Veradigm Inc (MDRX) 2002 Q3 法說會逐字稿

Good afternoon. My name is , and I will be your conference facilitator today.

At this time, I would like to welcome everyone to the Allscripts Healthcare Solutions quarterly conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the - press the star, then the number two on your telephone keypad.

I will now turn the call over to Mr. Glen Tullman, Chief Executive Officer of Allscripts Healthcare Solutions. Thank you. Sir, you may begin your conference.

Thank you. I'm pleased to welcome all of you to the Allscripts Healthcare Solutions third quarter call.

This is Glen Tullman, Allscripts Chief Executive Officer, and joining me today on the call is Bill Davis, our Chief Financial Officer. We will begin by reading a copy of the Safe Harbor Statement. Bill?

The statements made by Allscripts or its representatives in this conference call will include certain forward-looking statements that are based on the current beliefs of Allscripts' management, as well as assumptions made by and information currently available to Allscripts' management.

Wherever practical, Allscripts will identify these forward-looking statements by using words such as may, , expect, anticipates, believes, intends, estimates, could, or similar expressions.

These forward-looking statements are subject to a variety of risks and uncertainties, including those described in Allscripts' Annual Report on Form 10-K and other filings with the SEC, all of which are available through their Web site maintained at www.sec.gov. These risks and uncertainties could cause Allscripts' actual - Allscripts' actual results, performance, or prospects in the remainder of 2002 and beyond to differ materially from those expressed in or implied by these statements.

Except as required by federal securities laws, Allscripts undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, further events, changed circumstances, or any other reasons after the date of this release.

With that, I'll turn it back over to Glen.

Thanks, Bill.

This is a very exciting time for Allscripts for a number of reasons. When we first set out on our journey at Allscripts, our goal was to become an indispensable part of the way physicians practice medicine and the way pharmaceutical companies communicate with physicians. Today what I am most excited about is the progress we are making with both our products and our customers, which I believe are the two best indicators of our future prospects.

Before I continue, I do want to touch on our financial results for the quarter. During the third quarter, we continued to take very positive steps toward our goal of profitability. Today we reported our lowest loss per share since becoming a public company. Our cash position at $66.2 million remains one of the strongest in the industry. Our cash burn for the quarter was only $1.5 million, down from $4 million in Q2. While Bill will provide more detail on the financials later in the call, I think it's very clear that we're delivering a better bottom line, just as we promised.

strong financial progress as our backdrop, I wanted to review our activity in each of our business units. Let's start with TouchWorks.

If there is one key fact I would want you to take away from this call, it would be that we have completed a fundamental shift in our market position to a complete clinical solutions provider for the ambulatory care market. Today we are positioned very differently from the traditional monolithic EMRs that require multimillion dollar commitments, multiyear install cycles, and a full change of position behavior overnight, which, as you know, just doesn't happen. Simply stated, our approach works better.

In Q3, we introduced Version 9 of TouchWorks. Version 9 provides a number of advanced features, including the ability to view transcript - transcribed documents on the PDA, the ability to access evidence-based medicine real-time when the physician is with a patient, the ability to scan paper-based documents, and the ability to generate notes via real-time templates - another first in this area compared to the static library of templates some of our competitors have. All of these features are very important to physicians.

And the feedback from customers as well as industry consultants is that Version 9 represents a real breakthrough in ambulatory EMRs, and it solidifies our position as a leader in this marketplace both in sales and innovation. As Rich Terrant, CEO of IDX, said at the IDX user conference, no other organization he knows of has sold 60 electronic medical records systems in just over a year. And we're just getting started.

Speaking of innovation, we're very pleased to be one of only three healthcare companies invited by Microsoft to participate in the launch of their new tablet PC in Times Square on November 7. Hewlett Packard has scheduled their official healthcare release on the same day at our executive summit in Las Vegas.

Another exciting event occurred last week when we held our first national users' conference for TouchWorks. We had over 130 customers from 46 different organizations attend. Attendees included academic medical centers, such as Dartmouth-Hitchcock, University of Tennessee Medical Group, and the University of Minnesota Physicians; integrated delivery networks, like Aurora Healthcare, the largest provider in the state of Washington - or, Wisconsin, I should say; specialty groups, such as University Cardiologists in Chicago; and independent multi-specialty groups, such as Holston Medical Group in Tennessee - essentially, some of the largest and most prestigious physician groups in the country.

