Omnicell, Inc.
OMNICELL, Inc (Form: 8-K, Received: 05/04/2017 08:11:06)


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):  May 4, 2017

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 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 May 4, 2017 , Omnicell, Inc. issued a press release announcing its financial results for the quarter ended March 31, 2017 . The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

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

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Number
 
Description of Document
99.1
 
Press release entitled "Omnicell Announces First Quarter 2017 Results" dated May 4, 2017

 







SIGNATURE

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

 
OMNICELL,  INC.
 
 
 
Dated: May  4, 2017
 
 
 
 
/s/ Dan S. Johnston
 
 
Dan S. Johnston
 
 
Executive Vice President and Chief Legal & Administrative Officer
                                                      
                                                                           

 







EXHIBIT INDEX

Number
 
Description of Document
99.1
 
Press release entitled "Omnicell Announces First Quarter 2017 Results" dated May 4, 2017

                                                                           

 





Exhibit 99.1

EXHIBIT991Q414LOGOA01A05.JPG

Contact:
 
 
 
 
 
Peter Kuipers
 
Omnicell, Inc.
Chief Financial Officer
 
590 East Middlefield Road
800-850-6664, ext. 6180
 
Mountain View, CA 94043
Peter.kuipers@omnicell.com
 
 


Omnicell Announces First Quarter 2017 Results

GAAP revenue of $150.6 million and net loss per diluted share of $0.29
Non-GAAP revenue of $150.9 million and net income per diluted shares of $0.06


MOUNTAIN VIEW, Calif. -- May 4, 2017 -- 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, 2017

GAAP results: Revenue for the first quarter of 2017 was $150.6 million , down $21.4 million , or 12.5% from the fourth quarter of 2016, and down $20.5 million or 12.0% from the first quarter of 2016 .
First quarter 2017 net loss as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $10.8 million , or $0.29 per diluted share. This compares to GAAP net income of $0.2 million , or $0.00 per diluted share, for the fourth quarter of 2016 , and GAAP net loss of $0.4 million , or $0.01 per diluted share, for the first quarter of 2016 .
Non-GAAP results: Non-GAAP revenue for the first quarter of 2017 was $150.9 million , down $23.8 million , or 13.6% from the fourth quarter of 2016, and down $22.8 million or 13.1% from the first quarter of 2016 .

Non-GAAP net income for the first quarter of 2017 was $2.1 million , or $0.06 per diluted share. This compares to non-GAAP net income of $13.8 million , or $0.37 per diluted share, for the fourth quarter of 2016 and $12.9 million , or $0.35 per diluted share, for the first quarter of 2016.

Non-GAAP net income for each period presented excludes, when applicable, the effect of stock-based compensation expense, amortization expense of acquired intangible assets, acquisition related expenses, fair value adjustments related to business acquisitions, severance and integration related expenses, and amortization of debt issuance cost.

“During the first quarter of 2017, Omnicell won in the marketplace through its differentiated platform and innovative products including the XT Series.  I am pleased with our new conversion wins and customers’ strong interest and acceptance of our new XT Series," said Randall Lipps, Omnicell president, CEO and chairman.  “An expected sequential decline in revenue due to the XT Series product launch and customer implementations timing affected our first quarter revenue and results, but our order intake and pipeline of new sales opportunities demonstrate our strong market momentum.” Mr. Lipps added.

2017 Guidance:

Following the market launch of the XT Series and ramp up of manufacturing for the XT Series in the first quarter of 2017 we expect the revenue and profitability to scale and improve every quarter during 2017.



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For the second quarter of 2017, the Company expects non-GAAP revenue to be between $172 million and $178 million. The Company expects second quarter of 2017 non-GAAP earnings to be between $0.21 and $0.27 per share.

For the combined third and fourth quarters of 2017, the Company expects non-GAAP revenue to be between $395 million and $415 million, and non-GAAP earnings to be between $0.95 and $1.05 per share.

