OMCL - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Omnicell Third Quarter Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Peter Kuipers, Chief Financial Officer. Thank you. Please go ahead, sir.

Peter Kuipers

you. Thank welcome Third and Call. XXXX the to afternoon, Quarter Omnicell Earnings Good

to other me Omnicell results implied. will This subject Lipps, is to include uncertainties Chairman, statements Joining those Randall CEO. differ Founder, materially today expressed cause that factors could President from and forward-looking risks, actual and or call

XX-K release statements, to the Form information a description the with of report refer For filed the risks that annual our filed on please XXXX, press today, the SEC more detailed impact in Omnicell these more SEC. February forward-looking in and the in with recent on XX, reports other

Please today. simply these XXXX, forward-looking as statements be Future reliance made The undue date are place made on of events only. and or all this call of beliefs you may on to Omnicell aware passage XX, of should call the this beliefs not October of statements on cause any based date time forward-looking conference the change. this that is

this Inc., duplication and property the prohibited. any of Omnicell conference Omnicell, expressed is audio rebroadcast without or the taping, call Finally, consent written of is

of our will After Randall's cover our first on the for results remainder our and business. for year. provide third will I Randall guidance remarks, an quarter the XXXX the update of

included Our Investor Relations the in our third our released earnings at financial and results omnicell.com. is posted in earlier section quarter are announcement, today which was website of

in be will remarks prepared section. posted also same Our the

Randall. Let turn me call now the over to

Randall Lipps

Good afternoon.

million, from quarter increase; non-GAAP points to $X.XX record quarter a share margins record results third the last year, basis quarter compared record pleased XX%, XXXX. XXX period up to XX% include: XX% EPS same quarter. in from of share share third $XXX Key of are the non-GAAP per the approximately of operating financial of XXXX; representing over of $X.XX another and We per results of revenue for up

realized continuing model. through this every customers our our technology is revolutionize delivery advance Autonomous in us day invest on to we Pharmacy being journey We're more join to vision care are The creating vision. value to as pharmacy the

medications a zero-error, infrastructure managed Our fully intention Care. across be automated digitized Continuum the of is for and through to

of integrates Omnicell data dispensing solutions and set Pharmacy platform medication areas: of insights have problems, across solutions key extension operations. a cloud health of better workflows, and secondly, medical across to provides automation expert comprehensive prescription improve adherence Care, errors, all driving up designed abuse: automation medication chain to for by to reducing these which management; for the intelligence costs understand vision medical significant actionable X powered help the problems industry-wide Continuum services opportunity an and supply serve pharmacy By connecting outcomes. of like that wastes, Autonomous better the opioid The pharmacy streamline we as workflows; care the medication usage and that and opportunity digitize third, includes solutions solve

through service is to Arkansas, We're sole-source one care the solution valuable vision systems and the a management Missouri support highlight with believe the of and streamline and resulted their patient has we health will solutions intelligence and This expansion our sizes our large previously services we that agreement more newest automation and hospital of network across X including and in partnerships, medication a serving workflows Autonomous in with developing has renewal Kansas, are top Omnicell products central XX-year areas. This care Oklahoma. of multiple Mercy pharmacy pleased Mercy. customers. business As discussed, we and expanded of and products in to years our the from single-point comprehensive, a enduring platform further across over the Pharmacy. relationships have deal

full our innovative world's Omnicell our the and with reached adherence solutions. and also Vizient's organization renewed including been medication portfolio designation has industry-leading IV of XRX, expanded largest solutions. products, X-year agreement Vizient, have with technology group for recognized We robotics for a workflow purchasing and

