Omnicell Inc (OMCL) 2013 Q4 法說會逐字稿

Good afternoon. My name is [TaShauna] and I will be your conference operator today. At this time I would like to welcome everyone to the Omnicell fourth quarter 2013 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session. (Operator Instructions)

Thank you. Mr. Rob Seim you may begin your conference.

Thank you good afternoon and welcome to the Omnicell 2013 fourth quarter results conference call. Joining me today is Randall Lipps Omnicell Chairman, President and CEO.

You can find our results in the Omnicell fourth quarter earnings press release posted in the Investor Relation 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 in our press release today, in the Omnicell annual report on form 10K filed with the SEC on March 11, 2013, and in other 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 the February 4, 2014 and all forward-looking statements made on this call are made based on the beliefs of an Omnicell as of this date only. Future events or simply the passage of time may cause these events to change.

Finally this conference call is a property of Omnicell Incorporated and any taping other duplication or rebroadcast without the expressed written consent of Omnicell is prohibited.

Randy will cover an update on our business first today and then I'll cover our results for 2013 and our guidance for 2014. And following our prepared remarks we'll take your questions.

Good afternoon. I am very proud of our performance in the fourth quarter, in all of 2013 and over the past four years. Exceeding our guidance we recorded record revenues in Q4. We also recorded record orders culminating in full-year bookings performance of $328 million, $13 million over the upper end of our guidance.

Our full-year 2013 was also a record in both revenue and earnings. But I think the most compelling statistics are the ones that measure our performance over time.

In the past four years we have increased revenue over 75% and more than tripled our non-GAAP net profit. We've expanded our market share and take in new thought leader customers every quarter for nine consecutive years.

We've change our revenue mix from 15% recurring to 45% recurring. We've broaden their product line, expanded into new markets, and moved with our customers to address medication management across the continuum of care.

I want to assure you while we are proud of what we've accomplished, we are not standing still. I believe Omnicell has more expansion opportunities now than we have ever had before and that we are positioned well to take advantage of them.

Of our three growth strategies our first strategy of differentiated products continues to attract new customers who adopt our award-winning G4 platform. Customers such as mobile infirmary, a 689 bed hospital system in Mobile, Alabama has adopted our G4 medication dispensing systems and seizure workstations and pharmacy automation. Mobile infirmary selected Omnicell to replace two competing systems and standardize their medication management approach across the entire enterprise, with the goal of improving nursing efficiency and patient care.

Every year we win new academic medical centers, government installations, and smaller community hospitals. We've announced new advance interoperability such as the ability to operate an automated dispensing system from Cerner PowerChart, an interoperability between our non-acute medication packaging systems and leading non-acute pharmacy information systems such as SoftWriters.

And we continue to bring new differentiated products to the market such as our expanded Pandora Analytics product line, that now aggregates information from not only medication dispensing systems, but also supply systems, operating rooms systems, and the central pharmacy systems. In addition our systems are now Stage II meaningful use certified.

Our second strategy of expanding into new markets also fueled growth particularly in 2013. Examples include our expanding business of placing automated dispensing systems into non-acute care settings and our continued international expansion.

In addition our multi-med medication adherence solutions continue to do well in Europe with over a 500,000 patients receiving their prescriptions through our medication adherence solutions every week. And part of our record revenue performance in Q4 was driven by the recording of revenue from the Sidar Medical Center in Qatar an order we took my 2012.

Our third strategy of expanding our presence and relevance through acquisition has also delivered results. [All many] our non-acute care medication adherence solutions in Q4 we announced an agreement to purchase SurgiChem Limited from Bupa Home care in the United Kingdom.

SurgiChem provides medication adherence solutions popular with community pharmacies, which is an excellent complement to our existing business in the UK that is predominantly served larger chain pharmacies. The acquisition is going through regulatory review now in the UK. Pending regulatory approval, the acquisition is expected to be immediately accretive.

We believe our hard work over the years and the execution of our three leg strategy lay the foundation for our successes last year and sets us up for continued future growth. In today's changing and tumultuous healthcare environment, we remain focused on our mission to change the practice of healthcare with solutions that improve patient and provider outcomes. Our solutions provide clinicians greater assurance that medication and supplies are administered correctly, are not misused, and are handled in a cost effective manner.

We now count over 6000 customers using one or more of our solutions. Every day our products serve the caregivers of thousands of patients around the globe saving money and improving patient safety. We will never stop in our pursuit of a better outcome in healthcare.

