Veradigm Inc.
Q1 2011 Earnings Call Transcript

Published: 6 May 2011

[Operator:]

Good afternoon. My name is Andrea, and I will be your conference operator today. At this time, I would like to welcome everyone to the Allscripts First Quarter Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Seth Frank, Vice President of Investor Relations with Allscripts. You may begin your conference.

[Seth Frank:]

Thank you, Andrea. Good afternoon. This is Seth Frank, Allscripts' Vice President of Investor Relations. On the call today are Glen Tullman, our Chief Executive Officer; Bill Davis, our Chief Financial Officer; and Lee Shapiro, our President. To start the call, I'll read the Safe Harbor statement. This presentation will contain forward-looking statements within the meaning of the Federal Securities laws. Statements regarding future events and developments, the company's future performance, as well as management's expectations, beliefs, intentions, plans, estimates or projections relating to the future are forward-looking statements within the meaning of these laws. These forward-looking statements are subject to a number of risks and uncertainties, including our ability to achieve the strategic benefits of the merger with Eclipsys, and other factors outlined from time-to-time in our most recent transition report on Form 10-KT, our earnings announcements and other reports we file with the Securities and Exchange Commission. These are available at www.sec.gov. The company undertakes no obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. And now I'd like to introduce Glen Tullman, Chief Executive Officer of Allscripts.

[Glen Tullman:]

Thanks, Seth. I want to welcome all of you to the Allscripts 2011 First Quarter Earnings Call. This is an amazing time in healthcare. The industry is transforming as we speak, and Allscripts is incredibly well-positioned with solutions that improve the quality of care and better manage costs. We provide the broadest suite of applications to connect caregivers, deliver information where and when it's needed and to generate insights, actionable suggestions at the point of care that lead to better outcomes. And we can prove it. Here are just a few examples from our lengthy list of Sunrise reference clients. At Blessing Hospital in Quincy, Illinois, they achieved a 95% reduction in the rate of transcription-related medication errors. At Orlando Health in Orlando, Florida, they achieved a significant 25% decrease in the relative risk of mortality due to sepsis, one of the leading causes of death in U.S. hospitals. And at University Hospital in San Antonio, Texas, they were able to achieve a significant improvement on a few key metrics related to diabetic patients, including 74% more compliance with medication therapy to prevent cardiovascular disease and a 50% improvement in eye exams. And those are just a handful of the clinical outcomes our clients have achieved using our solutions. You can read about many more of them on our website. The news of our ability to help our clients improve clinical and operational outcome is beginning to resonate in the market today, and it shows in our performance. It's also increasingly clear that our strategy is aligned with the direction of the market. Last month, CMS released their draft rules governing accountable care organizations or ACOs. Some of our largest clients see ACOs or bundled payments as the future of healthcare, and they are already working with payors to formulate new reimbursement strategies. The rules for ACOs make one point very clear

[William Davis:]

Thanks, Glen, and good afternoon, everyone. Before we begin, I encourage you to access the non-GAAP table in the press release and accompanying explanation to assist you in evaluating and reconciling our GAAP and non-GAAP financial metrics that we've provided you earlier today and we'll discuss further on this call. In terms of our financial presentation this quarter, please note that Allscripts 2011 first quarter financial statements include consolidated results for both Allscripts and the Eclipsys for the 3 months ended March 31, 2011. Given our change to our December fiscal year, last August, historical consolidated results of Allscripts on both a GAAP and a non-GAAP basis, as well as our bookings, have been recast to provide comparative results for the 3 months ended March 31, 2010. As it relates to our first quarter results, we are very proud of the fact that we continue to generate very positive financial results illustrated by

[Glen Tullman:]

Thanks, Bill. To quickly sum up, we couldn't be more excited, as Bill just indicated, about the year ahead. 2011 is the year of transformation. Our clients and prospects want a vision they can believe in and that fits with the market change that they are feeling everyday, supported by up-to-date technology and innovation and confidence in our ability to deliver, as evidenced by Baylor and North Shore-LIJ, we are delivering. And now, more than ever, I'm confident we have the depth of talent and commitment to execute on our vision of building a connected community of health and becoming the new operating system for healthcare. Thanks to our clients who give us the opportunity to make a difference everyday, to our employees for their commitment to delivering on our mission and vision and to our shareholders for your continued confidence in Allscripts. And with that, we'll now be happy to take your questions.

[Operator:]

[Operator Instructions] And your first question comes from the line of Atif Rahim with JPMorgan.

