Omnicell, Inc.
Jan 29, 2009

Omnicell Reports Fourth Quarter and Full-Year 2008 Results

MOUNTAIN VIEW, Calif., Jan 29, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Omnicell, Inc. (Nasdaq: OMCL), a leading provider of system solutions to acute healthcare facilities, today announced results for its fourth quarter and year ended December 31, 2008.

GAAP results: Revenue for the fourth quarter of 2008 was $62.1 million, down $2.3 million or 3.6% from third quarter 2008 revenue, and up $4.1 million or 7.1% from the fourth quarter of 2007.

Fourth quarter 2008 net income as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $3.3 million, or $0.10 per diluted share. This compares to net income of $2.9 million, or $0.09 per diluted share in the third quarter of 2008 and $14.3 million, or $0.39 per diluted share in the fourth quarter of 2007. For the year ended December 31, 2008, net income was $12.7 million, or $0.38 per diluted share. This compares to net income of $43.3 million or $1.28 per diluted share for the year ended December 31, 2007. The existence and subsequent release of a tax valuation allowance in the second and fourth quarters of 2007, created differences in income tax liabilities which affect the comparability of results for these periods.

Product backlog as of December 31, 2008 totaled $110 million, down $27 million or 20% from December 31, 2007.

In addition to the company reorganization, announced on January 20th, Omnicell today announced it has taken steps to reduce its regular full-time employee headcount to 744 positions. Omnicell expects approximately $2.5 million of pre-tax restructuring charges associated with the reduction in force to be recorded in the first quarter of fiscal year 2009.

Non-GAAP results: Excluding the impact on our results of recording $2.4 million in share-based compensation expense related to SFAS No. 123(R) and $0.2 million in income tax benefits related to research tax credits, non-GAAP net income was $5.5 million for the fourth quarter ended December 31, 2008, or $0.17 per diluted share. This compares to non-GAAP income of $10.2 million or $0.28 per diluted share for the fourth quarter of 2007. Excluding $11.2 million in share-based compensation expense relating to SFAS No. 123(R) and $0.2 million in income tax benefits related to research tax credits, non-GAAP net income was $23.6 million for the year ended December 31, 2008, or $0.71 per diluted share. Excluding $11.2 million in share-based compensation expense related to SFAS No. 123(R) and $20.0 million in income tax benefits related to a partial reversal of our tax valuation allowance, non-GAAP net income was $34.5 million for the year ended December 31, 2007, or $1.02 per diluted share. Non-GAAP income decreased from 2007 to 2008 due to significant increases in the effective tax rate driven by greater utilization in 2007 of net operating loss carry-forwards.

"Omnicell completed 2008 profitable, with revenue growth of 18% and with a strong balance sheet," said Omnicell CEO, president and chairman Randall Lipps. "Our performance was primarily driven by patient safety initiatives our medication management systems support which remain a priority in hospitals. We met our 2008 revenue objectives and exceeded our profit objectives. Entering 2009 as we face uncertain times in a global economic downturn, we have taken the necessary steps to align our operating expenses with our business."

Omnicell Conference Call Information

Omnicell will hold a conference call today at 1:30 p.m. PST to discuss fourth quarter financial results. The conference call can be monitored by dialing 1-888-803-5209 within the U.S. or 1-706-679-1978 for all other locations. The Conference ID # is 82021357. Internet users can access the conference call at http://www.omnicell.com. A replay of the call will be available today at approximately 5:00 p.m. PST and will be available until 8:59 pm PST on February 5. The replay access numbers are 1-800-642-1687 within the U.S. and 1-706-645-9291 for all other locations, conference code # 82021357.

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.

Omnicell's 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, including statements related to the expected magnitude of the pre-tax restructuring charges associated with the reduction in force to be recorded in the first quarter of 2009 and our belief that we have taken the necessary steps to align our operating expenses with our business. 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 (SEC) filings and include, without limitation, the actual realization of the intended savings resulting from the reduction in force and the effect on Omnicell's financial results, including the expense estimates used, the unfavorable general economic and market conditions, the tightening in the credit market, 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 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, and non-GAAP earnings per diluted share. These non-GAAP results should not be considered as an alternative to gross margin, operating expenses, net income, earnings 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 gross margin, non-GAAP operating expenses, non-GAAP net income, non-GAAP earnings 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 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 No. 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 No.123R).

b) Income tax benefit from tax valuation allowance release. This refers to the recognition of an income tax benefit from the partial reversal of our tax valuation allowance on specific deferred tax assets that is no longer required. Under Statement of Financial Accounting Standards No. 109, the release of the tax valuation allowance is necessary, primarily as a result of achieving sustained profitability in certain tax jurisdictions.

c) Income tax adjustments. To provide transparency into the Company's trends and performance, we consider one-time current and deferred research tax credit adjustments, to be non-GAAP adjustments.

Management adjusts for the 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; and

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 No.123R 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 stock-based compensation expense to assist management and investors in evaluating our core operating results.

b) 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 No.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 expense is inconsistent in amount and frequency.

c) We concluded under Statement of Financial Accounting Standards No. 109 that a portion of our tax valuation allowance on specific deferred tax assets was no longer required, primarily as a result of achieving sustained profitability in certain tax jurisdictions. Therefore, we reversed a portion of our tax valuation allowance which favorably impacted income tax expense and net income.

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 No.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 Omnicell's GAAP and non-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.

