Cerner Reports Second Quarter 2011 Results

July 28, 2011

Cerner Reports Second Quarter 2011 Results
Record Revenue and Bookings, Strong Earnings and Cash Flow
Raises Outlook for Year

KANSAS CITY, Mo. — July 28, 2011Cerner Corporation (Nasdaq: CERN) today announced results for the 2011 second quarter that ended July 2, 2011, delivering strong levels of bookings, revenue, earnings and cash flow.

Bookings in the second quarter of 2011 were $649.9 million, an increase of 39 percent compared to second quarter 2010 bookings of $467.8 million. Bookings were an all-time high for a second quarter and the second highest result in company history.

Second quarter revenue was $524.2 million, an increase of 15 percent compared to $456.0 million in the year-ago period.

On a Generally Accepted Accounting Principles (GAAP) basis, second quarter 2011 net earnings were $72.0 million and diluted earnings per share were $0.42. Second quarter 2010 GAAP net earnings were $55.5 million and diluted earnings per share were $0.33.

The number of shares and the per share amounts for all periods presented within reflect the two-for-one stock split effective June 24, 2011.

Adjusted (non-GAAP) Earnings

Adjusted second quarter 2011 net earnings were $76.1 million, an increase of 29 percent compared to $59.1 million of adjusted net earnings in the second quarter of 2010. Adjusted diluted earnings per share were $0.44 in the second quarter of 2011 compared to $0.35 of adjusted diluted earnings per share in the year-ago quarter. Analysts’ consensus estimate for second quarter 2011 adjusted diluted earnings per share was $0.43.

Adjusted Net Earnings is not a recognized term under GAAP and should not be substituted for net earnings as a measure of the Company’s performance but instead should be utilized as a supplemental measure of financial performance in evaluating our business. Following is a description of adjustments made to net earnings. For more detail, please see the accompanying schedule, titled “Reconciliation of Adjusted Net Earnings and Adjusted Diluted Earnings Per Share to GAAP Net Earnings and Diluted Earnings Per Share.”

Adjusted second quarter 2011 and 2010 net earnings and diluted earnings per share exclude share-based compensation expense, which reduced second quarter 2011 net earnings and diluted earnings per share by $4.1 million and $0.02, respectively, and reduced second quarter 2010 net earnings and diluted earnings per share by $3.7 million and $0.02, respectively.

Other Second Quarter Highlights:

  • Second quarter cash collections of $509.0 million and operating cash flow of $122.1 million.
  • Second quarter free cash flow of $71.2 million, which is an all-time high level of free cash flow in a second quarter. Free cash flow is a non-GAAP financial measure defined as operating cash flow less capital expenditures and capitalized software. For more detail, please see the accompanying schedule, titled “Reconciliation of GAAP Operating Cash Flow to non-GAAP Free Cash Flow.”
  • Days sales outstanding of 88 days, which is the same as the year-ago quarter.
  • Total revenue backlog of $5.41 billion, up 21 percent over the year-ago quarter. This is comprised of $4.74 billion of contract backlog and $678.6 million of support and maintenance backlog.

“I am very pleased with our second quarter results,” said Neal Patterson, Cerner chairman, CEO, president and co-founder. “Our outstanding bookings, revenue, earnings, and cash flow performance are evidence of a very strong market and Cerner’s leadership position. We expect our market opportunity to remain robust for years to come as we benefit from demand driven by stimulus, health care reform, and other regulatory requirements, such as ICD-10 codes, that can be addressed with our solutions and services. We are also making ongoing investments in new solutions and services that strengthen our alignment with our existing clients and also allow us to address new large market segments, such as employers. We believe these investments will increase Cerner’s role in transforming health care while also fueling another wave of growth beyond stimulus,” Patterson said.

Future Period Guidance

Cerner currently expects:

  • Third quarter 2011 revenue between $520 million and $540 million.
  • Third quarter 2011 adjusted diluted earnings per share before share based compensation expense between $0.46 and $0.48.
  • Third quarter 2011 new business bookings between $560 million and $600 million.
  • Full-year 2011 revenue between $2.09 billion and $2.12 billion, up from a previous range of $2.07 billion to $2.12 billion.
  • Full-year 2011 adjusted diluted earnings per share before share-based compensation expense between $1.80 and $1.83, up from a prior range of $1.78 to $1.81.
  • Share based compensation expense to reduce diluted earnings per share by approximately $0.02 - $0.03 in the third quarter of 2011 and between $0.10 and $0.11 for the year.

Earnings Conference Call

Cerner will host an earnings conference call to provide additional detail on these results at 3:30 p.m. CT on July 28. The dial-in number for the conference call is (617) 213-8066; the passcode is Cerner. The company recommends joining the call 15 minutes early for registration. The re-broadcast of the call will be available from 6:30 p.m. CT, July 28 through 11:59 p.m. CT, July 31. The dial-in number for the re-broadcast is (617) 801-6888; the passcode is 51684145.

An audio webcast will be available live and archived on Cerner’s website at under the About Cerner section (click Investor Relations, then Presentations and Webcasts).

About Cerner

Cerner is transforming health care by eliminating error, variance and waste for health care providers and consumers around the world. Cerner® solutions optimize processes for health care organizations ranging in size from single-doctor practices, to health systems, to entire countries, for the pharmaceutical and medical device industries, employer health and wellness services industry and for the health care commerce system. These solutions are licensed by more than 9,000 facilities around the world, including approximately 2,600 hospitals; 3,500 physician practices covering more than 30,000 physicians; 500 ambulatory facilities, such as laboratories, ambulatory centers, cardiac facilities, radiology clinics and surgery centers; 800 home-health facilities; and 1,600 retail pharmacies. The trademarks, service marks and logos (collectively, the “Marks”) set forth herein are registered and unregistered trademarks and/or service marks owned by Cerner Corporation and/or its subsidiaries in the United States and certain other countries throughout the world. Nasdaq: CERN. For more information about Cerner, please visit, Twitter, Facebook, and YouTube.

This release contains forward-looking statements that involve a number of risks and uncertainties. It is important to note that the Company's performance, and actual results, financial condition or business could differ materially from those expressed in such forward-looking statements. The words “expect,” “believe,” “guidance” or the negative of these words, variations thereof or similar expressions are intended to identify such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: the possibility of product-related liabilities; potential claims for system errors and warranties; the possibility of interruption at our data centers or client support facilities; our proprietary technology may be subject to claims for infringement or misappropriation of intellectual property rights of others, or may be infringed or misappropriated by others; risks associated with our non-U.S. operations; risks associated with our ability to effectively hedge exposure to fluctuations in foreign currency exchange rates; the potential for tax legislation initiatives that could adversely affect our tax position and/or challenges to our tax positions in the United States and non-U.S. countries; risks associated with our recruitment and retention of key personnel; risks related to our dependence on third party suppliers; risks inherent with business acquisitions; the potential for losses resulting from asset impairment charges; risks associated with the ongoing adverse financial market environment and uncertainty in global economic conditions; changing political, economic and regulatory influences; government regulation; significant competition and market changes; variations in our quarterly operating results; potential inconsistencies in our sales forecasts compared to actual sales; volatility in the trading price of our common stock; and, our directors’ authority to issue preferred stock and the anti-takeover provisions in our corporate governance documents. Additional discussion of these and other risks, uncertainties and factors affecting the Company's business is contained in the Company's periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial condition or business over time.

Investor Contact: Allan Kells, (816) 201-2445,

Media Contact: Kelli Christman, (816) 885-4342,

Cerner’s Internet Home Page:

Statement of Earnings, GAAP Reconciliation and Condensed Consolidated Balance Sheets  

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