Omnicell, Inc.
Apr 30, 2015

Omnicell Announces First Quarter 2015 Results

- Revenue of $116.2 million grew 14.2% Year-Over-Year
- Acquisitions of MACH4 Pharma Systems and Avantec Healthcare Ltd. completed

MOUNTAIN VIEW, Calif., April 30, 2015 /PRNewswire/ -- Omnicell, Inc. (NASDAQ: OMCL), a leading provider of medication and supply management solutions to healthcare systems, today announced results for its first quarter ended March 31, 2015.

Omnicell, Inc. logo

GAAP results: Revenue for the first quarter of 2015 was $116.2 million, up $14.5 million or 14.2% from the first quarter of 2014, and down $5.3 million or 4.4% from the fourth quarter of 2014.

First quarter 2015 net income as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $6.3 million, or $0.17 per diluted share. This compares to net income of $6.2 million, or $0.17 per diluted share, in the first quarter of 2014 and net income of $9.2 million, or $0.25 per diluted share, in the fourth quarter of 2014.

Non-GAAP results: Non-GAAP net income was $10.8 million for the first quarter of 2015, or $0.29 per diluted share. Non-GAAP net income for the first quarter excludes $3.7 million of stock-based compensation expense and $1.2 million ($0.8 million net of the $0.4 million tax effect) of amortization expense for all intangible assets associated with acquisitions made by Omnicell in 2014 and earlier years. This compares to non-GAAP net income of $9.6 million, or $0.26 per diluted share, for the first quarter of 2014. Non-GAAP net income for the first quarter of 2014 excluded $2.7 million of stock-based compensation expense and $1.0 million ($0.6 million net of $0.4 million tax effect) of amortization expense for all intangible assets acquired in connection with our business acquisitions. First quarter 2015 results compare to non-GAAP net income of $14.3 million for the fourth quarter of 2014 or $0.39 per diluted shares. Non-GAAP net income for the fourth quarter excludes $4.2 million of stock-based compensation expense and $1.2 million ($0.8 million net of the $0.4 million tax effect) of amortization expense for all intangible assets associated with our business acquisitions.

"I am pleased to report Omnicell's very strong start to the year, as the success we achieved in 2014 based on our established growth strategy is continuing to deliver great results," said Randall Lipps, Omnicell president, chairman and CEO. "In the first quarter of 2015 we exceeded expectations in each of our key measures of new orders, revenues and profit."

"We are well positioned to pursue future growth as well, as demonstrated by the recently announced acquisitions of MACH4 Pharma Systems, a producer of robotic medication dispensing systems and Avantec Healthcare Ltd., our longstanding distribution partner in the U.K., in addition to our continued success in competitive conversions of leading health systems," he added.

Reporting Segments

In the first quarter of 2015, we enhanced the management of our business, operating structure and segment reporting structure by excluding certain corporate-level costs from our reporting segments based on how the Chief Operating Decision Maker ("CODM") reviews the business. Corporate-level costs may include expenses related to executive management, finance and accounting, human resources, legal, training and development, and certain administrative expenses.  Our CODM allocates resources and evaluates the performance of our segments using information about its revenues, gross profit and income from operations, excluding certain costs which are managed separately at the corporate level.

The historical information presented has been retrospectively adjusted to reflect the enhanced segment reporting and are included below in 'Segmented Information - As Recast.'  We have also provided the same Segmented Information for our current quarter below.

Omnicell Conference Call Information

Omnicell will hold a conference call today, Thursday, April 30, 2015 at 1:30 p.m. PT to discuss first 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 28311534. 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 May 21, 2015. 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 28311534.

About Omnicell

Since 1992, Omnicell (NASDAQ: OMCL) has been creating new efficiencies to improve patient care, anywhere it is delivered. Omnicell is a leading supplier of comprehensive automation and business analytics software for patient-centric medication and supply management across the entire health care continuum from the acute care hospital setting to post-acute skilled nursing and long-term care facilities to the home.

More than 3,000 customers worldwide have utilized Omnicell Automation and Analytics solutions to increase operational efficiency, reduce errors, deliver actionable intelligence and improve patient safety. Omnicell Medication Adherence solutions, including its MTS Medication Technologies brand, provide innovative medication adherence packaging solutions to help reduce costly hospital readmissions. In addition, these solutions enable approximately 6,000 institutional and retail pharmacies worldwide to maintain high accuracy and quality standards in medication dispensing and administration while optimizing productivity and controlling costs.

