Q2 2019 Earnings Call
Good afternoon. My name is Kelly and I will be your conference operator today.
At this time I would like to welcome everyone to the Ami So second quarter earnings call.
All lines have been placed on mute to prevent any background noise.
After the prepared remarks, there will be a question and answer session.
If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad.
If youd like to withdraw your question. Please press the pound key.
I would now like to turn the call over to Peter Piper Chief Financial Officer. Please go ahead.
Thank you.
Good afternoon, and welcome to the only self second quarter 2019 earnings call. Joining me today is Randall Lipps, only so founder chairman President and CEO .
This call will include forward looking statements subject to risks.
Uncertainties and other factors that could cause actual results to differ materially from those expressed or implied.
For a more detailed description of the rest of things I can follow statements. Please refer to the information in our press release today.
You want me so I know the portal concept, okay, Oh, yes to see on February 27th doesn't like being in other more recent reports so yes.
Thanks, theoretically should not place undue reliance on any forward looking statements made today.
They have this conference call July 26, 2019, and all forward looking statements made on this call are based on the beliefs only so that's what it is they own.
Two or three centssixty the types of time may cause these beliefs and change.
Finally, this conference call is the property of all this line.
And they they ought to dislocation or rebroadcast without the expressed written consent of Omnicell is prohibited.
Randall will provide an update on our business.
After a rental CE marks on the core of our results for the second quarter 2019, and our guidance for the remainder of the year.
A second quarter financial results are included in our earnings announcement, which was released earlier today and is posted in the Investor Relations section of the website that only sell dot com.
Oh prepared remarks will also be posted in the same sense.
Let me now turn over the call Toronto.
Thanks, Peter good afternoon.
Were pleased to share the results of another strong quarter as the health care industry continues to recognize the importance of the vision for the economists pharmacy.
As we discussed previously this vision of creating a zero error fully automated and digitized infrastructure will lead to enhanced safety.
Control and efficiency of medication management across the continuum of care.
We have made significant strides this quarter to advance this vision and engage customers to join us on this tour.
Our business is very healthy and continues to grow profitably.
Key financial results for the quarter included.
Record revenue of 217 million up 15% from the same quarter of 2018.
non-GAAP EPS of 67 cents per share compared to 46 cents a share in the same period last year, representing a 46% increase.
Our product backlog.
At June 32019, and at an all time high.
And it's growing faster than our product revenue.
During this quarter, we continued to see solid momentum from new customer partnerships that are embracing the vision for the Thomas pharmacy.
Yeah, Thomas pharmacy integrate.
Hence a set of solutions powered by the omni sell cloud data platform across three key areas.
First automation solutions designed to digitize and streamline workflows.
Second intelligence that provide actionable insights to better understand medication usage and improved pharmacy supply chain management.
And automation of medication dispensing workflows, which include expert services that serve as an extension of pharmacy operations to support improved efficiency regulatory compliance.
And patient outcomes.
Some of our recent partnerships include Spartanburg regional health care system.
An integrated healthcare delivery network in South and North Carolina.
At select an Ami cell solutions at their flagship research and teaching hospital.
Spartanburg Medical center.
As well as the newly acquired very black campuses.
Spartanburg will make will spartanburg like many provider networks is building a centralized distribution center or CDC.
But the main hub for pharmacy supply chain management.
Central to operations in this new center will be Omnicells XR to automate central pharmacy systems.
Robotic system designed to automate critical workflows to management to maximize inventory control help improve efficiency and increase medication safety.
Spartanburg will also have the ability to better utilize health data analytics through omni sell performance center.
M.U.S.C. Hill.
Named the number one on the health system in South Carolina by U.S. News and World report.
Well be implementing omnicells robotic I.E. insourcing solution to bring sterile compounding in house as part of the health systems Central Pharmacy operations.
This unique programs and buying advanced robotics technology.
Data and expertly trained pharmacy technicians that into a comprehensive turnkey package.
