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"I am pleased with Cerner's solid results in the first quarter," said David Feinberg, M.D., president and CEO. "Our results reflect solid execution across the business and strong contributions from Cerner EnvizaSM, which is well positioned to build on a terrific first year by accelerating the discovery, development, and deployment of therapies. We continue to make progress towards the closing of the proposed acquisition by Oracle, and I remain excited by the potential for the combination to further our purpose of empowering those devoted to delivering care and keeping people healthy."

"During the first quarter, we delivered revenue growth in line with our expectations and expanded Adjusted Operating Margin by 130 basis points, resulting in strong Adjusted Diluted EPS growth of 17%," said Mark Erceg, executive vice president and chief financial officer. "The margin expansion this quarter was on top of strong margin expansion over the past two years. Since the first quarter of 2020, our GAAP operating margin has expanded 500 basis points and our Adjusted Operating Margin has expanded 330 basis points, reflecting the ongoing impact of our organizational transformation, productivity measures, more focused product strategy, and cost control initiatives. These efforts are improving our ability to create value for our clients while also driving better financial performance."

On Dec. 20, 2021, we entered into an Agreement and Plan of Merger (as it may be amended or supplemented from time to time, the "Merger Agreement") with Cedar Acquisition Corporation ("Merger Subsidiary"), OC Acquisition LLC and Oracle Corporation ("Oracle"). Pursuant to the Merger Agreement, on Jan. 19, 2022, Oracle commenced a cash tender offer (the "Offer") to acquire all of the issued and outstanding shares of our common stock, par value $0.01 per share (the "Shares") for a purchase price of $95.00 per share, net to the holders thereof in cash, without interest and subject to any required tax withholding. Following the completion of the Offer, Merger Subsidiary will merge with and into Cerner (the "Merger"), with Cerner continuing as the surviving corporation and as a wholly owned indirect subsidiary of Oracle, at which time the Shares would cease to be publicly held. We expect the Merger to close in calendar year 2022, subject to receiving certain regulatory approvals and satisfying other closing conditions, including Cerner stockholders tendering a majority of Cerner's outstanding Shares in the Offer. Additional information about the Offer and Merger and the Merger Agreement is set forth in our filings with the Securities and Exchange Commission ("SEC").

Adjusted Operating Margin, Adjusted Diluted EPS and Free Cash Flow are not recognized terms under GAAP. These non-GAAP financial measures should not be substituted for GAAP operating margin, GAAP diluted earnings per share, or GAAP cash flows from operating activities, respectively, as measures of Cerner's performance, but instead should be utilized as supplemental measures of financial performance in evaluating our business. Please see the accompanying schedule, titled "Reconciliation of GAAP Results to Non-GAAP Results," where our non-GAAP financial measures are defined and reconciled to the most comparable GAAP measures.

In connection with the proposed acquisition, Oracle has commenced a tender offer for the Shares. This document is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell the Shares, nor is it a substitute for the tender offer materials that Oracle and its acquisition subsidiary have filed with the SEC upon commencement of the tender offer. Oracle and its acquisition subsidiary have filed tender offer materials on Schedule TO, and Cerner has filed a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC with respect to the tender offer. The tender offer materials (including an Offer to Purchase, a related Letter of Transmittal and certain other tender offer documents) and the Solicitation/Recommendation Statement contain important information. Holders of the Shares are urged to read these documents carefully (as each may be amended or supplemented from time to time) because they contain important information that holders of Shares should consider before making any decision regarding tendering their Shares. The Offer to Purchase, the related Letter of Transmittal and certain other tender offer documents, as well as the Solicitation/Recommendation Statement, are available to all holders of the Shares at no expense to them. The tender offer materials and the Solicitation/Recommendation Statement are available for free at the SEC's website at www.sec.gov.

