CERN - Earnings call transcript Q1 2019

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Operator

Welcome to Cerner Corporation's First Quarter 2019 Conference Call. Today's date is April 25, 2019, and this call is being recorded. The company has asked me to remind you that various remarks made here today constitute forward-looking statements, including, without limitation, those regarding projections of future revenues or earnings; operating margins; operating and capital expenses; bookings; new solution; services and offering development; capital allocation plans; and future business outlook, including new markets or prospects for the company's solutions and services. Actual results may differ materially from those indicated by the forward-looking statements. Please see Cerner's earnings release, which was furnished to the SEC today and posted on the Investors section of cerner.com and other filings with the SEC for information on the most significant factors that could cause actual results to differ materially from those in the forward-looking statements.

non-GAAP be discussed earnings found on of call this release reconciliation cerner.com. also can in a financial in measures earnings available Additionally, the company's except any no statements to assumes by update Cerner or obligation information as required law. forward-looking turn like Schaefer, Chief Cerner At Officer, over and call to time, to the this Executive Corporation. I'd Brent Chairman

Brent Schaefer

Chief then CFO, them. then Cerner you, Good that afternoon in additional last context call. Starboard observations. Naughton, Officer, earnings our first the and our with spend providing position through Brian. a and Client provide and we everyone John some Peterzalek the Since seen the our Thank acquired few the on highlights announced to I'll to call, walk the and quarter likely I'll Marc you've and agreement marketplace welcome ask minutes cooperation results; to with refreshment approached just and attainable. focus we Board outset, like the targets we plans in with are had do and efforts improve the agreement on accelerates and any operating on we fashion, commitment From in Starboard's been The including formalizes work areas. we've was objectives performance, specific our shareholder. conversation existing builds the doing but an to and open-minded improvements consistent cooperation aggressive, and operational both Starboard underway our that

facets improvements unlock believe significant operations improve CEO added the In governance Board reviewing and in the have entire governance. our XXXX, Cerner Since in to all our strengthens we and team shareholders. I and potential. strongly the interest outstanding We the role leadership been financial plants, addition, these performance of company's which of associates four assuming of and are we members, Cerner's best believe operational new clients

commitments. enable to new in discussed call believe focus at foundational out our our client-centric this work improvement streamline growth. rolled become more we a model we to is operations, last and operational improved and operating on to As HIMSS, We earnings

As structure, next operations a step and cost consulting the in firm. improvements AlixPartners Cerner's engaged outside we toward driving leading

to I'm for and commitments -- become our -- commitments. while impacting balanced start help and investments have is we spend include: The it I we work have portfolio facilities; review profitable clients. confident working to ourselves efficiencies assess against more make to and off I work goal have without client non-personnel to they efficient, process continue expressed with address expect started and we detail, to additional to in Key we good layers; to clear better a the they Marc growth their more management position growth. important improvements. and will top direct want investments focused that Cerner's -- XXXX; rationalize is management and growth uncover balanced Cerner but more and Our to become us experience expenses; areas drive ability in discuss AlixPartners in been we targets company

shareholders, which commitment program Cerner's of to our the of quarterly share Based wanted the other led year last strength repurchases. strategy. evaluated to to sheet, on the to elements return of dividend enhance we capital was continued our and One allocation balance we capital announced

to John for invaluable Melinda counsel These Greisch, directors of Halsey to Given George Board. on our we existing repurchase. buyback currently deliver new members respect with available we resulting initiatives, welcome and Cerner's create along Wise increased a our we our operational Mount, With billion Riedel, as our value $X.X that expectation our authorization will share bring insight. Starboard with part governance, as in we agreement

our base. in with space the without and operational Our that considerations management been risk. Committee the work respect to profitable our a against we putting create To operates measured Cerner client will has operating Board are supports our established company for can view the at focused actions management associate monitor execution with Strategy Finance targets. be will that outlined actions and taking stronger more we efforts, positioned closely value improvement the & a approach for commitments, to business ensure investments highly believe a help become long-term well We us growth. much competitive and in will shareholder

Now it I'll over turn Marc.\ to

Marc Naughton

guidance Thanks, $XX future $X.XXX as were This range afternoon results start booking down million from QX anticipated, everyone. of cover much our XXXX and above levels QX. bookings. long-term of I'll bookings $X.XXX of large Brent. Good the I'm in higher-than-normal which is which QX to going billion midpoint guidance. with our billion, included and

to both XXXX to a XX% year-over-year Revenue grew XXXX not after John primarily of long-term was Subscriptions with growth quarter Licensed the being growth software up The a QX sequentially slightly implementation QX of year-ago period. XXXX over solid is compared revenue excludes impacted QX QX $XX.XX with year. $XX $XX at But revenue Managed businesses. travel quarter services expectations to XX% through forward. last X% business the offerings. growth and year good included software and low remains driven business to $XX visibility in over Technology of works our of now subscriptions up would in with are $X.XXX both of calculation ago. software at return contracts QX in I'll XXX. that discuss, in months. to QX to We year-over-year the XXXX. growth of was flat to expected be of and and XXXX. in comparable traditional with of going maintenance As the maintenance. of hardware midpoint XX the our grew in quarter for our that new quarter over finally, guidance with in the down that by bookings first periods go comparable $XXX which and XXXX low year. QX next standard X% Topic single-digit QX grew both and resell in bookings not our revenue in which million was the reimbursed in growth QX solid in expected. Professional a in expect sequentially by And from SaaS QX software combine decreased support billion XX% revenue was exercised. detail driven flat model declines flat backlog in range. the revenue our Support level million up but lowest benefited $XXX traditional to XX% the solid of over from remainder was XXXX has we XXXX million clauses, as adoption the in services termination contracts model from contracts revenue and by from the support the Millennium backlog Cerner Recall $XXX the support and in we growth to growth in increased as legacy over backlog, million. to revenue and robust up approximately compared quarter such expected under was at X% backlog the will million excluding even million offsetting revenue easier the you services clauses XX% in quite ended When and billion, the Note revenue QX rarely XX% line additional our was

