Omnicell (OMCL) 1 Aug 232023 Q2 Earnings call transcript

Good afternoon and welcome everyone to the Omnicell Second Quarter 2023 Financial Results Call. Please note that this call is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be question and answer session. [Operator Instructions]

the Investor to your Relations, turn Vice Nemeth, conference. now of President you will call Kathleen over Senior I may begin

financial Good second to welcome results XXXX afternoon, conference the call. and quarter Omnicell

CEO Officer. with call Vice Randall Chairman, Etta, today On and Chief the Nchacha Commercial me Founder; and Lipps, are Omnicell President, President Executive

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

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

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

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

during GAAP these these are difficult be we are estimate non-GAAP of not do forward-looking will With inherently financial uncertain unreasonable basis call, measures respect cannot financial measures of as our press measures, you provide items discuss this to we GAAP Reconciliations a to non-GAAP non-GAAP to and measures issued Additionally, without comparable the results that on we reconciliation effort. forward-looking measures predicted the remind to and a today. in like would non-GAAP measures. most included to release financial some comparable forward-looking

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

our today. walk of and industry. on performance key our the joining we're I customer thank I'll this Good trends an Today remainder wins business for through including provide afternoon, you our all the and XXXX. update will for also us and quarter in outlook our seeing

begin the non-GAAP non-GAAP financial Through which we quarter total results team. EPS. revenue strong believe generated from exceeded revenues our for earnings and discipline per $XXX share non-GAAP million of me of service reflects XXXX and growth and We Omnicell continued our total execution we $XX ranges Let with non-GAAP product and million $X.XX. guidance of revenues EBITDA EBITDA second sequential

this and key technical quarter driven walk revenues, as as and and favorable will half outlook recently higher welcomed drivers financial detail second our well CFO his Nchacha of more the cost in results remarks service and who better as than during primarily was expected the for we by Omnicell performance to advanced the customer Our through product speak mix management. year.

delivering remain across and the with is globally. continued for management to these seen call, now largely we care solutions update believe a second that an Amplicare quarter's acquisitions. mission this executing robust strategy we integration provided to Specialty Market noting on the our pleased last we complete. we acquisitions we continue On integration FDS Services, With medication momentum that focus and quarter find underway of operations called go-to-market pharmacy progress ReCept Omnicell and we customers Media critical support have are on our was the today. what Pharmacy Throughout XXXX we portfolio for Touch of positioned the entire uniquely continuum ReCept to

maximize further to outcomes Omnicell and medication global playing turning the infrastructure. role in which our recent choose important and customer to think the financial automating clinical we continue management customer Now landscape we're Customers modernizing to demonstrates wins. and solutions

wins customer the with start We'll advanced for services.

for service across group customer optimization southern led expand Following a health that to its the XX and system service indicated its system. now of hospitals inventory the increased for control and to of the approximately savings the to health cost its hospitals decision expanding major a for insights implementation visibility analytics The is inventory successful need solution.

continued labor in also system effort a with shortages pharmacy addition challenge improve to In health the from of Omnicell insights this efficiency. seeking platform is an technician

for pharmacy better to solutions potential delivering XT on central the automation Florida of This secure help outsourcing. compounding customer seeks reliance service Omnicell Omnicell's systems. it expanding in premium also health gain system footprint a Recognizing as value XXXb IV pharmacy their license is decrease and automated its control the in fleet over dispensing medications supply chosen entire has and software it with carousels chain to

system's has In technology strategy should central patient increase Minnesota decided system convert pharmacy This while to to expanding a pharmacy terms with service. conversions inventory Omnicell's dispensing automated of inventory initiatives. the and management combined to health XT in their better system-wide safety cabinets optimization aligning customer efficiency footprint competitive visibility

California not cited support but the in based for to of southern pharmacy chosen comprehensive XT has continued recognized what an expertise pharmacy. current a only as launch system saw customer a continuum. in services This deep a strategy growth this health as also specialty the it specialty care Furthermore across customer technology decision owned opportunity to Omnicell's support a Omnicell's factor key

