Eastman Kodak Co (KODK) 2003 Q4 法說會逐字稿

All sites are now on the conference line in a listen-only mode. I would like to turn the presentation over to your moderator today, Mr. Stephen Hicks. Go ahead, please.

Thank you, and welcome to the earnings call for VitalWorks, Inc. As the operator mentioned, my name is Stephen Hicks, Vice President and General Counsel. I'm here with Joseph Walsh, our Chairman and CEO, and Michael A. Manto, Executive Vice President and Chief Financial Officer. Also joining us by telephone today is Stephen Kahane, our Vice Chairman and Chief Strategy Officer.

Before beginning, I would like to inform you that during this call we will discuss our business outlook and make many other forward-looking statements. The particular forward-looking statements and all of the statements that may be made during this conference call that are not historical facts are subject to a number of risks and uncertainties. Our actual results may differ materially from those suggested by our forward-looking statements. For more information on the risk factors that could cause actual results to differ, please refer to the Safe Harbor section of our earnings press release issued prior to this call as well as the various documents that we file with the SEC, including our most recent annual report on Form 10-K and our last 10-Q.

In addition, I want to note that although we may use some non-GAAP financial measures in our presentation, these measures should be viewed as supplemental to the company's GAAP financial measures and not as an alternative to the company's GAAP financial measures.

Now, I would like to introduce our Chairman and CEO, Joseph Walsh.

Thank you, Steve, and thank you, everyone, for joining us as we review VitalWorks' results for the fourth quarter of 2003. We'll begin our conference with Mike Manto, who will go over the fourth quarter's fiscal results. I will then review the quarter's operational accomplishments and the outlook for 2004. After that, we will then take any questions you may have. I will now turn the call over to Mike. Mike?

Thanks, Joe, and again, thank you all for joining us this morning. Yesterday, we reported that the company's revenues for the fourth quarter were $26.7 million compared to 28.1 million for the September 2003 quarter and $29 million for the December 2002 quarter. Although recognized revenues are down sequentially, deferred revenues rose to $11.8 million at December 2003 from 7.9 million at September 2003. The increase includes $1 million of product sales and services that were deferred in the quarter pursuant to revenue recognition criteria. In addition, our backlog orders are up $2 million from September 2003.

We incurred an operating loss of $1.7 million for the December 2003 quarter. The operating loss includes charges of $3 million, which consisted of acquired in-process (ph) technology, asset impairment, restructuring, and depreciation and amortization. We had a loss of $2 million, or 5 cents per share, for the December 2003 quarter compared to net income of $4.1 million, or 9 cents per diluted share, for the corresponding period ended December 2002. The amounts for 2003 include one month of operating results of AMICAS, which we acquired on November 25th, 2003.

Turning to the balance sheet, we ended the quarter with cash of $20.1 million and a long-term debt of 29.8 million. In the quarter, we borrowed $15 million in connection with the AMICAS acquisition, and we repaid 1.4 million of our outstanding debt. We have working capital of $9.5 million net of deferred revenue of 11.8 million, and our current ratio is 1.3-to-1, compared to 1.9-to-1 at December 2002.

Days sales outstanding was 55 days compared to 47 days for the September 2003 quarter. The calculation includes only one month of AMICAS revenues, and its customers, primarily hospitals, tend to be slower payers, which accounts for a significant portion of the DSO increase.

We identified and determined the fair value of intangible assets related to AMICAS as follows -- picture archiving and communications software systems software, $13.7 million; trademarks, 1.9 million; and noncompete agreements of $1.5 million. In addition, $14.2 million of the purchase price was allocated to goodwill. The purchase price of AMICAS was allocated and the economic lives of the intangible assets were estimated by us based on an independent appraisal. A complete copy of our balance sheet and statements of operations can be obtained from our web site.

