- Cerner has reached an agreement with the Department of Veterans Affairs for the agency's new EHR system, named MHS Genesis.
- Signatures for the $10 billion no-bid contract, first announced last June, had been on hold due to issues over interoperability as well as reports that President Donald Trump's inner circle allegedly influenced the delay.
- The 10-year contract adds to Cerner's government clients. The EHR company landed a $4.3 billion Department of Defense contract in 2015 and plans to provide clinical data between DoD, VA and community providers. "We expect this program to be a positive catalyst for interoperability across the public and private health care sectors, and we look forward to moving quickly with organizations across the industry to deliver on the promise of this mission,” Cerner President Zane Burke said in a statement.
The contract comes on the heels of Cerner's first quarter financial results, which showed the delay negatively impacted revenue. Bookings rose 12% in the quarter year-over-year but the company reported weaker-than-expected revenue growth and cut guidance for the year.
Cerner is coming off of a record booking quarter in the fourth quarter of last year, accounting for $2.3 billion.
The project is set to replace VA's VistA medical records system, which was developed 40 years ago.
Acting VA Secretary Robert Wilkie said the agency is taking lessons learned from DoD sites to guide VA EHR implementations. He added the VA “will add capabilities as necessary to meet the special needs of veterans, VA clinicians and our community care partners."
The Pentagon project has been met with criticism, however. A recent DoD report said the MHS Genesis deployment is "neither operationally effective nor operationally suitable" and that users questioned accuracy of information exchange between MHS Genesis and outside systems.
Analysts view the contract award positively. Leerink analyst David Larsen said it removes "a significant overhang" for the stock, and Jefferies analyst Sean Dodge wrote the contract timing should be "incrementally positive for guidance," giving the Cerner stock a "buy" rating.
Dodge noted Cerner hadn't expected the VA contract to close until the second half of the year. "Now with the contract being finalized earlier than expected, we think this should be incrementally positive for guidance," Dodge wrote in a May 17 note.
Cerner's stock jumped 3.4% at the open of business, compared to the previous day's close.