Thank you, Shannon. Good afternoon, everyone, and welcome to the call.

I'll start with a review of our numbers. Zane Burke, our President, will follow me with results, highlights, and marketplace observations.

Then Brent Shafer, our Chairman and CEO, will provide closing comments. Turning to our results, overall we had a solid Q2, with all key metrics coming in at or above our expected results.

Our bookings in Q2 were $1.775 billion, which reflects a 9% increase over $1.636 billion in Q2 of 2017. This is well above the guided range we provided, largely due to the initial task orders for the Veterans Affairs contract that was announced in May.

Note that while the total contract opportunity is $10 billion over 10 years, the impact to our bookings, revenue, and earnings will be phased in over time as individual task orders are executed during the various phases of the process. With the initial task order signed in Q2, we expect to receive the expected contributions from the contract in the second year that we discussed on our last call.

(2:18) revenue backlog of $14.79 billion. Recall from our Q1 earnings discussion that the backlog calculations changed with our adoption of the new revenue standard, so it is not comparable to prior-year periods.

Revenue in the quarter was $1.368 billion, which is up 6% over Q2 of 2017 and above the high end of our guidance range. I'll now go through the business model detail and year-over-year growth compared to Q2 of 2017.

Licensed software revenue was $172 million, up 11%, primarily due to strong licensed software bookings in the quarter. Tech resale increased 3% to $75 million.

Subscriptions revenue was $83 million in Q2 of 2018, down from $119 million in Q2 of 2017, but up 8% from $77 million in Q1 of 2018. Recall our comments last quarter that subscriptions were impacted by our adoption of the new revenue standard, which reduced subscription backlog and also led us to classifying a portion of subscription revenue as support.

Professional services revenue grew 13% to $447 million, driven largely by growth in our Works businesses. Managed services increased 9% to $286 million.

Support maintenance was up 7% to $279 million, reflecting our expected low single-digit growth plus the previously discussed impact of the new revenue standard. And finally, reimbursed travel was $25 million, which is down 5%.

Looking at revenue by geographic segment, domestic revenue was up 4% from the year-ago quarter at $1.202 billion and non-U.S. revenue of $166 million increased 22% from the year-ago quarter.

Moving to gross margin, our gross margin for Q2 was 82.5% which is up from 82.1% in Q1 of 2018, but down slightly from 82.7% a year ago. Now I'll discuss spending, operating margin, and net earnings.

For these items, we provide both GAAP and adjusted or non-GAAP results. The adjusted results exclude share-based compensation expenses, share-based compensation permanent tax items, and acquisition-related adjustments.

All is detailed and reconciled to GAAP in our earnings release. Looking at operating spending, our second quarter GAAP operating expenses of $921 million were up 12% compared to $820 million in the year-ago period.

Adjusted operating expenses were $873 million, which is up 13% compared to $771 million in Q2 of 2017. Looking at the line items, sales and client service expense increased 14% over Q2 of 2017.

This increase was primarily driven by an increase in personnel expense related to our services businesses, including the hiring of Adventist Health revenue cycle staff and hiring additional revenue cycle staff in Kansas City. Software development expense increased 18%, driven by an (5:11) percent increase in gross R&D, a 26% increase in amortization, and 4% less capitalized (5:20).

G&A expense was up 4% and amortization of acquisition-related intangibles decreased 53% year over year. Moving to operating margins, our GAAP operating margin was 15.2% compared to 19.3% in the year-ago period.

And our adjusted operating margin was 18.7%, down from 23%. The year-over-year decline in operating margin is consistent with our guidance, which reflects items we have discussed, including the higher growth of non-cash expenses, investments in our Works businesses, and an increased mix of Works revenue.

We do continue to believe that many of these factors are temporary in nature and that we can begin to expand margins in 2019. Moving to net earnings and EPS, our GAAP net earnings in Q2 were $169 million, or $0.51 per diluted share, compared to $0.53 in Q2 of 2017.

Adjusted net earnings in Q2 were $207 million, and adjusted diluted EPS was $0.62 compared to $0.61 in Q2 of 2017. Our GAAP tax rate for the quarter was 21%.

Our non-GAAP tax rate was also 21%, which is slightly below our tax rate in Q1. We'll move to our balance sheet.

We ended Q2 with $1.004 billion of cash and investments which is down from $1.093 billion in Q1 of 2018, primarily due to the use of cash for our stock repurchase program. During the quarter we repurchased 4 million shares of stock at an average price of $58.75 per share, for a total of $200 million.

We currently have $639 million of remaining authorization under our repurchase program after our board increased the authorization amount by $500 million in May. Moving to debt, our total debt including capital lease obligations was $441 million, which was down from $446 million in Q1 of 2018.

Total receivables at the end of the quarter were $1.152 billion, up from $1.041 billion in Q1 of 2018. Our Q2 DSO was 77 days, which is up from 73 days in both the year-ago period and Q1 of 2018.

