Wall Street’s appreciation for Cerner Corp. received validation Thursday when the Kansas City-based company reported strong third-quarter revenues, net earnings and bookings for new business.
Revenue for the quarter was reported at $840.1 million, up 15 percent from $727.8 million a year ago.
Third quarter 2014 net earnings were $129 million, compared with $115.3 million in the same quarter of 2013. Diluted earnings per share were 37 cents for the recent quarter, compared to 33 cents a share a year earlier.
Bookings, which Cerner uses to indicate new business, totaled $1.1 billion for the third quarter, an all-time high for the company’s third quarter and an increase of 19 percent from $928 million a year ago.
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The health care technology and information company also said it has been hiring an average of 302 employees a month this year.
Cerner now employs 16,000 worldwide, including a recently reached milestone of 10,000 in the Kansas City area. Locally, it houses associates at four office campuses in Kansas City, North Kansas City and Kansas City, Kan.
Revenues for the first nine months of 2014 were listed at more than $2.47 billion, with total operating expenses of more than $1.48 billion and net earnings of $377.56 million.
The company expects fourth-quarter revenue between $880 million and $915 million and fourth-quarter new business bookings between $1.15 billion and $1.25 billion.
Looking ahead to 2015, when Cerner expects to close its pending $1.3 billion acquisition of Siemens Health Services in February, the company said total revenues are expected to total between $4.8 billion and $5 billion.
The third-quarter earnings report came in the midst of company preparations for its 29th annual Cerner Health Conference, set for Nov. 2-5 at the Kansas City Convention Center. About 11,000 health industry administrators, medical practitioners and Cerner associates are registered to attend, a 14 percent growth in attendance from last year that is expected to pump an estimated $7.2 million into the Kansas City economy.
Cerner president Zane Burke said in an interview that participants, including existing and potential Cerner customers, will come from all 50 states and 26 countries on six continents.
About 240 sessions featuring 400 speakers are scheduled during the conference, designed to “share the best of what we and our clients are doing,” Burke said. “There’s going to be a lot more about interoperability and collaboration.”
Interoperability refers to the ability of software programs to share data. Federal law is mandating health care interoperability in an effort to reduce duplication of service and reduce costs, partly by showing best-practice results of care.
Burke said Cerner prefers to “err on the side of sharing” information rather than worrying about competitors using the conference to gain proprietary insight. For example, he said, Cerner has made its algorithm for tracking Ebola available on the open market rather than provide it solely to hospitals and doctors’ offices that are Cerner customers.
“All organizations are running toward delivering the highest-quality health care at the lowest cost,” Burke said. “The fee for service model that we’ve known in the past still exists, but a new model is emerging” that gives incentives for keeping people healthy. “How do we keep people away from the hospital?”
Cerner is among health care industry players trying to answer that question through a focus on “population health.” They are looking for aggregate data from patient information software to help health care providers zero in on people who are most in need of health care interventions to help them manage or prevent disease.
“We can take all the data out there in digitized health care, analyze it and get information in clinicians’ workplaces and tell them who they need to call,” Burker said. “We can take the data sets out there (insurance claims data, pharmacy data, physician and hospital reports) and help everyone make better decisions.”