Rob Seim - CFO Randall Lipps - President and CEO

Steven Crowley - Craig-HallumCapital Group Tom Gallucci - Merrill Lynch Newton Juhng - BB&T Glenn Garmont - BroadpointCapital Len Podolsky - Piper Jaffray Steve Halper - Thomas Weisel Matt Teplitz - Quaker CapitalManagement

Thank you. Good afternoon, andwelcome to Omnicell 2007 third quarter results conference call.

I'll becovering our results today from our company headquarters in Mountain View, California.And joining me on the call today is Randall Lipps, Omnicell President and CEO,who is traveling on customer visits this week. You can find the results on theOmnicell third quarter press release, posted in the Investor Relations sectionof our website at www.omnicell.com.

This call will include forward-lookingstatements subject to risks, uncertainties, and other factors that could causeactual results to differ materially from those expressed or implied. For a more detailed descriptionof the risks that impact these forward-looking statements, please refer to theinformation under the heading "Risk Factors", and under the heading"Management's Discussion and Analysis of Financial Condition and Resultsof Operation", and in the “Omnicell Annual Report” on Form 10-K filed withthe SEC on March 23, 2007, as well as more recent filings with the SEC.

Please be aware that you shouldnot place undue reliance on any forward-looking statements made today. The dateof this conference call is October 18, 2007 and all forward-looking statementsmade on this call are based on Omnicell's belief as of this date only.

Futureevents or simply the passage of time may cause these beliefs to change. Finally, this conference call isthe property of Omnicell Incorporated and any taping or duplication orrebroadcast without the express written consent of Omnicell is prohibited.

So, during the call today I'llstart with an overview of the financial results for the quarter followed byRandy who will cover some of the quarter's business highlights. I'll thendiscuss Omnicell's guidance for the rest of 2007 and our initial guidance for2008.

After that, we'll open thecall to your questions. I am happy to report that ourthird quarter of 2007 resulted in record revenues and record profits.

Back inthe last two years, our quarterly revenues have increased 80% and our profitshave increased more than five-fold. The results of sales and operations in Q3 '07exceeded analysts' expectations by $0.02 per share.

Our product backlog grew by $9million with orders strong again in every segment of our business. Product-orderbacklog now totals $141 million, which like last quarter is a little less thanthree calendar quarters of future revenue.

Because the third quarter hashistorically been a seasonally weaker quarter for Omnicell, we are very pleasedwith the demand for our products. Business for both our medicationand supply dispensing systems were strong.

Momentum with corporatemulti-hospital organizations continued. Orders from the Federal Governmentcomprise the significant contribution, as they have been in the past thirdquarters.

New customers accounted for asizeable portion of our orders with 33% of our bookings in Q3 comprised of acombination of competitive conversions and Greenfield accounts. Greenfield accounts are those customersinstalling automation for the first time.

This quarter about two-thirds ofthe new business mix came from competitive conversions. Our four-quarterrolling average of bookings from new accounts is 38% of our total orders.

Backlog was an importantindicator for Omnicell. We changed our business back in 2005 and in 2006.

Ourbacklog is now growing steadily for 10 consecutive quarters, and we anticipateit we will continue to grow overtime consistent with our annual revenue growth. We've been operating the companywith a backlog in the range six to nine months for sometime and feelcomfortable, because of the good balance between providing the flexibility tomeet customer requirements and operating the company efficiently and productively.We anticipate that we will continue to manage backlog in this range.

But we donot believe the quarter-to-quarter change in backlog as a meaning for measureof our success or a forward-looking indicator that should be used to manage ourbusiness on a quarterly basis. For this reason, we will bephasing out reporting our backlog on a quarterly basis.

Following next quarterof Q4 '07, we will report our backlog annually at our December year -end. Wewill continue to keep you informed if we make a decision to manage backlogdifferently, or if there is a significant change in visibility to futurerevenues and backlog.

As with the previous quarters, wehave continued to add customer installation and support staff to handle thegrowth in our sales to new customers. We typically require longer installationcycles and to support our increased installed base.