Salem to Omnicell hospital's record solutions to Hospital. tracking systems the improve to close-loop will system XT streamline and its efficiency Health Health Salem for the Salem workflows, and with hospitals and health along advanced at help clinics, leverage selected Omnicell Valley Oregon's has interoperability safety. Salem in medication prevention. nursing enhance health be patients' implementing flagship, care the automated diversion electronic premier system pharmacy will provide provider dispensing integration Mid-Willamette

continues sector, Veterans' the Pharmacy In selected Omnicell technological and Central VA North Teague own System, toward Health Autonomous Carolina fully Cincinnati segment a the Automated the as are Angeles, an Care important technology. VA building System Medical IV XRX this Los of in and Central Center to Pharmacy. their Center including has step government our also traction IV Medical VA Texas in gain adopting in workflow automation facilities,

the back to quarter Now turn discuss over to financial call I'd like Peter results. to third

Peter Kuipers

Thank you, Randall.

up X% The growth of over installed health up third equipment of solutions as due XX% and larger XXXX largely increased quarter in the implementations, increase in third was Series of was million annual XT base maintenance service prior and a from Our the from XXXX revenue revenue to well quarter revenue. in quarter. as population increase $XXX revenue

solutions health As solutions. past, in other discussed medication the and our synchronization, include adherence messaging population patient

increase economies the largely per was the earnings in quarter $X.XX achieving per share of $X.XX, and quarter third revenue -- economic expenses. per accordance to earnings scale in third our over due share The XXXX. quarter of GAAP share XXXX higher third up in of with in operating The from is

tax excludes benefits and amortization of restructuring-related with non-GAAP onetime is our stock posted website. acquisition A In restructuring components believe amortization we full because results financial understand expense, and are addition GAAP to useful acquisitions, we is in restructuring-related reconciliation cost. in and results tax financial our statements issuance use addition to compensation income intangible amortization non-GAAP and reform results results, third release statements the of to contingent our well expenses, effects We of and acquisition-related basis, on associated of on expenses, and it assets earnings financial gains to GAAP quarter in GAAP reported as debt costs non-GAAP compensation our investors for a report expenses which of acquisition is included and stock noncash press expenses. as our that of events

primarily was due to non-GAAP the scale non-GAAP share XXXX again expenses interest increase outstanding expense to a the the The rates the in fallen. Similar $X.XX debt EPS, achieved have has $X.X period per higher decreased EPS to XX% to as quarter other $X.XX the million context same compared and in economies for our earnings in was third of representing compared GAAP Third is of on year, relates balance $X.X lower last the our largely quarter million to of basis increase. revenue. XXXX. a decrease XXXX increase Non-GAAP of third interest quarter in in

from XXXX, Let's September was up now balance move cash $XXX flow. cash to million, XX, our million June the balance XX, At sheet XXXX. at $XX and

Our outstanding of $XX a position $XX was debt funded million, net million. resulting in cash

in million the comparable $XXX XXXX, months flows million During is any third stock cash from was our Cash for by did compared quarter, ended the periods quarter XX, and million sell flow and and program. $XX under $XX in ended to increase last million, operating flow increases $XX aftermarket the due net flow primarily capital. respectively X September million primarily operations year. we not The third last driven $XX increased million comparable million during the the $XX September income compared third to increase The the and was months free $XX million, XXXX improvement operating and in for to generated periods is earlier. X and cash XX, and in in flow quarter mentioned Free working $X respectively cash cash year.

third XXXX were collections. September decrease receivable sales by the quarter DSO increased Accounts million year primarily for September and line. XX, previous up XXXX. due $X The XX $XXX driven XX days, were to XT The in from outstanding quarter, approximately primarily year. $X September previous days increase the days Inventories Series from last from is of from demand million, quarter the down product as million the sales for up higher from last XX, XX down days and and quarter prior the is X

Our September from personnel majority of to implementation the manufacturing, is business XXXX, last needed it and year. quarter XXX our from headcount the same previous up end quarter service XX, support was the continues to increase XX as The of X,XXX and at up the from expand.

