Cerner Corporation (Nasdaq: CERN) today announced results for the 2018 fourth quarter and full year that ended December 29, 2018. Cerner also announced plans to initiate a quarterly cash dividend of $0.15 per share.

Bookings in the fourth quarter of 2018 were $1.960 billion, representing the second highest quarterly bookings result in Cerner’s history. The highest bookings level was $2.329 billion in the fourth quarter of 2017. Full-year 2018 bookings were a record $6.721 billion, up 6 percent compared to 2017 bookings of $6.325 billion.

Fourth quarter 2018 revenue was $1.366 billion, an increase of 4 percent compared to $1.314 billion in the fourth quarter of 2017. Full-year 2018 revenue was $5.366 billion, up 4 percent compared to 2017 revenue of $5.142 billion.

On a U.S. Generally Accepted Accounting Principles (GAAP) basis, fourth quarter 2018 net earnings were $131.3 million and diluted earnings per share were $0.40. Fourth quarter 2018 GAAP net earnings include a $45.3 million pre-tax charge to provide an allowance against a non-current client receivable related to a dispute that has been ongoing since 2008. Fourth quarter 2017 GAAP net earnings were $336.7 million and diluted earnings per share were $1.00. For the full year, 2018 GAAP net earnings were $630.1 million and diluted earnings per share were $1.89. Full year 2017 GAAP net earnings were $867.0 million and diluted earnings per share were $2.57.

Adjusted Net Earnings for fourth quarter 2018 were $208.1 million, compared to $195.7 million of Adjusted Net Earnings in the fourth quarter of 2017. Adjusted Diluted Earnings Per Share were $0.63 in the fourth quarter of 2018 compared to $0.58 of Adjusted Diluted Earnings Per Share in the year-ago quarter. Analysts’ consensus estimate for fourth quarter 2018 Adjusted Diluted Earnings Per Share was $0.63. For the full year 2018, Adjusted Net Earnings were $818.5 million and Adjusted Diluted Earnings Per Share were $2.45, compared to full year 2017 Adjusted Net Earnings of $804.9 million and Adjusted Diluted Earnings Per Share of $2.38.

Adjusted Net Earnings and Adjusted Diluted Earnings Per Share are not recognized terms under GAAP. These non-GAAP financial measures should not be substituted for GAAP net earnings or GAAP diluted earnings per share, respectively, as measures of Cerner’s performance, but instead should be utilized as supplemental measures of financial performance in evaluating our business. Please see the accompanying schedule, titled “Reconciliation of GAAP Results to Non-GAAP Results,” where our non-GAAP financial measures are defined and reconciled to the most comparable GAAP measures.

Other Highlights:

• Fourth quarter operating cash flow of $406.9 million and full-year of $1.454 billion.
• Fourth quarter Free Cash Flow of $201.3 million. For the full year, Free Cash Flow was $733.4 million. Free Cash Flow is a non-GAAP financial measure defined as GAAP cash flows from operating activities less capital purchases and capitalized software development costs. Please see the accompanying schedule, titled “Reconciliation of GAAP Results to Non-GAAP Results.”
• Fourth quarter days sales outstanding of 79 days, down from 82 days in the third quarter and up from 72 days in the year-ago quarter.
• Total backlog of $15.25 billion.

Initiation of Quarterly Cash Dividend

Subject to declaration by the Board of Directors, the Company plans to initiate a quarterly cash dividend of $0.15 per share, with the first payment expected in the third quarter of 2019. On an annualized basis, this would represent a yield of just over 1% based on the current stock price. The Company believes the dividend, combined with ongoing share repurchases, will enhance shareholder value while maintaining ample resources to fund ongoing investments in growth and strategic opportunities. Future dividends will be subject to the determination, declaration and discretion of the Board of Directors.

“We finished the year on a solid note and in line with full-year expectations,” said Brent Shafer, Chairman and CEO. “After one year at Cerner, I have confirmed my initial view that we have significant opportunity to grow and create value in health care, and we are refining our operating model so we can innovate at scale, deliver value to clients faster, and grow profitably. Our confidence in Cerner’s growth outlook, combined with strong cash flow and balance sheet, put us in a position to return capital to shareholders by initiating a quarterly dividend. This move along with the existing share repurchase program underscores our commitment to delivering shareholder value.”

Future Period Guidance

Cerner currently expects:

• First quarter 2019 revenue between $1.365 billion and $1.415 billion.
• Full year 2019 revenue between $5.650 billion and $5.850 billion.
• First quarter 2019 Adjusted Diluted Earnings Per Share between $0.60 and $0.62.*
• Full year 2019 Adjusted Diluted Earnings Per Share between $2.57 and $2.67.*
• First quarter 2019 new business bookings between $1.100 billion and $1.300 billion.

*Future period non-GAAP guidance includes adjustments for items not indicative of our core operations, which may include, without limitation, share-based compensation expense, Voluntary Separation Plan expense and acquisition-related expenses. Such adjustments may be affected by changes in ongoing assumptions and judgments, as well as nonrecurring, unusual or unanticipated charges, expenses or gains or other items that may not directly correlate to the underlying performance of our business operations. The exact amounts of these adjustments are not currently determinable, but may be significant. It is therefore not practicable to provide the comparable GAAP measures or reconcile this non-GAAP guidance to the most comparable GAAP measures.

