Omnicell Announces Second Quarter 2013 Results Results include record revenues and profit larger than expectations PR Newswire MOUNTAIN VIEW, Calif., Aug. 1, 2013 MOUNTAIN VIEW, Calif., Aug. 1, 2013 /PRNewswire/ -- Omnicell,Inc. (NASDAQ: OMCL), a leading provider of medication and supply management solutions to healthcare systems, today announced results for its quarter ended June 30, 2013. (Logo: http://photos.prnewswire.com/prnh/20120731/SF48971LOGO-a) GAAP results: Revenue for the second quarter of 2013 was $93.7 million, up $6.6 million or 7.5% from the first quarter of 2013, and up $18.3 million or 24.3% from the second quarter of 2012. Revenue for the six months ended June 30, 2013 was $180.8 million, up $41.3 million or 29.6% from the six months ended June 30, 2012. Second quarter 2013 net income as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $6.0 million, or $0.17 per diluted share. This compares to net income of $3.4 million, or $0.10 per diluted share, in the first quarter of 2013 and net income of $1.4 million, or $0.04 per diluted share, in the second quarter of 2012. For the six months ended June 30, 2013, net income was $9.4 million, or $0.27 per diluted share. This compares to net income of $3.7 million, or $0.11 per diluted share, for the six months ended June 30, 2012. Non-GAAP results: Non-GAAP net income was $9.4 million for the second quarter of 2013, or $0.27 per diluted share. Non-GAAP net income for the second quarter excludes $2.7 million of stock-based compensation expense and $1.1 million ($0.7 million net of the $0.4 million tax effect) of amortization expense for all intangible assets associated with acquisitions made by Omnicell in 2012 and earlier. This compares to non-GAAP net income of $6.7 million, or $0.20 per diluted share for the second quarter of 2012, excluding $2.2 million of stock-based compensation expense, $4.9 million of acquisition transaction and integration costs ($2.9 million net of the $2.0 million tax effect), and $0.5 million ($0.3 million net of the $0.2 million tax effect) of amortization expense for all intangible assets associated with prior acquisitions. Second quarter 2013 results compare to non-GAAP net income of $7.4 million, or $0.21 per diluted share for the first quarter of 2013. Non-GAAP net income for the first quarter excluded $2.9 million of stock-based compensation expense and $0.7 million ($0.4 million net of the $0.3 million tax effect) of reorganization costs related to the continued integration of MTS medication technologies, which was acquired in May of 2012, and $1.1 million ($0.6 million net of the $0.5 million tax effect) of amortization expense for all intangible assets associated with acquisitions. For the six months ended June 30, 2013, non-GAAP net income was $16.8 million, or $0.48 per diluted share. Non-GAAP net income for the six months ended June 30, 2013 excludes $5.6 million of stock-based compensation expense and $2.1 million ($1.3 million net of the $0.8 million tax effect) of amortization expense for all intangible assets associated with acquisitions. For the six months ended June 30, 2012, non-GAAP net income was $11.3 million, or $0.33 per diluted share. Non-GAAP net income for the six months ended June 30, 2012 excludes $4.4 million of stock-based compensation expense, $4.9 million of acquisition transaction and integration costs ($2.9 million net of the $2.0 million tax effect), and $0.5 million ($0.3 million net of the $0.2 million tax effect) of amortization expense for all intangible assets associated with acquisitions. "Omnicell is on track for a strong fiscal 2013 with record revenue in the second quarter," said Randall Lipps, Omnicell president, chairman and CEO. "By all measures, Omnicell continues to perform well against competition. Thirty percent of bookings were from competitive conversions such as the 14-hospital Baptist Memorial Health Care system, Wisconsin's ProHealth Care and other first-time customers," added Mr. Lipps. "And recently KLAS, a leading independent healthcare research firm, named Omnicell the 2013 number one overall pharmacy equipment vendor. Further validating Omnicell value, our automated medication dispensing system achieved the top ranking, 'Best in KLAS', for the eighth consecutive year, and the company's central pharmacy products received top ratings in three categories." Omnicell Conference