Cerner Sells Parts Of Healthcare IT Portfolio For $250 Million

Earlier this month, Cerner Corporation entered into an agreement with CompuGroup Medical SE to sell off parts of its healthcare IT portfolio. This will see Cerner’s Medico, Selene, Soarian Health Archive, and Soarian Integrated Care software products sold for around $247.5 million to the German healthcare software company. Cerner acquired the hospital information system business back in 2014 for $1.3 billion from Siemens.

“The products from this acquisition are an excellent fit with our current portfolio,” said Frank Gotthardt, Chairman, CEO of CompuGroup Medical SE. “Existing customers of CGM, as well as those of medico, S-IC, S-HA, and Selene, will benefit from this transaction: The products acquired from Cerner complement our existing portfolio of products perfectly, and we believe the exchange between professionals of all healthcare segments will be further intensified. For all of our customers, this means that they will be optimally prepared for a world in which the patient journey is increasingly cross-institutional and cross-sectoral. And this is true regardless of whether they are doctors’ or dentists’ practices, hospitals, laboratories, pharmacies, rehabilitation or care facilities or other service providers.”

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The sell-off reflects the North Kansas City-based company's growth strategy for 2020, as part of a deal struck with activist investment fund, Starboard Value in 2019. The company-wide transformation began last year, with Cerner implementing cost-cutting efforts including multiple rounds of layoffs. This sale also demonstrates the company’s renewed focus on portfolio management.

On an investor conference call, Cerner executives indicated that several acquisitions and divestitures could be anticipated in the coming years. Last year, CEO Brent Sakfer unveiled the company’s new operating model, which spans behavioral health, data as a service and more consumer-based services that go beyond hospitals and traditional healthcare.

This is also significant for CompuGroup. Just last year, the company failed to acquire Agfa's hospital division which was instead obtained by Dedalus Holding. Its acquisition of Cerner's software gives it the second-largest market share at 20%, just behind the market leader, Agfa.

Currently, Medico is used by 251 hospitals in Germany, while 65 Spanish hospitals utilize Selene. Barclays acted as exclusive financial advisor to Cerner. The acquisition is expected to close in Q3 of 2020.