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Omnicell Announces Second Quarter 2023 Results

Total GAAP revenues of $299 million

GAAP net income per diluted share of $0.08

Non-GAAP net income per diluted share of $0.57

Omnicell, Inc. (NASDAQ:OMCL) (“Omnicell,” “we,” “our,” “us,” “management,” or the “Company”), a leader in transforming the pharmacy care delivery model, today announced results for its second quarter ended June 30, 2023.

“Our second quarter results reflect sequential revenue and profit growth, as we exceeded our previously disclosed guidance ranges for total product and service revenues, non-GAAP EBITDA, and non-GAAP earnings per share,” said Randall Lipps, chairman, president, chief executive officer, and founder of Omnicell. “We continue to make progress integrating our most recent acquisitions and executing go-to-market strategies for each. In addition, we believe our recent customer wins demonstrate the important role Omnicell plays in automating and modernizing global medication management infrastructure. We are maintaining what we believe is a prudent approach to managing the business and believe Omnicell will play a key role in addressing the labor constraints that so many of our customers continue to navigate. We remain focused on delivering mission-critical medication management solutions and long-term growth.”

Financial Results

Total GAAP revenues for the second quarter of 2023 were $299 million, down $32 million, or 10%, from the second quarter of 2022. The year-over-year decrease in total GAAP revenues reflects lower point-of-care revenues primarily as a result of ongoing health systems capital budget and labor constraints.

Total GAAP net income for the second quarter of 2023 was $3 million, or $0.08 per diluted share. This compares to GAAP net income of $9 million, or $0.20 per diluted share, for the second quarter of 2022.

Total non-GAAP net income for the second quarter of 2023 was $26 million, or $0.57 per diluted share. This compares to non-GAAP net income of $38 million, or $0.84 per diluted share, for the second quarter of 2022.

Total non-GAAP EBITDA for the second quarter of 2023 was $47 million. This compares to non-GAAP EBITDA of $56 million for the second quarter of 2022.

Balance Sheet

As of June 30, 2023, Omnicell’s balance sheet reflected cash and cash equivalents of $399 million, total debt (net of unamortized debt issuance costs) of $568 million, and total assets of $2.19 billion. Cash flows provided by operating activities in the second quarter of 2023 totaled $73 million. This compares to cash flows used in operating activities totaling $10 million in the second quarter of 2022.

As of June 30, 2023, the Company had $418 million of availability under its revolving credit facility, which availability is subject to reduction in order to maintain compliance with certain financial covenants under the revolving credit facility. As of June 30, 2023, the Company had no outstanding balance under the revolving credit facility.

Updated 2023 Guidance

For the full year 2023, the Company expects bookings to trend toward the lower end of the previously disclosed guidance range of $1.000 billion and $1.100 billion. The Company expects full year 2023 total revenues to be between $1.160 billion and $1.200 billion. The Company expects full year 2023 product revenues to be between $740 million and $760 million, and full year 2023 service revenues to be between $420 million and $440 million. The Company expects full year 2023 technical services revenues to be between $215 million and $225 million, and full year 2023 Advanced Services revenues to be between $205 million and $215 million. The Company expects full year 2023 non-GAAP EBITDA to be between $130 million and $145 million. The Company expects full year 2023 non-GAAP earnings per share to be between $1.75 and $2.00 per share.

For the third quarter of 2023, the Company expects total revenues to be between $290 million and $300 million. The Company expects third quarter 2023 product revenues to be between $185 million and $190 million, and third quarter 2023 service revenues to be between $105 million and $110 million. The Company expects third quarter 2023 non-GAAP EBITDA to be between $31 million and $37 million. The Company expects third quarter 2023 non-GAAP earnings per share to be between $0.42 and $0.52 per share.

The table below summarizes Omnicell’s third quarter and updated full year 2023 guidance outlined above.

