Omnicell delivers strong fourth quarter
financial results
Results exceed previously issued full year
guidance for bookings, total revenues, and non-GAAP EBITDA
Omnicell, Inc. (NASDAQ:OMCL) (“Omnicell,” “we,” “our,” “us,”
“management,” or the “Company”), a leader in transforming the
pharmacy and nursing care delivery model, today announced results
for its fiscal year and fourth quarter ended December 31, 2024.
“We delivered solid financial results for the fourth quarter of
2024, including returning to year-over-year revenue growth. We are
pleased with the improved execution of the business throughout
2024, including strong free cash flows achieved in the year,”
stated Randall Lipps, chairman, president, chief executive officer,
and founder of Omnicell. “As we progress through 2025, we remain
focused on successfully executing on our strategic priorities,
which include driving long-term revenue growth, achieving
consistent GAAP profitability, and continuing to raise the bar in
medication management and adherence through innovation and bringing
new products and services to market.”
Financial Results
Total revenues for the fourth quarter of 2024 were $307 million,
up $48 million, or 19%, from the fourth quarter of 2023. The
quarter-over-quarter increase in total revenues reflects the
improvement of the macroeconomic environment and the timing of
implementation of XT Series systems, as well as continued growth in
our SaaS and Expert Services (formerly known as Advanced Services),
including an increase in revenues from our Specialty Pharmacy
Services offering. Total revenues for the year ended December 31,
2024 were $1.112 billion, down $35 million, or 3%, from the year
ended December 31, 2023. The year-over-year decrease in total
revenues reflects the impact of a challenging environment through a
significant portion of 2024 for some of our health system customers
and the timing of our XT Series systems lifecycle, as we are
largely through the replacement cycle.
Total GAAP net income for the fourth quarter of 2024 was $16
million, or $0.34 per diluted share. This compares to GAAP net loss
of $14 million, or $0.32 per diluted share, for the fourth quarter
of 2023. Total GAAP net income for the year ended December 31, 2024
was $13 million, or $0.27 per diluted share. This compares to GAAP
net loss of $20 million, or $0.45 per diluted share, for the year
ended December 31, 2023.
Total non-GAAP net income for the fourth quarter of 2024 was $28
million, or $0.60 per diluted share. This compares to non-GAAP net
income of $15 million, or $0.33 per diluted share, for the fourth
quarter of 2023. Total non-GAAP net income for the year ended
December 31, 2024 was $79 million, or $1.71 per diluted share. This
compares to non-GAAP net income of $87 million, or $1.91 per
diluted share, for the year ended December 31, 2023.
Total non-GAAP EBITDA for the fourth quarter of 2024 was $46
million. This compares to non-GAAP EBITDA of $24 million for the
fourth quarter of 2023. Total non-GAAP EBITDA for the year ended
December 31, 2024 was $136 million. This compares to non-GAAP
EBITDA of $138 million for the year ended December 31, 2023.
Bookings and Backlog - Historical Metric
Total bookings(1) for the year ended December 31, 2024 were $923
million compared to $854 million for the year ended December 31,
2023, or an increase of 8% year-over-year, primarily driven by XT
Series upgrades as we complete the XT Series upgrade cycle, as well
as better than expected bookings of XTExtend, a core component of
the multi-year XT Amplify innovation program.
The chart below summarizes our total backlog(2) under the
definition of bookings in use for the years ended December 31, 2024
and 2023:
December 31,
2024
2023
(In thousands)
Total backlog
$
1,201,296
$
1,142,686
By type:
Product backlog
$
646,508
$
610,832
SaaS and Expert Services backlog (3)
$
554,788
$
531,854
By duration and type:
Short-term product backlog
$
447,412
$
377,936
Long-term product backlog
$
199,096
$
232,896
Short-term SaaS and Expert Services
backlog (3)
$
93,113
$
72,455
Long-term SaaS and Expert Services backlog
(3)
$
461,675
$
459,399
____________________________
(1)
We utilize bookings as an
indicator of the success of our business. During 2024, we defined
bookings generally as: (i) the value of non-cancelable contracts
for our connected devices, software products, and SaaS and Expert
Services (although, for those SaaS and Expert Services contracts
without a minimum commitment, bookings only include the amount of
revenue that has been recognized once the services have been
provided); and (ii) for our consumables, the value of orders placed
through our Omnicell Storefront online platform or through written
or telephonic orders. We typically exclude technical services and
other less significant items ancillary to our products and
services, such as freight revenue, from bookings. In addition,
dependent upon counterparty or credit risk, which is evaluated at
the time of contract signing, for a given multi-year subscription
contract we may reduce the portion of the contractual commitment
booked at a given time. Connected devices and software license
bookings are recorded as revenue upon customer acceptance of the
installation or receipt of goods. Revenues from SaaS and Expert
Services bookings are recorded over the contractual term.
