Omnicell (OMCL) 28 Feb 232022 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Omnicell Fourth Quarter 2022 Financial Results Call.

I would now like to turn the call over to Kathleen Nemeth, Senior Vice President, Investor Relations. Please go ahead.

Good afternoon. Omnicell call. and the financial year to conference results welcome fourth full quarter XXXX And

call me Executive the Executive CEO Chief On with Officer; Vice and Chairman, Lipps, Commercial Financial Founder; President, President Omnicell and Scott Officer. Peter Seidelmann, and Vice Chief and today President Kuipers, are Randall

factors outlook including uncertainties This Omnicell’s cost expectations, plans, statements to could that subject projections risks, statements that or to are call other results or will materially contain or actual financial and objectives, those saving related from forward-looking implied. to other regarding cause actions statements differ expressed

For XX-K a the with these information of with February on filed annual today and risks to forward-looking press our that Omnicell release issued the other filed SEC more impact reports detailed XXXX, more description recent in in the XX, refer Form statements, in on please SEC. the the report

Please speak we date or our be forward-looking the publicly should assume today. any release you specified law, date as made All call, obligation to place any to as not otherwise on any reliance on except only forward-looking required not undue aware revisions or the that by forward-looking do statements. of statements statements update hereof the

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

measures measures. financial Additionally, of GAAP these you to we to press included that financial most release remind some financial we results comparable non-GAAP Reconciliation today. like will non-GAAP would during in this discuss issued call, the our measures are

these predicted unreasonable the a cannot a measures forward-looking to uncertain do provide of reconciliation forward forward-looking items comparable without measures, be and inherently measures to and we difficult GAAP to respect are estimate on effort. non-GAAP basis as With non-GAAP not

turn With the Randall. over call that, to Randall? will I

I to we markets and overall currently we address. thank relates like afternoon by joining medication as context some management what that seeing the for the healthcare would begin environment are providing on us today. it Good and you to

effort we and We will ongoing for savings we some our quarter as will the well year ensure to positioned we X-K detailing full also face. challenges economic in to well then the are I additional filed XXXX. discuss today for are highlights the Form through walk fourth XXXX, cost an as we actions taking navigate priorities

current ensuring to Starting with optimal spend the health capital focused within healthcare highly investments. committees environment, their on for partners to our ROI and system be look continue budgetary

believe tech-enabled devices we they and our We realize services. in and and savings health as are retail and help ROI SaaS to connected Omnicell’s in strong customers a position system invest

capital of Although are most believe medication in it are systems they points customers still are positioned facing today. a the pain appears address health help many we constrained uniquely management environment, to we

ongoing uncertainty we of remain potential and macroeconomic are pleased greater us stability base, we the While given within continued customers. mindful our for the customer to our see headwinds

by As that a our business. stance a our cautious a reducing on believe workforce how were disclosed result, we we across the we intend to functions. manage November is XXXX, take In approximately of what majority we X% we

anticipated and with structure on a are our align maintaining expense continuing are We cost management revenues. to to our refine focus

Now we in our reducing functions. our be today view across many workforce of announced we that, will of further

broader square XXXX. of that end, high we footage To expect with our addition, the footprint quarter reducing second costs. and reduce reduce of align estate to end In by are to work the real our further load we strategy to

within volume sales. annualized include we anticipate the we these expense the cost containment reduction Through savings workforce, with around initiatives, November of expenses does in the in to along be reductions based which operating from for not efforts, XXXX expected XXXX, $XX including other million announced

face and companies long-term. for to always employees, it be we we to challenges not committed continue are positioned us taking are our across the impact While adversely the we immune to to well is help decisions that make believe many difficult actions to will industries

of the fourth full to the turning Now highlights quarter of some and year XXXX.

to Now certain meet me. clear as are with things I becoming increasingly our customers,

Omnicell’s We environment. our important provide measurable ROI. this partners, current the particularly believe in to Services is Advanced First, economic healthcare

In devices combination day-to-day industry believe care. and vision improve experience. the be factors we and autonomous compliance, the our turn, addition, of pharmacy. our in This, connected nurses believe improve improving and Advanced patient also and to pharmacists’ Services strategy validates We work of appears this

us. our for to demand is The market service clear

by health a we pharmacy We to next-generation ultimately help that model. and positioned our mission anticipate the believe to are capabilities we we will delivery are cloud-native partners and our transition transform energized systems to uniquely retail care

more Second, to quarter top Omnicell. continues competitive XXX the than to XXXX U.S. half health competitors during long-term systems. a new be from we challenging the to despite environment, We continuing fourth of added macroeconomic second convert of of new contracts agreements are the sole-source with what conversion two us and This half sole-source to a during brings announced customers XXXX.

