Oracle is buying Cerner, an electronic medical records firm, for $28.3 billion, making it one of the software company's largest purchases ever and one of the year's largest takeovers.

Cerner is valued at $95 per share in the all-cash acquisition, which was revealed just three days after allegations that Oracle was in talks to buy the health IT business surfaced.

According to Oracle's Chief Executive Officer, Safra Catz, the acquisition will be instantly accretive to Oracle's earnings on a non-GAAP basis in the first full fiscal year after closing and will add significantly more to earnings in the second fiscal year.

Cerner's business will also be expanded into other international markets by Oracle.

Oracle enters the healthcare vertical in a big way with this transaction, a rising market that should aid Oracle's young cloud infrastructure company, which is still in the single digits, according to Synergy Research.

“Oracle’s acquisition of Cerner may be a play to get a strong foothold in the emerging cloud opportunity in healthcare. Cerner is a leading EHR vendor and healthcare is in the early stages of the cloud journey”, says Paddy Padmanabhan, founder and CEO, Damo Consulting.

Oracle has been slow to tap into the cloud opportunity landscape relative to other big tech firms, Padmanabhan said. "The Cerner acquisition may provide the boost it needs to become a strong contender in an emerging space with significant headroom for growth," he says.

According to Holger Mueller of Constellation Research, the deal is the largest in Oracle's history, and the business has a lengthy history of acquisitions.

Joining Oracle as a dedicated industry business unit provides an unprecedented opportunity to accelerate Cerner's work modernizing EHRs, improving the caregiver experience and enabling more connected, high-quality and efficient patient care, says David Feinberg, president and Chief Executive Officer at Cerner, who just took the helm in August.

"We are also very excited that Oracle is committed to maintaining and growing our community presence, including in the Kansas City area”, he expresses.

"Oracle's revenue growth rate has already been increasing this year—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. That's exactly the growth strategy we adopted when we bought NetSuite—except the Cerner revenue opportunity is even larger”, says Catz.

Healthcare is a $3.8 trillion market in the US alone, thus Oracle is investing in one of the fastest-growing industry verticals.

"We’ve never fully realized the value of healthcare data but as technology and machine learning continues to get better, access to patient data is the holy grail," Brad Haller, a partner in the M&A practice at consulting firm West Monroe, told Fierce Healthcare.
"If Oracle wants to be a player in this space, and obviously they do for $30 billion, they need access to patient data and can't really rely on third parties and just continue to be the processor," he said.

Oracle is known for its vast database technology, and Haller believes that acquiring Cerner will broaden the company's reach to major health systems and provide lucrative cross-selling opportunities. Oracle could switch to Cerner and host it on the Oracle cloud, then use Cerner's strong relationships with health systems to get them on board.

Oracle will employ its autonomous database, low-code development tools, and voice digital assistant user interface to swiftly upgrade Cerner's systems and migrate them to Oracle's Gen2 Cloud, according to Mike Sicilia, executive vice president, vertical industries at Oracle.
According to Sicilia, Cerner's largest business and most important clinical system is already running on the Oracle Database.

“We will make Cerner's systems much easier to learn and use by making Oracle's hands-free Voice Digital Assistant the primary interface to Cerner's clinical systems. This will allow medical professionals to spend less time typing on computer keyboards and more time caring for patients”, says Sicilia.