Q4 2021 Omnicell Inc Earnings Call

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If you would like to withdraw your question again press Star one. Thank you Kathleen Nemeth head of Investor Relations you May begin your conference.

Speaker 1: If you would like to withdraw your question, again, press star 1. Thank you. Kathleen Nemeth, Head of Investor Relations. You may begin your conference.

Good afternoon, and welcome to the Omnicell fourth quarter and full year 2021 financial results conference call on the call with me today are Randall Lipps, Omnicell, Chairman, President CEO and founder.

Speaker 2: Good afternoon and welcome to the OmniCell fourth quarter and full year 2021 Financial Results Conference call. On the call with me today are Randall Lipps, OmniCell Chairman, President, CEO and Founder, Scott Seidelman, Executive Vice President and Chief Commercial Officer, and Peter Kuyperz, Executive Vice President and Chief Financial Officer.

Outside of Mann, Executive Vice President and Chief Commercial Officer, and Peter Kuipers, Executive Vice President and Chief Financial Officer.

Speaker 2: This call will contain forward-looking statements, including statements related to financial projections or other statements regarding on-us-else plans, objectives, expectations, targets, or outlooks that are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied.

This call will contain forward looking statements, including statements related to financial projections or other statements regarding all of these health plans objective expectations targets or outlook that are subject to risks uncertainties and other factors that could cause actual results to differ materially from those.

Expressed or implied.

Speaker 2: For a more detailed description of the risks that impact this forward-looking statement, please refer to the information in our press release issued today in the OmniCell Annual Report on Form 10K filed with the FCC on February 24, 2021, and in other, more recent reports filed with the FCC.

For a more detailed description of the risk that impact. These forward looking statements. Please refer to the information in our press release issued today.

In the Omnicell annual report on Form 10-K filed with the L. P. C. On February 'twenty, four 2021 and in other more recent reports filed with the SEC.

Speaker 2: Please be aware that you should not place undue reliance on any forward-looking statements made today.

Please be aware that you should not place undue reliance on any forward looking statements made today.

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

Speaker 2: Our results were released this afternoon and are posted in the Invest Relations section of our website at omisell.com. Additionally, we'd like to remind you that during this call, we will discuss some non-GAAP financial measures. Reconciliation of these non-GAAP measures to the most comparable GAAP financial measures are included in our financial results press release.

We felt dot com. Additionally, we'd like to remind you that during this call. We will discuss some non-GAAP financial measures reconciliation of these non-GAAP measures to the most comparable GAAP financial measures are included in our financial results press release with.

With respect to forward looking non-GAAP measures such as guidance and targets. We do not provide a reconciliation for forward looking non-GAAP measures to the comparable GAAP measures on a forward looking basis. As these items are inherently uncertain and difficult to estimate and cannot be projected without unreasonable effort.

Speaker 2: With respect to forward-looking non-GAAP measures, such as guidance and targets, we do not provide a reconciliation for forward-looking non-GAAP measures to the comparable GAAP measures on a forward-looking basis, as these items are inherently uncertain and difficult to estimate and cannot be predicted without unreasonable efforts. I will now turn the call over to Randall.

I will now turn the call over to Ron.

Good afternoon, and thank you for joining us today.

Speaker 3: Good afternoon and thank you for joining us today.

2021 was another outstanding year for Omnicell strong customer demand for our differentiated technical enabled and cloud based medication management products and adherent solutions exceeded our expectations across all metrics.

Speaker 3: 2021 was another outstanding year for OmniCell, a strong customer demand for our differentiated technical enabled and cloud-based medication management products and inherent solutions exceeded our expectations across all precautionaries and

We believe our business is resilient and our innovation growth strategy is delivering results.

Speaker 3: We believe our business is resilient and our innovation growth strategy is delivering results.

Speaker 3: We delivered a record 1.22 billion.

We delivered a record 1.22 billion.

Speaker 3: bookings for the full year compared to $1.0 billion for 2020.

Bookings for the full year compared to 1.0 billion for 2020.

Speaker 3: This was a year-over-year increase of 21%.

This was a year over year increase of 21%.

Speaker 3: exceeding the top end of our guidance by 47 million.

Feeding the top end of our guidance by 47 million.

Speaker 3: demand for our advanced services portfolio was exceptionally strong and exceeded our plan for the year.

Demand for our advanced services portfolio was it.

Exceptionally strong and exceeded our plan for the year.

Speaker 3: As a reminder, advanced services includes our SaaS subscription software and tech-enabled services.

As a reminder, advanced services includes our SaaS subscription software and tech enabled services.

Our 2021 non-GAAP revenues of 1.13 billion were also a record for the company, increasing 241 million or 27% from 2020.

Speaker 3: Our 2021 non-GAAP revenues of $1.13 billion were also a record for the company, increasing 241 million, or 27%, from 2020.

Speaker 3: And we are entering 2022 with a record backlog of $1.25 billion.

Now we are entering 2022 with a record backlog of 1.25 billion.

Speaker 3: We increased our total number of long-term sole source partnerships to 151 of the top 300 US health systems, an increase of six from 2020. Many of these were competitive...

We increased our total number of long term sole source partnerships to 151 of the top 300 U S health systems, an increase of six from 2020.

Many of these were competitive conversions.

In addition to increasing the number of sole source partnerships, we're seeing an increase in average booking size. In fact, we booked three of the largest deals in our history in 2020 one.

Speaker 3: In addition to increasing the number of sole source partnerships, we're seeing an increase in average booking size. In fact, we booked three of the largest deals in our history in 2021.

As a trusted partner.

Speaker 3: As a trusted partner, we develop solutions that we believe will continue to elevate our critical role in the pharmacy health system.

We develop solutions that we believe will continue to elevate our critical role in the pharmacy health system.

To that end.

Speaker 3: To that end, we're excited to announce that OmniCell is partnering with Long Island University to launch pharmacy simulation centers that prepare the next generation of pharmacy leaders.

Excited to announce that Omnicell is partnering with long Island University to launch pharmacy simulation centers that prepare the next generation of pharmacy leaders.

This immersive experience goes live later this year and will provide the opportunity for more than 200 pharmacy residents and technicians to become certified and the innovative technologies.

Speaker 3: This immersive experience goes live later this year and will provide the opportunity for more than 200 pharmacy residents and technicians to become certified in the innovative technologies, systems, and workflows that will help them navigate the challenges of medication management and shift their focus to clinical care.

And workflows that will help them navigate the challenges of medication management.

And shift their focus to clinical care.

These centers will also be used to train and certify omnicell pharmacy technicians as well as pharmacy students, who will go on to support our customers and their technology onsite.

Speaker 3: These centers will also be used to train and certify OmniSail Pharmacy technicians, as well as pharmacy students. We'll go on to support our customers and their technology on site.

Speaker 3: We're excited to launch this initiative and look forward to providing updates on our progress on future earnings calls.

Excited to launch this initiative and look forward to providing updates on our progress on future earnings calls.

The critical role automation and Digitization play in addressing the health care labor shortage.

Speaker 3: critical role automation and digitization play in addressing the healthcare labor shortage, ensuring access to care, and improving patient outcomes is becoming recognized by our healthcare system partners and retail customers even more strongly today.

During access to care and improving patient outcomes is becoming recognized by our health care system partners and retail customers even more strongly today.

The pandemic led to increased demand for care cousin heavier workloads for health care and pharmacy workers, which in turn resulted in worker burn out and resignations.

Speaker 3: The pandemic led to increased demand for care, causing heavier workloads for health care and pharmacy workers, which in turn resulted in worker burnout and resignation.

According to the U S Bureau of Labor Statistics from February 2020, the September 2021 .

Speaker 3: According to the U.S. Bureau of Labor Statistics, from February 2020 to September 2021, the healthcare sector lost 524,000 workers from an already aging workforce.

Care sector loss 524000 workers from an already aging workforce.

And with the continued high demand for administering COVID-19, vaccines tests and treatments the nationwide acute shortage of pharmacy technicians is adversely impacted both hospitals and retail pharmacies.

Speaker 3: And with the continued high demand for administering COVID-19 vaccines, tests, and treatments, the nationwide acute shortage of pharmacy technicians has adversely impacted both hospitals and retail pharmacies.

Moreover, patient volumes projected to rebound and exceed pre pandemic levels.

Speaker 3: Moreover, patient volume is projected to rebound and exceed pre-pandemic levels.

Mckinsey and company survey of 100 large private sector hospitals, which was conducted several months prior to the emergence of the Omnicom Berrien concluded but on average.

Speaker 3: McKinsey & Company survey of 100 large private sector hospitals, which was conducted several months prior to the emergence of the Omicron variant, concluded that on average

Speaker 3: hospitals inpatient admissions have returned to 2019 levels and predicted that inpatient admissions would increase by 4% in 2022 relative to 2019.

Hospitals inpatient emissions have returned to 2019 levels and predicted that inpatient admissions would have increased by 4% in 2022 relative to 2019.

Not surprisingly a recent American college of healthcare Executive Survey of 310 community Hospital Ceos found that personnel shortages what are their top concern in 2021, marking the first time since 2004 that financial.

Speaker 3: That's not surprisingly, a recent American College of Healthcare Executive Survey of 310 community hospital CEOs found that personnel shortages were their top concern in 2021, marking the first time since 2004 that financial challenges were not executives primary concern.

Challenges were not executives primary concern.

We believe we are uniquely positioned to assist our customers in addressing these labor challenges by implementing an automated and cloud based comprehensive medication management and inherent platform, reducing the manual processes within pharmacy, workflows, and enabling pharmacists to practice at the top.

Speaker 3: We believe we are uniquely positioned to assist our customers in addressing these labor challenges by implementing an automated and cloud-based comprehensive medication management and adherence platform, reducing the manual processes within pharmacy workflows, and enabling pharmacists to practice at the top of their life.

Of their license.

In 2019 at our Investor day at the a S. H B midyear clinical meeting we outlined our plan to fundamentally transform our business toward building the I O T a medication management to.

Speaker 3: In 2019, at our investor day at the ASHP mid-year clinical meeting, we outlined our plan to fundamentally transform our business toward building the IoT of medication management.

Speaker 3: to support the industry vision of a fully autonomous pharmacy.

To support the industry vision of a fully autonomous pharmacy.

We believe the results we achieved in 2021 demonstrate that our strategy is working.

Speaker 3: We believe the results we achieved in 2021 demonstrate that our strategy is working.

And why are we still are in the early innings of this strategy. We were very pleased with the level of customer interest, which is ahead of our initial expectations as well as the value. We find we're already creating for our healthcare system partners and retail customers.

Speaker 3: And while we still are in the early innings of this strategy, we are very pleased with the level of customer interest, which is ahead of our initial expectations, as well as the value we find we are already creating for our healthcare system partners and retail customers. In our opinion, the broad adoption of these new services and cloud-enabled SaaS solutions validates our decision to take the path toward transforming the pharmacy care delivery model.

In our opinion the broad adoption of these new services and cloud enabled SaaS solutions validates our decision to take the path towards transforming the pharmacy care delivery model.

Now turning to how we expanded our advanced services portfolio over the past year with three strategic accretive acquisitions.

Speaker 3: Now, turning to how we expanded our Advanced Services portfolio over the past year with free strategic and creative acquisition.

