Both Cerner and Siemens are giants within the medical technology market, both providing the tools for comprehensive Electronic Medical Record (EMR) systems. In an effort to improve the company's customer reach, Cerner has begun drafting an agreement to purchase Siemen's health IT business unit, known commonly as Siemens Health Services. The deal, announced on Tuesday afternoon, will reportedly be settled for $1.3 billion in cash, and is expected to close sometime in early 2015.
$1.3 billion is a sizable chunk of money to pay for this service, considering that the two companies have a combined annual revenue of around $4.5 billion. However, the deal is expected to add around 18,000 new facilities to Cerner's client base, which will significantly improve revenues in the long run. The deal will also add approximately 20,000 associates to Cerner's 14,200 strong workforce.
According to Frost & Sullivan Healthcare IT Research Analyst Shruthi Parakkal, this acquisition could have huge implications for the future of the EMR industry. “Cerner's acquisition of Siemens will reinforce the former’s leadership in healthcare IT (HCIT), as the expanded client base, synergies in resources and investment potential will help to expand its addressable market,” claims Parakkal. “The highlight of the two HCIT giants’ alliance is the value generated from their synergy: Siemens’ expertise in imaging IT and laboratory management will add value to Cerner’s EHR and PAS portfolio... Overall, the alliance will enable the expansion of Cerner’s market footprint and provide opportunities to up-sell, especially in Europe where Siemens has a rich client base.”
He also adds that “This acquisition is not just an organic business development route for Cerner, but has to be seen as a stepping stone supporting its strategy of positioning itself as an end-to-end player in the evolving HCIT markets globally.”
Edited by
Adam Brandt
