Cerner, Kansas City’s largest private employer, will be acquired by Oracle in a $28 billion deal

Oracle said it intends to “maintain and grow Cerner’s community presence, including in the Kansas City area” and use Oracle’s global footprint “to reach new geographies faster.” Cerner, which is headquartered in Kansas City and has multiple office locations throughout the Kansas City area, was founded in 1979. Photo credit Carlos Moreno/KCUR 89.3.

By Dan Margolies

Cerner Corp., Kansas City’s largest private employer, has agreed to be bought by software giant Oracle Corp. in a deal valued at $28.3 billion.

Oracle’s all-cash offer for the electronic health records company comes to $95 a share.

Oracle, which is based in Austin, Texas, is one of the biggest providers of software to other companies. The Cerner deal marks its largest acquisition to date.

Cerner provides electronic health records to hospitals and other health care providers. The company was founded in Kansas City in 1979 by the late Neal Patterson, Cliff Illig and Paul Gorup, who were colleagues at Arthur Andersen, the accounting giant. Cerner is now the second biggest vendor of electronic health records after Epic Systems.

In a news release announcing the Oracle deal, Cerner President and CEO David Feinberg said becoming part of Oracle “provides an unprecedented opportunity to accelerate our work modernizing electronic health records (EHR), improving the caregiver experience, and enabling more connected, high-quality and efficient patient care. We are also very excited that Oracle is committed to maintaining and growing our community presence, including in the Kansas City area.”

Cerner employs more than 12,700 local full-time workers at four campuses throughout the Kansas City area, according to the Kansas City Business Journal. The company has more than 25,000 employees worldwide.

Although Oracle said it intends to “maintain and grow Cerner’s community presence, including in the Kansas City area,” it is not immediately clear what the deal’s implications are for Cerner’s long-term presence in the Kansas City area. Cerner officials did not immediately return calls seeking comment.

Cerner is the latest home-grown company snapped up by an outside entity, joining Sprint Corp., which was acquired by T-Mobile in April 2020, and Kansas City Southern railroad, which is being acquired by Canadian Pacific railroad in a pending deal.

In a statement, Joe Reardon, president and CEO of the Greater Kansas City Chamber of Commerce, said those two deals put the Kansas City companies in a stronger position.

“In fact,” he said, “the Sprint Campus became T-Mobile’s second headquarters, and CPKC’s U.S. headquarters is in Kansas City, which puts KC right in the middle of a U.S., Canada, Mexico single line railroad in a newly combined North American rail network. These transformations bring global innovation and exposure.”

In the third quarter that ended in September, Cerner posted $175.8 million in net income, down 50% from a year earlier, on revenue of $1.46 billion. In 2020, Cerner reported $780.1 million in net income, a 47% increase, on revenue of $5.5 billion.

In a bid to cut costs, Cerner has eliminated more than 1,100 positions since November.

Cerner was awarded a $10 billion contract in 2018 by the Department of Veteran Affairs to upgrade its electronic health records system. The project’s rollout was criticized this year by the VA’s inspector general, who found that hospital workers were not adequately trained on the new software during a pilot program at a small VA facility in Spokane, Washington.

Cerner remains committed to the project, telling KCUR in a statement in July that “Cerner and (the) VA have made progress toward achieving a lifetime of seamless care for our nation’s veterans and we look forward to continuing this important mission.”

Feinberg, a physician and former Google Health executive, became president and CEO of Cerner just 11 weeks ago. He was expected to continue the company’s push into health care in general, emphasizing not just the sale of electronic health records software but mining the data from those records to help guide health care decisions.

In late October, Feinberg told investors that Cerner had not reached its “true potential” and that “(i)mproving the usability of Cerner’s solutions is at the top of my list of things to get done.”

KCUR 89.3 is Kansas City’s NPR affiliate public radio station. You can read and listen to more of their reporting at kcur.org.