Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.  20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 26, 2018

OMNICELL, INC.
(Exact name of registrant as specified in its charter)

Delaware
 
000-33043
 
94-3166458
(State or other jurisdiction of
incorporation or organization)
 
(Commission File Number)
 
(IRS Employer Identification Number)

590 East Middlefield Road
Mountain View, CA 94043
(Address of principal executive offices, including zip code)

(650) 251-6100
(Registrant’s telephone number, including area code)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b– 2 of the Securities Exchange Act of 1934 (§240.12b–2 of this chapter).
 
Emerging growth company
 o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
 
 o








Item 2.02 Results of Operations and Financial Condition

On July 26, 2018, Omnicell, Inc. issued a press release announcing its financial results for the quarter ended June 30, 2018. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Number
 
Description of Document
99.1
 
Press release entitled “Omnicell Announces Second Quarter 2018 Results” dated July 26, 2018

 







SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 
OMNICELL,  INC.
 
 
 
Dated: July 26, 2018
 
 
 
 
/s/ Peter J. Kuipers
 
 
Peter J. Kuipers,
 
 
Executive Vice President and Chief Financial Officer



 






EXHIBIT INDEX

Number
 
Description of Document
99.1
 



 



Exhibit


Exhibit 99.1

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12371824&doc=3

Contact:
 
 
 
 
 
Peter Kuipers
 
Omnicell, Inc.
Chief Financial Officer
 
590 East Middlefield Road
800-850-6664
 
Mountain View, CA 94043
Peter.Kuipers@Omnicell.com
 
 


Omnicell Announces Second Quarter 2018 Results

GAAP revenues of $189 million, up 4.2% year-over-year
GAAP net income per diluted share of $0.16, up $0.11 year-over-year
Non-GAAP revenues of $189 million, up 4.0% year-over-year
Non-GAAP net income per diluted share of $0.46, up $0.13 year-over-year


MOUNTAIN VIEW, Calif. -- July 26, 2018 -- Omnicell, Inc. (NASDAQ: OMCL), a leading provider of medication and supply management solutions to healthcare systems, today announced results for its second quarter ended June 30, 2018.

GAAP Results

GAAP revenues for the second quarter of 2018 were $188.7 million, up $7.6 million, or 4.2% from the second quarter of 2017. GAAP revenues for the six months ended June 30, 2018 were $371.3 million, up $41.7 million, or 12.7% from the six months ended June 30, 2017.
Second quarter 2018 GAAP net income as reported was $6.6 million, or $0.16 per diluted share. This compares to GAAP net income of $1.9 million, or $0.05 per diluted share, for the second quarter of 2017.
GAAP net income for the six months ended June 30, 2018 was $9.3 million, or $0.23 per diluted share. This compares to GAAP net loss of $8.5 million, or a net loss of $0.23 per diluted share, for the six months ended June 30, 2017.
Non-GAAP Results
Non-GAAP revenues for the second quarter of 2018 were $188.7 million, up $7.3 million, or 4.0% from the second quarter of 2017. Non-GAAP revenues for the six months ended June 30, 2018 were $371.3 million, up $41.1 million, or 12.4% from the six months ended June 30, 2017.

Non-GAAP net income for the second quarter of 2018 was $18.4 million, or $0.46 per diluted share. This compares to non-GAAP net income of $12.8 million, or $0.33 per diluted share, for the second quarter of 2017.
Non-GAAP net income for the six months ended June 30, 2018 was $29.8 million, or $0.75 per diluted share. This compares to non-GAAP net income of $15.3 million, or $0.40 per diluted share, for the six months ended June 30, 2017.
Non-GAAP net income for each period excludes, when applicable, the effect of share-based compensation expense, amortization expense of acquired intangible assets, acquisition-related expenses, fair value adjustments related to business acquisitions, restructuring and severance-related expenses, tax reform and restructuring benefits, contingent gains, and amortization of debt issuance cost.


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Effective January 1, 2018, the Company adopted the new revenue recognition accounting standard, ASC 606, “Revenue from Contracts with Customers,” utilizing the full retrospective transition method. All 2017 financial results have been adjusted to reflect the change.

“Medication management is playing an increasingly strategic role in patient outcomes and the financial success of healthcare institutions,” said Randall Lipps, chairman, president, chief executive officer, and founder of Omnicell. “With a continued focus on digital transformation and strategic partnerships, we are driving efficiency and supporting patient safety through Omnicell’s industry-leading platform.”

2018 Guidance
For the third quarter of 2018, the Company expects non-GAAP revenues to be between $200 million and $206 million. The Company expects third quarter 2018 non-GAAP earnings to be between $0.52 and $0.57 per share.

For the year 2018, the Company expects product bookings to be between $630 million and $665 million. The Company expects non-GAAP revenues to be between $780 million and $800 million, and non-GAAP earnings to be between $1.90 and $2.05 per share.

The table below summarizes 2018 guidance outlined above.