I can't emphasize enough how important the enthusiasm from this conference is. A great deal of our future sales will come from existing customers, either through purchasing additional modules or by bringing additional physicians live. Getting customers live and keeping them happy is critical to our future success, and this conference was an excellent step in that direction.

We're also being successful in growing our customer base. Today in separate releases, we announced three customer signings that I wanted to highlight. Springfield Clinic, a group of 152 physicians located in Illinois, selected TouchWorks as their solution for developing a clinical data repository. Springfield will begin with four of our applications and add modules as they demonstrate success. Independent physician groups like Springfield are key to our strategy.

The second announcement was University of Tennessee Medical Group. UTMG had already implemented TouchWorks charge for over 100 physicians in less than 45 days and had such positive results that they contracted for three additional modules - a great client and a great demonstration of how our modular strategy is working.

And one other key agreement signed during the quarter was with Sutter Health in northern California. As many of you know, Sutter has over 7,000 physicians in their network and designated Allscripts as a preferred vendor. Given that IDX is also a preferred vendor with Sutter, together we represent a comprehensive solution for their practices and we are already engaged in the sales process with a number of physicians groups in the Sutter network.

In general, we continue to make very solid progress with IDX customers. During the quarter, 33 IDX customers purchased products from us, and we added seven new IDX clients to our base. Overall, IDX users represented 80 percent of our customer signings in Q3. We continue to learn with IDX how to better market to their customer base and are working more closely than ever before to take advantage of our unique presence there. There are 134,000 physicians in organizations that use IDX Practice Management systems, and we have the exclusive access to all of them for clinical applications.

Now, as you evaluate the prospects for success in our TouchWorks business, I think it's also important to understand the trends that will have a major impact on physician purchase decisions over the next 12 to 24 months. Many of you are aware that Senator Kennedy recently introduced a patient safety bill that would authorize funds for computerized physician order entry and electronic prescribing. His bill joins two other recently introduced bills with similar language. And we're told that this legislation will in fact be enacted.

Coupled with efforts by Leapfrog, working closely with the largest employers in the country, as well as organizations like RxHub, who are making connectivity to critical information from PBMs and managed care plans easier to access, we expect significant progress in the next 12 months. Remember, we're talking about between three and four billion paper prescriptions that will be automated represented - representing billions of dollars of drug spending. This is an enormous opportunity both to improve healthcare quality, reduce cost, and for Allscripts as a business.

Now let's turn to our Physicians' Interactive Group. Physicians' Interactive continues to solidify its position as the leading provider of interactive solutions to help pharmaceutical companies reach key physicians. Currently over 70 percent of major pharmaceutical companies are Physicians' Interactive clients. PI, as we call it, is a profitable part of our business and is already producing margins in excess of 50 percent with revenue for the year of 6.6 million to date and sales projected to exceed $10 million this year. Not bad for a business that two years ago did $1.8 million in revenues.

The message here is very clear - we're growing our high-margin software and information businesses, and we continue to do so each and every quarter.

As we've mentioned before, pharmaceutical companies spend over $8 billion each year marketing their products to physicians. Our solutions enable pharma to reach physicians more cost effectively and with a greater level of impact, supplementing traditional methods. I just reviewed the results for a project we completed with one of the largest pharma companies in the world that demonstrated a fifteen to one return on investment for the program. The bottom line is that PI is consistently delivering results - a primary reason why pharmaceutical companies are making PI an indispensable part of the way they communicate with physicians.

I also wanted to briefly comment on our Allscripts business unit, which in the past we referred to as our or our business. We continue to see steady progress in sales as well as margin improvements and have recently expanded the product line to include medical supplies and other items, leveraging the great relationship we enjoy with thousands of physicians offices.

While we don't expect this to be a growth business, we do expect continued solid results and good cash flow. And as we turn to our financials, I wanted to reintroduce Bill Davis, who has, as we announced in a recent press release, joined our team as Chief Financial Officer. Bill comes to us after an accomplished career in public accounting with Pricewaterhouse Coopers, including almost two years focused exclusively on SEC issues as a part of PWC's National SEC Practice. Shortly thereafter, Bill was recruited to Lante Corporation, a publicly traded company where he most recently served as their Chief Financial Officer. Bill's focus dealt with issues specific to software and service accounting. I'm very pleased to have Bill on board and contributing.

