Cerner Corp. shares had their best day in a decade 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 on Thursday 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. Representatives of Oracle and Cerner didn't respond to repeated requests for comment on the report.
A former Silicon Valley executive took over the reins of Cerner, according to the report. David Feinberg, previously vice president of Google Health, joined the company as chief executive officer on October 1. Cerner, 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.
Cerner's shares rose 13% to $89.77 at Friday s close, the biggest single-day increase since October 2012 and had a market value of $23.4 billion at the close of New York on Thursday. Oracle fell 6.4% to $96.62, the largest one-day fall since March.
As CEO of Cerner's choice of Feinberg, an analyst at KeyBanc Capital Markets said when Feinberg was appointed in August the company's move towards a strategy based on big data, population health management and consumerism.
Cerner is 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, trailing 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.
Anurag Rana, a research note from Bloomberg Intelligence analyst Anurag Rana, believes that a potential acquisition of Cerner would move Oracle more toward applications, which we believe is the right long-term strategy despite an ailing infrastructure business. He said that applications make up 41% of Oracle's cloud services and license support segment.
Two years ago, Cerner announced a deal with Amazon's cloud division to develop programs designed to 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. Cerner, who is based in North Kansas City, Missouri, has about 23,000 employees.
Oracle has racked up 13 deals over the past two decades, according to the data compiled by Bloomberg. At its current market value, Cerner is roughly three times larger than Oracle's biggest previous acquisition - its 2016 purchase of NetSuite Inc. in a deal valued at $8.7 billion. Oracle completed an $8.4 billion takeover of Peoplesoft Inc. in 2005, according to the data show.
The software maker in Austin, Texas reported revenue and profit that surpassed analysts estimates, sending shares up 16% the next day, the biggest single-day gain since March 2020.
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