OMCL
#Thank you.
Thank you, <UNK>.
Yes, from a ---+ thanks, <UNK>.
Thanks for the question.
The way to look at is on a segment reporting perspective.
Essentially, we have determined that the Aesynt products fit into the A&A segment and effectively is an integrated business as of the date of close.
As a matter of fact, we have seen some customers already be tapering bookings to actually switch products within that same segment.
So we're not providing separate breakouts of the Aesynt business, as it is essentially now a merged business with common customers and customers actually buying products from both legacy entities, if you will.
Strong mid-level digits.
So you should take the midrange of our bookings guidance, and then back into the number.
What I can tell you is that on a combined basis, we're expecting to be roughly up 15% organically ---+ 16% versus combined 15%.
Both businesses combined off of that number (multiple speakers) up 15%.
And actually after we have combined the businesses, it's difficult to track if an Aesynt customer now buys an Omnicell product or it switches over to a Omnicell product or vice versa, you can't ---+ it's hard to track which products people are buying based on which customers.
Because they may just ---+ they may be originally an Aesynt customer and now they are buying Omnicell products and vice versa.
But overall, it's a strong growth profile for next year.
Well, yes, that's great question.
Actually, we see consistently strong competitive conversions and more greenfield ---+ probably less on the greenfield side because there's just less of it.
We also count, on the A&A side, greenfield accounts on the international side, which is contributing to that number mostly.
But inside the US, it's mostly competitive conversion.
Now, since we've combined with Aesynt, we used to convert them as a competitor, and now obviously they are inside the family.
So the competitive conversion rate naturally, we believe, will drop around 25%.
That's not because we were less competitive, it's just that the competitive conversions are now internal, if you will.
For 2015 or looking forward to 2016.
Yes, yes.
I think we are actually updating the ---+ we have updated the investor deck on that as well.
So the way to think about it number-wise is that the Omnicell legacy business had about ---+ or has about 35% pure recurring revenue between maintenance service and the consumables.
Add on the Aesynt business, that's a ---+ that business is 50-50 between product and recurring revenue from services.
Exactly.
Yes, we do.
We will disclose them in actuals, but you should ---+ we are still, of course, doing the purchase price accounting and making sure we got a good estimate there.
But initial indications on intangible amortization, about $12 million for the acquisition for the year.
No, fair question.
We are finalizing the audit for Aesynt for calendar 2015, if you will.
But it's roughly in that ballpark.
In the LTM that we disclosed earlier, it should be roughly in line at the $190 million mark for calendar 2015.
Like we commented on earlier, we really see it as one business now.
We have some customers switching bookings, actually, between products, so we're not measuring it separately from that perspective.
We're not disclosing exact numbers, but there is some assumption that most of the delays in the revenue conversion rate are from former Aesynt customers.
That's (multiple speakers) right.
So we're not losing the business there, just moving the product choices around.
Yes, I think as I said publicly recently, the debated completes this quarter and then is available Q2.
And we feel like things are on schedule for that and getting good feedback.
We are at the end of the year at 78% ---+ 77.7%, I believe.
77.7%.
(multiple speakers).
Go ahead.
Well, I think we are ---+ definitely, finishing the year at a high of 41% of annualized conversion rate is a record.
And we've been very pleased with that kind of result in the marketplace.
And I would just say that we continue to see that kind of success in our pipeline is indicating that and gives us confidence about 2016.
Well, you are, and I think we said it was a transitional year.
And what we mean by that, the bookings is still strong continuing on.
But we see a delay in some of the customers moving from bookings to revenue, mainly out of the former Aesynt customer base, that does not contribute.
We're going to have to get through this year to get through some of these transitions, so it's muting the revenues slightly for the year.
It's fairly equally spread over the quarters.
No, not specifically.
We had a little bit less overhead cost absorption.
We do have an upward trend in gross margin and med adherence if I look at the different months.
So October, November, December to the quarter, so we feel good about margins going forward.
Yes, I think we ---+ definitely today we ---+ for the first 90 days we kept the sales force structure in place so that the former Aesynt employees could focus on closing their deals for the quarter; Omnicell can close ---+ focus on closing their stuff for Q1.
And the beginning of April, we're going to rationalize the sales force into a single face to the customer, and that's more territory realignment so we don't have overlaps like we have today.
I think it's going to allow us to actually expand ---+ I don't think we're going to disrupt the geographic territories of the corporate levels, but we are going to expand our named account executives, which allows us to give dedicated accounts to key accounts that we haven't had in the past.
So I don't think the disruption is going to be as big.
But we will still make sure that people team up on former accounts to work together to ---+ you have some overlapping commissions to pay up from both groups until the end of the year to make sure we don't lose focus or lose contact with key accounts.
No, but we've got several demarcation points and we are on the last.
So we've done two and we've got one left, and we feel confident about getting that before the end of the quarter.
I think IT budgets are strong.
I think we see a lot of continued consolidation and the execution of rationalization of groups and hospital and ID and providers and inpatient and outpatient coming together.
And all of that activity, which is really a macro trend, is driving people to standardize on medication management, of strategies to reduce costs and put in best practices, which is ---+ historically has just been hospital by hospital.
But now they are trying to put in corporate best practices, and they're more and more engaging us to do that for them, not just figure out the workflow but how to institute those best practices.
And so we feel like there hasn't been a slowdown in either engagement or funds allocated to our specific area of growth in hospital spending.
Well, obviously, this year with the additional burden of the integration costs and some overlaps in some people as we work through the synergies, we're around 13% this year, and obviously next year we're going to do better than that.
We're not committing to what those are, but you should expect improvement as we ---+ we're committed to those targets.
They are very important to us.
And as we look to get closer to 2017, we will have a better understanding of that.
But especially ---+ we know for sure it's going to be an improvement over our (multiple speakers) (inaudible) forecast.
Yes, I think that ---+ yes, we've had a really strong closeout to Q4, which has just continued right on into Q1.
Obviously, with the two announcements that we made on University of Wisconsin and Penn University closed almost the first week or two in the quarter there.
It's just a good sign up momentum that we have.
And we have strong pipelines.
And we feel good about putting our guidance in place and executing to the plan that we have now got before us.
No, we don't.
We're not providing that.
It's ---+ the AA business is one combined business.
Thanks, everybody, joining the call.
We're really excited about the Aesynt acquisition.
It's only been 30 days and we've already seen some just great results.
Spending time with customers and employees and all the things that we had before us, it's just an exciting time to be at Omnicell.
And being able to drive growth and really deliver on solutions for what customers need in order to get through the next phase of healthcare.
Thanks for joining us today, and see you next time.
