Omnicell Reports Results for First Quarter 2019
MOUNTAIN VIEW, Calif., April 25, 2019 /PRNewswire/ -- Omnicell, Inc. (NASDAQ: OMCL), a leading provider of medication and supply management solutions to healthcare systems, today announced results for its first quarter ended March 31, 2019.
GAAP Results
GAAP revenues for the first quarter of 2019 were $202.5 million, up $19.9 million, or 10.9% from the first quarter of 2018.
First quarter 2019 GAAP net income as reported was $3.3 million, or $0.08 per diluted share. This compares to GAAP net income of $2.7 million, or $0.07 per diluted share, for the first quarter of 2018.
Non-GAAP Results
Non-GAAP revenues for the first quarter of 2019 were $202.5 million, up $19.9 million, or 10.9%, from the first quarter of 2018.
Non-GAAP net income for the first quarter of 2019 was $25.8 million, or $0.61 per diluted share. This compares to non-GAAP net income of $11.5 million, or $0.29 per diluted share, for the first quarter of 2018.
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, fair value adjustments related to business acquisitions, restructuring and severance-related expenses, tax reform and restructuring income tax benefits and expenses, contingent gains, and amortization of debt issuance cost.
"We believe that customers and the market are embracing our Autonomous Pharmacy vision and the impact that advanced automation, data intelligence, and expert services will have on patient care," said Randall A. Lipps, chairman, president, chief executive officer, and founder of Omnicell. "Our solutions are designed to drive improvement in patient and provider outcomes in a variety of healthcare settings across the continuum of care, with medication management automation becoming central to their success."
2019 Guidance
For the second quarter of 2019, the Company expects non-GAAP total revenues to be between $211 million and $217 million. The Company expects non-GAAP product revenues to be between $153 million and $158 million, and non-GAAP service revenues to be between $58 million and $59 million. The Company expects second quarter 2019 non-GAAP earnings to be between $0.61 and $0.66 per share.
For the year 2019, the Company expects product bookings to be between $745 million and $780 million. The Company expects non-GAAP total revenues to be between $880 million and $900 million. The Company expects non-GAAP product revenues to be between $652 million and $668 million, and non-GAAP service revenues to be between $228 million and $232 million. The Company expects 2019 non-GAAP earnings to be between $2.62 and $2.82 per share.
The table below summarizes 2019 guidance outlined above.
Q2'19 2019
Product
Bookings
Not provided
$745 million - $780 million
Non-
GAAP
Total
Revenues
$211 million - $217 million
$880 million - $900 million
Non-
GAAP
Product
Revenues
$153 million - $158 million
$652 million - $668 million
---
Non-
GAAP
Service
Revenues
$58 million - $59 million
$228 million - $232 million
---
Non-
GAAP
EPS
$0.61 - $0.66
$2.62 - $2.82
---
Omnicell Conference Call Information
Omnicell will hold a conference call today, Thursday, April 25, 2019 at 1:30 p.m. PT 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 1788166. 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 May 24, 2019. 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 1788166.
About Omnicell
Since 1992, Omnicell has been inspired to create safer and more efficient ways to manage medications across all care settings. Through our industry-leading medication management platform that spans the continuum of care, Omnicell is developing a vision for a fully automated infrastructure, powered by a cloud data platform that supports improved patient care, fewer errors, enhanced safety, and new opportunities for growth.
Omnicell's vision for the Autonomous Pharmacy integrates a comprehensive set of solutions across three key areas: Automation solutions designed to digitize and streamline workflows; Intelligence that provides actionable insights to better understand medication usage and improve pharmacy supply chain management; and Work - expert services that serve as an extension of pharmacy operations to support improved efficiency, regulatory compliance, and patient outcomes.
Over 5,500 facilities worldwide use Omnicell automation and analytics solutions to help increase operational efficiency, reduce medication errors, deliver actionable intelligence, and improve patient safety. More than 40,000 institutional and retail pharmacies across North America and the United Kingdom leverage Omnicell's innovative medication adherence solutions designed to improve patient engagement and adherence to prescriptions, helping to reduce costly hospital readmissions.
For more information about Omnicell, Inc. please visit www.omnicell.com.
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; pipeline; new products and solutions yet to be generally available; and new sales opportunities. Risks that contribute to the uncertain nature of the forward-looking statements include (i) Omnicell's ability to take advantage of the growth opportunities in medication management across the spectrum of healthcare settings from hospital to home, (ii) 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, (iii) 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, (iv) unfavorable general economic and market conditions, (v) risks to growth and acceptance of Omnicell's products and services, including competitive conversions, (vi) growth of the clinical automation and workflow automation market generally, (vii) potential of increasing competition, (viii) potential regulatory changes, (ix) Omnicell's ability to improve sales productivity to grow product bookings, and (x) 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, 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 revenues, 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) 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) Amortization of debt issuance cost.