In the U.S.C. helpful also implement omni sales X P series.
And patient care areas.
Additionally, we have secured several long term partnership commitments with leading healthcare systems, including.
Saint Louis University Health network in Eastern Pennsylvania, and Western New Jersey.
[noise] plus.
Northern Arizona healthcare.
And in Charlotte North Carolina is based atrium help.
These health systems will support medication management across their service networks through omni scale automation and intelligence solutions.
Hoping to improve management of the pharmacy supply chain on tolerant pharmacists nurses clinicians the pharmacy staff to focus on patient and clinical satisfaction.
These three health system alone.
Represent approximately 1% of the U.S. hospital market.
Based on total bed count.
Well the second quarter, we closed a record number of multimillion dollar deals versus any previous second quarter in the company's history.
Over 80% of these deals are anchored by long term commitments and over 90% of these customers who purchase multiple products coming out in the field crop platform.
These are examples of how our business has expanded over the years from a single point solution to a platform of products and services, which has resulted in a larger deal sizes across multiple product lines.
More complex implementations and we believe a more comprehensive and then during the relationship with our customers.
It's hot in the pharmacy is steadily evolving from a visit to a collaborative mission being driven in partnership with our customers and industry partnerships I'm thrilled to share this progress and look forward to our continued success.
Now, let me turn the call back over to Peter for second quarter update and the rest of the year guidance Peter.
Thank you Randall our second quarter 2019, GAAP revenues amounted to $17 million was up.
15% over the second quarter 2008.
The increase in revenue largely driven by.
An increase in Exi series implementations from a growing base of customers second.
Increases in annual service and maintenance revenue from a larger installed base of equipment Lastly.
Contributions from new products introduced over the last year.
The second quarter earnings per share in accordance with GAAP was 37 cents per share up from 60 cents per share in the second quarter of 2018.
The increase in earnings per share is largely due to higher revenue the second quarter of 2019 and achieving economies of scale.
Overall previously.
In addition to GAAP financial results. We report our results on a non-GAAP basis, which excludes stock compensation expense amortization of intangible assets associated with acquisitions.
Acquisition and restructuring related expenses tax reform and personal income tax benefits expenses.
I think the gains and emphasize establishes costs.
We use non-GAAP remains the same as in addition to GAAP financial statements because we believe it's useful for investors to understand the effects of amortization of acquisition related costs and non cash stock compensation expenses that are part of our reported results as well as one time events in acquisition and restructuring related expenses.
A full reconciliation of our GAAP to non-GAAP results is included in a second quarter earnings press release and is posted on our website.
Second quarter 2019, non-GAAP EPS was 67 cents per share compared to 46 cents per share in the same period last year, representing a 46% increase.
Similar to the increase in our GAAP bps increase in earnings and show a non-GAAP basis is again, largely due to economies of scale and chief of the contexts, Ohio revenue.
non-GAAP other expenses and income for the second quarter of 2019 was $1.1 million compared to $2.8 million in the second quarter 2018. The decrease primarily relates to lower interest expense as we have continues to de leverage.
Let's now move to the balance sheet cash flow.
Second quarter 2090 cash flow from operations was $27 million.
Operating cash flow in the second quarter was primarily driven by net income and adjustments for non cash related items, such as depreciation amortization, which were partially offset by changes in working capital.
During the second quarter of 2019, the company generated approximately $12 million of free cash flow.
We believe our business will continue to deliver free cash flow for the remainder of 2019.
Inventory as of June 32019 were approximately $104 million flat from the previous quarter and flat from June 32008.
We have been able to hold our inventory relatively constant over the last year. Despite a continued growth new product launches and larger average deal size.
The considerable days sales outstanding for the second quarter were 87 days down six days from the previous quarter and up one day from June 32008.
The decrease is the result from last quarter is primarily driven by higher taxes.
As of June 32019, our cash balance was $87 million.
Up $10 million sequentially and up $41 million from June 32008.
