About Cerner

Cerner Corporation (Cerner) is a leading supplier of healthcare information technology (HCIT) solutions and services. The company offers a wide range of intelligent solutions and tech-enabled services that support the clinical, financial and operational needs of organizations of all sizes. Cerner solutions and services help clinicians make care decisions and assist organizations in managing the health of their populations. The company also offers integrated clinical and financial systems to help manage day-to-day revenue functions, as well as a wide range of services to support clinical, financial and operational needs. The company has also expanded its presence in the life sciences industry, where it works with healthcare stakeholders to improve the safety, efficiency, and efficacy of clinical research. Cerner solutions are primarily offered on the unified Cerner Millennium architecture and on the HealtheIntent cloud-based platform. Cerner Millennium is a person-centric computing framework, which includes integrated clinical, financial and management information systems. This architecture allows providers to securely access an individual's electronic health record (EHR) at the point of care, and it organizes and proactively delivers information to meet the specific needs of physicians, nurses, laboratory technicians, pharmacists, front- and back-office professionals and consumers. On its HealtheIntent platform, the company offers solutions that aggregate, transform and reconcile data across the continuum of care, enabling key stakeholders to manage the health of populations, improve outcomes, and enhance clinical research. Cerner also has an EHR agnostic platform, CareAware that facilitates connectivity of healthcare devices to EHRs and helps improve hospital operations, allowing for more efficient and effective care. On February 2, 2015, Cerner acquired the Health Services business from Siemens AG, which offered a portfolio of enterprise-level clinical and financial healthcare information technology solutions, as well as departmental and care coordination solutions globally. The company offers a broad range of tech-enabled services, including implementation and training, remote hosting, application management services, revenue cycle services, support and maintenance, healthcare data analysis, real-world evidence, clinical process optimization, transaction processing, employer health centers, and data-driven services that help life sciences companies with the discovery, development and deployment of therapies. In addition to software and services, the company offers a wide range of complementary hardware and devices, primarily as a reseller for third parties. A description of the company’s business models is as follows: Licensed Software - The company develops and licenses intellectual property (IP) (its architectures, application software, executable and referential knowledge, data and algorithms) to its clients. The company’s licensed software business model includes revenues from IP delivered via perpetual license and software as a service, where functionality is delivered via the cloud. Technology Resale - The company bundles licensed software with other companies' IP in the form of sublicenses to create complete technology solutions for its clients. The company also resells bundled computer equipment (hardware) from technology companies to create a completely functional system. Additionally, the company resells medical devices for medical device companies. Subscriptions - Another method by which the company provides IP is on a time-based subscription model that has a periodic usage charge. This is the primary way the company packages and provides medical knowledge, which changes frequently based on research and can be updated independently from the software in which it is embedded. Also included in this category of revenue is the company’s Electronic Data Interchange (EDI) transaction revenue. EDI is the electronic transfer of data between healthcare providers and payers. Professional Services - The company provides a wide range of professional services to assist its clients in the implementation of its information systems in their organizations. These services are in the form of project management, technical and application expertise, clinical process optimization, regulatory consulting and education and training of the company’s clients' workforce to assist in the design and implementation of its systems. This business model also includes certain outsourcing services utilized by healthcare organizations, as well as services provided to the life sciences industry through its Cerner Enviza offerings. Managed Services - The company’s managed services business model includes revenues from remote hosting, operational management services, and disaster recovery. Remote hosting is the largest of these offerings, and it involves Cerner buying the necessary equipment, installing it in one of its data centers, and operating the entire system on the client's behalf. Support and Maintenance - This business model consists of the ongoing support and maintenance services the company provides its clients. Almost all of the company’s clients contract for these services. Clients with support contracts get 24x7 access to its immediate response center, which serves as its emergency room, as well as access to its SolutionWorks organization for less urgent issues. In addition, the company’s clients' support payments give them ongoing access to the latest releases of its IP. The company also provides support for sublicensed software and maintenance for third party hardware. Reimbursed Travel - Includes reimbursable out-of-pocket expenses (primarily travel) incurred in connection with its client service activities. Segments The company operates through two segments, Domestic and International. The Domestic segment includes revenue contributions and expenditures associated with business activity in the United States. The International segment