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Oracle (ORCL) Receives Approval for the Acquisition of Cerner

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Oracle (ORCL - Free Report) recently received all the required antitrust approvals, including European Commission clearance, for its proposed Cerner acquisition.

Cerner focuses on providing digital information systems used in hospitals and healthcare systems, enabling medical professionals to deliver improved healthcare to communities and individuals.

The planned $28.3 billion acquisition, announced last year by Oracle and Cerner, is now expected to close on Jun 6.

The acquisition will help Oracle expand its back-office technology for hospitals and healthcare service providers. Cerner’s acquisition is also anticipated to be a huge growth accelerator for Oracle in years to come as Oracle expands Cerner’s business all over the world.

The merger will be substantially accretive to Oracle’s earnings on a non-GAAP basis in fiscal 2023 and contribute to its earnings thereafter.

 

Cerner Acquisition Positions Oracle in the Healthcare Tech Space

Healthcare is the biggest and most important vertical globally, especially as the pandemic has made us realize in the last two years. The use of cloud computing in healthcare has also increased since then.

During the pandemic, the entire healthcare system had to depend on the application of cloud computing. There is now an increased understanding of the potential of cloud technologies, which provide data storage and computing resources managed by external service providers to help improve the safety, quality and efficiency of healthcare.

Per a Mordor Intelligence report, the healthcare cloud computing market is expected to reach $71.7 billion by 2027 at a CAGR of 14.12%.

With these trends in the backdrop, it is no surprise that Oracle entered the healthcare market with its plans to acquire Cerner.

Moreover, the Cerner systems were already running on Oracle Database. Thus, with the completion of the merger, migrating and integrating Oracle cloud offerings with Cerner’s platform can be accomplished seamlessly without any downtime.

Oracle is expecting to benefit from increased demand for telemedicine among consumers. With the deal in place, Oracle will complete Cerner’s transition to the cloud and equip the electronic health record (EHR) with increased virtual care capabilities. Oracle will also be adding its hands-free digital voice assistant to Cerner’s interface.

However, stiff competition awaits this Zacks Rank #4 (Sell) company in the EHR space. Firms with a greater presence in the cloud-based services market, such as Alphabet’s (GOOGL - Free Report) Google Cloud and Microsoft (MSFT - Free Report) , have also been investing in the EHR industry.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Alphabet-owned Google Cloud unveiled a preview of the Healthcare Data Engine and end-to-end solution for healthcare and life sciences organizations. The healthcare solution will help in harmonizing healthcare data from multiple sources, including medical records, claims, clinical trials, and research data.

Moreover, Microsoft recently completed the acquisition of Nuance Communications. Headquartered in Burlington, MA, Nuance Communication specializes in offering innovative conversational Artificial Intelligence (AI) tools to boost business productivity

The acquisition is expected to bolster Microsoft’s position in the lucrative healthcare domain. Previously the software giant had noted that the Nuance acquisition is likely to increase the company’s total addressable market in the healthcare space to $500 billion.


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