One of the largest electronic medical record companies on Tuesday afternoon announced it had inked an agreement to acquire Siemens' health IT business unit, Siemens Health Services, for $1.3 billion in cash. 

The combined revenue of the two companies will bring in $4.5 billion annually, Cerner officials noted. Siemens Health Services' employees combined with Cerner's 14,200 associates will total nearly 20,000 associates across more than 30 countries. The deal is expected to close in early 2015. 

Already, Cerner boasts formidable marketshare in the U.S. This acquisition will "bring an impressive worldwide client base," expanding its reach in European countries such as Germany, Austria, Spain, Sweden and Norway, said Zane Burke, Cerner president, on a conference call announcing the deal.

"Cerner is doing very well," Burke added, "so we didn't approach this from a position of needing to be a large acquisition, but we did identify it as a great opportunity."

[See also: Is Cerner eyeing a Siemens acquisition?.] [See also: Cerner sees record Q2 results.]

Siemens Health Services' 2014 fiscal year revenues were estimated at $1.2 billion and, in the past few years, have stayed fairly flat over a period of time, noted Marc Naughton, Cerner's chief financial officer. "I think that's something we can change the trajectory of." 

Cerner was one of only three EMR vendors that increased its market share in 2013. The company saw GAAP net earnings stand at $398.4 million, up from $397.2 million in 2012. 2013 bookings also reached a record high, at $3.77 billion, up 20 percent from 2012. The acquisition, officials said, will allow Cerner to bring new solutions to the market that leverage both Cerner's health IT platforms and Siemens' medical devices and imaging niche.

When asked how this acquisition would affect customer attrition, Naughton said, "Certainly that was a key concern for us … we understand that we're going to have to create a very secure future for these clients."

Cerner officials plan to support and advance the Siemens' Soarian EMR platform for at least the next 10 years, with current implementations poised to continue.

"We're just going to win their trust and show them an unbelievable value proposition going forward," said Cerner CEO Neal Patterson. "It will be work. It isn't anything we don't know how to do." 

"Siemens cares deeply about its clients and believes Cerner is the best organization to fully support their health IT needs going forward," said John Glaser, CEO of the Health Services business unit of Siemens Healthcare, in a prepared statement. "The knowledge and strength of our combined resources opens up great possibilities for future collaboration and development, which is exciting for all of us. And our clients will benefit from our alignment with a company that has such a strong historical and future commitment to rapid innovation."

Based on 2014 estimates, Cerner and Siemens Health Services have combined totals of more than:

• 18,000 client facilities, including some of the largest healthcare organizations in their respective countries
• $4.5 billion of annual revenue
• $650 million of annual R&D investment

Of all hospitals attesting to meaningful use, slightly more than 10 percent of unique hospitals attested using a Cerner platform. Contrastingly, only about 4 percent of hospitals used a Siemens EHR to attest. 

With regard to eligible professionals, only 12 unique eligible providers have used Siemens to attest, representing just .004 percent of the market. Cerner, however, held approximately 3 percent of the marketshare with eligible providers, as some 9,700 unique eligible professionals attested to meaningful use with a Cerner platform (out of 293,000 EPs included in an HHS meaningful use data set.)

Company officials anticipate the transaction will reach more than $0.15 accretive to Cerner's non-GAAP diluted EPS in 2015, and more than $0.25 accretive in 2016. Non-GAAP earnings are expected to exclude share-based compensation expense, one-time transaction costs, and acquisition-related amortization and deferred revenue adjustments.