Call Information Omnicell will hold a conference call today at 1:30 p.m. PT to discuss second 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 19881764. Internet users can access the conference call at http://ir.omnicell.com/events.cfm. A replay of the call will be available today at approximately 4:30 p.m. PT and will be available until 12:00p.m. PT on August 15. The replay access numbers are 1-855-859-2056 within the U.S. and 1-404-537-3406 for all other locations, conference code # 19881764. About Omnicell For over 20 years, the mission of Omnicell (NASDAQ: OMCL) has been creating new efficiencies to help improve patient care, anywhere it is delivered. Omnicell is a leading supplier of comprehensive automation and business analytics software solutions for patient-centric medication and supply management across the entire healthcare continuum, from the acute care hospital setting to post-acute skilled nursing and long-term care facilities to the home. Since 1992, more than 2,600 Acute Care customers worldwide have utilized Omnicell's medication automation, supply chain and analytics solutions to enable them to increase operational efficiency, reduce errors, deliver actionable intelligence and improve patient safety. Omnicell Non-Acute Care solutions, including its MTS Medication Technologies brand, provide innovative medication adherence packaging solutions that can help reduce costly hospital readmissions and enable approximately 6,000 institutional and retail pharmacies worldwide to maintain high accuracy and quality standards in medication dispensing and administration while optimizing productivity and controlling costs. For more information about Omnicell, please visit www.omnicell.com. Forward-Looking Statements To the extent any statements contained in this release deal with information that is not historical, these statements are necessarily forward-looking. As such, they are subject to the occurrence of many events outside Omnicell's control and are subject to various risk factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statement. The risk factors are described in the Company's Securities and Exchange Commission (SEC) filings and include, the potential failure to realize the anticipated benefits of the MTS acquisition, including our ability to take advantage of the growth opportunities in medication management across the spectrum of healthcare settings from long term care to home care, unfavorable general economic and market conditions, risks to growth and acceptance of our products and services, including competitive conversions, and to growth of the clinical automation and workflow automation market generally, the potential of increasing competition, potential regulatory changes, and the ability of the company to improve sales productivity to grow product backlog and to develop new products and integrate acquired companies. Prospective investors are cautioned not to place undue reliance on forward-looking statements. Use of Non-GAAP Financial Information This press release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). Our management evaluates and makes operating decisions using various performance measures. In addition to Omnicell's GAAP results, we also consider non-GAAP gross profit, non-GAAP operating expenses, non-GAAP net income, and non-GAAP net income per diluted share. Additionally, we calculate Adjusted EBITDA (another non-GAAP measure) by means of adjustments to GAAP Net Income. These non-GAAP results should not be considered as an alternative to gross profit, operating expenses, net income, net income per diluted share, or any other performance measure derived in accordance with GAAP. We present these non-GAAP results because we consider them to be important supplemental measures of Omnicell's performance. Our non-GAAP gross profit, non-GAAP operating expenses, non-GAAP net income and non-GAAP net income per diluted share are exclusive of certain items to facilitate management's review of the comparability of Omnicell's core operating results on a period to period basis because such items are not related to Omnicell's ongoing core operating results as viewed by management. We define our "core operating results" as those revenues recorded in a particular period and the expenses incurred within that period that directly drive operating income in that period. Management uses