Omnicell (OMCL) 2 Nov 222022 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing-by. My name is [Brent] [ph] and I will be your conference operator today. At this time, I would like to welcome everyone to the Omnicell Third Quarter 2022 Financial Results Conference Call. [Operator Instructions] Thank you. It is now my pleasure to turn today’s call over to Kathleen Nemeth, Senior Vice President of Investor Relations. ahead. go Please

welcome conference and Omnicell quarter third Good to results call. financial morning the

call are uncertainties will Vice On Chairman, me Financial Kuipers, with the today and President statements, and Commercial and Chief Scott Executive Chief Vice President, This Randall Founder; Seidelmann, forward-looking and that or Executive other objectives, expectations, call plans, cause statements including President outlook Officer. Officer; are Peter contain to from regarding CEO, that statements Omnicell Lipps, defer related factors to implied. those financial Omnicell’s and subject results actual expressed risks, expense could projections management, other or materially targets, or

place today, of SEC. XX-K XXXX, statements, a any the any of the to reliance filed our not and SEC by the with detailed forward-looking description impact issued otherwise annual with reports the that in the obligation aware XX, please the as on or date report the be to assume you the in on For filed on hereof not Except our publicly only update made on as do specified Omnicell forward-looking Form refer today. in forward-looking forward-looking these February release law, information required recent speak date that revisions should more release any Please more risks undue to call. All statements we statements. press or statements

in section released the Our our Relations and at posted Investor results were ir.omnicell.com. this are morning website of

a comparable With measures forward-looking without included relations be some results to that this call uncertain forward-looking forward-looking Additionally, With on unreasonable posted as of Reconciliation items the non-GAAP financial the of that, guidance measures measures I measures we’d do and to call press as to comparable non-GAAP the the cannot discuss measures predicted will basis GAAP our are estimate section in targets, financial these we inherently Randall. and reconciliation non-GAAP difficult like measures. financial a to to website. GAAP non-GAAP turn not investor our provide these release and we will respect most of such are in during effort. over remind you to

today. you, thank Thank joining us and morning you for Kathleen. Good

our pharmacy model This mission to transform our quarter, strategy medication care to delivery advance management and critical the to continued customers. deliver we solutions

Day, I recent As enable management said and improve more this XX caregivers spend at patients. to to our years started Investor ago company I with medical their time medication

clinicians further our objective, continue partner. trusted to to day to most as well We innovate as be to this each the achieve mission

is objectives, service Services a demand business Advanced including encouraged the we to to only strategy as go strategy as deliver SaaS us see these model. are Advanced ahead we working and us remains is transition strong is our the seeing It continue forward for strong. to advance to of we're important clear retail these are to solutions. an Services especially by for on our not results future tremendous Our solutions but Omnicell's that we the also growth as

can out create near we health delivering third budget pharmacy care that budget designed term, additional and adversely capital which caused of care rapidly have shifted point our care. of system has the move continue said, in many environment, and our forward. for for ongoing in implementations has typical a tech-enabled do and the SaaS effect We affected enabled by processes, the to systems to which seeing customers entire to of customers see our to business, With and quarter. products. health point accordingly. factors are year of the is revenue defer significant major implement the system believe increase, point health This we bookings long-term to At continuing continued constraints resulting environment, and across overall value despite economic sales I platform temporarily number of the requesting have focus including want outlook higher cycles. are are cloud-based on continuum point updating in time, elongated we our in headwinds of the in revenue to that its The resulted same we on bookings labor solutions current approval end implementations. care than These freezes operations we

of meet industries, navigating point We are other continue compliance. the many customers environment. for to our to we Like need companies believe recognize a care across our products macroeconomic dynamic

implementing actions I'll to speak changing prudent to to including needed this actions disciplined through more take were a expenses and believe We environment, what business period. we a these approach about appropriate minute. managing will respond in on this to our by continue is