I will now turn it over to Bill to detail our financial results for the quarter. Bill?

Thanks, Glen, and hello, everybody.

I would like to start out by stating first how excited I am about being here at Allscripts and having joined such an exceptional management team and organization. As it relates to our third quarter results, let me provide some perspective regarding our top line, margin improvement, and expense control. I also will discuss a few highlights regarding our financial position.

Turning first to our sales. The sales of our TouchWorks products continue to build. We closed $4.6 million of TouchWorks business during the quarter excluding ongoing support. Our third quarter sales represent a $1.4 million or 44 percent increase over Q2 of this year. We also experienced an overall increase in the number of new deals we had in the quarter.

Further, more than half the contracts we signed are deals with existing customers, which separate and apart from the dollars, are important because they represent expanded commitment on the part of our clients to our products and underscore the continuing success of our modular strategy.

Our pipeline also remains strong. The challenge continues to be the time it takes to close a deal which seems to take longer in many cases than we would like. Average deal size for the quarter was $220,000, and the average number of modules purchased was four.

Our Physicians' Interactive unit, the largest part of our information service segment, had sales during the quarter of $2.6 million. This compares to 3.4 million in the second quarter. We believe the timing of the pharmaceutical companies' budget cycles and its impact on their spending patterns is the primary reason for the decline in Q3 sales. The average deal size was $250,000. Seventy percent of our PI deals were with repeat customers, once again further emphasizing that we are becoming a meaningful part of the ways these companies market their products.

On our backlog, our backlog at the end of the quarter was $30 million, a level consistent with the prior quarter. The backlog breakout is as follows - subscription, which includes recurring revenues - revenue streams over the next three to five years was $9 million; one-time fees constituted $17 million; and - here again this is a recurring revenue stream related to our maintenance programs on our products, represented four million, for a total of 30.

Revenues for the quarter were 20 million. That represents a 22 percent increase over the third quarter of last year and is comparable with the prior quarter. Technology revenue from our Software and Information Service segment rose 49 percent year-over-year, which we believe is a significant accomplishment given the challenging environment we are operating in. Our Technology revenue was off approximately $400,000 sequentially due to certain client delays in our Information Service segment and the mix between license and subscription milestones we delivered in the quarter in our Software segment.

It is important to note that we delivered more milestones in the quarter than in Q2. A significant portion of those milestones were for subscription clients that did not positively impact revenue in the quarter, but will in the future.

Twenty-one clients came live on one or more modules in Q3 versus 16 in the second quarter, and six of those 21 clients came on for the first time. We had 65 IDX customers as of September 30. This represents just below six percent of the IDX's customer base.

In terms of revenue mix, Technology revenue was 36 percent of total revenue for the quarter, compared with only 29 percent a year ago. The slight increase we experienced in our Medications, or Allscripts business, caused a shift in our overall mix. That slight increase was caused by the seasonal benefit associated with the sale of flu vaccine and other seasonal medications in the third quarter.

Turning now to our revenue breakdown by category, Meds in the third quarter - Medication segment in the third quarter represented $12.8 million of our revenues; Software and Related Services, 4.8; and Information Services, 2.4.

Margins continue to improve as we see the impact of exiting from unprofitable parts of our business and improving on our overall implementation capabilities. Overall gross margins for the quarter were 26.2 percent versus 24.7 percent in the second quarter. More specifically by segment, Medications moved from 19 percent up to 20 percent from Q2 to Q3, Software and Related Services moved from 17 up to 29 percent in the third quarter, and Information Services moved from 67 percent down to 54 percent.

As indicated, margins improved over the second quarter in our Medications and Software and Related Services segments of our business. We experienced an anticipated decline in the margin in our Information Services business due to a slight increase in our program development and recruiting cost. We believe Q3 margins in that business are more indicative of what we expect going forward. We continue to be encouraged by the progress we are making in our Software and Related Services business. As indicated before, margins improved 12 percent in the quarter, demonstrated in our improved capabilities with implementing the TouchWorks product.

Turning now to expenses, we continue to maintain tight control over our expenses. SG&A for the quarter was $9 million versus 9.7 in the second quarter. Please note that both quarters include approximately $100,000 in amortization, and the third quarter includes approximately $600,000 in non-recurring costs, the bulk of which is associated with a separation payment that will be made to our former Chief Financial Officer.

