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Cerner (CERN) Q2 Earnings and Revenues Surpass Estimates
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Cerner Corporation reported second-quarter 2021 adjusted earnings of 80 cents per share, which beat the Zacks Consensus Estimate of 76 cents by 5.3%. The bottom line improved 26.9% from the prior-year quarter.
GAAP EPS in the quarter was 11 cents, down 75% from the prior-year quarter.
Revenue Details
The company reported revenues of $1.46 billion, which surpassed the Zacks Consensus Estimate by 1.3%. The top line increased 9.5% from the year-ago quarter.
Segmental Performance
Licensed software revenues were $175.1 million, which climbed 15.1% from the year-ago quarter.
Technology resale revenues were $56.9 million, up 35% on a year-over-year basis.
Revenues from Subscriptions were $98.4 million, up 6.9% year over year.
Cerner Corporation Price, Consensus and EPS Surprise
Professional services’ revenues totaled $537.1 million, up 16.5% from the prior-year quarter figure.
Revenues at the Managed services unit amounted to $320.8 million, up 4.4% from the prior-year quarter.
Support and maintenance revenues were $259.7 million, down 5.2% year over year.
Reimbursed travel revenues amounted to $8.8 million, reflecting year-over-year increase of 405.9%.
Margins
In the quarter under review, gross profit was $1.19 billion, up 6.9% on a year-over-year basis. Gross margin was 82.1%, down 200 basis points (bps) on a year-over-year basis.
General and administrative expenses increased 16.4% to $156.3 million. Software development expenses rose 35% to $241.6 million.
Operating income totaled $49.6 million, down 66.3% from the prior-year quarter. Operating margin contracted 760 bps on a year-over-year basis to 3.4%.
Financial Position
The company exited the quarter with cash and cash equivalents of $246.4 million, compared with $997.9 million in the previous quarter.
Cumulative net cash from operating activities totaled $819.6 million, compared with $542.1 million in the year-ago period.
Cumulative free cash flow amounted to $453.2 million, compared with $224.4 million.
2021 Guidance
For third-quarter 2021, Cerner anticipates revenues to improve around 6% over third-quarter 2020. The Zacks Consensus Estimate for revenues stands at $1.47 billion.
For third-quarter 2021, adjusted EPS is projected to grow in the range of 12% to 15% over the prior-year quarter. The consensus mark for earnings is pegged at 81 cents.
For full-year 2021, revenues are projected to grow in the mid-single digits. The Zacks Consensus Estimate for revenues stands at $5.80 billion.
Adjusted EPS is expected to be more than $3.25 (up from the previous guidance of above $3.20). The consensus mark for earnings is pegged at $3.21.
Wrapping Up
Cerner exited the second quarter on a strong note, wherein both earnings and revenues beat the Zacks Consensus Estimate. Gains in six of the company’s business units buoy optimism. Apart from this, the company repurchased shares worth $400 million in the quarter under review.
Per management, the robust performance reflected the company’s strong progress in its transformation initiatives and a strong market presence.
The company saw a decrease in revenues in Support and maintenance segment. Contraction in both gross and operating margins is a headwind. Further, competition in the global MedTech space remains a concern.
Boston Scientific reported second-quarter 2021 adjusted EPS of 40 cents, which beat the Zacks Consensus Estimate by 8.1%. Second-quarter revenues of $3.08 billion outpaced the consensus mark by 4.4%.
West Pharmaceutical reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Second-quarter revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%.
LabCorp reported second-quarter 2021 adjusted EPS of $6.13, surpassing the Zacks Consensus Estimate by 8.7%. Revenues of $3.84 billion exceeded the Zacks Consensus Estimate by 6.9%.
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Cerner (CERN) Q2 Earnings and Revenues Surpass Estimates
Cerner Corporation reported second-quarter 2021 adjusted earnings of 80 cents per share, which beat the Zacks Consensus Estimate of 76 cents by 5.3%. The bottom line improved 26.9% from the prior-year quarter.
GAAP EPS in the quarter was 11 cents, down 75% from the prior-year quarter.
Revenue Details
The company reported revenues of $1.46 billion, which surpassed the Zacks Consensus Estimate by 1.3%. The top line increased 9.5% from the year-ago quarter.
Segmental Performance
Licensed software revenues were $175.1 million, which climbed 15.1% from the year-ago quarter.
Technology resale revenues were $56.9 million, up 35% on a year-over-year basis.
Revenues from Subscriptions were $98.4 million, up 6.9% year over year.
Cerner Corporation Price, Consensus and EPS Surprise
Cerner Corporation price-consensus-eps-surprise-chart | Cerner Corporation Quote
Professional services’ revenues totaled $537.1 million, up 16.5% from the prior-year quarter figure.
Revenues at the Managed services unit amounted to $320.8 million, up 4.4% from the prior-year quarter.
Support and maintenance revenues were $259.7 million, down 5.2% year over year.
Reimbursed travel revenues amounted to $8.8 million, reflecting year-over-year increase of 405.9%.
Margins
In the quarter under review, gross profit was $1.19 billion, up 6.9% on a year-over-year basis. Gross margin was 82.1%, down 200 basis points (bps) on a year-over-year basis.
General and administrative expenses increased 16.4% to $156.3 million. Software development expenses rose 35% to $241.6 million.
Operating income totaled $49.6 million, down 66.3% from the prior-year quarter. Operating margin contracted 760 bps on a year-over-year basis to 3.4%.
Financial Position
The company exited the quarter with cash and cash equivalents of $246.4 million, compared with $997.9 million in the previous quarter.
Cumulative net cash from operating activities totaled $819.6 million, compared with $542.1 million in the year-ago period.
Cumulative free cash flow amounted to $453.2 million, compared with $224.4 million.
2021 Guidance
For third-quarter 2021, Cerner anticipates revenues to improve around 6% over third-quarter 2020. The Zacks Consensus Estimate for revenues stands at $1.47 billion.
For third-quarter 2021, adjusted EPS is projected to grow in the range of 12% to 15% over the prior-year quarter. The consensus mark for earnings is pegged at 81 cents.
For full-year 2021, revenues are projected to grow in the mid-single digits. The Zacks Consensus Estimate for revenues stands at $5.80 billion.
Adjusted EPS is expected to be more than $3.25 (up from the previous guidance of above $3.20). The consensus mark for earnings is pegged at $3.21.
Wrapping Up
Cerner exited the second quarter on a strong note, wherein both earnings and revenues beat the Zacks Consensus Estimate. Gains in six of the company’s business units buoy optimism. Apart from this, the company repurchased shares worth $400 million in the quarter under review.
Per management, the robust performance reflected the company’s strong progress in its transformation initiatives and a strong market presence.
The company saw a decrease in revenues in Support and maintenance segment. Contraction in both gross and operating margins is a headwind. Further, competition in the global MedTech space remains a concern.
Zacks Rank
Currently, Cerner carries a Zacks Rank #3 (Hold).
Earnings of Other MedTech Majors at a Glance
Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Boston Scientific Corporation (BSX - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Laboratory Corporation of America Holdings (LH - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Boston Scientific reported second-quarter 2021 adjusted EPS of 40 cents, which beat the Zacks Consensus Estimate by 8.1%. Second-quarter revenues of $3.08 billion outpaced the consensus mark by 4.4%.
West Pharmaceutical reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Second-quarter revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%.
LabCorp reported second-quarter 2021 adjusted EPS of $6.13, surpassing the Zacks Consensus Estimate by 8.7%. Revenues of $3.84 billion exceeded the Zacks Consensus Estimate by 6.9%.