[Atif Rahim:]

Bill, I guess just on the bookings number, there might be some confusion in terms of how we model it. But you're about $30 million below my expectations. And if I recall, last quarter, you didn't talk about the 4Q '10 bookings being strong because of any pull through from the first quarter. So just want to see what that number might be like. And the year-over-year tough comp as you're calling out because of the $40 million in 1Q '10, if you back that out, what does your number come out to be? Or what should be our kind of regular trend in bookings that we should be expecting?

[William Davis:]

Yes. A lot there in your question, Atif. I guess I'll start first with your comment around what I said on the fourth quarter call. My recollection was that, I thought I did in fact, mentioned specifically around University of Kentucky transaction that, that was one that had moved appreciably faster than we had originally expected. And in fact, it was a transaction of meaningful size that we are able to pull in the fourth quarter that kind of normal course would've expected in Q1. So that, in my comments, that was specifically what I was referencing, number one. Number two is in terms of the comparability from a year ago, and I appreciate at the outset, that there's a lot of moving pieces here just in terms of change of fiscal periods and thus recasting results and the like, but if you were to look at legacy Eclipsys' historical results in terms of Q4 of 2009 to that of Q1 of 2010, as I indicated before, there were 2 large transactions, as I believe if we go back to even Eclipsys' transcript in the fourth quarter, they made note of at that time, that had moved out of the fourth quarter into Q1. So the dynamic of that was you literally had a higher Q1 performance for legacy Eclipsys than you did Q4, which is very unusual in this market place for reasons I think you understand, number one. Number two is that with the recasting of the Allscripts results and effectively adding a March and taking away a December, I would suggest you have a little bit of the same dynamic at play, too, in terms of an apples-to-apples comparison. What I have said consistently and why we believe that the kind of a 6-month view is worth noting is that to grow this business top line 10% to 12%, I've talked about the fact that we need to be prepared to grow new system sales bookings in the high-teens into the low-20s. And so again, I would orient you in that direction but I would caution you in that when you're dealing with these very large Enterprise transactions and large hospital transactions, one of the primary reasons we do not give bookings guidance is the predictability of when those are going to fall in any particular quarter. And as I've indicated and I think it's evident in our Q1 results, the fact of the matter is, is that with so much of that going to backlog and our ability to pull that into revenue, our revenue is insulated from some of that volatility on the bookings side. So we are very pleased with our bookings performance through the first 2 full quarters of the combined businesses operation. And again, we're looking forward to continued success in that regard as we look forward to the balance of the year.

[Glen Tullman:]

This is Glen. I'll just add 2 quick points. One, last quarter, we were $20-plus million ahead of what a lot of folks thought we would deliver, and that basically is one reason we don't give the quarterly guidance because if you look at the past 2 quarters as I called out, $500 million, $500 million in sales is exactly what we think this company and the sales engine ought to be generating. And so I'm really clear about that. I'd also mentioned we talked about the South Australia deal. That's not included in these numbers. If that was included in the numbers, you'll see a substantially different bookings result. So again, in some of these larger Enterprise deals we're talking about, any one deal can have an impact in the quarter given the size of some of these. So I just -- we do think, as we look at production, as we look at the year, it's one reason that Bill was very clear on restating our guidance numbers because we're very comfortable that we'll deliver those. But it's sometimes hard, as you saw one of the net new deals we've just talked about just happened to come in. So we can't always predict those exactly. But we're seeing terrific traction, and we're very comfortable with what's happening in the sales environment.

[Atif Rahim:]

Okay, that's great. I appreciate that. Bill, thanks for that color on the 18% to 20% kind of top line booking through that we should we expecting. That's good. So just one follow-up, anything that slipped out of 1Q that you feel might have been fine or was close to being fine? And then the South Australia deal, Glen, that you mentioned, the timing on that, when do you expect that to come through?

[William Davis:]

Yes. So specific to your first question, Glen, just alluded to it. But to be very clear, we did have 1 new Sunrise deal signed. We talked about that Hannibal Medical Center. That is a Q2 deal of decent size that I've pointed to. There's always other deals in terms of a timing perspective that, again, we're always working aggressively to pull as much in as we can. But again, these larger deals have certain cadence to them that we just have to effectively just kind of manage to us. In terms of the South Australia transaction, that negotiation continues to go very well. As we estimated earlier -- or late last year, it's one that is heavily regulated in terms of the government being involved in the ultimate approval of it. We do anticipate that a portion of that transaction, and I would suggest to you, a small portion of that transaction will likely be consummated this coming quarter in Q2. And then I would expect that the balance of that transaction to be in the second half of 2011. But we are anticipating the initial tranche there in Q2 as we originally intimated and then the balance still within the year.