F D S ample care market touch and reset.

Speaker 3: FDS AmpliCare, Market Touch, and Reset.

We are pleased with the early momentum and progress we are making in strengthening our market position through value enhancing M&A.

Speaker 3: We are pleased with the early momentum and progress we are making in strengthening our market position through value-enhancing M&A.

Speaker 3: In December , we announced our agreement to acquire RESET, which is a leading provider of specialty pharmacy management services for health systems, clinics, and physicians group.

In December we announced our agreement to acquire a reset which is a leading provider of specialty pharmacy management services for health systems clinics and physicians groups.

This acquisition is expected to open a new market for Omnicell and will expand omni sales portfolio of capabilities and advanced services that are designed to address the significant need to improve access to and management of complex medications.

Speaker 3: This acquisition is expected to open a new market for OmniCell and will expand OmniCell's portfolio of capabilities and advanced services that are designed to address the significant need to improve access to and management of complex medication.

Speaker 3: In January , we announced our acquisition of pharmacy software solutions provider, Marketouch, which will expand and deepen Enliven Health's footprint across key pharmacy segments.

In January we announced our acquisition of pharmacy software solutions provider market touch, which will expand and deepen and live in house footprint across key pharmacy segments.

Speaker 3: Each of these acquisitions are strong additions to our Leviathan Health M340B solution set.

Each of these acquisitions are strong additions to our it alive until and $3 40 B solution sets.

Speaker 3: Scott will speak more about how these companies have strengthened our competitive offering in just a moment.

Scott will speak more about how these companies have strengthened our competitive offering and just some of it.

Speaker 3: Looking ahead, we also intend to continue strengthening our market position through our robust innovation pipeline.

Looking ahead, we also intend to continue strengthening our market position through our robust innovation pipeline.

From next generation IV robotics.

Speaker 3: From next generation IV robotics to new SAS and connected device capabilities, we are very proud of the advancements we have made. We expect to launch new next generation IV robotics in the coming months and are very excited about the years ahead.

New SAS and connected device capabilities.

We're very proud of the advancements we have made.

We expect to launch New next generation IV robotics in the coming months and are very excited about the years ahead.

As I noted earlier 2021 was an outstanding year and yet despite the records. We have said across a number of financial metrics, we are not immune to the inflationary headwinds and supply chain constraints that others are also seeing.

Speaker 3: As I noted earlier, 2021 was an outstanding year. And yet, despite the records we have set across a number of financial metrics, we are not immune to the inflationary headwinds and supply chain constraints that others are also seeing.

As we indicated last quarter, we have been taking and will continue to take steps in an effort to address and offset these challenges.

Speaker 3: As we indicated last quarter, we have been taking and will continue to take steps and an effort to address and offset these challenges.

Despite current headwinds we are entering 2022 with significant momentum and expect to deliver profitable growth and value creation in the year ahead.

Speaker 3: Despite current headwinds, we are entering 2022 with significant momentum and expect to deliver profitable growth and value creation in the year ahead.

2022 marks the 30th anniversary since our founding it.

Speaker 3: 2022 marks the 30th anniversary since our founding.

Speaker 3: is a milestone we will be celebrating throughout the year. Over the last 30 years, we have successfully navigated through many difficult economic cycles and believe we will do the same in this current cycle.

It is a milestone we will be celebrating throughout the year over.

Over the last 30 years, we have successfully navigated through many difficult economic cycles and believe we will do the same in this current cycle.

Speaker 3: Our focus on creating long-term, enduring value for all of our stakeholders and transforming the pharmacy care delivery model continues to inspire and guide.

Our focus on creating long term enduring value for all of our stakeholders and transforming the pharmacy care delivery model continues to inspire and guide us.

We are confident in the opportunities ahead of us and look forward to updating you on our progress.

Speaker 3: We are confident in the opportunities ahead of us and look forward to updating you on our progress.

Now before I turn the call over to Scott I would like to say how pleased we are that the omni cells environmental social and governance.

Speaker 3: Now before I turn the call over to Scott, I would like to say how pleased we are that the OmniCells environmental, social, and governance efforts have been recognized by Sustained Analytics, one of the largest providers of ESG research ratings and analytics.

Efforts have been recognized by sustained analytics, one of the largest providers of ESG research ratings and analytics.

Speaker 3: In their most recent report, Omnicell ranked higher than 89% of other companies in the healthcare industry for ESG risk management, which acknowledges our company's tremendous efforts and improvements in this area.

In their most recent report.

Omnicell ranked higher than 89% of other companies in the health care industry for ESG risk management, which acknowledges our company's tremendous efforts and improvements in this area.

Sustained analytics also rated Omnicell number one.

Speaker 3: Sustained analytics also rated Omnicell number one for lowest risk among our peers.

Our lowest risk among our peers.

Speaker 3: remain focused on innovating to drive sustainability across our business.

Main focused on innovating to drive sustainability across our business.

Speaker 3: ethically and responsibly sourcing materials by adhering to international recognized OECD guidance and elevating our diversity and inclusion initiatives.

Ethically and responsibly sourcing materials by the hearing to international recognized O E C D guidance and elevating our diversity and inclusion initiatives.

Now with that I'd like to turn the call over to Scott to discuss the industry landscape and key customer engagements Scott.

Speaker 3: Now with that, I'd like to turn the call over to Scott to discuss the industry landscape and key customer engagements. Scott?

Thank you Randall.

Speaker 4: Thank you, Randall. As Randall stated, in our view, our results demonstrate that our strategy is working. Our shift in 2018 toward tech-enabled services and cloud-based services, which we shared with you in 2019, is gaining traction and delivering initial results.

As Randall stated in our view our results demonstrate that our strategy is working.

A shift in 2018 towards Tech enabled services and cloud based services, which we shared with you in 2019 is gaining traction and delivering initial results.

Speaker 4: We made this shift back in 2018 because we recognized the significant need and large opportunity to transform the pharmacy care delivery.

We made this shift back in 2018, because we recognize the significant need in large opportunity to transform pharmacy care delivery model and we recognize the unique position that omnicell had because of its high quality brand significant customer base and large channel to successfully execute our land and expand strategy.

Speaker 4: And we recognize the unique position that Omnicell had because of its high quality brand, significant customer base and large channel to successfully execute a Land and Expand strategy.

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Speaker 4: In 2018, the primary reason that the pharmacy care delivery model struggled with quality and cost problems was that its labor force was overwhelmed, overworked, and under supported. COVID significantly exacerbated this people problem and in 2022, we feel better about our market opportunity than we did three years ago. We find the need to automate and digitize manual processes within pharmacy workflows is now even more.

In 2018, the primary reason that the pharmacy care delivery model struggled with quality and cost problems was that its labor force was overwhelmed overworked and under supported.

Covid significantly exacerbated this people problem and in 2022, we feel better about our market opportunity than we did three years ago, we find the need to automate and digitize manual processes within pharmacy workflows is now even more pronounced.

Speaker 4: We offer our customers an intelligent medication management infrastructure that equips and empowers pharmacists and caregivers to focus on clinical care rather than administrative tasks.

We offer our customers an intelligent medication management infrastructure that equips and empowers pharmacists and caregivers to focus on clinical care rather than administrative tasks.

Speaker 4: This infrastructure is a comprehensive cloud-based platform that combines automation, analytics, and expert services.

This infrastructure is a comprehensive cloud based platform that combines automation analytics and expert services.

Our intelligent infrastructure provides the foundation for realizing the industry's vision of the autonomous pharmacy vision defined by pharmacy leaders for improving operational efficiencies and ultimately targeting zero era medication management.

Speaker 4: Our intelligent infrastructure provides the foundation for realizing the industry's vision of the autonomous pharmacy, a vision defined by pharmacy leaders for improving operational efficiencies and ultimately targeting zero-error medication management.

Speaker 4: Ultimately, our intelligent infrastructure will enable pharmacists and caregivers to improve patient outcomes, reduce costs, and reduce provider burnout.

Ultimately, our intelligent infrastructure will enable pharmacists and caregivers to improve patient outcomes reduce costs and reduce provider burnout.

Speaker 4: Now, I would like to comment on some of our recent customer wins. Our intelligent infrastructure platform clearly resonates with customers.

Now I would like to comment on some of our recent customer wins are intelligent infrastructure platform clearly resonates with customers. For example, we are excited to announce today that we signed a long term sole source contract with UMC health system in Lubbock, Texas.

Speaker 4: For example, we are excited to announce today that we signed a long-term sole source contract with UNC Health System in Lubbock, Texas.

Omnicell was selected to support key pharmacy initiatives across acute care outpatient and retail care settings. This is a competitive conversion and the partnership include Central Pharmacy services point of care solutions, Omnicell, 340, <unk> service and and widen our patient engagement solutions.

Speaker 4: Omnicell was selected to support key pharmacy initiatives across acute care, outpatient, and retail care settings. This is a competitive conversion, and the partnership includes Central Pharmacy Services, Point of Care Solutions, our Omnicell 340B service, and Enliven Health patient engagement solutions.

Speaker 4: We think this is an excellent example of several key elements of our strategy and demonstrates why we are winning in the market.

We think this is an excellent example of several key elements of our strategy and demonstrates why we are winning in the market.

Speaker 4: One, our comprehensive platform approach and long-term vision significantly differentiate on the cell.

One our comprehensive platform approach and long term vision significantly differentiate on Michelle <unk>.

Two are in life and health solution will appeal to health systems as they focus on ambulatory and retail opportunities therefore, thereby adding further differentiation and three our channel can successfully deliver acquired solutions such as Omnicell $3 48.

Speaker 4: Two, our enliven health solution will appeal to health systems as they focus on ambulatory and retail opportunities, thereby adding further differentiation. And three, our channel can successfully deliver required solutions such as Omnicell 340B.

Speaker 4: Similar to UMC, I am also pleased to announce that University Health in San Antonio, Texas has selected Omnicell One along with Omnicell Central Pharmacy and Point of Care Solutions to support their pharmacy.

Similar to UMC I am also pleased to announce that University health in San Antonio, Texas has selected Omnicell, one along with Omnicell central pharmacy and point of care solution.

To support their pharmacy care model.

Our platform is aligned with University health goals and long term vision for growth.

Speaker 4: Our platform is aligned with University Health's goals and long-term vision for...

Additionally, unmet health and Anderson, South Carolina selected Omnicell, one on the South Central Pharmacy, dispensing service and IV compounding service as a comprehensive platform that can support their goals of supply chain control approved efficiency and enhance patient safety.

Speaker 4: Additionally, AnMed Health in Anderson, South Carolina selected Omnicell One, Omnicell Central Pharmacy dispensing service, and IV compounding service as a comprehensive platform that can support their goals of supply chain control, approved efficiency, and enhanced patient safety.

Speaker 4: Lastly, an Ohio-based health system partnered with Omnicel to help them address staffing constraints while enhancing visibility and communication across the system. Again, this health system chose Omnicel One, Central Pharmacy Dispense Service, and IV Compounding Service to help them achieve their goals to manage near-term staffing challenges and support future growth.

Lastly, an Ohio based health system partnered with Omnicell to help them address staffing constraints, while enhancing visibility and communication across the system again. This health system chose Omnicell, one central pharmacy, dispense service and IV compounding service to help them achieve their goals to manage near term staffing challenges and.