 

Q3 2023

2023

Bookings

Not provided

$1.000 billion - $1.100 billion

Total Revenues

$290 million - $300 million

$1.160 billion - $1.200 billion

Product Revenues

$185 million - $190 million

$740 million - $760 million

Service Revenues

$105 million - $110 million

$420 million - $440 million

Technical Services Revenues

Not provided

$215 million - $225 million

Advanced Services Revenues

Not provided

$205 million - $215 million

Non-GAAP EBITDA

$31 million - $37 million

$130 million - $145 million

Non-GAAP Earnings Per Share

$0.42 - $0.52

$1.75 - $2.00

The Company does not provide guidance for GAAP net income or GAAP earnings per share, nor a reconciliation of these forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures on a forward-looking basis because it is unable to predict certain items contained in the GAAP measures without unreasonable efforts. These forward-looking non-GAAP financial measures do not include certain items, which may be significant, including, but not limited to, unusual gains and losses, costs associated with future restructurings, acquisition-related expenses, and certain tax and litigation outcomes.

Omnicell Conference Call Information

Omnicell will hold a conference call today, Tuesday, August 1, 2023 at 4:30 p.m. ET to discuss second quarter 2023 financial results. The conference call can be monitored by dialing 1-888-550-5424 within the U.S. or 1-646-960-0819 for all other locations. A link to the live and archived webcast will also be available on the Investor Relations section of Omnicell’s website at http://ir.omnicell.com/events-and-presentations/.

__________________________________________________

About Omnicell

Since 1992, Omnicell has been committed to transforming the pharmacy care delivery model in an effort to optimize financial and clinical outcomes across all settings of care. Through a comprehensive portfolio of automation and advanced services, Omnicell is uniquely positioned to address evolving healthcare challenges, connect settings of care, and streamline the medication management process. Healthcare facilities worldwide partner with Omnicell to help increase operational efficiency, reduce medication errors, improve patient safety, and enhance patient engagement and adherence, helping to reduce costly hospital readmissions. To learn more, visit omnicell.com.

From time to time, Omnicell may use the Company’s investor relations website 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 (“Reg FD”).

OMNICELL and the Omnicell logo are registered trademarks of Omnicell, Inc. or one of its subsidiaries.

Forward-Looking Statements

To the extent any statements contained in this press 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. Without limiting the foregoing, statements including the words “expect,” “intend,” “may,” “will,” “should,” “would,” “could,” “plan,” “potential,” “anticipate,” “believe,” “forecast,” “guidance,” “outlook,” “goals,” “target,” “estimate,” “seek,” “predict,” “project,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to the occurrence of many events outside Omnicell’s control. Such statements include, but are not limited to, Omnicell’s projected bookings, revenues, including product, service, technical services and Advanced Services revenues, non-GAAP EBITDA, and non-GAAP earnings per share; expectations regarding, and progress integrating, recent acquisitions; our ability to deliver long-term growth; and statements about Omnicell’s strategy, plans, objectives, goals, vision, planned investments, products and services and the expected benefits. Actual results and other events may differ significantly from those contemplated by forward-looking statements due to numerous factors that involve substantial known and unknown risks and uncertainties. These risks and uncertainties include, among other things, (i) unfavorable general economic and market conditions, including the impact and duration of inflationary pressures, (ii) ability to realize the benefits of our expense containment efforts, (iii) Omnicell’s ability to take advantage of growth opportunities and develop and commercialize new solutions and enhance existing solutions, (iv) reduction in demand in the capital equipment market or reduction in the demand for or adoption of our solutions, systems, or services, (v) delays in installations of our medication management solutions or our more complex medication packaging systems, (vi) risks related to Omnicell’s investments in new business strategies or initiatives, including its transition to selling more products and services on a subscription basis, and its ability to acquire companies, businesses, or technologies and successfully integrate such acquisitions, (vii) risks related to failing to maintain expected service levels when providing our Advanced Services or retaining our Advanced Services customers, (viii) Omnicell’s ability to meet the demands of, or maintain relationships with, its institutional, retail, and specialty pharmacy customers, (ix) risks related to climate change, legal, regulatory or market measures to address climate change and related emphasis on ESG matters by various stakeholders, (x) changes to the 340B Program, (xi) Omnicell’s substantial debt, which could impair its financial flexibility and access to capital, (xii) covenants in our credit agreement could restrict our business and operations, (xiii) continued and increased competition from current and future competitors in the medication management automation solutions market and the medication adherence solutions market, (xiv) risks presented by government regulations, legislative changes, fraud and anti-kickback statues, products liability claims, the outcome of legal proceedings, and other legal obligations related to healthcare, privacy, data protection, and information security, including any potential governmental investigations and enforcement actions, litigation, fines and penalties, exposure to indemnification obligations or other liabilities, and adverse publicity as a result of the previously disclosed ransomware incident, (xv) any disruption in Omnicell’s information technology systems and breaches of data security or cyber-attacks on its systems or solutions, including the previously disclosed ransomware incident and any potential adverse legal, reputational, and financial effects that may result from it and/or additional cybersecurity incidents, as well as the effectiveness of business continuity plans during any future cybersecurity incidents, (xvi) risks associated with operating in foreign countries, (xvii) Omnicell’s ability to recruit and retain skilled and motivated personnel, (xviii) Omnicell’s ability to protect its intellectual property, (xix) risks related to the availability and sources of raw materials and components or price fluctuations, shortages, or interruptions of supply, (xx) Omnicell’s dependence on a limited number of suppliers for certain components, equipment, and raw materials, as well as technologies provided by third-party vendors, (xxi) fluctuations in quarterly and annual operating results may make our future operating results difficult to predict, (xxii) failing to meet (or significantly exceeding) our publicly announced financial guidance, and (xxiii) other risks and uncertainties further described in the “Risk Factors” section of Omnicell’s most recent Annual Report on Form 10-K, as well as in Omnicell’s other reports filed with or furnished to the United States Securities and Exchange Commission (“SEC”), available at www.sec.gov. Forward-looking statements should be considered in light of these risks and uncertainties. Investors and others 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 of this press release. Omnicell assumes no obligation to update any such statements publicly, or to update the reasons actual results could differ materially from those expressed or implied in any forward-looking statements, whether as a result of changed circumstances, new information, future events, or otherwise, except as required by law.