Last quarter, I reported our goalto increase staff over the second half of 2007. I am happy to report that theywere on track.

During Q3, we grew to 728 employees and we anticipate addinganother 40 to 50 employees during Q4 of 07. This additional staff will helpus in achieving our goal of providing the best customer experience in thehealthcare industry.

So now I would like to discussour third quarter financial performance. I will first discuss our financialperformance, in accordance with generally accepted accounting principles withyear-to-year comparisons.

Our financial results demonstratecontinued strong demand for our products and continued management of thebusiness to higher profit levels. Revenue for the third quarter of fiscal 2007was $55.2 million, up 34% year-over-year and up 6% from the second quarter of2007.

On a GAAP basis, gross marginsincreased sequentially to 54.1%, inclusive of stock compensation expenses. Thisis down from 54.6% from Q3 of last year and is driven primarily by a shift ofallocated expenses from OpEx to COGS, which had no effect on overallprofitability.

I would like to point out that weare seeing continuous improvement in gross margins through the year. And as wehave reported in previous quarters, we've not seen any fundamental shifts inindustry pricing practices.

Operating expenses were $24.6million, including stock compensation expenses. Operating expenses increased to$5 million or 26% from $19.6 million in Q3 2006.

The growth in operatingexpensess is consistent with our practice over the last 18 months of growingour expenses at a little more than half the rate of our revenue growth. But thisdid not include a one-time write off from a bad debt and an increase in the baddebt provision, which together totaled $0.5 million.

Net earnings were $6.9 million or$0.19 per share in Q3 '07, up from $3.1 million or $0.11 per share in Q3, '06.I would also like to remind you that Omnicell took a one-time release on theallowance against our deferred tax assets last quarter of fiscal Q2, whichprovided a $13 million profit benefit or $0.39 per share. But please keep thatone-time benefit in mind when making quarter-to-quarter comparisons.

Now I'd like to cover ournon-GAAP results, excluding stock compensation expenses when making anysequential comparisons, excluding the one-time tax benefit in Q2. I'll covernon-GAAP gross margins, operating expenses, and earnings per share.

So, with eachof these discussions, the only adjustment to GAAP results is the exclusion ofstock compensation expenses and the one-time tax benefit. Stock compensation expensesincluded the estimated future value of employee stock options, restricted stock,and our employee stock purchase plan.

And since stock compensation expense is anon-cash expense, we use financial statements internally that excludestock-based compensation expense in order to measure some of our operatingresults. We use these statements inaddition to GAAP financial statements, and we feel it is useful for investorsto understand the non-cash stock compensation expenses.

They are components ofour reported results. Full reconciliation of our GAAP to non-GAAP results isincluded in our press release and will be posted to our website.

Our non-GAAP gross margin for thethird quarter of 2007 was 54.6%, compared to a non-GAAP gross margin of 55.4%in the same quarter of last year. The business trends are the same, as Imentioned for GAAP.

Gross margins are primarily driven by reallocation of costsfrom OpEx to cost to goods sold. Our non-GAAP operating expenseswere $22.1 million, up $4.2 million or 23% from our Q3 2006 non-GAAP operatingexpenses of $17.9 million, and driven mainly by headcount growth.

Our Q3 '07 non-GAAP net incomewas $9.7 million, or $0.27 per share, $0.02 above the analysts' consensus. OurQ3 2007 non-GAAP net income was up $4.5 million, or 88% year-to-year from Q32006 non-GAAP income of $5.3 million.

This is an increase of $0.09 per shareyear-to-year. Last quarter I introduced anEBITDA measure.

EBITDA or Earnings before Interest, Taxes, Depreciation andAmortization, excludes non-cash expenses and focuses on operating results.EBITDA was $11.1 million in Q3 '07 compared to $8.9 million in Q2 '07 and $6.4million in Q3 '06. This is an increase of 25% sequentially and 77% from a yearago.

Our cash and short-terminvestments were $176 million at the end of Q3 '07, an increase of $4 millionfrom the second quarter of 2007, resulting primarily from stock optionexercises. There was no change in cash from operations.