Cerner's health technologies connect people and information systems at thousands of contracted provider facilities worldwide dedicated to creating smarter and better care for individuals and communities. Recognized globally for innovation, Cerner assists clinicians in making care decisions and assists organizations in managing the health of their populations. The company also offers a connected clinical and financial ecosystem to help manage day-to-day revenue functions, as well as a wide range of services to support clinical, financial and operational needs, focused on people. For more information, visit Cerner.com, Cerner Perspectives, connect on Facebook, Instagram, LinkedIn, Twitter or join the discussion on Cerner's podcast Perspectives on Health & Tech. Nasdaq: CERN.

All statements in this press release that do not directly and exclusively relate to historical facts constitute forward-looking statements. 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. It is important to note that Cerner's performance, and actual results, financial condition or business could differ materially from those expressed in such forward-looking statements. The words "positioned", "proposed", "potential", "expect", "will", "would", "expectations", or the negative of these words, variations thereof or similar expressions are intended to identify such forward-looking statements. For example, our forward-looking statements include statements regarding the proposed acquisition of Cerner by Oracle and its affiliates and general business outlook. Factors that could cause or contribute to such differences include, but are not limited to, potential disruptions to our business caused by the proposed acquisition of us by Oracle; the possibilities that the proposed acquisition will not close or that the closing may be delayed; stockholder litigation could prevent or delay the

closing of the transaction or otherwise impact our business, operating results and financial condition; the ability of Cerner to attract or retain customers and key personnel and to maintain relationships with key suppliers; litigation or claims relating to the proposed acquisition or Cerner's assets and business; general economic conditions in regions in which either Cerner or Oracle does business; the impact of the COVID-19 pandemic on how Cerner and its customers are operating their businesses and the duration and extent to which the pandemic will impact Cerner's future results of operations; the possibility that Cerner may be adversely affected by other economic, business, and/or competitive factors, including our ability to anticipate or respond quickly to market changes, changing technologies and evolving pricing and deployment methods and to bring competitive new solutions, devices, features and services to market in a timely fashion; and changing political, economic and regulatory influences. Additional discussion of these and other risks, uncertainties and factors affecting Cerner's business is contained in Cerner's filings with the SEC. 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 or revise 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.


(In thousands, except per share data)	Three Months Ended
	2022		2021

Revenues	$	1,429,801	$	1,387,778
Costs of revenue	243,848		230,656

Margin	1,185,953		1,157,122

Operating expenses
Sales and client service	612,997		622,176
Software development	195,091		192,327
General and administrative	109,279		112,365
Amortization of acquisition-related intangibles	16,602		12,196
Total operating expenses	933,969		939,064

Operating earnings	251,984		218,058

Other income, net	26		1,206

Earnings before income taxes	252,010		219,264
Income taxes	(45,881)		(47,012)

Net earnings	$	206,129	$	172,252

Basic earnings per share	$	0.70	$	0.57

Basic weighted average shares outstanding	293,412		304,731

Diluted earnings per share	$	0.70	$	0.56

Diluted weighted average shares outstanding	296,336		308,031


(In thousands)	Three Months Ended
	2022		2021

Operating expenses (GAAP)	$	933,969	$	939,064

Share-based compensation expense	(34,719)		(47,835)
Acquisition-related amortization	(16,602)		(12,196)
Organizational restructuring and other expense	(21,179)		(17,195)
COVID-19 related expense	(565)		(1,360)

Adjusted Operating Expenses (non-GAAP)	$	860,904	$	860,478


(In thousands)	Three Months Ended
	2022			2021

Operating earnings (GAAP)	$	251,984		$	218,058

Share-based compensation expense	34,719			47,835
Acquisition-related amortization	16,602			12,196
Organizational restructuring and other expense	21,179			17,195
COVID-19 related expense	565			1,360

Adjusted Operating Earnings (non-GAAP)	$	325,049		$	296,644

Operating Margin (GAAP)	17.62		%	15.71		%

Adjusted Operating Margin (non-GAAP)	22.73		%	21.38		%


(In thousands, except per share data)	Three Months Ended
	2022		2021

Net earnings (GAAP)	$	206,129	$	172,252

Pre-tax adjustments for Adjusted Net Earnings:
Share-based compensation expense	34,719		47,835
Acquisition-related amortization	16,602		12,196
Organizational restructuring and other expense	21,179		17,195
COVID-19 related expense	565		1,360