Medicaid by enhance significant medication In a populations partnership milestone market a support with patients. entering underserved health partnership adherence The synchronization also offering medication new a personalized has the aims to among live and plan. leading with reached Medicaid to

In days interruptions in and in personalized proud a call lowered prescription notable reduction lastly, plays a refills approximately saw just are rise to improving the XX%. pharmacy by in live chain chain And transfers Omnicell northeast We automated patient health. a significant pharmacy role the support in selected XXX health of IVR. and

we software we services quarter are this resonating prudent we on managing the to Omnicell with tech-enabled Moving continue a to as environment we the is care to take that appear business be market. in to pleased but health products our industry what the seeing what and market believe are by approach the currently evidenced overall [customer-wise] and

customers to their designed remaining important an With solutions key help Our years health as technology challenges strategic pressures the few achieve goals. in is hospitals system the evaluating and as for challenges constraints faced that salary Omnicell solution. think well of part we many labor them are are last have and cost innovative long-term

For pressure process they services us the the solutions help implement clearer need to the the and hospitals automate optimize becoming the which ease to at and is purchase outset. medication modernize management should on

workforces. long-term a to for in choose mitigate be as we are order some also new near-term the should requirements training customers Omnicell these technologies While delay additional adopting some headwinds seeing tailwind to for

second of the outlined. we year bookings full-year the and share. we I half factors the end ongoing and expense non-GAAP full-year of Considering due As range half to towards management the expect per provided trend CapEx we the previously constraints look ahead budget strong the to toll lower to solid of revenues first are earnings raising we non-GAAP for performance guidance some and XXXX EBITDA our just full-year guidance

will pressure in As labor I appear need guidance trends driven expect discuss Nchacha long-term favorable offset customers services and we detail constraints. but by mentioned for to continued as more software tools our enabled automation

At to the publish ESG. to pleased on second report. third were we moving ESG annual our of quarter start the Now

goal innovative footprint with while a to our our are our towards a technologies progress world. to patient environmental customers build creating This entails our intended view minimize and help products of maximizing that make healthier to continue positive outcomes. We change delivering designing

equity support continue and and a for inclusion ESG intended also inclusive aim well-being all. we to initiatives belonging foster workplace. lives to to our We and ensure an promote are diversity that Through engaging efforts healthy

note an Nchacha have the to an president The of Bobby SaaS independent Bobby the to Omnicell's experience as to over XX established currently expands of more it turn ResMed to members. results healthcare speak board Ghoshal the than is our global July some discuss as to our to board more leadership as SaaS recent board. ongoing I to most leader changes. for In years Incorporated join for Bobby addition addition board in refreshment quarter Before our want brings our Omicell pleased Kaushik of I of process. and XX technology our serving were part to important and who and the director financial we to is addition detail

impressive leading rapidly strategy SaaS and and ResMed's operations expanding is an for and track of high-performance the teams day-to-day record vision, has portfolio. responsible products software He

today. We welcomed are a Omnicell's accounting new a financial seasoned and with pleased at working organizations his is He consumer he's Nchacha to Nchacha speaking industries. June. have as It's than patients to products improving for We and with and of also XX in benefiting work looking financial CFO far. across of more and experience the and find executive are already to I leading beginning shares healthcare you to global our of with years insights leader some we collaborative Nchacha priorities his and is commercially this pleasure passion health. know forward from focused

deliver our believe place patients. changes to create a announced of streamlined within In value This on addition we shareholders, next to to our we Nchacha, a the designed employees, in well as We of welcoming motions phase excellence. focus seek leadership lead as organizational appointment new organization. a their a of for included continue team more organization members number the operational put continued to and healthcare have we of with our to partners, the team to also our the our right as number other performance

the that changes, these emphasize our With remains same. I want strategy to

worked build will a as We evolution. delivery pharmacy more should a enable and ever-changing we moving reflects customers. We adapt operate position strengthen new the care to the us believe structure meeting leadership of management model we to phase to effort Omnicell's This We've further must industry strategy hard and our of medication transform needs are into leading the the that continue provider. globally. and nimbly our simply next this believe

