The Q4 Revenue Misses but Earnings Meet Analyst Estimates for Cerner (CERN)

The Q4 Revenue Misses but Earnings Meet Analyst Estimates for Cerner (CERN)

The earnings of Cerner Corp for the adjusted Q4 2016 were 57 cents/share matching estimates by Zacks analysts. The earnings inched down by 1.7% year over year.

However, Zacks had estimated $1.262 billion net revenue, which the company misses by reporting revenue of $1.257 billion. Although, according to year by year basis, the revenue rose 7% and the amount was smacked down in the middle of the company’s guidance of $1.225 billion to $1.300 billion.

The complete year revenue totalled up to $4.80 billion i.e. 8% year by year increase. System sales had 26.3% of the net revenues in fiscal year 2016, support, maintenance and service revenues were 71.8% and reimbursed travel segment had 1.8% of the net revenue in the fiscal year 2016.

Performance of Stock:

The stock added just 3% in the last 3 months, which is lower than Medical Info Systems sub industry’s total gain of 6.5% and this level was also below the S&P 500’s 5.1% return in the same time frame. However, there is still confidence in the stock.

Highlights of the Quarter:

  1. The Q4 2016 bookings were $1.44 billion. These were at the lower end as per the company’s previously provided guidance as there were less new ITWorks deals.
  2. The sales were strong and there was a hefty contribution from Revenue Management Services (RevWorks), which made the Revenue Cycle a strong contributor to results. There were record bookings and a growth of 19% revenue in this segment for the complete year.
  3. The company’s HealtheIntent solutions also drove a lot of revenue into the fourth quarter results due to the growth in their population health service businesses. There was a growth of 13% in revenues in this segment for the complete year as compared to 2015.
  4. The University of Missouri Health Care and Cerner also announced that their partnership will be continued in the fourth quarter, which also benefitted the company’s growth. Their existing population health management system “HealtheIntent” was the center of this deal.
  5. The Ambulatory also had impressive performance from the company and the small hospital market as well. The bookings for ambulatory this year grew 16%.

The Balance Sheet:

  1. The company had a backlog of $15.927 billion this year.
  2. Total investments and cash at the end of Q4 were $466 million.
  3. Debt including obligations of capital lease was $564 million.
  4. Cash flow for Q4 was $333.2 million.

Cerner has a healthy guidance for Q1 2017. The revenues are forecasted to be between $1.2 Billion and $1.275 Billion. The adjusted earnings are forecasted to be from 57 cents/share to 59 cents/share

For fiscal 2017, revenues are expected from $5.1 Billion to $5.3 Billion and earnings to be $2.44 to $2.56 per share.

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