Trinity Medical Center Settlement Forces Cerner to Take Charge Against Anticipated Earnings

A settlement agreement with Trinity Medical Center in Minot, N.D., will force health IT giant Cerner to take a significant charge against its fourth quarter earnings.

Last year, Trinity claimed the patient accounting software it purchased from Cerner in 2008 was defective and did not deliver the expected business benefits, according to a report in The Wall Street Journal.

The medical center sought $240 million in damages, while Cerner estimated damages should total around $4 million. Both parties agreed to arbitration, which started in October and concluded Thursday.

The amount of the settlement was undisclosed in court filings, though Cerner released a statement reporting the company "strongly disagreed" with the amount awarded to Trinity. The company also stated the settlement was "the only material judgment against Cerner in its 34-year history," according to a Kansas City Star report.

As a result of the arbitration, Cerner expects a charge of $0.18 to $0.19 per share for the quarter ending Dec. 28, 2013. Cerner shares closed down 1 percent on Thursday, according to the Kansas City Star.

Neither Cerner nor independent research firm International and Strategy Investment Group expects the settlement to have lasting effects on Cerner's growth opportunities, according to the reports.

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