Operating cash flow for the quarter was $300 million. Q2 capital expenditures were $109 million.

Capitalized software was $69 million. Free cash flow, defined as operating cash flow less capital purchases and capitalized software development costs, was $121 million for the quarter.

We continue to expect strong operating cash flow for the year to more than offset the increase in capital expenditures leading to another year of strong free cash flow. Now I'll go through guidance.

We expect revenue in Q3 to be between $1.335 billion and $1.385 billion, with the $1.360 billion midpoint reflecting growth of 7% over Q3 of 2017. For the year, we continue to expect revenue between $5.325 billion and $5.45 billion, with the $5.388 billion midpoint reflecting 4.8% growth over 2017.

We expect Q3 adjusted diluted EPS to be $0.62 to $0.64 per share. The $0.63 midpoint is $0.02 higher than Q3 of 2017.

Note that while consensus EPS for the year is in line with our annual guidance midpoint, consensus estimates reflect a different quarterly ramp. So our Q3 guidance range is below the current Q3 consensus.

For the full year, we continue to expect diluted EPS to be $2.45 to $2.55, with the $2.50 midpoint reflecting 5% growth over 2017. Moving to bookings guidance, we expect bookings revenue in Q3 of $1.45 billion to $1.65 billion.

The $1.55 billion midpoint reflects a 40% increase compared to Q3 of 2017, which was our lowest bookings quarter of 2017. In summary, we are pleased with our solid performance in Q2 and our outlook for the rest of the year.

With that, I'll turn the call over to Zane.

Thanks, Marc. Good afternoon, everyone.

Today I'll provide color on our results and make some marketplace observations. I'll start with bookings, which grew 9% from Q2 of 2017 and was well above our guidance range.

In Q2 the percent of bookings coming from long-term contracts was in the normal range at 35%. Multiple large transactions contributed to our bookings this quarter, with a record seven contracts over $75 million.

We're also pleased with the quarter from a new business standpoint, with 31% of bookings coming from outside our core Millennium install base, including a noteworthy win at a large academic medical center. This quarter included broad contributions across several areas that reflect the diversity of our offerings and end markets.

We had good results from almost all our solution and service categories, large and small clients, U.S. and non-U.S.

geographies. Starting with smaller venues of care, our ambulatory business had a strong quarter, driven by ongoing penetration in the ambulatory settings of our large health system clients as well as adding a large independent provider.

In the small hospital market, our CommunityWorks organization continues to execute well, with whole new footprints and delivering strong sales back into our base. Moving to revenue cycle, we had a good quarter, driven by (10:48) inclusion in many new EHR business and selling to our base, as our existing clients continue to migrate from legacy systems to Cerner Millennium.

Operationally, we are seeing early returns on enhancements we had made to our revenue cycle implementation methodology. Our approach includes more upfront assessments to identify potential implementation challenges, an enhanced pre-project design approach, conversion readiness assessments, and post-go lab monitoring and transition services.

We also had good contributions from Cerner ITWorks, including a new ITWorks client, scope expansion with existing clients, and good sales back into our ITWorks space. We have a strong outlook for the rest of the year with several more ITWorks contracts forecasted.

Next I'd like to provide an update on our federal business, starting with the Department of Defense MHS Genesis project. The optimization efforts we have discussed have led to many improvements in access and efficiency at our initial sites, and we remain on track to begin the next wave of implementations later this year.

In addition, DoD announced last week that they are increasing the contract ceiling for MHS Genesis by $1.2 billion to include the Coast Guard and expand the scope of solutions and services. Moving to the Department of Veterans Affairs, as Marc mentioned, we signed a contract in May with the VA as the prime contractor to replace the Vista system with one built off of the EHR we are deploying across the military health system.

With VA managing one of the largest healthcare systems in the country, we believe there is great potential for a broad industry impact. At the core of this project, Cerner will enable seamless care through a single system that links both veteran populations totaling more than 18 million people, while also delivering a national interoperability to the commercial market.

This will allow patient data to be shared between VA, DoD, and community providers through a secure system. We also expect to accelerate our efforts in population health, open platforms, and telehealth, all of which have relevance to our commercial client base.

We view this opportunity as a great honor, and we're well positioned to successfully deliver based on our experience with the Department of Defense project, our own delivery capabilities, and capable partners. Moving to our business outside the U.S., we had another strong quarter with 22% revenue growth.

Bookings were also a highlight, with noteworthy contributions from the Middle East and UK. Looking ahead, we can expect to have a good second half of the year, with Australia, Canada, Middle East, and Europe all forecasted to provide solid contributions to our growth.

The last topic I'd like to cover is population health and our recently announced collaboration with Lumeris. We had strong sales of HealtheIntent solutions to both new and existing clients in Q2.

There continues to be steady progress towards value-based care models, which is a key driver of our population health sales. We also continue to have success at selling HealtheIntent to clients that aren't yet fully moving to value-based care models because of the platform's ability to help clients offer fee-for-service models while also preparing them for the shift to value-based care.

