Good afternoon. My name is Kelly and I will be your conference operator today. At this time, I'd like to welcome everyone to the Omnicell Second Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number 1 on your telephone keypad. If you would like to withdraw your question, please press the pound key. I would now like to turn the call over to Peter Kuipers, Chief Financial Officer. Please go ahead.
Thank you. Good afternoon and welcome to the Omnicell Second Quarter 2019 earnings call. Joining me today is Randall Lipps, Omnicell Founder, Chairman, President, and CEO. 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 27th, 2019, and in other more 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 26th, 2019, 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. Finally, this conference call is the property of Omnicell, Inc., and any taping or duplication or rebroadcast without the express written consent of Omnicell is prohibited. Randall will provide an update on our business. After Randall's remarks, I will cover our results for the second quarter of 2019 and our guidance for the remainder of the year. Our second quarter financial results are included in our earnings announcement, which was released earlier today and is posted in the investor relations section of our website at omnicell.com. Our prepared remarks will also be posted in this same section. Let me now turn over the call to Randall.
Thanks, Peter. Good afternoon. We are pleased to share the results of another strong quarter as the healthcare industry continues to recognize the importance of the vision for the Autonomous Pharmacy. As we've discussed previously, this vision of creating a zero error, fully automated and digitized infrastructure will lead to enhanced safety, control, and efficiency of medication management across the continuum of care. We have made significant strides this quarter to advance this vision and engage customers to join us on this journey. Our business is very healthy and continues to grow profitably. Key financial results for the quarter include record revenue of $217 million, up 15% from the same quarter of 2018. Non-GAAP EPS of $0.67 per share compared to $0.46 a share in the same period last year, representing a 46% increase.
Our product backlog at June 30, 2019, is at an all-time high and is growing faster than our product revenue. During this quarter, we continued to see strong momentum of new customer partnerships that are embracing the vision for the Autonomous Pharmacy. The Autonomous Pharmacy integrates a comprehensive set of solutions powered by the Omnicell Cloud Data Platform across three key areas. First, automation solutions designed to digitize and streamline workflows. Second, intelligence that provides actionable insights to better understand medication usage and improve pharmacy supply chain management. Automation of medication dispensing workflows, which includes expert services that serve as an extension of pharmacy operations to support improved efficiency, regulatory compliance, and patient outcomes.
Some of our recent partnerships include Spartanburg Regional Healthcare System, an integrated healthcare delivery network in South and North Carolina, has selected Omnicell solutions at their flagship research and teaching hospital, Spartanburg Medical Center, as well as the newly acquired Mary Black campuses. Spartanburg, like many provider networks, is building a centralized distribution center, or CDC, at the main hub for pharmacy supply chain management. Central to operations in this new center will be Omnicell's XR2 automated central pharmacy system, a robotic system designed to automate critical workflows to maximize inventory control, help improve efficiency, and increase medication safety. Spartanburg will also have the ability to better utilize health data analytics through Omnicell Performance Center. MUSC Health, named the number one health system in South Carolina by U.S.
News & World Report, will be implementing Omnicell's robotic IV insourcing solution to bring sterile compounding in-house as part of the health system's central pharmacy operations. This unique program combines advanced robotic technology, data, and expertly trained pharmacy technician staff into a comprehensive turnkey package. MUSC Health will also implement Omnicell's EC series in patient care areas. Additionally, we have secured several long-term partnership commitments with leading healthcare systems, including St. Luke's University Health Network in eastern Pennsylvania and western New Jersey, plus Northern Arizona Healthcare, and in Charlotte, North Carolina's based Atrium Health. These health systems will support medication management across their service networks through Omnicell automation and intelligence solutions, helping to improve management of the pharmacy supply chain while empowering pharmacists, nurses, clinicians, and pharmacy staff to focus on patient and clinical satisfaction.
These three health systems alone represent approximately 1% of the U.S. hospital market based on total bed count. For the second quarter, we closed a record number of multimillion-dollar deals versus any previous second quarter in the company's history. Over 80% of these deals are anchored by long-term commitments, and over 90% of these customers will purchase multiple products from the Omnicell platform. These are examples of how our business has expanded over the years from a single point solution to a platform of products and services, which has resulted in larger deal sizes across multiple product lines, more complex implementations, and we believe a more comprehensive and enduring relationship with our customers. The Autonomous Pharmacy is steadily evolving from a vision to a collaborative mission being driven in partnership with our customers and industry partnerships. I'm thrilled to share this progress and look forward to our continued success.
