Q1 2021 Hill-Rom Holdings Inc Earnings Call
Good morning, and welcome to Hill Rom's fiscal first quarter 'twenty 'twenty, One earnings conference call. During the presentation, all participants will be in a listen only mode. At the end of management's prepared remarks, we will conduct a question and answer session at that time, if you have a question press.
Star one on your Touchtone phone if anyone should require assistance during the conference call. Please press Star then zero in order to make the call more efficient. Please limit your inquiries to one question and one follow up if you have additional questions. You may return to the queue. As a reminder, this call is being recorded by Hill ROM and is copyrighted material.
Not be recorded rebroadcast or transmitted without hill rom's written consent. If you have any objections. Please disconnect at this time I would now like to turn the call over to MS. Mary Kay in the Don Senior Vice President Corporate development strategy Investor Relations Mr. Don you may begin.
Good morning, and thanks for joining us for our fiscal first quarter 2021 earnings Conference call. Joining me today are John <unk>, President and Chief Executive Officer of Hill, ROM and Barbara boat I'm, Chief Financial Officer before we get started let me begin by reminding you that this presentation includes forward looking statements.
That are subject to risks uncertainties assumptions and other factors that could cause actual results to differ materially from those described including any impact related to the COVID-19 pandemic.
Please refer to today's press release, and our SEC filings for more information concerning risk factors that could cause actual results to differ materially.
In addition on today's call non-GAAP financial measures will be used reconciliations between GAAP and non-GAAP financial measures are included in our earnings release issued this morning.
Finally, I would also like to mention that in addition to the press release issued this morning, we have posted a supplemental presentation, which highlights Hill rom's performance and 2000 and 'twenty one financial guidance. These materials can be accessed on the Investor Relations page of our website.
So with that introduction, let me now turn the call over to John.
Thanks, Mary Kay and good morning, everybody.
Today, we are pleased to announce strong financial results for Q1 and as a result, we are raising both our revenue and earnings guidance for the full year.
We started on our fiscal year building momentum accelerating recovery and expanding demand for many critical care products.
This underscores our significant transformation the diversity of our product portfolio and strong execution against our strategic priorities.
Q1 revenue grew 8% and adjusted earnings of $1 53 per diluted share increased 35% versus the prior year.
We exceeded guidance on both metrics.
New product revenue exceeded $150 million, an increase of more than 20% and we achieved significant operating margin expansion of 260 basis points.
We executed on our accelerated business optimization program and advance our strategic growth platforms with both organic and inorganic investments.
We looked at several other accomplishments in the press release issued this morning, but none of these can be possible without the dedication and commitment of the entire hill ROM team around the world.
Continue to be impressed and proud of how our team members are rising to the occasion to support our global customers and the broader health care community.
Now, let me provide some perspective on our quarterly financial results before turning the call over to Bob for more detail.
The Q1 revenue growth of 8% reflects better than expected performance across all three businesses.
On the recovery progresses faster than anticipated along with the benefit of select onetime COVID-19 purchases at this point more than 80% of the Hill ROM portfolio is showing stable or sequential improvement compared to the fourth quarter.
Relative to our guidance, we estimate onetime COVID-19 purchases accounted for about half of the upside or about $40 million and <unk> 20 per diluted share as Covid cases began peaking late in the quarter.
We expect to see some ongoing benefit in the fiscal second quarter, although at a more measured pace given the good news about the declining volume of Covid hospitalizations.
Remainder of the Q1 upside can be attributed to recovery on the underlying business as we continue on the path toward.
Geographically U S revenue exceeded our expectations and increased 1% as lower capital revenue like beds, and surgical equipment was offset by higher demand for bed rentals.
And several frontline care products.
International revenue increased 19% on a constant currency basis with double digit growth across Europe, Asia Pacific and Canada.
We are encouraged by the strong execution in these markets as we strengthen our engagement in partnership with local governments and customers while supporting their needs during the pandemic.
