Cerner (CERN) Earnings And Revenues Beat Estimates In Q1
Zacks Investment Research | Apr 28, 2017 06:54AM ET
Cerner Corp (NASDAQ:CERN) reported adjusted first-quarter 2017 earnings of 56 cents per share, beating the Zacks Consensus Estimate of 53 cents. Notably, earnings inched up from 49 cents from the year-ago quarter.
The company reported net revenues of $1.260 billion, beating the Zacks Consensus Estimate of $1.226 billion. Meanwhile, revenues rose from $1.138 billion in the year-ago period.
Stock Performance
Over the last three months, the stock added 17.11%, higher than the Zacks classified Medical Info Systems sub-industry’s gain of 10.03%. Additionally, the current level is above the S&P 500’s return of 5.57% over the same time frame.
However, a modest long-term expected earnings growth rate of 14.30% instills confidence in the stock.
Quarter Highlights
Bookings in the first quarter of 2017 were $1.25 billion, up 7% on a year-over-year basis.
Revenue Cycle was a strong contributor to the company’s results, courtesy of strong sales and solid contribution from RevWorks services (revenue management services). Population Health service businesses also drove revenues in the first quarter on the back of solid growth in the company’s flagship HealtheIntent solutions. The company also posted an impressive performance in the ambulatory and small hospital market.
System sales increased from $279.4 million in the year-ago quarter to $319.9 million, owing to stable performance in technology resale and software.
Total services revenues, including professional and managed services, rose 11% from the year-ago quarter. This is in line with management’s guidance and reflects solid execution by the company’s service organizations.
Due to higher equipment maintenance revenues as a result of technology resale, support and maintenance revenues increased 4%.
Geographically, domestic revenues increased 13% from the year-ago quarter to $1.13 billion and non-U.S. revenues fell 3% to $129 million.
Margin Details
Gross margin in the reported quarter was flat year over year totaling 84.2%, courtesy of the lower mix of technology resale and improving service margins.
Cerner registered adjusted operating margin of 22.9% in the reported quarter, unchanged year over year.
As a percentage of revenues, sales and client services expanded 110 basis points (bps) to 42.7%. Meanwhile, both software development and general and administrative expenses contracted roughly 40 bps and 20 bps, respectively.
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Balance Sheet
Cerner had a total backlog of $16.098 billion, up 10% on a year-over-year basis.
Cerner ended the first quarter of 2017 with $531.9 million of total cash and investments.
Total debt for Cerner, including capital lease obligations, was $532.7 million.
Operating cash flow for the quarter was $303.6 million.
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