CERNER (CERN) 11 Feb 212020 Q4 Earnings call transcript

Welcome to Cerner Corporation’s Fourth Quarter 2020 Conference Call. Today’s date is February 10, 2021, and this call is being recorded. The company has asked me to remind you that various remarks made here today constitute forward-looking statements, including without limitation, those regarding projections of future revenues or earnings, operating margins, operating and capital expenses, bookings, new solutions, services and offering development, and capital allocation plans; cost optimization and operational improvement initiatives; future business outlook; the expected benefits of our acquisitions, divestitures or other investments or collaborations; and the expected impact of the COVID-19 pandemic. Actual results may differ materially from those indicated by the forward-looking statements. Please see Cerner’s earnings release, which was furnished to the SEC today and posted to the investor section of cerner.com and other filings with the SEC for information concerning factors that could cause actual results to differ materially from those in the forward-looking statements. of which to and our highly could future and to the taken financial uncertain extent on routines related depend predict. response materially results and an difficult COVID-XX which measures pandemic in conditions, future to In development will are operations adversely affect discussed non-GAAP call this can company’s also A reconciliation in the release. of be earnings financial measures earnings found in information obligation to update except or as no statements required assumes Cerner forward-looking law. by any over I'd to of time, At like and the call Shafer, to CEO Brent this Cerner turn Chairman Corporation.

and commentary. a results for all for and our I'd Cerner CFO Well, us to comments thanks Services remarkable Trigg Officer more afternoon Don and then Good executing challenged fourth President several very our and and some full Client over it Cerner Marc by XXXX our our on Travis much. focusing delivered was Dalton a clients Naughton like I'll the fronts. everyone. and year to year Well plans hand on clients. performance and The and really circumstances solid start with our then on pandemic given on supporting quarter Chief of few marketplace our new

Cerner's This through collaboration Health transitioned productive proud period. really City extremely hosting remote continue a series Hospital, in events vaccinated nearly have County to seamlessly our is community Clay I've clients weeks on and X,XXX and Kansas battling have ahead. world Hospital who events we at work the vaccination said are I'm on and Hospital, from proud we to really by We began week of be is environment often rise cities focused a Center March Clay throughout throughout one in recently of of our of mission clients’ and several how North the partners also done remained County. a through the success Operation day of driven within Public North we're initiative on to volunteers has Liberty this of headquarters. that pandemic way that very staffed strong associates and with and the to that called the is whole mass our support Cerner Kansas our and commitment to one demonstration together COVID This additional the last whole strongest being in every our each the this the frontline presented and pleased are Safe with people Cerner, challenge willingness associates City planned people assets year. it

In addition in to Cerner's supporting our we operational clients as of improvements transformation growth continue to and make our XXXX. part and communities advance strategies ongoing

validated COVID system our health also Cerner clinical, and health accelerated health healthcare initiatives strategies. expansion improve clients growth consumer-facing operational As real-time it outcomes. our our and financial networks, insights macro of providing creation is data-driven and the including can trends capabilities that

about how business. and life Our deploying detail a accelerate in recent presence strong examples growth Don to these Kantar Elligo we're foundation are Health create investments advance of as how strategies acquire data we'll provide in and Cerner's in agreement a capital for sciences Research Health our service to investment more Cerner's

the helped the cost ago years we're nearing toward transformation reductions and million been growth goals. efforts model mitigate and two our about has and focused operational annualized those believe and of we our transformation simplifying continue also resilient our really transformation since our We business. efficiencies profitable beginning Cerner's on impacts on creating COVID business delivering XXX efficiencies business, in

assets. go fewer outsourcing in offering XX,XXX divested non-core from products part features some RevWorksS’ product As management business simplified we really than of to also and process our our XXX global to than portfolio we more set

are using and since exchange members of to Affairs track health remains time Veterans Defense, work our the to Coast electronic of on from service in Department patients U.S. history X veterans XX million of U.S. and the care the record. U.S. the Importantly deliver grew and Department year. the seamless same first for April in Guard XXX,XXX last joint our million And number health information of for

Finally and business the new evolution supported our adding transformation proven who bringing perspective. are we of leaders by already

more like Intuit at Strategy us Aetna Officer Chief Oracle. in Jerome Technology William Cross Shield. Fortune In and development global and September Cerner experience and Blue technology came XXX working healthcare and Officer XX companies with years leading Our and including Labatt businesses than after product Hewlett-Packard joined Enterprise, June CTO of leading Chief Mintz to bringing tech Blue

know we're Erceg excited is You a critically than our balance growth global base and high more leadership leadership bring recent Services and Cerner bringing across now of who Travis February from leader to business on retaining shareholder global Dalton to appointment and Client in replace to oversight Mark is Officer leveraging our Naughton federal and client driving XX probably our same and leadership work. drive will energy important Chief Travis Mark operations while most CFO long-time that of sheets federal have his financial experience XX. including will transformation Marc years complex value. our

honored with board proven also to Dr. military Granger and Cerner leader clinical, leaders business in addition join directors experiences In have those November. Granger of we environments. Major to the Elder in a is are General

and I calls Naughton service endeavors Cerner wishing is hard Marc let appreciate this say I to of I'd Marc Before was year have XX at I like our of the have And nearly call XXXX. I'm call close with appreciation change very to contributions their just than in driving XXX associates first best for we end is years in to be his very who This I and leaving quarter. to more earnings over revised cannot it I fun say towards pleased imagine the delivered anything of healthcare. now know calls. with work turn very for and you future my In to number while Marc we XXX after many all last a luck what Cerner this summary, of our and will CFO in the earnings of acknowledge me Marc what significant expectations unusual earnings accomplished amount progress. sincerely a and in XXX. you We share all

