Cerner : Q420 Speaker Script

Cerner Corporation

Fourth Quarter 2020 Earnings Conference Call

February 10, 2021

Moderator

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 solution, 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. The extent to which the COVID-19 pandemic and measures taken in response thereto could materially adversely affect our financial condition, future bookings and results of operations will depend on future developments, which are highly uncertain and difficult to predict. A reconciliation of non-GAAP financial measures discussed in this earnings call can also be found in the Company's earnings release. Cerner assumes no obligation to update any forward-looking statements or information except as required by law.

At this time, I'd like to turn the call over to Brent Shafer, Chairman and CEO of Cerner Corporation.

Brent Shafer

Thank you, and good afternoon everyone.

I'll start with a few comments on our fourth-quarter and full-year performance before handing it over to our CFO, Marc Naughton; our new Chief Client & Services Officer, Travis Dalton; and then President, Don Trigg, for some marketplace commentary.

2020 was a remarkable year for all of us. Given the circumstances, Cerner delivered solid results by executing our plans and supporting our clients.

The pandemic challenged Cerner and our clients on several fronts. We continue to be extremely proud to support clients who are battling COVID on the frontlines each day. We're especially pleased with the way our associates seamlessly transitioned to a remote work environment last March and have remained productive and focused on our clients' success.

I'm also proud that Cerner recently began hosting a series of mass vaccination events at our World

Headquarters through a collaboration with North Kansas City Hospital, Liberty Hospital, Clay County Public Health Center and cities within Clay County. The initiative, called Operation Safe, is being staffed by volunteers from Cerner, North Kansas City Hospital and several partners in the community. We have vaccinated nearly 5,000 people through one week, with additional events planned in the weeks ahead. I've often said that one of Cerner's strongest assets is how mission-driven our people are, and the willingness of our associates to rise to the challenge the pandemic has presented demonstrates that strong commitment.

In addition to supporting our clients and communities, we continued to advance our growth strategies and make operational improvements as part of Cerner's ongoing transformation in 2020.

As COVID accelerated health care macrotrends, it also validated our growth initiatives, including the creation and expansion of health networks, our Real-Time Health System capabilities and consumer-facing health strategies. Cerner is providing data-driven insights that can improve our clients' clinical, operational and financial outcomes.

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

Service business.

We also continue towards our transformation goals. Cerner's transformation has been focused on simplifying the business, creating operational efficiencies and delivering profitable growth.

We are nearing $300 million in annualized cost reductions since beginning our transformation efforts about two years ago. We believe those efficiencies and our resilient business model helped mitigate the impacts of COVID on our business.

As part of our portfolio management process, we simplified our product set to go from offering more than 25,000 features to fewer than 400 products. We also divested the RevWorks outsourcing business and some non-core global assets.

Importantly, our work to deliver seamless care for 18 million Service members and Veterans remains on track.

For the first time in history, the U.S. Department of Defense, the U.S. Department of Veterans Affairs and the U.S. Coast Guard are using the same electronic health record, and the number of patients in our Joint Health Information Exchange grew from 700,000 to 4 million since April of last year.

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

Chief Technology Officer Jerome Labat joined us in June, bringing more than 30 years of CTO and product development experience at Fortune 500 and leading global technology companies like Hewlett Packard Enterprise, Intuit and Oracle.

In September, Chief Strategy Officer Will Mintz came to Cerner after working with leading health care and technology businesses, including Aetna and Blue Cross Blue Shield.

You probably know Chief Client & Services Officer Travis Dalton from his leadership of our federal business. We are excited that Travis is now bringing the same leadership to our global client base while retaining oversight of our federal work.

Mark Erceg is our most recent appointment and will replace long-time Cerner CFO Marc Naughton on February 22.

Mark is a high-energy leader who will bring more than 25 years of financial leadership experience, including driving transformation across complex global operations and leveraging balance sheets to drive growth and shareholder value.

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

Before I close, I'd like to acknowledge that this is our last earnings call with CFO Marc Naughton, who after nearly 30 years of service and 101 earnings calls will be leaving Cerner at the end of the first quarter. I know many of you share my appreciation for Marc and wish him the best of luck in his future endeavors.

In summary, I'm very pleased with what we accomplished in 2020. We delivered towards our revised expectations while driving a significant amount of change in what - to say the least - was an unusual year in health care. This was hard work, and I appreciate all Cerner associates for their contributions to this progress.

I'll now hand the call over to Marc.