the We grow expect hiring we business. this continue as to trend

Let's total now expect The quarter for guidance. fourth to to revenue million we and guidance move $XXX of specific the as follows: between XXXX $XXX million. be is

and million. $XXX be We revenue expect $XXX product between million to

$XX expect $X.XX between be $X.XX expect revenue between million; per non-GAAP EPS be we share. and to million and We service to and $XX

moving guidance. our XXXX full Now year to

from million. our bookings be between We million to is expect product This guidance. unchanged previous and XXXX $XXX $XXX

XXXX XX% expect growth narrowing our and narrowed our revenue. The XXXX $XXX updated be range total $XXX to total of for year-over-year our now guidance million between XXXX million. guidance revenue We revenue We applies revenue. year approximately full midpoint total and from are

This to revenue now is based million product between as guidance revenue we be expect XXXX $XXX follows: and on million. $XXX

and guidance between $XXX $XXX million We be service $XXX million. million now previous to range $XXX was million. Our XXXX expect and revenue

previous Our was guidance range million. $XXX $XXX to million

EPS non-GAAP We now are expect $X.XX per EPS year our XXXX non-GAAP increasing We $X.XX be guidance. share. XXXX and total narrowing to and between

growth EPS between XXXX approximately was of previous guidance year-over-year. midpoint share The non-GAAP our $X.XX and new updated guidance share. an Our per non-GAAP per XX% $X.XX EPS and implies

in X% of non-GAAP now year operating For guidance for an XX%. midpoints our full the the provided range. tax be of margins EPS we slightly rate above the XXXX, issuing ranges, Using expect non-GAAP we're average to

the As results results forward Randall quarter. continuing to we mentioned, the for in with look quarter XXXX, pleased we're of fourth the third deliver to and profitable

the briefly GlassHouse the the the want GlassHouse, received Such Before are not today's that from an issued in I July. SEC touch we that uncommon call, self-proclaimed like informal following portion one reports was of Q&A on returning inquiry to selling inquiries following from to issued. short-seller report

have fully GlassHouse with consistent in XXXX the our the cooperating and remain XX, report. July We SEC. We responded to response are

ask With focused that, on our keep results. of and to our discuss you the earnings, purpose quarter we that call is third questions today's

Now the your we call questions. would for like open the

Operator

[Operator Instructions].

is with Craig-Hallum. question Your first Hewitt from Matt

Matthew Hewitt

light particularly your if of in these just little product was supply a little there related, bit revenues, maybe flowing in or a expectations. orders the how on kind my bit bookings. of expectations, given color off, anything of wondering I'm are through revenues First Street strength came timing

Peter Kuipers

Yes.

healthy internationally, the We Middle Backlog the a little below range. bit a and We're from timing and from tiny headwinds strong. Brexit from influence of there. geopolitical well is in the delay as an slightly FX quite then are U.K. had So midpoint guidance some developments and bit the the of bookings East provided there's in strong. the perspective

have product if end and guidance X higher wouldn't So the at you the been would range, factors, exceeding will. have the those we then we --

Matthew Hewitt

margin. gross the Okay, to then that's great. And shifting gears

margin, product very So a strong gross quarter.

might midterm? it you be to the margin kind there to near think add I why then Can Where those more software, -- of service the been up? moving kind margin. more wouldn't on And down and service? gross a to one ticking other margins gross fall over so, you expand little ticking continue Meanwhile, into that has gross do the a be and record or have bit. if see does that as

Peter Kuipers

customer So with quarter and you build that gross in the then increase in product will, and quarter for gross lower is time, if to do during revenue, the margin, up over the expect We third to first year. we the margins we quarter. have a favorable continue a caveat typically mix

third leverage volume quarter definitely quarter there's of So bit as and the expected fourth well also. in little in the a

population also we professional services forward. solutions. traditional bit margins, for have. mention revenue investing more service lower a compared That go comes that in typically tiny implementations we we're the service as we at the health to in And then strength For did margin

