CERN - Earnings call transcript Q4 2019

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Operator

Welcome to the Cerner Corporation Fourth Quarter 2019 Conference Call. Today's date is February 4, 2020, 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 solutions, services and offering development and capital allocation plans, cost optimization and operational improvement initiatives, future business outlook including new markets or prospects for the company's solutions and services and the expected benefits of certain of our acquisition or other collaborations. Actual results may differ materially from those indicated by the forward-looking statements. Please see Cerner earnings release, which was filed with the SEC today and posted to the Investors section of cerner.com and other filings with the SEC for additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements. financial found in release. in non-GAAP can earnings of be also the reconciliation measures the discussed call A company's earnings assumes law. update except to no statements Cerner information or any as forward-looking by required obligation to At this to Chairman like time, Corporation. CEO Cerner Brent call of turn and Shafer, the I'd over

Brent Shafer

our to call everyone, hand Delim, Growth, from so Strategic event, organizational a afternoon, our to enhance focus team the of with productive few by to call. alignment year and then was and the the Cerner. client scalable innovation with. comments, business to a you, over City, Don easier Client Thank EVP refine CFO, good I'm Kansas the an Cerner year it important operating and to operational Trigg. client Naughton; I'll XXXX welcome Marc do new and make introducing to and began Officer, including joining call We in a accelerate start the Peterzalek; John for to our model Chief

through strong initiated refining along have We and efficiencies, addition our simplification, we operating business transformation growth. Cerner invaluable our on been X who we existing long-term focused management Further, enhanced governance company-wide our as to of transformation. profitable growth portfolio for Board strategy our through members, a position members the with also work

our in cash exceeding included which free results, is good all quarter delivering progress operating adjusted our including fourth margin key across XXXX metrics reflected target Our flow. record performance and

our the with powerful care to of experiences of was Cerner's significant X share Amazon. deliver many expect announcement capabilities, Leveraging dividend enabler their relationship a combination XXXX we of platform intelligence commitment next-generation shareholders infrastructure, learning to evolution as technology, view reflecting the more this to our discussed Software-as-a-Service strategies the XXXX and health our to including and an in we've calls the patient-centric Cerner previous to IT multifaceted first capital create a program AWS become We to $X.X growth all value in buyback collaboration predictive development cognitive We shareholders. delivering care. the artificial on of to machine billion innovations partner. AWS also returned Also through our and payments, and of user and

the to Now interoperability, before to of on Cerner's data topic turning I'd security privacy. and over call Mark, like the discuss position

ensure affordability We the to working love the because to organizations I career started We is like crisis in been of the lot wrong relevant and And in fundamentally the administrative is dollars a waste when several world do, costs has this an health thing health patient healthiest For patients faxes, in stakeholders care. this information. live decades, Healthcare, to PDFs spent other care. a who a vocal today the shopping the with Century the manage highest I'm care bags. to and and day and to information of other vocal information me, to striving it's better continuing trusted hundreds disparate Cerner future collection billions right lives secure interoperability. seen the with do same. and fact health with proponent care data providers the my people across with collaborate -- at systems ask to where to flow the key ask It's of of and leader entities. talking of of get of talked stay health of excuse clients I too in reminded and workflows proponent the ONC, And work Act and have important our United steward and we -- been forward health possible. to a help review XXst We've with we're other together wrong leaders paper-filled a pursuit to the about of it's and about it wrong we that get to to look today, Cures on I their Intermountain, a the It's believe of are a leave the States to chance middle of leverage Intermountain

in global continues driving continue expectations to serve. the XXXX. drive against We So positive summary, a In our at to the the advocacy significant very right in set Access everything accomplished we're of right the going in throughout be we industry. Cerner. and to markets amount Washington while a the we we delivered right change consistently place I'm voice information for pleased in to change time with

work. it's work hard specifically appreciate hard I their this the all Cerner And year the and contributions So throughout associates' progress. to

more growth to a to off We're have to doing importantly, we are the I'll We believe our more good call us long-term create in while for advance continue to to in the lot driving will a Cerner. health And Marc. And now also meaningful I'm XXXX. optimistic do I position transformation. and good value over work we'll start, care turn

Marc Naughton

Good Brent. afternoon, everyone. Thanks,

our reflecting I I want guidance. for the cover Chiefs! Go Champion, which the future Bowl QX Kansas XX XX weekend, most Before important Chiefs. are period results begin, from and did numbers the Super point cover to and I'll the Now City XX, win

in contracts, from XXXX. related ago, year we to the year backlog long-term due history. from our $X.XXX down to on X% the XXXX. with included This is for in end $X.XXX decline the is from revenue $X.XX QX of with X% contracts being a in in guidance. delivered billion, primarily new second not QX key exceeding quarter We revenue our quarter, were bookings, revenue was revenue backlog When billion, Decline our in high the and the 'XX, XX% termination a for you XX up revenue termination which in our I Revenue recall primarily such RevWorks over of contracts though expected the to in our next year. excludes with were QX, the This bookings a backlog expected guidance. selective expectations. the XX% the billion the due as agreement and of billion, Also throughout combine the QX year are discussed $X.XXX more with exercised. our that we've us quarter billion $XX.XX bookings from ended on at year remains at and from a our clauses, which clauses down outsourcing revenue additional down over over the growth of revenue billion, Total which which in nearly Full 'XX line bookings is our rarely calculation quarter of standard metrics our I'll all above was backlog, reflecting call. discussed of months. that QX start even highest or was was our $X.XXX visibility from

