Cerner Q4 disappoints but CEO pledges to do better
- Cerner on Tuesday reported fourth quarter bookings in 2018 fell to $1.96 billion from $2.33 billion a year earlier. The company did note that the figure represented the second-highest quarterly bookings in its history. Bookings for the full year of 2018 increased 6% to $6.72 billion.
- Despite revenue for the EHR vendor rising by 4% for both the fourth quarter ($1.36 billion) and the full year ($5.36 billion), it was lower than what the firm expected, mainly due to a bigger drop in technology resale than anticipated.
- CEO Brent Shafer sought to reassure investors it is working to boost profitability and predictability and the stock rose slightly on Wednesday.
Leerink analysts called the quarter disappointing given the miss on revenue and earnings. Still, they argued Cerner has a strong pipeline of future business and predicted it could benefit from hospital consolidation and its Veterans Affairs and Defense Department contracts.
Earnings for the fourth quarter fell to $131 million, or 40 cents per share, compared with the prior-year period of $337 million, or $1 per share. Earnings also fell for the full year to $630 million, or $1.89 per share, compared with the prior-year of $867 million, or $2.57 per share.
The company also announced a quarterly divided of $0.15 per share with the first payment expected in the third quarter of 2019.
CEO Brent Shafer, who just completed his first year at the helm, told investors plans are underway to improve profitability.
"While we did deliver our full year guidance ranges, I'm aware that our results included a decline in operating earnings. This is not something we expect to continue and I believe the structure and process changes we are making will help make Cerner more focused and efficient which should allow us to increase our predictability, profitability over time," he said.
Shafer hinted on the call that the company has a new "refined operating model" it will detail at the HIMSS conference next week in Florida.
The company said it expects first quarter revenue for 2019 to between $1.37 billion and $1.42 billion with adjusted earnings to be between $0.60 and $0.62. It also expects new bookings in the quarter to be between $1.1 billion and $1.3 billion.
Full year 2019 revenue is expected to range from $5.65 billion and $5.85 billion with adjusted earnings per share to be between $2.57 and $2.67.