basis. year from foreign Looking $XXX of and that Domestic million revenue impacted non-U.S. international mid-single-digit at ago at a constant and rates on currency was segment. the million geographic have year revenue revenue up would growth ago quarter. X% quarter by our billion revenue $X the $X.XXX by was was up Note been from currency

margin. gross Moving to

slightly margin gross XXXX QX due services. to for Our down of was XX.X% from third-party in XX.X% mix higher QX of XX.X% year-over-year and

net I'll spending Now operating discuss earnings. margin and

these tax share-based items, expenses expense, provide results. The and acquisition-related non-GAAP compensation adjustments detailed in earnings permanent our reconciled both For or items, adjusted to adjustments GAAP organizational we results share-based other all adjusted exclude GAAP and compensation and restructuring release.

spending. operating at Looking

X% operating million GAAP expenses to $XXX were $XXX quarter. million quarter first of up ago year the in Our compared

adjusted expenses XXXX. of compared up QX Our were operating X% to

Looking primarily in an service expense to year-over-year in driven related our X% expense QX, services sales increased client items at the businesses. by line increase personnel for

driven and a G&A of intangibles of XX% decreased QX XX% X% increased capitalized in year-over-year. X% slightly over flat is and amortization amortization increase Software software. development acquisition-related in R&D, gross XXXX expense expense up increase by

margins. to operating Moving

margin operating the to year-ago GAAP QX was XX.X% in in XX.X% Our period. compared

adjusted quarter operating down from quarter. margin in last XX.X% was and the XX.X% for XXXX Our XX.X% QX of

we to taking and portfolio discussed improve performance focus on steps Brent are a with process optimization, operating our As management. improvement cost

We the of expect our these results impacting efforts year. to begin the second in positively half

improvement our refine We of are detailed process and more AlixPartners list to timeline. build and a opportunities with optimization working

core and QX This our meet of opportunities necessary federal ongoing to market that growth strategic by environment, our system, want still in targets of this done hard based we backdrop believe time as XXXX, We with base that efficiency ourselves to growth. XX% operating our but announced it make adjusted by be the work, initiatives have And second and be driven XX.X%, with work expect these work large to for we our long-term is respectively. of preliminary and profitable challenging to we quarter. business, focus adjacent health for will QX a clear XXXX report position to markets. we enhance our I and previously good on changes remain address confident we the growth ability margins for be particularly opportunities our within

drive efforts, we'll this protect the The look changes to through revolve we necessary work improvement As make growth. we around investments to our expect to focus. operational

profitable satisfaction too can We and represent better most retention. on client target do areas if and growth the believe are we we things we and opportunities drive that doing attention many and largest our

net Moving and to earnings EPS.

QX in diluted Our earnings is million were Adjusted in share, GAAP EPS $X.XX X% compared $X.XX to earnings $X.XX to up net in XXXX. $XXX diluted $XXX in was EPS of net QX million compared GAAP which XXXX. per QX adjusted of QX or and were

the Our GAAP was XX.X% for quarter. rate tax

XX%. rate Our non-GAAP was tax

of We to for expect to XXXX. the our non-GAAP be XX% remainder tax closer rate

cash our Moving short-term from and QX ended $XXX of XXXX. which We of QX million with in up investments is balance to million sheet. $XXX

quarter quarter Total was down billion in of from of debt $XXX from down at total $X.XXX million $X.XXX XXXX. to billion, $X Our receivables QX end the million. last the are

QX XX the million. as period. XX DSO the and software operating capital quarter capital in flow was expenditures QX cash defined was cash for days Operating software Our less flow, $XXX flow Free purchases $XX from the and days up capitalized development is in was quarter. cash million for year-ago $XXX capitalized million were cost down which and $XXX QX days, from million. XX was XXXX

our organizational For payouts related continue for our expect to expenses and be our to voluntary other XXXX, to flow outflows cash impacted restructuring. taxes, we by higher operating separation cash plan

of an at should combination of XXXX. Due the free phase expenditures decline Campus, on these expect work in driven we side, we lead construction free two XXXX. be In in capital half the a which the increase to completed of in to by factors, flow in Innovations expenditures cash a primarily to On expect normal to cash first XXXX, capital flow to capital expect strong operating to cash decline meaningful we our flow. return growth,

addition, in included review identify note is our opportunities reduce expect our capital capital we spending to forward. spending operational to In that and going

Moving to capital allocation.

recently share increased our to announced buyback we we As authorization $X.X billion.

the fund next and debt as the market We we our amount this other timing authorization We of with of subject to factors. with XX intend depending the such use to whether debt months cash of purposes from expect cash and M&A. majority for repurchases execute operations conditions and the the to other in on repurchase

announced in program the the first a share still dividend per in to $X.XX with Regarding the third expected we cash we early payment initiate February, quarterly expect dividend quarter.

officially We at expect board the May meeting. shareholder the declare dividend our to

increased to commitment expected repurchase a authorization initiation our shareholders reflects to in of our and returning our dividend long-term potential. belief significantly combined Our Cerner's capital with

the through guidance. go I'll Now

X% We reflects be QX The billion range QX XXXX. midpoint expect billion. and of of of $X.XXX between over revenue $X.XXX this in to growth

year, billion the full between revenue we and midpoint, $X.XX X% to billion For with over $X.XX XXXX. reflecting $X.XX a continue expect billion growth

