Q3 2023 Omnicell Inc Earnings Call
Good morning, and.
I'll be <unk>, my name's, Jordan and I'll be a confidence operated today at this time I'd like to welcome everyone to the omni Sal third quarter earnings call.
I'll be turning the call over to Kathleen.
Name is senior Vice President of Investor Relations as a reminder, this call will be recorded.
Kathleen before Joyce.
Thank you operator.
[noise] and welcome to the Army sell third quarter 20, twenty-three financial results conference call.
Call with me today, Orlando Lips, Omnicell, Chairman President C E O and founder and.
Executive Vice President and Chief Financial Officer.
This call will contain forward looking statements, including statements related to financial projections or other statements regarding on Michelle's plan strategy objective gold expectations cost savings auctions or outlook that are subject to risks uncertainties and other factors that could cause actual results today.
Materially from those expressed or implied.
For a more detailed description of the risks that impact. These forward looking statements. Please refer to the information in our press release issued today.
So annual report on Form 10-K filed with the F. C. C on March 1st 2023.
Other more recent reports filed with the F C C.
Please be aware that you should not place undue reliance on any forward looking statements made today.
All forward looking statements speak only as of the date hereof or the date specified on the call except as required by law, we do not assume any obligation to update or otherwise released publicly any revisions to our forward looking statements.
Our results were released this morning and are posted in the Investor Relations section of our website at <unk> Dot <unk> Dot com.
Additionally, we would like to remind you that during this call we will discuss some non-GAAP financial measures reconciliations of these non-GAAP measures. The most comparable GAAP financial measures are included in our financial results press release issued today with respect to forward looking non-GAAP measures, we do not provide a reconciliation.
Forward looking non-GAAP measures to the comparable GAAP measures on a forward looking basis.
These items are inherently uncertain and difficult to estimate and cannot be predicted without unreasonable effort with that I will turn the call over to Randall Randall.
Good morning, and thank you all for joining us today.
Today walk through our high level performance for the quarter.
<unk> customer wins and near term and long term trends, we are seeing for our business and in the industry.
We will provide an update on our outlook for the remainder of 2023 as well as introduce our preliminary thoughts on what we expect in 2024.
Let me begin with the results, which we believe reflect solid performance and continued financial discipline from the Omnicell team.
Throughout the third quarter of 2023, we continue to focus on advancing a strategy to transform the pharmacy care delivery model and.
And deliver mission critical medication management solutions for our customers globally.
We achieved the high end about a third quarter of 2000 twenty-three guidance ranges for total product and service revenues.
And we exceeded.
Gap EBITDA and non-GAAP E P S target ranges.
We generated total revenues of 299 billion non-GAAP EBITDA of 41 million.
Yep earnings per share of 62 cents.
We believe these results were primarily driven by a prudent approach to managing the business.
Now turning to the market environment and what we are currently seeing in the overall health care industry.
As evidenced by our customer wins, which we will details shortly.
The omni sells products software and tech enabled services appear to be resonating with the market.
However, our health system customers continue to face challenges and seemed to be showing signs of caution and implementing new workflows that may stress already thinly stretch nursing and I T staff.
And turn impacting the potential timing of new capital and software projects.
We continue to work through our X T upgrade cycle, we are seeing moderation in our bookings and subsequently in our revenue.
Relates to the point of care.
While we remain bullish on or advanced services, and achieving strong quarter in C. P. D S.
Point of care still makes up the majority of our revenue.
We are also seeing headwinds for I V X systems.
Regulatory requirements. However.
Customer interest in her Ivy solutions remain robust that said, we continue to believe Omnicell. This part of the solution for the industry is.
This hospital P&L pressure should alleviate in the macro economic environment should improve we expect omnicell will be well positioned to capture incremental market share.
Additionally, we continue to believe that the need to automate optimize and modernise is more important than ever.
Our technology and innovative solutions are designed to help our customers achieve their long term goals.
And we believe today's industry challenges, while currently a near term headwind will become a longterm tailwind for omnicell.
No. Let me provide an update on a recent acquisitions recept now called omni sells specialty pharmacy services.
F D S appley care and Mark in touch media.
The third quarter, we continued to focus on executing our go to market strategy building on our momentum from the first half of the year.
We are pleased with our progress to date.
With a robust portfolio, we believe that we remain uniquely positioned to continue to support pharmacy operations across the entire continuum.