Brent. Thanks are the so. They always second the hundred easiest say

that's true. hopefully to So QX and going cover guidance. everyone. Good afternoon I'm future results

pandemics which primarily in This our billion from down XX were line key which billion midpoint delivered quarter I'll X.XXX guidance our year with over in all bookings we million bookings X.XX above with start is of the expectations. X% Full were our with range. XXXX X.XX RevWorks billion ended to commercial metrics global a primarily certain of a businesses ago due impact billion the of of in QX. of and backlog and which by the We impact year down from revenue divestiture $XX.XX is driven the year divestitures.

reflects driven midpoint was I'll of XXX XXXX with contracted for its X% roughly the provides adjusting the from our for XX% the Total which excluded guidance months. makes by up range primarily which is in above investitures. now billion XXXX. adjusting and the offset Revenue year-over-year year-over-year in next year billion definition after model SaaS revenue as after compared QX ASC a and for full through to software backlog XXX combined other business to revenue that visibility revenue healthy flat in $XXX quarter the more driven partially X% software also approximately revenue growth of than approximately based was $X.XXX Licensed this divestitures. license from year-over-year million. now go year the by growth total $X.XXX in represents in QX XX at revenue revenue of growth XX service from software due to was Full declined revenue XXXX backlog Our revenue traditional has still of software expected over growth To-date to software pandemic intent been related revenue. detail X% shift to and XX% year million solutions. growth declines

we expect in and factors how community changes deliver shift forward continue factors contribute including care aware this to for we for Going works. to contracts year and additional for additional this and

be the businesses changes small will impact not relatively the these sizes Given of of significant. the

the travel full in Support party full to divestiture, billion revolutions QX impact to for were million will the year up expect maintenance for strength due for to with to for was $XX full of and pandemic, XXXX $X.XXX to modernization. full Technology year Subscriptions Professional due $X QX finally to QX QX $XXX $XX the the million environment $XXX million at to billion. pandemic. down to $XXX X% and for million to technology maintenance declines year the down partially travel to grew a restrictions. service. expectations. these X% by services. and revenue. was of $X.XX [$XXX] X% tough the a The termination Managed XX% overall resale was the impacted due down year the the billion QX million professional our factors down driven X% million. use in platform in divestitures, and in move our $XX to of advance this revenue and of services of continued revenue and in down will Full-year million large $XXX the X% technology full down with services XX% offset revenue for primarily SaaS attrition million to And and driven X% pandemic a and X% transition our by as impact up at was was federal grew million continue in third guide was hardware QX millennium to the reimburse reduced line in resale in year-over-year for and to and occur X% lower primarily We was down broader agreement down $X.XXX XX% which X% the as to we year resale

non-U.S. year $XXX down was X% the down revenue domestic at revenue primarily Germany due quarter of divestiture was due segment in assets quarter the also geographic X% Looking and ago and from billion the year revenue at to of Spain. from by $X.XX ago million

X% well domestic the due full the impact and to revenue as as divestitures. of declined down the year For revenue X% non-U.S. was pandemic

to Moving gross margin.

up margin was to from services, full mix ago points improved XXX basis basis up to QX XX.X% reflecting travel. and revenue outsourcing, technology third-party year and XXX due points was less for over reimburse Our resale to XX.X% year a gross XXXX

net Now I will spending margin operating discuss earnings.

results. to sale allowance release. non-GAAP compensation both based gains these and and asset, The other and on GAAP acquisition are restructuring and adjusted adjusted items related our earnings expense GAAP, provide a on that in share reconciled organizational the expenses, COVID-XX expense, detailed businesses we exclude related other of results adjustments, non-current For and adjustments

XXXX. in of quarter. ago billion Full in year Looking basically year our compared flat X% GAAP the from operating $X.XXX down at quarter billion $XXX were million $XXX were expenses GAAP spending $X.XXX fourth our operating operating expenses to

Our of optimization expenses and adjusted fourth XXXX lower X% of ‘XX year-over-year to expense. travel divestitures due primarily compared were efforts, in the full XXX down continued QX X% operating and to million year quarter cost decreased our

items at lower for Looking X% QX sales line non-personnel service and by the divestitures. expense and driven expense client year-over-year decreased

development slight defined QX QX and X% software. of was R&D up by X% increased G&A in net both Software from personnel expense ‘XX and in driven capitalized expense with gross X% expenses. a increase down non-personnel

margins. operating to Moving

in the XX.X% operated QX year ago margin GAAP Our period. to flat was

operating for to full XXXX. XX.X% XX.X% year XXXX GAAP Our compared margin in was

margin the improved of our ‘XX XX.X% efforts revenue XX.X% quarter optimization cost operating up QX and XX.X% mix. the adjusted Our was reflecting last in for quarter of from impact and

happy margin a adjusted in efforts aim expect given circumstances deliver Our We're margins improving operating we modernization. margin longer expansion and XXX from full points benefit platform full-year to XX.X% realize over our and to results XXXX. as margins XXXX year representing basis the term optimization continue with was ongoing operating

EPS. at Moving and earnings net

from includes EPS X% to were Adjusted and million $X.XX net compared QX earnings ‘XX. earnings earnings The and QX net divestitures of sales. with $X.XX million per $XXX Our or diluted was diluted $X.XX in to $XXX diluted down share year $XXX adjusted in were investment GAAP gains in GAAP were at of QX share $X.XX full from million QX ‘XX. $X.XX net per

adjusted up and EPS X% adjusted For earnings million in diluted year XXXX. the was were full net $X.XX $XXX

the for XX% year. and Our rate for XX% full GAAP quarter was tax the

Our non-GAAP XX% and rate tax full XX% year. for the was QX for

be to For XX% XXXX tax range. XX% we our expect to rates GAAP and non-GAAP in

billion We to and with short-term balance and $X.XX our year Moving sheet. investments the cash billion $X.XX debt. ended

ended last Our the from million $XX $X.XX down receivables billion at quarter. year

