Veradigm Inc.
Q2 2011 Earnings Call Transcript

Published: 2 Aug 2011

[Operator:]

Good afternoon. My name is Alicia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Allscripts Second Quarter 2011 Earnings Conference Call. [Operator Instructions] Mr. Seth Frank, Vice President, Investor Relations, you may begin your conference.

[Seth Frank:]

Thank you, Alicia. This is Seth Frank, Allscripts Vice President, Investor Relations. On the call today are Glen Tullman, our Chief Executive Officer; Bill Davis, our Chief Financial Officer; and Lee Shapiro, our President. Before we begin, let me read the brief Safe Harbor statement. This presentation will contain forward-looking statements within the meaning of the Federal Securities laws. Statements regarding future events and developments or companies 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 statements whether they are results of new information, future events or otherwise. And with that, I'd like to turn the call over to Glen Tullman, CEO of Allscripts.

[Glen Tullman:]

Thanks very much, Seth. I want to welcome all of you to the Allscripts 2011 Second Quarter Earnings Call. I'm pleased to welcome Cliff Meltzer, our new Executive Vice President of Solutions Development who I'll ask to say a few words later in the call. Let's begin the call today with a high-level view of the market, and then we'll walk through the details of the quarter. I really see 2 stages playing out in this market. The first stage is Meaningful Use, which will continue to be a significant driver in accelerating adoption in this market. We are perfectly positioned with the largest footprint in the market, with clinical and financial solutions for all points of care and the largest sales force in the industry. We believe we have leading share in the market today and that it will continue to grow. The second stage will be the emergence of new payment models, such as accountable or value-based care where providers will be paid for quality versus quantity. This market will be driven by companies that can connect care and provide insights that drive clinical and financial outcomes. Relative to the second stage, our open platform will connect patient information into a single view and help to coordinate care, both inside an organization and throughout the community. Our analytics capabilities, which include our partnership with and strategic investment in Humedica, signed in the second quarter, will provide insights that will drive both clinical and financial outcomes. That is what will be rewarded in the future model where Allscripts has already proven that we can deliver. As the advisory board cited in the their leasing report, Allscripts is the "market leader in improving clinical outcomes" through the delivery of actionable insights. The key point here is that Meaningful Use, the Meaningful Use threshold of the Federal HITECH Act that we have all heard so much about, is increasingly being seen as minimum use. In other words, it's the first stage in building the infrastructure that will enable the delivery of insights leading to better outcomes. There will be significant growth in this market for years to come, and we believe that there is no company better positioned to capture the opportunity in the market today and in the future. Having made these points, let's turn to the quarter. Allscripts' performance in the second quarter was strong across-the-board, reflecting the demand in the market and the strength of our solutions. We delivered bookings of $244.6 million, up 15% from the first quarter of 2011, reflecting strong sales across our entire portfolio. The overall volume of bookings for the transactions over $1 million was up by over 50%, which indicates a very solid mix of business across a large number of clients. To give you an example of how our market penetration is growing compared to another publicly-traded peer we're often compared to, in the June quarter, Quality Systems reported 97 new client agreements. By comparison, Allscripts signed a total of 359 net new clients during the quarter. It's clear that we're winning in the most important area of all

[Clifford Meltzer:]

Thanks, Glen. I'm extremely enthusiastic about contributing to the team. I joined Allscripts because the intersection of healthcare and technology represents one of the most socially relevant challenges and business opportunities in the market today. And my past experiences have all prepared me for this opportunity. My time in Apple provided insight as to better navigate how we enhance our product's design efforts and user interfaces, including our new iPad applications. My time at Cisco positioned me well to assist as we connect all key constituents in healthcare, most importantly the patient. And my time at IBM, gives me a strong systems view into how to use information to informate the decision process all 3 companies, by the way, our strong partners with Allscripts today. So bottom line, I'm thrilled to be part of a company that's making such an important impact on healthcare, and I can tell you that I'm already deep into the issues and enjoying the challenge.

