Q4 2023 Omnicell Inc Earnings Call

Operator: Good morning, and welcome to the Omnicell fourth quarter and full year 2023 financial results call. Please note that today's call is being recorded. All lines have been placed on mute to prevent any background noise.

Good morning, and welcome to the Omnicell fourth quarter and full year 'twenty twenty-three financial results call.

Please note that today's call is being recorded all.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answers.

Operator: After the speaker's remarks, there will be a question and answer session. I'd like to take questions during this time. Press Stop 1 on your telephone keypad.

I'd like to go quite right.

Speaker Change: Hi, please.

One on your telephone keypad.

Operator: I will now turn the call over to Kathleen Nemeth, Senior Vice President, Investor Relations. You may begin your conference. Good morning and welcome to the Omnicell fourth quarter and full year 2023 financial results conference call. On the call with me today are Randall Lipps, Omnicell Chairman, President, CEO, and Founder, and Chata Etta, Executive Vice President and Chief Financial Officer.

Speaker Change: I will now turn the call over to Kathleen Nemeth Senior Vice President Investor Relations you May begin your conference.

Kathleen Nemeth: Good morning, and welcome to the Omnicell fourth quarter and full year 2023 financial results conference call on the call with me today are Randall Lipps, Omnicell, Chairman, President CEO, and founder and Tata Executive Vice President and Chief Financial Officer.

Kathleen Nemeth: This call will contain forward-looking statements, including statements related to financial projections or other statements regarding Omnicell's plans, strategy, objectives, goals, expectations, cost-savings, Holistic Review of the Business or Market, or Company Outlook that are subject to risks, uncertainties, and other factors that could cause actual results to differ 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, in Omnicell's Annual Report on Form 10-K filed with the SEC on March 1, 2023, and in other more recent reports filed with the SEC. 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 release publicly any revisions to our forward-looking statements.

Kathleen Nemeth: This call will contain forward looking statements, including statements related to financial projections or other statements regarding on yourselves plans strategy objectives goals expectations cost savings actions holistic review of the business or market. Our company outlook that are subject to risks uncertainties and other factors.

Kathleen Nemeth: That could cause actual results to differ materially from those expressed or implied.

Kathleen Nemeth: 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 in the Omnicell annual report on Form 10-K filed with the SEC on March 1st 2023 and in other more recent reports filed with the SEC. Please.

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

Kathleen Nemeth: 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 release publicly any revisions to our forward looking statements. Our results were released this morning and are posted on the Investor Relations section of our web.

Kathleen Nemeth: Our results were released this morning and are posted in the Investor Relations section of our website at ir.omnicell.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 to 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 of 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 consideration. With that, I will turn the call over to Randall. Randall?

Kathleen Nemeth: Site of IR Dot Omnicell 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 to 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 of forward looking.

Kathleen Nemeth: 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 effort.

Randall A. Lipps: With that I will turn the call over to Randall Randall.

Randall A. Lipps: Good morning, and thank you all for joining us. Today, I will walk through our high-level performance for the fourth quarter and fiscal 2023, including some key customer wins. CHACHA will also provide an update on the current demand environment in our Q1 and full year 2024 outlook. Beginning with our results, we delivered overall 2023 financial results roughly in line with the original guidance as we provided in February 2023. However, bookings for full year 2023 were down 19% for the prior year and missed our original guidance. For the fourth quarter, total GAAP revenues were $259 million, down 13 percent from the prior year.

Randall: Good morning.

Randall: And thank you all for joining us.

Randall: Today, I will walk through our high level performance for the fourth quarter and fiscal 2023.

Randall: Adding some key customer wins.

Randall: We'll also provide an update on the current demand environment, and our Q1 and full year 2024 hours.

Randall: Beginning with our results we delivered overall 2023 financial results roughly in line with the original guidance as we provided in February 2023.

Randall: However, bookings for full year 2023.

Randall: Down 19% for the prior year and missed our original guidance.

Randall: For the fourth quarter total GAAP revenues were $259 million down 13% from the prior year total non-GAAP EBITDA for the fourth quarter was $24 million above our fourth quarter guidance due to strong expense management.

Randall A. Lipps: Total non-GAAP EBITDA for the fourth quarter was $24 million above our fourth quarter guidance, Strong Expanse Management, versus $26 million for the prior year. Gap earnings per share was a loss of $0.32 per share versus a loss of $0.64 for the prior year.

Randall: Versus $26 million for the prior year.

Randall: GAAP earnings per share was a loss of 32 cents per share versus a loss of 64.

Randall: But the prior year.

Randall A. Lipps: Now let me be clear. We do not view our recent performance as acceptable. Although we have taken various actions to improve our, we intend to take further action. For example, over the past few years, we launched a number of advanced services that are gaining traction with customers, and Beginning to Scale. We also previously announced a heightened focus on managing costs, including an approximate 7% reduction in our workforce announced last. These already announced cost actions are expected to result in $50 million of savings on an annualized basis by the end of 2024. But we recognize we have more to do.

Speaker Change: Now let me be clear.

Speaker Change: We do not view our recent performance is acceptable.

Speaker Change: Although we have taken various actions to improve our performance we intend to take further action.

Speaker Change: For example for the <unk>.

Speaker Change: A few years, we launched a number of advanced services that are gaining traction with customers.

Speaker Change: And beginning to scale.

Speaker Change: We also previously announced a heightened focus on managing costs.

Speaker Change: <unk>, an approximate 7% reduction in our workforce announced last quarter. These.

<unk> already announced cost actions are expected to result in $50 million of savings on an annualized basis by the end of 'twenty 'twenty four.

Speaker Change: But we recognize we have more to do.

Randall A. Lipps: Our results tell us there is a need for a thoughtful evaluation of where we can potentially make further changes to improve, from our operations and go-to-market initiatives to our product portfolio. Accordingly, we have decided to undertake a holistic review of the business. With the assistance of an outside consultant in an effort to determine how we can best optimize our operations and investors. Omnicell's strength has been demonstrated repeatedly over the years, and we believe our core point-of-care business remains critical to health systems' ability to safely and efficiently manage medication across the continuum of care. We intend to continue to evolve as a company to improve our performance and deliver returns to our shareholders. We are moving forward with this work with determination, and we will continue to transform the pharmacy care delivery model and advance the industry vision of the autonomous pharmacy. However, we are committed to ensuring we deliver strong returns for shareholders as we work to achieve this mission. I look forward to updating you on the project.

Speaker Change: Our results tell us there is a need for a thoughtful evaluation of where we can potentially make.

Other changes to improve.

From our operations and go to market initiatives to our product portfolio.

Speaker Change: Accordingly, we have decided to undertake a holistic review of the business with the assistance of an outside consultant in an effort to determine how we can best optimize our operations and investments.

Speaker Change: Now let me felt strength has been demonstrated repeatedly over the years and we believe our core point of care business remains critical to health system's ability to safely and efficiently manage medication across the continuum of care.

Speaker Change: We intend to continue to evolve as a company to improve our performance and deliver returns for our shareholders.

Speaker Change: We are moving forward with this work with determination and urgency we will continue to transform the pharmacy care delivery model and advance the industry vision of the autonomous pharmacy. However, we are committed to ensuring we deliver strong returns for shareholders as we work to us.

Speaker Change: See this mission.

Speaker Change: I look forward to updating you on the progress.

Operator: For example, over the past few years, we launched a number of events across the health center to gain traction with customers. Industry-wide headwinds impact hospitals and healthcare systems, leading to a heightened focus on managing costs, including an approximate 70% reduction in non-stabilization. Industry Research & Process. Pardon the interruption.

Speaker Change: I'd like to share.

Speaker Change: We launched a number of sales that are gaining traction with customers.

Speaker Change: Industry wide scale wins impact he also previously.

Speaker Change: Our focus on managing costs, but as we move to hitting it probably is more what I understood.

Speaker Change: Our up to stabilization as last quarter industry.

Speaker Change: <unk> announced.

Speaker Change: Yes pardon the interruption, we are experiencing a technical difficulty. Please allow a moment for that conference to continue.

Operator: We are experiencing a technical difficulty. Please allow a moment for the conference to continue. Thank you, operator. Will you continue the recording, please?

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Thank you operator will you continue the recording please.

Operator: Kathleen's war is expected to result in $50 million year-over-year. However, industry-wide headwinds impacting hospital and health systems seem to persist in 2023. But as we move into 2024, we are seeing some encouraging signs of stabilization. Industry research indicates that 2024 CAPAC budgets could increase year over year. In turn, some forecasts are predicting that health systems will start moving forward with long-delayed capital projects in 2024. However, we believe challenges may persist across the industry, including continuing high labor costs and an operating company, and therefore we will continue to take what we believe is a cautious approach to managing our business. We continue to believe that Omnicell is an essential part of the solution for the industry.

Speaker Change: Or is that kind of resulted in $15 million year over year.

Speaker Change: Okay.

Speaker Change: Industry wide headwinds impacting hospital and health system seem to persist in 2023.

Speaker Change: As we move into 2020 four we are seeing some encouraging signs of stabilization.

Speaker Change: Industry research indicates that 2024.

Speaker Change: It could increase year over year.

Speaker Change: And turn some forecasts are predicting that health systems will start moving forward with long delayed capital projects in 2024.

Speaker Change: However, we believe challenges may persist across the industry, including continuing high labor cost and operating cost.

Speaker Change: And therefore, we will continue to take what we believe is a cautious approach to managing our business.

Speaker Change: We continue to believe that Omnicell isn't a central part of the solution for the industry.

Operator: We think we are uniquely positioned to capture incremental market share as hospital cost pressures alleviate and the macroeconomic environment improves. However, as I mentioned, our lower year-over-year bookings create challenges for 2024. And we expect revenue and non-GAAP EBITDA profit to decline from 2023. However, as we work to transform the pharmacy care delivery model through a combination of automation, intelligence, and Technology Enabled Services, we believe that the solutions we are able to deliver to customers are more important than ever. The total addressable market for medication management remains large.

Speaker Change: We think we are uniquely positioned to capture incremental market share as hospital cost pressures alleviate and the macroeconomic environment improves.

Speaker Change: As I mentioned are lower year over year bookings create challenges for 2024.

Speaker Change: We expect revenue and non-GAAP EBITDA profit to decline from 2023.

Speaker Change: However, as we work to transform the pharmacy care delivery model through a combination of automation and <unk>.

Speaker Change: Diligence and technology enabled services, we believe that the solutions, we are able to deliver to customers are more important than ever.

Speaker Change: The total addressable market for medication management remains large.

