Cerner stocks tumble on lower outlook despite strong earnings

Cerner Corp., Kansas City, Mo., on Tuesday lowered its revenue expectations for 2016 while reporting strong fourth-quarter and full-year earnings and revenue growth for 2015.

The health information technology company said it expects first-quarter revenue between $1.15 billion and $1.2 billion and 2016 revenue between $4.9 billion and $5.1 billion. The company previously put its 2016 revenue at over $5 billion.

Cerner's share prices fell more than 17% in after-hours trading before recovering slightly.

The company reported a 27% increase in revenue in the last three months of 2015 compared with the year-ago period, and its full-year revenue grew 30% over 2014 to $4.4 billion.

Cerner President Zane Burke was upbeat about the results. “Our fourth-quarter results reflect a solid finish to a record year,” he said in a news release. The company touted in the release that its bookings for the fourth quarter of 2015 were up 16% over the same period of 2014.

"While that is a healthy growth rate, it is below our guided range," Burke acknowledged in a call with analysts.

In December, Iasis Healthcare announced plans to switch its hospitals and health facilities to Cerner's Millennium electronic health-record platform. The project will cost $50 million and will be completed by March 2018.

Cerner also will soon benefit from significant business with the federal government. The U.S. Army awarded it a contract for pathology department laboratory software and the Defense Department's Military Health System awarded a partnership among Cerner, Leidos and Accenture a 10-year contract to install an EHR system across its 56 hospitals and more than 300 clinics.

Cerner announced last month that CEO Neal Patterson is being treated for cancer.

Michael Sandler

Michael Sandler does general assignment reporting as well as reporting on hospital system finances. He earned a master's degree in journalism from Columbia College in Chicago in 2012 after earning a bachelor’s degree from Cardinal Stritch University in Milwaukee. Joined Modern Healthcare in 2013.

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