The EPS X% $X.XX share. midpoint QX this $X.XX XXXX. than to be to We expect range per adjusted QX is of of higher diluted

now share, per program. repurchase amount share the earnings we operational $X.XX depend and estimates, expect the EPS preliminary is growth the of be midpoint our to X% For expanded recently benefit operational of full from improvement $X.XX, at on and timing $X.XX reflects which between above initiatives year the previous benefit on based But diluted to diluted we guidance range and buybacks. $X.XX. adjusted adjusted expect announced improvements to will and of The share

Moving bookings to guidance.

the included We of VA. order range $X.XX in the $X.XX quarter to XX% billion expect compared task for initial QX of XXXX, to bookings which The reflects billion. revenue of this the a second decrease midpoint

will performance bookings. discuss, as pleased primary on over for the in we profitable summary, projected we we position John call With results long-term with our operating quarter improved shareholder first As and creating expect that, the levels In and reason the decline year-over-year to solid are long-term is lower focused Cerner the I'll for delivering we remain growth. value turn John. of

John Peterzalek

I'll we percent was ago previewed you in last year bookings XX% Thanks, growth Today in offset discuss component, with bookings Marc. Good XX% of and from exclude cover QX compared with to in which everyone. in the the the bookings, long-term non-long-term which quarter. marketplace. start are results our being decline projections bookings, with our quarter. last our long-term to afternoon, quarter of long-term year. top-line I'll grew The by coming bookings compared in the a line contracts When X%

with for consider be have earnings our be part more is year the of expected focus a a is but review by on amplified the tough This all-time selective given bookings it forecast our an to that QX not expected opportunities impact is the lower mix certain to operational by we VA bookings. to fact higher Marc low-margin, material mentioned, dynamic bookings long-term long-term contract growth. the as current year. the expect in or in to is near-term our in we decline last The on was of continue driven and level do bookings impact high comparable initial long-term As of revenue near long-term QX lower another included margin the expected decision in and and as represents our

and Our pursue we growth. strong with good we remains to willing growth high business that pipeline are focus deliver sure but on well-positioned aligns to long-term quality our make profitable

the coming had core quarter as space, bookings with mix. our Moving to from federal of Millennium with both solid outside progressing installed DoD new and planned. our a XX% In business are projects We base. VA

we continuing are VA our wave initial has in key year, sites the was work and the cycle Similarly, track second the as as with go-live into the population For and remain sites DoD, on and expected go year through project, revenue solid next go-lives we ramp steadily for we on on to of QX growth other with still health. with our fall. track also the XXXX. our work such for quarter this continued on as a to areas work planned,

better arrangements, analytics growth a revenue care material We opportunities hospital, partnership data also their to will naviHealth, as the Big continues outcomes. their announced expanded line we the tools win improve Cerner and A need an management. ZIP and towards shift few code post-acute and to -- provider as increase shift Data beyond and see their the ago, at-risk, with providers weeks to top support clients expects health pioneer providing patient in predictive we economics. value-based better pay help experiences

the five years the naviHealth with for to post-acute past streamline have worked discharge. We workflows for

drives with payments the clinical We create financial outcomes payments the addressing on bundled CMS to for the advance. a bundled focus as a for that relationship the and results model offering improved expanding care EHR-agnostic new are known improvement latest

build systems highly higher-margin As care models, the leverage value-based our a important with network health complementary naviHealth, leverage platform line at-risk health higher-dollar, capabilities selectively economics risk will we Because network. an to advancing we health work us add will allows with for strategy, naviHealth strategy of Lumeris, drive relationship and example, around key Cerner's our the HealtheIntent partners. for is provider business. portfolio our post-acute of to

provide I'll brief on observations marketplace. Now the

opportunities deliver their outcomes revenue population, and We their and market we with EHR quality In I'll our cycle our clients' and base. because clients, we well-positioned in the into them both additional cross-sell client replace enhancing optimizing aligned which generally health closing to call to have fee-for-service of that, imperatives, EHR the are we strategies over imperatives. well-positioned solutions, Brent remain for back models, include suppliers their existing to to pursue and as, to and turn operational and legacy beyond with efficiencies. enable is we core are as ambulatory to against creating improve such and the act growth align believe that With to value-based needs mature, believe comments. summary, revenue our While partner capabilities our

Brent Schaefer

as John. Thanks undergoing us Well, you've heard today, from we're a of change. lot

embraced to a the have year, the improvements and fast the as performance. to we've our We in cooperation opportunity past at an agreement done over needed pace on make the build move operating work

to innovation, is are to that clients against health the ability established, networks to allow which Cerner means and around to advancements successes. We us thing and that change to innovation. interventions. advancing believe connected are developers have challenges. supporting priorities. committed insights on One delivering us of with outcomes, tangible value health we we delivering confident most commitment client impact to the we health investing open evidence-based focused on and health relentlessly experiences, In to commitment platforms to and technology a care, to aligning new and making technologist intelligent will We our administrator. following deliver believe execute. we're rapid summary, have by and our to data more on care's workflow stronger, complex the care. a to in focused solve commitment company power our partners targets We're contextual, in intelligent and leverage Open positioned positive experiences create which innovate clients, will patient, very includes our allow which clients every Intelligent our and Better not reflects clinician,

for up open and questions. moderator, the to back call the turn I'll Now

Operator

And the of question Thank Goldman line come Jones Robert with you Sachs. from sir. first [Operator will our Instructions]

now is open. line Your

Robert Jones

in shared hoping bit order to reach evaluated evening. a being targets that a Thanks if Brent, agreement. R&D you sense of you of operating you of maybe I just was highlighted the line in of the you areas magnitude. I as expenses, shared for highlighted on Great. just like more that guys from feel help you the you have margin as cooperation about you question. know traditional taking of getting then today kind us exit profit into take shared? had sight, fence But that, rate level operating you XX% the saw operating within Good sides several those the And that things savings, you both guys think give could cost to I'm versus could a share we step of because we kind there. thinking if that of what you've of more little And the back the XQ

