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Cerner to Manage Revenue Cycle at MCHS and its Affiliates

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Cerner Corp. (CERN - Free Report) announced that it would now offer professional revenue cycle management for Miami Children's Health System (“MCHS”) and its affiliates, Pediatric Specialists of America and Nicklaus Children's Hospital.

Per the agreement, the company would provide the service through its Business Office Services (BOS) across MCHS's 200-member physician group practice. Notably, BOS is the company’s in-house billing service that uses Cerner Ambulatory practice management solutions to cater to clients’ front and back office tasks. Cerner's BOS provides holistic and proactive revenue cycle management services at practices of all sizes and specialties.

Going forward, we believe Cerner’s strong product portfolio will help it to win customers in the rest of 2016 and beyond. The company has growth opportunities in revenue cycle management, Population Health and ambulatory market based on its product strength and an enviable track record. Additionally, the growing percentage of higher margin software in the company’s business mix is expected to drive margins.

However, the HCIT market is highly competitive, which exerts considerable pressure on both pricing and margins. Moreover, a growing proportion of low-margin services and technology resale may affect margins. Meanwhile, stringent hospital budgets exert further pressure on pricing.

Cerner designs, develops, markets, installs and supports information technology and content solutions for healthcare organizations and consumers. The company's integrated suite of solutions enable healthcare providers to improve operating effectiveness, reduce costs and improve the quality of care as measured by clinical outcomes.

Zacks Rank & Key Picks

Currently, Cerner carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical sector are CryoLife Inc. (CRY - Free Report) , IDEXX Laboratories Inc. (IDXX - Free Report) and Masimo Corporation (MASI - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CryoLife has recorded a year-to-date return of 63.0%, better than the S&P 500’s 6.1% over the same time frame. In fact, the company posted positive earnings surprises in the last four quarters, the average being 502.50%.

IDEXX has a strong year-to-date return of 54.6%. The company also surpassed estimates in the last four quarters at an average rate of 12.7%.

Masimo has an impressive long-term expected earnings growth rate of 15% and a solid year-to-date return of 43.3%.

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