XXXX. Technology Full I'll growth revenue to growth Full QX in And up Managed revenue weak due $XX and for travel technology million. year grew million X% grew solid $XXX also for and reimbursed a year XX% $XXX X% Professional to million X% increased million, year the the Full 'XX. QX discussed. $XXX XXXX. support billion. million, of $X.XXX million revenue X% was XX% which implementation compared to in finally, by X% down services discussed was and of to $XX resale X% QX QX at subscription less primarily in million. billion. QX partially $XX $XXX professional revenue Now XXXX and over model in resale offerings. full due X% million. X% QX business the Full million, last over go QX Support and and full full of reflects primarily the to grew is year grew maintenance X% XXXX $XX $XXX million of services we to down XX% million million, year-over-year was to through $XX up XXXX. impact quarter. QX RevWorks past that to revenue XX% year to down our Licensed $XX compared $XXX growth revenue software termination our offset strong agreement software maintenance services at detail $X.XXX the expectation increase an of was year in up $X.XXX of $XXX services by and revenue billion, QX some for approximately to range million. revenue SaaS in X% was we grew down both to attrition Full in managed year in was year 'XX in licensed revenue services revenue from Subscription to of $XXX previously and over driven was quarter,

year-ago non-U.S. million quarter. at revenue was segment. at up X% was from X% from up by the billion, geographic Looking the $X.XXX revenue $XXX of and revenue year-ago quarter Domestic

For grew domestic grew the X%. full and year, X%, revenue revenue non-U.S.

gross to Moving margin.

margin a XX% technology was from QX for QX our quarterly services XX.X% and to year-over-year. largely in margin within of business year The gross from margin 'XX gross by gross XXXX. related lower margin year is XX.X% and XX.X% are of our in declines in Our driven both full higher down resale. third-party down XX.X%, Full mix federal and

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

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

million $XXX XXXX. XX% up billion operating operating year-ago GAAP the up billion, operating X% in $X.XXX spending, from period. year $X.XXX expenses million in of to our Looking at GAAP our compared $XXX quarter fourth expenses were Full were

compared our operating cost with X% year quarter adjusted essentially flat progress of QX optimization Our good full the up reflecting the 'XX, for efforts. on expenses were fourth to

QX. QX. line the service X% expense at increased Looking in and Sales items for client

in QX Amortization software. in Software in a gross slightly personnel acquisition-related of expense and decreased by expenses. increase development non-personnel year-over-year. expense is in amortization G&A increased XX%, decrease R&D, X% by and over capitalized driven driven a a X% intangibles 'XX, a decline increase both X% of X%

margins. operating Moving to

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

XX.X% Our adjusted the 'XX up XX.X% operating quarter. from margin of QX was and last for XX.X%, in quarter

is last QX target of above April. adjusted line in committed operating operating with expectations 'XX adjusted QX Our our XX% margin to and we that margin the for

which optimization GAAP XX.X% believe XXXX. year 'XX due XX.X% margin margin that last note our adjusted operating compared year. in from business And targeted of for delivering slightly some We to XX.X%, for adjusted year of to was was expected is Our down operating track ongoing seasonality. like is XX.X% QX last of the on operating expansion keep be margin some back-end-loaded efforts I'd XX.X%. our the full initiatives full our to and our margin timing us XXXX year

have adjusted done of higher do points basis we of approximately cumulative than discuss However, XXXX our year guidance, operating in reflects which reflect about impact and XX%, does a XXX the a and is minute, the to I'll margin year. expect optimization full all this which work

also efforts believe profitability can XXXX opportunity we improving ongoing beyond to benefit through from modernization. continue We optimization longer-term a and platform

from As multiyear near-term we largely modernization most will for discussed, investments. particularly a And be process, Millennium. benefits offset platform the by benefits modernization are

lower our total cost development However, and also the move, deliver ownership. of we along our with process, operating us profitability to to associated improvements in solution expect clients helping our at with while efficiencies driving to a contribute costs lower we're differentiated this meaningfully a

earnings to EPS. and net Moving

Our GAAP share. in QX of from or diluted $XXX net up $X.XX is QX million It earnings 'XX. $X.XX per in were

in net share. adjusted earnings $X.XX were per For $X.XX diluted diluted QX were earnings or EPS the year, and compared 'XX. million in GAAP QX full was million, net to $X.XX $XXX of Adjusted $XXX

net adjusted $X.XX, and were diluted year, up EPS full the $XXX For from was XXXX. X% earnings adjusted million,

the tax GAAP XX% was quarter rate Our and year. for

Our for XX% the and year. non-GAAP was rate tax quarter

between and non-GAAP be expect to we rates our GAAP XXXX, XX%. XX% For and tax

QX free million with and million million to QX. of $XX million $XXX ended short-term from share in with investments, down cash $XXX available Moving flow offset and repurchases quarter, by debt which cash acquisition sheet. our our being of is balance We our $XXX last

end $XX.XX, For repurchase million shares we by XX.X average against of our the to us an $X.X price the QX of year, $X.X repurchased at billion plan billion 'XX. keeping for of on track

debt. to Moving

the ended 'XX. Our total last $X.XXX down QX receivables of to at quarter billion, debt at in billion. from $X.XX quarter $X.XXX billion remained flat Total

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

$XXX was were cash For expenditures is cash by million flow the $XXX was year, from $X.XXX $XXX higher full capitalized Capital free year restructuring and software operating flow million. XXXX, billion. Full capital $XXX which expenditures down million, was and costs. million, driven

expect lower to but to drive operating some restructuring flow of cash and strong we flow continue, level cash still we free costs higher growth. XXXX, expect For CapEx

Moving to capital allocation.

authorized available or $X.X billion. repurchases $X.X in of As how is targeted announced $X.X stock shares on additional I the total used up our investments. purposes that We and combination to $X.X billion other from an funding amount funding of acquisitions level operations meet repurchases amount billion for the repurchase our remain continue the for end billion December, as we intend of we authorized the to Board In and debt, much by repurchased and repurchase indicated, a to XXXX with on of timing of track bringing of these will depend cash such and stock, of QX.

