Cerner Corporation (NASDAQ:CERN) reported first-quarter 2019 adjusted earnings of 61 cents per share, in line with the Zacks Consensus Estimate. The bottom line increased from the prior-year quarter’s figure by 5.2%. 
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The Zacks Rank #2 (Buy) company posted revenues of $1.39 billion, which improved 7.5% year over year and met the Zacks Consensus Estimate.
Revenues by Geography
Per management, U.S. revenues grossed $1.24 billion, in line with the company’s expectations.
Non-U.S. revenues increased $1 million from the year-ago quarter figure to $159 million. Per management, Cerner’s international revenue growth was impacted by foreign exchange rates.
Bookings
In the reported quarter, the company’s bookings totaled $1.24 billion, down from $1.40 billion in the same quarter of the last year.
Cerner Corporation Price, Consensus and EPS Surprise
Cerner Corporation Price, Consensus and EPS Surprise | Cerner Corporation Quote
Segmental Performance
Licensed software revenues shot up 14.6% to $154.5 million, with growth in traditional software and SaaS offerings.
Technology resale revenues were $55.5 million, down 12.4% on a year-over-year basis.
Revenues from Subscriptions grossed $84.3 million, up 10% year over year.
Professional services’ revenues totaled $490.4 million, up 11.1% from the prior-year quarter number, driven by solid growth in implementation services and Cerner’s works businesses.
Revenues at the Managed services unit summed $304.4 million, up 13.5% from the prior-year quarter.
Support and maintenance revenues were $277 million, down 2.7% year over year.
Reimbursed travel revenues amounted to $23.8 million, mirroring a 0.5% decline year over year.
Margins
In the quarter under review, gross profit summed $1.14 billion, up 7.1% year over year. Gross margin was 81.8%, down 30 basis points (bps) on a year-over-year basis.
General and administrative expenses rose 4.2% to $96.2 million. Further, software development expenses increased 11.6% to $180.4 million.
Adjusted operating margin contracted 130 basis points (bps) to 17.5% during the reported quarter.
Guidance
For the second quarter of 2019, Cerner expects revenues between $1.41 billion and $1.46 billion. The Zacks Consensus Estimate for revenues stands at $1.45 billion, towards the upper end of the company’s guided range.
Adjusted earnings per share are expected to be 63-65 cents. The Zacks Consensus Estimate stands at 66 cents, above the company’s guided range.
Cerner kept its 2019 revenue guidance intact. The company continues to expect revenues between $5.65 billion and $5.85 billion. The Zacks Consensus Estimate for revenues in 2019 stands at $5.74 billion, within the company’s guided range.
Cerner raised 2019 earnings per share view. Notably, the company now expects the metric to be $2.64-$2.72 per share, above the previously mentioned $2.57-$2.67. The Zacks Consensus Estimate for earnings stands at $2.64, which is the lower end of the company’s guidance.
Wrapping Up
Cerner exited the first quarter on a strong note. The company continues to witness strong contributions from key areas like Population Health, Revenue Cycle and IT Works. Also, gains in Professional and Managed Services units buoy optimism. International revenues also moved up in the quarter. Raised earnings per share guidance for 2019 buoys optimism.
Cerner is likely to benefit from electronic health record (EHR), electronic patient record (EPR) or electronic medical record (EMR) platforms that provide patient care in acute inpatient and outpatient settings.
On the flip side, Technology Resale, Support & Maintenance and Reimbursement Travel revenues saw a year-over-year decline in the quarter under review. Bookings also came down in the quarter, which is concerning. Contraction in operating margins also adds to the woes. Furthermore, competition in the global MedTech space is worrisome.
Earnings of Other MedTech Majors at a Glance
Other top-ranked stocks which posted solid results this earnings season are Stryker Corporation (NYSE:SYK) , Abbott Laboratories (NYSE:ABT) and CONMED Corporation (NASDAQ:CNMD) , each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker delivered first-quarter 2019 adjusted earnings per share of $1.88, beating the Zacks Consensus Estimate by 2.2%. Revenues of $3.52 billion were in line with the Zacks Consensus Estimate.
Abbott reported first-quarter 2019 adjusted earnings of 63 cents per share, beating the Zacks Consensus Estimate by 3.3%. First-quarter worldwide sales were $7.54 billion, surpassing the Zacks Consensus Estimate of $7.47 billion.
CONMED posted first-quarter 2019 adjusted earnings per share of 57 cents, which beat the Zacks Consensus Estimate of 54 cents. Revenues were $218.4 million, surpassing the Zacks Consensus Estimate of $213 million.
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Cerner Corporation (CERN): Free Stock Analysis Report
Abbott Laboratories (ABT): Free Stock Analysis Report
Stryker Corporation (SYK): Free Stock Analysis Report
CONMED Corporation (CNMD): Free Stock Analysis Report
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