focused Now are are we're we the focused positioned believe skill with that keenly for profitable and growth bringing and in laser people sets the on well future. I right on execution

to Now and it over details performance turn I'll himself that, to further outlook. provide and Nchacha introduce our on with

the Thank over be you ahead. the last operational IT my meeting in thrilled organization, several warm play of team believe thank am the to you weeks forward I I through and here in excited key many excellence. with be overall finance I for all and enabling today looking driving to and strategy Omnicell a the the am entire I for and support to Randy, and Omnicell's in which of the you am weeks. leading you mission role onboarding vision to the welcome, and company's

others is in success. partner strategy with Omnicell and the to to mission-driven improving here I working care the be transform Omnicell. delivery have fully model trusted healthcare the differentiated has the far mission I just brand closely is impressive healthcare executive relationship June, medication time most along for Omnicell joining These Since the management. positive My committed reasons with team why why pharmacy joined to enhance incredibly The to and so ensuring provider's customer Omnicell positioned reaffirmed a been at to has and I outcomes. for and of team long-term strong care well believe talented few recognition. patient are company a here continue

financial immediate to I discuss half results, of year would the in I our before going like second you priorities with forward. Now, and my share the

financial to First, leverage the data insights our our improve performance and of I predictability and intend analytics to business. strengthen

at forward Second, weeks ensure are as forward work to move company's to capital work improve throughout that few the to And look value I will team strategy working really with I to we the and and as swell operational discipline that enjoyed seek support I and organization. will to growth. efficiency long-term innovation deliver we Omnicell first to the continue stakeholders. to continue have with deploying to we our my third, sustainable ensure financial operate strategically I profitable we

financial to Now, our turning results.

compared of lower quarter constraints. over of second XX% were capital of or million, or reflects GAAP ongoing quarter year-over-year second growth Our million primarily revenues of the total driven an systems of to care a decrease prior versus second and XXXX XXXX. million point quarter primarily $XX in a XXXX, The advanced of XX% Services million, an the X% increase quarter, $XXX revenues $X decrease healthcare result the increase of by services. revenue budget as $XXX were

the of within previously million disclosed second above year. quarter in the second quarter services, to and expected revenues of Total favorability were the advanced reoccur top which in XXXX half $XX is guidance end range, the technical our due to not primarily

services revenues , Non-GAAP XXX growth quarter, due from result XX.X% basis containment of the actions. XXXX an was for quarter primarily increase higher the margin prior cost second prior of to the and our

quarter results free ending to In express our non-GAAP for still our full we lower are addition, prior saw GAAP our quarter. is the costs semiconductors reconciliation posted of compared in and relations release included second on A to website. investor and

first other second assets, XXXX the cost impairment the the of reflects quarter, were with an loss the earnings in $X.XX as share XXXX charges $X.XX and of of profit use in higher the income actions. as of quarter and for per GAAP full to revenue XXXX. per of compared benefit assets $X.XX of accordance compared leaves a performance containment well right improved operating absence share quarter second to quarter Our prior in abandonment prior of from This

As previously shared the for GAAP sustained a objective we have you, is profitability with company. key

$X.XX year. quarter the Our in prior period compared $X.XX non-GAAP XXXX the in was to quarter second $X.XX per last earnings share same and

to compared to same was previous an quarter quarter second the decrease and last $XX non-GAAP EBITDA period Our $X million $XX year. of when compared a of million, the million increase

EBITDA The of due the non-GAAP At XXXX, non-GAAP per revenue, mix the from timing offset $XXX and cost strong income expected to is and March second share earnings services year, reflects tax up the and earnings favorability quarter of the as per balance customer second of quarter XXXX. higher the from operational year. income in the be higher half year XXXX and million XX, quarter guidance second the than to was the non-GAAP share end within was The management. taxes. of second favorable timing expected primarily second exceeded million, product impact $XXX in within quarter our Our cash expense by

revolving million credit As of there and of our under we XXXX, had no $XXX facility was June availability balance. outstanding XX,

quarter cash well of as In of strong a within accounts for XXXX decrease this of was the of the XX collections receivable, over timing sales second terms prior quarter the days days, quarter. due outstanding invoicing XX as to primarily

supply XX, the strong $XX team initiatives. XXXX of on $XXX is million the driven XXXX progress, strong chain as Free continued million, a flow from cash cash inventory collection. were management global million, of key process quarter second quarter. decrease Inventories Reflecting June prior and making during of $XX our was improvements by

