Cerner's second quarter profit up 24 percent

By Bernie Monegain
10:41 AM

Cerner Corp.'s second quarter earnings were up 24 percent in the second quarter, though the company reported flat revenue - $403.8 million - compared with the same quarter a year ago.

Cerner reported a profit of $43.7 million, or 52 cents a share, up from $35.3 million, or 42 cents a share, a year earlier Excluding stock-compensation costs, earnings rose to 55 cents from 51 cents. Cerner reported its earnings at the close of market on Wednesday for the quarter ended July 4.

Bookings in the second quarter of 2009 were $394 million.

"We delivered good earnings and cash flow performance in the second quarter despite the economy continuing to have an impact on our revenue levels," said Neal Patterson, Cerner co-founder, chairman and CEO. "We continue to believe the Health Information Technology for Economic and Clinical Health (HITECH) provisions in the American Recovery and Reinvestment Act of 2009 (ARRA) represent a substantial opportunity for Cerner in coming years. And the investment from the ARRA could create the level of systemic change in the U.S. healthcare system that will improve safety and quality while also saving our nation hundreds of billions of dollars annually."

Sean Wieland, senior research analyst at Piper Jaffrey said Cerner's bookings growth, the uptick in RFPs, and management's expectations of the stimulus driven demand, are promising.

"We continue to believe that Cerner is well positioned to attract its fair share of the stimulus demand, if not more," Wieland said.

Other Second Quarter Highlights

  • Second quarter cash collections of $436 million and operating cash flow of $67.9 million;
  • Days sales outstanding of 100 days compared to 102 days in the first quarter of 2009 and 90 days in the year-ago quarter;
  • Total revenue backlog of $3.7 billion, up 12 percent over the year-ago quarter.  This is comprised of $3.1 billion of contract backlog and $0.6 billion of support and maintenance backlog.

Future guidance

  • Third quarter 2009 revenue between $410 million and $430 million;
  • Third quarter 2009 adjusted diluted earnings per share before stock options expense between $0.57 and $0.63;
  • Third quarter 2009 new business bookings between $380 million and $420 million;
  • Full-year 2009 revenue between $1.7 billion and $1.75 billion;
  • Full-year 2009 adjusted diluted earnings per share before stock options expense between $2.40-$2.50, which is unchanged from prior guidance;
  • SFAS No. 123R share-based compensation expense to reduce diluted earnings per share by approximately $0.03 in the third quarter of 2009 and 12-13 cents for the full-year 2009.