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Cerner to Take Over PureWellness

Zacks Equity Research

Leading healthcare information technology (“HCIT”) solutions provider Cerner Corporation (CERN) recently reported that it had arrived at an agreement to take over PureWellness, a company specializing in wellness and health.

PureWellness provides offerings that improve lifestyle and population health. With this takeover, Cerner will develop the ability to help entities better manage the care of individuals in a population. By coordinating PureWellness with its own offerings, Cerner will be well placed to support a variety of health care entities provide improved population health management.

PureWellness provides a tailor-made platform used by a few thousand entities for over 4 million persons. Its overall wellness and health offering permits better management and administration of all wellness programs initiated by an entity.   

Cerner remains the trend setter among pure-play, publicly traded healthcare IT (:HCIT) vendors. The company is diversified not only on a global basis but serves both hospitals and ambulatory outfits. Its integrated solutions have captured market share. While greenfield opportunities are shrinking, the replacement market is growing.

We believe long-term investors may consider Cerner, which serves a sizeable installed hospital base that requires composite clinically-oriented applications complying with “meaningful use” requirements, reimbursement difficulties and complicated coding challenges. The company has long-standing, integrated and seamless solutions for both inpatient and ambulatory settings.

On the negative side, the federal Stimulus program is gradually winding down. Cerner faces stiff competition from established HCIT players, such as Athenahealth (ATHN).

We currently have a Zacks Rank #3 (Hold) on Cerner. However, we are more positive about other stocks such as Merge Healthcare Incorporated (MRGE) and Becton, Dickinson and Company (BDX) both of which carry a Zacks Rank #2 (Buy) and are expected to do well. 

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