Cerner Extends Reach Into Federal Contracting With Recent Acquisition

Missouri-based IT giant Cerner announced that it plans to acquire IT consulting firm AbleVets for an undisclosed amount. Cerner, which stands as one of the biggest distributors of EHR systems, appears to be undertaking the acquisition in order to grow its presence in federal contracting, despite having garnered criticism for the challenges the company has faced in creating an EHR system for the VA.

Based in Virginia, AbleVets specializes in cyber, cloud and system development with a client roster that mainly consists of federal agencies. The Washington Business Journal has identified the 350-person company as one of the fastest-growing businesses in the Washington, D.C. metro area.

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AbleVets’ most recent high-profile project involves developing software to determine whether individual VA enrollees are eligible to access healthcare services from private healthcare providers. As part of this project, AbleVets was responsible for culling and interfacing data from six different IT systems—although the U.S. Department of Veteran Affairs has received criticism alleging poor execution and planning of the project.

Cerner has been the recipient of similar controversy recently as well. The IT giant was tasked with modernizing the VA’s EHR system, but many observers questioned Cerner’s award of the multi-billion dollar project outside of a competitive bidding process. What’s more, the expected timing of the project has been called into question, with the system’s go-live date of March 2020 recently pushed back seven months at three VA medical centers.

AbleVets executives are outwardly optimistic about the acquisition, however: "By combining AbleVets' strategic and technical expertise in the federal space with Cerner's global scale, technology and innovation, we can expand our collective reach, accelerate developments and make the greatest impact on improving outcomes across the care continuum," AbleVets CEO Wyatt Smith said in a statement.

The hope appears to be that the transaction can also help reverse some negative trends that Cerner has been seeing in recent quarters. The company’s earnings have been lackluster; while its second quarter net income exceeded estimates, its revenue was below expectations. Likewise, new business bookings were down 20 percent year-over-year. In addition to betting on transactions like the AbleVets acquisition to boost future earnings, Cerner also recently announced that it would be investing over $200 million in streamlining business processes with an eye to reducing expenses.