[Glen Tullman:]

Thanks, Cliff. As most of you know, we announced Cliff's hiring, at the same time we announce the hiring of 3 other key executives. Steve Shute joined Allscripts as Executive Vice President of Sales, and will lead our sales organization. Steve is a veteran sales leader who was most recently Vice President of Worldwide Sales for Enterprise Content Management at IBM. Jackie Studer, our new General Counsel comes to us from GE Healthcare IT, where she spent 8 years most recently as General Counsel. Jackie has hit the ground running and brings broad experience in everything we do. And John Guevara, a seasoned leader with extensive success leading mission-critical operations for Microsoft and other top technology companies, joined Allscripts as Chief Information Officer. John already has a few months under his belt and will play an increasingly important role as we expand our hosting options. Overall, I'm very confident that the team we now have in place will build on our success and take us to the next level of execution, while allowing us to accelerate into what we believe is a very vibrant market. And with that, I'll turn the call over to Bill Davis to take us through the detailed financials. Bill?

[William Davis:]

Thanks, Glen, and good afternoon, everyone. Before I begin, I encourage you to review the GAAP and the non-GAAP financial tables in the press release issued earlier today, and accompanying explanations to assist you in evaluating and reconciling our GAAP and non-GAAP financial metrics that we will discuss on today's call. As a reminder, please note that Allscripts' 2011 second quarter financial statements include consolidated results for both Allscripts and Eclipsys for the 3-months ended June 30, 2011. Given our change to a December fiscal year last August, historical consolidated results of Allscripts on both a GAAP and non-GAAP basis as well as bookings will recast to provide comparative results for the 3 months ended June 30, 2010. This information is available in the non-GAAP statement included in our press release, as well as the supplemental booking schedule we published at the time of our first quarter 2011 release. This data is also posted on our website at investors.allscripts.com\webcast and the presentations as well. I'm excited to discuss our second quarter results and would like to start out by highlighting the following

[Glen Tullman:]

Thanks, Bill. So to sum up, we are delivering both strategically and operationally. We have a broad and growing portfolio of solutions that is increasingly attractive to all segments of the market, and we're confident that our growth will continue. The industry is changing, and Allscripts will continue to respond to its needs and continue to innovate. We do that in part through a great group of clients, who give us the opportunity to make a difference, and with an extraordinary team of our employees who, along with our shareholders, are committed to delivering on our mission and vision. And with that, we will now be happy to take your questions. Alicia, if you'd open up the lines, that would be great.

[Operator:]

[Operator Instructions] Our first question comes from the line of Michael Cherny with Deutsche Bank.

[Michael Cherny:]

So just -- I want to dig into the Heritage deal a bit, in terms of using that as a microcosm for the rest of your client experiences. You, obviously, that was a legacy Allscripts customers that you were able to cross sell with the Sunrise portfolio. Can you talk about just as you were selling those products, what was the key selling points for them, that they decide they want to go with the legacy Sunrise products and kind of, was it the connectivity was it experience with Allscripts from a service perspective? Just walk us through a little bit of the sales cycle there, just to give a sense in terms of how that relates to some of the other conversations.

[Glen Tullman:]

I think it always begins with client satisfaction. If the client is not happy, they're not going to buy from you. So that's the first step, which is they were happy with the offerings they had. They have received grants on their ePrescribing program and they were happy with their Electronic Health Record rollout. And from there, it just made sense as they looked at what's the next step. In addition, we keep coming back to this idea of market penetration. And in the Pittsburgh market, it's a great market for us, we have a lot of connectivity and penetration. Heritage is one of the ring hospitals, if you understand how that market is set up and connectivity is important to them as well. But this is a very innovative group, a very innovative organization, a very innovative group of leaders there. And so it was a big win for us. And I think it's consistent with what we said. What we said was, we got to take Allscripts products, sell them into the legacy Eclipsys space and we got to take legacy Eclipsys products primarily SCM and sell them to former Allscripts clients, and we've done that. So one other note I make is that we have more than 20,000 physicians in the State of Pennsylvania. So again, that kind of penetration, when you talk about connectivity, when you talk about hospitals, who want to get their lifeblood referrals, that becomes a very important part of selling proposition. So it's an agreement that we're very proud of. And again, that's a big part of our future, making those kind of sales.

