Cerner’s growth hits new gear with completion of $1.3B Siemens deal

February 3, 2015

 

Executives and employees of Cerner Corp.have gotten used to rapid growth. But Monday’s closing of Cerner’s $1.3 billion acquisition of Siemens Health Services takes that growth to an entirely new level.
The deal takes North Kansas City-based Cerner (Nasdaq: CERN) from a little less than 16,000 associates to roughly 22,000 and gives the company a presence in 30 countries — nearly doubling that total.
Cerner purchased the health care information technology operations of German giant Siemens AG. It offers clinical and financial IT products and offers support services including hosting of client data, consulting and health information exchange capabilities. The combination will allow abundant cross-selling opportunities and give Cerner a greater global presence.

“Fundamentally, this is good for our collective client base, and Siemens thought Cerner was a good recipient of this client base,” Chief People Officer Julie Wilson said.

In an August presentation, Cerner executives estimated Siemens Health Services’ 2014 revenue at $1.2 billion.

After the acquisition, Cerner expects to report revenue of between $4.8 billion and $5 billion for 2015. Cerner won’t report its 2014 revenue and earnings until Feb. 10, but Bloomberg reports an analysts consensus revenue estimate of $3.4 billion.

John Glaser, former CEO of Siemens Health Services, is joining Cerner as a senior vice president and part of the company’s executive cabinet. Glaser, who Wilson said could be seen as an “iconic” CIO, will help Siemens Health Services clients make the transition to Cerner and work on strategic initiatives.

Dick Flanigan, who has 20 years of experience with Cerner, will act as president of the Siemens Health Services business unit. Farrell Sanders, senior vice president and general manager of Cerner ITWorks, will essentially act as COO of the new business unit.

Cerner plans to retain the Siemens Health Services offices in Malvern, Pa. That was the base of Shared Medical Systems, which Siemens bought for $2.1 billion in 2000. Siemens AG said earlier this year that it planned to consolidate some of its divisions and that its health care division would be separately managed in the future.

Cerner said that it and the former Siemens Health Services unit have a combined research and development investment of more than $650 billion.

As part of the purchase, Cerner formed a strategic alliance with Siemens AG. Each company expects to kick in up to $50 million during the first three years for research on integrating health diagnostics and therapeutics into the electronic health record.

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