Now let me turn the call back over to Peter for second quarter update and the rest of the year guidance. Peter?
Thank you, Randall. Our second quarter 2019 GAAP revenue of $217 million was up 15% over the second quarter of 2018. The increase in revenue is largely driven by an increase in EC series implementations from a growing base of customers. Second, increases in annual service and maintenance revenue from a larger install base of equipment, and lastly, contributions from new products introduced over the last year. The second quarter earnings per share in accordance with GAAP was $0.37 per share, up from $0.16 per share in the second quarter of 2018. The increase in earnings per share is largely due to higher revenue in the second quarter of 2019 and achieving economies of scale over our operating expenses.
In addition to GAAP financial results, we report our results on a non-GAAP basis, which excludes stock compensation expense, amortization of intangible assets associated with acquisitions, acquisition and restructuring-related expenses, tax reform and restructuring income tax benefits and expenses, contingent gains and amortization of debt issuance costs. We use non-GAAP financial statements in addition to GAAP financial statements because we believe it's useful for investors to understand the effects of amortization of acquisition related costs and non-cash stock compensation expenses that are part of our reported results, as well as one-time events and acquisition and restructuring-related expenses. 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 2019 non-GAAP EPS was $0.67 per share, compared to $0.46 per share in the same period last year, representing a 46% increase.
Similar to the increase in our GAAP EPS, the increase in earnings per share on a non-GAAP basis is again largely due to economies of scale achieved in the context of higher revenue. Non-GAAP other expenses and income for the second quarter of 2019 was $1.1 million, compared to $2.8 million in the second quarter of 2018. The decrease primarily relates to the lower interest expense as we have continued to deleverage. Let's now move to the balance sheet and cash flow. Second quarter 2019 cash flow from operations was $27 million. Our operating cash flow in the second quarter was primarily driven by net income and adjustments for non-cash related items such as depreciation and amortization, which were partially offset by changes in working capital. During the second quarter of 2019, the company generated approximately $12 million of free cash flow.
We believe our business will continue to deliver free cash flow through the remainder of 2019. Inventories at June 30, 2019, were approximately $104 million, flat for the previous quarter and flat from June 30, 2018. We have been able to hold our inventory relatively constant over the last year despite continued growth, new product launches, and larger average deal sizes. Accounts receivable days sales outstanding for the second quarter were 87 days, down six days from the previous quarter and up one day from June 30, 2018. The decrease in DSO from last quarter is primarily driven by higher sales. As of June 30, 2019, our cash balance was $87 million, up $10 million sequentially and up $41 million from June 30, 2018. The increase in cash is due to proceeds from our at-the-market offering and operating cash flows.
During the second quarter, we utilized our at-the-market offering to sell approximately 217,000 shares of our common stock at an average selling price of $82.51 per share. Total gross proceeds raised during the quarter was approximately $18 million. These proceeds were used to repay outstanding debt. During the second quarter, we repaid $21 million of debt. As of June 30, 2019, we had $80 million of outstanding funded debt, and our loan leverage measured as outstanding total funded loan balance over the last 12 months or LTM of bank EBITDA was approximately 0.5 times. As of June 30, 2019, we are now in a net cash position for the first time since the closing of the Aesynt transaction in early 2016. Our headcount was 2,555 at June 30, 2019, up 83 from the end of the previous quarter and up 131 from the same quarter last year.
The majority of the quarter-over-quarter increase is for manufacturing, implementation, and service personnel needed to support our business as it continues to expand. Moving to our full year 2019 guidance. We are increasing our full-year product bookings guidance. We now expect 2019 product bookings to be between $765 million and $790 million. Our previous guidance was between $745 million and $780 million. The increase in our product bookings guidance is based on strong commercial momentum, especially from expected orders for our XT Series. We continue to gain traction in XT upgrades, and as we have mentioned previously, we're in the early years of the XT upgrade cycle. We are increasing the midpoint of our 2019 total revenue guidance by narrowing our guidance range. We now expect 2019 total revenue to be between $886 million and $900 million. Our previous guidance range was between $880 and $900 million.