[Michael Cherny:]

Great. And then just in terms of Australia, it's nice to see the first tranche of that deal. Are we at a point now where you can give us updated expectations in terms of what the full scope of that deal could end up contributing from a bookings perspective, or is it still too early to figure that out?

[Glen Tullman:]

Well, I think -- let me just comment on the deal. We're excited about it because the first step was the development lab, the implementation, the planning, that's now underway in a big way. We're starting to exchange tremendous amount of information and the like, and we continue to say that that's something that we expect to deliver in total by the end of the year and that's 80 hospitals. So it's a very substantial bookings for us in that respect. I'll let Bill comment on how that's going to drop to the extent we want to make any comments.

[William Davis:]

Well, I would just reiterate what I've said in the past, and we have indicated that this deal will likely represent one of the largest deals that the company has done on a combined basis. And we have sized that in terms of historically what margin deals we've ever done in the kind of $45 million to $50 million range. So I would encourage you to think about it, potentially a little bit north of that but not substantially north of that.

[Operator:]

[Operator Instructions] Our next question comes from the line of George Hill from Citigroup.

[George Hill:]

Bill and Glen, first of all thanks for all the financial color. I don't know if it's just me but these seems like a lot more color than you guys previously given. I'm sure we all appreciate it. Let me bring up a topic we haven't talked about in a while, which is the transition from the Misys customer base to the Allscripts customer base. You guys brought it up in this call. I guess, can you talk about the contribution of that segment of the business to the bookings growth this quarter? And how should we think about where that legacy customer base is from a technology perspective on the upgrade cycle and how much room is left around with those guys?

[Glen Tullman:]

Yes, we don't break it out separately to the market. I appreciate your acknowledgment, Bill has worked very hard with his team, with Seth and the group to make sure that we're giving you a really strong view into the analytics, because we think the quality of our earnings is substantially better than some of our competitors who are reporting. So number 1, I just wanted to thank you for recognizing that. That said, relative to the Misys space, we've spent a lot of time we have in upgrade program underway that allows them to easily and painlessly convert to the existing supported products that we have and we've made good traction there, we continue to make good traction there. And I think there's still a significant amount of room to run. One thing I'll say about a lot of the Misys Practice Management products, they were solid kind of working products and they continue to work. So really, what's going to start to happen now is that, that second half of the base, if you will, the ones that haven't converted are going to start to convert as they start to upgrade to Electronic Health Records and go for Meaningful Use, and we'll start to see that in the next 6 to 12 months. But we've seen a constant steady stream of that, we made real good progress.

[William Davis:]

What I would add to that, George, while we're recognizing that, that base is largely in the medium- to smaller-sized segment of the market. We've seen adoption of Electronic Health Records in that base, keep pace if not slightly better than the broader market adoption in those subsegments. So we've been very pleased. I'd also would underscore the retention comment that I made earlier. So we are very optimistic that as they make Electronic Health Records decisions, we are revered in the market as being the safe and logical choice for them in that context. So again, it serves to be a great opportunity for us as we look forward.

[George Hill:]

Good to hear that you guys are holding on to those. Maybe I can sneak one more and then -- Bill, you talked about not taking the price increases on service and maintenance as customers are going through the upgrade cycle. I imagine that is benefiting the systems sales line and kind of holding back the maintenance line a little bit. Can you give us anything directionally around the degree to which that's impacting those lines?

[William Davis:]

Yes. Again, it's actually the -- it's showing up more and that -- it showing up on the service, professional service line as opposed to the system line because in lieu of a maintenance increase, if you will, they are paying us upgrade fees, which again is largely service or professional service based. And as I've indicated, recognizing a substantial portion of our maintenance is effectively subject to CPI, we typically define it being as kind of 2% to 3%. That's effectively what has been potentially foregone. But again, that -- it wasn't across-the-board. We were very specific just in terms of where that was pulled in terms of a trade-off in recognizing what the clients were taking on this year.