XX, quarterly dividends $X.XX X, X. January per July to program. three on We of Moving dividend share first our October paid our

authorization payments our continued long-term also into quarterly to QX our have belief acquisition the repurchase the to to potential. federal space. plan commitment their our I'd we accelerate to begun and service Our our offerings success dividend that in return the shareholders reflect AbleVets and in in in completed integrate capital share our of note and increased portfolio Cerner's

in growth that As create with expected of to strategy. there strategic efforts divestiture foundational in M&A, pursuing. is that we I'd to to refined growth several lead to we've growth most the activity organization our focus our also opportunities active expect in note markets management discussed, we aligned be portfolio we more are look our areas as be could to as more our some are believe

Now I'll go through guidance.

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

XXXX. the expect growth billion For range consensus $X.XX revenue midpoint, over billion of this we is The below X% year, between of growth reflecting midpoint with and $X.XXX billion a slightly full X%. $X.XXX

the outsourcing could contracts. this expect growth Also, of of of XXXX with you impact estimates like XXXX. levels continued our not to reduced We due be of an factoring types in approach fully of selective more and view in through I'd being bookings walk organic to those

This from of be organic that of Adventist XXXX, don't we Adjusting X%. qualified on adjust is would out their because view by the Health XXXX leverage you If in exit AbleVets revenue But for for it as bring X%. their revenue contract through been would growth pure revenue have inorganic we to hiring, as normally our all our we expect VA the value contract taking associates and done over to would up. highly but the AbleVets growth back ramps workforce. performing organic there believe leveraging

for line there us the and up solid to XXXX, moving top year M&A, set There As actions reductions. offset divestiture will we is that we've could activity. the in we take also as growth. on result that serve additional take expect could we there Overall, we be do do be this we but actions believe in the revenue parts which likely will potential discussed, several profitable to an

Moving to EPS.

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

diluted EPS ongoing ramp-up operation guidance last Our similar reflects that the adjusted year, This efforts. year timing the reflects QX. expected biggest and of a is sequential the throughout increase efficiency with in to

$X.XX, to midpoint with XX% expect be For over adjusted reflecting XXXX. growth a to the EPS $X.XX we year, diluted full $X.XX

lower tax than our our about the to to outsourcing revenue. by rate ramp mix full $X.XX. XXXX, year to is slightly QX I'd primarily our impacting X% we than mentioned, also expect target, margin XX% note EPS also due higher expected As non-GAAP approximately be higher of XX.X% of I with adjusted expected year, during operating a

bookings Moving guidance. to

midpoint place $X.X results expect X% we've There's a it XXXX, an made believe quarter We in work our of are a lot hard expect summary, of bookings. lot billion to this beyond. of and decrease to meet long-term range $X.X the targets, execute compared fourth progress profitability plan growth to billion. have bookings revenue QX the The strong to but in our this driven XXXX and with quarter of in decline and in we expected of in and reflects good In pleased left a we by first a year.

to Tuesday, will up, Investment that I you like on our Before at March XX. Community I'd we remind Annual wrap HIMSS host Meeting

If you of plan please to do the the attend the and at not link top have registered, of so section through cerner.com. Investors

turn With there available. the be I'll over If will you to person, attend John. call that, to unable webcast are in a

John Peterzalek

Thanks, Marc. with business. highlights federal bookings. update our Today, an start Good afternoon, provide I results, I'll on everyone. our and will

guidance we mentioned, segments by of driven multiple as and bookings academic delivered across our Marc such for contributions investor IDNs. quarter, ahead owned, range strong As the

We cycle across recent drove discuss. lower businesses, long-term compared solutions which revenue also to of will overall our had level quarters, good strategic year, contributions with decline Don and the bookings. which Consistent had we a in from growth bookings last

quarter, the was last percent last Bookings QX compared the represented of with long-term XX% for this bookings XX% XX% increased Long-term for in compared bookings the total in slightly year the from bookings down driving excluding bookings full contracts the year. of total year. year, of long-term to decline coming bookings For year. to contracts for long-term XX%

which marketplace, their reimbursement trends seen overall simultaneously can the enabler are and make the same Cerner. clear opportunity environment. technology out important service; and manage solutions lower key convenience consumer competencies XXXX, represents during time, continued grow models. Medicare consolidation; same strategies. on providers At for health value-based drive businesses expectations economy; and lower-margin continual is service are a to out Information of of an on and the required an the industry reimbursement macro fund make forces investment, contributing and advance costs Providers as to evolution an participation and to risk-based of pressure risk challenging seeking to of make of gradual These required provider models take adding the operational outpacing to it the many to return the effectively and play cost, it for care with build have at to elevated Looking cost difficult to around lines, nature efforts, services at efficiencies broader rising these levels rates in money investment. growth to

into This continuing up well getting clients. to and our base, XXXX, installed also at and back penetration our our In CareAware look we opportunities are Cerner business both solutions our suite pipeline, base on of is revenue on As in focus see solutions opportunity base. focused which solutions for by our solid supported HealtheIntent we out while cycle new new filling is year-over-year for both clients and in as our increasing gain current with reflected we as their a sales opportunity platforms.

as Our have traditional CommunityWorks and remains opportunities provider post-acute government, state pipeline strong, and of outside in employer base such our long-term areas care. we

We of beyond growing also continue CareAware presence base. our and the have our opportunities to EHR-agnostic solutions EHR HealtheIntent

Moving to our federal business.

our continue and DoD to advance both projects. VA We

Cerner, partners, go-live. capability, operating VA with on or project, IOC the remain and initial VA On focused along our our

integration initial amount scheduled and of March. validation go-live training the completed are ahead preparation have We and doing activities site a significant of in

to our sites initial to and and the quarters. value to we to in go capabilities work also live scale expect go-live, at continue the additional upcoming additional beyond in VA Looking IOC provide just steadily XXXX

successfully activities waves. that, as We're Guard code kicked Don. making to are deployment year. With we the the upgrade to X XXXX. Coast DoD. on these slated ramp in expect and call waves team completed additional mentioned, the I'll the the for progress Marc these project also off late for over the Go-lives We during AbleVets quarter As leverage throughout turn good