Now looking forward to the full year 2004, we expect total revenues to be approximately 122 million to $128 million, which includes 49 million to 52 million from our radiology and 73 million to $76 million from our medical unit. In 2003, revenues of the radiology business were 34.5 million and medical had revenues of $77 million. We expect operating results to be a loss of approximately 1.4 million to income of $2.4 million for the year 2004, including operating income of 1.6 million to $2.9 million for the December 2004 quarter. Excluding depreciation and amortization expense of $8 million for the year 2004, we expect adjusted operating results, or EBITDA, of approximately 6 million to $10 million -- 4 million to 5 million for the December 2004 quarter.

Earnings per share is expected to be approximately a loss of 7 cents to earnings of 2 cents per share. These estimates assume, among other things, an income tax provision of approximately $300,000.

We believe that the EBITDA measurement is a meaningful indicator of our core operating performance. And we use it in evaluating such performance and in planning for future periods. This non-GAAP financial measure should be viewed as a supplement to, and not as an alternative for, our GAAP financial measures. Back over to you, Joe.

Thank you, Mike. We've had an extremely busy quarter, and I would like to take a few moments to discuss a few important events that have taken place.

First, I would like to comment on our acquisition of AMICAS, which as you know, was announced during the last quarter. As I mentioned in the related conference call in November, AMICAS was a key acquisition for VitalWorks. PACS, which stands for Picture Archiving and Communications Systems, manages the storage, viewing, and distribution of radiology images as a critical component of a complete radiology IT system. When integrated with a RIS, which focuses on the management of an imaging center's clinical data, and with a radiology billing system, you have a system that will handle all the major data and image management needs of a radiology practice or imaging center.

VitalWorks now has such a system, and that positions us in an extremely competitive situation in the marketplace. None of our major competitors has an offering like ours, where they can provide a complete, end-to-end solution featuring Web-based RIS and PACS and radiology billing all from a single vendor. We are extremely excited about this important addition to our business and about the opportunities it will open for us.

Next, I would like to discuss some changes we've made to the company's organizational structure, changes which will allow us to enhance our management focus on specific products as well as increase the level of client support and services we deliver. Rather than having three divisions -- an office-based physician division, a hospital-based physician division, and an enterprise division -- we now have two divisions, a radiology division and a medical division.

This organizational change makes sense on many levels. First, radiology IT systems are significantly different than those of other specialties. And as a significant component of our business, it therefore makes sense for radiology to be managed by a unique division. The core products of our radiology division are our RIS and radiology billing systems, which offer solutions to radiology practices and outpatient imaging centers, and our AMICAS PACS solution, which also falls under the division, and offers solutions to both the hospital and imaging center markets.

Our new medical division is essentially the combination of our enterprise and office-based divisions. As I had commented in our third-quarter call, we have seen an increasing number of large office-based deals, and have seen an increasing amount of synergies and product crossover between the two divisions. This, along with the similarities in product functionality, made this combination a sensible change. In addition, our anesthesiology business will be also included in this division.

As Mike stated, our total revenues for the quarter were 26.7 million. This consists of maintenance, including software and hardware support and EDI, of 18.1 million; services of 2.4 million; and software and systems sales of 6.2 million. The sequential decline in revenues over the prior quarter is primarily attributable to a decline in HIPAA-related revenues of 1.9 million.

As I stated on our Q3 earnings call, we are seeing an increase in larger deals. These larger deals tend to have a longer sales cycle, and often include terms and conditions that defer the recognition of revenue. To illustrate this, the value of sales orders from the core VitalWorks business, which excludes orders related to HIPAA and AMICAS, increased 33 percent from Q3 to Q4. This is an indication of the increasing traction we are beginning to see at the high end of the market, which is also reflected by the increase in deferred revenues and backlog orders.

Now let's take a closer look at each of our two divisions. In our radiology division, total revenues for the quarter were 8.2 million. This consists of maintenance, including software and hardware support and EDI, of 4.8 million; services of 0.8 million; and software and systems sales of 2.6 million.

