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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2021
or
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________

Commission File Number: 0-15386

CERNER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
https://cdn.kscope.io/2f5200568bf5d7d4b36bc3fbcbb05013-cern-20210630_g1.jpg
43-1196944
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
2800 Rock Creek Parkway
North Kansas City,MO64117
(Address of principal executive offices)(Zip Code)

(816) 221-1024
(Registrant's telephone number, including area code)
_________________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareCERNThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer Accelerated Filer Non-accelerated Filer Smaller Reporting Company Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class  Outstanding at July 26, 2021
Common Stock, $0.01 par value per share  295,585,810 shares



Table of Contents
CERNER CORPORATION

TABLE OF CONTENTS
 
Part I.Financial Information:
Item 1.Financial Statements:
Item 2.
Item 3.
Item 4.
Part II.Other Information:
Item 1.
Item 2.
Item 6.
Signatures



Table of Contents
Part I. Financial Information

Item 1. Financial Statements

CERNER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 2021 (unaudited) and December 31, 2020
(In thousands, except share data)20212020
Assets
Current assets:
Cash and cash equivalents$246,404 $615,615 
Short-term investments638,488 442,473 
Receivables, net1,237,230 1,168,712 
Inventory20,168 23,027 
Prepaid expenses and other398,510 401,160 
Total current assets2,540,800 2,650,987 
Property and equipment, net1,768,617 1,804,083 
Right-of-use assets95,666 104,536 
Software development costs, net1,001,440 1,009,349 
Goodwill1,129,699 914,520 
Intangible assets, net492,547 329,249 
Long-term investments497,350 510,220 
Other assets194,983 198,152 
Total assets$7,721,102 $7,521,096 
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable$332,959 $235,755 
Current installments of long-term debt225,000  
Deferred revenue429,219 393,293 
Accrued payroll and tax withholdings332,513 309,814 
Other current liabilities223,203 229,764 
Total current liabilities1,542,894 1,168,626 
Long-term debt1,611,154 1,336,069 
Deferred income taxes389,018 376,035 
Other liabilities151,552 157,799 
Total liabilities3,694,618 3,038,529 
Shareholders' Equity:
Common stock, $0.01 par value, 500,000,000 shares authorized, 376,935,912 shares issued at June 30, 2021 and 373,224,832 shares issued at December 31, 2020
3,769 3,732 
Additional paid-in capital2,509,545 2,288,806 
Retained earnings6,546,615 6,475,551 
Treasury stock, 77,455,570 shares at June 30, 2021 and 67,371,686 shares at December 31, 2020
(4,914,718)(4,164,718)
Accumulated other comprehensive loss, net(118,727)(120,804)
Total shareholders' equity4,026,484 4,482,567 
Total liabilities and shareholders' equity$7,721,102 $7,521,096 

See notes to condensed consolidated financial statements (unaudited).
1

Table of Contents
CERNER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended June 30, 2021 and June 30, 2020
(unaudited)
 
 Three Months EndedSix Months Ended
(In thousands, except per share data)2021202020212020
Revenues$1,456,755 $1,330,349 $2,844,533 $2,742,090 
Costs and expenses:
Costs of revenue261,325 211,963 491,981 466,379 
Sales and client service731,077 645,087 1,353,253 1,281,736 
Software development (Includes amortization of $65,247 and $130,097 for the three and six months ended June 30, 2021, respectively; and $61,197 and $122,208 for the three and six months ended June 30, 2020, respectively)
241,600 178,955 433,927 364,275 
General and administrative156,307 134,332 268,672 274,184 
Amortization of acquisition-related intangibles16,886 13,114 29,082 30,242 
Total costs and expenses1,407,195 1,183,451 2,576,915 2,416,816 
Operating earnings49,560 146,898 267,618 325,274 
Other income (loss), net(1,678)24,632 (472)30,227 
Earnings before income taxes47,882 171,530 267,146 355,501 
Income taxes(15,175)(36,782)(62,187)(73,594)
Net earnings$32,707 $134,748 $204,959 $281,907 
Basic earnings per share$0.11 $0.44 $0.68 $0.92 
Diluted earnings per share$0.11 $0.44 $0.67 $0.91 
Basic weighted average shares outstanding300,737 304,776 302,723 307,256 
Diluted weighted average shares outstanding303,591 306,717 305,802 309,520 
See notes to condensed consolidated financial statements (unaudited).