After-tax adjustments for Adjusted Net Earnings:
Income tax effect of pre-tax adjustments	(13,302)		(16,850)
Share-based compensation permanent tax items	(3,121)		1,411

Adjusted Net Earnings (non-GAAP)	$	262,771	$	235,399

Diluted weighted average shares outstanding	296,336		308,031

Diluted earnings per share (GAAP)	$	0.70	$	0.56

Adjusted Diluted Earnings Per Share (non-GAAP)	$	0.89	$	0.76


(In thousands)	Three Months Ended
	2022		2021

Cash flows from operating activities (GAAP)	$	375,063	$	450,434
Capital purchases	(42,393)		(75,925)
Capitalized software development costs	(56,300)		(83,550)
Free Cash Flow (non-GAAP)	$	276,370	$	290,959

Cash flows from investing activities (GAAP)	$	(12,197)	$	(182,185)

Cash flows from financing activities (GAAP)	$	(241,334)	$	117,115

We report our financial results in accordance with accounting principles generally accepted in the United States of America ("GAAP"). However, we supplement our GAAP results with certain non-GAAP financial measures, which we believe enable investors to better understand and evaluate our ongoing operating results and allows for greater transparency in the review and understanding of our overall financial, operational and economic performance. These non-GAAP financial measures are not meant to be considered in isolation, as a substitute for, or superior to GAAP results and investors should be aware that non-GAAP measures have inherent limitations and should be read only in conjunction with Cerner's consolidated financial statements prepared in accordance with GAAP. These non-GAAP 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. We provide the measures of Adjusted Operating Expenses, Adjusted Operating Earnings, Adjusted Operating Margin, Adjusted Net Earnings and Adjusted Diluted Earnings Per Share as such measures are used by management, along with GAAP results, to analyze Cerner's business, make strategic decisions, assess long-term trends on a comparable basis, and for management compensation purposes. We provide the measure of Free Cash Flow as such measure takes into account certain 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, and for management compensation purposes.

Share-based compensation expense - Non-cash expense arising from our equity compensation and stock purchase plans available to our associates and directors. We exclude share-based compensation expense as we believe the amount of such non-cash expenses in any specific period may not directly correlate to the underlying performance of our business operations. Share-based compensation expense is included in our Condensed Consolidated Statements of Operations as follows:

Acquisition-related amortization - Non-cash expense consisting of the amortization of customer relationships, acquired technology, and trade name intangible assets recorded in connection with our acquisitions of the Health Services business in February 2015, AbleVets in October 2019, and all subsequent acquisitions. We exclude acquisition-related amortization as we believe the amount of such non-cash expenses in any specific period may not directly correlate to the underlying performance of our business operations. Such amount is included in our Condensed Consolidated Statements of Operations in the caption "Amortization of acquisition-related intangibles."

Organizational restructuring and other expense - Consists of certain charges incurred in connection with our operational improvement initiatives. Expenses in connection with these efforts may include, but are not limited to, consultant and other professional services fees, employee separation costs, contract termination costs, asset impairment charges, and other such related expenses. Also included herein, are $4.450 million of expenses incurred in the first quarter of 2022 in connection with that certain merger agreement dated December 20, 2021 with Oracle Corporation and related affiliates. We exclude organizational restructuring and other expense as we believe the amount of such expense in any specific period may not directly correlate to the underlying performance of our business operations. Organizational restructuring and other expense is included in our Condensed Consolidated Statements of Operations as follows:

COVID-19 related expense - Consists of certain charges incurred that we can clearly and objectively attribute to the impact of the ongoing Coronavirus disease pandemic ("COVID-19"). These charges include expenses incurred related to trade shows for which we withdrew our participation and expenses associated with incremental cleaning and sanitation efforts for facility space that may have been exposed to the virus. We exclude COVID-19 related expense as we believe the amount of such expense in any specific period may not directly correlate to the underlying performance of our business operations. COVID-19 related expense is included in our Condensed Consolidated Statements of Operations as follows:

Share-based compensation permanent tax items - Consists of permanent items impacting the Company's income tax provision related to our share-based compensation arrangements, including net excess tax benefits recognized upon the exercise of stock options and the vesting of restricted share and share unit awards. We exclude such items as we believe the amount of such items in any specific period may not directly correlate to the underlying performance of our business operations. Such amount is included in our Condensed Consolidated Statements of Operations in the caption "Income taxes."