It is what drives us to continue to deliver differentiated products. Drives us into new markets where our solutions make a difference. And drives us to use our cash flows to expand our product lines to meet the changing needs of the healthcare industry and it is what drives the results that we saw in Q4 and into 2013 overall.

I'll turn the call back over to you Rob.

Alright. So the fourth quarter and full-year results for 2013 exceeded our expectations in nearly every way. Set us up for another great year in 2014.

First of all, the orders were very strong in the quarter topping off a year of growth resulting in record order volumes. Our product backlog ended of the year at $180 million exceeding our guidance range of $160 million to $165 million. And up 16% from the ending backlog in 2012, of $155 million.

Overall product bookings finished the year at $328 million above our guidance of $305 million to $315 million. Those bookings are up from $265 million in 2012, when we had a partial year contribution from MTS. Year-over-year growth of 24% is made up of about 10% from a full year of the MTS contribution and about 14% from organic growth.

Contributing to the quarter where significant number of new customer wins both in our acute care segment, where we saw large orders from academic medical centers and strong performance in the non-acute care market.

We've also seen continued expansion of demand for our G4 upgrades to existing automated dispensing system installations. We've now taken orders to upgrade 37% of our existing customers to G4. So while we're happy with the progress we still have a large portion of our installed base to upgrade.

Historically we've discussed the percentage of our new product orders that have come from new and competitive conversion accounts. This measure encompasses all of our products except the MTS product. All these products are marketed under the Omnicell brand.

So those orders from new and competitive conversion customers were 47% of Q4 bookings for Omnicell branded products. With the bulk of the orders coming from competitive conversions and a small number of the orders from Greenfield customers who had never purchased automation before.

For the full year 2013, 38% of our orders for Omnicell brand systems came from new or competitive conversion customers. Every year since 2005, nine years in a row, our orders from new and competitive conversion customers have been over one third of this portion of our business.

Our 2013 financial performance was very strong. Our revenues of $381 million were a record. Non-GAAP net income of $1.08 per share also a record, was consistent with our increased guidance and well above the upper end of the guidance we set at the beginning of the year. We exited the year with non-GAAP operating margins of 14.6% for Q4.

So the revenue for Q4 2013 of $105.8 million was above our expectation, driven by a strong demand for G4 upgrades which often ship shortly after they're ordered. And revenue was up 17% from Q4 2012 and up 12% from Q3 of 2013. The Q4 2013 profit on a GAAP basis was $0.19 per share up from $0.16 per share one year ago.

For the full year of 2013 the revenue of $381 million was up 21% from 2012 and GAAP earnings per share of $0.67 was up $0.20 from $0.47 in 2012. We also report our results on a non-GAAP basis which excludes stock compensation expense, amortization of intangible assets associated with acquisitions, and any nonrecurring cost or benefits.

We use non-GAAP financial statements in addition to GAAP financial statements because we believe it's 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 to non-GAAP results is included in our fourth quarter earnings press release and is posted on our website.

This quarter a nonrecurring charge of $0.6 million associated with the pending acquisition of SurgiChem was excluded from our non-GAAP results. On a non-GAAP basis earnings-per-share were $0.29 in Q4, $0.01 higher than analysts expectations. Non-GAAP EPS was down sequentially from $0.31 in Q3 as expected.

In Q3 we had tax benefits associated with employee stock plans totaling $0.03 per share which we did not expect to repeat in Q4. Non-GAAP earnings per share were up from $0.25 in Q4 2012. For the full year 2013 our non-GAAP profits increased from $0.87 per share to $1.08 per share, an increase of 24%.

Adjusted earnings before interest, taxes, depreciation, and amortization which also excludes stock compensation amortization and amortization of acquisition related costs, was $18.9 million for the fourth quarter of 2013, up 17% from $16.2 million a year ago. For the full year 2013 adjusted EBITDA was $66 million, an increase of 21% from $54.4 million in 2012.

Our acute care segment which includes everything we sell to hospitals contributed $79.9 million in revenue and $12.4 million of operating income in Q4 2013 or roughly 80% of the total operating income of the Company.

Our non-acute care business which consists of solutions sold outside the hospital setting, including equipment and consumables that manage medications through adherence packages and dispensing systems sold to institutions serving long-term care needs. The non-acute segment contributed $25.8 million in revenue for the quarter and contributed $3.1 million of non-GAAP operating income. Or 20% of the total operating income of the Company.

