Cerner Posts Disappointing Sales and Earnings

Shares of healthcare information systems provider Cerner Corp. (NASDAQ: CERN – $64.69) are falling nearly 10% in today’s trading after the company reported financial results for the third quarter, with earnings and revenue that fell short of analysts’ expectations. Cerner posted adjusted earnings of $0.61 per share, compared with the prior-year period’s $0.59 per share, one cent below Street consensus. Revenue was $1.28 billion, up 8% from $1.19 billion in the same quarter last year, but below the Street view of $1.29 billion. The company blamed delays in securing contracts in the quarter, but believes it can make up for lost revenue in the final period. The company expects fourth quarter earnings per share of $0.60 – $0.62 on revenue of $1.3 billion – $1.35 billion, but shy of the consensus for $0.68 on revenue of $1.36 billion. Cerner is forecasting 2018 revenue between $5.5 billion and $5.7 billion, with the midpoint of this range reflecting growth of 9% over 2017 expected results. It also expects 2018 adjusted earnings between $2.52 and $2.68 per share, with the midpoint reflecting 7% growth over 2017 expected results. Analysts are looking for revenue of $5.64 billion, and earnings of $2.78.

       The drop in value is a bit of an over reaction, in my opinion. I still believe Cerner is a decent choice for long-term growth in the healthcare technology space and can continue to be held in a well-diversified aggressive account.

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