(2)
Backlog is the dollar amount of
bookings that have not yet been recognized as revenue. Bookings for
those SaaS and Expert Services contracts without a minimum
commitment are not included in backlog. In addition, dependent upon
counterparty or credit risk, which is evaluated at the time of
contract signing, for a given multi-year subscription contract we
may reduce the portion of the contractual commitment booked at a
given time, and these excluded amounts are not included in backlog.
A majority of our connected devices and software license products
are installable and recognized as revenues within twelve months of
booking, while service revenues from SaaS and Expert Services are
recorded over the contractual term. Larger or more complex
implementations such as software-enabled connected devices for
Central Pharmacy, including but not limited to our Central Pharmacy
Dispensing Service and IV Compounding Service, are often installed
and recognized as revenue between 12 and 24 months after booking.
We consider backlog that is expected to be converted to revenues in
more than twelve months to be long-term backlog. We believe a
majority of long-term product backlog will be convertible into
revenues in 12 to 24 months. Long-term SaaS and Expert Services
backlog typically represents multi-year subscription agreements
(usually with contractual terms of 2 to 7 years, some of which have
not yet been implemented) that will be converted to revenue over
the contractual term. Due to industry practice that allows
customers to change order configurations with limited advance
notice prior to shipment and as customer installation schedules may
change, backlog as of any particular date may not necessarily
indicate the timing of future revenue. However, we do believe that
backlog is an indication of a customer’s willingness to install our
solutions and revenue we expect to generate over time.
(3)
Includes only the value of SaaS
and Expert Services non-cancelable contracts with minimum
commitments.
Product Bookings, Product Backlog and Annual Recurring
Revenue - New Metrics
Starting in 2025, we will utilize product bookings(1) as a key
performance metric for our business. Under the new definition,
product bookings as of December 31, 2024 were $558 million. In
addition, going forward, we will no longer be reporting SaaS and
Expert Services backlog information, as these revenue streams will
be captured by the new Annual Recurring Revenue (“ARR”) metric,
which we will begin utilizing as a key performance metric for our
business. For comparative purposes, the table below summarizes our
product backlog and ARR for December 31, 2024 under the new
definitions of product bookings and ARR:
December 31,
2024
(In thousands)
Total product backlog(2)
$
646,440
By duration:
Short-term product backlog
$
447,344
Long-term product backlog
199,096
Annual Recurring Revenue(3)
$
580,025
____________________________
(1)
We define product bookings
generally as the value of non-cancelable contracts for our
connected devices and software licenses. We typically exclude
freight revenue and other less significant items ancillary to our
products from product bookings. In addition, dependent upon
counterparty or credit risk, which is evaluated at the time of
contract signing, for a given multi-year subscription contract we
may reduce the value of the contractual commitment booked at a
given time. Connected devices and software license bookings are
recorded as revenue upon customer acceptance of the installation or
receipt of goods. We utilize product bookings as an indicator of
the success of certain portions of our business that generate
non-recurring revenue.
(2)
Product backlog is the dollar
amount of product bookings that have not yet been recognized as
revenue. A majority of our connected devices and software license
products are installable and recognized as revenues within twelve
months of booking. Larger or more complex implementations such as
software-enabled connected devices for Central Pharmacy, including,
but not limited to, our Central Pharmacy Dispensing Service and IV
Compounding Service, are often installed and recognized as revenue
between 12 and 24 months after booking. Due to industry practice
that allows customers to change order configurations with limited
advance notice prior to shipment and as customer installation
schedules may change, backlog as of any particular date may not
necessarily indicate the timing of future revenue. However, we do
believe that backlog is an indication of a customer’s willingness
to install our solutions and revenue we expect to generate over
time. We consider backlog that is expected to be converted to
revenues in more than twelve months to be long-term backlog. We
believe a majority of long-term product backlog will be convertible
into revenues in 12-24 months.