The midpoint of our new guidance range is $893 million compared to $890 million, which was the midpoint of the guidance range provided in our 1Q 2019 earnings call. The midpoint of our new total revenue guidance range implies approximately 13% year-over-year growth from our full year 2018 total revenue. This breaks down as follows. We now expect 2019 product revenue to be between $653 million and $662 million. Our previous guidance range was $652 million and $668 million. We now expect 2019 service revenue to be between $233 million and $237 million. Our previous guidance range here was $228 million and $232 million. We are narrowing our total year 2019 non-GAAP EPS guidance. We now expect 2019 non-GAAP EPS to be between $2.65 and $2.82 per share. Our previous 2019 non-GAAP EPS guidance range was between $2.62 and $2.82 per share.
The midpoint of our new non-GAAP EPS guidance implies approximately 31% growth year-over-year. For the third quarter of 2019, we expect total revenue to be between $227 million and $232 million. We expect product revenue to be between $168 million and $173 million. We expect service revenue to be between $59 million and $60 million, and we expect non-GAAP EPS to be between $0.67 and $0.72 per share. Finally, for 2019, we're assuming an average effective tax rate of 7% in our non-GAAP EPS guidance range. As Randall mentioned, we are very pleased with the results for the second quarter of 2019, and we look forward to continuing to deliver profitable results throughout the rest of the year. Now I'd like to open the call for your questions.
At this time, I'd like to remind everyone, in order to ask a question, please press star then the number one on your telephone keypad. If you'd like to withdraw your question, please press the pound key. Your first question comes from the line of Mohan Naidu from Oppenheimer. Please go ahead, your line is open.
Thanks for taking my questions. Randy, Peter, I think you guys made a comment about backlog being all-time high. I guess XT is probably a big part of it. Can you talk about what other products are contributing to that? Is there any change in mix in that backlog? I think as of last year, I think you guys had mix around 22% long-term versus short-term. Any other color would be useful.
Yeah. Thanks, Mohan. You look at, of course, the total revenue, product revenue, take service revenue to the side. Within product revenue, there's also product backlog, XT Series is the biggest product line. Yeah, that is a correct assumption. There's one nuance there that most of the increase above the revenue increase, the increase in the product backlog, is really more in the short-term backlog as well. That is an improvement, if you will, in the installation timing in the product backlog. We're very pleased with that conversion momentum as reflected in the backlog.
I guess, Peter, what other products are contributing on the short-term side apart from XT? Are there any specific products that are gaining momentum at this point?
It's the whole platform. It's XT Series, it's Performance Center, it's XR2, it's Med-Adherence Robots, it's services. We're building out the platform that we announced in December last year at ASHP. Including IVRISE, forgot about that. Yeah.
Okay. Thank you. Maybe a couple more questions. I guess in the last couple of weeks, there have been a lot of questions about receivables growth and revenue recognition. I guess, what type of terms do you normally place in your contracts for payments? It sounds like the implementations are taking longer, there are delays in conversion there, do you insist on a fixed payment terms, or do you let the clients wait until the full implementation is done? Can you elaborate any on that?
It's a good question. There's a couple of dynamics there. Your average payment terms are roughly around 45 days. Larger long-term partnerships might be more around 60-day range. International has, by nature, longer payment terms as usual, and that's business practice there. I would say, because of the larger deals and the larger installs, that probably adds about 10 days to that average. I would also say, because we're a configurable product, when we serve the customer, that probably adds another 10 days, calculates to roughly that 80-day average there. You can compare it also maybe to some other med tech companies that are also in the 80 range to up to 100 or above that. We feel very comfortable. You should also consider that we bill for our main product lines. We bill upon shipping. Not all companies do that.
To some extent, that elongates the payment cycle as well.
Just to be clear, when you ship the product, when you put that revenue, I guess not revenue, but that amount into receivables, you do not recognize the revenue, right?
Exactly. Revenue follows later after installation is completed, after there is a written customer acceptance. For the main product line, that is. For capital goods.
Okay, got it. Thank you so much for taking my questions.
Your next question comes from the line of Eugene Mannheimer from Dougherty & Company. Please go ahead, your line is open.
Thanks. Good afternoon. A good job on the quarter and outlook. I just wanted to follow the other line of questioning. Do you think you can get DSOs back down to the 60s and 70s levels over time? Same for inventory days. Could those go even lower going forward?