In the measures for the full year of 2013 our acute care segment contributed $285 million of revenue and $41 million of operating income and the non-acute care segment contributed $96 million of revenue and $11 million of operating income.

During Q4 we completed share repurchases totaling $21 million. We bought back approximately 885,000 shares at an average price of $23.67 per share. So consequently cash decreased from $116 million at the end of Q3 2013 to $105 million at the end of Q4 2013.

Excluding the buyback, cash was up $10 million. The majority of the shares were repurchased late in the quarter and had minimal impact on earnings per share in Q4. We have authorization to repurchase up to another $29 million of stock.

For the full year of 2013 our free cash flow was over $43 million up from $33 million in 2012. Accounts receivable days sales outstanding were 51, down 12 days from last quarter. We had very favorable collections at the end of the year and strong revenue. Going forward we expect our DSO to be between 55 and 65 days.

Inventories were $31 million roughly flat to last quarter. Our headcount was 1,134 up from 1,089 at the end of 2012 as we continue to invest in our growth initiatives add headcount to handle increase production and installations.

Looking forward we know our customers will continue to face unprecedented change over the upcoming years. We believe we can help them meet regulatory and cost challenges. We're optimistic about new emerging opportunities for medication adherence. We believe our solutions will play an increasingly integral role in making healthcare organizations more efficient and to improve patient outcomes.

2014 we expect revenue to be the revenue to between $415 million and $425 million, an increase of 9% to 12%. We expect non-GAAP earnings to be between $1.17 and $1.23 per share. growth of 8% to 14%.

We expect steady revenue and earnings growth through the year so we expect Q1 2014 to be $96 million to $98 million of revenue and approximately $0.23 non-GAAP earnings per share. We typically experience higher expense levels in Q1 due to several seasonal factors in our business.

So our business has evolved to include much more consumable revenue and the backlog number has become a less meaningful number. We are going to focus more now on the annual product bookings as a measure of our new business. And product bookings are firm orders for installation of our automation solutions or for delivery of the consumable products. Product bookings do not include service contracts.

We will provide updates to the annual bookings expectation each quarter as we go through the year. We expect product bookings to be between $340 million and $350 million in 2014.

We've steadily improved our operating margins over time and are now operating near our goal of 15% . We expect our results to fluctuate from quarter to quarter but to average near the 15% objective for the year. And all of this guidance excludes the pending acquisition of SurgiChem.

That concludes our prepared remarks. And now I'd like to open the call to questions.

(Operator Instructions)

First question comes from Matt Hewitt of Craig-Hallum Capital.

Good afternoon, gentlemen, and congratulations on a great finish to the year.

Thank you.

First question what was the Sidra contribution in the fourth quarter?

So we don't actually disclose the amount of revenue for a particular customers. They typically don't really like us to do that. Sidra was a sizable order in the fourth quarter last year and we did record all the revenue for it in the fourth quarter of this year.

Okay. Fair enough. And then as far as the general market is concerned, you mentioned a couple times that there is unprecedented challenges that your customers are facing.

How are your sales team and how are you navigating some of those challenges? Obviously given your Q4 performance you're doing better than most. What tools do you have and how have you been able to outperform what others in your space have been witnessing?

The first of all our products are actually pretty easy to install. There might be some changes in workflows that customers have to go through, but our teams really have a consultative process starting with the early portion of sales process going all the way through planning for the installation and actually doing the installation.

We take as much of the pressure and workload off of the customer as possible and you know the installation process typically involves the pharmacy staff quite a bit. Does not involve the CIO staff as much.

So we find there's plenty of customers who are in the market that are looking to move to higher levels of efficiency and better outcomes for their patients. They're out looking at all the systems that are available in the marketplace and quite a few of those customers are choosing us because of the overall package we can provide. The product features, the consultative process, the good solid service.

All right fair enough. Thank you. I'll jump back in the queue.

The next question comes from Sean Wieland of Piper Jaffray.

Thanks guys. So it feels like there was an inflection in the quarter and just based on your remarks I can't really put my finger on the one or two things that changed. You reiterated last 90 days ago you reiterated your bookings guidance for the year and then you came in meaningfully above that. My question is what changed over the past three months? To drive that out performance?

Well we did have a strong order quarter and as I talked about in the past we take almost 1000 orders every quarter. But there is a pretty small number of them that are very large orders that have -- can have a significant impact in the quarter.

