Omnicell Inc (OMCL) 2012 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2012 Omnicell's Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. (Operator Instructions). Thank you. I would now like to turn today's conference over to Mr. Rob Seim, Chief Financial Officer of Omnicell. Please go ahead sir.

Good afternoon, and welcome to the Omnicell 2012 3rd Quarter Results Conference Call. Joining me today is Randy Lipps, Omnicell Chairman, President and CEO. You can find our results in the Omnicell 3rd Quarter Earnings press release posted in the Investor Relations section of our website at www.omnicell.com.

This call will include forward-looking statements subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied. For a more detailed description of the risks that impact these forward-looking statements, please refer to the information under the heading Forward-Looking Statements, in our press release today, and under the headings Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations, in the Omnicell Annual Report, on Form 10-K filed with the SEC on March 8th, 2012, as well as more recent reports filed with the SEC.

Please be aware that you should not place undue reliance on any forward-looking statements made today. The date of this conference call is October 25th, 2012 and all forward-looking statements made on this call are made based on the beliefs of Omnicell as of this date only. Future events, or simply the passage of time, may cause these beliefs to change.

Finally, this conference call is the property of Omnicell, Inc., and any taping, other duplication, or redistribution without the express written consent of Omnicell is prohibited.

So Randy will give us an update on the Omnicell business today, and then I'll cover our Q3 results and our forecast going forward. And following that, we'll open the call to questions. Randy?

Good afternoon. Q3 was a record quarter for Omnicell. We had record orders, record revenues, and record profits. Non-GAAP earnings per share exceeded analyst consensus by $0.07, and we achieved a significant company goal by posting non-GAAP operating margins above 15% in Q3, a quarter ahead of projections.

Both the acute care and non-acute care segments of our business are contributing ahead of the expectations we shared with you in June after the acquisition of MTS Medication Technologies. Most importantly, our three-part growth strategy of market expansion in the U.S., focused international growth, and acquisition and partnership is working.

Our strategy to expand our market presence in the U.S., providing the most extensive medication and supply management solutions, is being validated through continued equipment expansion and upgrades among some of our largest accounts.

This past quarter, we announced that Partner's Health, which includes such renowned that Partners Health, which includes such renowned hospitals as Massachusetts General and Brigham and Women's, have renewed an exclusive contract with us and will be upgrading their systems and anesthesia solutions to our G4 platform, which we believe to be the most advanced, automated dispensing technology in the market.

We also announced the Erie County Medical Center, a 550 bed teaching facility for the University of Buffalo, would become our largest user of Savvy medication mobile systems. Now Savvy extends both the physical and electronic control of medications from the automated dispensing systems to the bedside, and is a platform to run hospital information systems.

Erie County chose Omnicell because of our demonstrated commitment to constantly improving technology and our superiority to other systems. Adding Savvy builds on Erie County's already extensive commitment to Omnicell automation, which includes our [OmniRx] G4 automated dispensing systems, anesthesia workstations, and several of our advanced workflow software solutions.

Focused international expansion, both in acute and non-acute care, is the second part of our growth strategy. We have entered the medication adherence business in two new international markets, and we are expanding our multi-medication adherence business in Australia.

In the acute care segment, we recently won a preferred supplier status award for dispensing automation with the Assistance Publique Hopitaux of Paris, or AP-HP, a significant healthcare organization in France, and an affiliated group purchasing organization. AP-HP is the largest university health system in Europe with 44 hospitals, and the affiliated GPO has more than 120 members serving 42,000 hospital beds in France. And preferred supplier status gives all members of AP-HP, and the GPO, the ability to purchase from Omnicell without going through the lengthy tender process to secure competitive bids. Finally, we continue to make progress in China and in the Middle East.

The last part of our strategy for growth is through acquisitions and partnerships. We've now completed the first full quarter after the acquisition of MTS Medication Technologies. Our sale pipeline for medication dispensing systems in long-term care facilities continues to grow. And our multi-medication adherence package is gaining momentum in new markets outside the U.S. We're pleased that the additional profit generated by the non-acute care business is higher than the guidance we had provided in June.

We also recently announced a partnership with Cerner to bring a new model of interoperability to the industry. Using Cerner's CareAware iBus, the resulting turnkey solution for connectivity between our G4 suite of products and Cerner's electronic medical record should provide our shared customers with seamless access to information previously unavailable with standard interface connections.

