1、 Event overview
On December 20, 2021, Oracle, an American software giant, announced its acquisition of Cerner, an electronic case company, with a total transaction size of US $28.3 billion in cash of US $95 per share, which is the largest acquisition ever made by Oracle.
2、 Analysis and judgment
The scale of single M & A reached a new high of Oracle, and the trend of medical IT industry was better
Since its establishment in 1977, Oracle is famous for its old database products and is the second largest software manufacturer in the world. This acquisition will help the company enhance its influence in the field of health care. As of December 20, 2021, the market value of oracle was about $264 billion. This transaction was launched at the price of $95 per share, and the total scale of the transaction was about $28.3 billion. The huge transaction scale not only shows Oracle’s determination to enter the “track” of smart medicine, but also shows its recognition of the strategic value of medical it.
The transaction helped Oracle enter the field of cloud computing and led the growth of additional revenue
As the second largest medical information enterprise in the United States, Cerner achieved operating revenue of USD 36.830 billion, USD 39.779 billion and USD 35.925 billion respectively in 2018-2020; The net profit was USD 4.324 billion, USD 3.700 billion and USD 5.090 billion. Cerner has been listed since 1986, with a compound annual revenue growth rate of 19.26% and a gross profit margin of 80%. The transaction will become an engine for Oracle’s revenue growth in cloud computing. It is expected to bring profit growth to Oracle after the first full fiscal year after the transaction is completed.
Cerner has performed well in the international market, and mergers and acquisitions may accelerate Oracle’s leading position in the medical IT market
According to the announcement, Cerner’s EHR international business revenue accounts for about 11.5% of the total business. Due to the relatively mature EHR market in the United States, Cerner seeks a path for growth through active regional expansion. Especially after its acquisition of Siemens EHR business, Cerner is widely deployed in Dach, France, Norway and Spain, with the top market share. Oracle is optimistic about Cerner’s global layout and plans to further expand the order volume through resource integration to improve the pessimistic situation of scattered global market and slow change in share.
3、 Investment advice
From the perspective of this acquisition, the global market has highlighted the strategic value of medical it. With the continuous promulgation of China’s industrial policies recently, the medical IT industry is in the early stage of a new round of business cycle, leading enterprises usher in multiple opportunities, and the reform of medical insurance payment is expected to drive the transformation of SaaS mode. It is suggested to focus on B-Soft Co.Ltd(300451) , Winning Health Technology Group Co.Ltd(300253) , Wonders Information Co.Ltd(300168) , Sichuan Jiuyuan Yinhai Software Co.Ltd(002777) and other leading medical IT enterprises.
4、 Risk tips:
Competition in the medical IT industry intensified, and the progress of policy implementation was less than expected.
