Anne Samuel: Perfect. Thank you so much.
Randall Lipps: You are welcome.
Kathleen Nemeth: Thanks, Anne.
Operator: Your next question comes from Scott Schoenhaus with KeyBanc. Please go ahead.
Scott Schoenhaus: The product bookings – or the product guidance for revenue and bookings. So are you assuming any revenue contribution this year from that new XT Series console that you talked about as a growth opportunity? And then secondly, on Advanced Services, you talked about the regulatory environment pressuring Advanced Services demand for the IVX. But are you also seeing any slowdown in maybe the retail side, EnlivenHealth?
Randall Lipps: Well, I think EnlivenHealth is a different business model, mostly SaaS. We did have some churn in the business, but we’re not necessarily seeing slowdown in interest or the value that the product line brings. We are seeing – we believe that Advanced Services for IV is certainly a bigger impact. If IV were where we would want it to be, it would be probably riding the ship on the Advanced Service side.
Scott Schoenhaus: And then your guidance on the product side for revenue. Does it assume any contribution from the new console…
Randall Lipps: Small amount in the back half of the year, yes. But it’s a small amount.
Scott Schoenhaus: Thanks.
Kathleen Nemeth: Thank you, Scott. Next question, please.
Operator: Your next question comes from Allen Lutz with Bank of America. Please go ahead.
Allen Lutz: Good morning, and thanks for the questions. One for Randy or Nchacha. On the strategic review, trying to get a sense of where this is focused. Is it more on the operational cost structure? Could it result in the divestiture of assets? And just can you elaborate a little bit more on the scope here, basically everything on the table. And then trying to understand the timing here? Is this something where we should expect a resolution in 2024?
Randall Lipps: It’s just a holistic operational and go-to-market review, right? I mean, we’ve got a lot of great products we’ve either launched or acquired over the last several years, and it’s just time to do a review on those. And it’s been a long time since Omnicell has had this type of year-end decline. So it just makes sense to do this review.
Nchacha Etta: Yes. I’ll just add to that. Our results tell us that there is a need for a significant and thoughtful evaluation of where we can make changes to improve our performance from operations to go-to-market initiatives as well as our overall product portfolio. And while the cost savings that we’ve taken already on the way, we need to evaluate opportunities for additional actions that will enhance value creation for our shareholders.
Allen Lutz: Great. And then on the product bookings, curious – a follow-up to some other questions here. I’m curious if the driver – just to kind of break down some of the drivers around the expectation for higher bookings growth from the product side in 2024. Would you say – what’s – as we think about changes in the hospital budgets that you’re seeing, the new XT console upgrade, I’m just curious, are those the two things that are providing the greater confidence here as we go through 2024. I’m just curious what you’re seeing today as it relates to your conversations with hospitals.
Randall Lipps: Yes, definitely, the macro environment has improved over time. Still some headwinds there. But the XT product line, which is the Point of Care product line is a big contributor of what’s in product. Upgrading the cycle of the XT line is something we did before, right? We went from G3 to G4 with a console upgrade. Now we’ve got the XT console that’s going to be upgraded to the next version, which is a natural thing for customers to do. . It’s a playbook that we’ve run before. So we’re really confident that this will resonate with customers, extend their investment they made in the XT product line to bring them more value, provide more security. Some of these keyboards and screens are seven, eight years old. They need to be replaced.
So there’s a lot of logic there for customers and a little bit more willingness we see for them to invest. And this is not just a pharmacy piece, it’s something that will help nursing, which is a very sensitive area of our providers these days.
Allen Lutz: Great. Thanks, Randy.
Operator: Your next question comes from Matt Hewitt with Craig-Hallum Capital Group. Please go ahead.
Matt Hewitt: Good morning, and thank you for taking the questions. Maybe a couple on the new console upgrade. And Randy, thanks for explaining. I mean, it sounds like it’s like the G4. When I think back over a couple of your prior upgrade cycles, you had an external driver that helped kind of expedite the process. I think at one point, it was the EHR meaningful use. You guys were the only ones that had approval for that. And so that helped drive adoption of a new cabinet. And then at one point, it was the Windows 2000 sunsetting. What do you see as a driver for this new console upgrade? Is it on the cybersecurity side? Is there something else that could help externally kind of drive customers to adopt this new platform? .
Randall Lipps: Yes. In itself, it definitely allows you to access the latest operating systems, which of course everybody is concerned about. And so it is more secure. It’s also more efficient for nurses to use it. There’s some efficiency enhancements. As well, it is going to be a platform which we will continue to innovate on that will allow them access to these new innovations. You’ll have to have the new console to access these additional innovations as we go along. And probably the biggest driver is that if you made an investment in XT, you want to be able to lengthen the life of that frame. And in order to do that, you have to do the console upgrade, because we’re not going to allow the continual use of an older piece of equipment when it gets out of date.
And so to get that refresh from the frame, you’ve got to upgrade the console. So it’s something that they’re used to. It’s something that we’ve done over the years. They understand. And we’ve had a lot of discussions and pipeline on it. So it’s sort of just very early returns. I’d say we’re pretty pleased with how it’s going, right, or it’s expected to go.
