Cerner Corp (NASDAQ:CERN)

CAPS Rating: 4 out of 5

A supplier of healthcare information technology, healthcare devices & related services. It offers a range of services including implementation & training, remote hosting, support & maintenance, healthcare data analysis & clinical process optimization.

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Player Avatar FSaucy (99.92) Submitted: 8/27/2009 1:39:27 PM : Underperform Start Price: $15.88 CERN Score: -174.31

Overvalued. Losing new sales as a % of market share. Neal is selling.

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Member Avatar FSaucy (99.92) Submitted: 10/29/2009 6:40:53 PM
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-19 in caps points at the time I write this.
The only catalyst keeping this company going is the Obama push for more EMRs. I stand behind my 5 year downthumb and won't close it early unless the company starts making better products, treating customers better, and wining sales. Once the dust from the EMR push settles and it turns out no sizable forward thinking healthcare organization wanted to get into a relationship with Cerner, being long on CERN at this point will have proven to be a terrible investment relative to the S&P.

Member Avatar FSaucy (99.92) Submitted: 11/5/2009 9:54:49 PM
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Notice how in their most recent 10Q they fall short on the top line growth expectations and had to guide lower for future. Expect this to be the beginning of a more frequently occurring trend. Maybe not immediately, maybe not severely, but the cuts in guidance and missed estimates on revs will pick up steam over the next couple years. Revenue is first, then watch out for the margins because bottom line quickly follows. After that, because this is a public company we're talking about, their first line of defense to save the shareholders will be to cut costs rather than turn revenues around. After all, cutting costs is so much easier to do and gets a quick fix to shareholder value just in time for the next 10Q release. Once they start cutting costs (read "staff" or "their only hope for growth"), their customers will feel the pain of having even less support for stagnant products at a higher cost. They jump ship as soon as contracts are up, and Cerner rinses and repeats until eventually the market cap is say $2B and an idiotic competitor, not to name names but my first pick is McKesson, buys them out at a 20% markup and the board is quickly "delighted to accept the substantial shareholder value this presents."

OK I went a bit nuts there with such specific predictions but you get where I'm going. I'm not calling a top, and I'm definitely not shorting this stock in such a broader bull market, but I know where my 5 year thumb stands especially relative to the S&P.

Even without being an EMR market insider, you can look at the financial statements of this company and get at least a little worried. 6x tangible book, 31 PE. And that's looking backward, not forward! The G in PEG says we need to be looking at 31% annual growth for 5 years to break even. Where is even the 17.5% analyst estimated growth coming from? Do we really expect CERN to have over doubled their earnings in 5 years? Why are they poised to grow at such a rate when opportunities for market share growth are dwindling and competitors abound? I'm not sure where these analysts are getting their information and why even the industry stinkers get these super optimistic estimates.

I Googled "I love Cerner" and got 9 hits. My favorite is "I love Cerner. I think it is hands down better than meditech." Congratu-lol, at least there is one nurse who thinks Cerner is better than the world's 2nd worst EMR vendor.

Member Avatar CubsBearsBulls43 (96.17) Submitted: 3/15/2010 1:23:21 PM
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FSaucy:

Do you have a paricular bias against Cerner? Have you been burned by them in some way or do you work for a competitor? The fact that the two comments on your original posting are both yours, shows me that something other than fundamental analysis is going on here.

I am involved in the industry and although Cerner can be a litle snobbish and like to play by its own rules, they are still considered to have to quality products and extremely loyal customers. Additionally, they are diversifying by representing some top tier healthcare product manufacturers like Hospira. They religiously manage their cash unlike many companies I've seen and their management is highly respected. I have to believe that when the stimulus money for EMR runs out they will be even stronger relative to their peers and still have a strong annuity stream coming in from service and maintenance fees they will continue collecting in addition to new products.

Certainly the stock has gotten a little pricey at times but I'm still very bullish long term.

Member Avatar FSaucy (99.92) Submitted: 3/16/2010 10:36:20 PM
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What market intelligence surveys have you been following? Curious because everything that I've seen has been showing consistent down trends on satisfaction surveys for multiple years running. What industy awards of any significance have they won recently? Why were they so conspicuously gone at
HIMSS this year? Did they issue any statement regarding that? I honestly don't know. I do work in the industry but have never held and do not currently hold any position long or short on any company in HIT.