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”). 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 gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share, non-GAAP diluted shares, non-GAAP EBITDA, non-GAAP EBITDA margin, and non-GAAP free cash flow. These non-GAAP results and metrics should not be considered as an alternative to revenues, gross profit, operating expenses, income from operations, net income, net income per diluted share, diluted shares, net cash provided by operating activities, or any other performance measure derived in accordance with GAAP. We present these non-GAAP results and metrics because management considers them to be important supplemental measures of Omnicell’s performance and refers to such measures when analyzing Omnicell’s strategy and operations.

Our non-GAAP revenues, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share, non-GAAP EBITDA, and non-GAAP EBITDA margin 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 such period that directly drive operating income in such 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: non-GAAP revenues excludes from its GAAP equivalent item a) below; non-GAAP gross profit and non-GAAP gross margin exclude from their GAAP equivalents items a), b), c), f), and h) below; non-GAAP operating expenses excludes from its GAAP equivalents items b), c), d), e), f), g) and h) below; non-GAAP income from operations and non-GAAP operating margin exclude from their GAAP equivalents items a), b), c), d), e), f), g) and h) below; and non-GAAP net income and non-GAAP net income per diluted share exclude from their GAAP equivalents items a) through i) below. Non-GAAP EBITDA is defined as earnings before interest income and expense, taxes, depreciation, amortization, and share-based compensation, as well as excluding certain other non-GAAP adjustments. Non-GAAP EBITDA and non-GAAP EBITDA margin exclude from their GAAP equivalents items a), b), d), e), f), g), h) and i) below:

a)

Acquisition accounting impact related to deferred revenues. In connection with the acquisition of FDS Amplicare on September 9, 2021, we recorded a fair value adjustment to acquired deferred revenues as part of the purchase accounting in accordance with GAAP. The adjustment represents revenues that would have been recognized in the normal course of business by FDS Amplicare if the acquisition had not occurred, but was not recognized due to GAAP purchase accounting requirements. The non-GAAP adjustment to our revenues is intended to include the full amounts of such revenues. We believe the adjustment to these revenues is useful as a measure of the ongoing performance of our business.

b)

Share-based compensation expense. We excluded from our non-GAAP results the expense related to equity-based compensation plans as it represents expenses that do not require cash settlement from Omnicell.

c)

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.

d)

Acquisition-related expenses. We excluded from our non-GAAP results the expenses related to recent acquisitions, including amortization of representations and warranties insurance. 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 acquisition activity. We believe that excluding these expenses provides more meaningful comparisons of the financial results to our historical operations and forward-looking guidance, and to the financial results of less acquisitive peer companies.

e)

