Surging Oracle to acquire Cerner for $28.3B in its biggest deal ever

Posted: 20 December 2021 7:29 pm
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It’s a sign the enterprise software giant sees health care data as a new, big growth area.

Oracle, which has been hitting all-time highs all year, is putting some of its money to work to buy medical records company Cerner.

On Monday, both companies announced an agreement for Oracle to buy Cerner through an all-cash deal for $95 per share — or approximately $28.3 billion in equity value.

It’s the biggest deal ever for Oracle. Back in 2016, the company purchased NetSuite for $9.3 billion to strengthen its position in the cloud.

Oracle said it expects the deal to be immediately accretive to its earnings on a non-GAAP basis in the first full fiscal year after closing. The acquisition is expected to close in 2022.

Acquisition comes off Oracle’s strong earnings

Despite the news, Oracle shares closed down 5% Monday. The stock is up 42% for the year.

On December 9th, Oracle reported better-than-expected financial results. For its fiscal year 2022 second quarter, the company reported revenue of $10.4 billion, up 6% from a year ago. Non-GAAP profits were up 14% to $1.21, beating analyst estimates of $1.11.

Cerner purchase allows Oracle to push deeper into health care market

The move to buy Cerner should help Oracle expand its presence in the healthcare industry. Cerner is one of the biggest healthcare IT companies in the US and will give Oracle access to a trove of health data.

“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,” said Larry Ellison, Chairman and Chief Technology Officer of Oracle.

Analysts see the stock going above $100 within a year

Analysts have been pleased with Oracle’s performance and many raised their price targets on the stock following the company’s strong earnings report.

Looking ahead, Oracle is rated a Hold with an average price target of $101.15

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