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Cerner (CERN) Q2 Earnings Surpass Estimates, Revenues Miss
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Cerner Corporation reported second-quarter 2020 adjusted earnings of 63 cents per share, which beat the Zacks Consensus Estimate of 61 cents by 3.3%. However, the bottom line declined 4.5% from the prior-year quarter.
The company reported revenues of $1.33 billion, which missed the Zacks Consensus Estimate by 2%. Moreover, the top line declined 7% from the year-ago quarter.
Revenues by Geography
Per management, U.S. revenues grossed $1.17 billion, down 8% from the prior-year quarter.
Non-U.S. revenues fell 2% to $162 million from the year-ago quarter.
Bookings
In the reported quarter, the company’s bookings totaled $1.34 billion, down 6.3% from the year-ago quarter. However, the metric came in more than $100 million above the higher end of the company’s guided range courtesy of robust levels of bookings in Managed services in the quarter under review.
Cerner Corporation Price, Consensus and EPS Surprise
Licensed software revenues fell 22.8% to $152.2 million, as a decline in traditional license software offset strong growth in SaaS offerings.
Technology resale revenues were $42.1 million, down 30.7% on a year-over-year basis.
Revenues from Subscriptions were $92.1 million, up 2.5% year over year.
Professional services’ revenues totaled $461.1 million, down 4.9% from the prior-year quarter number. The downside can be attributed to impact of the pandemic on project activity, lower third-party services, and the termination of the large RevWorks agreement.
Revenues at the Managed services unit amounted to $307.2 million, up 3.2% from the prior-year quarter.
Support and maintenance revenues were $274 million, down 0.9% year over year.
Reimbursed travel revenues amounted to $1.7 million, reflecting year-over-year decline of 92.8%. This was owing to travel restrictions that were in place in toward the end of first-quarter 2020.
Margins
In the quarter under review, gross profit was $1.12 billion, down 3.8% year over year. Gross margin was 84.1%, up 290 basis points (bps) on a year-over-year basis.
General and administrative expenses decreased 10.3% to $134.3 million. Further, software development expenses fell 1.2% to $185.3 million.
Adjusted operating income totaled $245.3 million, down 4.8% from the prior-year quarter. Adjusted operating margin expanded 40 bps to 18.4% during the reported quarter.
Q3 Guidance
For third-quarter 2020, Cerner expects revenues between $1.35 billion and $1.40 billion. The Zacks Consensus Estimate for revenues stands at $1.39 billion.
For third-quarter 2020 adjusted earnings per share is projected between 70 cents and 74 cents. The consensus mark for earnings is pegged at 71 cents.
New business bookings for third-quarter 2020 are estimated between $1.35 billion and $1.55 billion.
For full-year 2020, the company anticipates revenues in the range of $5.45-$5.55 billion (down from the previously guided range of $5.55-$5.70 billion).
For the full year, adjusted earnings per share are expected between $2.80 and $2.88 (narrowed from the prior guided band of $2.78-$2.90).
Wrapping Up
Cerner exited the second quarter on a mixed note. The company continues to witness strong contributions from key areas like Population Health, Revenue Cycle and IT Works. Further, gains in Subscriptions and Managed Services units buoy optimism. Margin expansion is also a positive.
The company benefited from electronic health record (EHR), electronic patient record (EPR) or electronic medical record (EMR) platforms that provide patient care in acute inpatient and outpatient settings.
Meanwhile, bookings witnessed a noticeable decline in the quarter under review. The company also saw a decline in revenues across Licensed software, Technology resale, Professional services and Reimbursed travel segments. Moreover, international revenues witnessed a decline in the quarter. Further, competition in the global MedTech space remains a concern.
Thermo Fisher reported second-quarter 2020 adjusted EPS of $3.89, beating the Zacks Consensus Estimate by 45.7%. Revenues of $6.92 billion outpaced the consensus mark by 0.1%.
PerkinElmer reported second-quarter 2020 adjusted EPS of $1.57, surpassing the Zacks Consensus Estimate by 68.8%. Revenues of $811.7 million outpaced the consensus mark by 1.3%.
LabCorp reported second-quarter 2020 EPS of $2.57, outpacing the Zacks Consensus Estimate of 78 cents. Revenues of $2.77 billion surpassed the consensus estimate by 14.3%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Cerner (CERN) Q2 Earnings Surpass Estimates, Revenues Miss
Cerner Corporation reported second-quarter 2020 adjusted earnings of 63 cents per share, which beat the Zacks Consensus Estimate of 61 cents by 3.3%. However, the bottom line declined 4.5% from the prior-year quarter.