We're also pleased that our strategic investments in China are paying dividends with a targeted go to market commercial strategy and ongoing recovery delivering double digit growth for six of the last seven quarters.
Now, let me turn briefly to review the performance by business at constant currency rates.
First patient support systems revenue increased 8% in Q1, which included the onetime Covid benefit mentioned earlier P.
PSS performance reflects the strong international growth of 33%.
Driven by market expansion of med surge in ICU bed systems across Europe and other markets.
As expected U S fed purchases and care communications revenues were down modestly compared to the prior year, but we continue to anticipate sequential recovery from here. We believe we're very well positioned with our strong value proposition and differentiated ecosystem of smart beds and connected care solutions.
As hospitals prioritize clinical workflow efficiencies.
This continues to be validated by several recent competitive wins, including a five year standardization project for Hill ROM with nurse call volt mobile applications.
And medical device integration across one of the nation's largest health care systems.
In frontline care first quarter revenue increased 5% performance continues to be driven by double digit growth in patient monitoring blood pressure in thermometry.
Physician office based products, including our vision care and physical assessment tools.
Also continued to rebound as U S physician office visits resume.
And our vision care business, we successfully obtained CMS coverage for annual diabetic retinopathy exams, and the primary care setting and secured an agreement with a national pharmacy chain to improve access to screenings.
Lastly, surgical solutions revenue increased 4% in Q1, reflecting strong international growth with the completion of some large projects in EMEA and as expected lower revenue for surgical equipment in the U S. Due to access limitations related to the pandemic.
As I mentioned last quarter. This pandemic has demonstrated that work we have done to build a strong portfolio will allow hill ROM to uniquely benefit from the accelerated transformation of the global health care environment.
Hill ROM is well positioned to drive meaningful value and deliver our long range aspirations of mid single digit top line and double digit bottom line growth.
We continue to execute on our strategic priorities, including new product momentum and emerging market expansion, while creating value with our business development activities.
As you know.
On Monday, we acquired the contact free continuous monitoring technology from early sense. This digital sensing technology is currently integrated into our centrella smart bed to help identify clinical deterioration that can lead to improved survival decreased cost.
And decreased need for ICU admissions.
By expanding capabilities with Hill Rom's connected care ecosystem, we continue to widen the differentiation gap by transforming the bed into a patient monitoring platform that acts as the hub for digital connectivity and communications.
Earlier. This month, we also announced our intent to acquire Bharti diagnostics Bharti is an innovator in digital health and a leading provider of ambulatory cardiac monitoring technologies, the coronation ambulatory monitor or Cam patch provides a differentiated wearable biosensor technology.
<unk> is designed to promote patient comfort and compliance streamline clinical workflow and yield clinically actionable data that enables physicians to identify specific cardiac arrhythmias.
There was a clear value proposition vast body of clinical evidence cost effectiveness data and physician support for this category of devices.
That said, we are actively monitoring the situation related to the announced category one reimbursement rates by Nova to US last week, and we will provide an update when more definitive information is available.
In summary, I am pleased with our strong start to the fiscal year and how our team is executing during these unprecedented times.
Despite the challenges posed by the ongoing pandemic, our customers' continued trust and support for the solutions, we provide demonstrates our resiliency and why our vision of advancing connected care is more vital than ever.
Now, let me turn the call over to Barb.
Thanks, John and good morning, everyone.
I'll briefly walk through our financial results before turning to our updated guidance.
As mentioned worldwide revenue in Q1 of $741 million grew.
Grew 8% compared to $685 million in revenue last year.
Revenue growth on a constant currency basis was six 5%.
All three businesses generated higher than expected growth driven by accelerated recovery trends and expanded demand for critical care products.
Adjusted gross margin was 51, 2% and expanded by 130 basis points versus the prior year.
This was the result of favorable product mix and operational improvements.
