CERNER ANNOUNCES FOURTH QUARTER AND YEAR END RESULTS
KANSAS CITY, Mo., Feb. 25 /PRNewswire/ -- Cerner Corp. (NASDAQ: CERN) today reported that for the fourth quarter ended Dec. 31, 1991 net earnings were $2.5 million or $.73 per share. Revenues were $27.2 million. For the year ended Dec. 31, 1991, net earnings were $4.7 million or $1.36 per share. Revenues were $77.2 million.
These results reflect the adoption by the company for its fiscal year 1991 of the statement of position 91-1 (SOP) - software revenue recognition - issued by the AICPA (American Institute of Certified Public Accountants) on Dec. 12, 1991. Adoption of the SOP, which is mandatory for all software vendors, constitutes a change in accounting policy and requires the company to restate its results for prior periods. After restatement the comparable fourth quarter results for 1990 reflect revenues of $15.1 million and net earnings of $30,000 or $.01 per share. After restatement the results for the year ended Dec. 31, 1990 reflect revenues of $57.1 million and earnings of $2.6 million or $.76 per share.
Clifford W. Illig, president and chief operating officer, said "1991 was an excellent year for Cerner as we met the financial and operating targets we had established for the company, independent of the effects of the SOP on our revenue recognition practices. There were a number of significant measures of real growth and achievement for Cerner during 1991. The total value of contracts signed exceeded $61 million, approximately a 65 percent increase over any prior year. At the end of the year, total revenue backlog stood at $63.1 million, a $26.5 million increase over any previous year end backlog figure. Revenues and gross profits from the company's recurring revenue stream increased 47 percent and 49 percent respectively over 1990. We added 56 clients during the year, and our client base at the end of 1991 stood at 270 relationships worldwide."
Illig continued, "Placements of the company's Pathnet laboratory information systems continued to proceed well with a strong fourth quarter performance. Cerner's stand-alone radiology and pharmacy systems also met with increased demand. We also are seeing a higher level of interest by hospitals in the U.S. in Cerner's extended line of Healthcare Network Architecture (HNA) products. Such interest in multiple-product systems, particularly in the pharmacy and laboratory areas, should lead to more placements in 1992. We now have seventeen production sites up and running on our pharmacy and radiology systems, and expect these installed sites will be helpful reference points in making other sales of these systems."
Illig added, "The company also continued to make progress in marketing Cerner's integrated hospital-wide clinical information systems which provide a complete patient focused approach to managing information throughout an institution. Increasing interest is being shown in Cerner's Open Clinical Foundation (OCF) electronic medical record products which allow healthcare professionals to have simultaneous access to patient information on-line, facilitating and accelerating clinical decisions to optimize the delivery of quality healthcare. In addition to the important agreements signed earlier in 1991 with the Emory Clinic in Atlanta, Children's Medical Center of Dallas, the Dartmouth-Hitchcock Medical School of Dartmouth College and Oklahoma Healthcare Corporation's Baptist Medical Center in Oklahoma City, an agreement was completed with McLaren Regional Medical Center in Flint, Mich., during the fourth quarter for the implementation of a hospital-wide clinical information system. McLaren's implementation of Cerner's broad line of HNA products will include order management, clinical decision support and scheduling, as well as systems for nursing, radiology, pharmacy, laboratories, medical records and therapies."
Illig commented, "Successful installation of hospital-wide clinical information systems will be a key goal in 1992 and should be helpful to future sales, as potential clients see the increasing value of delivering integrated vital patient information through a common system."
Illig also stated, "The changes with the adoption by Cerner of a new revenue recognition policy reflect full compliance with the SOP issued by the AICPA late in 1991. This policy is intended to provide greater uniformity of reporting among software vendors. In Cerner's specific circumstance, the SOP requires that the revenues on software licenses which include significant post-delivery activities by Cerner should be accounted for by using contract accounting methodology. Revenue on system sales will now be recognized using percentage of completion measures based on meeting key milestone events over the course of the software installation project. In adopting this change, there will be no impact on the cash position of the company but the effect of the change will be to associate a portion of the revenue with installation milestones that are to be completed after the delivery of the software. While Cerner had the option to defer adoption of the policy until 1992, we felt that it was in the best interests of the company and its shareholders to adopt the policy for the 1991 fiscal year."
Due to this change in policy, Cerner is required to restate its earnings for 1989 and 1990. The effect of this restatement is to decrease 1989 net earnings from $3.6 million or $.95 per share to $2.5 million or $.66 per share, and to increase 1990 net earnings from $1.6 million or $.45 per share to $2.6 million or $.76 per share. 1991 net earnings would have been $4.1 million or $1.19 per share under the old policy as compared to $4.7 million or $1.36 per share under the new policy. As Cerner was already using contract accounting for revenue recognition on its major integrated system sales, the impact of the SOP on 1991's results was limited to stand-alone clinical information system sales.
Illig concluded, "As we look to 1992, the company anticipates another year of solid achievement in the sales of stand-alone systems and in further developing the market for hospital-wide clinical information systems. We also expect to make continued progress in developing international opportunities, particularly in the United Kingdom and selected European countries, the Middle East and Australia."
Cerner is the leading developer of clinical information systems for the healthcare industry. All Cerner systems are designed around a central structure called Healthcare Network Architecture (HNA). Through HNA, Cerner is able to deliver application software products that serve the unique needs of each clinical discipline, while allowing unprecedented management and cross-disciplinary medical applications. Cerner offers products to a broad international marketplace including hospitals, HMO's, clinics and reference laboratories.
CERNER CORP. AND SUBSIDIARIES
Condensed Statement of Operations (Unaudited)
(In thousands, except per share amounts)
Periods ended Three Months Twelve Months
Dec. 31 1991 1990 1991 1990
Revenues $27,152 $15,139 $77,240 $57,110
Operating earnings 4,175 187 8,068 4,296
Earnings before taxes 4,112 49 7,552 4,185
Income taxes 1,563 19 2,864 1,549
Net earnings $2,549 $30 $4,688 $2,636
Net earnings per share $0.73 $0.01 $1.36 $0.76
Shares outstanding 3,474 3,229 3,454 3,454
The 1990 results presented above have been restated to conform to the statement of position 91-1 - software revenue recognition (see text of this release.)
/CONTACT: Clifford W. Illig, president and chief operating officer of Cerner, 816-221-1024/
(CERN) CO: Cerner Corp. ST: Missouri IN: CPR SU: ERN SM -- NY078 -- 2517 02/25/92 16:26 EST