During the quarter, there were two particularly noteworthy sales orders that were announced in separate press releases. The first of these is Wake Radiology. Headquartered in Raleigh, North Carolina, Wake Radiology stands among the largest radiology groups in the country and conducts 500,000 procedures each year at 16 locations, including a network of imaging centers and hospital locations.

We also announced the selection of the AMICAS Vision Series PACS by Newark Beth Israel Medical Center. Located in Newark, New Jersey, the Medical Center is a 669-bed regional care and teaching hospital with more than 800 physicians, and handles more than 300,000 outpatient visits and 23,000 admissions annually.

As I mentioned earlier, our ability to offer a combined RIS-PACS solution puts us in a very competitive position in the ambulatory radiology marketplace. We are really enthusiastic that we have seen early signs of the market embracing our combined RIS-PACS offering. Late in the fourth quarter, after our acquisition of AMICAS, the company received its first two orders for combined RIS-PACS system. This immediate and enthusiastic response to the acquisition illustrates the impact of the combined offering, and demonstrates how quickly this offering has gained traction in the marketplace. Our radiology products were demonstrated at two tradeshows during the quarter -- the RSNA annual meeting and the AHRA Imaging Center Administration conference.

During the quarter, we also began the process of creating a roadmap for what we refer to as a seamless desktop -- a deep level of integration between the AMICAS PACS and RadConnect RIS systems, where parts of the RIS and parts of the PACS will be actually driving each other, almost as if the user is operating a single system. This R&D effort will continue through most of 2004. In addition, we've begun the process of integrating the sales and marketing operations of the two companies.

In our medical division, total revenues for the quarter were 18.5 million. This consists of maintenance, including software and hardware support and EDI, of 13.4 million; services of 1.5 million; and software and systems sales of 3.6 million.

There at two significant orders we received during the quarter that I would like to highlight. One is Mountain States Health Alliance, a network of hospitals, outpatient care sites, and primary care centers headquartered in Johnson City, Tennessee. 750 physicians serve 28 counties in four states, and our emergency department information system -- both EMstation and EMtrack -- will be deployed at all five of their emergency departments. In addition, a university-affiliated medical center in the southwestern United States will be installing our VitalWorks Enterprise iSeries system throughout their network of primary care and urgent care clinics. The system will be used at over 20 sites and will serve over 80 physicians.

Our medical division products were demonstrated at 16 tradeshows during the quarter, including the American Society of Anesthesiologists' annual meeting, the American College of Emergency Physicians' annual meeting, the MGMA annual conference, the American Society of Plastic Surgery meeting, and the American Academy of Ophthalmology meeting.

Development of Ingenuity EMR, our browser-based EMR system, is progressing on schedule. During the quarter, we began data-testing at one client site and signed up a second data site, which will begin testing shortly. In addition, we are in discussion with several other clients who are interested in installing Ingenuity EMR as soon as the production version becomes available. As I mentioned in our last quarterly call, EMR systems have become an important driver for the growth of the medical information space, particularly for higher-end accounts. And we are excited about the progress we are making in this area.

Now looking forward, we expect total revenues to grow from 111.5 million in 2003 to approximately 122 to 128 million for 2004. In our radiology division, we expect total revenues to grow from 34.5 million to approximately 49 to 52 million. In our medical division, we expect total revenues to remain relatively unchanged at approximately 73 to 76 million for 2004.

As mentioned in the past, we believe that PACS is a key driver to growth in the radiology space. With the increased popularity and utilization of digital imaging systems, and with the need for hospitals and imaging centers to increase our productivity and competitiveness, PACS are being increasingly viewed as necessity rather than luxuries.

Consequently, revenue growth in our radiology business will be driven by the addition of AMICAS PACS and a substantial investment in marketing and expansion of our sales organization. We expect to add 45 new positions, including 20 in sales, 12 of which are field reps, and seven of which are related to our increase in the new PACS line. In the first month of 2004, we've hired 11 of those 45 position, including six field reps. We have also increased our radiology marketing budget 1.7 million over the prior year's actual spending.