Debt issuance cost represents
costs associated with the issuance
of Term Loan and Revolving Line of
Credit facilities. The cost
includes 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.
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, 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 the financial
results of peer companies.
e) Tax impact from restructuring
activity. We excluded from our
non-GAAP results the tax impacts
related to restructuring activity.
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.
f) 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.
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
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 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.
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 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.
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 2019 guidance for non-GAAP earnings per share, as well as 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 non-GAAP earnings per share guidance to the comparable GAAP measure 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 in future periods.
Omnicell, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
Three months ended March 31,
2019 2018 (a)
---
Revenues:
Product revenues $
145,610 $
130,659
Services and other
revenues 56,907 51,960
Total revenues 202,517 182,619
Cost of revenues:
Cost of product revenues 78,811 75,417
Cost of services and
other revenues 26,589 24,747
Total cost of revenues 105,400 100,164
Gross profit 97,117 82,455
Operating expenses:
Research and development 16,078 16,537
Selling, general, and
administrative 68,278 65,285
Total operating expenses 84,356 81,822
Income from operations 12,761 633
Interest and other
income (expense), net (1,410) (2,729)
Income (loss) before
provision for income
taxes 11,351 (2,096)
Provision for (benefit
from) income taxes 8,067 (4,816)
Net income $
3,284 $
2,720
Net income per share:
Basic $
0.08 $
0.07
Diluted $
0.08 $
0.07
Weighted-average shares outstanding:
Basic 40,692 38,635
Diluted 42,281 39,691
(a) Includes a $0.6 million
reclassification from services and
other revenues to product revenues
to conform with current-period
presentation.
Omnicell, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
March 31, December 31,
2019 2018
---
ASSETS
Current assets:
Cash and cash equivalents $
77,244 $
67,192
Accounts receivable and unbilled
receivables, net 203,489 196,238
Inventories 103,909 100,868
Prepaid expenses 17,048 20,700
Other current assets 12,017 12,136
Total current assets 413,707 397,134
Property and equipment, net 52,039 51,500
Long-term investment in sales-type
leases, net 19,469 17,082
Operating lease right-of-use assets 63,851
Goodwill 336,119 335,887
Intangible assets, net 138,893 143,686
Long-term deferred tax assets 32,043 15,197
Prepaid commissions 43,669 46,143
Other long-term assets 77,270 74,613
Total assets $
1,177,060 $
1,081,242
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $
38,466 $
38,038
Accrued compensation 29,056 41,660
Accrued liabilities 52,996 43,047
Deferred revenues, net 90,104 81,835
Total current liabilities 210,622 204,580
Long-term deferred revenues 10,302 10,582
Long-term deferred tax liabilities 61,405 41,484
Long-term operating lease liabilities 57,470
Other long-term liabilities 9,786 9,562
Long-term debt, net 96,990 135,417
Total liabilities 446,575 401,625
Total stockholders' equity 730,485 679,617
Total liabilities and stockholders'
equity $
1,177,060 $
1,081,242
Omnicell, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Three months ended March 31,
2019 2018
---
Operating Activities
Net income $
3,284 $
2,720
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 12,637 12,310
Loss on disposal of fixed
assets 355
Share-based compensation
expense 8,410 6,528
Deferred income taxes 3,075 (5,128)
Amortization of operating lease
right-of-use assets 2,602
Amortization of debt financing
fees 573 573
Changes in operating assets and liabilities:
Accounts receivable and
unbilled receivables (7,251) (632)
Inventories (2,936) (6,881)
Prepaid expenses 3,652 (769)
Other current assets 373 (997)
Investment in sales-type
leases (2,641) (1,491)
Prepaid commissions 2,474 1,796
Other long-term assets 5,206 (1,673)
Accounts payable (233) (9,416)
Accrued compensation (12,604) 2,391
Accrued liabilities 127 4,276
Deferred revenues 7,989 15,118
Operating lease liabilities (2,669)
Other long-term liabilities 4,074 131
Net cash provided by operating
activities 26,497 18,856
Investing Activities
Software development for
external use (11,717) (5,272)
Purchases of property and
equipment (4,980) (9,268)
Net cash used in investing
activities (16,697) (14,540)
Financing Activities
Repayment of debt and revolving
credit facility (39,000) (2,500)
At the market offering, net of
offering costs 20,216
Proceeds from issuances under
stock-based compensation
plans 20,526 9,541
Employees' taxes paid related
to restricted stock units (1,920) (1,300)
Net cash provided by (used in)
financing activities (178) 5,741
Effect of exchange rate changes
on cash and cash equivalents 430 1,292
Net increase in cash and cash
equivalents 10,052 11,349
Cash and cash equivalents at
beginning of period 67,192 32,424
Cash and cash equivalents at
end of period $
77,244 $
43,773
Omnicell, Inc.