For more information about Omnicell, please 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 "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 profit and revenue growth and the success of Omnicell's strategy for growth, including differentiated products, expansion into new markets and targeted acquisitions. Risks that contribute to the uncertain nature of the forward-looking statements include our ability to take advantage of the growth opportunities in medication management across the spectrum of healthcare settings from long term care to home care, unfavorable general economic and market conditions, risks to growth and acceptance of our products and services, including competitive conversions, and to growth of the clinical automation and workflow automation market generally, the potential of increasing competition, potential regulatory changes, the ability of the company to improve sales productivity to grow product bookings, to develop new products and 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. 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 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 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 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)  Stock-based compensation expense impact of Accounting Standards Codification (ASC) 718. 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 ASC 718, Compensation - Stock Compensation (ASC 718) as non-GAAP adjustments in each period.

b)  Intangible assets amortization from business acquisitions. We excluded from our non-GAAP results the intangible assets amortization expense resulting from our 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.

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 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 share-based compensation expense related to ASC 718 is excluded from our non-GAAP financial measures:

i)  While share-based compensation calculated in accordance with 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 stock-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 stock compensation expense, as well as excluding certain non-GAAP adjustments.

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:

  • 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.
  • 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.

 

Omnicell, Inc.

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)



Three Months Ended


March 31,
 2015


December 31,
 2014


March 31,
 2014

Revenues:






Product

$

94,109



$

100,291



$

82,580


Services and other revenues

22,112



21,250



19,184


Total revenues

116,221



121,541



101,764








Cost of revenues:






Cost of product revenues

45,416



49,005



38,900


Cost of services and other revenues

9,120



8,757



8,369


Total cost of revenues

54,536



57,762



47,269








Gross profit

61,685



63,779



54,495








Operating expenses:






Research and development

8,019



8,132



6,121


Selling, general and administrative

43,287



42,173



38,420


Total operating expenses

51,306



50,305



44,541


Income from operations

10,379



13,474



9,954


Interest and other income (expense), net

(517)



(77)



(256)


Income before provision for income taxes

9,862



13,397



9,698


Provision for income taxes

3,544



4,162



3,504


Net income

$

6,318



$

9,235



$

6,194








Net income per share:






Basic

$

0.18



$

0.26



$

0.18


Diluted

$

0.17



$

0.25



$

0.17








Weighted average shares outstanding:






Basic

36,024



35,697



35,225


Diluted

36,914



36,585



36,305


 

Omnicell, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands)



March 31,

2015


December 31,
2014





ASSETS

Current assets:




Cash and cash equivalents

$

139,553



$

125,888


Accounts receivable, net

88,107



82,763


Inventories

33,190



31,554


Prepaid expenses

16,811



23,518


Deferred tax assets

12,444



12,446


Other current assets

6,217



7,215


Total current assets

296,322



283,384


Property and equipment, net

34,373



36,178


Long-term net investment in sales-type leases

10,443



10,848


Goodwill

122,216



122,720


Intangible assets, net

81,279



82,667


Long-term deferred tax assets

1,330



1,144


Other long-term assets

24,963



23,273


Total assets

$

570,926



$

560,214






LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:




Accounts payable

$

21,812



$

19,432


Accrued compensation

17,064



19,874


Accrued liabilities

22,113



19,299


Deferred service revenue

23,301



25,167


Deferred gross profit

24,334



28,558


Total current liabilities

108,624



112,330






Non-current deferred service revenue

19,841



20,308


Non-current deferred tax liabilities

30,999



30,454


Other long-term liabilities

6,012



7,024


Total liabilities

165,476



170,116






Stockholders' equity:




Total stockholders' equity

405,450



390,098






Total liabilities and stockholders' equity

$

570,926



$

560,214


 

Omnicell, Inc.

Reconciliation of GAAP to Non-GAAP

(Unaudited, in thousands, except per share data)




Three Months Ended



March 31, 2015


December 31, 2014


March 31, 2014



Net Income


Net Income
per Share-
Diluted


Net Income


Net Income
per Share-
Diluted


Net Income


Net Income
per Share-
Diluted

GAAP


$

6,318



$

0.17



$

9,235



$

0.25



$

6,194



$

0.17


Non-GAAP adjustments:













Amortization of intangible assets acquired by acquisition


1,231





1,233





1,048




Income tax effect of non-GAAP adjustments (a):


(443)





(383)





(379)




Subtotal after-tax adjustments


788





850





669




ASC 718 share-based compensation adjustment (b):













Gross profit


517





483





268




Operating expenses


3,148





3,692





2,461




Subtotal ASC 718 share-based compensation adjustments


3,665





4,175





2,729

















Total non-GAAP adjustments


4,453



0.12



5,025



0.14



3,398



0.09















Non-GAAP


$

10,771



$

0.29



$

14,260



$

0.39



$

9,592



$

0.26




(a) 

Tax effects are calculated using the effective tax rates for the respective periods presented.



(b) 

This adjustment reflects the accounting impact of non-cash stock-based compensation expense for the periods presented.

 

Omnicell, Inc.

