• Cerner, the EHR giant, beat Wall Street earnings expectations but had no sales in the second quarter of 2020, falling 7% year over year to $ 1.33 billion.
• According to financial results released Wednesday afternoon, the Kansas City, Missouri-based supplier lowered its 2020 guidance, forecasting sales of between $ 5.45 billion and $ 5.55 billion, below the previous range of 5.5-5, 7 billion US dollars.
• Analysts defined the mixed quarter, finding that reserves of $ 1.34 billion were better than expected in a difficult financial environment for healthcare systems and other potential buyers of Cerner software. The Cerner share declined slightly in the secondary market due to the results.
Cerner’s first-quarter results were lower than expected due to unexpectedly low bookings as healthcare customers were less likely to invest in software again given financial challenges. In the second quarter, reserves of $ 1.34 billion fell 6% year-over-year, but were still higher than many analysts expected, and at most Cerner reported.
“Although [management] has set a floor, we still believe that closing deals in a COVID-distracted environment could prove difficult,” Jefferies analysts said in a statement.
Managing Director Brent Shafer said on a conference call with investors on Wednesday that they are providing funds to support health systems that will continue to be a key part of Cerner’s future. Congress has allocated $ 175 billion in aid to providers despite hospitals and health systems demanding more after suffering the brunt of losing many electoral services.
Better-than-expected cost and reserve control initiatives led Cerner to outperform profits. The supplier reported a net income of $ 134.7 million for the quarter, up 6% year over year.
The only lines of revenue that increased during the quarter were Subscriptions and Managed Services, which rose 3% to $ 92 million and $ 307 million, respectively.
Jefferies’ analysts said $ 461 million in professional services revenue, a 5% year-over-year decline, was Cerner’s expectation but was higher than Wall Street’s expectations as Cerner was rushing up in its federal book has switched virtually and made progress.
Licensed software revenue was $ 152, down 23% from the record for the second quarter of last year. Technology resale revenue of $ 42 million fell 31% YoY, support and maintenance fell 1% to $ 274 million and reimbursed travel decreased due to current travel restrictions for COVID-19, fell by 93% to just $ 1.7 million.
The pandemic further delayed the multi-billion dollar project to implement a new EHR system for the U.S. Department of Veterans Affairs and Defense. Cerner continues substantial work on the projects and plans to be on-site in a near future to update the pandemic-induced implementation plan. Exact commissioning dates have been proposed but have not yet been published.
“We should hear more publicly sometime in the near future when these changes occur,” said John Peterzalek, director of customers and services at Cerner, noting that activations are planned for the DOD in the coming months. Side protection of the cyclist? ˅.
Last year, Cerner shifted its business strategy from its previous EHR business to software as a service and plans to continue mergers and acquisitions in strategic growth areas by selling troubled companies. In June, the company sold its below-average revenue cycle management division, RefWorks, to vendor RCM R1 for $ 30 million. This business is expected to close in the third quarter of this year.
In the second quarter, Cerner also acquired a cybersecurity company for $ 35 million to expand its security capabilities. However, the name of the company was not disclosed and executives tried to downplay the purchase.
Cerner also announced in July that nonprofit Banner Health will use its revenue cycle management products with 28 hospitals and clinics in six states.