Turning to the customer landscape in our recent customer wins.
Customers continue to choose Omnicell in the third quarter, which we believe further demonstrates the important role were playing and automating and modernizing global medication management infrastructure.
Beginning with customer wins for advanced services.
Central Pharmacy dispensing services continues to gain market attraction was several health systems choosing to automate their central pharmacy inventory and dispensing operations.
Customers appear to be recognizing the benefit to patient safety and workflow efficiencies of automating central pharmacy operations through a comprehensive solution.
<unk> advanced robotics.
Fencing optimization tools and expert services.
As you may have seen today, we announced that Kentucky base Baptist Health has selected our central pharmacy dispensing service in an effort to alleviate staffing challenges and improve clinical and financial outcomes such as quality.
Patient safety and efficiency.
That his health has been a leader in embracing the industry vision of a fully autonomous pharmacy, and we're pleased to partner with them to help them move closer to that vision.
And and live in health, we appear to be gaining momentum with cross selling and Upselling.
Medication solutions to existing customers. We also launched our digital medication guides that are designed to digitize medication and vaccine information sheets.
We are seeing significant customer interest.
This solution.
We believe that these guys will improve medication literacy adherence and reduce.
Environmental waste.
Importantly.
Continue to choose on this L. As a long term partner for their pharmacy technology strategy as evidenced by several customers extending their sole source agreements.
With one competitive conversion achieved this quarter.
This includes a Florida based health system.
Replace their existing point of care footprint with a lace.
They sell X T systems.
Recognizing the potential value in delivering secure solutions and the pharmacy supply chain.
Georgia largest health care networks will be adding omni cells inventory optimization service that is designed to improve visibility too and optimization of their medication inventory in an effort to reduce waste.
Explorations stock apps and shortages.
His health systems extend pharmacy care beyond the four walls of the hospital one of our focus areas has been to expand the solutions and value we bring to the outpatient setting.
So specialty pharmacy service offering should provide a revenue generating opportunity, while helping to support important patient care outcomes.
Michelle's management service expertise appears to be driving significant savings for this rapidly growing area of health care.
As such we want to share some results with the President and C. E O of Temple University Hospital Ah Bieber us, though he presented at our illuminate live event recently.
We think the results they had seen thus far well they may not be representative all our customers.
Lee compelling after implementing Omnicell specialty pharmacy services Temple University Hospital saw.
97% of its patients.
Patients receiving access to limited distribution drugs, that's 183 per cent increase in providers serviced and 457% growth in patient volume here over here.
Omnicell has strong customer relationships, we have a strong position in the market and our team is implementing many initiatives across the business that are expected to drive longterm growth that's.
As we look ahead near term.
We continue to face challenging industry dynamics and macro economic conditions were taking and will continue to take steps to reduce discretionary spending within the business to bring our cost structure in line with near term revenue expectations. We are building on our expense containment initiatives already underway.
K and reducing the company's head crowd across a majority of our business functions.
As expected resolved in approximately 7% reduction in our workforce.
At the same time, we're focusing on closely managing cost.
We will continue to advance or innovation agenda, which is focused on solving the biggest challenges in pharmacy care delivery.
That and we're excited about our potential opportunities for expansion within specialty pharmacy.
Good traction least you're seeing with a robotic central pharmacy dispensing services.
Our ability to offer new services and solutions that are designed to optimize a large installed base of X T systems.
I want to emphasize that our team has worked hard to architect a strategy that assigned to fundamentally transform the pharmacy care delivery model globally.
Michelle is profitable with deep customer relationships and strong brand and customer loyalty and we believe the company is uniquely positioned to transform the pharmacy care delivery model.
As we move into the next phase of our evolution, we believe our laundry and opportunities are compelling and we remain confident that omnicell is well positioned for the future.
I'll turn the call over to charge, who just completed his first full quarter with us at army cell and has done an excellent job, leading our financial organization as we work to drive operational efficiencies across the business.
Gotcha.
Think find out and thank you all for being here today.
Let me start by expressing my deep appreciation to the Omnicell team, who I've made my transition into this chief financial officer, So as smooth as possible over the past four months.
B I T of incredibly talented professionals, who are passionate about on fully call me Ted walking to deliver.
Long term strategy of transforming pharmacy care delivery model.
We have a long history of profitability.
Team will remain laser focus on building on our strong track record to deliver for us.