from Our days which a XX in and is QX, XX from up down period. year QX XX was DSO days in days ‘XX ago

cash capitalized flow we expect software million were million. $XX DSO Free was QX flow of Looking the The XXs. was $XXX in to million. was Operating remain forward strong very at in the million. Capital high $XX cash a expenditures $XXX record quarter. for

up year million. year million expenditures billion. free capitalized operating nearly operating was was flow flow was cash million reduction $XXX expenditures. is in cash For $XXX Capital in cash software $XXX were flow $X.XXX solid and by driven and million $XXX full million the Full which XXXX $XXX capital

increase flow the ending cash free capitalized we in to increase flow growth, by software is deferral and related of to fourths being tied by growth free control. payroll these are CARES total, expected to modernization flow This continued some by cash third-party CapEx focused payroll items tax, expect in over an XXXX with about For offset operating partially platform Act, driven with be to cash million In use $XXX taxes. assist three impact developers expected two expected to work.

for million announcement and to discuss to market. acquisitions this our cash pharmaceutical and the a as in acquire service a will Health $XXX existing as Don and meaningful adjustment. Kantar allocation efforts represents capital strong entry a Moving to data the complement to agreement to subject several

We to second transition expect close the in quarter. the

up the to to this acquisitions total We other remained deal. year, the the repurchased billion X.X Kantar to an $XXX our shares per depending year shares for average on Health million approval, also exact discussed such currently at plus of program repurchase brings with million. Subject Board leaves and expect cash repurchased authorization. of our purposes, used amount and amount million our for with current beyond $XX.XX million, we QX price share as us for for previously on $XXX the million share in resumed $XXX This XX.X repurchase $X

increased announced Moving was or paid quarterly to of we or it investments. additional in dividend, increase which XX% Health October, we January fund in we the capital a share per quarterly as to acquisitions our possibly we to $XX our paid XX. $X.XX increase dividend deployment the In expect on summary, acquisition, dividend program, a $X.XX, dividend In to and bringing Kantar XXXX share repurchases, million. December, other

after large We use low and investment repurchases sheet getting in to actions relating better during and the make divestitures expect to pandemic cash these balance to as our inflows we a leverage position paused of XXXX, gains. net received

we while of well the to Moving fairly amount far, executed still considerable guidance, so we discussed previously have pandemic uncertainty a through exists.

amount of subject I'll revenue. that to a than higher So, our start please remains note with guidance risk. normal

$X.XX between to billion. We be expect revenue in QX $X.XX billion and

As of revenue which 'XX from 'XX divestitures. not these included adjusting QX of billion revenue. RevWorks The after and QX for range divested from commercial million a about of reminder, global our $XX midpoint represents X% is businesses, this growth QX included in 'XX $X.XXX

full $X.XX the expect we billion. year, and between billion For revenue $X.XX

to Kantar in $XX from and remaining impact of a the to million year the this addition billion offsetting million from contribute in XXXX, of based of expect in contribution divestiture range million than acquisition about $X headwind both and impact closing $XX approximately $XXX represents midpoint growth for early more is adjusting expected results $X.XX on anticipated QX, also XXXX to than revenue QX. which X% QX In approximately in QX QX growth. divestitures guidance Health The the for QX, we the $XX the approximately in over acquisition, the for X% total million, million in headwinds

The midpoint of be diluted -- of share. to per represents over $X.XX X% to Moving 'XX. QX range expect adjusted to diluted QX $X.XX we growth EPS EPS, this

diluted For the with reflecting $X.XX be over full growth $X.XX $X.XX year, XX% EPS midpoint, XXXX. to we a expect adjusted to

Investor guidance our referenced It of above range current slightly from call. first XXXX, over the included our part billion. pandemic, outlook and of EPS mid-single the a in $X.XX driving growth. XXXX last range. summary, adjusted again of is guidance basis quarter the we We quarter. long-term expansion of estimates with these do some we Investor this the last points revenue being bookings we in at Day impacted consistent XXX to our our reflects over get Day, for consistent to revenue in framework. a are plan by not we that want up initial XX% that to QX to we estimates the to an Moving took our of 's with when bookings $X.XX The midpoint in billion XXXX note time return to impact couple with consensus In double-digit digit guidance adjusting framework is hold range. this consensus in shared don't have which expect This Note growth, margin growth which reflects the speed. to guidance, Mark result EPS of as 'XX QX previewed Erceg

of long-term growth messaging EPS meetings shared our that and the similar revenue However, reflects framework updated we a and have year. source expansion investor plan, updated last we financial at margin plan the is our as growth,

to to but by organic likely growth to will expect and communication. our for remain strategic past continue the our with driven our strategy federal also augmented top We best team next by be our line work M&A. with timing plan long-term and event, determine the investor businesses Mark consistent and

So now. quarter we hold solid to our In we positive fourth pleased summary, off with and as sense results it as for makes in well the think outlook. full-year are our

step confident, over that, ahead shareholders. we over call call I'm been his is how spent turn value in I to much honor one going Mark quickly CFO it of the time and with say the of an to to and Cerner, has more at turning clients date, to Before time be Erceg With Travis, to Cerner Travis. add to he upcoming start our want I'll and

our to want role as stepped honored and Thanks on the my Services share Thank into afternoon, the an I of Marc. and business. provide you. I Officer Chief hand Today Client everyone. off to Good federal from take update I'm you. focus

to times in services, express answering on I've speak of many gratitude Peterzalek commitment of Brent I know time. Many Board I that the be of privilege take Cerner for our over role. working as federal clients, area capacity. our steadfast as my across remised leader for my to opportunity me every the mission Cerner's I'd had and I've to to period that trust, I placed the if First, the with am of the his John year me business you our and had in at XXth in they you organization of and didn't

guiding principles drive Moving several used our lay forward, have will and foundation for success. the business I decisions that our to be