Calculation of Adjusted EBITDA(1)

(Unaudited, in thousands)




Three Months Ended



March 31,
 2015


December 31,
 2014


March 31,
 2014








GAAP net income


$

6,318



$

9,235



$

6,194









Add back:







ASC 718 stock compensation expense


3,665



4,175



2,729


Interest expense, net


99



18



(2)


Depreciation and amortization expense


5,711



5,566



4,612


Income tax expense


3,544



4,162



3,504









Non-GAAP adjusted EBITDA(1)


$

19,337



$

23,156



$

17,037




(1) 

Defined as earnings before interest income and expense, taxes, depreciation and amortization, and non-cash expenses, including stock compensation expense, per ASC 718, as well as excluding certain non-GAAP adjustments.

 

Omnicell, Inc.

Segmented Information - As Recast

(Unaudited, in thousands, except for percentages)



Three Months Ended March 31, 2014


Automation and

Analytics


Medication

Adherence


Total



Revenues

$

81,499



$

20,265



$

101,764


Cost of revenues

34,940



12,329



47,269


Gross profit

46,559



7,936



54,495


Gross margin %

57.1

%


39.2

%


53.6

%







Operating expenses

25,102



4,651



29,753


Income from segment operations

$

21,457



$

3,285



$

24,742


Operating margin %

26.3

%


16.2

%


24.3

%







Corporate costs





14,788


Income from operations





$

9,954


 

Omnicell, Inc.

Segmented Information - As Recast

(Unaudited, in thousands, except for percentages)



Three Months Ended June 30, 2014


Automation and

Analytics


Medication

Adherence


Total



Revenues

$

84,702



$

20,350



$

105,052


Cost of revenues

35,992



13,020



49,012


Gross profit

48,710



7,330



56,040


Gross margin %

57.5

%


36.0

%


53.3

%







Operating expenses

26,044



4,800



30,844


Income from segment operations

$

22,666



$

2,530



25,196


Operating margin %

26.8

%


12.4

%


24.0

%







Corporate costs





12,638


Income from operations





$

12,558


 

Omnicell, Inc.

Segmented Information - As Recast

(Unaudited, in thousands, except for percentages)



Three Months Ended September 30, 2014


Automation and

Analytics


Medication

Adherence (1)


Total



Revenues

$

89,547



$

22,996



$

112,543


Cost of revenues

38,412



14,585



52,997


Gross profit

51,135



8,411



59,546


Gross margin %

57.1

%


36.6

%


52.9

%







Operating expenses

27,420



4,822



32,242


Income from segment operations

$

23,715



$

3,589



27,304


Operating margin %

26.5

%


15.6

%


24.3

%







Corporate costs





13,707


Income from operations





$

13,597




(1) 

Includes Surgichem results as of August 2014.

 

Omnicell, Inc.

Segmented Information - As Recast

(Unaudited, in thousands, except for percentages)



Three Months Ended December 31, 2014


Automation and

Analytics


Medication

Adherence (1)


Total



Revenues

$

98,347



$

23,194



$

121,541


Cost of revenues

41,983



15,779



57,762


Gross profit

56,364



7,415



63,779


Gross margin %

57.3

%


32.0

%


52.5

%







Operating expenses

27,363



6,313



33,676


Income from segment operations

$

29,001



$

1,102



30,103


Operating margin %

29.5

%


4.8

%


24.8

%







Corporate costs





16,629


Income from operations





$

13,474




(1) 

Includes Surgichem results as of August 2014.

 

Omnicell, Inc.

Segmented Information - As Recast

(Unaudited, in thousands, except for percentages)



Twelve Months Ended December 31, 2014


Automation and

Analytics


Medication

Adherence (1)


Total



Revenues

$

354,095



$

86,805



$

440,900


Cost of revenues

151,327



55,713



207,040


Gross profit

202,768



31,092



233,860


Gross margin %

57.3

%


35.8

%


53.0

%







Operating expenses

105,929



20,586



126,515


Income from segment operations

$

96,839



$

10,506



107,345


Operating margin %

27.3

%


12.1

%


24.3

%







Corporate costs





57,762


Income from operations





$

49,583




(1) 

Includes Surgichem results as of August 2014.

 

Omnicell, Inc.

Segmented Information

(Unaudited, in thousands, except for percentages)



Three Months Ended March 31, 2015


Automation and

Analytics


Medication

Adherence


Total



Revenues

$

92,779



$

23,442



$

116,221


Cost of revenues

38,852



15,684



54,536


Gross profit

53,927



7,758



61,685


Gross margin %

58.1

%


33.1

%


53.1

%







Operating expenses

28,589



6,341



34,930


Income from segment operations

$

25,338



$

1,417



26,755


Operating margin %

27.3

%


6.0

%


23.0

%







Corporate costs





16,376


Income from operations





$

10,379


 

Omnicell, Inc.