R&D spending increased 11% to $35 million.
Highlighting our commitment to drive innovation and advanced our portfolio of connected care solutions.
Adjusted SG&A of $205 million increased 3%.
We continue to fund our strategic growth platforms in <unk> transformation.
While managing discretionary spending and realizing planned savings from our business optimization program implemented last year.
As a result.
Adjusted operating margin improved 260 basis points to 18, 8%.
Interest and other non operating expenses for the quarter totaled $11 million.
This is lower than the prior period due to the benefit of insurance recoveries totaling approximately $5 million or six cents per diluted share.
The adjusted tax rate was 25%.
Lately higher than our original expectation due to the geographic mix separate profit.
Overall this translates into adjusted earnings for the fiscal first quarter of $1 53 per diluted share, which is an increase of 35% from $1 13 per diluted share in the prior year.
Now turning to cash flow.
Cash flow from operations for Q1 was $100 million on.
A 30% increase compared to the prior year, primarily driven by higher net income.
Capital expenditures totaled $29 million.
$5 million higher than the prior year driven by the continued investment in our global I T transformation.
Free cash flow advanced 35% to $71 million.
Our balance sheet and financial position remains very strong.
In Q1, we returned $70 million to shareholders through dividends and share repurchases.
We ended the quarter with $295 million in cash.
And our debt to EBITDA ratio at the end of December was two seven times.
Or two three times on a net debt basis.
Now, let me conclude my remarks with our updated guidance.
Let me start by saying we have not included the impact of the party diagnostics acquisition and our updated revenue guidance.
However, the earnings per share guidance ranges provided today provide sufficient flexibility to absorb the deal related dilution in fiscal 2021 under various scenarios.
So with that said.
For the full year, we now expect revenue to increase zero to 2% on a reported basis, which includes a benefit from foreign currency of approximately 100 basis points.
This compares to our prior guidance of a revenue decline in the 3% to 5% range.
By business segment at constant currency rates, we expect patient support systems revenue to decline between two and 4%.
An improvement of more than 400 basis points from our previous guidance range.
We now expect frontline care revenue to grow between two and 4% as recovery in the underlying businesses continues.
And finally, we continue to expect surgical solutions revenue growth of 3% to 5% with recovery towards pre COVID-19 level.
From a profitability perspective, we now expect adjusted gross margin and operating margin to be approximately flat to the record levels set in fiscal 2020 with gross margin of approximately 51, 5%.
And operating margin of approximately $18 eight per cent.
We expect R&D to approach, 5% of sales and.
And expect SG&A to represent approximately 28% of revenue.
We now expect other expense, which includes interest on.
$65 million to $70 million.
The tax rate of 19% to 20%.
This translates into adjusted earnings of $5 77 to $5.90 per diluted share for the year.
Roughly an increase of 45 cents per diluted share compared to our previous guidance range.
And reflecting mid teens earnings per share growth after excluding the onetime COVID-19 impacts from both the current and the prior year period.
From a cash flow perspective, we are now expecting operating cash flow of 400 million to $430 million, an increase of $30 million compared to our prior guidance.
We continue to expect capital expenditures of approximately $100 million, resulting in free cash flow of $300 million to $330 million.
For our fiscal second quarter, we expect revenue to increase zero to 2% on a reported basis.
And adjusted earnings excluding special items of $1 47 to $1 45.
For diluted share.
And now I'll turn the call back over to John.
Thanks Barb.
In closing, while we expect the pandemic to continue to impact the global health care landscape in the near term we remain optimistic about the year ahead, and our continued execution on our path toward recovery and normalization.
With the diversity of our portfolio, we are well positioned for growth as we navigate this transition throughout fiscal 2021.
Over the long term, we remain committed to driving sustainable and profitable growth, achieving our strategic objectives and unlocking significant value for patient caregivers and shareholders as we deliver on our mission.
Now I'd like to open up the call for Q&A.
