Good morning and welcome to the Omnicell Second Quarter 2021 Financial Results Conference Call. On the call with me today are Randall Lipps, Omnicell Chairman, President, CEO and Founder; Scott Seidelmann, Executive Vice President and Chief Commercial Officer; and Peter Kuipers, Executive Vice President and Chief Financial Officer. 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 10-K filed with the SEC on February 24, 2021 and in other 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 July 29, 2021 and all forward-looking statements made on this call are 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 and we undertake no obligation to update these forward-looking statements. Finally, this conference call is the property of Omnicell, Inc. and any taping, other duplication or rebroadcast without the expressed written consent of Omnicell is prohibited. We’ve refreshed and expanded the Investor Relations section of our website where you can find our first corporate sustainability report and other information. On our call today, Randall will provide an update on our business. After Randall’s remarks, Scott will provide perspective on the healthcare industry and our market positioning. Finally, Peter will cover our results for the second quarter, our guidance for the third quarter and commentary on our second half 2021 outlook. Our results were released earlier this morning and are posted in the Investor Relations section of our website at omnicell.com. Additionally, we would like to remind you that during this call we will discuss some non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most comparable GAAP financial measures are included in our financial results press release. I will now turn the call over to Randall.

Thanks, Kathleen and good morning and thank you for joining us today. Omnicell continues to deliver strong results and we are making significant progress towards the 5-year outlook we outlined earlier this year. Before I dive in, I would like to take a moment to welcome investors who may be new to Omnicell and share a bit of our history and our story. Omnicell is a healthcare IT company that was founded on the idea that innovation and technology that address complex medication management systems and workflows could help hospitals, health systems and pharmacies improve patient care and health outcomes. We are proud of the pharmacy innovations we have brought to the market throughout our history, and we are humbled to be considered a trusted partner by many leading hospitals, health systems and retail pharmacies. In 2019, Omnicell debuted the vision of the autonomous pharmacy, a zero-error, fully automated digital medication and supply management delivery platform that will enable pharmacists, nurses and other clinicians to focus more on patients and less on non-clinical and administrative tasks. COVID has put a spotlight on the need for investment in medication management infrastructure, and the value Omnicell brings has never been more apparent. This is our purpose to deliver a better way and it extends across all of our stakeholders and within the communities we serve. We are excited about the opportunities ahead for Omnicell and welcome those shareholders that have recently joined us. Turning to our financial results, as a reminder of our previously stated 5-year outlook, we are targeting a revenue CAGR of 14% to 15% from 2021 to 2025, reaching $1.9 billion to $2 billion in 2025. And we’re targeting a non-GAAP operating margin of 21% and a non-GAAP EBITDA margin of 25% by 2025. Hospitals and health systems are…

Thank you, Randy. Last quarter, I discussed how we evolved our organizational design over the last 3 years from one that delivered a single hardware product to one that can deliver new products and technology-enabled services built on the cloud. These changes to position Omnicell for the future included transforming our sales and customer organizations, but also notably included making significant investments in our product management and software engineering organizations. All of these changes were supported by our new world-class commercial leadership team. As a result of these organizational changes and our hard work over the last 3 years, we feel confident in our strategy and are truly excited about our innovation pipeline. On today’s call, I would like to provide an overview of progress against that strategy and some areas of opportunity for innovation. When you look at healthcare today, it is clear that the industry is at a historic inflection point in terms of how healthcare is accessed and delivered. This change is being driven by the confluence of several key factors. First, hospitals are experiencing a renaissance of importance in the healthcare continuum. After over a decade of debating whether we have too many hospital beds in the U.S., it is clear now that the hospital plays a critical role in care delivery. And because scale matters, consolidation will continue, and the top 300 health systems will be larger and more important. Second, some care will move from acute care and other institutional settings to the home. And not only are new entrants serving this emerging market, but traditional players like institutional pharmacies, retail pharmacies and health systems will play a necessary role in caring for patients in the home. Third, the role of the pharmacist, both in retail and acute care settings, is increasing in importance.…