[George Hill:]

Okay. So that -- this is being done client by client then?

[William Davis:]

That's right.

[Operator:]

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

[Jamie Stockton:]

Bill, on the transaction process and other line. A couple of questions there. One, the costs look like they ramped a fair amount sequentially. I know you talked about some merit and I'm going through that, I know that it would be hitting that segment. I was curious if maybe there was anything related to the ACS deal that would be going on there?

[William Davis:]

No, actually it's -- we did see a nice uptick in outsourcing revenue in the quarter. And so the incremental cost is a complement of the bonus that pertains to that segment but more notably on the outsourcing revenue.

[Jamie Stockton:]

Okay. and then, I guess, on the same line, just looking at the backlog. It looks like, if my numbers are right, it was down a little sequentially. Is that, that duration is coming in a little bit for the contracts that you have in place or can you give us any...

[Glen Tullman:]

Yes, a great question. It really pertains to just the timing of bookings, again, specifically to the outsourcing arrangement. These are long-term arrangements and they will ebb and flow from quarter-to-quarter. So the timing of booking is one. Second is the revenue uptick. It was up sequentially about $5 million, and this was related to increased activation support in one of our large outsourcing arrangements there in the second quarter. And so it's really those 2 dynamics that drove the backlog, the slight decline. Again, that will change from quarter-to-quarter, just recognizing the long-term nature of those relationships.

[Jamie Stockton:]

Great. Last question, SCM outsourcing, you guys have started to talk about it a little more lately. What kind of a contribution does that make today? I know it's very small and where do you think that business can go? And that's it for me.

[Glen Tullman:]

I'll comment, in terms of its contribution today, I mean, we have a whole host of products that we sell and have been selling that are a meaningful part of our overall performance. I think what you're speaking to in terms of the broader service offering, that is representing virtually no contribution to our financial performance today. We are taking the migration in terms of that offering very slow, in terms of making certain we have our Ts crossed and our Is dotted, just in terms of the requisite infrastructure and operations to ensure that we do it on the right way. So that will take some time to manifest itself in our financial results.

[Operator:]

Our next question comes from the line of Atif Rahim with JPMorgan.

[Atif Rahim:]

Question for Bill. On the 3Q bookings, are there any one-time items that were present in the year-ago quarter similar to what you've called out, call it, the first and second quarters?

[William Davis:]

No. I mean, I think as I've intimated before, I think the comparability of our booking results, most notably in Q3 and Q4 of last year become a lot cleaner than certainly what we were dealing with in Q1 and Q2. So there are no notable callouts in terms of the year-ago comparison. And again, why I feel comfortable in terms of the reasonable growth rates that I described. We should be able to deliver on those.

[Atif Rahim:]

Got it, okay. Glen, you talked about the physician market. You're definitely gaining share there. On the hospital market, the data that's coming out seems to imply that you're net down in 2010, and perhaps that was a legacy Eclipsys issue. But as you look to 2011, and which you've done so far in terms of wins versus losses, should we expect '11 to be a year where you're up in terms of the number of hospitals you have?

[Glen Tullman:]