Let's third quarter the walk financial results. through

the million quarter million. for management, XX primarily income our and million net delivery of third as per third was per of reschedule XXXX diluted third XXXX performance-based compensation in for customer reductions guidance as share. with of revenue Non-GAAP or Third well below million share. XXX was This of implementation quarter diluted to EBITDA XX due guidance expense. point $X of range, quarter our or for to was the Non-GAAP request the driven in-line XXXX was of strong XX was expense care quarter GAAP by products. net $X.XX income our

EnlivenHealth in installed point in our demand. fact Services, that CPDS XRX service as the including headwinds of of or continue robust is the that's despite a example demand record care, number we installations. mentioned, this quarter, our and solutions products see of Advanced our One a I third As robot to

Service. the we for and with are our One Compounding pleased also are the IV demand strong seeing momentum in Omnicell We

digital approximate third pharmacy offerings. SaaS deal or appear Northeast-based EnlivenHealth uniquely chain, XXXX million, for EnlivenHealth quarter, our key EnlivenHealth retail of a with customers turn a two solutions. to to major contracted expected ARR exit our closed annual During rate to run is with the revenue as increasingly XX positioned for an

with that long-term have been the XXX source of This was sole the contracts. expanded being conversions. of new Top our its customers XXX case the are years will U.S. positioned of choosing a focus or with to and the two our sole of we strong to an Health differentiation due other depth singular for on are wanted a portfolio have our provide Many Omnicell with the positioning wins the enter source We and systems color offerings. ahead long-term to system and Omnicell the U.S. conversion current existing under that pharmacy now we well, Omnicell for with one us. uniquely competitive into points acknowledge comprehensive long-term customer, Advanced on contracts source Systems competitive opportunities Whether to our of that a Scott employees. long-term believe XX competitive relationship our As recent solutions, health sole source We believe growth hard strong company. customer work channel, getting sole I our continue on breadth is be presence shortly, more by we growth but capitalize that our our important that Services we're to testament of find started. to across the just health this

operating cycles years. environment. Omnicell has different said a and call, our headwinds in through facing market difficult I are been many as last But past We in the on XX

to believe our to are business and areas Near-term, actions the Omnicell continued our our investment challenging and enable to continue transform We year, Omnicell’s headwinds we future intend will ability digital to note, to our Services. the of R&D Advanced do That support time, expectation taking we we account. significantly each have revenue and I continue the ensure to On invest want growth believe outlook entire how align to in take our are we the our operating our to the to those to and needs address that cost all We and meet have with medication we and intend At business of spending same innovation our plan the so. the customers' into revised they to navigate management we us confident expenses continuum. is backdrop evolve our cycles we roadmap We review this believe We we navigated continue a anticipate adjust well-positioned structure to to be continue have transformation we against strategy reduce of said, in revised of underway. and with bookings plan our to and levels. in and agenda. enable will we our for seeing. that

the Omnicell Our customers to provides healthcare of value delivering value long-term and all to system stakeholders. our forward recognize look we

turn over details me some quarter. Scott it to that, with for let on So, the

you, Thank Randall.

instances our we are Randall under this resulting significant CapEx labor health implementations As constraints headwinds, hospital of Hospitals in pressure sales delays. experiencing financial elongated seen products point in saw budget of primarily some systems and in and solutions noted, we in additional quarter. to in and due pauses budget in of point resulting construction processes approval some freezes Also, system health care cases, labor or have their availability cycles. care

