Cerner executives saw an earnings increase in Q2, but revenue fell due to the financial impact of COVID-19.
Cerner announced a 6.1 percent net earnings increase, up to $134.7 million for the second quarter of 2020, from $127 million during the same period in 2019.
However, as expected, the second-quarter revenue fell 7 percent from $1.43 billion in 2019 to $1.33 billion this year.
Revenue primarily declined due to COVID-19 and Cerner folding its revenue cycle management outsourcing services earlier this year, explained the vendor. COVID-19 had a more significant impact than Cerner initially expected, but it had minimal impact on low margin areas, such as travel reimbursement and technology resale.
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“Cerner’s solid results during the pandemic reflect the commitment of our associates, the importance of Cerner’s solutions, and the resiliency of our business model,” Brent Shafer, chairman and CEO, said in a statement.
“Our clients are heroes on the frontlines providing health care, and I am proud of Cerner’s ability to support them. COVID19 has brought Cerner’s vision and mission to life and strengthened our belief that Cerner is well-positioned to play a key role in shaping the future of health care.”
Although net earnings increased, adjusted net earnings fell short of last year’s mark. This number dropped from $215 million in 2019 to $193 million in 2020.
Bookings also exceeded the vendor’s expectations, totaling $1.34 billion, more than $100 million above Cerner’s high-end guidance range, said the company.
Second-quarter days sales hit outstanding from 81 days, up from 78 days at this time last year, and 74 days in Q1.
The company also noted a total backlog of $13.47 billion.
Looking forward, the vendor views the most substantial COVID-19 impact to have occurred in the second quarter, and it forecasts an increase in sales for the second half, assuming the COVID-19 effect subsides.
While the ultimate COVID-19 impact is unknown at this time, Cerner said the pre-pandemic project and sales projections should still hit, but it could take longer than expected. These optimistic expectations come with a higher risk and uncertainty, but the vendor said it projects Q3 revenue to be between $1.35 billion and $1.40 billion.
It also projects full 2020 revenue between $5.45 billion and $5.55 billion, slightly below its initial range of $5.550 billion to $5.700 billion. This slight decrease is due to the 2Q revenue loss, an updated view of the pandemic, and the sale of its revenue cycle management services. The vendor also projects bookings to be between $1.350 billion and $1.550 billion.
Just as in Q1, Cerner optimized its EHR technology and developed workarounds to help providers fight against COVID-19.
While the vendor conducted virtual EHR implementations, it also launched a cloud-based EHR platform, CommunityWorks Foundations, for critical access and rural hospitals.
CommunityWorks Foundations scales the Cerner Millennium EHR to accelerate EHR implementation down to six months.
“Working with this segment of clients for more than a decade, we have evolved this cloud-based model to meet the various challenges community and rural health care organizations face,” Mitchell Clark, president of Cerner CommunityWorks, said in a statement.
“CommunityWorks Foundations is the next evolution based on what we’ve learned from our more than 200 rural and critical access clients and the broader industry. It is built to help reduce financial barriers and better support communities that sometimes face challenges accessing the most innovative health care technology.”
Cerner said just both CommunityWorks and CommunityWorks Foundations clients leverage the vendor’s software that aims to improve patient and provider experience, as well as clinical and business outcomes.
Seventy percent of new clients after 180 days are beating baseline accounts receivable, and those clients averaged a 5.5 percent improvement in that area, according to the vendor.
Source: EHR Intelligence