2

Table of Contents
CERNER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the three and six months ended June 30, 2021 and June 30, 2020
(unaudited)
 
 Three Months EndedSix Months Ended
(In thousands)2021202020212020
Net earnings$32,707 $134,748 $204,959 $281,907 
Foreign currency translation adjustment and other (net of taxes (benefit) of $250 and $(429) for the three and six months ended June 30, 2021, and $(88) and $337 for the three and six months ended June 30, 2020, respectively)
4,486 9,197 (4,505)(11,349)
Unrealized gain (loss) on cash flow hedge (net of taxes (benefit) of $736 and $2,245 for the three and six months ended June 30, 2021, and $(332) and $(6,682) for the three and six months ended June 30, 2020, respectively)
2,238 (1,007)6,826 (20,315)
Unrealized holding gain (loss) on available-for-sale investments (net of taxes (benefit) of $(9) and $(80) for the three and six months ended June 30, 2021, and $494 and $215 for the three and six months ended June 30, 2020, respectively)
(27)1,502 (244)653 
Comprehensive income$39,404 $144,440 $207,036 $250,896 

See notes to condensed consolidated financial statements (unaudited).

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CERNER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2021 and June 30, 2020
(unaudited)
 Six Months Ended
(In thousands)20212020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings$204,959 $281,907 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization354,567 343,941 
Share-based compensation expense101,891 72,580 
Provision for deferred income taxes3,232 12,884 
Investment gains (26,410)
Asset impairments115,812  
Changes in assets and liabilities (net of businesses acquired):
Receivables, net(41,751)(48,426)
Inventory2,868 5,509 
Prepaid expenses and other9,914 (36,431)
Accounts payable54,088 (31,711)
Accrued income taxes11,585 26,358 
Deferred revenue(676)(66,137)
Other accrued liabilities3,080 8,032 
Net cash provided by operating activities819,569 542,096 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital purchases(199,281)(166,296)
Capitalized software development costs(167,108)(151,393)
Purchases of investments(558,686)(91,957)
Sales and maturities of investments380,156 81,022 
Purchase of other intangibles(16,031)(20,656)
Acquisition of businesses, net of cash acquired(349,869)(35,766)
Net cash used in investing activities(910,819)(385,046)
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt issuance500,000 300,000 
Proceeds from exercise of stock options154,900 156,908 
Payments to taxing authorities in connection with shares directly withheld from associates(36,346)(14,217)
Treasury stock purchases(750,000)(650,000)
Dividends paid(135,260)(111,101)
Other(8,672)(4,159)
Net cash used in financing activities(275,378)(322,569)
Effect of exchange rate changes on cash and cash equivalents(2,583)(6,429)
Net decrease in cash and cash equivalents(369,211)(171,948)
Cash and cash equivalents at beginning of period615,615 441,843 
Cash and cash equivalents at end of period$246,404 $269,895 