these non-GAAP financial measures in making operating decisions because, in addition to meaningful supplemental information regarding operating performance, the measures give us a better understanding of how we should invest in research and development, fund infrastructure growth and evaluate the effectiveness of marketing strategies. In calculating the above non-GAAP results, management specifically adjusted for the following excluded items: a) Stock-based compensation expense impact of Accounting Standards Codification (ASC) 718.We recognize equity plan-related compensation expenses, which represent the fair value of all share-based payments to employees, including grants of employee stock options, as required under ASC 718, "Stock Compensation" as non-GAAP adjustments in each period. b) Reorganization costs. During the six months ended June 30, 2013, we recorded $0.7 million of reorganization costs related to our Non-Acute Care segment ($0.4 million net of the $0.3 million tax effect). This charge is not expected to be recurring and, as such, the financial impact is excluded from our non-GAAP results. c) Acquisition-related transaction and integration expenses. In connection with our acquisition of MTS, we recorded $4.9 million of acquisition transaction and integration costs ($2.9 million net of the $2.0 million tax effect) in the second quarter of 2012. This charge is not expected to be recurring and, as such, the financial impact is excluded from our non-GAAP results. d)Intangible assets amortization from business acquisitions. We excluded from our non-GAAP results the amortization expense resulting from the MTS acquisition as well as earlier Omnicell acquisitions. This impacts the second quarter of fiscal 2013 non-GAAP results by $1.1 million ($0.7 million net of the $0.4 million tax effect) and the first quarter of fiscal 2013 non-GAAP results by $1.1 million ($0.6 million net of the $0.5 million tax effect). This impacts the June 30, 2013 year-to-date non-GAAP results by $2.1 million ($1.3 million net of $0.8 million tax effect) and impacts June 30, 2012 second quarter and year-to-date non-GAAP results by $0.5 million ($0.3 million net of the $0.2 million tax effect).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. Management adjusts for the above items because management believes that, in general, these items possess one or more of the following characteristics: their magnitude and timing is largely outside of Omnicell's control; they are unrelated to the ongoing operation of the business in the ordinary course; they are unusual and we do not expect them to occur in the ordinary course of business; or they are non-operational, or non-cash expenses involving stock option grants. We believe that the presentation of these non-GAAP financial measures is warranted for several reasons: 1) Such non-GAAP financial measures provide an additional analytical tool for understanding Omnicell's financial performance by excluding the impact of items which may obscure trends in the core operating results of the business; 2) Since we have historically reported non-GAAP results to the investment community, we believe the inclusion of non-GAAP numbers provides consistency and enhances investors' ability to compare our performance across financial reporting periods; 3) These non-GAAP financial measures are employed by Omnicell's management in its own evaluation of performance and are utilized in financial and operational decision making processes, such as budget planning and forecasting; and 4) These non-GAAP financial measures facilitate comparisons to the operating results of other companies in our industry, which use similar financial measures to supplement their GAAP results, thus enhancing the perspective of investors who wish to utilize such comparisons in their analysis of our performance. Set forth below are additional reasons why share-based compensation expense related to ASC 718 is excluded from our non-GAAP financial measures: i) While share-based compensation calculated in accordance with ASC 718 constitutes an ongoing and recurring expense of Omnicell, it is not an expense that requires cash settlement by Omnicell. We therefore exclude these charges for purposes of evaluating core operating results. Thus, our non-GAAP measurements are presented exclusive of stock-based compensation expense to assist management