Leading healthcare information technology ("HCIT") solutions
) reported fourth-quarter and 2012 earnings per share of 63 cents
and $2.26, respectively, beating the corresponding Zacks
Consensus Estimates of 60 cents and $2.23 and the year-ago
earnings per share of 52 cents and $1.76 per share,
Net income rose 22.6% year over year to $111.8 million (or 63
cents per share) due to buoyant bookings.
Revenues for the fourth quarter rose 15% year over year to
$710.4 million, handily beating the Zacks Consensus Estimate of
$697 million. The corresponding figure for 2012 was $2,665.4
million, an increase of 21% year over year, surpassing the Zacks
Consensus Estimate of $2,652 million.
In the reported quarter, higher revenue from Support,
Maintenance and Services (up 15.9% to $445.1 million) was
supported by robust System sales (up 14.2% to $251.8 million).
Revenues from Reimbursed Travel were up 21% to about $13.5
Bookings and Revenue Backlog
Bookings amounted to $1.02 billion, up 13% year over year and
an all time high for the company. Total revenue backlog came to
$7.27 billion at the end of the fourth quarter, up 19% year over
year, including $6.53 billion of contract backlog and $738.2
million of support and maintenance backlog.
Gross margin for the quarter dropped slightly to 78.4% from
78.6% a year ago. Operating margin increased marginally to 22.6%
from 22.4% in the prior-year quarter.
Balance Sheet & Cash flow
Cerner ended the quarter with cash, cash equivalents and
short-term investment of $1,036.8 million, up 33.8% on a
year-over-year basis. Total long-term debt and other obligations
rose 57.3% year over year to about $136.6 million.
Cash flow from operation was $180.6 million in the reported
quarter, up 7.2% year over year. Free cash flow was $99.4
million, down 15.9%.
For the first quarter of 2013, the company forecasts sales in
a band of $690 million and $715 million and earnings per share,
before share based compensation expense, of 61 cents to 63 cents.
Fresh bookings for the quarter are projected between $720 million
and $760 million. Cerner projects stock-based compensation costs
to dilute first-quarter earnings by about 4 cents.
For 2013, the company forecasts sales in the region of $2,950
million and $3,050 million. Earnings per share, before share
based compensation expense, are expected to be in the
neighborhood of $2.75 and $2.82. Cerner projects stock-based
compensation costs to dilute earnings by about 16 cents to 17
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"
requirements, reimbursement difficulties and complicated coding
challenges. The company has long-standing, integrated and
seamless solutions for both inpatient and ambulatory
On the negative side, the federal Stimulus program is
gradually winding down. Moreover, the favorable growth prospects
are already factored into the stock price and the risk-reward
trade-off appears to be fairly poised. Cerner faces stiff
competition from established HCIT players, such as
We currently have a Zacks Rank #4 (Sell) on Cerner. However,
we are more positive about other stocks such as
Merge Healthcare Incorporated
Becton, Dickinson and Company
) both of which carry a Zacks Rank #2 (Buy) and are expected to
ATHENAHEALTH IN (ATHN): Free Stock Analysis
BECTON DICKINSO (BDX): Free Stock Analysis
CERNER CORP (CERN): Free Stock Analysis
MERGE HEALTHCAR (MRGE): Free Stock Analysis
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