See notes to condensed consolidated financial statements (unaudited).
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CERNER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the three and six months ended June 30, 2021 and June 30, 2020
(unaudited)
Common StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive Loss, Net
(In thousands)SharesAmount
Balance at December 28, 2019367,635 $3,676 $1,905,171 $5,934,909 $(3,407,768)$(118,660)
Exercise of stock options and vests of restricted shares and share units2,543 26 114,050 — — — 
Employee share-based compensation expense— — 35,031 — — — 
Cumulative effect of accounting change (ASU 2016-13)— — — (4,606)— — 
Other comprehensive income (loss)— — — — — (40,703)
Treasury stock purchases— — — — (650,000)— 
Cash dividends declared ($0.18 per share)— — — (55,206)— — 
Net earnings— — — 147,159 — — 
Balance at March 31, 2020370,178 3,702 2,054,252 6,022,256 (4,057,768)(159,363)
Exercise of stock options and vests of restricted shares and share units1,009 10 28,540 — — — 
Employee share-based compensation expense— — 37,549 — — — 
Other comprehensive income (loss)— — — — — 9,692 
Cash dividends declared ($0.18 per share)— — — (55,602)— — 
Net earnings— — — 134,748 — — 
Balance at June 30, 2020371,187 $3,712 $2,120,341 $6,101,402 $(4,057,768)$(149,671)
Balance at December 31, 2020373,225 $3,732 $2,288,806 $6,475,551 $(4,164,718)$(120,804)
Exercise of stock options and vests of restricted shares and share units824 8 31,471 — — — 
Employee share-based compensation expense— — 47,950 — — — 
Other comprehensive income (loss)— — — — — (4,620)
Treasury stock purchases— — — — (350,000)— 
Cash dividends declared ($0.22 per share)— — — (67,191)— — 
Net earnings— — — 172,252 — — 
Balance at March 31, 2021374,049 3,740 2,368,227 6,580,612 (4,514,718)(125,424)
Exercise of stock options and vests of restricted shares and share units2,887 29 87,377 — — — 
Employee share-based compensation expense— — 53,941 — — — 
Other comprehensive income (loss)— — — — — 6,697 
Treasury stock purchases— — — — (400,000)— 
Cash dividends declared ($0.22 per share)— — — (66,704)— — 
Net earnings— — — 32,707 — — 
Balance at June 30, 2021376,936 $3,769 $2,509,545 $6,546,615 $(4,914,718)$(118,727)

See notes to condensed consolidated financial statements (unaudited).
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CERNER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
(1) Interim Statement Presentation

Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by Cerner Corporation ("Cerner," the "Company," "we," "us" or "our") without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our latest annual report on Form 10-K.
In management's opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position and the results of operations and cash flows for the periods presented. Our interim results as presented in this quarterly report on Form 10-Q are not necessarily indicative of the operating results for the entire year.

The condensed consolidated financial statements were prepared using GAAP. These principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ from those estimates.

All references to quarters or six month periods ended 2021 and 2020 in these notes to condensed consolidated financial statements refer to the respective three and six month periods ended June 30, 2021 and June 30, 2020, unless otherwise noted.

Employee Separation Costs

In connection with involuntary separation benefits, we recognized $40 million and $12 million of expenses in the second quarters of 2021 and 2020, respectively; and $45 million and $15 million of expenses during the first six months of 2021 and 2020, respectively.

In connection with voluntary separation benefits, we recognized $14 million and $2 million of expenses in the second quarters of 2021 and 2020, respectively; and $27 million and $15 million of expenses during the first six months of 2021 and 2020, respectively.

Such employee separation costs are included in "General and administrative" expense in our condensed consolidated statements of operations.

At June 30, 2021, a liability of $48 million for such obligations is included in "Accrued payroll and tax withholdings" in our condensed consolidated balance sheets.

Real Estate Held For Sale

In connection with our operational improvement initiatives, during the second quarter of 2021 we made certain decisions regarding the continued use of certain of our owned real estate. As a result of those decisions, on July 9, 2021, we sold office space located in Kansas City, Missouri (known as our Oaks Campus), in April 2021 began the process of marketing office space located in Kansas City, Missouri (known as our Riverport Campus), and in June 2021 began the process of marketing office space located in Kansas City, Kansas (known as our Continuous Campus). At June 30, 2021, these long-lived assets aggregating $67 million were held for sale and presented within our condensed consolidated balance sheets in "Property and equipment, net." In connection with the designation as held for sale, during the three months ended June 30, 2021, we recorded a pre-tax charge of $68 million to reduce the amount of such long-lived assets to fair value, less estimated costs to sell. Such charge is included in "Sales and client service" expense in our condensed consolidated statements of operations.


