athenahealth and Cerner Working with Apple for HealthKit

Healthcare information systems providers athenahealth, Inc. (ATHN) and Cerner Corporation (CERN) are reportedly working with technology giant Apple Inc. (AAPL) to develop applications that leverage the latter's recently launched mobile health service app HealthKit.

Since the announcement, shares of athenahealth rose 5.4% while shares of Cerner inched down 0.3% till the last trading session.

HealthKit allows health and fitness services to share their data with the app and with each other. An Apple product user’s health information is stored in a centralized location and the user can decide which data should be shared with her app.

For example, through the HealthKit app, the user can allow the data from her blood pressure app to be automatically shared with her physician. Or it can allow nutrition app to instruct her fitness apps how many calories she should consume each day.

Representatives of both athenahealth and Cerner are said to be building integrations with HealthKit and working with Apple. Earlier, Apple announced a partnership deal with leading privately-held electronic health record company Epic Systems - one of the big rivals of both athenahealth and Cerner.

Last month, Cerner said it inked a deal to acquire the health care information technology business, Siemens Health Services, from German industrial conglomerate Siemens AG (SIEGY) for $1.3 billion.

According to Cerner CEO and Founder, billionaire Neal Patterson, the acquisition will improve the scale of its business. Post-acquisition, the combined entity will have 20,000 associates in more than 30 countries, and 18,000 facilities.

The acquisition of Malvern, PA-based Siemens Health Services will lift North Kansas City, MO-based Cerner’s sales from $3 billion in 2013 to more than $4.5 billion this year. Both the companies will have an annual research and development investment of $650 million.

All these benefits are definitely going to deliver a heavy blow to Cerner’s largest rival company Epic Systems as well as new entrants including NantHealth and Flatiron Health.

The acquisition is expected to be accretive to Cerner's adjusted earnings per share by more than 15 cents in 2015 and more than 25 cents in 2016. The acquisition is expected to close in the first quarter of next year.

As part of the deal, Siemens has also agreed to form a strategic alliance with Cerner to invest in projects for developing the electronic health record system. Both the companies have agreed to contribute up to $50 million per year for the next three years to fund projects for their mutual benefit.

Currently, both athenahealth and Cerner carry a Zacks Rank #3 (Hold).

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