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Jul 20, 2006

Omnicell Announces Second Quarter 2006 Financial Results

MOUNTAIN VIEW, Calif. -- July 20, 2006 -- Omnicell, Inc. (NASDAQ: OMCL), a leading provider of patient safety technology, today announced second quarter 2006 results.

GAAP results: For the second quarter of 2006, GAAP net income was $1.8 million, resulting in fully diluted GAAP earnings per share of $0.06. This compares to adjusted GAAP net income of $0.8 million or $.03 per adjusted fully diluted share in Q1 2006 and $0.1 million or nil per share in the second quarter of 2005. For the first half of 2006, GAAP net income on an adjusted basis was $2.6 million, or $.09 per adjusted fully diluted share. This compares to GAAP net loss of $5.7 million or a loss of $0.22 per basic share for the first half of 2005.

Non-GAAP results: Excluding the impact on our results of recording $1.9 million in share-based compensation expenses related to SFAS No. 123®, non-GAAP net income was $3.7 million for the three months ended June 30, 2006, or $0.13 per fully diluted share on a non-GAAP basis. This compares to second quarter 2005 net income of $0.1 million or fully diluted earnings per share of nil. Excluding year-to-date share-based compensation expenses of $4.1 million, non-GAAP adjusted net income was $6.7 million for the first half of 2006, or $0.24 per fully-diluted share. Excluding the impact of results of recording $1.1 million in inventory obsolescence, $1.5 million in reduction in force expenses, and $0.6 million in suspended acquisition costs, non-GAAP net loss was $2.5 million for the six months ended June 30, 2005, or a loss of $0.10 per basic share on a non-GAAP basis. Non-GAAP results, as presented in the attached consolidated statements, exclude certain expenses for the applicable periods.

Revenue for the second quarter of 2006 totaled $36.0 million, up $2.1 million or 6.1% from Q1 2006 revenue of $33.9 million, and up $7.4 million or 25.8% from the second quarter of 2005.

Product backlog grew to $86.9 million, up $9.6 million or 12.5% from the end of Q1 2006.

Omnicell Chairman, President and CEO Randall A. Lipps commented, "I am very pleased with the success of our products in the marketplace. Our focus on customer satisfaction, superior service, and innovative solutions is winning in head-to-head competition for hospital automation business. The success of our products, coupled with operational efficiencies, continue to generate positive financial results."

A software error experienced by our outside stock plan administrator caused several stock option grants to be omitted from stock compensation expense calculations for the first quarter of 2006. Consequently, net income for the quarter ended March 31, 2006 will be reduced from $1.2 million, or $0.04 fully diluted earnings per share, to $0.8 million, or $0.03 fully diluted earnings per share. As a result of these corrections, Omnicell intends to file an amended quarterly report on Form 10-Q/A with revised first quarter 2006 financial results to correct under-reporting of share-based compensation. Investors should look to the revised financial statements when they become available and discontinue use of Omnicell, Inc.'s previously issued financial statements for the period ended March 31, 2006.

Financial Results Conference Call Details
Management will discuss financial results for the second quarter of 2006 on Thursday, July 20, 2006 at 1:30 p.m. PT via conference call. Investors and analysts may listen to this conference call by logging on to www.omnicell.com or by dialing 800-240-7305 (domestic) or 303-262-2137 (international) approximately 10 minutes prior to the scheduled start. A replay of the call will be available from 3:30 p.m. PT on July 20, 2006 through 11:59 p.m. PT on July 27, 2006. Dialing 800-405-2236 (domestic) or 303-590-3000 (international) and entering the passcode 11064055# for both numbers will access the call replay. On the conference call, management will be discussing certain additional financial and statistical information. That information can be located on the "Investor Relations" page of Omnicell's Web site at www.omnicell.com.

About Omnicell
Omnicell, Inc. (NASDAQ: OMCL) is a leading provider of systems and software solutions targeting patient safety and operational efficiency in healthcare facilities. Since 1992, Omnicell has worked with more than 1,600 healthcare facilities to enhance patient safety and allow clinicians to spend more time with their patients.

Omnicell's medication-use product line includes solutions for the central pharmacy, nursing unit, operating room, and patient bedside. Solutions range from large central pharmacy "smart inventory" carousels to small handheld devices. From the point at which a medication arrives at the receiving dock to the time it is administered, Omnicell systems store it, package it, bar code it, order it, issue it, and provide information and controls on its use and reorder.

Our supply product lines provide a healthcare institution with fast, effective control of costs, capture of charges for payor reimbursement, and timely reorder of supplies. Products range from high-security closed-cabinet systems and software to open-shelf and combination solutions in the nursing unit, cath lab and operating room.

Omnicell's mission is to provide the best customer experience in healthcare, helping hospitals reduce medication errors, operate more efficiently, and decrease costs. For more information, visit www.omnicell.com.

Forward-Looking Statements
To the extent any statements contained in this release deal with information that is not historical, these statements are necessarily forward-looking. As such, they are subject to the occurrence of many events outside Omnicell's control and are subject to various risk factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statement. The risk factors are described in the Company's Securities and Exchange Commission filings and include, without limitation, the continued growth and acceptance of our products and services and the continued growth of the clinical automation and workflow automation market generally, the potential of increasing competition, the ability of the company to achieve profitability in the next few quarters, grow product backlog, retain key personnel, cut expenses, develop new products and integrate acquired products or intellectual property in a timely and cost-effective manner, and improve sales productivity. Prospective investors are cautioned not to place undue reliance on forward-looking statements.