All those.
Having settled in my role in the last few months I have now spent a considerable amount of time speaking with a global teams.
<unk> customers and all that's the key stakeholders to learn more about the ins and out of our business.
Bringing my on fresh perspective regarding how we manage the business.
I have taken a deeper look at the financials and how we are planning and forecasting.
I have given it a lot of thought to how I think we can strengthen refined certain processes.
And I am committed to.
Two fodder advancing our existing processes.
Today, I will just call us and what's it called the financial performance.
Current demand environment on the fourth quarter and full year 2023 outlook.
I'll also provide.
<unk> perspective on 2024.
Which will be higher level and quality of it because we are in the early stages of 2024 planning.
I would like to begin with an overview of financial results for the third quarter.
<unk> 2023, total revenues with 299 million.
Yeah. The top end of the previously provided guidance range, reflecting strong execution within the quota.
Total revenue.
Way down 14% compared to the third quarter of 2022.
Point of care revenues, primarily as a result of ongoing health care system capital budget constraints.
Constraints.
Services revenue of $110 million, an increase of 8% versus the third quarter of 2022 alright.
Primarily driven by growth in advance services.
Continued growth.
<unk> customer base as well as the impact of pricing options.
Gross margin for the third 2023 was 45.7%.
110 basis points from the prior quota.
Primarily due to the continued investment in services as we scale, our services solutions I'm, making investments.
And technical services to support our customers.
For some of our advanced services, we are required to high up.
It must be a technician some experts.
In advance of implementation.
A full reconciliation offer to non-GAAP resolve are included.
The.
2023, <unk>, which is posted on <unk> relations website.
20.
2023 earnings per share in accordance with gap, where 12 cents compared to eight cents per share in the private quota.
37 cents per share in the third quarter of 2022.
20th 23, <unk> with 62 cents compared to 57 cents per share in the prior quota.
Sure.
Period last year.
How 'bout the pulled up 2023 <unk> $41 million.
Degrees of $6 million compared to the previous quarter generally reflects and continue the investments in services.
2023, non <unk> and non-GAAP earnings per share exceeded the Guy then screen substantially due to a strong cost management.
At the end of the third quarter 2023.
Balance was $447 million.
A medium from.
9 million as of June 30th 2023.
Reflecting strong cash collections and free cash flow within the quota.
We recently completed the refinancing of revolving credit first maybe.
Two $350 million.
It was oversubscribed and we believe indicates our Linda confidence in our business model.
Strong balance sheet and discipline financial management approach.
We are mindful of the upcoming 2025 maturity of comfortable see me on those.
Considering various options to maintain strategic flexibility for a company.
Tend to minimize potential dilution shareholders.
In the meantime, we believe we are in a very good position with the current <unk> see me your notes.
0.25 per cent coupon interest rate.
In short we remain confident in our capital structure.
To support the ongoing execution of our growth strategy.
Accounts receivable days of sales outstanding for the third quarter of 2023 was 84 days a decrease of one day over the prior quarter, reflecting continued strong cash collections.
Inventories as of September 30th 2023, with 160 million.
Of 31 medium from December.
2022.
Global supply chain team has made great progress managing inventory levels throughout the year.
Free cash flow during the third quarter of 2023 was $43 million driven by strong cash collections.
Now moving onto our full year on fourth quarter 2023 guidance.
Surrender mentioned, we continue to see our customers be more cautious as they can't see that the change.
Require to implement new workflows, which could stress already family scratch nursing and I T staff.
Please customer caution has affected the timing of some of our contracting a new copy as well a software project implementations.
Additionally, we are seeing moderation of sales off our X T happiness based on where we were currently in the X T upgrade cycle.
As a result of these changes we now expect it bookings.
Bookings for 2023, two range between $850 million and $950 million.
Why are we are pleased with our strong performance screw. The first three quarters of a year. We are taking what we believe is a prudent approach to managing our business.
We now expect a full year 2023 total revenues to range between 1.135 billion to 1.155 billion.
Decreased to the guidance provided on the second call that 2023 earnings call.
Without expect before year 2023 product revenues to range between $705 million and 750 million.
<unk> expected lower than originally planned levels of connected devices revenues in the fourth quarter.
Despite the low all bookings on product revenue guidance ranges, we continue to execute well within about technical services in advance services.
We now expect 2023 services revenue to range between $430 million and 440 million.
