Cern Headquarters

Cerner's coming new campus in Kansas City, Mo. Source: Cerner Corporation 

Good news came to Cerner Corporation (NASDAQ:CERN) last week in the form of a big Department of Defense contract. The major health information technology company announced its second-quarter results after the market closed on Tuesday. Was there more good news?  

By the numbers
On the revenue front, the news wasn't very positive. Cerner posted second-quarter revenue of $1.126 billion, a solid 32% jump over the same period last year. However, the figure fell short of the company's guidance and the consensus analysts' estimate of $1.2 billion.

Earnings looked much better, though. Cerner announced adjusted earnings of $183.0 million, or $0.52 per diluted share. That represented a 30% year-over-year increase. It also was right in line with Wall Street's expectations.

The company reported operating cash flow for the second quarter of $108.7 million. However, Cerner also posted negative free cash flow of $46 million. This negative amount stemmed mainly from payouts related to a voluntary separation plan in the second quarter.

Behind the numbers
Cerner didn't provide details in its initial announcement about reasons why revenue didn't meet expectations. However, it seems safe to conclude that there could have been an impact from the timing of deals. The company had all-time high bookings of $1.29 billion during the second quarter -- 20% greater than the same quarter in 2014. Also, Cerner's backlog during the quarter was $13.3 billion, which is 37% higher year over year.

The bottom line wasn't affected as badly by the revenue miss, though, because Cerner kept expenses under control. On a GAAP basis, earnings were down in the second quarter compared with the same period a year ago. However, the aforementioned voluntary separation plan combined with acquisition expenses and stock-based compensation expenses helped boost the adjusted earnings upward.

Investors weren't pleased with the lower-than-expected revenue and in-line earnings. Cerner's shares fell 4% in early after-hours trading. 

Looking ahead
Shareholders found even more to dislike with Cerner's updated guidance. The company expects third-quarter revenue to come in between $1.15 billion and $1.2 billion, less than the consensus analysts' projection of $1.22 billion. Cerner anticipates third-quarter adjusted earnings between $0.54 and $0.55. Wall Street expects adjusted earnings of $0.55 per share.

For the full year, Cerner now thinks that revenue will be between $4.475 billion and $4.575 billion. That range is well below the previous full-year revenue guidance of $4.65 billion to $4.8 billion. It's also less than analysts' estimate of $4.72 billion.

There was one bright spot, though. Cerner bumped up its lower end of guidance for full-year earnings from $2.07 to $2.09 per share. The company maintained the upper end of the range at $2.15 per share. Wall Street thinks Cerner should post full-year adjusted earnings of $2.12 per share.

Cerner's relatively pricey valuation makes it susceptible to taking a beating whenever a quarter doesn't go as well as expected. Investors still have good news to cling to, though. Cerner remains a dominant player in the health technology space. Landing part of the multibillion-dollar DOD contract was nice. There's still plenty for investors with a long-term perspective to like about Cerner.

Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Cerner. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.