Impairment and abandonment of operating lease right-of-use and other assets related to facilities. We excluded from our non-GAAP results the impairment and abandonment of certain operating lease right-of-use assets, as well as property and equipment, incurred in connection with restructuring activities for optimization of certain leased facilities. 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.

f)

Ransomware-related expenses, net of insurance recoveries. We excluded from our non-GAAP results the net expenses related to the previously disclosed ransomware incident identified by the Company on May 4, 2022. Expenses include costs to investigate and remediate the ransomware incident, as well as legal and other professional services, and are presented net of expected insurance recoveries. These expenses are unrelated to our ongoing operations and would not have otherwise been incurred by us in the normal course of business. We believe that excluding these expenses provides more meaningful comparisons of the financial results to our historical operations and forward-looking guidance, and to the financial results of peer companies.

g)

Executives transition costs. We excluded from our non-GAAP results the executives transition costs associated with the departure of certain executive officers, primarily consisting of severance expenses. These expenses are unrelated to our ongoing operations and we do not expect them to occur in the ordinary course of business. We believe that excluding these expenses provides more meaningful comparisons of the financial results to our historical operations and forward-looking guidance, and to the financial results of peer companies.

h)

Severance-related expenses. We excluded from our non-GAAP results the expenses 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 to the financial results of peer companies.

i)

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 fees, and legal fees. These non-cash expenses are not considered by management to reflect the core cash-generating performance of the business and therefore are 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 compensation plans or other items.

We believe that the presentation of non-GAAP revenues, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share, non-GAAP EBITDA, and non-GAAP EBITDA margin 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 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 Standards 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.

Non-GAAP diluted shares is defined as our GAAP diluted shares, excluding the impact of dilutive convertible senior notes for which the Company is economically hedged through its anti-dilutive convertible note hedge transaction. We believe non-GAAP diluted shares is a useful non-GAAP metric because it provides insight into the offsetting economic effect of the hedge transaction against potential conversion of the convertible senior notes.

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 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 equity incentive plans 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.

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 as well as in Omnicell’s other reports filed with or furnished to the SEC.

Omnicell, Inc.

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2023

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Product revenues

$

188,436

 

$

233,806

 

 

$

374,151

 

 

$

459,681

 

Services and other revenues

 

110,537

 

 

97,580

 

 

 

215,451

 

 

 

190,533

 

Total revenues

 

298,973

 

 

331,386

 

 

 

589,602

 

 

 

650,214

 

Cost of revenues:

 

 

 

 

 

 

 

Cost of product revenues

 

107,962

 

 

121,814

 

 

 

217,489

 

 

 

240,152

 

Cost of services and other revenues

 

56,568

 

 

51,480

 

 

 

112,641

 

 

 

101,923

 

Total cost of revenues

 

164,530

 

 

173,294

 

 

 

330,130

 

 

 

342,075

 

Gross profit

 

134,443

 

 

158,092

 

 

 

259,472

 

 

 

308,139

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

23,137

 

 

26,355

 

 

 

46,015

 

 

 

51,385

 

Selling, general, and administrative

 

103,558

 

 

119,252

 

 

 

228,672

 

 

 

239,185

 

Total operating expenses

 

126,695

 

 

145,607

 

 

 

274,687

 

 

 

290,570

 

Income (loss) from operations

 

7,748

 

 

12,485

 

 

 

(15,215

)

 

 

17,569

 

Interest and other income (expense), net

 

4,461

 

 

(1,711

)

 

 

6,242

 

 

 

(1,825

)

Income (loss) before income taxes

 

12,209

 

 

10,774

 

 

 

(8,973

)

 

 

15,744

 

Provision for (benefit from) income taxes

 

8,758

 

 

1,705

 

 

 

2,576

 

 

 

(1,538

)

Net income (loss)

$

3,451

 

$

9,069

 

 

$

(11,549

)

 

$

17,282

 

Net income (loss) per share:

 

 

 

 

 

 

 

Basic

$

0.08

 

$

0.21

 

 

$

(0.26

)

 

$

0.39

 

Diluted

$

0.08

 

$

0.20

 

 

$

(0.26

)

 

$

0.37

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

 

45,125

 

 

44,219

 

 

 

45,007

 

 

 

44,234

 

Diluted

 

45,472

 

 

46,260

 

 

 

45,007

 

 

 

47,121

 