Randall A. Lipps: Omnicell has successfully increased its installed base of point-of-care connected devices through market share gains over the previous three years. We are very enthusiastic about and encouraged by the opportunities to deliver product and service enhancements within the XT installed base. We recently launched the XT console upgrade, which is designed to enhance data and network security and improve nursing efficiency and overall user experience for our XT cabinets. The XT console upgrade is part of a broader strategy toward a planned XT product refresh. We are investing in the XT platform to bring a multi-year initiative that provides key products and services to drive medication management outcomes.

Speaker Change: <unk> has successfully increased our installed base of point of care connected devices through market share gains over the previous three years.

Speaker Change: We are very enthusiastic about and encouraged by the opportunities to deliver product and service in handsets within the XT install base.

Speaker Change: We recently launched the X T console upgrade.

Speaker Change: Which is designed to enhance data and network security and improve nursing efficiency and overall user experience for our XT cabinets and showcase this solution at a S. H P 2023 mid year meeting in December.

Speaker Change: DXP console upgrade as part of a broader strategy toward a planned X T product refresh we.

Speaker Change: We're investing in the XD platform to bring a multiyear initiative that provides key products and services to drive medication management.

Speaker Change: Outcomes.

Speaker Change: This year, our innovation pipeline related to the <unk> platform is anticipated to begin to provide key product enhancements and services.

Randall A. Lipps: This year, our innovation pipeline related to the XT platform is anticipated to begin to provide key product enhancements and services designed to improve medication management. Our XT fleet of products is focused on delivering outcomes health systems are asking us for and related to patient safety and efficiency. As I mentioned, our innovation pipeline is very strong within point of care, and we believe we are beginning to see the signs of stabilization in 2024. We are very excited about these initiatives because they will amplify what our customers have already purchased. Now turning to some important customer wins during the quarter. Cell systems continue to find value in long-term collaboration with Omnicell, as evidenced by two multi-year sole-source agreements. This includes an Illinois-based health system that has expanded a multi-year sole source agreement to convert the automated dispensing cabinet footprint across multiple locations to Omnicell's XT automated dispensing system.

Speaker Change: Designed to improve medication management.

Speaker Change: Art X T fleet, our products are focused on delivering outcomes health systems are asking us.

Speaker Change: Four and related to patient safety and efficiencies as I mentioned.

Speaker Change: Our innovation pipeline is very strong within point of care and we believe we are beginning to see the signs of stabilization. In 2024. We are very excited about these initiatives because they will amplify what our customers have already purchased.

Speaker Change: Now turning to some important customer wins during the quarter.

Speaker Change: Health systems continue to find value in the long term collaboration with Omnicell as evidenced by two multiyear sole source agreements.

Speaker Change: This includes an Illinois based health system, which has expanded a multiyear sole source agreement to convert the automated dispensing cabinet.

Speaker Change: Across multiple locations to omni sales XT automated dispensing system.

Randall A. Lipps: Standardizing their technology strategy with Omnicell solutions should position this health system well for future expansion. Most recently, in January, Omnicell was pleased to participate in the grand opening of Tennessee-based ballot health's New Consolidated Distribution Center, which will support medication distribution for Bellin Health Hospitals across the Appalachian Highlands region. This new facility is anchored by our central pharmacy dispensing solution, which includes three XR2 robots, along with Omnicell carousels and packagers, which are intended to help sort, help optimize inventory management and allow pharmacy staff to focus on higher-value tasks. Chris Tanner, VP and Chief Pharmacy Officer for Ballard Health, has long been an advocate of technology-driven pharmacy care as a member of the Automation Pharmacy Advisory Board.

Speaker Change: Standardizing their technology strategy with Omnicell solutions should position this health system well for future expansion.

Speaker Change: Most recently.

Speaker Change: In January we were pleased to participate in the Grand opening of Tennessee based ballad Health, New consolidated distribution Center.

Speaker Change: Which will support medication distribution for Berlin help hospitals across the Appalachian Highlands region.

Speaker Change: This new facility is anchored by our central pharmacy dispensing solution, which includes three exon two robots, along with Omnicell care ourselves and packagers, which are intended to help Alan help optimize inventory management.

Speaker Change: Our pharmacy staff to focus on higher value task.

Speaker Change: Trish Tanner, VP and Chief Pharmacy officer for ballad Health.

Trish Tanner: As long been an advocate of technology, rather than pharmacy care as a member of the automation Pharmacy Advisory Board.

Randall A. Lipps: During the event, she commented, it's not just technology. It's about advancing patient care. Streamlining operations and embracing a future where our health professionals can spend more time on what truly matters, and that, of course, is the well-being of our patients. We could not agree more with this sentiment and are proud to be leading the effort to enable our customers to get closer to achieving the industry vision of the autonomous pharmacy. We also continue to take steps to enhance our corporate governance with the recent election of Eileen Volkneck to the Board of Directors. Eileen is a widely respected leader with significant experience in the software, technology, and healthcare industries, with a track record of creating value for shareholders, accelerating growth, driving operational excellence, and developing global businesses. We are thrilled to have her join the board.

Speaker Change: During the event she commented it's not just technology.

Speaker Change: It's about advancing patient care streamlining operations and embracing the future.

Speaker Change: Our health professionals are involved.

Speaker Change: Todd.

Speaker Change: To what truly matters and that of course is the well being of our patients.

Todd: He could not agree more with this sentiment and are proud to be leading the effort to enable our customers to get closer to achieving the industry vision of the autonomous pharmacy.

Speaker Change: We also continue to take steps to enhance our corporate governance with the recent elections by lean book net to the board of Directors Eileen has a widely respected leader with significant experience in the software technology and healthcare industries with a track record of creating value for shareholders accelerating.

Speaker Change: Growth.

Speaker Change: Driving operational excellence and developing global businesses. We are thrilled to have her joined the board welcome Eileen.

Randall A. Lipps: Welcome, Eileen. Now, let me be clear. We have hard work ahead of us, but we are taking the steps we believe are necessary to strengthen our financial performance. Celebrating Profitable Growth! and Drive Shareholder Value. We remain confident in Omnicell's long-term opportunities and continue to believe that the company is uniquely positioned to transform the pharmacy care delivery model and ultimately help enable our customers achieve better outcomes and increase their ROI. Now, with that, cha-cha. I will turn it over to you for more details on the quarter. Cha-cha.

Speaker Change: Now let me be clear.

Speaker Change: We have hard work ahead of us, but we are taking the steps we believe are necessary to strengthen our financial performance.

Speaker Change: To accelerate profitable growth.

Speaker Change: And drive shareholder value.

Speaker Change: We will we remain confident in omni sales long term opportunities and continue to believe that the company is uniquely positioned to transform the pharmacy care delivery model.

Speaker Change: Ultimately help enable our customers achieve.

Speaker Change: Better outcomes and increase their ROI.

Speaker Change: Now with that.

Speaker Change: I will turn it over to you for more details on the quarter.

Speaker Change: Okay.

Operator: Thanks, Randall, and thank you all for being here today. We will discuss our full year 2023 financial performance, the current demand environment, and our Q1 and full year 2024 outlook. Over the last three quarters, we have taken a hard look at our business and product, along with our go-to-market strategy, and have given a lot of thought to how we can strengthen and refine certain processes. As Randall mentioned, to better understand the opportunities in front of us and ways we can strengthen our financial performance. We have decided to undertake a comprehensive review of our business and engage a consultant to assist in looking at everything from growth opportunities and further operational improvements to productivity enhancements and refinements in our product portfolio.

Speaker Change: Thanks, Brenda and thank you all for being here today.

Speaker Change: We will discuss our full year 2023 financial performance the current demand environment, our Q1 and full year 2020 outlook.

Speaker Change: Over the last three quarters, we have taken a hard look at our business products, along with our go to market strategy and I've given a lot of thought to how we can strengthen and refine certain processes.

Speaker Change: As Randall mentioned to better understand the opportunities in front of us and ways. We can strengthen our financial performance. We have decided to undertake a comprehensive review of our business and engage a consultant to assist in looking at everything.

Speaker Change: From growth opportunities and further operational improvements to productivity and I understand some refinements in our product portfolio.

Operator: During 2024, we also intend to re-evaluate the financial and key performance metrics we report, including bookings and backlogs, and we will consider potential new metrics we may be able to share in an effort to provide additional transparency and information to our stockholders. We look forward to updating you on our progress. With that, let me get into results for the fourth quarter and for the year 2023, as well as our outlook for 2024. For the fourth quarter of 2023, total GAAP revenues were $259 million, slightly above the midpoint of the guidance range we provided during our third quarter 2023 earnings call. Total revenues in the quarter were down 13% compared to the fourth quarter of 2022, reflecting lower point-of-care revenues primarily as a result of ongoing healthcare systems, capital, budget, and labor constraints.

Speaker Change: During 2024, we will also we also intend to reevaluate the financial and key performance metrics, We will report.

Speaker Change: Including bookings and backlog.

Speaker Change: And we will consider potential new metrics, we may be able to share.

Speaker Change: Therefore to provide additional transparency and information to our stockholders.

Speaker Change: We look forward to updating you on our progress.

Speaker Change: With that let me get into.

Speaker Change: For the fourth quarter and full year 2023.

Speaker Change: Well as our outlook for 2024.

Speaker Change: Okay.

Speaker Change: For the fourth quarter 2023, total GAAP revenues with 259 million slightly above the midpoint of the guidance range. We provided during our third quarter 2023 earnings call.

Speaker Change: Low revenues in the quarter were down.

Speaker Change: When compared to the fourth quarter of 2022.

Speaker Change: Reflecting the lower point of care revenues, primarily as a result of ongoing health care systems capital budget on labor constraints.

Operator: Services revenue was $113 million, an increase of 12% versus the fourth quarter of 2022, primarily driven by growth in technical services as a result of strong execution. Growth in the install-based and decisive pricing options. Non-GAAP gross margin for the fourth quarter 2023 was 43.6 percent, a decrease of 210 basis points from the prior quarter. Compared to the third quarter of 2023, non-GAAP product gross margin decreased 450 basis points, while non-GAAP services gross margin expanded modestly. The decrease in product gross margin is primarily based on the impact of lower revenue and mix of products within the quarter.

Speaker Change: Services revenue were $113 million.

Speaker Change: An increase of 12% this was a fourth quarter 2022.

Speaker Change: Primarily driven by growth in technical services.

Speaker Change: The result of strong execution.

Speaker Change: And the installed base and decisive pricing actions.

Speaker Change: non-GAAP gross margin for the fourth quarter 2023 was 43, 6%.

Speaker Change: A decrease of 210 basis points from the prior quarter.