Now guidance. full moving year on to third our XXXX quarter and

As Randall to continue to earlier, prudent the a we managing business. take approach mentioned

bookings the billion implementing lower and labor, new XXXX previously nursing stretched billion. stress the is $X of and towards software to range expect We year showing impact the already full of $X.X trend new caution end provided IT continuing Customers which the to capital that signs for projects. of are of workflows to timing

our bottom well with strong our half pleased services, are XXXX underscoring services of and first guidance provided from billion, to management. raising our top our continued we and Considering increase solid year as execution an and to are full $XX $X.XX cost We performance, strong prudent the $X.X advanced between million billion as range total end execution, strengths previously technical range. the of our in revenues

full million. million million, end half, raising to $XXX of product range our million an XXXX year to top We and the between from between are solid $XXX revenues are million to our revenues full $XXX reaffirming increase our first to XXXX the guidance. in $XX execution the year bottom of to initial we $XXX Due range service

revenues. million revenue XXXX between the to We be expect an from end approximately XX% and services This its advanced XXXX, of of $X $XXX and our total top to increase compared at original XX% increase of million reflects and guidance. million, midpoint bottom the $XXX

guidance Please summary an services website from technical investor total original increase midpoint presentation bottom as the and a for in expect compared This earnings $XXX to of relations in We XX number the and refer our between of component. the Slide revenues end of year represents $XXX on published XXXX. at top to million the X% increase of revenue our million an our million range guidance. XXXX, to $X

for million XXXX year prudent services and total the expect and our the revenues guidance, to expected million, an initial $XX We from of increase million non-GAAP $XXX higher which the $XXX and profit year incremental EBITDA range bottom from top cost between end management. of reflects

earnings guidance. to initial top our of XXXX share bottom the per $X non-GAAP and be of $X.XX $X.XX expect per share, an between from end We increase and

non-GAAP reduction $XX expense the containment non-GAAP per annual The year impact million of savings efforts, includes from and the full primarily falls and in within operating share the of disclosed recent expense other previously guidance EBITDA derived earnings SG&A.

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

year-over-year. expenses operating down We to be to expect non-GAAP flat

higher expected rate numbers Included is a a expectations. of profit tax in in result increased XXXX the blended these as

an XXXX, in assuming year per now XX% share. full our rate are earnings approximately the non-GAAP For of effective tax blended we

For providing guidance. the third following we are quarter XXXX, the

third million. to range between revenues expect $XXX XXXX We and quarter $XXX total million

$XXX expect $XXX million. million revenues product We million range million and and to $XXX services range revenues $XXX between and between to

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

of third per EBITDA includes [business] quarter and share the guidance as mix expenses. well expected in quarter product as impact customer investments services non-GAAP advanced earnings and planned third and innovation and The non-GAAP

third quarter compared non-GAAP tax second the benefit per reflects income to Additionally, timing XXXX the earnings guidance the quarter. share

compelling the summary, and to we for delivering operational are long-term and performance. believe strong In Omnicell we financial are committed opportunities

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

[Operator question comes Instructions] Your from KeyBanc. Schoenhaus first Scott with

open. now is line Your

be should from of Hi leverage that? very, really is expense My or operating on there, last efficiencies down aware and is, other there results driving what's operating quarters team, coming mostly the congrats the Seeing there point SG&A strong sequentially side line. the and of? that headcount Thanks. on on care nice that very question outlook. first we XX% Is cost

are of. that need to aware There you other you, efficiencies cost be Thank Scott. definitely

which operating achieved reduction will we of half half announced, the and and that timing, first impact of efforts remaining half a other of year. of the see less expense it savings savings savings. than Based in is expense in million assume saw previously $XX force annual cost full reasonable to we on containment second we slightly in As the the the