Yeah. We're not really going to give guidance on the specific DSO inventory turns, if you will. Of course, we're working on both metrics. Expect to get some traction there. Again, I would refer also to other med tech companies that have DSOs in the range of 80-100. Not all of those have the contractual terms where you actually can bill upon shipping. We have a strong contractual term there. On the inventory side, I would say that we do have a very large installed base, as you know, that we need to serve from a services perspective as well. We have a marketing commitment to service equipment within the field for about 10 years. That includes an inventory as well. Plus then we have the new product ramp-up for XR2 and for IVX.
Okay. Makes sense. Thank you. Could you offer, Randy, maybe some commentary around the IV line of products? How's the reception there? What are you seeing? What type of reception from your customers? Thank you.
Well, I think everyone in the provider network is struggling with the cost of IV compounding. You have a lot of choices to make, either outsourcing or buying a robot or insourcing and have us help you run it. The pricing in the IV compounding market shifts around a little bit. It's a more complicated equation because how you set the robot up, if you run it, you get maximum efficiency is important. That's why we see bigger uptake on the IVRI side. We're really helping customers run that for them, and we can get better throughput and better productivity out of it.
This is a constant nagging problem around the cost of IV compounding, and I think we have new products on the IV workflow side, and we're heavily invested in this area to constantly find ways to make this cheaper, faster, and better. I think everybody recognizes it. It's about what strategy they want to take.
How comfortable they are having us come in and help them run some of those pieces, or whether they want to try to take some of those on themselves. I think some of the earlier customers who took these products on themselves, I think it's harder for them to keep up with the configuration changes as much as they should. We think we've got the better working model going forward.
Very good. Thank you.
Your next question comes from the line of Matt Hewitt from Craig-Hallum Capital. Please go ahead. Your line is open.
Thank you for taking the questions. Just a couple from me. I guess, first off on, and I'm going to pick some of the areas that have been hot-button items here recently, but on the receivables and the DSOs, and I appreciate what you put out in the press release, but I'm wondering if you could discuss a little bit how the business has changed over the past, call it half dozen years. Are you seeing more system-wide adoption, maybe 10, 12 hospital systems purchasing the product versus single hospitals or even divisions within a hospital? How do those bigger contracts change how you collect on those receivables?
That's a great question. We talked in this script and in earlier scripts about the long-term sole source or long-term commitments, if you will, multi-year. Those are typically 5, 7, or 10-year commitments where Omnicell becomes a partner for that health system to provide all medication management automation products and services. That then is substantiated, if you will, as you go through the partnership to build the next level of pharmacy within that health system by purchase orders or bookings every year or every 6 months, if you will, as you build that out. The deal sizes are also becoming bigger, so those POs are becoming bigger. The installs are becoming bigger as well. I would say it definitely does impact the average collection timing as well. Sometimes hospital systems wait till the very last floor is installed or the last facility.
We're becoming a lot more strategic as well. If you look at our bad debt expense, the last five years has been less than half a %. Hospitals do pay. Also the bigger health system including as well, but just might be a little prolonged at this point.
Shifting to the inventories, and you just provided a little bit of detail there as far as making the commitment for 10 years to support the programs. If you look back, there's been some comparisons to the last upgrade cycle, the G4 upgrade cycle. Maybe if you could describe a little bit some of the differences between the G4 upgrade cycle and the full equipment platform upgrade cycle with XT and some of these other product lines.
Yeah. The G4 upgrade was different. That was a console upgrade, which is the computer console in the frame, on the existing frame, if you will. Therefore, the parts are really common, both for upgrades and total complete product. The requirements for inventory for service was really the same parts if you will. Move forward now to the current period, per se. We now have the largest install base of ADCs in the U.S. consisting of AcuDose and G4 Omnicell ADCs, that we will support for the economic life of our customers up to 10 years after purchase. Of course, those service parts are not used in the XT Series, so that's a new frame and a new console.
Okay.
We of course look at our inventory based on demand from both a current product perspective and also from a service perspective, and we feel comfortable there.
Got it. All right, maybe one last one from me regarding adjusted operating margin. 14.8% in the quarter, that's a really good number, and it's the highest we've seen since Q2 of 2014, which was a little bit of an anomaly due to some recognition of vacation. I'm wondering, 14.8% in Q2 implies that you're going to get higher than that as we get into the back half of the year. Have you had a chance to look at maybe a three or a five-year target for that? I know that you've kind of historically stuck to that 15%, as you look at the model shifting to more software, do you envision an opportunity for that to maybe lift at times to something north of 15% on an annualized basis? Thank you.
