Cerner Results Slightly Beat Views; Guides Mostly In Line
Shares of Cerner Corp. (NASDAQ: CERN – $66.10) surged in early trading after it reported second quarter results, which were slightly better-than-expected and issued mostly in line guidance for the third period and the full-year. The healthcare information technology supplier said adjusted earnings per share was $0.58 up from $0.52 last year and a penny above the consensus. Revenues rose 8% year-over-year to $1.22 billion and narrowly topped the $1.21 billion mean estimate. Second quarter free cash flow was $56.9 million and total order backlog of $15.0 billion is up 13% over the year-ago quarter. For the third quarter, Cerner expects earnings of $0.59 to $0.61 per share on revenues of $1.20 billion to $1.28 billion. Analysts are expecting slightly higher sales of $1.26 billion and the high-end of the range at $0.61 per share. For the full year, the company expects to see adjusted earnings of $2.30 to $2.40 per share on revenues of $4.9 billion to $5.0 billion, straddling the earnings consensus for $2.35 and $4.94 billion on revenues.
Kansas City-based Cerner is well-positioned in the clinical information systems and services business. It is having good success against competitors, and is adapting to the requirements of its targeted markets. The Health Services Group (formed when Cerner acquired Siemens’ healthcare IT business) is making slow, but steady, progress in getting integrated with the other product lines. Although growth may moderate some from here, my sense is this is reflected in the stock’s recent valuation, and shares – which have lagged the market since entered into the portfolio late last year – have rebounded of late and are worth consideration for aggressive accounts.