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Cerner (CERN) Q4 Earnings Surpass Estimates, Revenues Miss

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Cerner Corporation reported fourth-quarter 2021 adjusted earnings of 93 cents per share, which beat the Zacks Consensus Estimate of 88 cents by 5.7%. The bottom line improved 19% from the prior-year quarter.

GAAP EPS in the quarter was 59 cents, up 28% from the prior-year quarter.

In full-year 2021, the company reported $3.35, up 18% from the previous year.

Revenue Details

The company reported revenues of $1.45 billion, which missed the Zacks Consensus Estimate by 2.3%. Nonetheless, the top line increased 4% from the year-ago quarter.

In 2021, the company reported $5.77 billion, up 5% from the previous year.

Segmental Performance

Licensed software revenues were $189.7 million, which rose 8.8% from the year-ago quarter.

Technology resale revenues were $44.6 million, down 20.3% on a year-over-year basis.

Revenues from Subscriptions were $92.8 million, down 5.6%.

Cerner Corporation Price, Consensus and EPS Surprise

Cerner Corporation Price, Consensus and EPS Surprise

Cerner Corporation price-consensus-eps-surprise-chart | Cerner Corporation Quote

Professional services’ revenues totaled $533.2 million, up 11.5% from the prior-year quarter figure.

Revenues at the Managed services unit amounted to $327.2 million, up 3.2%.

Support and maintenance revenues were $252.9 million, down 3.9% year over year.

Reimbursed travel revenues amounted to $11.9 million, reflecting an increase of 45.8%.

Margins

In the quarter under review, gross profit was $1.19 billion, up 2.9% on a year-over-year basis. Gross margin was 82.2%, down 100 basis points (bps).

General and administrative expenses increased 29.8% to $130.6 million. Software development expenses rose 0.8% to $199.4 million.

Operating income totaled $215.7 million, up 21.6% from the prior-year quarter. Operating margin expanded 210 bps to 14.8%.

Financial Position

The company exited the fourth quarter with cash and cash equivalents of $589.8 million compared with $459.5 million in the previous quarter.

Cumulative net cash from operating activities in the fourth quarter totaled $1.77 billion compared with $1.44 billion in the year-ago period.

Cumulative free cash flow amounted to $1.17 billion, up from $857.4 million a year ago.

Wrapping Up

Cerner exited the fourth quarter on a mixed note, wherein earnings beat the Zacks Consensus Estimate, but revenues missed the same. Solid gains in four of the company’s business units buoy optimism. Apart from this, the company repurchased shares worth $1.50 billion in 2021. Expansion in operating margin is a positive.

Per management, the performance in the quarter reflected the company’s commitment toward its core business and better operational execution.

The company saw a decrease in revenues in Technology resale, Subscriptions and Support and maintenance segments. Contraction in gross margin is a headwind. 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 announced quarterly results are Henry Schein, Inc. (HSIC - Free Report) , Quidel Corporation (QDEL - Free Report) and Bio-Rad Laboratories, Inc. (BIO - Free Report) .

Henry Schein, sporting a Zacks Rank #1 (Strong Buy), reported fourth-quarter 2021 adjusted earnings of $1.07 per share, which beat the Zacks Consensus Estimate by 18.9%. Revenues of $3.33 billion outpaced the consensus mark by 4.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Henry Schein has an estimated long-term growth rate of 11.8%. HSIC surpassed earnings estimates in each of the trailing four quarters, the average surprise being 25.5%.

Quidel reported fourth-quarter 2021 adjusted EPS of $7.29, which surpassed the Zacks Consensus Estimate by 49.1%. Fourth-quarter revenues of $636.9 million outpaced the Zacks Consensus Estimate by 0.3%. It currently sports a Zacks Rank #1.

Quidel’s earnings yield of 8.4% compares favorably with the industry’s (0.7%). QDEL surpassed earnings estimates in two of the trailing four quarters and missed twice, the average surprise being 129.4%.

Bio-Rad reported fourth-quarter 2021 adjusted EPS of $3.21, which surpassed the Zacks Consensus Estimate by 11.9%. Fourth-quarter revenues of $732.8 million outpaced the Zacks Consensus Estimate by 0.5%. It currently has a Zacks Rank #2 (Buy).

Bio-Rad has an earnings yield of 2.3%, which compares favorably with the industry’s negative yield. BIO surpassed earnings estimates in each of the trailing four quarters, the average surprise being 66.9%.


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