Earnings Conference Call

Cerner will host an earnings conference call to provide additional detail on the Company’s results and outlook at 3:30 p.m. CT on February 5, 2019. On the call, Cerner will discuss its fourth quarter and full-year 2018 results and answer questions from the investment community. The call may also include discussion of Cerner developments, and forward-looking and other material information about business and financial matters. The dial-in number for the conference call is (678)-509-7542; the passcode is Cerner. Cerner recommends joining the call 15 minutes early for registration.

An audio webcast will be available live and archived on Cerner’s website at www.cerner.com under the About Us section (click Investor Relations, then Presentations and Webcasts).

About Cerner

Cerner’s health technologies connect people and information systems at more than 27,500 contracted provider facilities worldwide dedicated to creating smarter and better care for individuals and communities. Recognized globally for innovation, Cerner assists clinicians in making care decisions and assists organizations in managing the health of their populations. The company also offers an integrated clinical and financial system to help manage day-to-day revenue functions, as well as a wide range of services to support clinical, financial and operational needs, focused on people. For more information, visit Cerner.com, The Cerner Blog, The Cerner Podcast or connect on Facebook, Instagram, LinkedIn or Twitter. Nasdaq: CERN. Smarter Care. Better Outcomes. Healthier You.

Certain trademarks, service marks and logos set forth herein are property of Cerner Corporation and/or its subsidiaries.

All statements in this press release that do not directly and exclusively relate to historical facts constitute forward-looking statements. These forward-looking statements are based on the current beliefs, expectations and assumptions of Cerner's management with respect to future events and are subject to a number of significant risks and uncertainties. It is important to note that Cerner's performance, and actual results, financial condition or business could differ materially from those expressed in such forward-looking statements. The words “expects”, “expected”, “guidance”, “position”, “believe”, “plan”, “opportunity”, “forecasted”, “estimate”, “would”, “outlook”, “anticipate”, “scheduled”, “objectives” or the negative of these words, variations thereof or similar expressions are intended to identify such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: possibility of significant costs and reputational harm related to product-related liabilities; potential claims for system errors and warranties; the possibility of interruption at our data centers or client support facilities, or those of third parties with whom we have contracted (such as public cloud providers), that could expose us to significant costs and reputational harm; the possibility of increased expenses, exposure to legal claims and regulatory actions and reputational harm associated with a cyberattack or other breach in our IT security or the IT security of third parties on which we rely; our proprietary technology may be subject to claims for infringement or misappropriation of intellectual property rights of others, or may be infringed or misappropriated by others; potential claims or other risks associated with relying on open source software in our proprietary software solutions or technology-enabled services; material adverse resolution of legal proceedings or other claims; risks associated with our global operations, including without limitation greater difficulty in collecting accounts receivable; risks associated with fluctuations in foreign currency exchange rates; changes in tax laws, regulations or guidance that could adversely affect our tax position and/or challenges to our tax positions in the U.S. and non-U.S. countries; the uncertainty surrounding the impact of the United Kingdom’s vote to leave the European Union (commonly referred to as Brexit) on our global business; risks associated with the unexpected loss or recruitment and retention of key personnel or the failure to successfully develop and execute succession planning to assure transitions of key associates and their knowledge, relationships and expertise; risks associated with failure to timely or effectively manage publicity related to harassment or discrimination claims and legal proceedings if such claims are raised against key personnel; risks related to our dependence on strategic relationships and third party suppliers; risks inherent with business acquisitions and combinations and the integration thereof into our business or relating to disputes involving such acquisitions or combinations; risks associated with volatility and disruption resulting from global economic or market conditions; significant competition and our ability to quickly respond to market changes, changing technologies and evolving pricing and deployment methods and to bring competitive new solutions, devices, features and services to market in a timely fashion; managing growth in the new markets in which we offer solutions, health care devices or services; long sales cycles for our solutions and services; risks inherent in contracting with government clients, including without limitation, complying with strict compliance and disclosure obligations, navigating complex procurement rules and processes and defending against bid protests; risks associated with our outstanding and future indebtedness, such as compliance with restrictive covenants, which may limit our flexibility to operate our business; changes in accounting standards issued by the Financial Accounting Standards Board or other standard-setting bodies may adversely affect our financial statements; the potential for losses resulting from asset impairment charges; changing political, economic, regulatory and judicial influences, which could impact the purchasing practices and operations of our clients and increase costs to deliver compliant solutions and services; non-compliance with laws, government regulation or certain industry initiatives or failure to deliver solutions or services that enable our clients to comply with laws or regulations applicable to their businesses; variations in our quarterly operating results; potential variations in our sales forecasts compared to actual sales; volatility in the trading price of our common stock and the timing and volume of market activity; risks that our stock repurchase program or quarterly dividend program will not be fully implemented or enhance long-term shareholder value; and our directors’ authority to issue preferred stock and the anti-takeover provisions in our corporate governance documents. Additional discussion of these and other risks, uncertainties and factors affecting Cerner's business is contained in Cerner's filings with the Securities and Exchange Commission. The reader should not place undue reliance on forward-looking statements, since the statements speak only as of the date that they are made. Except as required by law, Cerner undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events, or changes in our business, results of operations or financial condition over time.