KANSAS CITY, Mo., July 29, 2009 (GLOBE NEWSWIRE) -- Cerner Corp. (Nasdaq:CERN) today announced results for the 2009 second quarter that ended July 4, 2009, delivering strong levels of bookings, earnings and cash flow.
Bookings in the second quarter of 2009 were $394.0 million. Second quarter revenue was $403.8 million, which is flat over the year-ago period.
On a Generally Accepted Accounting Principles (GAAP) basis, second quarter 2009 net earnings were $43.7 million, and diluted earnings per share were $0.52. Second quarter 2008 GAAP net earnings were $35.3 million, and diluted earnings per share were $0.42.
Adjusted (non-GAAP) Earnings
Adjusted second quarter 2009 net earnings were $46.0 million, compared to $42.5 million of adjusted net earnings in the second quarter of 2008. Adjusted diluted earnings per share were $0.55 in the second quarter of 2009 compared to $0.51 in the second quarter of 2008. Analysts' consensus estimate for second quarter 2009 adjusted diluted earnings per share was $0.55.
Adjusted Net Earnings is not a recognized term under GAAP and should not be substituted for net earnings as a measure of the Company's performance but instead should be utilized as a supplemental measure of financial performance in evaluating our business. Following is a description of adjustments made to second quarter net earnings. For more detail, please see the accompanying schedule, titled "Reconciliation of Adjusted Net Earnings and Adjusted Diluted Earnings Per Share to GAAP Net Earnings and Diluted Earnings Per Share."
Adjusted second quarter 2009 and 2008 net earnings and diluted earnings per share exclude the impact of accounting pursuant to Statement of Financial Accounting Standards (SFAS) No. 123R, Share-Based Payment, which requires the expensing of stock options. The effect of accounting under SFAS 123R reduced second quarter 2009 net earnings and diluted earnings per share by $2.3 million and $0.03, respectively, and reduced second quarter 2008 net earnings and diluted earnings per share by $2.2 million and $0.03, respectively.
Second quarter 2008 adjusted net earnings and adjusted diluted earnings per share exclude the impact of a third party supplier settlement. The settlement reduced second quarter 2008 net earnings and diluted earnings per share by $5.0 million and $0.06, respectively.
Other Second Quarter Highlights: * Second quarter cash collections of $436.0 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.
"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 chief executive officer. "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," Patterson said.
Future Period Guidance
Cerner currently expects: * 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.
Earnings Conference Call
Cerner will host an earnings conference call to provide additional detail on second quarter results at 3:30 p.m. CT on July 29. The dial-in number for the conference call is (617) 213-8844; the passcode is Cerner. The company recommends joining the call 15 minutes early for registration. The re-broadcast of the call will be available from 5:30 p.m. CT, July 29 through 11:59 p.m. CT, Aug. 1. The dial-in number for the re-broadcast is (617) 801-6888; the passcode is 85120678.
An audio webcast will be available live and archived on Cerner's Web site at www.cerner.com under the About Cerner section (click Investors, then Presentations and Webcasts).
About Cerner
Cerner is transforming healthcare by eliminating error, variance and waste for healthcare providers and consumers around the world. Cerner solutions optimize processes for healthcare organizations ranging in size from single-doctor practices, to health systems, to entire countries, for the pharmaceutical and medical device industries, and for the healthcare commerce system. These solutions are licensed by more than 8,000 facilities around the world, including approximately 2,100 hospitals; 3,300 physician practices covering more than 30,000 physicians; 500 ambulatory facilities, such as laboratories, ambulatory centers, cardiac facilities, radiology clinics and surgery centers; 600 home-health facilities; and 1,500 retail pharmacies. The following are trademarks of Cerner: Cerner and Cerner's logo. Nasdaq: CERN. For more information about Cerner, please visit our Web site at www.cerner.com.
