Q1 2021 Omnicell Inc Earnings Call
Yeah.
Good day, and thank you for standing by.
Welcome to the omni sales first quarter 2021 financial results conference call.
At this time all participants are in a listen only mode.
After the Speakers' presentation there.
There will be a question and answer session.
To ask a question during this time, you and need to press star one on your telephone keypad.
If you require any further assistance you can press star zero.
I would now like to hand, the conference over to your speaker today Ms. Kathleen Nemeth. Please.
Please go ahead.
Thank you operator.
Good afternoon, and welcome to the Omnicell first quarter 2021 financial results call on the call with me today on a Randall there Omnicell, chairman, President and CEO, and founder and Scott <unk> Executive Vice President and Chief Commercial Officer and.
Peter Cooper Executive Vice President and Chief Financial Officer.
This call will include forward looking statements subject to risks uncertainties and other factors that could cause actual results to differ materially from those expressed or implied for more detailed description of the risk.
These forward looking statements.
Prior to the Internet.
And on our practices.
And the Omnicell annual report on form 10-K filed with New York.
'twenty four 2021 and done.
Other more recent reports filed with the M D C.
Please be aware of and you should not place undue reliance on any forward looking statements made today.
The day to this conference call of duty from 29, 2021, and all forward looking statements made on this call are based on that.
And so.
And.
Future events or expenses.
Passage of time may cause.
And we undertake no obligation to update these forward looking statements.
Finally, this conference call and it's a property, Bob and myself and.
Chasing other people location or rebroadcast without the expressed written consent on themselves.
100 and.
We have refreshed and expanded the Investor Relations section of our website, where you can find on her.
Corporate sustainability report and other information.
On our call today Randall will provide an update on on personnel after Randall remarks golf and survive.
Perspective on the health care industry and other key customer wins finally, Peter will cover our results for the first quarter our guidance from the second quarter and our total here guide on our first quarter financial results are included on our earnings announcement, which was released earlier today and is posted in the Investor Relations section of our.
Website, and Omnicell dot com. Additionally, we'd like to remind you that during this call. We will discuss from non-GAAP financial measure reconciliations of these non-GAAP measures to the most comparable GAAP financial measures are included in our earnings announcement.
I'll now turn the call over to Randall.
Good afternoon.
And thanks for joining us today well on.
Let me spell is off to a solid start per year.
And I'm proud of the outstanding results delivered by the team this quarter.
We exceeded the top end of our guidance ranges for webinar and non.
Non-GAAP EBITDA and debt.
Non-GAAP EPS.
Hosting record revenues of 252 million and.
Non-GAAP earnings per share of ADP said from the first quarter.
We believe these strong results reflect on our customers' trust and Omnicell.
So and there was a condition of significant benefits inherent.
And part of a pharmacy.
Our first quarter performance also reflects excellent operational execution and financial discipline.
With non-GAAP EBITDA of $51 million and.
Strong free cash flow of $44 million.
You know, we don't want a view of the financial results and our guidance for the second quarter and the total here and more detail later and the call.
Well, it's been about one year now since the COVID-19, pandemic fundamentally alters our society and our daily lives.
Getting this time, we have focused our efforts on supporting our health care partners.
Unprecedented times.
We successfully pivoted to virtual and install with hospital sites and like many companies we implemented remote work practices.
We learned a lot over the last year and we believe the industry now recognizes this and medication management is a mission critical elements of their care delivery model.
And a privilege to support our customers as they work to modernize and optimize their medication management systems, and we are confident and hanmi is well positioned to neighborhood and accomplished effectively and efficiently.
Now turning to recent customer successes.
We increased our number of long term sole source contracts during the first quarter with top 300 U S health systems.
One of these new wins is the largest single sole sourced agreement and on myself history.
Top and U S health system.
Cozy Omnicell and help them design and implement complex pharmacy workflows and supported their journey towards Vietnam and the pharmacy.
We now have long term sole source agreements with 147 at the top 300, New U S health system.
We are honored to have been selected for this critical infrastructure initiatives and believe a win this magnitude didn't strength that our strategy and our execution are working.
And our second quarter is off to a solid start with the addition of Scripps health is on.
The other 48 long term sole source agreement.
And this new partnership Omnicell will be implementing automated dispensing systems for patient care areas and operating rooms, and cloud based intelligent solutions and tech enabled services.
