Oracle Ramps Up Cloud Expansion with Acquisition of Cerner

Oracle is expanding its healthcare footprint and teeing up to turbo-charge its cloud business with the $28.3 billion purchase of medical software and IT firm Cerner Corporation. Many healthcare providers use Oracle database solutions, but the company says Cerner will be “Oracle’s anchor asset to expand into healthcare.” Oracle chairman and CTO Larry Ellison said in a statement that together the firms “have the capacity to transform healthcare delivery.” The deal — the largest in Oracle’s history — will provide “overworked medical professionals” with access to Oracle’s “hands-free voice interface to secure cloud applications,” Ellison added.

The Missouri-based Cerner makes software used by hospitals and medical professionals to store and analyze records. It is described as the second-largest purveyor of such services in the healthcare industry, and its purchase “gives Oracle a major presence in an industry that is one of the top drivers of growth for cloud computing,” The Wall Street Journal writes, quoting Ellison as “telling analysts that it was ‘on par with banking in terms of the importance to our future.’”

“From algorithmic systems that predict the likelihood a patient will contract sepsis to tech that tracks hospital bed capacity, Cerner will bring an array of cloud-based data analytics and AI technologies to Oracle as it competes with Amazon Web Services, Google, IBM and others to serve the healthcare industry’s data and AI needs,” writes Protocol. “The deal is poised to shift some business away from AWS, which Cerner named as its preferred cloud partner in 2019.”

For the fiscal quarter ending in mid-2021, Statista ranked Oracle seventh among global cloud services vendors, with about $2 billion in revenue. Microsoft was No. 1, with $19.5 billion, followed by Amazon at $14.8 billion.

“Oracle’s Autonomous Database, low-code development tools, and Voice Digital Assistant user interface enables us to rapidly modernize Cerner’s systems and move them to our Gen 2 Cloud,” Oracle executive vice president of vertical industries Mike Sicilia said in a joint press release.

“This can be done very quickly because Cerner’s largest business and most important clinical system already runs on the Oracle Database,” he said. “What will change is the user interface. 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.”

Because it is so large, and “has often been slow to adopt the latest digital tools,” healthcare is “a big battleground for cloud companies,” WSJ writes, pegging U.S. healthcare spending at “nearly 20 percent of the country’s gross domestic product.” Oracle CEO Safra Catz quantified the market at “$3.8 trillion last year in the United States alone,” calling it the “most important vertical” in the world.

The Cerner deal, which requires regulatory approval, is expected to close in 2022.

Related:
Oracle-Cerner Deal Could Help Healthcare Systems Share Data, The Wall Street Journal. 12/21/21