VA contract puts pep in Cerner's Q2 step
Bolstered by a signed contract with the VA, Cerner Corp. had a record level of booked business in the second quarter of 2018, with bookings up 9% and revenue up 6% compared with the same period of 2017.
But the benefit from the contract did not come all at once. Instead, Cerner will feel the effects of its contract to replace the VA's electronic health record over time as task orders come in, according to Cerner Chief Financial Officer Marc Naughton.
Nearly a year after the VA announced it would switch to a Cerner EHR, the agency and vendor finally settled on a contract in May. Because of the delay, Cerner took a hit on its revenue in the first quarter, which was up just 3% compared to the first quarter of 2017.
Now, "we are pleased with our solid performance in Q2 and our outlook for the rest of the year," Naughton said.
The 10-year project is slated to cost $10 billion, though former VA Secretary Dr. David Shulkin estimated the cost at $16 billion. The VA recently created the Office of Electronic Health Record Modernization to manage the transition away from its old EHR, VistA. The U.S. House of Representatives created its own oversight panel to monitor implementation of the new EHR.
This work comes amidst the ongoing project to bring a Cerner EHR to the Defense Department. The Defense Department recently increased the funding for its own $4.3 billion Cerner project, MHS Genesis, by $1.2 billion. That extra funding will go toward additional functions for the Defense EHR so it can match the capabilities of the VA's future EHR.
Even without the VA contract, second-quarter bookings were strong with growth coming from its global and population health software, as well as its core EHR, Cerner President Zane Burke said.
Cerner's revenue in the second quarter was $1.37 billion.
Burke also cited the company's investment in Lumeris as a strong point during the quarter. In July, Cerner invested $266 million in Lumeris' parent company, signaling its intentions to get deeper into population health. Cerner will partner with Lumeris to develop EHR-agnostic software for provider-sponsored health plans and Medicare Advantage plans.
"We expect to accelerate our efforts in population health," Burke said.
Correction: Zane Burke is president of Cerner Corp. An earlier version of this story added an incorrect title for Burke.
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