This newest when it was a competitive conversion opportunity for us and underscores the strength of omni sales value proposition.
We believe that the power of our customer relations is unique within our industry as we are truly strategic partners with our customers and work.
Closely together to understand design and implement complex pharmacy automation workflows.
This enables pharmacy staff and care providers to spend their time, where it matters most caring for patients.
Is the quality and these relationships together with our innovative product and services and enables us to achieve market share gains and improved business performance.
And importantly, our advanced services portfolio, which includes several subscription based technology enabled services, such as Omnicell and $3 40 B.
Yeah.
And life and health and Omnicell, one delivered strong results for the quarter and continues to be.
Well received by the market.
As we continue to enable the vision of the autonomous pharmacy, we are evolving from a product hardware company to a technology enabled software services business powered by the cloud.
2021 mark nearly 30 years since the company was founded and.
Throughout the years I have one debt evolving the business and undertaking a shift in strategy requires it and we continue on.
Based on our culture.
Breath and three years ago, I hired Scott thought on them to help transform our commercial organization to realize our vision and Scott has assembled a great team.
And it's possible for some of our recent strong execution.
And other this mindset, we welcome Christine relative on myself during the first quarter of this year and the newly created role of Chief people Officer.
Your thought on the pharmacy vision requires investments and our people and culture.
Just wanted to roll is so critical for us at this time.
Christine brings more than 25 years of experience and a high performing software and technology companies such as oil.
And most recently CST.
We are delighted to welcome Christine and the team.
Our treatments over the years have always been driven by our people individuals from diverse backgrounds and share pre committed and commitment.
And our vision.
We can make a positive impact on the world.
And during the last year and employees have shown great dedication and efforts. Despite the many many challenges brought on by the pandemic.
And before it kind of hope and Scott I wanted to highlight our recently released and novel ESG and corporate responsibility report.
Which many of you have had.
And already seeing.
We recognize that we are accountable not only to our customers and our shareholders, but also for the global community.
We are focused on innovating to drive sustainability across our business ethically and responsibly sourced materials by the hearings and the internationally recognized OECD guidance and elevating our diversity and inclusion initiatives.
Hope you find our first and afford helpful and we look forward to continuing to provide updates on our progress.
Now looking ahead I remain confident and believe that we are well positioned to continue to drive growth and add real value to the communities we serve.
And they continue to build on a non welcome in 2020, one and beyond and we appreciate your support and.
Competence and Omnicell with that I'll turn it over to Scott.
Thank you Randy.
Where are and discuss some of the customer highlights and our progress this quarter.
And to briefly expand on the point that Randy just mentioned regarding the organizational work that we have done from the last three years.
Once we translated the autonomous pharmacy vision into a strategy. It was clear that we needed to evolve our organizational design from one focused on delivering from the earliest and no hardware product.
She wants and they could deliver a new product and technology enabled services on the cloud.
We significantly changed our organizational design by elevating our account management structure and nationalizing, our sales and customer organization structure and its been recognized by Gartner and the best in class go to market to buy.
And we also added professional services product management and customer success.
Software engineering function and.
And to that transform organizational design and we recruited seasoned leaders with expertise and technology enabled services.
Customer experience and software development.
And today, we're fortunate to have a complete and world class commercial leadership team, which is largely responsible for the exciting results.
The combination of our strategy to transform the organizational design and new leadership and helping us to realize the vision of the autonomous pharmacy.
Practically what progress can be seen and our continued expansion of our long term customer partnerships and income.
Bruce.
Randy mentioned, we increased the number of sole source agreements and the first quarter, bringing our total to 147.
And 140 year sole source agreement with a top 10 health system.
And selected Omnicell and deliver medication management solutions across its network of more than 65 hospitals, and 550 facilities and new U S. A.
The largest contracts and our company's history.
Additionally, we signed a 141 agreement and Q2 with the North Carolina based or hospital system.
And our second quarter is off to a solid start with the addition of Scripps health and about 148 long term long term sole source agreement.
Through this new partnership Omnicell will be implementing and XT automated dispensing system and its cloud based intelligence solution.
This is a competitive conversions and underscores the value of our market position proposition.
Another highlight for the quarter, the competitive conversions and Illinois based academic medical center that will be expanding their footprint from XT automated dispensing system across our integrated health network.