    OMCL-E


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

                                   Three Months Ended          Year Ended
                               December September December  December  December
                                  31,      30,      31,       31,       31,
                                 2008     2008     2007      2008      2007
    Revenues:
      Product                   $51,068  $54,294  $48,735  $210,648  $178,006
      Services and other
       revenues                  10,987   10,051    9,211    41,217    35,075
    Total revenue                62,055   64,345   57,946   251,865   213,081

    Cost of revenues:
      Cost of product revenues   24,202   24,940   21,724    97,461    80,500
      Cost of services and
       other revenues             6,687    6,642    5,317    25,770    19,272
    Total cost of revenues       30,889   31,582   27,041   123,231    99,772

    Gross profit                 31,166   32,763   30,905   128,634   113,309
    Operating expenses:
      Research and development    4,256    4,685    4,051    18,196    15,050
      Selling, general, and
       administrative            23,152   23,862   21,538    93,098    80,035
    Total operating expenses     27,408   28,547   25,589   111,294    95,085
    Income from operations        3,758    4,216    5,316    17,340    18,224
    Other income and expense        578      673    1,978     3,382     6,053
    Income before provision for
     income taxes                 4,336    4,889    7,294    20,722    24,277

    Provision for (benefit
     from) income taxes           1,013    1,975   (7,003)    7,998   (19,018)
    Net income                   $3,323   $2,914  $14,297   $12,724   $43,295

    Net income per share:
      Basic                       $0.11    $0.09    $0.41     $0.40     $1.35
      Diluted                     $0.10    $0.09    $0.39     $0.38     $1.28

    Weighted average shares
     outstanding:
      Basic                      31,265   31,128   34,482    32,076    32,080
      Diluted                    31,849   32,138   36,203    33,108    33,820





                                 Omnicell, Inc.
                      Condensed Consolidated Balance Sheets
                                 (In thousands)

                                                December 31,      December 31,
                                                     2008             2007
                                                 (unaudited)

    Current Assets:
       Cash and cash equivalents                  $120,439          $169,812
       Accounts receivable, net                     57,976            37,522
       Inventories                                  12,957            13,732
       Prepaid expenses                              9,310             9,482
       Deferred tax assets                          14,886            11,830
       Other current assets                          9,721             9,806
          Total current assets                     225,289           252,184
       Property and equipment, net                  16,179            10,184
       Non-current net investment in
        sales-type leases                           10,609            12,633
       Goodwill                                     24,982            23,076
       Other intangible assets                       6,706             9,467
       Non-current deferred tax asset               16,424            12,881
       Other assets                                  8,902             7,998
          Total assets                            $309,091          $328,423

    Current Liabilities:
       Accounts payable                             $9,377           $10,116
       Accrued compensation                          8,889             8,306
       Advance payments from customers                  47               156
       Accrued liabilities                          10,383            12,876
       Deferred service revenue                     12,084            11,263
       Deferred gross profit                        16,648            14,566
       Obligation resulting from sale of
        receivables                                    170               538
          Total current liabilities                 57,598            57,821
       Long-term deferred service revenue           16,782            15,726
       Other long-term liabilities                   1,154               237
          Total liabilities                         75,534            73,784

          Stockholders' equity                     233,557           254,639
          Total liabilities and
           stockholders' equity                   $309,091          $328,423



                                  Omnicell, Inc.
                        Reconciliation of GAAP to Non-GAAP
                 (In thousands, except per share data, unaudited)

                                             Three months ended
                                  December 31,    December 31,   September 30,
                                      2008            2007           2008
                                       Earnings        Earnings       Earnings
                                          per             per            per
                                  Net   share-   Net    share-   Net   share-
                                 income diluted income  diluted income diluted
    GAAP                         $3,323  $0.10  $14,297  $0.39  $2,914  $0.09
    Non-GAAP Adjustments:
    SFAS No. 123(R) adjustment (a)
        Gross Margin                283             469            401
        Operating Expenses        2,113           2,680          2,367
    Tax valuation allowance
     release (b)                                 (7,217)
    One time tax adjustment (c)    (246)
                                  2,150   0.07   (4,068) (0.11)  2,768   0.09

    Non-GAAP                     $5,473  $0.17  $10,229  $0.28  $5,682  $0.18



                                                      Year ended
                                         December 31, 2008   December 31, 2007
                                                    Earnings          Earnings
                                                      per               per
                                             Net     share-    Net     share-
                                            income  diluted   income  diluted
    GAAP                                   $12,724   $0.38   $43,295   $1.28
    Non-GAAP Adjustments:
    SFAS No. 123(R) adjustment (a)
        Gross Margin                         1,610             1,488
        Operating Expenses                   9,555             9,674
    Tax valuation allowance release (b)                      (20,005)
    One time tax adjustment (c)               (246)
                                            10,919    0.33    (8,843)  (0.26)

    Non-GAAP                               $23,643   $0.71   $34,452   $1.02


    (a) This adjustment reflects the accounting impact of non-cash
    share-based compensation expense related to the impact of FAS123R
    for the periods shown.

    (b) This adjustment reflects the accounting impact of income tax
    provision and tax benefit from release of valuation allowance reserves for
    the periods shown.

    (c) This adjustment reflects the accounting impact of income tax
    provision and net tax benefit from one time liability adjustments
    primarily related to research tax credits.


SOURCE Omnicell, Inc.

http://www.omnicell.com

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