Now I'd like to tell you a little bit more about what we're doing with Lumeris, which we believe will strengthen and expand the scope of our offerings and contribute meaningfully to our longer-term growth. Lumeris is (13:58) company with a consistently highly rated Medicare Advantage plan, a proven methodology to help leading health providers advance value-based care strategies, and the subject matter expertise required to support those efforts.

We're launching an EHR-agnostic offering with Lumeris called Maestro Advantage. That will be designed to help health systems set up and manage Medicare Advantage plans, provider-sponsored health plans, and other risk-based arrangements.

Additionally, Lumeris will adopt Cerner's HealtheIntent as the platform for its clinical methodology and advanced analytics, which will be the core to the operating model for Maestro Advantage to help drive better patient outcomes and lower costs of care. We believe this offering, which will combine solutions and services from Cerner and Lumeris, will be differentiated in the market in several ways.

We believe it will be the most comprehensive technology and service offering that leverages the experience of a proven 4.5-star Medicare Advantage plan. It will provide connectivity across the provider health plan and consumer, and will be designed to improve outcomes and lower costs by embedding actual insights into the provider workflow.

It will include a unique accountable care clinical model that supports a health system's development of a high-performing integrated delivery network and shared savings with providers through value-based incentive alignment. And finally, this offering is differentiated by Lumeris's long-term strategic partnership with Mutual of Omaha to deploy Medicare Advantage plans nationally utilizing Lumeris's collaborative payer model and Mutual of Omaha's marketing, distribution and funding.

While there's a lot of work ahead to realize the potential of the Cerner-Lumeris collaboration, the value proposition at the outset is high. For Lumeris, that means aligning an industry-leading technology partner that can bring national scale to their (15:40).

It also gives access to our leading health system client base increasingly looking to Medicare Advantage as part of their value-based care strategies. For Cerner, we gain a partner with a 4.5-star Medicare Advantage plan to build out the end-to-end capabilities required to run a provider health plan within HealtheIntent, the opportunity to be a larger participant in the per-member per-month [PMPM] economics in the provider-sponsored health plan space, and a new point of marketing non-Millennium leading health systems.

As most of you know, a major trend playing out on the provider supply side of healthcare is the creation of MSA-level health networks to advance existing and new business models. We believe Cerner is uniquely positioned to activate these intelligent health networks at a national level.

With this collaboration, we are taking another step towards fulfilling Cerner's long-held desire to be a change agent within the traditional U.S. payment model, which we believe is filled with hundreds of billions of dollars of inefficiencies and massive consumer dissatisfaction.

If we deliver on a better provider and consumer experience, we will disrupt a category in significant need of change. Lastly, I wanted to highlight that this relationship also includes Cerner acquiring a minority interest in Lumeris's parent company, Essence Group Holdings Corporation, for $266 million.

We believe this is a good use of capital, as the relationship and investment speeds our entry into tech-enabled services related to the value-based care, broadens our population health offering, and increases our addressable market. With that, I'll turn the call over to Brent.

Thank you, Zane. Good afternoon, I'm going to offer some closing observations on the second quarter on Cerner as a whole and on our recently announced collaboration and investment in the Medicare Advantage space.

Over the course of the last 90 days, I've had the opportunity to spend time with over 100 health system CEOs, including many at our annual CEO event. It's been a chance to listen.

While health system CEOs are (17:33) unique issues in their respective markets and organizations, there are definitely some common themes. They're looking to grow key service lines, drive operational efficiencies on the expense line in order to make money at Medicare rates, and to navigate the uncertainties of risk-based contracting.

They believe technology and data-driven process change are critical success factors, and they see Cerner as a critical partner for success. While I don't have all the answers two quarters into my tenure, there are a set of things I know will be core to Cerner's success in the years to come.

We are going to be obsessively focused on our clients' success. We will develop solutions that deliver the best possible experiences and outcomes.

We will continue to be a transformative growth company focused on delivering on the top and bottom line. Our leadership team isn't content with where healthcare is today, and we see opportunities for Cerner to make it better.

We have a growing, diverse client base. We have a suite of technologies and services to solve provider business challenges.

We have an amazing culture filled with tens of thousands of talented associates with ambitions to take Cerner well beyond the scope of where our business is today. In my conversations over the last several weeks, I've been struck by the number of CEOs that have mentioned our collaboration and investment in Lumeris.

They're excited to see us partner with an organization that has a 4.5-star Medicare Advantage plan. They're pleased our HealtheIntent platform will be core to the operating model for the combined market offering.

And they're excited about the leverage they'll get from their existing Millennium investment as they build out their value-based care strategies. We are in an enviable position with a balance sheet that allows us to invest for success in the current EHR market while also investing in new markets beyond it.