exist we clients. our serve First, to

center clients solutions earn the We Our clients that to remained doing day. pressing every That what to at we the to must end-to-end means challenges that our enable their them their of and do providing and achieve everything solve serve do. we're we going say missions. privilege most

requires Second, team clarity on objectives of do play value common a goals set on improving on need Cerner. and with that focused of We we make as collectively delivering focus alignment and structure, our are the of client delivering with for one clients satisfaction. purpose, will This focus it to to value. simple and business

the must we lines and transparency clear matter will we of bottom pursuit line. top clearly Results results. of Third, accountability right and ensure produce business in with data-driven

ourselves teams results. our hold will for and We those accountable

and excellence. we'll strive to play Finally, win for

unacceptable. in that's recent We lost years key some totally have clients and

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Department our Defense, year Turning U.S. the Veterans Coast a QX of to up business, for wrapped historic Affairs and United States federal the Guard.

Guard pandemic, challenges first and on health for a three joint Despite federal As global of Brent effectively to system. to in MHS now DoD more Cerner's through crisis. the time deployment, mentioned, delivered facing live agencies Genesis federal with we across solution, continues be new the promises in clients sites Cerner our same EHR solutions, information are utilized vaccination ever our the the exchange. mass included enabled manage Coast leveraging a and this

core Health, Leidos our and with XX at Guard four a the are continued and work the Guard live for Defense DoD member Coast Cerner we Partnership of now commands U.S. and sites. As DoD Coast

of successful at Mann-Grandstaff On Las 'XX, event EHR four sustainment Consolidated and way a and VA Spokane, Idaho, ongoing we to Department October for facilities. operations This also into Washington. first clinics Veterans move new go-live expect business Montana, multiple Vegas. Patient the our their of we with Center, included continue momentum announced Affairs As includes West it's in -- facility deployments and of in Medical community-based Center XXth, live U.S. go-live Washington, outpatient in Account VA the

pleased in to in XXXX. with CommonWell on on progress planned working the current that, health call to seamless joint Cerner Coast preparing providers a service solution moving scheduling Don. staff actively information deployments forward DoD, our our optimization. Columbus, system are our successful focus exchange in will With work site state with at We partners, earlier this interfaces, multiple Exchange VA in sustainment for follow Cerner, members with implementation of VA those and nation's providing I'll lifetime to and with This and continue conducting Mann-Grandstaff site work the localization, and Guard go-live our are continue and over turn including via eHealth along of locations. veterans. Ohio, XXXX, care and reviews, and for required testing, for

Prominent for was COVID-XX. ground health Travis. Thanks, in Seattle zero

and a to admitted. the whiteboard CEO, tells would first Hartmann Ron travel. a a of story that from through noted learn documentation The she the patient day tested, a practitioner nurse and he He Provident that process later overseas that recently was he cough returned drawing. had presented

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enterprise, data-driven organization began rallied during three the We system to At health push we lead unparalleled in strategies economy integrate Our level, all the those areas after COVID. and health enterprise see COVID. network, an opportunity progress the create and health before to advance COVID, a as to an our the lines, unit of where and network operate. revenue focus larger is with delivery must service plan, an increase and Cerner key integrated every lower simple, within costs, bill. in client working codes record, solutions manage to one one they zip is a one enable health the system

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Sandy Instructions] [Operator Securities. from Draper question from the Truist first Your comes you. Thank line of

Your line open. is now

joke. with say, a would XXXX some have Thanks the very for first, It's I trouble I And I think much. name.

So I good book have jokes. number two Marc that of a

it. Appreciate

and with some are do just to Don would and company middle as areas, and they in as sense convince of people to also a not studies in I that and can't they're new go the The competitor market they up as on How trying are are not not a guys and according for model. how keep do those stuff lot you an do go deal So new you new balance legacy talk about. company are my but hand regain literally you space. challenge I love on the about customer think why out with a you want of you you intensive you on that. I with, there very about we and newer I'm Travis. model of innovative, the legacy sorry, do then these how so, you for should Cerner has -- share, all newer trying some some the is is perspective losses. won with sit you old are do that private that [pool] one, to the who deal traditional probably to My question When focused one where going,

Hey, That's Sandy. Don. really good This a question. is

I first the would I think are thing companies is, end. great say the all about

today adjacencies what's simultaneously So the business identify it's new you to said that both the ability and and defined work both are growth on market. as new opportunities as

of us the say company opportunity five would years and the I in which fundamentally the we in built that's in front So that's ahead. the set way

of Sciences around they thing business strategies second Life and is, highly space, think the health with around strategies Pharma, The what we're the would particularly about as I strategies and network data say clients. doing our think I traditional aligned about I around are

about that's in network, absolutely Pharma the make strategies So thinking to us and buyer would when we of Sciences to clients, then I final are allows think always at aligned and provider are or the execution business do that's around we're strategies that our way allocation and sure And to Life that advancing to through say we also best building is that capital government that provider objectives that types provider employer, we're works solution technologies the the is new opportunities beyond payer, our need base, a and our space. data the advancing for that. us strategies we not begin for thing think and our whether are clients only but around

So well. on, you I I we're it think that's think and working what articulated

congrats, and so Marc. Thanks again much

Do jump two? comment a make or you in there, Thanks. Travis, want

as Travis. is a our would that clients I continuum. on do noted, Brent. got I Don this both, Sure, to view say it's Thanks,

them take Our they our to from where and along and goal are that take to them is their continuum needs. related vision

journey So we an that and going core, our to we plan clients work so was to keep base sure growth current, my across expand and an along amplify continuum. can and in us be Don and expectations, we're opportunity we That say. that's take work clients in the to plan the existing describing strategic work we that we the core view, that perspective, to related core do meet we we're opportunity the fight that those for that And entire that over what in from to to hard that from we gives to extend us their really client going time. my make aggressive and

growth strategic the crucial can it to it's keeping again of opportunity we furthermore, us So force that opportunity global move work do, going of to that extend, in in current, potentially client's the and the doing and and forward some growth. and basics, tackling, do commitments, keeping continue with block I we and commitments, meeting then federal we're so we're also we're multiplier what expand them doing targeted gives think saying