 
Q3’18
Total Year 2018
Product Bookings
Not provided
$630 million - $665 million
Non-GAAP Revenues
$200 million - $206 million
$780 million - $800 million
Non-GAAP EPS
$0.52 - $0.57
$1.90 - $2.05

Omnicell Conference Call Information

Omnicell will hold a conference call today, Thursday, July 26, 2018 at 1:30 p.m. PT to discuss second quarter financial results. The conference call can be monitored by dialing 1-800-696-5518 within the U.S. or 1-706-758-4883 for all other locations. The Conference ID # is 7290938. Internet users can access the conference call at http://ir.omnicell.com/events.cfm.  A replay of the call will be available today at approximately 4:30 p.m. PT and will be available until 11:59 p.m. PT on September 6, 2018. The replay access numbers are 1-855-859-2056 within the U.S. and 1-404-537-3406 for all other locations, Conference ID # is 7290938.
 

About Omnicell

Since 1992, Omnicell (NASDAQ: OMCL) has been inspired to create safer and more efficient ways to manage medications and supplies across all care settings. Omnicell is revolutionizing the patient medication experience from hospital to home by empowering providers to keep each patient at the center of care. The Company’s autonomous approach to medication management leverages a differentiated platform for hardware and workflow software solutions, real-time predictive intelligence, and performance-driven partnerships to help drive operational, financial, and clinical success for customers.

Supporting the highest level of patient safety is essential to excellent patient care. As a leader in medication and supply dispensing automation, central pharmacy automation, IV robotics, analytics software, and medication adherence and packaging systems, Omnicell is focused on delivering solutions for medication availability, affordability, safety, and adherence. Over 4,500 facilities worldwide use Omnicell® automation and analytics solutions to increase operational efficiency, reduce medication errors, deliver actionable intelligence, and improve patient safety.

Omnicell’s innovative medication adherence solutions, used by over 32,000 institutional and retail pharmacies in North America and the United Kingdom, are designed to improve patient engagement and adherence to prescriptions, helping to reduce costly hospital readmissions.

For more information about Omnicell, Inc. please visit www.omnicell.com.


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Forward-Looking Statements

To the extent any statements contained in this release deal with information that is not historical, these statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. 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. Such statements include, but are not limited to, Omnicell’s pipeline; new products and solutions yet to be generally available; new sales opportunities; and projected bookings, revenues, earnings per share, profit, and market share growth. Risks that contribute to the uncertain nature of the forward-looking statements include (i) our ability to take advantage of the growth opportunities in medication management across the spectrum of healthcare settings from the hospital, long-term care, to home care, (ii) our ability to develop and commercialize new products, including the XR2 Automated Central Pharmacy System and the IVX Workflow semi-automated workflow solution, (iii) unfavorable general economic and market conditions, (iv) risks to growth and acceptance of our products and services, including competitive conversions, (v) growth of the clinical automation and workflow automation market generally, (vi) potential of increasing competition, (vii) potential regulatory changes, (viii) our ability to improve sales productivity to grow product bookings, and (ix) our ability to acquire and successfully integrate companies. These and other risks and uncertainties are described more fully in Omnicell’s most recent filings with the Securities and Exchange Commission (“SEC”). Prospective investors are cautioned not to place undue reliance on forward-looking statements. All forward-looking statements contained in this press release speak only as of the date on which they were made. Omnicell undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.

Use of Non-GAAP Financial Information

This press release contains financial measures that are not calculated in accordance with GAAP. Our management evaluates and makes operating decisions using various performance measures. In addition to Omnicell’s GAAP results, we also consider non-GAAP revenues, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP net income, and non-GAAP net income per diluted share. Additionally, we calculate adjusted EBITDA (another non-GAAP measure) by means of adjustments to GAAP net income. These non-GAAP results should not be considered as an alternative to gross profit, operating expenses, net income, net income per diluted share, or any other performance measure derived in accordance with GAAP. We present these non-GAAP results because we consider them to be important supplemental measures of Omnicell’s performance.

Our non-GAAP revenues, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP net income, and non-GAAP net income per diluted share are exclusive of certain items to facilitate management’s review of the comparability of Omnicell’s core operating results on a period-to-period basis because such items are not related to Omnicell’s ongoing core operating results as viewed by management. We define our “core operating results” as those revenues recorded in a particular period and the expenses incurred within that period that directly drive operating income in that period. Management uses these non-GAAP financial measures in making operating decisions because, in addition to meaningful supplemental information regarding operating performance, the measures give us a better understanding of how we should invest in research and development, fund infrastructure growth, and evaluate the effectiveness of marketing strategies. In calculating the above non-GAAP results, management specifically adjusted for the following excluded items:

a)
Share-based compensation expense. We excluded from our non-GAAP results the expense related to equity-based compensation plans as they represent expenses that do not require cash settlement from Omnicell.

b)
Amortization of acquired intangible assets. We excluded from our non-GAAP results the intangible assets amortization expense resulting from our past acquisitions. These non-cash charges are not considered by management to reflect the core cash-generating performance of the business and therefore are excluded from our non-GAAP results.

c)
Amortization of debt issuance cost. Debt issuance cost represents costs associated with the issuance of Term Loan and Revolving Line of Credit facilities. The cost includes underwriting fees, original issue discount, ticking fee, and legal fees. This non-cash expense is not considered by management to reflect the core cash-generating performance of the business and therefore is excluded from our non-GAAP results.

d)
Acquisition accounting impact related to deferred revenues. In connection with recent acquisitions, business combination rules require us to account for the fair values of arrangements for which acceptance has not been obtained, and post installation support has not been provided in our purchase accounting. The non-GAAP adjustment to our revenues is intended to include the full amounts of such revenues. We believe the adjustment to these revenues is useful as a measure of the ongoing performance of our business.