Yeah. First looking at 2019, if you kind of back into our guidance and use the midpoints of the provided guidance ranges, you're going to end calculating at roughly 14.5% for the year. The math shows that for third quarter and fourth quarter, we're estimating to be slightly higher than the 2Q19 non-GAAP operating margin. I would say we're not ready at this point to provide longer-term guidance. We are transforming the company to more of a service-oriented company, also with the Autonomous Pharmacy. The market, we see the demands are growing with our evolution, I would say. More to follow.
Understood. All right. Thank you.
The last point maybe is looking at the data that we disclosed. The growth of the multimillion-dollar deals, if you will. If you look at the top 10, for example, the top 10 deals in the fourth quarter of 2018, they were on average $10.3 million each. Compare that to the fourth quarter of 2015, that was $2.7 million on average. If you think about the last six years as the last four years, gives you a good indication of the average PO size for the top 10 in the quarter. Almost three to four times bigger to look at those quarters. All right. Thank you.
Your next question comes from the line of Jamie Stockton from Wells Fargo. Please go ahead. Your line is open.
Good afternoon. Thanks for taking my question. Peter, I think you said that, obviously you guys have gotten into a slight net cash position here. How are you thinking about M&A at this point? It's been, I think, a little over two years since you did your last acquisition. Piggybacking on Matt's question earlier about margin thoughts. Historically, it feels like every time you guys have bumped up against 15%, you've backed yourself down a little bit from that by buying interesting businesses. Anything there would be great.
Yeah, Jamie, if I can take that question for you. There's a lot of momentum in the business, we're actively sorting through M&A potential always, and particularly anything that can fit into that platform that will enhance the big pipeline, the big connection to these customers that can tie into the platform to enhance and make it more valuable. As we have sort of evolved from the single solutions to platform play, it makes a lot of sense to try to find the right kinds of tuck-ins just to leverage that platform. There's a lot of things out there. You just got to find the right one at the right time, there's no particular timing. We're active, we're looking, and we want to make it make sense.
It's not particularly time to earnings or anything else other than finding the right ones at the right time to make sense. Yeah. It's probably fair to say also that the last big acquisition, Aesynt, if you will, we called it earlier on the XT upgrade cycle in the early years. We think the potential of the upgrade cycle for the customers that came with Aesynt, the AcuDose-Rx products and ABC, that's also in the early years. There's more to come there. To Randy's point, yeah, we always look at acquisitions. Doesn't mean that we need to close one or we'll close one every year or every two years. It depends. It needs to fit our framework, needs to be at least an adjacency, and needs to be contributing as well to revenue growth and to profitability.
Maybe not immediately to 15%, but it needs to contribute as well. We like to make sure deals are accretive on a market EPS basis from day one.
Okay, that's great. Maybe just an update, I know you guys consolidated the business, you don't report the two segments anymore. I realize you changed the way things are run internally, that makes sense. If we think about maybe the non-acute settings, retail pharmacies, institutional pharmacies, can you just give us an update on how things are going there? Is there any traction in trying to build out a broader offering with deals like the Ateb platform?
I mean, that business is evolving. Benefit there we have is that we have a very large customer base in the pharma network, specifically on the population health solution side, the medication therapy management, the comprehensive medication review. We have some really good early results commercially, not big enough to break out by any means on the front of the P&L. The benefits are that we have a large customer base. Plus also is that we have some good early successes, but we need to continue to work on that. I think that that's what we've seen so far on that. I think it's still sort of in the embryonic stage, but good early success stories and we need to leverage those up and continue to see some bigger growth there. We've got a nice growth, but it's on a small base.
It fits with the whole story of when you go to these provider networks and they're looking at both inpatient and outpatient, and you got to have solutions that work in both. The same thing for institutional pharmacy. They're evolving as well. I think our business there is still strong. We just want to continue to develop some of our population health products to get to a bigger size. Yes. More scale. More scale. Yeah.
Okay. Thank you.
Your next question comes from the line of Bill Sutherland from Benchmark Company. Please go ahead. Your line is open.
Hey, Bill.
Actually, hey, Peter. My question got pretty much answered in the last two. Good quarter. I'll leave it there. Thank you.
Yeah. Thank you, Bill.