We do see customers moving forward with those orders and quite a few of them maybe a few more than we -- certainly more than we expected to close in the quarter. So it's always hard to call these things because there's many people involved in the decision process. Many times the customer might be changing the vendor. So there's competitive pressures and negotiations of contracts and so forth. We did very well in the fourth quarter and our products held up very well in those competitive situations and so we're really happy with the performance that we had.

And then on a revenue basis we did -- although I can't really disclose the exact amount -- we did have the large order for Sidra that we booked into the revenue and we expected to book that into the revenue. That's not a surprise. That did cause it to have pretty solid revenue.

Does the end of life of Windows XP have anything to do with driving upgrades to G4?

Yes. That certainly does. There's a lot of features in the G4 upgrade, the end of life of Windows XP -- our G4 upgrade is Windows 7 -- end of life of XP is certainly making some of the IT folks of our customers interested in getting those upgrades done. We have seen steadily increasing demand for the G4 upgrade since we announced it two years ago. And substantially more increase in demand through this year.

It took off a little bit slower than we probably expected. It took a while for folks to get it in the budget and sort of work it into their process, but now we have a lot of customers interested.

Okay. And CareFusion talked about a lengthening implementation time. Are you seeing any of that and your customer base?

We are not. We're not really seeing any lengthening in the order time or the installation time.

Super. Thanks and congrats on a nice quarter.

Thank you.

Thanks, Sean.

You next question comes from Jamie Stockton of Wells Fargo.

Yes, good evening. Thanks for taking my questions. I guess maybe to follow-up on one of Sean's real quick just on the Windows XP front. What you think the mentality as of those hospitals that are not going forward with the G4 upgrade as far as Windows XP end-of-life is concerned?

I mean it sounds like maybe half of your user base will still be on XP because they haven't upgraded to G4 after it goes end-of-life. Will there be a real rush for them at some point by the end of the year to try to upgrade because they're afraid of some sort of security audit or do you feel like they're not in that big of a hurry?

Well I think you are correct. Hospitals kind of fall in the category that are driven totally by the IT upgrade and the IT demand yet all systems up out of XP onto the next version of Windows. And some places to see that too big of a hurdle to do for every place in the hospital including our systems. So they've taken on other avenues to get that done.

But I still think probably this year will be the peaking year for our G4 upgrades and particularly in 2013 every quarter was an increasing larger quarter for G4 and I think that will continue. We should have a record year next year in G4 upgrades. It should provide a good base of business for us going forward. But there'll still be I think it will take five years to get 90% of the people there, but I think year four and five which is 2015 and 2016 we'll be on the other side of the slope.

Great. Is there any component of it where they're waiting for like Windows 8?

No I don't think so. I think there just waiting to -- the proper time allocate budget. There's a lot of great reasons to upgrade to our G4 platform medication. There is even different functions and features you can't get without the new console.

So as people get further into their G3 platform those get more apparent that they look better. And of course eventually at some point we're going to sunset the G3 platform so we won't support the G3 platform. But that won't be for a year or two.

Okay. And then you had a really strong quarter as far as new client activity within bookings. Could you just touch on competitively whether they are kind of an initial burst of activity around McKesson getting out from under their dispensing business, that we might see continue in 2014 or not continue in 2014?

Well I think we've seen probably a full on market. I think we're doing really well in the market compared to our competitors. What we see happening is as hospitals merge they take on a more formal process that they did at the infirmary in Mobile that I discussed in the remarks. And when they merge they have hospitals with different systems so the usually create a committee to go do -- to go through a more formal selection process and that gives us a little bit more of a level playing field.

And an interesting thing at Mobile was that we were in none of the hospitals. And both the -- there were two competitors in the group of hospitals and so we replaced both those competitors and I believe one was CareFusion and the other was a small division at AmeriSourceBergen. And so as we see consolidation I think in general that helps us to get these new competitive wins. And you're seeing a lot of that in the industry.

My last question. Just give us an update on where China stands? I don't recall if you had anything in your prepared remarks. I think the last thing that we heard was there were roughly 30 hospitals that were piloting your solution there.

No. We had 30 in the pipeline. So we have 20 hospitals right now that are installed or in the process of installing. And so there is still the early installations where it's a relatively small installation. They're trying it out in a particular ward. We don't have hospitals gone house wide yet.

Do you think that's phenomenon that we might see in 2014?

Well we're certainly trying to make it so.

Okay. Alright. Thanks guys.

You next question comes from Charles Rhyee of Cowen and Company.

Yes, thanks for taking the question. One more question on the G4 side, obviously you gave a lot of details here. Rob I don't know if you gave that number but what was -- what percentage of the base still needs to be converted?

