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Oracle has big plans for its Cerner acquisition, but it has integration work ahead including moving a customer base to the cloud and rewriting applications with a little help from generative AI.

As a refresher, Oracle closed its $28 billion acquisition of Cerner in June 2022. The plan for Oracle is clear: Use its cloud and data knowhow to transform healthcare.

But lost amid talk of Oracle Cloud Infrastructure, growth rates, partnerships with Microsoft and Oracle Cloud World was how much attention Cerner integration received from CTO Larry Ellison and CEO Safra Catz. Consider:

  • On the first quarter earnings call, Cerner was mentioned 30 times, second only to cloud at 71 mentions.
  • Catz gave revenue growth guidance including Cerner and excluding it. Catz cited headwinds on moving Cerner customers from a license model to a cloud one. And she noted that Cerner profitability has to get to "Oracle standards." Catz said: "We are in an accelerated transition of Cerner to the cloud. This transition is resulting in some near-term headwinds to the Cerner growth rate as customers move from license purchases, which are recognized upfront, to cloud subscriptions, which are recognized ratably. Again, excluding Cerner, I remain committed to accelerating our total revenue growth rate this fiscal year as well as maintaining our current high cloud growth rate for the year."
  • Ellison said that Cerner, aka Oracle Health, has been "awarded two large new contracts with a total value of over $1 billion" to be recognized in the current quarter.

Rest assured that Cerner and healthcare will get a breakout when Oracle hosts its analyst meeting at Oracle Cloud World. Oracle at its health conference tied to Cloud World being held in Las Vegas, made a series of announcements that highlight the company’s healthcare push. Oracle outlined generative AI capabilities across its health product suite, healthcare workplace optimization, financial planning and supply chain applications and customers wins such as Tenent Healthcare, Providence and Loblaw.

Ellison outlined the Cerner integration.

First, Oracle is moving Cerner's Millenium electronic health record (EHR) platform to the cloud and rewriting the software in pieces. At Oracle Cloud World, Oracle also outlined its next-generation Millenium EHR with generative AI tools and public APIs running on Oracle Cloud. 

Ellison said:

"There's a two-phase process with Cerner. The first thing is to get the lift and shift and get the existing system hardened, which we've done and moving the customers to the cloud, which we are in the process of moving everybody to the cloud. That will give them better performance, better security and new features will then start showing up with the system."

And then Oracle is replacing Cerner features with new ones. Ellison said this process will replace the old Cerner system with a new one. He added that Oracle isn't rewriting the code in Java though. It is using generative AI. Ellison said:

"We have an application generator called APEX. And we are not writing code for the new Cerner. We are generating that code in APEX, and it's going extremely well. Again, one of the great things about code generators is they don't make mistakes. Well, either they make the same mistake over and over again or once you fix the mistake, you fix it everywhere. So, the code gen -- we are using a code generator, and to write the new features in Cerner and it's coming along very, very nicely."

Finally, Oracle will transition the old Cerner business to a new model. Catz covered that point, but Ellison reiterated that the transition to a cloud model is a headwind as revenue is recognized over time. Catz also said Oracle "still has a way to go" on Cerner expenses, but changes will become more obvious in future quarters.


"We are always looking to save as much as we can, and to spend as little while still really transforming Cerner into a modern system in its entirety," said Catz.

Ellison added that Oracle loves to save money. "One of the things we did with our data centers is we automated them. We saved labor costs, and we have better security and better reliability because we eliminated human error," he said. "With the rewrite of Cerner, it's not armies of programmers that are going be rewriting this. We are generating the new Millennium software using APEX. And that's also going to save us a lot of human labor and generate higher quality code and higher quality user interfaces and better security all at once."