I I separate them then one thing, So right, their them treating it and solving clients taking problems things. with journey our as us. don't that listening, on as view view

Great. Thanks Travis.

mind, operational to market one to make. in end-to-end comment, of to think I That's you the refer don't as Don points and we're across our and and in next, they we work to add around I'd the just doing it the simplification, whole other adoption, planning if and continuum. Sandy, internally, foundational Cerner Travis, and speed excellence, The both whole spectrum just is innovation execution. transformation

So how make, they we points I noting part of that's think, the deliver.

in. that tie to wanted just I So

Thanks so much.

Thank you.

Thank you.

comes question the of Hooker KeyBanc. Donald next line from Your from

open. Your line is now

evolving you. Science's directly the years. It interested I how you the Marc. to of you mean about pharma maybe thinking services, more through companies Life offer broader -- ecosystem with sort you can was of and in guess best of thank with sort in kind I around the the working work Great, and your this to been you are do do fit you wishes has Kantar how bio-pharma how fun you over go-to-market? sort of story you through CROs. Thank walk in going mean I to maybe market, are to he

question. is this a It's Don. great Yes,

differentiators bring have, data including when so space the clinical I activity. about So we about first trial critical thinking think for differentiator and is that clinical it's you asset the by we and all, we strategic that the to data think what's provinces a start think us I of traceability that around

access the we time as how cost basis clinical provider second and trial think part ability to for actually and of The have patient tackling activities. thing about is

So those we differentiators. start with there

take proposition data gives think how your Kantar what is curation market, make linking sure And PhD, we that include ability activity looking to and think to really long-standing competency date I go different the and to us, MD, activity. and we significant then trial around some companies Pharma to Life really data that the and capabilities can fulfill to taken late-stage I question for, value then has the around to are for Sciences forms. epidemiological

site around I is really activation clinical or those provider will clients associated think participate strategies investment trials. Elligo with are our partnership the who in participating for and

us thinking gives drive call also contractual ability assets and the and think about those I originate actually to to points Kantar data expertise, but begin both domain and revenue. Pharma within Life proprietary opportunities then those start Sciences

Marc's we inorganic and further excited what forward So that's as yes, can point, our constituted and as we're other we in I other for of acquisition partnered capabilities, XXXX with validated space a but opportunities business look with UBC we've think play how our in we think think the this strategy. growth and do to at and about aspect CROs I I dimensional

then maybe one of sort strategic And Okay. higher-level question.

maybe highlighted of divestitures there to done Is that this the -- divest forward XX acquisitions that? or where year, point are to guys going on are at months any businesses focus Can been there -- more sort big areas. several core that areas or more divestitures. in invest Cerner have You could sort looking Obviously, there on ahead of past more you be now elaborate over you with pruning have the guidance. been

Marc. is this Sure,

that will in to investing I things make think certainly think we that drive growth. future the manage continue we're we sure to portfolio

some divestiture as about. new activity that 'XX. additional be us was the focus limited of acquiring level could Don on that the think side for certainly assets work drive the But help is through there M&A us we I on So businesses talking as can

there So on side. be focus little will while divestiture may be the side, activity the on the some acquisition

Okay. Thanks so much.

you. Thank

you. Thank

Stanley. from comes of Goldwasser question the line next Ricky Your Morgan from

Your is line open. now

conversation. Hi. afternoon in Good insights thoughtful always our Yes. your appreciated Marc and I

I all best luck. couple So and have the questions good of a here.

Don's The question. just first follow one up on

things that the data. the you assets of of strategic said One the is one clinical

you is think with of are own it the that standalone clinical as about doing on So life a have sort you of companies these it data together you or some the providers sciences approaching basis? that

Right.

great a it's So question.

opportunities. them is engaged that with So like the client with and way about clinical participate it had base our to in conversation would approach what trial look which we've in we a

how we're clinical affirmatively, with executed about, would and proactively those those we participate. activity as like have access clinical we being Life So said organizations our talk and that then to yes, XX sourcing who Pharma capabilities organizations opportunity part And stage Sciences clients trial patient leverage opportunities data occurs. and of to and later predominantly the their is

Interesting.

because an for revenue. clients, both sort a of XX it's win-win additional sides, So sort of

do have you network, it in And the learning is some opportunity delivery have comment, of absolutely that University lot and but participants to are this Sandy's have our Absolutely. in And research back integrated networks, health is hospitals a also medical like gets we don't win-win. participate a economics. Indiana very to historically community who really which prestigious centers academic related regional

So and them, of does for for opportunity that a in deeply patients an this rarely the a in an and opportunities for generating amazing we're appreciative live areas win-win revenue them as those amazing described. they're is you opportunity represent that geographic way

about federal one million then we And the to contribution in about federal guidance, also the we federal is just XXXX just And the make And $XXX million? want line top to I on should the ballpark. just can opportunity in how then then getting we're the think to us from When think bridge $XXX question to for you we're sure a guidance. about quantify XXXX?

$X at under actually out We break Alan. What say would our detail we to would $X Hey, next the once it standard] a the for grow at end Ricky, year, just previewed don't billion. several guidance, [mid-teens I got there. have the to billion is of that the federal the is of this around years level and

as contribution the far as XXXs, mid to the in you growth. puts that So

you. Thank Okay.

