IBM Stock Jumps For Buying Truven Health At Twice Its 2012 Price
Cerner stock headed down Thursday morning and IBM ‘s jumped after the latter disclosed that it’s buying Truven Health Analytics for $2.6 billion, twice Truven’s sale price four years ago. Like Cerner ( CERN ), the largest pure-play health care software provider in the U.S., smaller Truven provides cloud-based health care data and analytics. Truven counts 8,500 clients, including federal and state agencies, private employers, health plans, hospitals, clinicians and life science companies. Cerner’s primary clientele is large hospitals, though it serves many others, too. IBM stock was up 5.5%, near 133, in morning trading in the stock market today . Following two bad days after guiding Q1 and 2016 below analyst estimates, Cerner was down another 2%, near 52, in morning trading Thursday, 31% off an all-time high set April 13. Smaller rivals Allscripts ( MDRX ) and Athenahealth ( ATHN ) were down 1% and 3%, respectively. Quality Systems ( QSII ) stock was up 1%. Oracle ( ORCL ), which also developers health care IT software, was down a fraction Thursday morning. This is IBM Watson Health’s fourth big health care IT purchase since IBM created that business last April, bringing total employment in the unit to about 5,000. That’s about a fourth of Cerner’s employment, after it acquired Siemens Health last February. In October, IBM completed the $1 billion acquisition of Merge Healthcare, a clinical image processing and interoperability-systems specialist. Including Truven, IBM will have invested more than $4 billion to build Watson Health, a business that IBM says is “intended to help professionals improve health outcomes, control costs, and advance value-based care solutions.” Encouraged by lawmakers, software developers and mountains of new regulations, health care IT has been moving into a “value-based care” model that measures outcomes — and rewards hospitals and medical practices for good outcomes, while pushing doctors out of paper-based systems. Hospital IT budgets are expected to rise about 8% in 2016, up from 6% to 7% growth in 2015, though Cerner closed 2015 with 30% revenue growth, due largely to its Siemens acquisition. Based in Ann Arbor, Mich., Truven was sold by Thomson Reuters ( TRI ) in June 2012 to Veritas Capital for $1.25 billion. In the press release, Truven CEO Mike Boswood said the merger “will help catapult the industry forward to transform health care and to save and improve lives.”