Cerner second-quarter profits up 25%

Cerner - one of the largest suppliers of software to NHS hospitals in England - has reported a 25% rise in net profits in its second quarter, in the face...

Cerner - one of the largest suppliers of software to NHS hospitals in England - has reported a 25% rise in net profits in its second quarter, in the face of a recession and static turnover.

Its net profits, which were based on US "generally accepted accounting principles", were $43.7m [£26.7m], compared with $35.3m [£21.6m] last year. Turnover in the second quarter was $403.8m [£246.9m]. Global turnover fell 21%, in part because of lower revenue from the UK, said Marc Naughton, Cerner's chief financial Officer.

But Cerner's directors say that turnover in the UK will pick up: Naughton revealed that Cerner receives about £8m to £9.1m a quarter - up to £36m a year - from the NHS's National Programme for IT.

He expects this to rise to £13.4m to £15.3m a quarter - £53.8m to £61.1m a year - as the national programme ramps up and Cerner is bought by more "standalone" foundation and other trusts within the NPfIT and outside of it.

Trace Devanny, Cerner's president, said the supplier's success with order bookings outside the NPfIT - it is supplying Newcastle and Royal Berkshire foundation trusts - shows the strength of the company's solution set.

He said some suppliers have been successful in the south of England - where Fujitsu has vacated its slot as NPfIT local service provider - but they have simply upgraded legacy systems.

"Most importantly, we continue to be the preferred supplier for NHS leading foundation trusts as they contract for additional capability and capacity." He said that the company's software is used in active projects at more than 20 trusts which between them control about 10% of all beds in England's NHS.

He added, "I think the activity around clinical systems outside the programme [the NPfIT] have been focused in our direction. We think that will only continue with the good performance around execution between now and the end of the year".

A roll-out of the Cerner system in London is due to resume after it was halted last year because of serious problems at some trusts.

Money owed to Cerner by Fujitsu represents about 10% of total receivables. "While we still do not know the exact timing of when Fujitsu and the government will unwind their contract allowing us to finalise items with Fujitsu, we currently expect to fully collect these receivables," said Naughton.

Cerner's share price fell by about 5% when the US markets opened today. Its second quarter results although strong were behind market expectations.

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