Dive Brief:
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EHR company Cerner Corporation reported bookings dropped to $1.11 billion in the third quarter, which was a big drop from $1.43 billion last year.
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In its third-quarter earnings report, Cerner said Q3 revenue increased 8% to $1.28 billion, which was in the company’s guidance range.
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Cerner said it expects bookings to rebound in the fourth quarter. Company officials predicted fourth-quarter revenue between $1.3 billion and $1.35 billion and bookings of between $1.75 billion and $2 billion.
Dive Insight:
Cerner said delayed large contracts, which the company expected in the third quarter, were the reason for bookings dropping below guidance range. Cerner President Zane Burke said the company’s third quarter “was solid from a revenue and earnings standpoint … but we are disappointed with missing our targeted level of bookings due to large contracts pushing.”
Cerner expects most of those contracts will be finalized in Q4. Those contracts and an “already strong level of forecasted activity in the fourth quarter” are why Cerner is expecting a better Q4 with nearly doubled bookings possible.
“We believe Cerner remains extremely well positioned for good long-term growth as we continue to gain share in the electronic health record replacement market and still have meaningful growth opportunities in revenue cycle and population health, where our solutions and services help our clients navigate the shift from fee-for-service reimbursement to reimbursement based on value and quality," Burke said.
As digital health is seeing record funding numbers this year, EHR vendors are looking to make their mark. In the first half of this year, there were 11 deals involving EHRs and related clinical workflow, which amounted to $276 million. Patient engagement tools are particularly hot, with that market expected to reach $18.7 billion in 2022.
Burke said during the earnings call that Cerner continues to work with the Department of Veterans Affairs (VA) in negotiating a contract for an EHR system awarded in June. Burke hopes the contract is signed by the end of the year.
Once the VA contract is signed, the new Cerner EHR system will take 18 months to launch and seven to eight years to fully transition from its homegrown system, said Veterans Affairs Secretary David Shulkin at a recent House Committee on Veterans Affairs hearing. The cost of the project has not been announced, but Politico reported it may cost about $18 billion.
Last week, a federal judge dismissed a lawsuit challenging the VA contract. The ruling was because of lack of jurisdiction, and ClinicComp said it plans to continue the lawsuit arguing the VA did not conduct a competitive bidding process for the contract.