The increase in cash as use of proceeds from our at the market offering and operating cash flows.
During the second quarter, we utilized via our at the market offering to sell approximately 270000 shares of our common stock.
At an average selling price $82.51 per share.
So the gross proceeds raised during the quarter was approximately $18 million.
These proceeds were used to repay outstanding debt during the second quarter, we repaid $21 billion of that.
As of June 32019, we have $80 million of outstanding funded debt and our low leverage measured as outstanding total funded loan balance over the last 12 months, our LTM Bank EBITDA was approximately 7.5 times.
As of June 32019, we are now in a net cash position for the first time since the closing of the ascend transaction in early 2016.
Our headcount was 2555 at June 32019.
83 from the end of the previous quarter and up 31 from the same quarter last year. The majority of the quarter over quarter increases for manufacturing implementation and service personnel needed to support.
Our business continues to expand.
Now moving to our full year 2019 ducs.
We are increasing our full year product booking sites.
We now expect 2019 product bookings.
Between $765 million and seven of the $9 million.
Our previous guidance was between $745 million and seven the $780 million.
The increase in a product bookings guidance is based on strong commercial momentum.
Especially for expected orders for Arctic Caesars.
We continue to gain traction in ICSI upgrades.
And as we have mentioned previously we're in the early years of the ICSI upgrade cycle.
We are increasing the midpoint over 2090 total revenue guidance by mirroring your guidance range.
We now expect 2019 total revenue to be between $886 million dollars that $900 million. Our previous guidance range was between 880 $900 million the midpoint of our new guidance range says $819 million compared to $890 million, which was the midpoint of the guidance range from five as you know once you.
2019 earnings call.
Also the mid point of a new total revenue guidance range implies approximately 13% year over year growth from a full year 2018.
Total revenue.
This breakdown as follows we now expect because 90 product revenues of between to be between 653, six and $63 million our previous guidance range was 652.
And $668 million, we now expect 2019 service revenues between 233 into the $37 million our previous guidance range here was to 28.
$32 million.
We are narrowing our total year doesn't 19, non-GAAP EPS guidance. We now expect does 19, non-GAAP EPS to be between $2.65 and $2 $82 to all of us and 82 cents a share.
Our previous 2019, non-GAAP EPS guidance range was between $262.62 to $2.82 per share.
The midpoint of a new non-GAAP EPS guidance implies approximately 31% growth year over year.
For the third quarter of 2019.
We expect total revenue to be between 227 and $32 million.
We expect product revenues between to be between $68 million and out of that $72 million, we expect service revenue.
Between 59 and $60 million.
And we expect non-GAAP EPS to be between 60 767 cents.
72 cents a share.
Finally, before 2019 were assuming an average effective tax rate of 7% in a non-GAAP EPS guidance range.
As Randall mentioned, we are very pleased with results for the second quarter 2019, and we look forward to continuing to deliver profitable results. We were throughout the rest of the year.
Now I would like to open the call for your questions.
At this time the termite everyone in order to ask a question. Please press Star then the number one on your telephone keypad.
If youd like to withdraw your question. Please press the pound.
Your first question comes from the line of Mohan Naidu from Oppenheimer. Please go ahead. Your line is open.
[noise].
Thanks for taking my questions Randy Peter or you think you guys made a comment about.
Backlog being an all time high I guess.
<unk> is probably a big part of it can you talk about whether what other products are contributing to that and is there any change in mix in that backlog I think as of last year or.
I think you guys had makes around 22% long term or is this not shocked or any other color would be useful.
Yeah, they're small and if you look at it.
Of course, we saw revenue product revenue service revenue to decide so within product revenue are those also product backlog Exi series, it's the biggest the biggest product line.
So yes that is a that is a correct assumption.
There's one nuance there that's a.
Most of the increase above the revenue change things these product backlog.
It's really more in the short term backlogs. So that is a improvement if you will.
In the installation timing it acquired backlog. So we're very pleased with that.
Commercial momentum as reflected in the backlog.
