Jefferies Healthcare Conference Healthcare Conference ... HHS targeting 90% of Medicare payments ... Connect. the continuum

Marc NaughtonExecutive Vice President and Chief Financial Officer

June 9. 2016

Jefferies Healthcare Conference

© Cerner Corporation. All rights reserved. All Cerner trademarks and logos are owned or licensed by Cerner Corporation and/or its affiliates. All other brand or product names are trademarks or registered marks of their respective owners.2

Cautionary Statement Regarding Forward-Looking Statements

This presentation may contain forward-looking statements, including without limitation, those regarding projections of future revenues or earnings, operating margins, operating expenses, product development, new markets or prospects for Cerner’s solutions or services. These forward-looking statements are based on the current beliefs, expectations and assumptions of Cerner's management with respect to future events and are subject to a number of significant risks and uncertainties. Cerner’s performance, and actual results, financial condition or business could differ materially from those expressed in such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to:

(a) the possibility of product-related liabilities; (b) potential claims for system errors and warranties; (c) the possibility of interruption at our data centers or client support facilities; (d) the possibility of increased expenses, exposure to claims and regulatory actions and reputational harm associated with a cyberattack or other breach in our IT security; (e) our proprietary technology may be subject to claims for infringement or misappropriation of intellectual property rights of others, or may be infringed or misappropriated by others; (f) material adverse resolution of legal proceedings; (g) risks associated with our global operations; (h) risks associated with fluctuations in foreign currency exchange rates; (i) the potential for tax legislation initiatives that could adversely affect our tax position and/or challenges to our tax positions in the United States and non-U.S. countries; (j) risks associated with our recruitment and retention of key personnel; (k) risks related to our dependence on third party suppliers; (l) difficulties and operational and financial risks associated with successfully completing the integration of the Health Services (formerly Siemens Health Services) business into our business or the failure to realize the synergies and other benefits expected from the acquisition; (m) risks inherent with business acquisitions and combinations and the integration thereof; (n) the potential for losses resulting from asset impairment charges; (o) risks associated with volatility and disruption resulting from global economic or market conditions; (p) managing growth in the new markets in which we offer solutions, health care devices or services; (q) continuing to incur significant expenses relating to the integration of the Health Services (formerly Siemens Health Services) business into Cerner; (r) risks inherent in contracting with government clients; (s) risks associated with our outstanding and future indebtedness, such as compliance with restrictive covenants, which may limit our flexibility to operate our business; (t) changing political, economic, regulatory and judicial influences, which could impact the purchasing practices and operations of our clients and increase costs to deliver compliant solutions and services; (u) government regulation; (v) significant competition and our ability to respond to market changes and changing technologies; (w) variations in our quarterly operating results; (x) potential inconsistencies in our sales forecasts compared to actual sales; (y) volatility in the trading price of our common stock and the timing and volume of market activity; and (z) our directors’ authority to issue preferred stock and the anti-takeover provisions in our corporate governance documents.

Additional discussion of these and other risks, uncertainties and factors affecting Cerner's business is contained in Cerner's filings with the Securities and Exchange Commission. The reader should not place undue reliance on forward-looking statements, since the statements speak only as of the date that they are made. Except as required by law, Cerner undertakes no obligation to update forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in our business, results of operations or financial condition over time. A reconciliation of non-GAAP financial measures discussed in this presentation can be found in the Appendix to this presentation and Cerner’s most recent earnings release that was furnished to the SEC and posted on the investor section of www.cerner.com.


Cerner – at the Intersection of Health Care and IT

Founded in Kansas City in 1979• Largest standalone health care IT company in

world• 22,000 associates worldwide• 20,000 client facilities in over 30 countries

• 18 of 30 largest health systems have Cerner footprint

• Annual R&D investment ~$700M

• $4.9B cumulative R&D• 5,000+ person IP org• 2,000 clinicians• 350 patents

• $4.4B 2015 revenue• 14% 10-year CAGR

(mostly organic growth)22% 10-year Operating Earnings CAGR * Operating earnings reflects adjustments compared to results reported on a U.S. Generally Accepted Accounting

Principles (GAAP) basis in our 2015 annual report on Form 10-K. Non-GAAP results should not be substituted as a measure of our performance but instead should be used along with GAAP results as a supplemental measure of financial performance. Please see the Appendix for a reconciliation of these items to GAAP results.