Based on the ongoing work we've been doing as a leadership team to assess the marketplace and growth opportunities, I believe we will identify other opportunities to deploy capital in ways that support our growth strategies. I believe this deployment of capital along with our ongoing share repurchase program represents a balanced approach to capital deployment that supports our long-term growth while also adding value to shareholders in the near term.

And I want to congratulate our team on a solid second quarter. And I'll now turn the call over to Marc and the moderator.

I think we're ready for questions.

Great, good evening, thanks for the question. Marc, you mentioned the bookings coming largely above the guidance range, driven from the VA.

Can you maybe just share a little bit more context on how the bookings fared outside the VA? I'm just curious maybe where you saw traction away from that key client.

Robert, this is Zane. I'll take it and let Marc clean up my story here but what I'll first say is without the VA, we finished just above the highest end of the range without the VA.

So we saw incredibly strong growth across global, across our population health solutions, and our core EHR marketplace both with a significant win at the academic side, as I mentioned in my prepared comments, as well as in our community offerings, so broad-based with that. We had our ITWorks clients that did well, this client as well as additional rev cycle in the RevWorks business.

So we saw broad-based elements both globally and here at home in the U.S.

Great, thanks so much.

Hey, thanks for the question. I wanted to ask about the margin outlook and some of the comments Marc made, and I was hoping you could get us oriented for 2019.

With the headwinds impacting the margins this year, is there an opportunity for you to be above the high end of the 30 to 60 bps range, or would you encourage us to stay within that range?

This is Marc. Obviously for 2019, we're just starting the planning process for that year, so it's a little early to provide anything that's more granular.

Relative to that, I think we've talked about the ability that once we get through this significant investment year to be able to look at 30 to 60 basis points growth beginning in 2019, while certainly our starting point for that growth is going to be a little bit (22:40) where it was in the beginning of the year. That's our best view.

Obviously, we'll update that in the Q3 call when we start getting into the first returns on our 2019 plan. But at this point, I would still hold it in the 30 to 60 basis points range until we can give you a little bit more visibility.

Got it, and one quick follow-up. When do you expect the next task order for either the VA or the DoD?

I'm just trying to understand when that will hit bookings next.

We'll try to give you some visibility to the extent we can, but those task orders we've got – the first set of task orders, that usually carries you forward for a little while. So it will be dependent on the projects and when the next set of services and solutions need to be delivered.

So that's about all we can provide for a view on that.

Got it, thank you.

Thanks very much. Just going back to your comments around the relationship with Lumeris, how do we think about that overall size of that market opportunity?

Do we think about it HealtheIntent? Do we think about it the new Maestro Advantage EHR, or do we think about you taking on risk over time as we think about value-based care?

I'm just trying to get my arms about how to think about and size that market opportunity for Cerner specifically.

Lisa, this is Zane. So first off, I think what you should say is yes, obviously it's a HealtheIntent play, but really the broad elements of this are this is a higher PMPM market that allows us to move from where we've been just a technology-only play in the $1 to $5 PMPM on an aspirational basis to playing more the nature of being upwards of $100 PMPM.

Now we'll share in that. Lumeris at this point has the larger bulk of the offerings and the services that will be provided in that area, but it allows us to play at a much higher PMPM basis, bring all the attributes of what we do from a HealtheIntent perspective, bring the things to bear that Lumeris has, and then we'll go create some new offerings together.

This is Marc. I think financially, you look at going from, as Zane said, $1 to $4 PMPM technology to probably $15 to $20 PMPM would be what we would work to develop and deliver on these clients.

Anything relative to a success factor or fee would be on top of that. So we're not going at-risk from a negative standpoint.

We are putting some of the economics at risk that we will deliver certain performance, and that performance will then be additive to the $15 to $20 PMPM once we get fully ramped up. So you can gauge the market however many million PMPMs you wanted to use, but it's obviously significant.

When we look at going forward on our 10-year model, if you will, and $1.8 billion that we're looking at, the key is it's not additive. This is part of the strategy for that $1.8 billion, and this business by itself would be 25% to 30% of that number by the time we get to that point in time, the end state of the 2025 model.

So I think that would clarify at least for us what we think the ability to deliver an impact on our financials is.

And then, Marc, this is the way I understand this. Brent made a comment that as you think about your balance sheet and supporting your growth strategies, do you have what you need today to be able to support this growth that you talk about over the next 10 years, or do we think about internal investments or is it more M&A activity that you'll have to grow and procure certain products to be able to deliver on this?

I think the Lumeris investment is a great example of taking technology we've created, skill sets we're developing, but then finding a partner where we can go faster on development, we can go faster into the marketplace, we can get to those revenue dollars in a faster timeframe. I think that applies to the other businesses.

You'll see us both investing internally, as always has been our history, but you'll also see us identify areas that could grow to be $100 million businesses, and maybe there's an opportunity to do an acquisition that gets us started doing that business and gets us to that $100 million level in a shorter period of time. So I think we're certainly not going away from investing internally.