Thank you we will now begin the question and answer session. If you have a question. Please press star one on your Touchtone phone, if you wish to remove yourself from the queue press the pound key if you're using a speaker phone. Please lift the handset to ask your question, we will pause for a moment, while the list is being compiled I would like to remind participants that this call is.
Being recorded and a digital replay will be available on the Hill ROM website for seven days at Www Dot Hill ROM Dot Com first.
First question comes from Rick Wise with Stifel. Please go ahead.
Good morning, John Good morning, Barbara.
Yes.
Let me start with Inc.
Focusing on two.
Two things one the.
The better than expected base business performance and this is sort of a general question, but help us better understand.
The.
Drivers of that business improvement to what extent is it.
Just recovery environmentally in various geographies or execution or to what extent is that new product. If you could give us a little more color there and and.
And maybe just as part of that John you could talk about.
But the pipeline you highlighted you've emphasized in the past.
10, new products coming in the current fiscal year.
How is that how do we think about the impact there as well does that.
How quickly does it help you drive accelerated growth.
That all fully dialed into your guidance just help us understand those two big picture things for starters. Thank you so much.
Yeah, Thanks, Rick and thanks for the question.
We're very pleased with the performance in Q1.
It's really split between accelerated recovery.
Pace faster than we expected.
Really good news and it was broad based across all businesses and across all geographies. So.
Even feel better about that knowing how broad based it was across our entire portfolio.
That was about half and half the driver.
Our peak versus consensus the other half came from from Covid benefit.
It's important to say that it wasn't a pull forward.
But it was rather an expansion on demand and we've been talking about.
Last couple of quarters, we've been anticipating and expecting international markets to expand their ICU capacity and that's exactly what we're seeing on.
In Europe, particularly in France, and Italy in the prior quarter. So hope that helps characterize the nature of the beat broad base or rapid acceleration of recovery and some COVID-19 benefit.
Particularly now that grew up on the ICU expansion cash.
Category.
With respect to the growth driver of new products on the second part of your question.
New product in the quarter grew over 20%.
At $150 million for the quarter. So very pleased about the performance of that growth engine and its ability to deliver throughout this pandemic. We saw last year in fiscal 'twenty that we beat our expectations on new products.
Our pipeline is chock full of new launches. This year, we have 10, new launches expected.
On a great number on that what's happened in Q2.
If you'll recall Rick.
By the time, we reached peak revenue.
Our typical launches it takes about two to three years. So what we're really building now is.
Kind of springing a coil total.
We pushed forward into the future because we have so many product launches planned. This year, we had fixed last year. We have over 10, this year and I think that positions. The company very well for continued new product performance as we look into the out years.
That's great and just one quick housekeeping question, just because I think.
So there might be from questions about it.
I know you've retired your noncore revenue.
Our use of that term.
The exit of the international surgical OEM business, but did this quarter.
A complete that.
Was there an impact in this quarter or is that all behind US now. Thanks. So much yeah. Thanks, Rick we have retired the definition of core noncore. However in this quarter, we did have $11 million on what we would normally calling on core.
And the revenue number and that was due to our partner on the surgical OEM side, who really requested an additional by end of inventory. So.
That was fulfilled in the first quarter.
Thank you very much.
Next question comes from David Lewis with Morgan Stanley. Please state your question.
Good morning, and thanks for taking the question I guess.
A couple of things here from me.
John just to keep out sort of the enthusiasm for growth factors. So theres a lot of enthusiasm heading into 2020, I mean do you think it's safe to say what we're seeing here is those investments with new product growth of 20% and <unk> traction.
You think you can be definitive those investments are now paying off and your confidence in that 5% growth.
It's now elevated or do you think we're sort of putting the cart before the horse.
Great question, David I think if we if we breakout the COVID-19 impact last year and this year.
What we're actually seeing at mid single digit top line growth and 15% EPS growth.
