Karla Mejia

Oracle to buy Cerner for $28.3 billion in a bold healthcare deal

Karla Mejia

Karla Mejia

Oracle Corp. approved the acquisition of medical records systems provider Cerner Corp.

The deal, the largest in Oracle's history, will include payment of $95 per share, the companies said in a statement Monday. The price represents a 20% premium over Cerner's market value last Thursday When the deal talks first became public, Oracle shares fell 3% in intraday trading Monday, while Cerner shares until the announcement were flat. Oracle CEO Safra Catz

Oracle, Safra Catz, said the acquisition should "boost Oracle's earnings immediately on an adjusted basis" for the first full fiscal year after closing and "add significantly more to earnings for the second fiscal year and beyond." is expected to close next year, the companies said.

Oracle, the second-largest software company by revenue, is best known for its legacy database products and has struggled to gain a foothold in cloud computing in recent years, far behind market leaders such as Amazon.com Inc. and Microsoft Corp. Cerner Back The deal gives Oracle a big technology foothold for the healthcare industry, as the sector is expected to spend $15.8 billion on cloud infrastructure and software by 2023, according to market researcher IDC.

David Feinberg, a former vice president at Google Health, took over as CEO of Cerner on Oct. 1 and said one of his main goals was to use data as a diagnostic tool to help doctors and nurses improve patient care.Two years ago, Cerner announced a deal with Amazon's cloud division to develop programs that attempt to predict medical diagnoses or recommend courses of treatment for patients.

The choice of Feinberg as CEO of Cerner underscored the company's move toward a "strategy based on big data, population health management and consumption, and away from the old medical records business," said Donald Hooker, an analyst with KeyBanc Capital Markets, when Feinberg was named to the post in August.

Cerner, which among other things works with Epic Systems Corp. and Allscripts Healthcare Solutions, had sales of $5.51 billion in 2020, and this year's sales are expected to grow 5% to $5.8 billion. Missouri and has approximately 23,000 employees.

The acquisition is Oracle's largest since it bought NetSuite Inc. in 2016, an $8.7 billion transaction that has given Oracle one of its fastest-growing financial software products for Oracle's growing small and midsize businesses.

Oracle said it did not expect the Cerner acquisition to affect the company's investment-grade credit rating.




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