omcl-20201027
0000926326false00009263262020-10-272020-10-27

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):  October 27, 2020

OMNICELL, INC.
(Exact name of registrant as specified in its charter)

Delaware000-3304394-3166458
(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:

    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.001 par valueOMCLNASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company 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
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.



Item 2.02 Results of Operations and Financial Condition
On October 27, 2020, Omnicell, Inc. (the "Company") issued a press release announcing its financial results for the quarter ended September 30, 2020. 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

NumberDescription of Document
99.1
104Cover Page Interactive Data File (embedded within the inline XBRL document)






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.
Date: October 27, 2020
/s/ Peter J. Kuipers
Peter J. Kuipers,
Executive Vice President and Chief Financial Officer





Document

Exhibit 99.1

https://cdn.kscope.io/ce454070de53f2ff3f8cabd56eb416dd-omnicell_logo-hzxgrnxrgbxma.jpg

Contact:
Peter KuipersOmnicell, Inc.
Chief Financial Officer590 East Middlefield Road
800-850-6664Mountain View, CA 94043
Peter.Kuipers@Omnicell.com

Omnicell Reports Third Quarter 2020 Results

GAAP and non-GAAP revenues of $213.7 million
GAAP net income per diluted share of $0.20
Non-GAAP net income per diluted share of $0.60

