Cerner bookings, revenue see strong growth in Q2
- Cerner’s bookings climbed 9% to $1.78 billion in the second quarter of 2018, up from $1.64 billion in the same period last year. Bookings were "well above the guided range we provided, largely due to the initial task orders for the Veterans Affairs contract announced in May," CFO Mark Naughton said on a Thursday earnings call.
- Revenue grew 6% to $1.37 billion, compared with $1.3 billion the prior year, according to financial results. Net earnings dropped to $169.4 million from $179.7 million in the same quarter a year ago.
- The Kansas City, Missouri-based company said it expects full-year revenue of between $5.33 billion and $5.5 billion, consistent with previous guidance.
In addition to the boost from the VA contract, seven large contracts contributed more than $75 million to bookings in the quarter. Cerner President Zane Burke described the deals as "a full box of chocolates, and they’re all very desirable."
Overall, 31% of bookings came from outside the company's core Millenium install base, including a "noteworthy win in a large academic medical center," he said on the call.
Cerner reported strong revenues in its ambulatory business, driven by ongoing penetration in ambulatory settings of large healthcare system clients and a new large independent provider.
Delay of the VA contract negatively impacted Cerner revenues in the first quarter of this year, Cerner officials previously said. The $10 million, no-bid contract is set to replace the VA's aging VistA medical records system, which was developed four decades ago.
"We expect to accelerate our efforts in population health, open platforms and telehealth, all of which have relevance to our commercial client base," Burke said.
The company is also on track to begin the next wave of implementations on the Department of Defense's MHS Genesis project, Burke said, adding that DOD last week increased the contract ceiling by $1.2 billion to include the Coast Guard and expand the scope of tools and services.
Officials were especially bullish on Cerner's recent partnership with Lumeris to develop an EHR-agnostic tool, called Maestro Advantage, to improve population health. In addition, Lumeris will adopt Cerner's HealtheIntent as a platform for its clinical methodology and advanced analytics, which will form the core of the operating model for the tool to drive better outcomes and reduce costs of care.
While there is lots of work to be done, "the value proposition is high," Burke told investors, noting Lumeris operates a large Medicare Advantage plan in the Midwest.
"The Lumeris investment is a great example of taking the technology we've created and the skill sets that we're developing and then finding a partner where we can go faster in development, we can go faster to market," Naughton said. "We have a strong balance sheet, and … the Lumeris investment shows that we're willing to use it to support our growth strategy."
Earlier this week, rival athenahealth posted increased revenues for Q2 but said bookings were down 4.8%. That company is mulling an unsolicited acquisition offer and dealing with the aftermath of an executive shakeup.