Brent Schaefer

Yes, with into question. Alix. a engagement weeks So early days, it's okay. Well, we're the Good right? of couple

we doing for how the -- did really So around, opportunities established we're really and we're around health some of good The structured year opportunities some baseline perspective -- identify of the a last management is portfolio, layers. analogy, process in mentioned But fundamental where best it's a are. feel as opportunities been we're quantified the look. where and to certainly, we HIMSS out to in we And of see organization are opportunities. good the on build Sumitt, full-body we do the we understanding we us, of where and like work span where aspects to exactly And early starting little CT using a a go. look it's I've to data-sharing is everything, all scan care for

to that to But given in and on And model of we maximize know find clear through alignment efficiencies. growth strong about for of improvement clarity throughout last we as efficiencies help the through, scale of comes know organization. that those we look going and just with the to seeing whole we that that organization. operating was in our processes some And there's help -- cases based up and us So, our QX process then fundamental really the the model obvious next intended it's for just opportunity next opportunity, for the year out around step set to work step making accountability rolled is those kind that. discussed the many kind decisions that size here

that of So, for directional going get as and sure. into we I some hope we're least at gives you be it it sense where there'll more

Robert Jones

the assume just on certain to that And conscious last of long-term guess it work it year. I a that Brent contracts. things? center. on just No, that's side was was described the on safe you helps. as true comments a follow-up. more maybe on if Is billing update know Yes. that focus I thought buildout bookings guidance. margin interesting pursuing that I lower seems you're an a It stand the quick big that's you big where not

Marc Naughton

Yes this is Marc.

ones that number to fairly relative certainly which that a on to are we the can is us want drive we're profitable going retain -- in bring back decide businesses help clients the point at and just all mind be doing light those the for to we we're that we're going And transaction a at year us bookings to types I the and to clients to big keep funnel us that relative lumpy. we're our look about QX I that ones more making year difference was for the reviewed of transactions be and of actually in that in think every coming attention as And in are QX ago long-term are our But you think certainly quarters, certainly and is going normalized when agreement that. our we large varies seeing QX to or of that be those look to front primary that our funnel our opportunities relative as tend it But focus. indicated and which we we as is in to of in talked QX the year wasn't those focus growth. think to bookings the ago.

of impact pipeline. I going the little So, in to about just right year this lower half bookings what decide exactly think early first that a that's it's think to meaningful But entail. a more is you the now probably when

Robert Jones

Appreciate that. Got Marc. it. Thanks

Marc Naughton

Sure.

Operator

you. Thank

will next with Morgan Stanley. Ricky Our come from question Goldwasser

open. now Your is line

Ricky Goldwasser

topline hi of follow-up When expect you less federal your Yes, percent revenue about XXXX them your chance you're customer to on customers areas the the think with evening. a where then from and to not good your of to And changing spend come back if And we where second what at hearing growth kind contracts are question planning what you on versus speak from feedback you spending hospital that had on? after a is announcement? them? you are do

Brent Schaefer

Yes, that? John you take to do want

John Peterzalek

go is I'll it's first clients post speak many as with catalyst John. with had And the us. without a the feedback from I announcements. This the almost client. viewed obviously to opportunity exception for positive

that's As model we things positive we both to that more focus new efficient. already around our clients' members accelerating operating perspective. and of at are and improvements the the on We're become our look operational doing technology some from Board our very

to reflects all market Our do get well. to things. efficiencies solutions well business it of types with us. our It's quicker with as those for clients We them easier

a So much it as to good and we that move have. for catalyst us our was pretty plans without accelerate already viewed exception forward

Marc Naughton

of of your kind opportunities out the those of element visible our in as that impact the are or relative key in in but where that or Yes, that But thinking when are next determining and roll I year XX to obviously have revenue is the revenue revenue we Working to out us. and on efforts going are of we're on Marc. and here. we view into backlog early see contracts continue revenue XX-month has and the this months doesn't to backlog, our still about costs is is the based not you're XX% costs think question that went to on

be the comes and rolling clearly of for our which to from not VA you're is of going a that are activities cut revenue Most the are going people people lot revenue generating revenue. go that costs services those generating to So through. from

from I dent taking think the XXXX. relative material efficiency revenue going a to a efforts a to So, standpoint aren't make we're from perspective

Ricky Goldwasser

Thank you.

Operator

come next the our JPMorgan. will from question Lisa you. Thank line of And with Gill

Your open. is line now

Lisa Gill

Thanks of look guidance I very afternoon. I looks be margin second the the on know improvement. I cadence quarter wanted if specific to don't but you if good implied up much margin I it Marc follow -- and at the it'll margin down for like just at look give year-over-year. again the

to the maybe that can but that about mean you by this efficiencies to does third in of just fourth how come the target all as quarter? aggressive ramp of will said talk that and quarter? XX% Is attainable -- that really get fourth quickly So, will Brent these quarter