Thank you, Scott. Our strong second quarter commercial, operational and financial results demonstrate the strength of our business model and strategic market positioning. Our healthcare system and retail pharmacy customers are clearly embracing the vision of the fully autonomous pharmacy, and the demand metrics for Omnicell remains strong. We are making strong progress toward the 5-year outlook we provided earlier this year, and I’m proud of the solid execution that our over 3,000 Omnicell team members continue to consistently deliver. During the quarter, we welcomed many new team members to the Omnicell family, and our headcount increased by over 100 new employees to support our continued strong growth. Turning now to our financial results, our second quarter 2021 revenues were $273 million, an increase of $21 million over the prior quarter, up 37% over the second quarter of 2020 and above the top end of our guidance range. The sequential revenue increase reflects continued momentum in our commercial business and strong customer implementations. The year-over-year increase was partially attributable to the lower-than-typical second quarter revenue levels in 2020 due to the COVID-19 pandemic. Our second quarter earnings per share in accordance with GAAP were $0.43 per share compared to $0.30 per share in the first quarter of 2021 and a loss of $0.10 per share in the second quarter of last year. A full reconciliation of our GAAP to non-GAAP results is included in our second quarter earnings press release and is posted on our website. Second quarter non-GAAP earnings per share were $0.97 per share compared to $0.83 per share in the previous quarter and $0.37 in the same period last year. Non-GAAP gross margin for the second quarter was 51.7%, an increase from the previous quarter by 110 basis points primarily due to revenue mix and favorable services…

[Operator Instructions] And your first question comes from Jessica Tassan of Piper Sandler.

Hi, thank you for taking the question. Good morning. So I think on the FDS Amplicare side, we were just interested to know if you guys could clarify whether the independent pharmacy customer base that you’re acquiring is entirely incremental to your existing retail pharmacy footprint. And then just do the acquired solutions have the potential to be cross-sold into your existing retail pharmacy install base or would they be redundant? And if redundant, who is the incumbent?

Scott, do you want to take...

Sure. Hey, Jessica. It’s Scott Seidelmann. How are you?

Great.

So the short answer is – you are basically asking two questions. So one is are the independents, the FDS customer base largely, is there much overlap? The reality is there may be some overlap with the vast, vast majority of it. It’s a complementary market. It’s just not an area that Enliven is focused on. We’ve been primarily focused on Tier 1s and Tier 2s, so the large chains and the mid-chains. And FDS, we’ve been excited about is that it’s very complementary because it really brings in the independents. And yes, a big portion of the thesis here is the ability to cross-sell both Enliven solutions, particularly like CareScheduler, the omni-channel communications into the current FDS, those independent pharmacies, and we certainly think there is an opportunity. And it’s quite complementary, their capabilities. So we believe that there is a really good opportunity for us to cross-sell the current FDS capabilities to the current Enliven customer base.

And then, Jessica, this is Peter. Maybe specifically, we announced the signing of the acquisition earlier this week, and you can see there that we disclosed that FDS Amplicare will bring around 15,000 independent pharmacies. And those are – the vast, vast majority of those would be incremental market for us. Maybe an additional note as well is that the revenues of FDS Amplicare are a pure SaaS revenue. It’s also high growth, so it will help also with the total growth rate. And then lastly, of course, it’s immediately accretive, we expect for non-GAAP EBITDA and for non-GAAP EPS. And then maybe a final point as well as far as the additional capabilities Scott referred to earlier, we’re very excited also about the capabilities of the Medicare plan, which use the automated tool there. It’s really a great opportunity for us as well, and it helps really to enhance the value for retail pharmacies.

Got it. That’s really helpful. If I could just follow up with one, changing direction a little bit. So in 2016, I think the DoD awarded an ADC contract to your largest competitor. We know that deployment has had a bunch of issues and then the contract expires in 2021. So are you guys anticipating a replacement RFP from the DoD anytime soon? And would you be eligible to compete in that market with the XT? Thank you.

Yes. This is Randy. We’d certainly be eligible to compete. We haven’t seen anything yet, and I don’t have enough to comment on it really. But we certainly have a lot of government business in many facets, and this certainly would be one that we would be taking a close look at when it becomes available.

Thank you.

