Cerner reported a 22.5 percent drop in its third-quarter bookings of new business after failing to sign “several large contracts” expected to have been completed during the quarter.
The electronic health records company said it expects most of the contracts to be signed by the end of the year along with others already slated for the final three months of 2017.
“Those are tracking well,” President Zane Burke said during a conference call with analysts. “Many have either closed or are in the process of closing.”
Bookings in July, August and September totaled $1.111 billion, down from $1.434 billion during the same months of last year, the company’s announcement said. Cerner investors focus on bookings of new business as an indication that the company’s growth will continue.
Revenues in the third quarter were $1.276 billion, up 8 percent from a year ago. Earnings totaled $177.4 million, or 52 cents a share. A year ago Cerner had earned $170 million in its third quarter.
Cerner described the delayed signings as larger contracts that are more complex than typical business in the past. This has made predicting the company’s quarterly bookings totals increasingly difficult.
Burke said these kinds of contracts work almost like an acquisition. Employees of the client are “rebadged” as employees of Cerner, he said. And when contracts remain unsigned late in a quarter, Cerner keeps working normally.
“There’s just no pushing at the edge, so we don’t,” Burke said.
Expectations that Cerner will meet its bookings expectations for all of this year depend on signing not only the delayed deals from the recent quarter but also deals previously targeted for the fourth quarter.
Cerner said it expects bookings in the fourth quarter to be between $1.75 billion and $2 billion.
Burke also said Cerner is poised for continued growth and for gaining a larger share of the electronic health records market, as well as poised for “meaningful growth opportunities” in its revenue cycle and population health businesses.
The North Kansas City-based company continues its search for a new CEO but reported no new information Thursday. Cerner co-founder and long-time CEO Neal Patterson died in July.