Omnicell, Inc.
Jan 30, 2007

Omnicell Announces Fourth Quarter 2006 Financial Results

MOUNTAIN VIEW, Calif. - Jan. 30, 2007 -- Omnicell, Inc. (NASDAQ: OMCL), a leading provider of patient safety technology, today announced results for the fourth quarter ended Dec. 31, 2006.

GAAP results: Fourth quarter 2006 net income as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $3.8 million, or $0.13 per fully diluted share. This compares to net income of $2.8 million, or $0.10 per fully diluted share in the third quarter of 2006 and $2.2 million in the fourth quarter of 2005 or $0.08 per fully diluted share. For the twelve months ended Dec. 31, 2006, net income was $9.3 million, or $0.32 fully diluted per share. This compares to a net loss of $(2.1) million or a loss of $(0.08) per diluted share for the twelve months ended Dec. 31, 2005.

Revenue for the fourth quarter of 2006 totaled $42.3 million, up $1.4 million or 3.4% from the third quarter of 2006 revenue of $40.9 million, and up $8.9 million or 26.4% from the fourth quarter of 2005.

Product backlog grew to $114.3 million, up $15.3 million or 15.4% from the end of the third quarter of 2006 and up $44.7 million or 64.2% from Dec. 31, 2005.

Non-GAAP results: Excluding the impact of recording $1.9 million in share-based compensation expenses related to SFAS No. 123®, non-GAAP net income was $5.7 million for the three months ended Dec. 31, 2006, or $0.19 per fully diluted share. This compares to fourth quarter 2005 non-GAAP net income of $2.2 million or fully diluted earnings per share of $0.08. Excluding share-based compensation expenses of $8.0 million, non-GAAP net income was $17.3 million for the twelve months ended Dec. 31, 2006, or $0.60 per fully diluted share. Excluding the impact 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 income was $1.1 million for the twelve months ended Dec. 31, 2005, or $0.04 per diluted share. Non-GAAP results, as presented in the attached consolidated statements, exclude certain expenses for the applicable periods.

Omnicell Chairman, President and CEO Randall A. Lipps commented, "Our fourth quarter provided a strong finish to a very good year for our company. Once again, we achieved record orders and revenue, and earnings were above expectations. We enter 2007 with a healthy product backlog, and with our sizable growth in staff, we feel we are well-positioned to meet growing customer demand for our solutions."

Financial Results Conference Call Details

Management will discuss financial results for the fourth quarter of 2006 on Tuesday, Jan. 30, 2007 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 800-240-2430 -- toll-free (domestic) or 303-262-2131 -- direct-dial (international) approximately 10 minutes prior to the scheduled start. A replay of the call will be available from 3:30 p.m. PT on Jan. 30, 2007 through 11:59 p.m. PT on Feb. 6, 2007. Dialing 800-405-2236 -- toll-free (domestic) or 303-590-3000 - direct-dial (international) and entering pass code 11068326# 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 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 payer 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.

Use of Non-GAAP Financial Information

This press release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). Our management evaluates and makes operating decisions using various performance measures. In addition to Omnicell's GAAP results, we also consider non-GAAP gross margin, non-GAAP operating expenses, non-GAAP net income (loss), and non-GAAP earnings (loss) per share-diluted. These non-GAAP results should not be considered as an alternative to gross margin, operating expenses, net income, earnings per share-diluted, 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 gross margin, non-GAAP operating expenses, non-GAAP net income (loss), non-GAAP earnings (loss) per share-diluted 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 operation performance, the measures give us a better understanding of how we should invest in research and development, fund infrastructure growth and evaluate marketing strategies. In calculating the above non-GAAP results, management specifically adjusted for the following excluded items:

a) Stock-based compensation expense impact of SFAS 123R. We recognize equity plan-related compensation expenses, which represent the fair value of all share-based payments to employees, including grants of employee stock options, as required under SFAS No. 123 (revised 2004), "Share-Based Payment" (SFAS 123R).