Thanks Jess. Next question, please.

Your next question comes from Scott Schoenhaus of Stephens.

Hi, Randy, Peter and team, hope you can hear me. Congrats on the results and the recent acquisition.

Thank you.

So Peter or Scott, I guess this question is for you. I think this is really for Peter. But on the software expansion story here in the retail pharmacy side, clearly, you’re growing the side of the business with FDS Amplicare. I just wanted to make sure I understand how you are recognizing the revenue and how you’re charging your customers. Are these independent complementary modules that you charge, that you add on for each module to your retail customer or do you bundle it as kind of a bundled offering? So that’s actually my first question.

Yes, these are – thank you, Scott. Good to talk to you. So this is Peter. These are incremental revenue opportunities. These are additional modules, specifically on the financial side, the Medicare plan review side and then also in workflow integration as well. So those are incremental revenue streams, the pure SaaS and we will charge them – they are charged on a monthly basis essentially.

Perfect. That’s exactly what I wanted to hear. My second question, Peter, is on ease, shifting away from the FDA Amplicare. How is it going with the cross-selling opportunities? You have an installed base of 160 large healthcare systems. What are you seeing in the market for the 340B – on the 340B side? Could you just add any color there? Thank you.

Yes. So on 340B, we’re very pleased with the integration. We’ve completed most of the integration, we would say, very successfully and according to plan. We did, I think, in the first quarter, mention publicly that we had a first cross-sell contract actually signed of really selling and incorporating 340B – Omnicell 340B to an existing long-term sole-source customer within the 148. That pipeline is very nicely growing, and we see some really good momentum there.

Great. Thanks. That’s all for me. Great quarter.

Yes. Thank you.

You bet. Thanks.

Your next question comes from Steve Halper of Cantor.

Hi. Two questions. Could you just talk about some of those key capabilities of FDS? Just trying to understand exactly what those are.

Scott, do you want to take that?

Yes. I got it. Sorry, I was on the mute. Several key capabilities, so – or I would say several buckets. So one bucket is really all around financial analytics, so really helping pharmacies understand payment discrepancies, claims visibility, opportunities for improvement. So that’s one set – or one bucket of functionality, just simply helping a pharmacy understand its own business and how to make it more profitable. That was on the Enliven roadmap, so that’s certainly a synergy and an acceleration. The other category, on the clinical side, one that Peter mentioned was a set of tools that helps patients – or helps pharmacists guide and advise patients on which Medicare plan is best suited for the types of drugs in the drug regimen. That’s certainly a really interesting opportunity with the growth in Medicare Advantage and I think the increasing importance of the role of the pharmacists to really engage patients at that point of care. So that’s – it’s really interesting. And then there is some overlap and that’s an additional functionality to Enliven. I mean there is some overlap with med synchronization and communications, which we believe the Enliven toolkit and the FDS Amplicare capabilities can certainly add in. And the last bucket which is less around functionality so much as technology capability is FDS Amplicare has a really interesting technology stack that allows you to sit on top of the pharmacy management system, and so that a pharmacist wouldn’t have to swivel suite, but to swivel between systems instead. The technology can now just engage a pharmacist with notifications. And so it’s a really complementary set of functionality, a lot of which was already in the Enliven road map. And so we think it’s a really synergistic acquisition.

Thank you. That’s very helpful. And then the follow-up question was on the inflation costs. Could you just quantify what you think those are going to be? And to what extent the – can you quantify the cost saves, recognizing that you did lower the EBITDA midpoint just a bit? I’m assuming that’s because of the inflation headwinds?