Reconciliation of GAAP to Non-GAAP
(Unaudited, in thousands, except per share data and percentage)
Three months ended
March 31, March 31,
2019 2018
---
Reconciliation of GAAP revenues to non-GAAP
revenues:
GAAP revenues $
202,517 $
182,619
Non-GAAP revenues $
202,517 $
182,619
Reconciliation of GAAP gross profit to non-GAAP gross profit:
GAAP gross profit $
97,117 $
82,455
GAAP gross margin 48.0% 45.2%
Share-based compensation
expense 1,462 1,019
Amortization of acquired
intangibles 2,066 2,791
Non-GAAP gross profit $
100,645 $
86,265
Non-GAAP gross margin 49.7% 47.2%
Reconciliation of GAAP operating expenses to non-GAAP operating expenses:
GAAP operating expenses $
84,356 $
81,822
GAAP operating expenses %
to total revenues 41.7% 44.8%
Share-based compensation
expense (6,948) (5,509)
Amortization of acquired
intangibles (2,716) (3,238)
Severance and other
expenses (286) (1,512)
Non-GAAP operating
expenses $
74,406 $
71,563
Non-GAAP operating
expenses % to total non-
GAAP revenues 36.7% 39.2%
Reconciliation of GAAP income from operations to non-GAAP income from operations:
GAAP income from
operations $
12,761 $
633
GAAP operating income %
to total revenues 6.3% 0.3%
Share-based compensation
expense 8,410 6,528
Amortization of acquired
intangibles 4,782 6,029
Severance and other
expenses 286 1,512
Non-GAAP income from
operations $
26,239 $
14,702
Non-GAAP operating
income % to total non-
GAAP revenues 13.0% 8.1%
Omnicell, Inc.
Reconciliation of GAAP to Non-GAAP
(Unaudited, in thousands, except per share data and percentage)
Three months ended
March 31, March 31,
2019 2018
---
Reconciliation of GAAP net income to non-GAAP net income:
GAAP net income $
3,284 $
2,720
Tax benefit for
restructuring activity - (4,205)
Tax impact of IP
restructuring 9,624
Share-based compensation
expense 8,410 6,528
Amortization of acquired
intangibles 4,782 6,029
Severance and other
expenses(a) 859 2,085
Tax effect of the
adjustments above(b) (1,184) (1,703)
Non-GAAP net income $
25,775 $
11,454
Reconciliation of GAAP net income per share - diluted to non-GAAP net income per share - diluted:
Shares -diluted GAAP 42,281 39,691
Shares - diluted Non-
GAAP 42,281 39,691
GAAP net income per share
-diluted $
0.08 $
0.07
Tax benefit for
restructuring activity - (0.10)
Tax impact of IP
restructuring 0.23
Share-based compensation
expense 0.20 0.16
Amortization of acquired
intangibles 0.11 0.15
Severance and other
expenses 0.02 0.05
Tax effect of the
adjustments above(b) (0.03) (0.04)
Non-GAAP net income per
share - diluted $
0.61 $
0.29
Reconciliation of GAAP net income to non-GAAP Adjusted EBITDA(c):
GAAP net income $
3,284 $
2,720
Share-based compensation
expense 8,410 6,528
Interest (income) and
expense, net 706 1,772
Depreciation and
amortization expense 12,637 12,310
Severance and other
expenses 859 2,085
Income tax expense
(benefit) 8,067 (4,816)
Non-GAAP adjusted EBITDA $
33,963 $
20,599
(a) For the three months ended March 31,
2019, other expenses include $0.4
million and $0.2 million of
amortization of debt issuance costs
related to prior acquisitions and
credit facilities amendments,
respectively, and $0.3 million of
IP restructuring costs. For the
three months ended March 31, 2018,
other expenses include $0.4 million
and $0.2 million of amortization of
debt issuance costs related to
prior acquisitions and credit
facilities amendments,
respectively.
(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 2019
and 2018.
(c) Defined as earnings before interest
income and expense, taxes,
depreciation and amortization,
share-based compensation, as well
as excluding certain non-GAAP
adjustments.
OMCL-E
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SOURCE Omnicell, Inc.