For the year 2017, the Company expects product bookings to be between $570 million and $590 million. The Company expects non-GAAP revenue to be between $720 million and $740 million, and non-GAAP earnings to be between $1.22 and $1.34 per share. 

The table below summarizes 2017 guidance outlined above:

 
Q2'17
Q3'17 through Q4'17
Total Year 2017
Product Bookings
Not provided
>20% year over year growth
$570 million - $590 million
Non-GAAP Revenue
$172 million - $178 million
$395 million - $415 million
$720 million - $740 million
Non-GAAP EPS
$0.21 - $0.27
$0.95 - $1.05
$1.22 - $1.34

Omnicell Conference Call Information

Omnicell will hold a conference call today, Thursday, May 4, 2017 at 8:30 a.m. ET 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 36563190. 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 11:30 a.m. ET and will be available until 11:59 p.m. PT on May 22, 2017. 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 36563190.

 

About Omnicell

Since 1992, Omnicell (NASDAQ: OMCL) has been inspired to create safer and more efficient ways to manage medications and supplies across all care settings. 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 improving care across the entire healthcare continuum-from the acute care hospital setting, to post-acute skilled nursing and long-term care facilities, to the patient’s home.

Over 4,000 customers worldwide use Omnicell® automation and analytics solutions to increase operational efficiency, reduce medication errors, deliver actionable intelligence and improve patient safety.

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

Recent Omnicell acquisitions, including Ateb, add distinct capabilities, particularly in central pharmacy, IV robotics, and pharmacy software, creating the broadest medication management product portfolio in the industry.

For more information about Omnicell, Inc. 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 momentum, pipeline and new sales opportunities, bookings, 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, our ability to successfully convert product backlog and sales quotes to our XT Series, our ability to execute the manufacturing ramp-up of XT Series, impact

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of the reduction in our workforce and closure of our Nashville and Slovenia facilities, our ability to continue cost reduction efforts, and our ability to implement development and manufacturing Centers of Excellence, 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 revenue, 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 revenue, 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)  Intangible assets amortization from business acquisitions.  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 revenue.  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.

e)  Inventory fair value adjustments.  In connection with acquisition of Aesynt, business combination rules require us to account for the fair values of inventory acquired in our purchase accounting. The non-GAAP adjustment to the cost of revenues is intended to include the impact of such adjustment. We believe the adjustment is useful as a measure of the ongoing performance of our business.

f)  Acquisition related expenses.  We excluded from the non-GAAP results the expenses which are related to the 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

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historical operations and forward looking guidance and the financial results of less acquisitive peer companies.
g) Severance and other related expenses. We excluded from our non-GAAP results the expenses which are related to the restructuring and integrations related 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 less acquisitive 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.


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 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 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.

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5




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

 
Three Months Ended
 
March 31, 2017
 
December 31,
2016
 
March 31, 2016
Revenues:
 
 
 
 
 
Product
$
98,930

 
$
125,753

 
$
127,895

Services and other revenues
51,624

 
46,221

 
43,109

Total revenues
150,554

 
171,974

 
171,004

Cost of revenues:
 
 
 
 
 
Cost of product revenues
63,588

 
78,024

 
71,918

Cost of services and other revenues
22,774

 
19,621

 
19,141

Total cost of revenues
86,362

 
97,645

 
91,059

Gross profit
64,192

 
74,329

 
79,945

Operating expenses:
 
 
 
 
 
Research and development
16,803

 
14,902

 
13,838

Selling, general and administrative
64,625

 
59,608

 
64,255

Total operating expenses
81,428

 
74,510

 
78,093

Income (loss) from operations
(17,236
)
 
(181
)
 
1,852

Interest and other income (expense), net
(2,456
)
 
(1,656
)
 
(2,171
)
Loss before provision for income taxes
(19,692
)
 
(1,837
)
 
(319
)
Provision (benefit) for income taxes
(8,938
)
 