We also now cycle. XT through over the well are upgrade XX%

are operating of We difficult care. in respect to particularly currently environment, a with point

few we understand working. to model know? of indicators important is a is key are a it transform that Let's believe strongly an success. at the to as we However, to our strategies business our gauge look tracking our we How service do

to our better achieving it's financial these health seeing to our compliance, patient their customers pressing most care, our continuum across their increasing customers of to are whether as are of for management proactively customers with referenceability them address many improve sharing we ROI relying improved expense, with the on other seeing a solutions, labor are Services First, medication with care. performance, with us Advanced we result, real reduced partner challenges And successes systems. services and/or

quarter, these Advanced market. seeing moment, with our our than lastly, We I will the large central to saw appears dispensing differentiate service. and health And portfolio Also for faster growing discuss market record systems. a to further demand our in pharmacy Omnicell in strong services are be continues also for as this the pipeline Services revenue we

launched to of with Advanced they our growth investment of accelerate that additional what an we hospital ease facing. we potentially revenue help all are Services intend the are reasons, Services is pressures that financial agenda. our systems continued pharmacy example to service specialty believe our in can One invest For provide and to some is we transition significant help to continuing these of Advanced our source in recently smart of

Advanced experiencing. to recurring the predictable also Services, transition will of care our which believe we are future in projected point cycle challenge revenue that with ease replacement comes the We currently

we adopting system our I Omnicell's XXX commitment end, next to and touch setting customer customer Day, platform. continue remarks management. of about Pharmacy highlights. the our to health to at a understand our optimizing by inventory competitive customer customers that is few was among each agreement his medication we We to a center. and resonating a we about signed investment vision Virginia-based focus this we to with recent optimization service. At due was health health on agreements. system care and patient agreement dispensing excited within of Top management on cloud-hosted I'll a build medication Next, compounding after are are sole with the Investor through medication that added Central in top successfully IV five-year partnerships care generation long-term This vision this spoke about the management these our we strongly believe really win strong point a services, of source and expertise Omnicell announce of sole for solutions, healthcare customers. and that systems XXX spoke excited that signed in one recently have conversion Randall briefly To source the as This transform

optimization to IV We an was XX-year are customer also signed a implementing source and with agreement This both sole customer Automated announce or Indiana-based new an SaaS delivers Dispensing Service system. inventory that that Systems, Omnicell now One is also Advanced health long-term excited XT capabilities.

Specialty addition engaging customers portfolio, Services strategically. are we Pharmacy our more With to of the our

South managed with part improved our care Specialty performance. Our pharmacy key a significantly Pharmacy financial of medication We to significant patient our realization this for Dispensing Also grow. addition team to optimization of this work and the Pharmacy portfolio. service solutions. customers value Pharmacy additional to signed in visibility accelerate and pipeline improve of is to identify the Services a is Pharmacy significant and part quarter an and advanced quarter, Service offerings Specialty service to these lead two time a and customers for better our Central can long-time continues specialty customer adopted potentially Specialty Omnicell how inventory in-house

exciting portfolio significant performing XXX in-house expands over to University health and appeared solution our the which Pharmacy pharmacy hosted also streamline updates. that our operations. the Hospital, high illuminate portfolio, of customer and very formal for our live services and Services strengthen through well. pharmacy further financial pharmacists that how Advanced for outcomes Specialty systems We engagement health of results. very within and is financial and them their launch services time pharmacy Event achieving clinical offering is improve bottom-line Also clinical our interested outcomes allowing Services included at frees fall has their automate This been other workflows. specialty business Advanced Enliven Services specialty patient hear value and Temple EnlivenHealth event, patient of helping license participants top their up pharmacies to provide practice critical

current will contracted a business in overcome two is to we increase profit. earlier, for new key and to mentioned we the are Randall better results. believe difficult strong and retail chain We execution As help that Northeast closed with deal challenges pharmacies solutions. environment care we pharmacy excited digital a This disappointed deliver currently about are continue major these based our

we that solid and However, Solutions. our Services, source progress new that with two pleased Advanced long-term added are sole continue we our and demand EnlivenHealth make see customers strong including to we

our may near I our be over confident healthcare for work to a are model and it now service an term period as turn better. the this to excited we with Peter. transform transition While closely difficult, to to will customers in