And I guess Peter it what are the products are contributing on the short term starting from Buck from XT are there any specific products that are gaining momentum is fine.
It's a platform insects these areas as performance better effects or to its med adherence robots services.
So building out the platform that we announced in December .
Last year at age they see so that's all picking up.
And excluding hockey rights like.
Yeah.
Okay. Thank you and maybe a couple of more questions I guess the last couple of weeks there have been a lot of questions about receivables growth and revenue <unk> revenue recognition <unk> I guess, what type of storms do you normally place in your contracts for payments. It sounds like the implementations are talking taking longer to get our delays in conclusion, there, but you insist on a fixed payment terms. So do you let the Cline wait until the full implementation is down and.
Can you elaborate any of that.
Yes, those are good questions a couple of them that makes their right. So you're saying in terms of roughly a 145 days or larger.
Long term partnerships might be more of that.
60 day range.
International assets by nature, a longer payment terms as usual suspects there.
And I would say because of the larger deals and the large of installs.
Probably asked about 10 days to that to that average.
And then I would also say because wearable figure or products that we serve the customer.
I, probably ask another 10 days translates to roughly that day.
Average there you can compare at all so maybe there's some other med tech companies that are also in the 80 range do up to 100 or above that so.
We feel very comfortable you should also consider that a bill or me product lines below one shipping so not all companies do that so so my sense that you know gates, a payment cycle as well.
And just to be clear when you ship.
When you ship the product when you put.
That revenue I guess not revenue, but that amounting to just be able to do not recognize that revenue range.
Exactly revenue follows later after installation was completed after their written customer acceptance.
Well the main problem.
Okay.
Okay got it. Thank you so much for taking my questions.
Your next question comes from the line up.
Please go ahead your line is open.
Thanks, Good afternoon, a good job on the quarter and outlook.
I just wanted to follow the other line of questioning do you do you think you can get dsos back down into the Sixtys and seventys levels over time and.
Same for inventory days could you bring could would it could those go even lower going forward.
Yes, we're not really going to give guidance on the specific dsos inventory turns if you will.
Of course, we're working on the on both metrics a second got some traction there again I would refer also to other lessor companies that dsos arranged.
And not all of those have.
The contractual terms, we actually can bill a bunch yet so we have this fall.
Oh, it's factual term there.
On the ancillary side I would say that we do have.
A fairly large installed base as you know that we need to serve or services. The second of all if a marketing from them.
Two service equipment into field for about 10 years. So that's included in this story as well.
Plus and we have to be a new product ramp up access to.
Yes.
Okay makes sense. Thank you could you offer Randy maybe some commentary around the Ivy.
Line of products, what how is the reception there what are you seeing what type of reception from your customers. Thank you.
Well I think every one of the.
Finally network probably caused by the compounding and you have a lot of choices to make either outsourcing or buying a robot or insourcing in of itself you've got it.
And the pricing in the IB mounting market shifts around a little bit so it's a more complicated.
ER equation, because how you set the robot up and you've gone if you get maximum efficiencies or.
And so that's why we see bigger uptake on the IB Rightside, we are really helping customers love that for them and we can get better throughput and better for the out of it but this is a constant now I know many problems caused by the compounding in it I think we have new products on the idea or close eye and we're heavily investing in this area.
Find ways to make this cheaper faster and better and so I think everybody recognizes that its about what strategy. They want to take and you know how comfortable they are having us come in and help them run some of those pieces or whether they want to try to take some of those on themselves and I think some of the earlier customers. He took these products saw themselves you know I think that it's harder for them to keep up with the configuration changes as much as they should so we think we've got a better word models for.
Very good thank you.
Your next question comes from Matt Hewitt from Craig Hallum Capital. Please go ahead. Your line is open.
Thank you for taking the questions just a couple from me I guess first off on and connect.
Pick some of the areas that have been hot button items here recently, but on the receivables and the Dsos.