Thank you.

from of Piper Sandler. Your next question Jeff line from Garro comes the

Your line open. is now

like Yes, congrats good Marc. questions. And would to taking again for afternoon, thanks and the I to

years help those the and calls the insight other XXX tremendous helpful and interactions. over earnings Just over

how ask the in bookings approach. in and to about past. XXXX go-to-market and something in forward It's again. I discussed we of the think you've So about thanks the wanted discipline going terms

toward So in solutions more profitable areas shifting solutions the discipline of aforementioned innovative growth mix software progress and the curious on more between bookings toward just the

of divestitures didn't to Marc, certainly Yes. bookings, but outsourcing have the our This certainly that to or margin overall -- bookings, lines. the the done RevWorks evolved impact is contribute some significant relative we've a earnings our the the as of did a lot one on businesses, as we such

to comment as to relative Travis a not our certainly we success. that mentioned strategic our we're think intention So critical continue the component future new portfolio I are base. as to what walking in, client federal growth the and what the our our And that market, -- They at going and I our areas to we to invest business. are Those invite look are going take clearly to business, focusing away are of -- from decide a to business. him we're existing we lot further,

just So to be us like us that of growing there, to as we federal billion business them our it's approaching around business small from reinvigorated $X can Travis' and let we're the XXXX. have in a on to -- strategy that that watch. portion lead He going is a going guy you exited help

I talk Travis, coming want our our little So bit -- if go-to-market you thoughts don't to in up 'XX. of a about know some

we've I a been important. us lot also gives it, them areas when soul extend are clients gives our well new with of but us and important with expand a are key but Yes, is mean, about probably think or They I opportunity of one those four do have to for investing Yes, current. solution it. time. our mean, It's talked really core us heart we're keep It agreements, five Cerner whitespace Thanks, clients Mark. and thanks. us. and I They so the to in we we're is, Appreciate because for are ways. with to current, capability. it working for long us them there

the there. that I've leading business, last years. pleasure focus important The very federal that So it's business had for the six of we

have there. think continued solid I opportunity we

potential potential growth new and network think have -- contracts. on work. opportunity more agency think core third-party think side for them and do work deliver see to strategic us behave with we'll how service, of see resources. prior efficient the we particularly with I that doing work the for by how network I beyond I the go I use we're our with so also I And and an us business be federal become continues we in and we're opportunity more then, I've capabilities, we to markets us for base to as a opportunity goes and as gives that I take that client I strategic those have them our and I prime in time do and way. we're and the an think capital we our in of as in support right enabling of and develop we into we mentioned that strategy but has doing forward as times, mix the an strategic multiple to know, it have line that years. don't putting opportunity an as think -- then And core aggressive growth amplification strategy. business -- really to our well M&A the the me, push it's is to contractor,

extensive end-to-end key side. possible, services then pretty an on those four focus that deliver the delivery go-to-market. also a the or think ensuring for So areas most background I basis will on service have And in be we five efficient our way

So delivery. proper on will focused be

thoughts. Travis. Excellent very All helpful

for or for margin operating more on line call guidance expansion is the operating XXXX? continued baseline briefly. turn to the any in Marc I to one just that if So, in areas as there then wanted assumption -- out margin the Thanks. extent you forecast? mentioned, repurchase And me, ask expansion, outside question any first if contributors as to would that activity items

think could to looking we purchase our as 'XX. best in is repurchases view we're that stock midpoint now, view, shared Right more potentially our side on a going the of of Certainly, year impact capital and margin it's year. more And Marc. indicated, certainly the activity of is M&A in this our billion apply Yes, plus to somewhat a we long-term in increase at than it we're our during way that the from the margins view I possible, going of but in from expansion our variety bps guidance, remains places. XXX. of places, XXX is The every that come

widen be key this margin in I remember think to their for expansion might for looking year. more -- the thing that

savings XXXX, deliver able the opportunities order the optimization to through results, some in earnings line we our we cost were our year. the on Going deliver to in for accelerated of

lines things some working, the we're kind which have pull and some are we those too additional on opportunities, a hit still of them in means -- line from of gross we still expense will margin the So cross forward cost but perspective.

throughout thing the there really realizing benefits, it's we So of and is it much they'll and be in driving process pretty we're the in XXXX. it, one in began spread any relying just to all particularly process already on going drive almost of

much. so Thanks it. Got

Thank you.

question next from Your Goldman line Sachs. Robert comes of Jones of the

open. now is line Your

millionish to the assumed I to can you in in kind you there. confirm round offset of out long-term know what's bucket basis. that and I questions to going guidance the sense and to pieces. revenue government wanted mid-market in the for you $XXX of pointed had in mentioned back thanks back what to decline and the was Any strategic major growth the guidance, watch. the too, then you definitely guess had talked Great, the before guess, expected that. give guys on guys annual an there. just to go Yes, the on current general thoughts Wanted have just just the maybe I Kantar us And then the I you think I on bit, thinking previously about Yes. I was a business that shared still that to on core. echo

on really what's that thoughts would in any be Just contemplated around XXXX helpful.

sort business to what but parts we is didn't and had obviously originally with our also same had is plan It you at XX% if what strategic range Yes, Bob, to that mid-single-digit COVID, XXXX as organically deliver the federal a on. be growth. strategic growth set in this core. slight growing growth decline you of all you due had, rate, in we look to means out overall resulting same I'll that pretty baseline, of at Alan plus CAGR, to similar then with start which a

very XXXX similar we previously. laid resetting to the It of sort off had So baseline. they're what all out just

the question, date looking one of your XXX your And on day. number is would XX the an question the at Kantar we're was XXX that be about annual in probably given

Yes. XXX three in or that's XXXX, just quarters. but so it's

number really for you be annualize will in range XXXX the the it. XXX So is if annualized