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Software Development Costs

In the second quarter of 2021, we recorded a pre-tax charge of $48 million to reduce the carrying amount of certain capitalized software development costs to estimated net realizable value. Such charge is included in "Software development" expense in our condensed consolidated statements of operations.

Supplemental Disclosures of Cash Flow Information
 Six Months Ended
(In thousands)20212020
Cash paid during the period for:
Interest (including amounts capitalized of $5,514 and $8,831, respectively)
$20,190 $16,572 
Income taxes, net of refunds53,358 8,690 
Non-cash items:
Lease liabilities recorded upon the commencement of operating leases7,743 22,270 
Financed capital purchases6,143  

Recently Issued Accounting Pronouncements

Reference Rate Reform. The Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting in March 2020 and ASU 2021-01, Reference Rate Reform (Topic 848): Scope in January 2021. Such guidance provides optional financial reporting alternatives to reduce the cost and complexity associated with the accounting for contracts and hedging relationships affected by reference rate reform, such as the upcoming discontinuance of the London Interbank Offered Rate ("LIBOR"). The accommodations within this guidance may be applied prospectively from the beginning of our 2020 first quarter through December 31, 2022. We are currently evaluating the effect that this guidance may have on our contracts that reference LIBOR, specifically, our Third Amended and Restated Credit Agreement (as amended, the "Credit Agreement") and related interest rate swap. As of the date of this filing, we have not elected to apply any of the provisions of this guidance.

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(2) Business Acquisition

On April 1, 2021, we acquired Kantar Health, a division of Kantar Group. Kantar Health provides data, analytics, commercial research, and consulting services to the life sciences industry. We believe this acquisition complements our existing Data-as-a-Service efforts as it provides a meaningful entry into the pharmaceutical market through Kantar Health's existing clients and their leadership team with important industry experience and relationships. These factors, combined with the synergies and economies of scale expected, are the basis for the acquisition and comprise the resulting goodwill recorded.

Consideration for the acquisition was a base cash purchase price of $375 million. The base purchase price is subject to post-closing adjustments for working capital and certain other adjustments, as specified in the Securities Purchase Agreement dated December 16, 2020, as amended.

Our acquisition of Kantar Health is being treated as a purchase in accordance with ASC 805, Business Combinations, which requires allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed in the transaction. The allocation of purchase price is based on management's judgment after evaluating several factors, including a preliminary valuation assessment. The allocation of purchase price is preliminary and subject to changes, as appraisals of intangible assets are finalized, working capital and certain other adjustments are agreed upon, and additional information becomes available. The following is a summary of the preliminary allocation of purchase price:
(In thousands)Allocation Amount
Cash and cash equivalents$14,541 
Receivables, net30,895 
Prepaid expenses and other13,860 
Property and equipment, net1,136 
Right-of-use assets1,680 
Goodwill210,247 
Intangible assets, net:
Customer relationships143,100 
Existing technologies39,700 
Trade names10,200 
Other assets26 
Accounts payable(34,215)
Deferred revenue(36,656)
Accrued payroll and tax withholdings(9,910)
Other current liabilities(3,777)
Deferred income taxes(10,169)
Other liabilities(6,248)
Total purchase price$364,410 

The fair values of the acquired intangible assets were estimated by applying the income approach. Such estimations required the use of inputs that were unobservable in the marketplace (Level 3), including a discount rate that we estimated would be used by a market participant in valuing these assets, projections of revenues and cash flows, and client attrition rates, among others. The acquired intangible assets are being amortized over a weighted-average period of 13 years. Refer to Note (7) for further information about the fair value level hierarchy.

The goodwill of $210 million was allocated among our Domestic and International operating segments, as shown below, with approximately $160 million of such goodwill expected to be deductible for tax purposes.