Member Avatar JStarbux (46.84) Submitted: 7/20/2010 12:51:45 AM
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Reading your comments is actually quite funny for multiple reasons:
1) You're the only one saying anything negative.
2) I think you are the one who doesn't have the "intelligence". If market analyts are forecasting growth and you don't know where they get their numbers then clearly you are the one missing something.
3) If you are in the industry you would know that meaningful use won't begin reimbursement for several years and that there is more work then the entire industry's workforce can actually commit to at the moment, Cerner being no exception to a large backlog of clients wanting to begin projects in order to meet the government requirements.
4) You're thumbs down on 5 years is a worse bet then picking your own college team through to the final four simply because you graduated from that college.
5) Where were all your negative comments when Cerner's stock tripled last summer? Cerner stock saw its highest value in a long time so its only natural that a cycle will follow to dip back down until it's undervalued again.

Nothing you have stated is really a threat to a company that continues to lead the industry in innovation. Cerner is expected to continue its recruiting growth, establish partners in Kansas City, and position itself very well in global markets as HIT benefits are realized around the world.

I'm not proud that I had to respond to this in the "bear" pitches but unless somone actually begins looking into your rather rude statements someone may actually think you know what you're talking about.

Member Avatar cdgran (< 20) Submitted: 3/17/2011 12:01:21 AM
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The product is horrible. Loyalty to the product is dictated by the purchasers, not the users. The product is mandated by Medicare/Medicaid reimbursement penalties. When the implimentation of the Cerner EMR, mandated, results in a significant loss in revenue stream, (a 1-2 year process minimum in most health systems) loyalty will not persist. This company will be dropped like a hot rock based upon what I have seen of their latest and greatest product. I was using an EMR, created and maintained by the VA (yes that VA) which was superior in all aspects 5 years ago. This company will sink based on the merits of their product. It is better than Meditech, you're right. FYI, Meditech was written in Cobalt in the early 70s, initially incorporating the use of punchcards, and was only recently updated to a type of windows based graphics in 2005 with a core of outdated programming. Not much has changed in computers in 40 years though, hahaha. Rotten from the inside out, not flexible, not efficient, not user friendly, horrible graphics, inefficient and confusing graphics design, poor to non-existant cross compatibility with pharmacy and imaging technology without significant increases in capital outlay. FSaucy's assessment is not off base when viewed from the trenches. If you're only looking at speculative buying and sector investments and recent stock prices, you're breaking every rule of intelligent investing. Know the product and company, get your information from those using the product, not those selling it. Shall I go on...?

Member Avatar JStarbux (46.84) Submitted: 2/27/2012 8:44:14 PM
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I'm pretty sure if you look at Cerner's success that continues to grow each year, all of the statements you made just had the floor fall out from under them.

Your quote about knowing the product and company is hilarious seeing as how I've worked for them for 6+ years now. I'll also save you a response and mention that I've been in consulting the entire time so I'm actually quite familiar with the product across all aspects including usability, build, design, and troubleshooting. Thank you for that joke, it was a good one.

So yes, please go on in more detail. There is no refuting the fact that we are the industry leader. Stock growth is a minor aspect of the measure of success which appears to have doubled since your post.

There is no company better positioned for Meaningful Use right now. You try to mention this as a negative which I'm not sure you are actually understanding what is behind the role of Health Care IT. If a client lost revenue its most likely as a result of client decisions and improper usage of the application and not an inherent problem to Cerner.

All that aside, I will agree that the roll out is longer then some competitors in the industry. There are actually two models available so perhaps you are only familiar with a more traditional customized implementation and not the rapid roll out using standard methodology. Again, perhaps a component of Cerner you are not aware of and should not be placing all your chickens in one basket based on a single bad experience.

Maybe now almost a year later you've had a chance to see the positive effects that Cerner is bringing to the industry as well as its clients. Better luck next time on your predictions!

Member Avatar Graveldog (< 20) Submitted: 2/3/2013 8:30:19 AM
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I agree that in the next few years people will see great weakness in the stock. I am not a finance guy but end user . I have this in the hospital and in my office. I hate it. The billers hate it. The hospital staff hates it.

The medical templates are horrible. I am on the board at my hospital and I have complained up and down the chain of command at cerner without a single improvement.

Examples of frustration. When trying to send in rx to pharmacy. You may have to type in Walmart other times wal-mart and other times wal mart. Which one will work in which town? Only trial and error. cvs may be listed as w Caldwell in one town but can only in another town west must be completely spelled out to find it. When I have complained to cerner they only shrug and say they can't fix it. It is the problem of a third party. I am so frustrated

The templates don't work well They are not standardized and not easily modifiable. It only works for me because I am a fairly quick typist

When the contact is up and the rates go up. I am out.

Unless there is a chance in corporate to actually improve the products it can't continue to fly. As noted it is losing market share

No I have no financial ties to the company. I am not short on the stock . . . Yet.

Sorry for typo. Written on phone

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