includes revenue contributions and expenditures linked to business activity outside the United States, primarily from Australia, Canada, Europe, and the Middle East. Strategy The company focuses on delivering in its core market, including executing effectively on its large U.S. federal contracts, continuing to enhance key solution areas, such as revenue cycle that are important to existing clients and represent revenue growth opportunities, and aligning with its provider clients to help them increase revenue in key service lines, tackle margin compression and optimize their reimbursement dollars. Cerner has an opportunity to become a strategic partner and assist with network design, provide services in areas, such as cybersecurity and operational reporting, and improve performance under value-based contracting. Cerner has an opportunity to harness data to drive growth in new areas, including using real-world evidence to improve clinical research. The company launched Cerner Enviza in 2021. Cerner Enviza combines the expertise of Cerner and Kantar Health, which the company acquired in April 2021. Kantar Health's leading data, analytics, real-world evidence and commercial research consultancy, combined with Cerner's real-world data, positions Cerner Enviza to help accelerate discovery, development and deployment of therapies and advance clinical research and the life sciences industry to improve everyday health. Cerner's health data strategy is based on curating data from a willing and engaged network of providers with an emphasis on clear boundaries around the usage of patient data and based on clearly defined use cases with clarity and transparency around data rights. Cerner's core value proposition remains strong and there is ample opportunity to grow both organically and inorganically through the areas. Contracting with the Government As it grows the company’s federal business, revenue attributable to prime contracts or to subcontracts with other contractors engaged in work for the U.S. government is becoming a bigger contributor to its overall revenue. Within the U.S. government, the company’s revenues are diversified across various agencies, including the Department of Defense and the U.S. Department of Veterans Affairs. During 2021, approximately 20% of the company’s total revenues were attributable to its relationships (as the prime contractor or a subcontractor) with the U.S. government agencies. Software Development The company commits significant resources to developing new health information system solutions and services. Total expenditures for the development and enhancement of the company’s software solutions were $829 million during 2021. Continued investment in research and development (R&D) remains a core element of the company’s strategy. This will include ongoing enhancement of the company’s core solutions and development of new solutions and services. Intellectual Property The company continues to develop its patent portfolio and own more than 650 issued patents with hundreds of patent applications pending. Managing Cybersecurity Risks The company’s business operations, including the provision of the solutions and services, involve the compilation, hosting and transmission of confidential information, including patient health information. The company has included security features in its solutions and services that are intended to protect the privacy and integrity of this information, but its solutions and services may be vulnerable to security breaches, viruses, programming errors and other similar disruptive problems. In addition, all of the company’s associates are required to complete annual cybersecurity education and training, which includes identifying suspicious emails, Internet threats, telecommunication threats and ransomware. Sales and Marketing The markets for Cerner HCIT solutions, healthcare devices and services include integrated delivery networks, physician groups and networks, managed care organizations, hospitals, medical centers, free-standing reference laboratories, home health agencies, blood banks, imaging centers, pharmacies, pharmaceutical manufacturers, employers, governments and public health organizations. The majority of the company’s sales are clinical and revenue cycle solutions and services to hospitals and health systems, but its solutions and services are highly scalable and sold to organizations ranging from physician practices, to community hospitals, to complex integrated delivery networks, to local, regional and national government agencies. Sales to large health systems typically take approximately nine to 18 months, while the sales cycle is often shorter when selling to smaller hospitals and physician practices. The company’s client representatives are deployed across the United States and globally. In addition to the United States, through its subsidiaries, the company has sales associates and/or offices giving it a presence primarily in Europe, the Middle East, Australia, Canada, and India. The company supports its sales force with technical personnel who perform demonstrations of Cerner solutions and services and assists clients in determining the proper hardware and software configurations. The company markets its ambulatory solutions, offered on a subscription basis, directly to the physician practice market using lead generation activities and through existing acute care clients that are looking to extend Cerner solutions to affiliated physicians. Competition The company’s principal existing competitors, including their affiliates, in these markets include Allscripts Healthcare Solutions, Inc.; Arcadia Solutions, LLC; athenahealth, Inc.; Capsule Technologies, Inc.; Computer Programs and Systems, Inc.; eClinicalWorks, LLC; Epic Systems Corporation; Health Catalyst, Inc.; InterSystems Corporation; Innovaccer, Inc.; Medical Information Technology, Inc. (MEDITECH); and Optum, Inc. History Cerner Corporation was founded in 1979. The company, a Delaware corporation, was incorporated in 1986.