(1,994
)
 
59

Net income (loss)
$
(10,754
)
 
$
157

 
$
(378
)
Net income (loss) per share:

 
 
 
 
Basic
$
(0.29
)
 
$

 
$
(0.01
)
Diluted
$
(0.29
)
 
$

 
$
(0.01
)
Weighted average shares outstanding:
 
 
 
 
 
Basic
36,840

 
36,553

 
35,740

Diluted
36,840

 
37,256

 
35,740


 


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Omnicell, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
 
March 31, 2017
 
December 31, 2016
 
 
 
 
ASSETS
Current assets:
 

 
 
Cash and cash equivalents
$
46,348

 
$
54,488

Accounts receivable, net
131,433

 
150,303

Inventories
76,230

 
69,297

Prepaid expenses
27,775

 
28,646

Other current assets
12,593

 
12,674

Total current assets
294,379

 
315,408

Property and equipment, net
40,996

 
42,011

Long-term investment in sales-type leases, net
19,174

 
20,585

Goodwill
328,216

 
327,724

Intangible assets, net
184,127

 
190,283

Long-term deferred tax assets
5,624

 
4,041

Other long-term assets
37,247

 
35,051

Total assets
$
909,763

 
$
935,103

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 

 
 
Accounts payable
$
38,466

 
$
27,069

Accrued compensation
28,677

 
26,722

Accrued liabilities
31,406

 
31,195

Long-term debt, current portion, net
8,410

 
8,410

Deferred revenue, net
90,521

 
87,516

Total current liabilities
197,480

 
180,912

Long-term, deferred revenue
15,994

 
17,051

Long-term deferred tax liabilities
42,502

 
51,592

Other long-term liabilities
8,716

 
8,210

Long-term debt, net
206,128

 
245,731

Total liabilities
470,820

 
503,496

Total stockholders’ equity
438,943

 
431,607

Total liabilities and stockholders’ equity
$
909,763

 
$
935,103


 

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Omnicell, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
 
Three months ended March 31,
 
2017
 
2016
Operating Activities
 
 
 
Net loss
$
(10,754
)
 
$
(378
)
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
12,448

 
14,473

(Gain) loss on disposal of fixed assets

 
13

Share-based compensation expense
5,511

 
3,891

Income tax benefits from employee stock plans
11

 
164

Deferred income taxes
(9,091
)
 
(1,042
)
Amortization of debt financing fees
397

 
397

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
18,870

 
(1,070
)
Inventories
(6,933
)
 
(5,113
)
Prepaid expenses
871

 
1,983

Other current assets
372

 
324

Investment in sales-type leases
1,120

 
(8,928
)
Other long-term assets
(38
)
 
1,232

Accounts payable
11,104

 
1,568

Accrued compensation
1,955

 
4,114

Accrued liabilities
(115
)
 
417

Deferred revenue
1,948

 
12,663

Other long-term liabilities
506

 
(2,701
)
Net cash provided by operating activities
28,182

 
22,007

Investing Activities
 
 
 
Purchases of intangible assets, intellectual property and patents
(160
)
 
(1,074
)
Software development for external use
(4,225
)
 
(3,070
)
Purchases of property and equipment
(2,452
)
 
(4,261
)
Business acquisition, net of cash acquired

 
(271,458
)
Net cash used in investing activities
(6,837
)
 
(279,863
)
Financing Activities
 
 
 
Proceeds from debt, net

 
247,059

Repayment of debt and revolving credit facility
(40,000
)
 
(20,000
)
Payment for contingent consideration

 
(3,000
)
Proceeds from issuances under stock-based compensation plans
10,916

 
5,149

Employees' taxes paid related to restricted stock units
(1,052
)
 
(382
)
Net cash provided by (used in) financing activities
(30,136
)
 
228,826

Effect of exchange rate changes on cash and cash equivalents
651

 
300

Net decrease in cash and cash equivalents
(8,140
)
 