And I appreciate what you put out in the press release, but I'm wondering if you could discuss a little bit how the business has changed over the past call it half dozen years.
Are you seeing more system wide adoption, maybe you know 10, 12 hospital systems purchasing the product versus single hospitals or even divisions within a hospital and how does that change or how did those bigger contracts how do those change how you collect on those receivables.
Yeah, that's a great question so.
So we talked in the script that an earlier scripts about the long term sole source on a long term commitments. If you will more by year end those are.
This will be five seven or 10 year commitments, where we'd be bomb unsold nickel partner for that health system.
Supervise all medication mannesmann automation products and services.
And that then is the anchor that Dennis.
Substantiated, if you will as you go to the partnership to build the next level pharmacy live at health system.
My purchase orders or bookings or every year or every six months. If you will as you build that out.
The deal size is also becoming bigger and so those b O some becoming bigger installs are becoming bigger as well.
Yeah, I would say definitely does in fact ER.
The average collection timing as well sometimes also sits just wait till the very last or is its all of the last facility.
But are becoming a lot more strategic as well.
Look at our bad debt expense last five years has been less than half a cent.
Some hospitals do pay over the bigger health systems, including Us all.
I just might be a little guidance.
Okay, and then shifting to the inventories and can you just provide a little bit of detail there as far as making the commitment for 10 years.
To support the programs, but if you look back theres been some comparisons to the last upgrade cycle. The GE for upgrade cycle, maybe if you could describe a little bit some of the differences between the GE for upgrade cycle and the full equipment platform upgrade cycle with XT in some of these other product lines.
Yeah. So the deeper I bet was difference that was a console upgrade which is the computer console into frame on the existing frame. If you will therefore, the parts of lead common so both for upgrades and ER and it's all complete product right. So the.
Requirements for instance, already for for service was definitely the same parts if you will.
Move forward now to wants to earn that serious today, we now have the largest installed base just youve a season, U.S., consisting or actually dose and a and G. Four only sell agencies a that we will support for the economic life for customers up to 10 years. After after purchase and of course those service parts are not use and you actually share. So that's a new framework.
On the new console so.
I mean look I felt how far you know where I'm sorry based on multi band football say.
Uh huh.
Current product perspective, and also from a service perspective.
We feel comfortable there.
Got it.
All right and then maybe one last one from me regarding adjusted operating margin.
14.8% in the quarter and that's a really good number in its.
The highest we've seen since Q2 of 14, which was a little bit of an anomaly due to some recognition of vacation, but I'm wondering a 14.8 in Q2 implies that you're going to get higher than that as we get into the back half of the year have you had a chance to look at maybe three or five year target for that I know that you've kind of historically stuck to that 15%, but as you look at the model shifting to more software.
Do you envision an opportunity for that to maybe lift at times to something north of 15% on an annualized basis. Thank you.
Yes. The first looking at the 2019 is you've got to back into a guy and they use the midpoints of apply the guided range until you're gonna and calculating up roughly at points in that sense, but that's what a year or so.
The math shows that third or fourth quarter estimated to be slightly higher than the two to 90 or non-GAAP operating margin.
I would say, we're not not ready at this point to provide longer term guidance. We are transforming the company to more of a service oriented as a company.
Also with your bonus pharmacy or what does the market, we see a themselves are growing or.
Absolutely I would say.
So more to follow.
Oh understood alright, thank you.
And then the last one maybe just looking at the data there is close to the.
The growth of the of the multimillion dollar deals if you will and if you look at the top end for example, the top 10 deals in the fourth quarter of 18, and they were on average $7.3 million, he's comparing that to a fourth quarter all though.
Oh, 15 that was $2.7 million and average so you asked about the last six years as the last four years gives you. It's a good indication of the Oh the average deal size.
For the top 10 in the quarter, so almost a three four times.
Bigger stood us quotas.
Alright, thank you.
Your next question comes from Jamie Stockton from Wells Fargo. Please go ahead. Your line is open.