Yes, absolutely. I think you can expect that we will be up over the course of the full year. And I think you'll see solid growth there. That said, we should understand that putting together the offering, making the case, which we are increasingly getting by into why people want to go with us, whether it's architecture. We have a modern architecture based on Microsoft.NET and the new Microsoft technologies versus some of the other architectures that make it hard to connect, hard to exchange information. If you look at what the advisory board has said, it said we're best positioned relative to what's coming on ACOs and the like, which is the ability to use our system to drive insights and better outcomes. As those kinds of messages get out along with the sense of what do hospitals want to do? They want to connect with those people who refer to them, which are small to mid-sized physician practices. And we have 50,000 of them, who they can connect to. No one else is close. I mean, everybody on the call understands that traditionally, the large hospital vendors have not had competitive ambulatory products. And today, we are the only one who competes against -- competes across ambulatory, acute and post-acute. And as you start to look at where the market's going, that's very important. Let me make one other point, and that is, Oliver Wyman did a study that said that 93% of the market can't afford to rip and replace, and can't be dependent on one set of architectures. What they need to do is use what they have, build upon that, fill in the gap. Only 7% have enough money, enough time and essentially kind of the monopolies in the area to do that. So we compete in 100% of that market. Some of that is at the very high end, where we're competing and winning. You heard me talk about 2 of our substantial wins that we're head-to-head against our 2 primary competitors at the high end. But moreover, when you look at the community hospitals, when you look at that mid-market, we're going to make substantial traction there. And that story is coming together, we're going to have it at the end of the month at ACE as I mentioned. There are more than, close to 5,000 of our clients who are going to see that story come together. We're going to deliver on the integration that we talked about. So we are very bullish on what's happening in the high-end SCM market.

[Atif Rahim:]

Okay, that's very helpful. And then just in terms of the latest contracts you've announced, looks like there's 3 big ones in Pennsylvania. Anything going on there that gives you somewhat of a larger presence than in other regions, or is it just a coincidence?

[Glen Tullman:]

Well, I think it's coincidental, although I would say, we've got great penetration, we've had great results in Pennsylvania. So that word spreads pretty quickly. But the northeast was traditionally strong for legacy Eclipsys. That's helpful. So those markets are strong, but we see it happening. I mean, you're going to see those kinds of agreements happen across the country as SCM really begins to take off. We know this is the best software in the market today. And there have been a number of reasons that it wasn't promoted that way. But I think that has come off and if you talk to anyone, even some of our competitors, their clients, they'll tell you that the best market used by the best customers or the best software, I should say, used by the best customers is our Sunrise software. And we have to get out there and make that case to the market. And we're going to do that. The big effort that Steve Schute is going to lead is making sure that we deliver that message and that's going to result in sales. Now the high-end is an incredibly vibrant growth market opportunity. People talked about between 300 and 400 large acute deals happening in the next 18 to 24 months. And we expect to get more than our fair share of that and we think we're well positioned to do it.

[Operator:]

Our next question comes from the line of Eric Coldwell with Robert W. Baird.

[Eric Coldwell:]

Just following up on Atif's question and your answer to that. You talked about making sure you get out in the market with your message. Is this kind of a trial balloon or a signal that perhaps we could see some SG&A increase as we go into 2012? Or longer term, are you still thinking that margin expansion is clearly on the table, net of all other adjustments? How do we think about that?

[Glen Tullman:]

I think, there's 2 answers. I'll answer that and then Bill can comment as well. But what I'll tell you is, we have everything we need from a sales perspective, now it's about telling the story. The first thing was as we look at the merger, people said, "Well, can they work together, continuing to deliver?" Then, "Can they cross-sell?" Then, "Can they sell in both directions?" And then the final question was, "Does the software work together well?" Each one of those, we've knocked off quarter-by-quarter as we continue to educate the sales force, as we continue to educate our clients and they see what we can deliver. Now what you've already started to see is, we're actually starting to run the first ad that, I'm not sure if Eclipsys ever ran ads, but they sure haven't run ads recently, nor had Allscripts to tell the story not of us, not of our software but of the successful outcomes of our clients and we're delivering. We're #1 in CPOE, we have been for a long time. We're #1 in utilization, we're #1 in electronic prescribing. And in the world of Meaningful Use, where it all gets measured, that kind of stuff becomes very important. And in terms of physicians wanting to use the system, again, those metrics are important. So I don't think that we need anything more than we have today. We just have to get out there and tell the new story. Bill?

[William Davis:]

I just would underscore that we absolutely believe that margin expansion is very much of our financial model. And we remain committed to delivering that. So there was no intended message in Glen's early remarks.