Last quarter we had a significantcash contributions from improvement in collections that drove DSO down. Thisquarter, days sales outstanding increased from 67 to 77 days, primarily due toa substantial shift in the mix of our installation in this quarter away fromthe lease business.

Lease is typically our fastercollection cycle as the payment stream is sold to third party leasingcompanies. Since we installed on the customer schedule, we do not try to managethe mix of lease versus purchase business in anyway.

We don't expect this to bean indication of a trend. We just had several installations that were scheduledduring the quarter with customers that have their own financing direct withfinancial institutions.

And finally, our inventories of$12 million were down $2 million quarter-to-quarter. I would like to now turn the callover to Randy to provide an update on the business.

Randy?

Thanks Rob. I'm very pleased withthe continued momentum of our business through the third quarter.

That momentumis due to our focus on the customer. The most important thing to us is assuringour products and our services are making a positive impact on our customers,and helping those customers deliver safer care for their patients.

In the third quarter of 2007, wewelcomed another group of new customers installing automation for the firsttime, or switching to our systems from competitors' products. During Q3,Omnicell completed beta installations of our new WorkflowRx,central pharmacy automation solution with Hendricks Regional Health in Indiana and ChambersburgHospital in Pennsylvania.

Within thelast week, both hospitals joined Omnicell to announce how WorkflowRx is helpingthem to improve patient care while more efficiently managing their medications. Omnicell also jointly announcedthe contract to automate Grant Regional Health Centre of Lancaster, Wisconsinwith mediation dispensing systems, and Anesthesia Workstation.

The systems usedat Grant will use barcode technologies to protect patients against medicationerrors and to allow nurses and other caregivers to work with improvedefficiency. We continue to build on thestrength of our customer service.

Our solutions helped solve our customerpatients' safety requirements and our order rates continue to be robust. We'veenjoyed success with new customers each quarter and we continue to win repeatbusiness with our existing customers who expand and upgrade theirinstallations.

Since I founded the company 15years ago, we have had a sole focus on providing a differentiated customerexperience, and we have met several milestones along the way. I am pleased thatyet another new milestone in our history was met when our company was includedin the Standard & Poor's Cap 600 Index in September.

Our customers' successis our success and we remain dedicated to improving patient safety and care. And with that I will turn it backover to Rob.

Okay, thanks Randy. The resultsof Q3 '07 demonstrate our continued growth momentum and profit improvementagain resulting in an increase in our expectations for this year.

We previouslygave guidance for 2007 of 32% to 34% revenue growth and $0.98 to $1.00 ofearnings per share excluding stock compensation charges. We are now increasing ourguidance to grow revenue from 2006 by 36% to 37%.

Last quarter I said that wewould continue to invest in new staff to show that we are maintaining highcustomer service levels and that investment would slow our attainment of 15%operating margins until the middle of 2008, but we actually came very close to15% operating margins in Q3 '07. But we expect to see some fluctuation betweennow and the middle of 2008 when we expect to begin to consistently deliver 15%operating margins, excluding stock compensation expense.

In Q4 '07, we expect to continueto grow our staff in preparation for 2008, which will increase expenses. Theholiday season in Q4 also shortens the time we have to perform installations,limiting the amount of revenue growth we can attain.

We now expect earnings pershare to be up or slightly over the high end of our previous guidance, a $1.00to $1.01 excluding stock compensation expense and excluding the one-timebenefit from releasing the allowance and deferred tax assets booked in Q2 '07. I'd also like to now give ourinitial guidance for 2008.

We've enjoyed revenue growth that we believe issubstantially faster than the industry growth rate for two years now. We have aclear order backlog and pipeline to continue very healthy growth.

We expectrevenues to continue to grow ahead of industry growth rates between 21% and 23%during 2008. We expect EBITDA to grow 30% to35% over 2007.

Based on the profit increases we had seen in 2007 and resultingincreases in our expectations of profitability in 2008, we now expect our taxrate to be 38% next year, as we become fully taxed, compared to 5% in 2007 whenwe utilize net operating loss carry forwards to offset taxes. After applying a38% tax rate, earnings per share excluding stock compensation expenses, areestimated to be between $0.90 and $0.93 per share in 2008.

