Cerner Stock Gains On Q2 Earnings Beat, Restructuring Savings, Q3 Outlook

Cerner Corp CERN reported second-quarter FY21 revenue growth of 10% year-on-year to $1.46 billion, beating the analyst consensus of $1.44 billion.
Revenues from Licensed software rose 15.1% Y/Y to $175.1 million, Technology resale climbed 35% Y/Y to $56.9 million, Subscriptions increased 6.9% Y/Y to $98.4 million, Professional services expanded 16.5% Y/Y to $537.1 million, Managed services improved 4.4% Y/Y to $320.8 million, Support and maintenance declined 5.2% Y/Y to $259.7 million and Reimbursed travel increased 405.9% Y/Y to $8.8 million.
The adjusted operating margin expanded 220 bps to 20.6%.
Adjusted EPS of $0.8 beat the consensus of $0.76.
Cerner generated $369 million in operating cash flow and held $884.9 million in cash and equivalents.
Cerner performed a sizable reduction in force, took specific measures to shrink physical (office space) footprint, and made some critical product rationalization decisions to improve the return on nearly $800 million annual R&D. It also repurchased shares worth $400 million.
Outlook: Cerner sees Q3 revenue of $1.45 billion below the analyst consensus of $1.48 billion and an adjusted EPS growth of $0.81-$0.83 versus an analyst consensus of $0.82.
Price action: CERN shares are trading 1.16% higher at $79.44 on the last check Friday.