[Eric Coldwell:]

That's great. And I'll treat that as my follow-up to Atif's question. And my main question is actually on the affiliated physician group selling activity that you're seeing. I believe in the past, you've talked about UPMC and maybe Long Island Jewish, some others, St. Lukes, now that are actually supporting the community physicians and helping them to write the product. Is there any way you could quantify what kind of market activity you're seeing there? What may be the total affiliated physicians that hospital CFOs are supporting now in these affiliate programs? Any sense we could get on the size of that opportunity and how much you expect that to grow?

[Glen Tullman:]

Let me say, again, as you look at the market, there's a few things happening. One, you have hospitals who are trying to buy practices. We benefit from that to the extent they own these practices, they need software. We have other practices, multi-specialty groups, they are growing larger. And then you have a hospitals that are providing endorsements and those endorsements, as you heard me talk about today come in the form of funding. So we had talked about too. What I can tell you is that we have a more than 20,000 slots that are essentially pre-endorsed or funded at some level ready to be sold by hospital partners. And those vary across a variety of markets, stretching from California markets to the Northeast, to almost every area of the country. And that's, again, a key selling item because those hospital endorsements, if you wanted to endorse some of our competitors who have hospital products, it's very difficult to deploy those products both from an architecture standpoint, try putting MUMPS into a small office and from just a usability standpoint. So when we're out there, these hospitals are using our Sunrise systems at the hospital level, and then as they roll out, they might be using Enterprise, they might be using professional, they might be using MyWay or a combination thereof. And that's what makes the offer so powerful, as they understand that, we see the attraction.

[Operator:]

Our next question comes from the line of Charles Rhyee with Cowen.

[Charles Rhyee:]

I don't know if Cliff is still on the call here, but I was curious maybe to get his early impressions here. I think in your comments, Cliff -- is he still on?

[Glen Tullman:]

He is still on.

[Charles Rhyee:]

Okay. Yes, you said you're already sort of getting your arms deep into sort of the issues. Maybe if you could just give us a sense on what you're seeing so far, and obviously you talked about the experiences you bring. Maybe as you take a first look, where do you see sort of the biggest opportunities to move forward perhaps from a product development stance? Maybe I'll start there.

[Clifford Meltzer:]

Well, it's been a short period of time, so it's hard to draw too many conclusions. But there's nothing I haven't seen before. There's some common issues with software technology companies of great opportunities in the area of consistency in terms of user interface, application performance the customers are looking for, and clearly in terms of deployment schedules in rapidly bringing markets to the marketplace that customers can absorb very, very quickly. So there's just the standard set of issues that I would expect to see, that's kind of what there. But it's early to really get into it. I need more time with my team and also with customers because part of the challenges that the opportunity is the scale of which customers are starting to use the software [indiscernible].

[Glen Tullman:]

I'll just add that we've been dragging Cliff all around the country. I think he's been at every one of our development sites, and he's headed over to India next week or the week after. But in addition, he's been at a substantial number of our client sites and of course, ACE will give him the opportunity here directly. This is very -- this is stuff that Cliff has done before in a number of different companies, and so that's what made him so appealing for us to get on board here.

[Charles Rhyee:]

Great. And then maybe a follow-up for Bill. Maybe I missed it here, what sort of the expectation and the guidance for the tax rate? And in terms of the share count guidance, clearly with the stock where it is, can you give us any thoughts here on sort of how aggressive the company can be in terms of buying back stock? Because if I look at the guidance, it's for still 194 million shares for the full year, and we're already sitting here at a 193 million. Maybe some thoughts there.