Yes. Thank you, Steve. It’s Peter. I’ll answer that question, right? So yes, net-net, right, so we have been really proactive since we see the market economic change in the semiconductor market to really, first of all, with high confidence, secure critical supply of semiconductors that go in our products, to really secure supply through our critical healthcare customers. So that was our first objective. And we’re very confident that we have a surety of supply going all the way through 2022. We’ve placed direct orders with semiconductor manufacturers, and we’ve qualified also additional parts. So we feel really good about that priority. And secondly, of course, our objective is to offset the transitory inflationary costs, and we’re able to do that for the second half of ‘21, as is in our prepared remarks. The vast majority, we are offsetting with higher revenue, with lower cost or cost control, if you will, while maintaining, of course, the investments in innovation and customer experience. And then lastly, of course, we’ve also implemented what we call price optimization and price actions, and they almost net off, right? So a really great job done by the team in supporting our customers. And it will be our aim as well going forward, of course, to continue to follow that strategy. You can imagine, of course, that price actions, of course, they take some time to take hold and show up in the P&L, if you will. Then also from a cost perspective, as you know, cost goes via backlog and inventory also over time. And so we’re managing the totality, if you will. And at this point, we’re not breaking out kind of the different components.

And then – but is it safe to say that the net impact was primarily responsible for the lower top end of the range of the EBITDA guidance? Is that correct?

Yes. The biggest driver in inflationary – transitory inflationary costs is semiconductor. Yes, that’s the biggest driver, correct.

Just to answer your question directly, the whole drop is just the inflation for the additional cost of – it’s the only impacted, probably midpoint there.

Right. Got it. Thank you.

Yes. Thank you, Steve.

The next question comes from Matt Hewitt with Craig-Hallum Capital Group.

Good morning. Congratulations on the strong quarter. A couple of questions on FDS first. I think in the press release and even today, you’ve mentioned a high growth rate for that business. Can you give us what the percentage growth was maybe over the last 12 months and what the margin profile is for that business?

Yes. So it’s a high-growth business. Again, it’s SaaS solutions. Think about the growth as mid-double-digit growth directionally and maybe a tad higher. Maybe a reminder, we haven’t closed the acquisition yet, right? So we signed and announced it. So we will provide more guidance once we close the acquisition as well. Really good gross margin as well. As you would expect, it’s SaaS – pure SaaS solutions, so it’s accretive to – on the gross margin level as well to Omnicell total gross margin, yes.

Thank you for that. And then I guess as we think out – if you look back in the early 2000s, your product gross margin was 58% plus. Once this acquisition is completed and you start getting active on the cross-selling front, can gross margins on the product side maybe get back to that level over time or are you more focused on the EBITDA margin? So some incremental costs here and there on the cost of goods side is more than offset by leverage in the operating lines. And therefore, your EBITDA margins start to approach that 2025 target.

Yes. I would say the primary goal is, of course, the EBITDA margin expansion that we feel very, very confident on, and we think it’s more or less linear to the 5-year period. Gross margins, we have talked about probably before, we see increasing through the year sequentially, right, also on the product side. So that probably is the largest driver over time, and there is going to be some cost leverage as well, right, specifically on SG&A.

Got it. And then if I could sneak in one more. Just out of curiosity, of the 148 sole-source agreements that you have with the top 300 hospitals, how many of those are currently using Omnicell One and how do you anticipate that growing over the next couple of years? Thank you.

Yes. So Omnicell One is in early days of early adopters, if you will. The pipeline is growing very nicely there. If you would expect a large portion of our large healthcare top 200 system customers to use the Omnicell One solution. But that’s over time, right? So again, the pipeline is really strong. Advanced Services bookings, if you will, right, Omnicell One is part of that. It’s ahead of plan actually year-to-date, so that’s going well. But then, of course, you go from booking, of course, to implementation planning and rollout and you train more users, if you will. So that’s a nice recurring SaaS revenue that we will build up over time.

That’s great. Thank you.

The next question comes from Anne Samuel with JPMorgan.

Hi, guys. Congrats on the quarter and thanks for taking the question. Scott, you talked about the renaissance for hospitals coming out of COVID. I was hoping maybe you could talk a little bit about the pace and appetite of incremental purchasing and just maybe how that will impact timing of when we will see that start to come through the P&L?