Speaker Change: Compared to the third quarter of 2023, non-GAAP product gross margin decreased 450 basis points, while non-GAAP services gross margin expanded modestly.

Speaker Change: The decrease in product gross margin is primarily based on the impact of the lower revenue and mix of product within the quarter.

Operator: A full reconciliation of our GAAP to non-GAAP results is included in our fourth quarter 2023 and third quarter 2023 earnings press releases, which are posted on our investor relations website. Our fourth quarter 2023 earnings per share in accordance with GAAP were a loss of $0.32 compared to earnings of $0.12 per share in the prior quarter and a loss of 64 cents per share in the fourth quarter 2022. Our fourth quarter 2023 GAAP earnings per share includes $10 million of severance-related expenses associated with our 2023 cost savings plan. Our fourth quarter 2023 non-GAAP earnings per share was $0.33 compared to $0.62 per share in the prior quarter and $0.33 per share in the same period last year.

Speaker Change: A full reconciliation of our GAAP to non-GAAP results are included in our fourth quarter, we need 23.

Speaker Change: Third quarter 2023 earnings press release.

Speaker Change: Which are posted on our Investor Relations website.

Speaker Change: Fourth quarter 2023 earnings per share in accordance with in accordance with GAAP were a loss of 32 cents compared to earnings of <unk> 12 per share in the prior quarter.

Speaker Change: And a loss of 64 cents per share in fourth quarter 2022.

Speaker Change: Our fourth quarter 2023, GAAP earnings per share include $10 million of severance related expense associated with our 2023 cost savings plan.

Speaker Change: Our fourth quarter, 2023, and non-GAAP earnings per share with 33 cents compared to 62 cents per share in the prior quarter.

Speaker Change: 33 cents per share in the same period last year.

Operator: Our fourth quarter 2023 non-GAAP EBITDA was $24 million, a decrease of $17 million compared to the previous quarter, which reflects the impact of lower product revenue in the fourth quarter partially offset by cost savings actions taken in the quarter. Our fourth quarter 2023 non-GAAP EBITDA and non-GAAP earnings per share exceeded the guidance range we provided during our third quarter earnings call due to strong cost management across our organization. Turning now to review our full year 2023 results. Bookings for full year 2023 were $854 million compared to our original full year 2023 guidance of $1 billion to $1.1 billion, provided in February 2023, and $1,054,000,000 for the full year 2022, a decrease of 19% from the prior quarter. 2023 bookings were lower than original four-year guidance, primarily driven by lower-than-expected orders for advanced services, particularly tech-enabled services, which include CPDS and IVCS.

Speaker Change: Fourth quarter 2023, non-GAAP EBITDA was $24 million, a decrease of 17 million compared to the previous quarter.

Speaker Change: Which reflects the impact of lower product revenue in the fourth quarter, partially offset by cost savings actions taken in the quarter.

Speaker Change: Our fourth quarter, 2023, non-GAAP EBITDA and non-GAAP earnings per share exceeded the guidance range. We provided during our third quarter earnings call due to strong cost management across our organization.

Speaker Change: Turning now to review our full year 2023 results.

Speaker Change: Bookings for full year, 2023, with $854 million compared to our original full year 2023 guidance of 1 billion to $1 1 billion.

Speaker Change: <unk> provided in February 2023, and one.

Speaker Change: $1.054 billion for the full year 2022.

Speaker Change: A decrease of 19% from the prior quarter.

Speaker Change: 2023 bookings were lower than original full year guidance, primarily driven by lower than expected, thus far advanced services.

Speaker Change: Particularly tech enabled services, which includes <unk> and <unk>.

Operator: Additionally, our point of care bookings, including XT cabinets, were lower than original expectations. As a result of the healthcare system, customers continue to delay capital budget decisions, and XT cabinet bookings continue to moderate as a result of timing in our XT upgrade cycle. To summarize, the majority of the lower-than-expected bookings in 2023 were a result of lower demand for CPDs and IVCs and other advanced services.

Speaker Change: Additionally.

Speaker Change: Point of care bookings, including XD cabinets were lower than our original expectation.

Speaker Change: As a result of healthcare system customers continue to delay capital budget decisions.

Speaker Change: On XD cabinet bookings continue to moderate as a result of timing.

Speaker Change: XT upgrade cycle.

Speaker Change: To summarize the majority of the lower than expected bookings in 2023 was the result of lower demand for CBD CPD is on <unk>.

Operator: Our total backlog was $1,143,000,000 as of December 31, 2023, compared to $1,215,000,000 as of December 31st, 2022. Product backlog includes connected devices such as XT-Series automated dispensing systems and the product portion of our central pharmacy dispensing services and IV compounding service. Product backlog as of December 31st, 2023 was $611 million, of which $378 million is short-term product backlog, which we expect to convert to revenue within 12 months. Product backlog decreased by 186 million over the prior year as a result of lower 2023 bookings.

Speaker Change: Advanced services.

Speaker Change: Our total backlog was 1.143 billion as of December 31, 2023.

Speaker Change: Compared to $1 billion 215 million as of December 31st 2022.

Speaker Change: Product backlog includes connected devices, such as XT series automated dispensing systems and it.

Speaker Change: A portion of our central pharmacy dispensing services on IV compounding service.

Speaker Change: Product backlog as of December 31st 2023 was $611 million.

Speaker Change: 378 million is short term backlog.

Speaker Change: Which we expect to convert to revenue within 12 months.

Speaker Change: Product backlog decreased by 186 million over the prior year as a result of lower 2023 bookings.

Operator: The advanced services backlog includes only the service portion of our advanced services multi-year contract, which has a stated minimum commitment within the agreement. While we partner closely with our customers when providing advanced services, and the majority of our advanced services are provided under multi-year contracts, only a portion of those contracts have a stated minimum commitment. Advanced services backlog as of December 31, 2023 was $532 million, of which $72 million is short-term advanced services backlog, which is expected to come back to revenue within 12 months. Advanced services backlog increased $113 million, or 27% over the prior year. Our full year 2023 gap revenues were $1,147,000,000, a decrease of $149,000,000, or 11% from 2022.

Speaker Change: Advanced services backlog includes only the service portion of our advanced services multi year contracts with.

Speaker Change: Which have as stated minimum commitment within the agreement.

Speaker Change: While we partner closely with our customers when providing advanced services and the majority of our advanced services are provided on a multiyear contracts.

Speaker Change: Only a portion of those contracts.

Speaker Change: Minimum commitments.

Speaker Change: Advanced services backlog as of December 31, 2023 was $532 million.

Speaker Change: Of week $72 million, a shot Tam advanced services backlog.

Speaker Change: Which is expected to convert to revenue within 12 months.

Speaker Change: Advanced services backlog increased $113 million.

Speaker Change: 27% over the prior year.

Speaker Change: Our full year 2023 cap revenues with 1.147 billion, a decrease of $140 $49 million or 11% from 2022.

Operator: The decrease in revenue over the prior year reflects the impact of lower bookings, as I just outlined. Our 2023 product revenues were $709 million, and our 2023 services revenues were $439 million, within the four-year 2023 services revenue. Technical Services revenue with $226 million and Advanced Services revenue with $213 million. 2023 Advanced Services revenues increased 14% over the prior year. Our full year 2023 earnings per share, in accordance with GAAP, were a loss of $0.45 per share.

Speaker Change: The decrease in revenue over the prior year reflects the impact of lower bookings as I just outlined.

Speaker Change: Our 2020 report product revenues with $709 million.

Speaker Change: On our 2023 services revenue of $439 million.

Speaker Change: Within the full year 2023 services revenue.

Speaker Change: Our services revenue with $226 million.

Speaker Change: And advanced services revenue with $213 million.

Speaker Change: 2023 advanced services revenues increased 14% over the prior year.

Speaker Change: Full year 2023 earnings per share in accordance with GAAP were a loss of 45 per share.

Operator: Our full-year 2023 non-GAAP earnings per share were $1.91 per share, a decrease of $1.09 per share from 2022. For the full year 2023, we delivered non-GAAP EBITDA of $138 million, a decrease of $55 million from 2022, which is above the revised 2023 guidance range we provided in the third quarter of 2023. The year-over-year decrease in earnings per share and EBITDA was mostly driven by lower revenues during the year, partially offset by cost-savings actions, including the benefit from cost-savings plans we announced in November 2022 and November 2023. Although our full-year 2023 bookings and revenues were lower than expected when we provided the original guidance in February 2023. We are pleased with the results of the cost savings plan, as we announced in November 2023, together with other factors, including ongoing cost savings initiatives implemented throughout the year. The implementation of the 2023 cost savings plan drove non-GAAP EPS and EBITDA to be above the original guidance and NONCAP EPS and EBITDA guidance. However, we believe there is more work to be done on this front.

Speaker Change: Our full year 2023, and non-GAAP earnings per share were $1 91 per share a decrease of $1.09 per share from 2022.

Speaker Change: For the full year 2023, we delivered non-GAAP EBITDA of $138 million a.

Speaker Change: A decrease of $55 million from 'twenty to 'twenty two.

Speaker Change: Which is above the revised 2023 guidance range, we provided in the third quarter of 2023.

Speaker Change: The year over year decrease in earnings per share and EBITDA was mostly driven by lower revenue during the year.

Speaker Change: Partially offset by cost savings actions, including the benefit from cost savings plans, we announced in November 2022, and November 2023.

Speaker Change: Although our full year 2023 bookings and revenues were lower than expected.

Speaker Change: When we provided the original guidance in February 2023.

Speaker Change: We are pleased with the results of the cost savings plan that we announced in November 2023.

Speaker Change: Together with other factors, including ongoing cost savings initiatives implemented throughout the year.

Speaker Change: The implementation of the 2023 cost savings plan drove non-GAAP, EPS and EBITDA to be above the original guidance.

Speaker Change: And non-GAAP EPS of EBITDA guidance.

Speaker Change: However, we believe there is more work to be done on this front.

Operator: And, as I mentioned, we are actively working to identify opportunities to further streamline our costs. We believe the favorable profitability during the year demonstrates our commitment to taking actions designed to bolster the continued profitability of our business during this challenging customer and product period. At the end of fourth quarter 2023, our cash balance was $468 million, up $21 million from $447 million as of September 30, 2023. Our full year 2023 non-GAAP free cash flow was $126 million compared to $17 million for the prior year, which includes the benefit of reductions in accounts receivable and inventory during the year reflecting strong working capital management.

Speaker Change: As I mentioned we.

Speaker Change: We are actively working to identify opportunities to further streamline our costs.

Speaker Change: We believe the favorable profitability during the year demonstrates our commitment to taking actions designed to bolster the continued profitability of our business during this challenging customer and product period.