This level of integration between our products is also expected to enable transformative workflows for hospitals, cutting down their IT department cost and time needed to implement and maintain the systems. The relationship is particularly significant because it brings together two recognized leaders in healthcare.

Omnicell with our technology advances has been recognized seven years in a row by KLAS, and of course Cerner ranked 14th on Forbes Magazine's list of most innovative companies. Earlier this month we participated in the Cerner health conference and have since experienced a great deal of excitement and support from existing and potential customers.

Overall, I'm very excited about our momentum in the marketplace, the reception to our new products, pleased that we're on track to deliver continued improvements in healthcare economics and patient safety. Now let me turn the call back over to Rob for some financial details.

Thanks, Randy. So we had an absolutely outstanding quarter in Q3 that exceeded expectations across the board. Our record order volume included 34% of our acute care equipment orders from new and competitive conversion customers. Of those orders, we continue to see a strong contribution from competitive conversions, with more than three quarters, three-fourths of the orders again being competitive conversions, and the rest from new green field customers who had never purchased automation before.

We do see fluctuation in these [majors] quarter to quarter, but year-to-date, we have 32% of our orders from new and competitive conversion customers, of which about two-thirds of those are competitive conversions. We're very happy with these results, believe they continue to demonstrate the competitiveness of our solutions.

Revenue for Q3 2012 was $84.39 million, up 31% from Q3 2011, and up 12% from last quarter. Q3 2012 earnings per share on a GAAP basis was $0.20. We report our results on a non-GAAP basis also, which excludes stock compensation expense, amortization of intangible assets associated with acquisitions, and any one-time costs or benefits. All the transaction costs associated with the acquisition of MTS Medication Technologies were recorded in Q2 2012 and were excluded from non-GAAP earnings that we reported that quarter. For Q3, there were no one-time transactions costs recorded.

We use non-GAAP financial statements, in addition to GAAP financial statements, and we feel it is useful for investors to understand acquisition related costs and non-cash stock compensation expenses that are a component of our reported results. A full reconciliation of our GAAP and non-GAAP results is included in our 3rd quarter earnings press release and is posted on our website.

On a non-GAAP basis, earnings per share was $0.29 in Q3 2012, up from $0.16 in Q3 2011, and up from $0.20 in Q2 of 2012. Our non-GAAP operating margin was 17.4% in the quarter, which is a new record. Non-GAAP operating margin is up from 11.2% a year ago and 13.3% last quarter.

Our expectations had been to achieve non-GAAP operating margins close to our goal of 15% by the end of the year. We're happy to have achieved the goal early, capping a steady process of profit improvement, while continuing to invest in our product line and our market strategies.

As a part of the profit improvements we achieved in Q3, we saw some benefits in both product costs and operating expense that we don't expect to repeat. Those benefits drove 100 basis points of favorable gross margin, and 150 basis points of favorable operating expense. On a go-forward basis, we expect our operating margin to hover in the mid-teens, and will have some fluctuation with the product mix of our sales.

Our blended non-GAAP gross margin was 55.4% for the quarter, which is very strong considering we now have a full quarter of non-acute care products that carry lower gross margins. Our acute care gross margin tends to be in the mid to high 50% range, and our non-acute care gross margins are in the low to mid 40% range.

Adjusted earnings before interest, taxes, depreciation and amortization, which also excludes stock compensation amortization, and the amortization of acquisition-related costs, was $17.5 million for the 3rd quarter of 2012, up 94%, or $9 million, a year ago.

Our acute care segment, which includes everything we sell to hospitals, contributed $64.4 million in revenue. Our acute care business contributed $0.22 of non-GAAP earnings per share in Q3. The acute care business had non-GAAP gross margins of 59.8% on products, and 55.1% on service in Q3 2012, averaging 58.6% for the quarter. Acute care gross margins are up over 200 basis points from Q2, and about half of that result reflects sustained improvements. The acute care segment achieved 16.5% non-GAAP operating margins in Q3, and is exceeding our expectations we set earlier in the year.

Our non-acute care business consists of solutions sold outside the hospital setting, including equipment and consumables that manage medication adherence packages, and dispensing systems sold to institutions serving long-term care needs. Over 80% of the non-acute segment revenue is comprised of consumables used by pharmacists to make blister cards that are at the center of medication control in most non-acute care facilities.

Non-acute segment contributed $19.9 million of revenue to the quarter, and contributed $0.07 of non-GAAP EPS. The rate of earnings contribution is higher than originally expected. Non-GAAP gross margin for Q3, non-acute care business, was 45.1%, and our non-GAAP operating margin was 20%.