will momentarily. new We our customer the that our exemplify end Advanced continued wins year. believe these to of customer Services speak Scott the in wins momentum throughout the in more detail

particularly seeing we customer’s such to as with our and capital robotic connected are CPDS. among spend respect our confident growth of remain devices, our trajectory While Advanced IVCS based expected in we stabilization Services, services

as-a-service our to company. an This reaffirms long-term belief to positive vision and transform momentum Omnicell our

focused While the our industry, we XXXX all stakeholders. and for positioned increasing on within deliver are challenges value are presented the believe well unprecedented to long-term we

by compared of particularly level bookings. billion to billion, Services an financial point-of-care year turning primarily XXXX reflecting Advanced full $X.XXX $X.XX results, for Now bookings were high XXXX, an bookings, slowdown our increase our a to offset in

were XX% from billion, revenues revenues $X.XXX prior the year. full non-GAAP GAAP XXXX an billion year $X.XXX increase and were of Our

earnings deliver to per manage over were per long-term. $X share the per share Full intend year GAAP earnings per earnings company non-GAAP in XXXX were and share. GAAP to growth the We $X.XX share

cost targeted overall a compensation expect this We will efficiency. more require stock-based to our and approach programs

approach business given environment. noted as intend macroeconomic we is current I XXXX, to to ahead a what the earlier, take to looking managing we the Now cautious believe

Our also throughout cost while three, to and working our priorities recent what integration plan we the XXXX future the improve R&D of lower to company; synergies; acquisitions following; efficiencies a one, are to prudent make continuing two, growth expected and that drive think in invest expected to to for on agenda the deploying is progress drive meaningful pursue and is innovation growth.

Omnicell XXXX, look to To while of in we I face all reiterate, deliver as alongside challenges been endeavor long-term team we stronger. value future has to Omnicell’s conviction never like the forward working for stakeholders. our and

the stepping role will as Kuipers over to to seven X, with I significant be XXXX. that the like Scott, and company Before CFO from would last I on that Omnicell has today have will we down leaving over his and time. appreciate contributions Peter be Peter made years the note announced I turn closely that call the July to worked over Peter

when Peter just million $X.X were under just revenue. and joined $XXX XXXX our company concluded nearly with the annually revenues we billion in

search CFO we for ensure Peter. our to Thank next Now help Peter a you, transition. the will have smooth and launched

With will that, I Scott. over to turn the call

Thank you, Randall.

systems to hospitals encouraged As appear that Randall noted, we demand conditions and be stabilizing. within are health

are to this and budget freezes, environment to in continue capital we continuing Advanced strong many while seen Services. remain see for point-of-care under business, customers have demand and primarily we constraints, face impact our our cases, Our labor

in-patient Advanced which their in infrastructure, customers to the help Services is address medication intended intelligent problems processes to are the a key management from home. part management of bed medication our

Let’s our walk wins recent believe power of through offering. that the our a few highlight we of

inventory First our service, is an service. optimization Ohio-based IV and with to health has pharmacy central partner compounding chosen service dispensing system that us for

nature Additionally, this health our system. system critical our competitive the was winning will XT comprehensive to automated dispensing to convert of that believe this solution We conversion.

because QX, system creation our one and and with pharmacy to its of that Tennessee, in dispensing also service. networks health the XT potential IV service value dispensing in existing delivery our of management healthcare customer, contracted integrated partnered for medication Also upgraded inventory solution optimization our service, care system compounding they has indicated the largest the ADCs an central their of across total model. Again, us

with optimize Pharmacy looking systems to of portfolio, recently Specialty health for to Also, operations. our Specialty quickly or their are help that a that as Services part up acquired continues gain Advanced can Service traction Pharmacy stand our partner

chose the citing managed establish services our partnership. a teaching model Program, Specialty Florida and expertise for QX, key as with Pharmacy in Pharmacy partner Specialty Omnicell largest new private to example, hospital the in For to reasons

with very demand will continue we are for and we as the the pleased seeing Services, XXXX, that in Overall, portfolio. across Advanced R&D are we such, investment

two in position the have growth in will technology of Additionally, We acquired the late the us our believe we on with demand investment in we our for XXXX, that continued companies platforms for coupled future. EnlivenHealth, Services, R&D Advanced seen that integrating focus for strong the should well we XXXX.