Non-GAAP Gross Margin and Non-GAAP Operating Margin

(Unaudited, in thousands, except for percentages)



Three Months Ended


March 31,
 2015


March 31,
 2014









Revenue

$

116,221





$

101,764












GAAP Gross profit

$

61,685



53.1

%


$

54,495



53.6

%

Plus:








a) Stock-based compensation expense

517



0.4

%


268



0.3

%

b) Amortization expense of acquired intangible assets and other acquisition-related expenses

368



0.3

%


368



0.3

%

Non-GAAP Gross profit

$

62,570



53.8

%


$

55,131



54.2

%









GAAP Operating expenses

$

51,306



44.1

%


$

44,541



43.8

%

Less:








a) Stock-based compensation expense

3,148



2.7

%


2,461



2.4

%

b) Amortization expense of acquired intangible assets and other acquisition-related expenses

863



0.7

%


680



0.7

%

Non-GAAP Operating expenses

$

47,295



40.7

%


$

41,400



40.7

%









GAAP Operating income

$

10,379



8.9

%


$

9,954



9.8

%

Plus:








a) Stock-based compensation expense

3,665



3.1

%


2,729



2.7

%

b) Amortization expense of acquired intangible assets and other acquisition-related expenses

1,231



1.1

%


1,048



1.0

%

Non-GAAP Operating income

$

15,275



13.1

%


$

13,731



13.5

%

 

Omnicell, Inc.

Segment Information - Non-GAAP Gross Margin and Non-GAAP Operating Margin

(Unaudited, in thousands, except for percentages)



Three Months Ended March 31, 2015


Automation and
Analytics


Medication
Adherence


Total













Revenues

$

92,779





$

23,442





$

116,221
















GAAP Gross profit

$

53,927



58.1

%


$

7,758



33.1

%


$

61,685



53.1

%

Plus:












a) Stock-based compensation expense

351



0.4

%


$

166



0.7

%


517



0.4

%

b) Amortization expense of acquired intangible assets and other acquisition-related expenses

35



0.0

%


$

333



1.4

%


368



0.3

%

Non-GAAP Gross profit

$

54,313



58.5

%


$

8,257



35.2

%


$

62,570



53.8

%













GAAP Operating income

$

25,338



27.3

%


$

1,417



6.1

%


$

26,755



23.0

%

Plus:












a) Stock-based compensation expense

1,443



1.5

%


256



1.1

%


1,699



1.4

%

b) Amortization expense of acquired intangible assets and other acquisition-related expenses

147



0.2

%


1,084



4.6

%


1,231



1.1

%













Non-GAAP Operating income

$

26,928



29.0

%


$

2,757



11.8

%


$

29,685



25.5

%













GAAP Corporate costs









$

16,376



14.1

%

Less: Stock-based compensation expense









1,966



1.7

%

Non-GAAP Corporate costs









$

14,410



12.4

%













Non-GAAP Income from operations









$

15,275



13.1

%

 

Omnicell, Inc.

Segment Information - Non-GAAP Gross Margin and Non-GAAP Operating Margin

(Unaudited, in thousands, except for percentages)



Three Months Ended March 31, 2014


Automation and
Analytics


Medication
Adherence


Total













Revenues

$

81,499





$

20,265





$

101,764
















GAAP Gross profit

$

46,559



57.1

%


$

7,936



39.2

%


$

54,495



53.6

%

Plus:












a) Stock-based compensation expense

237



0.3

%


31



0.2

%


268



0.3

%

b) Amortization expense of acquired intangible assets and other acquisition-related expenses

35



0.1

%


333



1.6

%


368



0.3

%

Non-GAAP Gross profit

$

46,831



57.5

%


$

8,300



41.0

%


$

55,131



54.2

%













GAAP Operating income

$

21,457



26.3

%


$

3,285



16.2

%


$

24,742



24.3

%

Plus:












a) Stock-based compensation expense

1,029



1.3

%


156



0.8

%


1,185



1.2

%

b) Amortization expense of acquired intangible assets and other acquisition-related expenses

147



0.2

%


901



4.4

%


1,048



1.0

%













Non-GAAP Operating income

$

22,633



27.8

%


$

4,342



21.4

%


$

26,975



26.5

%













GAAP Corporate costs









$

14,788



14.5

%

Less: Stock-based compensation expense









1,544



1.5

%

Non-GAAP Corporate costs









$

13,244



13.0

%













Non-GAAP Income from operations









$

13,731



13.5

%

 

OMCL-E

Logo - http://photos.prnewswire.com/prnh/20120731/SF48971LOGO-a

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/omnicell-announces-first-quarter-2015-results-300075431.html

SOURCE Omnicell, Inc.

News Provided by Acquire Media