With a combination of these significant investments, we expect new software license and systems sales of approximately 20 to 22 million for 2004, an increase of more than 100 percent over 2003 actual results. Again, as I indicated earlier, we expect to continue to see traction at the high end of the market, and as a result, the majority of our expected revenue growth should fall into the latter part of 2004.

We also expect radiology maintenance revenues, consisting of software and hardware support and EDI, of approximately 22 to 23 million, an increase of 13 to 16 percent over 2003 actual results. And radiology service revenues are expected to increase 33 percent to approximately 7 million.

We expect total revenues from our medical division to remain relatively flat over the prior year. Due to the effects of HIPAA on the marketplace in the industry, we expect growth in billing systems to be slow for several more quarters. Many payers are still on the process of converting their systems to accepting HIPAA-compliant transactions, and this has caused a number of administrative and reimbursement problems for providers, as well as a significant additional support burn on their software vendors.

These complications have resulted in increased cost. As a result of these complications, we're cautious about the growth prospects in this area. On the other hand, we believe that these issues will largely be resolved by the second half of the year.

In addition to the market effects of HIPAA, the $6 million of HIPAA-related revenues generated in 2003 in the medical division will not reoccur in 2004. We expect that this one-time HIPAA-related revenue will be replaced with an increase in systems and EDI services -- sales of approximately 3 to 5 million from the existing Intuition and Emergency Medicine product lines and our new product offering, Ingenuity EMR. As worldwide mentioned, EMR will be the primary driver for growth for mid- and high-end accounts, and revenues for these accounts will not likely be seen until late in the year.

Total revenues from our medical division in 2004 are expected to consist of new software license and systems sales of approximately 15 to 17 million; maintenance revenues, including software and hardware support and EDI, of approximately 52 million; and services revenues of approximately 6 to 7 million. Rounding out the picture for our medical division in 2004, we expect to add 50 new positions, including 16 in sales, 11 of which are field reps.

In closing, I would like to emphasize that we remain focused on our basic strategy of delivering profitable growth, offering compelling products and services to our target markets, and obtaining dominance in the markets we serve. I'm optimistic about our future as we enter 2004 with an industry-leading PACS systems to complete our radiology product line and the planned release of what we believe will be the most advanced EMR system on the market. And I believe our new organizational structure will allow us to respond even faster to changing market conditions and to the needs of the various specialties we serve.

Our financial condition remains strong. Our next generation products continue to create excitement in the marketplace. Our entire management team remains confident that we can continue to improve our value proposition to the marketplace, grow our business, and deliver positive returns for our shareholders.

At this point, I would now like to open the conference call to any questions you may have.

(OPERATOR INSTRUCTIONS) Shea Gurson, Corsair Capital.

On the radiology front, if you hit your guidance, does AMICAS get their earnout? Or is this assuming that you don't get to that point?

In our guidance, they do not hit their earnout, Shea.

They don't hit their earnout -- okay. And I might have missed it, but could you give me the total number of new positions that you're going to be adding between the two divisions?

I think it's approximately 95.

95, wow. And how many of those are sales?

Approximately 30.

30 -- okay. I'm going to go back to the queue, and I will come back.

Corey Tobin, William Blair & Company.

Let's start off with a housekeeping item. Could you please provide the comparable results for the radiology and medical divisions for the Q -- I guess it's Q4 2002 period?

I think you mean Q4 -- yes, Corey, we did not -- as you know, we have reorganized the structures of those two divisions. And we have not restated 2002 numbers to reflect some of those divisional changes in some of the units.

Okay. Let's -- can we talk for a second about the HIPAA revenue that you booked in 2003? Can you tell us -- what was the dollar amount of the HIPAA revenue and the dollar amount of the HIPAA-revenue-related EBITDA in 2003?

I don't have the related EBITDA numbers, because we don't track numbers that way, Corey. But it was about $8 million that flowed through the company as it related to HIPAA. $6 million flowed through the medical side of the business and approximately 2 million flowed through the radiology side of the business.