To support future growth.

Based on the strength of advanced services bookings and robust customer demand in 2022, we are continuing to invest in our innovation pipeline cloud platform and customer experience.

Speaker 4: Based on the strength of advanced services bookings and robust customer demand in 2022, we are continuing to invest in our innovation pipeline, cloud platform, and customer experience.

Now I will comment a bit more on the acquisitions, we made in 2021.

Speaker 4: Now, I will comment a bit more on the acquisitions we made in 2021.

Sds ample care reset and market touch are great. Examples of where we think retail pharmacies and health systems are going and why we are so energized by the opportunities ahead.

Speaker 4: FDS sample care, Recept and Market Touch are great examples of where we think retail pharmacies and health systems are going and why we are so energized by the opportunities ahead.

In 2020 specialty drugs totaled $269 billion and accounted for 51% of all drug sales. Furthermore, health system owned specialty pharmacies are generating significant patient outcomes and profits for the health system and as such are a strategic priority for the C suite.

Speaker 4: In 2020, specialty drugs totaled $269 billion and accounted for 51% of all drug sales.

Speaker 4: Furthermore, health system-owned specialty pharmacies are generating significant patient outcomes and profits for the health system, and as such, are a strategic priority for the C-suites. However, managing a specialty pharmacy requires a different skill set. And increasingly, hospitals are outsourcing their specialty pharmacy operations to manage service organizations like resets.

However, managing a specialty pharmacy requires a different skill set and increasingly hospitals are outsourcing their specialty pharmacy operations to manage service organizations like reset.

Speaker 4: Specialty pharmacy is a key part of the medication management process and Omnicell can significantly scale the recept solution through our channel and ultimately create new value for customers through integration with other parts of our intelligent infrastructure. It is another way we are expanding our footprint within our existing customer base.

Specialty pharmacy is a key part of the medication management process and Omnicell can significantly scale, the reset solution through our channel and ultimately create new value for customers through integration with other parts of our intelligent infrastructure.

It is another way, we are expanding our footprint within our existing customer base.

Speaker 4: As Randall mentioned, we also strengthened our Enlivened Health solution with the acquisitions of FDS AmpliCare and MarketTech.

As Randall mentioned, we are we also strengthened our life and health solution with the acquisitions of Fts ample care end market touch.

The addition of <unk> differentiated financial management analytics, and population health solutions, along with its nationwide network of more than 15000 independent retail pharmacies expand <unk> product functionality and its market footprint.

Speaker 4: The addition of FDS AmpliCare's differentiated financial management analytics and population health solutions

Speaker 4: along with its nationwide network of more than 15,000 independent retail pharmacies, expands in LiveInHealth's product functionality and its market footprint.

And the addition of market touch media not only expands <unk> customer base, but also adds critical mobile capabilities to the solution with these acquisitions and live and adds critical functionality to its platform and expand its customer base.

Speaker 4: And the addition of Market Touch Media not only expands in Libran's customer base, but also adds critical mobile capabilities to the solution.

Speaker 4: With these acquisitions, Enliven adds critical functionality to its platform and expands its customer base.

Speaker 4: We believe COVID and the current labor market have accelerated the need for a new intelligent medication management infrastructure.

We believe COVID-19 and the current labor market have accelerated the need for a new intelligent medication management infrastructure omni.

Omnicell is uniquely positioned to deliver this intelligent infrastructure and ultimately enable our customers to transform a significant part of the health care system. We are early in this journey and we are excited by our progress to date.

Speaker 4: Omnicell is uniquely positioned to deliver this intelligent infrastructure and ultimately enable our customers to transform a significant part of the healthcare

Speaker 4: We are early in this journey and we are excited by our progress to date. With that, I will turn the call over to Peter.

With that I will turn the call over to Peter.

Speaker 5: Thank you, Scott. I'm pleased with the strong results for our fourth quarter and full year 2021.

Thank you Scott.

I'm pleased with the strong results for our fourth quarter and full year 2021.

Speaker 5: our healthcare system and retail pharmacy customers continue to partner with Omnicell to realize the industry vision of the fully autonomous pharmacy and the overall demand metrics for Omnicell remain strong.

Health care system in retail pharmacy customers continue to part of it all Michele will realize the industry vision of that full year volumes pharmacy and the overall the mad metrics for Omnicell remains strong.

I'm, especially proud of the solid execution that are over 3500 Omnicell team members continue to consistently deliver.

Speaker 5: I'm especially proud of the solid execution that our over 3,500 Omnisol team members continue to consistently deliver. During the quarter, we welcome 429 employees to the Omnisol family.

During the quarter, we welcomed 449 employees to the Omnicell family.

Speaker 5: 293 of whom joined us via the Receptive Market Projectors.

$293 per year to reset the marketplace acquisitions.

Speaker 5: Throughout the pandemic, OmniSite employees have demonstrated their unwavering commitment to ensuring our frontline healthcare heroes receive the critical medication automation management systems and expertise they need to deliver the best patient care possible.

Throughout the pandemic only started please demonstrated their unwavering commitment to ensuring our frontline health care heroes received the critical medication automation management systems and expertise they need to deliver the best patient care possible.

Speaker 5: Before I dive into the specifics of our financial results, I would like to highlight that despite the challenges from the pandemic, 2021 was a record year for bookings.

Before I dive into the specifics of our financial results I would like to highlight that.

Spike the challenges from the pandemic.

21 was a record year for bookings.

Backlog.

Speaker 5: backlog, revenue, non-gap EBITDA, non-gap EPS, and free cash flow generation.

Revenue.

non-GAAP EBITDA, non-GAAP , EPS and free cash flow generation.

Record product bookings for full year, 2020, $141.217 billion compared to $1 billion and 2 million.

Speaker 5: Record product bookings for full year 2021 were $1,217,000,000 compared to $1,002,000,000 for the full year 2020.

For the full year 2020.

Speaker 5: and we're 67 million above the midpoint of our full year guidance range and an increase of 21%.

And were $67 million above the midpoint of our full year guidance range.

And an increase of 21% over the prior year.

Speaker 5: Total product backlog at the end of 2021 was $1,254,000,000 compared to $924,000,000 at the end of 2020, a significant increase of 36% year-over-year.

Product backlog at the end of 2021, with 1 billion or $254 million.

Compared to the $924 million at the end of 2020.

A significant increase or 36% year over year.

After a $1 billion $254 million and make product backlog.

Speaker 5: up to $1,254,000,000 in ending product backlog.

$449 million or 35%.

Speaker 5: $439 million or 35% is considered long-term.

It's considered long term.

Speaker 5: This percentage is up from 33% at the end of 2020.

This percentage is up from 33% at the end of 2020.

Speaker 5: The year-over-year percentage increase primarily reflects the growth in the transsurface.

The year over year percentage increase primarily reflects the growth in defense services.

We believe the strong 2021 product bookings are an indication that our health care system and retail pharmacy customers continue to turn to only sell realize the industry vision problems.

Speaker 5: We believe the strong 2021 product bookings are an indication that our healthcare system and retail pharmacy customers continue to turn to OmniCell to realize the initiation of the fully balanced pharmacy.

Bonus pharmacy.

We saw specific strength in defense services as well as the strength of that.

Speaker 5: We saw specific strength in attend services, as well as the strength in our key partnerships, including long-term sole source agreements with 151 of the top 300 US health systems.

From our partnerships, including a long term sole source agreements with 161 of the top 300 U S health systems.

Speaker 5: Out of these 151, 50% have not booked at least one offensive.

All of these have been a 50 150.

50% booked at least walnut sensors.

Speaker 5: We have partnered with the majority of the Helena 51 long-term social partners to create multi-year assessment plans for medication management automation.

We have partnered with the majority of the having a 61 login social partners to create multi year investment plans for medication management automation.

These plants provide significant visibility into future bookings.

Speaker 5: These plans provide significant feasibility in the future.

We are continuing to see strong momentum would've sent services when engaging with our health system, a repo pharmacy customers.

Speaker 5: We are continuing to see strong momentum with defense services and engaging with our health system and our retail pharmacy customers.

Speaker 5: For the larger fields, we find that advanced services are a clear differentiator and one of the main reasons these partners do business with OmniSelf.

With the larger deals we find that ascend services.

A clear differentiator and one of the main reasons. These partners group business at home so.

Turning to our financials.

Speaker 5: fourth quarter 2021 revenues in accordance with GAAP were $311 million, an increase of $15 million over the prior quarter.

Fourth quarter 2021 revenues in accordance with GAAP, where $311 million, an increase of $15 million over the prior quarter.

Our fourth quarter of 2021, non-GAAP revenues were $312 million.

Speaker 5: a fourth quarter 2021 non-GAAP revenues of $312 million, up 25% over the fourth quarter 2020, and approaching the top end of a kind of

25% over the fourth quarter of 2020 and approaching the top end our guidance range.

The strong year over year non-GAAP revenue increase reflects continued strong demand for all yourselves medication management.

Speaker 5: The strong year-over-year non-GAAP revenue increase reflects continued strong demand for on-the-shelf medication management, adherence automation solutions, as well as the contribution of revenue from the FDS Amplicare acquisition in the third quarter of 2021.

Automation solutions as well as the contribution of revenue from the <unk>.

And prepare acquisition in there.

The third quarter of 2021.

A full reconciliation of our GAAP to non-GAAP results is included in our fourth quarter earnings press release and is posted on our website.

Speaker 5: A full reconciliation of our gap and non-gap results is included in our fourth quarter earnings press release and is posted on our website.

We delivered record GAAP and non-GAAP revenues in 2021, reflecting strong customer demand.

Speaker 5: We delivered record GAAP and non-GAAP revenues in 2021, reflecting strong customer demand and strong commercial execution.

And commercial execution.

Our full year 2021, GAAP revenues were $1 billion and $132 million.

Speaker 5: A full year 2021 GAAP revenues were $1,132,000,000.

Our non-GAAP 2021 revenues were 1 billion water of about $33 million, an increase of $341 million or 27% from 2020.

Speaker 5: are non-GAAP 2021 revenues for $1,133,000,000, an increase of $241 million for 27% of 2020.

Speaker 5: As a reminder, the year of the increase was partially as we go to the more than typical gap and no gap revenue levels in 2020 due to the COVID-19 pandemic.

As a reminder, the year over year increase was partially attributable to the lower than physical GAAP and non-GAAP revenue levels in 2020 due to the COVID-19 pandemic.

non-GAAP gross margin for the fourth quarter of 2021 was 49, 8% a.

Speaker 5: non-GAAP close margins for the fourth quarter of 2021 of 49.8 percent, a decrease of 130 basis points from the previous quarter, primarily due to the mix of customer and product implementations in the quarter, as well as modestly higher inflationary costs.

A decrease of 40 basis points from the previous quarter, primarily due to the mix of customer and policy from the basis in the quarter as well as modestly higher inflationary costs.

Included in the fourth quarter gross margin as the impact of approximately $5 million or inflationary cost compared to the cost base for semiconductors other materials and freight in 2020.

Speaker 5: Included in the fourth quarter gross margin is the impact of approximately $5 million of inflationary costs compared to cost paid for semiconductors, other materials and freight in 2020.

