M&A

Oracle to Buy Cerner in $28B Health Care Play

“Both Microsoft and Oracle, analysts say, see the huge health care market as a path to strengthening their positions in the cloud business.”
Matthew HellerDecember 20, 2021

In its largest deal ever, Oracle will acquire electronic medical records company Cerner for $28.3 billion to accelerate its push into health care.

Oracle’s move comes seven months after cloud-computing rival Microsoft agreed to pay $19.7 billion for Nuance Communications, a provider in voice-recognition software used in hospitals, clinics, and doctors’ offices.

“The digital patient record market, like most industries, is adopting cloud-computing technology,” The New York Times reported. “Both Microsoft and Oracle, analysts say, see the huge health care market as a path to strengthening their positions in the cloud business.”

Oracle agreed to pay $95 per share for Cerner in an all-cash transaction.

“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,” Oracle Chairman Larry Ellison said in a news release.

Cerner is the number two provider in the electronic health records (EHR) space with a 25% market share. But according to KLAS Research it has been falling farther behind Epic, which has 31% of the market.

“For Cerner, the deal is not only a payday but a merger with a deep-pocketed owner at a time of increasing competition and changing technology in the market for digital patient records,” the Times said.

Oracle’s health care efforts have focused on enterprise resource planning (ERP) solutions for finance leaders.

“Adding a dominant EHR platform to the portfolio may make sense on the face of it,” said Paddy Padmanabhan, CEO of Damo Consulting. “However, ERP and EHR are entirely different in their applications, and Oracle definitely does not have a background in the clinical workflow space that is critical for an EHR platform player.”

On news of the deal, Oracle shares fell 5.1% to $91.64 in trading Monday. “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,” Oracle CEO Safra Catz said.

Cerner posted revenue of $5.5 billion in 2020 and $4.3 billion in the first three quarters of this year.