Peter. to that, will turn over call the With I

hospitals a health afternoon. its freezes and XXXX ongoing full Good requirements, mostly elongated capital year that to sales We and found resulting budget Scott. approval you, Thank capital point-of-care the XXXX the reacted company was for This year resulted lowering our business challenges and in macroeconomic challenging the additional guidance. many in company. impacted cycles. by implementing systems

that we in pleased seen not so quarter further am environment in healthcare the far have and in last I to note XXXX. XXXX of deterioration the

that XXXX, quarter ranges. generally revised delivered XXXX fourth results exceeded we For our guidance

the on relationships customers an them retail Omnicell healthcare in-patient in long-term investments vision build pharmacy. of care, rely realize to deliver effort continue help and pharmacy on improvements and industry strategic look autonomous with return to achieve Our partner to system to to the and

to fourth XXXX quarter earnings guidance our posted year Investor top full and GAAP our in $XXX Our our GAAP million our or quarter reconciliation revised on above $X the website. fourth end press release range. is Relations revenues and is A were of and million included XXXX of results non-GAAP non-GAAP full XXXX

impact well our we efforts of as right-of-use the office assets loss the in impact fourth per of hybrid fourth of November with fourth in were $XX includes The to lease accordance align GAAP for strategy. as earnings income share $X.XX share, the the per of quarter space as expenses quarter part $X work of our million with as XXXX quarter share on in XXXX, disclosed the in we quarter Form per X-K broader for previous of of operating GAAP earnings share impairment share $X.XX the $X.XX per XXXX. XX, million accordance in per rationalized a as of to filed compared with and the XXXX Our income severance-related

of Cost quarter previous XXXX XXXX announced fourth the previously quarter a very in actions, results. to of impact lower on the fourth points November the revenue for volume margin including quarter had primarily decrease was basis due gross headcount XX.X%, generally reductions XXX Non-GAAP the XXXX from little leverage.

to margin more from these gross the begin to expect We in and XXXX. the on operating fully of expenses second actions see benefit quarter

to volume fourth the projected of by beginning return grow We the see leverage is the as quarter revenue expect year. to to throughout XXXX

previous the in in and million $XX to last period compared $XX same million, year. $XX million quarter was EBITDA non-GAAP quarter Fourth the

quarter Fourth same share quarter compared earnings last per share per per the expense of lower previous $X.XX quarter earnings share our in non-GAAP share lower $X.XX period and XXXX above sales, year. cost compensation. quarter due the Fourth were revenue, non-GAAP performance-based in XXth higher share, to per guidance to and per management XXXX solid were $X

offset freezes a increase primarily review requirements, Services XXXX increasing an CapEx, year Advanced in Turning health were our for XXXX. compared $X.XXX bookings billion, budget XX% now decreased partially the approval an bookings due year full additional slowdown as full CapEx or systems, results, for number in the billion Bookings to to point-of-care prior bookings. XXXX year, implemented full $X.XXX over of year to by

was to XXXX. $X.XXX as XX, as December backlog XX, of total of Our billion compared billion XXXX, $X.XXX December

on Relations detail Investor Form and our further X-K in website prior today presentation, earnings the our call. slide filed of to based all As today’s XX on we

backlog bookings. information the our additional of Advanced about and Services providing now both are derived portion products We from

Backlog to Services, expected represents that in recognized bookings the backlog to XX be and not dollar products for yet as our be backlog. revenue. revenues amount converted long-term which has more We than of consider been Advanced to months is

devices, Product service portion our compounding and such dispensing dispense of our service. XT the and backlog IT includes as pharmacy, systems product central connected Series automated

and is million believe of the as $XXX the was $XXX backlog. will $XX We convertible long-term of backlog months. majority between revenues XX, and Product months product into be product million, million backlog short-term of is product long-term backlog XX XXXX, XX December which

within and a backlog our such XXXB Services the solutions, as solutions, our Services IV inventory our as Pharmacy Solutions, agreement. portion have software only includes EnlivenHealth services and the minimum multiyear compounding as portion central which the Services Advanced service Advanced of pharmacy service. commitment service of Services, optimization Specialty dispense include contracts, service stated Advanced well other

are Services our of stated commitments. and when minimum Advanced partner closely on provided Advanced providing Services our the contracts portion While we Only majority a with the of contracts. customers these has multiyear

commitments contractual was of Services backlog Advanced long-term consisting of is Services backlog, $XXX $XX which backlog. and $XXX as is Advanced million, XX, short-term Services million December XXXX, million Advanced of minimum

represents Long-term terms seven Advanced agreements Services of backlog between two usually multiyear years years. contractual typically the and subscription

which have revenue term. to yet converted will be the of which Some contractual not been ratably implemented, over

challenging macroeconomic a our billion record the year a Despite GAAP XXXX revenues were $X.XXX were and non-GAAP environment, revenues full $X.XXX billion. record

saw The well adherence million and the as of strong XX% recent non-GAAP management of impact scaling revenue reflects revenue XXXX. $XXX for automation XXXX increase an revenue medication continued of demand as Our solutions Advanced year-over-year acquisitions. or contribution the from Omnicell non-GAAP Services from and increase

with per Our GAAP were in $X.XX full year share XXXX share. earnings accordance per

driven from share, year-over-year originally expected from mostly of XX% XXXX. a full reduced second XXXX operating earnings than half per year or per revenue the Our The XXXX. per were $X of was share $X.XX by leverage during decrease lower decrease non-GAAP share

inflationary were primarily freight than cost at For full million $XX to the steel moderation earnings million, expected semiconductor due is XXXX year in inflation. XXXX, third total costs quarter call, $X of which and the lower time