This release contains forward-looking statements that involve a number of risks and uncertainties. It is important to note that the Company's performance, and actual results, financial condition or business could differ materially from those expressed in such forward-looking statements. The words "believe," "opportunity," "could," " "guidance," and "expects" or the negative of these words, variations thereof or similar expressions are intended to identify such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: the possibility of product-related liabilities; potential claims for system errors and warranties; the possibility of interruption at our data centers or client support facilities; our proprietary technology may be subject to claims for infringement or misappropriation of intellectual property rights of others, or may be infringed or misappropriated by others; risks associated with our non-U.S. operations; risks associated with our ability to effectively hedge exposure to fluctuations in foreign currency exchange rates; risks associated with our recruitment and retention of key personnel; risks related to our reliance on third party suppliers; risks inherent with business acquisitions; changing political, economic and regulatory influences; government regulation; significant competition and market changes; the current adverse financial market environment and uncertainty in global economic conditions; variations in our quarterly operating results; potential inconsistencies in our sales forecasts compared to actual sales; and the volatility in the trading price of our common stock. Additional discussion of these and other factors affecting the Company's business is contained in the Company's periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial condition or business over time.
CERNER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Six
Three Six Months Months
Months Months Ended Ended
Ended Ended June 28, June 28,
(In thousands, except July 4, July 4, 2008 2008
per share data) 2009 (1) 2009 (1) (1)(2) (1)(2)
-------- -------- -------- --------
Revenue
System sales $114,302 $214,491 $120,633 $236,865
Support, maintenance
and services 281,444 565,272 271,470 531,264
Reimbursed travel 8,060 16,365 10,697 19,436
-------- -------- -------- --------
Total revenue 403,806 796,128 402,800 787,565
Margin
System sales 71,673 130,298 74,789 150,838
Support, maintenance
and services 265,244 533,410 256,225 500,567
-------- -------- -------- --------
Total margin 336,917 663,708 331,014 651,405
-------- -------- -------- --------
Operating expenses
Sales and client service 171,633 344,986 182,915 353,997
Software development 65,090 129,826 65,890 135,054
(Includes amortization of
software development costs of
$15,830 and $28,879 for the
three and six months ended
July 4, 2009; and $13,409 and
$24,425 for the three and six
months ended June 28, 2008.)
General and administrative 34,038 60,760 28,988 52,667
-------- -------- -------- --------
Total operating expenses 270,761 535,572 277,793 541,718
-------- -------- -------- --------
Operating earnings 66,156 128,136 53,221 109,687
Interest income 1,953 3,686 3,245 7,074
Interest expense (2,099) (4,153) (2,785) (5,583)
Other income 213 417 42 (171)
-------- -------- -------- --------
Non-operating income
(expense), net 67 (50) 502 1,320
Earnings before income taxes 66,223 128,086 53,723 111,007
Income taxes (22,478) (43,511) (18,436) (38,903)
-------- -------- -------- --------
Net earnings $ 43,745 $ 84,575 $ 35,287 $ 72,104
======== ======== ======== ========
Basic earnings per share $ 0.54 $ 1.05 $ 0.44 $ 0.90
======== ======== ======== ========
Basic weighted average
shares outstanding 80,691 80,512 80,618 80,500
Diluted earnings per share $ 0.52 $ 1.02 $ 0.42 $ 0.86
======== ======== ======== ========
Diluted weighted average
shares outstanding 83,590 83,258 83,581 83,553
Note 1: Operating expenses for the three months ended July 4, 2009
and June 28, 2008 and the six months ended July 4, 2009 and
June 28, 2008 include share-based compensation expense. The
impact of this expense on net earnings is presented below:
Three Six Three Six
Months Months Months Months
Ended Ended Ended Ended
July 4, July 4, June 28, June 28,
2009 2009 2008 2008
--------------------------------------
Sales and client service $ 1,377 $ 3,086 $ 1,732 $ 3,566
Software development 851 2,002 621 1,397
General and administrative 1,358 2,418 1,075 2,027
--------------------------------------
Total Shared Based
Compensation 3,586 7,506 3,428 6,990
Amount of related income
tax benefit (1,336) (2,796) (1,277) (2,604)
--------------------------------------
Net impact on net earnings $ 2,250 $ 4,710 $ 2,151 $ 4,386
======================================
Decrease to diluted earnings
per share $ 0.03 $ 0.05 $ 0.03 $ 0.06
======================================
Note 2: Includes the impact of the third party supplier settlement
reported in the second quarter of 2008.
