Cerner Corp. board announces departure of CEO Brent Shafer, launches leadership search

Cerner Corp. will begin a search for a new chief executive, the company announced Wednesday.

As part of the healthcare IT firm’s quarter earnings report, Cerner announced CEO Brent Shafer would soon depart. A news release said he would continue serving as chairman and CEO until the board has appointed a successor. He will then stay on as as an adviser for one year.

“On behalf of the board, I want to thank Brent for his leadership, dedication and commitment to advancing client success and the quality of healthcare, particularly with the unprecedented events of the last year,” said William Zollars, the lead independent director of the Cerner board. “The board believes that now is the right time to identify a successor to Brent who will lead Cerner through its next chapter of growth and shareholder value creation.”

In an interview with The Star, Zollars said the CEO’s departure wasn’t unexpected.

Shafer was 60 years old when he came on board in 2018 and committed to spending three to five years at Cerner, Zollars said.

“We really have appreciated and valued Brent as the leader of the company,” he said. “He’s done a really good job. And in a way this is bittersweet, because we knew this day would come, but we’re sorry to see him go.”

Shafer is the first outsider to lead the firm since co-founders Neal Patterson, Paul Gorup and Cliff Illig created the company in 1979. Patterson served as chief executive until his death in July 2017.

After Patterson’s death, the board pushed for more robust succession planning, Zollars said. And Shafer’s tenure has represented a new era for the company.

“Neal Patterson was one of a kind. He was an icon in the industry, a brilliant guy, founder of a very successful company and the CEO for 30 years. So you can’t take anything away from Neal’s success,” Zollars said. “I think what Brent brought in was a little more professional management style than maybe what Neal had because Neal was still an entrepreneur at heart.”

Zollars said Shafer has hired a strong leadership team, improved profit margins and built a foundation for the company’s future success in a changing industry. In just a few years, Shafer has reshaped the executive ranks at Kansas City’s largest private employer.

In October, Cerner announced that Marc Naughton, executive vice president and chief financial officer, would leave after nearly 30 years at the company.

In November 2019, the company announced that Chief Operating Officer Mike Nill, another company veteran, would retire by the end of the year. Around the same time, the company announced the departures of Chief Strategy Officer Joanne Burns and Jeff Townsend, executive vice president and chief of innovation.

In January, the company announced two more executive changes: John Peterzalek, chief client and services officer, and Randy Sims, chief legal officer, left the company as Cerner promoted Travis Dalton, who previously led the Cerner government services division, and Dan Devers, the company’s senior vice president of cloud strategies.

In February, Marc Erceg began as Cerner’s new chief financial officer. Erceg previously worked as the CFO of three other publicly traded companies, most recently as an executive vice president and CFO of Tiffany & Co.

Cerner initially pioneered the work of digitizing the nation’s paper health records. But that domestic market has largely completed the move away from paper records and Cerner and its competitors have saturated the market.

That has pushed Cerner to look for ways to diversify its business model and executives are participating with third-party consultants in an exhaustive review of all current operations.

During Shafer’s tenure, he frequently referred to a large scale “transformation” of the business as the company has eliminated jobs and acquired and divested in certain business lines.

“Cerner is on the right trajectory, with increased financial guidance based on actions we are taking to improve performance,” Shafer said in a news release Wednesday. “With the support of the entire organization, we have simplified the business while implementing a new operating model to make Cerner more efficient and effective.”

On Wednesday, Cerner reported first quarter revenue of $1.388 billion, down 2% compared to $1.412 billion in the first quarter of 2020.