On December 20, 2021, Oracle and Cerner “jointly announced an agreement for Oracle to acquire Cerner through an all-cash tender offer for $95.00 per share, or approximately $28.3 billion in equity value.” Per comments from Oracle in the press release, “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’s announcement adds that “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.” According to this interesting analysis from Chilmark Research though, “it remains to be seen how Oracle will treat Cerner going forward, as they have set up Cerner as a stand-alone division within Oracle that may provide some autonomy.” The article from Chilmark also hypothesizes that “the acquisition will not accelerate the move to cloud for Cerner; if anything, this will disrupt advances to date” – with Chilmark citing Cerner’s existing contract with AWS as a hurdle (among other factors).
Why It Matters:
The deal is major news given the two companies involved and the price tag alone. The long-term implications of this acquisition (both in the U.S. and abroad) will certainly be interesting to keep an eye on in the coming years, but despite the headlines and premature speculation that the announcement generated, the reality is that in the near-term, Oracle buying Cerner will likely have only a minimal impact (at best) on most hospitals and health systems in the United States. It is clear from the initial announcement that Oracle sees this acquisition (in part) as a catalyst for more international growth – and that will definitely be a key area to watch. It is also worth noting that there has been a lot of attention about Oracle’s plans to “modernize Cerner’s systems” by migrating them to Oracle’s Gen2 Cloud and to make “Oracle’s hands-free Voice Digital Assistant the primary interface to Cerner’s clinical systems.” Despite the potential benefits of those developments in the future though, change on that kind of scale is easier said than done. Changes of that magnitude will require significant time, resources, and organizational commitment from Oracle – especially given Cerner’s complex product suite and large, diverse client base.
This article was originally published in Impact Advisors’ digital newsletter: The Impact Advisor 1Q2022.