Cerner's Zane Burke: DoD deal won't hinder other commitments

In Cerner's first comments since winning the Department of Defense's coveted electronic health record modernization contract in a bid with Leidos and Accenture Federal, company President Zane Burke said that he does not expect it to impact other client rollouts.

Burke, speaking on a conference call revealing the Kansas City, Missouri-based vendor's second-quarter earnings, also said the contract award is not likely to have a "near-term" impact on earnings, revenue and bookings, since the project will roll out in several phases and will start off small.

Still, Burke noted that Cerner and its clients were "excited" for the win.

"We are honored, humbled and excited to be a part of the team that won what we believe was the most objective and comprehensive evaluation of technology platforms and solutions ever conducted," Burke said. "We now have the opportunity for Cerner's suite of integrated solutions to replace the DoD's legacy health IT system in its 55 hospitals and more than 350 clinics worldwide, as well as in ships, submarines and other locations in the theater of military operations."

Regarding earnings, Cerner's were pretty sturdy in Q2, with lower than expected revenue "largely overshadowed by solid earnings and record bookings," according to its report of Second Quarter 2015 results.

The results indicated that bookings in the second quarter were at $1.29 billion, an all-time high and an increase of 20 percent, compared to $1.08 billion second quarter of 2014.

Second quarter revenue was $1.126 billion, an increase of 32 percent compared to $851.8 million last year. While revenue was below guidance provided by Cerner, it did not have a material impact on profitability, and Cerner's adjusted earnings were in line with guidance.

Cerner expects third quarter 2015 revenue to be between $1.15 billion and $1.2 billion, and full-year 2015 revenue to be between $4.475 billion and $4.575 billion. Third quarter 2015 new business bookings are expected to be between $1.35 billion and $1.45 billion. It will also continue migrating Siemens clients to Cerner's systems. Cerner Corporation finalized its acquisition of Siemens Health Services, Siemens AG's health IT business unit earlier this year.

Cerner CFO Marc Naughton, who also spoke on the call, said that the results were "mostly in line" with what was expected. The company had lower revenue, but that was offset by lower expenses. For instance, third-party services and travel reimbursements were lower this quarter. Cerner also had some delay in billing as it absorbed Siemens Health Services. The company, which had limited hiring after it acquired Siemens, is now ramping up hiring to meet demand.

To learn more:
- here's the webcast of the call
- read the associated announcement

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