So little installation the mix the those it down up products bit will. services bit core the also ramping gross the a are on implementations little margin on and professional That and X were they versus of they newer factors, of kind of products, makes service line. and in they investing percentage were what the a service scale lower you but if

Operator

Mike with from Oppenheimer. is question next Your Ott

Michael Ott

think, was to population solutions. due some could you in rev call that solutions, particular quarter strength health health Peter, growth if out the you of in mentioned I strength the just the any curious

Peter Kuipers

good Really it. and some that live mean a went of program, majority so really if the across-the-board. will, that nationwide, at larger we was has I enrollments that's you

Michael Ott

the you XQ? also, deal flow that how the government then does past some here years? year for fairly Is And nice I government quarter. the mean realized Okay. fiscal to compare at typical in X/XX. said I end this

Peter Kuipers

Yes.

higher business. So third quarter quarter, typically, for is government the

components IT of in we is for business and Pharmacy, -- very quarter adopting government also year, in year some partner the bookings, the But the the the that the automation. XRX, and expect third for right? Autonomous likely pleased a would quarter also organizations like quarter see right, we so is robot And highest it's serve fourth some fiscal pharmacy end so expect most we But government do for to of that's We're that you're government them. more with kind from government. business for

Operator

Instructions]. [Operator

We with Craig-Hallum. Matt have from Hewitt queue a in question

Matthew Hewitt

more operating A very couple above strong your here. a typical obviously, Adjusted quarter XX%. margin, and

explained think the given of margin from target. you on this the to perspective, should that typically kind seeing which you've leverage how just year, we but back that see talked not a of do the of from XX% the translate perspective. spot I into you've I'm the here, that of about some booking in historical thinking coming got a in areas north that the about put is in be you or business, trying But half XX% QX, deleveraging some revenues, appropriate still seeing you're other strength number? deleveraging you're should there you

Peter Kuipers

Yes.

So year-over-year, in on is and out strength well. we see we that mentioned, of Pharmacy think for with past booking we the professional We that the already services, do some in the new services Autonomous it But investments correct. have as and investing products a products building perspective. are do the Plus we're we is. now absolutely

not-too-distant framework. future. total now it's potentially We're for kind So But it XX%. the for year, updating now is in of that at the looking longer-term the

Matthew Hewitt

Okay.

question DSOs. Another regarding

number we there? or You've steady are internal improvement quarters, Do range last you shooting down. have to the you're couple that shown for? And bringing that an how of target getting close maybe

Peter Kuipers

on hard, reducing receivable formal drivers accounts We balances, a the definitely companies compared will, well. as do We're have prior other Yes. MedTech to I calls a But went weeks mostly as a one DSO DSO mathematical to if in following in of really very the you really have do of you installs revenue the over we it not we the the debt target. quarter. difficult and and couple fees we those results. collection estimate. last we really because a see cash estimate The to if -- targets piece is of of one internal we're are and quarter do the teams, the makes the in they for gross the revenue for shipments will, some by The the calculation month, quarter that's have is purely good difficult the AR balance part think definitely driving very

Matthew Hewitt

One last me. one for

Regarding Mercy.

health top large in I sole-source was The XXXX. that's mentioned, you you As agreement by my with X math, last back system, believe, them, XX contract, years. an signed extremely

front-end-loaded how those agreement. cabinets, would think longer-term on So they're But in kind will agreements kind that But would this is consistent us walk How think more I previously layer through be the kind of of with partnership that of into we these -- should XX-year as that layer you've of they longer-term had. about this, assume this term. maybe revenues? kind or that adding over XT XRX. upgrading I their assume that would that sole-source they're