Sure. I mean, look, I think what – I think – my point there was what COVID has really done is that, clearly, I think, from a societal perspective as well as from a healthcare policy perspective, cemented the role of the hospital and certainly the large health system and its value as a quaternary or tertiary care facility and what that means in the overall sort of healthcare delivery model. In terms of what we are seeing, I think we have said several times that one benefit of COVID – or certainly a tailwind of COVID for us has been it really shined the light on managing medications to treat that and more broadly, just the importance of pharmacy and medication management to the health system. As a result, I think what we reported and what we saw last year and what we are seeing this year is the really strong demand not only for the core products, but the newer services as well. And so that’s translating into really strong bookings growth across the portfolio. And I think Peter will give you a better sense of how that may flow through the P&L. But I think the short version is we are seeing really strong demand, and that’s certainly flowing through bookings.

Yes. I think that’s certainly the case. And with the FDS Amplicare acquisition, we are also really bolstering our presence and platform offerings across the continuum of care, right. So, the pharmacies outside the hospital are not necessarily kind of fully separate from the larger health systems as well. So, we really look at it more and more in totality also.

That’s really helpful and really great to hear. Maybe just one on the quarter specifically, you saw some really nice expense savings this quarter. I was just wondering, is that related to some of the cost savings actions that you are anticipating taking or was there something unique to this quarter? Thanks.

Yes. Thank you, Annie. No, there wasn’t really anything specific in the third quarter, maybe a little bit of the cost actions we are taking in the fourth quarter. But I would say that’s really a small piece of it.

Great. Thanks guys.

Thank you.

Your next question comes from David Larsen of BTIG.

Hi. Congratulations on a very good quarter. Can you please talk a little bit about your sales force? It’s my understanding that the products that you are selling into the healthcare industry, they are complicated. These are long sales cycles. They are expensive. And what that ultimately means, in my view, is that your sales force has a lot of value in the relationships they have built and their knowledge levels. Did I hear something about sort of a realignment or something like that with the sales force earlier or not? Just any color there would be very helpful?

Yes. Thank you, David. Let me first maybe comment on that one. So, we realigned really the commercial organization. That’s about 2 years ago that really we have seen the impacts now. I think we talked about before publicly that for our top U.S. health system customers, right, the 148 that we have long-term sole-source agreements with, you have a customer success executive, right, that works with the health system to develop a multiyear medication management automation investment plan, right. So, that’s where the investment is. These are really deep relationships, if you will, really good understanding of the health systems of their needs and really helping them to get to the next levels of automation in pharmacy, right. So, that’s what Scott was referring to, and we are seeing the benefits of that. And we are seeing larger and larger deal sizes. If you look at it from a trailing perspective, our deal sizes are increasing. We announced, I think in the last earnings call, our largest deal, if you will, a multiyear deal as well with an undisclosed national leading health system also. So, it’s paying dividends. So, it’s definitely working.

Okay, fantastic. That’s great. And then just on the retail and the home health side. It sounds to me with the FDS Amplicare solution, you have all of these software solutions that a retail pharmacy might need in order to basically run their practice, billing, AR, everything, communications. Is that true or not? And if not, what other components would you need to buy? And then can you maybe just touch on the home health piece? Like as folks start delivering these medications next day or real-time or same day to the home, are there any – is there any sort of opportunity there with all of these telehealth vendors seeking to close gaps in care at the last mile? Thanks a lot.

Yes, I can help with that. So the first question, which is really around the software needs for retail pharmacy, I would really break it down into two buckets. One is the pharmacy management system itself. So, that’s a piece of software that’s been around for a very long time, and that is the sort of primary tool that a retail pharmacy uses to fill scripts and to kind of manage their day-to-day. We do not have that software today. What we have is really the second bucket, which is really all of the complementary – many of the complementary capabilities above that PMS that helps pharmacists engage patients, follow-up with those patients on managing adherence, communicating with those patients. With the potential FDS Amplicare acquisition, we would add to that financial capabilities, financial analytics capabilities, the ability to have pharmacists help engage patients around which Medicare plan they might need to be on. And so that certainly would be – that combination would certainly enable us to have a much more comprehensive software solution for those value-add capabilities, which we certainly think are the more interesting area. But we do not have a pharmacy management system today. I think your second question around home health and mail order delivery. Was your question really there in terms of what capabilities could we or do we potentially have to enable that?

Yes. It’s more like if you are a telehealth vendor and you want to have a script delivered to the patient at home, there is – technologies are needed to basically make sure that happens, track it, to make sure they are adherent to their formularies and so forth.

