KANSAS CITY, Mo. — October 24, 2013 — Cerner Corporation (Nasdaq: CERN) today announced results for the 2013 third quarter that ended September 28, 2013, delivering strong levels of bookings and earnings performance.
Bookings in the third quarter of 2013 were $928.0 million, an all-time high for a third quarter and an increase of 21 percent compared to third quarter 2012 bookings of $769.9 million.
Third quarter revenue was $727.8 million, an increase of 8 percent compared to $676.5 million in the year-ago period. Revenue growth was below Cerner’s expectations due to reduced levels of low-margin technology resale. However, the lower technology sales had limited impact on earnings, which were in line with expectations due to strength in other areas.
On a U.S. Generally Accepted Accounting Principles (GAAP) basis, third quarter 2013 net earnings were $115.3 million and diluted earnings per share were $0.33. Third quarter 2012 GAAP net earnings were $98.9 million and diluted earnings per share were $0.28.
The number of shares and the per share amounts for all periods presented within reflect the two-for-one stock split effective June 28, 2013.
Adjusted (non-GAAP) Net Earnings
Adjusted net earnings for third quarter 2013 were $123.6 million, an increase of 17 percent compared to $105.2 million of adjusted net earnings in the third quarter of 2012. Adjusted diluted earnings per share were $0.35 in the third quarter of 2013 compared to $0.30 of adjusted diluted earnings per share in the year-ago quarter. Analysts’ consensus estimate for third quarter 2013 adjusted diluted earnings per share was $0.35.
Adjusted net earnings is not a recognized term under GAAP and should not be substituted for net earnings as a measure of Cerner’s performance but instead should be utilized as a supplemental measure of financial performance in evaluating our business. Following is a description of adjustments made to net earnings. For more detail, please see the accompanying schedule, titled “Reconciliation of GAAP Results to Non-GAAP Results.” (.PDF)
Adjusted net earnings and diluted earnings per share exclude share-based compensation expense, which reduced third quarter 2013 net earnings and diluted earnings per share by $8.2 million and $0.02, respectively; and reduced third quarter 2012 net earnings and diluted earnings per share by $6.3 million and $0.02, respectively.
Other 2013 Third Quarter Highlights:
- Third quarter cash collections of $766.1 million and operating cash flow of $164.2 million.
- Third quarter free cash flow of $32.8 million. Free cash flow is a non-GAAP financial measure defined as GAAP cash flows from operating activities less capital purchases and capitalized software development costs. For more detail, please see the accompanying schedule, titled “Reconciliation of GAAP Results to Non-GAAP Results.” (.PDF)
- Third quarter days sales outstanding of 66 days, which is down from 73 days in the year-ago quarter.
- Total backlog of $8.40 billion, up 24 percent over the year-ago quarter. This was comprised of $7.63 billion of contract backlog and $769.8 million of support and maintenance backlog.
“In addition to our solid financial results, our third quarter included several very strategic client wins across the globe and major development and deployment milestones for our population health and mobility solutions,” Neal Patterson, Cerner chairman, CEO and co-founder said. “Cerner sits at the intersection of health care and information technology, and I really like that intersection. Trends in health care costs are unsustainable and IT is the only remaining lever to pull that can change the current trajectory. Cerner has done well and we believe will continue to do well in the current electronic medical record era, but it’s our investments in capabilities beyond the EMR that differentiate us from our current competitors and position us for sustained growth through the decade.”
Future Period Guidance
Cerner currently expects:
- Fourth quarter 2013 revenue between $775 million and $815 million.
- Fourth quarter 2013 adjusted diluted earnings per share before share-based compensation expense between $0.38 and $0.39.
- Fourth quarter 2013 new business bookings between $1 billion and $1.1 billion.
- Share-based compensation expense to reduce diluted earnings per share by approximately $0.02 to $0.03 in the fourth quarter of 2013.
Earnings Conference Call
Cerner will host an earnings conference call to provide additional detail on these results at 3:30 p.m. CT on October 24. The dial-in number for the conference call is (857)-244-7553; the passcode is Cerner. Cerner recommends joining the call 15 minutes early for registration. The re-broadcast of the call will be available from 5:30 p.m. CT, October 24 through 11:59 p.m. CT, October 27. The dial-in number for the re-broadcast is (617)-801-6888; the passcode is 36253382.
An audio webcast will be available live and archived on Cerner’s website at www.cerner.com under the About Cerner section (click Investor Relations, then Presentations and Webcasts).
Cerner is contributing to the systemic change of health and care delivery. For more than 30 years Cerner has been executing its vision to make health care safer and more efficient. We started with the foundation of digitizing paper processes and now offer the most comprehensive array of information software, professional services, medical device integration, remote hosting and employer health and wellness services. Cerner systems are used by everyone from individual consumers, to single-doctor practices, hospitals, employers and entire countries. Taking what we’ve learned over more than three decades, Cerner is building on the knowledge that is in the system to support evidence-based clinical decisions, prevent medical errors and empower patients in their care.
Cerner® solutions are licensed by approximately 10,000 facilities around the world, including more than 2,700 hospitals; 4,150 physician practices; 45,000 physicians; 550 ambulatory facilities, such as laboratories, ambulatory centers, behavioral health centers, cardiac facilities, radiology clinics and surgery centers; 800 home health facilities; 45 employer sites and 1,750 retail pharmacies.