(28,730
)
Cash and cash equivalents at beginning of period
54,488

 
82,217

Cash and cash equivalents at end of period
$
46,348

 
$
53,487


8



Omnicell, Inc.
Reconciliation of GAAP to Non-GAAP
(Unaudited, in thousands, except per share data and percentage)
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
 
March 31, 2017
 
December 31, 2016
 
March 31, 2016
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP revenue to non-GAAP revenue:
 
 
GAAP revenue
 
$
150,554

 
$
171,974

 
$
171,004

 
Acquisition accounting impact related to deferred revenue
313

 
2,663

 
2,663

Non-GAAP revenue
$
150,867

 
$
174,637

 
$
173,667

 
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP gross profit to non-GAAP gross profit:
 
 
GAAP gross profit
$
64,192

 
$
74,329

 
$
79,945

GAAP gross margin
42.6%
 
43.2%
 
46.8%
 
Share-based compensation expense
982

 
776

 
549

 
Amortization of acquired intangibles
2,837

 
5,266

 
5,211

 
Acquisition accounting impact related to deferred revenue
313

 
2,663

 
2,663

 
Inventory fair value adjustments

 
921

 
921

 
Acquisitions related expenses

 
5

 

 
Severance and other expenses*
1,697

 

 

Non-GAAP gross profit
$
70,021

 
$
83,960

 
$
89,289

Non-GAAP gross margin
46.4%
 
48.1%
 
51.4%
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP operating expenses to non-GAAP operating expenses:
GAAP operating expenses
$
81,428

 
$
74,510

 
$
78,093

GAAP operating expenses % to total revenue
 
54.1%
 
43.3%
 
45.7%
 
Share-based compensation expense
(4,529
)
 
(4,663
)
 
(3,342
)
 
Amortization of acquired intangibles
(3,653
)
 
(3,752
)
 
(3,948
)
 
Acquisitions related expenses
(126
)
 
(829
)
 
(2,349
)
 
Severance and other expenses*
(2,332
)
 

 

Non-GAAP operating expenses
$
70,788

 
$
65,266

 
$
68,454

Non-GAAP operating expenses % to total revenue
46.9%
 
37.4%
 
39.4%
* Other expenses include relocation charge of $220 and depreciation adjustment related to purchase price allocation from acquisition of $264.

9



 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
 
March 31, 2017
 
December 31, 2016
 
March 31, 2016
Reconciliation of GAAP income (loss) from operations to non-GAAP income from operations:
GAAP income (loss) from operations
$
(17,236
)
 
$
(181
)
 
$
1,852

GAAP operating income (loss) % to total revenue
 
(11.4)%
 
(0.1)%
 
1.1%
 
Share-based compensation expense
5,511

 
5,438

 
3,891

 
Amortization of acquired intangibles
6,490

 
9,017

 
9,159

 
Acquisition accounting impact related to deferred revenue
313

 
2,663

 
2,663

 
Inventory fair value adjustments

 
921

 
921

 
Acquisitions related expenses
126

 
834

 
2,349

 
Severance and other expenses
4,029

 

 

Non-GAAP income (loss) from operations
$
(767
)
 
$
18,692

 
$
20,835

Non-GAAP operating income % to total Non-GAAP revenue
(0.5)%
 
10.7%
 
12.0%
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP net income (loss) to non-GAAP net income:
 
 
GAAP net income (loss)
$
(10,754
)
 
$
157

 
$
(378
)
 
Share-based compensation expense
5,511

 
5,438

 
3,891

 
Amortization of acquired intangibles
6,490

 
9,017

 
9,159

 
Acquisition accounting impact related to deferred revenue
313

 
2,663

 
2,663

 
Inventory fair value adjustments

 
921

 
921

 
Acquisitions related expenses
523

 
632

 
2,349

 
Severance and other expenses
4,029

 

 

 
Tax effect of the adjustments above (a)
(4,019
)
 
