Cerner announced this afternoon that it will acquire the assets of Siemens’ health information technology business, Siemens Health Services, for $1.3 billion in cash.
According to a statement from Cerner Chairman and CEO Neal Patterson, “We believe this is an all-win situation for the clients of both organizations and all of our associates and shareholders. Through more than $4 billion of cumulative investments in R&D, Cerner has established a strong market standing and is positioned for continued growth. Siemens’ health care IT assets provide additional scale, R&D, an impressive client base, and knowledgeable and experienced associates who will help Cerner achieve our plans for the next decade. In addition, the alliance we’re creating will drive the next generation of innovations that embed information from the EMR inside advanced diagnostic and therapeutic technologies, benefitting our shared clients.”
I spoke to Patterson ahead of the announcement. He said, “Siemens could not keep up with the need to innovate across the continuum,” adding that Cerner looked carefully at how its business would fit into Cerner’s. “If it slowed us down, we weren’t going to touch it. If we didn’t think it would have a huge value proposition, we weren’t going to touch it.”
Patterson added, “The broad driver is the post-Meaningful Use era” and pointed to the $650 million combined annual research and development spend between the two companies. The companies will also jointly fund a $100 million alliance to perform development activity around diagnostic and therapeutic medicine. “IT systems are important to Siemens’ healthcare modalities,” he told me. “We will go much deeper than the workflow level.”
Patterson summarized, “This is a win-win-win across the board. Siemens clients will get a lot of value. We will partner on their core healthcare business. Lots of our clients use both systems in different capacities.”
Cerner says it will continue to support Siemens’ platforms and will support Soarian “for at least the next decade.”
John Glaser, PhD, CEO of the Siemens unit, said in a statement, “We are excited to join with one of the most competitive companies in health IT today, and a recognized leader in innovation. Siemens cares deeply about its clients and believes Cerner is the best organization to fully support their health IT needs going forward. 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.”
The combined organizations will have 20,000 employees, 18,000 client facilities, and $4.5 billion of annual revenue. The transaction is expected to close in the first quarter of 2015.
HIStalk has featured rumors of the acquisition going back to early May, when Vince Ciotti was the first to tip me off to the rumors.