USA – Oracle, the world’s largest software company, has agreed to buy EHR vendor Cerner for US$28.3 billion, the two companies announced on Monday. The transaction is expected to close early this year.
It will be Oracle’s largest acquisition to date, surpassing the US$10 billion purchase of PeopleSoft Inc. in 2005.
The acquisition expands Oracle’s presence in the healthcare market, where it is primarily focused on data use efficiency for payers and providers. Oracle’s primary focus areas are database software and cloud systems.
According to a press release, Cerner will become a separate business unit within Oracle. With the goal of “deliver zero unplanned downtime in the medical environment,” voice-enabled user interfaces will be a key focus.
“Oracle’s focus on usability and voice enabled user interfaces will dramatically reduce the amount of time that medical providers spend dealing with systems and increase the time they spend directly caring for patients,” according to the press release.
A buyout of Cerner, based in Kansas City, Missouri, has long been rumored, with Oracle frequently mentioned as a potential buyer.
Oracle, which has approximately US$40 billion in annual revenue, relocated its headquarters from Silicon Valley to Austin about a year ago.
However, they and other analysts noted that the price tag would almost certainly necessitate the use of stock to fund it, which could cause Oracle shareholders to object to the valuation.
Cerner has been shifting its focus away from the legacy EHR business under the leadership of David Feinberg, who joined the company in October after leaving Google.
During a third-quarter conference call, he told investors that he wants to focus on improving usability and that “it’s very important that we acknowledge the fact that we haven’t reached our true potential.”
In a press release issued recently, Mike Sicilia, Oracle’s Employees Value Proposition (EVP) for vertical industries, stated that Cerner will migrate to Oracle’s Gen2 cloud, and that the transition should be completed quickly due to the two companies’ previous integration.
“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. This will allow medical professionals to spend less time typing on computer keyboards and more time caring for patients,” he said.
Cerner’s shaky rollout
he EHR vendor has also struggled with a shaky rollout of its EHR for Veterans Affairs facilities. The US$16 billion project, which began in 2018, was halted in July due to complaints about insufficient training and rising costs.
Department of Veterans Affairs, announced earlier this month that it intends to resume implementation in the new year.
The potential collaboration comes amid a flurry of merger and acquisition activity in the HIT sector. In November last year, two private equity firms paid US$17 billion for the acquisition of EHR vendor Athenahealth.
According to KLAS Research, which tracks the health care industry, Cerner is the No. 2 player in the electronic health record market, with a 25% market share in 2020.
Cerner was slipping slightly, while Epic, which had 31% of the market, was gaining, according to the research firm this year.
With the acquisition of Cerner, Oracle gains a leading technology company in health care, a massive, if fragmented, market. Other technology giants, such as IBM and Google, have stumbled in health care in recent years.
The merger could also combine data from Cerner’s digital records with Oracle’s data analysis and artificial intelligence tools to identify patterns and predict effective treatments.