(3)
We consider revenues generated
from our consumables, technical services, and SaaS and Expert
Services to be recurring revenues. For the portions of our business
which generate recurring revenues, we utilize ARR as a key metric
to measure our progress in growing our recurring revenue business.
We define ARR at a measurement date as the revenue we expect to
receive from our customers over the course of the following year
for providing them with products or services. ARR includes expected
revenue from all customers who are using our products or services
at the reported date. For technical services and SaaS and Expert
Services, solutions are generally on a contractual basis, typically
with contracts for a period of 12 months or more, with a high
probability of renewal. Probability of renewal is based on historic
renewal experience of the individual revenue streams or
management’s best estimates if historical renewal experience is not
available. Consumables orders are placed by customers through our
Omnicell Storefront online platform or through written or
telephonic orders and are sold to a customer base who utilize the
consumable product and place recurring orders when customer
inventory is depleted. ARR is generally calculated based on
revenues received in the most recent quarter and changes to
expected revenues where solutions were added to or removed from the
install or customer base in the quarter. Revenues from technical
services and SaaS and Expert Services are recorded ratably over the
service term. Revenue from consumables are recorded when the
product has shipped and title has passed. Our measure of ARR may be
different than that used by other companies. Because ARR is based
on expected future revenue, it does not represent revenue
recognized during a particular reporting period or revenue to be
recognized in future reporting periods. ARR should not be viewed as
a substitute for GAAP revenues.
Balance Sheet
As of December 31, 2024, Omnicell’s balance sheet reflected cash
and cash equivalents of $369 million, total debt (net of
unamortized debt issuance costs) of $341 million, and total assets
of $2.12 billion. Cash flows provided by operating activities in
the fourth quarter of 2024 totaled $56 million. This compares to
cash flows provided by operating activities totaling $38 million in
the fourth quarter of 2023.
As of December 31, 2024, the Company had $350 million of
availability under its revolving credit facility with no
outstanding balance.
Business Highlights
OmniSphere
The Company announced OmniSphere, a next-generation, cloud
native, software workflow engine and data platform that is intended
to seamlessly integrate enterprise-wide robotics and smart devices
to support more secure, data-driven, medication management across
the continuum of care. OmniSphere is designed to provide customers
state-of-the-art security, improved productivity, enterprise-wide
visibility, and streamlined upgrades, that is meant to deliver
optimal end-to-end medication management.
ASHP Midyear
More than 1,600 pharmacy and industry leaders had the
opportunity to explore Omnicell’s portfolio of outcomes-centric
solutions and learn best practices from peers as part of the
American Society of Health System Pharmacists (ASHP) Midyear 2024
Clinical Meeting and Exhibition. This annual event is the largest
gathering of pharmacy professionals in the world.
HITRUST Data Security
Certification
Omnicell’s medication management solutions powered by the
OmniCenter platform once again received HITRUST Common Security
Framework (CSF) certification, which we believe demonstrates the
Company’s ongoing commitment to high standards for cybersecurity
and data protection within the organization and for business
partners and customers.
Omnicell Issues New Convertible Senior
Notes
In late November, Omnicell issued $172.5 million aggregate
principal amount of 1.00% convertible senior notes due 2029. In
addition, Omnicell completed a partial repurchase of $400.0 million
aggregate principal amount of 0.25% convertible senior notes due
2025 for approximately $391.2 million in cash.