Marc Naughton

Yes clearly those. the lot a to we undertaking efforts got recent. are Lisa, And going steps Marc. this We I to to is fairly analysis the do. are mean that take we're then driving of have go start

get it's have those So start in take and underway the time a going plan realizing we us our I the because year view, benefits. of material in to think it's projects certainly in is amount that happens QX to this for

one. is think to half your year I in in QX, going of realistic So the is much and of certainly it be of most that last happening that synopsis the a

of of year. get of and ramp that initiatives year. toward certainly these more a But the from from percentage on going we up the pretty steep well going into I expect put hitting as QX, set for be roll us exiting think margin certainly the start see in you as we is QX good XX.X% all XXXX us quarterly the and in we end doing XXXX P&L more a operating see then the to to a work -- as to we're path will

Lisa Gill

repo? just the for the I share share updated around understand, the And how in guidance repurchase, then, updated much have in so guidance specifically you do

Marc Naughton

market will given specific the haven't repurchases It of clearly which the timing any number. We on et subject conditions cetera. depends be to

really of that to indicated will certainly expect serious about how repurchase getting as to EPS it therefore done. and far over authorization. going shares plan bringing we the we when that defined We We're haven't those that as just do and repurchases. that's when all we months, that majority time. -- impact So we timing occur relative those do over of But the set to a XX next over haven't

Lisa Gill

Okay. Thank you.

Operator

Jeff you. line William will question And our from & come Garro Blair next the of Thank with Company.

Your line is now open.

Jeff Garro

of you it with I about that guys some of opportunities. bookings Thanks in strictly to these questions. still on are it the afternoon. you to taking is for long-term really Good ask idea market your some Maybe pursuing? opportunities interested more potential? it Or and are the Is based of it Is way be, ask some long-term the the types want margin tightest more partnerships? in of leaders? what more with might getting selective

John Peterzalek

Yes. as tremendous it It'll John. we But where This -- opportunities be ones. are for right client ones both we benefit most you to making to of you're margins only to the to largest margins to value expect where great align doesn't We're the provide us of scrutiny mix. as forward opportunities. long-term continue move that deliver for for big which to client higher going at It's be is on the going mean the our have well with we'll and a all sure are to come focus the the base and our throughout Cerner. them get believe look added client going going around them as path to just our

base. sort But brought one of specific not it's at throughout them. entire revised a should client be look that all looking with our them be of we'll area at So just it

Jeff Garro

in of you a philosophy X% bookings for the given around bookings the change year pipeline kind ask, around category supporting the And of about then longer thinking to near-term opportunities. -- the the see year? those growth Got year-over-year and of what rest you follow-up, for Can the to of helps. it. going of level set of how are a near-term unfold want as longer That those bit rest bookings expectation some the in

Marc Naughton

Yes. share This bookings is again have a roughly a before we'd once Marc. This number that of to our is forecast process around to and a -- on color view lot rigorous that. like have we

second premature as of So call. to on provide at at we're going see little to this of next consistent the But as term a this we in breakdowns. more we it's of Certainly, to with give not far able the that a point, versus color think we've serve lot whole our non-long I we'll to what what more be point, those always long-term the get half based year. the as done, guidance

Brent Schaefer

I think robust. that to pipeline is the fair say it's

Marc Naughton

Yes.

the market's at strong. the look we As market,

Brent Schaefer

that I and pipeline comments that pipeline to and isn't at top well, I'd a solutions would services mentioned still We change there strong other a in both things. my as very in have material to add in bottom our all.

and services itself. optimistic am I solution broad It be to and about it throughout So continues pipeline continues mix mix. to grow highly the very our

Marc Naughton

Marc. is this And

The in in we a when well. as grew Just at XX%. pretty you do bookings zero. the in And in year, a little look context the that of have as to mind that last XXXX we we actually bookings, prior keep reminder significantly year in a you bit grew grew

opportunities the pretty is visibility. market good in go I line revenue lumpiness share. in is So our to And the to we on some of based deemed both there base backlog clients after years that existing news is good pipeline have -- is bookings. relative significantly strong within those that The think our this, grown seeming it's market a reality client is of to lot shape from mature, and two the strong but new is a

we continue So that. do will to

Jeff Garro

very Thank helpful. you all,

Operator

from of Research. Thank you. line Nephron Eric question Percher next our the And with will come

open. now is line Your

Eric Percher

to Thank will functional – Alix your you for how you. with Brent, function? a & little and how off the the interact Board's goes can Finance speak that Strategy management bit Committee hope will

Brent Schaefer

Yeah. new we're a of look of members diverse different cycles the stages operators One, all Board you with four in been business. business I adding who've experience, lot bios through at multiple think if they're the

will to their think part I Board feel a who especially deep that. – operations as of this that and have these insights be having and and who in, folks us traditional to combined benefit real couple to insights from folks the have with a I our very So new good our about then market we're

make a straight. keep is – as experience our it. and as interacting we perspective and of do need management work lift us it know way this through and question to we a our a of through work you lot mistakes and priorities It's with helping we kind changes well, mostly and these it's to sure heavy we think avoid pitfalls I as work So

it expect as be I to for So forward. helpful us very we move

Eric Percher

team Board? them more just broadly working advising And and the than management with you the you sounds like see

Brent Schaefer

Well, members. mean, no, I they're Board

But advise Board expect right I members. role work as absolutely. to them bring, advising as an that they So benefit this. a It's of through experience the breadth think I is we

but an yeah, So it's role. advisory

Eric Percher

you. Thank

Brent Schaefer

Yeah. Thank you.

Operator

Evercore next Ross come of from Muken ISI. our question with the Thank will you. line And

now Your line is open.

