Oracle’s Cerner buy proving to be more expensive–and complicated–than expected. Oracle is reportedly going to its banks to increase their term loan against the Cerner purchase from the current $4.4 billion. The increase would refinance short-term debt and reduce refinancing of the existing bridge loan into longer-term bonds and loans. According to reports, the bridge loan, originally $15.7 billion of debt, was reduced to about $11 billion by the term loan. The bridge loan was originally used to finance the Cerner purchase.
Under the existing agreement, the term loan can be extended up to a maximum of $6 billion. This avoids the dicey situation the bond market is currently in with yields and access by companies.
According to Bloomberg Intelligence, Oracle’s over $90 billion in debt is one of the largest debt loads in tech. Oracle’s credit rating by S&P Global Ratings places it two steps above junk (Baa2/BBB/BBB+) but it may sidestep a downgrade by this action. Yahoo!Finance (Bloomberg), Becker’s
Oracle announced last week modernizations to Cerner which would have greater interoperability and introduce more cloud-based features. This follows on Larry Ellison’s pronouncements during their September Q1 2023 earnings call. During the Oracle Cerner Health Conference last week, four were announced: Seamless Exchange (eliminating duplicate patient health information), Advance (dashboard), virtual models of care (virtual nurses capturing information), and RevElate (billing). Becker’s
Will the modernizations help Oracle’s VA migraine with the Cerner Oracle Millenium implementations? The prior week (13 Oct), the VA announced that deployments are being pushed from January to June 2023. The release cites the multiple problems with technical and system issues that were uncovered in August (outages), discussed extensively in Senate hearings in July, and the OIG report released in July on the ‘unknown queue’ and more.
Deputy Secretary of Veterans Affairs Donald Remy stated that “VA will continue to work closely with Oracle Cerner to resolve issues with the system’s performance, maximize usability for VA health care providers, and ensure our nation’s Veterans are served by an effective records system to support their healthcare. During this “assess & address” period, we will correct outstanding issues—especially those that may have patient safety implications—before restarting deployments at other VA medical centers.” VA will also concentrate on the existing five facilities already deployed on fixing the multiple issues they have. Veterans treated at these sites will receive letters asking them to call the VA if they experienced delays in prescription filling, appointments, referrals, or test results. One wonders if all the steps Oracle’s Mike Sicilia said Oracle is taking [TTA 28 July] to fix the performance, design, and functionality issues are achievable even in the longer time frame–and certainly in the five live systems.
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