OMNICELL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)

Three Months Ended Six Months Ended
June 30, 2006
March 31, 2006 (1) June 30, 2005 June 30, 2006 (1) June 30, 2005
Revenues:
Product revenues $ 28,207 $ 26,248 $ 21,752 $ 54,455 $ 44,494
Service and other revenues 7,765 7,665 6,846 15,430 12,855
Total revenue 35,972 33,913 28,598 69,885 57,349
Costs of revenues:
Cost of product revenues 13,055 12,131 10,052 25,186 21,585
Cost of service and other revenues 3,100 3,296 2,286 6,396 5,123
Total cost of revenues 16,155 15,427 12,338 31,582 26,708
Gross profits 19,817 18,486 16,260 38,303 30,641
Operating expenses:
Research and development 2,310 2,637 2,732 4,947 5,441
Selling, general and administrative 15,963 15,358 13,563 31,321 30,705
Restructuring, facility, severance
charges, and disposition of assets
0 0 0 0 406
Total operating expenses 18,273 17,995 16,295 36,268 36,552
Income (loss) from operations 1,544 491 (35) 2,035 (5,911)
Other income and expense 351 343 118 694 219
Income (loss) before provision for income taxes 1,895 834 83 2,729 (5,692)
Provision for income taxes 78 60 17 138 34
Net income (loss) $1,817 $774 $66 $2,591 ($5,726)
Net income (loss) per share:
Basic $ 0.07 $ 0.03 $ 0.00 $ 0.10 ($ 0.22)
Diluted $ 0.06 $ 0.03 $ 0.00 $ 0.09 ($ 0.22)
Shares used in computing net income per share:
Basic 27,149 26,442 25,784 26,795 25,637
Diluted 28,903 28,105 24,743 28,489 25,637

(1) Amended



OMNICELL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)

June 30, 2006
(unaudited)
March 31, 2006
(unaudited) (2)

December 31, 2005
(1)

ASSETS

Current assets:
Cash and cash equivalents $43,767 $33,853 $29,536
Accounts receivable, net 29,987 28,980 29,456
Inventories 14,468 12,165 13,763
Receivables subject to a sales agreement 1,843 2,175 2,551
Prepaid expenses and other current assets 13,092 10,634 10,286
Total current assets 103,157 87,807 85,592
Property and equipment, net 4,394 4,504 4,727
Long-term receivables subject to a sales agreement 832 1,507 1,292
Other assets 14,367 12,981 8,817
Total assets $ 122,750 $ 106,800 $ 100,428


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable $ 5,451 $ 3,674 $ 4,059
Accrued liabilities 14,303 11,400 12,664
Deferred service revenue 7,360 6,951 6,526
Deferred gross profit 11,271 10,764 7,981
Obligation resulting from sales of receivables 1,843 2,175 2,551
Total current liabilities 40,228 34,964 33,781
Long-term obligation resulting from sale of receivables 832 1,507 1,292
Long-term deferred service revenue 10,563 9,797 9,867
Other long-term liabilities 125 125 250
Total liabilities 51,748 46,393 45,190
Stockholders' equity 71,002 60,407 55,238
Total liabilties and stockholders' equity $ 122,750 $ 106,800 $ 100,428


(1) Information derived from the audited Consolidated Financial Statements.
(2) Amended




OMNICELL, INC.
RECONCILIATION OF GAAP TO NON-GAAP (PRO FORMA)
(in thousands, except for per share data, unaudited)

Three months ended
June 30, 2006
Three months ended
June 30, 2005
Revenue Net Income Earnings per share - diluted Revenue Net Loss Earnings per share - diluted
GAAP $35,972 $1,817 $0.06 $28,598 $66 $0.00
Non-GAAP Adjustments:
SFAS No. 123® adjustment (a)

Gross Margin 168
Operating Expenses 1,764
- $1,932 $0.07 - - $0
NON-GAAP $35,972 $3,749 $0.13 $28,598 $66 $0
Six months ended
June 30, 2006
Six months ended
June 30, 2005
Revenue Net Income Earnings per share - diluted Revenue Net Loss Earnings per share - diluted
GAAP $69,885 $2,591 $0.09 $57,349 ($5,726) ($0.22)
SFAS No. 123® adjustment (a)

Gross Margin 407
Operating Expenses 3,709
Inventory obsolecence due to product discontinuation (b)
Gross Margin 1,100
Operating Expenses
Restructuring expenses (c)
Gross Margin
Operating Expenses 1,500
Write off for suspended acquistions (d)
Gross Margin
Operating Expenses 600
$0 $4,116 $0.14 $0 $3,200 $0.12
NON-GAAP $69,885 $6,707 $0.24 $57,349 ($2,526) ($0.10)


These Non-GAAP adjustments reconcile the Company's GAAP results of operations to its non-GAAP results of operations.

The Company believes the presentation of results excluding such items as non-cash share based compensation, restructuring costs, inventory obsolescence, and write off of costs for suspended acquisitions provides meaningful supplemental information to both management and investors that is representative of the Company's core operating results and allows comparison of operating results. The Company uses these non-GAAP measures when evaluating its financial performance. These non-GAAP results of operations should not be viewed as a substitute for the Company's GAAP results.

(a) This adjustment reflects the accounting impact of non-cash compensation expense related to the impact of adoption of SFAS No. 123-R for the three months and six months ending June 30, 2006.

(b) This adjustment reflects a write off of $1.1 million in inventory obsolescence due to discontinuance of a product

(c) This adjustment reflects a write off of $1.5 million associated with a reduction in force

(d) This adjustment reflects a write off of $0.6 million in expenses associated with suspended acquisitions