I know a while back, I think at the start you talked about a five-year general cycle on these upgrades and I know it got a little pushed out but sort of can you give us a sense on the -- what's left and now obviously with the XP issue, what's sort of the time frame you kind of see it as?

Well there's 37% of the install base that has ordered so of course 63% that haven't ordered yet. We did -- looking back on the previous times we've done upgrades like this saw that there was a five year cycle as you said. And we expect that there will be another five year cycle or so.

Kind of the wild card in this is this XP end-of-life which we really didn't have last time that we did these sort of upgrades. At least not right in the middle of the upgrade process. So that may drive a little bit faster adoption cycle in the ensuing years. It was a little bit slower to take off than we expected than it had been historically. Certainly picked up quite a bit through 2013 as I said. And it may go pretty fast now.

Okay. And then just looking at that 1Q guidance here on revenues. I think you're looking at $96 million to $98 million. Anything -- do think that got pulled maybe out of the first quarter to fourth quarter?

I mean fourth quarter is obviously very strong if I look at the growth year-over-year in the first quarter -- we're kind of down sequentially. Anything that might have been different between -- a lot of big orders that you might've expected this year versus the fourth quarter?

There's nothing that got pulled from the fourth quarter, excuse me, from the first quarter to the fourth quarter. There was no customer that suddenly said wow, we need to install a lot faster or finish their installation ahead of time. The big driver in the fourth quarter was that Sidra order that we recorded revenue on.

But many times it's kind of a funny phenomenon. Sometimes our customers just have a hard time getting things installed in the fourth quarter because of the holidays. Other customers that doesn't bother as much.

And then sometimes customers can't quite get going in the first quarter. They come back from the holidays and they're just not ready to do things in those first few weeks. So nothing really getting pulled from quarter to quarter though, just the natural installation cycles of our customers.

Okay that's helpful and then just the last question here. I don't know if you mentioned it as we think about the full-year guidance, did you talk about sort of the uptick we saw in SG& A? And so how should we think about that going forward? Is that sort of the right run rate? And then as we think about bringing SurgiChem in? Thanks.

Well SurgiChem is not in our guidance at all. So that is still under regulatory review and we're not sure exactly when it will get through or if it will get through the regulatory review. And if it does, as we close the transaction then we'll update our guidance because will have better understanding of the timing.

In terms of the rest of the guidance. So we're operating pretty near the 15% operating margin now. And our goal is to stay there as I've said in the past and reinvest in the business. And a lot of that investment will be in the OpEx. So you'll see continued investment in R&D. Continued investment in the go to market engine marketing and sales.

We're going to try everything we can to maintain and improve our gross margins. We're always working in that area. But the P&L in terms of the overall percentages how it's laid out will probably be pretty similar as we go through the year as it has been and was in Q4.

Okay great. Thanks a lot.

You next question comes from Steve Halper of FBR.

Yes just one housekeeping question and then more of a competitive question. What was the operating cash flow in the quarter? I know you gave free cash flow.

The cash flow from operations in the quarter was $15.1 million.

And the free cash flow?

Yes, so the CapEx was $4.5 million.

Okay.

The difference between those --

Okay. So and then just on the pricing environment any change on that front? Did you see any mix -- change in mix for your sales, lease versus purchase?

Not really. We're still doing about between 25% and 30% of our business that we lease on our own paper. A lot of our customers are purchasing from us now. We have an excellent long-term cost of ownership story and our systems last a long time and we provide upgrade paths for our customers. So a lot of customers want to purchase the systems.

Margins -- we had a high mix of new customers and those deals are always very competitive. And they tend to be a little bit lower margin than some of our ongoing business, but otherwise no real change in the mix of margins.

Just going back to the lease comment you said 25% to 30% you lease on your own paper?

Yes.

What percentage do you sell those leases?

We sell most of those leases off. The only leases that we hold are federal US government leases. And the government has not been doing a lot of leases lately.

Okay. So the remaining let's call it 65% is really purchase and is that higher than it has been in the past?

No it's been pretty consistent over the last few years. And some of those customers do lease from their own -- they have their own third-party leasing lines that cover all the capital that they buy.

Right. So you don't differentiate that? That's just an outright purchase for you?

That's right.

Okay, thanks.

The next question comes from Gene Mannheimer of B. Riley.

Thank you and congratulations on a great year, guys.

Thank you.

Thank you Gene.

