Oracle Moves Deeper Into Health Care With $30 Billion Deal For Cerner Oracle (ORCL) will acquire medical records company Cerner (CERN) thro...
Oracle Moves Deeper Into Health Care With $30 Billion Deal For Cerner
Oracle (ORCL) will acquire medical records company Cerner (CERN) through an all-cash tender offer for $95 a share, or approximately $28.3 billion in equity value, the companies announced Monday. Oracle stock fell while Cerner edged up.
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It is Oracle's largest acquisition ever and moves the database software giant deeper into the health care sector.
Oracle stock dropped 2.7% to 93.99 during morning trading on the stock market today. Cerner stock edged up 1% to 90.60.
Cerner is the second largest seller of electronic health records software after Epic Systems. Other competitors include Allscripts Healthcare Solutions (MDRX). The software is used by hospitals and to store and analyze medical records and other health care data. The chief executive of Cerner is David Feinberg, former vice president of Alphabet's (GOOGL) Google Health. He joined Cerner Oct. 1.
Getting A Larger Foothold
"We think that acquiring CERN would allow ORCL to gain a much larger foothold in the health care industry," Jefferies analyst Brent Thill wrote in a note to clients.
"From a strategic perspective, CERN would bring a massive health records data set to ORCL and allow ORCL to further expand on the apps business side, while CERN stands to benefit from ORCL's broad suite of front and back-office apps to help consolidate its software systems and make a deeper push into the health care industry," Thill said.
Thill has a hold rating on Oracle stock and price target of 95.
"Oracle expects the acquisition to be immediately accretive to Oracle's earnings on a non-GAAP basis in the first full fiscal year after closing — and contribute substantially more to earnings in the second fiscal year and thereafter," Oracle Chief Executive Safra Catz said in written remarks with the announcement.
A Growth Engine For Oracle Stock
In addition, she said, "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," she said.
Oracle stock set an all-time high last month after reporting fiscal second-quarter earnings that topped estimates. Revenue jumped 6% to $10.4 billion, its best growth since 2018.
Based in Kansas City, Mo., Cerner reported third-quarter revenue of $1.47 billion, up 7% from the year-ago period. Adjusted earnings climbed 19% to 86 cents a share. It has about 23,000 employees.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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