As the industry-cloud phenomenon intensifies and the major players hunt for high-potential acquisition targets, healthcare-tech giant Cerner saw its stock jump yesterday amid speculation that Microsoft, Oracle and Google could be pursuing it.
I think it would be entirely logical to add Salesforce to that list of big cloud providers that might be interested in Cerner, one of the world leaders in electronic health records and connected data across the complex healthcare value chain.
While this is rumor about Cerner is currently nothing but pure uninformed speculation, it could at the same time also be the first indicator of what will certainly become an intense effort by those companies and others to snatch up successful providers of industry-specific solutions.
Among the likely candidates to be doing such hunting:
- on my weekly Cloud Wars Top 10 list, Microsoft is #1, Google is #3, Salesforce is #4, and Oracle is #6; and
- on my new Industry Cloud Top 10, Salesforce is #1, Google is #2, Oracle is #3, and Microsoft is #6.
The logic is simple: all of those huge cloud providers—as well as SAP, Infor, IBM and others—have targeted the healthcare vertical as one of the biggest and highest-potential industries ripe for focused innovation in the cloud. Microsoft CEO Satya Nadella has specifically stated that healthcare is the “most important” vertical market, and his company recently laid out $20 billion to acquire Nuance, an AI powerhouse with huge potential in the clinical field. I analyzed Nadella’s vision and his company’s industry-cloud ambitions recently in SAP & Oracle Beware: Microsoft CEO Nadella Declares “Industry-First Focus”.
And within that top-priority vertical, Cerner is the category king and major player, with a $23.6 billion market cap and about 24,000 employees. In a recent conversation with the head of Salesforce’s industry-cloud business, executive vice-president Jujhar Singh referred to Cerner as the “500-pound gorilla” in the healthcare space and pointedly described the various ways Salesforce has partnered with Cerner to unleash more value for healthcare providers and individual patients.
For its most recent quarter, Cerner reported that revenue was down 2% to $1.39 billion. So, while it’s not growing, the company’s got annualized healthcare-technology in the range of $5 billion from many thousands of customers across the globe.
In addition, on its May 5 earnings call, the company disclosed that CEO Brent Shafer will be stepping down as soon as the company is able to hire a new CEO. Also, it recently hired a new CFO, and is clearly positioning itself for some big changes in how it operates. Whether that could include an acquisition is anyone’s guess, but the appetite for that type of an acquisition is very healthy among the major cloud vendors.
Shafer’s looming resignation aside, at the company’s annual customer event in October 2020, he gave a keynote talk that included this overview of the role Cerner currently occupies in the market.
“Cerner has provided important insights and helped make clinical and operational decisions easier for more than 40 years. Today we’re using actionable data to truly transform health care,” said Shafer. “More than ever before, we have tools, technology and innovations to fight this global pandemic. Whether it’s working with health systems from around the world to set up field hospitals, sharing data to help stop the spread or delivering intelligence to better manage patients, equipment or bed availability, we rushed to support the work of health care providers across the globe.”
An article on the Cerner website highlighting Shafer’s presentation also offered this perspective on Cerner’s reach and breadth.
Using data to drive global health care transformation isn’t new for Cerner. The company – started in 1979 – has been a global leader in electronic health records (EHR) for more than 40 years. During that time, Cerner has amassed 250 million patient records supporting 80 million patient visits each year. Paired with nearly 600 patents – more than all core competitors combined, and up nearly 100 new patents from a year ago – Cerner’s investments in technology are nearly $800 million each year to improve and launch new products designed for more effective and cost-efficient heath care delivery.
If data is the new currency, it sounds like in the healthcare field, Cerner is sitting on quite the stash. And as every major tech vendor surges into the market for industry-specific solutions, that’s exactly the type of investment profile the major tech providers are looking for.
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