That's our key strategy and that will continue to be our key strategy. But we have a strong balance sheet, and I think the Lumeris investment shows that we're willing to use it to support our growth strategy.

That's very helpful, thank you.

Hey, thanks for taking the question. I just wanted to follow up, continuing on Lumeris here.

In their current M&A plan that they're offering, can you remind us how many lives they're currently managing? And then also, this is moving you further up the value chain here, certainly a little bit of a departure from your legacy business.

But as you think about longer term as we move to value-based care, does this make you think about maybe what the next generation of Millennium looks like? How do you see the EHR itself having to be redesigned to think about more of an outcomes-based model of care?

Thanks.

That was a simple question, Charles. I think surely from the Lumeris standpoint, obviously they run a health plan today, and you can certainly get the sense of how big that health plan is.

The opportunity here is really to go help our clients and non-clients who are going down the path, certainly in the Medicare Advantage space, prepare themselves for value-based care and ultimately for taking risk. And I think we see that market coming.

It hasn't come as fast as we originally thought, and I think for most people in the selling population health solutions. But I think this will get us – allow us to be ready when that market hits to have the premier solution that's available in the marketplace.

I think from how does this relate to our traditional EHR business, it obviously is key to what we're going to do with Lumeris is gathering the data from a variety of different EHRs. So the interoperability we built into Millennium and built into HealtheIntent, the ability to pull data from Millennium, the ability to push alerts and information back into an electronic medical record that can impact the care that the patient and the person is receiving while they're in front of their physician rather than getting a text message or an e-mail later, all of that is contextual to really being able to move the meter on the health of the population.

So they're intertwined. Millennium as it is today is a perfect conduit for us to leverage.

And those at HealtheIntent, as we've discussed, it lays over the top of not only Millennium but any EHR, and that's part of the strategy is that's the cloud-based option today is using that to pull all the data from all those different solutions.

And if I could just follow up, from an accounting standpoint, from a reporting standpoint, are you consolidating all the premiums, and then you kick back out – or can you talk about the ownership structure of how this joint venture would look like? Are they going to be booking all the revenues and you're just going to be getting a minority interest?

How should we think about the bookkeeping of it? Thanks.

Let me just break it into two parts. We made an investment in Lumeris that's less than 20%, so that will have no impact on our income statement.

To the extent we go to market, how it gets reflected in our income statement will depend on how the – are we basically the prime? Is Lumeris the prime?

Is it all run through us? Is it all run through Lumeris?

All of that will determine where the revenue sits. But certainly initially, a lot of the work there is going to be things that are components of the project because we're talking with (31:44) get to 20% of those dollars.

Because initially as we start (31:48), we're not going to be at that level. I'd also remind you that the ramp up here, when you're talking about creating and helping people create plans, that's a very cyclical business.

It really hits in the back half of the year, so a plan can be stood up and operate the following year. So really until we get to 2020 and 2021, you're not going to see a material impact on the financial statements for this.

This is a longer-term investment, but when it hits, it's going to be significant.

Great, thank you. Thanks a lot.

Thanks for taking my questions. I guess maybe the first one, Marc, real quick, the strong license revenue during the quarter, was there anything notable from the VA in that number?

No. No, it was...

Okay.

Once again, our expectation was that the VA wouldn't have a big impact on the quarter, and we delivered on that expectation.

All right, that's great. The sales and client service expense did ramp pretty notably sequentially, and I caught your – I think it was your comment that you guys, you're hiring up in the Works business in general, but you also were taking on Adventist employees.

Can you talk about whether there's been a really tight match of when you've taken on – maybe specifically the Adventist contract, when you've been taking on the expenses versus when the revenue is really flowing through, and maybe outside of Adventist with the rest of the Works business, what your expectations are there? Because it seemed like there was a big step-up in expenses this quarter but not necessarily a big step up in revenues.

So I'm curious. Has the revenue step-up already happened, or are we going to see it in the future?

Any color around that would be great.

Jamie, good question. In Q1, basically, we were in the process --we were running Adventist revenue cycles, so all of that activity was already occurring.

Under ASC 605, the older rev-rec rule, all we could recognize is the net margin that we (34:09) under that. Under ASC 606, since we are controlling the employees that were doing the work, the revenue actually folded into the top line of our income statement, but the costs went into the cost of goods sold.

This quarter the revenue is still in that number, but now the costs have moved down to the expense line, so that the vast majority of the expense increase you saw is basically just moving that expense out of cost of goods sold and down to that line. And you see that when you look at some of the – a little bit of the impact on gross margins.

Clearly on the expense side, we do have – we are (34:49) RevWorks to the Kansas City billing office. I think we're up to 400 associates now that we brought on board to work in that space.

We had some expenses related to VA, as we had in Q1. Q2 we're not getting paid for those either but we have those expenses.