2025 Guidance
The table below summarizes Omnicell’s first quarter and full
year 2025 guidance:
Q1 2025
2025
Product Bookings (2025
Definition)
Not provided
$500 million - $550 million
ARR
Not Provided
$610 million - $630 million
Total Revenues
$255 million - $265 million
$1.105 billion - $1.155
billion
Product Revenues
$137 million - $142 million
$610 million - $640 million
Service Revenues
$118 million - $123 million
$495 million - $515 million
Technical Services Revenues
Not provided
$235 million - $245 million
SaaS and Expert Service Revenue
(formerly Advanced Services)
Not provided
$260 million - $270 million
Non-GAAP EBITDA
$19 million - $25 million
$140 million - $155 million
Non-GAAP Earnings Per Share
$0.15 - $0.25
$1.65 - $1.85
The Company does not provide guidance for GAAP net income or
GAAP earnings per share, nor a reconciliation of any
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, Thursday, February
6, 2025 at 8:30 a.m. ET to discuss fourth quarter and year end 2024
financial results. The conference call can be monitored by dialing
(800) 715-9871 in the U.S. or (646) 307-1963 in international
locations. The Conference ID is 2515873. A link to the live and
archived webcast will also be available on the Investor Relations
section of Omnicell’s website at
https://ir.omnicell.com/events-and-presentations/.
About Omnicell
Since 1992, Omnicell has been committed to transforming pharmacy
and nursing care through outcomes-centric solutions designed to
deliver clinical and business outcomes across all settings of care.
Through a comprehensive portfolio of robotics and smart devices,
intelligent software workflows, and data and analytics, all
optimized by expert services, Omnicell solutions are helping
healthcare facilities worldwide to uncover cost savings, improve
labor efficiency, establish new revenue streams, enhance supply
chain control, support compliance, and move closer to the
industry-defined vision of the Autonomous Pharmacy. 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 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, the Omnicell logo, and ENLIVENHEALTH are registered
trademarks of Omnicell, Inc. or one of its subsidiaries. This press
release may also include the trademarks and service marks of other
companies. Such trademarks and service marks are the marks of their
respective owners.
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
product bookings, revenues, including product, service, technical
services and SaaS and Expert Services revenues, annual recurring
revenue, non-GAAP EBITDA, and non-GAAP earnings per share;
expectations regarding our products and services and developing new
or enhancing existing products and solutions and the related
objectives and expected benefits (and any implied financial
impact); our ability to drive long-term growth and consistent GAAP
profitability; and statements about Omnicell’s strategy, plans,
objectives, promise and purpose, goals, opportunities, and market
or Company outlook. 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) Omnicell’s ability to take advantage of growth
opportunities and develop and commercialize new solutions and
enhance existing solutions, (iii) reduction in demand in the
capital equipment market or reduction in the demand for or adoption
of our solutions, systems, or services, (iv) delays in
installations of our medication management solutions or our more
complex medication packaging systems, (v) 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, (vi) ability to realize the benefits of our expense
containment initiatives, (vii) risks related to failing to maintain
expected service levels when providing our SaaS and Expert Services
or retaining our SaaS and Expert 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) risks related to the incorporation of artificial
intelligence technologies into our products, services and processes
or our vendors' offerings, (xii) Omnicell’s substantial debt, which
could impair its financial flexibility and access to capital,
(xiii) covenants in our credit agreement could restrict our
business and operations, (xiv) continued and increased competition
from current and future competitors in the medication management
automation solutions market and the medication adherence solutions
market, (xv) 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, and the costs of compliance with, and
potential liability associated with, our actual or perceived
failure to comply with such obligations, including any potential
governmental investigations and enforcement actions, litigation,
fines and penalties, exposure to indemnification obligations or
other liabilities, and adverse publicity related to the same; (xvi)
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, (xvii) risks
associated with operating in foreign countries, (xviii) Omnicell’s
ability to recruit and retain skilled and motivated personnel,
(xix) Omnicell’s ability to protect its intellectual property, (xx)
risks related to the availability and sources of raw materials and
components or price fluctuations, shortages, or interruptions of
supply, (xxi) 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, (xxii)
fluctuations in quarterly and annual operating results may make our
future operating results difficult to predict, (xxiii) failing to
meet (or significantly exceeding) our publicly announced financial
guidance, and (xxiv) 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 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 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 gross profit and non-GAAP gross margin
exclude from their GAAP equivalents items a), b), e), and g) below;
non-GAAP operating expenses excludes from its GAAP equivalents
items a), b), c), d), e), g), h), i), j) and k) below; non-GAAP
income from operations and non-GAAP operating margin exclude from
their GAAP equivalents items a), b), c), d), e), g), h),i), j) and
k) below; and non-GAAP net income and non-GAAP net income per
diluted share exclude from their GAAP equivalents items a) through
l) 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), c), d), e), f), g),
h), i), j), k) and l) below:
a)
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.