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The changes in the carrying amounts of goodwill for the six months ended June 30, 2021 were as follows:
(In thousands)DomesticInternationalTotal
Beginning balance at December 31, 2020$854,188 $60,332 $914,520 
Goodwill recorded in connection with the Kantar Health acquisition118,386 91,861 210,247 
Foreign currency translation adjustment and other 4,932 4,932 
Ending balance at June 30, 2021$972,574 $157,125 $1,129,699 

Our condensed consolidated statements of operations for the three and six months ended June 30, 2021 include revenues of $45 million attributable to the acquired business since the April 1, 2021 acquisition date. The earnings contribution from the acquired business for the three and six months ended June 30, 2021 was not material to our condensed consolidated financial statements. Pro forma results of operations, assuming the acquisition was made at the beginning of the earliest period presented, have not been presented because the effect of this acquisition was not material to our results.

(3) Revenue Recognition

Disaggregation of Revenue

The following tables present revenues disaggregated by our business models:

Three Months Ended
20212020
(In thousands)Domestic
Segment
International
Segment
TotalDomestic
Segment
International
Segment
Total
Licensed software$157,908 $17,208 $175,116 $138,950 $13,212 $152,162 
Technology resale51,680 5,180 56,860 36,376 5,741 42,117 
Subscriptions94,222 4,215 98,437 85,281 6,771 92,052 
Professional services457,901 79,177 537,078 409,848 51,234 461,082 
Managed services284,758 36,019 320,777 275,679 31,479 307,158 
Support and maintenance211,986 47,689 259,675 220,301 53,735 274,036 
Reimbursed travel8,572 240 8,812 1,778 (36)1,742 
Total revenues$1,267,027 $189,728 $1,456,755 $1,168,213 $162,136 $1,330,349 

Six Months Ended
20212020
(In thousands)Domestic
Segment
International
Segment
TotalDomestic
Segment
International
Segment
Total
Licensed software$306,741 $30,036 $336,777 $285,447 $24,747 $310,194 
Technology resale89,571 12,961 102,532 80,825 12,779 93,604 
Subscriptions189,605 8,644 198,249 172,217 14,220 186,437 
Professional services892,063 139,437 1,031,500 862,632 109,796 972,428 
Managed services566,834 71,319 638,153 555,415 61,097 616,512 
Support and maintenance429,485 93,514 522,999 443,717 104,000 547,717 
Reimbursed travel14,720 (397)14,323 14,375 823 15,198 
Total revenues$2,489,019 $355,514 $2,844,533 $2,414,628 $327,462 $2,742,090 


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The following tables present our revenues disaggregated by timing of revenue recognition:

Three Months Ended
20212020
(In thousands)Domestic
Segment
International
Segment
TotalDomestic
Segment
International
Segment
Total
Revenue recognized over time$1,189,314 $178,406 $1,367,720 $1,101,797 $151,456 $1,253,253 
Revenue recognized at a point in time77,713 11,322 89,035 66,416 10,680 77,096 
Total revenues$1,267,027 $189,728 $1,456,755 $1,168,213 $162,136 $1,330,349 

Six Months Ended
20212020
(In thousands)Domestic
Segment
International
Segment
TotalDomestic
Segment
International
Segment
Total
Revenue recognized over time$2,342,163 $332,274 $2,674,437 $2,267,312 $304,900 $2,572,212 
Revenue recognized at a point in time146,856 23,240 170,096 147,316 22,562 169,878 
Total revenues$2,489,019 $355,514 $2,844,533 $2,414,628 $327,462 $2,742,090 

Transaction Price Allocated to Remaining Performance Obligations

As of June 30, 2021, the aggregate amount of transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) for executed contracts approximates $13.19 billion of which we expect to recognize approximately 30% of the revenue over the next 12 months and the remainder thereafter.