[Atif Rahim:]

Could you put any numbers around that?

[William Davis:]

We've not commented on the overall size at this juncture.

[Operator:]

Your next question comes from the line of Jamie Stockton of Morgan Keegan.

[Jamie Stockton:]

I guess the first one, Glen, there have been some other vendors in the space that have talked about a slowdown in bookings here early in 2011 because you're seeing some providers say,"You know what? I'm going to wait and qualify for meaningful use in 2012," and so that's delayed some contracting. Have you guys seen any impact from that or do you have any thoughts about what might be going on in the market as a result of that?

[Glen Tullman:]

No. To the contrary and again, that's one of the key points. I think some people -- Bill and I have been very consistent from the very day that auto was introduced, that every quarter, we would see positive movement in a variety of fronts, that the market would continue to build. And we are continuing to see that, and we talked about the net new Sunrise deals. We talked about the sheer number of deals that are being signed here. It's very substantial and $500 million is more business than we've done in any 2 quarters in the history of the company. So we see that as very well. There are always deals large and small that move out of one quarter and into the next, but our deal flow is very good. And we feel very confident about it.

[Jamie Stockton:]

Okay. And I guess my other question, just pertaining -- maybe it's the same answer, but some states have started to cut Medicaid EHR checks, those -- I guess at least half of that money can go out before the physician practice would actually qualify as a meaningful user of an Electronic Health Record. I am just curious if you've seen any impact from those initial checks going out, I think, in about 5 or 6 states.

[Glen Tullman:]

Yes, we've seen -- as we mentioned, University of Kentucky was the first hospital to get a federal check that came in, and we think that, that has created sufficient interest in the hospital space. We also see very dramatic interest, large and small, across the market. I think when the federal checks start to hit, that's when we'd see -- that's when we think we'll see much more dramatic increase. But the message is clearly getting out and the first one, when you talk about the small market where we've already seen, as a mentioned, very substantial penetration and growth, when you see physicians coming in with their federal checks, we think you're going to see another nice step up. And that's in the next month or few months.

[Operator:]

Your next question comes from the line of Larry Marsh of Barclays Capital.

[Lawrence Marsh:]

Just to further clarify and drill down the point on the bookings. I appreciate that your recast, or go-forward, definition actually introduces a bit more volatility as you introduce the Eclipsys legacy progression. And as you said, Bill, the fourth quarter is well above expectations, the fourth quarter, a little light. And it sounds like you're saying the second quarter may be, if I'm reading correctly, flat-to-down versus last year's $234 million. So I know you don't guide the bookings but just directionally then, do we think about then the comps then getting, obviously, much better in the second half because they're going to be facing, obviously, a much stronger fourth quarter 2010 comparison? Or is it, look, you can't really predict because of the size of the deals are that much greater?

[William Davis:]

Larry, I don't want to provide specific guidance on the second quarter. But what I will say, I did call out specific cautionary considerations as it pertains to Q2 comparison. Again, most notably that you had a large outsourcing transaction on the Eclipsys side and it captures our May quarter end. Really why I'm saying that is I don't want simply people to take the recast number, apply a growth rate, too, and say that's the expectation. I really would ask that the market puts some care into it. That being said, as Glen indicated, we really candidly could not be more bullish and optimistic in terms of the buying behavior and our success in the marketplace. And I would underscore another point, which I don't think is readily apparent in our Q1 results although both Glen and I commented on that. And that is, over half of our booking in the first quarter was into the small physician space. And as I've talked to the market about that, the reality is that those small physician practice sales by definition tend to be lower average deal value. And yet, they are very impactful in terms of overall market share and also tend to convert to revenue faster just given the inherent nature of the transaction. So we are very bullish on our success in all 3 subsegments of the market, and I am really just trying to encourage people as opposed to just unilaterally applying a growth rate to historical number. Just give some care to some of the nuances that we are dealing with through this transition.

[Lawrence Marsh:]

Yes. And guys, I appreciate you did call out to caution us for the first quarter because of the strong fourth quarter. So yes, I remember you saying that. But it sounds like in your mind, I guess, the first quarter bookings number, knowing there's always some variability, was in line with your general expectations?