The company reported revenues of $1.33 billion, which missed the Zacks Consensus Estimate by 2%. Moreover, the top line declined 7% from the year-ago quarter.
Revenues by Geography
Per management, U.S. revenues grossed $1.17 billion, down 8% from the prior-year quarter.
Non-U.S. revenues fell 2% to $162 million from the year-ago quarter.
Bookings
In the reported quarter, the company’s bookings totaled $1.34 billion, down 6.3% from the year-ago quarter. However, the metric came in more than $100 million above the higher end of the company’s guided range courtesy of robust levels of bookings in Managed services in the quarter under review.
Cerner Corporation Price, Consensus and EPS Surprise
Cerner Corporation price-consensus-eps-surprise-chart | Cerner Corporation Quote
Segmental Performance
Licensed software revenues fell 22.8% to $152.2 million, as a decline in traditional license software offset strong growth in SaaS offerings.
Technology resale revenues were $42.1 million, down 30.7% on a year-over-year basis.
Revenues from Subscriptions were $92.1 million, up 2.5% year over year.
Professional services’ revenues totaled $461.1 million, down 4.9% from the prior-year quarter number. The downside can be attributed to impact of the pandemic on project activity, lower third-party services, and the termination of the large RevWorks agreement.
Revenues at the Managed services unit amounted to $307.2 million, up 3.2% from the prior-year quarter.
Support and maintenance revenues were $274 million, down 0.9% year over year.
Reimbursed travel revenues amounted to $1.7 million, reflecting year-over-year decline of 92.8%. This was owing to travel restrictions that were in place in toward the end of first-quarter 2020.
Margins
In the quarter under review, gross profit was $1.12 billion, down 3.8% year over year. Gross margin was 84.1%, up 290 basis points (bps) on a year-over-year basis.
General and administrative expenses decreased 10.3% to $134.3 million. Further, software development expenses fell 1.2% to $185.3 million.
Adjusted operating income totaled $245.3 million, down 4.8% from the prior-year quarter. Adjusted operating margin expanded 40 bps to 18.4% during the reported quarter.
Q3 Guidance
For third-quarter 2020, Cerner expects revenues between $1.35 billion and $1.40 billion. The Zacks Consensus Estimate for revenues stands at $1.39 billion.
For third-quarter 2020 adjusted earnings per share is projected between 70 cents and 74 cents. The consensus mark for earnings is pegged at 71 cents.
New business bookings for third-quarter 2020 are estimated between $1.35 billion and $1.55 billion.
For full-year 2020, the company anticipates revenues in the range of $5.45-$5.55 billion (down from the previously guided range of $5.55-$5.70 billion).
For the full year, adjusted earnings per share are expected between $2.80 and $2.88 (narrowed from the prior guided band of $2.78-$2.90).
Wrapping Up
Cerner exited the second quarter on a mixed note. The company continues to witness strong contributions from key areas like Population Health, Revenue Cycle and IT Works. Further, gains in Subscriptions and Managed Services units buoy optimism. Margin expansion is also a positive.
The company benefited from electronic health record (EHR), electronic patient record (EPR) or electronic medical record (EMR) platforms that provide patient care in acute inpatient and outpatient settings.
Meanwhile, bookings witnessed a noticeable decline in the quarter under review. The company also saw a decline in revenues across Licensed software, Technology resale, Professional services and Reimbursed travel segments. Moreover, international revenues witnessed a decline in the quarter. Further, competition in the global MedTech space remains a concern.
Zacks Rank
Currently, Cerner carries a Zacks Rank #2 (Buy).
Other Key Picks
Some other top-ranked stocks in the broader medical space are Thermo Fisher Scientific Inc. (TMO - Free Report) , PerkinElmer, Inc. and Laboratory Corporation of America Holdings (LH - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Thermo Fisher reported second-quarter 2020 adjusted EPS of $3.89, beating the Zacks Consensus Estimate by 45.7%. Revenues of $6.92 billion outpaced the consensus mark by 0.1%.
PerkinElmer reported second-quarter 2020 adjusted EPS of $1.57, surpassing the Zacks Consensus Estimate by 68.8%. Revenues of $811.7 million outpaced the consensus mark by 1.3%.
LabCorp reported second-quarter 2020 EPS of $2.57, outpacing the Zacks Consensus Estimate of 78 cents. Revenues of $2.77 billion surpassed the consensus estimate by 14.3%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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