Contract Liabilities

Customer payments received in advance of satisfaction of the related performance obligations are deferred as contract liabilities. Such amounts are classified in our condensed consolidated balance sheets as "Deferred revenue". During the six months ended June 30, 2021, we recognized $259 million of revenues that were included in our contract liability balance at the beginning of such period.

Significant Customers

Revenues attributable to our relationships (as the prime contractor or a subcontractor) with U.S. government agencies, within our Domestic segment, comprised 20% and 17% of our consolidated revenues for the second quarters of 2021 and 2020, respectively; and 20% and 17% for the first six months of 2021 and 2020, respectively. Amounts due in connection with these relationships comprised 16% and 13% of client receivables as of June 30, 2021 and December 31, 2020, respectively.

(4) Receivables

A summary of net receivables is as follows:
(In thousands)June 30, 2021December 31, 2020
Client receivables$1,389,724 $1,322,278 
Less: Provision for expected credit losses152,494 153,566 
Total receivables, net$1,237,230 $1,168,712 

In addition to the client receivables presented above, at June 30, 2021 and December 31, 2020, we had $14 million and $17 million of non-current net client receivables, respectively, which are presented in "Other assets" in our condensed consolidated balance sheets.

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A reconciliation of the beginning and ending amount of our provision for expected credit losses is as follows:

(In thousands)CurrentNon-currentTotal
Provision for expected credit losses - balance at December 31, 2020$153,566 $38,564 $192,130 
Additions charged to costs and expenses20,251  20,251 
Deductions, foreign currency and other2,278  2,278 
Provision for expected credit losses - balance at March 31, 2021176,095 38,564 214,659 
Additions charged to costs and expenses5,887  5,887 
Reclassifications to non-current(26,480)26,480  
Deductions, foreign currency and other(3,008) (3,008)
Provision for expected credit losses - balance at June 30, 2021$152,494 $65,044 $217,538 

Our estimates of expected credit losses for client receivables at both June 30, 2021 and December 31, 2020, were primarily based on historical credit loss experience and adjustments for certain asset-specific risk characteristics (i.e. known client financial hardship or bankruptcy). Exposure to credit losses may increase if our clients are adversely affected by changes in healthcare laws; changes in reimbursement or payor models; economic pressures or uncertainty associated with local or global economic recessions; disruption associated with the COVID-19 pandemic; or other client-specific factors. Although we have historically not experienced significant credit losses, it is possible that there could be an adverse impact from potential adjustments to the carrying amount of client receivables as clients' cash flows are impacted by the COVID-19 pandemic and related economic uncertainty, which may be material.

During the first six months of 2021 and 2020, we received total client cash collections of $2.90 billion and $2.66 billion, respectively.

(5) Investments

Available-for-sale investments at June 30, 2021 were as follows:
(In thousands)Adjusted CostGross Unrealized GainsGross Unrealized LossesFair Value
Cash equivalents:
Money market funds$52,425 $— $— $52,425 
Time deposits37,685 — — 37,685 
Total cash equivalents90,110 — — 90,110 
Short-term investments:
Time deposits32,163 — — 32,163 
Commercial paper354,800 27 (13)354,814 
Government and corporate bonds251,453 112 (54)251,511 
Total short-term investments638,416 139 (67)638,488 
Long-term investments:
Government and corporate bonds106,306 2 (108)106,200 
Total available-for-sale investments$834,832 $141 $(175)$834,798 

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Available-for-sale investments at December 31, 2020 were as follows:
(In thousands)Adjusted CostGross Unrealized GainsGross Unrealized LossesFair Value
Cash equivalents:
Money market funds$40,027 $— $— $40,027 
Time deposits36,756 — — 36,756 
Commercial Paper61,000 — — 61,000 
Total cash equivalents137,783 — — 137,783 
Short-term investments:
Time deposits28,302 — — 28,302 
Commercial Paper264,000 12 (19)263,993 
Government and corporate bonds149,975 247 (44)150,178 
Total short-term investments442,277 259 (63)442,473 
Long-term investments:
Government and corporate bonds136,983