• Robust replacement market: >3,000 hospitals not on leading platform• Wide gap after top 2 suppliers• Cerner benefitting from:

• Our increased competiveness and other suppliers struggling• Vision and investments in future capabilities• Openness and Interoperability• Provider Consolidation

Electronic Health Record

• Integrated clinical / revenue cycle favored• Need for solutions that support population health, coding, analytics

and alternative payment models• Significant opportunity in installed base for both solutions and

services

Revenue Cycle

• Buying PHM solutions now to prepare for having more dollars at risk• HealtheIntent enables at-risk models and optimal FFS performance• Cerner’s broad platform well-positioned against niche competitors• Early success inside and outside our installed base

Population Health

Marketplace Observations


Active Replacement Market and Strong Competitiveness

• Record 2015 New Footprints• Added over 200 acute facilities• Displaced all major competitors

multiple times in both inpatient and ambulatory

• Great year vs. primary competitor

• Significant Opportunities 2016 and Beyond

• Pipeline continues to grow even after $20B of bookings from 2010-2015

• Over 3,000 sites on vulnerable platform; about half are legacy or sunset systems


Revenue Cycle• Organic revenue growth of 17% in 2015

• 33% 5-year organic revenue growth CAGR• Over $600 Million of Revenue Cycle revenue including

Health Services• Over 1,800 live sites; 250 hospitals; 1,600 clinics

• RevWorks• Good progress at Adventist Health• Significant opportunity in our installed base• Doing well in Ambulatory Business Office Services, with

displacements of key competitor• Extended Business Office

• Over 400 associates supporting hundreds of acute and ambulatory sites

• Marketplace Trends• Focus on integrated platform• Providers want solutions that support population

health, coding, analytics and alternative payment models


Population health• Market shifting from fee-for-service to

value/outcome-based payments• HHS targeting 90% of Medicare payments

tied to quality and 50% through alternative payment models by 2018

• ACO covered lives expected to grow from 23M in 2015 to 105M in 2020*

• Cerner’s HealtheIntent Cloud Platform• Supports move from reactive care to

proactive health• Connect the continuum• Empower members, care teams &

organizations• Facilitate knowledge-driven care

• Comprehensive platform• ~200 unique data sources

• Near real-time, actionable in workflow, programmable

*Leavitt Partners, Projected Growth of Accountable Care Organizations, December 2015


Typical approach to population health management

Person EHR Device HIE Payer Pharmacy Post-acute Open data

Contract management

EDW and analytics

Patient record NetworkingScorecards

Risk modeling

Care management

Medication managementRegistry


Cerner’s approach to population health management

Person EHR Device HIE Payer Pharmacy Post-acute Open data

Contract management

Patient record NetworkingScorecards

Risk modeling

Care management

Medication managementRegistry

HealtheIntent

EDW and analytics


Unmatched Global Scale

• 20,000+ Facilities Supported Worldwide • 40 countries with solutions, facilities or

associates• 22,000+ Associates

$-

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2010 2011 2012 2013 2014 2015

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Non-U.S. Revenue

Financial Highlights


Financial highlights

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Operating Cash FlowFree Cash Flow*

* Adjusted operating earnings, adjusted operating margin, adjusted diluted earnings per share and free cash flow reflect adjustments compared to results reported on a U.S. Generally Accepted Accounting Principles (GAAP) basis in our 2015 annual report on Form 10-K and most recent Form 10-Q. Non-GAAP results should not be substituted as a measure of our performance but instead should be used along with GAAP results as a supplemental measure of financial performance. Please see the Appendix for a reconciliation of these items to GAAP results.

FCF = Operating CF less Capital Expenditures and Capitalized SoftwareDollars in millions except for EPS

Top Line2015Q1 2015 Growth

2016Q1 Growth

Bookings 1,198$ 5,428$ 28% 1,170$ -2%

Revenue 996$ 4,425$ 30% 1,138$ 14%

Revenue Backlog 13,001$ 14,195$ 34% 14,615$ 12%

Bottom Line

Adjusted Operating Earnings* 236$ 1,076$ 28% 262$ 11%

Adjusted Operating Margin* 23.7% 24.3% 23.0%

Adjusted Diluted EPS* 0.45$ 2.11$ 28% 0.53$ 18%

Balance Sheet & Cash Flow

Cash and Investments 889$ 686$ -58% 707$ -20%

Days Sales Outstanding 79 80 21% 76 -4%

Debt 626$ 605$ 364% 595$ -5%

Operating Cash Flow 214$ 948$ 12% 327$ 53%

Free Cash Flow* 69$ 321$ -18% 152$ 121%

13

Sales Pipeline

Bookings$5,427

Cerner 2015 Business Model

Revenue Backlog $14,195

(Dollars in Millions)

* Operating margin reflects adjustments compared to results reported on a GAAP basis in our 2015 Form 10-K. Non-GAAP results should not be substituted as a measure of our performance but instead should be used along with GAAP results as a supplemental measure of financial performance. Non-GAAP results are used by management along with GAAP results to analyze our business, make strategic decisions, assess long-term trends on a comparable basis, and for management compensation purposes.

