Earlier this month Oracle CTO Larry Ellison cited the healthcare sector as one of the firm’s most lucrative vertical markets. The company has now put its money where his mouth is to the tune of $28.3 billion to fund a takeover of health tech provider Cerner.
The takeover, the largest acquisition in Oracle’s history, gives the company a major foothold in the sector. Ellison commented:
Working together, Cerner and Oracle have the capacity to transform healthcare delivery by providing medical professionals with better information, enabling them to make better treatment decisions resulting in better patient outcomes.
With this acquisition, Oracle's corporate mission expands to assume the responsibility to provide our overworked medical professionals with a new generation of easier-to-use digital tools that enable access to information via a hands-free voice interface to secure cloud applications. This new generation of medical information systems promises to lower the administrative workload burdening our medical professionals, improve patient privacy and outcomes, and lower overall healthcare costs.
David Feinberg, President and Chief Executive Officer, Cerner, added:
Cerner has been a leader in helping digitize medical care and now it's time to realize the real promise of that work with the care delivery tools that get information to the right caregivers at the right time. Joining Oracle as a dedicated Industry Business Unit provides an unprecedented opportunity to accelerate our work modernizing electronic health records (EHR), improving the caregiver experience, and enabling more connected, high-quality and efficient patient care.”
From a technology perspective, Oracle will move Cerner’s systems over to Oracle Gen2 Cloud. Cerner is an existing Oracle database customer, but the firm had been moving some of its workloads over to AWS. Oracle states that Cerner systems running on the Oracle Gen2 Cloud will be available “24 by 7 by 365” with the goal of delivering zero unplanned downtime in the medical environment:
With Cerner systems running on the Oracle database, only specifically authorized medical professionals can access patient data. IT professionals running the systems are unable to look at patient data.
The companies also cite voice-enabled user interfaces as a priority, arguing that this will dramatically reduce the amount of time that medical providers spend dealing with systems and increase the time they spend directly caring for patients. Mike Sicilia, Executive Vice President, Vertical Industries, Oracle, explained:
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 Gen2 Cloud. This can be done very quickly because Cerner’s largest business and most important clinical system already runs on the Oracle Database. No change required there. 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. This will allow medical professionals to spend less time typing on computer keyboards and more time caring for patients.”
Meanwhile Oracle CEO Safra Catz sees the deal as major revenue generator:
Healthcare is the largest and most important vertical market in the world—$3.8 trillion last year in the United States alone. Oracle’s revenue growth rate has already been increasing this year. Cerner will be a huge additional revenue growth engine for years to come as we expand its business into many more countries throughout the world. That’s exactly the growth strategy we adopted when we bought NetSuite, except the Cerner revenue opportunity is even larger.
The transaction is expected to close in 2022, subject to certain regulatory approvals and other closing conditions, including Cerner stockholders tendering a majority of the company's outstanding shares in the tender offer.
It’s a huge gambit on Oracle’s part, but one that brings with it the potential of enormous reward. Assuming the deal gets through the inevitable regulatory hurdles it will face, this will represent a major shake-up of the hugely lucrative healthcare market. The next question will be how other tech providers react and will this move by Oracle prompt further consolidation in the space?