3



e)
Acquisition-related expenses. We excluded from the non-GAAP results the expenses which are related to recent acquisitions. These expenses are unrelated to our ongoing operations, and we do not expect them to occur in the ordinary course of business. We believe that excluding these acquisition-related expenses provides more meaningful comparisons of the financial results to our historical operations and forward-looking guidance and the financial results of less acquisitive peer companies.

f)
Severance and other related expenses. We excluded from our non-GAAP results the expenses which are related to restructuring events. These expenses are unrelated to our ongoing operations, and we do not expect them to occur in the ordinary course of business. We believe that excluding these expenses provides more meaningful comparisons of the financial results to our historical operations and forward-looking guidance, and the financial results of peer companies.

g)
Tax impact from restructuring activity. We excluded from our non-GAAP results the tax impacts related to restructuring activity. These impacts are unrelated to our ongoing operations, and we do not expect them to occur in the ordinary course of business. We believe that excluding these impacts provides more meaningful comparisons of the financial results to our historical operations and forward-looking guidance, and the financial results of peer companies.

h)
Contingent gain. We excluded from our non-GAAP results the contingent gain related to a settlement agreement associated with the Ateb acquisition. This contingent gain is unrelated to our ongoing operations, and we do not expect it to occur in the ordinary course of business. We believe that excluding this contingent gain provides more meaningful comparisons of the financial results to our historical operations and forward-looking guidance, and the financial results of peer companies.

Management adjusts for the above items because management believes that, in general, these items possess one or more of the following characteristics: their magnitude and timing is largely outside of Omnicell’s control; they are unrelated to the ongoing operation of the business in the ordinary course; they are unusual and we do not expect them to occur in the ordinary course of business; or they are non-operational, or non-cash expenses involving stock compensation plans or other items.

We believe that the presentation of these non-GAAP financial measures is warranted for several reasons: 

a)
Such non-GAAP financial measures provide an additional analytical tool for understanding Omnicell’s financial performance by excluding the impact of items which may obscure trends in the core operating results of the business. 

b)
Since we have historically reported non-GAAP results to the investment community, we believe the inclusion of non-GAAP numbers provides consistency and enhances investors’ ability to compare our performance across financial reporting periods.

c)
These non-GAAP financial measures are employed by Omnicell’s management in its own evaluation of performance and are utilized in financial and operational decision making processes, such as budget planning and forecasting.

d)
These non-GAAP financial measures facilitate comparisons to the operating results of other companies in our industry, which use similar financial measures to supplement their GAAP results, thus enhancing the perspective of investors who wish to utilize such comparisons in their analysis of our performance.

Set forth below are additional reasons why share-based compensation expense is excluded from our non-GAAP financial measures:

i)
While share-based compensation calculated in accordance with Accounting Standard Codification (“ASC”) 718 constitutes an ongoing and recurring expense of Omnicell, it is not an expense that requires cash settlement by Omnicell. We therefore exclude these charges for purposes of evaluating core operating results. Thus, our non-GAAP measurements are presented exclusive of share-based compensation expense to assist management and investors in evaluating our core operating results. 

ii)
We present ASC 718 share-based payment compensation expense in our reconciliation of non-GAAP financial measures on a pre-tax basis because the exact tax differences related to the timing and deductibility of share-based compensation under ASC 718 are dependent upon the trading price of Omnicell’s common stock and the timing and exercise by employees of their stock options. As a result of these timing and market uncertainties, the tax effect related to share-based compensation expense would be inconsistent in amount and frequency and is therefore excluded from our non-GAAP results. 

Our adjusted EBITDA calculation is defined as earnings before interest income and expense, taxes, depreciation and amortization, and non-cash expenses, including ASC 718 share-based compensation expense, as well as certain non-GAAP adjustments.


4



As stated above, we present non-GAAP financial measures because we consider them to be important supplemental measures of performance. However, non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for Omnicell’s GAAP results. In the future, we expect to incur expenses similar to certain of the non-GAAP adjustments described above and expect to continue reporting non-GAAP financial measures excluding such items. Some of the limitations in relying on non-GAAP financial measures are: 

a)
Omnicell’s stock option and stock purchase plans are important components of incentive compensation arrangements and will be reflected as expenses in Omnicell’s GAAP results for the foreseeable future under ASC 718. 

b)
Other companies, including companies in Omnicell’s industry, may calculate non-GAAP financial measures differently than Omnicell, limiting their usefulness as a comparative measure. 

Pursuant to the requirements of SEC Regulation G, a detailed reconciliation between Omnicell’s non-GAAP and GAAP financial results is set forth in the financial tables at the end of this press release. Investors are advised to carefully review and consider this information strictly as a supplement to the GAAP results that are contained in this press release and in Omnicell’s SEC filings.

The Company’s 2018 guidance for non-GAAP earnings per share, as well as certain projections discussed in today’s teleconference, exclude “certain items,” which include but are not limited to: unusual gains and losses; costs associated with future restructurings; acquisition-related expenses; and certain tax and litigation outcomes. We do not provide a reconciliation of non-GAAP earnings per share guidance to the comparable GAAP measure as these items are inherently uncertain and difficult to estimate, and cannot be predicted without unreasonable effort. We believe such a reconciliation would imply a degree of precision that could be confusing to investors. These items may also have a material impact on GAAP earnings per share in future periods.