EBITDA full $XXX year. decrease XXXX our EBITDA non-GAAP XXX non-GAAP the above year million, is previous margin points For revised Full basis year guidance a which we from was delivered range. of of of XX% XXXX, XXXX

of the inventory moving free a well cash lower higher XXXX flow, Now flow decrease due and of net is $XXX GAAP collections. to of million full primarily timing cash of cash million, income, as to as $XX impact year

to $XXX The of the end XXXX. of was fourth cash flow as up the September XXXX, free cash XX, result cash strong and is increase from balance of $XXX our quarter million million million, of At $XX in record the the in quarter was fourth previous million of the in compared cash from the quarter quarter $X $XX $XX cash XXXX. the million, fourth million of during XXXX collections of quarter XXXX. and Free fourth flow

fourth accounts was previous quarter the outstanding sales days unchanged the XX for of In receivables, from terms days, of XXXX quarter.

lines. million Inventories XXXX. million, and includes December XXXX, approximately note as $X as XXXX, important supply quarter million XX, to were of of receipts that help inventories from $XXX from of future that time of quarter we fourth of the semiconductors million implementation the XX, of the increase of an prior It will reasonably purchases secure December $X increase believe is for $XX an expense and customer

be for becoming demand to balanced, particularly While times The execute supply more to long. we and to teams well in continue lead point-of-care. semiconductors volumes, continue adjust are as revise revenue

of and We on level including to continue products our confidence a to mission-critical chain systems for components with devices our to that and semiconductors customers. expect connected continue supply will critical to our healthcare high has deliver procure

billion. the bookings. approximately be XXXX the equal to midpoint Advanced on both concern bookings full expect includes XXXX $X.X bookings Bookings XXXX continued XXXX as as the guidance the bookings year and our and to of our bookings Now full products, moving The on from quarter the marketing from Services. well year is guidance, team, given first we to $X XXXX billion between

total For $X.XXX between full year revenues XXXX, we to billion. billion expect and be $X.XXX

revenue million product expect for and year $XXX short-term consisting lesser to between extent, revenue range million, revenue backlog revenue. to of $XXX and from expected from a consumables recurring product bookings within We

million. be between expect We to revenues $XXX $XXX million service and XXXX

well as as revenue from services. Our Services, service Advanced both includes revenue technical revenue from

be million, service XXXX between a which $XXX We of and Services increase at million the approximately from expect XX% compared XX% revenue is represents XXXX revenue to $XXX Advanced midpoint to revenues. and

extent, the the expected revenue solutions of Advanced a services new consists of revenue Services from and base revenue Services Advanced to implementations. short-term Advanced of the and lesser backlog Services installed recurring XXXX expected The and

training services, summary our revenue guidance of customer website Investor compared education million our includes We components. XX revenue increase slide our solutions expect in to see $XXX support, the post-installation Relations and for technical which service between a published on technical million X% presentation and range XXXX. in Please to for $XXX as number earnings of an XXXX,

announced effort XXXX containment revenue November Today, reduction with part in as with operating force cost and cost of an also announced a align volume. in expected actions our leverage containment measures, we we our the in create to together cost

today’s total functions reduction reduction half reduced as mostly was as November, the well in sales, Of of in included in volume. announcement, headcount cost of announced within force from the approximately

are reduction that continue of that forward, key investments portion force to as in very went in drive expected the Of in SG&A expenses to reduce will R&D us going operating all we innovation. of make functions nearly included with little

We expect these expected increased actions expected second impact as the as moderating actions, inflationary pricing containment volume XXXX costs. to to of from and gross margin in modestly of well the benefits due percentage cost half leverage, expand

to and innovation, specifically balance Services cost seek automation strategic including continue containment to We next-generation solutions. Advanced with and investing

million reductions A to other annual majority in is expense $XX expense savings of SG&A. in anticipated from from the and derived be of expected included operating recent functions approximately the containment efforts force

The offset in expected year-over-year investments in cost operating performance R&D. and inflation the and employee impact expense find by expected of the savings salaries be in compensation will largely XXXX annual increases increases based

expect in operating in reflects -- flat continuing our down in on by total R&D, by non-GAAP increase SG&A to while agenda. investments our offset slightly savings with cost expenses We focus be which growth non-GAAP non-GAAP slightly an year-over-year

from to recent put pressures impact which greater pricing to reduce in favorable expect expect million and and volume, includes revenue estimated guidance We non-GAAP total $XXX the total to year to non-GAAP between EBITDA expect in we actions in inflationary XXXX. lower XXXX from year we leverage, and impact million. be a cost the operating impact have years $XXX XXXX actions EBITDA create designed anticipated The place

within as the and the timing the in second impact through We pricing projected based the leverage expenses cost of margins margin of actions, year. and half EBITDA actions on of expect operating volume move gross we XXXX to expand

