Cerner Reports Profits In Line; Guides Lower on Sales Outlook
Healthcare information technology firm Cerner Corp. (NASDAQ: CERN – $55.46) reported first quarter revenue of $1.14 billion, an increase of 14% compared to $996 million in the first quarter of 2015, but a bit shy of most estimates of $1.24 billion. First quarter revenue was about $10 million below the company’s guidance range, largely due to a decline in low-margin technology resale revenue, which partially offset good growth in software, subscriptions and services. Adjusted earnings per share were $0.53 in the quarter, an increase of 18% compared to $0.45 of adjusted earnings per share a year-ago and in line with analysts’ consensus estimates. Cerner also provided the following guidance:
- Second quarter 2016 revenue between $1.175 billion and $1.25 billion.
- Full year 2016 revenue between $4.9 billion and $5.1 billion, consistent with last quarter’s full year guidance.
- Second quarter 2016 adjusted earnings per share between $0.56 and $0.58 (vs. $0.58 consensus).
- Full year 2016 adjusted earnings per share between $2.30 and $2.40, consistent with last quarter’s full year guidance (and within the range of Street estimates).
- Second quarter 2016 new business bookings between $1.35 billion and $1.48 billion.
The guidance could have been better and the shares retreated after hours on the news. However, Cerner remains well-positioned in the clinical information systems and services business over the long-term. Although growth may moderate some from here, the valuation is somewhat reflected in the stock price. Aggressive investors exhibiting a degree of patience may find interest in these shares.