[William Davis:]

Yes, and I could say that unequivocally. Relative to our own internal plan, the only variability, it pertains specifically to South Australia in terms of its specific timing. But as it pertains to domestically both what happened on the Eclipsys combined with that on the ambulatory side, we are very much in keeping with our own internal plan for the quarter.

[Lawrence Marsh:]

Okay. And then just to follow-up, we've gotten some feedback already with the announced departure of John Gomez, some customers communicating, I guess support of the direction of the company and not really that much of an overall concern. I was just curious if you could share any additional feedback you've gotten from customers as that's been communicated. And do you have a timeline in mind, Glen, when you'd like to have somebody else in that slot?

[Glen Tullman:]

Yes. Relative to John, again, I think people were -- John has been around the Eclipsys side of the equation for a period of time, was well-regarded by those folks. And really, John had a big part of helping to set our vision. I think most of those clients would tell you today that they're very focused on execution. And when John and I talked, I wanted to make sure the 5.5 was exactly what we wanted it to be, that the integration work was where we wanted it to be. And that of course meaningful use was achieved, and all of those objectives were met. So it couldn't have been a better time if John was going to be departing, that he depart. And from the standpoint of replacing, finding for replacement for John, interestingly, I mean, one, of course we have a search going on. We're getting terrific candidates. Those candidates will likely be folks that are bring a little bit broader experience, that's not just focused on applications but that are focused on this idea of a connected community of health. So that includes applications, that includes connectivity. It includes, what we call, not only information but insights and then outcomes. And so we see ourselves as moving into a broader business base as well. So I think it's healthy for the business.

[Lawrence Marsh:]

When do you hope to have somebody, Glen?

[Glen Tullman:]

We want to find the right person. So I don't think we'll time that. But based on the quality of folks we're getting, I expect that, that would be some time soon.

[Operator:]

Your next question comes from the line of Michael Cherny of Deutsche Bank.

[Michael Cherny:]

Just quickly on the buyback announcement. I was wondering, I know you said over the next 3 years, can you give any color as to how you think about executing that buyback, if you have any thoughts already, given this is something that's fairly new for you guys?

[William Davis:]

Yes. We are spending a lot of time, discussions with the Board on, what I affectionally refer to as a balanced distribution of capital. As I mentioned in my prepared remarks, we're very focused on continuing to make voluntary repayments on our debt. And I would just tell you that just rule of thumb, not that it will be always exactly like this, but we generally think about it in terms of 2/3 of what will deploy will go towards reduction of debt, 1/3 towards the buyback program. And as I intimated in my remarks, we're going to be opportunistic, just recognize the kind of the volatility that exists in and around the company from a stock performance perspective. I also -- I just would highlight, this is the second buyback that the company has executed under -- if you recall a few years ago on the heels of the Misys transaction, we launched and successfully executed a buyback program. So deploying a lot of those same type of principles and disciplines will be prevalent here as well.

[Michael Cherny:]

That's helpful. And then just one other question regarding the market. There's something that tends to come up in a lot of the calls, but in terms of Regional Extension Centers, we're obviously a little bit further down the path with these being established. Can you talk about some of the experiences you've had there and kind of what that's meant in terms of any type of additional bookings?

[Glen Tullman:]

Well, I guess what I would say is I think every element that comes in is helpful. But I wouldn't say that, that's driving the market per se. I think it's helping to educate the market. But ultimately, I think it's a combination of dollars, availability to install and ultimately, the acceptance and connectivity. Connectivity is becoming more and more important. So people want to make sure that what they buy is going to be available and out there. So that's pushing more and more of the system sales to the larger providers, and they want to make sure that they are connected and can talk with the people they refer to. So those are probably heavier buying signals. Most of the organizations out there have selected -- I think now Allscripts is in more than 90% of the overall, kind of, selected or approved systems. And so from that perspective, that by itself isn't driving sales. It's helpful but it's not driving sales.

[Operator:]

Your next question comes from the line of George Hill of Citigroup.

[George Hill:]

Bill, a couple of quick housekeeping items to start with. When you were going through the backlog, did you say the old transaction in the EDI was $859 million or $869 million?

[William Davis:]

The transaction is $869 million.

[George Hill:]

Okay. And then for those of us who build our models with the bookings flowing into the backlog and onto the income statement, I wasn't clear. Should we be modeling going forward for this quarter using the $227.6 million or the $212.4 million?

[William Davis:]

Well, again, I'm assuming that in your model, historically, you would have backed out the component that was maintenance. And the way we've given this to you, I think you could go either way quite frankly because we feel like we've given you enough information in terms of how much should go to the maintenance bucket versus how much of it should go to software service versus SaaS. So I'm hopeful that all pieces are there. But our intention going forward is we will try to transition fairly quickly, i.e., over the next couple of quarters where we provide both. But ultimately, I'd like to get to just the single net new definition.