And even when you look at the net – the software cap, the net software cap rate was 9% versus 13%, so that's going down, and the amortization impact had an impact on expenses as well, which we've talked about before. But the biggest impact was moving the Adventist people down to be our associates and the operating expense as opposed to being cost of goods sold.

All right. That's great, thank you.

Sure.

Thanks for taking my questions. Zane, Marc, on the non-federal business, if you can, parse out the upsell between your existing customers versus new market share gains.

What are you seeing that excites you in both these segments? And is there a worry for potential slowing of spending within hospitals as they try to figure out what they need to do for these value-based models?

So, Mohan, this is Zane. I think what we're excited about is first off that we actually had such strength across all the bookings elements.

And I think what we're seeing in the U.S. in particular is there is still a need for efficiencies and scale.

And that drives a lot of our Works offerings – so both our ITWorks, RevWorks. And so those pieces of our business, we're seeing good growth in that space.

New marketplace it was, it's continued strength in the community hospital marketplace, but we had – we sprinkled in a very significant large academic medical center. And so we're seeing our competitiveness be very good in the replacement EHR market, so there's still a strength, there's still quite a bit of activity in the replacement EHR market.

Many of those are community hospitals, so they tend to be a little bit smaller, but the activity levels are still very high. And while we had our highest Q2 in the history of the company for bookings, we also had a growth in (37:17) at the same time, so we're seeing continued strength in the business across all segments at this point.

And I think success is really in the execution and driving value for our clients. And so ultimately we feel like the closer we're tied to the outcomes of our clients and the more that we continue to drive towards helping them scale and to succeed and thrive in the future that we see continued growth opportunities.

And I think that's reflected in our results and reflected in our pipeline and the activities as we move forward.

Thanks, Zane.

Hey, good afternoon, guys, and thanks for taking the questions. I guess, Zane, my first question would be around the deals over $75 million in the quarter.

They're pretty large ones, I guess. Is there a characterization of what those customers typically tend to buy or what they look like, or is it spanning the range from new footprints to Works deals?

I would just love to hear about what's going on in the big check size category.

It's a great question, George, and it actually is a full box of chocolates, and they're all very desirable. And so I'd look at them and say what you saw – obviously our federal business was very strong in the quarter, but you saw our IDN business where a major IDN who's looking to scale and grow in their markets investing, doubling down on Cerner in the future.

You see an investment by clients that are a new ITWorks client in that space. You see a new academic medical center in that space.

So again, it was quite a very strong quarter from a diversity of what was driving those activities. Most all of those are around how do I grow and scale into the future.

And I think that's really how you have to think about it.

Okay, and then maybe a quick follow-up. I'm going to ask one more on Lumeris.

I guess how do we think about how that relationship fits into I guess your other relationships? And I'm thinking competitively.

Centene and Ascension announced a partnership this week on Medicare Advantage. You guys are working with Lumeris.

Do you envision that you and Lumeris eventually wind up competing against Cerner Ascension, or are you guys the back end and helping build out Cerner Ascension? I'm just trying to figure out how you guys think the pieces fit together.

Here's how I'd look at it this way, George. We see it as an opportunity for growth across multiple service lines, across multiple areas.

And I'd probably add just – I'm not going to compare and contrast what Centene is doing with what we're doing, but what I'd say is our relationship with Salesforce, for example, there are some significant business needs to accomplish for our clients and to help them succeed as the world changes and as we all work to empower the consumer of the future, in that we're going to partner with certain organizations to create that experience. We're going to help them empower healthcare in a different way.

We're in this case partnering with Lumeris to deliver a services offering that's based off our technology and their market-leading services and their Medicare Advantage plans. And I think you're going to continue to see us do that type of activity where we bring the biggest scale and really use Cerner's platform moving forward to be the world's most (41:01) healthcare platform.

And that's really the way that we think about it. And we'll have to get into the competitive environment of each one of those scenarios as we move forward.

And we're thinking about it very carefully. We don't want to be on the opposite side of our clients.

We want to be on the same side as our clients as we move forward.

Okay, I appreciate the color. Thank you.

Good afternoon and thanks for taking the question. Diving back into the margin question, some of the direct service costs, as you get more experience in some of the large Works and large consulting contracts, how do you think about any of the leverage if you can get it on the back-end costs, whether you can spread more of it over the RevWorks side or the ITWorks or whatever it might be so that going forward there is a little more predictability in some of those margin targets, I know, Marc, you want to hit.

Michael, clearly the concept of the Works business is to get scale and then to drive efficiencies into those businesses. One of the things you're already seeing as we move forward is we're investing this year in creating a 600-person Kansas City-based business office that will run at a much lower cost than some of the regional business locations that we're already using to support clients.

So that's one area where we can look at bringing costs down. We certainly are going to look at any of our options.

We have a large India presence. So there's a chance to be able to leverage some of those people that we have in some of the businesses as well.

So the whole focus of these businesses from a service component is how do I get leverage. In RevWorks, it's how do I get lower-cost humans, and the second set is how do I take this technology we've created, the clinically driven revenue cycle, and use automation, adding in AI to be able to significantly reduce the amount of human touches that are required to actually get paid in this environment.

