Oracle sees a future in healthcare
The takeover of Cerner is not the tech company Oracle’s first move into healthcare – witness its $150m investment in Oxford Nanopore Technologies in September, just ahead of the UK group’s IPO. But yesterday’s deal is a vastly larger move, the $95-per-share cash offer valuing Cerner’s equity at $28.3bn. Indeed it is Oracle’s biggest ever acquisition, and while the 5% drop in the group's share price might suggest that some investors think Oracle has overpaid, a move into the medical arena makes sense. Cerner’s tech stores and analyses electronic medical records and other healthcare data, and while medical records have been going virtual for years, the pandemic has provided a new impetus to move away from papers in filing cabinets for good. Cerner has a 25% share of the US hospital market, according to Leerink analysts, as well as 19% of the international market. As such, the ever-present risk of falling foul of competition authorities should not be ignored, as Microsoft and Unitedhealth have both recently found out. And Oracle’s purchase is bigger still.
|Selected healthcare software M&A in 2021|
|Date announced||Acquirer||Target||Value ($bn)||Notes|
|Dec 20||Oracle||Cerner||28.3||Close expected 2022|
|Apr 12||Microsoft||Nuance Communications||19.7||Under investigation by European Commission and UK CMA; close expected Dec 2021|
|Jan 6||Unitedhealth||Change Healthcare||13.0||Under investigation by US DoJ; close expected Apr 2022|
|Source: company communications.|