Omnicell, Inc.
OMNICELL, Inc (Form: 8-K, Received: 05/02/2011 16:12:24)

 

 

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 2, 2011

 

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)

 

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 May 2, 2011, Omnicell, Inc. issued a press release announcing its financial results for the first quarter ended March 31, 2011.  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 2011 Results” dated May 2, 2011.

 

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:  May 2, 2011

By:

/s/ Dan S. Johnston

 

 

Dan S. Johnston

 

 

Vice President and

 

 

General Counsel

 

3



 

EXHIBIT INDEX

 

Number

 

Description of Document

99.1

 

Press release entitled “Omnicell Announces First Quarter 2011 Results” dated May 2, 2011.

 

4


Exhibit 99.1

 

 

Contact:

 

 

Rob Seim

 

Omnicell, Inc.

Chief Financial Officer

 

1201 Charleston Road

800-850-6664, ext. 6478

 

Mountain View, CA 94043

rob.seim@omnicell.com

 

 

 

Omnicell Announces First Quarter 2011 Results

 

MOUNTAIN VIEW, Calif. — May 2, 2011 — Omnicell, Inc. (NASDAQ: OMCL), a leading global provider of system solutions to acute healthcare facilities, today announced results for its first quarter ended March 31, 2011.

 

GAAP results: Revenue for the first quarter of 2011 was $57.2 million as compared with $57.3 million for the fourth quarter of 2010, and up $3.0 million or 5.5% from the first quarter 2010 revenue of $54.2 million.

 

Net income as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $0.7 million or $0.02 per diluted share for the first quarter of 2011, which is unchanged from the fourth quarter of 2010. First quarter 2011 results compare to net income of $1.0 million, or $0.03 per diluted share in the first quarter of 2010.

 

Non-GAAP results: Non-GAAP net income was $3.7 million for the first quarter of 2011, or $0.11 per diluted share, which excludes $2.4 million in stock compensation expense and $1.0 million pre-tax settlement expense for litigation claims, net of a $0.4 million tax effect. This compares to non-GAAP net income of $3.6 million, or $0.11 per diluted share for the fourth quarter of 2010, which excludes both $2.6 million in stock compensation expense and $0.4 million in non-recurring tax adjustments.  First quarter 2011 results compare to non-GAAP net income of $3.1 million, or $0.09 per diluted share for the first quarter of 2010, which excludes $2.2 million in stock compensation expense.

 

“The first quarter of 2011 met our expectations, and I am pleased with our performance,” said Randall Lipps, Omnicell President, Chairman and CEO. “As announced earlier today, we are excited to bring to the market our innovative fourth-generation platform, highlighted by a single unified database for medications maintained in automated dispensing cabinets, as well as the first cabinet console to leverage Microsoft ®  Windows 7 ®  to boost reliability, security and performance.”

 

Omnicell Conference Call Information

 

Omnicell will hold a conference call today at 1:30 p.m. PDT today 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 62255499. 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 2:30 p.m. PDT and will be available until 8:59 p.m. PDT on May 9. The replay access numbers are 1-800-642-1687 within the U.S. and 1-706-645-9291 for all other locations, conference code # 62255499

 



 

About Omnicell

 

Omnicell, Inc. (NASDAQ: OMCL) is a leading provider of systems that enable healthcare facilities to increase operational efficiency, enhance patient safety and allow clinicians to spend more time with their patients.

 

Founded in 1992, Omnicell’s medication-use solutions include complete automation systems for the central pharmacy, anesthesia workstations for the operating room, dispensing cabinet systems for nursing units, and safe, secure medication transportation and verification systems to the patient bedside. From a medication’s arrival at the receiving dock to its dosing to the patient, Omnicell systems store it, package it, bar code it, order it, issue it, and provide information and controls on its use and reorder.

 

Omnicell supply product lines provide a healthcare institution with comprehensive supply chain solutions that result in 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.