b) Charges related to inventory obsolescence. We recognized costs related to termination and discontinuance of a product.

c) Restructuring charges. We recognized costs related to internal restructuring and/or reductions of personnel resources consisting of expenses for severance and benefits for former Omnicell employees whose positions were eliminated in conjunction with the restructuring.

d) Write off for suspended acquisition. We recognized certain costs related to a prior period suspended acquisition.

e) The cumulative tax effect related to a change in accounting principle. This refers to Omnicell's presentation of our reconciliation of non-GAAP financial measures on a net of tax basis due to the adoption of SFAS 123R.

Management adjusts for the excluded 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 option grants.

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

1) 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;

2) 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;

3) 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;

4) 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 specific items are excluded from our non-GAAP financial measures:

a) While stock-based compensation calculated in accordance with SFAS 123R constitutes an ongoing and recurring expense of Omnicell, it is not an expense which requires cash settlement by Omnicell. We therefore exclude these charges for purposes of evaluating core operating results. In addition, stock-based compensation expense is significant in 2006 operating results, but it does not exist in 2005 operating results. Thus, our non-GAAP measurements are presented exclusive of stock-based compensation expenses to assist management and investors in evaluating period-over-period changes.

b) We exclude costs related to the inventory obsolescence for the discontinued product, as management does not consider the costs to be reflective of ongoing operations in the current period. In addition, management considers these costs to be non-recurring period-over-period. Thus, our non-GAAP measurements are presented exclusive of these costs to assist management in evaluating core operating results and to assist investors in evaluating period-over-period changes.

c) Associated with the modification and realignment of our internal cost structure and strategic emphasis on future growth opportunities, we recognized restructuring charges primarily related to severance costs and/or termination benefits for former Omnicell employees whose positions were eliminated. These costs are excluded because management does not consider them reflective of the underlying ongoing core operating results of the period presented. Further, management considers these costs to be non-recurring period-over-period. Thus, our non-GAAP measurements are presented exclusive of these costs to assist management in evaluating core operating results and to assist investors in evaluating period-over-period changes.

d) Our non-GAAP financial measurements are presented exclusive of a write-off for suspended acquisitions. The costs associated with the write-off are a function of prior period suspended acquisitions rather than the underlying core operating activities of this reporting period. Management does not consider these charges for purposes of evaluating core operating results. Further, management considers these costs to be non-recurring period-over-period. Thus, our non-GAAP measurements are presented exclusive of these costs for purposes of management's evaluation of core operating results and to assist investors in evaluating period-over-period changes.

e) We present our reconciliation of non-GAAP financial measures on a net of tax basis because the exact tax differences related to the timing and deductibility of stock-based compensation, pursuant to the adoption of SFAS 123R, is dependent upon the trading price of Omnicell's common stock and the timing and exercise by employees of their stock options. We analyze and measure operating results net of tax when evaluating core operating results because the tax effect related to stock-based compensation expenses is inconsistent in amount and frequency.

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 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:

-- 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 SFAS 123R.

-- Other companies, including other 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 the company's GAAP and non-GAAP financial results is set forth in the financial statements 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 the company's SEC filings.