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 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 peer companies.
d)
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.
e)
Severance-related expenses. We
excluded from our non-GAAP results the expenses related to
restructuring events, partially offset by reversals of previously
recognized severance expenses in subsequent periods. 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.
f)
Amortization of debt issuance
costs. Debt issuance costs represent costs associated with the
issuance of revolving credit facilities and 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.
g)
RDS restructuring. We excluded
from our non-GAAP results the nonrecurring restructuring charges
related to the wind down of the Company’s Medimat Robotic
Dispensing System (“RDS”) product line, partially offset by
reversals of previously recognized expenses in subsequent periods.
For the period ended December 31, 2024, those charges consisted
primarily of inventory write-down, severance and other related
expenses. These expenses are unrelated to our ongoing operations
and 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)
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.
i)
Ransomware-related insurance
recoveries. We excluded from our non-GAAP results the insurance
recoveries related to the previously disclosed ransomware incident
identified by the Company on May 4, 2022. These recoveries are
unrelated to our ongoing operations and would not have otherwise
been received by us in the normal course of business. We believe
that excluding these recoveries provides more meaningful
comparisons of the financial results to our historical operations
and forward-looking guidance, and to the financial results of peer
companies.
j)
Legal and regulatory expenses. We
excluded from our non-GAAP results certain non-recurring legal and
regulatory expenses, representing potential settlement amounts,
related to certain claims of non-compliance with our government
contracts that are outside of the ordinary course of our business.
We believe that excluding these amounts provides more meaningful
comparisons of the financial results to our historical operations
and forward-looking guidance, and to the financial results of peer
companies.
k)
Management severance costs. We
excluded from our non-GAAP results the severance expense of certain
senior management associated with the restructuring of our senior
leadership team. 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.
l)
Gain on extinguishment of
convertible senior notes, net. We excluded from our non-GAAP
results the gain on the partial repurchase of the Company’s Senior
Convertible Notes due 2025 as well as the related unwinding of the
convertible note hedge and warrants. We believe that excluding this
gain provides more meaningful comparisons of the financial results
to our historical operations and forward-looking guidance, and to
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 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 December
31,
Year Ended December
31,
2024
2023
2024
2023
Revenues:
Product revenues
$
182,271
$
145,655
$
630,507
$
708,561
Service revenues
124,608
113,192
481,731
438,551
Total revenues
306,879
258,847
1,112,238
1,147,112
Cost of revenues:
Cost of product revenues
96,755
90,306
383,025
414,106
Cost of service revenues
68,363
63,137
258,210
236,166
Total cost of revenues
165,118
153,443
641,235
650,272
Gross profit
141,761
105,404
471,003
496,840
Operating expenses:
Research and development
26,040
26,819
90,412
97,115
Selling, general, and administrative
103,325
101,950
380,254
434,593
Total operating expenses
129,365
128,769
470,666
531,708
Income (loss) from operations
12,396
(23,365
)
337
(34,868
)
Interest and other income (expense),
net
11,204
4,848
25,256
14,760
Income (loss) before income taxes
23,600
(18,517
)
25,593
(20,108
)
Provision for (benefit from) income
taxes
7,758
(4,142
)
13,062
263
Net income (loss)
$
15,842
$
(14,375
)
$
12,531
$
(20,371
)
Net income (loss) per share:
Basic
$
0.34
$
(0.32
)
$
0.27
$
(0.45
)
Diluted
$
0.34
$
(0.32
)
$
0.27
$
(0.45
)
Weighted-average shares
outstanding:
Basic
46,345
45,495
