Omnicell, Inc.
OMNICELL, Inc (Form: 8-K, Received: 07/28/2011 16:12:30)

 

 

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):  July 28, 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 July 28, 2011, Omnicell, Inc. issued a press release announcing its financial results for the quarter ended June 30, 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 Second Quarter 2011 Results” dated July 28, 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:  July 28, 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 Second Quarter 2011 Results” dated July 28, 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 Second Quarter 2011 Results

 

MOUNTAIN VIEW, Calif. — July 28, 2011 — Omnicell, Inc. (NASDAQ: OMCL), a leading provider of system solutions to healthcare facilities, today announced results for its quarter ended June 30, 2011.

 

GAAP results: Revenue for the second quarter of 2011 was $61.0 million, up $3.8 million or 6.6% from the first quarter of 2011, and up $6.3 million or 11.5% from the second quarter of 2010.  Revenue for the six months ended June 30, 2011 was $118.2 million, up $9.3 million or 8.6% from the six months ended June 30, 2010.

 

Second quarter 2011 net income as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $2.6 million, or $0.08 per diluted share. This compares to net income of $0.7 million, or $0.02 per diluted share in the first quarter of 2011 and net income of $2.0 million, or $0.06 per diluted share in the second quarter of 2010. For the six months ended June 30, 2011, net income was $3.3 million, or $0.10 per diluted share. This compares to net income of $2.9 million, or $0.09 per diluted share for the six months ended June 30, 2010.

 

Non-GAAP results: Non-GAAP net income was $5.0 million for the second quarter of 2011, or $0.15 per diluted share. Non-GAAP net income for the second quarter excludes $2.5 million in stock-based compensation expense. This compares to non-GAAP net income of $3.7 million, or $0.11 per diluted share for the first quarter of 2011, which excluded $2.4 million in stock-based compensation expense and $1.0 million pre-tax settlement expense for litigation claims, net of a $0.4 million tax effect.  Second quarter 2011 results compare to non-GAAP net income of $4.1 million, or $0.12 per diluted share for the second quarter of 2010, which excluded $2.1 million of stock-based compensation expense.

 

For the six months ended June 30, 2011, non-GAAP net income was $8.7 million, or $0.26 per diluted share. This excluded $4.8 million in stock-based compensation expense and $1.0 million pre-tax settlement expense for litigation claims, net of a $0.4 million tax effect. For the six months ended June 30, 2010, non-GAAP net income was $7.2 million, or $0.22 per diluted share, excluding $4.3 million in stock-based compensation expense.

 

“I am pleased with our second quarter performance, in which we exceeded consensus on earnings,” said Randall Lipps, Omnicell president, chairman and CEO. “Omnicell’s innovative G4 platform for advanced medication and supply automation, introduced in May and well received in the marketplace, positions us to meet our growth objectives for 2011. Omnicell continues to set the industry pace for customer satisfaction, as evidenced by the recent top ranking, for the sixth consecutive year, of our automated medication dispensing system by the leading research firm KLAS.”

 

Omnicell Conference Call Information

 

Omnicell will hold a conference call today at 2:30 p.m. PT 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 84878863. 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 August 4. The replay access numbers are 1-855-859-2056 within the U.S. and 1-404-537-3406 for all other locations, conference code # 84878863.

 



 

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, volatility in the credit market, risks to growth and acceptance of our products and services and to growth of the clinical automation and workflow automation market generally, the potential of increasing competition, potential regulatory changes, and the ability of the company to improve sales productivity to grow product backlog, retain key personnel, to cut expenses, to manage future changes in revenue levels, to develop new products and integrate acquired companies, products or intellectual property in a timely and cost-effective manner. 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 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, “Stock Compensation” as non-GAAP adjustments in each period.

 

b) Litigation settlement (net of tax).  We recorded an accrual in the first quarter of 2011 for settlement of litigation claims for $1.0 million ($0.6 million net of the $0.4 million income tax effect.)  This charge is not expected to be recurring and, as such, the financial impact is 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 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

 

Six Months Ended

 

 

 

June 30,
2011

 

March 31,
2011

 

June 30,
2010

 

June 30,
2011

 

June 30,
2010

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

46,218

 

$

42,575

 

$

42,023

 

$

88,793

 

$

84,318

 

Services and other revenues

 

14,787

 

14,585

 

12,670

 

29,372

 

24,535

 

Total revenue

 

61,005

 

57,160

 

54,693

 

118,165

 

108,853

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

Cost of product revenues

 

19,730

 

17,836

 

19,009

 

37,566

 

38,274

 

Cost of services and other revenues

 

7,468

 

7,674

 

6,816

 

15,142

 

14,125

 

Total cost of revenues

 

27,198

 

25,510

 

25,825

 

52,708

 

52,399

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

33,807

 

31,650

 

28,868

 

65,457

 

56,454

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

5,280

 

4,840

 

4,950

 

10,120

 

9,515

 

Selling, general, and administrative

 

24,297

 

25,781

 

20,426

 

50,078

 

41,938

 

Total operating expenses

 

29,577

 

30,621

 

25,376

 

60,198

 

51,453

 

Income from operations

 

4,230

 

1,029

 

3,492

 

5,259

 

5,001

 

Other income and (expense), net

 

71

 

54

 

53

 

125

 

127

 

Income before provision for income taxes

 

4,301

 

1,083

 

3,545

 

5,384

 

5,128

 

