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Thursday, January 20, 2022

Oracle will buy Cerner for $28.3 billion in healthcare sector push

Business software maker Oracle Corp. said Monday it will buy Cerner Corp. for $28.3 billion in its biggest deal ever, gaining access to a trove of data from one of the largest healthcare IT firms in the United States.

Cerner shareholders will receive $95 in cash for each share they hold, which represents a premium of 5.8 percent to the company’s final closing price.

Oracle will be able to use Cerner’s data to train and improve the software maker’s artificial intelligence-based cloud services. This is likely to give Oracle an advantage and attract more healthcare customers to its cloud platform.

Cerner, whose software traditionally ran in its customers’ data centers, began moving its service to cloud computing providers. It acquired Amazon.com, Inc. in 2019. of Amazon Web Services as its “preferred” cloud provider.

However, Oracle said on Monday it would move Cerner’s software to its cloud computing service and modernize Cerner’s apps with tools like voice assistants.

“This can be done very quickly because Cerner’s largest business and most important diagnostic system already runs on Oracle databases,” Mike Sicilia, executive vice president of Vertical Industries at Oracle, said in a statement.

Amazon Web Services did not immediately respond to a Reuters request for comment.

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“There’s potentially some low-hanging fruit in terms of cost-savings if Oracle moves all corners to Oracle’s cloud,” said Logan Perk, analyst at Edward Jones, noting that by customers on Oracle’s cloud App development will make them less likely to leave. A competing platform can be expensive in the form of switching costs.

“This reduces customer friction while giving Oracle a flagship product for healthcare customers,” Perk said.

Oracle said it expects the deal, which is expected to close in 2022, to add to revenue growth as it expands Cerner’s business to more countries. Cerner expects earnings to grow on an adjusted basis in the first full fiscal year and is expected to contribute “significantly higher” thereafter.

Shares of Cerner were up about 1 percent while those of Oracle were down about 4 percent at $92.93.

Analysts believe healthcare has been a tough nut for tech players, who have increased investments in the sector as demand for cloud-based solutions has increased during the pandemic.

This Microsoft Corp. of Nuance Communications Inc. K buyout offers are also indicated, as the tech giant makes a push to tap into the fast-growing sector.

by Chhavi Mehta

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World Nation News Deskhttps://www.worldnationnews.com
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