Further insights on and thoughts about the Oracle acquisition of Cerner

December 22, 2021 | by

HISTalk, with its focus on health IT and generally short mentions without opinion on the news, in today’s issue includes some thoughts on the Oracle-Cerner deal, including a rare “Announcements and Requests” inviting reader thoughts on the acquisition’s effect on several issues. Also rare: a lengthy anonymous comment from a healthcare CIO.

A few highlights–your Editor recommends you go to the article for more:

  • Oracle’s free cash is far less than the purchase price at $23 billion. They will need additional financing to complete the Cerner acquisition.
  • Announcements and Requests: will customers on the fence between Epic and Cerner run towards the less uncertain choice? Will the Cerner VA and DOD business be affected? How does this affect Cerner’s implementations of cloud services, currently AWS versus Oracle’s Gen2, as well as healthcare’s usage of  InterSystems Cache versus Oracle’s relational databases? And will Oracle’s Voice Digital Assistant as the user interface to Cerner Millenium really fly?
  • From Change of Control: How key to the deal was CEO David Feinberg MD, who only joined in October? No matter what, he’s now a very wealthy man.
  • From On-Demand: Oracle is buying its way into healthcare. Cerner lost a lot of ground in executive changes and a less than effective CEO. (Editor’s note: This dates back to 2017–the illness and untimely death of Neal Patterson, the co-founder and CEO, at age 67 and president Zane Burke’s departure the following year after 20 years for the CEO spot at Livongo, which undoubtedly made him a wealthy man!)
  • From Anonymous Health System CIO’s Initial Thoughts: Their biggest problems are 1) people and process.”Cerner has struggled to maintain competent staff that understand healthcare and individual customer workflows. Throughout our implementations, we had major challenges with project management, availability of experienced staff, and the ability to help us make informed decisions.”  2) “If Oracle is going to help reduce the cost of healthcare, they also need to help find savings for their customers.” 

All these should be of concern to Cerner as they–and their people–try to maintain momentum until the acquisition closes. Customer uncertainty, staff competence, and Oracle’s lack of background in how healthcare operates (including a history of pulling some ‘fast ones’ around cloud licensing, as well as understanding clinician preferences such as Dragon as a voice assistant) are undoubtedly giving some investors–and hospital systems–pause. Hat tip to HISTalk. Our earlier coverage here.

One final comment from Editor Donna: Never underestimate the power of a CEO’s ego–especially one who is routinely compared to God, at least in TechWorld–in wanting One Last Coup to burnish his escutcheon, before that Long Sail Into The Sunset on his yacht Musashi.

(Breaking) Sold! Cerner to Oracle for $28.3 billion. And is Epic next?

December 20, 2021 | by

That bombshell came in fast! From the rumor mill to reality, from last Thursday to today (Monday), Oracle and Cerner announced their deal today at 9.37am ET. It is a bracing all-cash deal at $95/share plus debt assumption totaling $28.3 billion, expected to be immediately accretive to Oracle’s earnings. Closing is anticipated sometime in 2022. It is subject to considerable regulatory (SEC and likely DOJ) and shareholder approvals. It’s Oracle’s largest deal ever, but so far their share price is not appreciative of the big move.

According to the Oracle release, Cerner and its EHR plus related systems will be organized as a dedicated Industry Business Unit within Oracle. No transition information was included, although towards the end it’s stated that “Oracle intends to maintain and grow Cerner’s community presence, including in the Kansas City area, while utilizing Oracle’s global footprint to reach new geographies faster.”

Both the Oracle and Cerner releases (headlining their home page in gigantic type) are written totally from Oracle’s POV–no shilly-shallying about how Cerner will guide them into the healthcare arena or a meeting of like companies, et al. It’s all about how Oracle will transform healthcare.

Changes will be coming to Cerner. Between the lines, they are not painted in the best light. From the Mike Cecelia (EVP, Vertical Industries) quote, “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. (Ed. emphasis) 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.”

There is also no mention of Cerner’s challenges with the VA. What are the implications with the Cerner implementations there and with DOD?

Do anticipate much industry speculation on David Feinberg, MD, who only this fall joined Cerner as CEO, and his role in this. The most logical is that he’ll shepherd the sale till the close and exit stage left, well-rewarded, with his future (only 59) still ahead, unless Oracle sees a role for him. In its way, it broke Cerner out of a corner that they were painted into with EHRs. At the end of the day, will there be a Cerner?

And what about Epic? A more complex picture, as Epic Systems is wholly private, on a roll, and dominated by Judy Feinberg, the founder and CEO. However, she is 78, and both personal and corporate considerations on future planning must loom large. What would Epic be worth to an acquirer? And who would it be? Amazon? IBM? (a terrible fit after the Watson Health debacle), Salesforce? Microsoft? Hmmmmm…. CNBC,  TechCrunch, HealthcareITNews   Our earlier coverage here.

Oracle in negotiations to buy Cerner for $30B (sold!)

December 17, 2021 | by

2021 may go out with a bang! The Wall Street Journal (paywalled) reported late Thursday that software colossus Oracle was in discussions with EHR giant Cerner to buy it, lock stock dropdown menus and workflows. And soon, according to the WSJ‘s sources. The reported amount is $30 billion.

It would be Oracle’s most expensive purchase ever, much more than PeopleSoft (HR) in 2005 and NetSuite in 2016. Given their valuations, Cerner is a snack at $23 billion for Oracle at $280 billion. But Cerner gives Oracle four-star entree to healthcare and practice systems. Oracle has long seen healthcare as a growth area for cloud computing services targeted to payers, hospitals, and health systems, and has clients like Cleveland Clinic and Kaiser. Back in June 2020, they launched a cloud service collecting clinical data from sensors, patient apps, EHRs, and labs supporting therapy development. 