We tax lower count under employee XXXX issued in and our earnings of per blended between XXXX to the This share a $X.XX a non-GAAP share. per rate takes being $X.XX and plans. account shares as expect be new in share stock expected into increase expected result

of are year tax to assuming guidance, our we actual XXXX. share of XXXX, in an per For full in tax blended effective compared rate non-GAAP an blended earnings rate approximately X% X%

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

and million million between million. We between to be between revenues $XXX to expect $XX $XXX million and total million first XXXX $XX million, $XXX with revenues $XXX quarter and product to revenues and be be service

quarter And to between first between be be non-GAAP and share expect non-GAAP EBITDA to $X.XX first share. expect million XXXX XXXX per $X We $X.XX per quarter $XX per million. we earnings share and

strength in We seeing agreements partnerships, have in health the customers our source sole the U.S. with long-term customer Services. Of of systems. than of XXX U.S. our least XXX over our for XXX systems, more top contracted half which include top health one are Advanced at

we see of scaling, As adoption XXX strong Advanced momentum U.S. within to the systems. our Advanced in health continue Services are to the Services expand top pipeline the

We in look We potential our environment stakeholders in value for strive long-term in we to opportunities. our continue all macroeconomic this forward deliver confident our quarters. the progress of and coming to remain you to challenging on updating

make great team, to company. with words Randall our Directors of want have worked incredible great earlier all people call. and leadership has been a Omnicell in thank the kind privilege I Lastly, It executive the who a of our you, Board your to for

chain, a played led development model the during supply created such have I of part being to and within scaling grateful that part am of has global have time IT of team healthcare. a the and teams am business value and finance, international, transformation. the proud I corporate

in the when be successor have have career. ago commences I will the chapter achieve next are over as I for the will to the Omnicell help year. looking my I objectives out smooth to years I transition point, joined forward team and in supporting we this assist I At to accomplished later this and search seven set my a

is automation full management take very evolve positioned will success. medication to well know and great need to and always wish for I the I continue advantage company solutions the Omnicell of that

the open for With questions. would like to that, your call we

from first Fargo Wells [Operator Instructions] proceed. Please Stan question Our Securities. comes Berenshteyn from

today, just question. provided with down the backlog pleasure also want helpful. Hi. you first, my Thanks savings I factored to Maybe say for that it’s a the you wish to thank been guess, year? clarifying for for the Maybe luck. taking first, breaking Peter, you. I announced I of guidance full also you you that’s I the that working is get into first, details, question, wanted very that announced a best

Yeah. today total provided like Yes. I Peter. guidance Thank with for question, cost your of you, and working also across first the year both quarter XXXX. This the containment and of as you actions the is factored To included Stan. impact we access for XXXX are really well. last the that into

Got it.

like guidance of so it Advanced on specifically much somewhat from on are helpful. Day. anything Advanced ago? were the to out Investor believe That’s we pacing Okay. the unchanged there expectations But I a is seems Services, call expectations Services quarter seems quarter suggest last two moderated, or from what maybe And provided right now, then comments pretty that to from the changed

Stan. really. Hey, Scott. No. It’s Not

strong we think I continue to demand. that see

We be continue to excited.

customers this think generally, ROI Advanced demand a that’s Services continue deliver the the for macroeconomic to see and I environment. we in why that positive

are a will XXXX, think there. as I and guidance we to in this relates taking we think cautious that, obviously, it go the I from to approach

add to Yeah. Maybe to that.

trade very for bookings that guide bookings perspective. the that, and the play between down Advanced expected bookings increasing for year breaking are core not really within bookings to are we services XXXX, down core will, to product well, be you on bookings Service from if be bookings and all So if expected limited are [inaudible] you out through

point-of-sale on here And one XT it. the maybe one Got products. then quick

have on upgrading based of recently them it them you end reaching like life. seems So been

have beyond think You good you should as obviously XXXX. visibility there

versus or can here? XXXX you in curious, just guidance or pipeline like XXXX, looking any if it am steady the even what’s replacement lower, think I give higher maybe you XXXX into XXXX and us So Is XXXX?

next solid replacements a have of years. pipeline do the of handful over We

steady, as so only look do do given have does It it predictability -- it’s predictability any ADC of we sales that is we it. quarter, nice component us think to in a at I give

you. Thank

Yeah.

