Omnicell, Inc.
OMNICELL, Inc (Form: 8-K, Received: 01/31/2008 17:16:14)

 

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):  January 31, 2008

 

OMNICELL, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

0-33043

 

94-3166458

(State or other jurisdiction of
incorporation or organization)

 

(Commission File
Number)

 

(IRS Employer
Identification Number)

 

1201 Charleston 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))

 



 

Item 2.02 Results of Operations and Financial Condition

 

On January 31, 2008 Omnicell, Inc. issued a press release announcing its financial results for the fourth quarter and year ended December 31, 2007.  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 (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 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 Reports Fourth Quarter and Full-Year 2007 Results” dated January 31, 2008.

 

2



 

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: January 31, 2008

By:

 /s/ Robin G. Seim

 

 

 

Robin G. Seim

 

 

Vice President of Finance and

 

 

Chief Financial Officer

 

3



 

EXHIBIT INDEX

 

Number

 

Description of Document

99.1

 

Press release entitled “Omnicell Reports Fourth Quarter and Full-Year 2007 Results” dated January 31, 2008.

 

4


Exhibit 99.1

 

Contact:

 

 

Rob Seim

 

Omnicell, Inc.

Chief Financial Officer

 

1201 Charleston Road

800-850-6664, ext. 6478

 

Mountain View, CA 94043

robs@omnicell.com

 

 

 

Omnicell Reports Fourth Quarter and Full-Year 2007 Results

Record annual revenue tops $213 million

 

MOUNTAIN VIEW, Calif.—January 31, 2008— Omnicell, Inc. (NASDAQ: OMCL), a leading provider of system solutions to acute healthcare facilities, today announced results for its fourth quarter ended December 31, 2007.

 

GAAP results: Revenues for the fourth quarter of 2007 totaled $57.9 million, up $2.8 million or 5.1% from third quarter 2007 revenue of $55.2 million, and up $14.9 million or 34.5% from the fourth quarter of 2006.

 

Fourth quarter 2007 net income as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $14.5 million, or $0.40 per fully diluted share.  Included in fourth quarter net income is $7.0 million, or $0.19 per fully diluted share, income tax benefit related to the partial reversal of the Company’s tax valuation allowance.  This compares to net income of $6.9 million, or $0.19 per fully diluted share in the third quarter of 2007 and $4.1 million in the fourth quarter of 2006 or $0.14 per fully diluted share.  For the twelve months ended December 31, 2007, net income was $43.5 million, or $1.29 per fully diluted share, including $19.8 million or $0.59 per fully diluted share in income tax benefit related to the partial reversal of the Company’s tax valuation allowance.  This compares to net income of $10.4 million or $0.36 per fully diluted share for the twelve months ended December 31, 2006.

 

Product backlog totaled $137.0 million, down $3.6 million or 2.6% from the third quarter of 2007 and up $23.0 million or 20.2% from December 31, 2006.

 

Non-GAAP results: Excluding the impact on Omnicell’s results of recording $2.8 million in share-based compensation expenses related to SFAS No. 123(R) and $7.0 million in income tax benefit related to the partial reversal of its tax valuation allowance, non-GAAP net income was $10.3 million for the quarter ended December 31, 2007, or $0.28 per fully diluted share. This compares to non-GAAP income of $6.1 million or $0.20 per fully diluted share for the fourth quarter of 2006.  Excluding $10.8 million in share-based compensation expenses related to SFAS No. 123(R) and $19.8 million in income tax benefit related to a partial reversal of the Company’s tax valuation allowance, non-GAAP net income was $34.5 million for the twelve months ended December 31, 2007, or $1.02 per fully diluted share.  Excluding $8.1 million in share-based compensation expenses relating to SFAS No. 123(R), non-GAAP net income was $18.5 million for the twelve months ended December 31, 2006, or $0.64 per fully diluted share.

 

“Omnicell delivered another quarter of solid financial performance as demonstrated by our earnings, with new customers expressing their confidence in our solutions,” said Randall A. Lipps, Omnicell president and

 



 

chief executive officer. “In the fourth quarter, we extended our product offerings with the addition of mobile cart technology through our acquisition of Rioux Vision, Inc, and the announcement of SinglePointe, our patient-specific medication management software. These two new product solutions are key to our continued success in helping our customers deliver patient safety all the way to the bedside.  We remain focused on delivering the best customer experience in healthcare that enables our customers to continually improve patient safety.”

 

Omnicell Conference Call Information

 

Omnicell will hold a conference call today at 3:00 p.m. PST to discuss fourth quarter financial results. The number is 1-800-257-1836 within the U.S. or 1-303-262-2137 for all other locations.  No pass code is required. Internet users can access the conference call at www.omnicell.com. A replay of the call will be available today at approximately 5:00 p.m. PST and will be available until February 8.  The replay access numbers are 1-800-405-2236 within the U.S. and 1-303-590-3000 for all other locations, conference code 11107657#.

 

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. 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 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 fully 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 fully 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 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) 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.

 

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; 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 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. Thus, our non-GAAP measurements are presented exclusive of stock-based compensation expenses 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 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.