Randall Lipps

I'll take how of technologies and between if These who our but up, much really at customers Yes. have, with to do ground really mind. long the they what the the a not don't it look pieces. replace question, have the newer and redeployment redesign time big you that more just from customers out for of technologies connection get you the have been coordinated

the equipment. with out you the so oldest the -- we couple over start really next as And then build generally, of design years, that we of

that's bit of equipment customer, so they're older they And have quite an aged. a if

that don't So run the quickly. since of equipment, run today, software the as course, same quite to they technology initial newer we it and they have replace

from have a without a our to is those the sort long need think which So just But not a so addressed really that than lot deploy of total -- would set of time, of be probably view. key comprehensive of total that some that pharmacy customer been a Mercy to replaced rollout that sooner these we're systems, I some systems standpoint, for later. been to they has gets solution to have a able I, issues able have

Operator

Your next Sidoti. from with question is Ramgopal Mitra

Lalishwar Ramgopal

of couple in of questions. little. coming scaling SG&A couple you a I wondering quarters. last that revenue noticed of a And early percentage a I Just on, front. on you're as headcount the I'm just know are up where

Peter Kuipers

Yes.

quarter. of quarter, bit looking are little the a third drive growing, fourth momentum. pipeline in we the at momentum we'll and So here backlog bookings But and leverage

do as we the we up as scale to as go to well. in expect in like we're said, hiring. quarter to we SG&A cost the continue will expect We fourth SG&A well, And

Lalishwar Ramgopal

Okay. a noticed... have And again, I know you

Peter Kuipers

quarter, bigger that quarter health to conferences the have And to fourth actually, pharmacy the of the number in compared we add fourth cost also and do a quarters. as other

Lalishwar Ramgopal

you've I Okay, the U.S. obviously, especially, nice know in wins And announced okay. recently, obviously some

just if seeing business any change outside So you're environment the there. the in U.S. wondering, now

Peter Kuipers

the you if win in utilized see some in in British will, if well. spending, we we have of perspective believe, related, earlier And the the a and an see the We But geopolitical the as Brexit. some a we internationally. in from to the will. Australia that's we earlier and on little from Middle in East, think pound adoptions -- mostly we some said do in ADC well euro. do you Asia that's do have merely Capital see FX well. we We do Like a up, specifically you delay delays where question, impact NHS. on of from U.K., then an headwinds think Kong the ordering bit a nice picking also Hong that's We of most patterns as as wins, number part have

a third there, probably good but we've we into we it expected quarter. got bit some lower So quarter little momentum the be than to in as

Lalishwar Ramgopal

finally, quite quarter. in came about that the How third I tax And bit should a obviously going know rate the be forward? thinking in we

Peter Kuipers

Yes.

So depending so that's of are that future. U.S. you a on the probably in lower right, blended range, fluctuations we the got the in benefit make at up that tax however, fair assume the got year, the rate. why that it about bit. right, to you for dollars But tiny ticked stock X%] of incremental And for really it's to it that's for really kind exercises, of full XX%, sure so to the to future need incremental rate -- stay the to calculate In at profit rate effect years, federal you XX%. going is option

Lalishwar Ramgopal

then, crisis, Right, And things on, finally, et opioid Randy, of lot could a that a early things on, you making you like see be you've mentioned cetera. difference right.

Just conversations things base. you're doing be wondering terms already you your any regarding with having existing if specific of in customer could working

Randall Lipps

Yes.

pharmacy, do one have game and, is a because regulations is I just a management behind around such more you an is piece of think no are but diverting become the are and of areas whole care that opioids, those on executing that the because sure the well, got of to bit the energy because pharmacies solution important every new institution. the we to else And them. and make at people there's now level, guess, scrutiny need little one struggled it's and advancing health this to I time we scrutiny a have next opioid set now, even and putting sets

never mission-critical like before. become been it's it's So

So a product and to but have, come. us, we for line opportunity it's great more already that big a

Operator

with comes Bill next from Sutherland question Your Benchmark.