So just back to G4 for a minute. You indicated 37% of the base took orders for the year. So how does that translate into the number of units or consoles you can install this year? And remind us of the price per upgrade?

It was 37% of the install base have ordered program to date. So it wasn't just in 2013 but since we announced the G4 product in the middle of 2011, 37% of the install base has ordered.

Got you. So how can I interpret that to mean how many you might install this year?

So the time that it takes to install those upgrades is not that long so they don't sit in backlog for very long. They turn through backlog pretty quickly. It's really just a portion of the fourth quarter orders that haven't been installed yet, of those customers that have already ordered.

So really going forward we're looking at most of the orders that would happen in 2014 as probably being installed in 2014. And we'd expect the pace to continue. As Randy said, 2014 will probably be a peak year so we'll probably see another, I don't know 20% or so something like that order in 2014.

Yes,

Thanks. And then with respect to the non-acute care business what was the contract -- or the dollar value of Omnicell medication cabinets you installed in non-acute settings?

So we have been given that through the year because I know there's kind of a bridge that people are trying to do. It's probably not something that we're going to be doing on a go forward basis. But it's about $5 million in the quarter.

Perfect. Thank you and congrats again.

Thank you.

Thank you, Gene.

Next question comes from Raymond Myers of Alere Financial.

Thank you very much. My first question is about the service margin. If you look at the trend in service margins it's been steadily increasing for at least two years. Can you describe why that is and how much further margin improvement you expect in fiscal 2015?

Yes. Our service margins have been going up and I keep saying that they're going to plateau. Service margins are heavily affected by how many parts are used in the service process and how frequently the product breaks down. The G4 product was -- is just -- had a significantly wonderful service record. We just -- had become very efficient with that product and we're not using as many parts and we're not doing as many service calls.

That being said we're getting a lot more of them out in the field now. We continue to expand our install base. And we will be expanding our just coverage of service people because of the increased install base. So I don't really expect that margin to increase. I do expect the margin to be in the low to mid 50% range for service. Barring just the product never breaking it -- we'd love to be the Maytag repairman here, I guess. Not quite there yet.

I want to make sure I got this right. You say low to mid 50s in service but you average 56% for the year and just every quarter is higher than the last.

That is true.

I'm all for under promising and over delivering, but are we establishing a realistic bar?

Like I said we do need to add in --

We'll be adding folks to the service team in 2014. So I'm sure that will impact it a little bit.

Okay. That sounds good. And then the converse question, the product margin, while generally trending well was light in the fiscal fourth quarter. Was there a particular reason?

Yes. The larger order that we had -- the larger international order they tend to carry lesser gross margins. We don't over time spend as much in the sales process because we're using distribution partners and value-added resellers. But since we booked all that revenue for the Sidra order in Q4, that drove down the margins.

(Operator Instructions)

You have a follow-up from Matt Hewitt of Craig-Hallum.

Thanks just a couple follow-ups from me. First of all on the SurgiChem, you are waiting for regulatory approval. Is there any chance given the market share dynamics of MTS in SurgiChem that you're not able to complete that acquisition?

We don't know. We're just going through the process and we'll find out what happens. We obviously believe that it will go through. We wouldn't be going through the process. But I think we've got a little ways to go on that and it's just a matter of what time this year. But hopefully it will go through.

Okay. And then secondly. You've rolled out some new analytics functionality at ASHP this past December. And I'm curious what the feedback has been from your installed base and potentially new customers given those attributes?

Yes, I think it's a real positive thing because in a world of analytics you have to understand everything that's not only going in your hospital but the things that are going on at the enterprise level. So we've been able to collect data beyond just the medication use systems on the floors and add it to the pharmacy workflow, the Anesthesia Workstation, supply chain station and then also give a global view of that.

And that's a big driver when you go into see these big IDNs that really want to understand what's going on in their institutions from a global and a corporate view. And it's been a strong response. So I'm excited about it. It's great that people buy these very expensive systems and deploy the, but I really want them to get the maximum value out of it and it really takes great analytics that are easy to use of that's really what that Pandora is all about.

Great. Thanks again.

At this time we would like to turn the call back over to Mr. Randy Lipps for closing remarks.

Well, thanks for joining us today. We had a great 2013. And I'd like to congratulate the management team and the team players throughout Omnicell for delivering on everything that we asked them to do and more. And it's just exciting to be in a Company that's out making a difference in healthcare and driving great results. We'll see you next time.

This concludes today's conference call. You may now disconnect.