Great.

seeing to as levels right remainder over now. continuing related year built similar the Just at expectations guys around to the labor mentioned issues environment up, you hospitals we're Do guidance? a of labor for have into any or your technicians. the you. the is follow headwinds that just improve you kind at Thank and that hospitals of Really of nursing

seeing health challenged by Scott, the of as uncertainty macroeconomic decisions. which, still So continued our labor impacting systems while are incremental year we're customers' are course progresses, buying improvements and constraints our

While including decision help our drive labor, to services lower to the advanced challenges to impact contributing to and solutions which near-term to adopt the need our continue technology-enabled the towards our customers' ability automation end of range. is technologies labor guide new for reduce

labor you business this where about new Yes, particularly you've advanced not you concerns new in to got is where than have that in seeing but just things would more committing and mostly areas install. robots we're service projects advanced new particular that in disruption services and in to ADC which area

to people side and the IT technical need commit. on You organizational

Randy. Thanks,

You bet, Scott.

next with Your of question comes from Allen Lutz America. Bank

Your open. line now is

Thanks ago, this the for seeing The what I ago? least doesn't perspective kind it are pipeline? they're in Just three for and to seem in at three sequentially was you pipeline seeing quarters flatter on of to some than six the It you're better range, quarter-over-quarter guess worse. I kind getting have of up like months but trying was revenue there. months it taking get product bottom. the today Is things of guess guiding you're that seems questions. me sort I guess what

to products would customers about expand. continues our the pipeline say excited and the I Yes. have that are to

all timing products. it's about funding the is think these on what I

run to the would that all or place. have robots. of needs perfection autonomous to management pharmacy. has near we take There software to medication these get modernization think the at can things to doing automated we us There so to needs be I agree be that pharmacies

been. question industry piece. It's just the as vision ever the that the on about We're as have I that. a bought It's into we engaged has timing bought there. funding and uncertainty just the think it's of much

And prospective those then Randy bifurcate and on any a the you business of between, the seeing two clients you and those? solutions. products to in-live question, product in-house? follow that mentioned either rates Is you Great. on suite, up there lines? pressures on products in Scott's the hospital then budgetary growth acquired, between Can difference you new Thanks. I that difference there is Or built you're with guess,

a the is I the very Medicaid about I the think products. Well, new is the think for for Medicaid very developed plan, We in-live-in unique lot which market We've exciting area. with go-to talked product us. of

that the a want bringing because big all solution there's interesting to product more core our customers lot format so hospital retail the in outpatient big the of in opportunity networks, What's And home. provider and same mostly we're patients way there. set into way an probably they engage even to is these networks,

the to same the need traditionally been kinds which has they So in of environment, that tool been have sets retail in-live-in sold pharmacies.

exciting piece. really we're that's happen. see the So And begin that crossover to to starting

I is people in big think piece, the hospitals and or some mostly techs nursing well. redlining IT are as retail provider pharmacy the but where not most of in particularly these exhausted, headwinds it's

So exactly when. and relief it's it funded know doesn't those before get a time and get of they the just matter positions

of are I better think and on think the what strong doing far there, I it's exciting and market is not an as is hospitals the because getting things. getting But of core place for-profit those expansion ahead actually probably but better our already as pipeline seeing of crossing marketplace. we're the our some of the alignment over just in-live-in into results regular product we're it product that really

you. Thank Great.

Stan Your next question Fargo. comes Wells with from Berenshteyn

open. Your line is

impacting services range. warm details a call of side mean, you the to on the lower on some Can guidance. to share here Nchacha. welcome I guided just Hi, products what's thanks Maybe we or you my particular start booking to can maybe taking out? and as for questions on that lower any

with as welcome. in But as constraints IV, customers particularly still prepared uncertainty. again, as well challenged Stan. seeing are are my our Like we're a Thank labor services, as for macroeconomic regulatory you warm navigating remarks, very I complex in near-term mentioned customers headwinds also environment. some earlier, well advanced the Yes, as

Okay.