Hi, good afternoon. Thanks for taking my question I guess.
You know Peter I think you said that ER and obviously you guys have gotten into a slight net cash position here.
You know how are you thinking about.
M&A at this point and you know it's been I think a little over two years. Since you did you know your last acquisition.
You know piggybacking on Matts question earlier about kind of margin thoughts historically it feels like every time you guys have bumped up against 15% you've kind of.
Back yourself down a little bit from that by buying interesting businesses anything there would be great.
Yes, Yeah, Jay if I can take that question I got a lot of momentum in the business and so it really.
You know, we're we're actively sorting through M&A potential.
You know always and particularly anything that can fit into that that platform that will enhance a big pipeline connection to these customers the kings island platform to enhance and make it more valuable so as we have sort of evolved from the single solution affluent like it makes a lot of sense too.
You know how to find the right kinds of tuck ins this to two.
[noise] leverage that platform. So yeah, but you know there's a lot of things out there, it's a little bit not just going to find the right amount of my time, but no particular timing, but we're active we're lucky and we want to make it makes sense, but it's not particularly time to earnings or.
Oh anything else other than finding Taiwan's like [laughter].
Yeah, It's probably fair to say also that the you know the last big acquisition that says if you will recall that earlier on the X the younger insightful.
In the early years by anything to that.
We think the potential of the upgrade cycle for the customers that came with us and actually those.
Promised legacy that's also drove year, so there's more to come there so.
But you're right as far as there always look at the acquisitions that doesn't mean that we need to close what would cause won't ever year over year to two years.
It depends I need to fill a framework.
He used to be at least an adjacency needs to be computing as well as the revenue from that.
It's a possibility that maybe nothing really to 50%.
He's a coffee or something like that.
They should deals are accretive on a non-GAAP basis.
Yes.
Okay. That's great and then maybe just an update on you know I know you you guys consolidated the business line and you don't report the two segments anymore.
Hi, and I realize you know any kind of change the way things are run internally, so that makes sense, but.
If we think about.
Maybe that you know.
The non acute settings.
You know retail pharmacies.
Institutional pharmacies can you just give us and update on on how things are going there.
You know.
You know is there any traction in trying to build out a broader offering.
I don't know with deals like the PTAB platform.
Yeah.
Yes, I mean that this is a is evolving a benefit there. We have is that we have a very large customer base and a part of the network.
Yeah on the population health or.
So solution side.
You know the medication therapy management, a comprehensive medication review we have some really good early results are commercially not not big enough to survey how bad means on the on the front of the you know so the benefits are there. If you have a large customer base plus also so we have some good.
Early successes, but we need to continue to work on that.
Yeah, I think it's just it's just if it's still sort of in the embryonic stage, but good.
Good early success stories and.
I need to leverage those up.
As we continue to see some bigger growth there nice growth, but it's such a small base and.
You know and it fits with the whole story when you go to these provider network and they're looking at both inpatient and outpatient you got to have solutions that work in both in the same thing for institutional pharmacy. There there are evolving as well I think it really our business. There is still strong we just want to know.
Continue to develop some of our population health products that to get to a bigger bigger size.
Okay.
Okay. Thank you.
Your next question comes the line of Bill Sutherland from Benchmark Company. Please go ahead. Your line is open.
[noise], though actually is hey, Peter Hi, My question got a pretty much answered in the last two sort of lumpy.
The quarter I'll I'll leave it there thank you.
Yeah. Thank you Bill.
Your next question comes from the line of Mitra Ramgopal from Sidoti. Please go ahead. Your line is open.
Yes, hi, good afternoon, I'm just wanted to follow up on the record backlog, you're seeing and get a sense to say, if it's coming more from say new customers versus upgrades or competitive wins any color on that would be great.
Yeah, the old idea its all the above.
For an early cycles or years for the Axio Grace.
We continue to gain market share we believe that the first six months. This year, we have for the game.
Market share as well and then the growth also comes from excites you might remember that.