Right. So, that’s really an emerging market, and I think it’s an interesting one that we are exploring. We really don’t have capabilities today that supports them in theory. I think what’s an interesting potential opportunity is that some of the Enliven tools – I mean they are a pharmacy, and so you still need pharmacists to engage those patients to do medication adherence, to do follow-up. And so that’s an area of really keen interest to – for us to understand as a potential emerging market for Enliven capabilities.

Okay. Congrats on a great quarter and congrats on the FDS deal.

Thank you.

Your next question comes from Iris Long of Berenberg.

Hi Iris.

Hi. Good morning team. Thanks for taking my question. So, my first question is on the FDS Amplicare. So, I understand that the acquisition will give you additional capabilities, like financial management, analytics and population health. I am just wondering from customers’ perspective, so how important are these new added capabilities to your existing Tier 1 pharmacy customers? And then maybe how should we think about the integration time line? When do you expect to finish integration? And then what would the go-to-market strategy look like?

We believe there is – as we mentioned before, we believe that in both those segments, both on the independent segments and the typical, which is the FDS Amplicare core market as well as the core market for Enliven, which is the Tier 1 and Tier 2s, the functionality – the respective functionalities of EnlivenHealth and FDS are very synergistic. And so we believe there is strong demand both in the independent side for the EnlivenHealth capabilities and the Tier 1 and the Tier 2s for the FDS Amplicare. So, that’s really why we are so excited about the potential acquisition. Post close, and I won’t speak to how long that process might take, but from an integration perspective, really from a go-to-market perspective, it’s very complementary. They have a sales channel that is very good and adapted at targeting independent pharmacies that’s not a channel or a capability that EnlivenHealth has today and vice versa. We do have very strong relationships with the customer base in Tier 1 and Tier 2. So, the channel is very complementary. From a branding perspective, we think the mission, vision and the capabilities are very complementary. And so we will roll this under the EnlivenHealth brand, but we haven’t worked that through yet. And then lastly, from a product integration perspective, again, that will take longer, but – as it always does. But like I said, the capabilities are so synergistic that we are really excited about getting those integrated.

Okay, good. And then I guess my second question is on the inflationary comment. I am wondering, to what extent is this inflationary headwind kind of reflected already in the Q2 results? And then, Peter, I am wondering if you can talk a little bit about the pricing refinement that you mentioned. Kind of what’s the scope of that? How much pricing change are we talking about? Anything there will be helpful? Thank you.

Yes, great question, Iris. Thank you. So the – yes, there are some transitory inflationary costs in the second quarter. For the third and then for total year and then implied, of course, for the fourth quarter, we have included our forecasted number for those inflationary costs, right. So, that’s embedded in there, right. And we disclosed in the prepared remarks that we are almost offsetting. So, the vast majority of these inflationary costs were offsetting the higher revenue and then cost actions and then also pricing actions. So, we are – we have increased, if you will, minimum margin requirements for deals, right, given our market strength as well. We have increased separately we also used CPIs, if you will and some charge-throughs as well, right. So, there is a variety of actions there. Really holistically, it’s really a pricing optimization strategy.

Okay, great. I guess if I can squeeze in one last question. I am wondering if you can talk about the Spartanburg expansion a bit. So, it seems that the expansion includes the adoption for the Central Pharmacy Advanced Services and Omnicell One, and they have been a customer with you guys. I am wondering like how long – how much time have they been a customer with you? And what kind of triggers their interest for this expansion?

