Oracle Bets On Health Care With $28B Cerner Acquisition Plans
Wade Tyler Millward
Oracle’s hands-free Voice Digital Assistant will serve as ‘the primary interface to Cerner‘s clinical systems,’ according to the statement. ‘This will allow medical professionals to spend less time typing on computer keyboards and more time caring for patients.’
Oracle confirmed plans Monday to acquire health care IT company Cerner Corp. in an all-cash tender offer of $28.3 billion, or $95 a share, giving the tech giant a leg-up in the health tech space. The deal, Oracle’s largest ever, is expected to close in 2022, pending regulatory approval.
Austin, Texas-based Oracle wants to invest in “easier-to-use digital tools that enable access to information” with a hands-free voice interface to secure cloud applications, according to a company statement Monday. This interface should lower administrative workload, lower health care costs and improve patient privacy and health outcomes.
Oracle sees opportunity in adding cloud, artificial intelligence, machine learning and other technologies to Cerner’s offerings. The goal is zero unplanned downtime for Cerner customers using Oracle Gen2 Cloud, according to the statement. IT professionals running Cerner systems will not have access to patient data, maintaining privacy standards.
Oracle stock sank about 4 percent Monday as of 2 p.m. ET to $92.38 on the news.
Cerner will become an industry business unit of Oracle, according to the statement. Oracle industries include financial services, telecommunications, pharmaceuticals, hospitality, retail, manufacturing, construction and government.
An Oracle representative declined a CRN request for an interview. A Cerner representative did not respond to a CRN request for comment.
Ron Zapar, CEO of Naperville, Ill.-based Oracle partner Re-Quest – which offers managed services in health care – previously told CRN in an interview that if the acquisition rumors are true, Cerner could give Oracle a major boost in data analytics and AI-related offerings.
“IBM has it, Microsoft has it. So it’s really an arms race in this health care data space in the cloud at the end of the day. It’s a way for Oracle to jump to No. 1 in that space because of who Cerner is and what their history is and how much market share those guys have.”
The plan is to use Oracle’s Autonomous Database, low-code development tools and Voice Digital Assistant user interface to modernize Cerner’s systems and move them to Oracle’s Gen2 Cloud, according to the statement. Cerner’s “largest business and most important clinical system” already runs on Oracle Database, speeding up the process.
Oracle’s hands-free Voice Digital Assistant will serve as “the primary interface to Cerner‘s clinical systems,” according to the statement. “This will allow medical professionals to spend less time typing on computer keyboards and more time caring for patients.“
Oracle also plans to expand Cerner’s business into “many more countries,” the growth strategy Oracle adopted for NetSuite “except the Cerner revenue opportunity is even larger.”
Cerner will maintain and grow its “community presence, including in the Kansas City area” of Missouri where it is headquartered, according to the statement.
Cerner offers services around data warehouses, population health management, analytics, revenue cycle management and other areas, according to its website. It has a managed services wing for management and monitoring data within Oracle rival Amazon Web Services.
Other announced Oracle acquisitions in 2021 include FarApp, a provider of online commerce, logistics, retail and hospitality connectors for Oracle NetSuite, and GloriaFood, an online ordering system for restaurants.
A report published Monday by investment bank Barclays was mixed on the deal. While the opportunity to convert on-premises Oracle customers to Oracle Cloud Infrastructure customers “could easily double the company‘s revenue,” the news appears to go against the company’s reports of organic growth in its cloud offerings.
“Why does ORCL need to buy a very large non-core asset when its underlying story is just coming together?” according to the report. “The likely outcome here is that post the transaction we will see higher estimates, but the valuation multiple will have a ceiling.”
Earlier this year, Microsoft announced the acquisition of voice-to-text services company Nuance this year for $16 billion to further deepen the company’s health care offerings.