46,047
45,212
Diluted
46,854
45,495
46,255
45,212
Omnicell, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited, in
thousands)
December 31,
2024
2023
ASSETS
Current assets:
Cash and cash equivalents
$
369,201
$
467,972
Accounts receivable and unbilled
receivables, net
256,398
252,025
Inventories
88,659
110,099
Prepaid expenses
25,942
25,966
Other current assets
75,293
71,509
Total current assets
815,493
927,571
Property and equipment, net
112,692
108,601
Long-term investment in sales-type leases,
net
52,744
42,954
Operating lease right-of-use assets
25,607
24,988
Goodwill
734,727
735,810
Intangible assets, net
188,266
211,173
Long-term deferred tax assets
57,469
32,901
Prepaid commissions
54,656
52,414
Other long-term assets
79,306
90,466
Total assets
$
2,120,960
$
2,226,878
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
51,782
$
45,028
Accrued compensation
60,307
51,754
Accrued liabilities
167,895
149,276
Deferred revenues
141,370
121,734
Convertible senior notes, net
174,324
—
Total current liabilities
595,678
367,792
Long-term deferred revenues
76,123
58,622
Long-term deferred tax liabilities
1,108
1,620
Long-term operating lease liabilities
31,123
33,910
Other long-term liabilities
7,218
6,318
Convertible senior notes, net
166,397
569,662
Total liabilities
877,647
1,037,924
Total stockholders’ equity
1,243,313
1,188,954
Total liabilities and stockholders’
equity
$
2,120,960
$
2,226,878
Omnicell, Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited, in
thousands)
Year Ended December
31,
2024
2023
Operating Activities
Net income (loss)
$
12,531
$
(20,371
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
82,232
87,319
Loss on disposal of assets
978
2,572
Share-based compensation expense
39,316
55,300
Deferred income taxes
(14,855
)
(11,047
)
Amortization of operating lease
right-of-use assets
7,523
8,239
Impairment and abandonment of operating
lease right-of-use assets related to facilities
—
9,998
Inventory write-down
5,393
—
Impairment of certain long-lived
assets
—
1,014
Amortization of debt issuance costs
3,788
4,397
Gain on extinguishment of convertible
senior notes, net
(7,517
)
—
Changes in operating assets and
liabilities:
Accounts receivable and unbilled
receivables
(5,002
)
49,150
Inventories
15,633
38,016
Prepaid expenses
24
1,149
Other current assets
9,337
(6,821
)
Investment in sales-type leases
(10,398
)
(10,411
)
Prepaid commissions
(2,242
)
7,069
Other long-term assets
2,161
2,111
Accounts payable
7,210
(17,525
)
Accrued compensation
8,553
(21,461
)
Accrued liabilities
13,942
(10,343
)
Deferred revenues
28,952
24,058
Operating lease liabilities
(10,737
)
(10,918
)
Other long-term liabilities
900
(401
)
Net cash provided by operating
activities
187,722
181,094
Investing Activities
External-use software development
costs
(16,330
)
(13,542
)
Purchases of property and equipment
(36,463
)
(41,474
)
Net cash used in investing activities
(52,793
)
(55,016
)
Financing Activities
Payments for debt issuance costs for
revolving credit facility
—
(2,967
)
Proceeds from issuance of convertible
senior notes, net of issuance costs
166,272
—
Partial repurchase of convertible senior
notes
(391,000
)
—
Purchase of convertible note hedge
(40,279
)
—
Proceeds from sale of warrants
25,168
—
Partial unwind of convertible note hedge
and warrants
(727
)
—
Proceeds from issuances under stock-based
compensation plans
13,411
23,216
Employees’ taxes paid related to
restricted stock units
(4,827
)
(7,366
)
Change in customer funds, net
(3,596
)
10,537
Net cash provided by (used in) financing
activities
(235,578
)
23,420
Effect of exchange rate changes on cash
and cash equivalents
(1,716
)
(1,354
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
(102,365
)
148,144
Cash, cash equivalents, and restricted
cash at beginning of period
500,979
352,835
Cash, cash equivalents, and restricted
cash at end of period
$
398,614
$
500,979
Reconciliation of cash, cash
equivalents, and restricted cash to the Condensed Consolidated
Balance Sheets:
Cash and cash equivalents
$
369,201
$
467,972
Restricted cash included in other current
assets
29,413
33,007
Cash, cash equivalents, and restricted
cash at end of period
$
398,614
$
500,979
Omnicell, Inc.