Donald Trigg

Thanks, John. Good everyone. afternoon,

in launched organization XXXX. growth strategic Our

subject gain billion, scale beyond EMR business They ambition share markets hospital, was to traditional addressable units X focused meaningful requirements from and business as on that aggregation that beyond make of industry-leading path expertise up opportunities growth gross for Millennium are target And positions. model. market. leverage pursue they each in recurring Cerner a position finally, of X data our set payment with around Cerner a one: understood, to the the each surmountable in to overweight speed beyond excess high units EMR are growth, matter large from the category-leading offer fee-for-service of on strategic existing The $X a Our HealtheIntent, processing last-mile simple our Cerner margin All workflow. revenue larger and leaders squarely potential. differentiation. Regulatory focused assets revenue strategic ranging businesses the capabilities and and

year-over-year. For will in full business. to which growth afford look deliver strategic We year targets growth in us revenue, XXXX at review XXXX, and in Investor forward each opportunity businesses generated can we our HIMSS $XXX the to our Day growth Orlando, similar million representing believe the long-term for XX%

strategic rate of data health per particular at of As strength frames cybersecurity approach. X our in we seen care areas XXXX, look at U.S. day. a has breaches

driven to Our area CIOs CSOs support our by is veterans. technologies their building growing are armed are enterprise part strategies. out of core Cyber an in and how to competency, and services internal work critical

health result, a XXXX. our systems revenue security XX% grew As from nearly in

from strong communications users. business, CareAware also was XXXX. benefited adoption leveraging over provider year-over-year and increase XX,XXX delivered almost record EMR-agnostic XXX% with monthly in Connect bookings utilization strong solution Our to an in tailwinds platform, market CareAware our

year care XX% long-term growth. post-acute We also with the were market year-over-year the pleased in with progress full and

It bookings bright coming LT with our new health outside behavioral particular revenue Millennium of was almost a XX% our spot. suite footprints, pack from solution base. delivered within Our XX total

only category Our leader. is as unified Friday best-in-class in announced differentiated XXXX market, was solution the strongly the behavioral health not also it

and families the make deliver solutions providers that individuals integrated help, strives seek easier our care unified treatment for successful Cerner it For that to to demands.

network health our in regions. platform technical platform a sell is At States of level, lynchpin area the the an United focused also of X MSA our we health is our strategies solution larger point and all solidly strategic in it build out our HealtheIntent fits efforts. at push LTPAC into level, strategic to the network every While our global

DaVita including Health plants like us the leading to providers adoption continued drive progress in to HealtheIntent HealtheIntent Our health. worldwide, addition and XXXX, Prospect market-facing XXX bringing of push of to

a by the noted in AWS. Chilmark the native like as was our AWS with in of at also cloud built partnership, describing HealtheIntent capabilities analysts EMR-agnostic and has has product been the recognized our Brent It is industry best platform, been category. As as heart work having

nearly will clear clients of XXXX, to proposition half move the cloud we it in approach of our establish for all AWS provider As care. value public first HealtheIntent of non-federal cloud technology the health

also push We of enabler network the global a as and England, to as its markets integrated care NHS it see our advanced accelerates key strategy health as focused such systems.

Finally, with XXXX, the announced emerging business easier XXXX strategic top health identified to it around Cerner next-generation less content yesterday, services. efforts the new growth across -- And Several and team of trials. for therapeutics. story. concept health care our life-saving it to in central can digitized, to of not make clinical the team clients. us enterprise we helped do. an tell strategic fit things about and were things the In we believe generating network a intentional do portfolio also and all create in to we around we partnerships decided strategies discipline are the our decided role as as for activate Glasgow launched research helping growth important six Cerner. advancing network to into a that announced expensive management data set a MedStar we Art of to to units, partnership Across are drive learning make health such systems, patients The in a participate institute research clinical played as be in opportunities XXXX

home Sleep decision GetWellNetwork revenue-generating a also partner decision application in bring with in believe It assessment to favor new will of solution system further of the for build analytics and our asset portfolio better individual partnership also featured in to have have and not what to invest only its health opportunity our post-acute our ResMed care system GetWell's of vision a the to hold believe with offers combination long-standing preferred come. XXXX never into foundation their health. engagement an the partnership offering, by to also and We me industry-leading greater. to growth quarters is intersection the over thoughtful go-to-market health but that, Brightree a opportunities ability patient their Respiratory. us Our a of the entrepreneurial moving consumer billed offering. It Similarly, & myStation came health solution. IT right Loop ResMed's closer with our in with embedded We framework. to make around for call of of care to advanced and laid with Cerner. for pursuit area a turn health performance, it mobilize It's a not at XXXXs And for further, solid been center. consumers the faster our part, the for where have data in at We're the care strategic questions. excited a setting about emerging XXXX let operator the

Operator

Instructions]. [Operator

comes Sachs. from Goldman Robert question from Our first Jones

Robert Jones

pieces remaining March, transition more in understanding maybe then, the growth came we'll some about federal? just clearly frame major beyond profitable the and be think some to future? of the that importantly, contract from curiosity, growth we And a service hear are you aside how growth just to we growth as as I building year, of highlighted we more of AbleVets starting much been out at that just frame about that kind I of know What you the back exited. your Marc, comments, should guess, returning and X% cycle put as XXXX? to as guess, ex blocks you less least think the addition to has I revenue and XXXX in out of go guys that year

Marc Naughton

is Marc. this No, Yes.