5




Omnicell, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)

 
Three Months Ended
 
June 30, 2018
 
June 30, 2017
 
 
As Adjusted*
 
As Reported
 
Change
Revenues:
 
 
 
 
 
 
 
Product revenues
$
134,636

 
$
130,205

 
$
128,056

 
$
2,149

Services and other revenues
54,037

 
50,837

 
52,829

 
(1,992
)
Total revenues
188,673

 
181,042

 
180,885

 
157

Cost of revenues:
 
 
 
 
 
 
 
Cost of product revenues
75,076

 
81,738

 
81,738

 

Cost of services and other revenues
24,814

 
21,172

 
21,172

 

Total cost of revenues
99,890

 
102,910

 
102,910

 

Gross profit
88,783

 
78,132

 
77,975

 
157

Operating expenses:
 
 
 
 
 
 
 
Research and development
15,512

 
16,911

 
16,911

 

Selling, general, and administrative
65,937

 
61,922

 
63,468

 
(1,546
)
Total operating expenses
81,449

 
78,833

 
80,379

 
(1,546
)
Income (loss) from operations
7,334

 
(701
)
 
(2,404
)
 
1,703

Interest and other income (expense), net
(896
)
 
196

 
196

 

Income (loss) before provision for income taxes
6,438

 
(505
)
 
(2,208
)
 
1,703

Provision for (benefit from) income taxes
(150
)
 
(2,385
)
 
(3,045
)
 
660

Net income (loss)
$
6,588

 
$
1,880

 
$
837

 
$
1,043

Net income (loss) per share:
 
 
 
 
 
 
 
Basic
$
0.17

 
$
0.05

 
$
0.02

 
$
0.03

Diluted
$
0.16

 
$
0.05

 
$
0.02

 
$
0.03

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
38,970

 
37,250

 
37,250

 
 
Diluted
40,000

 
38,370

 
38,370

 
 
*
As adjusted for full retrospective adoption of Accounting Standard Codification (“ASC”) 606, “Revenue from Contracts with Customers.” The adjustment also includes a $0.2 million reclassification from services and other revenues to product revenues to conform with current-period presentation.

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Omnicell, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)

 
Six Months Ended
 
June 30, 2018
 
June 30, 2017
 
 
As Adjusted*
 
As Reported
 
Change
Revenues:
 
 
 
 
 
 
 
Product revenues
$
265,295

 
$
228,996

 
$
226,986

 
$
2,010

Services and other revenues
105,997

 
100,599

 
104,453

 
(3,854
)
Total revenues
371,292

 
329,595

 
331,439

 
(1,844
)
Cost of revenues:
 
 
 
 
 
 
 
Cost of product revenues
150,493

 
145,326

 
145,326

 

Cost of services and other revenues
49,561

 
43,946

 
43,946

 

Total cost of revenues
200,054

 
189,272

 
189,272

 

Gross profit
171,238

 
140,323

 
142,167

 
(1,844
)
Operating expenses:
 
 
 
 
 
 
 
Research and development
32,049

 
33,714

 
33,714

 

Selling, general, and administrative
131,222

 
123,862

 
128,093

 
(4,231
)
Total operating expenses
163,271

 
157,576

 
161,807

 
(4,231
)
Income (loss) from operations
7,967

 
(17,253
)
 
(19,640
)
 
2,387

Interest and other income (expense), net
(3,625
)
 
(2,260
)
 
(2,260
)
 

Income (loss) before provision for income taxes
4,342

 
(19,513
)
 
(21,900
)
 
2,387

Provision for (benefit from) income taxes
(4,966
)
 
(11,058
)
 
(11,983
)
 
925

Net income (loss)
$
9,308

 
$
(8,455
)
 
$
(9,917
)
 
$
1,462

Net income (loss) per share:
 
 
 
 
 
 
 
Basic
$
0.24

 
$
(0.23
)
 
$
(0.27
)
 
$
0.04

Diluted
$
0.23

 
$
(0.23
)
 
$
(0.27
)
 
$
0.04

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
38,804

 
37,046

 
37,046

 
 
Diluted
39,854

 
37,046

 
37,046

 
 
*
As adjusted for full retrospective adoption of ASC 606, “Revenue from Contracts with Customers.” The adjustment also includes a $0.3 million reclassification from services and other revenues to product revenues to conform with current-period presentation.