Speaker Change: At the end of fourth quarter 2023, our cash balance was $468 million up between two 1 million from $447 million as of September 30.

Speaker Change: 2023.

Speaker Change: Our full year 2023, and non-GAAP free cash flow was 126 million compared to $17 million for the prior year.

Speaker Change: Which includes the benefit of reductions in accounts receivable and inventory during the year, reflecting strong working capital management.

Operator: As we communicated in our November 2023 earnings call, we continue to be mindful of the upcoming 2025 maturity of our compatible senior notes and are considering various options to maintain strategic flexibility for our company and in an effort to minimize potential dilution for our stockholders. In the meantime, We believe we are in a very good position with the current compatible senior nodes, which have a 0.25 coupon interest rate. In short, we remain confident in our capital structure and our ability to support the ongoing execution of our growth strategy, in terms of accounts receivable. Day sales outstanding for the fourth quarter of 2023 were 90 days, an increase of six days over the prior quarter and a reduction of three days compared to the fourth quarter of 2022. Inventories as of December 31, 2023 were $110 million, a decrease of $37 million from December 31, 2022.

Speaker Change: As we communicated in our November 2023 earnings call. We continue to be mindful of the upcoming 2025 maturity of our convertible senior notes and are considering various options to.

Speaker Change: To maintain strategic flexibility for our company.

Speaker Change: An effort to minimize potential dilution for our stockholders.

Speaker Change: In the meantime.

Speaker Change: We believe we are in very good position with the current convertible senior notes.

Speaker Change: Which happens 0.25% coupon interest rates.

Speaker Change: In short we remain confident in our capital structure.

Speaker Change: I believe it will support the ongoing execution of our growth strategy.

Speaker Change: In terms of accounts receivable.

Speaker Change: Days sales outstanding for the fourth quarter 2023.

Speaker Change: It was 90 days.

Speaker Change: An increase of sequence over the prior quarter and.

Speaker Change: And a reduction of previous compared to fourth quarter of 2022.

Speaker Change: Inventories as of December 31, 2023 were $110 million a decrease of $37 million from December 31 2022.

Operator: Our global supply chain team continues to make great progress managing inventory levels. Now, moving to our 2024 full year and first quarter guidance. We would like to start by commenting on the current demand environment we are seeing within point-of-care. We are encouraged by the opportunities to offer new and innovative product enhancements on a larger installation base, including the XT console upgrade Randall noted in his opening remarks. We believe that with these new innovations, we should see a modest increase in point-of-care product bookings in 2024. Our core franchise is strong.

Speaker Change: Global supply chain team continues to make great progress managing inventory levels.

Speaker Change: Now moving to our 2020 for full year and first quarter guidance.

Speaker Change: We would like to start by commenting on the current demand environment, we are seeing within point of care.

Speaker Change: We are encouraged by the opportunities to offer new innovative product enhancements on a larger installed base, including the XT console upgrade Randolph noted in his opening remarks.

Speaker Change: We believe that with these new innovations, we should see a modest increase in point of care product bookings in 2024.

Speaker Change: Our core franchise is strong.

Operator: Our channel is a durable source of future opportunities, and we are excited by our innovation pipeline based on these expectations. We expect our full year 2024 bookings to range between $750 million and $875 million. We expect our full year 2024 total revenues to range between $1,045,000,000 and $1,120,000,000. We expect product revenues to range between $605 million and $650 million.

Speaker Change: Our channel is a durable source of future opportunities.

Speaker Change: And we are excited by our innovation pipeline.

Speaker Change: Based on these expectations.

Speaker Change: We expect our full year 2020 for bookings to range between $750 million to $875 million.

Speaker Change: We expect our full year 2024, total revenues to range between $1.045 billion to $1.120 billion.

Speaker Change: We expect product revenues to range between 605 million to $650 million.

Operator: We expect services revenue to range between $440 million and $470 million. We expect revenue from advanced services to range between $220 million and $235 million. We also expect revenue from technical services to range between $220 million and $235 million.

Speaker Change: We expect services revenue to range between $440 million and $470 million.

Speaker Change: We expect services revenues from advanced services to range between $220 million and $235 million.

Speaker Change: We also expect services revenue from technical services to range between $220 million and $235 million.

Operator: The revenue guidance reflects our expectations for the continued impact of a challenging environment for our health system customers and the timing of our XT product lifecycle. At the midpoint, the full year 2024 revenue guidance implies an expected year-over-year product revenue decline, partially offset by a modest increase in advanced services revenue when compared to 2023, as we have shared in the past. Advanced services provide a stable, recurring revenue stream, and for a majority of our services, we have multi-year contractual partnerships with our health systems and retail customers as we continue to book new orders. The increase in the installed base will continue to contribute to advanced services revenue growth. Please refer to our fourth quarter 2023 earnings release published on our Investor Relations website for a summary of the full year 2024 revenue guidance components. We expect full year 2024 non-GAAP EBITDA to range between $90 million and $120 million. We expect full-year 2024 non-draft earnings per share to be between $0.90 and $1.40 per share.

Speaker Change: The revenue guidance reflects our expectation for the continued impact of a challenging environment.

Speaker Change: Health system customers and timing of our XD product lifecycle.

Speaker Change: At the midpoint the.

Speaker Change: Full year 2020 for revenue guidance implies unexpected year over year product revenue decline.

Speaker Change: <unk> offset by a modest increase in advanced services revenue when compared to 2023.

Speaker Change: As we have shared in the past.

Speaker Change: Advanced services provide a stable reoccurring revenue stream and for a majority of our services, we have multiyear contractual partnerships with our health systems and retail customers.

Speaker Change: As we continue to book New orders.

Speaker Change: The increase in the installed base will continue to contribute to advanced services revenue growth.

Speaker Change: Please refer to our fourth quarter 2023 earnings release published on our Investor Relations website.

Speaker Change: A summary of the full year 2020 for revenue guidance components.

Speaker Change: We expect full year 2024, non-GAAP EBITDA to range between $90 million and $120 million.

Speaker Change: We expect full year, 2024, known especially <unk> to be between 90 and 98.

Speaker Change: The $1 40 per share.

Operator: For the full year 2024, we are assuming an effective blended tax rate of approximately 19% in our non-GAAP earnings space share guidance. The full year 2024 non-GAAP EBITDA and non-GAAP earnings-based shared guidance includes the expected impact of a full year-over-year gross margin percentage decrease as a result of the lower point of care revenue partially offset by the benefit of the recently implemented cost savings plan. We continue to expect approximately $50 million of annualized cost savings as a result of the cost actions announced in November 2023, of which around 75% is expected to be in operating expenses. A majority of the benefit from the cost actions is anticipated to be realized in the beginning of the first quarter of 2024, with a smaller portion of the savings expected as we progress through the year. As a reminder, the cost options are expected to be partially offset by year-over-year inflation, as well as lower gross margin due to anticipated product make.

Speaker Change: For the full year 2024.

Speaker Change: Assuming an effective blended tax rate of approximately 19% in our non-GAAP earnings per share guidance.

Speaker Change: The full year 2024, non-GAAP EBITDA and non-GAAP earnings per share guidance includes the expected impact of a full year over year gross margin.

Speaker Change: And a decrease as a result of the lower point of care revenue.

Speaker Change: Actually offset by the benefit of the recently implemented cost savings plan.

Speaker Change: We continue to expect approximately $50 million of annualized cost savings as a result of the cost actions announced in November 2023.

Speaker Change: Of which around 75% is expected to be in operating expenses.

Speaker Change: A majority of the benefit from the cost actions is anticipated to realize to be realized in the beginning of the first quarter of 2024 with a smaller portion of these savings are expected as we progress through the year.

Speaker Change: As a reminder, the cost actions are expected to be partially offset by year over year inflation.

Speaker Change: As well as lower gross margin due to anticipated product mix.

Operator: For the first quarter of 2024, we are providing the following guidance. We expect total first quarter 2024 revenues to be between $232 million and $242 million, with product revenues to be between $128 million and $133 million, and services revenue to be between $104 million and $109 million. We expect first quarter 2024 non-GAAP EBITDA to be between a loss of $2 million and earnings of $4 million. And we expect first quarter 2024 non-GAAP earnings per share to be between a loss of 10 cents per share and break-even per share.

Speaker Change: For the first quarter 2024, we are providing the following guidance.

Speaker Change: We expect total first quarter 2020 for revenues to be between $232 million and $242 million.

Speaker Change: With product revenues to be between $128 million and $133 million.

Speaker Change: And services revenue to be between $104 million and $109 million.

Speaker Change: We expect first quarter 2024, non-GAAP EBITDA to be between a loss of $2 million and earnings of $4 million.

Speaker Change: And we expect first quarter 2024, non-GAAP earnings per share to be between a loss of <unk> 10 per share.

Speaker Change: Breakeven per share.

Speaker Change: In summary.

Operator: In summary, we continue to execute against our long-term growth strategy and navigate a challenging macroeconomic environment. We are seeing challenges for our customers, including the impact of the macroeconomic environment and labor challenges, and we expect these headwinds to continue into 2024. However, we are confident that the approach we are taking to managing the business should position Omnicell to deliver on its commitments over the long term.

Speaker Change: We continue to execute against our long term growth strategy and navigate a challenging macroeconomic environment.

Speaker Change: We are seeing challenges for our customers Inc.

Speaker Change: Including the impact of the macroeconomic environment and labor challenges.

Speaker Change: And we expect these headwinds to continue in 2024.

Speaker Change: However, we are confident that the approach we are taking to managing the business should position omnicell to deliver on our commitments over the long term.

Operator: The team has built a strong foundation from which we expect to continue our momentum in transforming the pharmacy care delivery model and are taking actions intended to improve our performance. We remain focused on driving value for our stockholders as we look to execute on our strategy and work towards capturing the opportunities we see ahead of us. We continue to endeavor to drive long-term profitable growth and success at Omnicell. I want to conclude by thanking our employees for their continued hard work and commitment to Omnicell. With that, we would like to open the call for questions. Thank you. At this time, I would like to remind everyone in order to ask a question, dot one. Our first question comes from Stan Bernstein with Wells Fargo. Please go ahead. Hi, good morning.

Speaker Change: The team has built a strong foundation from which we expect to continue our momentum in transforming pharmacy care delivery model and are taking actions intended to improve our performance.

Speaker Change: We remain focused on driving value for our stockholders as we look to execute on our strategy and work towards to capture the opportunities. We see ahead of us.

Speaker Change: We continue to endeavor to drive long term profitable growth and success at Omnicell.

Speaker Change: I want to conclude by thanking our employees for their continued hard work and commitment to omnicell.