Balance sheet metrics remain strong. Cash and cash equivalents were $55 million, up slightly from Q2 2012. During the quarter we repurchased $5.6 million of stock, which was fully offset by cash generated from the rest of our operations in Q3.

Our accounts receivable days outstanding was 58, up 6 days from last quarter. We expect our DSO to be in the range of 50 to 60 days and we view the increase as normal fluctuation. Our inventory was $26 million and our regular headcount 1,084, both relatively unchanged from Q2 2012.

Regarding the full year of 2012, we're tightening our expected range of revenue from $307 million to $315 million previously forecasted to a range of $310 million to $312 million. This forecast is consistent with our guidance that we gave at the beginning of the year for revenue growth in the range of 7% to 8% in the acute care business.

Our guidance for product backlog at the end of 2012, which is the value of firm orders that have not yet completed installation, remains in the range of $138 million to $142 million. Product backlog is comprised primarily of automated dispensing cabinets, central pharmacy systems, and supply management products.

Non-GAAP earnings per share were expected to be between $0.75 and $0.81. Both of our segments are achieving better results than expected, so we are raising our expectations for non-GAAP EPS for 2012 to be between $0.86 and $0.88 per share.

So this concludes our prepared remarks. Now I'd like to open the call to take your questions. And I'd like to note that for the Q&A session, Randy and I are joined by Chris Drew, our Executive VP in charge of all of our field operations for acute care. Operator, can you open the call?

(Operator instructions). We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Matt Hewitt with Craig-Hallum Capital.

Hi Matt.

(Inaudible) on the quarter, gentlemen. Can you hear me?

Oh, yeah.

Great. The first question. Obviously fantastic progress on the operating margin, and I think you touched on a little bit as far as whether or not 17.4% was sustainable. It sounds like there were some items that impacted this quarter positively. Can you detail maybe what were those and why that would fall back? Obviously there's mixed variability every quarter, but what would cause that to fall back, you know 100, 150 basis points in Q4?

Yeah, we have a couple items that hit during the quarter that were favorable, that were a little bit unusual. I mean first of all we used very few, relative to normal, spare parts in our service process. That's not something that we expect to be normal and sustainable. I think it's just kind of an unusual blip. I'd like to think that none of our products will break in the future, ever, but that's probably not the case, and it's not consistent with history.

We also did a site shutdown for the first time in the company's history, and a lot of people burned off some vacation, which favorably impacts the P&L. That won't repeat. And we'll do one again next year but we won't be doing one in Q4.

Then on the flip side, we do have some additional expenses coming in in Q4 as we move our facilities. I think we've mentioned before, we're moving to some new buildings in California, and there's some one-time move costs and then a little bit higher rents that come into play.

So we won't see the same operating margins in Q4. And frankly we expect our operating margins to hover, like I said, in the mid-teens, 15% was our goal. And we've always said, and continue to believe that we need to reinvest in the business. Fifteen percent is a good return and we'll take any additional profits and reinvest them in product development and market development.

Okay. Customer response, since the acquisition I know that initially there was, in particular I believe a couple customers that were pretty excited that you were making this commitment to the space. What have you heard since the acquisition? How are the sales teams reacting? Anything you can provide on that front will be helpful.

Well of course on the non-acute care side, we've been able to build our pipeline for our cabinets a lot stronger because MTS Medication Technologies has a lot of relationships there. While we were selling in the marketplace before, that's continued to do quite well and we see a nice growth in pipeline.

And on the acute care side, I think we have some opportunities in multi-dose adherence. And maybe Chris, could you comment a little bit on those?

Sure, Randy. Yeah, we've been able to get out into the marketplace since the acquisition and talk with some of our top IDN customers, customers like Partners, about the opportunity to integrate compliance packaging into their operations as they discharge patients. And in particular, we think that can go against the new 30-day re-admittance rules.

It's a new concept and so is in very early days, but customers have reacted positively as they're seeing the future in healthcare change in their operations and see the opportunity for the MTS solution set to maybe have an impact on that future state.

Okay. I guess along those lines, I think this past week Walgreen's came out and announced that they had, and it looked more like a beta test, but they were going to work with a couple hospitals along those lines, where they were going to be providing medications for the first 30 days for discharged patients. Is that the type of opportunity that you could see yourselves in as far as maybe working with someone like a Walgreens, but basically providing these blister pack dosage forms for 30 days' worth of drugs? Is that kind of what you're expecting?