One other reasons that our sole source strategy is winning and the market is because of our unique advanced services portfolio with work from some of the highlights.
Omnicell one is a cloud based technology enabled services combined hoffler analytics and experts to help health systems manage drug inventory increased provider efficiency and reduce compliance risk.
We continue to see strong market demand for this unique solution recently West Virginia based there'll be new medicine subscribed the Omnicell, one pardon me and multiyear sole source agreement.
Central Pharmacy dispensing services as a technology enabled services and combines our ex or two robot analytics and expert to help health systems, and central pharmacy, and reduce errors and increased provider efficiency for oral drug distribution.
And we're very pleased with the positive customer feedback we are receiving on this recently launched solution and look forward to continuing to update you on our progress.
And the first quarter opened and Health Foundation, and the price Hospital Health networks signed long term agreements with CPP, yes.
Omnicell 340, B as a technology enabled services that combines workflow software and analytics and expert help help with some sport and Ikea increasingly complex and financially and critical $3 40, new programs we.
See strong market demand for this solution and this is a great example of the power of Omnicell channel to accelerate acquisition.
Less than six months. After we acquired this technology enabled services business, we've successfully integrated the Omnicell 340, <unk> capabilities into our autonomous pharmacy vision.
And excitedly and Q1, the largest not for profit health care system in Texas and expanded its existing omnicell relationship with the implementation of Omnicell 340, new solution under a multiyear agreement.
Also in Q1, we find the Omnicell 340 partnerships with and integrated health system, and the Midwest and one of the largest community help them.
Wow.
And life and health as a technology enabled services to combine workflow software analytics and expert.
Retail pharmacies and payers to increase provider efficiency improve economics, and provide population health services to at risk population.
We are helping our retail pharmacies and health plans to improve patient outcomes, while reducing cost of advanced technology solutions for patient engagement and communication, we are very proud and life and health care Scheduler solutions are playing an important role in enabling pharmacy and other health care and the entities to efficiently manage the historic.
And 19 immunization effort.
Kerr scheduler automated scheduling and patient communication and reporting for administering vaccination immunization and blood diagnostics, all increasingly important services and pharmacists are asked to expand our scope of services.
This week, we announced a new partnership with Twilio, a global leader and cloud based digital communications technology.
The partnership will enable a vibe and help to accelerate the creation and launch of an omni channel communication solution that will allow customers to create a truly personalized experience for their patients and members and you can interact with from a messaging SMS texting chatbot email and our mobile app.
A traditional SaaS offering and life and health will continue to frequently on new features and capabilities to a platform to increase value for its retail pharmacy and payer customers.
We are still early and the development of our advanced services portfolio and the realization of the autonomous pharmacy vision.
However, overall, we are excited by our recent performance and long term outlook, our advanced services portfolio.
Not only create new sources of revenue growth and recurring revenue streams from yourself and it is key to achieving a fully autonomous pharmacy.
Powerful combination of on advanced services portfolio with our superior channel and long term sole source contract strategy reinforces our confidence and the 2020 five advanced services revenue targets, we shared with you at the JP Morgan annual Healthcare conference earlier this year.
As a reminder, we are forecasting a 50% CAGR and advanced services revenue from 'twenty, and 'twenty to 'twenty, and 'twenty, five which would be 20% to 30% and total revenue by that timeframe.
Now I'd like to turn the call over to Peter to discuss our first quarter financial and operational results and on Q2 and full year 2021 vital Peter.
Scott.
Our strong first quarter commercial operational and financial results demonstrate the strength of our business model and the other side.
And it's working.
Health care system partners are embracing decision on a fully autonomous pharmacy.
Resulting in an increasing percentage high interest.
<unk> ability and high flexibility recurring revenue from <unk>.
From a customer SKU to failure, and our platform and solutions and are partnering with us.
And their pharmacy automation Hoover's.
I'm very pleased with the progress, we're making and furthering sufficient if you throw on the pharmacy and it.
Crowds and solid execution on nearly 3000 old mutual and team members.
Can you consistently deliver.
Turning now to our financial results.
First quarter, because on the 21 restaurants.
On a 52 million.
This increase of $3 million per year.
<unk>.
Oh 10 per cent for first quarter of 2020.
And that's off the top of our guidance range.