This business very rapidly environment quarter the quarter. Scott. was the you, Thank with of end a towards shifting the challenging

late Hurricane negatively the postpone quarter, we noted, also revenue. customer occurred delayed seeing customer to installations. Randall care our a Both of of factors As in impacted multiple these Ian high which implementations. are level requests of point

bookings which lower important that expected number of majority remains expected resulted in point vast [ph] we're Services full-year. is [CapEx In of note for products. robust. requirements, full-year increasing have of But purchase or to implement bookings an seeing in addition, decrease systems Demand is Advanced health it XXXX CapEx the in the freezers] care additional the for approval

that to the in expense customers in diligent I'm pleased impacted strong compensation across put consistently as challenging. execution employees management to first solid that us performance modestly was non-GAAP and company lower the macroeconomic pleased our I'm well the more team expense and with EBITDA within the our that deliver team's well X,XXX guided during Omnicell based revenue Our Omnicell as management, deliver third members than as are to the quarter, environment EPS remains our enabled continue quarter. continue as non-GAAP ranges. expense

Turning now of results. quarter our to review third

Our record third were quarter XXXX GAAP and non-GAAP revenues a $XXX million.

X% impact the a delays customer quarter over of Our of automation system, mission the headwinds. the primarily revenue from XX% recent to including medication guidance Ian availability, of Hurricane acquisitions. was below in Omnicell's non-GAAP to due Total demand our the revenues quarter over solutions, up as FX range, timing delays, as from revenue health increased for and portion prior and due were labor $XX small quarter critical contribution third well XXXX. million revenue strong the year-over-year or The reflects management and increase

revenues XX% XXXX year-over-year. GAAP Our non-GAAP third quarter and increased organic

quarter, higher the of X. employee-related due annual the which recent implementations basis referred as Amplicare, Services, and July objectives. and increase, was headcount product primarily are FDS due Pharmacy customer now prior to This to of XX.X%, growth the decrease support costs, and points acquisitions as we during became well, addition, acquisitions a for expect the mix of quarter. our quarter higher performing margin Non-GAAP ReCept Media gross XXX third effective a Specialty was as to from merit XXXX the MarkeTouch decrease of on to these long-term well In and

$X.XX of and per XXXX, quarter share third share per in the compared Third the per $X.XX share in quarter share, to XXXX $X.XX of earnings second per quarter XXXX. were GAAP

the reminder, XXXX benefit release included Investor in per full third tax third the As $X.XX XXXX. is the results GAAP of posted GAAP per of quarter in third non-GAAP EPS of non-GAAP results section in a Relations a our share, $X.XX press A EPS website. our financial XXXX quarter and included stock reconciliation share of to to excess compared quarter

meeting of Our per $X period guidance in and to non-GAAP high-end per $X.XX XXXX non-GAAP same quarter quarter million in earnings range, the share share, $X.XX to our XXXX, non-GAAP the third last share was $XX per per EBITDA previous June within the the At XXXX, up compared of share of quarter million in compared guidance, delivered Cash non-GAAP of in the We quarter, to a quarter year. EBITDA ranges by of last our lower and $XX cash operations million quarter $XXX was in third cash quarter same our the $XX lower previous than Despite the the free and Non-GAAP expected from $X was as was EPS third the compensation. performance-based non-GAAP million, of $XXX the guidance provided balance EBITDA result million. $XX XXXX. management third end relative during strong revenue flow achieved of expense million. of as million our XX, XXXX and flow we year.

the cash was flow lower quarter cash by impacted timing collections the reduced on and in the free shipments of quarter. revenue in Our

very supply include well is reasonably semiconductors timelines. and and secure believe help process For third that we and to million] for were purchases improvements $X was believe quarter a timing of global that from XXXX execute We important decrease days. $XXX to continuing management of million [$XX initiatives. X Inventories will primarily for XXXX from XXXX invoicing Today's the an the sales of on quarter, XX, outstanding [$XX advanced supply as within of an in chain from implementation reflects million, inventories accounts sales increase million] of increase approximately September as It of of over outstanding the days the note XXXX. quarter. receivable, quarter the receipts are inventory customer of XX, [ph] the future last [ph] third prior September our days we quarter XX of that