So I think all of those things are future opportunities for efficiencies. We're at a point where we're trying to grow these businesses.

We're trying to capture that business. These are dollars that they're spending today that we're trying to have them redirect to us.

Once we get those captured, then we'll start worrying about becoming more efficient at it. And that's not any different from the hosting business when we started that out and we were single-digit margins, now we're well over 30%.

So I think it's a similar thought. Maybe it doesn't get us over 30%, but that's the same goal that we're striving for.

Excellent, thanks so much.

Sure.

Good afternoon, thanks for taking the question. I want to ask about Adventist.

Marc, the bookkeeping a little bit there, but maybe more of a substantive thing, thinking about how the progress is going against the plan for the year and just the impact of them, RevWorks and a partial ITWorks client, and then how we can start to think about that impact being the more fully outsourced RevWorks pipeline.

Wow, you broke up a little bit on the question, but I think it was basically how does Adventist impact in the year out. Clearly we have ASC 606 coming into the year, we knew that we would get revenue from that client fully in our revenue and then have the cost coming in cost of goods sold and other expense line.

So it hasn't changed our revenue guidance. It was all baked into our original guidance.

So I think that's pretty consistent with the numbers we've been sharing is how it's going to impact this year. The good news is it's going to continue to impact future years.

It's a recurring level of revenue that will be underneath a very long-term contract, so it will continue for some time.

Great. And then the follow-up is I was actually hoping for also a little bit more on the substance of the relationship and achieving greater value for them, where you're progressing there, and then how we can think about that relationship impacting the more fully outsourced RevWorks pipeline.

Thanks.

Sure, this is Zane. So the project has been going extremely well.

We've been delivering against our objectives. I think that's Marc's view of performance plan, so I'd just say it's gone very well.

I think we have, from a value creation office, we've been hitting several tens of millions in the value creation office in terms of our value that we're driving together on an annual basis. And so the management team on that side is very happy with where we are, and I think that will lend itself to additional opportunity.

There's not a hard code in for hit this objective and then it creates the next trigger event. But success here will help us to get more success, both with Adventist as well as, obviously, throughout the marketplace because this is central to how we're thinking about the entire marketplace, which is add value, create value together with our partner and to be closer to the strategies of our clients overall.

And Adventist is a really good example of how we're driving value together, and we've seen continued growth and trust placed in Cerner to perform and execute on the services side of that. And I would anticipate that will help us both with Adventist as it relates to additional services offerings as well as other clients who are closely watching to see what happens here and how we perform over time.

Jeff, this is Marc. We've talked about them being our cornerstone client for this business.

The fact that they rebadged all of their associates to Cerner in Q2 is a big statement by them in their trust on us to deliver, where folks are certainly reducing their cost to collect. We need to get some time in delivering on those targets to be able to prove to people that we can do this at large scale.

So we're in that process, it's going well, but it's going to – it takes some time. Rebadging was a big milestone for us.

Great, thanks again.

Thank you. So Lumeris and your willingness to deploy capital for growth opportunities seems very significant.

I understand Lumeris – the agreement with Lumeris occurred over a very long or fairly long period. I'd welcome perspective on how the transaction came to be and whether you think that's a path you should typically follow, or if Brent's comments around using the balance sheet suggest increased awareness of other potential opportunities to put capital to work.

I think from my perspective, Lumeris was a little bit unique, because when we started working with him, we figured out hey, this is pretty cool. We like it.

We want to be in this Medicare Advantage. We think it's a sweet spot as people start going to take risks and coming around to who's the best in our opinion in that.

Lumeris having the services component and actually running a 4.5-star plan, which is kind of a big deal, caught our attention. So we spent a lot of time just meeting with the people, understanding what it would take, how would we leverage our technology and our service offerings to be effective in that space.

And as all those conversations kept going, it evolved from hey, we should work together to hey, maybe we could use some of your tools. And that's why that one took quite a while.

I think if we look at other maybe smaller levels of capital deployment to help us jump-start growth in an area that we think has potential for growth, I think those can occur more quickly. But I think we're still a company that likes to invest internally, but I think it's also – we are also – we're looking at our balance sheet saying we ought to – to the extent we have seven really good areas of growth, is there some subset of that that we could go invest some capital in and get us started faster, and therefore get us to that $100 million-plus business faster.

That's helpful.

And this is Zane. If I may, just Marc talked about our ability for speed, which I couldn't agree more with.

The flip side of that is we're being incredibly thoughtful about who we partner with and who we bring into our clients and what that means when we do that. And so I would just say these are very long-term plays, so we're being – the Lumeris conversation, I think it's appropriate that we spent a lot of time on how will this work and how can we deliver real value.

Our Salesforce arrangement is of a similar variety. We spent two years in the making to make that really come to life in the proper way because these are incredibly strategic decisions we're making to broaden the suite of solutions.

