Cerner Corporation CERN reported first-quarter 2020 adjusted earnings of 71 cents per share, which beat the Zacks Consensus Estimate of 67 cents by 5.9%. The bottom line also improved 16.4% from the prior-year quarter.
The company reported revenues of $1.41 billion, which missed the Zacks Consensus Estimate by 1.2%. However, the top line increased 1.6% from the year-ago quarter.
Revenues by Geography
Per management, U.S. revenues grossed $1.25 billion, up 1% from the prior-year quarter.
Non-U.S. revenues increased 4% to $165 million from the year-ago quarter.
Cerner Corporation Price, Consensus and EPS Surprise
Cerner Corporation price-consensus-eps-surprise-chart | Cerner Corporation Quote
In the reported quarter, the company’s bookings totaled $1.09 billion, down 12.1% from the year-ago quarter. The coronavirus outbreak in mid-March resulted in volume of contracts to be lower than normal in the last two weeks of the first quarter.
Licensed software revenues improved 2.4% to $158 million, driven by strong growth in SaaS offerings.
Technology resale revenues were $51.5 million, down 7.3% on a year-over-year basis due to lower level of bookings.
Revenues from Subscriptions grossed $94.4 million, up 11.9% year over year.
Professional services’ revenues totaled $511.3 million, up 4.3% from the prior-year quarter number, on the back of solid growth in implementation services.
Revenues at the Managed services unit amounted to $309.4 million, up 1.6% from the prior-year quarter.
Support and maintenance revenues were $273.7 million, down 1.2% year over year.
Reimbursed travel revenues amounted to $13.5 million, reflecting year-over-year decline of 43.5% on account of the travel restrictions that were in place in March.
In the quarter under review, gross profit summed $1.16 billion, up 1.8% year over year. Gross margin was 81.9%, up 10 basis points (bps) on a year-over-year basis.
General and administrative expenses increased 45.4% to $139.9 million. Further, software development expenses rose 2.7% to $185.3 million.
Adjusted operating income totaled $273.6 million, up 12.7% from the prior-year quarter. Adjusted operating margin expanded 190 bps to 19.4% during the reported quarter.
For second-quarter 2020, Cerner expects revenues between $1.34 billion and $1.39 billion. The Zacks Consensus Estimate for revenues stands at $1.43 billion.
For the second-quarter 2020 adjusted earnings per share is projected between 60 cents and 64 cents. The consensus mark for earnings stands at 70 cents.
New business bookings for second-quarter 2020 are estimated between $1 billion and $1.20 billion.
For full-year 2020, the company anticipates revenues in the range of $5.50-$5.70 billion (down from the previously guided range of $5.72-$5.98 billion).
For the full year, adjusted earnings per share are expected between $2.78 and $2.90 (down from the prior guided band of $3.09-$3.19).
Cerner exited the first quarter on a mixed note. The company continues to witness strong contributions from key areas like Population Health, Revenue Cycle and IT Works. Further, gains in Licensed software, Subscriptions, Professional and Managed Services units buoy optimism. International revenues also moved up in the quarter. Further, margin expansion is a positive.
The company benefited from electronic health record (EHR), electronic patient record (EPR) or electronic medical record (EMR) platforms that provide patient care in acute inpatient and outpatient settings.
Meanwhile, bookings witnessed a noticeable decline in the quarter under review. The company also saw a decline in Technology resale revenues. Further, competition in the global MedTech space remains a concern.
Currently, Cerner carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space are Exact Sciences Corporation EXAS, ViewRay, Inc. VRAY and ResMed Inc. RMD, each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Exact Sciences’s first-quarter 2020 revenues is pegged at $350.2 million, suggesting a whopping year-over-year improvement of 116.1%. The same for EPS stands at a loss of 60 cents, indicating growth of 9.1% from the prior-year quarter.
The Zacks Consensus Estimate for ViewRay’s first-quarter 2020 earnings per share stands at a loss of 20 cents, suggesting an improvement of 41.8% from the year-ago period.
The Zacks Consensus Estimate for ResMed’s third-quarter fiscal 2020 revenues is pegged at $715.6 million, suggesting year-over-year improvement of 8.1%. The same for EPS stands at $1.00, indicating growth of 12.4% from the year-ago reported figure.
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