Now, guidance. to quarter and moving on fourth our XXXX full-year

continued health [ph] Health XXX the the budget We our [Advanced freezes, Services] cycles, full-year Services approval schedules, additional which remains health due the very impacting system interest Demand macroeconomic labor implementation availability portfolio system resulting in are and budget environment following and Increased to with in processes, U.S. CapEx sales are for uncertainty. revising from Top Advanced elongated health strong our factors: we're system, XXXX Systems. outlook capital pleased

of point primarily the However, expected I our full-year noted earlier impacting factors are in care. bookings,

the now million product As a billion. expect we result, we between to $X.XXX and For expect range $XXX XXXX, bookings following: full-year

GAAP $X.XXX We revenues $X.XXX XXXX to expect non-GAAP and and be between billion billion.

non-GAAP We full-year and $XXX to million. between XXXX GAAP expect and product million revenues range $XXX

XXXX. expect Solutions XXXX to XXXB revenue $XXX full-year approximately revenue million to We our to and now We revenues expect GAAP non-GAAP of $XX be between for to continued Services Advanced percentage [ph] a as million estimate in and service XXXX of revenue million. million. $XXX $XX be [XX%] to track prior total

We XXXX of $XXX non-GAAP impact reflecting expect million reduction in margin million, to EBITDA full-year between the and the be $XXX revenue.

non-GAAP XXXX XXXX expect $XX cost now $X.XX full-year to share. We approximately and of million. in be share expect total EPS per between per We $X.XX inflationary

we tax XXXX, our assuming of rate EPS blended an effective are full-year For guidance. approximately non-GAAP X% in

quarter fourth the following the For guidance. providing are XXXX, we of

point Our for impact than well as the of incorporates as lower result lower uncertain bookings as outlook revenue business environment, an I in the of a our expectations care, noted previously. as of anticipated

$XXX $XXX $XXX million and and GAAP be GAAP million. million product between to $XXX revenues GAAP and and and non-GAAP fourth be to and expect million, revenues between $XXX million be non-GAAP million total between non-GAAP quarter We with service and XXXX $XXX to revenues

$XX and structure to fourth share the million and to revenue intend in actions we near In our and to to quarter a business quarter outlook this between bookings environment designed term. and non-GAAP long-term was levels. the non-GAAP We we expected expect cost to remain fourth per $X.XX in per per between XXXX our and $X.XX difficult be expect share. share be expect remain confident challenging We we and take align with quarter summary, EBITDA million $XX XXXX earnings

plan to agenda. all at our manage same We're you call open our the cost coming prudently categories forward to to of looking and At are expenses the time, We delivering for stakeholders updating questions. the invest intend all your we committed in to would to growth diligently. continue value to our we of and like look progress to in that, quarters. on With and

question Fargo with first Wells Your Securities. Instructions] of from Berenshteyn [Operator comes line the Stan

Your is line open.

how of I thanks with on the start room us questions. guess can exactly implementations? to delay but in freezes? in customer Are provided the walk through to pretty taking implementations, you your the budget at delay related for my reduction I'll here. capital base? then plan maybe long across the sizable end It's elephant visibility these the have booking And Hi, any you clients side these year, seeing how the the into widespread

third widespread, think I increasingly large but they more particularly more put their have fairly not end see start it's everywhere, and Yes. financial a health systems but the results. think and quarter at Well, I of delay, to

more as of – the we they systems to people equipment that probably environments. because a don't control see want concern because do nursing. nursing the and project And by quarter the like some process user local or or in. are far These another major them are put also installation the there so because not and implementations, deal usually impacted as have committed on-site that over the to shortages and of to when to And labor so as them nursing they they upgrade about their all shortage they've with feel gets divert delayed enough of with two disrupt

going So, happens that's the it actually but is when key. on the away, not timing

And you with XXXX one. guidance? still one quick your Are Okay. sticking then maybe

the at point. reaffirm we to No, targets. We framework, timing this we are committed reaffirming the not XXXX but these remain cannot

Thank you. Okay.