That concludes the preparedcomments. I would like to now open the call to your questions.

Operator?

Good afternoon, gentlemen.Another nice quarter.

Thank you, Steve.

I want to ask you a little bit,you have pointed out about central pharmacy opportunity and some earlysuccesses there. Could you pan us a little picture of the size of thatopportunity, the market penetration so far and the timeline that you think isrealistic for that segment to become significant?

Well, that's a pretty earlymarket segment actually. There is not much of the industry that's penetrated.It's quite a bit less than 10%.

The hospitals in the United States have centralpharmacy automation equipment. We provide a nice line and nice suite of productsthere for inventorying, controlling the assets, controlling narcotics and forrepackaging and bar coding.

We just completed a new version of the softwarethat greatly enhances the workflow amongst those various solutions in thecentral pharmacy. And I just announced that recently, we are very happy withthat.

And we are very happy with how the data's were from the customers thatwe've talked about. Overall, that market we believe is somewhere in the rangeof $1 billion to $2 billion.

So, it's a pretty good untapped opportunity.

Great. A similar line ofquestions, maybe an update more on your operating room/anesthesia, theworkstations.

I've seen more and more in your press releases about customerorders and customer wins. There is also a landscape item that maybe you couldaddress.

Your competitor Pyxis has half an issues out in the field with theperformance of their system. Could you bring it up to speed on kind of thelandscape from that opportunity and how it's progressing?

Well, I think both Pyxis andourselves are seeing more and more inclusion of the operating room in themedication automation that's taking place in various hospitals when they areput in new systems. The Anesthesia Workstations are a little bit different thanthe rest of the product line and that they not only serve the pharmacists andnurses but it serve constituency and doctors now have a number of features thatare unique to the anesthesiologist operating or working in the operating room.

Yeah. Those systems as youmentioned are a larger piece of our business, kind of a growing piece of ourbusiness.

But that piece of the hospital is very un-penetrated. And we estimatethat there is less than 2% of the operating rooms that are actually automated.You mentioned Pyxis now in a little bit of difficulty, I don't think that'sanything really significant in the marketplace.

And I hope they get thoroughthat just fine. We certainly won't want anybody in any operating room to have anydifficulty getting to the medications.

We find more and more hospitalsembracing that solution and we are happy with how that's going.

In terms of sizing that, do youhave a fund there on the potential eventual size of that segment?

We think that portion of thehospital market is about a $1 million market. It is generally, one of thesesystems per operating room.

I think you probably meant abillion versus a million?

Yeah. I am sorry.

(inaudible) $1billion market.

Alright. Much more attractivethen.

I appreciate the update on these segments. I will let some others to getto the financial housekeeping questions and get back in the queue if necessary.Thanks so much.

Congrats again.

Good evening, everyone. Thanks alot for taking the questions.

I guess just first, last quarter you had saidthat you are early in the process of figuring of what you might do with thecash on the balance sheet, I am wondering if you can first offer an update,sort of, on your thought process there?

Well, there is nothing toannounce yet. We are moving down that process, and we are happy with how we aremoving along, but we don't have anything to announce at this point.

Right. Is there any sort of highlevel timeframe that we should be thinking about or you're just going to takeit as it comes?

Yeah, nothing has really changedfrom the time that we raised the funds towards the middle of Q2. We said atthat time that we anticipate extending our product line through acquisitionwithin a year and we are still working to that [timetable].

Okay. And then just one detailquestion.

I think Rob, you mentioned -- and I wasn't sure if I got it right.You had one-time write-off bad debt and an increase in the provision, was thatabout $500,000 in the quarter you said?

Correct

Okay. So what's that -- that'sabout a penny or so that's in that $0.27 number?

Yeah, a little bit more than apenny. Yeah, we had one customer, actually a non-hospital customer that hadpretty significant change in their business model and then they lap on notbeing able to go forward with this.

