Delayed contracts cut into Cerner's bookings in Q3
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.
Cerner Corp. is not getting customers on the books as quickly as the health information technology provider expected because of delayed contracts with unidentified clients.
Larger and more complicated contracts, as well as difficulty predicting contract timetables, led to the delays, Cerner President Zane Burke said in an earnings call.
Bookings in the quarter were $1.11 billion, down from $1.43 billion in the third quarter of 2016 and also down from the second quarter of 2017.
The company now expects the delayed contracts to be signed in the fourth quarter, which if it happens, it said, would result in record high bookings for the fourth quarter and full year.
Also among the contracts Cerner expects to sign in the next quarter is one with the Veterans Affairs Department, which announced last summer that it would replace its homegrown VistA EHR system with software made by Cerner. Earlier this week, VA Secretary Dr. David Shulkin said it would take 18 months after the contract is signed to go live with the system in the first VA site and up to eight years to roll the system out across the entire VA.
Cerner doesn't expect the VA contract to strongly affect fourth-quarter bookings or earnings, the company said during the call, since it expects the VA to commit to the project but then run it as small task orders.
Cerner is also at work on a $4.3 billion, 10-year project to roll out an EHR system for the Defense Department, with which it contracted in 2015.
"We are in the early stages of government business contributing to our growth," Burke said, pointing to the Federal Bureau of Prisons and U.S. Coast Guard as opportunities.
Outside of government, Cerner should see long-term growth, Burke said.
"We do not believe that lower bookings were related to our competitiveness," Burke said. "Our win rate remained high in the quarter."
Third-quarter revenue was up 8% from the year-ago quarter, hitting $1.28 billion.
Send us a letter