7




Omnicell, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
 
June 30, 2018
 
December 31, 2017
 
 
As Adjusted*
 
As Reported
 
Change
ASSETS
Current assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
46,168

 
$
32,424

 
$
32,424

 
$

Accounts receivable and unbilled, net
174,570

 
190,046

 
189,227

 
819

Inventories, net
103,732

 
96,137

 
96,137

 

Prepaid expenses
18,266

 
20,392

 
36,060

 
(15,668
)
Other current assets
16,122

 
13,273

 
13,273

 

Total current assets
358,858

 
352,272

 
367,121

 
(14,849
)
Property and equipment, net
50,884

 
42,595

 
42,595

 

Long-term investment in sales-type leases, net
16,707

 
15,435

 
15,435

 

Goodwill
336,550

 
337,751

 
337,751

 

Intangible assets, net
155,750

 
168,107

 
168,107

 

Long-term deferred tax assets
9,451

 
9,454

 
9,454

 

Prepaid commissions
38,620

 
41,432

 

 
41,432

Other long-term assets
59,655

 
49,316

 
39,841

 
9,475

Total assets
$
1,026,475

 
$
1,016,362

 
$
980,304

 
$
36,058

 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
 
 
 
 
Accounts payable
$
35,261

 
$
48,290

 
$
48,290

 
$

Accrued compensation
31,168

 
27,241

 
27,241

 

Accrued liabilities
31,721

 
35,693

 
35,693

 

Long-term debt, current portion, net
17,708

 
15,208

 
15,208

 

Deferred revenues, net
85,776

 
78,774

 
86,104

 
(7,330
)
Total current liabilities
201,634

 
205,206

 
212,536

 
(7,330
)
Long-term, deferred revenues
8,957

 
10,623

 
17,244

 
(6,621
)
Long-term deferred tax liabilities
34,788

 
41,446

 
28,579

 
12,867

Other long-term liabilities
11,394

 
9,829

 
9,829

 

Long-term debt, net
181,062

 
194,917

 
194,917

 

Total liabilities
437,835

 
462,021

 
463,105

 
(1,084
)
Total stockholders’ equity
588,640

 
554,341

 
517,199

 
37,142

Total liabilities and stockholders’ equity
$
1,026,475

 
$
1,016,362

 
$
980,304

 
$
36,058

*
As adjusted for full retrospective adoption of ASC 606, “Revenue from Contracts with Customers.”

8



Omnicell, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
 
Six months ended June 30,
 
2018
 
2017*
Operating Activities
 
 
 
Net income (loss)
$
9,308

 
$
(8,455
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation and amortization
24,829

 
25,942

Loss on disposal of fixed assets

 
79

Share-based compensation expense
13,766

 
11,056

Income tax benefits from employee stock plans

 
11

Deferred income taxes
(6,655
)
 
(11,722
)
Amortization of debt financing fees
1,145

 
795

Changes in operating assets and liabilities:
 
 
 
Accounts receivable and unbilled
15,476

 
(1,058
)
Inventories
(9,789
)
 
(12,226
)
Prepaid expenses
2,126

 
128

Other current assets
(2,283
)
 
202

Investment in sales-type leases
(1,838
)
 
5,482

Prepaid commissions
2,812

 
1,554

Other long-term assets
(2,797
)
 
(622
)
Accounts payable
(12,229
)
 
23,357

Accrued compensation
3,927

 
4,529

Accrued liabilities
(2,574
)
 
2,165

Deferred revenues
5,336

 
(3,412
)
Other long-term liabilities
167

 
1,119

Net cash provided by operating activities
40,727

 
38,924

Investing Activities
 
 
 
Purchases of intangible assets, intellectual property, and patents

 
(160
)
Software development for external use
(13,091
)
 
(6,748
)
Purchases of property and equipment
(14,985
)
 
(6,493
)
Business acquisition, net of cash acquired

 
(4,446
)
Net cash used in investing activities
(28,076
)
 
(17,847
)
Financing Activities
 
 
 
Proceeds from debt

 
10,000

Repayment of debt and revolving credit facility
(12,500
)
 
(70,500
)
Proceeds from issuances under stock-based compensation plans
16,117

 
15,783

Employees’ taxes paid related to restricted stock units
(3,062
)
 
(2,638
)
Net cash provided by (used in) financing activities
555

 
(47,355
)
Effect of exchange rate changes on cash and cash equivalents
538

 
(1,274
)
Net increase (decrease) in cash and cash equivalents
13,744

 
(27,552
)
Cash and cash equivalents at beginning of period
32,424

 
54,488

Cash and cash equivalents at end of period
$
46,168

 
$
26,936

*
As adjusted for full retrospective adoption of ASC 606, “Revenue from Contracts with Customers.”

9



Omnicell, Inc.
Reconciliation of GAAP to Non-GAAP
(Unaudited, in thousands, except per share data and percentage)
 
Three Months Ended
 
Six Months Ended
 
June 30,
2018
 
June 30,
2017*
 
June 30,
2018
 
June 30,
2017*
 
 
 
 
 
 
 
 
Reconciliation of GAAP revenues to non-GAAP revenues:
 
 
 
 
 
GAAP revenues
$
188,673

 
$
181,042

 
$
371,292

 
$
329,595

Acquisition accounting impact related to deferred revenues

 
313

 

 
626

Non-GAAP revenues
$
188,673

 
$
181,355

 
$
371,292

 
$
330,221

 
 
 
 
 
 
 
 
Reconciliation of GAAP gross profit to non-GAAP gross profit:
 
 
 
 
 
GAAP gross profit
$
88,783

 
$
78,132

 
$
171,238

 
$
140,323

GAAP gross margin
47.1
%
 
43.2
%
 
46.1
%
 
42.6
%
Share-based compensation expense
1,177

 
864

 
2,196

 
1,846

Amortization of acquired intangibles
2,756

 
2,848

 
5,547

 
5,685

Acquisition accounting impact related to deferred revenues

 
313

 

 
626

Severance and other expenses

 

 