And so that ends up being a bad debtwrite-off and then the general increase in accounts receivable, of course,there is a general provision that's associated with that. It's a percent of theaccounts receivable, until that the increase in accounts receivable drove thatprovision.

Okay, perfect. And then I guess,just sort of a big picture question to just end up here.

You've talked a littlebit about international in the past it's in a sort of developing market. Wehave heard a little bit more, I guess out of pictures there lately in terms ofwhat they think can happen.

I was just wondering what your high level thoughtson that marketplaces too?

Well, their marketplace is stillvery early and as I said in the past, we've seen some successes in kind ofisolated geographies, particularly particular countries that have become moreaware of patient safety issues who are on medication control. Except forCanada, we operate through a system of distributors in those countries at thispoint in time.

We are aware of all the deals that are going on and we have afairly substantial share of those deals as they happen. As that market developsor as any international geography develops, we will move more-and-more toproviding solution for that particular geography and putting our customersupport activities there.

In Canada, we go -- we actually go direct withinstallation support and sales because it's a little bit bigger market now.

Okay. Well, thank you very muchfor the color.

Thanks for taking my call, guys.Couple of quick questions here; one is just with the removal of backlogguidance on the quarterly basis, I am wondering if you are going to beproviding any other type of operating metrics that might help us to view yourbusiness a little bit more accurately. I understand the backlog might not bethe best indicator for you, but at the same time considering the staffing upthat you are doing and the plans to implement more, we would be looking for howmuch of that is coming from the backlog versus being done with new business.

Soany operating metrics that you might be able to give us that would help us on,on that front?

Yeah, our selling cycle is solong and it's so easy for a few deals to fall from one quarter to anotherquarter or coming early. These are the quarterly fluctuations of a few millionbacklog just really aren't meaningful, now that we are operating with $140million of backlog.

We will get a visibility on how the business is doing withthe annual number and I think kind of looking at it on an annual basis isappropriate measure for us. If it's moved and really to effect revenue andwithin a year the backlog has to move almost tens of millions of dollars.

Andso, looking at over a longer period of time this is more appropriate. We willcontinue to give indicators of where we are at.

If we are changing our viewpoint of holding between the six to nine months or if there's any dramaticchange in short period of time we'll certainly talk about that. We willcontinue to talk about our headcount and we will certainly continue to give theguidance on revenue and profit on a go-forward basis and I think that'sprobably the most important thing.

Okay. Rob, and then just with youpushing towards that higher end of that six to nine months in the backlog,would you say you are comfortable being towards the lower end of that range inthe future or is it really kind of somewhat irrelevant to you at this point?

Well, it's kind of driven by thecustomers' need. You know so, as we do these competitive conversions in newcustomers, they just take a longer to get the product installed after theyplace the order.

They want to plan the installation that longer installationcycle. And so the backlog pretty naturally fall to the higher-end of the range..

They've got construction. They've got a lot of different things that have togo on.

They want to make sure their interfaces all work and so forth. You know,[they have shifted] our customers moved to a greater percentage of currentcustomers, they are doing add-on business.

We will probably be comfortable withthe backlog being at the lower end of the range. But right now, we arecontinuing, as I reported, continuing to add new customers every quarter thatkind of require

I see. So, it depends on the mixthat you have in the backlog but what you have right now the upper-end is good.

Yeah. It really does.

Yeah. Anyof them really, the 6 to 9 months is kind of the right range.

That's what wefound so far.

Okay. And then, just lastly hereon the DSOs moving, the operating -- at least I know that it kind of comes andgoes.

But I am just trying to get an idea for -- I think the last quarter itwas down, this quarter its up considerably. What's your ideal range to be in atthis point?

Like I said, I don't anticipatethat this is going to be a trend. However, this quarter is a trend.

But wedefinitely just had a mix of business that was just almost all purchasebusiness. And so, that is they pay quickly.

I expect that we should be able toget into a 60-day range.

Okay. Well, thanks for youcomments and it's a nice quarter.

Thanks.

Thanks. Good afternoon.

