Cerner Corp. beat expectations for its third-quarter profits, which were up 26 percent – a performance spurred by sales fueled by healthcare providers striving to meet meaningful use criteria.
For the quarter ending on Oct. 2, Cerner earned $60.9 million (71 cents a share) – compared to $48.4 million (57 cents a share) for the same period last year.
Sales for the quarter, meanwhile, rose 13 percent to $462.7 million (a showing that, while strong, still fell somewhat shy of analysts' $465.6 million predictions).
"All key measures in Q3 were at or above our expected levels," said Marc Naughton, Cerner's CFO, during an earnings call on Oct. 28. "Bookings were strong and exceeded the high-end of our guidance range. Our income statement performance was very good … we again had great cash flow performance, with record levels of free cash flow reflective of high earnings quality."
Cerner executives said demand was fueled by providers nationwide striving to meet meaningful use and attain lucrative federal stimulus funds.
“Further, we believe additional demand for our solutions and services will be driven by healthcare reform and the increasingly complex and more clinically focused requirements healthcare providers must meet to get reimbursed for their services,” Cerner chairman and CEO Neal Patterson said in a statement.
Cerner projected fourth-quarter business to continue the trend, forecasting earnings of 80 to 85 cents a share and sales of $490 million to $510 million.
Analysts were bullish on the company, noting that Cerner's "business trends are incredibly solid," as Piper Jaffray's Sean W. Wieland and Mohan A. Naidu wrote in a report.
"The company is executing well on all fronts," they wrote, singling out its ambulatory solutions, its ITworks business unit and its Revworks RCM technology.
Wieland and Naidu noted also that 36 percent of Cerner's Q3 bookings came "from outside the install base, suggesting they are taking market share" and projected "steady increases in stimulus-driven activity."