Revenue Streams RevenueContribution

Margin %Contribution

Margin $Licensed Software $564 91% $515Technology Resale $330 20% $67Subscriptions $388 63% $246

Professional Services $1,237 27% $330Managed Services $857 36% $312Support & Maintenance $976 77% $747

Reimbursed Travel $73 0% $0

Totals $4,425 50% $2,217Indirect ExpensesResearch and Development -12% ($524)Selling, General and Administrative -14% ($618)

Operating Margin* 24% $1,075

System Sales

Support, Maintenance and Services

More details and historical trends available in Cerner Trend File on Cerner.com

in the Investor Kit

http://www.cerner.com/About_Cerner/Investor_Relations/Investor_Kit/


2016/2017 Bookings, Backlog and Revenue Dynamics

• Strong backlog and 2015 bookings increase visibility into 2016 and beyond

• Year-end 2015 backlog1 projected to cover:

• 79% of 2016 revenue before travel• 60% of 2017 revenue

• As result of this visibility:• Flat 2016 bookings would support

guided 13% 2016 revenue growth• Only 7% bookings growth in 2017

would be needed for 10% 2017 revenue growth

• Higher bookings growth would support upside to revenue growth and/or enhanced visibility

*For illustration purposes only. This is not guidance nor does it suggest we expect no bookings growth in 2016 and only 7% growth in 2017. Assumes no material changes in bookings mix.

21%

79%

20%

20%

60%

1 – Backlog only contains 1 year of Support; assumptions for 2017 revenue visibility from backlog assume support backlog is reset after 2016


Long-term Growth• Long-term plan

reflects double-digit growth through 2025

• 10%+ CAGR 2015-2025 on bigger base

• 13% CAGR 2010 – 2025

• Near-term growth from EHR replacement and solution whitespace followed by larger contributions from new growth areas Population Health and Revenue Cycle revenue reflect changes from previous reporting. Population Health no longer includes revenue from Home

Care, Long-term Care, Retail Pharmacy, HIE, and Workforce Management. Each of these are now in Core. Revenue Cycle now includes solutions and content that are part of our Revenue Cycle offering, but weren’t being captured in Revenue Cycle revenue. Prior years have also been adjusted.


$45B+ Non-U.S. Health Care IT spend (Gartner)EHR less penetrated than in U.S.Associates or offices in more than 25 countries; market leader in many

$18B-$36B+ addressable market assumes $5 - $10+ PMPMCurrent target supported by PMPM below $5Assumes 10+ additional HealtheIntent solutions developed by 2020 and addition of Works-like services offeringBookings ramp in 2018-2020, followed by ramp in SaaS/PMPM revenue

$30B-$50B+ addressable software and services market (MicroMarket Monitor, McKinsey)Growth includes ongoing penetration of revenue cycle solutions in client base and resumed focus on full RevWorks

$8B+ annual revenue opportunity in installed base2025 target assumes 50-60 new clients by 2025Over 400 prospects in client base

Represents EHR replacement (primarily through ~2020), Federal Government, Device Resale, non-ITWorks Hosting and Support, Ambulatory, Post Acute, CareAware, Emergency, Lab, Interoperability, Critical Care, Pharmacy, Perioperative, Women’s Health, Imaging, Behavioral Health, Oncology, RehabCurrent client has installed <15 of 70+ solutionsModel assumes 5% growth through 2020, then 2-3% growth 2020-2025

Key Assumptions


Margin Expansion• Targeting 50-100 basis points of

annual margin expansion after 2016

• R&D and SG&A could provide 500+ basis points of leverage

• At scale, Population Health expected to be large recurring revenue source that is accretive to margins

• ITWorks and Revenue Cycle both have over 35% margins

• Reflected margin expansion would drive earnings growth of 200-400 basis points higher than revenue growth

* Operating margin reflects adjustments compared to results reported on a GAAP basis in our 2015 Form 10-K. Non-GAAP results should not be substituted as a measure of our performance but instead should be used along with GAAP results as a supplemental measure of financial performance. Non-GAAP results are used by management along with GAAP results to analyze our business, make strategic decisions, assess long-term trends on a comparable basis, and for management compensation purposes.