 
1,697

Non-GAAP gross profit
$
92,716

 
$
82,157

 
$
178,981

 
$
150,177

Non-GAAP gross margin
49.1
%
 
45.3
%
 
48.2
%
 
45.5
%
 
 
 
 
 
 
 
 
Reconciliation of GAAP operating expenses to non-GAAP operating expenses:
 
 
 
 
GAAP operating expenses
$
81,449

 
$
78,833

 
$
163,271

 
$
157,576

GAAP operating expenses % to total revenues
43.2
%
 
43.5
%
 
44.0
%
 
47.8
%
Share-based compensation expense
(6,061
)
 
(4,681
)
 
(11,570
)
 
(9,210
)
Amortization of acquired intangibles
(3,126
)
 
(3,626
)
 
(6,364
)
 
(7,279
)
Acquisition-related expenses

 

 

 
(126
)
Severance and other expenses
(1,735
)
 
(970
)
 
(3,247
)
 
(3,302
)
Non-GAAP operating expenses
$
70,527

 
$
69,556

 
$
142,090

 
$
137,659

Non-GAAP operating expenses % to total revenues
37.4
%
 
38.4
%
 
38.3
%
 
41.7
%
*
As adjusted for full retrospective adoption of ASC 606, “Revenue from Contracts with Customers.”

10



 
Three Months Ended
 
Six Months Ended
 
June 30,
2018
 
June 30,
2017*
 
June 30,
2018
 
June 30,
2017*
Reconciliation of GAAP income (loss) from operations to non-GAAP income (loss) from operations:
GAAP income (loss) from operations
$
7,334

 
$
(701
)
 
$
7,967

 
$
(17,253
)
GAAP operating income (loss) % to total revenues
3.9
%
 
(0.4
)%
 
2.1
%
 
(5.2
)%
Share-based compensation expense
7,238

 
5,545

 
13,766

 
11,056

Amortization of acquired intangibles
5,882

 
6,474

 
11,911

 
12,964

Acquisition accounting impact related to deferred revenues

 
313

 

 
626

Acquisition-related expenses

 

 

 
126

Severance and other expenses
1,735

 
970

 
3,247

 
4,999

Non-GAAP income (loss) from operations
$
22,189

 
$
12,601

 
$
36,891

 
$
12,518

Non-GAAP operating income (loss) % to total Non-GAAP revenues
11.8
%
 
6.9
 %
 
9.9
%
 
3.8
 %
 
 
 
 
 
 
 
 
Reconciliation of GAAP net income (loss) to non-GAAP net income:
GAAP net income (loss)
$
6,588

 
$
1,880

 
$
9,308

 
$
(8,455
)
Tax benefit for restructuring activity

 

 
(4,205
)
 

Share-based compensation expense
7,238

 
5,545

 
13,766

 
11,056

Amortization of acquired intangibles
5,882

 
6,474

 
11,911

 
12,964

Acquisition accounting impact related to deferred revenues

 
313

 

 
626

Acquisition-related expenses(c)
397

 
397

 
794

 
920

Severance and other expenses
1,911

 
970

 
3,599

 
4,999

Contingent gain
(2,456
)
 

 
(2,456
)
 

Tax effect of the adjustments above(a)
(1,204
)
 
(2,817
)
 
(2,907
)
 
(6,836
)
Non-GAAP net income
$
18,356

 
$
12,762

 
$
29,810

 
$
15,274

 
 
 
 
 
 
 
 
Reconciliation of GAAP net income (loss) per share - diluted to non-GAAP net income per share - diluted:
Shares - diluted GAAP
40,000

 
38,370

 
39,854

 
37,046

 
 
 
 
 
 
 
 
Shares - diluted Non-GAAP
40,000

 
38,370

 
39,854

 
38,103

 
 
 
 
 
 
 
 
GAAP net income (loss) per share - diluted
$
0.16

 
$
0.05

 
$
0.23

 
$
(0.23
)
Tax benefit for restructuring activity

 

 
(0.11
)
 

Share-based compensation expense
0.18

 
0.14

 
0.35

 
0.29

Amortization of acquired intangibles
0.15

 
0.17

 
0.30

 
0.34

Acquisition accounting impact related to deferred revenues

 
0.01

 

 
0.02

Acquisition-related expenses
0.01

 
0.01

 
0.02

 
0.03

Severance and other expenses
0.05

 
0.02

 
0.09

 
0.13

Contingent gain
(0.06
)
 

 
(0.06
)
 

Tax effect of the adjustments above(a)
(0.03
)
 
(0.07
)
 
(0.07
)
 
(0.18
)
Non-GAAP net income per share - diluted
$
0.46

 
$
0.33

 
$
0.75

 
$
0.40

 
 
 
 
 
 
 
 
Reconciliation of GAAP net income (loss) to non-GAAP Adjusted EBITDA(b):
 
 
 
 
 
GAAP net income (loss)
$
6,588

 
$
1,880

 
$
9,308

 
$
(8,455
)
Share-based compensation expense
7,238

 
5,545

 
13,766

 
11,056

Interest (income) and expense, net
1,615

 
1,311

 
3,387

 
2,743

Depreciation and amortization expense
12,519

 
13,494

 
24,829

 
25,942


11



Acquisition accounting impact related to deferred revenues

 
313

 