Your next question comes from the line of Mitra Ramgopal from Sidoti. Please go ahead. Your line is open.
Yes. Hi, good afternoon. Just wanted to follow up on the record backlog you're seeing and get a sense as to if it's coming more from, say, new customers versus upgrades or competitive wins. Any color on that would be great.
It's all of the above. We're in the early cycles or years for the XT upgrades. We continue to gain market share. We believe that for the first six months of this year, we have further gained market share as well, and then the growth also comes from expansion, right? Remember that these big health systems that we have long-term partnerships with, they expand as well, and they might implement our products and services at the next facility, and then the next facility. It's a combination of all. We're seeing good traction on all of those tracks or revenue drivers.
The XT, I would just add to that, the XT Series certainly is, in some cases, is the entry point for the big discussion, which then broadens out into a longer and broader type agreement. I think a couple of our deals right now, Spartanburg I know was a new customer for us. I believe one of our other ones was as well.
Sure.
We don't really track those things. It just states about how important it is to have these kinds of systems in a large system, in a programmatic way. I think that the big systems are scaling up and standardizing, and most of them have our older systems or the legacy systems from when we acquired. Eventually, they've got to make a bigger movement towards standardizing and putting in more pieces of the product line. You're just starting to see that.
Okay. No, that's great. Then just following up on that, any constraints in terms of being able to handle the increased business you're seeing and in terms of whether it's needing to add personnel, et cetera, to handle the implementation, or are you comfortable that you have?
Yeah
enough work on board?
Yeah, in our prepared remarks, we talked about the headcount increase. Sequentially, we're up 83 heads or headcounts from the end of March, and the majority of the increase is from manufacturing, implementation teams, and service teams. We're definitely scaling up. You have to do that always just a little bit ahead of the revenue increase just to allow for training, et cetera. Yes, we are doing that, and we don't see really a hindrance on manufacturing capacity, specifically for the XT Series. We've got a really efficient assembly and test plant, if you will, where we can run a second shift also.
Okay, thanks again for taking the question.
Your next question comes from the line of Matt Hewitt from Craig-Hallum Capital. Please go ahead, your line is open.
Yeah, just one follow-up from me. During the prepared remarks, I believe you were talking about the three wins with St. Luke's, Northern Arizona, and Atrium representing 1% market share.
Yeah
bed comp perspective. I know historically you've talked about gaining 1%-2% a year, and you obviously hit those numbers, and that's what's allowed you to become the market leader as of last fall. I'm just curious, does the 1%-2% still hold, or are you seeing such momentum that you think that you could actually take more than 2% share over the next couple of years as you get into the XT cycle in particular?
Yeah. There's a couple of nuances there. Northern Arizona, that was a competitive conversion. That's a new customer. Atrium is a renewal, really a platform renewal, sole source contract. Think about bigger platform, more products, if you will. St. Luke is also an existing customer, but that's a new sole source agreement, multi-year agreement.
Okay.
Yeah. It's only part of that 1%, but it's anchored, if you will. That definitely is our strategy. Smaller locations and health systems that we don't disclose, that don't make it to the level of a press release, we're chipping away at those and we're gaining that first year. Every quarter, we take away and we have competitive conversions in our favor. We don't necessarily want to give guidance on market share increases. We believe that throughout the first six months of the year, that we have further gained market share in the U.S., and the 1.5%-2% has been mostly the historic rate over the last couple of years. It might have been higher in some of the years, I think that's fair enough for now to assume.
The real expansion also on revenue besides competitive converts is really the whole platform and then the upgrade cycle.
Got it. All right. Well, that was it. Thank you.
Thank you.
There are no further questions at this time. I will now turn the call back over to Randall Lipps for closing comments.
Well, thanks for joining us today. As we enter the second half of 2019, I'm thrilled to see our Autonomous Pharmacy vision come into life. Together, our health systems and retail pharmacy partners are helping to create value for the industry by transforming pharmacy care delivery model. This is really freeing up the pharmacist. It's getting them out of the basement, from behind the counter, and getting them connected to clinicians and the patient, so that we get improved outcomes for everybody. I especially want to thank our customers for partnering with us, and especially the Omnicell team for executing on our strategy as we deliver our vision of the Autonomous Pharmacy and really improve healthcare for everyone. Thanks, everybody. See you next time. Cheers.
Goodbye. This concludes today's conference call. You may now disconnect.