Excluding the approximately $5 billion inflation cost the gross margin percentage would have been 160 basis points higher.

Speaker 5: Excluding the approximately $5 million in inflation costs, the gross margin percentage would have been 160 basis points higher.

Our fourth quarter of 2021 earnings per share in accordance with GAAP, where 20 cents per share compared to <unk> 61 per share in the previous quarter and 37 cents per share in the fourth quarter of 2020.

Speaker 5: A fourth quarter of 2021 earnings per share in the quarters of GAAP were $0.28 per share compared to $0.61 per share in the previous quarter and $0.37 per share in the fourth quarter of 2020.

Fourth quarter of 2014 warm non-GAAP earnings per share with 92, a share compared to $1 a share in the previous quarter.

Speaker 5: Fourth quarter 2021, non-GAAP earnings per share were $0.92 per share compared to $1.08 per share in the previous quarter and $0.91 per share in the same period last year.

91 per share in the same period last year.

Fourth quarter non-GAAP earnings per share were near the midpoint of fourth quarter guidance inclusive of a favorable tax benefit from stock compensation of 10 cents per share offset by the impact of incremental expenses related to compensation from significantly stronger product bookings M&A related expenses and certain key.

Speaker 5: Fourth quarter non-GAAP earnings per share were near the midpoint of fourth quarter guidance, inclusive of a favorable tax benefit from stock compensation of $0.10 per share, offset by the impact of incremental expenses related to compensation from significantly stronger product bookings and M&A-related expenses and certain key investment.

Yes.

Our full year 2021 earnings per share in accordance with GAAP, where $1 62.

Speaker 5: Our full year 2021 earnings per share in accordance with GAAP were $1.62 per share.

For sure.

Speaker 5: full year 2021 non-GAAP earnings per share, with $3.81 per share, an increase of $1.27 per share, or 50% for 2020.

Our full year 2021, non-GAAP earnings per share were $3 81 per share an increase of $1 27 per share or 50% from 2020.

The year over year increase was mostly driven by higher revenue volume and gross margin expansion.

Speaker 5: The year-over-year increase is mostly driven by higher revenue volume.

Speaker 5: partially upset by the impact of inflationary costs in 2021, as well as the impact of higher share counts. We delivered non-gap EBITDA of $52 million in the fourth quarter of 2021, resulting in a record full-year non-gap EBITDA of $230 million.

Partially offset by the impact of inflationary cost in 2021 as well as the impact of higher share counts, we delivered non-GAAP EBITDA of $52 million in the fourth quarter of 2021.

Solving in a record full year non-GAAP EBITDA of $230 million.

In comparison to guidance fourth quarter until the your non-GAAP EBITDA includes the impacts of additional driver compensation farm significantly stronger product bookings M&A.

Speaker 5: Fourth quarter and total year non-Gabibida includes the impacts of additional variable compensation from significantly stronger product bookings.

Speaker 5: M&A related expenses, and certain key investments.

M&A related expenses and certain key investments.

Full year 2021, non-GAAP EBITDA margins, 23%.

Speaker 5: Cool year 2021 non-GAP ECDA margins, 20.3%. An increase of 240 basis points from the previous year, five inflationary headwinds for approximately 100 basis points.

An increase of 240 basis points from the previous year, despite inflationary headwinds of approximately 100 basis points.

Moving to cash flow.

Speaker 5: We're looking at 2021 free cash flow of $173 million. Let's say you wrecked a

2021 free cash flow of $173 million, let's say records.

Speaker 5: and reflects the overall increase demands in the business, strong cash collections, and working capital market.

It reflects the overall increased imagine the business' strong cash collections and working capital matters.

At the end of the fourth quarter of 2021, our cash balance was $349 million down from $482 million versus September 32021, the $133 million decrease in cash is the result of financing activities related to our recently completed acquisitions.

Speaker 5: At the end of the fourth quarter of 2021, a cash balance was $349 million.

Speaker 5: down from $482 million as of September 30, 2021. The $133 million decrease in cash is the result of financing activities related to our recently completed acquisitions of Recept and Market Touch, partially offset by operating cash flow.

Issuance of resets and market touch, partially offset by operating cash flow in the quarter.

Speaker 5: Pre-cash flow during the fourth quarter of 2021 was $42 million compared to $27 million from the previous quarter and $65 million in the fourth quarter of 2020.

Cash flow during the fourth quarter of 2021 was $42 million compared to $27 million from the previous quarter and $65 million in the fourth quarter of 2020.

In terms of accounts receivables days sales outstanding for the fourth quarter and one for 70 days, excluding the impact of the reset the market starts acquisitions, which were completed in the last few days of 'twenty one.

Speaker 5: In terms of accounts receivables, they say it was outstanding for the fourth quarter of 21 for 70 days.

Speaker 5: excluding the impact of recent market purchase acquisitions which were completed in the last few days of 2021 and therefore did not contribute significant revenue over the course of the year.

And therefore did not contribute significant revenue in the quarter.

Speaker 5: Today's sales outstanding in the fourth quarter of 2021 reflect a decrease of three days over the last quarter and a decrease of one day from the fourth quarter in 2020.

Today's sales outstanding in the fourth quarter of 2021 reflect a decrease of three days over last quarter and a decrease of one day from the fourth quarter of 2000.

Inventories as of December 31, 2021 were $120 million, an increase of $60 million from the prior quarter and an increase of $24 million for the fourth quarter of 2020.

Speaker 5: Inventories as of December 31, 2021 were $120 million, an increase of $16 million from the prior quarter, and an increase of $24 million from the fourth quarter of 2020.

It's important to note that the inventories as of December 31, 2021 include approximately $7 billion of advance purchases of receipt of semiconductors.

Speaker 5: It's important to note that the inventories as of December 31, 2021 include approximately $10 million of advanced purchases and receipts of semiconductors.

We believe will help reasonably secure supplier for future customer implementation timelines.

Speaker 5: that we believe will help reasonably secure supply for future customer implementation timelines.

We continue to execute very well on a global supplier of process improvements and then exporting Madison Elizabeth.

Speaker 5: We continue to execute very well on our global supply chain process improvements and inventory management initiatives.

Now moving onto our full year 2020 guidance.

Speaker 5: All guidance includes the recently announced acquisitions, including FDS Mplicare, resets, and market.

All guidance includes our recently announced acquisitions, including SBS as the care.

And market touch.

Speaker 5: As we look to the rest of the year, we continue to expect strong revenue growth from customer demand and a record backlog.

As we look through the rest of the year, we continue to expect strong revenue growth from customer demand and a record backlog.

Our record 2021 product group base reflects strong marketing methods, including momentum.

Speaker 5: Our record 2021 product goodness reflects strong marketing management, including momentum in advanced services.

Hence surfaces, we continue that high confidence that we have secured supply for semiconductors and critical components to 2021 in order to deliver our mission critical systems and connected devices to our health care customers.

Speaker 5: We continue to have high confidence that we have secure supply for semiconductors and critical components through 2021 in order to deliver omniscient critical systems and connect the devices to our health care.

Our global supply chain, our procurement teams have done a great job addressing these challenges of minimizing potential disruptions to our customers.

Speaker 5: Our global supply chain and procurement teams have done a great job addressing these challenges and minimizing potential disruptions to our customers.

Speaker 5: We expect 2022 product bookings to be between $1,370,000,000 and $1,430,000,000.

We expect 2022 product bookings to be between $1 billion $370 million and $1.430 billion.

Speaker 5: We expect total GAAP and non-GAAP revenues to be between $1,385,000,000 and $1,410,000,000.

We expect total GAAP and non-GAAP revenues to be between $1.385 billion and $1.410 billion.

Speaker 5: I expect GAAP and non-GAAP product revenues to range between $950 million and $965 million.

Our GAAP and non-GAAP product revenue to range between $950 million and $965 million.

Speaker 5: We expect GAAP and non-GAAP services to be between $435 million and $440 million.

We expect GAAP and non-GAAP service revenue to be between $435 million and $445 million at the midpoint. This reflects an increase in total non-GAAP revenue of $265 million or 23% over the prior year, we expect deferred services revenue.

Speaker 5: At the midpoint, this reflection increased the total non-GAAP revenue of $265 million, or 23% over the prior year. We expect defense services revenue as a percentage of total revenue to increase from 10% in 2021 to approximately 15% in 2022.

As a percentage of total revenue to increase from 10% in 2021 approximately 15.

In 2022.

We expect total year 2022 non-GAAP EBITDA.

Speaker 6: We expect total year 2022 non-GAAP EBITDA.

Be between $243 million.

Speaker 6: be between $243 million and $255 million, is non-GAAP even a guarantee?

$65 million.

As non-GAAP EBITDA guidance reflects.

One the expected impact of inflation.

Speaker 6: One, the expected impact of inflation. And secondly, integration costs for recent acquisition.

Secondly integration costs for recent acquisitions.

As we noted for the last two quarters, we are experiencing the impact of inflationary headwinds.

Speaker 6: As we noted for the last two quarters, we are experiencing the impact of inflation.

Speaker 6: This continues to be primary due to semiconductor and other component costs and to a lesser extent freight and steel and other raw materials.

This continues to be primarily due to semiconductor and auto component cost and to a lesser extent freight on steel and other raw material costs.

The total year non-GAAP EBITDA guidance includes the impact of approximately $30 million to $35 million.

Speaker 6: totally a non-gas EBITDA guide that includes the impact of approximately 30 to 35 million dollars of cost inflation in 2022 as compared to cost based on semiconductors, other materials and trade in 2020.

Cost inflation in 2022 as compared to the cost base of semiconductors auto materials and freight in 2020.

The 2022 non-GAAP EBITDA guidance also includes $8 million of integration costs for the STS and prepare.

Speaker 6: The 2022 non-GET-EBITDA guidance also includes $8 million of integration costs for the SDS MCARE, RESET, and MARCUS subset.

Research and markets such acquisitions.

As we have noted we have had a particularly active here in terms of M&A.

Speaker 6: As we have noted, we have had a particularly active year in terms of M&A.

As expected there are integration expenses associated with this activity.

Speaker 6: As expected, there are integration expenses associated with this activity. Generally, the majority of integration expenses are incurred in the first year after activity.

Generally the majority of integration expenses are incurred in the first year after acquisition.

Speaker 6: We have a strong balance sheet, which we believe positions as well for future growth, and we look forward to continuing our plan to execute on a value-enhancing discipline in the Menace family.

We have a strong balance sheet, which we believe positions us well for future growth and we look forward to continuing our plans to execute on our value enhancing disciplined M&A strategy.

Now I'll provide some color for the gross margin outlook for 2022.

Speaker 6: Now I'll provide some color for the gross margin outlook for 2022.

We are working through product backlog and pipeline prior to pricing actions.

Speaker 6: we are working to product backlog and pipeline prior to pricing actions. As a result...

As a result, we expect that the pricing actions, we have put in place will begin to have a greater impact.

Speaker 6: we have put in place will begin to have a greater impact near the end 2022 and as we move into 2023.

2022, and as we move into 2023.

Included in our non-GAAP EBITDA guidance as the favorable impact of these pricing actions.

Speaker 6: included in a non-Gov EBITDA guidance is the favorable impact of these prices.

Speaker 6: We expect those markets to modestly expand in the second half of 2022 as compared to the first half of 2021.