These big Health systems that we have long term partnership with expansion as well as you might imagine.
Our products and services that Nexus next to it so it's a.
It's a combination of all so we're seeing good traction in all of those tracks.
For revenue drivers and then in the <unk> and I was just add to that dictates here. It certainly is.
In some cases as the entry point for the Big discussion, which then runs out into a longer and broader.
Type agreement.
Thank you.
A couple of our deals we announced Barbara I know was a new customer for us.
Other ones, let's as well.
Don't really track those things, but its just it just stayed about how important it is to have these kinds of systems and a large system at program and its way and.
And I think that that they.
Big systems are scaling up and standardizing and.
You know most of them.
Most of my time or older systems, or you know the legacy systems from when we acquired so.
You know eventually they've got to make a bigger.
Movement towards standardizing and putting in more peace.
You just start to see that.
Okay. No that's great and then just following up on that any constraints in terms of being able to handle them. The.
Increased business, you're seeing in terms of but it's needing to add personnel to handle the implementation are you comfortable that you have for onboard.
Yeah and prepared remarks, he talked about the half going to be so sequentially were up 83 heads.
Our headcount from ER on the other parts of the majority of cases for manufacturing and then with agencies and answers. So definitely scaling up a you have to do it always just a little bit out of the.
Revenue increases to upgrading so yes, we are.
If we don't see usually a song.
Manufacturing capacity so before the Exi series, we've got a really efficient assembly invest plan. If you will where we can run a second shift.
Okay. Thanks again for taking the question.
Your next question comes from Matt Hewitt from Craig Hallum Capital. Please go ahead. Your line is open.
Yeah, just one follow up for me during their prepared remarks, I believe you were talking about the three wins with St. Luke's Northern Arizona on atrium, representing 1% market share from a bed count perspective, I know I know historically, you've talked about gaining 1% to 2% a year and you obviously hit those numbers and that's what's allowed you to become the market leader.
As of last fall, but I'm just curious.
Does that did that one did this the 1% to 2% still hold or are you seeing such momentum that you think that you could actually take more than 2% share over the next couple of years as you get.
Get into the X T cycle in particular.
Yeah, there's a couple of nuances there so a northern Arizona, a that was a competitive conversion. So that's a that's a new customer.
Atrium is a is a renewal I believe platform renewal sole source contract. So think about bigger platform more or products. If you will and the San Lucas also existing customers, but that's a.
A new sole source agreement multiyear.
Okay.
Yes, the only part of the old said, but you know it's an anchor if you will.
So that definitely is our is our strategy and then.
You know smaller locations analysis is that we don't disclose that don't make the level of the press release, we're chipping away those and Allegheny.
First quarter.
We take away we have.
The first phase so we don't necessarily want to give guidance on a market change basis, but we believe that the throughout the first six months to you that we have for today.
Markets here in the U.S. and the one that happened 2% it's been the most historic rate.
Over the last couple of years quite a bit higher than that so many years I think that's fair enough. Another issue and you know the real the real expansion also revenue size.
Oh I forgot it occurs is really the old platform and then the up sell.
Got it alright, well think that was it thank you.
Thank you.
And there are no further questions at this time I will now turn the call back over to Randall Lipps for closing comments.
[noise].
[noise] yeah well.
Thanks for joining us today and I.
As we enter the second half of 2019, I'm thrilled to see our economists pharmacy vision.
Coming to life.
Gather our health systems at retail pharmacy partners.
Were helping to create value for the industry by transforming pharmacy care delivery model and this is really freeing up the pharmacist is getting out of the basement behind from behind the counter and getting them connected because OLED clinicians of the patient.
So that we can improve outcomes for everybody.
And I, especially want to thank.
Customers for partnering with us and especially the Ami Scil team for executing on our strategy as we deliver a vision of the optimists pharmacy.
Really the prove healthcare for everyone.
Thanks, everybody see an effect.
Good bye.
This concludes today's conference call you may now disconnect.