(5,031
)
 
(5,735
)
Non-GAAP net income
$
2,093

 
$
13,797

 
$
12,870

 
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP net income (loss) per share - diluted to non-GAAP net income per share - diluted:
Shares - diluted GAAP
36,840

 
37,256

 
35,740

 
 
 
 
 
 
 
 
 
 
 
Shares - diluted Non-GAAP
37,782

 
37,256

 
36,307

 
 
 
 
 
 
 
 
 
 
 
GAAP net income (loss) per share - diluted
$
(0.29
)
 
$

 
$
(0.01
)
 
Share-based compensation expense
0.15

 
0.15

 
0.11

 
Amortization of acquired intangibles
0.17

 
0.24

 
0.25

 
Acquisition accounting impact related to deferred revenue
0.01

 
0.07

 
0.07

 
Inventory fair value adjustments

 
0.02

 
0.03

 
Acquisitions related expenses
0.01

 
0.02

 
0.06

 
Severance and other expenses
0.11

 

 

 
Tax effect of the adjustments above (a)
(0.10
)
 
(0.13
)
 
(0.16
)
Non-GAAP net income per share - diluted
$
0.06

 
$
0.37

 
$
0.35

 
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP net income (loss) to non-GAAP Adjusted EBITDA (b) :
 
 
GAAP net income (loss)
$
(10,754
)
 
$
157

 
$
(378
)
 
Share-based compensation expense
5,511

 
5,438

 
3,891

 
Interest (income) and expense, net
1,432

 
998

 
1,747

 
Depreciation and amortization expense
12,448

 
14,457

 
14,473

 
Acquisition accounting impact related to deferred revenue
313

 
2,663

 
2,663

 
Inventory fair value adjustments

 
921

 
921

 
Acquisitions related expenses
523

 
632

 
2,349

 
Severance expense
3,765

 

 

 
Income tax expense
(8,938
)
 
(1,994
)
 
59

Non-GAAP Adjusted EBITDA
$
4,300

 
$
23,272

 
$
25,725

     (a) Tax effects calculated for all adjustments except share-based compensation expense, using an estimated annual effective tax rate of 35% for fiscal year 2017 and 38% for fiscal year 2016.
(b) Defined as earnings before interest income and expense, taxes, depreciation and amortization, as well as excluding certain non-GAAP adjustments.
 

10



Omnicell, Inc.
Segmented Information
(Unaudited, in thousands, except for percentages)

 
Three Months Ended March 31, 2017
 
Three Months Ended March 31, 2016
 
Automation and
Analytics
 
Medication
Adherence
 
Total
 
Automation and
Analytics
 
Medication
Adherence
 
Total
 
 
 
 
Revenues
$
124,171

 
$
26,383

 
$
150,554

 
$
148,945

 
$
22,059

 
$
171,004

Cost of revenues
68,761

 
17,601

 
86,362

 
77,207

 
13,852

 
91,059

Gross profit
55,410

 
8,782

 
64,192

 
71,738

 
8,207

 
79,945

Gross margin %
44.6%
 
33.3%
 
42.6%
 
48.2%
 
37.2%
 
46.8%
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
50,747

 
11,196

 
61,943

 
52,205

 
5,611

 
57,816

Income (loss) from segment operations
$
4,663

 
$
(2,414
)
 
$
2,249

 
$
19,533

 
$
2,596

 
$
22,129

Operating margin %
3.8%
 
(9.1)%
 
1.5%
 
13.1%
 
11.8%
 
12.9%
 
 
 
 
 
 
 
 
 
 
 
 
Corporate costs
 
 
 
 
19,485

 
 
 
 
 
20,277

Income (loss) from operations
 
 
 
 
$
(17,236
)
 
 
 
 
 
$
1,852

 
 
 
 
 
 
 
 
 
 
 
 



 

