Leading healthcare information technology (“HCIT”) solutions provider Cerner Corp (CERN) reported fourth quarter fiscal 2010 earnings per share of 82 cents, beating the Zacks Consensus Estimate of 80 cents and exceeding the year-ago earnings of 71 cents.
Net income surged 16.7% year over year to $70.6 million owing to solid bookings. For fiscal 2010, earnings of $2.78 also surpassed the Zacks Consensus Estimate of $2.75 and the year-ago earnings of $2.31.
Revenues for the fourth quarter rose 7.3% year over year to $500.2 million, but missed the Zacks Consensus Estimate of $503 million. Higher revenues from Support, Maintenance and Services (up 13.8% to $327.1 million) were partly offset by a decline in system sales (down 4.2% to $164.5 million).
Revenues from Reimbursed Travel climbed 20.5% to roughly $8.6 million. For the full year, sales leaped 10.7% year over year to $1,850 million, also trailing the Zacks Consensus Estimate of $1,853 million.
Bookings
Bookings for the fourth quarter came in at $626.2 million, significantly ahead of the company’s forecast range of $490 million to $530 million and were the second-highest ever after the record level of $680.4 million reached a year-ago.
For the full year, bookings rose 9% year over year to a record $1.99 billion. The federal stimulus represents a major boost to bookings.
Gross margin for the quarter fell to 81% from 83% a year ago on account of lower system sales margin. Operating margin improved to 20.7% from 20% in the earlier year quarter.
Balance Sheet & Cash flow
Cerner ended fiscal 2010 with cash, cash equivalents and short-term investment of $571 million, up 2% year over year. Total debt declined 23% year over year to roughly $93 million.
Cash flows from operation for the fourth quarter and fiscal 2010 were $121.7 million (up 12.6%) and $456.4 million (up 31.4%), respectively. Free cash flows catapulted 98% year over year to a record $272.3 million, including $75.6 million (up 58.5%) recorded in the fourth quarter.
Outlook
Cerner has issued its financial forecasts for fiscal 2011. It anticipates first-quarter 2011 revenues in the range of $475 million and $490 million and adjusted earnings per share between 73 cents and 77 cents.
New business bookings for the quarter have been projected between $435 million and $465 million. For fiscal 2011, the company expects revenues and adjusted earnings per share between $2.05-$2.10 billion and $3.50-$3.60, respectively.
Cerner expects stock-based compensation costs to dilute first quarter and full year earnings by roughly 5 cents and 20-22 cents, respectively. The current Zacks Consensus Estimates for first-quarter 2011 revenues and earnings per share are $484 million and 72 cents, respectively. For the full year, the corresponding Zacks Consensus Estimates are $2.09 billion and $3.38, respectively.
Missouri-based Cerner is a leader in HCIT solutions, serving hospitals and healthcare providers, primarily in the U.S. These solutions, which can be implemented as standalone, combined, or enterprise-wide systems, are created to provide clinical, financial and information management tools for the healthcare marketplace. Cerner competes with Allscripts Healthcare Solutions (MDRX) and Quality Systems (QSII).
Optimism about the growth prospects of HCIT service providers has improved under the Obama Administration, which passed the Stimulus package in May 2009, aimed at increasing the use of electronic health record (“EHR”) systems by medical practitioners.
The “meaningful use” rule, which enables hospitals to qualify for federal incentive program, is expected to boost business opportunities for Cerner in the long run.
CERNER CORP (CERN): Free Stock Analysis Report
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