Cerner (CERN) To Develop Electronic Health Records System

North Kansas City, MO-based Cerner Corp (NASDAQ:CERN) recently announced that it has been chosen by the U.S. Department of Veterans Affairs to develop an electronic health record (EHR) system. Department of Veterans Affairs will use the same system the company is developing for the U.S. Department of Defense, which began its operation at its first site in February.

Stock Performance

Over the last three months, the stock added 23.29%, which is higher than the Zacks classified Medical Info Systems sub-industry’s gain of 16.99%. The current level is above the S&P 500’s return of 4.94% over the same time frame.

A modest long-term expected earnings growth rate of 13.93% instills confidence in the stock.

Coming back to the news, Department of Veterans Affairs would use Cerner's proprietary MHS GENESIS system for developing the electronic health record (EHR) system. This system will facilitate the exchange of data between military care facilities and civilian health providers, where current and former service members receive care.

We believe that Cerner has solid growth opportunities in the revenue cycle management (RCM) suite of solutions. The next biggest driver of growth for Cerner is its Population Health (PH) Management platform. Notably, the company clinched a large number of contracts for the PH platform in the last reported quarter.

Cerner offers exposure to worldwide healthcare automation. Its international operations provide a more diversified revenue stream. In the past, the company had won contracts in the U.K. and the Middle East. Apart from this, Cerner constantly pursues complementary business acquisitions that enable it to expand its solutions, device offerings and services.

On the flipside, the company operates in the HCIT space which is intensely competitive and fast evolving, and is also subject to rapid technological changes.

Stocks to Consider

Cerner carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader medical sector are Luminex Corporation (NASDAQ:LMNX) , Inogen, Inc. (NASDAQ:INGN) and Accelerate Diagnostics, Inc. (NASDAQ:AXDX) . Luminex and Inogen sport a Zacks Rank #1 (Strong Buy), while Edwards Lifesciences (NYSE:EW) carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Luminex has an expected long-term adjusted earnings growth of almost 16.3%. The stock has roughly added 12.4% over the last three months.

Inogen has long-term expected earnings growth rate of 17.5%. The stock has a solid one-year return of roughly 82.0%.

Accelerate Diagnostics has a long-term expected earnings growth rate of 30.0%. The stock has added roughly 10.1% over the last three months.

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