Thanks, Stan.

please? Next question,

question comes the Matt from proceed. Please Group. line next from of Craig-Hallum Our Hewitt Capital

afternoon QX and a But wishes future pieces and things are sounds me so Congratulations relatively them like Good if am just are other they the were and first It I endeavors. give you echo what the what far in capital into obviously, stable how from budgets talked yours. little best year you still as QX. bit, and need more some will Peter. this prioritizing, little their but I on comments you to for about your hearing am I of progresses? need the Maybe expectations are from still color what on you equipment, a one hearing they wondering even freezes. customers, hospital curious they and the are could upgrade

This Yeah. is Randy.

when on I to committing a come still until and do think systems and pretty out to. an we date they ahead more go have those through. market stabilization but or definitely they cautious are put expansion do well that capital being they really And people seen -- systems the in have of

gives it in comfort don’t the and think decrease any we market. in I So us see that

a few more to yet, are health systems. positive think good significant the year gives uptake point for haven’t quarters we I not of having these macroeconomic cautious think but still assembling We going still starting I because I us results seen about for environment, it think any the a be it’s and

Pharmacy on business. Specialty Congratulations on then the a win question enough. maybe Fair the there. And

the growth over but and maybe we you year, you year? As for stage and you this it good a be having of driver are this as kind beyond, this sounds driver for the year look course clearly XXXX like setting that should looking nice discussions, a of at nice out

there. there is growth systems very positively creation health The Hey. This in-house Scott. offering and specialty is sort for or a certainly Pharmacy and then our of pharmacies of market the bullish Absolutely, are trending about growth tailwind. the we excited and Specialty of very

Great. Thank you.

of from Schoenhaus the line Scott Our Please next comes from KeyBanc. question proceed.

the Thanks, over question. several guys. well. my my past working is pleasure I you years it’s for taking on knowing as Peter, a question guess Thanks and with first these margins.

Your implied first are margins quarter X%.

cost XXXX embedded that and rest kind sequential help X% there a and the that’s you Can throughout seen stair since steep guidance? your Can over just cuts year. walk walk margins from in the the evenly you through implies really us haven’t orders XX% quarter of in? us to each it coming stuff through or these for We please? digits steep is acceleration what’s high-double to with of a spread Is some the year, it to seasonality acceleration get Thanks.

Great Yeah. as working Thank you you, Scott. with Yeah. well.

year, I P&L the you starting cost of think this middle impact the year. a really November mentioned full cost the most really will right? of to announced goods both debate year, have the and going the So in through expenses and we both drivers of there, that more taxes sold in operating

there a the you if So ramp profitability see from we perspective. will up

some second we in and improvement see scale more Advanced leverage Also in year, volume then care the well. half Services, more also see of leverage, specifically important the as volume as in we

that access go previously, announced more we as we through we and And impacting every heavily the pricing then, quarter single year. see coming lastly, through

cost costs the and for we semis, components. steel year, quarters, freight, further and inflationary moderate Plus to inflationary for and exceeding the pricing this in then, actually three for see we lastly, those [Technical actions expect XXXX Difficulty]

Great. about thinking follow-up, And guys. are how forward? Thanks, I this guess capital allocation from as point you my

Yeah.

the balance approach acquisition got far the as from think, and Randall of lower have the So to to the I earlier, planning year, bit It’s as on I perspective. a a a from allocation as make sure on perspective, we guide. for the and I priorities the say that mentioned capital we probably is well. as little say enter large course, want year strategic fair would that M&A cash

Sandler. comes from Piper Tassan the next Jessica Please proceed. from Our question of line

touch Hi. Thank be for all and will now in sure so last of and years. the you, July, questions the for am much guys, Peter between thanks for I we help appearing short-term couple maybe Services? and over first a for but difference sorry Advanced my Advanced one, what revenue Services to subscription go. is guess see recurring backlog between or in I is the there you

Yeah.

and So right? of for posted. question, the in investor to the subscription your you almost prepared So part we thanks second deck are that question, subscription, then our for while Jess. Advanced in as and see similar Services then and Recurring also recurring, the it that way

that Advanced Services exclusively of are contracts. the or the does Services Advanced rate base covered include backlog commitments minimum the in only installed not investor It contract contracts. solely run minimum multiyear not

Services… Advanced But it. Got

Yeah.

then rate …bookings backlog the run should we and those between would minimums only or two includes the how include about relationship service? think the

Yeah.

Okay.

That’s right.

it. Got

of then the upon terms subscription Advanced transactional and subscription So revenue revenue of just of of that revenue short-term a what ratio kind we line backlog layers? based guidance and should to then think as Services in

Yeah. those then expense, small on backlog. going this And that the… effects I short-term you new Exactly. are the really implementation are live year, of they throughout two layer felt the have

Got it.

