Support revenue boosts Cerner 3Q profit 31 percent

Shares of health care information technology company Cerner Corp. rose Wednesday after the company said its second-quarter profit grew 31 percent due to improved sales in its support, maintenance and system services business.

The Kansas City, Mo.-based company said late Tuesday its profit rose to $35.3 million, or 42 cents per share, from $26.8 million, or 32 cents per share, last year. Excluding stock options costs and the expense of settling a lawsuit with a supplier, Cerner earned 51 cents per share.

Revenue grew 4 percent to $402.8 million from $386.6 million. Support, maintenance and system services revenue grew 10 percent to $271.5 million from $246.2 million, outweighing an 8-percent slip in revenue from system sales.

On average, analysts expected Cerner to earn 50 cents per share on $399.3 million in revenue, according to Thomson Financial. Analyst estimates usually exclude one-time expenses.

The stock rose 88 cents to $46.94 in midday trading.

The second-quarter results included a charge of $5 million, or 6 cents per share, because Cerner determined it had used a software application in a way that was not covered by its licenses. As a result, it compensated the provider of that software for past and future use.

The settlement will allow Cerner to use the products for current and future clients until January 2009. Cerner declined to identify the software provider.

The company's contract bookings fell to $404 million in the second quarter from $487 million a year earlier. It expects to book contracts worth $370 million to $400 million in the third quarter, and forecast a profit of 55 cents to 56 cents per share for that period. Stock-based compensation costs are expected to total 3 cents to 12 cents per share.

Cerner said it is "comfortable" with Wall Street's profit forecast of $2.17 per share for the full year. Analysts expect an average of 56 cents per share in profit in the third quarter, excluding compensation costs.