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What's happening: After reporting second-quarter sales that fell short of forecasts, shares in Cerner (NASDAQ:CERN) fell by 10% earlier today.

Why it's happening: Cerner is one of America's largest providers of software solutions to healthcare providers, and demand for its products has swelled in the past few years as healthcare reform has taken a carrot and stick approach to advancing the use of healthcare IT.

However, Cerner appears to have hit a speed bump in the second quarter given that its $1.12 billion in sales, which was up 31.5% year over year, was below the company's prior guidance for at least $1.17 billion in sales and fell $80 million short of analyst projections. This marked a second consecutive quarter where Cerner's top line was shy of its forecast.

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On the bright side, Cerner did report EPS of $0.52 in the second quarter, up 30% from a year ago, which was in line with what investors were looking for. Cerner's ability to offset the impact of its sales shortfall on the bottom line is encouraging -- especially in light of the fact that Cerner's backlog has swelled 37% to $13.3 billion in the past year. If Cerner can keep a lid on its costs, it could translate into bigger profit as this backlog is worked through.

Looking forward, demand for Cerner's solutions should remain strong because healthcare providers are increasingly adopting software solutions to track, evaluate, and report on patient health. Additionally, Cerner should also benefit from revenue opportunities tied to providers switching from prior generation solutions that are becoming obsolete.

Regardless, investors will want to keep an eye on Cerner's sales progress over the coming year to make sure that its recent revenue shortfalls aren't the start of a longer lasting trend. 

 

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies 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.