Schaefer says the COVID-19 pandemic caused an “explosion of innovation” at Cerner

Cerner’s second-quarter earnings were $134.7 million, up 6% from $127 million in the same period of 2019.

Health IT companies reported a profit of 44 cents per share. This is due to a 39 cent improvement in revenue in the second quarter of 2019.

Adjusted revenue was $193 million (63 cents), below the level of $215 million (66 cents) in the year-ago quarter, but more than Wall Street expected. The average estimate of the 12 analysts surveyed by Zacks Investment Research was a profit of 61 cents per share.

However, second-quarter revenue for the Kansas City, Missouri, company was $1.33 million, down 7% from $1.43 billion in the second quarter of 2019.

CernerQ2 revenues were $10 million below the company’s guidance range. Cerner’s second-quarter earnings were also below street forecasts as 10 analysts surveyed by Zack predicted $1.36 billion.

The revenue shortfall is due to the termination of a large revenue cycle outsourcing contract in the fourth quarter of 2019.

Mark Norton, Cerner’s Chief Financial Officer, said the revenue impact on the company’s second-quarter revenue call as revenue deficits primarily occurred in low-margin areas, including technology resale and refunds. Said it is minimal.

RELATED: Cerner’s First-Quarter Revenue Increased to $1.4 Billion but Didn’t Meet Goal Due to COVID-19 Impact

“Because these are mainly low-margin sources of revenue, their impact on revenue was limited and expense management was able to offset them,” Norton said.

Cerner also cut spending in the fourth quarter, with total operating expenses down nearly 6% year-over-year to $971.5 million.

According to Norton, the company booked $1.34 billion in the second quarter, down 6% from the second quarter of 2019, but mainly due to higher levels of managed service bookings in the fourth quarter He said it exceeded the range and exceeded $100 million.

“We are delighted that the second quarter was very strong,” Cerner CEO Brent Schaefer said at the earnings briefing.

“Our quarterly booking reflects our strong relationships with our clients, and our strong focus on cost management has delivered positive revenue results. We have a resilient business model, worldwide. We are fortunate to have our employees, highly relevant healthcare technologies, and a solid transformation plan that positions us. We manage pandemics, which have less impact than many other companies.” ..

Shaver said the COVID pandemic caused a “real explosion of innovation” as the Cerner team undertook significant and rapid projects, saying the company’s data and analytics capabilities and network solutions.

Donald Triggsai, Cerner’s President, said the company’s focus on innovation is well suited to rethink future health delivery for healthcare organizations.

“Someone argues that Silicon Valley start-ups will bring the next wave of change. But I don’t think anyone has deep knowledge of healthcare and IT. Impact last mile provider workflow. No one has the same ability, and we don’t have our combination of entrepreneurial scales.”

During the second quarter, Cerner, in collaboration with the Department of Veterans Affairs and the Department of Defense, initiated a joint medical information exchange, enabling secure data exchange between departments and an expanded network of community partners.

RELATED: R1 RCM Acquires Cerner’s Revenue Cycle Outsourcing Business for $30 Million

John Peterzalek, executive chief client and service officer at Cerner, said the work on the electronic medical records project for VA and DOD was suspended during the pandemic, and the modified working days were not announced during the call. ..

The company keeps the VA centralized scheduling solution running and the first VA program running, he said.

Together with the Department of Defense, as part of the Raids Partnership for Defense Health, Cerneris has made substantial strides to advance the program and schedule an activation schedule in the coming months.

Cerner is also working in the United States. The Coast Guard pilot site will implement the new EHR, Peterzalek said.

More on 2nd Quarter Results for Sarner

Licensed software revenues for the second quarter were $152 million, down 23% from last year’s best-in-class record of $197 million.

According to Norton, $42 million of technology resale in the second quarter was down 31% year-over-year, mainly due to some anticipated new business deals pushed out of the quarter during the pandemic. Second quarter subscription revenue increased 3% to $92 million.

Norton said Cerner is on track with planned cost optimization efforts and additional steps the company has taken to mitigate the effects of the crisis.

“We expect the adjusted operating profit margin for the full year to be around 20%. That’s about 150 basis points of the full-year profit margin expansion, which is very impressive in terms of the situation,” he said. It was

In the fourth quarter, Cerner’s operating margin is expected to be 50 to 100 basis points below its original target of 22.5%.

Norton said this reflected the reality that Cernerwon could not completely offset the impact of COVID-19 by the end of the year, even beyond the original optimization goals.

Cerner executives believe that the pandemic will have the greatest impact in the second quarter and the business will improve later this year.

Related: Expanding Cerner-Amazon Partnership Key to 2020 Growth Strategy

Norton said the company’s business is “generally elastic, with repetitive key elements.”

In June, Cerner sold its RevWorks revenue cycle business to R1 RCM for $30 million.

Cerner forecasts third-quarter earnings between $1.35 billion and $1.4 billion.

According to Norton, Q3’s range reflects a slightly larger pandemic impact than originally expected and the factors behind the sale of Cerner’s RevWorks services business, which is expected to close in the remaining third quarter. $20 million in the third and fourth quarters.

The company also tightens its full-year revenue outlook, forecasting full-year revenues to be between $5.45 billion and $5.55 billion. This is below Cerner’s previous guidance range of $5.55 billion to $5.7 billion based on lower-than-expected second-quarter earnings, RevWorks pending sales, and revised forecasts for the second half of 2020. I am.

Cerner also forecast an adjusted diluted earnings per share for 2020 between $ 2.80 and $ 2.88. This reflects a reduction in the previous range from $ 2.78 to $ 2.90.

According to Norton, the company expects third-quarter revenue of $1.35 billion to $1.55 billion.

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