And even if we do a similar math and compare it 19% to 21 and our new guide similar similar outcomes at mid single digit top line.
Higher than 15% EPS growth.
So I think those underlying your question underlying growth vectors of new products in emerging markets and growth.
Oriented acquisitions are all delivering throughout this period of time.
And I feel very good about about the outlook there of course as you know.
All of our investors know, we had a really strong Q3 last year, so around the cycle past that Q3 comp.
A couple of quarters, and then and then I think the ongoing transparency on a constant currency and reported basis, we'll demonstrate the strength on that topline performance.
Okay, and just two more quick ones for me I'll ask them. Both together bar for you I mean, just given John referenced the strong third quarter. There is some historical volatility on the business could you just give people a sense of what assumptions you made in this forward guidance. This early in the year to give people confidence that this guide still remains risk adjusted and then John for you just on Bharti. It sounds like you're confident in your <unk>.
Yes guidance, regardless of the outcome with party what are the next steps from your perspective with with party. Thanks, So much.
Thanks, David on procurement first part of the call over to Brian to answer and I'll come back.
Good morning, David Thanks for the question if I heard you correctly. What you are looking for is how balance and achievable is is our guide for the remainder of the year and as you think about that.
On the top and the bottom line as you think about the improvement on.
Our revenue guidance for the year on the <unk>.
Majority of the roughly 140 $150 million with improvement that we've signaled with this guide is coming from our over performance in Q1, and as John talked about part of that is coming from onetime COVID-19.
But more importantly, it's coming from the underlying momentum business and thats stronger than expected recovery and we will see that you know a momentum play into Q2, which also plays into the improvement as we think about the full year revenue improvement.
The other thing on slide there is we have been more explicit about FX and the impact for the full year and we anticipate that on the topline well, we'll have about 100 basis points of benefit from FX on revenue for the full year.
So really what we're reflecting is really reflecting the first half strength of the ear.
Recognizing that you know we have very challenging comp from Q3, and we have three quarters ahead of us to pick up.
From a bottomline perspective, we are we are looking at an improvement in our bottom line EPS trajectory of 45 and that really reflects the performance of Q1.
What that does is it.
It was <unk>.
Any any further favorability that we would see in Q2 to offset any potential dilution from business development deals.
And you should think about it as a floor.
So as we've looked at this we've looked at it pretty much as you know it is balanced and achievable, but it also takes into consideration that we're early in the year.
And there is uncertainty regarding the pandemic and uncertainty.
On the overall trajectory of where we're going but we believe that this is a an achievable on balance sheet.
And then David to your question on Bharti.
As we said on our opening comments our prepared comments, we're continuing to monitor the reimbursement situation closely.
And our guidance contemplates various scenarios.
That can absorb or cover the dilution that was expected from the BARDA deal.
As Bob just mentioned you can think of this guidance is the floor.
And those various scenarios of different party outcome on.
I'm going to really limit any further comments on bharti going into this call. It's a very sensitive period of time in light of some pending discussions that will likely take place with Dolby.
And other industry stakeholders and for that reason I don't think it's productive to have speculative comments and read into it too much I would like to say that.
Given the strength of our business and given the strength of our Q1 performance and our rate and our and our.
The increase in guidance for the full year, we feel very good about the growth of our underlying business and our ability to do.
To meet this increased guidance.
Great. Thank you so much.
Michael <unk> with Baird is on the line with a question. Please state your question.
Hey, good morning.
It's about the five year standardization project you'd called out in care Communications wondering if you could.
Give us any more color there would you name a name who is the customer if not frame frame size number of facilities total number of beds.
Perhaps contract value to you over the over the five year term and then maybe just a little bit of color as you put together that platform right nurse call plus.
Middleware and volt.
Maybe it would be interested in hearing about the sales process there and why you won in.
What sort of things the customer seems most interested in.
Great question Mike.