Speaker Change: With that we will.

Speaker Change: We'd like to open the call for questions.

Speaker Change: Thank you.

Speaker Change: I would like to remind everyone.

Speaker Change: A question Please press star one.

Speaker Change: First question comes from Dan Bernstein with Wells Fargo. Please go ahead.

Dan Bernstein: Hi, good morning, Thanks for taking my questions.

Operator: Thanks for taking my questions. Maybe a couple on the bookings guidance. First, in touch. If I heard you correctly, you said point of care product bookings are expected to increase in 2024. And if that's the case, can you help us understand what's driving the decrease in overall bookings guidance? Thanks.

Dan Bernstein: Maybe a couple on the bookings guidance first and touch on I heard if I heard you correctly, you said point of care product bookings.

Dan Bernstein: It is expected to increase in 2024 and if that's the case can you help us understand what's driving the decrease in overall bookings guidance for the year.

Operator: Thanks, Ann, for the question. We are continuing to see our customers be more cautious as they consider implementing new workflows that may stress already thinly stretched nursing IT and IT staff, which potentially impacts the timing of contracting and implementing new capital and software projects. While we are expecting a modest improvement in demand for our point-of-care solutions as a result of new innovations and services, we still expect moderation in sales of our XT cabinets based on where we are currently in the XT upgrade cycle. However, in advanced services, we continue to work with our customers to navigate the complex regulatory environment for our IV robotics. Please keep in mind that, however, there is a lot of interest in IV services, which is quite strong, and we believe the long-term trends remain favorable. Okay. Thank you. Sorry, but go ahead.

Dan Bernstein: Thanks.

Speaker Change: Good question.

Speaker Change: We are continuing to see our customers the more cautious as they consider implementing new workflows that made strength early in this strategy nursing.

Speaker Change: Staff.

Speaker Change: Which potentially impact the timing of contracting and implementing new capital and software projects.

Speaker Change: While we are expecting a modest improvement in demand for our point of care solutions as a result of new innovations and services.

Speaker Change: We still expect moderation of sales of our XD cabinet based on where we are currently in the XT upgrade cycle.

Speaker Change: However in advance services, we continue to work with our customers to navigate the complex regulatory environment for our IV robotics.

Speaker Change: Please keep in mind that however.

Speaker Change: There is a.

Speaker Change: A lot of interest in IV services, which is quite strong and we believe the long term trends remain favorable.

Speaker Change: Okay. After considering all these years.

Speaker Change: Sorry go ahead.

Speaker Change: No I'm, saying, we just we expect our full year bookings in order to again be between the range of 750 and $875 million.

Speaker Change: But we're very excited about our innovation within the equity platform.

Operator: No, I'm saying we expect our four-year bookings to, again, be between the range of $750 and $875 million. But we're very excited about our innovation within the XT platform. Okay, so what about advanced services? Will the bookings for advanced services be positive or negative for the year?

Speaker Change: Okay. So what about underground services are the bookings for advanced services expected to be positive or negative for the year.

Speaker Change: As I mentioned earlier, we continue to see our customers navigate the complex regulatory environment within our IV robotics.

Speaker Change: Okay, and so so you are saying that at point of care seeing modest increase in demand by <unk> sales.

Speaker Change: <unk> are expected to decline so on a net basis.

Speaker Change: Our product bookings just to be clear our product bookings overall.

Operator: As I mentioned earlier, we continue to see our customers navigate a complex regulatory environment within our IV robotics. Okay, and so you're saying that point-of-care is seeing a modest increase in demand, but XT sales... are expected to decline. So I'm a net-based company.

Speaker Change: <unk> to be negative in 2024 are positive.

Speaker Change: Slightly positive.

Speaker Change: Okay.

Speaker Change: So that would imply advanced services has to be negative right to get the overall bookings guidance negative.

Speaker Change: That's correct.

Speaker Change: Okay.

Speaker Change: Okay I appreciate that.

Speaker Change: And then just in terms of the guidance range its pretty wide 125 million pages walk us through what factors on the guidance range.

Operator: Our product bookings, just to be clear, our product bookings overall are expected to be negative in 2024 or positive in 2021. Slightly positive. So that would imply advanced services has to get the overall bookings guidance negative? That's correct. Okay, appreciate that. And then just in terms of the guidance range, you know, it's pretty wide, 125 million. Can you just walk us through what factors are in the guidance range?

Speaker Change: Right.

Speaker Change: We provide a very you know.

Speaker Change: Reasonable guidance that we believe you know.

Speaker Change: Is what we think we can achieve for the year.

Speaker Change: Yes, I think.

Speaker Change: I think the.

Speaker Change: As we introduce new innovation throughout this year and this is a big innovation year for us.

Speaker Change: The uptake on that innovation and adoption by our customers is and Thats why we see.

Speaker Change: The lift in product.

Speaker Change: Bookings and.

Speaker Change: And how fast it can be implemented as it is varied. So we're just at the beginning of the first phase of the <unk>.

Speaker Change: Grade cycle, which means.

Speaker Change: Every <unk> customer is in play now within offering.

Operator: Right, we provide very, you know... Reasonable guidance that we believe is what we think we can achieve for the year. Yeah, and I think...

Speaker Change: And as we continue to innovate we will have to see how those new products.

Speaker Change: How quickly they can the uptake in this this is a big year at the beginning of the cycle of these new <unk> products.

Operator: I think the, as we introduce new innovation throughout this year, and this is a big innovation year for us, and you know, the uptake on that innovation and adoption by our customers is, and that's why we see the list and product. And how fast it can be implemented is, you know, it's varied. So we're just at the beginning of the first phase of the XT upgrade cycle, which means that every XT customer is in play now with an offering. And as we continue to innovate, we'll have to see how those new products... How quickly they can be adopted, and this is a big year at the beginning of the cycle of these new XT products and platforms that will... Well, get a lot of customer attention. It's just, do we have enough time this year to get them in the pipeline and get them sold? And then eventually, when does it make revenue? Okay, well, thanks so much. I'll jump back.

Speaker Change: And platform that will well.

Speaker Change: I get a lot of customer retention is just do we have enough time this year to get it in the pipeline and get it sold and then eventually windows of revenue.

Speaker Change: Yes.

Speaker Change: Got it okay. Thanks, so much I'll jump back in the queue. Thanks.

Speaker Change: Thanks, Ed.

Speaker Change: Your next question comes from Anne Samuel with Jpmorgan. Please go ahead.

Anne Samuel: Thanks, So much for taking the question I was hoping maybe you know in the advanced services business can you parse out maybe what some of those key challenges or is it still.

Anne Samuel: Issues around hiring the pharmacy technicians or is it something broader within the industry backdrop around demand.

Speaker Change: Well I think IV lot of interest and demand.

Speaker Change: <unk>.

Speaker Change: Making our way through the regulatory environment is is by state is not just federal is by state so to achieve that you have to take that.

Speaker Change: Proper steps to get there. So that's the biggest stempler, there and Super CPD S.

Speaker Change: It's really a lot of our customers are looking at where to deploy robotics is it in a consolidated service center like valid or is it a large hospital and so these strategies that the customers are looking at or slightly changing from what they have been in the past.

Operator: Thanks, Seth. Your next question comes from Anne Samuel with J.P. Morgan. Please go ahead.

Operator: Thanks so much for taking the question. I was hoping maybe, you know, in the advanced services business, could you parse out maybe what some of those key challenges are? Is it, you know, still an issue around, you know, hiring pharmacy technicians? Or is it something, you know, broader within the industry backdrop around demand? Well, I think IV, a lot of interest and demand, uh, is just... Making our way to the regulatory environment is by state. It's not just federal; it's by state.

Speaker Change: And so they are not ready to dive into new innovation until they sort of get there.

Speaker Change: Big.

Anne Samuel: Hospital network strategy built on how theyre going to dispense medication across a broad group of.

Anne Samuel: Of hospitals and clinics.

Anne Samuel: And because of that I think.

Anne Samuel: We're in a lot of discussions, but they're moving pretty slow.

Speaker Change: That's really helpful. Thank you and then maybe just one more on the bookings and can you just remind us of the timeline as converting bookings into revenue how long that takes if we were to start to see a pickup in the macro and maybe some improvement in new bookings, how long would it take for us to see that translate into revenue.

Anne Samuel: Well.

Operator: So to achieve that, you have to take the proper steps to get there. So that's the biggest dampener there. And for CPDS, a lot of our customers are looking at where to deploy robotics. Is it in a consolidated service center like Ballad, or is it in a large hospital?

Anne Samuel: It's a good question because this is one of the things charge I discussed about coming up with new metrics because bookings.

Anne Samuel: Bookings can be confusing, but the easiest thing is to look at product product generally is 12 to 18 months for installation maybe.

Anne Samuel: It may be shorter than 12 months and in many cases, so that's a key driver for the business or the near term part of the business.

Operator: And so these strategies that the customers are looking at are slightly changing from what they have been in the past. And so they're not ready to dive into new innovation until they sort of get their big hospital network strategy built on how they're going to dispense medication across a broad group of hospitals and clinics. And because of that, I think... You know, we're in a lot of discussions, but they're moving pretty slow. That's really helpful. Thank you. And then maybe just one more on the bookings.

Anne Samuel: Bookings and advanced services are a multitude of different ways.

Anne Samuel: Monetization of the stream over in the three five even 10 years.

Anne Samuel: So it kind of confuses window's backlog dollars will hit the P&L.

Anne Samuel: But they are generally longer than 12 months and in three to five years. So.

Anne Samuel: It's not the same impact, but the key for us and the way to look at our P&L as we gave guidance on advanced services. This year for the revenue.

Operator: Can you just remind us of the timeline of converting bookings into revenue? How long that takes? You know, if we were to start to see a pickup in the macro and maybe some improvement in your bookings, how long would it take for us to see that translate into revenue? Well, um... It's a good question because this is one of the things Cha Cha discussed about coming up with new metrics because bookings can be confusing. But the easiest thing is to look at product. The product generally takes 12 to 18 months for installation, maybe shorter than 12 months in many cases.

Anne Samuel: So that is the revenue piece of the advanced services the.

Anne Samuel: The product backlog than is monetized in.

Anne Samuel: 612, maybe as much as 18 months. So that's more of a near term revenue CCP advanced service product revenue.

Anne Samuel: And in.

Anne Samuel: The product revenue.

Anne Samuel: And that that steers, you pretty close to how the business works.

Speaker Change: Terrific. Thank you so much.

Speaker Change: Thanks Danny.

Speaker Change: Your next question comes from Scott <unk> with Keybanc. Please go ahead.