Yes, filter expand has made gotten IV to some a bit, Stan, an that just get that. that. little through gone The through insights can has if on to on I FDA and

pharmacy through further Now set it's compliance to individual regulations or boards states, going rules.

in just slower some So states, it's going states. than other

so back making decision understand going certainly executed. that's that's to And holding until some how they fully be

And are was Okay. I back square I here. seems mean, Maybe advanced you reiterated. it performing guidance. with like to step guess if that take services bookings a side. Product just we

started backlog. $XXX in year You million the with about short-term

You entry be essentially you you'd over do in of that. at the of the where you through What the year? of bookings or need million hit $XXX And visibility where have kind year. versus thought to start are We're you way here? the XX%

disciplines is brought have really already on And we of particularly the implemented scheduled. it in and new because visibility. lock those year think much we've second for And I strong of visibility. half Well, particularly in new we've revenue to earnings, the that and processes

think less about So commit commit part we're are feel that people to is capital I about these really the piece And necessarily. that their projects? we we new going forward. to move Not or talking as visibility when where strong there's

their or they platforms integrating the require in going but take new is spend which to it platforms mostly. to go may of IT time new is training, of into Some these the when it operation. newer That's on be a these to organization some be really hesitancy ready require new where see we financial, and lot workflows,

Okay. so Thanks much.

Stan. Thanks,

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

Your line now is open.

mean to pretty does going that hospitals of change related Nchacha. ruling to but question, years, announce payment recently Thank afternoon. CMS that to to And over the Good nice for taking speak a realize the you first couple Supreme the prompted was Court has challenged B $X a for your a with the past XXXB things? And you forward? there platform that with questions. Maybe what this been XXXB billion program. I that market it's does

probably things. it that of couple means Well, a

it going and more will We is we in is One to bigger means for what rebate, be. more have specialty $XX frankly, which services, opportunity, said that means pharmacies, $XX which flat we this XXXB two hospitals about angles our an revenues up $X XXXB. have is million, in Probably believe there's outcome discussion for the where to significant spend for the spinning us, we're it continue rebates that where it in to money, that it's that no to pharmacies whether deploying not services, pharmacy QX, opportunity been QX hit two one or year, and contracted knows, either our really advantage slightly actually billion and hospitals have means million on specialty is to bigger relatively for But but sets. has there is services. to solution mean are we remember, does our the customers, more that obviously, our

to XXXB, that's adopted opportunity this what ready people. were in big the be bolsters going money Now, light. amounts, accelerate But has yet you're a reaffirms the until bank get own the to a more spend back in-house for CFO going I many X really they and the the place us, you're higher I then so is got this millions I'm coming said, and point that now to guess to they're I've in, on wait take My project. decide connection [indiscernible] haven't where by know in going seen I richer I to just in to have that to significantly program rebate think get it pharmacy, that old that cases, rebates, program your think, which it

the of gross A think separate much steel, a here ago, this chips, when from the I one to quarter question got step transportation three and semiconductor it costs quarter, I regarding benefit then and think gas. specific up little you margins. you nice year side, faced It great, bit sounds That's side a semiconductor the this services on and like maybe but was challenges, of and on back here on transportation.

from benefits down? year, three remainder some we you hand those look on as those inventory as prices this of for through the products or kind come As you. work are the of at further you expecting either areas Thank

we of XXXX so approximately The Yes, purchases We December to committed of chain. remaining resets also QX short believe compared continuity that of December $XX XX, during included of deeply XXXX of inventories to June consistent year we the some XX balance a as really as as buybacks and semiconductors. prepared was of have disclosed remarks, purchase XX. have this our resets of million to advanced we supply that

you. Got it. Thank

with from Benchmark Your Bill Sutherland Company. the next comes question

line now is open. Your

Hey, kind guess question thinking the my for you thank point process going going you. what's of evaluate Welcome, might this be? your that Nchacha. what's you into be as main deployment, capital and to at I