Stan. Thanks,

please. question Next

is Jessica of Piper line next Tassan the Your Sandler. with from question

is line open. Your

backlog call, taking was the of the guys the if what on one not any relative the products Thanks customers the covered delaying, appeared just for guidance this is to plenty guess kind and but you right? guidance happened of as revenue were It to, deployment disconnect? have one adequately did, said Hi. XQ them question. specifically of guess with guess, where I another. revision, replace that with strategy I just you'd I

Yes, Peter. this is

the So, implementations a very of of [on were [ph] multiple requests really quarter as well. availability really what to the third was quarters. delays prior] end of timing changed the Customer

majority seen implementation have the rescheduled. we've the and in multiply delays had projects, of been So, that now that's

Okay. Got just then less with it. than or operating And pulling talk think kind should a about as site ADC you opportunity as of few commensurate revenue the you the being to expenses outlined back? about, upgrade upgrade we revision, on back that X.X billion years

to I parts two guess. the question, So,

at So, we're looking types of all expenses.

[ph]. at We'll accordingly. Of types we're looking well. as of look course, operating [variable adjust costs] We'll at all expenses

[indiscernible] As will point product the guidance believe majority line, a we the majority majority is the definitely of bookings that care. far of do lowering see for product timing can the guidance, that fast, product of the The expected but there the impact of is XXXX. you of fast ADC as happen, as the cycle bookings

your do the at Walgreens, least And I Thanks. to just then is terms growing are think a last [Shield] quick pharmacy specialty [grow] [Walgreens] of is upwards is your my with on just, help think for view many systems, XX And that curious their systems it. health partnered I how XX% Got in [ph] Can systems? reported health own business quickly so offering one us you expect [ph]? pharmacy? candidates year, frame just for of [ph], specialty this you how TAM health

it's Jess, Scott. Hey,

market big pharmacy operation we of It's pharmacies – largely pharmacy, specialty outsourcing feel the market. specialty of sort in-house the the think is greenfield. for I a that specialty

could and market that fingertips. greenfield differentiator with really other I'm and But the Omnicell's or we're is paired we I So, big don't significant we we're sure quite not well-positioned and that at we there growth. number. at but products at and That's offering least how significant have The it that more is this exact counts, excited to services a on. think my importantly, having a a something about it's think follow-up our channel, get

Got it.

of America. Bank the is of question Allen from with line Lutz next Your

Your is line open.

for of I OpEx this Can Peter. could the XQ Is this dynamic? of XXXX we Thanks see the questions. taking about for more you one guess potential in is talk any timing reductions? or something a

planning, we'll the going of through couple operating and the timing of Yes. more impact, next months, provide course, the we'll sizing, But and also in the accordingly. of variable cost We're update the of and cost clarity expense the on actions.

you with cycle that, delays when mentioned their began you conversation play financial different third that And that the you you. there to a Thank the typically context know end typically know, I systems? last? How or provide really health long of systems results, in the change when any health has to out? takes how quarter a started then been of Okay. see can historically type does but is every know, these than long you Thanks. last, typically, slowdown

for Thanks Yes. the question.

