Cerner shares soar on report of $30 billion buyout

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Cerner shares soar on report of $30 billion buyout

Shares of Cerner Corp. went up as much as 22% after a report that Oracle Corp. is in talks to buy the medical-records company for about $30 billion, part of the software maker's push into health care.

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The Wall Street Journal reported that a deal could be reached soon, citing unidentified people familiar with the situation. If the transaction goes through, it would be Oracle's biggest acquisition yet. Cerner, based in North Kansas City, Missouri, has about 23,000 employees. David Feinberg, formerly Google Health's vice president, took over as the company's chief executive officer on October 1. The company, which competes with Epic Systems Corp. and Allscripts Healthcare Solutions, generated $5.51 billion in revenue during 2020, and sales are projected to increase by 5% to $5.8 billion this year.

The shares of Cerner, which had a market value of $23.4 billion at the close of New York on Thursday, went up as high as $97.60 in after-hours trading. Oracle dropped more than 3%.

Donald Hooker, an analyst at KeyBanc Capital Markets, said that when Feinberg was appointed CEO in August, the company s move towards a strategy based on big data, population health management and consumerism highlighted the company's move toward a strategy based on big data, according to an analyst at KeyBanc Capital Markets.

That effort could make Cerner an attractive target for Oracle, the second biggest software maker by revenue, known for its database products. Oracle has struggled to gain ground in the cloud computing business, but it trails far behind market leaders such as Amazon.com Inc. and Microsoft Corp. A deal for Cerner would give Oracle a huge foothold in the health industry. The sector is expected to spend $15.8 billion on cloud infrastructure and software by the year 2023, according to market researcher IDC.

Two years ago, Cerner announced a deal with Amazon's cloud division to develop programs that predict medical diagnoses or recommend courses of treatment for patients. Cerner said it would use the tech company's artificial intelligence and machine-learning prowess to improve patient care beyond moving its data and computing to Amazon s cloud services.

According to Bloomberg, Oracle has racked up 13 deals topping $1 billion over the past two decades. At its current market value, Cerner is three times larger than Oracle's biggest previous acquisition - its 2016 purchase of NetSuite Inc. in a deal valued at $8.7 billion. In 2005, Oracle completed an $8.4 billion takeover of Peoplesoft Inc., according to the data show.

The software maker, Austin, Texas, reported revenue and profit that surpassed analysts estimates on December 9, sending shares up 16% the next day, the biggest single-day gain since March 2020.

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