Happy to answer that I. Unfortunately can't mention the name of the customer, but it was one of the largest.
One of the top three largest hospital systems in the country and the whole end to end solutions at Hill ROM was able to bring in our enterprise.
<unk> ability to scale a solution like that is really what made us well positioned to win so what I'm, saying and to and I'm talking about nurse call. The middleware to do medical device integration, which came from our XL acquisition and then.
Hold on mobile communications and also to answer that acquisition of volt.
That combination of those full that full communication suite digital communications is really what made the difference and having the confidence and trust.
Hill ROM with an organization that can scale that type of deployment.
Over over a five year period.
It would go up there are having a day.
<unk> had a chance to go back and confirm I believe this is our single largest deal the company has ever done.
As part of one one contract so it was a big win.
And we expect it to.
Provide a nice backlog of orders and future revenue as we recognize revenue over the next five years.
Appreciate that on body I have to ask one so let's assume you move forward with the transaction I know that sounds like it's very much TBD, but let's assume you move forward.
I understand there is an earn out structure and the current arrangement from.
Times when.
Goes frameworks are put in place.
The acquirer isn't plugging the product into its existing commercial infrastructure right away.
Acquiree ex.
Cute against the earn out what is the base case.
In terms of taking the <unk> product to your current Welch Allyn position.
Physician office sales force is that weight.
A year or two and the earn out unfold or is the expectation that.
If and when the deal closes that.
Your sales force would be able to sell that product.
On day one.
Yeah, our going in proposition there Michael is to leave that sales organization.
And to invest in it.
And then separately ad.
The channels that we have in primary care.
In Welch Allyn to top of mind it so.
That was on approach filling in that is our approach.
Thank you very much but again thanks for the question I just want to reiterate that our focus is on long term shareholder value.
And in any scenario.
Related to.
Acquisitions are related to things that are going out on our core business. Our overwhelming commitment is to drive double digit EPS growth and mid single digit top line growth.
And we'll manage accordingly.
And various scenarios.
Hey, Matt Taylor with UBS is on the line with a question. Please state your question.
Good morning, Thanks for taking the question.
I just wanted to ask one about the.
Comments that you made on ongoing demand for ICU bed expansion.
Going back to last year.
There was.
The Q3, where you talked about a lot of that would be more one time.
On the ICU opportunity longer term, but it sounds like thats coming to past maybe sooner than you expected so I.
I was hoping you could help on.
Square those comments and discuss whether your order book looks good and Youre continuing to see strong demand there and whether we should view this as more onetime or sort of the new stronger trend.
Yeah, Thanks, Matt for the question.
Yeah, what I tried to communicate in the past was that we would probably see that ICU expansion come in lumpy right and it's going to come in at times in a quarter or that's going on.
<unk>.
Yeah.
Come in come in hot and heavy and feel kind of like a onetime.
And then it might be off record on I know, Mike come back this quarter after that so our current outlook and it's incorporated into our guidance. So we do expect another strong performance out of Europe, and the bed category. So we've seen it in our backlog.
And we do expect another strong performance out of Europe in our category for ICU expansion requirements. So you.
This will be a couple of quarters on a rolling out where we're seeing it and it's a little bit hard to predict longer term.
Save you on a couple of quarters.
And because that visibility is not there when the timing is going to happen. However from a broader aperture of broader timeframe port point of view over a multiyear period.
That growth opportunity is definitely there we believe.
Yeah.
We were hesitant to call it out.
In the middle of last year, and then we saw enough data to give us the confidence that it was real and now we're seeing it showing up on the results. So.
We will at times come in lumpy will try to give investors a great heads up to when we're seeing it coming.
And incorporate that into our guidance, but we've seen that at this point, we see it obviously in Q1 again, a little bit in Q2 attenuating from Q1.
And then we just don't have clear enough visibility to call it out and get on the back half of the year.
Okay. Okay.