R&D expense as a percentage of revenues was 22 percent in the third quarter versus 19 in the prior quarter. The third quarter continued to benefit from the capitalization of software and subsidization of some of our marketing expenses by our strategic partners. These two items account for a majority of the reduction in SG&A from Q2. While we continue to manage our costs aggressively, I do not expect capitalized software and marketing subsidies to benefit at the same level as they did in Q3. Therefore, I would continue to think about our ongoing SG&A cost structure - cost structure in the low $9 million range. With regard to headcount, we ended the quarter with approximately 350 employees.

Our loss for the quarter was 3.2 million, a substantial improvement from the $4 million we lost in Q2 and six million we lost in Q1. Our loss per share for the quarter was eight cents a share versus 10 cents per share in the second quarter. Our loss per share in the third quarter would have been seven cents per share had we not incurred the $600,000 expense related to the separation payment discussed earlier of the 2001 restructuring plan.

Basic shares outstanding for the quarter were 38.4 million and fully diluted shares were 38.9 million had we been profitable.

A quick review of the balance sheet - as Glen mentioned, we had $66.2 million in cash and marketable securities at the end of the quarter which we believe provides us with ample financial resources to accomplish our goals. This reflects a cash burn of 1.5 million in the quarter compared to a $6.6 million burn in Q1 and $4 million burn in Q2. We continue to make substantial progress in this area. In addition, the company has no debt. Further, accounts receivable and inventory balance has declined modestly in the quarter, and DSOs were essentially unchanged.

In summary, we continue to execute on our past profitability. Our balance sheet puts us in a very strong position relative to the industry and should enable us to accomplish what we have set out to do. With that, I'd like to turn it back over to Glen for some closing remarks.

Thanks, Bill.

So to summarize, I think you can see that Allscripts is becoming an indispensable part of the way physicians practice medicine and the way pharmaceutical organizations communicate with physicians. As a company, Allscripts is all about physicians - providing them with tools and information that allows them to practice higher quality medicine more cost-effectively. We eliminate hassles for physicians and provide them with critical information, from vital signs to the latest lab results, prescription history to best practices, real-time evidence-based medicine as well as interactive education from pharmaceutical organizations in a variety of formats. Each of our business units is making excellent progress and moving toward profitability, while at the same time investing heavily in software and people that will extend our leadership position.

We're building a long-term opportunity focused on providing information and access to the most valuable and influential people in healthcare - physicians. Physicians control 80 percent of the $1.3 trillion spent in healthcare. And if we're to address the problems in healthcare, that effort will start and end with physicians and we'll be there.

As you've seen, we're also making excellent progress toward profitability. Given our cash reserve, no one doubts our staying power and our willingness to invest to build an organization that will lead this space into the future.

Last but not least and perhaps most important, our partners and our clients tell us that no one in healthcare demonstrates the commitment that our people show every day. Our people are a huge competitive advantage for us. They care and they want to make a difference, and we are, every day for each of our clients, making that difference. That is ultimately what will drive our success.

I want to thank each of you for your continued interest in our success and for your support. At this point, we'd be happy to entertain your questions. Thanks very much for joining us, and we'll open for questions.

At this time, I would like to remind everyone if you would like to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

Your first question comes from of A.G. Edwards.

Good afternoon. I missed the bookings number. Was this - the number 4.6 just on TouchWorks or include PI?

No, that - 46 was just on the TouchWorks, and PI was 26 - an additional 26.

OK. So, are you having a mix shift, then, to subscription deals? And when you give us the bookings number, how much of the subscription deal is in there? So, if you could give me a sense of how big are the subscription deals on average and maybe just address, given what you talked about in terms of the revenue trend in that business this quarter, is there a mix shift going on.

Yes, we, in terms of the overall mix between subscriptions and licenses, it's been fairly consistent quarter-over-quarter, and so we're not seeing any appreciable change there. I did comment as it relates specific to our revenue in the third quarter and specific implementation, that we did have a disproportionate number of subscription installs that you didn't see come through in our revenue line. But in terms of the overall mix, it's been fairly consistent with prior quarters.

, the key there is that when we are doing a subscription install, we don't recognize the revenue until it goes live. So that means that a lot of that work that was getting done during the quarter will start to get recognized next quarter and in future quarters.