We expect gross margin to modestly expand in the second half of 2022 <unk>.

As compared to the first half of 2020.

Speaker 5: We expect 2022 non-GAAP earnings to be between $3.75 and $3.95 per share.

We expect 2022 non-GAAP earnings to be between $3 75.

$3 95 per share.

Speaker 5: This takes into account a higher expected blended tax rate in 2022 and the expected share count increase from employee stock plans. For full year 2022, we are assuming an effective blended tax rate of approximately 6% in our non-GAAP EPS guidance compared to 4% in 2021 Actual.

This takes into account the higher expected blended tax rate in 2022, and the expected share count increase from employee stock plans for full year 2022, we are assuming an effective blended tax rate of approximately 6%.

non-GAAP EPS guidance compared to 4% in 2021 actuals.

For the first quarter of 2022, we are providing the following guidance.

Speaker 5: For the first quarter of 2022, we are providing the following guidance.

We expect total first quarter 2022, GAAP and non-GAAP revenues to be between 312 and $318 million with.

Speaker 5: expect total first quarter 2022 GAAP and non-GAAP revenue.

Speaker 5: to be between $312 and $318 million, with GAAP and non-GAAP product revenues between $216 million and $219 million.

The GAAP and non-GAAP product revenues between $216 million and $219 million and GAAP and non-GAAP service revenues between 96 and $99 million.

Speaker 5: and GAAP and non-GAAP service revenues between $96 and $99 million.

We expect first quarter 2022, non-GAAP EBITDA to be between $45 million and $49 million.

Speaker 5: We expect first quarter 2022 non-gap EBITDA to be between $45 million and $49 million.

Speaker 5: And we expect first quarter non-gap earnings per share to be between $0.65 per share and $0.72 per share.

And we expect first quarter non-GAAP earnings per share to be between 65 per share and 72 per share.

Speaker 6: In 2021, we made the decision to secure what we believe is an adequate supply of semiconductors and other key components via direct buys and pre-buys from brokers and OEMs to support our customers.

In 2021, we make a decision to secure what we believe is an adequate supply of semiconductors and other key components.

Direct buys and pre buys from brokers and Oems to support our customers.

Speaker 6: We're confident in our supply of stromoconverters and other key components through 2022 to support our health system customers that are critical to health.

We're confident within a supplier of semiconductors and other key components through 2022 to support our health system customers that are critical to health care.

We are anticipating supplier challenges.

Speaker 6: We are anticipating supply chain challenges and inflationary cost impacts, particularly for ferry and steel, which are spot markets, to continue throughout 2022.

Dairy cost impacts, particularly for face shields to spot markets to continue throughout 2022.

As I noted earlier, the majority of our current product backlog and pipeline reflects pre inflation pricing.

Speaker 6: As I noted earlier, the majority of our current product backlog and pipeline reflects pre-inflation pricing.

Speaker 6: As a result, we expect that the pricing actions we have put into place will begin to have a greater impact near the end of 2022 and as we move into 2026.

As a result, we expect that the pricing actions, we've put into place will begin to have a greater impact near the end of 2022 and as we move into 2022.

We believe that we have build a company that is able to adapt and scale sorry, well I believe is well positioned to deliver on our 2025 total revenue growth targets.

Speaker 6: We believe that we have built a company that's able to adapt and scale very well and believe it's well-positioned to deliver on our 2025 total revenue growth targets driven by a number of factors, including growing advanced services revenue, benefits from long control source customer partnerships, including multi-year co-developed plans, and increased average yields.

A number of factors, including growing expense services revenue benefits will long term sole source customer partnerships, including multiyear co developed plans.

Increased average deal size.

We continue to have line of sight and are committed to our 2025 profitability targets. However, it's important to note that these targets.

Speaker 6: We continue to have line of sight and are committed to our 2025 profitability target.

Speaker 6: However, it's important to note that we issued these targets prior to the current stationary environment.

Meyer to the current deflationary environment.

Speaker 6: We continue to execute pricing actions, manufacturing savings across the business.

We continue to execute pricing actions manufacturing savings across the efficiencies.

Speaker 6: As we continue to scale the business in the coming years, we expect to invest and redeploy some of these savings into value-creating growth and innovation.

As we continue to scale the business in the coming years, we expect to invest and redeploy some of these savings into value creating growth.

Innovation initiatives.

In summary, we're very pleased with our commercial operational and financial results for 2021, and the forward visibility of any sort of any sort of business we.

Speaker 6: In summary, we're very pleased with our commercial operational financial results for 2021 and the forward feasibility in this way for the

Speaker 6: We continue to take steps to address inflationary headwinds and supply chain disruptions in the market, and we remain confident in the long-term outlook. We look forward to updating you on our progress in the coming quarters.

We continue to take steps to address inflationary headwinds.

Akshay and disruptions in the market and we remain confident in our long term outlook.

We look forward to updating you on our progress in the coming quarters.

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

At this time I would like to remind everyone in order to ask a question. Please press star followed by the number one on your telephone keypad.

Speaker 1: At this time, I would like to remind everyone in order to ask a question, please press star followed by the number one on your telephone keypad.

Speaker 1: Your first question comes from Jessica Tesfan with Piper Sandler, your line is open.

Your first question comes from Jessica <unk> with Piper Sandler Your line is open.

Hi, Thank you so much and congratulations on a great 2021.

Speaker 7: Hi. Thank you so much, and congratulations on a great 2021. So, I think we were just curious if you could maybe help us understand how the price increases work within the context of either GPO contracts or under your sole source contracts, and specifically, is price flexibility based into the sole source contracts, or do you have to negotiate each of those on a kind of one-on-one, customer basis? Thank you.

I think we were just curious if you could maybe help us understand how the price increases work within the context of either GPO contract or under your sole source contract.

And specifically if price flexibility baked in the sole source contracts did you have to negotiate.

Each of those on a kind of one on one customer by customer basis.

Thank you.

Hi, Scott settlement, So I think a couple of questions. There. Your first one was really how the GPO pricing impact long term sole source agreement towards pricing in the long term sole source agreement I think of the latter point typically the sole source agreement will have a price lock of maybe first couple of years, one or two years.

Speaker 8: Thanks. Hey, it's Scott Seidelman. So I think a couple of questions there. Your first one was really how did GPO pricing impact long-term sole source agreements? How does pricing in the long-term sole source agreement? I think to the latter point, typically the sole source agreement will have a price block of maybe a first couple of years, one or two years. And then after the fact, pricing can adjust sometimes tied to CPI, et cetera. But after that initial price block, it can adjust.

And then after the fact pricing can adjust sometimes tied to CPI et cetera, but but after that initial price lock it can adjust.

Speaker 4: GPO pricing really doesn't come into any kind of effect in a long-term sole-source agreement. It's outside of that, so long-term sole-source agreements are negotiated directly.

GPO pricing really doesn't come into any kind of a factor in our long term sole source, it's outside of that so larger clusters agreements are negotiated.

Thanks, Doug.

Speaker 8: No, I think that's actually helpful on that, and I guess this one is for Peter. What explains the improvement in adjusted EBITDA margin expansion over the course of the year? Is that mostly owing to cost of goods, or is that integration cost concentrated in the first task? Any color there would be helpful. Thanks again. Thanks.

I think I saw you had a second one.

No I think that's actually helpful.

And I guess this one is for <unk>.

Peter.

And what explains the improvement in adjusted EBITDA margin expansion over the course of the year.

Is that mostly owing to cost of goods or is that integration costs concentrated in the first half any color there would be helpful. Thanks again.

Speaker 9: Yeah, good question, Jessica. I'm going to go back to the initial pricing action. We do have flexibility on service pricing. That was a pricing action that we talked about in the last earnings call. So that is starting to build up.

Yes, great question Jessica.

Back to the initial pricing actions, we do have.

Flexibility on service pricing that was.

Pricing actions that we've talked about in the last earnings call. So that has started to build up and flow through as well and we've also talked about in the prepared remarks in the last call that we have to increase the margin approval levels as well so.

Speaker 9: and flow it through as well, and we've also talked about in the prepared remarks in the last call that we have increased the margin approval levels as well. So then to your question around the improvement of gross margins through the year, we delineated in the prepared remarks between the first half and the second half.

Now to your question around.

We improved our gross margins.

For the year.

Delineated in the prepared remarks, we see the first half in the second half.

The way to look at it there's really two factors there.

Speaker 9: So the way to look at this, there's really two factors there. One is the pricing action. So the majority of our product backlog and also a portion of our quotes are from before pricing actions, right? So the pricing actions kicked in in the quoting process, the sales process, and we expect that to go through the backlog into revenue and to offset a larger portion of the inflation to the end of 2022 and as we move into 2022.

One is the pricing actions. So the majority of our product backlog and also a portion of our quotes are from before pricing actions. If I answer the pricing just kicked in.

In the coated proppant sales process and we expect that to go see the backlog into revenue and so on.

A large portion of the inflation.

2022, and as we move into 2023, and we expect now that pricing will fully offset inflation beginning in the first half.

Speaker 9: And we expect now that pricing actions will fully offset inflation beginning in the first half of 2023. So you see that dynamic. And then from an inflation perspective...

For 2022 associate that dynamic.

From an inflation perspective.

Speaker 9: We had initiated pre-buys initially via brokers and then directly also via OEMs, and so we see that pricing and the cost easing over time, starting probably really near the end of 2022 and then flowing into 2023. So those two factors drive a lot of the gross margin.

Got initiated pre buys initially to your brokers and direct deals a few Oems and should we see that pricing.

Pricing and the cost easing over time starting.

Really near the end of 2022 and are flowing into 'twenty three so that those two factors drive a lot of the gross margin.

Modest improvement.

Speaker 9: modest improvement that we currently see from the first half to the second half of 2022.

So on the first half the second half of 'twenty two.

Got it thank you.

Your next question comes from the line of Stan <unk> with Wells Fargo. Your line is open.

Speaker 1: Your next question comes from the line of Stan Berenstain with Wells Fargo. Your line is open.

Hi, Thanks for taking my questions maybe.

Speaker 10: Hi, thanks for taking my questions. Maybe a couple on bookings. I guess first, how much of the bookings guidance is coming from M&A? Could you quantify that number for us?

Maybe a couple on bookings.

I guess first how much of the bookings guidance is coming from M&A could you quantify that number for us.

Yes, so the bookings guidance and also referenced a couple of points from full year impact of M&A.

Speaker 9: Yes, the bookings, guidance and also revenues are a couple of points from the full year impact of M&A compared to last year.

Compared to last year.

Okay.

Yeah.

I guess, one thing I would like to ask just in the context of.

Speaker 10: I guess, one thing I'd like to ask, just in the context of your bookings guidance, can we get some insight into the conversations you're having with sales reps? You know, are sole source clients expressing any notable changes, maybe in the product or services roadmaps that they're contemplating, or perhaps in the pacing of product implementations over the coming year? Can you comment on anything along those lines?

Of your bookings guidance.

Can we get some insight into the conversations youre, having with sales reps.

Our sole source clients expressing any notable changes.

Maybe in the product or services, roadmaps that theyre contemplating or perhaps in the pacing of product implementations over the coming year.

Can you comment on anything along those lines.

