Cerner Enters New Agreement with North Carolina's Mission Health - Analyst Blog

Cerner Corporation CERN and North Carolina's sixth-largest health care provider Mission Health went beyond its 15 years of partnership in IT by entering a new 10-year agreement that will build strong co-ordination between senior CERN and Mission Health executives in order to offer a wide array of information technology tools to caregivers and patients.

Under the new agreement, signed on Mar 28, CERN will help Mission Health control IT costs, align strategies, and improve the quality of care. Both the entities will achieve this objective by meeting quarterly to review progress, ensure alignment and identify areas of opportunity and industry-wide innovation.

As part of the agreement, CERN will invest in Buncombe County by bringing its 11 associates to work on-site with Mission Health staff. CERN may also provide additional associates to Mission Health over time in order to support the latter's IT department.

Asheville-based Mission Health is a 130 years old not-for-profit health care provider operating six hospitals and numerous outpatient facilities across 18 counties in western North Carolina. It is recognized as one of the nation's Top 15 Health Systems 2012-2014 by Truven Health Analytics. Its medical team consists of 1,000 physicians.

Recently, CERN entered the private health care sector in UAE by announcing a deal with Dubai-based physician helpline service provider Mobile Doctors (MD 24-7). The deal is a result of UAE government's strong initiatives for digitization in the health care industry.

With the deal, MD 24-7 will be able to implement mobility solutions from CERN. CERN's patient portal will help MD 24-7's subscribers to access their electronic health record (EHR) and schedule appointments with a doctor.

In the first quarter of 2014, CERN revealed a 9.7% rise in earnings per share to 34 cents from 31 cents in the comparable quarter of 2013. However, earnings were flat compared with the Zacks Consensus Estimate. Net earnings rose 8.6% to $119.5 million from $110.0 in the first quarter of 2013.

Revenues in the quarter grew 15.4% to $784.8 million, marginally exceeding the Zacks Consensus Estimate of $783 million. The increase can be attributed to stronger revenues from Support, maintenance and services, Reimbursed Travel, and System sales. Global revenues went down 16% due to tough comparables.

For the second quarter of 2014, CERN anticipates revenues between $790 and $830 million while adjusted earnings are expected between 36 and 37 cents per share, including share based compensation expense. These compared with the Zacks Consensus Estimates of $809 million and 36 cents for revenues and earnings per share, respectively for the quarter.

For full year 2014, CERN upgraded revenue guidance to the range of $3.25 to $3.40 billion from the prior range of $3.20 to $3.40 billion. Adjusted earnings are also expected to be higher at $1.52–$1.55, compared with the prior range of $1.51 to $1.55, including share based compensation expense. These compared with the Zacks Consensus Estimates of $3.3 billion and $1.54 for revenues and earnings per share, respectively for the year.

For 2014, CERN expects capital expenditures between $260 and $280 million, down from $353 million in 2013. It also expects capitalized software to remain in the mid-$40 million range throughout the year.

Currently, CERN retains a Zacks Rank #3 (Hold). Some better-ranked stocks in the medtech space include Cardica Inc. CRDC, NeuroMetrix Inc. NURO, and PositiveID Corporation (PSID). All of them carry a Zacks Rank #2 (Buy).