$10 million compared to the bottom of the end of the guidance range provided.
<unk> 2023 earnings call.
We expect advanced services revenue to be between $208 million and 250 million.
This is a 13% increase at the mid point compared to 2022.
Similarly, 18% of 2023 total revenues.
We expect technical services revenue to ranch between 222 million and 227 million in 2023.
This is an increase of 9%.
At the midpoint as compared to 2022.
Please refer to our third 2023 endings relieves publish although I invest <unk> website.
Summary of the total yeah 2023 revenue guidance components.
We expect with all your 20th 23.
Two range between 123 million.
I'm 33 million.
He is from the guidance provided on a second caught up 2023 earnings call.
We expect 2023 non-GAAP earnings to be between $8.65 on $1.80 per share.
Decreased Lamar previously provided guidance.
The reduction of the branch for the full year 2023, non <unk> and non-GAAP earnings per share compared to the guidance range we provided.
<unk> 2023 earnings call reflects the lower profit from the decrease in expected product revenue for the year.
We continue to evaluate our cost structure and expect non-GAAP operating expenses to be down year over year.
I'll also speak in a moment about additional options, we expect to take.
Spot quota.
Spirit associated charges and future savings.
For the full year 2023.
Linda tax rate of approximately 15%.
Earnings per share.
For the fourth quarter of 2023, we are providing the falling guidance.
We expect a phone call that 20th 20th three revenues to range between 247 million in 267 million.
We expect product revenues to range between 142 million and 152 million.
Services revenue to range between 105 million and 150 million.
We expect.
2023, non-GAAP to range between $9 million and 19 million.
Fourth quarter, 20th 23, non-GAAP earnings Spaceshiptwo range between seven cents and 22 cents.
As Randall Mason today, we also disclose cost containment options, we plan to take.
Including a head count with option across our business our company.
We expect approximately 12 to 18 million of non reoccurring restructuring and really the charges.
Cost.
<unk> plan.
I'm taking.
We expect to incur a majority of the changes in the fourth quarter of 2023 and substantially completed plan by the end of the second quarter of 2024 subject to a local law and consultation requirements.
We also expect 45 to 55 million of annualized cost savings as a result of the cost options, which.
Around 75% is expected to be operating expenses.
A majority of their benefits from the cost options is anticipated to be realized beginning in the first quarter of 2024.
Smaller portion of the savings expected as we progress through the year.
The cost options should be partially offset by year or via increases in compensation and zander price increases.
Now I'll I'll speak briefly about 2024.
While it is too early to provide specific metrics.
Wanted to share some considerations based on what we know today.
We believe that giving you some insight into our expectation may help you with your financial models.
We expect that with you.
Use bookings I'll look for 2023, we will have an impact on our revenues in 2024.
Wow, so far advanced services portfolio continue to deliver solid growth.
It is not expected to be enough in 2024 to offset the decline we expect.
A point of revenue.
Therefore total revenues for 2024, I expect it will decline modestly.
Of course, we plan to provide a full 2024 outlook in the first quarter of 2024.
So we hope is clear from the additional cost containment actions announced today, we are walking too closely manage expenses to be.
In line with our top my expectations.
Therefore to offset the anticipated continuation of macroeconomic headwinds in 2024.
As I noted earlier.
High level preliminary remarks intended to assist with the 2024 financial modeling of our business.
In summary, we continue to execute against or a longterm growth strategy and deliver a solid financial and operational results, despite claiming macroeconomic environment.
We are seeing challenges for our customers, including the impact of the macroeconomic environment of labor challenges.
<unk> to continue into 2024.
We also expect bookings for happiness to continue to moderate.
That said, we are confident that they approach we are taking to managing the business should position omnicell to deliver on our co payments over the long term.
The team has to build a strong foundation from which we expect to continue our momentum in transforming the pharmacy care delivery model.
We are clear on this strategy duration for <unk> and we believe we are well equipped.
<unk>.
We remain foreclosed on driving value for our shareholders as we look to execute on a strategy on walk to capture the opportunities will see I eight of us.
As we endeavor to drive long term profitable growth and success at <unk>.
With that we would like to open the call for questions.
At this time I'd like to remind everyone in order to ask a question.
Then the number one on your telephone keypad.
Pause for just a brief moment compiled a Q and a roster.
Your first question comes from the line.
Then Bernstein from Wells Fargo.