OK, that's helpful. And then, could - finally, could you just address how much the IDX users group meeting in August helped in terms of bookings in the quarter?

The IDX users group meeting was very successful for us in terms of getting us an increased level of access to their entire base. And that said, I'm not sure that with probably one exception that new business that we met during that meeting has actually translated into a sale that was recognized this quarter. So, a lot of progress there, but I think what we're seeing is, you know, a little - probably a small lengthening of the sales cycle in that respect and probably added, you know, anywhere from one to three months to the sales cycle that we've been seeing. So we have been saying three to six months, and now we would probably say closer to six to nine months from the time we meet someone to the time they're a signed customer.

And you'd cite what one or two main reasons for that, Glen?

Probably the two main reasons - one is the fact that we're doing larger deals, so the proposals that are going out are larger than they had been in the past. And in many cases that requires board approval, so that lengthens the cycle.

Second is the general economic conditions, and I think you've heard this from a variety of people. It's not that they're not spending money; it's just they're being more careful about doing it. That ultimately benefits us because they can implement us in a modular fashion. You know, if you take one of our closes - Springfield Clinic, you know, this quarter they basically said, "Let's get started, but let's start with a number of modules and we'll work and we'll add as we go." So, some of that pressure benefits us, but on an overall basis, I think people are being just a bit more cautious.

Thank you.

Your next question comes from of Raymond James.

Hi. Good afternoon. And, Bill, welcome.

Thank you.

Can you talk a little bit about the trends you're seeing, I guess, in Physicians' Interactive. It definitely has been a profit - a profitable venture for you. What are you doing to sort of broaden your penetration within the customer base and how maybe are you getting internal advocates to further your efforts there?

, this is Glen. Let me take a first shot at answering that. You know, Bill has done an incredible job of learning the business, but after two weeks if he was able to learn everything about the business, he would have embarrassed a lot of people here. So let me take a first shot and ask him to comment.

The business is going very well for us. As Bill mentioned, what we've started to learn about the business is that there is some seasonality in that business. So we see a little more lumpiness, if you will - and I'll use that word again. I used it last quarter. But we see a little more trending than we've seen in the past.

That said, in terms of customers, 15 of our customers this quarter were repeat customers. So that means they came back to us for additional programs. So not only are we adding new customers, and we added one of the - this quarter we added one of the five largest customers to our customer base one of the five largest pharma companies in the world this quarter which was exciting for us penetration about three out of the four - three out of four pharmas now use us in some fashion. So, great penetration there in terms of new customers - great penetration within customers for repeat business.

And we've also launched two new products this quarter - one called that allows pharma to specifically target some of the opinion leaders around the country and get a more interactive, more in-depth conversation going with them. So the product innovation we're starting to see also come through.

We also have another one called which allows pharma to get a quick look from physicians about what they're thinking. Again, what's really unique here is they can - using our product, they can get information much, much more quickly and accurately than any other way that they've had in the past.

So, good business - as I mentioned, very dramatic growth, and we expect it to continue to grow. It's really gone from being an interesting experiment to a key part of the way pharmas structure their marketing program.

Now, are you finding any kind of, you know, follow-on benefit from the IMS and the partnerships? I know it was - these were forged years ago, and I'm sure under different circumstances, different goals, and what have you. But can you give us any kind of examples as to how you might be leveraging those relationships?

Well, I think from a situation, that's one that we've not gone forward with. And we announced that, I think, probably a year ago that we weren't going to continue with that. So we didn't see a whole lot of benefit. And frankly, that was less a function of them as an organization and just a function of they were going a different direction, and so, you know, we decided just not to continue to work together.

IMS continues to be a strategic partner, and we're starting to see some traction in terms of research studies that we're working together on. So, we're leveraging the assets of PI, the assets of IMS - their salespeople are actually out selling and offering certain of our programs to large pharmaceutical organizations and we are recognizing revenue from IMS, you know, each quarter.

Can you also talk about where on the income statement the - you know, essentially the fee-sharing with IDX shows up on new sales?

Yes, it's actually reflected in our cost of goods sold line.

And at any point do you anticipate breaking that out discretely?

Honestly, we've not had conversations about that to date. And as it - as it becomes more meaningful, you know, something we would give consideration to.