Speaker 9: Well, to that, I mean, we'll probably comment here, but...

We'll probably hold on here.

So what we see really a couple of couple of factors.

Speaker 9: So what we see, really, a couple of factors that we also have in the prepared remarks. So first.

Prepared remarks, so first to really see the strong momentum in defense services and that is a clear differentiator.

Speaker 9: We really see the strong momentum in advanced services and that is a clear differentiator and very often the vast majority of all deals are really that makes the choice for us for OmniCell to be the partner. We have not seen any change in implementation timelines related to COVID or changing demand. Demand is very strong from our perspective, what we see in the field.

The vast majority of.

All deals are really.

That makes the choice for us for all Michelle Michelle partner, we have not seen any change in implementation.

The time lines related to <unk>.

Changing demand demand is very strong from our perspective, what we see in the field maybe Scott.

Comment as well.

Speaker 4: We're not seeing from an implementation perspective, we're not seeing any impact from COVID.

We're not seeing from a permit limitation perspective, we're not seeing any impact from COVID-19 .

Okay.

Yes.

Did you have a second part of your question as well I'm sure before I asked it.

No I think.

Speaker 10: No, I think I think that gives us some color. I guess maybe just switching gears, I'd like to maybe ask a question on the 340B sales that you're generating. You know, qualified hospitals already have point solutions in place. I'm trying to understand what's really driving the incremental growth for that business. Is it mainly tech enabled services or are you also displacing existing point solutions as you're generating these incremental sales?

And some color.

I guess, maybe just switching gears I'd like to maybe ask a question on the 340 <unk> sales that youre generating.

Qualified hospitals already have point solutions in place I am trying to understand what's really driving incremental growth for that business is it mainly tech enabled services or are you also displacing existing point solutions as youre generating these are incremental sales.

Alright, so our existing Argus.

Speaker 8: Right, so our existing Omnicel 340B business is a tech-enabled service at the TBA that includes big billing software and expert services that advise the hospital on how to manage the 340B program.

Sell $3 48.

The Tech enabled service Tpa puts the billing software.

And expert services that advisors advisors the hospital on how to manage the 340 <unk> program and optimize it.

Speaker 8: It does, we are displacing other vendors and we're doing that because as part of the portfolio, it is an element to the portfolio that health systems engaging us in a much broader relationship. The three forty B solution is only one of many services and products that that health system is acquiring from us and we've got a, we've got a.

It does we are displacing other vendors.

We're doing that because as part of the portfolio is an element of the portfolio that health systems engaging us in a much broader relationship with 340 <unk> solution is only one of many services and products at that health system is required from us and we've got a.

We've got a thoughtful.

Speaker 4: vision for how you can integrate the 340B split billing software into other aspects of our software and other synergies between 340B and opportunities such as IV. And so that's something that health systems are keenly aware of. And again, I'll point you back to the health system that we recently announced,

Vision for how you can integrate the 340 b split billing software into other aspects of our software and synergies between $3 40 and opportunities such as IP and so.

That's something that health systems are keenly aware of and again I'll point you back to the health system that we recently announced.

Sole source agreement with UFC.

Speaker 8: sole source agreement with UMC in Lubbock, Texas, which engaged us, both the 340B, Central Pharmacy, Point of Care, and Enliven. And the general impetus there was not only from a health system, which I think is a great example of health systems generally, focusing on optimizing inpatient, but also this health system like most.

Texas, which engaged us.

Both.

The 340, <unk> central pharmacy point of care and revive it and the general impetus there was not only from a health system, which I think is a great example, helps us generally focusing on optimizing inpatient but also this health system like most.

Speaker 8: is very much engaged and focused on optimizing ambulatory and outpatient. And when you start to do that, then services like 340B and patient engagement programs like in live and health become incredibly important to the health.

Very much engaged and focused on optimizing ambulatory and outpatient and let me start.

And then services like 340, B and patient engagement programs like in life and health, becoming critically important analysis.

Speaker 10: Got it. Got it. And then can you comment at all on the trajectory of growth in that segment?

Got it got it and then.

Can you comment at all on the trajectory of growth in that in that segment.

Yes. This is Peter I would say it's in line with.

Speaker 9: Yeah, this is Peter. I would say in line with the general growth of the business.

General growth.

<unk>.

Yes.

Speaker 3: Yeah, and just that reset, of course.

That reset of course.

Speaker 3: uh... allows us to have a different angle uh... occurred three point b product uses contractor pharmacy

Allows us to have a different angle.

The product is contracted pharmacies reset would use the pharmacy somewhere provider and so that allows an additional option.

Speaker 3: RECEP would use the pharmacies of our provider. And so that allows an additional option for 340B customers in the provider world to use either one. So we're really happy with that acquisition and it really broadens our specialty pharma offering and really allows us to.

Four three.

<unk> hundred 40, <unk> customers in the provider world to use either one so.

We're really happy with that acquisition and it really broadens our specialty pharmacy offering.

Really allows us to.

Speaker 3: meet, I think, both the demands of providers and pharma.

I think both the demands providers and pharma.

Okay, and then maybe just a clarifying question I think what Jeff was asking.

Speaker 10: Okay. And then maybe just a clarifying question, I think what Jess was asking earlier on the pricing adjustments. So when you're commenting that towards the end of 2022, you're going to see everything kind of back to normal from a pricing standpoint.

Earlier on the pricing adjustments so.

When you are commenting that towards the end of 2022 youre going to see.

Everything kind of back to normal from a pricing standpoint.

Speaker 10: Are we thinking about, from the perspective of the now bookings, a den of 2022 will be priced accordingly, or is the mix of bookings still going to have some kind of a drag where, when we're thinking about next year, you're still going to have a margin impact?

Are we thinking about from the perspective of the now bookings are down to 2022 will be priced accordingly.

Or is the mix of bookings still going to have some kind of a drag we're when we're thinking about next year, you're still going to have a margin impact.

Speaker 10: coming from like inflationary pressures maybe not as much as you're seeing now but we should still factor some kind of an impact.

Coming from inflationary pressures, maybe not as much as youre seeing now, but we should still factors some kind of an impact.

Speaker 10: going into next year because, you know, not the entire full year bookings have that pricing adjustment. Is that the correct way to think about it? Yes, I think it's a really...

Going into next year because.

The entire full year bookings have that all pricing adjustment is that the correct way to think about.

Yes.

Two questions there.

So from a from a.

Speaker 9: So from a ledger impact perspective, with the financial results, we estimate that the pricing actions will offset a larger portion of the inflation towards the end of 22 and into 23. And we expect these pricing actions to fully offset the inflation starting in the first half of 23. So that's the way to think about that. And we have, of course, analyzed, estimated our quotes in the pipeline. A portion of those are, of course, pre-pricing actions. Now, when they book, if you will.

A lesser impact perspective, with the financial results, we estimate that the <unk>.

Pricing actions will offset a larger portion of deflation towards the end of 'twenty two.

And then to 23 I would expect this pricing action to fully offset the inflation starting in the first half of 2003. So that's.

The way to think about that.

Of course annualized estimated our coach pipeline proportion of those are of course pre pricing actions.

Okay. If you will.

There will be kind of a net negative.

Speaker 9: they'll be kind of net negative when they...

Deflation, a price mix perspective, but more and more of course newer quotes since we started the pricing actions.

Speaker 9: inflation and pricing exit perspective, but more and more, of course, newer quotes since we started the pricing exits in the third quarter will absorb or offset most of the inflationary costs. Now, we continue to manage, of course, inflation as well. We do see, in what we see in the industry and what we also are looking at industry reports, we see inflation continuing also to an extent into 2023, but to a lower extent.

Third quarter level.

Sure will offset most of inflationary costs.

<unk> to manage of course inflation as well to do see what we see in the industry and what we also are looking at industry reports, we see inflation.

<unk> also.

Makes sense.

'twenty, three but to a lower.

Got it thanks, so much.

Your next question comes from the line of Scott Showin' Huff with Stephens. Your line is open.

Speaker 1: Your next question comes from the line of Scott Schoenhaus with Stevens. Your line is open.

Hi team.

Happy Valentine's day.

Speaker 3: So, Peter, I think you said there was a $35 million impact to margins from inflationary cross pressures. And then was it $15 million from integration costs? What was the second number you provided to the bridge?

So.

Peter I think you said there was a $35 million impact to margins from inflationary cost pressures and then was it $15 million from integration costs. What was the second number you provided to the bridge.

Yes. So thank you for the question so inflationary costs, we estimate to be in the range of $33 million to $35 million.

Speaker 9: Yeah, so so thank you for the question. So inflationary cost we estimate to be in the range of 30 to $30 to $35 million, and then the second remark made in the in the query marks $8 million of acquisition integration costs with the caveat there that most of the integration costs we modeled and execute on integration of strategic acquisitions is in the first year. So into.

And then the China market.

$8 billion of.

Acquisition integration costs.

Yes.

Most of the integration costs as we model that and execute on the integration of strategic acquisitions isn't a first year. So.

2023 that number should be significantly lower if you will one other element talking about acquisitions is that.

Speaker 9: 2023 that number should be significantly lower, if you will. One other element of talking about acquisitions is that the acquisitions that we've done, the three acquisitions in general or in total are of an average lower EBITDA percentage than the core total business, right? So that's also a headwind in 22, which you can also factor in.

Acquisitions that we've done three acquisitions in general or in total.

<unk>.

Average lower EBITDA percentage.

The poor total business right. So that's also a headwind.

And 'twenty two.

You can also find yes that was actually okay.

Speaker 11: That was actually what I was getting to, and where you really see leverage on the SG&A side, I'm assuming.

That was actually what I was getting to.

Where you really see leverage on the SG&A side I'm assuming.

Over time as we can.

Yes.

Speaker 11: over multiple years. Well, that helps me get to the bridge. So, just another question, so services revenue, you got it to about 31% of your total overall mix for 2022. That's a healthy increase from the end of even this past year. Should we expect that kind of momentum to continue annually going forward, Peter?

Over multiple years.

Well that helps me get to the bridge so.

Just another question. So services revenue you guided to about 31% of your total overall mix for 2022.

That's a healthy increase from the end of even this past year should we expect that kind of momentum to continue annually.

Going forward Peter.

Yes. Thank you.

Speaker 9: Yeah, so if you, the answer is we should not expect that absent any additional acquisitions. The most of the difference between the organic revenue growth and total revenue growth is of course in inorganic, and most of the acquisitions, most of the revenue of the three acquisitions we did in the last year are actually being recorded as service revenue. So there's quite a bit of growth there on inorganic basis.

Yes. The answer is you should not expect that absent any additional acquisitions.

Most of the difference between the.

Okay.

Total revenue growth is of course, an inorganic and most of the acquisitions most of the revenue off the three acquisitions, we did in the last year.

Is being recorded.

So there's quite a bit of growth there.

With this as well.

Thank you.

Yes.

Yes.

Your next question comes from the line of Anne Samuel with Jpmorgan Chase. Your line is open.

Speaker 1: Your next question comes from the line of Anne Samuel with JPMorgan Chase. Your line is open.

Hey, guys. Thanks for taking the question.

Speaker 2: Hi guys, thanks for taking the question. You spoke to increased booking size and was hoping maybe you could talk a little bit about, you know, what you would attribute that to. And are you seeing any benefit yet in those numbers from some of the labor shortages that you noted?