of ramp when – the spending up, their normal. And returned Usually, to it's really ramp in And systems. healthcare they down slow back I many think U-shaped that throughout a on I September year. believe to and it kind was these of more improving capital and think healthcare – systems XX were of margin a this is probably my a years. slow unprecedented in comes

think but And – improving it's enough. so been I

sort think know – that nursing the when thing we an back it the I some and health lot know sort long-term, deferred. the of and at their is [ph] this a underinvested in and is the uncertainty I really And I I cost that same the will And this, that orders time, know infrastructure systems availability come it's of increased They back, think think one of it increased the all hands come systems. have created so, capital, cost but with cost of impacted, moment] of really because of such will which labor unusual in. pharmacy don't [frozen future of they to about don't precisely I the the might unprecedented. what be, for time. they how need And

these so, And deferring. orders aren't disappearing, they're

Appreciate Thank you. color. the

question Schoenhaus KeyBanc. with line of next the from Your is Scott

line Your open. is

team. Hi,

I sales the delayed Peter, guidance out the the of and integration XX%. much and has focus came that So, break to deteriorated this labor Thanks. slower on due down this by in guide talked the cycle guide rapidly due guess, guidance, revenue this the to the everyone full-year higher was about of to down? in want How was can I the makeup you cost that from how on macro? lower profitability quarter. drilling And much delayed of installations costs? coming

Yes. Scott. Thanks the for question,

that the are milestones also. an guidance. itself would reduction It's going in remains level So, by is the EBITDA is of costs tracking $X from the track. of product decrease by We're for well $X million mostly integration the to first XX% I for all revenue. in driven through about year [volume] [ph], integration original plus say million on on hitting perspective. profitability the Integration

Thanks.

you a Scott. have follow-up, Do

No, that's it.

you. Thank

Your is Hewitt Matt Group. with next from Craig-Hallum Capital question

open. Your line is

this you're fiscal that the where bit those time QX and outlook of ago, I any was it Good now of like remember, got couple you at froze, labor you've XXXX, being for long short-term credit back credit the financial timing questions funding situation the markets. for budgets patterns was the was And I this ran if if guess how can signatures. for morning that markets you for than but provided taking don't remember XXXX it did when up, it know short-term thank into a questions. things? correlation facing, your take had think and a regarding potentially an had that to a back you somewhat unprecedented markets think it XXXX freeze [indiscernible] ordering have you still I situation I feel it's like and shortages, kind goes situation because to to I you but there froze [ph], I essentially, QX – to similar little get Is [frozen] realize I if that extra by changed there period? required a situation where different correctly,

need more back readiness of I the or actually was just Maybe the is I'm factor. really activities a shortage a install while systems people to year of them [ph] upgrade have, was accept And they I it them. Well, the with into to all think didn't credit year nurse to driven, sort see did back a my It of gradual I'm eventually, and people capital upgraded, was not probably Yes. sensitivity the a People kind of that upswing upgraded. is also flows. reaching the capital to guess so before. the their sure memory be And cash and markets have as it at than alone. need try forget. there. about systems; of cost back] that [come factor here systems That financial And and sort more once. to they're labor unfroze a I could the

situation. come, year. will grip financial was I long now but own trying it until within the they that they're recognize So, get on their they to But firmer a recalling, as think as delay can I my

That's say maybe Randy. at budget you. as helpful, would versus to you tied how then, Thank And delays, you those the much are current look of labor. conditions

implement is these to have that Thank your the got over And it's that do just don't are listen, We we something want get it's short-term if money. to even just the systems side those there you help systems, on integrated? could but So, there the staff? you. simply, customers we've

Hi, hearing had for oh, have we this bit gosh, last weeks? is around? Honestly, staffing the area, we a I staging side majority we're it minute, like, down kind this, the issue of a It's and have couple more. just at has or don't hospital – thought Or have simply don't Scott. people can I the what I'm this [frenetic] what begin the we delay. of of of move with, out the what staff hearing financial push think behavior is, can we question Very, now a Most [ph]. to we the is gosh, of XX we sort XX mostly, don't been heard we've of now. driving I'm but down areas, little been, right we're staging very

that some we We at as do those There's a an with of of labor can situations. some to on-site have outside limited in of help things worked of those supplementing vendor the amount situations. some

the [pain] to but [ph]. So, ways at looking we're ease

Understood. Thank you.

question Management. Berenberg with Your from Weerasuriya Dev is next Capital

is line Your open.