Just had a question on care Com. So I was hoping you can comment on that specifically in your installation related businesses since it sounds like that.
And gone better than you expected in the period can you talk about the growth for that and the outlook for installation base things given continued pandemic stress.
Yeah. So we're very pleased about the deal that we just discussed and on the orders that were coming in.
However from our recognize revenue point of view care Com was relatively flat to last quarter.
It's gradually recovering and as our access from cruise but during.
During the last quarter access into hospitals in England in the current periods is very limited so our ability.
On a complete installations and recognize revenue has been stalled.
However, as the pandemic continues to wane and hospitalizations continue to drop.
We're very optimistic about the back half of the year and seeing seeing that business come back to pre COVID-19 levels.
Okay very good I'll leave it there. Thank you so much thanks, Matt.
Matt Michelle with Keybanc is on the line with a question. Please state your question.
Hey, great.
Good morning, guys.
Just first on retina Vue, Thank you Matt.
That you signed a deal with a national pharmacy chain for increased screening.
Can you talk a little bit more about that channel versus the primary care physician and the strategy to grow that.
Yeah. Thanks.
Thanks for the question Matt.
The whole premise on all of them.
Technology is to provide better access for patients.
So we don't need to see an ophthalmologist hazard annual retinal exam.
And putting it in the hands of either a primary care physician's office or in this case on a retail pharmacy location helps us achieve both on the promise of the technology married up with the improvement in the sales channel of the access channel. So this is an exciting opportunity.
Fortunately for us.
I'm unable to.
Ounce, who the partner is.
One of the largest.
And the country and we're very pleased about that partnership and we are in the early phases of rolling that out and looking forward to a ramp of that of that activity in the second half of the year.
Okay.
Excellent and then I hate to go back to Bharti and I realize it's sensitive period of time.
On.
But I'm just curious the reimbursement decision from from Nova to Us.
And you mentioned there is pending discussions there is that a final decision or are there mechanisms in place to comment or appeal.
Yeah, I think this is a well covered topic by a lot of the sell side analysts. So I really as mentioned on the that can actively we're actively monitoring developments on reimbursement and will provide an update on more definitive information becomes available.
Okay. Thank you John thank.
Thank you Matt.
Mike Matson is on with Needham is on line with a question. Please state your question.
Hi, guys. This is Joseph on for Mike.
Just one today.
Just curious on the cost savings in the quarter from the restructuring.
If you guys could maybe explain if there you know if there was any how much in and where did that come from thank you.
Thanks, Josef I'll turn it over to Barbara.
Hi, Joseph Thanks for the question Hey, what we talked about the end of last year is that we were triggering.
$50 million.
I sort of accelerated business optimization activity.
Most of that over two thirds of that was going to be coming from sort of reductions in <unk>.
Head count so it's going to come more from the comp and Ben the areas. The balance of it was coming from re prioritization of discretionary spend.
That's the business.
So we're on track to deliver that that $50 million, it's roughly equal as you think about it over the course of the year.
We did realize significant savings in Q1, which we then as we talked about last fall as well we invested in the business and we have been spending a lot of time, making sure that as we identify opportunities too.
Dave or optimize the business that we're reinvesting behind our growth drivers.
And in those levers that we think are going to support our mid single digit top line growth and our acceleration how does the pandemic.
So we are realizing those savings.
Pretty equal across the course of the year.
And he's got mix now between what is coming from sort of comp and Ben and then whats coming from other levers.
Awesome. Thank you very much.
And at this time I will turn the call over to the presenters.
Well. Thank you all for your questions today, and really was a great quarter and a great start to our year momentum is building we feel very good about the growth drivers that we have been investing in over the last several years.
And it's really integrate margin expansion and a sustainable durable growth. So we're confident moving forward and thank you all for joining our call.
Ladies and gentlemen, this concludes today's conference call with Hill ROM Holdings incorporated thank you for joining.
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Moving on.
Okay.
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