and investors in evaluating our core operating results. ii) We present ASC 718 share-based payment compensation expense in our reconciliation of non-GAAP financial measures on a pre-tax basis because the exact tax differences related to the timing and deductibility of share-based compensation, under ASC 718 are dependent upon the trading price of Omnicell's common stock and the timing and exercise by employees of their stock options.As a result of these timing and market uncertainties the tax effect related to share-based compensation expense would be inconsistent in amount and frequency and is therefore excluded from our non-GAAP results. Our Adjusted EBITDA calculation is defined as earnings before interest income and expense, taxes, depreciation and amortization, and non-cash expenses, including ASC 718 stock compensation expense. As stated above, we present non-GAAP financial measures because we consider them to be important supplemental measures of performance. However, non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for Omnicell's GAAP results. In the future, we expect to incur expenses similar to certain of the non-GAAP adjustments described above and expect to continue reporting non-GAAP financial measures excluding such items. Some of the limitations in relying on non-GAAP financial measures are: oOmnicell'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. oOther 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. OMCL-E Omnicell, Inc. Condensed Consolidated Statements of Operations (in thousands, except per share data, unaudited) ThreeMonthsEnded Six MonthsEnded June30, March31, June30, June30, June30, 2013 2013 2012 2013 2012 Revenues: Product $ 75,581 $ 69,236 $ 59,269 $ 144,817 $ 107,793 Services and other 18,105 17,874 16,115 35,979 31,734 revenues Total revenue 93,686 87,110 75,384 180,796 139,527 Cost of revenues: Cost of product revenues 36,286 33,547 28,600 69,833 48,896 Cost of services and 8,032 8,196 7,408 16,228 15,506 other revenues Total cost of revenues 44,318 41,743 36,008 86,061 64,402 Gross profit 49,368 45,367 39,376 94,735 75,125 Operating expenses: Research and development 7,150 7,954 5,499 15,104 11,993 Selling, general, and 32,859 33,244 31,446 66,104 57,066 administrative Total operating expenses 40,009 41,198 36,945 81,208 69,059 Income from operations 9,359 4,169 2,431 13,527 6,066 Other income and 63 (223) (73) (159) 23 (expense), net Income before provision 9,422 3,946 2,358 13,368 6,089 for income taxes Provision for income 3,406 561 983 3,967 2,363 taxes Net income $ $ $ 1,375 $ 9,401 $ 3,726 6,016 3,385 Net income per share: Basic $ 0.17 $ 0.10 $ 0.04 $ 0.28 $ 0.11 Diluted $ 0.17 $ 0.10 $ 0.04 $ 0.27 $ 0.11 Weighted average shares outstanding: Basic 34,450 33,900 33,390 34,177 33,377 Diluted 35,374 34,820 34,316 35,099 34,329 Omnicell, Inc. Condensed Consolidated Balance Sheets (In thousands) June 30, December31, 2013 2012 (unaudited) (1) ASSETS Current assets: Cash and cash equivalents $ 87,334 $ 62,313 Short-term investments — — Accounts receivable, net 63,840 55,116 Inventories 26,360 26,903 Prepaid expenses 15,928 15,392 Deferred tax assets 11,860 11,860 Other current assets 7,899 9,172 Total current assets 213,221 180,756 Property and equipment, net 34,114 34,107 Non-current net investment in sales-type leases 13,222 13,228 Goodwill 111,343 111,407 Other intangible assets 83,468 85,550 Non-current deferred tax assets 985 993 Other assets 15,775 15,778 Total assets $ 472,128 $ 441,819 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 17,459 $ 18,255 Accrued compensation 11,239 11,613 Accrued liabilities 14,053 11,988 Deferred service revenue 20,434 20,449 Deferred gross profit 25,350 20,772 Total current liabilities 88,535 83,077 Non-current deferred service revenue 18,598 19,892 Non-current deferred tax liabilities 26,225 26,491 Other long-term liabilities 5,039 4,809 Total liabilities 138,397 134,269 Stockholders' equity: Total stockholders' equity 333,731 307,550 Total liabilities and stockholders' equity $ 472,128 $ 441,819 (1) Information derived from our December31, 2012 audited Consolidated Financial Statements. Omnicell, Inc. Reconciliation of GAAP to Non-GAAP (In thousands, except per share data, unaudited) Threemonthsended June 30,2013 March 31,2013 June 30,2012 Net Netincome Net Netincome Net Netincome income pershare- income pershare- income