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Cerner (CERN) to Report Q3 Earnings: What's in the Offing?

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Cerner Corporation is scheduled to release third-quarter 2021 results on Oct 29, before the closing bell. In the last reported quarter, the company delivered an earnings surprise of 5.3%. Its earnings beat estimates in each of the trailing four quarters, the average surprise being 2.3%.

Q3 Estimates

The Zacks Consensus Estimate for third-quarter earnings is pegged at 82 cents, suggesting an improvement of 13.9% from the year-ago quarter. The same for revenues stands at $1.45 billion, indicating growth of 6% from the prior-year 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 third-quarter results.

Adjusted earnings per share (EPS) is projected to grow in the range of 12% to 15% in the third quarter. Per management, the company’s cost optimization initiatives to date have been able to offset the impact of lower revenues due to the pandemic and lost earnings from divested businesses. This, in turn, might have contributed to EPS growth.

Cerner Corporation Price and EPS Surprise

Cerner Corporation Price and EPS Surprise

Cerner Corporation price-eps-surprise | Cerner Corporation Quote

Cerner has made substantial progress in its work with the Federal government, which includes expansion of interoperability capabilities that are important for the success of the Veterans Affairs (VA) and the Department of Defence (DoD) programs.

Per the second-quarter 2021 earnings call, the DoD remains on track with respect to deploying MHS GENESIS, their Cerner-powered EHR. In late April this year, DoD went live with Wave Carson that comprised 25 military treatment commands, 148 physical locations across 11 states and two time zones. In total, the DoD is now live at 42 commands, 663 locations with more than 41,000 activated users, highlighting that the system can be deployed at scale and on schedule.

In April 2021, Cerner completed the acquisition of Kantar Health — a division of Kantar Group — that will enable its Learning Health Network client group to engage with life sciences for funded research studies in a more direct manner. With this buyout, the company intends to control data to boost safety, efficiency and efficacy of clinical research throughout life sciences, pharmaceuticals and health care. It anticipates this buyout to contribute $40 million per quarter, around $125 million of incremental revenues in 2021.

These developments are likely to have contributed to the company’s third-quarter performance.

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 #4 (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.

Insulet Corporation (PODD - Free Report) has an Earnings ESP of +15.79% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Canopy Growth Corporation (CGC - Free Report) has an Earnings ESP of +26.83% and a Zacks Rank of 3.

Cardiovascular Systems, Inc. (CSII - Free Report) has an Earnings ESP of +24.59% and a Zacks Rank of 3.

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