-- growth. bit look be a why our as bit a to will a little -- to do little bit little job the at and year try talk It's a certainly, I think organic trying get we do that. We're from in we to 'XX. apples-to-apples going about to best challenging XXXX

which And top to get we back and we contract if outsourcing I top look of view the that that probably X% the range. basis that. line certainly selectivity X% could something of place for to the line think last to be growth, put point Clearly, you doable X% Adventist the talked would as we I impact, overall I XXX in impact to we've think about certainly that, a some being kind us. through growth level, X% potential that's expect would that's think year

from think of as contracts additional billion out of going federal just growth to million of to certainly, time $X contract, that are $XXX I way will driving, things that contract, revenue depending coming up continue be annual that's VA or on its the of revenue. the part a so ramps period. the the in year That's annual VA that growth

another So And certainly strategic the out continue that growth $XXX that to at is to that driver. is strong obviously we're good $XXX will of, business growth rates. and take see growth it grow expecting to million area to million a then today that's --

opportunity business. also the that have within we We base look at existing just our

take little more through could with the top the can how about. of the -- that we've a and accretive try those ability in and the of we to those XXXX be growing to got And But organic. about business, we about that inorganic primarily and expect they elements certainly of opportunity also overall in we past -- line get contribute we've talked sell opportunities kind discussed. the top the those more have growth growth. core growth elements those But detailed support I've top year. I just space, overall, point, our M&A have that growth to to opportunities there view us that really, in some opportunities that a that attack that primarily on And that We've be the size impact we'll go a for us will the are talked go the the businesses to -- level having of think, revenue talked things solutions we've certainly, strategic talked that being cycle and bit to you depending your time for size strategic things and the HIMSS are of line, to everyone, we the are reset line all back a of as to to So white growth. revenue base, those into bring, the all traditionally think of range

an you provided We things Obviously, management. on a going. adjustments. That's the impact to to positively will you But for to to we'll be update the solid. basis we're revenue. where we now, M&A are opportunities The portfolio if certain giving we quarterly looking impact really negatively quarterly And is give try at we'll as guidance do of revenue. think guidance kind we is as there's our do going divest what year any right

Robert Jones

those your guess No, would be comments around know guidance? Marc, where and M&A. stands? kind business Or divestitures best in we that. potential then further what is quick just I today of on potential this contemplated appreciate of follow-up all case those a the Are I is XXXX the just

Marc Naughton

to as Those be was the we kind today, of divestiture or you our way contemplate it largest by on items. same-store it's does list. going that occur be is of basically The a any still, Keep would if those guidance be that We that that's AH, that smaller away far the that not we as did point. them about of contemplate was more the divestitures. will, M&A RevWorks item business Yes. the can items activity at that in something determined. to after talk effective any It on mind going because does not of basis, think so potential the items

guidance we they that extent, occur. even the other. up we on and determine current great course the whether the as in speed, So now, overall is we adjust anything guidance, then way or But to -- the one impact will point be comes a as space, they at based something will right and

Operator

Kevin UBS. from Caliendo comes question from next Our

Kevin Caliendo

the bookings bookings, don't return for for any shift I year? do the the to compares when growth? view full you I the do bookings guide, given additional you you is entering for but think it's year-over-year away Or bookings long-term service already at content look LT for ones the from year, waiting assume And you normalize when guide you can there to know you year-over-year shift? the reasonable

Marc Naughton

we the to QX be guidance. clearly, don't mean, I to because do I relative guide Yes. we pretty think, beyond our want accurate

guidance is on QX, opportunities based based opportunity you the timing we with I the our results to think the things on quarter the to some that delivered delivering actually range, -- still normally above as pull a some solid of little in QX. in of we're in because and for impact clients those their would outsourcing But some the year bit QX that normalizing have going in things been to our think elements ends, landing I of the bookings.

top be fair from the bookings, say I growth XXXX, impacted side we year So on XXXX, a line focused going comparable in then do get the the think might that year it's of growth to it's thereafter. apples-to-apples should resetting be outsourcing space. pretty still being we'll perspective, able to of full a I to is But to view kind that services of that through the get while bookings for do think and the the we're for anything QX some by more

Kevin Caliendo

And if follow-up, one might. quick I

that you was contact a was with decision implementations. been contract? yesterday, the issues who was there Secretary if since Is one Deputy concern of wondering bottlenecks in implementation he any go with over and the was any timing VA or that or the charge there let reading of for made. was were we had them, So I about leadership potential I in VA VA guess technically

John Peterzalek

occurs, are Yes, in the this activity, comment say is I unexpected. is when both or impact we activity the and that a ensure there changes VA, project, have I supporters great in the The support of other that and surprise it constituents this throughout this effort do to groups from support. sure John. veterans, activity, on what the significant veterans And that that Hill, And had fact doesn't not happen, going. bipartisan but VA, won't we're things where it's they took project, or beginning making would the we political political like broad modernization specifically

anticipate and impact just broad going that, and support from on. continue is base to we're So think we that solid, of incredibly our any we don't

Operator

from Charles comes Rhyee from Cowen. question next Our

Charles Rhyee

the time I compressed thoughts around at the Any time the view instead? particularly to I maybe guess, on of soon. want I there think, -- providers final you And talk were guys beginning, you what those on to that? perceived do lines thoughts touch Maybe help And -- a clients lines is is through you sort talked preparedness work challenges? compressed know implementation. -- rules, on in some what your or right would put about -- on expected for How concerns, rule seeing place say, schedule interoperability the to any you about phased implementation

Donald Trigg

Yes.

