Leading healthcare information technology ("HCIT") solutions
provider
Cerner Corp
(
CERN
) reported fourth quarter and fiscal 2011 earnings per share of 52
cents and $1.76, respectively, beating the corresponding Zacks
Consensus Estimates of 50 cents and $1.74 and the year-ago earnings
per share of 41 cents and $1.39 per share, respectively.
Net income rose 29.1% year over year to $91.2 million (or 52
cents per share) due to buoyant bookings. The stock was up 6.6% to
$66.7 in after-hours trading on February 7.
Revenues
Revenues for the fourth quarter rose 23% year over year to
$615.6 million, handily beating the Zacks Consensus Estimate of
$588 million. The corresponding figure for fiscal 2011 was $2,203
million, an increase of 19.1% year over year, surpassing the Zacks
Consensus Estimate of $2,172 million.
In the reported quarter, higher revenue from Support,
Maintenance and Services (up 17.4% to $384 million) was supported
by robust System sales (up 34% to $220.5 million). Revenues from
Reimbursed Travel were up 29.5% to about $11.2 million.
Bookings and Revenue Backlog
Bookings amounted to $899 million, an all time high for the
company. Total revenue backlog came to $6.11 billion at the end of
the fourth quarter, up 24% year over year, including $5.40 billion
of contract backlog and $706 million of support and maintenance
backlog.
Margins
Gross margin for the quarter dropped to 78.6% from 81% a year
ago. Operating margin increased to 22.4% from 20.7% in the
prior-year quarter.
Balance Sheet & Cash flow
Cerner ended the quarter with cash, cash equivalents and
short-term investment of $774.8 million, up 35.7% on a
year-over-year basis. Total long-term debt and other obligations
rose 27.8% year over year to about $86.8 million.
Cash flow from operation was a record $168.5 million in the
reported quarter. Free cash flow increased to a new high of $118.2
million.
Outlook
For the first quarter of 2012, the company forecasts sales in a
band of $565 million and $585 million and adjusted earnings per
share, before share based compensation expense, of 48 cents to 50
cents. Fresh bookings for the quarter are projected between $560
million and $600 million. Cerner projects stock-based compensation
costs to dilute first quarter earnings by about 3 cents.
For fiscal 2012, the company forecasts sales in the region of
$2,425 million and $2,500 million. Adjusted earnings per share,
before share based compensation expense, are expected to be in the
neighborhood of $2.20 and $2.30. Cerner projects stock-based
compensation costs to dilute fiscal earnings by about 12 cents to
14 cents.
We believe long-term investors may consider Cerner, which serves
a sizeable installed hospital base that requires composite
clinically-focused applications complying with "meaningful use"
requirements, reimbursement problems and complex coding challenges.
The company has long-standing, integrated and seamless solutions
for both inpatient and ambulatory settings.
On the negative side, the federal Stimulus program will
gradually wind down. Moreover, the favorable growth prospects are
already factored into the stock price and the risk-reward trade-off
is fairly poised. Cerner faces stiff competition from established
HCIT players, such as
Athenahealth
(
ATHN
),
Allscripts-Misys
(
MDRX
) and
Quality Systems
(
QSII
) and many others in a crowded field. We are currently Neutral on
Cerner.
ATHENAHEALTH IN (
ATHN
): Free Stock Analysis Report
CERNER CORP (
CERN
): Free Stock Analysis Report
ALLSCRIPTS HLTH (
MDRX
): Free Stock Analysis Report
QUALITY SYS (
QSII
): Free Stock Analysis Report
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