KANSAS CITY, Mo., Oct. 28, 2009 (GLOBE NEWSWIRE) -- Cerner Corp. (Nasdaq:CERN) today announced results for the 2009 third quarter that ended October 3, 2009, delivering record levels of bookings, and strong cash flow and earnings.
Bookings in the third quarter of 2009 were $424.3 million, up 11% from $383.6 million in the third quarter of 2008 and a record for third quarter bookings. Third quarter revenue was $409.4 million, which is a 3% decrease from the year-ago period.
On a Generally Accepted Accounting Principles (GAAP) basis, third quarter 2009 net earnings were $48.4 million, and diluted earnings per share were $0.57. Third quarter 2008 GAAP net earnings were $45.0 million, and diluted earnings per share were $0.54.
Adjusted (non-GAAP) Earnings
Adjusted third quarter 2009 net earnings were $51.3 million, compared to $47.4 million of adjusted net earnings in the third quarter of 2008. Adjusted diluted earnings per share were $0.61 in the third quarter of 2009 compared to $0.57 in the third quarter of 2008. Analysts' consensus estimate for third quarter 2009 adjusted diluted earnings per share was $0.61.
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 third 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 third 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 third quarter 2009 net earnings and diluted earnings per share by $3.0 million and $0.04, respectively, and reduced third quarter 2008 net earnings and diluted earnings per share by $2.4 million and $0.03, respectively.
Other Third Quarter Highlights:
- Third quarter cash collections of $410.6 million and operating cash flow of $73.4 million.
- Days sales outstanding of 105 days compared to 100 days in the second quarter of 2009 and 93 days in the year-ago quarter.
- Total revenue backlog of $3.85 billion, up 13 percent over the year-ago quarter. This is comprised of $3.25 billion of contract backlog and $604 million of support and maintenance backlog.
"Our execution was solid in the third quarter, which included strong bookings, earnings, and cash flow," said Neal Patterson, Cerner co-founder, chairman and chief executive officer. "We are also encouraged by leading indicators that reflect demand beginning to be driven by the Health Information Technology for Economic and Clinical Health (HITECH) provisions in the American Recovery and Reinvestment Act of 2009 (ARRA). We believe HITECH will continue to be a driver of demand for several years as healthcare organizations embrace technology to create a safer, more efficient, and higher-quality healthcare system," Patterson said.
Future Period Guidance
Cerner currently expects:
- Fourth quarter 2009 revenue between $435 million and $465 million.
- Fourth quarter 2009 adjusted diluted earnings per share before stock options expense between $0.68 and $0.74.
- Fourth quarter 2009 new business bookings between $425 million and $475 million.
- SFAS No. 123R share-based compensation expense to reduce diluted earnings per share by approximately $0.03 to $0.04 in the fourth quarter of 2009.
Earnings Conference Call
Cerner will host an earnings conference call to provide additional detail on third quarter results at 3:30 p.m. CT on October 28. The dial-in number for the conference call is (617) 213-8860; 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 6:30 p.m. CT, October 28 through 11:59 p.m. CT, October 31. The dial-in number for the re-broadcast is (617) 801-6888; the passcode is 41281702.
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 "encouraged," "leading indicators," "believe," "continue," "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)
(In thousands, except per share data)
Nine
Three Nine Three Months
Months Months Months Ended
Ended Ended Ended Sept. 27,
Oct. 3, Oct. 3, Sept. 27, 2008 (1)
2009 (1) 2009 (1) 2008 (1) (2)
---------- ---------- ---------- ----------
Revenue
System sales $ 118,325 $ 332,816 $ 137,522 $ 374,387
Support, maintenance
and services 284,189 849,461 275,702 806,966
Reimbursed travel 6,901 23,266 9,504 28,940
---------- ---------- ---------- ----------
Total revenue 409,415 1,205,543 422,728 1,210,293
Margin
System sales 70,391 200,689 89,226 240,064
Support, maintenance
and services 269,545 802,955 261,185 761,751
---------- ---------- ---------- ----------
Total margin 339,936 1,003,644 350,411 1,001,815
---------- ---------- ---------- ----------
Operating expenses
Sales and client
service 171,415 516,401 178,750 532,747
Software development 66,752 196,578 68,092 203,145
(Includes
amortization of
software
development
costs of $16,922
and $45,801 for
the three
and nine months
ended October 3,
2009; and $13,197
and $37,622 for
the three and
nine months ended
September 27,
2008.)
