Leading healthcare information technology ("HCIT") solutions
) reported first-quarter 2013 adjusted earnings per share of 62
cents beating the Zacks Consensus Estimate of 59 cents and the
year-ago earnings per share of 51 cents. Net income rose 24% year
over year to $110 million (or 62 cents per share).
Revenues for the first quarter rose 6.1% year over year to
$680 million, missing the Zacks Consensus Estimate of $709
million. The growth in sales was lower than Cerner's earlier
assumptions due to reduced volume of tech resale, which carries a
Support, maintenance and services rose 15.5% to $466.6 million
in the reported quarter. This was partly offset by a fall in
System sales, which was down 11.9% to $198.9 million. Revenues
from Reimbursed Travel were up 26.8% to about $14.6 million.
Bookings and Revenue Backlog
Bookings amounted to $801.6 million, up 23% year over year and
a record for the company in any first quarter. Total revenue
backlog was $7.58 billion at the end of the first quarter, up 21%
year over year, including $6.8 billion of contract backlog and
$747.9 million of support and maintenance backlog.
Gross margin for the quarter rose to 81.3% from 75.4% a year
ago. Operating margin increased to 23% from 19.9% in the
Balance Sheet & Cash flow
Cerner ended the quarter with cash, cash equivalents and
short-term investment of $1,005.2 million, down 3.1% on a
sequential basis. Long-term debt and capital lease obligations
dropped marginally 0.8% to $135.5 million sequentially.
For the second quarter of 2013, the company forecasts sales in
a band of $705 million and $735 million and earnings per share,
before share based compensation expense, of 66 cents to 68 cents.
Fresh bookings for the quarter are projected between $825 million
and $875 million. Cerner projects stock-based compensation costs
to dilute second quarter earnings by about 4 cents to 5
For 2013, the company continues to forecast sales in the
region of $2,950 million and $3,050 million. Earnings per share,
before share based compensation expense, are forecast in the
range of $2.78 and $2.83 (earlier $2.75 and $2.82). Cerner
projects stock-based compensation costs to dilute earnings by
about 17 cents to 18 cents (earlier 16 cents to 17 cents).
We believe long-term investors may consider Cerner, which
serves a sizeable installed hospital base that requires composite
clinically-oriented applications complying with "meaningful use"
needs, reimbursement difficulties and coding challenges. The
company has long-standing, integrated and seamless solutions for
both inpatient and ambulatory settings.
While fresh projects are shrinking in number, the replacement
market is growing. Cerner faces stiff competition from
established HCIT players, such as
Allscripts Healthcare Solutions, Inc.
We currently have a Zacks Rank #3 (Hold) on the company.
However, we are more positive about other stocks such as
Merge Healthcare Incorporated
) which carries a Zacks Rank #2 (Buy) and is expected to do
ATHENAHEALTH IN (ATHN): Free Stock Analysis
CERNER CORP (CERN): Free Stock Analysis
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