You spoke to increased booking size and was hoping maybe you could talk a filter that what you would attribute that to.

Are you seeing any benefit yet in those numbers from some of the labor shortages that you noted.

Right.

Speaker 3: I think most of the booking size is because people have under invested in infrastructure particularly around medication management.

Most of that booking sizes, because people have under invested in infrastructure, particularly around medication management.

Speaker 3: And the real desire as these large providers want to create a standard and make a

And the real desire as these large providers want to create a standard.

I'll make a strategic investment.

Speaker 3: just not answer some of the problems, but put in an entire platform to digitize their whole network. And so, once that sort of presentation gets to the right level, usually the C-suite.

Just not to answer some of the problems, but put it an entire platform to digitize their whole network and so once that sort of.

Presentation gets to the right level, usually the Safeway people want to invest strategically over many years to automate and deliver.

Speaker 3: people want to invest strategically over many years to automate and deliver on the relief of not only labor shortages, which have become even more acute these

On the.

The relief of not only labor shortages, which have become even more acute these days, but also accuracy and some of the labor shortages have to do with some of the most <unk>.

Speaker 3: but also accuracy. And some of the labor shortages have to do with some of the most difficult people to find, like an experienced pharmacy technician who is compounding IVs.

Difficult people to find like an experienced pharmacy technician, who is compounding ivs, while moving to an automated robot that compound ivs really just doesn't relieve some head count will relieve some head count.

Speaker 3: Well, moving to an automated robot that compound IVs really just doesn't relieve some headcount, but relieves some headcount that are the most difficult to find and also in an area that is fraught with, could be fraught with danger if you're not doing it properly. So you know, it really means that you take a strategic approach to the total partnership with Omnicell and abroad.

That are the most difficult to find and also.

An area that is fraught with there could be problems.

Danger, if youre not doing it properly.

It really means that you can take a strategic approach to the total partnership with Omnicell and abroad.

Roger spectrum.

Speaker 8: I'd add to that, that's obviously completely correct. I'd add to that that the strategy has been explicit on two fronts, just one, focus on the large health systems and engage those large health systems with a comprehensive portfolio, namely the advanced services. And where that's been really working for us over the last couple of years, and namely last year, is that we have been winning those larger health systems on the strength of the differentiation provided by the advanced services.

I would add to that.

Obviously.

Correct I add to that.

Strategy's been explicit on two fronts I just wanted to focus on.

Large health systems.

<unk> large health systems with a comprehensive portfolio, namely the advanced services and where that's been really working for us over the last couple of years, namely last year is that we have been winning those larger health systems on the strength of the differentiation provided by the advanced services and I think what we're seeing is that.

Speaker 8: And I think what we're seeing is that I think over the last 14 large competitive conversions, 11 of those have had at least one advanced service in addition to that.

I think over the last 14 large competitive conversions 11 of those have had at least one advanced service in addition to that.

To the point of care, So health systems are engaging because of the strength there.

Speaker 8: to the point of care. So these health systems are engaging. Because of the strength, they're engaging quite heavily.

They are engaging quite heavily.

That's really helpful. Thank you and then maybe just one I apologize if I missed it but was wondering.

Speaker 2: That's really helpful. Thank you. And then maybe just one, I apologize if I missed it, but was wondering, given some of these near term inflationary headwinds that you're seeing, you know, does that impact your 2025, you know, profitability targets that 400 basis point expansion that you had had called out?

Some of these near term inflationary headwinds that you're seeing does that impact your <unk>.

25.

Profitability targets at 400 basis point expansion that you had called out.

Yes.

Speaker 9: Yeah, so it's a great question in the in the very works. Every comment on the 2025 framework right? So from a from a revenue perspective we feel very confident on being able to achieve that from a profitability perspective. Of course, there's a caveat on inflation. However, we had line of sight via execution of pricing actions, productivity, process improvement, and cost synergies and leverage.

So great question.

The prepared remarks.

We commented on the 2025 framework.

From a revenue perspective, we feel very confident on being able to achieve that.

Stability perspective, Theres, a coffee on inflation.

We have line of sight.

Execution.

Pricing actions.

Productivity process improvement and cost synergies and leverage.

Great. Thanks very much.

Your next question comes from the line of David Larsen with BTG. Your line is open.

Speaker 1: Our next question comes from the line of David Larson with BTIG. Your line is open.

Hi, can you provide a little more detail around the $30 million to $35 million.

Speaker 4: Hi, can you provide a little more detail around the $30 to $35 million in inflation pressure for next year? What portion of that is coming from semiconductors versus freight versus steel? And then it sounds to me like quotes were provided, but then after those quotes were provided, the prices of the materials increased, which is why there's a margin headwind.

And inflation pressure for next year like what portion of that is coming from semiconductors versus free versus steel and then it sounds to me like quotes were provided with an after those quotes provided the prices of the materials increased which is why there is a margin.

Headwind.

Speaker 4: I mean, why can't you just sort of go back to the customers and be like, hey, inflation popped up. We got to adjust the quote. Is that possible to do or not?

I mean, why can't you just sort of go back to the customers and be like Hey, inflation popped up we've got to adjust the quote is that possible to do or not thanks.

Yes.

So quick question. So on the first part of your question, so 30% to $35 million.

Speaker 9: So, quick questions. On the first part of the question, so the $30-35 million of inflationary costs, you should think about roughly half of that is semiconductor related?

<unk> cost you should think about roughly half semiconductor related.

And the second half is roughly equally divided between freight cost inflation in steel cost inflation.

Speaker 9: And the second half is roughly equally divided between freight cost inflation and steel cost

And then on the second part of the question.

Speaker 9: And on the second part of the question of going back to customers with quotes in hand or orders in backlog, there is limited flexibility to do so. We've chosen not to do that. Again, we're focused on the long term, focused on the customer.

Going back to the customers with quotes and orders and backlog.

Does this limit the flexibility to do so.

To do that again, we're focused on the long term.

Focus on the customers.

Speaker 9: Part of that also, of course, are pre-buy semiconductors, which gives us a high level of confidence that we can supply our end customers, but it does come at a transitory inflation cost here in 22, and we see some of that continuing in 23 as well.

Alright, that's all so far as a pre buy for semiconductors, which gives us a high level of confidence.

Can supply.

Alright customers, but a desktop.

Transitory inflation costs here in 'twenty two.

Some of that continuing in 2003 as well.

Yes.

Okay. That's helpful. Thank you and then assuming that prices do cover these inflationary costs in early 'twenty three.

Speaker 4: Okay, that's helpful. Thank you. And then assuming that prices do cover these inflationary costs in early 23, then for your 2025 guidance for earnings, it seems to me like maybe worst case scenario that could get pushed back by one year.

For your 2025 guidance for earnings it seems to me like maybe worst case scenario that could get pushed back by one year.

Speaker 4: Right? Because, I mean, the prices are going to offset the inflation a year from now, so maybe it could get pushed back a year, worst case scenario. Is that reasonable or not?

Right because I mean, the prices are going to offset the inflation a year from now so maybe you could get pushed back a year at worst case scenario is that reasonable or not.

Speaker 9: Yeah, so I think that's a great follow-up question. So we're working for the inflation, but there's uncertainty there.

Yes.

That's a big part of the question. So so we're working toward inflation. So there is uncertainty there.

And of course be happy we are assessing and here also incrementally year over year on your defense services and cloud given the given the strong demand.

Like we said earlier Nicole we are executing on this pricing actions, we believe that.

Those pricing actions will local to you or if you will on ongoing basis also in the outer years.

I never worked at cost productivity manufacturing center.

Our leverage so.

Yes, the leverage on the advanced services as well many of the advanced services are early stages, where were the margins arent as.

Leveraged up as they will be as they gain scale. So.

Speaker 3: Certainly, as we go on through 2023 to 2025, these will scale and deliver much better growth margins.

Certainly as we go on through 2023 to 25 diesel scale and deliver.

Much better gross margin.

Great and then just one more if I can squeeze one in for the 8 million integration costs are those are those onetime in nature or will they recur in 2023, and if they're onetime in nature.

Speaker 4: Great. And then just one more, if I can squeeze one in. For the $8 million in integration costs, are those one-time in nature, or will they recur in 2023? And if they're one-time in nature,

Speaker 4: I mean, can't we think about them as being kind of one-time in nature and exclude them from adjusted EBITDA or what are the 8 million, what's the 8 million bucks? Yeah, that's a great question. If they are one-time in nature, and just to be clear,

I mean can we think about them as being kind of onetime in nature and exclude them from adjusted EBITDA.

What are the $8 million, what's eating out of the box.

That's a great question.

Onetime in nature just to be clear.

Speaker 9: We have not excluded those costs. We've not adjusted for that cost in our EBITDA guide. So they are a drag on EBITDA earnings in 2022. For our integration plans, we'd like to integrate strategic acquisition.

We have not excluded those costs, we've not adjusted for that cost in our EBITDA guidance. So they are.

EBITDA and earnings in 2022.

For our integration plans that would be like to Intubate strategic acquisitions.

Speaker 9: for the majority in the first year, so the integration cost in the 2023 is significantly lower. So think about maybe $1 or $2 million compared to the $8 million.

But the majority of the first year or so.

Integration cost in the 2023 significantly lower so think about maybe one or $2 million compared to $8 million.

And 'twenty two.

Okay. Thanks, very much it sounds like its a sort of a temporary headwind here that will be overcome in 'twenty three thank you.

Speaker 4: Okay, thanks very much. Sounds like it's a sort of a temporary headwind here that will be overcome in 23. Thank you.

Your next question comes from the line of Matt Hewitt with Craig Hallum Capital. Your line is open.

Speaker 1: Your next question comes from the line of Matt Hewitt with Craig Hallam Capital. Your line is open. Good afternoon. Thank you for taking the questions. A couple different fronts here. Maybe first up, and sorry to keep asking about the inflation, but Peter, you specifically talked about the semiconductors, trade, steel. I'm curious, you're also seeing it on the wage side as well, particularly as you get more and more ingrained in the services business. Are you seeing it on that side as well?

Good afternoon. Thank you for taking the questions a couple of different fronts here, maybe first I'm, sorry to keep asking about the inflation, but.

Peter you specifically talked about the semiconductors trade steel I'm curious are you also seeing it on the wage side as well, particularly as you get more and more ingrained in the services business are you seeing it on that side as well.

Yes, that's a great question.

Speaker 9: Yes, that's a great question. We believe we were a very attractive employer. We've been able to hire great talent, as you've seen in the last couple of quarters. We haven't seen quite any significant labor inflation.

Believe we were very attractive employer has been able to balance.

Balance sheet.

The last couple of quarters, we haven't seen.

Any significant.

Labor inflation.

So it's probably too early to tell.

Speaker 9: So that's probably too early to tell. We do think our competition is good compared to market.

We do think our compensation is good compared to market.

Okay, Great and then separately I am curious and this is maybe a little bit out there but.

Speaker 12: Okay, great. And then separately, I'm curious, and this is maybe a little bit out there. But over the past couple years with the pandemic, procedure volumes are down, patient visits to their doctors are down all of that unless it was tied to COVID. And I'm curious how that is, you know, that if you want to call it a headwind has impacted, like the 340 B and some of the markets that you've moved into here recently. And as we come through the pandemic

Over the past couple of years with the pandemic procedure volumes are down patient visits to the doctors are down all of that unless it was tied to COVID-19 and I am curious how that is.