Don. So is this

is to we've for and very of years. on a that just first comments. pushed think, space on vocal and Brent's foremost, This been a number echo I aggressively

So we I have for personal space like interoperability, providers and to payers. and and what of, needs this a around look passion think, lot semantic patients interoperability

that's and foremost. So first

a feel we going of the to associated both time technical perspective. call, be like and think liquidity. that to think as there's of manageable with we reiterate and obviously well are finally, some we're to data positioned on understood, just implementation I they're positioned secondly, that the nontechnical the elevated ton business do we rates We'll from to being think, the meet business we're And well out that. I discussed, lines opportunities think, these of comes framing a those completely rule and finalize but strategies final they're very a

we're organizations the our alternative work, as and models So to the to to models payment think strategies we types make frankly tons doing the whole. when BPCIA, for about for the think help opportunity Cerner, opportunity a I required like create provide around payments of Advantage, technical enable industry that and our of things bundled Medicare business think those strategies through

Charles Rhyee

of I mention might on. it, missed Great. could didn't terms new I'm in Lumeris. not that if of if sure follow And but the maybe of you're model sort strategic -- any I just working on, the I have hear

an on partnership's that how on curious Just working. update

Donald Trigg

ton and I'll it. I a just We back comments appreciate tether there, progress making made. the think of No, to we're Yes. I

So foremost, was was and and was Advantage, the to total the to methodology, first sort best-in-class market. use thing their of really, -- for capabilities to Lumeris exciting solution our one bring and us the methodology the expertise things it a technical that offering that service of Medicare the of to super take

how data the business of practice are Louis as physician, runs of you capabilities think back a now foundational in And we're of to network to Lumeris part And In of progress excited liquidity, sharing, the integrating of strategy opportunities St. different the around milestones we as over-attained if topic as the model for forward. for XXXX, through made over focused come the running MA as plan, out. the and plan to think their deploying to for X-star rates trends we XX high about drive go-to-market about activating it's that into and to nicely one practices, you the technology, heterogeneity regulatory market, Lumeris going terms HealtheIntent again, and just use think Cerner. information solution last-mile that those best around course of both MA, we degrees strategies that against workflow do and a big platform elevated of it complementary your were playing IP the well us several the provider-sponsored that, very represents very on for

Operator

Goldwasser next from Stanley. question Ricky Morgan Our comes from

Rivka Goldwasser

and that made. the Marc, to some back revenue Going you of guidance growth the comments,

missed I have first clarify it. all, So to because of might just

to is and I X% X% think revenue you understand I at said for the growth, tried point, block just to longer-term there. one. some building doable That's

can today, up the for is making who's Is the the on you to that that think that I that range lastly, is guidance you And this opportunity, we the it you sure if to included client, just divestitures so think such in not of all, provided about that decision you to right you when make revenue a of us just time are just Second this a million beyond VA this the not? the expect that want that decision mentioned it -- being just is contract of $XXX highlighted hear grow, why margin making decision? Or long-term decides are mix? the to I taking make that I term the this then renew? as based clarify something are renewal, you that long is initial contracts we or divested the what not potential contract. a

Marc Naughton

Sure.

a growth that's to the of X% on happen. of haircut bit the outsourcing little to X%, provided just based to of year all, X% really X% amount bps was of kind First we activity going lower discussing at XXX long-term HIMSS the of with last

that I growth And growth businesses long-term you'll to rate, details going through some as to you businesses, be a able that lays we'll to to it growth all then be that where like, how be strategic So -- the we'll looks so it's our strategic out. growth underpin relative indicated, give we're as those businesses, businesses, our you assumptions. federal what see of at more earlier, coming bit core taking little HIMSS our

to we we a we that XX-year out billion. it, from Obviously, it ramps is over-attain million talk it talked the it year depending to about and a a that very a year. when So our there's gets first until and about contract, opportunity the do $X $XX period. contract the to it math on say path would VA a of range, $X period, that's within billion when being $XXX with a growing the when up falls to ramp-up it's M&A And we we a X-year said kind goal about contract, clear about lay perspective. -- Relative talked over billion an what

ramping $X billion So basically contract million my up the us reference to to going be to that the $XXX in gets run that rate. increase was that we're to revenue

the opportunities and have revenue $XXX more more speed, to current the $X and which that that stream up about drives forward. and the doing a just of to and projects, VA, kind bigger solutions services more talked the reference how is our I implementations certainly But course increase to sell We the in ramping number. could million certainly, of billion

That of of to little not. looking a in were reiterating that our finally, divestitures, we And to -- we're of piece really the amount talked new just of or growth anomaly another we about drive bit is an growth. a client in business in that on was outsourcing. that there. the It's about. a They nothing really whether we've what AH That's want be does and kind puzzle So space. talked largest good was decide

So that contractual client more a of agreement. was

relative management, business, our those be areas Going to for much options attention. In will forward, want where more our do of us that the our focus relative that to it are we we'll to of reviewing growth a portfolio in we for in partnering. will won't We'll company business. be, the for we're But some of consider. want those that going don't existing want things go. be to to the We'll opportunities -- will and a There variety don't cases, consider options. basically areas are divestitures to It on, unwound relationship focus way. consider willing business look to we of as market an the It say, to that existing divesting consider client something growth specific many divesting. one think to It's will will we're be let go out an here's we this asset. be

And some value. significant assets have these of

divestitures activities really on that be are we from our lot and as to are what -- a of why-is-it-taking-so-long in work certainly, year. the XXXX work key want portfolio standpoint, ideally ended that work we the decide in of share and was the underway, and the these finalizing as already we of think to can things very a you talked, And future. drive near things we done I was management some a we've there of kind So with is will really lot

Operator

from Garro question William next Our comes from Jeff Blair.

