Oracle is in talks to buy healthcare IT giant Cerner, according to people familiar with the matter, a deal that could be worth around $30 billion, according to media reports.
The potential deal, first reported by the Wall Street Journal Thursday, would push the enterprise software company further into the healthcare market. An Oracle-Cerner deal would rank as one of the largest takeovers of 2021, which is shaping up to be one of the busiest ever for mergers and acquisitions.
An agreement could be finalized soon, some of the people said, assuming the talks don’t fall apart or drag out, the Wall Street Journal's Cara Lombardo and Dana Cimilluca reported.
Shares of Cerner, an electronic health records company, soared in premarket trading Friday, jumping 18%.
Should a deal come together, it would rank as the biggest ever for Oracle, which has a market value of more than $280 billion, according to the WSJ.
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It would also be the latest major move by a software company to push deeper into healthcare following Microsoft's $19.7 billion bid to pick up speech artificial intelligence company Nuance.
Cerner rival Athenahealth recently agreed to a sale for around $17 billion to two private equity firms, Bain Capital and Hellman & Friedman.
Oracle, a Silicon Valley veteran that last year moved its headquarters to Austin, Texas, is one of the biggest software providers to other companies and organizations.
The company was founded by billionaire Larry Ellison and others in 1977. Mr. Ellison owns roughly 42% of the company’s shares, a stake that is worth well over $100 billion, the WSJ reported.
Oracle already has a major presence in healthcare, selling technology to health insurers, healthcare providers and public health systems. Buying Cerner could help Oracle with its pivot toward the cloud.
Kansas City, Mo.-based Cerner reported revenue of $1.47 billion in the third quarter of 2021, up 7% from $1.37 billion a year ago. The company's 2020 revenue hit $5.5 billion, down 3% from $5.7 billion a year ago as the company felt the impact of the COVID-19 pandemic.
Cerner has a market value of around $23 billion, according to the Wall Street Journal. With a typical takeover premium, a deal would be expected to value the company at something like $30 billion, though exact terms being discussed couldn’t be learned, the WSJ reported.
In August, the company tapped David Feinberg, M.D., who spent the past two years at Google leading the tech giant's health efforts, is moving over to lead Cerner after a three-month CEO search.
With slowing growth in the medical records software market, the company has been increasingly eyeing opportunities in its data business, including in the clinical research space.
Cerner acquired the health division of Kantar Group, which provides data, analytics and research to the life sciences industry, for $375 million. Company executives said the health IT company was setting its sights on building a $1 billion data business for the healthcare and life sciences industries.
It recently unveiled a new business unit, called Enviza, focused on providing real-world data solutions and research services to life sciences companies to support clinical trials. That unit combines Cerner's data business with Kantar Health's data, analytics and research expertise to help accelerate discovery, development and deployment of therapies and advance clinical research.
During his first earnings call in November since taking the reins at Cerner, Feinberg said Cerner will narrow its strategic focus to "high-value areas" with a particular focus on making medical records systems more reliable and usable.
The company also has massive federal contracts to build EHR systems for the departments of Defense and Veterans Affairs as well as the Coast Guard.