All Key Metrics Within or Above Company Guidance Ranges

Cerner Corporation (Nasdaq: CERN) today announced results for the 2019 fourth quarter and full year that ended December 28, 2019.

Fourth quarter 2019 revenue was $1.442 billion, an increase of 6 percent compared to $1.366 billion in the fourth quarter of 2018, and in line with the Company’s expectations. Full-year 2019 revenue was $5.693 billion, up 6 percent compared to 2018 revenue of $5.366 billion.

Bookings in the fourth quarter of 2019 were above the Company’s expectations at $1.665 billion. Full-year 2019 bookings were $5.990 billion compared to 2018 bookings of $6.721 billion. The decline in bookings was primarily driven by the Company being more selective in the types of contracts it pursues, which led to fewer large, long-term outsourcing contracts.

On a U.S. Generally Accepted Accounting Principles (GAAP) basis, fourth quarter 2019 net earnings were $154.3 million and diluted earnings per share were $0.49. Fourth quarter 2018 GAAP net earnings were $131.3 million and diluted earnings per share were $0.40. For the full year, 2019 GAAP net earnings were $529.5 million and diluted earnings per share were $1.65. Full year 2018 GAAP net earnings were $630.1 million and diluted earnings per share were $1.89.

Adjusted Net Earnings for fourth quarter 2019 were $237.2 million, compared to $208.1 million of Adjusted Net Earnings in the fourth quarter of 2018. Adjusted Diluted Earnings Per Share were $0.75 in the fourth quarter of 2019, in line with the Company’s expectations and up 19 percent compared to $0.63 of Adjusted Diluted Earnings Per Share in the year-ago quarter. For the full year 2019, Adjusted Net Earnings were $862.1 million and Adjusted Diluted Earnings Per Share were $2.68, compared to full year 2018 Adjusted Net Earnings of $818.5 million and Adjusted Diluted Earnings Per Share of $2.45.

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 $437.6 million and Free Cash Flow of $292.1 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 72 days, down from 74 days in the third quarter and 79 days in the year-ago quarter.
• Total backlog of $13.71 billion.

“I am pleased with our strong finish to the year, with all of our key operating metrics at or above our expectations in the fourth quarter,” said Brent Shafer, Chairman and CEO. “2019 was an important and productive year for Cerner. We made meaningful progress on driving value for our clients, delivering operating efficiencies, simplifying our business, and refining our growth strategy. These efforts are ongoing, and I believe they position us for long-term profitable growth.”

Future Period Guidance

Cerner currently expects:

• First quarter 2020 revenue between $1.415 billion and $1.465 billion.
• Full year 2020 revenue between $5.725 billion and $5.975 billion.
• First quarter 2020 Adjusted Diluted Earnings Per Share between $0.69 and $0.71.*
• Full year 2020 Adjusted Diluted Earnings Per Share between $3.09 and $3.19.*
• First quarter 2020 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, items included in the accompanying schedule, titled “Reconciliation of GAAP Results to Non-GAAP Results.” 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 4, 2020. On the call, Cerner will discuss its fourth quarter and full-year 2019 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 in thousands of worldwide facilities 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”, “guidance”, “position”, “believe”, “expectations”, “plan”, “future”, “approximately”, “targeted”, “intend”, “potential”, “opportunities” or the negative of these words, variations thereof or similar expressions are intended to identify such forward-looking statements. For example, our forward-looking statements include statements regarding future period guidance. Factors that could cause or contribute to such differences include, but are not limited to the possibility of significant costs and reputational harm related to product and service-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; material adverse resolution of legal proceedings or other claims or reputational harm stemming from negative publicity related to such claims or legal proceedings; 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; 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 related to our dependence on strategic relationships and third party suppliers; risks inherent with business acquisitions or strategic investments and the failure to achieve projected synergies; risks associated with volatility and disruption resulting from global economic or market conditions; significant competition and our ability to anticipate or respond quickly 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; 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; inability to achieve expected operating efficiencies and sustain or improve operating expense reductions; risks that Cerner’s revenue growth may be lower than anticipated and/or that the mix of revenue shifts to low margin revenue; and risk that our capital allocation strategy will not be fully implemented or enhance long-term shareholder value. 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.