pershare- diluted diluted diluted GAAP $ 6,016 $ 0.17 $ 3,385 $ 0.10 $ 1,375 $ 0.04 Non-GAAP adjustments: Business acquisition costs Reorganization — 732 — costs (a) Transaction and integration costs for — — acquisitions 4,855 (b) Amortization of intangible 1,060 1,060 assets acquired 558 by acquisition (c) Subtotal pretax 1,060 1,792 5,413 adjustments Income tax effect of (382) (716) non-GAAP (2,256) adjustments (d) Subtotal after-tax 678 1,076 3,157 adjustments ASC 718 share-based compensation adjustment (e) Gross profit 325 305 233 Operating 2,362 2,621 1,980 expenses Total after-tax 3,365 0.10 4,002 0.11 5,370 0.16 adjustments Non-GAAP $ 9,381 $ 0.27 $ 7,387 $ 0.21 $ 6,745 $ 0.20 (a) This adjustment is for reorganization costs related to our Non-Acute Care segment for the three months ended March 31, 2013. (b) This adjustment is for the incurrence of transaction and integration costs related to our acquisition of MTS in May 2012. Beginning with the second quarter of 2012, we are recognizing the (c) amortization expense resulting from all intangible assets recorded from business acquisitions as a non-GAAP adjustment, including MTS and prior acquisitions. (d) Tax effects are calculated using the effective tax rates for the respective periods presented. This adjustment reflects the accounting impact of non-cash stock-based (e) compensation expense related to the impact of ASC 718 for the periods shown Omnicell, Inc. Reconciliation of GAAP to Non-GAAP (In thousands, except per share data, unaudited) Six months ended June 30,2013 June 30,2012 Net Netincome Net Netincome income pershare- income pershare- diluted diluted GAAP $ 9,401 $ 0.27 $ 3,726 $ 0.11 Non-GAAP adjustments: Business acquisition costs Reorganization costs (a) 732 — Transaction and integration — 4,855 costs for acquisitions (b) Amortization of intangible assets acquired by acquisition (c) 2,120 558 Subtotal pretax adjustments 2,852 5,413 Income tax effect of non-GAAP (1,099) (2,256) adjustments (d) Subtotal after-tax adjustments 1,753 3,157 ASC 718 share-based compensation adjustment (e) Gross profit 629 501 Operating expenses 4,984 3,919 Total after tax adjustments 7,366 0.21 7,577 0.22 Non-GAAP $ 16,767 $ 0.48 $ 11,303 $ 0.33 (a) This adjustment is for reorganization costs related to our Non-Acute Care segment for the six months ended June 30, 2013. (b) This adjustment is for the incurrence of transaction and integration costs related to our acquisition of MTS in May 2012. Beginning with the second quarter of 2012, we are recognizing the (c) amortization expense resulting from all intangible assets recorded from business acquisitions as a non-GAAP adjustment, including MTS and prior acquisitions. (d) Tax effects are calculated using the effective tax rates for the respective periods presented. This adjustment reflects the accounting impact of non-cash stock-based (e) compensation expense related to the impact of ASC 718 for the periods shown Omnicell, Inc. Calculation of Adjusted EBITDA (1) (In thousands, unaudited) ThreeMonthsEnded Six months ended June30, March31, June 30, June30, June 30, 2013 2013 2013 2012 2012 GAAP net income $ 6,016 $ 3,385 $ 1,375 $ 9,401 $ 3,726 Add back: ASC 718 stock compensation 2,687 2,926 2,213 5,613 4,420 expense Reorganization costs 732 732 Transaction and integration costs for acquisitions, — — 4,855 — 4,885 pre-tax Interest (7) 106 (24) 99 (55) Depreciation and 4,773 4,471 2,998 9,244 5,333 amortization expense Income tax expense 3,406 561 983 3,967 2,363 Non-GAAP adjusted EBITDA $ 16,875 $ 12,181 $ 12,400 $ 29,056 $ 20,672 (1) (1) Defined as earnings before interest income and expense, taxes, depreciation and amortization, and non-cash expenses, including stock compensation expense, per ASC 718, as well excluding certain non-GAAP adjustments. The non-GAAP adjustments for the quarter ended March 31, 2013 and six months ended June 30, 2013 exclude transaction and integration costs for MTS, acquired in May 2012. The non-GAAP adjustments for the three and six months ended June 30, 2012 also exclude transaction and integration costs for MTS, acquired in May 2012. SOURCE Omnicell, Inc. Website: http://www.omnicell.com Contact: Rob Seim, Chief Financial Officer, Omnicell, Inc., 800-850-6664, ext. 6478, firstname.lastname@example.org
Omnicell Announces Second Quarter 2013 Results
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