Cerner snaps up Siemens Health IT for $1.3 billion
Cerner has entered into a definitive agreement to acquire Siemens Health Services, the company’s health IT division, in a deal reportedly worth slightly more than the division’s annual sales.
Cerner Corporation will pay $1.3 billion in cash, an amount slightly more than the Siemens division’s annual sales, according to a Forbes blog post that appeared shortly after the sale was announced.
“We think scale is important,” Cerner’s founder and billionaire CEO Neal Patterson told the Forbes reporter. “We were the largest IT company, but this gets us a bigger, better business platform. We’ll have a combined $650 million [in research and development] spend and we think the future of healthcare computing is driven around the ability to innovate. This kind of preserves our ability to spend heavily in innovation and IT certainly for the rest of this decade.”
According to a press release announcing the deal, Cerner and Siemens will form a strategic alliance to bring new solutions to market that combine Cerner’s health IT leadership and Siemens’ strengths in medical devices and imaging. Said Patterson in the release: “…the alliance we’re creating will drive the next generation of innovations that embed information from the EMR inside advanced diagnostic and therapeutic technologies, benefiting our shared clients.”
The acquisition creates a much larger company with 20,000 associates in 30 countries, 18,000 client facilities, and $4.5 billion in annual revenue. Support for Siemens Health Services core platforms will remain in place, and current implementations will continue. Cerner plans to support and develop the Soarian platform for at least the next decade.
In the release, John Glaser, PhD, CEO of Siemen’s Health Services division said: “We are excited to join with one of the most competitive companies in health IT today, and a recognized leader in innovation. Siemens cares deeply about its clients and believes Cerner is the best organization to fully support their health IT needs going forward. The knowledge and strength of our combined resources opens up great possibilities for future collaboration and development, which is exciting for all of us.”
The transaction is expected to be more than $0.15 accretive to Cerner’s non-GAAP diluted earnings per share in 2015, and more than $0.25 accretive in 2016. Share-based compensation expense, one-time transaction costs, and acquisition-related amortization and deferred revenue adjustments are expected to be excluded from non-GAAP earnings.
Vice President, Executive Editor, Radiology Business
Cheryl began her career in journalism when Wite-Out was a relatively new technology. During the past 16 years, she has covered radiology and followed developments in healthcare policy. She holds a BA in History from the University of Delaware and likes nothing better than a good story, well told.