[George Hill:]

All right. So for those of us who modeled the maintenance independently, $212 million is the right number?

[William Davis:]

That's right.

[George Hill:]

And I guess just lastly, one more question on the share repurchase. And Glen, this is kind of a strategy question for you as well. If you guys are looking to do the share repurchase, it's safe to assume that you guys think the products that as you go to market, especially on the inpatient side, is kind of robust and complete. And maybe comment on how you think about the M&A environment in light of the announced share buyback?

[Glen Tullman:]

Yes. I'll go first, and Bill may want to comment as well. We believe we have everything we need today to execute on the guidance that we've provided. Now that said, we have been in the past, and we'll continue to look at things that are put in front of us and be opportunistic. We will be carefully opportunistic, and we think we have the resources to do whatever we might need to do or whatever might come in front of us. So Bill and the team have been very careful in, kind of, the 2/3, 1/3 debt to buyback ratio. We've been very careful in understanding on a 3-year basis how much cash we're generating than we expect to. And then looking, working closely with Lee Shapiro at all of the opportunities in the market. I will say that some of the stand-alone providers, I'm sure you've heard this, are obviously, shopping. There's a lot in the market for stand-alone providers and they're out there. Those represent less interest to us because integrating a stand-alone provider means ripping out their existing base and putting in our stuff or if you don't do that, managing an extra Electronic Health Record. We're already very comfortable with the mix that we have. So no, the one place that we'll look to be strategic in is potentially in the information side of the equation. And we're looking at that very closely. We're investing a lot of dollars internally. We're looking at partnerships, and we'll continue to keep our eyes open for people who can help us push forward in the information side of the business.

[William Davis:]

I just would add 2 very quick things. One is we think the sizing of the buyback itself, we feel very comfortable with the financial flexibility that it affords us, number one. Number two is our access to capital, I think, demonstrated by our restructuring of the debt is very, very positive. I will note, we do as a company have a $250 million line of credit that has been fully repaid. So that is fully accessible. But third and probably most importantly, as we've demonstrated in the past, we're very focused on any potential transaction if and whenever one came to fruition in terms of evaluating its accretive nature, driving cost synergies out of the business. So in many respects, our ability to manage that from a capital allocation perspective, I remain very comfortable with. So we think this program should be received very positively by our shareholders. We're committed with not only reducing our leverage, but also begin to deploy capital in a way that benefits them directly, especially in light of how inexpensive the debt is now based on the restructured amounts.

[Glen Tullman:]

If you wanted to do something, capital wouldn't be our issue. It's all about strategy.

[George Hill:]

Last quick follow-up then. Australia, you guys have been VOC [ph] there for quite a while. Is there any risk that doesn't sign?

[Glen Tullman:]

Well, let me say, having grown up in business, until it's signed, it's not signed. That said, everything we hear, we see, we've hosted -- We've been fortunate to host the key leadership from Australia in the last 30 days. They were here in the U.S. and our teams spent a lot of time. Lee Shapiro, our President, is headed over there. Phil Pead, our Chairman, was recently there. I was recently there. So I think it's a very, very strong relationship that we're building there. And as Bill mentioned, our expectation is to bring in the first piece of that in the coming quarter. So we're highly confident about that. Again, that, as I mentioned, it wasn't in these numbers but when it is in, depending on the piece of it, you'll see some of that and we'll talk about it.

[Operator:]

Your next question comes from the line of Ryan Daniels from William Blair & Company.

[Jeremy Lopez:]

It's Jeremy in for Ryan. I'm just curious, you have several months of Eclipsys kind of under your belt now. I'm curious as you look at that business strategically, if you have made changes or see any changes from a go-to-market standpoint, whether it be in terms of how Eclipsys contracts. I know they have a fairly unique way of going about contracting relative to peers, and also related to the type of size of the hospital that you would consider from a pipeline standpoint.