Well Matt, I think everyone's trying to figure that out. And I think patients in particular are not viewed as just acute care patients, but now they belong to a whole system. And I think the systems all want to protect their patient flows, and that includes getting the meds after they leave the hospital because of the need to look at the patient's whole healthcare experience across the entire continuum.

So a lot of people are running after different types of solutions and ways to do it. Some are going to partner, and I think some are going to take our technology and put it out there as a solution to meet those kinds of needs. So it's very much a new evolving market.

All right. Thanks. I'll jump back in the queue.

Your next question comes from the line of Charles Rhyee with Cowen and Company.

Congrats on the quarter here. Just a couple of questions, you know to follow-up on that first one. Rob, when you said some favorable one-time, not necessarily one-time, but some unique events in the quarter, I think you said 100 basis points to gross margin and then 150 to op margins. So you're just saying 50 basis points additional in the OPEX line?

No. So 100 basis points in gross margin and another 150 basis points in the OPEX line.

So 250?

Rob Seim Our expectations are -- yeah. So we were at about 17.5% margins. Without those sort of activities that took place in the quarter, operating margin would have been more in the 15% range.

Okay.

To say it differently, we saw sustainable improvement from the previous quarter where we booked about 13.3% operating margin. We saw sustainable improvement up to about 15%.

Right. Okay. And going forward, I mean I think you've stated before that you had looked to reinvest beyond 15%. Is that still sort of your expectation or could we see our margin drift back up to this 17%, 18% range?

You know, in any one quarter I think we're, as I said, we're going to hover around the 15% goal. I think some quarters we might be a little bit less and some quarters a little bit more. But over the long-term, our objective will be to manage to the 15% operating margin.

And to the extent that we do see more profitability through cost controls or through product mix, we will take advantage of that and reinvest it in the business.

Okay. You know, obviously the results are good and you were talking about record orders. Any reason not to raise the product backlog guidance? Is there anything different between sort of the orders that you're booking in the 3rd quarter that wouldn't necessarily drive a higher product backlog for year end?

Well I'll take that first and I'll let Chris comment also, since all the sales force reports to him. But you know these are large equipment sales. Many times our sales can be well over a million dollars, into multi-million dollar sales. And it is lumpy. We had a great quarter in Q3 and we're very optimistic about the year overall. But we also plan for growth during the year and we're kind of on our plans for our long-term perspective. So that's why we're holding our guidance for backlog in $138 million to $142 million.

Yeah, it's Chris. I'll just add on to that, Q3 is historically for Omnicell a very strong quarter, and that's what we planned for and executed to. The primary driver for that is, in addition to the various core streams of business, that we enjoy quarter in and quarter out, it's also our strongest quarter for government orders. So the VA and military hospital system, we saw strong order volumes as expected from them. And then as we roll into Q4 to finish off the year, we've got a full pipeline and are confident being able to get to the guidance range.

Okay, great. And Rob, I think I may have missed it, but I know you were giving numbers between the acute care side and the non-acute care side. Can you give us sort of a revenue breakdown between the two, by product and service?

The service revenue that we have in the company, which is $16.9 million for the quarter, is predominately in the acute care side. Service for the non-acute business is about $700K a quarter. And then the rest is, of the $16.1, is on the acute care.

Okay. And then on the product?

So the product revenue is the remainder. I don't have it here by segment, but, and we can both do the math.

Okay. I can back into it then. Okay. Great. Thanks guys.

Your next question comes from the line of Sean Wieland with Pipe Jaffray.

Are you there, Sean?

(Inaudible) got going now.

Oh, wait, hold on. Can you hear me?

Yeah, start over.

All right. Sorry.

(Inaudible) problems here.

Wanted to ask about the Cerner relationship and how you think that that's going to impact order flow going forward and if that's had any meaningful impact so far.

Yeah, hey Sean. It's Chris again. We're really excited about the new Cerner partnership. And we're not the only ones excited. I would say our -- you know, I was able to get to their health conference and we had a lot of Omnicell customers come by and indicate how enthusiastic they are for the partnership. We have work to do now that's already been defined with Cerner to get ourselves onto the iBus and be able to start delivering solutions to our joint customers as early as Q1 of next year. And then there will be ongoing development beyond that.

So nothing yet. I mean the partnership was only just announced, so nothing yet that's booked directly attributable to the partnership. But certainly a lot of enthusiasm in the marketplace.

