Cerner board searching for new CEO
Cerner Corp. on Wednesday said its board is searching for a new chief executive officer, at which point company CEO Brent Shafer will step down from his post.
Shafer, who has served as Cerner’s CEO for three years, will continue to serve as chairman and CEO until the board appoints a successor, after which he will serve as a senior advisor for one year.
“The board and I have started a process to identify Cerner’s next CEO,” Shafer said on a call with investment analysts Wednesday.
William Zollars, lead independent director of Cerner’s board, in a statement thanked Shafer for his leadership at the company.
“The board believes that now is the right time to identify a successor to Brent who will lead Cerner through its next chapter of growth and shareholder value creation,” Zollars said.
The move is in line with Shafer’s plans when he took the role in 2018, in which he committed to serve as CEO for three to five years.
Shafer is the latest shake-up in Cerner’s C-suite this year, which has also seen changes in the chief financial officer and chief client and services officer roles.
Shafer joined Cerner in 2018 after the company’s co-founder and CEO Neal Patterson died as a result of unexpected complications following recurrence of soft tissue cancer.
Since joining Cerner, Shafer has been at the helm of a number of major initiatives at the company, including a 10-year rollout of an EHR system at the Veterans Affairs Department, a cloud partnership with Amazon Web Services, and a plan to create a $1 billion “data-as-a-service” business.
In 2019, one year into Shafer’s tenure as CEO, Cerner deployed a new “operating model” designed to make the company more efficient and profitable. The company restructured its board of directors and launched a set of 165 cost cutting, portfolio management and business simplification efforts to improve its adjusted operating margin.
Cerner’s target of mid-20% adjusted operating margins by 2024, a goal it set before the COVID-19 pandemic as part of that effort, “should be attainable,” Erceg told investment analysts Wednesday.
Cerner’s adjusted operating margin was 21.4% in 2021’s first quarter, according to financial results released Wednesday, compared to 19.4% in the year-ago quarter.
Cerner posted $1.4 billion in revenue for the quarter, down 1.7% year-over-year, including $494.4 million in revenue from professional services and $317.4 million in revenue from managed services. Cerner officials attributed the company’s dip in year-over-year revenue to divestitures and the COVID-19 pandemic.
Cerner’s operating income was $218.1 million in the first quarter, up 22.2% year-over-year.
Shafer on Wednesday said the company has worked to clarify its strategy—noting that Cerner’s processes three years ago “were not really conducive to speed”—but that there’s more work to do to execute on the new operating model.
That’s what the next CEO will likely focus on, he said.
“We’ve made good progress toward improving our operating model and strengthening our leadership team,” Shafer said. “Because of this progress, I believe my successor will take the reins at a time when Cerner’s poised to accelerate its impact on healthcare.”