taking Hey, morning. good Thanks questions. my for

wondering bookings customers just had much the with I'm to that from more regards of the that bookings where, if customers, And percentage, these have, would any what discussions is we you delays backlog part helpful? The in more any currently the on backlog, haven't know, a products be more Because you I product that delays? backlog first that one, informed have how curious you and follow-up. you of falloff, even just there's of from one yet have color I Thanks.

think have we percentage. a I don't

this included is what continue sort notion hospital because in that what continue to struggle. that are of in guidance see we we movement environment that shortages that we're, that to labor our in will the continuing think delays and expecting are will hospitals is I QX just

helpful. Okay. That's

looking hospitals is, this be are full-year that, know, of part sometime thing around budgets, we as time, kind guess, also of curious other I the the discussions into are The in delays, you implemented in what these there? to XXXX. are As expect XXXX hey, to discussions this

replacement a capital mentioned Randy booking couple standpoint, delayed budget from to upgrade because it's when around? that expect, Any turn example, don't there they windfall long with for, color might of is you delay could Do from an I how for be that XXXX when, in there that think as freezes, standpoint? Thank know, these I XT then right upgrades color usually maybe know quarters. helpful. would you. the you to a any a And be

falls Randy compliance. that pointed the that last and out equipment life, into as risk that think is to of the end I management think this point, I replacing

ADC the that, the seen that only going to and replace So, forward of we I sales. that think when will ADC hospitals a believe portion but we those continue have be business, portion that to is of need replaced,

hospitals think when of the my [ph] that driving I is I model hospitals my align, my of and what's currently about financial does back, behavior impact think – when as cost are revenue we unknown my of their sense their is in come they're in [XXXX] to bit driving terms a electives think and a what's bit etcetera.

And so, I hospitals in I as think And continues through think result, conservative what through we're think assuming have is that XXXX a that this way. for to a financial our we XXXX. through bookings challenge

line the with Your from of SVB next Zeng Joy Securities. is question

line open. is Your

I this this back one the to why being, go is, an Hey, you question. of unprecedented analysts know, I question made questioning to my XXXX? guys. of Thanks XXXX, looking sort versus about, should at non-recurring earlier know, want by more for you taking market just your tighter demand, which exit the right? differences, much lot current is than of also revenues a back have And revenues, offsetting versus now before. you at labor be factor to recurring sort versus some looking macroeconomically think then,

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Yes.

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scheduling the refine where we process a customers. continuous with it's So,

I'd we that now are and to out, move in relatively to that is customers only from is that due That's need to around. move always Scott. What's around we manage a revenue only is If movements What's The backlog. And to the and a to – are – that. all every if out, we of there quarter percentage needs add labor in that challenge something modest with the constraints. this environment more is of plenty add uncommon. that something movement customers not cover. right David, challenging into because I'd customer the this move see now there's quarter. that different moves a it's dealing pull

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Yes.

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Fargo Wells final Your Stan the comes question of Berenshteyn from Securities. line with

is open. Your line

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can you mix us on maybe the coming long-term from Thank quickly guidance, Just part into insight is what the, bookings give of an you. bookings bookings?

Yes.

expected bookings our the So, $XXX range plan product of for for mid-point The Advanced the essentially. by year, own Services million. bookings the we lowered

is So, the multi-year. in Services of non-Advanced is part Services. full reduction course Advanced And the

So, the of we expect in go consequently long-term percentage well. then as to the mix up

an seen just said is of way, the on we've slowdown the that I'd of of is add elongation to that or board, Stan, another point sales care side the across while cycles of the majority things.

Exactly.

Thank you.

my to this to turn There are is at call Randall over questions no Mr. It the Lipps. now pleasure back time. further

us Thank with you call the current economic our this on meet joining for To factors. the business today. we shareholders, to will realign

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you Ladies today's thank concludes call. for and This conference gentlemen, participating.

may You now disconnect.