And I think -- what it is --- it relates to EBITDA, Corey, that was pretty high-margin dollars. You know, we already had the infrastructure in place to handle that.

Is that the 80 percent high margin, or -- the ballpark?

Probably higher.

And Corey, that was mostly in the first three quarters of the year, obviously.

Okay. How much of the 8 million was in licensing revenue?

One second (multiple speakers), Corey. Corey, it was about 2.5 million.

In licensing?

Correct. Corey, it was actually 2.5 in software, about 250,000 in hardware, and 5.2 flowed through the services line.

Okay. Got it. Shifting, if we could for a second here, to the guidance -- if I look at the medical unit and I back out 6 million or so in HIPAA revenue, that just sort of implies that the midpoint of your guidance range -- about a 5 percent year-over-year growth rate? Assuming I take at about 6 percent -- I just -- can you give us a little color on how the Intuition product line is doing and what your expectations are there? I would have thought that that product was contributing a little bit more. I would have thought that the growth rate would have been a little bit higher, given how we -- under the impression that that product was doing --?

I think on the medical side of the business, Corey, some of the concerns are related around the effects of HIPAA on our ability to handle upgrades into our base. Again, I think when we look at the state of industry and the fact that the providers look at us as being responsible for whether they gets in to claims of that (ph) -- and some of what we're doing is out of our control, in that the payers and the clearinghouses, if they're not compliant -- comes back and has a negative impact on the providers' ability to send the claims.

We are cautious and concerned about the impact that'll have on our ability to upgrade users, especially in the first half of '03, until they are compliant. And so that's why I think we are a little bit cautious on ramping up Intuition sales to a higher number right now. And upgrades are about 50 percent of what we're selling in that area.

Oh, of what you're selling -- can you give us a feeling of how that Intuition product line is doing? What was the --

The results in the fourth quarter were similar to the third quarter in product sales.

And if you could remind us again what that was?

I don't think we disclosed the actual amount. But I think we stated that the third quarter was a significant increase over the second quarter.

I think the real driver of large dollars in that medical area --and if you look at the medical space, it's not from the practice management arena that companies are growing in the medical space. It's in the EMR side, and particularly in the mid to upper market are where companies are growing. And Ingenuity EMR -- we're excited the product is actually installed at its first beta site. I think we've signed up our second one. I believe it's being installed within the next 30 days or so. But we plan on leaving that product in beta for up to two more quarters -- the first and second quarter, to be -- based on how that's going, we may -- as far as our forecast goes, we've been cautious about how much we're expecting from that product line in 2004 until we see the results of the beta testing.

Okay. So minimal revenues from the new EMR product in your guidance?

Yes, there's less than $2 million of revenue forecast for that product next year to give you an indication. And again, we think (ph) that's the key driver of growth for that division is that product -- or we think what will happen with -- again, Intuition and EM will fill the gap, we believe -- most of the gap related to the HIPAA revenue -- the one-time HIPAA revenue leaving.

Okay. And on the topic of the HIPAA revenue again, just to go back to the EBITDA projection -- I'm trying to reconcile the EBITDA from this year versus your projections. If I take 8 million or so in HIPAA-related revenue and assume sort of an 85 percent margin, that implies sort of $6 to $7 million in HIPAA EBITDA, if you will. And if I offset that -- now some of that was going to be offset, if memory serves, with new EDI revenue. Is that correct?

Right.

Okay. So if I take sort of a $7 million loss, so to speak, from the HIPAA EBITDA, and let's call it a $3 or $4 million offset, I guess -- I'm going from 15 million and I'm looking at a net reduction of about 4 million or 5 million, which sort of puts me at the high end of your range of $6 to $10 million.

Well, let me explain the other things that are affecting EBITDA -- the bottom line here. We talked about the one-time loss of revenue, which is -- you're correct, is partially offset by gains. There are -- we talked about the sales of certain products that are going to be negatively impacted by HIPAA, especially in the first half of the year.