OK. And finally, if you could just sort of expand upon the expansion - the expansion of new products and supplies that you're offering to physicians? And do you anticipate in any way increasing the number of physicians to whom you market, or is it really to the - you know, the couple 10,000 or so that you're already servicing through medication dispensing?

You know, the - we're working very closely with MedLine in terms - I think and let me just clarify - you're asking about the expansion of our product line through our Allscripts business?

Yes.

We're selling them medications today?

Right.

Yes, what we concluded was that actually our customers were asking us - you know, we're dealing with them already, we're shipping to them each week medication, and we started to get requests saying, "Can you also ship other things to us?" because we have these relationships. So we went - we went to Medline and we said, "For certain of the products you sell, we can be a distribution outlet and just leverage the calls and the relationships we already have." So, that's what we expected to do.

It will - it will add to our margins. It will supplement that business. But that by itself is not - is not an expansion in that market. We expect that that will be, as I - as I mentioned, you know, nice - you know, very modest growth, but nice growth - continue to be a contributor on - from a cash standpoint and from an earnings standpoint.

I guess I probably - I probably just want to ask one more. I'm sorry. But can you verify whether or not you still expect to basically turn modestly cash flow positive in the fourth quarter or, you know, if you might - if that might slip the first quarter?

Well, I think that there's a number of analysts' models out there, including your own, ...

Yes?

... that have reasonable assumptions and reflect profitability, most of them in the first part of 2003. What I would say is we're not uncomfortable with those assumptions; however, as you know, we've not given quarterly guidance for 2003 and I guess I'd reiterate that all of this is subject to sales traction. So, you know, that's what we're looking for is strong traction. That's going to drive our movement to profitability.

We think we've made very significant progress on reducing our cost, and we expect that to continue. We also expect higher margins and a shift in the mix of business. But that said, at the end of the day, profitability is really going to be largely a function of sales.

OK. Thanks a lot, guys.

At this time, I would like to remind everyone if you would like to ask a question, please press star, then the number one on your telephone keypad. One moment.

Your next question comes from of Bear Stearns.

Yes, hi, guys - with Bear. One just minor housekeeping question and then one sort of high-level question - would you be able to give us the cost of goods sold for the three individual lines? Do you have that handy or gross margin - however you want to give it to us?

Yes, we can - try to get my figures - can you ask your top-level question ...

Yes, sure, sure. Yes, and I can call you after the call - whatever is easiest.

OK.

Yes, my high-level question, Glen, you know, you mentioned - and I guess the second quarter in a row you're getting a little bit more active in talking about Leapfrog and today you talked about Kennedy bill and some of the other high-level things. I was wondering your thoughts as you start going after some of these bigger opportunities if you're seeing yourself bumping up against some of the whether it be the smaller or the bigger hospital clinical vendors who might be going down to some of the stuff that you're looking at. And so are you entering sort of a whole new type of competitive climate as you - as you start going after some of these bigger opportunities?

The answer is, "Yes, in some respects." You know, we used to compete with single-application providers, and most of those people have gone away because we helped to change that playing field to say, "No one wants a single application. They want an integrated suite." And so that competition has gone away.

Kind of level two competition today who we're seeing - people like Epic and MedicaLogic, which are really the traditional monolithic EMRs. And those products really don't come close to our ambulatory applications in terms of the sophistication of the offering, whether it be wireless, whether it be PDA, along with tablet, along with desktop - you know, the Web-enabled kinds of applications. So we have a significant advantage there.

But over time, I think we do expect others to enter. And the reason is this is going to be the hottest part of the market because at the end of the day, whether you're in the back office, whether you're doing the billing or the like, you've got to get to the physician to change behavior and if you want to do it efficiently. And so we expect that a number of people will enter the market - will try to get into it.

We also believe that we have a very significant advantage both in terms of our strategic partners, in terms of the application, in terms of experience. You know, again, it's pretty fascinating. For a long time, people have asked about utilization, and as we start to larger and larger groups - you know, if you look at someone like Sierra, which is the largest multi-specialty group in Nevada. You know, we have there - have finished - just finished training 137 docs. About 43 of them are full-time up to speed now, and they'll probably write - they'll write just this year alone 50 to 100,000 new electronic prescriptions just in that one - for that one organization.