MOUNTAIN VIEW, Calif. -- October 27, 2020 -- Omnicell, Inc. (NASDAQ:OMCL), a leading provider of medication management solutions and adherence tools for healthcare systems and pharmacies, today announced results for its third quarter ended September 30, 2020.
GAAP Results
GAAP revenues for the third quarter of 2020 were $213.7 million, down $15.1 million, or 6.6% from the third quarter of 2019. GAAP revenues for the nine months ended September 30, 2020 were $643.0 million, down $5.7 million, or 0.9% from the nine months ended September 30, 2019.
Third quarter 2020 GAAP net income was $8.8 million, or $0.20 per diluted share. This compares to GAAP net income of $20.0 million, or $0.46 per diluted share, for the third quarter of 2019.
GAAP net income for the nine months ended September 30, 2020 was $15.8 million, or $0.36 per diluted share. This compares to GAAP net income of $39.2 million, or $0.92 per diluted share, for the nine months ended September 30, 2019.
Non-GAAP Results
Non-GAAP revenues for the third quarter of 2020 were $213.7 million, down $15.1 million, or 6.6%, from the third quarter of 2019. Non-GAAP revenues for the nine months ended September 30, 2020 were $643.0 million, down $5.7 million, or 0.9%, from the nine months ended September 30, 2019.
Non-GAAP net income for the third quarter of 2020 was $26.2 million, or $0.60 per diluted share. This compares to non-GAAP net income of $32.7 million, or $0.76 per diluted share, for the third quarter of 2019.
Non-GAAP net income for the nine months ended September 30, 2020 was $71.1 million, or $1.63 per diluted share. This compares to non-GAAP net income of $87.2 million, or $2.04 per diluted share, for the nine months ended September 30, 2019.
Non-GAAP net income for each period excludes, when applicable, the effect of share-based compensation expense, amortization expense of acquired intangible assets, acquisition-related expenses, restructuring and severance-related expenses, tax restructuring benefits and expenses, amortization of debt issuance costs, and amortization of discount on convertible senior notes.
“We are pleased with the solid financial performance this quarter, which exceeded the high end of our guidance ranges,” said Randall Lipps, chairman, president, chief executive officer, and founder of Omnicell. “We continued to increase new customer wins and bookings, particularly with the top 300 U.S. health systems, as our customers embrace the vision of the autonomous pharmacy. We believe this renewed momentum underscores the critical importance of Omnicell’s solutions, and we remain confident we are well-positioned to continue executing on our strategy and drive significant long-term value for shareholders, healthcare partners, and patients.”
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2020 Guidance
For the fourth quarter of 2020, the Company expects non-GAAP total revenues to be between $238 million and $244 million. The Company expects non-GAAP product revenues to be between $165 million and $170 million, and non-GAAP service revenues to be between $73 million and $74 million. The Company expects fourth quarter 2020 non-GAAP earnings to be between $0.72 and $0.77 per share.
For the full year 2020, the Company expects product bookings to be between $865 million and $900 million. The Company expects non-GAAP total revenues to be between $881 million and $887 million. The Company expects non-GAAP product revenues to be between $626 million and $631 million, and non-GAAP service revenues to be between $255 million and $256 million. The Company expects 2020 non-GAAP earnings to be between $2.35 and $2.40 per share.
The table below summarizes Omnicell's 2020 guidance outlined above.
Q4'202020
Product BookingsNot provided$865 million - $900 million
Non-GAAP Total Revenues$238 million - $244 million $881 million - $887 million
Non-GAAP Product Revenues$165 million - $170 million $626 million - $631 million
Non-GAAP Service Revenues$73 million - $74 million $255 million - $256 million
Non-GAAP EPS$0.72 - $0.77 $2.35 - $2.40
Given the COVID-19 dynamics and momentum we have experienced in the business, we have decided to accelerate our planning process for 2021. As a result, we are now able to provide our preliminary full year revenue guidance. The Company expects 2021 preliminary non-GAAP total revenues to range between $1.015 billion and $1.045 billion.
While we are aware of the recent increase in COVID-19 cases in the United States, we believe, in speaking with our customers, that they are well prepared and believe they will continue to resume more normal business conditions. However, our bookings and revenue in future periods could be impacted if hospitals need to materially change their operations in order to address a continued increase in COVID-19 cases.
Coronavirus (COVID-19) and Operations Update
Keeping in mind our role in the healthcare industry, we are continuing to closely monitor the COVID-19 pandemic. Our top priorities remain protecting the health and well-being of our customers, their patients, and our employees, while maintaining business continuity to meet the needs of our customers. In order to operate in a safe manner, we continue to follow the health and safety guidelines of the U.S. Centers for Disease Control and Prevention and local and state public health departments in each of the regions where we operate. Our manufacturing and distribution facilities have remained open due to our qualification as an essential business and to date, we have not experienced disruptions in our manufacturing activities. The vast majority of our non-manufacturing and non-customer facing personnel continue to work from home. In addition, to minimize the need for on-site visits, we are providing remote service and installation options, training programs, and product demonstrations for our customers, leveraging technology to enable our sales team to operate in a remote sales environment. Although we have not experienced disruptions in our supply chain to date, we cannot predict how long the pandemic and measures intended to contain the spread of COVID-19 will continue.