If you want to call it a headwind has impacted.

The $3 40, being some of the markets that you've moved into here recently and as we come through the pandemic.

Speaker 12: Is it your expectation that you'll actually start to see increased growth in those markets which you will now be the beneficiary of?

Is it your expectation that you'll actually start to see.

Increased growth in those markets, which you will now be the beneficiary of.

Speaker 3: Well, I think for sure, as I said in my prepared remarks, we do expect.

Well I think for sure as I said in my prepared remarks, we do expect.

Speaker 3: volumes of big providers, particularly hospitals, to go up. I think it was about 4%. Many of it was delayed.

The big providers, particularly hospitals to go up that I think it was about 4% many of it was delayed.

And so but.

Speaker 3: But that really hasn't slowed down the buying from from what we've seen. So I think it is just going to be more healthy for our customers as we move forward, because there will be more volume to go through. And and I think it's.

It really hasn't slowed down the buying from.

From what we've seen so I think it is just going to be more healthy for our customers as we move forward because there will be more volume to go through.

And I think it's.

Speaker 3: You know, and not just in, you know, the acute care, but also in outpatient areas. So just like Scott was talking about UMC. So I think people have all deferred many of the attention to some items in their health care that they should have done in the pandemic. And I think, as you say, as the Omnicron is moving away, some of the volumes should be increasing.

And not just Dan.

The acute care, but also in our.

Outpatient area. So just like Scott was talking about UMC. So I think people have all deferred.

Many of the attention to some items in their health care that they should have done in the pandemic.

I think as you say there is any other crowd.

As moving away, so whether volumes should be increasing.

That's helpful. Thank you.

Speaker 1: Your next question comes from the line of Dev, we're in Syria with Bernenberg Capital Markets. Your line is open.

Your next question comes from the line of Dev <unk> with <unk> capital markets. Your line is open.

Okay.

Jeff.

Yeah.

Hey.

Speaker 13: Hey, good, good, good evening. Can you guys hear me? Yeah, we can.

Good evening can you guys hear me.

Okay.

Okay great.

Speaker 8: Okay great. Thanks for taking my questions. So just to kick it off on this inflation hopefully circle this out. I just want to confirm I think you mentioned on wage inflation that it wasn't

Thanks for taking my questions.

So just to kick it off on this inflation hopefully circle this out.

Just want to confirm I think you mentioned on wage inflation that it wasn't.

Speaker 8: may be considered in 2022, 2023 in regards to your inflation, $35 million impact. I just want to confirm that. I guess that doesn't include any kind of wage inflation there.

Maybe considered in.

2022, 2023 in regards to your inflation $35 million impact I, just want to confirm that I guess that doesn't include any kind of wage inflation on that.

Speaker 9: Well, we always count, of course, and we plan for, you know, good merit increases, but it's hard to replace as well. Did you say $5 million in 2021? Okay.

Well, we always we always kind of correspond with clients.

Good.

It is tied to inflation as well.

Did you say $5 million.

'twenty one.

Nothing nothing extraordinary about that.

Okay great.

Speaker 8: And then maybe just jump in to kind of the top line.

And then maybe just jump in to kind of the top line.

On the revenue side, just trying to get some more color.

Speaker 8: On the revenue side, just trying to get some more color around, you know, this tech-enabled SaaS services and maybe, you know, disaggregated by the end market. You know, where you may be seeing more momentum, you know, for example, I guess OmniCell One.

This tech enabled SaaS services.

And maybe disaggregated by the end market.

Where are you maybe seeing more momentum for example, I guess omnicell one.

Speaker 8: you know, maybe kind of an easier sell with, you know, sole source agreements that already have, you know, ADS.

Maybe kind of an easier sell with.

All sorts of agreements had already had.

Yeah.

Yes.

Speaker 8: You know, versus maybe, you know, going after new retail customers or payers. So, just any color on kind of the momentum, more disaggregated on that side would be helpful.

Versus maybe going after new retail customers are pairs.

Just any color around kind of the momentum.

More disaggregated on that side that would be helpful. Thank you.

Yeah I think this is Scott.

Speaker 8: Yeah, I think this is Scott, so, um, in terms of markets, I mean, the focus of the business and the channel has largely been the large

In terms of markets being the focus of the business in the channel largely been the large health systems and.

Speaker 8: And that's not exclusively acute. The large health systems are increasingly, A, expanding through other hospitals and increasingly expanding in ambulatory, outpatient, and now.

And that's not exclusively acute the large health systems are increasingly expanding to other hospitals and increasingly expanding in ambulatory outpatient and now.

Hospital at home home Health care, and I think when you look at that and that's driving a lot of demand to automate pharmacy, not only to fill the acute care beds, but to support a large geographic enterprises to shed Omnicell. One is blinking that entire health system up to help them in effect Act as a.

Speaker 8: A hospital at home or home health care. And I think when you look at that, I mean, that's driving a lot of demand to automate central pharmacy, not only to fill the acute care bed, but to support a large geographic enterprise to shed on the cell. One is linking that entire health system up to help them.

Speaker 8: In effect, act as a air traffic control function to make sure that the right drugs are in the right locations, both inside the hospital and outside the hospital. Things like three forty B. Recept now are helping that hospital.

Air traffic control function to make sure that the right drugs are in great locations, both inside the hospital and outside the hospital.

Things like 340, <unk> now are helping that hospital.

Speaker 8: grow the top line, whether that's through retail meds, management of the 340B business, that's certainly on the outpatient side. And then Enliven, as we mentioned with UMC Lubbock, we're seeing more and more demand from health systems to actually utilize tools and solutions like the Enliven Health Portfolio, which is now pretty comprehensive because we've added FDS AmpliCare and Market Touch capabilities.

Growth top line, whether thats through retail adds management of the 340 <unk> business that certainly on the outpatient side and then analyze it as we mentioned with UNC Lubbock, we're seeing more and more demand from health systems to actually utilize tool solution like the enlightened health portfolio, which is now pretty comprehensive because we've added.

Yes, ample carrier architecture capabilities.

Speaker 8: That's showing there's real demand for the health systems. Again, those, the primary market for those are the more traditional retail of pharmacy, but we're certainly seeing.

That's showing there's real demand for the health system again, those the primary market, but those are the.

Traditional retail pharmacy, but we're certainly seeing the vision for the strategy was always that the world.

Speaker 8: The vision for the strategy was always that the worlds would certainly start to intertwine and that we'd be well-positioned with a fully comprehensive solution.

But certainly start too intertwined in that we will be well positioned with a fully comprehensive solution.

Okay. That's helpful. I guess, maybe taking back a customer for example on the 11th Walmart as an example.

Speaker 14: Okay, that's helpful. I guess maybe taking like a customer, for example, on N11 Health, you know, Walmart as an example, just in regards to recurring revenue growth, and also maybe also on like the gross margin side, a double-edged question here. So, on the revenue side, after you, you know, do the implementation,

Just in regards to recurring revenue growth.

And also maybe also on like the gross margin side.

A double edged question here so.

On the revenue side after you did implementation.

On the SaaS side, what kind of growth drivers are there.

Speaker 14: On the SaaS side, what kind of growth drivers are there after you roll it out, I guess?

After you roll it out I guess.

Widely and then on a gross margin side.

Speaker 14: Widely and then on a gross margin side, you know, I would assume there's some implementation

Assume there or something.

<unk>.

Speaker 14: you know, costs in the first couple of years, would you expect that to improve?

Costs in the first couple of years would you expect that to improve.

Speaker 14: you know, I guess, at what rate would you expect it to kind of improve on a unit economic basis per client, just on the advanced services and tech side?

I guess at what rate would you expect it to kind of improve.

On a unit economic basis per client.

On the advanced services and tech side.

So thank you.

Speaker 8: First point, which is really around where is growth from an enlivened customer? So very traditional fast, really on two dimensions. One dimension is that's a subscription product, that subscription is tied to, call it number of stores, number one, and then number two, what services are within that subscription? So any large enlivened customer revenue would scale on two dimensions, one of which is how many stores am I adding into the platform? And then how many services am I subscribing?

First point, which is really around where its growth.

So very traditional SaaS really on two dimensions. One dimension is that's a subscription product that subscription is tied to call. It a number of stores that are launched and then number two what services are within that subscription so.

Any large customer revenue at scale in two dimensions, one of which is how many stores and by adding into the platform and then how many subscribed services device subscribers.

Speaker 8: Uh, within the platform, right? And so, um, you know, you know, the customer you mentioned, you know, maybe rolling out all the stores on one of the platform on one of the subscription or one of the services call it.

Within the platform right and so.

The customer you mentioned may be rolling out all of the stores on one of the platform one of the subscription or one of the services call. It.

Speaker 8: scheduling or IVR, etc. The growth comes really with that inside sales notion of engaging that customer to add more of the services. So maybe I started with IVR and now I want to add MedSync and financial analytics and scheduling and then ultimately participate in some of the payer marketplace and activities. So that's how you'd see that growth.

Scheduling, our RBR et cetera, the growth comps really with that impact sales notion of engaging that customer to add more of the service. So maybe I started with IPR and now I want to add let's say.

Financial analytics and scheduling.

And then ultimately participate in some of the payer marketplace activity, so thats, how that you'd see that growth dimensions.

Speaker 8: Um, gross margin, we really haven't never commented on the particular gross margin.

Gross margin, we really havent never comment without that particular gross margin.

Okay.

Scale.

Speaker 10: Okay, but I guess just generally, would you expect gross margin to kind of increase over time after you win a customer?

Okay, but I guess, just generally would you expect gross margin to kind of increase over time after you win a customer.

Speaker 4: For sure, right, because there's certain, even a fast business has a fixed cost associated with a given customer that would scale over time as you add more clients, for sure.

For sure.

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Even a fast business as a fixed cost associated with a given customer that would scale over time.

For sure.

Okay, great. Thank you.

There are no further questions at this time I will turn the call back to Randall Lipps for closing remarks.

Speaker 1: There are no further questions at this time. I'll turn the call back to Randal Lipps for closing remarks.

Speaker 3: Hey, look, everyone, thank you so much for joining us today. I mean, Omnicel has all been about growth over the last few years. And yes, there's some headwinds in the inflationary places and some M&A.

Hey look everyone. Thank you so much for joining us today I mean, omnicell has all been about growth over the last few years and yes, there are some headwinds and the inflationary places and some M&A.

Speaker 3: uh... cost integration cost uh... but uh... we've got

Cost and integration cost.

But we've got a good game plan.

Speaker 3: And most importantly, we're going to get these systems installed for our customers so that they can improve health care for everyone. And we'll get back to our normal roast version as we go down the road. Thank you so much. We'll see you next time.

And most importantly, we're going to get the systems to solve for our customers. So that they can improve health care for everyone.

And we will get back to.

Our normal gross margin as we go down the road. Thank you. So much we'll see you next time.

Okay.

Speaker 1: This concludes today's conference call. Thank you for joining. You may now disconnect.

This concludes today's conference call. Thank you for joining you may now disconnect.

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