Cerner reports record bookings but misses revenue expectations

Cerner Corp., the North Kansas City-based health care IT company, reported an all-time high of $1.59 billion in bookings for the third quarter of fiscal 2015, but its revenue for the quarter fell short of expectations.

Bookings, or new business under contract, grew 44 percent, up from $1.1 billion for the same quarter last year. Revenue was up 34 percent, to $1.128 billion, from $840.1 million in the prior-year quarter. However, that was a slight decrease from the company’s revenue of $1.13 billion in the second quarter of 2015, and it was $20 million below the low end of Cerner’s guidance range in August.

The company reported adjusted third-quarter net earnings of $188.7 million and diluted earnings per share of 54 cents, which met the consensus analyst estimate, up from $145.3 million and 42 cents in the year-ago period.

“This quarter, the lower-than-expected revenue was mostly a function of lower-than-usual levels of upfront software revenue on some of our larger contracts and technology resale being slightly below our expectations,” Cerner CFO Marc Naughton said in the company’s conference call Tuesday.

Naughton said foreign currency fluctuation also had an impact on revenue. “In Q3, revenue would have been nearly $20 million higher if you held exchange rates consistent with those in Q3 2014,” he said.

Neal Patterson, Cerner’s co-founder, chairman and CEO, pointed out that the company signed more new clients in the first three quarters of 2015 than it has in any full year before.

“The highlight of our results in the third quarter was our strong bookings, which again included a record number of new clients joining Cerner,” Patterson said in a statement.

In August, Cerner won a contract on a 10-year, $842 million project to help digitize health records at three dozen hospitals and clinics in Canada. Two weeks before that contract, a group that includes Cerner won a $4.3 billion contract to overhaul the U.S. military’s electronic health records.

Cerner his its technology in more than 18,000 facilities worldwide, the company said, and it employs about 16,000 people worldwide. More than 10,000 of them are based in the Kansas City metro area.

For the fourth quarter of 2015, Cerner said it expects revenue between $1.15 billion and $1.2 billion, with the midpoint reflecting growth of 27 percent over the fourth quarter of 2014. The lower revenue may have some impact on earnings as well, the company said.

“While we are disappointed about delivering slightly lower‐than expected revenue, our bookings this year coupled with our strong pipeline set us up for good revenue growth next year,” Naughton said.

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