Okay, thanks. And on a follow-up question to the line of questioning before about MTS and that 30-day re-admission issue. How do you help -- or what kind of challenges do your hospitals face in dealing with the reimbursement process around these meds? How complicated is it for the hospitals to get paid if they do use an MTS solution to address the readmission?

Well most hospitals are already -- have an outpatient pharmacy operation. And so they already have a billing process for adjudicating with the PBM, so that's generally not a problem.

Okay. Good. Thanks a lot.

You bet.

Your next question comes from the line of Steve Halper with Lazard Capital.

Hi. Based on the commentary, it sounds like you had a good quarter in terms of conversions. Could you just give us a little bit of color on the competitive market and what should we be looking for at the pharmacy show in early December?

Yeah, Steve. It's Chris again. I think the competitive dynamics remain largely unchanged. We tend to see care fusion in every account that we go for, whether it's a competitive swap opportunity or new business. And we continue to execute and stay right in that range of about a third of our business coming from those competitive swap outs and new accounts.

And we've been particularly pleased with the competitive swap performance of late. I think our G4 product line and our broad suite, including Savvy, anesthesia workstations, central pharmacy, et cetera, is really playing well right now in the marketplace.

In terms of ASHP, we've got some exciting new stuff to launch to the marketplace and good augments to what we have in our current portfolio and we'll be able to preview our next release of software.

Okay. And just going back to care fusion, you know based on your intelligence, have they gotten any traction with the ES, which I guess was announced a year ago at ASHP.

We have not seen it broadly in the marketplace.

Great. Thank you.

(Operator Instructions). Your next question comes from the line of Leo Carpio with Caris & Company.

Hi, good evening gentlemen. A couple of quick questions. Did the share repurchase activity have any impact this quarter on the EPS?

Yeah, a little bit. We did about half of the $5.6 million that we bought back towards the beginning of the quarter, and that lowered our average share account a couple hundred thousand. The rest of it was in the end of the quarter and had little effect on the average share count.

Okay. And then regarding the big question in terms of the capital spending outlook, what are the hospitals telling you in terms of are they still in the same situation as last quarter that the large hospitals are still moving forward and small and mid-sized are a bit better in spending? Or is the situation a bit better?

Well I think all hospitals are trying to make investments to get themselves more efficient. And you know, a lot of the new products that we brought out last year helped even more. Systems always help and they helped even more with efficiency. So we are seeing that we're still on the capital prioritization list. You know I think overall, all hospitals of course are constrained, but their economic situation is changing.

Smaller hospitals, we haven't seen any particular improvement in smaller hospitals over the last three quarters. We saw some improvement towards the end of last year and towards the beginning of this year, but they continue to buy at about the same rate. And then the large academic centers are very active.

Okay. And in terms of the contract activity and solution activity you saw this quarter, were there any [deals] that were pulled forward from the 4th quarter or is everything well scheduled for third?

So we -- you talking about orders or are you talking about revenue?

Revenue.

So for revenue, everything was scheduled in pretty early, as is typical with our installations. After we get an order, there's a period of planning with the customer before the installation actually starts. And then the installation tends to be scheduled multiple months in advance, unless it's just a small add-on to an existing installation. So our orders are installations, which result in the revenue, we're pretty much on the schedule that we expected.

Yeah, there's nothing pulled in. it's just our regular run rate.

Okay. And then last question, in terms of the situation with the presidential elections, has any of your hospital customers expressed any concern, looking forward to 2013 or regarding the fiscal cliff?

I don't think so. I think for the most part hospitals kind of know what the picture looks like going forward. And it's all up -- you know the major activity going on in every hospital we see is a lean project where they're implementing lean process.

Most hospitals have selected their major HIS vendor, probably installed the first two phases of that, and now are really focusing on lean projects to drive out costs as they have to get more efficient with more patients and about the same revenue they think in the future.

So a lot of activity around those kinds of projects, which tends to lead to our kinds of systems, which are automating manual tasks and taking out costs and improving quality. So I don't think the presidential election, or even the fiscal cliff, will actually have much impact on hospital decision making for our type of systems.

Okay. And then just, sorry last one, this one. On meaningful use stage two, I think we've talked about in the past that it's been -- it's a possibility for a new order flow and demand there. And since the regs came out in August, have you seen any increase in demand related to it, or order flow yet, or it's just too early to tell?