Yes.

will we we'll and our deployment the make growth fuel standpoint. sustainable innovation evaluate to right decisions from to an our So capital investment strategy continue

long-term but I flows. think We've really I immediately cash a strategy will there, think that definitely like consider got point, it forward. at as maybe a to feels move anything don't some that we and M&A this debt. eventually. something think restructure I We there's we sheet then but at is Nchacha is have definitely think, looking the be balance I nice need

that are quarter implementing this your asking what your Got can't as a products? without call as technology it. about thoughts across And then and AI have far

of the with efficiency. and unique interaction, AI communications has a ability looking for internally potentials customer the lot at, many areas to that many are customers, think development, I externally of both and gain software companies obvious

AI fact pharmacy ability get that autonomous we the really important and to the will us. sooner, it accelerate So here, we that's eventually to to think love the

company, because of, have be careful as of top a specific around it's we where think use too as use internal strategies impacts cases, we have use regulatory of forward very externally move to proper such to to how it but and want those will loss the little I we of on use them powerful AI the to specific be, list company. full a mostly exactly and soon just when the and tool is we outside our say we

Randy? it's So internal been focus, mostly an

and encouraged by think them. the on our steps customers use some I some are we us are we these certain may internal proof and to some of many beta of that are have first projects of They them. very leading then may and, actually way customers, bringing with we but cases selected the

So be large I answered. unstructured data solving, about there's a lot that can of questions a easily think excitement

a there's healthcare. lot of So in unstructured data

sure, So opportunities for lots of right?

Right.

much. so Okay. Thanks

SaaS. Ghoshal just one the we've [indiscernible] us helping board. lot as got make process of we He him a and of through he's Bobby ResMed pro notch. AI him top I think got and He on from is well. and he's, would reasons resources. put And is our team the a on this is

but, to definitely ready like just we're part we I us impact that's how but not lots our going So it's directly share there of opportunities strategy. a to feel have of

Your next with question comes from BTIG. David Larsen

is line now Your open.

products for Hi. increasing that in prices your XXXX. It's you understanding my were

And around that? any semiconductors? Just these expect inflation occur? then offsetting be what complete XX/XX/XX? they over see Will to time Thanks. for those sort color And continue to period than are increases we more price price should at increases of

Yes.

to, continuing continue two our we strategy. to price the our increase So as see benefit continue to actions we But are years. place to, pricing last we we put the over last, continue over in of will assess

modest in We recent seeing inflationary on which been periods. cost reduction subject steel, for semiconductors are on also pressures and significant to had freight

the first which quarter second the modestly of second of we the and So benefit these in favorable product inflationary for half. to pricing the in saw outweigh gross margin actions impact will time, costs, the be

up can add renew coming And that year. for year, that customers that of our to I'd them Only you implement you pricing actions are, them renewing contracts every also for. some those can't service

ongoing move they're we as forward around. So come as customers

as we strategy think So there forward increases that. where about to, our to and be I is move prudent some are

version automated of cycle And Just be you to whole will thoughts in upgrades, Okay. you there that the Are dispensing that XT won't cabinets upgrade correct that new have the you bring to a process? of that of sort and not? or XX% sunset that more or these support you like market through are point, you'll will there of very helpful. the way the once upgrade there And at process? then terms of be legacy some because going any then starts? solutions. like be my another along XT to far And everybody's get color sort do it's how simply through of then understanding Is

XXX% It's XT going well is don't Yes, upgrade. the we we to through whole market convert. over significantly And even the way of that are the XX%. believe

end in on So new lifecycle create to add usually really with solutions we XXXX. value, expansions, which I to XX-year to a but days, call looking we're that value more business to generally, have of continue to we hardware a we that, believe to don't it systems getting software we and started certainly cycle We exactly our add on new customers. is to and for the On We conversions. we take those XT upgrade what but our time of continue our with more products. big have as part as our competitive well

