Back to top

Image: Bigstock

Cerner (CERN) to Report Q4 Earnings: What's in the Offing?

Read MoreHide Full Article

Cerner Corporation (CERN - Free Report) is scheduled to release fourth-quarter 2020 results on Feb 10, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 1.4%. Further, it beat estimates in each of the trailing four quarters, the average surprise being 3%.

Q4 Estimates

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 78 cents, suggesting an improvement of 4% from the year-ago quarter. The same for revenues stands at $1.39 billion, indicating a decline of 3.4% from the year-ago reported figure.

Factors to Note

Cerner continues to benefit 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. This is likely to get reflected in the company’s fourth-quarter results.

Moreover, adjusted earnings per share (EPS) is anticipated to be 76-80 cents in the fourth quarter. The mid-point of this range is 4% higher than the year-ago quarter. Per management, the company’s capability to offset the impact of lower revenues from the pandemic and lost earnings from divested businesses courtesy of its cost optimization initiatives to date have been contributing to EPS growth.

Cerner Corporation Price and EPS Surprise

Cerner Corporation Price and EPS Surprise

Cerner Corporation price-eps-surprise | Cerner Corporation Quote

In fourth-quarter 2019, the company completed the acquisition of AbleVets for about $75 million (in cash consideration). Cerner has been integrating AbleVets’ service offerings into its portfolio to accelerate growth in the federal space. Per management, the buyout is anticipated to contribute about $90 million to revenues in 2020. Consequently, we expect this contribution to get reflected in the fourth-quarter results.

In September 2020, Cerner inked a deal with Finland regional leadership with an aim to deliver more coordinated and efficient access to health and social services via a government-sponsored set of standards. Notably, this collaboration will not only strengthen Cerner’s foothold in the healthcare information technology (HCIT) space but also expand its presence geographically.

Further, in the same month, the company announced a collaboration with Vynca — a national leader in advance care planning solutions — to streamline the complicated advance care planning procedure for individuals and families, caregivers and clinicians in a bid to ensure patients’ end-of-life preferences and needs are met every single time. The partnership will allow Cerner and Vynca to break down the digital barrier between legal documents and EHRs, thereby making it simpler for clinicians to carry out the process.

In December 2020, the company announced that it is leveraging on its deal with Xealth to enable health systems to provide new centralized digital ordering and monitoring to clients. The partnership will help health systems to select, manage and deploy digital tools and applications, while providing clinicians access to remote monitoring and better engagement with patients.

Also, in the same month, Cerner made an investment in Elligo Health Research that will enable the former to ink a commercial agreement to extend the data and tools available in the Cerner Learning Health Network.

These deals are likely to have contributed to the company’s fourth-quarter performance.

Moreover, the company is likely to have witnessed operating margin expansion in the third quarter driven by the impact of cost optimization initiatives and improved revenue mix. For fourth-quarter 2020, the company continues to expect adjusted operating margin to be within 50-100 basis points (bps) of its abovementioned target, representing solid margin expansion of above 100 bps when compared to the year-ago quarter.

Here’s What the Quantitative Model Suggests

Per our proven model, a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here as you will see below.

Earnings ESP: Cerner has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #5 (Strong Sell).

Stocks Worth a Look

Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

DENTSPLY SIRONA Inc. (XRAY - Free Report) has an Earnings ESP of +4.45% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Option Care Health, Inc. (OPCH - Free Report) has an Earnings ESP of +34.69% and a Zacks Rank of 2.

Radius Health, Inc. (RDUS - Free Report) has an Earnings ESP of +10.54% and a Zacks Rank of 2.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>