Reconciliation of GAAP to
Non-GAAP
(Unaudited, in thousands,
except per share data and percentage)
Three Months Ended December
31,
Year Ended December
31,
2024
2023
2024
2023
Reconciliation of GAAP gross profit to
non-GAAP gross profit:
GAAP gross profit
$
141,761
$
105,404
$
471,003
$
496,840
GAAP gross margin
46.2
%
40.7
%
42.3
%
43.3
%
Share-based compensation expense
1,489
1,799
6,373
8,288
Amortization of acquired intangibles
1,017
2,607
4,131
11,165
RDS restructuring, net of reversals
1,211
—
9,897
—
Severance-related expenses, net of
reversals
—
2,987
—
3,089
Non-GAAP gross profit
$
145,478
$
112,797
$
491,404
$
519,382
Non-GAAP gross margin
47.4
%
43.6
%
44.2
%
45.3
%
Reconciliation of GAAP operating
expenses to non-GAAP operating expenses:
GAAP operating expenses
$
129,365
$
128,769
$
470,666
$
531,708
GAAP operating expenses % to total
revenues
42.2
%
49.7
%
42.3
%
46.4
%
Share-based compensation expense
(7,550
)
(10,388
)
(32,943
)
(47,012
)
Amortization of acquired intangibles
(4,480
)
(5,007
)
(18,578
)
(20,409
)
Acquisition-related expenses
(182
)
(244
)
(898
)
(982
)
Impairment and abandonment of operating
lease right-of-use and other assets related to facilities (a)
—
(1,587
)
—
(10,007
)
RDS restructuring, net of reversals
(1,223
)
(1,610
)
(2,056
)
(1,610
)
Ransomware-related insurance
recoveries
—
624
—
808
Legal and regulatory expenses
(2,000
)
—
(2,000
)
—
Management severance costs
(911
)
—
(911
)
—
Executives transition costs
—
—
—
(2,189
)
Severance-related expenses, net of
reversals
—
(7,098
)
—
(12,450
)
Non-GAAP operating expenses
$
113,019
$
103,459
$
413,280
$
437,857
Non-GAAP operating expenses as a % of
total revenues
36.8
%
40.0
%
37.2
%
38.2
%
Reconciliation of GAAP income (loss)
from operations to non-GAAP income from operations:
GAAP income (loss) from operations
$
12,396
$
(23,365
)
$
337
$
(34,868
)
GAAP operating income (loss) % to total
revenues
4.0
%
(9.0
)%
0.0
%
(3.0
)%
Share-based compensation expense
9,039
12,187
39,316
55,300
Amortization of acquired intangibles
5,497
7,614
22,709
31,574
Acquisition-related expenses
182
244
898
982
Impairment and abandonment of operating
lease right-of-use and other assets related to facilities (a)
—
1,587
—
10,007
RDS restructuring, net of reversals
2,434
1,610
11,953
1,610
Ransomware-related insurance
recoveries
—
(624
)
—
(808
)
Legal and regulatory expenses
2,000
—
2,000
—
Management severance costs
911
—
911
—
Executives transition costs
—
—
—
2,189
Severance-related expenses, net of
reversals
—
10,085
—
15,539
Non-GAAP income from operations
$
32,459
$
9,338
$
78,124
$
81,525
Non-GAAP operating margin (non-GAAP
operating income as a % of total revenues)
10.6
%
3.6
%
7.0
%
7.1
%
Omnicell, Inc.
