Cerner bookings fall short but still are second-best in its history

Cerner Corp. said it missed its own expectations for revenue and bookings of new business during the third quarter when compared to a strong performance in the same months a year ago.

The North Kansas City-based company said its misses were essentially a matter of timing and that its business remains brisk with a record amount of potential business still in the pipeline.

“We just had anticipated doing slightly better,” chief executive Zane Burke told analysts during a conference call.

Cerner provides information technology such as electronic health records to hospitals, physicians offices and other health care operations.

Burke said a few deals originally expected to be completed in the third quarter failed to finish. He said business would return to normal growth during the final months of this year.

“It’s not a question of if they’re going to do it, it’s a (question of) when,” Burke said.

Still, the company announced that it is offering voluntary buyouts to some U.S.-based employees, who have the option to accept the offers into December. Fewer than 2 percent are expected to accept the offer, the company said.

“This should not be viewed as a layoff,” chief financial officer Marc Naughton told analysts during the call.

Naughton said Cerner expects to grow by more than 2,000 employees this year and will continue to add jobs next year. It has more than 12,000 Kansas City-area employees and more than 24,000 globally.

The offer is available only to U.S.-based employees who have at least 10 years of service and whose age plus years of service equal at least 65. Details about the offer were not available.

Cerner underwent a similar voluntary buyout program in February 2015, citing a “deep bench” following an acquisition of Siemens Health for the move.

In the third quarter, revenues were up 5 percent at $1.185 billion, but that was just below the expected range it had set ahead of the Tuesday report.

Bookings of new business, which is a strong sign of future operations, fell by 10 percent to $1.434 billion in the three months that ended Oct. 1. It also was slightly below the range the company had said investors should expect.

Cerner’s announcement said the results were “solid” but not as high as the record bookings posted during its third quarter of 2015 that reached $1.59 billion, which had been a 44 percent increase.

Despite the decline, Cerner’s bookings in the quarter were the second largest in its history, according to the announcement.

Profits rose, reaching $170 million, or 49 cents a share, in the quarter. A year ago, Cerner had earned $147.3 million, or 42 cents a share, in the third quarter.

For the final three months of 2016, Cerner said investors should expect bookings of between $1.425 billion and $1.575 billion. It said revenues should be between $1.225 billion and $1.3 billion.

It estimated profits as earnings per share between 60 cents and 62 cents.

Before the earnings report, shares of Cerner had fallen $1.24, or 2.12 percent, to close at $57.34.

This story was originally published November 1, 2016 at 3:22 PM with the headline "Cerner bookings fall short but still are second-best in its history."