Elizabeth Anderson

do measure arrive Elizabeth This your level investment proper you in for Ross. your acceleration Anderson given end for efficiencies certain openness improve discuss in in the organization? or to revenue So how lack R&D of example, you of the markets? Can of at your Hi. it is

Brent Schaefer

Brent. is This Yeah.

you approach to a can was go. too like steps some way me many fundamental. we've in were Marc mentioned, we to we around add started portfolio couple as of Marc maybe review we Let last think times really But I mentioned do think year disciplined I this, the felt a things the trying and turn simultaneously. just we

seeing developing good So way it it we scaling I the the and all around within we process great cycle priorities, a think getting very I base, were got that a was developed we I work start. should that it are more start through the a through really the a in we that help client never put a how functionality first how our piece And robust we weren't think some there. like is because market good we've and it to then business But through. is can we model way place feel this work and R&D found the then deployed lot new setting and us assets There's and because do. having

you there. in that's think think of portfolio in us. opportunity We've process for kind when ground there's I place. topic come process got I And about the new We've a really then now place. model So got back the improvement, to

efficiencies we for is that processes how can throughout looking find development really Now work ahead us. for

all are this those So of I point. for us ongoing opportunities at think

gives So there a you it. hopefully, Marc? Is you on want add anything color that to little

Marc Naughton

Yeah.

table exactly and the as the through delivering is our – we focus clients this think right. there for do off go I every is nothing Certainly, and that's innovating. work. Certainly,

we been of has to that be of part resourcing is spend. certainly, sure the a reviewed make everything appropriate. do as the key to R&D appropriate So going a process of the that is level resources focus company is those But and and is right

– So

Elizabeth Anderson

And you final helpful. regarding do is how Perfect, likely question your going is counteract you how that? clients your competition message are how that's to position intent margins? very My to

John Peterzalek

But, we way of clients the the Well, in my some we to this clients. to solutions fact before, that messaging they'll this to be is efficiency we much fact make spend that there's the deeply will more accurate will I great our in as some not margin or side. competitive inaccurate stated, through our I've John. because they more on the have know more things. the We though that around And periphery being efficient and And at drives focused and our us be that opinion going embedded of clients think look time market quickly and need some is need all competitive the our to it how to more innovations welcome whether are. welcome we'll efficient bring be that it's ideas around our

come we them. has and we will deal clients, of some Brent client. will thing have can reality The best this innovation us competitive been So We'll then clear, the we have very very effectively impact with see doing, do them commitments the the we'll clients work terms be our I what with And communication will process but deliver. not and our be we with proactive very know to to it, it to our not about just impact in have clients and expect is messaging. been our And positive all we and think let not impact messaging, the we're of expect. positive to out we'll what things they from what very clear will how

Brent Schaefer

I points. I the just think appreciate to I'd that John. add

these the very think I long-term clients in are serve that we generally partnerships.

healthy a strong continue so move to a innovate be And forward. depend us to partner and help they partner and on to them

strong is well They that can a they right? continue commitments. on and the something our And know Cerner to want, to for future deliver we're all positioned so want

is I base. question. our think appreciate in so -- for good pretty And client think a But understanding thanks I there that's that I the of it.

Elizabeth Anderson

Thank you.

Operator

question will with from Larsen David next you. come Thank Leerink. our And

is line Your open. now

David Larsen

XXXX. think margin engagement revenue kind the I talk put That about the of your is you large on But efforts? works there. on bit some of you level Can about what rev cycle brought now has XXX in wins obviously FTEs hearing a little slowed. service pressure I'm

on thought up bringing ones. mentioned Just your sure to one Marc? make wanted RevWorks any you Thanks. that on perfect thoughts I was efforts, think process? new still your at before and that you and point running large Is Adventist

Marc Naughton

Sure.

roles our and signed our of take that we is that up in basically over from opened opening I Kansas think is to beginning billing It some staffed. fully center City clients. yeah, from are up attrition

our certainly, a this really before the is to case it currently at operating of that make doing -- those That's again one in at lot Kansas even a is and from that office sure we'd to look office operate operating have opportunities bookings clearly from turned continue this And broader. Once I we're actually meeting the in that it business out take lumpier that up. probably at point. right we So doing think now work leverage business to relative that are are want we was and whole of we come center long-term activities expectations. good they that to the efficiencies perspective. the new But has service opportunities to it. I the business of still be that able going I -- intended it to office around But and as it think as as to expected. leverage we're profitability. for City we're And to getting out We're think --

David Larsen

And just quick for one Okay. me. then more one

there in XX I of of waves were remind of waves to on there? think like the are and the terms VA, than XXXX. thought how like like me scheduled and are more one I many waves In two go-live the can and VA sort you rolling

or impression revenue my the ahead not? of of VA Cerner. are that is a bookings lot Is that still So correct and

Marc Naughton

color A -- absolutely little correct. more would be that Yes.

Brent Schaefer

get at You're that $X in will To project, bookings year kind into bookings further level. progressing have same we kind the initial have be around exactly we'll other able as start to had And keep proof-of-concept of time. we to that there forward rolling to billion and they of revenue right. set they're bookings real waves billion have expect in that This million some those we get to the as the of some you as year, those Right amount VA of of multiple particularly out There through bunch $X to for you're now, comes be increments bookings we has single kind $XXX do ways really come grow increase But a really additional get start of looking bookings. And bookings at and elements. you are mind from in be are kind until get once them. to -- waves year. we have the when stream of to a they VA to roll a been multiple significant contracting projects. start waves. they our to going there's view But to support you revenue statement future a

see continuing growth bookings VA VA. And we will the on we four-year from So you kind timeline as forward revenue to discussed. from grow therefore move that the of

