OMCL
#We had a very good quarter from the government.
I think we're actually up over last year or pretty commensurate with this.
And this has been a good quarter for us in the government.
We had a great quarter for the government.
Yes.
We don't really have those numbers readily available.
But we think that the combined company will meet our long-term goals of [15 and 15, 15] on the topline, obviously, over the next two years.
Just the combination will be all that higher than that.
But they are a growing business.
And the earning should meld in nicely with our operating margins that we would expect from our business.
They're not a lot different from our own business.
Well, I think, probably the biggest thing, I think, correct me if I'm wrong here, about half is service and half is products.
So a big component of their revenue base is of service business that's very recurrent.
So overall, we think the acquisition will nicely align with our long-term goals both on the topline and on profitability.
We are not at liberty to specifically disclose their historical growth on profitability.
But we feel really good that it is a nice fit.
They have a dedicated sales.
Some of the leadership is and some is not.
No, not to our knowledge.
We do have some customer overlap.
I would say that they have a lot of ---+ there's probably almost 10% of the hospital beds, maybe more that are using the centralized model that they are.
And so we have not been able to get into that marketplace because we don't offer a product solution in that set.
So University of Wisconsin, much of the VA, UPMC.
There's a lot of name brand accounts that Aesynt had for a long time and does very well with.
To step back, we think the acquisition is really complementary.
And we'll operate the businesses separately until closed.
No, They're separate products.
We will continue both product lines and servicing support and development as we move forward.
Their product lines are generally oriented toward the centralized market features and functions and workflows.
And so there's really not as big an overlap as you would think.
So it's really complementary.
Yes.
So I think it's relevant to Q2.
I think the impact is smaller but still noticeable.
I would also say between the third and the fourth quarter, some of the orders, while we're confident that that will be signed, they do go from signing dates from one quarter to the other quarter.
And they really look at us from a long-term perspective.
If you look at the pipeline, we feel really good about our pipeline of bookings to come here in the quarter.
(multiple speakers) So we really look at it total year if you, rather than just a quarter cut off for bookings if that helps.
Yes.
I think our market segment is more a standard of care and we haven't seen any impact of any hospital news around those items.
And the biggest impact in the marketplace affecting us is just the consolidation which has changed the shape and the size and the type and the profile of our orders from larger institutions now at our groups and hospitals as well as being more new.
And those are the biggest changes we see in the marketplace.
Yes.
I think we were disappointed that we couldn't get that product out this year.
And it certainly impacted MA and its results.
And we're excited to get that product right and completed and out in the marketplace in the first half of 2016.
And we know that there's a demand for the product, the customers want the product, it solves a great problem.
And we believe we're the leaders with that product in the marketplace as far as having a solution that really works.
But it is complex and it is a different product, but it is a game changer for us.
So we're excited about getting that thing out into the marketplace because we feel a strong demand behind it.
Well, I just think that the beta results have been good but there were more exceptions to the rule than we thought and it's just getting those last pieces of initial software needed to complete the product.
We are packaging, repackaging medications.
So the tolerance for error is very low.
And so we've got to do this with perfection.
So once we have that running at that level, then we'll be able to release the product.
Yes, exactly.
I think that we have gotten a good result in the marketplace as we move people away from centralized and decentralized.
And it's clear that in the marketplace that there are customers who, one, aren't going to move away from centralized and even new customers are picking up on this centralized piece.
And probably what's driving that is in many of the hospital locations, they see the centralized workflow is relieving the nurses from having to do a lot of picking out of dispensing systems, those the drugs can be delivered to them on a patient basis in a very almost a silver platter, if you will.
So they want that kind of customized approach and it really releases the nurses to do more patient care and not be as focused on medication management.
And it does probably come with some cost.
You have to probably put a medication tech on the floor to deal with exceptions.
But we've seen that in a couple of models and it is growing our market end.
I wouldn't say this was a compelling reason but we have seen this model also outside the US.
And so that's something for us to consider is to look at using this model outside the US where you tend to see this particular application as well.
The IV solutions robot is a big win for us.
We do not, to this day without this product line, touch any of the fluids in the hospital.
Really, we did touch the logistical end, we may all the meds until ---+ the IV fluids until they're used.
But there's the whole preparation piece that comes before that.
And the IV robot and the semi-automated software that goes along with it, in case you do manual preparation in the hospital, you will always have to do some, is a very important safety and workflow piece that we have not been able to offer in the marketplace and just about all the competitors that we compete out, but they have that sometimes solution in there.
So it puts us on a better competitive front and I think it allows us to really compete with hospitals that want a full set of solutions.
That's probably a worldwide market.
The TAM is $1 billion, that SAM is about $100 million and it's probably at least $0.5 million in most facilities.
But a lot of these hospitals are consolidating and they're trying to centralize a lot of these things.
And so it's almost a facility that's used for in a network of hospitals, not just a single hospital, but probably at least $0.5 million and just depending on how many you buy.
And I think the simplest version is around $0.25 million, but most people buy more than one to facilitate more automation.
Well, I think in the pharmacy central product area which includes the robot and some other - the central is over 600 ---+
600.
---+ hospitals that have one of their products in the workflow process.
And then point of care solutions, there are over 850 facilities using the Aesynt point of care solutions.
Yes.
It's essentially a term loan A at market conditions.
The commitment letter (inaudible) filed with the SEC, so you can take a look there.
Essentially, it's LIBOR plus.
At the expected leverage, it will probably be LIBOR plus 175 basis points.
1.
75% plus LIBOR, yes.
Yes, the IV robotic solutions is the most international-intensive outside of North America.
And it's actually designed and some of the manufacturing is in Europe.
And this still is an embryotic market.
They probably, I think, have one of the most advanced robots.
I believe they're pretty close to being the market leader.
And so I think it's a great opportunity and it's a swelling market.
But I would still call it embryotic.
But it's had impressive growth over the last year.
I just don't know if we can or (inaudible) growth rate at this point, it's probably (multiple speakers) until the transaction closes.
Yes, so looking at the Med Adherence business, so we feel good about our pricing.
Our pricing is stable.
We do have some lower margin customers.
So I think from a commercial perspective, we'd like to grow further but there's no underlying issues there.
We're definitely working on the cost aspect and we're looking to further increase volume as well that will help of course also our margin as we scale.
So we're building a path back to more historical margin rates over the next quarters.
Exactly.
Yes, we believe there's not been a fundamental change in the market other than ---+ we've said the kind of the profile of the customers.
We're still running great deals in the marketplace, still growing as a company.
The top of the funnel is good, still able to produce great earnings at the bottom, which is transitioning from the top of the funnel out to revenue.
And I think this also sets us up well for 2016 as we will ---+ given our backlog guidance and our revenue, moving our revenue down will set us up well to give us better visibility as we move forward into 2016.
Well, I don't have it at hand but we have won some accounts.
And I think when McKesson first broke off ---+ when Aesynt first broke off from McKesson, we thought there would be a real opportunity to kind of move the needle as they were going through a transition there.
And we really weren't able to acquire as many accounts as we thought we would have.
And so I think it probably is just a fact of the way this market works where the stickiness of customers is pretty strong.
Well, thank you joining us with today and we're really excited about the Aesynt opportunity to broaden our product line and even kind of respond in that last question, I think we don't compete very directly with McKesson and a lot of the product lines and so, we're just really so excited that we now can enter these new markets and offer such flexibility to the customer base out there, which is trying to lower the cost, improve safety, get more people to the healthcare system, so that we can leave fewer people on the outside and that's our goal and our mission.
Thank you for joining us today.
And we'll see you next time.
