Omnicell, Inc. (NASDAQ:OMCL) Q4 2022 Earnings Call Transcript

Matt Hewitt: Good afternoon and I will echo the other comments on Peter. Congratulations and best of wishes in your future endeavors. Maybe the first one for me and you talked about this a little bit, but I am wondering if you could give a little more color on the hospital budgets and capital freezes. It sounds like things were relatively stable Q4 so far into Q1. But what are you hearing from customers, how are they prioritizing, obviously, they still need equipment, they still need to upgrade some pieces even yours. I am just curious what you are hearing from them and what are their expectations as the year progresses?

Randall Lipps: Yeah. This is Randy. I think we have definitely seen a stabilization in the market and — but people are still being pretty cautious on committing capital to more systems until they really have to. And when systems do come out of date or they do an expansion that well they go ahead and put those through. So I think it gives us comfort in that and we don’t see any decrease in the market. We haven’t seen any significant uptake yet, but I think it gives us a good starting point for the year and I think we are still going to be cautious about the macroeconomic environment, because I think it’s still assembling not having a few more quarters of positive results for these health systems.

Matt Hewitt: Fair enough. And then maybe a question on the Specialty Pharmacy business. Congratulations on the win there. As you look out over the course of this year, it sounds like you are having good discussions, should we be looking at that as a nice growth driver for you this year and maybe kind of setting the stage for 2024 and beyond, but clearly a nice driver this year?

Scott Seidelmann: Hey. This is Scott. Absolutely, Specialty Pharmacy and the sort of creation or growth of in-house specialty pharmacies for health systems certainly a tailwind. The market is trending very positively there and then we are very bullish and excited about the growth of our offering there.

Matt Hewitt: Great. Thank you.

Operator: Our next question comes from the line of Scott Schoenhaus from KeyBanc. Please proceed.

Scott Schoenhaus: Thanks, guys. Thanks for taking my question. Peter, it’s a pleasure knowing and working with you over these past several years as well. I guess my first question is on the margins. Your first quarter implied margins are 3%. We haven’t really seen that since 2017 and it implies a steep acceleration throughout the rest of the year. Can you kind of walk us through what’s embedded in guidance? Is it a sequential stair stuff that’s spread evenly over each quarter or is there some seasonality with these cost cuts and orders coming in? Can you just help us walk through the steep acceleration from 3% to high-double digits to get to your 10% margins for the year, please? Thanks.

Peter Kuipers: Yeah. Thank you, Scott. Great working with you as well. Yeah. I think you mentioned most of the drivers there, right? So really going through the year, the cost taxes that we announced both in November and this year, both the cost of goods sold and in operating expenses will have a more full impact to debate P&L really starting middle of the year. So we see the ramp up there if you will from a profitability perspective. Also in the second half of the year, we see more volume leverage, specifically as Advanced Services, scale more and then also we see some improvement in volume leverage in important care as well. And then, lastly, we see pricing access that we announced previously, coming through more heavily and impacting every single quarter as we go through the year.