Cerner completes $1.3 billion buy of Siemens

Cerner Corp. president Zane Burke waited Monday morning for a wire transfer to confirm that the deal was done — that Siemens Health Services was now Cerner.

The transfer signaled that Cerner’s $1.3 billion cash acquisition was complete.

“It gets us to where analysts estimate we’re at $4.8 billion to $5 billion,” Burke said of the company’s expected combined annual revenues.

The acquisition, announced in August and approved by regulators in the fall, was cemented Monday.

Burke said it vaults Kansas City-based Cerner further into position as the market leader in providing health care information technology to physicians’ offices, hospitals, home health agencies, pharmacies and employer organizations.

Cerner’s next earnings report is due Feb. 10. Analysts expect the company to report $3.4 billion in sales to close out 2014. Add in about $1.2 billion from Siemens, and the revenue growth will be notable. Even without Siemens, Burke said, Cerner revenues grew in 2014 from $2.91 billion reported in 2013.

Cerner reported hiring 1,645 associates last year to pass a 10,000 milestone in the Kansas City area alone. With Siemens, the company gains about 5,000 workers, boosting worldwide employment to more than 21,000.

Burke said last week that Cerner is delighted to bring the Siemens company into the fold.

“We’re in exactly the same business with Siemens,” Burke said. “That’s why it’s such a great match.”

Both companies sell software and consulting services to health care providers. Cerner pledged to support Siemens’ IT platform, Soarian, for at least 10 years.

Burke said Cerner was particularly eager to pump up research and development, “solving big, hard, complex problems” in health care information technology. Combined, the company will have an annual research and development investment of more than $650 million.

“The two combined companies working together are focusing $100 million in additional investment (over the next three years) on joint initiatives,” Burke said. “Software is never finished.”

Cerner co-founder and chief executive Neal Patterson said in prepared remarks that “by combining client bases, investments in R&D and associates, we are in a great position to lead clients through one of the most dynamic eras in health care.”

Cerner also is moving forward on a strategic alliance with Siemens AG, the former parent company of Siemens Health Services. The alliance is focused on advancing health care information technology, drawing from Cerner’s IT leadership and Siemen’s imaging and device expertise.

The acquisition doesn’t involve relocation of Siemens employees, at least at this point, Burke said. Most of the affected Siemens workers are in Malvern, Pa. Some also are in Germany.

Since the Cerner acquisition was announced, 97 percent of the Siemens employees have accepted their new standing as Cerner associates, he added.

With the acquisition, Cerner will have clients in 18,000 facilities in more than 30 countries.

Cerner has just begun the earth-moving stage to develop its fourth major office campus in the Kansas City area. It broke ground this winter on a planned development in south Kansas City on the former Bannister Mall site.

In addition to another south Kansas City office site, the company also has its headquarters campus in North Kansas City and its technology support campus in Wyandotte County.

This story was originally published February 1, 2015 at 8:00 PM with the headline "Cerner completes $1.3 billion buy of Siemens."