First quarter earnings per share in accordance with GAAP was <unk> 30 per share compared to 37 cents per share and the fourth quarter successes in 'twenty and.
26, 26 cents per share and the first quarter of last year.
A reconciliation of our GAAP and non-GAAP sales.
First quarter earnings press release and exposed to it.
Right.
First quarter non-GAAP earnings per share 83 compares.
Compared to 91 cents per share from the previous quarter and 66 cents and the same period last one.
First quarter non-GAAP EPS ex.
Exceeded our expectations due to stronger revenue growth favorable expense items.
Travel and the timing and competitions.
Non-GAAP gross margins from the first quarter was 64 and 6%.
The slight decrease from the previous quarter, primarily due to revenue mix and income.
These trade expenses.
Year over year. This represents an increase of 120 basis points driven by volume leverage.
Chain and initiatives and favorable product mix.
The non-GAAP EBITDA margins from the first quarter of 21% expanded 260 basis points compared to the same prior year first quarter and <unk>.
Decreased slightly from the previous growth.
Omar I would know what the calls and the strength of our cash flow performance at the end of the first quarter on cash balance was $548 million.
From $486 million as of December 31, 2000 and for them.
The $62 million increase and cash was driven primarily by 57 million orders from cash flow from operations.
Free cash flow during the first quarter was strong at $44 million per.
65 million and from the previous quarter any knock on wood from Macquarie.
And.
In terms of accounts receivables day sales outstanding for the first quarter was 76 days.
And increase of five day to over the last quarter and a decrease.
17 days from the first quarter because of price.
As of March 31st 2021, $96 million essentially flat with the prior quarter and a decrease of share.
I have a few million dollars and compared to the first quarter 2020 as a result.
Conservative efforts and global supply chain process improvements and inventory management.
Before turning to guidance and as a reminder, I would like to walk through the long term financial framework and you initially presented at the JP Morgan Oh.
Since early this year.
And that we reiterated on the left for school.
Well I'll walk through the highlights.
Our revenue base and facilities and highly personal in nature and.
Currency is about five key drivers.
Sure.
It's very very robust product backlog.
Which increased during the first quarter and as expected and further increase during the year.
And secondly, long term sole source agreements with now 148 of the top 200 years old.
Customers value our offerings.
And that lives on our strong customer retention rate.
And we have 99 per se.
For strong and we are thrilled and insights into annual service and maintenance revenue from a large installed base of connected devices.
And the early stages.
Circles.
Last one from really all of our medicines and high visibility.
Roughly 40% well progressed and we face is recurring in nature and we are full.
Focus on gross percentage on it.
Sure.
And so we have previously discussed and area of our business, which is run and substantial growth and high visibility revenue. This is going on.
Services.
We're forecasting and revenue CAGR of approximately 50%.
From 'twenty to 2025, what are your defense services growth.
And he is expected to reach 20% to 30% on total revenue and resource.
Because I was on 'twenty one.
This is a subscription based recurring revenue high margin.
Yes.
We're targeting a company level total revenue CAGR of 40% to 50% from 2021 25, reaching one important line.
And $2 billion to total revenue.
And sort of.
We're targeting non-GAAP operating margin.
And 1% and a non-GAAP EBITDA margin of 25 per share.
Book.
We have no other company, that's able to scale fairly low and we believe we are very well positioned to deliver on the 2000 Twenty's line.
Driven by a number of factors, including improved business mix.
But from long term exclusive customer partnerships on.
On a national scale manufacturing savings and process efficiency.
As we continue to scale the business you expect to redeploy some of the savings.
Creating growth and innovation and shippers.
Now moving on to our full year 2021 updated guidance.
Given the strong start to the year, we are raising our full year and non-GAAP EBITDA and non.
GAAP earnings per share guidance ranges.
We remain on our full year 2021 product and things are expected to range between 1 billion and a $90 million and more.
100 and system.
Yes.
And we expect total from the 21.
And I think the range between $1.085 billion 1 billion.
Yes.
<unk>.
We expect product revenue to range between 770 million and cigarettes.
$85 million and reach.
Services revenue to be between $315 million and seamless way.
That's pretty new boats.
We now expect total year 2021, non-GAAP EBITDA to be between $231 million and $242 million.
Using the midpoint from updated and increased non-GAAP EBITDA ranges.