 

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 unfavorable general economic and market conditions, with potential variability from quarter to quarter,  the tightening in the credit market, the evolution of our products and services to match changing customer requirements, the continued growth and acceptance of our products and services,  the continued growth of the clinical automation and workflow automation market generally, the role of government regulation and funding in the health care industry, the impact of government budget cycles on customer demand , the potential of increasing competition, including the effect of customers’ broader business relationships with competitors many times our size, protection of our intellectual property and defense against others’ intellectual property claims, management of the volatility in our stock price resulting from variability in our operating  performance, the importance of maintaining effective internal control over financial reporting for Sarbanes Oxley compliance, and  our ability to grow product backlog, to recruit and retain key personnel, to cut expenses, to manage future changes in revenue levels, to successfully manage our inventory and our critical supplier relationships, to manage general purchasing organization (GPO) relationships for  profitable sales growth, to avoid delays in product installations, to develop new products and integrate acquired products or intellectual property in a timely and cost-effective manner, and to  improve sales productivity from our recently-expanded direct sales force. 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 profit, 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 profit, 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 profit, non-GAAP operating expenses, non-GAAP net income, and 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 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, “Stock Compensation” as non-GAAP adjustments in each period.

 

b) Litigation settlement (net of tax).   We incurred an accrual in the first quarter of 2011 for settlement of litigation claims for $1.0 million pre-tax, net of the $0.4 million income tax effect.  These charges are not expected to be recurring and, as such, the financial impact is excluded from our non-GAAP results.

 

c) Income tax adjustments.   To provide transparency into the Company’s trends and performance, we consider as a non-GAAP adjustment the non-recurring tax on repatriated foreign earnings of $0.4 million, incurred in the fourth quarter of 2010, as a result of the closure of our Bangalore, India office.

 

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.

 

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 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 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

(in thousands, except per share data, unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,
2011

 

December 31,
2010

 

March 31,
2010

 

Revenues:

 

 

 

 

 

 

 

Product

 

$

 42,575

 

$

 43,541

 

$

 42,295

 

Services and other revenues

 

14,585

 

13,727

 

11,865

 

Total revenue

 

57,160

 

57,268

 

54,160

 

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

Cost of product revenues

 

17,836

 

18,649

 

19,265

 

Cost of services and other revenues

 

7,674

 

7,256

 

7,309

 

Total cost of revenues

 

25,510

 

25,905

 

26,574

 

 

 

 

 

 

 

 

 

Gross profit

 

31,650

 

31,363

 

27,586

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

4,840

 

5,403

 

4,565

 

Selling, general, and administrative

 

25,781

 

24,438

 

21,512

 

Total operating expenses

 

30,621

 

29,841

 

26,077

 

Income (loss) from operations

 

1,029

 

1,522

 

1,509

 

Other income and expense, net

 

54

 

145

 

74

 

Income (loss) before provision for (benefit from) income taxes

 

1,083

 

1,667

 

1,583

 

Provision for (benefit from) income taxes

 

413

 

995

 

604

 

Net income (loss)

 

$

 670

 

$

 672

 

$

 979

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

Basic

 

$

 0.02

 

$

 0.02

 

$

 0.03

 

Diluted

 

$

 0.02

 

$

 0.02

 

$

 0.03

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

33,184

 

32,997

 

32,207

 

Diluted

 

34,098

 

33,900

 

33,153

 

 



 

Omnicell, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

 

 

 

March 31,

 

December 31,

 

 

 

2011

 

2010

 

 

 

(unaudited)

 

(1)

 

 

 

 

 

 

 

ASSETS

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

173,669

 

$

 175,635

 

Short-term investments

 

8,109

 

8,074

 

Accounts receivable, net

 

39,795

 

42,732

 

Inventories

 

15,399

 

9,785

 

Prepaid expenses

 

11,776

 

11,959

 

Deferred tax assets

 

13,052

 

13,052

 

Other current assets

 