11



Omnicell, Inc.
Segment Information - Non-GAAP Gross Profit and Non-GAAP Operating Margin
(Unaudited, in thousands, except for percentages)
 
Three Months Ended March 31, 2017
 
 
 
Automation and
Analytics
 
Medication
Adherence
 
Total
 
Amount
 
% of GAAP Revenue
 
% of Non-GAAP Revenue
 
Amount
 
% of GAAP Revenue
 
% of Non-GAAP Revenue
 
Amount
 
% of GAAP Revenue
 
% of Non-GAAP Revenue
Revenues
$
124,171

 
 
 
 
 
$
26,383

 
 
 
 
 
$
150,554

 
 
 
 
Acquisition accounting impact related to deferred revenue

 
—%
 
—%
 
313

 
1.2%
 
1.2%
 
313

 
0.2%
 
0.2%
Non-GAAP Revenues
$
124,171

 
 
 
 
 
$
26,696

 
 
 
 
 
$
150,867

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Gross profit
$
55,410

 
44.6%
 
44.6%
 
$
8,782

 
33.3%
 
32.9%
 
$
64,192

 
42.6%
 
42.5%
Share-based compensation expense
863

 
0.7%
 
0.7%
 
119

 
0.5%
 
0.4%
 
982

 
0.7%
 
0.7%
Amortization expense of acquired intangible assets
2,187

 
1.8%
 
1.8%
 
650

 
2.5%
 
2.4%
 
2,837

 
1.9%
 
1.9%
Acquisition accounting impact related to deferred revenue

 
—%
 
—%
 
313

 
1.2%
 
1.2%
 
313

 
0.2%
 
0.2%
Severance and other expenses
1,266

 
1.0%
 
1.0%
 
431

 
1.6%
 
1.6%
 
1,697

 
1.1%
 
1.1%
Non-GAAP Gross profit
$
59,726

 
48.1%
 
48.1%
 
$
10,295

 
39.0%
 
38.6%
 
$
70,021

 
46.5%
 
46.4%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating income
$
4,663

 
3.8%
 
3.8%

$
(2,414
)
 
(9.1)%
 
(9.0)%
 
$
2,249

 
1.5%
 
1.5%
Share-based compensation expense
2,500

 
2.0%
 
2.0%
 
366

 
1.4%
 
1.4%
 
2,866

 
1.9%
 
1.9%
Amortization expense of acquired intangible assets
4,506

 
3.6%
 
3.6%
 
1,984

 
7.5%
 
7.4%
 
6,490

 
4.3%
 
4.3%
Acquisition accounting impact related to deferred revenue

 
—%
 
—%
 
313

 
1.2%
 
1.2%
 
313

 
0.2%
 
0.2%
Acquisitions related expenses
18

 
—%
 
—%
 

 
—%
 
—%
 
18

 
—%
 
—%
Severance and other expenses
2,752

 
2.2%
 
2.2%
 
596

 
2.3%
 
2.2%
 
3,348

 
2.2%
 
2.2%
Non-GAAP Operating income
$
14,439

 
11.6%
 
11.6%
 
$
845

 
3.2%
 
3.2%
 
$
15,284

 
10.2%
 
10.1%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Corporate costs
 
 
 
 
 
 
 
 
 
 
 
 
$
19,485

 
12.9%
 
12.9%
Share-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
(2,645
)
 
(1.8)%
 
(1.8)%
Acquisition-related expenses
 
 
 
 
 
 
 
 
 
 
 
 
(108
)
 
(0.1)%
 
(0.1)%
Severance and other expenses
 
 
 
 
 
 
 
 
 
 
 
 
(681
)
 
(0.5)%
 
(0.5)%
Non-GAAP Corporate costs
 
 
 
 
 
 
 
 
 
 
 
 
$
16,051

 
10.7%
 
10.6%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Loss from operations
 
 
 
 
 
 
 
 
 
 
 
 
$
(767
)
 
