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Cerner Reports Strong Results; Narrows Guidance

Kansas City-based Cerner Corp. (NASDAQ: CERN – $64.31) reported second quarter revenue of $1.292 billion, an increase of 6% compared to 2016 and in the company’s guidance range. Adjusted net earnings were $205.5 million, compared to $199.2 million in the second quarter last year and equal to $0.61 per share, and increase of 5% from a year ago and inline with analysts’ consensus. Bookings in the second quarter were $1.636 billion, which is an all-time high and an increase of 16% compared to the second quarter of 2016.

       For the September period, the company expects earnings to be between $0.61 and $0.63 per share on revenue of $1.26 billion and $1.32 billion. This compares to previous guidance of $0.63/share on $1.3 billion in revenue. For the full-year, Cerner sees earnings to be between $2.46 to $2.54 per share versus prior guidance of $2.44 to $2.56 on revenue of $5.15 to $5.25 billion. This compares to analysts’ estimates of $2.51 per share on revenue of $5.21 billion.

       The operational challenges the company experienced in the wake of the large Siemens Health Services acquisition seem to have been met, and active market support for shares has returned since late last year. That said, the stock is now trading at a bit of a premium at 25.5 times estimated 2017 earnings. The company’s prospects for the next few years, however, suggest that they continue to be held by investors willing to speculate on promising long-term growth in healthcare information technology and Cerner’s ability to get its share of the pie.

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