Cerner Announces Siemens Acquisition Plan
By Christine Kern, contributing writer
Cerner to acquire Siemens AG and plans to deliver new solutions created by the $100 million strategic alliance.
Cerner Corporation and Siemens AG have announced the signing of a definitive agreement for Cerner to acquire the assets of Siemens’ health information technology business unit, Siemens Health Services, for $1.3 billion in cash.
The move combines investments in R&D, knowledgeable resources, and complementary client bases, as well as creates scale for future innovation. As part of the agreement, Cerner and Siemens will form a strategic alliance to combine Cerner’s health IT leadership and Siemens’ strengths in medical devices and imaging bring new solutions to market.
The newly combined company will have $4.5 billion in annual revenue and will invest $650 million annually in research and development, Kansas City, MO-based Cerner said. Its client base will include 18,000 facilities in the U.S. and Germany.
"We believe this is an all-win situation for the clients of both organizations and all of our associates and shareholders," said Neal Patterson, Cerner's CEO and co-founder. “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 alliance has a three-year initial term. Advanced workflows along with medical images and their unique role in diagnostic and therapeutic decision-making, will be an early focus of the joint work.
John Glaser, Ph.D., CEO of the Health Services business unit of Siemens Healthcare said, “The knowledge and strength of our combined resources opens up great possibilities for future collaboration and development, which is exciting for all of us. And our clients will benefit from our alignment with a company that has such a strong historical and future commitment to rapid innovation.”
Following the acquisition, support for Siemens Health Services core platforms will remain in place. Current implementations will continue, and Cerner plans to support and advance the Soarian platform for at least the next decade. Cerner will work with all clients to support their short-term and long-term business needs.
“Siemens is very innovative around imaging, diagnostic and therapeutic technologies and processes,” said Patterson. “Medical technologies generate mountains of images and other data that must be stored, accessed, visualized and interpreted intelligently. In addition, advanced diagnostic and therapeutic processes are enhanced by presenting EMR data at just the right moment and in the right context. Together we will innovate at the edge where IT, processes, and technologies meet.”
Modern Healthcare notes Cerner recently reported net income of $129 million in the second quarter of 2014, up 14.2 percent from the year-ago period. Revenue was up 20 percent to $851.8 million, compared with the same quarter of 2013. Management struck a confident note during its quarterly earnings call, based on new business bookings that increased 15 percent from the year-ago period to an all-time second-quarter high of $1.08 billion.
Earlier this summer, it entered into a bidding alliance with government contractors Leidos and Accenture Federal Services to make a play for the multibillion-dollar contract to build, install and configure a replacement EHR system for the Department of Defense health system.