[Glen Tullman:]

I'm going to take half of that. Bill can take the contracting piece. One, strategically, this is probably, given where the market is today and the need to operate across ambulatory, acute and post-acute, this was as well-timed a merger as you'll ever see. From an execution standpoint, we've now done a few of them, this is as smooth as an integration effort that you'll ever see in terms of realizing synergies, in terms of very little overlap between the 2 organizations and between in terms of the fit. The quality of the software is nothing short of the best in the market, and we're seeing that. It's one the reasons we're out there. We're starting to run ads and tell people about the story and especially, the outcome story and the great clients we have. I mean, it's the best client base in the world, bar none. And I say that very, very strongly. When you've got [indiscernible] tethering in the cancer area, when you've got Columbia, when you run down the whole gamut of organizations we're working with, and it's all of the best organizations out there. So all of that we see as very positive and we see -- and that's why you're starting to see now the net new sales of that software will pick up. Some of those net new sales will be not only at the high-end but into the strong, existing base of community hospitals. So we think that software can work with the largest, most sophisticated organizations, both in the U.S. and abroad, at great clients like SingHealth and others. But we also see it being able to scale down cost effectively to the community segment. And that's important given some of the changes with competitors at the small to mid-sized hospitals where we're also able to compete. So we just couldn't be more pleased with where it is. In terms of how they're contracting, Bill, you might want to comment a little bit on that.

[William Davis:]

Yes, I just would simply say that our experience through the first 2 full quarters is the contracting is proving to be very consistent with what Eclipsys had been doing, preceding the merger. So I really am not seeing any change there in any material sense. So very consistent. I'll just reiterate, Glen touched on it, I did in my prepared remarks, again, I -- one of the most significant positive surprises of this merger having now operated 2 full quarters is the success that we are having from a cross-sell perspective, which to me is true evidence of the success of bringing these businesses together and the value of bringing the portfolios together. And we're starting to see that extend out into net new opportunities. So the product integration and the power of the existing relationships, I think again, things that are just delivering real value to the business.

[Jeremy Lopez:]

And then one more, kind of shifting gears to the gross margin side. I know there's a little bit of -- the number is depressed because of the deferred revenue that you're reporting on the pro forma revenue, and I'm curious how should we think about allocating that deferred revenue in terms of getting to a more, I guess, accurate gross margin, in the different revenue segments?

[William Davis:]

The deferred revenue -- I'd almost rather follow up separately in terms of what that split of that deferred revenue adjustment is between software versus service and maintenance. My sense is that it's largely maintenance driven, second would be software and then third would be service. But we could follow up separately in terms of that break.

[Operator:]

Your final question comes from the line of Bret Jones of Oppenheimer.

[Bret Jones:]

If I could just follow up on Jeremy's question. I had a question on the systems gross margin. I was actually adding back all the deferred revenue just try and get to a clean number, but that doesn't seem right. Even doing that, the gross margin came in late. Now I was wondering if you could talk to what could have been driving the systems gross margin down and whether we're seeing -- is that an effect of the third-party resellers or is it really too early to see that hitting that number?

[William Davis:]

Yes, the systems sales margins -- so again, and I now have the data for Jeremy's question. Maintenance is about half of that adjustment. You've got actually the other half, about $4 million in the SaaS line item and then the balance is in professional services. So call $5 million maintenance, $4 million SaaS and $2 million professional services is the break of the adjustment. In terms of the systems sales margin, I will tell you that comparing Q4 to Q1 is a mix, both in the context of hardware and then secondarily with the third-party offering in that particular revenue category. So there is some variability from quarter-to-quarter as I've talked about in the past in terms of our own software versus third-party software. dbMotion being a very good example, which is very, very attractive to customers for the reasons that Glen touched on in his prepared remarks. But it's really the complement of third-party and hardware that's driving that margin differential.

[Bret Jones:]

All right. And then I'll just ask one final one. Bill, you were talking about in your comments, you were trying to reign in the bookings expectations, and you highlighted the outsourcing deal from a year ago within Eclipsys. Can you quantify that for us?

[William Davis:]

Yes, my recollection was kind of in the $15 million to $20 million range.

[Bret Jones:]

All right, perfect. Thank you.

[Operator:]

This concludes the Q&A portion of our conference. I would now like to turn the call back over to Mr. Glen Tullman for any closing remarks.

[Glen Tullman:]

I just want to sum up by again telling you that I think the message should be clear. We see a very robust market that we are successfully selling into. The last two quarters have generated more than $500 million of bookings, and we are executing very well from an integration standpoint. So we see very solid times ahead. Bill went ahead and reconfirmed the guidance that we have provided to the market. And again, I expect that we're going to continue to deliver on that. So a strong quarter for us and one that we're continuing to accelerate from. So I want to thank all of you for joining us today, and we look forward to talking with you next quarter.

[Operator:]

This concludes today's teleconference. You may now disconnect.