As a result of the pandemic, health systems have faced increased costs, decreased revenues and cash flow challenges due to cancelled or postponed elective procedures and other reduced demand. We believe these financial pressures led our customers to delay or defer purchasing decisions and/or implementation of our solutions during the first half of 2020, which resulted in delayed implementations and lower product bookings compared to management’s expectations prior to the COVID-19 outbreak. In the third quarter of 2020, we began to see our customers returning to more normal business operations, with increases in elective surgeries and hospital admissions as well as spending returning to pre-pandemic purchasing patterns consistent with long-term strategic investments. This enabled us to resume implementations that were delayed in the first half of the year, providing more visibility into product bookings for the fourth quarter of 2020. As a result, we now expect product bookings for 2020 to return to levels consistent with management’s expectations prior to the pandemic.
In response to the COVID-19 pandemic, we have implemented and continue to focus on cost reduction initiatives in all aspects of our business and remain mindful of the uncertainty related to the pandemic.
While our fiscal year 2020 results will be impacted by the challenges and opportunities brought on by the COVID-19 pandemic, we remain confident in the overall health of our business, in our ability to navigate through these unusual times, and in our ability to continue to execute on our long-term strategy, as we believe our customers and potential customers are increasingly embracing the vision of a fully autonomous pharmacy. However, the full impact of the COVID-19 pandemic and related
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containment measures cannot be predicted and to date, the COVID-19 pandemic and related containment measures have adversely affected and may continue to adversely affect, perhaps materially, our business, results of operations, financial condition, and liquidity.
Omnicell continues to deliver innovation that supports the autonomous pharmacy, an industry movement to leverage automation, intelligence, and technology-enabled services designed to achieve zero-error medication management. During this quarter, the Company accelerated the shift to cloud-based services with the launch of Omnicell One, a predictive intelligence solution that provides visibility and comprehensive data analytics to drive medication supply chain optimization opportunities. The Company also completed the acquisition of Pharmacy Strategies Group’s 340B Link business, adding a comprehensive suite of software-enabled services to help manage compliance with the 340B drug pricing program and the associated eligible drug cost savings. These solutions will support health system partners in managing an increasingly complex pharmacy supply chain.
Omnicell Conference Call Information
Omnicell will hold a conference call today, Tuesday, October 27, 2020 at 1:30 p.m. PT to discuss third quarter 2020 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 7580519. Internet users can access the conference call at http://ir.omnicell.com/communications/events-presentations. 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 November 24, 2020. 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 7580519.
About Omnicell
Since 1992, Omnicell has been committed to transforming the pharmacy care delivery model to dramatically improve outcomes and lower costs. Through the vision of the autonomous pharmacy, a combination of automation, intelligence, and technology-enabled services, powered by a cloud data platform, Omnicell supports more efficient ways to manage medications across all care settings.
Approximately 7,000 facilities worldwide use Omnicell automation and analytics solutions to help increase operational efficiency, reduce medication errors, deliver actionable intelligence, and improve patient safety. Approximately 50,000 institutional and retail pharmacies across North America and the United Kingdom leverage Omnicell's innovative medication adherence and population health solutions to improve patient engagement and adherence to prescriptions, helping to reduce costly hospital readmissions.
To learn more, visit www.omnicell.com. From time to time, Omnicell may use the Company's investor relations site and other online social media channels, including its Twitter handle www.twitter.com/omnicell, LinkedIn page www.linkedin.com/company/omnicell, and Facebook page www.facebook.com/omnicellinc, to disclose material non-public information and comply with its disclosure obligations under Regulation Fair Disclosure ("FD").
Omnicell and the Omnicell logo are registered trademarks of Omnicell, Inc. in the United States and other countries.
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 projected bookings, revenues and earnings per share; planned new products and services; statements about Omnicell’s strategy, objectives, and vision; and Omnicell's expectations about the continuing impact of the ongoing global COVID-19 pandemic (including efforts to contain the spread of the pandemic) on its workforce and operations, as well as the impacts on its customers and suppliers, and the anticipated continuing effects of the pandemic and associated containment measures on its business, financial condition, liquidity, and results of operations. Risks that contribute to the uncertain nature of the forward-looking statements include (i) risks related to outbreaks of contagious diseases or other adverse public health epidemics including the ongoing COVID-19 pandemic, including the duration and any resurgences of the COVID-19 pandemic, (ii) unfavorable general economic and market conditions, including due to economic disruption caused by public health crises such as the COVID-19 pandemic, (iii) Omnicell's ability to take advantage of the growth opportunities in medication management across all care settings, (iv) Omnicell's ability to develop and commercialize new products, including the XR2 Automated Central Pharmacy System and the IVX Workflow semi-automated workflow solution, and enhance existing products, (v) Omnicell's ability to deliver on our vision of the autonomous pharmacy and the impact that advanced automation, data intelligence, and expert services will have on patient care, (vi) risks to growth and acceptance of Omnicell's