So, you know, you're starting to see this dramatic ramp up and the ability to point to some of these sites with hundreds of physicians actually using and benefiting from either individual applications or the full suite of application. So that creates a competitive advantage that really no one else has. Clearly the traditional monolithic EMR providers, their big problem has been no one - you know, no one would ever use it. And, you know, as some of the other clinical providers start to enter the space, you know, they will be there, but, you know, our background has been, you know, being able to out-compete some of the larger organizations.

Our total focus starts with physicians and ends with physicians, and that's turned out to be an enormous competitive advantage. So, we'll see them. We'll see them because it's a hot market. But we're very confident in our ability to hold our own and lead this market.

Just a quick follow-up - to what extent is - obviously, you've emphasized the modular nature of what you're doing versus the monolithic guys. I'm imagining also the price point entry, you know, into your - into your solutions would be meaningfully less even if somebody were to buy almost your entire suite. Is that a fair assumption? And to what degree do you use that as a - as a competitive advantage?

You know what? We'd always rather not compete on price, so we're happy to move our price point all the way up to where some of those traditional EMR providers are. That said, we think we can have a very solid business and we're not sure we have to go as high as they've gone. But I don't think that many of these groups, especially groups that buy a full EMR, are price sensitive.

The big fear today that we hear is, "Make sure I'm successful," because there are a litany of CIOs and CEOs and CMOs who've lost their job by spending millions on EMRs that never worked. And one of the things they like about our approach is we immediately get them applications that are up and working very quickly - that they see a return on investment.

I was just out at - Arkansas Physician Management. And, you know, it's a smaller group there, but immediately they saw a reduction in dictation cost in terms of transcription, saving thousands of dollars. You know, they saw an immediate reduction in the need to pull charts, they said, from 100 percent to five percent. And so immediately they see results. That makes them comfortable. That makes them willing to spend more money. So it's less an issue of price.

And frankly, you know, we have had two price increases in the last 12 months, and that's reflective of the fact that as our reference sites get much stronger and as we demonstrate success, you know, the market is willing to step and pay for that success.

Great. And if I could just close with my final question, Glen, and then I'll turn it over. Your ...

, are you stalling so Bill can ...

Bill, Bill, I'll talk even slower if you want.

Go ahead. He's ready to go, but I'll take one more ...

I'll I'm giving Bill a lot of time to get a cup of coffee.

The revenue number - just, you know, your general thoughts. Obviously last year is a tough to look at, given the events of the year-ago quarter. But given that this, you know, was a sequentially flat quarter and what's your general sense of how we should be looking at it to see the overall growth year, given that we were - we were essentially flat on both of the IT lines?

Well, I think, you know, again, I think what we've said is that we are reasonably comfortable with the numbers that are out there in different models like your own. We're very sensitive about that because we understand the economy and some of the other issues that are out there, you know, can impact us.

But we also know that, you know, we've got a very strong pipeline and we've got the deals that we have pending are much larger than, you know, some of the smaller deals that we've had in the past. So assuming that they move forward, again, we are, you know, cautiously optimistic that the numbers that people like you have said out there are reasonable.

OK, great. Thanks.

On the question regarding cost of goods sold, just very quickly, on the Medications business, it's 10.3 million; on the Software and Services, it's 3.4; and Information Services, 1.1, for a total of 14.8.

Great. Thank you very much.

At this time there are no further questions. Do you have any closing remarks, Mr. Tullman?

No, I was just getting the hook from our people because we've actually taken one more than I guess we had - we had promised. We said to people we wouldn't stretch this out.

We - again, I think you can hear from the enthusiasm that we're approaching the call with there's an awful lot of good things happening. If you look at year-to-year improvement, it's pretty dramatic. If you look at the burn rate, you know, there's the dramatic reduction there. And each of the businesses is operating in a very healthy fashion and making progress.

So, you know, I think the other thing to look at is the size of the markets that we're competing in are enormous. So, we think the prospects are very strong. We're excited about what's happening. We think we have a significant lead over anyone else who is either in the market that we compete in or would like to enter those markets, and overall, we think we're very well positioned.

So, again, we appreciate the support that we're receiving from our investors and from our customers. And again, I'd just close the call by saying our employees make it happen for those customers every day, and we think that they're doing a great job as well.

So thanks very much for joining us today, and we'll look forward to talking with you, if not before, at the next quarterly call. Thanks very much.

Thank you for participating in today's Allscripts Healthcare Solutions quarterly conference call. You may now all disconnect.