Guidance as of May 5, 2016

Metric Q216 2016

Revenue $1.175B - $1.25B $4.9B - $5.1B

Adjusted diluted earnings per share* $0.56 - $0.58 $2.30 - $2.40

New business bookings $1.35B - $1.48B

*Adjusted Diluted Earnings Per Share reflects adjustments compared to results reported on a U.S. Generally Accepted Accounting Principles (GAAP) basis in our 2014 annual report on Form 10-K and most recent Form 10-Q. Non-GAAP results should not be substituted as a measure of our performance but instead should be used along with GAAP results as a supplemental measure of financial performance. Please see the Appendix for a reconciliation of these items to GAAP results.**Includes projected results from acquisition of Siemens Health Services, excluding acquisition-related adjustments.

Reg FD Disclaimer – This slide reflects guidance provided in the most recent earnings press release and does not imply a reiteration or update of guidance.

Health care is too importantto stay the same.TM


Appendix - non-GAAP financial measuresThe presentation of Adjusted Operating Earnings, Adjusted Net Earnings, Adjusted Diluted Earnings Per Share, and Free Cash Flow (together, the Non-GAAP Financial Measures), are not meant to be considered in isolation, as a substitute for, or superior to, U.S. Generally Accepted Accounting Principles (GAAP) results and investors should be aware that non-GAAP financial measures have inherent limitations and should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP. The Non-GAAP Financial Measures may also be different from similar non-GAAP financial measures used by other companies and may not be comparable to similarly titled captions of other companies due to potential inconsistencies in the method of calculations. The Company believes that the Non-GAAP Financial Measures are important to enable investors to better understand and evaluate its ongoing operating results and allows for greater transparency in the review of its overall financial, operational and economic performance. Cerner’s future period guidance in this presentation includes adjustments for items not indicative of our core operations, which may include without limitation share-based compensation expense and acquisition-related expenses, such as integration expense, and may be affected by changes in ongoing assumptions and judgments relating to the company's acquired businesses, and may also be affected by nonrecurring, unusual or unanticipated charges, expenses or gains, all of which are excluded in the calculation of non-GAAP Adjusted Operating Earnings, Adjusted Net Earnings and Adjusted Diluted Earnings Per Share. The exact amount of these charges or credits are not currently determinable, but may be significant. It is therefore not practicable to reconcile this non-GAAP guidance to the most comparable GAAP measure.The Company provides earnings with and without share-based compensation expense and acquisition-related adjustments because earnings excluding these items are used by management along with GAAP results to analyze its business, make strategic decisions, assess long-term trends on a comparable basis, and for management compensation purposes. The Company provides cash flow with and without capital purchases and software development cost because operating cash flows excluding these expenditures takes into account the capital expenditures necessary to operate our business. Free cash flow is used by management along with GAAP results to analyze our earnings quality and overall cash generation of the business. Please see the accompanying table and the Company’s earnings releases and other information posted on the investor section of Cerner.com for a reconciliation of 2015 Non-GAAP Financial Measures to GAAP results.

($ in millions except Earnings Per Share)Operating Earnings

Operating Margin %

GAAP Operating Earnings 781$ 17.7%Share-based compensation expense 75Voluntary separation plan expense 46Health Services acquisition-related amortization 79Acquisition-related deferred revenue adjustment 48Other acquisition-related adjustments 46

Adjusted Operating Earnings 1,075$ 24.3%

Net Earnings

Diluted Earnings

Per ShareGAAP Net Earnings 539$ 1.54$

Share-based compensation expense, net of tax 52 0.15 Voluntary separation plan expense, net of tax 31 0.09 Health Services acquisition-related amortization, net of tax 55 0.15 Acquisition-related deferred revenue adjustment, net of tax 33 0.09 Other acquisition-related adjustments, net of tax 31 0.09

Adjusted Net Earnings (non-GAAP) 741$ 2.11$

GAAP Operating Cash Flow 948$ Capital purchases (362)Capitalized software development costs (265)

Free Cash Flow (Non-GAAP) 321$

Reconciliation of 2015 Non-GAAP Results to GAAP Results*

*More detail on these adjustments and management's use of Non-GAAP results is in our 2015 annual report on Form 10-K and our current reports on Form 8-K.

Documents

Jefferies Healthcare Conference Healthcare Conference ... HHS targeting 90% of Medicare payments ... Connect. the continuum