<unk> Uh huh.
Alright, Thanks for taking my questions and I appreciate the collar on 2024.
First maybe on cost containment actions you said it was gonna be it crosses organization.
Can you. Please tell any particular areas you plan to focus on one thank you buy these cost cuts.
Thanks for the question and good morning, So we're looking at.
I'm, taking cough across the entire company, there's some specific areas, where we believe we will.
See more cost taken out and all that but primarily we're looking at.
Uhm, enabling functions, where we think there.
<unk> the areas, where we will not.
Look at taking out cause because they are good.
Areas within a company.
So for example, a van service is one of the areas, where it will limiting the amount of cost takeout.
Okay. That's helpful.
Would there be on services can you share with us what what products or services specific <unk> services are contributing to our growth in that segment.
The specialty Uhm specialty services continues to be.
Uhm agent for our company, we also seeing.
Some growth in.
Come up with solutions and services that will providing in the retail space with not as robust as specialty services.
Okay, maybe one final question on the bookings guidance any chance you can share with us.
Percentage of the of the mix of your guidance as with the product.
Yeah, So I would say.
The majority of the.
Okay.
Close to about 20% is related to.
That makes.
I'm, sorry, 20 per cent is product bookings.
Nope.
Sorry can you repeat the question.
So that the bookings that your guiding for this year 850 to 950 million.
What percentage of that bookings is this product related programs.
We don't we don't disclose that we do would probably do is some Asian at the end of the year. So the best you can do is kind of look at our K from last year, but I would say that most of the the headwinds.
I've been on the inpatient point of care.
Okay. Thanks, so much.
Next question please.
Your next question comes from the line of Scott showing house from Keybanc. Your line is alive.
Hi, Thanks for taking my question first wanted to talk about the macro it seems like it's a mix of both budget constraints and staffing shortages on the point of care side. What are your conversations with these hospital systems is it once they get staffing levels up they should be able to have enough capital to make these.
Execute on these worse what is there what is their conversations to you in regards to forward demand in the current environment at the hospital level. Thank you.
Yeah, I think the the problem providers have the.
You know the tough equation right their revenues are fairly flat payer contracts haven't gone.
Gone up much so potentially next year that will will help a little bit.
Labor costs have risen and so have the volume so particularly on inpatient.
This is where most of the headword is in these big providers outpatient, they're actually doing a lot better.
So of course point of care systems is is primarily used in the in patient world and that's where we have the strongest head with so.
<unk> squeeze due to the inflationary costs the flatness of the revenue.
And just the overall general increase in cost.
And we ourselves.
You know we're on the second half of our X T upgrade cycle and you know customers need to upgrade they have to upgrade but there's a lot of resistance there because of this impatient.
Macroeconomic head well.
That.
Is improved slightly stabilized or improved slightly but not not significantly.
Okay and then my next question is on the retail side. What are you seeing from your retail pharmacy customer you know there's been a lot of headlines regarding store closures across all the big pharmacy change there's been staffing shortages in staffing challenges there as well as this yeah.
Is this a headwind to in life and health.
Well, let's go ahead, when but it's also an opportunity you know some of the services that drive more demand pharmacies for medication management, sometimes that can be perceived as a headwind, but if you look at our communication solution said it really takes workload off a pharmacist allows them to take your calls.
And men synchronization also.
Lemonade lessen visits to the pharmacy it allows for transactions to be consolidated so that is also a big lift and we're also excited about our digital medication.
<unk> notices that we give out now we can give out with the pharmacist, which is also you know a big time saver.
And easier to administer for for patients. So I I think it's a little bit of a mix the headwinds.
Do sometimes revert.
You know the starting up a new services.
Most people look at these services is helping their pharmacy itchy, but they want which is for revenue lower cost more throughput.
Thank you.
Your next question comes from the line of just a song from Piper Sandler Your line is five.
Hi, guys. Thank you for taking my questions and thank you all for Friday at 2024, just commentary I wanted to start with me and I think you mentioned some additional regulatory requirements on the Ivy X.
Our understanding is that this device with F. D. A approved in March 22.
Would appreciate any comments on the additional regulatory hurdles, an ivy accident timeline congratulations.
Yeah, I think it's a complex situation because you not only have the F. D. A which is national you have local pharmacy board and each state would also have to put their spin or interpretation of those F. D. A rules and what they will allow to be compounded or mixed with the robot on site or what they won't allow.