It represents an approximate 21, 6% non-GAAP EBITDA margin from 2021.
Approximately 380 basis points.
2021, we're assuming an effective and Linda and the tax rate of approximately total non-GAAP.
And stuff.
We now expect it out and so when you want non-GAAP earnings per share to be between $2.50 per share and $2.07 per share.
We believe and our margin expansion progress is on track towards our 2025 estimated non-GAAP EBITDA margin target of 25 per se.
For the second quarter and pick up in 'twenty, and what we're providing quarterly guidance.
As we noted last quarter, we continue to invest and scaling our business to support the expected increase and revenue and the timing of customer implementations.
Our second quarter guidance also includes additional freight costs given global market conditions.
We expect total second quarter revenues to be between $265 billion and $270 million.
Revenues between $192 million, and 190, fives and their owners and service revenues between 73 and.
$5 million.
<unk>.
We expect second quarter non-GAAP EBITDA.
$53 million to $6 million.
Using the mid points of the second quarter guidance ranges. This represents an estimated quarter over quarter non-GAAP EBITDA margin expansion and also approximately 30 basis points.
We expect second quarter non-GAAP earnings and I have to be between 80 cents per share from 85 cents per share.
The team has done a fantastic job supporting our customers.
And with knowledge and as Randy mentioned, well many of physical and Michelle and tissue to remote work. This is not and honestly from a supply chain and manufacturing sites.
And I remain on site.
It's a start of a pandemic ensuring access to our critical and strategic medication management automation and management systems were assembled tested and transported to our health care and Cisco partners or from us.
And thank them for their efforts and contributions.
And certainly we are very pleased and our commercial operational and financial results for the first quarter and pretty warm and we look forward to updating you on our progress with growth.
Yes.
With that we would like to open the call for your questions.
If you would like to ask a question. Please press star one on your telephone keypad.
We'll pause for a moment to compile the Q&A roster.
Your first question comes from the line of Sean Weiland with Piper Sandler.
Hi, Thank you so much and this is Jeff on for Shaun.
And I think we're interested to know just.
And how exactly the COVID-19.
Vaccine management solutions developed and.
And if you could talk just a little bit about that innovation and process, where your customers are asking you for that.
<unk> rolled out and maybe it and.
Was that more and new customer and driver was net incremental revenue driver at existing customers and it is.
So on that would be helpful.
Sure I'll take that this is Scott vitamin.
And I.
I think the question came both from new was really around from what was the innovation process around the development of our COVID-19 vaccination solution, which we launched per schedule under the brand name.
First of all the per schedule and what might actually get some and life and health platform as a SaaS platform that we provide to retail pharmacies and enables pharmacist to automate and variety of workflows and frankly to let them to focus on things.
And actually treating the patient as opposed to be and many administrative thing.
Clearly one of the things that we heard loud and clear from our pharmacy retail pharmacy customers and COVID-19 on on Pam and frankly, the scope of practice for pharmacists with expanded and it became clear that pharmacists were going to have to start providing and fascination.
Was that they just simply did not have the tools and you got and we're talking and some cases and I'm pretty basic capabilities like how do we schedule patients and now with COVID-19 and once those patients queuing up inside the retail pharmacy et cetera, and so we.
And certainly are eager and we will continue to add value and add capabilities to that retail platform, which create incremental value from those retail funds. So.
I think kudos to the team that quite quickly over about a six month period. They identified the need to develop the software and rolled that out I think one aspect of your question was did we really rolled this out and new customers net new customers on the platform other than incremental for existing customers the short answer.
<unk> book, but predominantly existing customers right, which is that and can typical SaaS platform fashion and we can charge an additional amount for the care schedule over a module and as they upgraded to that and have that capability. They can provide that service to their customers and so it was really quite fast and.
I think like many things and during the pandemic.
And very proud of the team's ability one of them and to develop and bring a product and market, but actually getting deployed and to the point, where it can be used quite widely by that customer base. So.
And again I hope that gives you some new flavor.
Yes, that's helpful can I just quickly on and one follow up on that.
So how is alive and helped driving patient engagement and communication and pre twilio or are they based on that that's essentially going from nothing to a comprehensive omni channel solution.
Yeah, absolutely and so like I said, the alive and platform automated workflows for pharmacy pharmacy fit and and one of those workflows on one set of those workflows, enabling pharmacists to engage their patients.