Rob justlooking at your product gross margin came in a bit higher than we wereexpecting. Is there anything in there with respect to mix or what do you thinkis -- what's behind that?

Not much due to mix this quarter.We pretty much had a similar mix that we had last quarter. But we arecontinuing to gain some efficiency in our manufacturing model and that's whathelping there.

And we continue to invest in service and you can see that in theservice gross margins. Actually, we want to make sure there is always newcustomers are coming on that we got to held their stock up and so forth andsupport their stock up.

But otherwise, it's really just the continuingefficiency in the manufacturing model here as we grow.

Okay. And then, secondarily itlooks like you are going to end the year with, what I guess, around 775 inplace give or take.

Your '08 guidance, does that contemplate a lot ofadditional hiring next year or what the plan looks like?

Yeah. We expect there will behiring not quite at the rate that we hired this year.

But we'll likely behiring at least another 100 people next year.

Okay. And that's in the 90% to 92%?

Yes.

Okay. Great.

Thank you.

Thanks. Congratulations onanother great quarter.

Are customers talking at all about a change in theinspection policy that the joint commission is going to implement in '08,whereby they are not going to be doing inspections on the cycle? They areactually going to be doing them off cycle.

And is that driving purchasing decisionsall at this point?

Yeah. I think Len that in thepast, where JCO every three years did a planned review.

Hospitals weretypically going by our systems to make sure the timing of that was such thatour systems were installed, up and being running before the review. Now, thatJCO has moves to choose unannounced reviews, people in hospitals are planningthese installs quicker because they have got to.

They don't know when theactual reviews are going to be done. And so, that certainly a factor, I think,in the decision making of putting our systems in the place and reaching theregulatory requirements that the pharmacists are looking particularly to meetas the drugs flow through our systems.

It's a good question.

But I guess for '09 specifically,what they said is that they are going to start doing them kind of in 18 to 36months time period and that's a material change from what it was before. So,are our customers responding to the change yet?

I think so, and I think thecustomers actually have been responding to change. There's a change in aresponse.

Even though I think, as easily they pass these -- I will talk aboutthese changes from what actually happened and so it gets coming in to the marketplaceahead of time. And so, I think we have already started to see that and I thinkwe will continue to see that.

Great. And then, one more forRob.

I guess with automation revenue being at a record level this quarter, servicesrevenue seemed a little bit light. Can you talk about that a little bit moreand provide a little bit more detail?

Well, it's kind of similar towhat has happened in another quarters. We do have some fluctuation in theservices revenue based on who is renewing and how many people are on time andmaterial.

Last quarter, we had some catch up in revenues. Revenues we hadn'trecognized in previous quarters, because we don't recognize them until they arepaid for and that spiked up the revenues a bit more than the normal growth rateand then we just had the opposite happen this quarter.

I expect that that willcontinue through the future. Our revenue recognition policy is prettyconservative in this respect.

And so, somebody isn't paying upfront or on anongoing basis, we don't recognize it until we get check in hand.

Okay. That makes sense.

Thanksvery much.

Hi. My question has to do withthe backlog that you'll be giving us for the year now.

With your experiencethat maybe customers were -- you were kind of thinking about at the end of thequarter about what you needed to get to a certain number or are you thinkingother things in terms of basically providing the financial community with lessinformation as apposed to more?

Well, I am actually not quitecertain what you meant by the first part of your question as customers?

Yeah. I mean, obviously we allcalculate what we think looking towards the -- in the quarter based on thebacklog.

And is that your sense that maybe customers might be holding you up atthe end of a quarter, because they know what analysts are thinking about interms of your bookings per quarter?

No. I don't think so.

I don'tthink customers are taking any actions differently based on financial impact ofthe company. There certainly was a period of time, the transition period thatwe went through, when customers would try to hold their orders to the end of aquarter to get a better price.

And when we changed our business model in 2005,we essentially stopped to discounting at the end of the quarter and it took awhile for that learned behavior to go away. And some customers still try it.But we just don't discount it at the end of quarter.

And so, there really isn't muchbehavior around that. Yeah.