<unk>.
So as those rules get clarified.
Then our ally calculations can be more accurately done for each installation, which gives them the confidence of how fast they wanna progress with with in the rollout of the robot. So some states are a lot clearer some aren't.
And it just takes time because people are of course conservative and these kinds of decisions as they move board about regulations and what they can do and what they can do but we're very enthusiastic about the robot. We continue to make progress. We have just I think we are doing our next to install the pretty soon here. So.
Oh, we're getting a lot more enthusiasm as we start to have a broader base features has conferred should allow us to do more types of compounding which increase the Roy. So we're we're starting to make progress we're not exactly where we'd like but I think the enthusiasm and the and the <unk>.
ZIP line is definitely growing.
Nah that's really.
And then I think our follow up is just hoping to get an update on 340 b.
20th twenty-three misguided to about flat at $39 for Avenue.
Every year, but.
Through the market environment headwind tailwind and kind of stuff.
Expectations again on 340 <unk>. Thank you.
Yeah, well thanks for the question and actually 340, B, we now approach big providers with at 340 be third party solution or the internal.
Specialty pharmacy 340, B option. So you have both options right you can either go for drugs that are still process as a third party or can be processed through a single contracted site. Those most easily run through at 340 be.
Process and for those that don't then we say why don't you, let it spin up an internal 340, B, if you will or specialty pharmacy. There. So that's why we see strong double digit growth driving in the specialty pharmacy areas spin up of these things and it's an industry.
Opportunity not just to us.
Because the 340 B itself has been limited or restricted so we don't see a lot of growth and at 340, B, but it does give the opportunity for the internal side of the house of the services that we have to actually grow more significantly or you see in the industry uplift. There. So it's just a different way to obtain.
The rebate is through an internal pharmacy, then the external third party and that's why we're seeing the growth there.
Got it thanks, Thanks again.
Okay.
Your next question comes from the line of David Watson from B T I G.
Mine is lives.
Hi, can you talk a little bit about D. S. T upgrade process Uhm I know you said you're on a second half of that any more detail around that would be great and then.
I would think that once.
Get through this whole X P process there would be.
An entirely new.
Version of the comics created.
Technology numbers six still is that correct or not thank you.
Yeah. Thanks for the question, Dave what we're really excited about the point of care area right is still a large portion of the business and we're absolutely focused on not just delivering the the second half of the X T upgrades, but also competitive convergence right. We continue to have those all of that market slowdown.
<unk> hospital's not as willing to swap out during this environment, where it takes extra resources to do that but we continue to get expansion. So over the time over the last few years, our market footprint appointed care has grown tremendously right. It is really large so obviously in the next <unk>.
<unk> of an upgrade cycle will be quite significant for the company. So, but we just don't want to upgrade the technology from a product side, we are already investing and rolled out and will continue to roll out services around the point of care systems to drive outcomes.
This is the part that we think is really exciting just like the specialty services all have rois and have outcomes that really excite and continue to see the growth. There we wanted to make that story.
Same for point of care, so that we're not just simply stuck and product cycles, but also in the services that allow the product cycles to deliver more.
So you're absolutely right you know, we don't do any pre announcements on those products, but that certainly is the strategy and we see the point of care market.
It is very large and where were extremely well positioned to monetize and optimize that market.
And really create.
A whole new go to market as we move forward with advanced services.
Okay, and then just one more quick one can you talk a little bit about you know your process of you know.
Estimated bookings your process of setting guidance.
You know do you maintain a CRM like Salesforce dot com, where each of your salespeople.
My data in terms of like the deals they are working on the timing to close the odds of the clothes rates.
Can you just provide some color into how you actually collect your visibility and how that drives your guidance. Thank you.
<unk>.
Very robust approach of.
Forecasting overbooking throughout the year and we we managed this on a quarterly basis.
They see.
Very stringent process now we go through to ensure that we are engaging with our customers as we forecast bookings for the year. So we continue to revise an.
How we forecast on how we.
Specifically for Castro, a booking and we will see some additional changes and improvements as we go forward.
Okay. Thank you.
<unk>.
Next question.
Your next question comes from the line of Matt Hewitt from Craig How long your line is wise.
Hi, This is Jack on from that when looking at the 340.
Your next payment to hospitals have you spoken to customers that will be receiving some of those funds and are they expecting to buy equipment and services when they receive those funds.
