Cerner Corporation (Nasdaq: CERN) today announced results for the 2017 third quarter that ended September 30, 2017.
Bookings in the third quarter of 2017 were $1.111 billion, down from $1.434 billion in the third quarter of 2016 and below the company’s guidance range due to several large contracts that were projected to sign in the quarter being delayed, with most of them now expected to sign in the fourth quarter of 2017. The Company’s fourth quarter bookings guidance reflects these contracts in addition to an already strong level of forecasted activity for the fourth quarter. Achieving this guidance would lead to all-time high levels of bookings for the fourth quarter and full year.
Third quarter revenue was $1.276 billion, an increase of 8 percent compared to $1.185 billion in the third quarter of 2016 and in the Company’s guidance range.
On a U.S. Generally Accepted Accounting Principles (GAAP) basis, third quarter 2017 net earnings were $177.4 million and diluted earnings per share were $0.52. Third quarter 2016 GAAP net earnings were $170.0 million and diluted earnings per share were $0.49.
Adjusted Net Earnings for third quarter 2017 were $205.9 million, compared to $202.6 million of Adjusted Net Earnings in the third quarter of 2016. Adjusted Diluted Earnings Per Share were $0.61 in the third quarter of 2017, an increase of 3 percent compared to $0.59 of Adjusted Diluted Earnings Per Share in the year-ago quarter and in-line with the Company’s guidance range. Analysts’ consensus estimate for third quarter 2017 Adjusted Diluted Earnings Per Share was $0.62.
Adjusted Net Earnings and Adjusted Diluted Earnings Per Share are not recognized terms under GAAP. These non-GAAP financial measures should not be substituted for GAAP net earnings or GAAP diluted earnings per share, respectively, as measures of Cerner’s performance, but instead should be utilized as supplemental measures of financial performance in evaluating our business. Please see the accompanying schedule, titled “Reconciliation of GAAP Results to Non-GAAP Results,” where our non-GAAP financial measures are defined and reconciled to the most comparable GAAP measures.
“Our third quarter was solid from a revenue and earnings standpoint and included record cash flow, but we are disappointed with missing our targeted level of bookings due to large contracts pushing,” said Zane Burke, President. “We remain well positioned for a good year based on our strong bookings guidance for the fourth quarter and expected solid full-year revenue and earnings growth. More importantly, we believe Cerner remains extremely well positioned for good long-term growth as we continue to gain share in the Electronic Health Record replacement market and still have meaningful growth opportunities in revenue cycle and population health, where our solutions and services help our clients navigate the shift from fee-for-service reimbursement to reimbursement based on value and quality.”
Cerner currently expects:
Cerner is also providing preliminary comments on expected 2018 results. Note that these comments should be viewed as preliminary until the Company finalizes its financial plan and provides formal guidance when it reports fourth quarter results. Cerner currently expects 2018 revenue between $5.50 billion and $5.70 billion, with the midpoint of this range reflecting growth of 9 percent over 2017 expected results. Cerner currently expects 2018 Adjusted Diluted Earnings Per Share between $2.52 and $2.68 per share, with the midpoint reflecting 7 percent growth over 2017 expected results.
Cerner will host an earnings conference call to provide additional detail on the Company’s results and outlook at 3:30 p.m. CT on October 26, 2017. On the call, Cerner will discuss its third quarter 2017 results and answer questions from the investment community. The call may also include discussion of Cerner developments, and forward-looking and other material information about business and financial matters. The dial-in number for the conference call is (678)-509-7542; the passcode is Cerner. Cerner recommends joining the call 15 minutes early for registration. The re-broadcast of the call will be available from 6:30 p.m. CT, October 26, 2017 through 11:59 p.m. CT, October 29, 2017. The dial-in number for the re-broadcast is (855)-859-2056; the passcode is 96091854.
An audio webcast will be available live and archived on Cerner’s website at www.cerner.com under the About Us section (click Investor Relations, then Presentations and Webcasts).
