- Cerner CEO Brent Shafer is stepping down once a successor is found, the EHR vendor announced Wednesday as it released its first-quarter earnings report.
- The company reported Q1 revenue of $1.4 billion, down 2% year over year as a result of divestitures and the ongoing effects of the COVID-19 pandemic. That figure was below Wall Street expectations, but earnings numbers were a beat. Bookings were up 13% year over year to $1.2 billion.
- Cerner expects second-quarter revenue growth in the high-single digits and full-year growth in the mid-single digits. It also announced a $3.8 billion share repurchasing program.
Shafer, 63, began his tenure as Cerner CEO in February 2018 after stints at Philips, GE Medical Systems, Hill-Rom and Intermountain. His base annual salary was $800,000 with a $1.2 million bonus potential, according to the most recent filing with the U.S. Securities and Exchange Commission.
The company did not give a timeline for the transition, but said Shafer would stay on until a new CEO is found or until the end of the year, whichever is earlier. He will serve as a senior adviser to the company for a year after that.
SVB Leerink analysts said in a Thursday morning note that the transition is a surprise announcement but could provide tailwinds. "While we believe a transition to an operations-focused CEO represents an opportunity for the name, we do acknowledge that a transition period may present a delay to CERN's operational improvement initiatives," they wrote.
On a Wednesday morning call with investors, executives said a key business strategy moving forward is to focus on care settings outside the hospital. "We see a lot of traction and trend around our consumer offerings as folks try to think about what does it look like to engage the consumer outside the four walls of the hospital," Shafer said. "So those have been areas that have continued to see traction and trend over the course of the last four quarters reflected by our book revenue."
The Kansas City, Missouri-based IT giant reported net income of $172.3 million in the quarter, up from 147.2 million at the same time last year.
Cerner executives said in Q4 that revenue for 2020 was down 3% year over year to $5.5 billion, but that strong booking growth in the quarter left management bullish for 2021.
The company, however, is still dealing with frustration over its $16 billion project with the U.S. Veterans Administration, which is now under review by the agency, though officials said the vendor was not to blame for the troubled rollout.