 

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 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 Statement of Operations

(in thousands, except for per share data, unaudited)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31, 2007

 

September 30, 2007

 

December 31, 2006

 

December 31, 2007

 

December 31, 2006

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

48,735

 

$

46,376

 

$

34,994

 

$

178,006

 

$

123,196

 

Services and other revenues

 

9,211

 

8,776

 

8,092

 

35,075

 

31,514

 

Total revenue

 

57,946

 

55,152

 

43,086

 

213,081

 

154,710

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

Cost of product revenues

 

21,641

 

20,479

 

15,827

 

80,417

 

56,338

 

Cost of services and other revenues

 

5,285

 

4,860

 

3,137

 

19,240

 

12,851

 

Total cost of revenues

 

26,926

 

25,339

 

18,964

 

99,657

 

69,189

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profits

 

31,020

 

29,813

 

24,122

 

113,424

 

85,521

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

3,918

 

3,848

 

3,364

 

14,917

 

11,222

 

Selling, general, and administrative

 

21,416

 

20,732

 

17,012

 

79,913

 

65,043

 

Total operating expenses

 

25,334

 

24,580

 

20,376

 

94,830

 

76,265

 

Income from operations

 

5,686

 

5,233

 

3,746

 

18,594

 

9,256

 

Other income and expense

 

1,978

 

2,055

 

636

 

6,053

 

1,913

 

Income before (benefit from) provision for income taxes

 

7,664

 

7,288

 

4,382

 

24,647

 

11,169

 

(Benefit from) provision for income taxes

 

(6,851

)

348

 

282

 

(18,866

)

804

 

Net income

 

$

14,515

 

$

6,940

 

$

4,100

 

$

43,513

 

$

10,365

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.42

 

$

0.20

 

$

0.15

 

$

1.36

 

$

0.38

 

Diluted

 

$

0.40

 

$

0.19

 

$

0.14

 

$

1.29

 

$

0.36

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing net income per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

34,482

 

34,127

 

28,018

 

32,080

 

27,345

 

Diluted

 

36,203

 

35,833

 

30,001

 

33,820

 

28,902

 

 



 

Omnicell, Inc.

Condensed Consolidated Balance Sheet

(In thousands)

 

 

 

December 31,

 

September 30,

 

December 31,

 

 

 

2007

 

2007

 

2006 (1)

 

 

 

(unaudited)

 

(unaudited)

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

169,812

 

$

175,748

 

$

60,856

 

Accounts receivable, net

 

37,522

 

46,927

 

34,021

 

Inventories

 

13,732

 

12,665

 

15,724

 

Prepaid expenses

 

9,482

 

9,273

 

8,033

 

Current deferred tax asset

 

11,878

 

7,973

 

 

Other current assets

 

10,001

 

5,782

 

9,183

 

Total current assets

 

252,427

 

258,368

 

127,817

 

Property and equipment, net

 

10,184

 

7,945

 

5,226

 

Non-current net investment in sales-type leases

 

12,633

 

11,257

 

12,244

 

Goodwill

 

23,076

 

3,127

 

3,127

 

Other intangible assets

 

9,467

 

1,353

 

1,797

 

Non-current deferred tax asset

 

12,833

 

4,810

 

 

Other assets

 

7,998

 

8,054

 

4,419

 

Total Assets

 

$

328,618

 

$

294,914

 

$

154,630

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

10,116

 

$

9,749

 

$

8,792

 

Accrued compensation

 

8,306

 

7,532

 

7,702

 

Advance payments from customers

 

156

 

1,062

 

9,124

 

Accrued liabilities

 

13,071

 

5,276

 

5,174

 

Deferred service revenue

 

11,263

 

10,298

 

7,707

 

Deferred gross profit

 

14,566

 

15,308

 

13,964

 

Obligation resulting from sale of receivables

 

538

 

398

 

1,093

 

Total current liabilities

 

58,016

 

49,623

 

53,556

 

Long-term deferred service revenue

 

15,726

 

14,676

 

10,083

 

Other long-term liabilities

 

237

 

327

 

995

 

Total Liabilities

 

73,979

 

64,626

 

64,634

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

254,639

 

230,288

 

89,996

 

Total Liabilities and Stockholders’ Equity

 

$

328,618

 

$

294,914

 

$

154,630

 

 


(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, 2007

 

December 31, 2006

 

 

 

Net income

 

Earnings per
share-diluted

 

Net income

 

Earnings per
share-diluted

 

GAAP

 

$

14,515

 

$

0.40

 

$

4,100

 

$

0.14

 

Non-GAAP Adjustments:

 

 

 

 

 

 

 

 

 

SFAS No. 123(R) adjustment (a)

 

 

 

 

 

 

 

 

 

Gross Margin

 

354

 

 

 

315

 

 

 

Operating Expenses

 

2,425

 

 

 

1,699

 

 

 

Income tax adjustment (b)

 

(7,032

)

 

 

 

 

 

 

 

 

(4,253

)

($0.12

)

2,014

 

$

0.06

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

$

10,262

 

$

0.28

 

$

6,114

 

$

0.20

 

 

 

 

Twelve months ended

 

 

 

December 31, 2007

 

December 31, 2006

 

 

 

Net Income

 

Earnings per
share-diluted

 

Net Income

 

Earnings per
share-diluted

 

GAAP

 

$

43,513

 

$

1.29

 

$

10,365

 

$

0.36

 

Non-GAAP Adjustments:

 

 

 

 

 

 

 

 

 

SFAS No. 123(R) adjustment (a)

 

 

 

 

 

 

 

 

 

Gross Margin

 

1,373

 

 

 

1,143

 

 

 

Operating Expenses

 

9,419

 

 

 

6,987

 

 

 

Income tax adjustment (b)

 

(19,820

)

 

 

 

 

 

 

 

 

($9,028

)

($0.27

)

$

8,130

 

$

0.28

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

$

34,485

 

$

1.02

 

$

18,495

 

$

0.64

 


(a) This adjustment reflects the accounting impact of non-cash share-based compensation expense related to the impact of SFAS No.123R for the three and twelve months ended December 31, 2007 and 2006.

 

(b) This adjustment reflects the accounting impact of income tax provision and tax benefit from release of valuation allowance reserve for the three and twelve months ended December 31, 2007.  There was no adjustment for the comparable period in 2006.