I don’t have the exact number. I know that they have been a customer for multiple years on the cabinet side. I think why we are so interested in this account is I think it really – it’s a great example of where we see the market and the customer base going, which is that they – Spartanburg is and has been a great customer of ours on the point of care side of things. As they have looked – that health system has grown from – like many have, from one large hospital to multiple ambulatory acute care hospitals spread across the region. They have been acquiring physician practices. And so what that’s done is it’s not only changed their – from a pharmacy perspective, the pharmacist is not just focused on how do I make sure that the meds are getting to the right floors above me. Now suddenly, I have also got to be aware of serving that entire geographically distributed footprint. And so some of the things that they are looking at there is really centralizing some of that Central Pharmacy capabilities and scaling it up to really support that much broader, both acute care, but now also ambulatory care as well. And so as a result, what they have done is now they are investing in both our Central Pharmacy Dispensing, so that’s oral solids, but also IV compounding service as well. And so – and then because now you have got both point-of-care automation as well as Central Pharmacy automation, and you have got a widely distributed – or geographically distributed footprint, the use of Omnicell One to create visibility and control end-to-end throughout that organization from point – from Central Pharmacy to point of care across that geographically distributed, it’s really a – I think we call it out because it’s really where we see – going back to the point about the renaissance and the ever-changing role of the hospital is that we think that it’s a really great example of where health systems are headed and really how the full portfolio of our capabilities can really help that health system manage what is becoming an increasingly complex traffic control problem for them.

Thank you.

The next question comes from Bill Sutherland of Benchmark Company.

Hi Bill.

Good morning. Hi guys. I thought I would just change gears here because most of my questions have been asked. And I know you changed leaders where you expanded leadership in the international group last year. So, maybe there is – is there any developments there that we should know about?

Yes. Thank you, Bill, for the question. So yes, we hired Sara Dalmasso from GE Digital Healthcare last year. She has really reformed her team and really focused on the platform strategy. I think the initial win that we talked about from a platform perspective was the platform deal with South East London, right, that we – I think we did a press release back in January. And we see more platform-type deals evolving, specifically in the pipeline for the UK and then also the Middle East. So, more to comment there. The business is growing nicely. But again, first, it has to go to your pipeline and then, of course, bookings. And the ones that we can announce, we will, of course, and then that will flow into revenue. But we are pleased.

Great. Great job, guys. Thanks.

And your next question comes from Gene Mannheimer of Colliers Securities.

Hi. Thanks guys. I thought you dropped me. Congrats on the great quarter. I just had another question on FDS. I am just thinking about the growth trajectory you are talking about, but I am a little bit torn because, I mean, I see that the product looks to be penetrated in about two-thirds of the independent pharmacy market, and it’s a market that’s flattish to declining. So, would the growth that you are talking about come more from net new business within the indies or cross-selling into your existing Enliven base space?

Well, Gene, it’s Peter. It’s both, right. So, specifically on independents, so especially with what we see and we also see in the industry is that we believe that the role of the retail pharmacy and specifically independent pharmacy and pharmacies as well as a primary caregiver and provider, that seems to be tracking to be expanding, right. There is two bills, we believe, in Congress that have some traction as well. So, for the indie market – independent market from a revenue perspective, we definitely see, if you will, more revenue for independents on the – over the years, if you will. And then there is also a component of, of course, the FDS Amplicare, additional value-enhancing capabilities that we can cross-sell to the current EnlivenHealth Tier 1 and Tier 2 customer base. So, it’s both.

Got it. Thank you.

The only other thing I will add there, which is important, is that some of the FDS Amplicare products are penetrated broadly not independent, but there are newer products which is really predicated on Medicare Advantage growth. There is a lot of opportunity for growth, right. So simply, as that Medicare Advantage program continues to expand at a very high rate, then that will grow as well. So, even within the existing FDS Amplicare customer base, there is opportunity for growth, and that’s before we can get to the cross-sell opportunities.

Got it. Thank you.

Operator, we have time for one more question.

At this time, there are no further questions. [Operator Instructions]

Okay. Thank you very much. Randall, closing remarks?

Well, thank you, everybody, for joining us today. I want to give a special warm welcome to our new shareholder base. If you have recently joined us, welcome. I want to thank also Ed Bousa for joining us on our Board as a new member. It’s great to have you. If you are some of the new Omnicell employees who have joined over the last 90 days, welcome to this team. And if you are a new customer with us, we are so grateful that you have entrusted us with helping you reinvent the pharmacy and all of us as we move forward to reinvent the pharmacy, to really change the pharmacy care delivery model so that we can improve healthcare for everyone. Look forward to the journey. See you next time. Stay safe. Cheers.

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