 
626

Acquisition-related expenses
397

 
397

 
794

 
920

Severance and other expenses
1,911

 
728

 
3,599

 
4,493

Contingent gain
(2,456
)
 

 
(2,456
)
 

Income tax expense (benefit)
(150
)
 
(2,385
)
 
(4,966
)
 
(11,058
)
Non-GAAP Adjusted EBITDA
$
27,662

 
$
21,283

 
$
48,261

 
$
26,267

(a) 
Tax effects calculated for all adjustments except tax benefits and share-based compensation expense, using an estimated annual effective tax rate of 21% for fiscal year 2018 and 35% for fiscal year 2017.
(b) 
Defined as earnings before interest income and expense, taxes, depreciation and amortization, as well as excluding certain non-GAAP adjustments.
(c) 
Includes amortization of debt financing fees associated with our debt facilities.

12



Omnicell, Inc.
Segmented Information
(Unaudited, in thousands, except for percentages)
 
Three Months Ended June 30, 2018
 
Three Months Ended June 30, 2017
 
Automation and
Analytics
 
Medication
Adherence
 
Total
 
Automation and
Analytics*
 
Medication
Adherence
 
Total*
Revenues
$
158,365

 
$
30,308

 
$
188,673

 
$
148,584

 
$
32,458

 
$
181,042

Cost of revenues
78,686

 
21,204

 
99,890

 
80,716

 
22,194

 
102,910

Gross profit
79,679

 
9,104

 
88,783

 
67,868

 
10,264

 
78,132

Gross margin %
50.3
%
 
30.0
 %
 
47.1
%
 
45.7
%
 
31.6
%
 
43.2
%
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
48,167

 
10,296

 
58,463

 
47,508

 
10,099

 
57,607

Income (loss) from segment operations
$
31,512

 
$
(1,192
)
 
$
30,320

 
$
20,360

 
$
165

 
$
20,525

Operating margin %
19.9
%
 
(3.9
)%
 
16.1
%
 
13.7
%
 
0.5
%
 
11.3
%
 
 
 
 
 
 
 
 
 
 
 
 
Corporate costs
 
 
 
 
22,986

 
 
 
 
 
21,226

Income (loss) from operations
 
 
 
 
$
7,334

 
 
 
 
 
$
(701
)
*
As adjusted for full retrospective adoption of ASC 606, “Revenue from Contracts with Customers.”

13



Omnicell, Inc.
Segmented Information
(Unaudited, in thousands, except for percentages)
 
Six Months Ended June 30, 2018
 
Six Months Ended June 30, 2017
 
Automation and
Analytics
 
Medication
Adherence
 
Total
 
Automation and
Analytics*
 
Medication
Adherence
 
Total*
Revenues
$
309,771

 
$
61,521

 
$
371,292

 
$
270,754

 
$
58,841

 
$
329,595

Cost of revenues
156,928

 
43,126

 
200,054

 
149,477

 
39,795

 
189,272

Gross profit
152,843

 
18,395

 
171,238

 
121,277

 
19,046

 
140,323

Gross margin %
49.3
%
 
29.9
 %
 
46.1
%
 
44.8
%
 
32.4
 %
 
42.6
%
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
96,558

 
20,495

 
117,053

 
95,570

 
21,295

 
116,865

Income (loss) from segment operations
$
56,285

 
$
(2,100
)
 
$
54,185

 
$
25,707

 
$
(2,249
)
 
$
23,458

Operating margin %
18.2
%
 
(3.4
)%
 
14.6
%
 
9.5
%
 
(3.8
)%
 
7.1
%
 
 
 
 
 
 
 
 
 
 
 
 
Corporate costs
 
 
 
 
46,218

 
 
 
 
 
40,711

Income (loss) from operations
 
 
 
 
$
7,967

 
 
 
 
 
$
(17,253
)
*
As adjusted for full retrospective adoption of ASC 606, “Revenue from Contracts with Customers.”


14



Omnicell, Inc.
Segment Information - Non-GAAP Gross Profit and Non-GAAP Operating Margin
(Unaudited, in thousands, except for percentages)
 
Three Months Ended June 30, 2018
 
Automation and
Analytics
 
Medication
Adherence
 
Total
 
Amount
 
% of GAAP Revenues
 
% of Non-GAAP Revenues
 
Amount
 
% of GAAP Revenues
 
% of Non-GAAP Revenues
 
Amount
 
% of GAAP Revenues
 
% of Non-GAAP Revenues
Revenues
$
158,365

 
 
 
 
 
$
30,308

 
 
 
 
 
$
188,673

 
 
 
 
Non-GAAP Revenues
$
158,365

 
 
 
 
 
$
30,308

 
 
 
 
 
$
188,673

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Gross profit
$
79,679

 
50.3
%
 
 
 
$
9,104

 
30.0
 %
 
 
 
$
88,783

 
47.1
 %
 
 
Share-based compensation expense
1,004

 
0.6
%
 
0.6
%
 
173

 
0.6
 %
 
0.6
 %
 
1,177

 
0.6
 %
 
0.6
 %
Amortization expense of acquired intangible assets
2,232

 
1.4
%
 
1.4
%
 
524

 
1.7
 %
 
1.7
 %
 
2,756

 
1.5
 %
 
1.5
 %
Non-GAAP Gross profit
$
82,915

 
 
 
52.4
%
 
$
9,801

 
 
 
32.3
 %
 
$
92,716

 
 
 
49.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating income (loss)
$
31,512

 
19.9
%
 
 
 
$
(1,192
)
 
(3.9
)%
 
 
 
$
30,320

 
16.1
 %
 
 
Share-based compensation expense
3,148

 
2.0
%
 
2.0
%
 
489

 
1.6
 %
 
1.6
 %
 
3,637

 
1.9
 %
 
1.9
 %
Amortization expense of acquired intangible assets
4,204

 
2.7
%
 
2.7
%
 
1,678

 
5.5
 %
 
5.5
 %
 
5,882

 
3.1
 %
 
3.1
 %
Severance and other expenses
996

 
0.6
%
 
0.6
%
 
(25
)
 
(0.1
)%
 
(0.1
)%
 
971

 
0.5
 %
 
0.5
 %
Non-GAAP Operating income
$
39,860

 
 
 
25.2
%
 
$
950

 
 
 
3.1
 %
 
$
40,810

 
 
 
21.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Corporate costs
 
 
 
 
 
 
 
 
 
 
 
 
$
22,986

 
12.2
 %
 
 
Share-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
(3,601
)
 
(1.9
)%
 
(1.9
)%
Severance and other expenses
 
 
 
 
 
 
 
 
 
 
 
 
(764
)
 
(0.4
)%
 
(0.4
)%
Non-GAAP Corporate costs
 
 
 
 
 
 
 
 
 
 
 
 
$
18,621

 
 
 
9.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Income from operations
 
 
 
 
 
 
 
 
 
 
 
 
$
22,189

 
 
 
11.8
 %



15



Omnicell, Inc.
Segment Information - Non-GAAP Gross Profit and Non-GAAP Operating Margin
(Unaudited, in thousands, except for percentages)

 
Three Months Ended June 30, 2017
 
 
 
Automation and
Analytics*
 
Medication
Adherence
 
Total*
 
Amount
 
% of GAAP Revenues
 
% of Non-GAAP Revenues
 
Amount
 
% of GAAP Revenues
 
% of Non-GAAP Revenues
 
Amount
 
% of GAAP Revenues
 
% of Non-GAAP Revenues
Revenues
$
148,584

 
 
 
 
 
$
32,458

 
 
 
 
 
$
181,042

 
 
 
 
Acquisition accounting impact related to deferred revenues

 
%
 
%
 
313

 
1.0
%
 
1.0
%
 
313

 
0.2
 %
 
0.2
 %
Non-GAAP Revenues
$
148,584

 
 
 
 
 
$
32,771

 
 
 
 
 
$
181,355

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Gross profit
$
67,868

 
45.7
%
 
 
 
$
10,264

 
31.6
%
 
 
 
$
78,132

 
43.2
 %
 
 
Share-based compensation expense
736

 
0.5
%
 
0.5
%
 
128

 
0.4
%
 
0.4
%
 
864

 
0.5
 %
 
0.5
 %
Amortization expense of acquired intangible assets
2,228

 
1.5
%
 
1.5
%
 
620

 
1.9
%
 
1.9
%
 
2,848

 
1.6
 %
 
1.6
 %
Acquisition accounting impact related to deferred revenues

 
%
 
%
 
313

 
1.0
%
 
1.0
%
 
313

 
0.2
 %
 
0.2
 %
Non-GAAP Gross profit
$
70,832

 
 
 
47.7
%
 
$
11,325

 
 
 
34.6
%
 
$
82,157

 
 
 
45.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating income (loss)
$
20,360

 
13.7
%
 
 
 
$
165

 
0.5
%
 
 
 
$
20,525

 
11.3
 %
 
 
Share-based compensation expense
2,275

 
1.5
%
 
1.5
%
 
354

 
1.1
%
 
1.1
%
 
2,629

 
1.5
 %
 
1.4
 %
Amortization expense of acquired intangible assets
4,545

 
3.1
%
 
3.1
%
 
1,929

 
5.9
%
 
5.9
%
 
6,474

 
3.6
 %
 
3.6
 %
Acquisition accounting impact related to deferred revenues

 
%
 
%
 
313

 
1.0
%
 
1.0
%
 
313

 
0.2
 %
 
0.2
 %
Severance and other expenses
610

 
0.4
%
 
0.4
%
 

 
%
 
%
 
610

 
0.3
 %
 
0.3
 %
Non-GAAP Operating income
$
27,790

 
 
 
18.7
%
 
$
2,761

 
 
 
8.4
%
 
$
30,551

 
 
 
16.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Corporate costs
 
 
 
 
 
 
 
 
 
 
 
 
$
21,226

 
11.7
 %
 
 
Share-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
(2,916
)
 
(1.6
)%
 
(1.6
)%
Severance and other expenses
 
 
 
 
 
 
 
 
 
 
 
 
(360
)
 
(0.2
)%
 
(0.2
)%
Non-GAAP Corporate costs
 
 
 
 
 
 
 
 
 
 
 
 
$
17,950

 
 
 
9.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Income from operations
 
 
 
 
 
 
 
 
 
 
 
 
$
12,601

 
 
 
6.9
 %
*
As adjusted for full retrospective adoption of ASC 606, “Revenue from Contracts with Customers.”


16