6,337

 

7,266

 

Total current assets

 

268,137

 

268,503

 

 

 

 

 

 

 

Property and equipment, net

 

15,344

 

14,351

 

Non-current net investment in sales-type leases

 

9,251

 

9,224

 

Goodwill

 

28,543

 

28,543

 

Other intangible assets

 

4,533

 

4,672

 

Non-current deferred tax assets

 

10,103

 

9,566

 

Other assets

 

9,501

 

8,365

 

Total assets

 

$

 345,412

 

$

 343,224

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

 13,870

 

$

 13,242

 

Accrued compensation

 

6,382

 

7,731

 

Accrued liabilities

 

8,734

 

8,684

 

Deferred service revenue

 

18,524

 

16,788

 

Deferred gross profit

 

11,009

 

11,719

 

Total current liabilities

 

58,519

 

58,164

 

 

 

 

 

 

 

Long-term deferred service revenue

 

18,897

 

19,171

 

Other long-term liabilities

 

650

 

675

 

Total liabilities

 

78,066

 

78,010

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Total stockholders’ equity

 

267,346

 

265,214

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

 345,412

 

$

 343,224

 

 


(1)           Information derived from our December 31, 2010 audited consolidated financial statements.

 



 

Omnicell, Inc.

Reconciliation of GAAP to Non-GAAP

(In thousands, except per share data, unaudited)

 

 

 

Three months ended

 

 

 

March 31, 2011

 

December 31, 2010

 

March 31, 2010

 

 

 

Net income

 

Earnings
per share-
diluted

 

Net income

 

Earnings
per share-
diluted

 

Net income
(loss)

 

Earnings
(loss) per
share-diluted

 

GAAP

 

$

670

 

$

0.02

 

$

672

 

$

0.02

 

$

979

 

$

0.03

 

Non-GAAP Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

ASC 718 adjustment (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin

 

367

 

 

 

356

 

 

 

321

 

 

 

Operating Expenses

 

2,025

 

 

 

2,208

 

 

 

1,835

 

 

 

Litigation settlement, net of tax (b)

 

620

 

 

 

 

 

 

 

 

 

 

 

Taxes on repatriated foreign earnings

 

 

 

 

 

383

 

 

 

 

 

 

 

Total after-tax adjustments

 

3,012

 

0.09

 

2,947

 

0.09

 

2,156

 

0.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

$

3,682

 

$

0.11

 

$

3,619

 

$

0.11

 

$

3,135

 

$

0.09

 

 


(a) This adjustment reflects the accounting impact of non-cash stock-based compensation expense related to the impact of ASC 718 (formerly referred to as SFAS No. 123R) for the periods shown.

 

(b) This adjustment is for the accrual of a $1.0 million pre-tax settlement in operating expenses, net of tax effect of $0.4 million.

 

Omnicell, Inc.

Calculation of Adjusted EBITDA (1)

(In thousands, unaudited)

 

 

 

Three Months Ended

 

 

 

March 31, 2011

 

December 31,   2010

 

March 31, 2010

 

 

 

 

 

 

 

 

 

GAAP net income

 

$

 670

 

$

 672

 

$

 979

 

Add back:

 

 

 

 

 

 

 

ASC 718 stock compensation expense

 

2,392

 

2,564

 

2,156

 

Litigation settlement, pre-tax

 

1,000

 

 

 

Interest

 

(75

)

(79

)

(72

)

Depreciation and amortization expense

 

1,852

 

2,130

 

2,123

 

Income tax expense

 

413

 

995

 

604

 

Non-GAAP adjusted EBITDA (1)

 

$

 6,252

 

$

 6,282

 

5,790

 

 


(1) Defined as earnings before interest income and expense, taxes, depreciation and amortization, and non-cash expenses, including stock compensation expense, per ASC 718, formerly FAS 123R.  Also excludes the first quarter 2011 non-GAAP adjustment for pre-tax  litigation settlement.