Cerner Corporation (CERN +0.00%) got off to a solid start in 2017 with its first-quarter results. The healthcare technology giant posted both revenue and earnings at the upper end of its guidance.
On Thursday, Cerner announced its second-quarter results. The company continued its momentum with another solid performance. Here are the highlights.
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Cerner's results: The raw numbers
| Metric |
Q2 2017 |
Q2 2016 |
Year-Over-Year Change |
|---|---|---|---|
|
Sales | $1.29 billion | $1.21 billion |
6.3% |
|
Net income from continuing operations | $179.7 million | $166.5 million |
7.9% |
|
Adjusted EPS | $0.61 | $0.58 |
5.2% |
Data source: Cerner.
What happened with Cerner this quarter
Support, maintenance, and services continued to be Cerner’s bread and butter in the second quarter, with revenue of $917.4 million. That figure reflected a 6.6% year-over-year increase. The company reported a smaller 4.4% increase in its second-quarter system-sales revenue, which totaled $347.8 million.
Cerner’s earnings growth lagged revenue growth a bit. One reason was a slightly lower gross margin. In addition, the company’s operating expenses increased, driven largely by higher spending on sales and client service. Still, Cerner met expectations in the second quarter on both the top and bottom lines.
One notable positive for Cerner in the second quarter was the company’s bookings of $1.636 billion. That’s a record high level for the company and reflects a year-over-year increase of 16%.
Cerner posted operating cash flow of $292.2 million during the second quarter, with free cash flow of $119.1 million. The company’s days sales outstanding was 73 days, a slight dip from the prior-year period.
What management had to say
Cerner president Zane Burke said, "We are pleased with our execution in the second quarter, which included all key metrics being within or above our targeted ranges." He added, "Our record bookings reflect Cerner’s strong competitiveness and good marketplace activity."
Looking forward
Cerner projects third-quarter revenue of $1.265 billion to $1.325 billion. The company expects full-year 2017 revenue to come in between $5.15 billion and $5.25 billion. Cerner’s previous full-year guidance called for revenue of $5.1 billion to $5.3 billion.
The company expected third-quarter adjusted diluted earnings per share of $0.61 to $0.63. For the full year, Cerner projects adjusted earnings per diluted share between $2.46 and $2.54. The company’s previous full-year guidance was for earnings per share of $2.44 to $2.56.
While Cerner is still mourning the loss of founder Neal Patterson, who passed away in July, the company remains in solid shape. Perhaps the most important metric that underscores this point is the company’s record-high bookings in the second quarter and its expectations of third-quarter bookings of $1.45 billion to $1.6 billion.
Although the federal financial incentives for healthcare providers to invest in technology have dried up, Cerner continues to be in a strong position to grow its market share.
