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Despite growth, Oracle reported to cut jobs at Cerner healthcare unit

Despite growth, Oracle reported to cut jobs at Cerner healthcare unit

After reporting a jump in cloud revenue and record annual sales earlier this week, Oracle is reportedly laying off Cerner employees, casting a shadow on plans for its $28 billion acquisition of the healthcare business.

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Just days after reporting a jump in quarterly cloud revenue and record-breaking annual sales, Oracle has reportedly laid off hundreds of employees and pulled job offers for its Cerner healthcare unit, which it acquired in December for $28.3 billion.

The layoffs were a result of a troubled deal between Cerner and the US Department of Veterans Affairs Office, according to a report by Insider.

In April, the VA said that it was renegotiating its contract with Cerner due to a number of issues that had arisen regarding technical glitches and patient safety. “We’ve heard from Veterans and VA clinicians that the new electronic health record is not meeting expectations – and we’re holding Oracle Cerner and ourselves accountable to get this right,” said VA Secretary Denis McDonough, in a press release.

Earlier, in October 2022, the VA issued a report outlining the issues it was having, which included problems with performance, patient scheduling, referrals, medication management, and various types of medical orders.

Oracle declined to comment on the news of this week's layoffs, which cast a shadow on the company's high hopes for Cerner. Though Oracle's cloud business appears to be making gains, company executives have said that they expect Cerner to be a key factor in further growth, given the need of digital transformation in the healthcare industry as the sector digitises electronic healthcare records and optimises back-end systems.

Oracle reports record annual revenue

The news of the Cerner layoffs comes in the same week that Oracle posted its fourth quarter 2023 results, with revenue in the reported quarter up 17% year on year to $13.8 billion and profit up by 24% to $3.3 billion. Cloud revenue for the quarter jumped 54% to $4.4 billion, helping to fuel an overall 18% rise, to $50 billion, for the company's fiscal year — a company record.

During its earnings call with analysts after the results were announced, Oracle executives touted the gains it has made in cloud as well as work it's doing in AI, which include the addition of AI and automation features to its supply chain management (SCM) and human resource management (HCM) applications.  

In addition, at the start of June, Oracle participated in the Series C funding round for Cohere, an enterprise-focused generative AI startup whose technology can be used to produce copywriting and support search and summarisation capabilities. The company raised $270 million in the funding round and the business has since been valued at around $2.2 billion.

Meanwhile, Oracle plans to adapt its applications to the healthcare sector.

“When we bought Cerner, we decided that we were going to take our human capital management (HCM) system… [and] add features specifically for the healthcare industry,” co-founder and CTO Larry Ellison told analysts on the earnings call this week.

While he conceded that workforce management within the healthcare sector is “very complex,” he added that the acquisition of Cerner was allowing Oracle to further invest across the entire healthcare ecosystem.

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