Three Six Three Six
Months Months Months Months
Ended Ended Ended Ended
July 4, July 4, June 28, June 28,
2009 2009 2008 2008
--------------------------------------
Sales and client service $ -- $ -- $ 8,014 $ 8,014
Amount of related income
tax benefit -- -- (2,984) (2,984)
--------------------------------------
Net impact on net earnings $ -- $ -- $ 5,030 $ 5,030
======================================
Decrease to diluted earnings
per share $ -- $ -- $ 0.06 $ 0.06
======================================
CERNER CORPORATION
Reconciliation of Adjusted Net Earnings and Adjusted Diluted Earnings
Per Share to GAAP Net Earnings and Diluted Earnings Per Share(1)
(unaudited)
--------------------------------------
Three Six Three Six
Months Months Months Months
Ended Ended Ended Ended
July 4, July 4, June 28, June 28,
Net Earnings 2009 2009 2008 2008
--------------------------------------
(In thousands)
Net earnings $ 43,745 $ 84,575 $ 35,287 $ 72,104
Share-based compensation
expense(2) 3,586 7,506 3,428 6,990
Income tax benefit of
share-based compensation(2) (1,336) (2,796) (1,277) (2,604)
Third party supplier
settlement(2) -- -- 8,014 8,014
Income tax benefit of supplier
settlement(2) -- -- (2,984) (2,984)
--------------------------------------
Adjusted net earnings
(non-GAAP) $ 45,995 $ 89,285 $ 42,468 $ 81,520
======================================
Diluted Earnings Per Share
Diluted earnings per share(2) $ 0.52 $ 1.02 $ 0.42 $ 0.86
Share-based compensation
expense (net of tax)(2) 0.03 0.05 0.03 0.06
Third party supplier settlement
(net of tax)(2) -- -- 0.06 0.06
--------------------------------------
Adjusted diluted earnings per
share (non-GAAP) $ 0.55 $ 1.07 $ 0.51 $ 0.98
======================================
Note 1: The presentation of Adjusted Net Earnings, a Non-GAAP
financial measure, is not meant to be considered in
isolation, as a substitute for, or superior to, Generally
Accepted Accounting Principles (GAAP) results and investors
should be aware that non-GAAP measures have inherent
limitations and should be read only in conjunction with the
Company's consolidated financial statements prepared in
accordance with GAAP. Adjusted Net Earnings may also be
different from similar non-GAAP financial measures used by
other companies and may not be comparable to similarly
titled captions of other companies due to potential
inconsistencies in the method of calculation. The Company
believes that Adjusted Net Earnings is important to enable
investors to better understand and evaluate its ongoing
operating results and allows for greater transparency in the
review of its overall financial, operational and economic
performance.
Note 2: The Company provides earnings with and without stock
options expense and unique items such as the third party
supplier settlement because earnings excluding these items
are used by management along with GAAP results to analyze
its business, make strategic decisions and for management
compensation purposes.
CERNER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) July 4, January 3,
2009 2009
---------- ----------
Assets (unaudited)
Cash and cash equivalents $ 353,918 $ 270,494
Short-term investments 30,177 38,400
Receivables, net 444,699 468,928
Inventory 12,594 10,096
Prepaid expenses and other 90,463 69,553
Deferred income taxes 5,650 1,402
---------- ----------
Total current assets 937,501 858,873
Property and equipment, net 501,066 483,399
Software development costs, net 228,629 218,811
Goodwill 149,251 146,666
Intangible assets, net 44,110 51,925
Long-term investments 99,150 105,300
Other assets 15,184 16,014
---------- ----------
Total assets $1,974,891 $1,880,988
========== ==========
Liabilities
Accounts payable $ 59,039 $ 93,667
Current installments of long-term debt 25,477 30,116
Deferred revenue 111,935 107,554
Accrued payroll and tax withholdings 69,010 67,266
Other accrued expenses 38,318 42,620
---------- ----------
Total current liabilities 303,779 341,223
Long-term debt 122,945 111,370
Deferred income taxes and other liabilities 105,901 100,546
Deferred revenue 14,013 15,554
---------- ----------
Total liabilities 546,638 568,693
---------- ----------
Stockholders' Equity
Common stock 818 810
Additional paid-in capital 518,949 491,080
Retained earnings 944,673 860,098
Treasury Stock (28,002) (28,002)
Accumulated other comprehensive loss (8,305) (12,977)
---------- ----------
Total Cerner Corporation stockholders' equity 1,428,133 1,311,009
Noncontrolling interest 120 1,286
---------- ----------
Total stockholders' equity 1,428,253 1,312,295
---------- ----------
Total liabilities and stockholders' equity $1,974,891 $1,880,988
========== ==========