Omnicell, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands)

 

 

June 30,

2023

 

December 31,

2022

 

 

 

 

ASSETS

Current assets:

 

 

 

Cash and cash equivalents

$

399,464

 

$

330,362

Accounts receivable and unbilled receivables, net

 

273,899

 

 

299,469

Inventories

 

130,577

 

 

147,549

Prepaid expenses

 

23,514

 

 

27,070

Other current assets

 

53,907

 

 

77,362

Total current assets

 

881,361

 

 

881,812

Property and equipment, net

 

103,212

 

 

93,961

Long-term investment in sales-type leases, net

 

35,039

 

 

32,924

Operating lease right-of-use assets

 

27,698

 

 

38,052

Goodwill

 

735,523

 

 

734,274

Intangible assets, net

 

226,707

 

 

242,906

Long-term deferred tax assets

 

32,764

 

 

22,329

Prepaid commissions

 

54,777

 

 

59,483

Other long-term assets

 

96,791

 

 

105,017

Total assets

$

2,193,872

 

$

2,210,758

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

Accounts payable

$

47,192

 

$

63,389

Accrued compensation

 

52,475

 

 

73,455

Accrued liabilities

 

145,888

 

 

172,655

Deferred revenues, net

 

124,602

 

 

118,947

Total current liabilities

 

370,157

 

 

428,446

Long-term deferred revenues

 

48,750

 

 

37,385

Long-term deferred tax liabilities

 

1,511

 

 

2,095

Long-term operating lease liabilities

 

35,510

 

 

39,405

Other long-term liabilities

 

6,265

 

 

6,719

Convertible senior notes, net

 

568,114

 

 

566,571

Total liabilities

 

1,030,307

 

 

1,080,621

Total stockholders’ equity

 

1,163,565

 

 

1,130,137

Total liabilities and stockholders’ equity

$

2,193,872

 

$

2,210,758

Omnicell, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

 

 

 

Six Months Ended June 30,

 

 

2023

 

 

 

2022

 

 

 

 

 

Operating Activities

 

 

 

Net income (loss)

$

(11,549

)

 

$

17,282

 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

 

44,054

 

 

 

43,017

 

Loss on disposal of property and equipment

 

993

 

 

 

 

Share-based compensation expense

 

28,131

 

 

 

33,421

 

Deferred income taxes

 

(11,019

)

 

 

(9,506

)

Amortization of operating lease right-of-use assets

 

4,225

 

 

 

6,801

 

Impairment and abandonment of operating lease right-of-use assets related to facilities

 

7,815

 

 

 

5,093

 

Amortization of debt issuance costs

 

2,091

 

 

 

2,079

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable and unbilled receivables

 

26,463

 

 

 

(71,418

)

Inventories

 

17,820

 

 

 

(32,625

)

Prepaid expenses

 

3,576

 

 

 

1,660

 

Other current assets

 

773

 

 

 

(1,996

)

Investment in sales-type leases

 

(1,707

)

 

 

(12,465

)

Prepaid commissions

 

4,706

 

 

 

6,033

 

Other long-term assets

 

43

 

 

 

1,455

 

Accounts payable

 

(15,806

)

 

 

(3,130

)

Accrued compensation

 

(20,980

)

 

 

(11,118

)

Accrued liabilities

 

(4,646

)

 

 

4,682

 

Deferred revenues

 

16,540

 

 

 

1,395

 

Operating lease liabilities

 

(5,396

)

 

 

(7,176

)

Other long-term liabilities

 

(454

)

 

 

969

 

Net cash provided by (used in) operating activities

 

85,673

 

 

 

(25,547

)

Investing Activities

 

 

 

External-use software development costs

 

(6,685

)

 

 

(6,543

)

Purchases of property and equipment

 

(21,772

)

 

 

(21,099

)

Business acquisition, net of cash acquired

 

 

 

 

(3,392

)

Purchase price adjustments from business acquisitions

 

 

 

 

5,484

 

Net cash used in investing activities

 

(28,457

)

 

 

(25,550

)

Financing Activities

 

 

 

Proceeds from issuances under stock-based compensation plans

 

15,203

 

 

 

21,123

 

Employees’ taxes paid related to restricted stock units

 

(3,465

)

 

 

(8,470

)

Change in customer funds, net

 