This is more around, when we were changing thebusiness model, we were letting backlog grow pretty substantially and therevenues were flat, growth in 2005. And the flat growth wasn't reallyindicating what was happening in the demand structure.

And so, reportingbacklog I think was pretty important during that point in time. Now, it's much less important tous since we operate and really should be of less importance to investors andhow we operate too.

And in long-term, over the course of multiple quarters,more of our selling cycle, it's probably an important thing to know. And that'swhy we think reporting once year is a good thing to do.

But the quarterlyfluctuations really aren't something that -- they drives us to operate thebusiness any differently and shouldn't really drive investors to think of thisany differently.

But then if it doesn't affect theclient relationship and it doesn't affect how you run the business, then whywouldn't you give us the number? Again, I don't think I am going to get theanswer to the question, but generally, we would like to get (inaudible), againyou don't have to answer that question?

Okay.

I am all set.

Okay. Thanks Steve.

Thanks, gentlemen. A very nicequarter.

Two quick questions. One, just curious, what would you characterize asthe industry level of growth given that your, I guess, do you believe, you aregrowing faster?

Yeah. So, all of our competitorsthat you probably know are pieces of much larger corporations.

And so its --

That's why I'm asking, because Ican't figure it out.

Yeah. It's kind of hard to get aviewpoint on that.

What we do -- probably the only thing anybody can do is justgo back to competitors' financial statements, going back several years and seewhat they say about our growth. It appears to us that the industry has beengrowing somewhere in the 10% to 15% range.

I know that Cardinal gave someinformation about the division that Pyxis' is in their last public statement,which was a little bit higher than that as a whole segment of the business,which Pyxis is just a piece. So, that's what we can tell.

We think it'ssomewhere in the range of 10% to 15%.

Okay, which is probably what Iwould have guessed, but that sounds about right. And then, one other question.I always hear remodel more on GAAP basis, so, as I'm trying to put together an'08 model.

If I take your '08 EPS, how much stock comp expenses is successfullybeen added back to get to that number?

Yeah. So, we've been operatingbetween $2.5 million and $2.7 million of stock comp expense.

We anticipatethat, that's going to continue in that range and kind of declining a little bitovertime.

Okay. And just understanding themath on that.

That's the pre-tax number, the $2.5 million to $2.7 million?

Yes. It is.

Okay. And so, I would tax in factat the at same, 38% rate?

Yes.

Okay. And I guess --

Sorry. I always have to thinkabout this a little bit when it comes to stock comp expenses.

It's a little bitunusual on its treatment.

Okay. You think that it would betreated like the other expenses?

Right.

Okay. And one more questionrelated to that.

Is there any thought about, I guess, slowing the rate ofoption and grant in order to bring that expense down?

We have actually slowed the rateof option and grant as most companies have done, and we've kind of restructuredour stock compensation with the use of restricted stock also. But frankly, theway that calculation works as the stock price is going up, each in a share hasa higher expense level.

And so, we ended up with pretty much the same amount ofstock comp expense.

Okay. But the stock comp expenseyou are reporting includes restricted grants as well as options, correct?

Yeah, definitely. And theemployee stock purchase plans.

Okay. Is there a point of whichyou guys are somewhat comfortable with just sort of reporting and being judgedon a GAAP basis, given year-over-year comparability of the expense?

We are kind of looking to how theworld is viewing all the companies and we still feel a lot of measurement onthe non-GAAP basis without stock comp expense. And that's why we provide it.

Okay. That's fair.

I have seenbetter times. Just what we are trying to commence here, internally we used toswap, but we certainly see both.

Thank you.

Okay.

Okay. Randy, you want to finishup the call?

Sure. I'd like to just summarizethe call by reiterating that our financial performance comes as a result of ourability to deliver a differentiated customer experience and product solution.All this week, I am at the customer sites, and because I'd like to come outhere and see first hand, how our products were performing and how they'reimpacting customers and patients.

And I am very confident, we can continue todeliver the medication management and supply solutions that customers reallywant to buy, and help them solve their problems. So, that's it for this time,and we will see you next time.