Yeah.

rate was is moderated to CAGR Can you Advanced seems XX%? asked bit. curious Services Services guys am growth like a may bookings think and for that but have clarify what the just just driving little was might expectation someone I moderation like what then XX%-ish from kind what of about Advanced have Thanks. I XXXX earlier in And

Yeah.

Asia there Services, for Advanced non-Advanced The is we is XX% of within roughly similar Advanced and we growth expect. for have the broken XXXX haven’t out Services. we booking revenue So XXXX, rate Services that

higher is So the starting really you than of then increase. right? revenue, year-over-year bookings to get [ph], recurring have with in substantially bookings, Services into AR the XX% we the and for about think it the guide get course, So COGS way revenue Advanced is

XX% know understanding like was expectation that I so, you, to going CAGR to Services My guys. interested XXXX. that changed, XX% for at something Right. it that to through like expectation? a Advanced and grow has And is what am that’s Thank just And me. just driving was revenue if changed

Yeah.

Okay.

So last your the that of of second part question. part

business and the there is a lot really Services perspective that delta we of lens look a a revenue because point-of-care Advanced a is the revenue, down right? growing, So bookings delta there’s with and from from perspective at the

lower as slightly economic the that again, fair are for are it’s And being, for for the XXXX approach growing time we say our So somewhat the enough the but are to they also in and for I given expectations well. year current environment, think conservative nicely. planning market

So things those to take are consideration. into

The proceed. Company. Sutherland Our Benchmark question comes from Bill next Please from

not everybody. you. going say goodbye to Peter, I am Hello, to

will we get around that. to Okay,

So, think about you capabilities. Scott, on you -- just of am got curious conference a forecasting recent have kind I improving taken? what the I

Bill, bit. broke that? kind little repeat a there Could you up you of

sorry. am I

okay. That’s

functions that focus guys, curious to the I things think, to just about want Mobile I on? you and have done just phones. kind what something further you planning you was to was alluded improve forecasting of

Sorry, you can couldn’t it. repeat We hear it, again.

and Oh, I boy. hold in to up Am I fading still don’t out? the want call.

the missed Was exact hear. point We quite improving. We of Yeah. cash? it couldn’t

okay. I was --

on what, call just I that. take my know will get will back. You I Thank you. care of

Yeah. Thanks.

bet. You

Our question David Please BTIG. next comes from proceed. Larsen from

process through, happen, way you like give you XX% of Can process far upgrade And is just next update the they so have people is the what XX-year is over does your not XT rest to time entire the are base yeah, like, And Hi. through? over then going broadly or along period way it the to, XT? thanks. to you how do to of regards and upgrade to that upgrades? then on to on years, choose year speaking, to the an the a your XX% and have of XT that means base upgrade Are with which six, can three

the for question. you, David, Yeah. Thank

question in one of couple your a there. So questions

yeah, So, XT for of great cycle the we above are XX% specifically.

Scott, a we good well. also are I only as have competitor cycle, indicated earlier growth there and but expansion drivers than that more However, convergence think,

means we software more It technical you. rate no do provide support not and fixed maintenance services anymore. no years, upgrades XX After

custom for the say to upgrade equipment. So work compliance generally they generation prior

Okay.

So point happen I base still your going I XT heard to and have upgrade some the to that what was about think years? XX% to to was three over needs next the of just at

a XX% above now. I than Correct. less we It’s we But little what is XX%. are think said

and pricing your Taiwan, that Okay. of if what all semiconductor in for you China Great. Thanks. event Taiwan, And protected XXXX are in for then then terms needs like heat And for type about of things off COGS? of an XXXX? is and between semiconductors, locked your from in

Yeah.

that have have it goes million into year remainder think, good I excluded not that we as we pointed as seats the pricing as of impact, from us the we so not and up, manage are the the in well. David, into so say, a any year geopolitical sell $XX can. to of of way we I and we out are prepared gets we as would will actively remarks customer continue factor we our a risk from for in previous risk to and demands perspective, semiconductors locked

guess, just seeing actually are available then to or things? people tight, to And available labor hospital terms Scott, of cabinets Is I so aren’t labor these in enough and terms of is in like these there on the clients, Okay. deploy nurses technicians the deploy what just ground? you

Look, still labor I are Dave. hospitals Thanks, with struggling mean, challenges.

be to higher to better. continue XXXX, getting expenses they labor be think XXXX, back in seems were than but I it

figure hospitals think I just new certainly other of that’s like time takes organization like. bit to what any or feels any and a out operating it business the reality other

We are what’s our the the seeing of we on major this those as a I working, pushback have point know labor stabilized, sort forecast XXXX. timing, is in environment said, result at Like guidance not working, basis what’s stabilized, think, not of of which cetera, or our we processes et constraints. implementation,

the the were Supreme rulings should getting like and by my XXXB be positive then there very for and hospitals Court courts some it’s And are entire favorable Okay. that other pretty a understanding significant… that program

