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Why Cerner Stock Soared Today

By Joe Tenebruso – Dec 17, 2021 at 7:51PM

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A tech titan might be interested in acquiring the medical records company.

What happened

Shares of Cerner (CERN) surged 13% on Friday, as rumors of a potential merger with Oracle (ORCL 1.99%) swirled. 

So what

Oracle could soon move to acquire Cerner for as much as $30 billion, according to The Wall Street Journal. The deal would allow Oracle to make an aggressive move into the $4 trillion healthcare industry. 

A digital image of a cloud is above a person's outstretched hands.

Investors are excited about the potential combination of Oracle's cloud technology and Cerner's health information services. Image source: Getty Images.

Oracle's stock price recently hit an all-time high following its fiscal 2022 second-quarter results. Investors applauded the progress the software giant is making with its cloud initiatives. Oracle's total cloud revenue jumped 22%, to $2.7 billion, in the quarter.

Purchasing Cerner could help Oracle advance its cloud strategy, by giving it a leading presence in electronic medical records. Oracle, in turn, could help to accelerate Cerner's transition to the cloud. That could potentially provide cost savings to medical professionals, many of whom rely on Cerner's software to store and analyze healthcare data, while also improving the company's profit margins in the process.

Now what

Buying Cerner would be a bold move for Oracle. If a merger were to be consummated, it would likely be the largest, by far, in its history. Oracle's largest acquisition to date was its $8.7 billion purchase of NetSuite in 2016. 

Moreover, investors should be hesitant to speculate on either company's stock solely in hopes that a deal will be completed. Neither Cerner nor Oracle responded to the Journal's request for comment, and it's possible that a merger agreement will not be reached.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Cerner. The Motley Fool has a disclosure policy.

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