Scott: And the product bookings for the product guidance for revenue and bookings. So are you assuming any revenue contribution.

Operator: So that's a key driver for the business or the near-term part of the business. Bookings in advanced services are a multitude of different monetization of the stream over either 3, 5, even 10 years. And so it kind of confuses when those backlog dollars will hit the P&L, but they're generally longer than 12 months and 3 to 5 years.

Scott: This year from that Nu X T series console.

Scott: That you talked about as a growth opportunity.

Scott: And then secondly on advanced services, you know you talked about the regulatory environment pressuring advanced services demand for the IV X, but are you also seeing any slowdown in maybe the retail side in life and health. Thank you.

Operator: So it's not the same impact. But the key for us... and the way to look at our P&L, is we gave guidance on advanced services this year for revenue. So that is the revenue piece of the advanced services. The product backlog, then, is monetized, and... 6, 12, maybe as much as 18 months.

Scott: Well I think <unk> is a different business model, mostly SaaS.

Scott: We did have some churn in the business, but we're not necessarily seeing slowdown in interest or.

Speaker Change: Or the value that the product line brings.

Scott: We are seeing.

Scott: Yes, we believe that.

Scott: Okay.

Scott: That advanced services for IV is certainly a bigger impact of IV were where we would want it to be it would be.

Operator: So that's more of the near-term revenue. So you think about the advanced service product revenue and the product revenue, and that steers you pretty close to how the business works. Perfect. Thank you so much. You won't.

Scott: We are riding the ship on the advanced service side.

Scott: And then your guidance on the product side for revenue does it assume any contribution from the new console software a small amount in the back half of the year, yes, but.

Scott: Small amount.

Scott: Thanks.

Speaker Change: Thank you Scott next question please.

Operator: Your next question comes from Scott Schoenhaus with KeyBank. Please go ahead, product bookings or product guidance for revenue and bookings. So are you assuming any revenue contribution this year from that new XT series console that you talked about as a growth opportunity? And then, secondly, on advanced services, you talked about the regulatory environment pressuring advanced services demand for the IVX, but are you also seeing any slowdown on the retail side? Well, I think Alive and Out is a different business model, mostly SaaS.

Scott: Your next question comes from Alan <unk> with Bank of America. Please go ahead.

Scott: Yes.

Alan: Good morning, and thanks for the questions one for Randy or in charge.

Alan: On the strategic review trying to get a sense of where this is focused is it more on the operational cost structure accurate result in the divestiture of assets and just can you elaborate a little bit more on the scope here is basically everything on the table and then trying to understand the timing here as it's something.

Alan: Where are we should expect.

Alan: A resolution in 2024.

Alan: Just a holistic operational and go to market review right I mean, we've got a lot of great products.

Operator: We did have some churn in the business, but we're not necessarily seeing a slowdown in interest or... or the value that the product line brings. We are seeing... Yeah, we believe that advanced services for IV are certainly a bigger impact. If IV were where we would want it to be, it'd probably be riding the ship on the advanced service side. And then your guidance on the product side for revenue, does it assume any contribution from the new console you talked about? A small amount in the back half of the year, yes.

Scott: We've either launched or acquired over the last several years and it's just time to do a review on those and it's been a long time since Omnicell has had this type of year in decline. So it just makes sense to do that this this review.

Speaker Change: Yes, I would just add to that.

Speaker Change: Yes, I would just add to that.

Speaker Change: I'll say also is that there is a need.

Speaker Change: There is significant and thoughtful evaluation of where we can make changes to improve our performance from operations and go to market initiatives as well as our overall product portfolio.

Speaker Change: And while the cost savings that we've taken already on the way we need to evaluate opportunities for additional actions that will enhance value creation for our shareholders.

Operator: Thank you, Scott. Next question, please. Your next question comes from Allen Lutz with Bank of America. Please go ahead. Good morning, and thanks for the questions. One for Randy or Nuchacha.

Speaker Change: Great and then on the product bookings curious.

Speaker Change: A follow up to some other questions here I'm curious if the driver or just to kind of break out some of the drivers around the expectation for higher bookings growth.

Operator: On the strategic review, trying to get a sense of where this is focused, is it more on the operational cost structure? Could it result in the divestiture of assets? And just, can you elaborate a little bit more on the scope here? It's basically everything on the table. And then try and understand the timing here. Is this something where we should expect a resolution in 2024?

Speaker Change: From the product side in 2024 would you say whats as we think about changes to hospital budgets that you are seeing the new XT console upgrade.

Speaker Change: Im just curious.

Speaker Change: Are those the two things that are providing them the greater confidence here as we go through 2024, and just curious what youre seeing today as it relates to your conversations with hospitals.

Operator: Thanks. It's just a holistic operational and go-to-market review, right? We've got a lot of great products that we've either launched or acquired over the last several years. And it's just time to do a review of those. And it's been a long time since Omnicell had this type of year and decline.

Speaker Change: Yes, definitely the macro environment. It has improved over time is still some headwinds there, but the <unk> product line, which is the point of care product line.

Speaker Change: As a.

Speaker Change: A big contributor.

Speaker Change: What's in product upgrading the cycle of the.

Operator: So it just makes sense to do this review. Yeah, I'll just add to that that our results tell us that there is a need for a significant and thoughtful evaluation of where we can make changes to improve our performance from operations to go-to-market initiatives, as well as our overall product portfolio. And while the cost savings that we've taken are already underway, we need to evaluate opportunities for additional actions that will enhance value creation for our shareholders.

Speaker Change: X T line is something we did before right. We went from G III and <unk> with a console upgrade now we've got the XT console, that's going to be upgraded to the next version, which is a natural thing for customers to do so.

Speaker Change: It's a playbook that we've run before so we're really confident that.

Speaker Change: This will resonate with customers extend their investment they made in the <unk> product line to bring them more value provide more security.

Operator: And then in the product book, Curious, you know, follow up to some other questions here. I'm curious if the driver, just to kind of break down some of the drivers around the expectation for higher bookings growth from the product side in 2024, would you say, you know, what's, as we think about changes to hospital budgets that you're seeing with the new XT console upgrade, I'm just curious, you know, are those the 2 things that are providing them with greater confidence here? As we go through 2024, I'm just curious what you're seeing today as it relates to your conversations with hospitals. Thanks.

Speaker Change: Some of these keyboards and screens are seven to eight years old that need to be replaced so there's.

Speaker Change: There's a lot of logic, there for customers and a little bit more willingness we see for them to invest in.

Speaker Change: This is not just the pharmacy piece, it's something that that will help nursing, which is a very sensitive area.

Speaker Change: Our providers these days.

Speaker Change: Great. Thanks, Randy.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Your next question comes from Matt Hewitt with Craig Hallum Capital Group. Please go ahead.

Operator: Yeah, definitely, the macro environment has improved over time; there are still some headwinds there. But the XT product line, which is the point of care product line, is, you know, a big contributor to what's in product upgrading the cycle of the XT line is something we did before, right? We went from G3 to G4 with a console upgrade. Now we've got the XT console that's going to be upgraded to the next version, which is a natural thing for customers to do. It's a playbook that we've run before, so we're really confident that this will resonate with customers, extend their investment they made in the XT product line to bring them more value and provide more security. Some of these keyboards and screens are seven, eight years old. They need to be replaced with new ones.

Matt Hewitt: Good morning, and thank you for taking the questions maybe a couple on the new the new console upgrade.

Matt Hewitt: And Randy Thanks for explaining it sounds like it's like the <unk>.

Operator: When I think back over a couple of your prior upgrade cycles, you had an external driver that helps kind of expedite the process I think at one point it was the EHR meaningful use.

Matt Hewitt: You guys were the only ones that had.

Matt Hewitt: Approval for that and so that helped drive.

Operator: Adoption of our new cabinet and then at one point it was the Windows 2000, and sunsetting, what do you see as a driver for this new console upgrade is it on the cyber security side is there something else that could help externally kind of drive customers to adopt this new platform.

Operator: So there's a lot of logic there for customers and a little bit more willingness we see for them to invest. And this is not just a pharmacy piece. It's something that will help nursing, which is a very sensitive area of pharmacy. Thanks, Randy. Your next question comes from Matt Hewitt with Craig Hallam Capital Group. Please go ahead.

Speaker Change: Yeah in itself. It's definitely allows you to access the latest operating systems, which of course everybody's concerned about it.

Matt Hewitt: And so it is more secure it's also more efficient for nurses to use it there is some.

Matt Hewitt: Efficiency enhancements.

Operator: Good morning, and thank you for taking the questions. Maybe a couple on the new console upgrade. And Randy, thanks for explaining. I mean, it sounds like it's like the G4. When I think back over a couple of your prior upgrade cycles, you had an external driver that helped kind of expedite the process. I think, you know, at one point, it was the EHR meaningful use. You guys were the only ones that had approval for that, and so that helped drive the adoption of a new cabinet. And then, at one point, it was the Windows 2000 sun setting.

Matt Hewitt: As well.

Matt Hewitt: It is going to be a platform, which we will continue to innovate on that will allow them access to these new innovations youll have to add the new console to access. These additional innovations as we go along and probably the biggest driver is.

Speaker Change: Is that if you've made an investment in X T. You want to be able to lengthen the life of that frame and in order to do that.

Speaker Change: You have to do the console upgrade because we're not going to to allow the.

Operator: Continual use of an older piece of equipment when it gets out of date and so to get that refresh.

Operator: What do you see as a driver for this new console upgrade? Is it on the cybersecurity side? Is there something else that could help, you know, externally kind of drive customers to adopt this new platform? Yeah, in itself, it definitely allows you to access the latest operating systems, which, of course, everybody's concerned about. And so it is more secure. It's also more efficient for nurses to use it.

Speaker Change: From the frame you've got to upgrade the console. So it's something that they are used to is something that we've done over the years they understand and.

Operator: And we've had a lot of discussions on pipeline on it so sort of just very very early returns I'd say, we're pretty pleased with how it's going rate or is it expected to go.

Operator: That's great and then maybe a similar question or related question with it just being a software upgrade should that result in a shorter sales cycle. Unlike when you're ripping and replacing the full cabinet. Because this is just software does that result in a shorter sale.

Operator: There's some efficiency enhancements, as well is going to be a platform which we will get continue to innovate on that will allow them access to these new innovations. You'll have to have the new console to access these additional innovations as we go along and probably the biggest driver is is that if you've made an investment in XT you want to be able to lengthen the life of that frame and in order to do that you have to do the console upgrade because we're not going to allow the continual use of an older piece of equipment when it gets out of date and so to get that refresh from the frame you've got to upgrade the console so it's something that they're used to it's something that we've done over the years they understand and and we've had a lot of discussions in pipeline on it so you know sort of just very very early returns I'd say we're pretty pleased with how it's going right or it's expected to go. That's great.