(In thousands)	2022		2021

Assets
Current assets:
Cash and cash equivalents	$	709,532	$	589,847
Short-term investments	171,180		252,622
Receivables, net	1,178,037		1,161,361
Inventory	27,704		28,159
Prepaid expenses and other	381,404		417,465

Total current assets	2,467,857		2,449,454

Property and equipment, net	1,610,496		1,656,171
Right-of-use assets	76,474		82,940
Software development costs, net	1,003,806		1,000,357
Goodwill	1,129,539		1,131,121
Intangible assets, net	434,900		458,482
Long-term investments	456,398		461,984
Other assets	194,761		193,649

Total assets	$	7,374,231	$	7,434,158

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	359,562	$	329,582
Current installments of long-term debt	—		225,000
Deferred revenue	456,929		531,234
Accrued payroll and tax withholdings	284,145		317,092
Other current liabilities	278,236		223,350

Total current liabilities	1,378,872		1,626,258

Long-term debt	1,611,303		1,611,256
Deferred income taxes	362,236		395,177
Other liabilities	113,301		121,005

Total liabilities	3,465,712		3,753,696

Shareholders' Equity:
Common stock	3,814		3,802
Additional paid-in capital	2,811,612		2,717,244
Retained earnings	6,877,111		6,751,692
Treasury stock	(5,664,718)		(5,664,718)
Accumulated other comprehensive loss, net	(119,300)		(127,558)

Total shareholders' equity	3,908,519		3,680,462

Total liabilities and shareholders' equity	$	7,374,231	$	7,434,158

(unaudited)


	Three Months Ended
(In thousands)	2022		2021

CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	206,129	$	172,252
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	175,223		175,313
Share-based compensation expense	33,332		47,950
Provision for deferred income taxes	(36,301)		(2,829)
Changes in assets and liabilities:
Receivables, net	(16,712)		(12,301)
Inventory	461		(7,411)
Prepaid expenses and other	13,600		24,173
Accounts payable	35,730		30,118
Accrued income taxes	75,323		21,378
Deferred revenue	(72,800)		14,768
Other accrued liabilities	(38,922)		(12,977)

Net cash provided by operating activities	375,063		450,434

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital purchases	(42,393)		(75,925)
Capitalized software development costs	(56,300)		(83,550)
Purchases of investments	(8,439)		(321,670)
Sales and maturities of investments	99,638		306,935
Purchase of other intangibles	(4,703)		(7,975)

Net cash used in investing activities	(12,197)		(182,185)

CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt issuance	—		500,000
Repayment of long-term debt	(225,000)		—
Proceeds from exercise of stock options	63,394		36,514
Payments to taxing authorities in connection with shares directly withheld from associates	(1,583)		(4,897)
Treasury stock purchases	—		(341,715)
Dividends paid	(79,183)		(67,477)
Other	1,038		(5,310)

Net cash provided by (used in) financing activities	(241,334)		117,115

Effect of exchange rate changes on cash and cash equivalents	(1,847)		(3,118)

Net increase in cash and cash equivalents	119,685		382,246
Cash and cash equivalents at beginning of period	589,847		615,615

Cash and cash equivalents at end of period	$	709,532	$	997,861


(In thousands)	Three Months Ended
	2022		2021

Licensed software	$	189,421	$	161,661
Technology resale	47,483		45,672
Subscriptions	94,423		99,812
Professional services	525,260		494,422
Managed services	324,626		317,376
Support and maintenance	242,880		263,324
Reimbursed travel	5,708		5,511

Total revenues	$	1,429,801	$	1,387,778