Pandemic Complicates Sales for Lab Info System Companies

The COVID-19 outbreak last March made it challenging to win new customers

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HEALTHCARE INFORMATION TECHNOLOGY (IT) COMPANIES serving clinical laboratories and providers with laboratory information systems (LISs) and electronic health records (EHRs) shared recent financial reports on their businesses. 

It is challenging to obtain information about the revenue growth and market share of the leading vendors of laboratory information systems because these LIS businesses are either a division of a large public corporation or are owned by a private company. 

The following is current information about financial and market performance taken from quarterly earnings calls and public sources. 

Cerner-Corp-logo

CERNER CORPORATION: Q1-2021 Revenue was $1.4 Billion 

Cerner Corporation said revenue in the first quarter was $1.4 billion, a decline of 2% compared to Q1 last year. Full-year 2020 revenue was $5.5 billion, which was down 3% compared to 2019 as a result of pandemic. 

During an earnings call, Marc Naughton, Executive Vice President and Chief Financial Officer, addressed software revenue challenges. “Licensed software revenue in Q4 was flat year-over-year at $174 million. Full year licensed software revenue declined 4% from 2019 to $656 million due to pandemic-driven declines in traditional software.” 

Cerner executives commented on one trend that touches on how clinical laboratories serve hospitals, office-based physicians, and other providers. Donald Trigg, President, noted a need for information technologies to support integrating care beyond the hospital. “The biggest trend in provider healthcare—before, during, and after COVID—centers on the push for vertical integration beyond the four walls of a hospital.” he commented. 

“This mix of owned and affiliated physician practices, post-acute care facilities, and the home as venue are critical nodes on the health networks being built in every community. 

“These health network strategies have diverse contractual frameworks and disparate technologies, and our HealtheIntent platform is purpose-built to integrate and manage them,” Trigg continued. 

A topic of interest to clinical laboratories using the Millennium LIS is that Cerner would like to move this product to the cloud in a stepwise fashion. “We’ve indicated [moving] Millennium [to the cloud] will be a process. We probably will never move all of Millennium,” Naughton stated during the Q4-2020 conference call. 

“There are elements of Millennium that will stay out there,” he continued. “But the elements [of Millennium] that face the client—the elements that we benefit from being updated very quickly and frequently—those are the elements that will move to the cloud … over some period of time.” 

Epic-Systems-logo

EPIC SYSTEMS: Estimated Revenue of $3.2 Billion in 2020 

Epic Systems Corporation, Verona, Wis., is privately held and not required to disclose financial information. Epic’s flagship product is its electronic health record (EHR) system and it aggressively promotes its Epic Beaker LIS for both clinical and pathology laboratories. 

Forbes Magazine reported Epic’s 2020 revenue as $3.3 billion. In 2019, Epic had a 39% share of the more than 880,000 hospital beds in the U.S., according to estimates by the healthcare IT firm KLAS Research. KLAS also estimated Epic’s EHR market share for acute care hospitals to be 29%. 

Roper-logo

ROPER TECHNOLOGIES–Sunquest Information Systems, CliniSys, Data Innovations: Q1 Brings Growth in LIS Market in Europe 

Roper Technologies, the Sarasota, Fla.- based parent company of various laboratory IT companies, reported on first quarter 2021 (Q1 2021), calling it a “great start to 2021.” 

Clinical laboratory leaders are reminded that Roper’s report on application software segment revenue includes data from Sunquest Information Systems, Tucson, Ariz.; Data Innovations, Colchester, Vt.; and CliniSys Group, based in the United Kingdom (UK). 

In an earnings call, Roper explained that its reported Q1 2021 revenue of $1.5 billion—up 13%—was the “all-time record for a Roper quarter” and due to a revenue increase of 42% year-over-year in the application software division, which includes Roper’s two LIS companies. 

“Our results were enhanced a bit by approximately $40 million of accelerated payments that were the results of wins at our UK-based CliniSys laboratory software business,” said Chief Financial Office Robert Crisci. 

During the call, Roper executives described a booming market in Europe for its CliniSys laboratory information system (LIS). In the United States, the Sunquest LIS has maintained market share, even during the pandemic. 

“[Sunquest] benefited last year and in this quarter with the COVID-19 tailwind, and how it stood up SARS-CoV-2 testing,” explained Neil Hunn, President and CEO of Roper. [The Sunquest team] continues to invest in their public health offering and their molecular offering. The leadership team has done a nice job in that. So, that’s good news. The unfortunate part of that news is that [the pandemic] delayed the bottoming of the [LIS] business, which [the COVID-19 pandemic] … pushed out for a year or two … [which will give Sunquest a] baseline from which it can grow.” 

Ovation-logo

OVATION.IO: Emerging LIS Firm Raises $21.5 Million in New Funding 

Ovation.io of Cambridge, Massachusetts, announced a Series B funding of $21.5 million late last year. The company is a recent entrant into the LIS market and offers what it describes as a cloud-based laboratory information management system (LIMS). 

The funding was announced by Ovation co-founder/CEO Barry Wark, PhD, in December, at the end of a pivotal year when Wark said the firm (established in 2017) doubled revenue as it leveraged its LIMS to support COVID-19 testing and more. 

One of the five key funders called attention to Ovation’s focus on molecular genomics labs and precision medicine. 

“These labs need specialized software, and the real value is being able to stitch the data together to create a solution to go after targeted therapeutics,” said Chris Scoggins, Venture Partner, SignalFire, in Crunchbase News. 

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