Operator: Cycle or shorter implementation cycles, and therefore, maybe help a little bit sooner yes.

Speaker Change: Yes, let me just be clear it is a hardware console is like the.

Operator: The interaction screen and keyboard they use but it's a fairly simple exchange.

Operator: In less than an hour to pull out the old and put in the new and then it has the new software and it's ready to go. So it is a little bit simpler to make the sale and a little bit simpler to revenue as well.

Operator: Because.

Operator: Youre not doing.

Speaker Change: Not doing a forklift.

Operator: Of our major product lines, you are just upgrading and enhancing the one that's already there was a little bit of hardware and a lot of software.

Speaker Change: Got it alright, thank you.

Operator: Yeah.

Operator: Your next question comes from David Mann.

Operator: And then maybe a similar question or related question: with it just being a software upgrade, should that result in a shorter sales cycle? Unlike when you're ripping and replacing the full cabinet, because this is just software, does that result in a shorter sales cycle, a shorter implementation cycle, and therefore, maybe help a little bit sooner? Yeah, let me just be clear. It is a hardware console. It's like the interaction screen and keyboard they use, but it's a fairly simple exchange, you know, less than an hour to pull out the old and put in the new, and then it has the new software, and it's ready to go.

Speaker Change: Please go.

Speaker Change: Go ahead.

Speaker Change: Hi, can you talk about your own sort of cost inflation trends.

Operator: Along the lines of like steel and freight and your own labor and then I think you were implementing some price increases for your base to help offset that.

Operator: How are those being received by your by your customers and how far along are we on that process. Thanks.

Operator: So we continue to monitor.

Operator: Supply chain and the geopolitical environment.

Operator: And the impact that that has on our business.

Operator: Inflation is normalized in the recent quarters, but we as we.

Operator: So it is a little bit simpler to make the sale and a little bit simpler to make the revenue as well because you're not doing a forklift of a major product line. You're just upgrading and enhancing the one that's already there with a little bit of hardware and a lot of software.

Operator: Take pricing actions.

Operator: We believe that this will be well received by our vendors.

Operator: Okay.

Operator: And then with the X T sort of upgrade Randy I think we had been talking about like being maybe 70% or more of the way through sort of this fall XT upgrade process and on previous calls I think what I'm hearing from you now is that it's a full reset everybody is going to have to go through this new XT upgrade for this new car.

Operator: All right. Thank you. Your next question comes from David. Go ahead.

Operator: Hi, can you talk about your own sort of cost inflation trends along the lines of like steel and freight and your own labor? And then I think you were implementing some price increases. You know, inflation has normalized in recent quarters, but we, as we take pricing actions, you know, we believe that, you know, this will be well received by our vendors. And then with the XT sort of upgrade, Randy, I think we had been talking about being maybe 70% or more of the way through sort of this full XT upgrade process on previous calls. I think what I'm hearing from you now is that full reset. Everybody's going to have to go through this new XT upgrade for this new console. Can you talk a little bit about the pricing for that, please? Like how much of a lift?

Operator: So can you talk a little bit about the pricing for that please like how much of a lift should we expect to see per per customer.

Operator: Just the console alone and we're looking at it.

Operator: <unk> expanded portfolio to take to the customer, which we will announce.

Operator: Throughout the year.

Operator: Broader innovation is going to work but.

Operator: It's about.

Operator: As these console upgrades generally are about a third of the price.

Operator: Of the unit.

Operator: Okay. So it sounds like it will be actually very very material quite frankly, which is obviously a good thing.

Operator: And then just my last one is for the <unk> revenue guide that looks low so I like how cha-cha beat the guide this quarter, that's that's great.

Operator: Are you being conservative with the <unk> revenue guide or what is causing the seasonality here.

Operator: I guess my concern is if you are not being conservative than youre kind of expecting a pretty good lift in the back half of the year.

Speaker Change: Just any color there would be great.

Operator: we expect to see per customer. We're just the console alone, and we're looking at an expanded portfolio to take to the customer, which we will announce throughout the year about how this broader innovation is going to work. But you know it's about, as these console upgrades generally are, about a third of the price and a couple of units. So it sounds like it'll be very, very material, quite because I was. And then just my last one is, for the 1Q revenue guide, that looks low, so I like how ChaCha beat the guy this quarter. That's great. Are you being conservative with the 1Q revenue guide, or what is causing the seasonality here? I guess my concern is if you're not being conservative, then you're kind of expecting a pretty good lift in the back half of the year. Color therapy

Operator: Yes.

Speaker Change: Yes, well look we.

Operator: <unk> provided a plan that we believe we can manage a company to and we remain optimistic about.

Operator: Our innovation within the XT platform, which includes this.

Operator: Console upgrade and we expect a modest improvement in demand for point of care as we go into 2024.

Speaker Change: Okay. Thanks, I'll hop back in the queue.

Speaker Change: Thanks, David.

Operator: Your next question comes from Stephanie Davis with Barclays. Please go ahead.

Speaker Change: Hey, guys. Thank you for taking my question.

Operator: I heard in the prepared remarks that you guys are talking about execute against our long term growth strategy. So I wanted to revisit that.

Operator: And all of that.

Operator: Annual fall last year, you talked a lot about moving.

Operator: What are the services and software play away from just the hardware alone.

Operator: Advanced services was part of that.

Operator: Where are you in that transformation.

Operator: The long term targets.

Operator: Yes, obviously advanced services is very key, but we'll always have product as part of our business model and a big portion of that business model over the past few years, which generate a lot of growth in a lot of revenue has been the point of care.

Operator: And so that is impacting our model more than we'd like obviously right now but to get our model back in balance we need to be able to have those product revenues.

Operator: Yeah, look, we provided a plan that we believe we can manage a company on, and we remain optimistic about, you know, innovation within the XT platform, which includes this console upgrade. And we expect a modest improvement in demand for our point of care as we go into 2024. Thanks, David. Your next question comes from Stephanie Davis with Barclays. Please go ahead.

Stephanie Davis: Particularly from point of care start to drive our growth and increased earnings.

Stephanie Davis: But theres a lot of ways, we can offer those products. They don't have to be as a product sale alone. We don't really want to be doing product sales alone. We want to do those product sales enhance with services around them.

Operator: But.

Stephanie Davis: So it's really key for us to move from selling products.

Operator: Hey guys, thank you for taking my call. I heard in the repair remarks that you guys were talking about executing against your long-term growth strategy, so I wanted to revisit that. I know at Analysts' Day last year, you talked a lot about moving from more of a services and software play away from just hardware alone. Advanced Services was part of that. Where are you in that trance?

Stephanie Davis: Two really helping our customers run the day to day operations.

Operator: And their medication processes. So they can achieve success, but it does include the offering and the sale of products either embedded into service are sold as a service surrounded by services. So I don't know if that answers your question directly but it's kind of it's the same it's we're moving forward.

Operator: And is that still kind of the long-term target? Yeah, obviously advanced services are very key, but we'll always have products as part of our business model. And a big portion of that business model over the past few years, which has generated a lot of growth and a lot of revenue, has been the point of care. And so that is impacting our model more than we'd like, obviously, right now, but to get our model back in balance, we need to be able to have those product revenues, particularly from point of care, start to drive our growth and increased earnings. But there are a lot of ways we can offer those products. They don't have to be as a product sale alone.

Operator: Toward managing our customers' businesses day to day with these enhanced services and the revenues that are driving that can be in the form of traditional product revenues, but always adding on advanced services to get the results from the outcome.

Speaker Change: No. That's helpful. That's helpful. And then as you go through the strategic review and you kind of shake that discussion.

Speaker Change: First of all its not.

Operator: Are there any incremental end market like the retail pharmacy side of the house that might be more compelling to get into giving some of the headwinds.

Speaker Change: Yes, I think there is there is.

Operator: We don't really want to be doing product sales alone. We want to do those product sales enhanced with services around them. But so it's really key for us to move from selling products to really helping our customers run the day-to-day operations in their medication processes so they can achieve success. But it does include the offering and the sale of products either embedded in a service or sold as a service surrounded by services.

Operator: Always in the clinics.

Operator: <unk>.

Operator: Outpatient theres, some a lot of growth there and concerns there.

Operator: There are the quite the tool sets that they have on the inpatient side. So a lot of our customers want us to help them figure those out and certainly those.

Operator: Those kind of markets or in our view and either investing or make or buy so.

Speaker Change: Absolutely those those made a lot of sense.

Operator: Proceeded.

Speaker Change: Alright, Thank you and I'll hop back in the queue.

Operator: Yeah.

Operator: Your next question comes from Bill Sutherland with Benchmark Company. Please go ahead.

Operator: Yes.

Operator: So I don't know if that answers your question directly, but it's the same. We're moving forward toward managing our customers' businesses day-to-day with these enhanced services, and the revenues that are driving that can be in the form of traditional product revenues, but always adding on advanced services to get the results and the outcome. No, that's helpful.

Speaker Change: Thanks, Good morning, everybody, Hey, Ray you just mentioned maker pie.

Speaker Change: I'm actually going to ask you what your room.

Speaker Change: Any thoughts on the capital deployment side.

Operator: Particularly with the cash.

Operator: Moving quite nicely.

Speaker Change: Yes, I'll, let <unk> comment on the refinancing of the debt.

Operator: And we should should've said that they probably wont be looking at acquisitions do we get sort of the debt side of it.

Operator: Addressed here and.

Operator: That's helpful. And then as you go through the strategic review, you kind of shake that sketch of what's in business versus what's not. Are there any incremental end markets?

Speaker Change: That's not too too far off in the distant future I don't know if catch up which we would want to say anything else about that.

Operator: We continue to be mindful of the upcoming 2025 much already of the convertible senior notes and we.

Operator: The retail pharmacy side of the house that might be more compelling to get into given some, Yeah, I think there's, uh, um.., always in the clinics and, you know, outpatient, there's some, a lot of growth there and concerns there that there aren't quite the tool sets that they have on the inpatient side, so a lot of our customers want us to help them figure those out, and certainly those kind Thank you. Your next question comes from Bill Sutherland with The Benchmark Company. Please go ahead. Thanks. Good morning, everybody.

Bill Sutherland: And we are considering various options to maintain strategic flexibility for the company.

Bill Sutherland: And therefore too.

Bill Sutherland: Minimize any potential dilution to our stockholders.

Bill Sutherland: Got it.