David Larsen

you. Great. Thank

Marc Naughton

Thanks the question. for

Operator

question Richard next of Canaccord Genuity. the Thank will our you. Close with from come And line

now open. is line Your

Richard Close

Great. Thanks for question. the

So the on potential see are products the on then one thoughts Does some maybe that the you five deemphasizing long-term services, is deemphasizing growth by commentary, profitable next growth those. sounds that RevWorks things? some areas you're over your revenue of maybe growth of if it not, maybe these most in or what like change And years? this

Marc Naughton

Yeah. This Marc. is

area HIMSS at. looking the government opportunities is Certainly a think area that kind I were laid we growth out to growth grow. huge we for at of for the us some of

opportunities portfolio cycles line focus There profitable The today. of naviHealth I about that some talked taking referenced from we -- something the -- to continue to spending sizable are we're of that that's going it's look a of can on a Brent top talked reality any is perspective perspective. that be But bunch money mean it's management a business. and taking almost a be we to growth space in work to You the across the at intention grow opportunities health from grow revenue. that contributor on never to people. top

that are I But overall be just whatever approach not continue to there that So are be. off of growth if spin provide areas individual going going think anymore out we're that adjust of either there's to to categories, those lot are will that not able a things decide is we but in elements that those to of go from we and an standpoint, types avenues. need do to have

So, that of focus might that us million today, was to you of at if revenue hundred of question if a today. dollars RevWorks be kind your couple your look

growth that hasn't a from So that's huge -- well that's sizable. in more a bookings from perspective. revenue There recently or perspective been

potential process growth, avenue help of an potential and we have invest lots of those while we avenues actively pursue which we those to. of other This which So that's of in, growth. I of not think will define, us decide

John Peterzalek

comments, going add we needs, We're out they terms And wouldn't very just of I lots We're we growth to long-term to selective clients' in we're use think for growth they are in There profitable I that us. I said growth made align that of not lines, our drive do there, value I the which our would can jumping comments are some word profitable to both is before. opportunities And specific product. to the which deemphasize. the still very Cerner. sure selective would important now. what use of business with areas these make sure make we right and we the

what deemphasize we… to and be would to I I what the continue So use be going would selective word in we're hesitant with

Marc Naughton

And with services of to that a software sales. business it is align these high one the a mind sales, more Cerner. tight lot to in Keep Yeah. brings lot the tightly works more level more key alignment client of elements

that is the contribution efforts what looking overall So we're -- from is those at.

We’re relative we had. and go to that not that sense. client. making piece be pursue, ones going of to does doesn't always promise. profitability been a it sure selective we've in, want overall this just say be business a that's to on But deliver got in the which focus we pigeonhole, to It's And of those the make

Richard Close

very That’s Okay. Thank helpful. you.

Operator

question come Demko from next Stephanie And our with Citi. you. Thank will

open. Your line is now

Stephanie Demko

you questions. thank for the guys Hey, taking

bookings much the drove to is a nonlinear a I something Analyst Day? else? that impact growth decision view Or one on avoid was way recent path of First margin what how any just conscious another versus at guess your or of top-line put

Marc Naughton

goal efficiencies. process. now as working mean, where Yeah, the point We're doing We're drive to be Clearly were start we're on Starboard at a I intent I think the We there Brent a I we of structures our accelerates at was over detail. it any time our top-line. pace. We impact faster on says HIMSS those adding said, XX% don't was to avoid don't doing prepared spend and deeper that getting a lot to an to our with go agreement to work meeting XX%, plus. clearly

is with over we're we that talking don't and there news were XX.X% XX% what probably And The about that's all I more and investors getting Starboard, with good We're of have is So which would getting relative and absolutely many know to margins. it's XX% inconsistent over get on alignment ourselves expected our to people shareholders. us that in many than goal. actually aligned is quickly there.

Stephanie Demko

Understood.

opportunities are in consulting offset being mix you're approach Just the any looking more staying they're sidelines Or finishes? with social at are until just take the analyst more So by on that two? near-term next to there. mind, the there quarter or over you that a

Marc Naughton

going getting very through something certainly received something there a that's term even while. this -- doing work to going process -- it's this organization, the are to the in things real so and and been the space they've on may be the in We once last the be in been this we impact, well. these had we've AlixPartners, our that able We thinking love well have with start very already been are are is reality part doing But you're in we again, that's at are if going that what of within work for a to that those on. but the the point. collaboration action toward it we're are, of immediately, going to year. many nearer Depending situation kicked impact of off And on be actually

Stephanie Demko

right. It’s All helpful. Thank very you.

Marc Naughton

you. Thank Sure.

Operator

Thank you. Gillmor Matthew next Baird. come question of from with Robert the our line will And

Your line is now open.

Matthew Gillmor

thanks for had one Hey, I question. one. last the just

the you obviously back go program to to then repurchase you a we you just can buyback us the on your I philosophy think pace? And be just you should once cadence? But there. this trying to you this perspective complete influenced. M&A the prior guess and as of repurchase billion if $X.X And would keep I stock Or the one-time point? On intend more update execute large outlook there and know be the do would if that that similar understand future a authorization, at repurchasing at

Marc Naughton

allocation Sure. This is approach all time. something our mean that Marc. the review capital I is we

relative of a that look the this think what's on work like stock we had that we the the what at lot dilution. minimum working conditions get We've repurchases is. always done. of value view and to through and offsetting -- by -- market how think at board position repurchase our going most the for is And are to certainly we the attractive I the will authorization the share the price do

you'll bought of us lot a think back in or over purchase. stock six five last And mind, keep I complete large see we've this the So years.

at of But look So investments. this have done that. we authorizations. we other It's another time. our determine do this a we our on at than larger inconsistent offsets allocation one, doing get dilution that just certainly sizable do continue with capital and it we little If isn't prior once based we'll

us So to is little a be attack. plan this of going to tell that for early

is allocation nature on a long-term than capital of a think do more I nature. to you've kind temporal of got plan a something

Matthew Gillmor

All enough. right. Fair you. Thank

Marc Naughton

Sure.