That was voice and the form of IV arm and voice on the phone.
We are a text message follow up communication. So we were providing those services and what the partnership with Twilio does it enables us to really upgrade the quality of those communication technology and look to add chat and other online and mobile and so.
It really.
For us instead of developing that for ourselves and <unk>.
And I was we were able to partner with a best in class provider and get to market. So much faster and it allows us to put our resources on solving problems not delivering basic.
Connectivity to people so.
And it allows us to work on those complex workflows that fully felt product.
Thank you on that.
Thank you Jessica next question.
And your next question comes from the line of Iris long with Baron Bird Capital management.
Alright, guys.
Thanks for taking my question, So I guess, a follow up to that and life and health question. I'm wondering if you guys can talk about how big is the retail pharmacy business.
And as a percentage of your total revenue right now and then as we think about the guidance and as you continue to add more interest to the platform I guess what growth assumptions are you and <unk>.
And do you have or what growth assumption is embedded and the guidance.
Yeah I think this is Peter.
On the retail pharmacy part of our business right.
And part of the business would be comparable.
And the hospital side of the business. It is growing and it's really nice momentum maybe generally kind of in line with the total company. We are focusing I think we've discussed before moving on the software platform and it's really engage with patients and see the pharmacy yourself and the individual firms with your growth.
Okay got it and then the pricing model there is it just a.
And model based on the number of module is thought to light weight to think about it.
And it's a combination and the subscription model and to go on.
And then and services and in line.
Good chunk of that is also a as pure size.
Okay great.
Other questions on patients engaged right.
And more cash.
Okay.
Okay and then the other question I had just on Omnicell, one, but it seems that you guys are seeing strong customer interest and so I'm wondering.
And if you can compare omnicell, one two and maybe some of the other software solutions on the market. What's on me. So once a bad pitch and then I guess the same similar question. There can you remind us what's your pricing model and the.
The price of strategy going forward.
Sure and so the question is how does omnicell, one compare to some of the other offerings and new market.
And then two weeks breadth and depth right on the one hand division for Omnicell once it's not to be a pure analytics product and the sense that there's a lot of analytics capabilities and health care and the challenge with analytics capabilities and health care I can only speak and health care pretty pretty much. The only interest you have worked and the challenge is is that getting an operator and the customer too.
Actually we react to that data and actually change thing that's often.
And they're not connected and many times because the workflows, so complicated and so what we've done with Omnicell. One is to really integrate analytics with work. So with Omnicell. One is predicting that there's a potential for a stock out and on shortage. Instead of just creating a dashboard that someone may or may not pay attention to omnicell, one actually send a notification to the.
Pharmacy staff to actually do something or creating the task and to work with and so we think that on the one hand that connectivity between analytics and workflow. It's really so important and I mentioned previously I think extending that is that we have a customer success organization and the former.
Pharmacy and for Matt as debt workflow experts they get assigned to accounts that really and true customer success fashion are really trying to interpret some of the data and work very closely with customers to engage and provide better outcomes, so and so.
On the one hand, it is very much.
And true service on that and the sense that we're identifying outcomes, we're integrating and workflow and this and expert that is on the customer journey with the customer to achieve those outcomes, we think that heightened and differentiate it.
The second one and I think on the second dimension, which is breadth of offerings is that on the sell one and optimizing inventory and optimize provider efficiency and optimize the avoidance of compliance risk and that's what it's very unique when compared to other service offerings and.
That was a very deliberate and our approach to not offer those and separate module that's operating a single from.
Scripts and services combined with and again like a true subscription services, we're continuing to add that and have that functionality and that value will continue to grow from the customers and to drive more demand for the services.
Great and if I may add one more question. So you guys talk a lot about competitive conversion. So I'm wondering what do you think is the main driver for success. There and then how has that changed maybe compared to last year.
And we took already.
Well I'd.
I'd say it hasn't changed much from last year, but I'd say a couple of years ago, a few years ago, and small product base and as we moved to a solutions based company with a broader whereas the product and now with Tech enabled services really allows us to talk about how are we going to digitize.
The entire pharmacy workflows.
We can use the power and about to do a lot of the work that.
And that just doesn't seem to get done and as you would think that happened and a complex pharmacy operations and so when we go in and talk about.