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

Three Months Ended Twelve Months Ended
December 31, 2006
September 30,
2006
December 31, 2005 (1) December 31, 2006 December 31, 2005 (1)
Revenues:
Product revenues $34,113 $32,938 $26,604 $121,506 $95,292
Services and other revenues 8,226 7,992 6,877 31,648 26,226
Total revenue 42,339 40,930 33,481 153,154 121,518
Costs of revenues:
Cost of product revenues 15,922 15,383 12,557 56,433 44,714
Cost of services and other revenues 3,137 3,317 2,445 12,851 9,794
Total cost of revenues 19,059 18,700 15,002 69,284 54,508
Gross profits 23,280 22,230 18,479 83,870 67,010
Operating expenses:
Research and development 3,361 2,878 2,027 11,219 9,611
Selling, general and administrative 16,391 16,736 14,547 64,422 59,698
Restructuring, facility, severance
charges, and disposition of assets
0 0 0 0 406
Total operating expenses 19,752 19,614 16,574 75,641 69,715
Income (loss) from operations 3,528 2,616 1,905 8,229 (2,705)
Other income and expense 657 583 282 1,934 651
Income (loss) before provision for income taxes 4,185 3,199 2,187 10,163 (2,054)
Provision for (benefit from) income taxes 382 384 (50) 904 20
Net income (loss) $3,803 $2,815 $2,237 $9,259 ($2,074)
Net income (loss) per share:
Basic $ 0.14 $ 0.10 $ 0.09 $ 0.34 ($ 0.08)
Diluted $ 0.13 $ 0.10 $ 0.08 $ 0.32 ($ 0.08)
Shares used in computing net income per share:
Basic 28,018 27,775 26,249 27,345 25,906
Diluted 30,017 29,450 27,582 28,901 25,906


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



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

December 31, 2006
(unaudited)
September 28, 2006
(unaudited)

December 31, 2005
(1)

ASSETS

Current assets:
Cash and cash equivalents $60,887 $50,081 $29,536
Accounts receivable, net 36,660 32,667 29,456
Inventories 16,254 21,883 13,763
Receivables subject to a sales agreement 1,117 1,017 2,551
Prepaid expenses and other current assets 18,507 11,954 10,286
Total current assets 133,425 117,602 85,592
Property and equipment, net 5,168 4,742 4,727
Long-term receivables subject to a sales agreement 617 1,131 1,292
Notes receivable 9,563 8,167 325
Other assets 6,694 6,862 8,492
Total assets $155,467 $138,504 $100,428


Current liabilities:
Accounts payable $8,788 $11,874 $6,901
Accrued compensation 7,116 6,362 4,781
Accrued customer deposites 10,601 1,286 640
Accrued liabilities 5,357 4,809 4,401
Deferred service revenue 7,707 7,600 6,526
Deferred gross profit 14,935 14,241 7,981
Obligation resulting from sales of receivables 1,117 1,017 2,551
Total current liabilities 55,621 47,189 33,781
Long-term obligation resulting from sale of receivables 617 1,131 1,292
Long-term deferred service revenue 10,407 10,350 9,867
Other long-term liabilities 0 125 250
Total liabilities 66,645 58,795 45,190
Stockholders' equity 88,822 79,709 55,238
Total liabilties and stockholders' equity $155,467 $138,504 $100,428


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




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

Three months ended
December 31, 2006
Three months ended
December 31, 2005
Net Income Earnings per share - diluted Net Income Earnings per share - diluted
GAAP $3,803 $0.13 $2,237 $0.08
Non-GAAP Adjustments:
SFAS No. 123® adjustment (a)

Gross Margin $315 -
Operating Expenses $1,579 -
$1,894 $0.06 - $0.00
NON-GAAP $5,697 $0.19 $2,237 $0.08
Twelve months ended
December 31, 2006
Twelve months ended
December 31, 2005
Net Income Earnings per share - diluted Net Income (Loss) Earnings (loss) per share - diluted
GAAP $9,259 $0.32 ($2,074) ($0.08)
SFAS No. 123® adjustment (a)

Gross Margin $1,143 -
Operating Expenses $6,867 -
Inventory obsolecence due to product discontinuation (b)
Gross Margin - 1,100
Restructuring expenses (c)
Operating Expenses - 1,500
Write off for suspended acquisitions (d)
Operating Expenses 600
$8,010 $0.28 $3,200 $0.12
NON-GAAP $17,269 $0.60 $1,126 $0.04


(a) This adjustment reflects the pre-tax accounting impact of non-cash compensation expense related to the impact of adoption of SFAS 123R for the three months and twelve months ended December 31, 2006.

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