General and
administrative 31,059 91,819 35,818 88,485
---------- ---------- ---------- ----------
Total operating
expenses 269,226 804,798 282,660 824,377
---------- ---------- ---------- ----------
Operating earnings 70,710 198,846 67,751 177,438
Interest income 2,371 6,057 3,004 10,078
Interest expense (2,191) (6,344) (2,576) (8,159)
Other income (3) 414 (221) (392)
---------- ---------- ---------- ----------
Non-operating
income (expense),
net 177 127 207 1,527
Earnings before
income taxes 70,887 198,973 67,958 178,965
Income taxes (22,493) (66,004) (22,944) (61,847)
---------- ---------- ---------- ----------
Net earnings $ 48,394 $ 132,969 $ 45,014 $ 117,118
========== ========== ========== ==========
Basic earnings per
share $ 0.60 $ 1.65 $ 0.56 $ 1.45
========== ========== ========== ==========
Basic weighted
average shares
outstanding 81,225 80,750 80,782 80,594
Diluted earnings per
share $ 0.57 $ 1.59 $ 0.54 $ 1.40
========== ========== ========== ==========
Diluted weighted
average shares
outstanding 84,172 83,576 83,681 83,594
Note 1: Operating expenses for the three months ended October 3, 2009 and September 27, 2008 and the nine months ended October 3, 2009 and September 27, 2008 include share-based compensation expense. The impact of this expense on net earnings is presented below:
Three Nine Three Nine
Months Months Months Months
Ended Ended Ended Ended
Oct. 3, Oct. 3, Sept. 27, Sept. 27,
2009 2009 2008 2008
-------- -------- -------- --------
Sales and client service $ 2,315 $ 5,401 $ 2,033 $ 5,599
Software development 1,132 3,134 830 2,227
General and
administrative 1,258 3,676 1,017 3,044
-------- -------- -------- --------
Total Shared Based
Compensation 4,705 12,211 3,880 10,870
Amount of related income
tax benefit (1,753) (4,549) (1,445) (4,049)
-------- -------- -------- --------
Net impact on net
earnings $ 2,952 $ 7,662 $ 2,435 $ 6,821
======== ======== ======== ========
Decrease to diluted
earnings per share $ 0.04 $ 0.09 $ 0.03 $ 0.08
======== ======== ======== ========
Note 2: Includes the impact of the third party supplier settlement reported in the second quarter of 2008.
Three Nine Three Nine
Months Months Months Months
Ended Ended Ended Ended
Oct. 3, Oct. 3, Sept. 27, Sept. 27,
2009 2009 2008 2008
-------- -------- -------- --------
Sales and client service $ -- $ -- $ -- $ 8,014
Amount of related income tax
benefit -- -- -- (2,984)
-------- -------- -------- --------
Net impact on net earnings $ -- $ -- $ -- $ 5,030
======== ======== ======== ========
Decrease to diluted earnings
per share $ -- $ -- $ -- $ 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 Nine Three Nine
Months Months Months Months
Ended Ended Ended Ended
Oct. 3, Oct. 3, Sept. 27, Sept. 27,
2009 2009 2008 2008
--------- --------- --------- ---------
Net Earnings
(In thousands)
Net earnings $ 48,394 $ 132,969 $ 45,014 $ 117,118
Share-based compensation
expense(2) 4,705 12,211 3,880 10,870
Income tax benefit of
share-based
compensation(2) (1,753) (4,549) (1,445) (4,049)
Third party supplier
settlement(2) -- -- -- 8,014
Income tax benefit of
supplier settlement(2) -- -- -- (2,984)
--------- --------- --------- ---------
Adjusted net earnings
(non-GAAP) $ 51,346 $ 140,631 $ 47,449 $ 128,969
========= ========= ========= =========
Diluted Earnings Per Share
Diluted earnings per
share(2) $ 0.57 $ 1.59 $ 0.54 $ 1.40
Share-based compensation
expense (net of tax)(2) 0.04 0.09 0.03 0.08
Third party supplier
settlement (net of tax)(2) -- -- -- 0.06
--------- --------- --------- ---------
Adjusted diluted earnings
per share (non-GAAP) $ 0.61 $ 1.68 $ 0.57 $ 1.54
========= ========= ========= =========
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)
October 3, January 3,
2009 2009
(unaudited)
----------- -----------
Assets
Cash and cash equivalents $ 367,972 $ 270,494
Short-term investments 66,678 38,400
Receivables, net 470,071 468,928
Inventory 12,532 10,096
Prepaid expenses and other 90,194 69,553
Deferred income taxes 5,162 1,402
----------- -----------
Total current assets 1,012,609 858,873
Property and equipment, net 506,331 483,399
Software development costs, net 232,138 218,811
Goodwill 150,823 146,666
Intangible assets, net 40,059 51,925
Long-term investments 95,250 105,300
Other assets 14,492 16,014
----------- -----------
Total assets $ 2,051,702 $ 1,880,988
=========== ===========
Liabilities
Accounts payable $ 53,835 $ 93,667
Current installments of long-term debt 24,896 30,116
Deferred revenue 100,847 107,554
Accrued payroll and tax withholdings 62,861 67,266
Other accrued expenses 64,411 42,620
----------- -----------
Total current liabilities 306,850 341,223
Long-term debt 118,927 111,370
Deferred income taxes and other liabilities 105,142 100,546
Deferred revenue 14,972 15,554
----------- -----------
Total liabilities 545,891 568,693
----------- -----------
Stockholders' Equity
Common stock 823 810
Additional paid-in capital 543,718 491,080
Retained earnings 993,067 860,098
Treasury stock (28,002) (28,002)
Accumulated other comprehensive loss (3,915) (12,977)
----------- -----------
Total Cerner Corporation stockholders'
equity 1,505,691 1,311,009
Noncontrolling interest 120 1,286
----------- -----------
Total stockholders' equity 1,505,811 1,312,295
----------- -----------
Total liabilities and stockholders' equity $ 2,051,702 $ 1,880,988
=========== ===========