The whole breadth of our product offering and the tech enabled solutions to help them actually get better performance not by that adjusted was a product, but by and US working together and take a day and optimizing and deploying new products together if it if it makes sense.
Our success rate there.
And they have not paid and the path with.
Other ways and doing it so.
Want a better outcome from a pandemic for sure brought up.
The shortcomings.
Shortcomings.
The core pharmacy supply chain and many of the system and.
In many cases devoted its proper.
Care for some patients because they just didn't have the right kind of drugs position and the right places.
So with that I think there's a heightened sense.
Well, we got to digitize the pharmacy in order to deploy cash.
And where we want to which is near perfection on getting drugs to the right place near perfection.
On regulation, and safety, and economics, and making better decisions and get harvest out of the base and get them all behind the counter and get paid.
Patient, where their clinical practice and make a change and a different topic.
Oh, great. Thanks, so much.
And your next question comes from the line of Scott Schonhaus with Stephens.
Hi, Randall Peter and team.
Okay.
Hey, So my first question is on the results and guidance you guys beat the top line driven by greater than expected product revenues came in about 4 million above the top end of your guidance range, but you didn't change your full year product revenue guidance was this just a pull forward and timing of a contract that you.
And anticipated to occur later.
Throughout the year I just wanted any additional color there.
Yeah, So I would say that as you know.
Product backlog going into the year product.
Back on for the end of December 31st because on the 20th was up 57 per cent right Joe.
And as swallowing calls on them and the rest of the guidance for the year you did achieve and the first quarter on the call center because honestly.
And its timing, but its all of whom are fairly early in two years ago and pick up that in total you guys and so.
And he might be might later in the year.
Most of the aligns with customer timing of implementation.
And so that makes sense.
Yeah that makes sense, Peter given your track record with a capable guidance. So okay and then on the services services side can you talk more about 340, <unk> opportunities and the traction youre seeing and any cross selling.
And believe you stated last quarter that the 340 B team closed multiple new opportunities in Q4 is there any update to these stats and the quarter and maybe some color on the acceleration of others.
Software platforms, and we've been talking about and life and health Omnicell one.
<unk> assumes more of a ramp and this service revenues and the back half of the year. Thanks for the questions.
And just thoughts on the local pushes there to the truthfully D M.
Pretty pleased with judicious with you and Michelle on the platform.
And he didn't have a rich pipeline and the leasing momentum in crushing.
Would you be we did announce the first cross sell already within now and talk to them.
And then a 48.
Non control solution partners.
Within the software and yourself systems.
There is a really good opportunity there and for.
Those local sole source customers that do not have 240 differently or have a different software vendor a pretty positive there and then.
Pulse on what that will be.
Be able to announce some more possible from your share on the.
They show up on shown throughout the year, and especially close to three years as well.
And lives and also talked about on the script quite extensively we got on early personal as well and really growing nicely.
A lot of momentum and then also on the street assets.
Bob talked about moving earlier.
And see some great momentum there as well.
It's all day long and maybe Smith.
Other way to frame it is and we're very confident and we're making progress to be put on long term goal certainly on the fiduciary and we're definitely on track.
And with the quotation as well.
Right.
Absolutely.
Thanks looking forward for your continued execution, Peter and Keith Thanks.
Right.
Again, if you would like to ask a question. Please press star one on your telephone keypad.
Your next question comes from Matt Hewitt with Craig Hallum Capital.
Good afternoon, and congratulations on a good start to the year.
Yeah.
Our first one and I think if you look it's been a while since we've talked about the competitive landscape. Obviously as you guys have expanded the services.
And we added more software I feel like we don't talk about it much but are you seeing anything from you.
And your peers are they trying to match or mimic.
The way that you've kind of expanded into other areas or and they don't want to give it up but I just feel like we're not hearing much about the competitive landscape much anymore.
Yeah, maybe and maybe I think.
So moving well.
Oh, well, they're still there and there's always competition and that you know it just depends on.
What kinds of things our customers are looking for but most customers are taking the strategic importance of medication management and I think it.
And you take a strategic approach to value you have to take a broader and more in depth approach to figuring out how to digitize coal.
Pieces other business and really go.
And with a company that's got a vision for doing that and I think I think people are not buying only and to what we have today, but where we're going.
And and that's why you see these partnerships for <unk> seven.