Operator

Thank with will Lynch. the you. Bank Cherny come of America next question line from Michael And of our Merrill

Your now open. line is

Michael Cherny

investment cycle bit in question. Thanks angle. cuts much a of so thing taking about the The little the for a from the cost different

do what's the organization to bring terms the selling the in terms in the that sure looking in at positioning against against margin of through what these expansion. How when driving outlined against cost think company? think beginning you about what's plan And you just to the new the to about given about the backdrop the make of of of of at that I developing competition you've a think so in not the do also to pieces you? products not land competition think cuts and platforms want just least attack terms talent more but dynamics culture you protecting new to of staying you forefront much of much revenue, the challenging, expand competition, in you world but competitive. you, becomes where revenue tech you're some so How your more in hiring

Brent Schaefer

Maybe I'll of -- here. couple a comments

– a great amazing. because and one that's culture, about asking think think emphasize, we to I I You're this is

attract I we here, attracting I of global if to need and new to it talent. for tour, real but the world-class As a improve Cerner, center, think very as that innovation to at part we an have far a that health strong chance if to and and build and I comer desire to had to we a amazing It contribute And you've talent and you and innovate world-class. of don't to culture look care. think do be And is place, and something asset in a innovation facilities continue environment want relative some us real that, reinforce emphasis to there's is a that. and for as our is a

and that? better to here to away understand we driving careful health do to nature a culture for So mission attracting we'll great that want great want this honestly the about than maintain. be while contribute the of scare improvement be talent? be to efficiency a question we And I that and talent in. need what culture balancing is in is reinforce And So I place think your we we're is care. to to that there

Marc Naughton

This is Marc. Yeah.

harder operating Cerner. inside done because silos some the It in created get model. we've company that was in areas we cases, things the some grown changed the we think I there are up to before, how -- of of we've and

evolve So I culture to think it get things I will to the where And easier important. one done. think is that's

the growth. of think pillars the is strategic one I our of organization clearly

focusing finding are entire an areas go we grow So just new the on to company. organization

a than point City. out Missouri be the for of be Kansas going referenced to that being completely is rather dispersed of focus the Campus that would just final we're and Innovation State city as that world-class comment in think I this makes that the Brent being paid incentives being by tax one I to from innovating. having successful throughout And more of group So single on it likely organization it was

Michael Cherny

Thanks.

Marc Naughton

question. more take one we Well,

Operator

Thank you.

will question line last Our Steven Valiquette with come the of from Barclays.

now open. Your line is

Steven Valiquette

also Great. no Good just agreement. definitely let how afternoon, you positive, it. congrats on say slice matter me Starboard everybody, a It's reaching and the

ways really the think investment points bit targeting the company. long XXX trying now additional obviously a the exists a just of larger that off targeting not in within ago, XXbps that just then evolution that of opportunity the majority are basis be process a of a investors is to in needs margin think similar is question to by doubting though, it I XXXX some target an margin community really almost this I really still but but XX.X% Nobody's to get definitely earlier mean think I that, higher good the XXbps news way that believes to And backing the little to period. I time short but satisfy than to the pretty of XX.X% kind in really you're margin investors. of much to end expansion the good some Cerner

looking XX.X% margin this whole right of you arrive Thanks. for target I color think more for XQ during really investors on the XXXX how are process. that as just at

Marc Naughton

us Marc. deep actually what is they give I time a we start AlixPartners, doing they early to with mean through high this a view No Sure. dives, of spent on at we their incorporated go we think before level we thought that a opportunities to we thinking strong our into were And business incorporated an have the And from efficiency and stretch relative target. opportunities. And the that no perspective. thinking. yes XX.X% is the

So target. deliver we of that in our on to level have ability high a confidence,

available. I efficiencies the are think

of it's think not that -- I mind we'll really keep at percentage. healthy you your when cost as the a revenue high of percent that of organization. And total look a be in a the represents -- percent from you

relative we So, company not draconian to that we're to doing the be the here. expect of size anything

of reduction, expecting XX.X% where points folks not seeing we our growth in certainly think cost some I can control. the operating revenue to basis to somehow that space margin. We're things on add So,

we So, I strong. what this think And all willing we is target. think good in it's can that to. is context we did commit we're this I a believe to and the to feels say do This what work

okay and think associates something target sends I hold it's would've should this perhaps to financially health need But would've with. a don't company. investors on. increase been smaller been we that to our investors of both to But that and message think this something people us I a I that focus -- the

that. work that to target. towards it's I efficiently be our can will we will -- continue that comfortable we better. the business it's We continue with XX.X% handle. doing business so, it and think do love not just target. we and we're that the need get the have to there. something And to have be more the And We very to we on And And think is start I marching

Brent Schaefer

that quarter, to ready And to goals. that's do. achievable taken work, I add more set had ambitious a would what to from I And steps of an do. first and up think as of in it. we out we year and the know number go but the it this set the was intend have good. And And ourselves We so for team's work and we done on to it's last rolled timing's after take

Steven Valiquette

the appreciate Thanks. extra color. I Okay.

Brent Schaefer

Steve. you. Thanks, Thank

Brent Schaefer

we thank afternoon. care. that, And for we you a attending. With Take hope all you have good

Marc Naughton

Thank you.

Operator

Ladies and and does in conference. program, may disconnect. today's conclude day. Everybody gentlemen, thank have you wonderful today's for your you participation all This a

CERNER (CERN) 25 Apr 192019 Q1 Earnings call transcript