Provision for income taxes

 

1,714

 

413

 

1,580

 

2,127

 

2,184

 

Net income

 

$

2,587

 

$

670

 

$

1,965

 

$

3,257

 

$

2,944

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.08

 

$

0.02

 

$

0.06

 

$

0.10

 

$

0.09

 

Diluted

 

$

0.08

 

$

0.02

 

$

0.06

 

$

0.10

 

$

0.09

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

33,003

 

33,184

 

32,567

 

33,093

 

32,388

 

Diluted

 

33,981

 

34,098

 

33,452

 

34,039

 

33,303

 

 



 

Omnicell, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

 

 

 

June 30,

 

December 31,

 

 

 

2011

 

2010

 

 

 

(unaudited)

 

(1)

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

181,258

 

$

175,635

 

Short-term investments

 

 

8,074

 

Accounts receivable, net

 

43,105

 

42,732

 

Inventories

 

17,382

 

9,785

 

Prepaid expenses

 

10,568

 

11,959

 

Deferred tax assets

 

13,052

 

13,052

 

Other current assets

 

5,940

 

7,266

 

Total current assets

 

271,305

 

268,503

 

 

 

 

 

 

 

Property and equipment, net

 

16,320

 

14,351

 

Non-current net investment in sales-type leases

 

8,913

 

9,224

 

Goodwill

 

28,543

 

28,543

 

Other intangible assets

 

4,414

 

4,672

 

Non-current deferred tax assets

 

10,057

 

9,566

 

Other assets

 

9,901

 

8,365

 

Total assets

 

$

349,453

 

$

343,224

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

14,380

 

$

13,242

 

Accrued compensation

 

8,122

 

7,731

 

Accrued liabilities

 

6,224

 

8,684

 

Deferred service revenue

 

18,717

 

16,788

 

Deferred gross profit

 

11,300

 

11,719

 

Total current liabilities

 

58,743

 

58,164

 

 

 

 

 

 

 

Long-term deferred service revenue

 

18,855

 

19,171

 

Other long-term liabilities

 

625

 

675

 

Total liabilities

 

78,223

 

78,010

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Total stockholders’ equity

 

271,230

 

265,214

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

349,453

 

$

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

 

 

 

June 30, 2011

 

March 31, 2011

 

June 30, 2010

 

 

 

Net
income

 

Net income
per share-
diluted

 

Net
income

 

Net income
per share-
diluted

 

Net
income

 

Net income
per share-
diluted

 

GAAP

 

$

2,587

 

$

0.08

 

$

670

 

$

0.02

 

$

1,965

 

$

0.06

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

ASC 718 share-based compensation adjustment (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

383

 

 

 

367

 

 

 

363

 

 

 

Operating expenses

 

2,068

 

 

 

2,025

 

 

 

1,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Litigation settlement, net of tax (b)

 

 

 

 

620

 

 

 

 

 

 

Total after-tax adjustments

 

2,451

 

0.07

 

3,012

 

0.09

 

2,097

 

0.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

$

5,038

 

$

0.15

 

$

3,682

 

$

0.11

 

$

4,062

 

$

0.12

 

 


(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 ($0.6 million, net of tax effect of $0.4 million) in the first quarter of 2011.

 



 

Omnicell, Inc.

Reconciliation of GAAP to Non-GAAP

(In thousands, except per share data, unaudited)

 

 

 

Six months ended

 

 

 

June 30, 2011

 

June 30, 2010

 

 

 

Net
income

 

Net income
per share-
diluted

 

Net
income

 

Net income
per share-
diluted

 

GAAP

 

$

3,257

 

$

0.10

 

$

2,944

 

$

0.09

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

ASC 718 share-based compensation adjustment (a)

 

 

 

 

 

 

 

 

 

Gross profit

 

750

 

 

 

684

 

 

 

Operating expenses

 

4,093

 

 

 

3,569

 

 

 

 

 

 

 

 

 

 

 

 

 

Litigation settlement, net of tax (b)

 

620

 

 

 

 

 

 

Total after tax adjustments

 

5,463

 

0.16

 

4,253

 

0.13

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

$

8,720

 

$

0.26

 

$

7,197

 

$

0.22

 

 


(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 ($0.6 million, net of tax effect of $0.4 million) in the first quarter of 2011.

 



 

Omnicell, Inc.

Calculation of Adjusted EBITDA (1)

(In thousands, unaudited)

 

 

 

Three Months Ended

 

Six months ended

 

 

 

June 30,
2011

 

March 31,
2011

 

June 30,
2010

 

June 30,
2011

 

June 30,
2010

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income

 

$

2,587

 

$

670

 

$

1,965

 

$

3,257

 

$

2,944

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

ASC 718 stock compensation expense

 

2,451

 

2,392

 

2,097

 

4,843

 

4,253

 

Litigation settlement, pre-tax

 

 

1,000

 

 

1,000

 

 

Interest

 

(75

)

(75

)

(88

)

(150

)

(160

)

Depreciation and amortization expense

 

1,942

 

1,852

 

2,178

 

3,794

 

4,301

 

Income tax expense

 

1,714

 

413

 

1,580

 

2,127

 

2,184

 

Non-GAAP adjusted EBITDA (1)

 

$

8,619

 

$

6,252

 

$

7,732

 

$

14,871

 

$

13,522

 

 


(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 first quarter 2011 non-GAAP adjustment for pre-tax litigation settlement.