I'd say the (ph) other things are -- as it relates to revenues -- that significant revenues of some of the product lines, especially including the imaging center PACS line and Ingenuity EMR -- we just spoke about Ingenuity EMR, and that it's really less than $2 million of the total contribution. But when you even look at the imaging center PACS area, you have to realize that we've completely built out -- the existing AMICAS company was primarily geared at the hospital arena. So we, again, have added I believe seven or eight reps in the imaging center PACS area.

Those reps don't -- even though we've had some additional small successes, we're not counting on in the forecast any real significant revenues from that until the third and fourth quarters of this year. Those reps have to come online. They have to be trained. They have to get out. They have to build a pipeline. Typically, those sales take a little bit longer. So you're seeing the costs related to building out sales upfront. And then the impact of the revenue is not going to be until the second half of the year.

On the expense side, we have increased costs related to the ramp-up of this sales that we talked about and marketing -- we talked about the fact that we're increasing marketing $1.7 million. We talked about the increased cost of training the people. We also have increased costs concerning the implementation of HIPAA, which -- we talked about the revenue side being impacted as far as upgrades, but we also have concerns about the cost sides. We've had to keep extra resources on the implementation side. I would estimate that there's probably 40 to 50 people in the company right now that we are having to keep involved in the implementation side of HIPAA due to the problems that the payers and clearinghouses are having -- because again, the customers are looking at us. That's creating a problem as far as the expense side.

Also, we do have other -- just increased cost of doing business, including health-care costs, regular corporate insurance. We also have additional rent planned for 2004 that's fairly significant. We may be moving to corporate locations. So those are factors that are impacting the numbers this year, Corey.

Okay, so net net, even though the revenue should be up by 13 million or so, it's going to be completely offset -- and even more so, perhaps, by some of these expense items you just talked about.

Right. But I think we tried to give you a run rate of the fourth quarter to give you an indication that the business is ramping -- in the press release, to give you an indication of what's happening. And also, we are being impacted by the types of deals we are doing. As you see in this quarter, the fourth quarter -- from orders in the fourth quarter, we ended up deferring a million -- adding a million to deferred revenue, and we added 2 million to our orders backlog. Those are all from orders that the company did in the fourth quarter. Those orders, as we start to look at them -- and when we're actually going to start to realize the revenue, we think are not going to be even next quarter, but they're going to be two, three quarters out, based on the size of the installation and the acceptance criteria with them.

Also, we're selling in the radiology area a lot of new centers -- new customers -- that the radiology centers are not even built yet. So we're signing up orders where the centers are not going to come online until April or May. So it's really a fundamental shift in the business from -- of what we're selling that's impacting our revenues also in the short-term.

Okay. One more question and I'll jump back in queue. Any -- with the decrease in EBITDA, is there any issue with the debt covenants? Does this pose any problem from that perspective?

No, it does not.

(OPERATOR INSTRUCTIONS) Shea Gurson, Corsair Capital.

The revenue on the radiology side is most of that that you're assuming coming from your install base? Is that coming from new customers? Could you talk little bit more about that?

Shea, I would say the majority of that revenue -- over 50 percent -- is from new customers on the license side - software and hardware side. Again, we are really concentrating on building new business first. And I think we will -- as far as the upgrades and upgrading our base, you will see again that increased towards the middle of the year.

Okay. And these new customers -- would you say more of that is on the hospital side or more of it is on the non-hospital side?

The PACS installation will cover both. But the -- on the imaging center, the radiology imaging center side, there's a fair number of both.

Okay. And it seems one of the contracts you announced seem to be arrest some (ph) I guess larger radiology inflations that I guess I'd thought was a larger market than you usually peg (ph) plan -- are you guys going upstream at all now that you have PACS? Or are you still kind of concentrating on the same market?

I think in general, historically, with just a RIS billing product, most of our sales were in the 100 to $500,000 range, I'll say, at the top. We certainly -- entering the pipeline now -- and with the acquisition of AMICAS PACS, the deals -- you know, there are several deals that are in the 1 to 2 million range that we're currently working. So it's quite -- the deals sizes are much larger.