--- So so trailing, reflect was of sort been expecting the for XXXX. XXX have we're that would what

growth. looks but I And it Okay. of the an like off follow-up, it, there clearly kind then into guide, acceleration this is think, XQ the plays expected in

into line have off that sight a the explained timing Sounds you given pick like XQ of part else of kind Kantar of that closing. might just of up the levels. be in the growth the Anything revenue to helps

biggest Yes. QX in Kantar impact Two, the One XXXX There year things. COVID. of far is a is in the QX. few hits was by our is

a you when for last halt your So while business services screeched that's to year. a here saw

but year things two our as of throughout year those then you the adding then business and issue really rolling and rest build then comp the the it's So QX Kantar well. throughout easy you're is sort increasing in and so gradually an built it's of up

very That's you. Thank Perfect. helpful.

a if mind Alan, jump second. Thanks, I'll don't for you in

to go we next question. Before

Sure.

communicated and with that working restate, comment. very their to we want and talking data and providers. we data opportunity about careful these rights are the rights that. I I previously agreements we sure very clear protected data calls making was and those Don and agreements. our a just great patient Yes, in on about just relationships having are just have want protected rights be proactive in safely to around this is

to and think us stage this time. key, to course I very it's every important of in at client it's it's important

point out. to want that So I just

Thanks Marc.

next ready you take the to question? Are

Please. Yes.

Yes.

Great.

George Your from of from Bank. Deutsche the next question comes Hill line

now open. is line Your

what good to choose whatever I guys. two what in Marc, I to to before you the do mystery long for for which Thanks do have the the kind greatest you I takes near-to-medium question and head what you you first scale, And want different to core afternoon kind life, with next Travis concretely is and kind of in a create is, your guess, and which as guess of pretty is you question. Yes, move the do questions, of and company I two the decline think do. you Brent, do taking core big pieces can think stem opportunities term, for how it the needle. value how is in it the to are the do is please

of pedal on things. So comments Thank those you. two

mission as product better that principles accountable is got their Travis. absolutely for it I to delivery we're it you what embracing transform, to really answer work internal our client give capabilities, solving back it. the it's core say-do needs clients, I that clients absolutely call folks if relates our I think I to of core -- it's for problems market. don't Yes. say, have listening really It's service on doing goes focusing ratio, our to an other I better you our do critical mean every it's than think This to holding relates mean, day, you some such results. to to as to it connect to it's I us, the to and

to And are clients. relevant things so really are our those core that

and We have have them current. we uplift those make we sure to that clients

a important. meaningful is Our to way. very test makes for and in a to the easier real makes and I think train us us It so with for current to stay easier data it element them focus that us from it use on clients

those trying And to also to them basics, that way and that. core, relationships way understand and we've a think clients the on matter point we're was and to I back executing abandoning important covering and make it's then in on they really not we're so I it's fully, the to them got the matters in right the that cover focused earlier,

we're we capabilities and of on thought to continue that leadership, them While on we be and continue innovate, those want core behalf that doing with us. develop to we clients while journey to

clear have how group of messaging as it bringing we're to important back crisp, clean, really and think, as understand swagger for clients, us I so I with And what why we along. and them we're -- call bring that is doing, they to

to basic to we're the that going try forward. bring are those think I so really principles And

either if Maybe be by of first, it mid-term with just Thanks. the Travis. would similar.

just about core lot a space also If we've just simplistically, core that's and expand and white through and is think in in the through that core There that foundational expanding comes available the you core there defending delivering today. the solutions of room is space. the is said Travis the it to absolutely opportunity as and core into

executing as -- leadership correlation the well our to growth, leadership core strategic that and same our that have Travis' in now up, in very And is glad critical and of strong going core. that is that in area and strategic drive we area are key. there how absolutely showing So, solid there is a commercial in to Federal course to full on how and the things a do growth loop laid back plans the we executing is organization. again well has out and because in track

those at emphasis is critical to deficiencies operating execution. The that business the and really in the to critical that transformation So because work innovation, are we've relationships making ways the scale, is operating that very connection execution it the is out, having midterm. as us made primary allow key. making in those us invest continue And laid keys then the we've of standard finding sure is solid effective just is in

Brent. Thanks helpful. That's

you. Thank

Thank you.

Close Your the Genuity. next question comes of from Canaccord line from Richard

open. now is line Your

Congratulations any the timeline be begin you and cloud. for of Great, to completed make that's to Has just on With the there? a them question, transition clients financial Can Marc. the impact comments respect us expect provide maybe when changed the do on really on guys current transition. anything uplift Millennium updated an When does thanks helpful. and your to important you core. would it the and

frequently, quickly It and We've but client, will kind we primarily it, we instance quickly of -- there. that of are are cloud this some elements bit, move over the for occur of lot kind elements to our is there is of relative have that today cloud. from that never of most we period the of CareAware moved kind financial -- indicate business Yes, the business the a move Marc. and already. Millennium moved will -- be movement a a healthy a to to to that is of will elements -- will elements from very -- probably all Millennium. We There impact, time the the process. being out to part, Millennium designed is a our stay hosting relative benefit little we very there, that those will updated face But the indicated will the

a the all elements accounting, have as a some But over of really lot more recurring point more of are life, more these start platform, switch -- is you spending impact SaaS timing of at of to of in pretty it said, We the a time we some evolution. modernization an to that revenue. it some an of I recognizing going revenue work are on could similar into to have The it, have. is timing on be cloud of a way. of as of more services to that which consistent There of is in Millennium SaaS and of lot there'll implementation which what that Certainly and do that resources a for moving of the we of lot to there, Millennium, a our modernization.

days, a once an lot what in points, is, way be a a better as again done, of but able update that my that only we milestones and and view process but XX really financial probably you end about are that it on by pretty we'll confident that of count, business the elements I'm doesn't and given nature. recurring won't get the impact today the to operates So, but is be of tenure, continues, certainly of it it the process give

similar SaaS model in So a be to to the those see extent. would you great what

ahead. Okay. Go

Sorry.