Cerner’s health information technologies connect people, information and systems at more than 25,000 facilities worldwide. Recognized for innovation, Cerner® solutions assist clinicians in making care decisions and enable organizations to manage the health of populations. The company also offers an integrated clinical and financial system to help health care organizations manage revenue, as well as a wide range of services to support clients’ clinical, financial and operational needs. Cerner’s mission is to contribute to the systemic improvement of health care delivery and the health of communities. Nasdaq: CERN. For more information about Cerner, visit cerner.com, read our blog at blogs.cerner.com, or connect with us on Twitter at twitter.com/cerner and on Facebook at facebook.com/cerner. Our website, blog, Twitter account and Facebook page contain a significant amount of information about Cerner, including financial and other information for investors.
Certain trademarks, service marks and logos set forth herein are property of Cerner Corporation and/or its subsidiaries.
All statements in this press release that do not directly and exclusively relate to historical facts constitute forward-looking statements. These forward-looking statements are based on the current beliefs, expectations and assumptions of Cerner's management with respect to future events and are subject to a number of significant risks and uncertainties. It is important to note that Cerner's performance, and actual results, financial condition or business could differ materially from those expressed in such forward-looking statements. The words “expects”, “expectations”, “guidance”, “positioned”, “believe”, “plan”, “opportunity”, “forecasted”, “estimate”, “would”, “target”, “projected”, “outlook” or the negative of these words, variations thereof or similar expressions are intended to identify such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: the possibility of significant costs and reputational harm related to product-related liabilities; potential claims for system errors and warranties; the possibility of interruption at our data centers or client support facilities; the possibility of increased expenses, exposure to legal claims and regulatory actions and reputational harm associated with a cyberattack or other breach in our IT security; our proprietary technology may be subject to claims for infringement or misappropriation of intellectual property rights of others, or may be infringed or misappropriated by others; potential claims or other risks associated with relying on open source software in our proprietary software, solutions or services; material adverse resolution of legal proceedings; risks associated with our global operations; risks associated with fluctuations in foreign currency exchange rates; the potential for tax legislation initiatives that could adversely affect our tax position and/or challenges to our tax positions in the U.S. and non-U.S. countries; the uncertainty surrounding the impact of the United Kingdom’s vote to leave the European Union (commonly referred to as Brexit) on our global business; risks associated with the unexpected loss or recruitment and retention of key personnel, failure to successfully develop and execute succession planning to assure transitions of key associates and their knowledge, relationships and expertise, and uncertainties as to how quickly we are able to finalize our CEO succession plans; risks related to our dependence on strategic partners and third party suppliers; difficulties and operational and financial risks associated with successfully completing the integration of the Cerner Health Services (formerly Siemens Health Services) business into our business or the failure to realize the synergies and other benefits expected from the acquisition; risks inherent with business acquisitions and combinations and the integration thereof; the potential for losses resulting from asset impairment charges; risks associated with volatility and disruption resulting from global economic or market conditions; managing growth in the new markets in which we offer solutions, health care devices or services; risks inherent in contracting with government clients; risks associated with our outstanding and future indebtedness, such as compliance with restrictive covenants, which may limit our flexibility to operate our business; changing political, economic, regulatory and judicial influences, which could impact the purchasing practices and operations of our clients and increase costs to deliver compliant solutions and services; government regulation; significant competition and our ability to quickly respond to market changes and changing technologies and to bring competitive new solutions, devices, features and services to market in a timely fashion; long sales cycles for our solutions and services; variations in our quarterly operating results; potential variations in our sales forecasts compared to actual sales; volatility in the trading price of our common stock and the timing and volume of market activity; our directors’ authority to issue preferred stock and the anti-takeover provisions in our corporate governance documents; and changes in accounting standards issued by the Financial Accounting Standards Board or other standard-setting bodies may adversely affect our financial statements. Additional discussion of these and other risks, uncertainties and factors affecting Cerner's business is contained in Cerner's filings with the Securities and Exchange Commission. The reader should not place undue reliance on forward-looking statements, since the statements speak only as of the date that they are made. Except as required by law, Cerner undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events, or changes in our business, results of operations or financial condition over time.
Investor Contact: Allan Kells, (816) 201-2445, firstname.lastname@example.org
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