(4,273

)

 

 

5,986

 

Stock repurchases

 

 

 

 

(52,210

)

Net cash provided by (used in) financing activities

 

7,465

 

 

 

(33,571

)

Effect of exchange rate changes on cash and cash equivalents

 

148

 

 

 

(2,123

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

64,829

 

 

 

(86,791

)

Cash, cash equivalents, and restricted cash at beginning of period

 

352,835

 

 

 

355,620

 

Cash, cash equivalents, and restricted cash at end of period

$

417,664

 

 

$

268,829

 

Reconciliation of cash, cash equivalents, and restricted cash to the Condensed Consolidated Balance Sheets:

Cash and cash equivalents

$

399,464

 

 

$

244,953

 

Restricted cash included in other current assets

 

18,200

 

 

 

23,876

 

Cash, cash equivalents, and restricted cash at end of period

$

417,664

 

 

$

268,829

 

Omnicell, Inc.

Reconciliation of GAAP to Non-GAAP

(Unaudited, in thousands, except per share data and percentage)

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP revenues to non-GAAP revenues:

GAAP revenues

$

298,973

 

 

$

331,386

 

 

$

589,602

 

 

$

650,214

 

Acquisition accounting impact related to deferred revenues

 

 

 

 

302

 

 

 

 

 

 

680

 

Non-GAAP revenues

$

298,973

 

 

$

331,688

 

 

$

589,602

 

 

$

650,894

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP gross profit to non-GAAP gross profit:

 

 

 

 

 

GAAP gross profit

$

134,443

 

 

$

158,092

 

 

$

259,472

 

 

$

308,139

 

GAAP gross margin

 

45.0

%

 

 

47.7

%

 

 

44.0

%

 

 

47.4

%

Share-based compensation expense

 

2,268

 

 

 

2,160

 

 

 

4,276

 

 

 

4,404

 

Amortization of acquired intangibles

 

2,900

 

 

 

3,537

 

 

 

5,925

 

 

 

6,851

 

Acquisition accounting impact related to deferred revenues

 

 

 

 

302

 

 

 

 

 

 

680

 

Ransomware-related expenses, net of insurance recoveries

 

 

 

 

222

 

 

 

 

 

 

222

 

Severance-related expenses

 

238

 

 

 

 

 

 

382

 

 

 

156

 

Non-GAAP gross profit

$

139,849

 

 

$

164,313

 

 

$

270,055

 

 

$

320,452

 

Non-GAAP gross margin

 

46.8

%

 

 

49.5

%

 

 

45.8

%

 

 

49.2

%

 

 

 

 

 

 

 

 

Reconciliation of GAAP operating expenses to non-GAAP operating expenses:

 

 

 

 

GAAP operating expenses

$

126,695

 

 

$

145,607

 

 

$

274,687

 

 

$

290,570

 

GAAP operating expenses % to total revenues

 

42.4

%

 

 

43.9

%

 

 

46.6

%

 

 

44.7

%

Share-based compensation expense

 

(11,821

)

 

 

(15,053

)

 

 

(23,855

)

 

 

(29,017

)

Amortization of acquired intangibles

 

(5,135

)

 

 

(5,308

)

 

 

(10,352

)

 

 

(11,047

)

Acquisition-related expenses

 

(246

)

 

 

(263

)

 

 

(492

)

 

 

(1,658

)

Impairment and abandonment of operating lease right-of-use and other assets related to facilities (a)

 

 

 

 

(3,340

)

 

 

(8,420

)

 

 

(5,093

)

Ransomware-related expenses, net of insurance recoveries

 

 

 

 

(1,152

)

 

 

 

 

 

(1,152

)

Executives transition costs

 

(841

)

 

 

 

 

 

(841

)

 

 

 

Severance-related expenses

 

(483

)

 

 

 

 

 

(5,653

)

 

 

(3,371

)

Non-GAAP operating expenses

$

108,169

 

 

$

120,491

 

 

$

225,074

 

 

$

239,232

 

Non-GAAP operating expenses as a % of total non-GAAP revenues

 

36.2

%

 

 

36.3

%

 

 

38.2

%

 

 

36.8

%

 

 

 

 

 

 

 

 

Reconciliation of GAAP income (loss) from operations to non-GAAP income from operations:

GAAP income (loss) from operations

$

7,748

 