Seven and 15 years, it's because it's not it's not necessarily that we have every single product. They want today, but they know that debt that were committed and that debt.
And the software and the service and Tech enabled services are places, where we're going to continue to create value on the platform.
And and so to the extent that debt.
You know these customers are aligned with that vision with us and many are and maybe not everyone, but like many other more instances.
How's us per se.
Really a compete and sort of in a different space and.
And.
But I would never say, there's no competition because there's.
There's always something.
Got it and take.
We're doing what we're doing that and it's a little different things and most stable.
Understood and then maybe shifting gears, a little bit with the ramps and the number of people vaccinated and obviously pockets of the pandemic, maybe showing signs of slowing down and.
Enabling your sales and service teams to get back and and actually meet with the customers face to face and and what can that mean.
From driving incremental sales. Thank you.
Yeah, I think we're seeing more of that I mean, if you vaccinated and under certain conditions and then they can meet face to face and I say everybody there, but that's certainly a lot, but I think for many other.
Of our big customers out there this is strategic and so it's really beyond the question on how healthy is the financial.
Bottom line and the possible and this is something they have to do they know they need to do and it's beyond just you know always having to meet and the old fashioned line face to face. So we have a lot of engagement with our account.
The account base and and with the marketplace and I just don't feel like this time and that's really and then still on execution at all.
And.
And maybe in some ways are getting a few more zoom calls and there's a lot more efficient and are planning for people around so.
And take it a little bit of advantage from that so I feel really good about the pipeline and the momentum of the sales force ability to do what they need to do that.
And to get these solutions and customers like that.
Well that's great. Thank you for taking the questions.
Thank you Matt next question please.
And you have a question from Bill Sutherland with benchmark company.
Thanks, Hello, everybody.
And I apologize upfront I got on a pretty late in the call. So if you've covered it.
But Peter did you address the service gross margin and the first quarter.
Different and my model, and that's where Q I thought two P M bit more 340 billion positive impact on it.
And of course, so on the services gross margin and looking at the risk of tailings and most of the services.
Services from out of this old and recurring revenue that is.
And at full force and and service revenue and just scaling the business and yeah.
Front assessments, if you will and go from.
From a gross margin perspective, so we expect both product gross margin and services gross margin to increase during the year, two and afford us Directionally and then also over the next couple of years.
And so I'm not sure I caught on the first part of your answer Peter and so the first quarter is just is.
Is there anything other than just.
I don't know what to call it noise.
Its cabling and and investment in people and because we build out and skill will be services offerings as well.
And then okay.
And if you see historically.
On the benefit cost and I believe you benefit cost and in the first half of the year, it's always hard on it.
And so far so.
Just adding a few more people earlier on and a year to deal with the demand as we move forward and so that kind of hit and a little bit more on first quarter.
Yeah. So that's that's also true maybe because the R&D was lower than I expected as a percentage of revenue anyway.
M a.
One other thought I had on the 340 b the customers that debt.
They have.
Already and are there any discussions with their customers that might lead to sole source deals.
For your other family of solutions.
Okay.
Yeah, I think we're.
We are.
Looking essentially both ways right and it ends up.
We're looking.
Our channel and certainly as well.
And quite powerful and its ability to introduce the solution to a much broader set of customers that through the sole source arrangements and that's really pointed out the comprehensive strategic portfolio.
There's there's certainly demand there and at that sort of and we are certainly the teams are also working to say are there customers debt.
340 D has debt. We don't currently serve guidance is gonna be a much much smaller and let's just given the breadth and depth of our customer base.
But certainly the teams are exploring.
Yeah, I was thinking and Rick mostly go.
One way, but.
First from either it could it.
It could lead to some sole source deals too.
Thanks for taking the questions, we'll catch up later.
Thank you Bill and stuff.
I would now like to turn the conference over to Randall Lipps for closing remarks.
Well, thanks for joining us today, and where it sounds like weighted with a strong start for the year.
And as the need for increased automation and digitization of processes and scale, our solutions are more strategically relevant and ever for these customers our resolve and our continued momentum under schools.
And Omnicell domains as partner of choice and are excited to continue to build on our platform has advanced division and they talked about.
Thanks for joining us sick and like that and.
And they're not.
This does conclude today's conference call. Thank you for your participation you may now disconnect your line.
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Okay.
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And last year.