Right.

some happen and would could and/or drive I windfall rulings. might when for sense that, think your that solutions? for that … from demand if Any those

regarding XXXB, think courts lot activity the bad. I some some a good, there’s of in

continues taking that Service a flat our to favor BPA be Specialty XXX our business, expect think are to and Pharmacy year-over-year. we this I and relatively it on year it outlook cautious

queue. And one hop then will last in I just the back and the Okay.

backlog, of XXXX backlog kind for any In backlog there backlog estimated just was reported the or there in your done? the were was the way or reduce were way that changes might the terms backlog any XXXX. that in like of like any being calculations for your Were written-off expected changes and ending out reversed

Yeah.

the is for unchanged methodology XXXX So for The Dave the XXXX. and question. -- thanks

that you We backlog, we haven’t calculate today. which can forecasted adding it XXXX numbers provided the with

I and you. hop Okay. Appreciate the Thank much, queue. it. Thanks back will yeah, very in

Dave. Thanks,

Our next from comes Please SVB proceed. the question line of from Stephanie Davis Securities.

am you like than you Thank leaving questions, the must taking because and core party. I I to am. much party, something guys. be am It’s going Hey, for the sorry see Peter, I are walking into to my

Was a the of I in bit the function to product better last reflecting of modeling little anything is of this quarter’s after light. a Some is quarter -- revenues call was the service expected surprised rent? by demand seeing a revenues, bit you there were changes outlook, that more while what and than versus there cuts some or out arm shifting last is

Yeah.

So for a year. with but execution teams, also if for solid cost well the executed in the little management well bit particularly will. came the plus Service by the a fourth you came quarter light, overall, in

of kind the And thing? just the same guidance of is sort

then, the in are more for dynamics second right. impact, lower the the you quarter-by-quarter quarter-over-quarter will. to that’s the actions the in first quarter, out But will of to think sequentially, model start Well, largest year revenue you for expected if course, the cost is those the right, so kicking that’s And guide which be quarter. so I

bit CapEx the have this we still seeing a quarter or health recovery far? more so budget downstream as out also playing U-shaped, know is going you kind a that set base? of like extension broader to were to really seen mentioned these of changes be that customer like, systems, I are predominantly of within then, are little Randy, And budgets larger mentioned you an how Understood. you contained to last or

during think, that QX have these the stop as without that Well, Scott the to money health think, capital lot they -- of QX their dynamics the big cost I I that a Act systems CARES had particularly said, realized spend.

as And each and They are margins. improve they have the think now we adjustments making adjustment on so forward. seen lower in quarter that May move I

and fact, improvement some think, I last over reported last In wave the in month comp margin. the

Yeah.

some know big and in into starting more move event margin make, take institutions, hit But -- guess that macroeconomic is So -- happen a slowly to need are move we it that to which and to them slow-moving takes put are the they bit of continue going which forward need, it’s but like once they little to investment while, create these tankers, forward. my more they it I feels as will we a another particularly they pharmacy.

Thanks. Helpful. it. Got

proceed. question of comes Allen final the line Our Lutz Please from America. from of Bank

for the guess Scott. taking one for Thanks I and questions. Peter

trying inflection understand in going in it you just into that quarter-over-quarter, of down sight think over of be and the over give sequentially. quarter, about how the you segments Just the these ramp a should to guide more Thanks. line we the for year? of something year? of to the look we are So the that’s revenue of think the quarter is is confidence it what hockey seeing to XQ, stick or the course course XQ segments revenue if is is reasonable are guess trough both But I trough both terms to of

Thanks, Alex. Yeah. Good Thanks. Yeah. question.

fourth is a the quarter quarter little seasonality. bit of through for always course, Of first the

Advanced the based and Services it majority entirely that’s revenue really is totality of see you planned can that do the year, we to we -- that prepared backlog the in revenue and And service about you revenue through the in So contracted on model So we mostly product how same. and take vast is already into got of remarks implementation, the had it right? then backlog increasing based that then on modestly that’s out account. talked

Yeah.

Got very it. Thank you much.

Thanks, Alex.

Lipps call to the Randall over for like closing now would I to remarks. turn

service pursuing exceptional delivering to everyone journey and their resilience. hard work a you It on conclude to the call, as-a-service give I a throughout we team Omnicell for particularly for our and I call, the the hard waver wanted supporting Well, to and not mean, customers, joining shout before is thank business. global communities translational I did they the our an and other each work XXXX, serve. to out

of great the on employees get XXXX. everyone. all as transforming forward of So the get we behalf the Directors that leadership team, of to to work We back you, myself for mode Thanks, dear look Board and of and pharmacy. I to XXXX growth and thank forward the

Thank you.

you, participation. you Thank Thank call. does ladies your conclude gentlemen. and you. Thank today’s This for

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