 

$

12,485

 

 

$

(15,215

)

 

$

17,569

 

GAAP operating income (loss) % to total revenues

 

2.6

%

 

 

3.8

%

 

 

(2.6

)%

 

 

2.7

%

Share-based compensation expense

 

14,089

 

 

 

17,213

 

 

 

28,131

 

 

 

33,421

 

Amortization of acquired intangibles

 

8,035

 

 

 

8,845

 

 

 

16,277

 

 

 

17,898

 

Acquisition accounting impact related to deferred revenues

 

 

 

 

302

 

 

 

 

 

 

680

 

Acquisition-related expenses

 

246

 

 

 

263

 

 

 

492

 

 

 

1,658

 

Impairment and abandonment of operating lease right-of-use and other assets related to facilities (a)

 

 

 

 

3,340

 

 

 

8,420

 

 

 

5,093

 

Ransomware-related expenses, net of insurance recoveries

 

 

 

 

1,374

 

 

 

 

 

 

1,374

 

Executives transition costs

 

841

 

 

 

 

 

 

841

 

 

 

 

Severance-related expenses

 

721

 

 

 

 

 

 

6,035

 

 

 

3,527

 

Non-GAAP income from operations

$

31,680

 

 

$

43,822

 

 

$

44,981

 

 

$

81,220

 

Non-GAAP operating margin (non-GAAP operating income as a % of total non-GAAP revenues)

 

10.6

%

 

 

13.2

%

 

 

7.6

%

 

 

12.5

%

Omnicell, Inc.

Reconciliation of GAAP to Non-GAAP

(Unaudited, in thousands, except per share data and percentage)

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP net income (loss) to non-GAAP net income:

GAAP net income (loss)

$

3,451

 

 

$

9,069

 

 

$

(11,549

)

 

$

17,282

 

Share-based compensation expense

 

14,089

 

 

 

17,213

 

 

 

28,131

 

 

 

33,421

 

Amortization of acquired intangibles

 

8,035

 

 

 

8,845

 

 

 

16,277

 

 

 

17,898

 

Acquisition accounting impact related to deferred revenues

 

 

 

 

302

 

 

 

 

 

 

680

 

Acquisition-related expenses

 

246

 

 

 

263

 

 

 

492

 

 

 

1,658

 

Impairment and abandonment of operating lease right-of-use and other assets related to facilities (a)

 

 

 

 

3,340

 

 

 

8,420

 

 

 

5,093

 

Ransomware-related expenses, net of insurance recoveries

 

 

 

 

1,374

 

 

 

 

 

 

1,374

 

Executives transition costs

 

841

 

 

 

 

 

 

841

 

 

 

 

Severance-related expenses

 

721

 

 

 

 

 

 

6,035

 

 

 

3,527

 

Amortization of debt issuance costs

 

1,046

 

 

 

1,041

 

 

 

2,091

 

 

 

2,079

 

Tax effect of the adjustments above (b)

 

(2,287

)

 

 

(3,185

)

 

 

(7,173

)

 

 

(6,786

)

Non-GAAP net income

$

26,142

 

 

$

38,262

 

 

$

43,565

 

 

$

76,226

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP net income (loss) per share - diluted to non-GAAP net income per share - diluted:

Shares - diluted GAAP

 

45,472

 

 

 

46,260

 

 

 

45,007

 

 

 

47,121

 

Shares - diluted non-GAAP (c)

 

45,472

 

 

 

45,361

 

 

 

45,306

 

 

 

45,655

 

 

 

 

 

 

 

 

 

GAAP net income (loss) per share - diluted

$

0.08

 

 

$

0.20

 

 

$

(0.26

)

 

$

0.37

 

Share-based compensation expense

 

0.31

 

 

 

0.38

 

 

 

0.62

 

 

 

0.73

 

Amortization of acquired intangibles

 

0.17

 

 

 

0.19

 

 

 

0.36

 

 

 

0.39

 

Acquisition accounting impact related to deferred revenues

 

 

 

 

0.01

 

 

 

 

 

 

0.01

 

Acquisition-related expenses

 

0.01

 

 

 

0.01

 

 

 

0.01

 

 

 

0.04

 

Impairment and abandonment of operating lease right-of-use and other assets related to facilities

 

 

 

 

0.07

 