Well meaningful use stage two has some requirements about end-to-end control of medications. Those requirements do not specifically drive demand for our products. You know the overall system of control of medications, obviously we contribute to. And as hospitals want to get better control over that overall process, there's more interest in our systems. But meaningful use, yeah no one would have to buy automated dispensing systems in meaningful use. They can do that with bedside point of control.

Okay. Thank you. And congrats on the quarter.

Oh, thanks.

Thank you.

Your next question comes from the line of Matt Hewitt with Craig-Hallum Capital.

Thanks for taking a couple of follow-up questions. First, you mentioned the Erie as a big adopter of the Savvy mobile carts. And I'm curious, given that the product's been out for a little while now, what can you tell us as far as adoption from a bed count to cart ratio? You know I think originally it was, you know, we were going to try it out in a couple units, see if we like it, and then maybe expand. Are you starting to see that expansion? Any color, that would be helpful.

So the Savvy Mobile Medication system is configurable and you can have anywhere from two medication drawers on it up to 12. And so it can be used in any sort of ratio like that. We tend to see the ratio typical of a nurse to patient ratio, in the five to six range. The Erie County installation, you know it's a 550 bed hospital and they're buying about 100 carts. So that ratio is I think where it's going to come out over the long run.

But there is a variety. You know every hospital's a little bit different. And as they use it in various different parts of the hospital, there's applications for a very high ratio to patients and lower ratios to patient.

Okay. And then internationally it sounds like you had a nice win in France. Is Europe maybe coming back or are they still challenged economically and therefore it's maybe a little bit less of a priority versus maybe China or even Australia, as it sounds that's becomes an opportunity for the non-acute care?

We have great partners in Europe. Europe obviously is challenged economically, as we all know. We've had some of our largest installations in Europe, like the [Karolinska] Institute that we talked about in the past and the Guy's and St. Thomas hospitals in London. This win in France is a great win with us. We've got some pretty large installations in France already. This is a great opportunity for us to sell into that organization without them having to go through the whole tender process.

Our focus does remain in the Middle East where there's a lot of new healthcare organizations and facilities being built. And, you know, the clinical workload tends to be somewhat similar to what is in the United States, and so our systems apply very readily. And in China, where of course there haven't been any automation systems like ours, there's very large hospitals and there's a great opportunity to bring our efficiency and medication control into that environment.

But certainly we still have our partners in Europe that are working their own sales process and have opportunities now and then.

You know I guess speaking to the China opportunity, and I know it's very early there, but I think initially -- and it sounds like you've got a great partner -- but initially it was going to be trials, maybe five, six cabinets. It's obviously a big change in workflow for them. How has that continued to evolve, and are you seeing more and more interest from some of the larger hospitals there?

Well, it's going well, and it's going pretty much like we expected it to. As we said, and you just repeated, we expected those hospitals to initially implement in a small portion of their facility, try it out, see how it works, test the changes in workflows. And of course, in any hospital, when you change your workflow, it's a pretty big deal. So once they've got all the bugs worked out, then they would deploy it further in their facilities.

That's exactly what we've seen. We've got a great pipeline of hospitals that are in different stages of implementation, and planning for implementations. And we're working out initial bugs with each one of them with their unique aspects of their individual workflows. But it's going pretty much as we expected and you know really meeting all of our expectations.

That's great. I guess one last from me. Do you have a breakdown for international versus domestic, particularly I guess on the acute care side scenario where you've talked about it maybe only being 5% to 10^ penetrated, but a very similar size market for the domestic business? Where does that fit today versus maybe the long-term aspirations?

Well our international business, our business outside of the United States and Canada, let me put it that way, is still less than 5% of our overall revenues. And you know what we said in the past, and we still believe, is there is a path, as medication control and automation of medications and supplies becomes more prevalent, the path to get closer to 20% of our business overall. And the numbers I'm talking about here are for the acute care, because that's what you asked about.

In the non-acute side, we already have about 20% of the business outside the United States, and that's where most of the multi-medication packaging exists, those adherence packages, primarily in UK and in Germany and Australia.

Okay, great. Thank you very much. And again, congratulations on the record quarter.

Thank you.

Thank you.

There are no further questions at this time. I would now like to turn the conference back over to Mr. Randy Lipps for any closing remarks.

Well thanks everybody for joining us. And really a great shout out to the Omnicell team for all the records they've produced this quarter to get us to the 15% operating margin, to great orders, record and profits. It's a significant milestone for us as we look to continue that momentum as we move forward. Thanks everyone. See you next time.

Thank you for participating in today's conference. You may now disconnect.