(0.5)%
 
(0.5)%
 


12



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

 
Three Months Ended March 31, 2016
 
 
 
Automation and
Analytics
 
Medication
Adherence
 
Total
 
Amount
 
% of GAAP Revenue
 
% of Non-GAAP Revenue
 
Amount
 
% of GAAP Revenue
 
% of Non-GAAP Revenue
 
Amount
 
% of GAAP Revenue
 
% of Non-GAAP Revenue
Revenues
$
148,945

 
 
 
 
 
$
22,059

 
 
 
 
 
$
171,004

 
 
 
 
Acquisition accounting impact related to deferred revenue
2,663

 
1.8
%
 
1.8
%
 

 
%
 
%
 
2,663

 
1.6
 %
 
1.5
 %
Non-GAAP Revenues
$
151,608

 
 
 
 
 
$
22,059

 
 
 
 
 
173,667

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Gross profit
$
71,738

 
48.2
%
 
47.3
%
 
$
8,207

 
37.2
%
 
37.2
%
 
$
79,945

 
46.8
 %
 
46.0
 %
Stock-based compensation expense
460

 
0.3
%
 
0.3
%
 
89

 
0.4
%
 
0.4
%
 
549

 
0.3
 %
 
0.3
 %
Amortization expense of acquired intangible assets
4,879

 
3.3
%
 
3.2
%
 
332

 
1.5
%
 
1.5
%
 
5,211

 
3.0
 %
 
3.0
 %
Acquisition accounting impact related to deferred revenue
2,663

 
1.8
%
 
1.8
%
 

 
%
 
%
 
2,663

 
1.6
 %
 
1.5
 %
Inventory fair value adjustments
921

 
0.6
%
 
0.6
%
 

 
%
 
%
 
921

 
0.5
 %
 
0.5
 %
Non-GAAP Gross profit
$
80,661

 
54.2
%
 
53.2
%
 
$
8,628

 
39.1
%
 
39.1
%
 
$
89,289

 
52.2
 %
 
51.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating income
$
19,533

 
13.1
%
 
12.9
%
 
$
2,596

 
11.8
%
 
11.8
%
 
$
22,129

 
12.9
 %
 
12.7
 %
Stock-based compensation expense
1,623

 
1.1
%
 
1.1
%
 
201

 
0.9
%
 
0.9
%
 
1,824

 
1.1
 %
 
1.1
 %
Amortization expense of acquired intangible assets
7,829

 
5.3
%
 
5.2
%
 
1,330

 
6.0
%
 
6.0
%
 
9,159

 
5.4
 %
 
5.3
 %
Acquisition accounting impact related to deferred revenue
2,663

 
1.8
%
 
1.8
%
 

 
%
 
%
 
2,663

 
1.6
 %
 
1.5
 %
Inventory fair value adjustments
921

 
0.6
%
 
0.6
%
 

 
%
 
%
 
921

 
0.5
 %
 
0.5
 %
Acquisitions related expenses
1,757

 
1.2
%
 
1.2
%
 

 
%
 
%
 
1,757

 
1.0
 %
 
1.0
 %
Non-GAAP Operating income
$
34,326

 
23.0
%
 
22.6
%
 
$
4,127

 
18.7
%
 
18.7
%
 
$
38,453

 
22.5
 %
 
22.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Corporate costs
 
 
 
 
 
 
 
 
 
 
 
 
$
20,277

 
11.9
 %
 
11.7
 %
Stock-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
(2,067
)
 
(1.2
)%
 
(1.2
)%
Acquisition related expenses
 
 
 
 
 
 
 
 
 
 
 
 
(592
)
 
(0.3
)%
 
(0.3
)%
Non-GAAP Corporate costs
 
 
 
 
 
 
 
 
 
 
 
 
$
17,618

 
10.3
 %
 
10.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Income from operations
 
 
 
 
 
 
 
 
 
 
 
 
$
20,835

 
12.2
 %
 
12.0
 %

 

13