 

 

0.19

 

 

 

0.11

 

Ransomware-related expenses, net of insurance recoveries

 

 

 

 

0.03

 

 

 

 

 

 

0.03

 

Executives transition costs

 

0.02

 

 

 

 

 

 

0.02

 

 

 

 

Severance-related expenses

 

0.02

 

 

 

 

 

 

0.13

 

 

 

0.08

 

Amortization of debt issuance costs

 

0.02

 

 

 

0.02

 

 

 

0.05

 

 

 

0.05

 

Non-GAAP dilutive shares impact from convertible note hedge transaction (c)

 

 

 

 

 

 

 

 

 

 

0.01

 

Tax effect of the adjustments above (b)

 

(0.06

)

 

 

(0.07

)

 

 

(0.16

)

 

 

(0.15

)

Non-GAAP net income per share - diluted

$

0.57

 

 

$

0.84

 

 

$

0.96

 

 

$

1.67

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP net income (loss) to non-GAAP EBITDA(d):

GAAP net income (loss)

$

3,451

 

 

$

9,069

 

 

$

(11,549

)

 

$

17,282

 

Share-based compensation expense

 

14,089

 

 

 

17,213

 

 

 

28,131

 

 

 

33,421

 

Interest (income) and expense, net

 

(4,410

)

 

 

(142

)

 

 

(7,484

)

 

 

(175

)

Depreciation and amortization expense

 

22,080

 

 

 

21,893

 

 

 

44,054

 

 

 

43,017

 

Acquisition accounting impact related to deferred revenues

 

 

 

 

302

 

 

 

 

 

 

680

 

Acquisition-related expenses

 

246

 

 

 

263

 

 

 

492

 

 

 

1,658

 

Impairment and abandonment of operating lease right-of-use and other assets related to facilities (a)

 

 

 

 

3,340

 

 

 

8,420

 

 

 

5,093

 

Ransomware-related expenses, net of insurance recoveries

 

 

 

 

1,374

 

 

 

 

 

 

1,374

 

Executives transition costs

 

841

 

 

 

 

 

 

841

 

 

 

 

Severance-related expenses

 

721

 

 

 

 

 

 

6,035

 

 

 

3,527

 

Amortization of debt issuance costs

 

1,046

 

 

 

1,041

 

 

 

2,091

 

 

 

2,079

 

Provision for (benefit from) income taxes

 

8,758

 

 

 

1,705

 

 

 

2,576

 

 

 

(1,538

)

Non-GAAP EBITDA

$

46,822

 

 

$

56,058

 

 

$

73,607

 

 

$

106,418

 

Non-GAAP EBITDA margin (non-GAAP EBITDA as a % of total non-GAAP revenues)

 

15.7

%

 

 

16.9

%

 

 

12.5

%

 

 

16.3

%

_________________________________________________

(a)

For the six months ended June 30, 2023, impairment charges of other assets were approximately $0.6 million related to property and equipment in connection with restructuring activities for optimization of certain leased facilities.

(b)

Tax effects calculated for all adjustments except share-based compensation expense, using an estimated annual effective tax rate of 21% for both fiscal years 2023 and 2022.

(c)

For the three and six months ended June 30, 2022, non-GAAP diluted shares excluded approximately 0.9 million and 1.5 million shares, respectively, related to the impact of dilutive convertible senior notes for which the Company is economically hedged through its anti-dilutive convertible note hedge transaction.

(d)

Defined as earnings before interest income and expense, taxes, depreciation, amortization, and share-based compensation, as well as excluding certain other non-GAAP adjustments.

Omnicell, Inc.

Reconciliation of GAAP to Non-GAAP

(Unaudited, in thousands)

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP net cash provided by (used in) operating activities to non-GAAP free cash flow:

GAAP net cash provided by (used in) operating activities

$

72,903

 

 

$

(9,551

)

 

$

85,673

 

 

$

(25,547

)

External-use software development costs

 

(3,186

)

 

 

(2,691

)

 

 

(6,685

)

 

 

(6,543

)

Purchases of property and equipment

 

(11,631

)

 

 

(9,610

)

 

 

(21,772

)

 

 

(21,099

)

Non-GAAP free cash flow

$

58,086

 

 

$

(21,852

)

 

$

57,216

 

 

$

(53,189

)

 

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