Jeffrey Garro

ask more maybe to important consumer we and can or look and IP milestones, of curious long-term those a our lowered for TCO in aside on clients, either more what of bit the benefits migration about that milestones innovation putting experience around want the and very type partnership bookings-related side work I efficiency the XXXX partnership. and milestones that for AWS from little

Marc Naughton

a Yes. Jeff. question, great It's Thanks.

it. talk of of let pieces kind me So multiple to

their around leverage ecosystem. of with the broader an about relationship, look just AWS technical care the the Amazon consumer. opportunity what the Just would perspective in were was like, to terms Amazon to think that of it not through in excited strong part their Coupled relationship to interest the we particular, migration of one, to but really from things cloud and the think I being in the framework and for the think, health public one opportunities around about deep competencies

publicly disclosed with So a concert population they've companies to to PillPack. look opportunity Berkshire acquisitions that of activities the I with of approach, with design was feature around around those and like how our they capabilities engage think or and key of made And about them think, and of I in doing very a, happy around been we've with whether that at are that things the some employee JPM they're think strategies kind relationship. their portfolio

exciting think an we've potential of of the We making work we visibility think about good piece to So -- piece relationship want how that. an part had to it's going forward. important partnership the and

half CareAware, very been perspective, part public technical will and first the talked similarly, tip that Millennium of you of the is saying that really in HealtheIntent relative that around if a the little path. transparent the year. of will will, in bit the early terms completed I a of I cloud. Secondly, fact been about we've strategy a spear, frames has Most to to the And the from elongated. migration time that work more be be of think

I drivers lot we life within in collaboration, of pull-through a look but revenue. bookings feel would going growth to in can would think potential or I the of we're are say businesses there's put Finally, very of out is businesses target or or around where employer the the revenue and strategic and strategic of a this over-attain. dialogue relative have about here impact confident like hit energy to excited what target point cycle real not consumer the have in we a in targeted that at probably terms terms been a could that revenue impact bookings particular our I

Jeffrey Garro

helpful. just are with around the Great. some migration. Cerner technical this half are specifics quick where That's CareAware those maybe clients. Maybe side follow-up, One in where and more on for the and very for on first benefits HealtheIntent the migrations benefits

Marc Naughton

public to approach. technical the we had try of about only about not a provider cloud migration real the conversation innovation but comprehensively we Yes. in our with the have to think think through this and we the has of just able concert potentials the ability as the value stage clients us to I with all, and really for proposition our think how how components to as part also Well, clients, dialogue first be think

In around is terms demonstrable performance and of benefits, I real. There's our to clients see. are how performance like latency thinking assets is need strategies environments data benefit how clear as a -- this and going There a are around about hospital around we cybersecurity think our And system they clients be that could competency that important path think hybrid with start cloud. very that's benefits about near-real opportunities growth to benefit time and there the relevant we like think I also expertise on-prem and where I think very operations. manage

interesting, and strategy white against from really that around perspective, and I business from that So opportunities we're a data some my think perspective, data benefits of deriving performance utilization we real for a have from space create capability that growth. the conversations

Operator

comes Our Sean next from question Sandler. from Piper Wieland

Sean Wieland

these going that restructuring the to on and quantify costs XXXX, are you XXXX? in the said So are XXXX that talking operating costs Marc, impact to restructuring continue. Can your you you're costs margin about forecasting, that you're the both

Marc Naughton

currently targets. the we number are on the is we're our operating is earnings, that costs costs out being adjusted adjusted that, based -- that impact that restructuring so our operating which of X the restructuring Well, earnings, have are on and there margin the incurring

Sean Wieland

And then Okay. helpful. then that's question. And -- a quick clarifying

move to clients to or almost be Or revenue you're of That's tenants? You you've going your the throughout impact 'XX. that the going backfilling that with with does to you hosting all are government first consistent half profitability said year? but cadence said, what AWS,

Marc Naughton

a for freeing Millennium that other center, on space data be platform. hosted Well, as us most part, our as to the are primary and and clients our the and -- impact is federal by clients will up have we absolutely used the to that AWS, hardware moving support in well

we basically the interchangeable devices these use. various relative of architectures All are to

will the impact on be is the that capital. savings So

Operator

from next RBC question Sean Markets. Dodge Our from comes Capital

Sean Dodge

going margins, to little entire interim? investments the be the Maybe going and part into for you that to ultimately platform it a as can multiyear or modernization some margin moment. to give there to The put it? be going the staying consistent some a bookends the have the make able how the around is more something for us in of have Or Are doesn't this project effort, entire big, of be much? are project's really you're a impact come on margins Understanding the this, until insight long-term help can to with to will meantime you're positive offset in done? garner is And you how they chunky? going efficiencies lift where that'll

Marc Naughton

Yes, is this Marc.

John As AWS, some time kind there went we of each move is the element an -- through savings to garnered.

manage as -- center. for the data AWS our move a takes from has savings HealtheIntent, the environment, environments us people it we certainly, in to in it So to able a run on being those that

is and dollars going going as cloud are to are They things environment. the growth we spending management incremental. they primarily goal of our our as expense, growth of aren't up we're into the to make but put there that's don't be to that cloud are that are part relative that Part such Millennium, significant, The our So investment that opportunities, incremental. portfolio -- R&D see right? free long-term the on opportunities platform, investment some we're of they things other on to

of other dollars to will forward our potentially as things normal to the some to not funded for exercise actually what's to idea move is efforts much exactly an entail, deciding timing, bit that the to R&D those are. you spend, hard what going our that it's of path those to moving right through me work still be what are focused process of to get expectation that on out modernization going is we're the that so in We opposed with. and little But exactly going on going exactly is be give of going efforts now a the

-- as shouldn't is that we of so -- although there this some. period a of costs we might be So that's we some influx there. to effort. those time large before to will, from gather Don it -- be some garner will get going have not a have a relative that savings it, refocus we're of to And of it's divestitures, the gets But said, of going

our center for our we in the from on Now run we annualized data clients to million over once them they we $XXX in just that the costs get there, solutions decrease for of are clients' -- clients. a stack higher. goes so will goes your the cloud experience, the our software significant. that in the a They won't data running cloud. we our significant software the got single need in so well There to We've hosting supporting a of appetite is advantages go much higher, version of benefits costs have better get use for center will the when more

goal. part, going bit next on I update I the Those something this we've is through you But have going lot work, margin talked be benefits longer-term most of a improvement. But do of to of we to our quantify things to the path expense is, aren't forward. we've 'XX. think we sublicensed path, identify for in years. got actual to it we'll to big our And That's one that X X to the little delivered as we will are cost work about that's impact. give a be make -- isn't the kind to But relative the an the be benefits those or point and -- of from that's more think than savings harder able So to software. at happen get other the a

iteration continue have going to We to And You to XXXX. thereafter? our basically you other then additions on optimization. the next bring operating the margins. increase delivering keep opportunities platform-based and path do that be How is other these you