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products and services, including competitive conversions, and growth in the overall demand for medication management and supply chain solutions and medication adherence solutions generally, (vii) risks presented by the transition to selling more products and services on a subscription basis, (viii) potential of increasing competition, (ix) potential regulatory changes, (x) Omnicell's ability to improve sales productivity to grow product bookings, and (xi) Omnicell's ability to acquire companies, businesses, or technologies and successfully integrate such acquisitions. These and other risks and uncertainties are described more fully in Omnicell’s most recent filings with the Securities and Exchange Commission (“SEC”). 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 GAAP. Our management evaluates and makes operating decisions using various performance measures. In addition to Omnicell’s GAAP results, we also consider non-GAAP revenues, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP net income, non-GAAP net income per diluted share, adjusted EBITDA, and non-GAAP free cash flow. These non-GAAP results should not be considered as an alternative to revenues, gross profit, operating expenses, net income, net income per diluted share, net cash provided by operating activities, 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 revenues, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP net income, non-GAAP net income per diluted share, and adjusted EBITDA 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 believe 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)Amortization of acquired intangible assets. 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)Acquisition-related expenses. We excluded from our non-GAAP results the expenses which are related to 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 historical operations and forward looking guidance, and the financial results of less acquisitive peer companies.
d)Severance and other related expenses. We excluded from our non-GAAP results the expenses which are related to restructuring events. These expenses are unrelated to our ongoing operations, vary in size and frequency, and are subject to significant fluctuations from period to period due to varying levels of restructuring activity. 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 peer companies.
e)Amortization of debt issuance costs. Debt issuance costs represent costs associated with the issuance of term loan and revolving credit facilities, as well as the issuance of convertible senior notes. The costs include 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.
f)Amortization of discount on convertible senior notes. We excluded from our non-GAAP results the amortization of the imputed discount on our convertible senior notes. Under GAAP, certain convertible debt instruments that may be settled in cash upon conversion are required to be bifurcated into separate liability and equity components in a manner that reflects the issuer's assumed non-convertible debt borrowing rate. For GAAP purposes, we are required to recognize the imputed interest expense on the difference between our assumed non-convertible debt borrowing rate and the coupon rate on our convertible senior notes. 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.
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g)Tax impact from intellectual property (“IP”) restructuring. We excluded from our non-GAAP results the tax impacts related to IP restructuring. These impacts 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 impacts provides more meaningful comparisons of the financial results to our historical operations and forward-looking guidance, and the financial results of peer companies.
h)IP and legal entities restructuring costs. We excluded from our non-GAAP results the expenses which are related to IP and legal entities restructuring events, such as legal and tax consulting costs. These expenses are unrelated to our ongoing operations, vary in size and frequency, and are subject to significant fluctuations from period to period due to varying levels of restructuring activity. 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 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 or other items.
We believe that the presentation of these non-GAAP financial measures is warranted for several reasons: 
a)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. 
b)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.
c)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.
d)These non-GAAP financial measures facilitate comparisons to the operating results of other companies in our industry, which also use non-GAAP financial measures to supplement their GAAP results (although these companies may calculate non-GAAP financial measures differently than Omnicell does), 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 Accounting Standard Codification (“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 share-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 share-based compensation expense, as well as certain non-GAAP adjustments.
Non-GAAP free cash flow is defined as net cash provided by operating activities less cash used for software development for external use and purchases of property and equipment. We believe free cash flow is important to enable investors to better understand and evaluate our ongoing operating results and allows for greater transparency in the review and understanding of our overall financial, operational, and economic performance, because free cash flow takes into account certain capital expenditures and cash used for software development necessary to operate our business.
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
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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: 
a)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. 
b)Other companies, including companies in Omnicell’s industry, may calculate non-GAAP financial measures differently than Omnicell, limiting their usefulness as a comparative measure.
c)A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in Omnicell’s cash balance for the period.
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.
Our 2020 guidance for non-GAAP earnings per share, non-GAAP total revenues, non-GAAP product revenues, and non-GAAP service revenues, as well as our 2021 preliminary guidance for non-GAAP total revenues, and certain projections to be discussed in the conference call noted above, exclude “certain items,” which include but are not limited to: unusual gains and losses; costs associated with future restructurings; acquisition-related expenses; and certain tax and litigation outcomes. We do not provide a reconciliation of forward-looking non-GAAP guidance to the comparable GAAP measures as these items are inherently uncertain and difficult to estimate, and cannot be predicted without unreasonable effort. We believe such a reconciliation would imply a degree of precision that could be confusing to investors. These items may also have a material impact on GAAP earnings per share, total revenues, product revenues, and service revenues in future periods.
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Omnicell, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)

Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Revenues:
Product revenues$151,337 $168,488 $460,352 $472,477 
Services and other revenues62,362 60,317 182,654 176,258 
Total revenues213,699 228,805 643,006 648,735 
Cost of revenues:
Cost of product revenues86,689 86,695 262,740 250,089 
Cost of services and other revenues30,219 29,963 90,628 85,337 
Total cost of revenues116,908 116,658 353,368 335,426 
Gross profit
96,791 112,147 289,638 313,309 
Operating expenses:
Research and development15,197 16,625 54,679 49,551 
Selling, general, and administrative71,442 70,876 219,647 207,588 
Total operating expenses86,639 87,501 274,326 257,139 
Income from operations10,152 24,646 15,312 56,170 
Interest and other income (expense), net 809 (1,168)161 (4,207)
Income before provision for income taxes10,961 23,478 15,473 51,963 
Provision for (benefit from) income taxes2,156 3,495 (344)12,720 
Net income$8,805 $19,983 $15,817 $39,243 
Net income per share:
Basic$0.21 $0.48 $0.37 $0.95 
Diluted$0.20 $0.46 $0.36 $0.92 
Weighted-average shares outstanding:
Basic42,802 41,771 42,606 41,283 
Diluted43,691 43,052 43,651 42,796 
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Omnicell, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
September 30,
2020
December 31,
2019
ASSETS
Current assets:
Cash and cash equivalents$629,171 $127,210 
Accounts receivable and unbilled receivables, net188,102 218,362 
Inventories103,101 108,011 
Prepaid expenses20,399 14,478 
Other current assets22,631 15,177 
Total current assets963,404 483,238 
Property and equipment, net
57,559 54,246 
Long-term investment in sales-type leases, net
22,510 19,750 
Operating lease right-of-use assets
50,415 56,130 
Goodwill
336,456 336,539 
Intangible assets, net
111,587 124,867 
Long-term deferred tax assets
14,985 14,142 
Prepaid commissions
46,649 48,862 
Other long-term assets
115,712 103,036 
Total assets$1,719,277 $1,240,810 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$37,203 $46,380 
Accrued compensation35,778 44,155 
Accrued liabilities59,254 55,567 
Deferred revenues, net101,641 90,894 
Total current liabilities233,876 236,996 
Long-term deferred revenues
5,163 7,083 
Long-term deferred tax liabilities35,584 39,090 
Long-term operating lease liabilities
44,365 50,669 
Other long-term liabilities
19,775 11,718 
Revolving credit facility
— 50,000 
Convertible senior notes, net462,115 — 
Total liabilities800,878 395,556 
Total stockholders’ equity918,399 845,254 
Total liabilities and stockholders’ equity$1,719,277 $1,240,810 
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Omnicell, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Nine Months Ended September 30,
20202019
Operating Activities
Net income$15,817 $39,243 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization43,903 39,525 
Loss on disposal of property and equipment— 436 
Share-based compensation expense33,034 25,175 
Deferred income taxes(3,643)4,023 
Amortization of operating lease right-of-use assets7,692 7,917 
Amortization of debt issuance costs754 1,718 
Amortization of discount on convertible senior notes249 — 
Changes in operating assets and liabilities:
Accounts receivable and unbilled receivables29,653 (7,716)
Inventories4,570 (7,015)
Prepaid expenses(6,272)(1,341)
Other current assets(6,617)974 
Investment in sales-type leases(3,273)(5,120)
Prepaid commissions2,213 909 
Other long-term assets(4,023)3,944 
Accounts payable(8,659)10,316 
Accrued compensation(8,377)(8,161)
Accrued liabilities3,281 5,262 
Deferred revenues8,827 3,900 
Operating lease liabilities(7,764)(7,887)
Other long-term liabilities8,057 4,086 
Net cash provided by operating activities109,422 110,188 
Investing Activities
Software development for external use(25,909)(34,129)
Purchases of property and equipment(17,265)(12,632)
Net cash used in investing activities(43,174)(46,761)
Financing Activities
Proceeds from revolving credit facility150,000 — 
Repayment of debt and revolving credit facility(200,000)(60,000)
Payments for debt issuance costs for revolving credit facility(550)— 
Proceeds from issuance of convertible senior notes, net of issuance costs559,665 — 
Purchase of convertible note hedge(100,625)— 
Proceeds from sale of warrants51,290 — 
At the market equity offering, net of offering costs— 37,806 
Proceeds from issuances under stock-based compensation plans33,226 35,029 
Employees’ taxes paid related to restricted stock units(4,101)(5,790)
Stock repurchases(53,035)— 
Net cash provided by financing activities435,870 7,045 
Effect of exchange rate changes on cash and cash equivalents(157)(387)
Net increase in cash and cash equivalents501,961 70,085 
Cash and cash equivalents at beginning of period127,210 67,192 
Cash and cash equivalents at end of period$629,171 $137,277 
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Omnicell, Inc.
Reconciliation of GAAP to Non-GAAP
(Unaudited, in thousands, except per share data and percentage)
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Reconciliation of GAAP revenues to non-GAAP revenues:
GAAP revenues$213,699 $228,805 $643,006 $648,735 
Non-GAAP revenues$213,699 $228,805 $643,006 $648,735 
Reconciliation of GAAP gross profit to non-GAAP gross profit:
GAAP gross profit$96,791 $112,147 $289,638 $313,309 
GAAP gross margin45.3%49.0%45.0%48.3%
Share-based compensation expense1,758 1,316 5,658 4,194 
Amortization of acquired intangibles2,032 2,037 6,100 6,147 
Severance and other expenses— — 2,564 — 
Non-GAAP gross profit$100,581 $115,500 $303,960 $323,650 
Non-GAAP gross margin47.1%50.5%47.3%49.9%
Reconciliation of GAAP operating expenses to non-GAAP operating expenses:
GAAP operating expenses$86,639 $87,501 $274,326 $257,139 
GAAP operating expenses % to total revenues40.5%38.2%42.7%39.6%
Share-based compensation expense(9,266)(7,189)(27,376)(20,981)
Amortization of acquired intangibles(2,336)(2,545)(7,056)(7,891)
Acquisition-related expenses(3,121)— (3,121)— 
Severance and other expenses(84)(194)(8,272)(920)
Non-GAAP operating expenses$71,832 $77,573 $228,501 $227,347 
Non-GAAP operating expenses % to total non-GAAP revenues33.6%33.9%35.5%35.0%
Reconciliation of GAAP income from operations to non-GAAP income from operations:
GAAP income from operations$10,152 $24,646 $15,312 $56,170 
GAAP operating income % to total revenues4.8%10.8%2.4%8.7%
Share-based compensation expense11,024 8,505 33,034 25,175 
Amortization of acquired intangibles4,368 4,582 13,156 14,038 
Acquisition-related expenses3,121 — 3,121 — 
Severance and other expenses84 194 10,836 920 
Non-GAAP income from operations$28,749 $37,927 $75,459 $96,303 
Non-GAAP operating income % to total non-GAAP revenues13.5%16.6%11.7%14.8%
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Omnicell, Inc.
Reconciliation of GAAP to Non-GAAP
(Unaudited, in thousands, except per share data and percentage)
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Reconciliation of GAAP net income to non-GAAP net income:
GAAP net income$8,805 $19,983 $15,817 $39,243 
Tax impact of IP restructuring— — — 9,624 
Share-based compensation expense11,024 8,505 33,034 25,175 
Amortization of acquired intangibles4,368 4,582 13,156 14,038 
Acquisition-related expenses
3,121 — 3,121 — 
Severance and other expenses (a)
84 194 10,836 921 
Amortization of debt issuance costs272 573 754 1,718 
Amortization of discount on convertible senior notes249 — 249 — 
Tax effect of the adjustments above (b)
(1,700)(1,123)(5,905)(3,501)
Non-GAAP net income$26,223 $32,714 $71,062 $87,218 
Reconciliation of GAAP net income per share - diluted to non-GAAP net income per share - diluted:
Shares - diluted GAAP43,691 43,052 43,651 42,796 
Shares - diluted Non-GAAP43,691 43,052 43,651 42,796 
GAAP net income per share - diluted$0.20 $0.46 $0.36 $0.92 
Tax impact of IP restructuring— — — 0.22 
Share-based compensation expense0.25 0.20 0.76 0.59 
Amortization of acquired intangibles0.10 0.11 0.30 0.33 
Acquisition-related expenses0.07 — 0.07 — 
Severance and other expenses0.00 0.01 0.25 0.02 
Amortization of debt issuance costs0.01 0.01 0.02 0.04 
Amortization of discount on convertible senior notes0.01 — 0.01 — 
Tax effect of the adjustments above (b)
(0.04)(0.03)(0.14)(0.08)
Non-GAAP net income per share - diluted$0.60 $0.76 $1.63 $2.04 
Reconciliation of GAAP net income to non-GAAP Adjusted EBITDA(c):
GAAP net income$8,805 $19,983 $15,817 $39,243 
Share-based compensation expense11,024 8,505 33,034 25,175 
Interest (income) and expense, net380 572 442 1,965 
Depreciation and amortization expense15,124 13,651 43,903 39,525 
Acquisition-related expenses3,121 — 3,121 — 
Severance and other expenses84 194 10,836 921 
Amortization of debt issuance costs272 573 754 1,718 
Amortization of discount on convertible senior notes249 — 249 — 
Income tax expense (benefit)2,156 3,495 (344)12,720 
Non-GAAP adjusted EBITDA$41,215 $46,973 $107,812 $121,267 
(a)For the three months ended September 30, 2020 and 2019, other expenses include $0.1 million and $0.2 million of IP and legal entities restructuring costs, respectively. For both the nine months ended September 30, 2020 and 2019, other expenses include $0.9 million of IP and legal entities restructuring costs.
(b)Tax effects calculated for all adjustments except tax benefits and expenses, and share-based compensation expense, using an estimated annual effective tax rate of 21% for both fiscal years 2020 and 2019.
(c)Defined as earnings before interest income and expense, taxes, depreciation and amortization, share-based compensation, as well as excluding certain non-GAAP adjustments.
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Omnicell, Inc.
Reconciliation of GAAP to Non-GAAP
(Unaudited, in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Reconciliation of GAAP net cash provided by operating activities to non-GAAP free cash flow:
GAAP net cash provided by operating activities$36,687 $56,428 $109,422 $110,188 
Software development for external use(5,907)(11,548)(25,909)(34,129)
Purchases of property and equipment(4,054)(3,263)(17,265)(12,632)
Non-GAAP free cash flow$26,726 $41,617 $66,248 $63,427 

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