And and we that so do have we're nearing don't assuming traditionally about, right. but product the XT. to talk cycles of you're have in the timelines that We end we right do you're any

billion if Did one can just Randy, one Great. that in and the 'XX? 'XX hear And of will last you XQ $X XQ be we I then in. quick from squeeze of paid CMS say, it

sum it's There my is and be grabs, as will as it's a been, far QX lump of QX. QX whether be still that year. this in hasn't it it understanding up But or will QX, current for

impact be spend or to dates what waiting extra think have those that but think QX money. are, the those I coming Just new these of of sure are the up think, seen will I And be I an by year. on hospitals to dollars QX ability to

much. very I'll thanks back Okay, into hop queue. the

Thanks, Dave.

question. Next

Your next with Jessica Piper question comes Sandler. Tassan from

open. now is line Your

date. congrats for Nchacha to taking question start on thanks and the the Hi,

just a kind question on quarters. So trending, of and you expect quite guys would or normalized 'XX? around goods just have should the I growth product growth describe for where moving cost of and you the structure been variable like margins, bit product is and 'XX maybe between first they mix the what product be fixed in margins. I'm can my of last couple think hoping Those

Thank you, Jessica.

comment cannot on of year. really as impact last containment that we revenue, our of product margin cost we So as favorable key XXXX drivers you actions that higher in mix, or the tell the full gross services well XXXX, customer took XXXX, but were and I'll

it. Got

we're products on I the guess trying understand, revenue margin. to right the So impact just, product incremental of growth

the of understand mix maybe goods us fixed this variable help you between growth versus cost within can product margin? So

really like services The higher between, as primarily mix, mix as I again well revenue. is said, customer and product

Okay, got it.

for just payer that the outcomes health? help if deal and any the deal kind of us of so, and deal? Does maybe maybe value-based can that exposure the So that for in or context Medicaid is you any mentioned live sort within deal you understand And the Randy, pricing? components have to Omnicell first of

regular somewhat up always is, driven and the synchronization customers you outcomes based medication that it's the more signing on synced are around And that's of that's to keeping management. the medication their if they is provider pharmacy, speak. Well, to up holistic them so as a the use and plan

a get where So this to I outcomes. see opportunity of that you what that's patient base the retail order come better to in of the unique think would call customer the inside engagement with more here plan directly to of came I be outside

Medicaid know we really it's service market. hard And the to

really we're that. about think I excited So

are have, certainly that we're doing are interaction, were, points. market go patient I us. I scenario difference of fits at And with of these to only good that together And uniquely and multiple these kinds the so multiple company the can this making be these things put think, like because penetration a really levels services feel you is well formulated and there one if after.

Got just quarters end it. revenue a question services, you is last guys high that row. of my see two guidance in now And the

that's wouldn't relative So the, persist high the for in have remuneration strength second you. And end XQ. you when is potentially arguably operating Thank the is better to coming to implementation? And environment going than better why if the upside $X that that payment guidance in expected of get the half this from billion case, hospitals? just hitting

knew saw to in services timing primarily timing not from that Yes, approximately the reoccur be expect of advanced revenues, the the which QX by strong due of year. to well is to revenue we driven and as is flat performance We technical do QX, all as this which second expected half we services. services, favorability in in

renewals of few come and renewals for. lot a paid they those had in payments QX, back just months hadn't for We a sometimes with

so payments you an there. get few And extra

so and QX. doesn't and in And happen lot QX. It that as of QX often a happens QX in

That makes Thank it. Okay, sense. you. got

Thanks, Jess.

call back Chairman, I Omnicell at are Lipps. Randall There to questions CEO, no and over further this turn President, time. the will now Founder,

deploy straight, it's infused predictable, an the particularly to new products Omnicell great getting us. a back this like help moving a and delivering great new to having innovation, exciting time say, team, get growth the really such us for the company for I thank team I'd He's our join customers track, forward. heads solid back getting just us, And profitable, with Well, quarter, exciting our scalable to management time would on Nchacha these for to been envision.

we'll being So for next see thanks and you time. here

concludes today's call. This conference

now may You disconnect.