William Sutherland

color more of on a situation? going that to is give deal, like Vizient some that? work? can you partnering how That kind of that Or Is us

Randall Lipps

GPO a really not and of Vizient many had the for over Well, whole only line. core years, many, years. new is deal worked with been that the -- they Probably we've Vizient that has expansion the part always a products

expand kind of and that's to be new well, important this, include And line -- product lines round, not a XRX is so that. of package, and to you because of we the product workflow really were supportive presented Vizient to want those lines, able, in IV robotics, this not as but the as product

was have with their course, they've And their members So directly it's the ours. don't for things. that's and They really good a I relationship important. really us buy a it, great and important product think for of because always looking enough on of are -- us important for that to been them, partner blessing important to these but mention

William Sutherland

that give you a their Do but like a of... majority to is want probably are in the percentage, don't of you hospitals? lot Or

Randall Lipps

probably their same share market our Whatever is, the that market hospitals. in were share is

more half, groups. around of little members, they a So the represent their larger -- if half somewhere probably or about maybe

William Sutherland

Okay. Curious, operating the in just a sense, general on margins.

of that more platform before, a As your but Net-net, be kind margins? you as get this generally larger you've about want to I with talked see operating multiyear these lift just for should experienced sales.

Peter Kuipers

gets always scale of large-scale Well, well. as economies

on to what talked pharmacies question, really as Autonomous opioids. are cumbersome Pharmacy that on we go bring the to said big the for earlier there's about life. a like are some quite However, to of an that investments of issues vision bit Randy this areas

limited there's If there. you are Feasibility in back Medication is There hospital cost health annual pharmacy, full the today, had. ER. technology medication manage on. is between implemented a to about is because a pharmacy, and automation and you in if for of look waste at have you in the cost hospital, kind the the that's a leader the you SKUs, and not pharmacy of points need gap lot feasibility X% big need of only the at to different X% case growth OR is X,XXX lot and a to of of systems. And specifically care needs and of step be

of make investment to to the really the next help industry us go bit to level. So quite we for that believe there's do a to

Randall Lipps

just And I'd add to that.

until mean, nicely. hard rate. they small, they're growing it's they're nice at get and growing larger. relatively are so really products But emerging Our a on get scale those I to still the

really our nice, just just story to and a that not confirms drive product people and those. platform of line the some uptakes want the and are medications, the broader but think I of it all So orders

Operator

Gene Your final question Dougherty. comes with from Mannheimer

Eugene Mannheimer

had record things. the on I just job X Good results.

about talked the a Do days? the market? You Mercy still And net certainly you other question yourselves the is share net be we should I new thinking some how these in heard, relates major good SEC about as How view my one. in about to very quarter, wins term, -- gainers expansions inquiry.

Just maybe could understand the expound they're are. if where into trying on to what you and concerns looking areas

Peter Kuipers

So a the for the we will, clicking perspective, this. have share, you And We away share fairly in market gained U.S. as relative mentioned were if short-seller XXX basis points comment on generally then at always recall points SEC We report. market that away report. to share And do that, we've And this about of taking in and year areas, bed We informal counts also self-proclaimed this you there's back consistent further share. believe rate. on kind that refer nothing aligned, but to the XXX the year say of we would, inquiry, voluntary as that's continuing believe we really basis can't to of a well. they're

Operator

there no at your further are And closing Lipps, please. this Randall Mr. remarks, time. questions

Randall Lipps

these continue done. very ASHP, upon. Care and of us thanks road really looked some of pain in way the map industry American the management today. for to Pharmacy out see is change our to Pharmacy the joining to big really it's is help rolled address our Well, And hoping is and to as points the the Society we'll is something Autonomous of talking midyear for And next really exciting. in about medication the that Hospital Autonomous change at executed In how way we is to management System be more medication the Pharmacists Continuum going December, be

us again well to join improve thanks much. Omnicell who everyone. the care to health time. can again for have you and to you perform And continued you hope marketplace We'll once out really next Thank see very team the guys I So there. in

Operator

this Ladies today's call. you and Thank participating. gentlemen, for concludes conference

may now disconnect. You

Omnicell (OMCL) 24 Oct 192019 Q3 Earnings call transcript