[William Davis:]

So we have not built into the guidance any additional buyback. As I've intimated in the past, we will obviously look for opportunity to exercise our commitment in terms of the 3-year program. We've not made any specific commitments in any particular quarter, and I'd be hesitant to do that at this juncture. So to the extent we do that, that will represent incremental upside to our share count assumptions and results and EPS for the year. In terms of tax rate, here again, we are doing a lot of work in terms of bringing organizations together from a tax profile perspective and planning perspective. And I do see opportunity there. I think that candidly, I'm being conservative in my assumptions in terms of what's being conveyed but I do at the same time expect that much of what we're focused on will start to present itself most likely end of Q3, beginning of Q4. So it's contribution to this full year will be less than what I expect in 2012. So I do expect that we're going to come back to the market and share some positive direction on tax rate. But again, I would expect that that's going to start to show up more in 2012 than 2011 .

[Charles Rhyee:]

And then just to clarify, on the share repurchase program, the 3-year program, is there anything in terms of timing requirements that limit you or is it just that the programs 3 years in length and it's up to the company and the board to decide when to exercise it?

[William Davis:]

Yes, it's really the latter in terms of the discretion and our commitment to fulfill the program over that 3-year period. And our commitment in turn to the market is that we would provide updates, formal updates each quarter, which we fully intend to do on these calls.

[Glen Tullman:]

There's no limits.

[William Davis:]

Yes, there's no limitation.

[Glen Tullman:]

The board and management will determine how to spend that based on what we perceive the valuation of the stock to be.

[Operator:]

Our final question comes from the line of Larry Marsh with Barclays Capital.

[Lawrence Marsh:]

Just a big picture question for Glen, you're defining, you said the $300 million to $400 million enterprise decisions over the next 12 to 18 months. As you think about in your mind, how many of those decisions in the market have been made? And you said you'd be disappointed if you didn't get your fair share. Is that 50 to 60 or a lot more than that, or how do you quantify that?

[Glen Tullman:]

Let me say a few things. One, I believe what we're seeing, we're just at the beginning of this transformation. So what we're starting to see is not only those people who don't have existing systems but even people with systems are talking about upgrades. And you know I talked about the difference between Meaningful Use and minimum use. And the idea is that people are starting to say, "Hey, we understand there's a sea change going on, this is now about information, we need better information systems and we need software that's going to give us that extra kick." So we don't see this as a one-time upgrade. We've got a lot going on. Now that said, Larry, I think that if you look at the market, we said there's going to be hundreds of decisions and you look at a really a 2-year window, and you look at us being under any set of circumstances in the top 3, I would argue in the top 2 right now and eventually #1 in the market in terms of the assets that we have. You have to do some planning. But I'd be hesitant before we come out with guidance, official guidance. When we do that, I think we'll have -- we'll give you some visibility into what we expect that to be. But most people believe that after we did the merger, it would be a year where no one would buy anything from us. And I think you're seeing substantial decisions already getting made, and I can assure you that the pipeline has grown in terms of the high-end SCM decisions. So we see a vibrant market opportunity.

[Lawrence Marsh:]

Okay, very good. And just a quick follow-up to Bill. You're communicating the 18% to 20% rough growth in bookings from Q3 last year, it was down sequentially, I guess that would compare to the 198 in Q3 of 2010. And then as we -- I know you're not talking about Q4, but I know that's a tougher comparison with Q4 being strong last year. Should we still think of the same kind of growth rate off of that number for the end of the year?

[William Davis:]

Yes. So the 198 comparison for Q3 is what I was absolutely contemplating when I made the 18% to 20% growth. So that's correct. I really candidly would like the benefit of working through the third quarter before I comment specifically on the fourth quarter. The one specific callout I would make is, again, anticipation of the South Australia deal, and that would obviously be helpful in the context of relative growth off of that period. But going beyond that at this point, I prefer not to do it.

[Glen Tullman:]

Again, I just want to thank everybody for joining us on the call. We continue to believe that we are extremely well positioned in a very vibrant growth market. It's a market that's growing now, that's being stimulated by the government. But frankly, the real stimulus here is that we got to improve healthcare from a cost standpoint, a quality standpoint. And we think we're making the right decisions to do that both for today's market and for the future market in terms of information and services and the like. So thanks for joining us. We look forward to talking with you next quarter.

[Operator:]

And this concludes today's conference call. You may now disconnect.