Reconciliation of GAAP to
Non-GAAP
(Unaudited, in thousands,
except per share data and percentage)
Three Months Ended December
31,
Year Ended December
31,
2024
2023
2024
2023
Reconciliation of GAAP net income
(loss) to non-GAAP net income:
GAAP net income (loss)
$
15,842
$
(14,375
)
$
12,531
$
(20,371
)
Share-based compensation expense
9,039
12,187
39,316
55,300
Amortization of acquired intangibles
5,497
7,614
22,709
31,574
Acquisition-related expenses
182
244
898
982
Impairment and abandonment of operating
lease right-of-use and other assets related to facilities (a)
—
1,587
—
10,007
RDS restructuring, net of reversals
2,434
1,610
11,953
1,610
Ransomware-related insurance
recoveries
—
(624
)
—
(808
)
Legal and regulatory expenses
2,000
—
2,000
—
Management severance costs
911
—
911
—
Executives transition costs
—
—
—
2,189
Severance-related expenses, net of
reversals
—
10,085
—
15,539
Amortization of debt issuance costs
871
1,258
3,788
4,397
Gain on extinguishment of convertible
senior notes, net
(7,517
)
—
(7,517
)
—
Tax effect of the adjustments above
(b)
(919
)
(4,573
)
(7,295
)
(13,754
)
Non-GAAP net income
$
28,340
$
15,013
$
79,294
$
86,665
Reconciliation of GAAP net income
(loss) per share - diluted to non-GAAP net income per share -
diluted:
Shares - diluted GAAP
46,854
45,495
46,255
45,212
Shares - diluted non-GAAP
46,854
45,532
46,255
45,439
GAAP net income (loss) per share -
diluted
$
0.34
$
(0.32
)
$
0.27
$
(0.45
)
Share-based compensation expense
0.19
0.26
0.85
1.22
Amortization of acquired intangibles
0.12
0.17
0.49
0.69
Acquisition-related expenses
0.00
0.01
0.02
0.02
Impairment and abandonment of operating
lease right-of-use and other assets related to facilities (a)
—
0.03
—
0.22
RDS restructuring, net of reversals
0.05
0.04
0.26
0.04
Ransomware-related insurance
recoveries
—
(0.01
)
—
(0.02
)
Legal and regulatory expenses
0.04
—
0.04
—
Management severance costs
0.02
—
0.02
—
Executives transition costs
—
—
—
0.05
Severance-related expenses, net of
reversals
—
0.22
—
0.34
Amortization of debt issuance costs
0.02
0.03
0.08
0.10
Gain on extinguishment of convertible
senior notes, net
(0.16
)
—
(0.16
)
—
Tax effect of the adjustments above
(b)
(0.02
)
(0.10
)
(0.16
)
(0.30
)
Non-GAAP net income per share -
diluted
$
0.60
$
0.33
$
1.71
$
1.91
Omnicell, Inc.
Reconciliation of GAAP to
Non-GAAP
(Unaudited, in thousands,
except per share data and percentage)
Three Months Ended December
31,
Year Ended December
31,
2024
2023
2024
2023
Reconciliation of GAAP net income
(loss) to non-GAAP EBITDA (c):
GAAP net income (loss)
$
15,842
$
(14,375
)
$
12,531
$
(20,371
)
Share-based compensation expense
9,039
12,187
39,316
55,300
Interest (income) and expense, net
(5,062
)
(5,811
)
(23,399
)
(18,542
)
Depreciation and amortization expense
19,966
21,723
82,232
87,319
Acquisition-related expenses
182
244
898
982
Impairment and abandonment of operating
lease right-of-use and other assets related to facilities (a)
—
1,587
—
10,007
RDS restructuring, net of reversals
2,434
1,610
11,953
1,610
Ransomware-related insurance
recoveries
—
(624
)
—
(808
)
Legal and regulatory expenses
2,000
—
2,000
—
Management severance costs
911
—
911
—
Executives transition costs
—
—
—
2,189
Severance-related expenses, net of
reversals
—
10,085
—
15,539
Amortization of debt issuance costs
871
1,258
3,788
4,397
Gain on extinguishment of convertible
senior notes, net
(7,517
)
—
(7,517
)
—
Provision for (benefit from) income
taxes
7,758
(4,142
)
13,062
263
Non-GAAP EBITDA
$
46,424
$
23,742
$
135,775
$
137,885
Non-GAAP EBITDA margin (non-GAAP EBITDA as
a % of total revenues)
15.1
%
9.2
%
12.2
%
12.0
%
Reconciliation of GAAP net cash
provided by operating activities to non-GAAP free cash
flow:
GAAP net cash provided by operating
activities
$
56,315
$
38,414
$
187,722
$
181,094
External-use software development
costs
(4,481
)
(3,302
)
(16,330
)
(13,542
)
Purchases of property and equipment
(9,087
)
(9,070
)
(36,463
)
(41,474
)
Non-GAAP free cash flow
$
42,747
$
26,042
$
134,929
$
126,078
____________________________
(a)
For the year ended December 31,
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
2024 and 2023.
(c)
Defined as earnings before
interest income and expense, taxes, depreciation, amortization, and
share-based compensation, as well as excluding certain other
non-GAAP adjustments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250206336508/en/
Kathleen Nemeth Senior Vice President, Investor Relations
650-435-3318 Kathleen.Nemeth@Omnicell.com
Omnicell (NASDAQ:OMCL)
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