As our Readers know, David Feinberg, MD left Google Health to join Cerner as president and CEO on 1 October [TTA 21 August] in a $34.5 million compensation package [TTA 24 August]. An acquisition by Oracle, in such a short time, can be interpreted as either a coup he engineered for the shareholders (and for his benefit, as change of control usually vests the package!), or he can be viewed as a placeholder for the top spot on a previously moving deal. Both are mature companies. While Cerner has been losing market share to Epic and has had many woes with its $18 billion VA Cerner Millenium implementation [TTA 3 Dec, 28 July], it also generates $1 billion per year in free cash flow and Oracle can institute operational efficiencies to increase profit margins. In the view of some, Oracle is returning to an aggressive market strategy that most felt it left behind.

Oracle shareholders didn’t like it much today, with shares declining over 6% on Friday to $96.67. But Cerner’s liked it a lot, increasing price nearly 13% to $89.77. Kansas City-based Cerner also had 150 layoffs in November in its 28,000 employee staff. Oracle recently relocated from California to Austin, Texas, shrinking its office footprint. Seeking Alpha 17 Dec, 17 Dec AM; Kansas City Star, Becker’s HealthIT

Updated–see our short article on the sale for $28.3 billion here.

Comings and goings: Cuts hit Athenahealth, IBM Watson’s Drug Discovery unit; Bain may sell Waystar RCM

April 25, 2019 | by

Athenahealth has announced they are trimming 4 percent of their total workforce. With a large 900-person campus in Belfast, Maine that once belonged to MBNA credit cards, and a workforce of about 5,000 headquartered in Watertown, Massachusetts, there is considerable local concern in an area of Maine that offers few well-paying jobs. Reportedly dozens of jobs there will be lost. This caps a tumultuous period with the company. Athenahealth was acquired last November by Veritas Capital and Evergreen Coast Capital, then merged with a GE Healthcare spinoff they owned, Virence Health, in value-based care, under the Athenahealth name. Bangor Daily News

IBM Watson’s Drug Discovery product, which was targeted to pharmaceutical companies, is being cut back to work with only current partners and with clinical trials due to poor sales. According to The Register, a tart-tongued UK tech website which actually reached an IBM spokesperson, IBM’s Ed Barbini stated that “We are not discontinuing our Watson for Drug Discovery offering, and we remain committed to its continued success for our clients currently using the technology.” Also Seeking Alpha. IBM Watson and Watson Health, like Athenahealth, are moving through a rocky period of closing initiatives (Watson Workplace), layoffs, executive departures (head Deborah DeSanzo last November), bad publicity, and clients like MD Anderson who don’t part quietly. [TTA 8 Nov 18].

Another merged health infotech company may have a new owner soon. Waystar, which was formed by the acquisition of ZirMed and Navicure in 2017 and manages revenue cycles for 450,000 practices, is rumored to be up for sale by owner Bain Capital. Interested parties include Visa and Oracle. Bloomberg

The Theranos Story, ch. 27: investor ‘whales’ surface in class action lawsuit news

November 30, 2016 | by
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2016/11/jacobs-well-texas-woe1.jpg” thumb_width=”150″ /]Don’t jump…you may land on one of them! In the Bottomless Well that is The Unicorn Losing Its Horn, The Transubstantiation of a $9 bn valuation to $9, to mix up a Whole Lotta Metaphors, the latest is that Certain Big Investors (‘whales’ in Vegas Lingo) and at least one minnow have lost their shirts, or maybe their sleeves and cuff links.

The first is via a class action lawsuit filed Monday against Theranos in San Francisco Federal Court by Hagens Berman Sobol Shapiro LLP, seeking to represent potentially hundreds of purchasers of Theranos shares from July 29, 2013, through October 5, 2016 .

According to the Wall Street Journal, the charges relate to “false and misleading claims about its operations and technology while soliciting money from investors.” Hagens Berman is representing Silicon Valley investment banker Robert Colman, who is the retired co-founder of Robertson Stephens & Co. (a legendary, now defunct, investment bank specializing in tech that blew up after the dot-com bust). He invested through a VC fund, Lucas Venture Group, who participated in Theranos’ Series G funding in late 2013. Lucas was invited to invest $15 million, and their principals had personal ties to Elizabeth Holmes, according to TechCrunch. The second plaintiff, Hilary Taubman-Dye, purchased Theranos shares at $19/share on SharesPost Inc., an online exchange for shares of private companies, in August 2015. Her claim is that she tried to cancel it after the Wall Street Journal exposé in October, but the purchase went through in December after Theranos, Elizabeth Holmes and an unidentified third party refused to buy back the shares as a secondary transaction. TechCrunch identified her as a “longtime technical recruiter who now works in investor relations for a TV production company” which means that her investment was likely no bag of shells for her. Their respective investments are not disclosed.

The second, according to a second article in the Journal, comes from the usual ‘sources familiar with the matter’ and papers filed by Theranos in Delaware and Arizona. These include some very atypical startup investors, such as Rupert Murdoch of News Corp. and family-controlled Cox Enterprises, at $100 million each in the 2014-15 round when shares were valued at $17/each, and an undisclosed amount by Riley Bechtel of Bechtel Group, who was later named to the board of directors. Other, more typical Silicon Valley investments date back to when Theranos was the more pedestrianly named Real Time Cures in 2004 and the shares were 15 cents each:

  • Oracle co-founder Larry Ellison
  • VCs from firms such as ATA Ventures and Draper Fisher Jurvetson. The latter’s Tim Draper and his daughter (!) have been quite critical of anyone, especially John Carreyrou of the WSJ, claiming that Ms Holmes was perhaps mistaken in her scientific and business practices. (Partner Jurvetson in reports has expressed a more ‘que será, será’ attitude.) (more…)