Q2 2014 results

On the 24th of July Cerner reported second quarter results for 2014. Just as a refresher here is what this exciting healthcare business actually does according to the presentation.


"Cerner's health information technologies connect people, information, and systems, at approximately 14,000 facilities worldwide. Recognized for innovation, Cerner solutions assist clinicians in making care decisions and enable organizations to manage the health of populations. The company provides clients with a wide range of in-house services, as well as an integrated clinical and financial system to help organizations manage revenue. Cerner's mission is to contribute to the systemic improvement of health care delivery and the health of communities."


If you take a look at the image below which I screen grabbed from their website you will get a better idea of the services they offer. This includes linking pharmacies with hospitals and doctors, allowing data from medical devices to be recorded and stored by practitioners and member engagement which sounds very similar to what Discovery's Vitality do. I urge you to explore their website for a better feel of the company www.cerner.com
Lets take a look at the numbers.





Revenues increased 20% to $851mn while earnings per share grew 18% to 40 cents. Earnings for the full year are expected to come in at $1.66. That is expected to grow to $2 in 2015 and $2.36 in 2016. The stock currently trades at $57 or 34 times this years earnings. But with earnings expected to grow 20% next year and 18% the following year you can understand why. Another phenomenal figure which Cerner boast is a gross profit margin of 80.9%. Software businesses have low capital costs. This figure was actually down 1.3% on the previous quarter because some third party outsourcing had to be done to fulfil ever growing orders.


Having absorbed all of the above it is quite clear why this company falls within the Vestact recommended list. They are creating technologies which make healthcare more efficient. And lets be honest, everyone wants healthcare to be more efficient from government, to the poor, to the rich. The more affordable and accessible healthcare is the better a place the world becomes.


Cerner are still very much a US company and growing their footprint around the globe has huge potential. Their CEO, Chairman and Co-Founder Neal Patterson is held under very high regard. The company already has a market cap of $20bn and is one of the leaders in the industry. We continue to add to Cerner as one of our leading exposures to the healthcare industry.