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Cerner (CERN) Earnings and Revenues Beat Estimates in Q4

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Cerner Corporation (CERN - Free Report) reported fourth-quarter 2019 adjusted earnings of 75 cents per share, which beat the Zacks Consensus Estimate of 74 cents by 1.4%. The bottom line also improved from the prior-year quarter figure by 19%.
 
The company reported revenues of $1.44 billion, which improved 5.6% year over year and outpaced the Zacks Consensus Estimate by 0.6%.

Revenues by Geography
 
Per management, U.S. revenues grossed $1.28 billion, up 6% from the prior-year quarter.

Non-U.S. revenues increased 3% to $166 million from the year-ago quarter.
 
Bookings
 
In the reported quarter, the company’s bookings totaled $1.67 billion, down 15.1% from the year-ago quarter.

Segmental Performance

Licensed software revenues improved 4.8% to $174.5 million, driven by strong growth in SaaS offerings.
 
Technology resale revenues were $60.4 million, up 31.2% on a year-over-year basis.
 
Revenues from Subscriptions grossed $92.8 million, up 6.6% year over year.
 
Professional services’ revenues totaled $509.3 million, up 9.3% from the prior-year quarter number, on the back of solid growth in implementation services.
 
Revenues at the Managed services unit amounted to $309.4 million, up 3.5% from the prior-year quarter.
 
Support and maintenance revenues were $273.9 million, down 1% year over year.
 
Reimbursed travel revenues amounted to $21.9 million, reflecting a year-over-year decrease of 8.9%.

Cerner Corporation Price, Consensus and EPS Surprise

 

Cerner Corporation Price, Consensus and EPS Surprise

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

Margins
 
In the quarter under review, gross profit summed $1.16 billion, up 3.2% year over year. Gross margin was 80.8%, down 180 bps on a year-over-year basis.
 
General and administrative expenses increased 23.6% to $122.3 million. Further, software development expenses rose 3.7% to $188.2 million.
 
Adjusted operating margin expanded 160 bps to 20.3% during the reported quarter.

2020 Guidance
 
For the first quarter of 2020, Cerner expects revenues between $1.42 billion and $1.47 billion. The Zacks Consensus Estimate for revenues stands at $1.43 billion, within management’s guided range.

For the first-quarter 2020 adjusted earnings per share is projected between 69 cents and 71 cents.

New business bookings for first-quarter 2020 are estimated between $1.10 billion and $1.30 billion.

For the full-year 2020, the company anticipates revenues in the range of $5.72-$5.98 billion.

For the full year, adjusted earnings per share are expected between $3.09 and $3.19. The Zacks Consensus Estimate stands at $3.14, lies within the company’s guided range.

Wrapping Up
 
Cerner exited the fourth quarter on a strong note. The company continues to witness strong contributions from key areas like Population Health, Revenue Cycle and IT Works. Further, gains in Licensed software, Technology resale, Professional and Managed Services units buoy optimism. International revenues also moved up in the quarter.
 
The company benefited 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.
 
Meanwhile, bookings witnessed a noticeable decline in the quarter under review. Contraction in operating margins remains a concern. Furthermore, competition in the global MedTech space is a woe.

Zacks Rank

Currently, Cerner carries a Zacks Rank #2 (Buy).

Earnings of Other MedTech Majors at a Glance

Some other top-ranked stocks which reported solid results this earning season are Stryker Corporation (SYK - Free Report) , Accuray Incorporated (ARAY - Free Report) and AmerisourceBergen Corporation (ABC - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker delivered fourth-quarter 2019 adjusted EPS of $2.49, outpacing the Zacks Consensus Estimate by 1.2%. Fourth-quarter reported revenues of $4.13 billion surpassed the Zacks Consensus Estimate by 0.7%. The company carries a Zacks Rank #2.

Accuray reported second-quarter fiscal 2020 adjusted earnings per share (EPS) of a penny, improving from the Zacks Consensus Estimate of a loss of 7 cents. Net revenues of $98.8 million outpaced the Zacks Consensus Estimate by 0.3%. The company sports a Zacks Rank #1.

AmerisourceBergen reported first-quarter fiscal 2020 adjusted EPS of $1.76, which beat the Zacks Consensus Estimate of $1.67 by 5.4%. The company has an expected long-term earnings growth rate of 7.4%. AmerisourceBergen carries a Zacks Rank of 2.

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