Bill Sutherland: Touch on the quarterly cadence, particularly on earnings non-GAAP earnings.

Bill Sutherland: From the Q Q1 guidance for the full year quite a lift is it going to be kind of them should.

Bill Sutherland: Can we think of as kind of ratably, improving or is it more back half loaded.

Bill Sutherland: I will say back half loaded to a certain extent.

Operator: Okay.

Bill Sutherland: And then Randy said not too long ago at a conference that.

Operator: Hey, Randy, you just mentioned Make or Buy. I'm actually going to ask you to give your... You know, any thoughts on the capital deployment side and, um, Moving quite nicely addressed here and, And, you know, that's not too far off in the distant future. I don't know, Chacha, would you want to say anything else about that?

Bill Sutherland: Regulatory headwinds, which are state by state Econ Ibs.

Operator: You kind of thought that most of the important states at least would be.

Operator: Worked through during the course of this year I think that's what you said.

Chacha: Is that is that the case, so that we can really expect Ivy X will be taking off in 'twenty five.

Operator: Okay.

Operator: Yeah, Bill, we continue to be mindful of the upcoming 2025 maturity of the convertible senior notes, and we are considering various options to maintain strategic flexibility for our company and in an effort to minimize any potential dilution to our stockholders. Got it. Um, shots of the quarterly cadence, particularly on earnings, non-GAAP earnings, from the Q1 guidance. Title Microsoft Office Word Document MSWordDoc Word.

Operator: 25.

Speaker Change: We'll have to see how it goes but I think.

Operator: I think 25% is going to be a much better year for IV, just because we will get through some of those state some of the things that impacted.

Operator: The IV is what drugs you can mix on site and how long the stability was in.

Operator: And so our original thesis for some of our sites, where we were making proposals the RIS, whereas high. So we had to go back and re formulate those and then get hospitals to get engaged on those again. So I think we will have worked through most of that by the end of this year.

Operator: Document.8, Should we think of it kind of rateably improving? Or is it more back calf load? I'll take back what I've loaded to a certain extent. And then, Randy, you said not too long ago at a conference that... Regulatory Headwinds, which are state-by-state on IVF. Yeah. You kind of thought...

Operator: Okay.

Speaker Change: That's all I have thanks very much.

Speaker Change: You bet.

Operator: Your last question comes from Jessica <unk> with Piper Sandler. Please go ahead.

Speaker Change: Hi, guys. Thank you for the question.

Operator: Without the need to ask what's really helpful Slide 14.

Operator: So I wanted to just get kind of clarity on the the enhancement of the XT cycle the console versus the upgrade cycle.

Operator: The United States, at least, would be worked through during the course of this year. I think that's the way you said it. Is that the case, so we can really expect IVX to be taking off in 2020? O-N-T-O-N-E-T-Y-F-I-V-E. We'll have to see how it goes, but I think... Um. I think 25 is going to be a much better year for IV just because we'll get through some of those states.

Operator: I guess, what's the thought process on launching the new console during the end of the XP cycle as opposed to just.

Operator: Entergy thing the new console in cabinets kind of bundled together as a new.

Operator: Our new product cycle entirely.

Operator: While this has been our tradition and it's also been part of our brand is that if you buy a frame from us. It's good for 10 years, but it includes an upgrade of the console about halfway through to get.

Operator: Some of the things that impacted IV are what drugs you can mix on-site and how long the stability is, and so our original thesis for some of our sites where we were making proposals, the RIs weren't as high, so we had to go back and reformulate those and then get hospitals to get engaged on those again. So I think we'll have worked through most of that by the end of this year. OK. That's all I have. Thanks. You bet. Your last question comes from Jessica Tassin with Piper Fandler. Please go ahead.

Jessica Tassin: New enhancements and <unk>.

Jessica Tassin: Really replacement of the old hardware or the interface consoles. So.

Jessica Tassin: Customers kind of expected.

Jessica Tassin: And it generates good revenue for us and it extends the life of their asset it's easy it makes sense for them to purchasing keeps customers engaged with us.

Operator: As we move on to product transitions and product rollouts of new products and services. So.

Operator: Hi guys, thank you for the question. And I thought the new deck was really helpful, slides 14, especially. So I wanted to just get kind of clarity on the enhancement of the XP cycle via console versus the upgrade cycle. And I guess what's the thought process on launching the new console during the end of the XP cycle, as opposed to just introducing the new console and cabinet kind of bundled together as the New Product Cycle Entirely. Well, this has just been our tradition, and it's also been part of our brand, that if you buy a frame from us, it's good for 10 years, but it includes an upgrade of a console about halfway through to get new enhancements and really replacement of the old hardware or the interface console. So, you know, customers kind of expect it, and it generates good revenue for us, and it extends the life of their asset. It's easy.

Jessica Tassin: It's I would say half of our customers in the last.

Operator: Three years of just installed our XD. So if you count.

Operator: It's not the timing to come up with a new piece of hardware told frame at this point and so this would be the next logical move for us and our go to market as well. Historically. This is this makes a lot of sense and then.

Operator: And that's probably the reason we've kind of had this dip on as we tailed off from the XT and were taken off on the console upgrades as we probably had some of those XD cabinet sales were pulled in through the pandemic process and so it really created a slack in the rope and now that we're getting the XC console going which is with people.

Operator: Expect about this time.

Operator: It should help us even out and move forward on a more consistent basis to drive revenue and profit.

Speaker Change: Okay got it that's helpful. So the customers who have already implemented the XT if not paid for the console, yet, but they've agreed to sensibly or implicitly to upgrading the console whenever it gets released is that fair and is and is this kind of the incremental market.

Operator: It makes sense for them to purchase and keeps customers engaged with us as we move on to product transitions and product rollouts of new products and services. So it's, you know, I would say half our customers in the last three years have just installed their XP. So if you, you know, it's not the timing to come up with a new piece of hardware, a total frame at this point. And so this would be the next logical move for us in our go-to market as well. Historically, this is this, and this makes a lot of sense. And that's probably, you know, the reason we've kind of had this dip on, tailed off on the XT and were taken off on the console upgrades is we probably had some of those XT cabinet sales pulled in through the pandemic process. And so it really created this slack in the rope.

Speaker Change: Sure driver.

Operator: Or a way to drive revenue.

Operator: Okay.

Operator: This is all for the equity base and that's it's quite large for us right because of our footprint that we've gained over the last three or four years. So this is a sale.

Operator: Into our captured customers Xg base that we have today.

Speaker Change: Okay got it and then I just wanted to quickly follow up on your commentary about the booking mix and 23 versus the preliminary guide so about $150 million at the midpoint.

Operator: Okay.

Speaker Change: If we imagine that the majority of that is attributable to you.

Operator: And now that we're getting the XT console going, which is what people expect about this time, it should help us even out and move forward on a more consistent basis to drive revenue and profit. Okay, got it. That's helpful. So the customers who have already implemented the XT have not paid for the console yet, but they've agreed ostensibly or implicitly to upgrading the console whenever it gets released. Is that fair?

Operator: U S and central dispensing Ann and the IV compounding robot. It just suggests that they were pretty significant expectations for those two products in the 'twenty three bookings guide have you guys thought about or changed your philosophy around guidance for those new products and 24.

Operator: Just kind of increased the level of conservatism given that there are new products with.

Operator: And is this kind of an incremental market share driver or a way to drive revenue on existing equity? This is all for the XD base, and it's, you know, it's quite large for us, right? Because of the footprint that we've gained over the last three or four years, so this is a sale into our captive customers XD base that we have today. Okay, got it. And then I just wanted to quickly follow up on your commentary about the bookings missed in 23 versus the preliminary guide. So about $150 million with the mid, and if we imagine that the majority of that's attributable to a miss in central dispensing and the IV compounding robot, it just suggests that there were pretty significant expectations for those two products in the 23 bookings guide. Have you guys thought about or changed your philosophy around guidance for those new products in 24? www.youtube.com Yeah, Jess, that's a great point and I think that you see that in our... Bookings Guide, that is..., is lower and it reflects those conclusions you just had.

Operator: Yes.

Jess: Yes, that's a great point and I think that you see that in our.

Jess: Bookings guide that is it.

Speaker Change: Is lower and that reflects those those conclusions you just had so I think that's that's implied in there yes.

Speaker Change: Okay, Great. That's it for me thank you.

Operator: There are no further questions at this time, we apologize for the technical difficulties. During today's conference I will now turn the call back over to Randall Lipps for any closing remarks.

Speaker Change: Well, thanks for joining us today.

Speaker Change: We've got a lot to do in 'twenty four but we're really excited about our innovation road path that we believe is really going to drive growth in earnings over the long term.

Speaker Change: We really have.

Operator: Stepped up our focus on our go to market on our innovation consistently even quarter to quarter as we move forward. So look foreseeing these new innovations as they come out and how they fit into our roadmap and what it means to customers and what they mean to our revenue and earnings.

Operator: It's really.

Operator: In a way, it's really exciting to get to the next phase, which is the upgrade phase and even more rollout of our XP and advanced service lines.

Operator: So I think that's implied in there, yes. Okay, great. That's it for me. Thank you. There are no further questions at this time. We apologize for the technical difficulties during today's conference. I will now turn the call back over to Randall Lipps for any closing remarks.

Operator: I also want to thank the Omnicell employees for working extremely hard as we.

Operator: Continue on to deliver great value for our customers and for each other.

Operator: And get our company going back to growth and back to profitability. Thanks, everyone Cheers.

Randall A. Lipps: Well, thanks for joining us today. We've got a lot to do in 24, but we're really excited about our innovation road map that we believe is really going to drive growth and earnings over the long term. We really have stepped up our focus on our go-to-market, on our innovation consistently, even quarter to quarter as we move forward. So look, we're seeing these new innovations as they come out and how they fit into our roadmap and what they mean to customers and what they mean to our revenue and earnings. It's really, in a way, really exciting to get to the next phase, which is the upgrade phase and even more rollout of our XP and advanced service lines. I also want to thank the Omnicell employees for working extremely hard as we... We continue to want to deliver great value for our customers and for each other and get our company going back to growth and back to profitability. Thanks, everyone. Cheers. This concludes today's conference; you may now disconnect. transcript Emily Beynon transcript Emily Beynon transcript Emily Beynon transcript Emily Beynon

Randall A. Lipps: This.

Randall A. Lipps: Today's conference you may now disconnect.

Randall A. Lipps: [music].

Randall A. Lipps: Yes.

Randall A. Lipps: [music].

Randall A. Lipps: Okay.

Randall A. Lipps: Yes.

Randall A. Lipps: Okay.

Speaker Change: Thank you.

Randall A. Lipps: Okay.