I haven't got any update on that way in fact, we just check before this call about what we thought what happened on there and this kind of cricket so hopefully.
Hopefully.
More about that soon because it was supposed to be around the beginning of the year or last.
And I think it certainly will.
Okay. Some way you have some some some them back on hospital spelling for sure.
And then a follow up in your press release, you spoke to a restructuring will bitten said to better align with anticipated top line heading into physical 24 should we take that to mean at least the start of fiscal 24 will be challenging as well.
You know, we we we fell out with you with our bookings I'll look for 2023, which we expert with will have an impact and a revenue in 2024.
You know while certain portions of hard on services portfolio continue to deliver a solid growth.
He is not expected to be enough in 2024 to offset the decline we expect an appointment okay revenue. So total revenues in 2024 I expected to decline modestly.
Oh.
2024 plan and we will provide the better looking to <unk>.
Next year.
Thanks, Jack next question.
As a reminder, if you'd like to ask a question press star followed by the number one on your keypad. Your next question comes from the line of Bill Southerland from the bench My company, you're lying is five.
Thank you everybody.
I'm kind of curious the shape of a sales funnel whether that this <unk>. This is just a matter of timing more than anything else as far as the bookings.
Yeah, I think it's a good question, let the the the final is still there. The most of these are in the pipeline and have been in the pipeline.
But particularly the point of care product line.
Is getting deferred a lot by these hospital customers because of the low to negative margin.
For in patient care, they don't want to spend the capital dollars there.
Even though they're out of date on some of these systems.
And there they need to upgrade so the pipeline how's it Goin' alright, they are going to eventually upgrade so time, just puts more pressure on them and and it gives us more opportunity to finally close this deal. So these are typically just deferrals in the pipeline and.
Literally.
Maybe all the approvals inside the system, except the CFO or the C E O.
Off on the last piece and then that gets pushed off.
To the next next quarter or next year.
So it's a cycle you expect for the exterior playhouse kind of like the past ones or do you think there might be some level of you have some some some of your provider's might just look ahead to the next.
Oh I think it's I think it's the shape of the curve is a little bit different right I think certainly the pandemic.
Probably sped the curb a little bit on the X T adoption and so instead of it being sort of more smoothed out over several years.
Certainly and 20.
2021 was sped up a little bit so and now people are kind of differing a D. As we get towards the second half of the S. G adoption curve there, they're trying to differ a little bit, but I think it's it's coming back into.
You know the shape of the curve is coming back into what we expect I think is particularly it'd be sort of look out at the 24.
And.
And I think that.
Okay that helps us runner.
And development timing cycles, when we understand what that curve isn't necessarily the pandemic kinda.
Carpet a wrinkle in there.
And then last one I'm just curious if.
Just your latest thoughts on capital allocation.
One for me.
Mmm.
We continue to focus on our go to market strategy with the recent acquisition integrations, largely completed and driving uhm positive free cash flow. We also continue to monitor my pets for any opportunities, which fits into our overall strategy and so we will continue to invest in.
<unk> growth areas that we have seen what our boss at all opportunities and we will continue to save for a capital location dollars based on a whole portfolio fuel strategy.
Okay. Thank you very much.
Thank you Bill.
Question.
There are no further questions at this time I will now turn the call over to C. E O of Omnicell Randall lips for closing remarks Randall.
Well, thanks for joining US today, you know as we go through this.
You cannot be headwinds.
Particularly on an impatient capital, we we will get through this and we're really excited about the point of care market.
It just says we innovate product there, but is particularly as we bring in new services, which will help us to accentuate this market and take advantage of this large but for that we have.
We also want to be very focused on getting the company back to profitability, we need to get the company going so that we can deliver strong earnings strong revenue growth and position as for this this return to growth, which I think.
Mm mm.
Is a big opportunity for it there is a large opportunity that we're building there for us to achieve we've.
We've got a lot of great businesses on the dance services like that are growing well being well adopted new potentials with Ivy very exciting businesses and we hope to bring that together in the near future to deliver for our customers for a patience.
Four employees and for our shareholders.
Yeah.
And of course, we are profitable today. Thank you.
Alright, well, thank you for joining today and thank you for the hard working <unk> continues to.
Labour without.
To help us all the successful as the mood board.
Thank you.
Thanks, everyone.
This concludes today's conference call you may now disconnect.
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