value just Sorry, level, is technologies clients little a of to of the hey, George's platform part at going create things question happen. product your for to cloud around value say The which significant I for bit you answer our clients, proposition will the a is, and modernization. some the good here was answer too hold if

creates their things quicker. largest So think redirection or total dollars government to functionality is they regulatory business. think them them opportunities reduction and currency in for will about think creates It of it opportunities ownership faster about for to of adopt and the It them cost innovate payer. that and to to grow allows

proposition to making cloud to of front on how through, Marc's and approach around work point, you and to in for with it's will the progress it that core clients that HealtheIntent. our and a topics been four really not oriented serviced strategic play our technical but So I that proposition Millennium can terms and value allowed contractual the of work us narrative the us also see of we we'll center. that and enable components, for progress inside selective into inclusive and HealtheIntent workflows just great value around growth on be have already some to the CareAware the high-value is about the because continue of has of of be efforts we're a walls' bunch think it non-technical

very you much. Thank Okay.

Thank you.

Your of next line question Cherny comes from Bank the Mike of from America.

Your now open. line is

This is Alan Mike. the Thanks for for in questions. taking

your like typical Cerner XX%. not part bookings of about strong are were at employers to and payers ecosystem? strategy the you I HealtheIntent, guess, can really traditional or new the on up win that customers talk Following

great it's a question Alan. Yes,

there. we good of think the having client existing have fortune relationships I some

thinking the grounds Health to we working testing Workforce know, Millennium in and space, about about problem HealtheIntent for been to payer what non-Millennium suite, our thinking add would payment ways management, have capabilities, we And business roughly a we they're application good and us foundation, ask our that need analytic network As many same and clients dash have care in provider and well-being then leverage application are. to so associated question, what employers, fundamentally coordination, suite wellness care are management, as member set look data really there. self-insured you boarding a have with see, reporting that focused clients Alan, relationships, use They hey, us engagement. it like some they're they're tethered for plus and around those XX, the and today existing on all model on really and XX

around native build capabilities we're combination much have in and Turnkey, getting space, don't through think of and we again be drive inorganic and through but types certainly in MVP strategies should we'll it meaningful line years next those top building line and So buyer you a we than it closer I to acquisition, it to out those and for think able five bottom that. look sooner the

you. Thank Very helpful.

you. Thank

line Cantor Your next Halper comes Fitzgerald. from question from Steve the of

line now Your is open.

Hi, with but you am Marc, counting, XXX forward afterwards. not connect I looking I but I'm quarters, to think really at

a of clarify wanted things. couple to I just So

was You is XXXX, flow $XXX said free out, to cash grow even that correct? you million going the with in called that

Yes.

it a to that. negative deferral Act next have headwinds grow the that headwind, million we're is going spite Cures in additional the paying $XXX about you're to of that deferred have have million costs, to Our which flow start would you're to not expectation 'XX year-over-year of make going yes but we up headwind in to at cash and of and plus of free to little bit for spite that free some year going flow $XXX expect goes least to cash

Great.

doesn't and unless up. in XXX stuff So, fair? that you then you necessarily Is that that have out, other that that when comes you called think XXXX repeat about

-- the it and year-over-year Correct. we The repeat. deferral doesn't impact in benefit biggest from the obviously is got 'XX a

payment that You larger will be to that XXXX, the it impact of or it would whatever you've so negative got the million number. in to not have pay would second-half a so have or have that $XXX $XX back

So smaller yes, impact. much

XXXX. we difference just in should see look So get you we wrap up to the to -- by to ability that when should XXXX have

then question, on just $XX last you allowance about could detail non-current asset, a that took the you little give And million? us on that

that charge-off quite QX out while, so to we there path, relative receivable thought that decided contract entity Yes, was to for Middle East. payment but striving been there. had to the for it probably we in was best a get it it, relates had we a declared bankruptcy been and in has This what to

it. Got luck. Thank you. Good

you. more call? we one Should question? more Thank take One

right. All

the question comes Valiquette from Steven of from next Your line Barclays.

Your line is now open.

Great, everybody. thanks,

so far info been So provided has on just helpful. the Kantar you

work related is Phase rev either Kantar utilization or more formulary may the positioning. approval and Just curious and base, of the in to more driven revenue or FDA studies post-FDA color model, hear whether kind process real or daily clinical on recurring potentially is more help with evidence data also the driven on or and the you the approval while commercialization there more more to reimbursement Life marketing revenue the we within Sciences, lumpy sort to the of about sales majority world all of help is work are be the drug X subscription project just

Just those some more nuances. around for color of Thanks. looking

hey, this is Yes. Don. Steven,

So they also around Disease. some, some They Kantar have think, Rare and data capabilities assets. best-in-class proprietary around I had reported do Oncology outcomes patient around

the they their and they value in data, and part pharma then data out for EMR are proposition RWE work for basis, multi-quarter opportunities data step engagements top is linking of prove deal strategic So and have actually orientation. in around do RWE on some consulting think their I around assets one consulting us but that to These rapid and their assets, that's claims, has ambulatory say are the strategies they data in I'd combination. their do proprietary XX it around and orientations real a the based strategies of as early subscription

so begin that part allow activation mix look, participating described, later-stage opportunities. later So to us assets about RWE-related associated the really the the UBC. site that's Much that Elligo like in allow to we arrangement those also a out hospitals and those and strategies, XXXX stage proved and Brent us community in is you're the IDNs and also provider clients DCRI, data the enhanced opportunities set with which of larger with and particularly around and looks are CRL, to through we for think to contract then of that Duke what then as begin our little both the bit opportunity with those is see of business right think

Perfect. Okay. Thanks. All right.

Well, the all, it's to to career, my I today. their this time with soon. talking Take want forward know time is you everyone Bye-bye. I time a in Marc. for look last and I very thank busy care. to

Thank you all. Thank you.

This concludes conference call. today's

you. Thank disconnect. You may not