Sean Dodge

then great. level. you're on still exit maybe to And XX.X% expecting margins That's Okay. XXXX around more the broadly,

You said better. maybe bit even little a

remarks, or buckets quickly primary to you walk in you through the four to in north of out you get you just briefly can touched could opportunities being us see but the quarters? take it levers the something prepared the kind on think just XX.X% you next XX% you of from I what printed of

Marc Naughton

Yes.

a really we is, remember to year, QX of margin in significant. key what there's did in late the the -- It lot to think I 'XX from improvement impacting started us was QX right? really

So drive the those location end as kind like we to of things us. things on next that, are happen -- go of benefits but going for next toward based of we have the year XXXX The uplift the and of associates happen set in are some place that to going XX% drive of over things margin actions XXXX. that we need to do of for will

the point I But basis margin and effort improvement So for the year. basically little time full those that, XXX next reason of of that delivering a, are those QX quarter tranches, takes to and because QX we'll it once place. the get in and go would be QX after back-end-loaded and bit out a is QX, again points XXXX basically each and be about will QX, year-over-year,

in level in on those 'XX, are of continuation put margin what -- XXXX. that that then place the phases in delivering occur So the improvements next we

I X%, My about like comment. question. Just of -- talk the people comments to little X% on I'm a get to to that that seemed trying bit we confusion around there's clarify, to it next before just if impact and the would that target X% portray the for trying to it lowered points. it reduce you that previous to took XXX the is outsourcing, by indication basis was X% range our of

is right So how But certainly, more the impact I the math, we'll give were one that to of the to I of or based on HIMSS, X%, and is about outsourcing talked those a the we've kind just what do you detailed answer view prior what basically at have, subtraction you of answer. was taking right what of is. view to we down that the do get think and and was just doing our and we skills X% we

confusion. of want that there's just to little I So bit because a clarify

Operator

Our next question comes Bank. from George Deutsche Hill from

George Hill

business Historically, regulations, know this opportunities, think about much margins. can changing attractive This -- might interoperability of interoperability an the probably of for the business? is question. but talk some of parts about been as I how that good part one to be be pretty Don, might Don. has kind with risk you management interface create we there an will And legacy historically business

Donald Trigg

Yes. a question, George. good It's

I think relatively profile. that business -- that, it's good you're right, we're margin a -- pretty it I have small, mean, think does and I comfortable

relatively we're we're some I our the minimis. strategic actually I SMART think it's impact enablement the bigger advancing we code enabling on the on more to inside swing mean point, we've doing comfortable been my is net think earlier think that that strategies to and that business And of things FHIR de that growth. program,

out perfectly I net it I into a look inures go while want to for and So top line you, upside it from can't our at the think that say to where to perspective. advantage relative we we

George Hill

guidance about Okay. number maybe Can number assumed is give in around super talk any number XXXX for coming the about XXXX, That's helpful. about in XXXX? the -- And the guidance? share EPS down million you $XXX repo maybe just in then, And X quick can color talked CapEx follow-ups. something the Marc, you just any that. from You maybe

Marc Naughton

Yes.

a at going would what things forward, of would one Why we'll M&A the take think is. certainly, adjust of I relative to our least to use million allocation, base capital. from that complete a amount of I we then be last that that CapEx question? our seem I And And look or that our for based being we $XXX perspective, slowed for XX-month. would a take our million out the be on repurchase, we QX to number. at of kind look have $XXX repurchases think It we million you think would of completed. would down M&A expect kind buildings as and I investment range don't to being scheduled quarter CapEx the basically could at relative But other opportunities $XXX obviously XXXX capital we think

Operator

from from Eric comes question Nephron last Research. Our Percher

Eric Percher

federal the I third that uptake, be And on the appears That on question contracts. you've had party A service. in margin. to early know weighing

versus there does third-party level XXXX or remain stable? decrease? increase about that support Or As we of think is XXXX, about any

Marc Naughton

Marc. is this Yes,

about For will be XXXX, the same. it

larger leverage working to Clearly, workforce that move our we example partners bring to was continue then on can AbleVets that focus quickly We us of space. in inside one Cerner a to the VA.

which through that point. a to get us event That of we down, the probably at XXXX the -- VA. As bring some allow existing are them of short-term that's this relatively but on their will as and projects, work more

Eric Percher

your And on look U.S.? XXXX, perspective think growth ex as you But last, is of on what year, I growth opportunity. that was items off don't the helpful. U.S. the ex you ticked to growth then X% That's last on part

John Peterzalek

those But the at, which each type well. look on years. we're John. is in a a U.S. those lot previous similar doing new I regions, of think with will the opportunity it will be also things, still of and of pursuing one the portfolio I said There's new we decision. form This that outside consistent make business, as countries opportunities U.S., to non-U.S. of analysis

be and to the process look follow to U.S. and -- going we're So same more become much focused well. outside the as

and So the we ups outside both may well. U.S. downs see as

Marc Naughton

to want comment, fact, growth there's still top be might confusion X% line a Absolutely. deliver. that. mentioned something Hey, little can about to Marc. The think I last is I everybody I this X% absolutely One our for we I think there thank participating. to target. long-term in is upside And

-- have point is building we reasonable. detail, I level so X% take deal So closer of a blindly the to a really I X% it the want the show just But putting to are, is think in. number blocks that what range the once probably in X% my a through you not you're confidence something you but to number great is, more in, level again

afternoon want evening. for on I to Until a you to March that, with together at look forward this and good So getting with you then, attending HIMSS thank have XX.

Operator

Ladies call. concludes conference you for and participating. Thank this gentlemen, today's

may disconnect. You now

CERNER (CERN) 5 Feb 202019 Q4 Earnings call transcript