain
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing