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): October 25, 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 October 25, 2018, Omnicell, Inc. issued a press release announcing its financial results for the quarter ended September 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
 

 







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.
Date: October 25, 2018
By:
 
/s/ Peter J. Kuipers
 
 
 
Peter J. Kuipers,
 
 
 
Executive Vice President and Chief Financial Officer



 



Exhibit


Exhibit 99.1

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12512298&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 Achieves Record Revenue in the Third Quarter 2018

GAAP revenues of $204 million, up 9.4% year-over-year
GAAP net income per diluted share of $0.33, up 65% year-over-year
Non-GAAP revenues of $204 million, up 9.2% year-over-year
Non-GAAP net income per diluted share of $0.63, up 37% year-over-year


MOUNTAIN VIEW, Calif. -- October 25, 2018 -- Omnicell, Inc. (NASDAQ: OMCL), a leading provider of medication and supply management solutions to healthcare systems, today announced results for its third quarter ended September 30, 2018.

GAAP Results

GAAP revenues for the third quarter of 2018 were $204.3 million, up $17.5 million, or 9.4% from the third quarter of 2017. GAAP revenues for the nine months ended September 30, 2018 were $575.6 million, up $59.2 million, or 11.5%, from the nine months ended September 30, 2017.
Third quarter 2018 GAAP net income as reported was $13.6 million, or $0.33 per diluted share. This compares to GAAP net income of $7.7 million, or $0.20 per diluted share, for the third quarter of 2017.
GAAP net income for the nine months ended September 30, 2018 was $22.9 million, or $0.57 per diluted share. This compares to GAAP net loss of $0.7 million, or a net loss of $0.02 per diluted share, for the nine months ended September 30, 2017.
Non-GAAP Results
Non-GAAP revenues for the third quarter of 2018 were $204.3 million, up $17.2 million, or 9.2%, from the third quarter of 2017. Non-GAAP revenues for the nine months ended September 30, 2018 were $575.6 million, up $58.3 million, or 11.3%, from the nine months ended September 30, 2017.

Non-GAAP net income for the third quarter of 2018 was $25.7 million, or $0.63 per diluted share. This compares to non-GAAP net income of $17.8 million, or $0.46 per diluted share, for the third quarter of 2017.
Non-GAAP net income for the nine months ended September 30, 2018 was $55.5 million, or $1.38 per diluted share. This compares to non-GAAP net income of $33.1 million, or $0.86 per diluted share, for the nine months ended September 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.


1



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.

“Solving challenges in medication management and reducing errors across the continuum of care is our singular focus at Omnicell,” said Randall Lipps, chairman, president, chief executive officer, and founder of Omnicell. “By replacing human workflows with a holistic approach combining hardware, software, and expert services, we are helping our healthcare partners to achieve the highest levels of clinical, operational, and financial success.”

2018 Guidance
For the fourth quarter of 2018, the Company expects non-GAAP revenues to be between $211 million and $217 million. The Company expects fourth quarter 2018 non-GAAP earnings to be between $0.64 and $0.69 per share.

For the year 2018, the Company expects product bookings to be between $645 million and $670 million. The Company expects non-GAAP revenues to be between $787 million and $793 million, and non-GAAP earnings to be between $2.00 and $2.05 per share.

The table below summarizes 2018 guidance outlined above.

 
Q4'18
2018
Product bookings
Not provided
$645 million - $670 million
Non-GAAP revenues
$211 million - $217 million
$787 million - $793 million
Non-GAAP EPS
$0.64 - $0.69
$2.00 - $2.05

Omnicell Conference Call Information

Omnicell will hold a conference call today, Thursday, October 25, 2018 at 1:30 p.m. PT to discuss third 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 3649229. 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 December 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 3649229.

 

About Omnicell

Since 1992, Omnicell 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 5,000 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 40,000 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.

Omnicell and the Omnicell logo are registered trademarks of Omnicell, Inc. in the United States and other countries.

2




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
 
September 30, 2018
 
September 30, 2017
 
 
As Adjusted*
 
As Reported
 
Change
Revenues:
 
 
 
 
 
 
 
Product revenues
$
149,709

 
$
136,838

 
$
135,103

 
$
1,735

Services and other revenues
54,558

 
49,910

 
51,679

 
(1,769
)
Total revenues
204,267

 
186,748

 
186,782

 
(34
)
Cost of revenues:
 
 
 
 
 
 
 
Cost of product revenues
79,149

 
79,725

 
79,725

 

Cost of services and other revenues
26,209

 
22,204

 
22,204

 

Total cost of revenues
105,358

 
101,929

 
101,929

 

Gross profit
98,909

 
84,819

 
84,853

 
(34
)
Operating expenses:
 
 
 
 
 
 
 
Research and development
15,805

 
16,414

 
16,414

 

Selling, general, and administrative
65,609

 
56,208

 
58,725

 
(2,517
)
Total operating expenses
81,414

 
72,622

 
75,139

 
(2,517
)
Income from operations
17,495

 
12,197

 
9,714

 
2,483

Interest and other income (expense), net
(2,837
)
 
(2,732
)
 
(2,732
)
 

Income before provision for income taxes
14,658

 
9,465

 
6,982

 
2,483

Provision for income taxes
1,030

 
1,717

 
751

 
966

Net income
$
13,628

 
$
7,748

 
$
6,231

 
$
1,517

Net income per share:
 
 
 
 
 
 
 
Basic
$
0.35

 
$
0.21

 
$
0.17

 
$
0.04

Diluted
$
0.33

 
$
0.20

 
$
0.16

 
$
0.04

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
39,432

 
37,698

 
37,698

 
 
Diluted
40,860

 
38,973

 
38,973

 
 
*
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.

6



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

 
Nine Months Ended
 
September 30, 2018 (a)
 
September 30, 2017
 
 
As Adjusted (b)
 
As Reported
 
Change
Revenues:
 
 
 
 
 
 
 
Product revenues
$
415,004

 
$
365,834

 
$
362,089

 
$
3,745

Services and other revenues
160,555

 
150,509

 
156,132

 
(5,623
)
Total revenues
575,559

 
516,343

 
518,221

 
(1,878
)
Cost of revenues:
 
 
 
 
 
 
 
Cost of product revenues
229,642

 
225,051

 
225,051

 

Cost of services and other revenues
75,770

 
66,150

 
66,150

 

Total cost of revenues
305,412

 
291,201

 
291,201

 

Gross profit
270,147

 
225,142

 
227,020

 
(1,878
)
Operating expenses:
 
 
 
 
 
 
 
Research and development
47,854

 
50,128

 
50,128

 

Selling, general, and administrative
196,831

 
180,070

 
186,818

 
(6,748
)
Total operating expenses
244,685

 
230,198

 
236,946

 
(6,748
)
Income (loss) from operations
25,462

 
(5,056
)
 
(9,926
)
 
4,870

Interest and other income (expense), net
(6,462
)
 
(4,992
)
 
(4,992
)
 

Income (loss) before provision for income taxes
19,000

 
(10,048
)
 
(14,918
)
 
4,870

Provision for (benefit from) income taxes
(3,936
)
 
(9,341
)
 
(11,232
)
 
1,891

Net income (loss)
$
22,936

 
$
(707
)
 
$
(3,686
)
 
$
2,979

Net income (loss) per share:
 
 
 
 
 
 
 
Basic
$
0.59

 
$
(0.02
)
 
$
(0.10
)
 
$
0.08

Diluted
$
0.57

 
$
(0.02
)
 
$
(0.10
)
 
$
0.08

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
39,015

 
37,266

 
37,266

 
 
Diluted
40,237

 
37,266

 
37,266

 
 
(a) 
Includes a $0.6 million reclassification from services and other revenues to product revenues to conform with current-period presentation.
(b) 
As adjusted for full retrospective adoption of ASC 606, “Revenue from Contracts with Customers.” The adjustment also includes a $0.5 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)
 
September 30, 2018
 
December 31, 2017
 
 
As Adjusted*
 
As Reported
 
Change
ASSETS
Current assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
44,174

 
$
32,424

 
$
32,424

 
$

Accounts receivable and unbilled, net
206,225

 
190,046

 
189,227

 
819

Inventories
99,231

 
96,137

 
96,137

 

Prepaid expenses
19,618

 
20,392

 
36,060

 
(15,668
)
Other current assets
9,871

 
13,273

 
13,273

 

Total current assets
379,119

 
352,272

 
367,121

 
(14,849
)
Property and equipment, net
50,484

 
42,595

 
42,595

 

Long-term investment in sales-type leases, net
17,448

 
15,435

 
15,435

 

Goodwill
336,517

 
337,751

 
337,751

 

Intangible assets, net
149,968

 
168,107

 
168,107

 

Long-term deferred tax assets
9,450

 
9,454

 
9,454

 

Prepaid commissions
40,441

 
41,432

 

 
41,432

Other long-term assets
68,948

 
49,316

 
39,841

 
9,475

Total assets
$
1,052,375

 
$
1,016,362

 
$
980,304

 
$
36,058

 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
 
 
 
 
Accounts payable
$
38,367

 
$
48,290

 
$
48,290

 
$

Accrued compensation
32,953

 
27,241

 
27,241

 

Accrued liabilities
35,777

 
35,693

 
35,693

 

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

 
15,208

 
15,208

 

Deferred revenues, net
87,777

 
78,774

 
86,104

 
(7,330
)
Total current liabilities
212,582

 
205,206

 
212,536

 
(7,330
)
Long-term, deferred revenues
10,634

 
10,623

 
17,244

 
(6,621
)
Long-term deferred tax liabilities
32,593

 
41,446

 
28,579

 
12,867

Other long-term liabilities
10,192

 
9,829

 
9,829

 

Long-term debt, net
167,135

 
194,917

 
194,917

 

Total liabilities
433,136

 
462,021

 
463,105

 
(1,084
)
Total stockholders’ equity
619,239

 
554,341

 
517,199

 
37,142

Total liabilities and stockholders’ equity
$
1,052,375

 
$
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)
 
Nine months ended September 30,
 
2018
 
2017*
Operating Activities
 
 
 
Net income (loss)
$
22,936

 
$
(707
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation and amortization
37,490

 
38,542

Loss on disposal of fixed assets
136

 
128

Share-based compensation expense
20,851

 
16,315

Income tax benefits from employee stock plans

 
11

Deferred income taxes
(8,849
)
 
(9,182
)
Amortization of debt financing fees
1,718

 
1,192

Changes in operating assets and liabilities:
 
 
 
Accounts receivable and unbilled
(16,179
)
 
(22,735
)
Inventories
(5,288
)
 
(22,942
)
Prepaid expenses
774

 
(972
)
Other current assets
3,120

 
(5,133
)
Investment in sales-type leases
(1,732
)
 
6,643

Prepaid commissions
991

 
217

Other long-term assets
(6,188
)
 
(750
)
Accounts payable
(8,439
)
 
23,717

Accrued compensation
5,712

 
658

Accrued liabilities
1,482

 
4,021

Deferred revenues
9,014

 
(9,240
)
Other long-term liabilities
(1,035
)
 
865

Net cash provided by operating activities
56,514

 
20,648

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

 
(160
)
Software development for external use
(22,213
)
 
(10,121
)
Purchases of property and equipment
(19,259
)
 
(9,374
)
Business acquisition, net of cash acquired

 
(4,446
)
Net cash used in investing activities
(41,472
)
 
(24,101
)
Financing Activities
 
 
 
Proceeds from debt

 
37,000

Repayment of debt and revolving credit facility
(27,000
)
 
(100,000
)
Payment for contingent consideration

 
(2,400
)
Proceeds from issuances under stock-based compensation plans
27,729

 
26,468

Employees’ taxes paid related to restricted stock units
(3,648
)
 
(3,133
)
Net cash used in financing activities
(2,919
)
 
(42,065
)
Effect of exchange rate changes on cash and cash equivalents
(373
)
 
(1,504
)
Net increase (decrease) in cash and cash equivalents
11,750

 
(47,022
)
Cash and cash equivalents at beginning of period
32,424

 
54,488

Cash and cash equivalents at end of period
$
44,174

 
$
7,466

*
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
 
Nine Months Ended
 
September 30,
2018
 
September 30,
2017*
 
September 30,
2018
 
September 30,
2017*
 
 
 
 
 
 
 
 
Reconciliation of GAAP revenues to non-GAAP revenues:
 
 
 
 
 
 
 
GAAP revenues
$
204,267

 
$
186,748

 
$
575,559

 
$
516,343

Acquisition accounting impact related to deferred revenues

 
313

 

 
939

Non-GAAP revenues
$
204,267

 
$
187,061

 
$
575,559

 
$
517,282

 
 
 
 
 
 
 
 
Reconciliation of GAAP gross profit to non-GAAP gross profit:
 
 
 
 
 
GAAP gross profit
$
98,909

 
$
84,819

 
$
270,147

 
$
225,142

GAAP gross margin
48.4
%
 
45.4
%
 
46.9
%
 
43.6
%
Share-based compensation expense
1,150

 
882

 
3,346

 
2,728

Amortization of acquired intangibles
2,728

 
2,985

 
8,275

 
8,670

Acquisition accounting impact related to deferred revenues

 
313

 

 
939

Severance and other expenses

 
70

 

 
1,767

Non-GAAP gross profit
$
102,787

 
$
89,069

 
$
281,768

 
$
239,246

Non-GAAP gross margin
50.3
%
 
47.6
%
 
49.0
%
 
46.3
%
 
 
 
 
 
 
 
 
Reconciliation of GAAP operating expenses to non-GAAP operating expenses:
 
 
 
 
GAAP operating expenses
$
81,414

 
$
72,622

 
$
244,685

 
$
230,198

GAAP operating expenses % to total revenues
39.9
%
 
38.9
%
 
42.5
%
 
44.6
%
Share-based compensation expense
(5,935
)
 
(4,377
)
 
(17,505
)
 
(13,587
)
Amortization of acquired intangibles
(3,029
)
 
(3,381
)
 
(9,393
)
 
(10,660
)
Acquisition-related expenses

 

 

 
(126
)
Severance and other expenses
67

 
(229
)
 
(3,180
)
 
(3,531
)
Non-GAAP operating expenses
$
72,517

 
$
64,635

 
$
214,607

 
$
202,294

Non-GAAP operating expenses % to total revenues
35.5
%
 
34.6
%
 
37.3
%
 
39.1
%
*
As adjusted for full retrospective adoption of ASC 606, “Revenue from Contracts with Customers.”

10



 
Three Months Ended
 
Nine Months Ended
 
September 30,
2018
 
September 30,
2017*
 
September 30,
2018
 
September 30,
2017*
Reconciliation of GAAP income (loss) from operations to non-GAAP income (loss) from operations:
GAAP income (loss) from operations
$
17,495

 
$
12,197

 
$
25,462

 
$
(5,056
)
GAAP operating income (loss) % to total revenues
8.6
%
 
6.5
%
 
4.4
%
 
(1.0
)%
Share-based compensation expense
7,085

 
5,259

 
20,851

 
16,315

Amortization of acquired intangibles
5,757

 
6,366

 
17,668

 
19,330

Acquisition accounting impact related to deferred revenues

 
313

 

 
939

Acquisition-related expenses

 

 

 
126

Severance and other expenses
(67
)
 
299

 
3,180

 
5,298

Non-GAAP income from operations
$
30,270

 
$
24,434

 
$
67,161

 
$
36,952

Non-GAAP operating income % to total Non-GAAP revenues
14.8
%
 
13.1
%
 
11.7
%
 
7.1
 %
 
 
 
 
 
 
 
 
Reconciliation of GAAP net income (loss) to non-GAAP net income:
GAAP net income (loss)
$
13,628

 
$
7,748

 
$
22,936

 
$
(707
)
Tax benefit for restructuring activity

 

 
(4,205
)
 

Share-based compensation expense
7,085

 
5,259

 
20,851

 
16,315

Amortization of acquired intangibles
5,757

 
6,366

 
17,668

 
19,330

Acquisition accounting impact related to deferred revenues

 
313

 

 
939

Acquisition-related expenses(a)
397

 
397

 
1,191

 
1,317

Severance and other expenses
109

 
299

 
3,708

 
5,298

Contingent gain

 

 
(2,456
)
 

Tax effect of the adjustments above(b)
(1,315
)
 
(2,579
)
 
(4,222
)
 
(9,415
)
Non-GAAP net income
$
25,661

 
$
17,803

 
$
55,471

 
$
33,077

 
 
 
 
 
 
 
 
Reconciliation of GAAP net income (loss) per share - diluted to non-GAAP net income per share - diluted:
Shares - diluted GAAP
40,860

 
38,973

 
40,237

 
37,266

 
 
 
 
 
 
 
 
Shares - diluted Non-GAAP
40,860

 
38,973

 
40,237

 
38,418

 
 
 
 
 
 
 
 
GAAP net income (loss) per share - diluted
$
0.33

 
$
0.20

 
$
0.57

 
$
(0.02
)
Tax benefit for restructuring activity

 

 
(0.10
)
 

Share-based compensation expense
0.17

 
0.14

 
0.52

 
0.43

Amortization of acquired intangibles
0.15

 
0.16

 
0.43

 
0.50

Acquisition accounting impact related to deferred revenues

 
0.01

 

 
0.02

Acquisition-related expenses
0.01

 
0.01

 
0.03

 
0.03

Severance and other expenses

 
0.01

 
0.09

 
0.14

Contingent gain

 

 
(0.06
)
 

Tax effect of the adjustments above(b)
(0.03
)
 
(0.07
)
 
(0.10
)
 
(0.24
)
Non-GAAP net income per share - diluted
$
0.63

 
$
0.46

 
$
1.38

 
$
0.86

 
 
 
 
 
 
 
 
Reconciliation of GAAP net income (loss) to non-GAAP Adjusted EBITDA(c):
GAAP net income (loss)
$
13,628

 
$
7,748

 
$
22,936

 
$
(707
)
Share-based compensation expense
7,085

 
5,259

 
20,851

 
16,315

Interest (income) and expense, net
1,561

 
2,127

 
4,948

 
4,870

Depreciation and amortization expense
12,661

 
12,600

 
37,490

 
38,542


11



Acquisition accounting impact related to deferred revenues

 
313

 

 
939

Acquisition-related expenses
397

 
397

 
1,191

 
1,317

Severance and other expenses
109

 
46

 
3,708

 
4,539

Contingent gain

 

 
(2,456
)
 

Income tax expense (benefit)
1,030

 
1,717

 
(3,936
)
 
(9,341
)
Non-GAAP Adjusted EBITDA
$
36,471

 
$
30,207

 
$
84,732

 
$
56,474

(a) 
Includes amortization of debt financing fees associated with our debt facilities.
(b) 
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.
(c) 
Defined as earnings before interest income and expense, taxes, depreciation and amortization, as well as excluding certain non-GAAP adjustments.


12



Omnicell, Inc.
Segmented Information
(Unaudited, in thousands, except for percentages)
 
Three Months Ended September 30, 2018
 
Three Months Ended September 30, 2017
 
Automation and
Analytics
 
Medication
Adherence
 
Total
 
Automation and
Analytics*
 
Medication
Adherence
 
Total*
Revenues
$
168,303

 
$
35,964

 
$
204,267

 
$
154,617

 
$
32,131

 
$
186,748

Cost of revenues
77,172

 
28,186

 
105,358

 
79,740

 
22,189

 
101,929

Gross profit
91,131

 
7,778

 
98,909

 
74,877

 
9,942

 
84,819

Gross margin %
54.1
%
 
21.6
 %
 
48.4
%
 
48.4
%
 
30.9
%
 
45.4
%
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
46,015

 
10,624

 
56,639

 
44,332

 
9,901

 
54,233

Income (loss) from segment operations
$
45,116

 
$
(2,846
)
 
$
42,270

 
$
30,545

 
$
41

 
$
30,586

Operating margin %
26.8
%
 
(7.9
)%
 
20.7
%
 
19.8
%
 
0.1
%
 
16.4
%
 
 
 
 
 
 
 
 
 
 
 
 
Corporate costs
 
 
 
 
24,775

 
 
 
 
 
18,389

Income from operations
 
 
 
 
$
17,495

 
 
 
 
 
$
12,197

*
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)
 
Nine Months Ended September 30, 2018
 
Nine Months Ended September 30, 2017
 
Automation and
Analytics
 
Medication
Adherence
 
Total
 
Automation and
Analytics*
 
Medication
Adherence
 
Total*
Revenues
$
478,074

 
$
97,485

 
$
575,559

 
$
425,371

 
$
90,972

 
$
516,343

Cost of revenues
234,100

 
71,312

 
305,412

 
229,217

 
61,984

 
291,201

Gross profit
243,974

 
26,173

 
270,147

 
196,154

 
28,988

 
225,142

Gross margin %
51.0
%
 
26.8
 %
 
46.9
%
 
46.1
%
 
31.9
 %
 
43.6
%
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
142,572

 
31,119

 
173,691

 
139,902

 
31,196

 
171,098

Income (loss) from segment operations
$
101,402

 
$
(4,946
)
 
$
96,456

 
$
56,252

 
$
(2,208
)
 
$
54,044

Operating margin %
21.2
%
 
(5.1
)%
 
16.8
%
 
13.2
%
 
(2.4
)%
 
10.5
%
 
 
 
 
 
 
 
 
 
 
 
 
Corporate costs
 
 
 
 
70,994

 
 
 
 
 
59,100

Income (loss) from operations
 
 
 
 
$
25,462

 
 
 
 
 
$
(5,056
)
*
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 September 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
$
168,303

 
 
 
 
 
$
35,964

 
 
 
 
 
$
204,267

 
 
 
 
Non-GAAP Revenues
$
168,303

 
 
 
 
 
$
35,964

 
 
 
 
 
$
204,267

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Gross profit
$
91,131

 
54.1
 %
 
 
 
$
7,778

 
21.6
 %
 
 
 
$
98,909

 
48.4
 %
 
 
Share-based compensation expense
963

 
0.6
 %
 
0.6
 %
 
187

 
0.5
 %
 
0.5
 %
 
1,150

 
0.6
 %
 
0.6
 %
Amortization expense of acquired intangible assets
2,223

 
1.3
 %
 
1.3
 %
 
505

 
1.4
 %
 
1.4
 %
 
2,728

 
1.3
 %
 
1.3
 %
Non-GAAP Gross profit
$
94,317

 
 
 
56.0
 %
 
$
8,470

 
 
 
23.6
 %
 
$
102,787

 
 
 
50.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating income (loss)
$
45,116

 
26.8
 %
 
 
 
$
(2,846
)
 
(7.9
)%
 
 
 
$
42,270

 
20.7
 %
 
 
Share-based compensation expense
3,111

 
1.8
 %
 
1.8
 %
 
561

 
1.6
 %
 
1.6
 %
 
3,672

 
1.8
 %
 
1.8
 %
Amortization expense of acquired intangible assets
4,125

 
2.5
 %
 
2.5
 %
 
1,632

 
4.5
 %
 
4.5
 %
 
5,757

 
2.8
 %
 
2.8
 %
Severance and other expenses
(199
)
 
(0.1
)%
 
(0.1
)%
 

 
 %
 
 %
 
(199
)
 
(0.1
)%
 
(0.1
)%
Non-GAAP Operating income
$
52,153

 
 
 
31.0
 %
 
$
(653
)
 
 
 
(1.8
)%
 
$
51,500

 
 
 
25.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Corporate costs
 
 
 
 
 
 
 
 
 
 
 
 
$
24,775

 
12.1
 %
 
 
Share-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
(3,413
)
 
(1.7
)%
 
(1.7
)%
Severance and other expenses
 
 
 
 
 
 
 
 
 
 
 
 
(132
)
 
(0.1
)%
 
(0.1
)%
Non-GAAP Corporate costs
 
 
 
 
 
 
 
 
 
 
 
 
$
21,230

 
 
 
10.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Income from operations
 
 
 
 
 
 
 
 
 
 
 
 
$
30,270

 
 
 
14.8
 %



15



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

 
Three Months Ended September 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
$
154,617

 
 
 
 
 
$
32,131

 
 
 
 
 
$
186,748

 
 
 
 
Acquisition accounting impact related to deferred revenues

 
%
 
%
 
313

 
1.0
 %
 
1.0
 %
 
313

 
0.2
 %
 
0.2
 %
Non-GAAP Revenues
$
154,617

 
 
 
 
 
$
32,444

 
 
 
 
 
$
187,061

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Gross profit
$
74,877

 
48.4
%
 
 
 
$
9,942

 
30.9
 %
 
 
 
$
84,819

 
45.4
 %
 
 
Share-based compensation expense
739

 
0.5
%
 
0.5
%
 
143

 
0.4
 %
 
0.4
 %
 
882

 
0.5
 %
 
0.5
 %
Amortization expense of acquired intangible assets
2,393

 
1.5
%
 
1.5
%
 
592

 
1.8
 %
 
1.8
 %
 
2,985

 
1.6
 %
 
1.6
 %
Acquisition accounting impact related to deferred revenues

 
%
 
%
 
313

 
1.0
 %
 
1.0
 %
 
313

 
0.2
 %
 
0.2
 %
Severance and other expenses
119

 
0.1
%
 
0.1
%
 
(49
)
 
(0.2
)%
 
(0.2
)%
 
70

 
 %
 
 %
Non-GAAP Gross profit
$
78,128

 
 
 
50.5
%
 
$
10,941

 
 
 
33.7
 %
 
$
89,069

 
 
 
47.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating income (loss)
$
30,545

 
19.8
%
 
 
 
$
41

 
0.1
 %
 
 
 
$
30,586

 
16.4
 %
 
 
Share-based compensation expense
2,365

 
1.5
%
 
1.5
%
 
368

 
1.1
 %
 
1.1
 %
 
2,733

 
1.5
 %
 
1.5
 %
Amortization expense of acquired intangible assets
4,485

 
2.9
%
 
2.9
%
 
1,881

 
5.9
 %
 
5.8
 %
 
6,366

 
3.4
 %
 
3.4
 %
Acquisition accounting impact related to deferred revenues

 
%
 
%
 
313

 
1.0
 %
 
1.0
 %
 
313

 
0.2
 %
 
0.2
 %
Severance and other expenses
96

 
0.1
%
 
0.1
%
 
(61
)
 
(0.2
)%
 
(0.2
)%
 
35

 
 %
 
 %
Non-GAAP Operating income
$
37,491

 
 
 
24.2
%
 
$
2,542

 
 
 
7.8
 %
 
$
40,033

 
 
 
21.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Corporate costs
 
 
 
 
 
 
 
 
 
 
 
 
$
18,389

 
9.8
 %
 
 
Share-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
(2,526
)
 
(1.4
)%
 
(1.4
)%
Severance and other expenses
 
 
 
 
 
 
 
 
 
 
 
 
(264
)
 
(0.1
)%
 
(0.1
)%
Non-GAAP Corporate costs
 
 
 
 
 
 
 
 
 
 
 
 
$
15,599

 
 
 
8.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Income from operations
 
 
 
 
 
 
 
 
 
 
 
 
$
24,434

 
 
 
13.1
 %
*
As adjusted for full retrospective adoption of ASC 606, “Revenue from Contracts with Customers.”


16