Despite record bookings, Cerner falls short of earnings expectations as it waits on VA contract

Cerner
Cerner President Zane Burke said the company "welcomed" an interoperability review by the VA. (Hookmeupbarb CC BY-SA 4.0)

After posting record bookings in the fourth quarter, Cerner fell short of year-end financial expectations as the company waits to sign a contract with the Department of Veterans Affairs.

Bookings were up 62% in the fourth quarter, bolstered by several large ITWorks transactions, including an expanded partnership with Adventist Health. Those deals pushed bookings to a record $6.3 billion in 2017, up 16% from the previous year.

The company also posted a 7% increase in revenue compared to 2016, reaching $5.1 billion by year’s end. Total profits for the year came in at $867 million.

RELATED: VA's expectations for Cerner: A ‘digital veteran’s platform,’ change management and seamless interoperability

However, executives noted that a delay in the VA contract—which the company expected to sign in November—contributed to lower-than-anticipated earnings. Secretary David Shulkin, M.D., has put the contract on hold to take a closer look at whether Cerner’s solution provides the level of interoperability required by the VA. Cerner President Zane Burke said he believes the contract will be finalized “soon.”

“We welcomed this review as we are confident in our interoperability capabilities and believe it good to have the requirements clearly defined,” he said on an earnings call Thursday.

The company also reported a $115 million income tax benefit from the legislation passed in December that decreased the company’s rate from 35% to 24%. Cerner plans to invest the bulk of that savings back into the company, including 600 new hires at the Kansas City Innovations Campus which will support its ITWorks business line.