But in our view, these are people we're bringing into our clients and we need to make sure that we fully vet the long-term feeling of that as well as the impact on Cerner over the long haul. And I think we're being appropriately judicious about how we look at these, but if there's a need for speed, I'm glad to hear Marc's ready to go with it.

That's helpful to hear. And unrelated but a follow-up, it's been a year since we spent some time about LifePoint, and obviously they were in the news lately.

Could we just get a bit of a progress report there?

Sure, the LifePoint engagement is progressing very well. I think we have our go-live coming up here in the very near term before the end of the year.

And they're very pleased and they've been a good partner for us. And so we would anticipate it will be beneficial for both organizations as we move forward and an opportunity to expand.

So we're excited about what they're doing and we think that's a great team and I don't anticipate their capital structure to really change the game here as it relates to what we're doing with them.

Thank you.

Hi, thank you, first a quick one on revenue cycle. The activity that you cited in the quarter, are you selling the Millennium revenue cycle or Soarian revenue cycle or a mix of the two.

This is Zane again. We market both solutions but principally it's the Millennium revenue cycle solution set.

Most organizations are buying an integrated ambulatory acute and revenue cycle, and then many of our clients who have been a long-term Millennium client want to get on a single instance. But we have had Soarian sales.

There's still a marketplace for standalone patient (52:55), and we offer that. But from a solution perspective, Soarian is architected to be very portable in terms of functionality and those pieces and we've taken much of the best things out of Soarian and been able to port those to Millennium.

And that's been very helpful, and we would anticipate that we'll continue to utilize both those. But I would say the vast majority of the revenue cycle opportunity is on a Millennium basis.

Okay, great, and an unrelated follow-up: How would you describe the appetite for two-sided risk models within your base? And do you see that as key to the relationship with Lumeris and overall population health?

I think in the population health space, there's an appetite for that dialogue. And we're tiptoeing our way appropriately into it, so we're not putting ourselves at significant risk, as Marc indicated.

But most of these are upside opportunities as we've done that. And so we'll continue to work our way through that and mature how comfortable we get with all the risk elements of that before we get too far.

This is Marc. We can do very well and grow to a significant number without having to take downside risk.

Okay, thanks so much.

Why don't we take one more question?

Great, just a side question. A lot of questions have been asked, but I was curious how you guys think about telemedicine.

And you guys have a partnership I know with American Well, and you've mentioned some work with the VA around virtual healthcare as well. But just how does telemedicine fit in your outlook for healthcare in your business model over the next few years?

This is Zane. Obviously, telemedicine is an important piece.

I think the recent changes in reimbursement are very helpful for telemedicine. I think there's going to be more as it relates to the consumer aspects of really well care and utilizing the physician and acute settings for really high-acuity situations as opposed to these many situations where people have to go to the doctor's office and use valuable resources that are very costly.

And so I think you'll see telemedicine. I think you're going to see the wearables.

I think you're going to see a whole lot of different technologies on the go-forward, which puts the people that don't need to utilize these very expensive, very talented resources, we're not using those for those people that don't have a high acuity; that we only use those resources when there's a real need for high acuity. And so we're going to continue to look for both.

Telehealth is one of those pieces. But on the telemedicine side of that, we're going to look for other technologies which continue that strategy.

Let's make sure that high acuity meets the high cost pieces versus the low acuity using up that bandwidth in the network.

Got you, and maybe one last quick one. You guys have been press releasing a lot of wins in the smaller rural hospital space.

So I guess, one, can you update us with where you are in terms of the number of hospitals, the footprint you have with that CommunityWorks offering in the sub-75 bed hospital area? And you had mentioned taking that multi-tenant offering up into larger hospitals.

I thought that was an interesting development a few quarters ago. I was just wondering if there was an appetite for a CommunityWorks style offering as you move up into larger settings.

So this is Zane. We're well over hospitals in taking that live actually today, and we're well in the contracted and significantly in excess of that.

Moving up into larger settings is really one of those pieces around both M&A activity, around ease of use, and predictable cost models, and so we see that more as a delivery model than we do as a market segment. So instead of thinking just pure community hospital, it's also surgical centers, it's behavioral health.

It's all those things. It's really a delivery model when we talk about CommunityWorks.

And so it's much broader than that. We see there's quite a bit of applicability for that model, and we are competing and doing extremely well in that marketplace, and there's as much activity as there's ever been in that space.

So it is very, very high activity level, and we're competing for more than our share.

Thank you.

Great, thank you.

Thanks, Marc. This is Brent.

I want to thank everyone for joining us today. I'm very pleased with our solid results for this quarter, and we will continue to focus on delivering against the expectations we set.

My conviction is that Cerner has great opportunities to grow over the long term, and those continue to increase. I think we're taking the steps necessary to realize this potential, and we appreciate you being with us.

Have a great evening. Thank you, bye-bye.