Okay. And can you talk about -- I mean, your best guess as to what percent of your base right now -- how the PACS system and what percent of you think the overall market has a PACS system?

Well, the market statistics are, I believe, that less than 10 percent of the ambulatory space has PACS systems right now. And as far as the hospital space, it depends on the sector. But most of the large, large academic institutions already have PACS. But as you move downstream, that penetration is also much smaller. Let me see if I have a number here I can give you. The numbers that -- we believe they're (indiscernible) at hospital is 20 percent penetrated, Shea, and that the imaging centers are about 10.

And your base would be similar to that? Your base of imaging centers --

Right, our base would be less than 10.

Okay. And just last question -- what was sort of the feeling that you got coming out of the show in Chicago? Obviously, that's a big deal on the radiology side. I mean, what was your sense specifically in terms of how the market was receiving your acquisition on AMICAS? And then sort of what -- where the market's going to terms of PACS, if you can talk a little bit more about that?

Well, the RSNA meeting was spectacular. The third (ph) -- I think the thing that -- if you -- and I know you were out there, Shea, but there's 50 different vendors selling RIS or PACS out there. In reality, when you start looking at the marketplace, I think it's shaking down to some of the large players that sell modality equipment who include PACS with their equipment, and then two or three other companies that are in this space that are going to pretty much dominate it that are outside of the modality companies. And we think we are going to be one of those two or three. We think we can take a large chunk of the market.

Corey Tobin, William Blair.

Just a couple more follow-ups, if I could. On the AMICAS side -- what was the AMICAS revenue contribution in the fourth quarter?

Shea, we'll give you that this time. But in the future, it's going to be included in our radiology numbers -- Corey, excuse me. We did about -- less than $1 million in revenue flow-through. And the expenses were slightly over $1 million in the fourth quarter.

And do you still expect -- I think the guidance was like 9 to 12 cents diluted in '04, and accretive in '05 -- does that still hold?

Yes, I think we slightly increased what we think PACS will bring in. But as far as the AMICAS hospital core business, we're staying with those numbers.

The revenue is still, if memory serves, was 11 to 14 million -- is that correct?

Yes, that's correct.

And the switch to accretive in '05 -- is that -- is it mostly a revenue? I'm assuming it's mostly an increase in revenue that's going to push that over the hump, or --

Software only, yes -- revenue in '05.

Okay. And what sort of growth rate should we -- are we still looking for over 50 percent growth rate in the AMICAS business?

I don't think we're going to start talking about '05 yet, Corey. I mean, the overall PACS market is increasing somewhere around 20 percent and is projected to go to about 1 billion in 2005 from the current 780 million (ph). AMICAS historically has grown at a pretty healthy, over 50 percent growth rate. It's a little early in the year. We want to see little more traction before we start speaking about 2005.

And then finally, RadConnect RIS -- can you give us update on that -- what was the contribution from RadConnect RIS in the quarter?

Again, I think we've given you -- we're going to be giving you different types of numbers this year. We're giving you specific numbers per division of license dollars, software dollars. I will tell you we're not going to provide necessarily the same metrics that we did last year for competitive reasons -- number of deals, etc.

I'll tell you just that this quarter, the fourth quarter, was one of our highest quarters in terms of orders of RadConnect RIS. It most likely was the highest dollars and orders that we've done to date in the fourth quarter.

Last quarter, I think you said it was up 50 percent year over year. I'm assuming from your comments that that is still the case, if not higher?

As far as projections for next year?

No, in terms of RadConnect RIS in the fourth quarter.

I don't know what the numbers were in the third quarter right in front of me here, Corey, so I can't go out on a limb and say that.

At this time, we have no further questions.

I would like to thank to everyone for joining us on the conference call. I'd like to thank our management team and our entire staff for their continued drive, enthusiasm, and commitment. And we look forward to a successful and prosperous 2004. Thank you again for joining us this morning. I look forward to speaking with you again next quarter.