Full Year 2023 GAAP Revenues of $1.147 billion
Full Year 2023 GAAP net loss of $20 million and GAAP net loss per
diluted share of $0.45 Full Year 2023 Non-GAAP EBITDA of $138
million and Non-GAAP net income per diluted share of $1.91 Full
Year 2023 Net Cash Provided by Operating Activities of $181 million
Full Year 2023 Non-GAAP Free Cash Flow of $126 million
Omnicell, Inc. (NASDAQ:OMCL) (“Omnicell,” “we,” “our,” “us,”
“management,” or the “Company”), a leader in transforming the
pharmacy care delivery model, today announced results for its
fiscal year and fourth quarter ended December 31, 2023.
Randall Lipps, chairman, president, chief executive officer, and
founder of Omnicell, said, “Our team delivered 2023 financial
results that were generally in line with what we originally
anticipated for the year. We are enthusiastic about our robust
innovation pipeline, particularly around our XT fleet of connected
devices. We believe the Company is uniquely positioned to capture
incremental market share as hospital cost pressures are expected to
alleviate and as the macroeconomic environment is anticipated to
improve. However, we recognize we have work to do to strengthen our
performance and accelerate profitability. To that end, we are
undertaking a holistic review of our business to determine how we
can best optimize our investments in an effort to deliver strong
returns for our stockholders. We remain confident in Omnicell’s
long-term opportunities as we work to transform the pharmacy care
delivery model and ultimately help enable healthcare providers to
deliver better outcomes around patient safety and overall
efficiencies.”
Financial Results
Total GAAP revenues for the fourth quarter of 2023 were $259
million, down $39 million, or 13%, from the fourth quarter of 2022.
Total GAAP revenues for the year ended December 31, 2023 were
$1.147 billion, down $149 million, or 11%, from the year ended
December 31, 2022. The quarter-over-quarter and year-over-year
decrease in total GAAP revenues reflects lower Point of Care
revenues primarily as a result of ongoing healthcare systems’
capital budget and labor constraints.
Total GAAP net loss for the fourth quarter 2023 was $14 million,
or $0.32 per diluted share. This compares to GAAP net loss of $28
million, or $0.64 per diluted share, for the fourth quarter of
2022. Total GAAP net loss for the year ended December 31, 2023 was
$20 million, or $0.45 per diluted share. This compares to GAAP net
income of $6 million, or $0.12 per diluted share, for the year
ended December 31, 2022.
Total non-GAAP net income for both the fourth quarter of 2023
and the fourth quarter of 2022 was $15 million, or $0.33 per
diluted share. Total non-GAAP net income for the year ended
December 31, 2023 was $87 million, or $1.91 per diluted share. This
compares to non-GAAP net income of $136 million, or $3.00 per
diluted share, for the year ended December 31, 2022.
Total non-GAAP EBITDA for the fourth quarter of 2023 was $24
million. This compares to non-GAAP EBITDA of $26 million for the
fourth quarter of 2022. Total non-GAAP EBITDA for the year ended
December 31, 2023 was $138 million. This compares to non-GAAP
EBITDA of $193 million for the year ended December 31, 2022.
Bookings and Backlog
Total bookings (1) for the year ended December 31, 2023 were
$854 million compared to $1.054 billion for the year ended December
31, 2022, or a decrease of 19% year-over-year, primarily driven by
lower-than-expected orders for our Advanced Services, particularly
our technology-enabled services, which include Central Pharmacy
Dispensing Service and IV Compounding Service.
Total backlog (2) for the years ended December 31, 2023 and 2022
was as follows:
December 31,
2023
2022
(In thousands)
Total backlog
$
1,142,686
$
1,215,462
By type:
Product backlog
$
610,832
$
796,967
Advanced Services backlog (3)
$
531,854
$
418,495
By duration and type:
Short-term product backlog
$
377,936
$
503,303
Long-term product backlog
$
232,896
$
293,664
Short-term Advanced Services backlog
(3)
$
72,455
$
49,567
Long-term Advanced Services backlog
(3)
$
459,399
$
368,928
_________________________________________________
(1)
We define bookings generally as:
(i) the value of non-cancelable contracts for our connected
devices, software products, and Advanced Services (although, for
those Advanced 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. We
utilize bookings as an indicator of the success of our
business.
(2)
Backlog is the dollar amount of
bookings that have not yet been recognized as revenue. Bookings for
those Advanced 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. Larger
or more complex implementations such as software-enable 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. Service revenues from Advanced Services are recorded
over the contractual term. 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 Advanced Services are recorded over the contractual term. 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. Long-term Advanced Services backlog
typically represents multi-year subscription agreements (usually
with contractual terms of 2-7 years, some of which have not yet
been implemented) that will be converted to revenue ratably 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
Advanced Services non-cancelable contracts with minimum
commitments.
Balance Sheet
As of December 31, 2023, Omnicell’s balance sheet reflected cash
and cash equivalents of $468 million, total debt (net of
unamortized debt issuance costs) of $570 million, and total assets
of $2.23 billion. Cash flows provided by operating activities in
the fourth quarter of 2023 totaled $38 million. This compares to
cash flows provided by operating activities totaling $82 million in
the fourth quarter of 2022.
As of December 31, 2023, the Company had $350 million of
availability under its revolving credit facility with no
outstanding balance.
2024 Guidance
For the full year 2024, the Company expects bookings to be
between $750 million and $875 million. The Company expects full
year 2024 total revenues to be between $1.045 billion and $1.120
billion. The Company expects full year 2024 product revenues to be
between $605 million and $650 million, and full year 2024 service
revenues to be between $440 million and $470 million. The Company
expects full year 2024 technical services revenues to be between
$220 million and $235 million, and full year 2024 Advanced Services
revenues to be between $220 million and $235 million. The Company
expects full year 2024 non-GAAP EBITDA to be between $90 million
and $120 million. The Company expects full year 2024 non-GAAP
earnings per share to be between $0.90 and $1.40 per share.
For the first quarter of 2024, the Company expects total
revenues to be between $232 million and $242 million. The Company
expects first quarter 2024 product revenues to be between $128
million and $133 million, and first quarter 2024 service revenues
to be between $104 million and $109 million. The Company expects
first quarter 2024 non-GAAP EBITDA to be between ($2) million and
$4 million. The Company expects first quarter 2024 non-GAAP
earnings per share to be between a net loss of ($0.10) and
breakeven per share.
The table below summarizes Omnicell’s 2024 guidance outlined
above.
Q1 2024
2024
Bookings
Not provided
$750 million - $875 million
Total Revenues
$232 million - $242 million
$1.045 billion - $1.120
billion
Product Revenues
$128 million - $133 million
$605 million - $650 million
Service Revenues
$104 million - $109 million
$440 million - $470 million
Technical Services Revenues
Not provided
$220 million - $235 million
Advanced Services Revenues
Not provided
$220 million - $235 million
Non-GAAP EBITDA
($2) million - $4 million
$90 million - $120 million
Non-GAAP Earnings Per Share
($0.10) - $0.00
$0.90 - $1.40
The Company does not provide guidance for GAAP net income or
GAAP earnings per share, nor a reconciliation of these
forward-looking non-GAAP financial measures to the most directly
comparable GAAP financial measures on a forward-looking basis
because it is unable to predict certain items contained in the GAAP
measures without unreasonable efforts. These forward-looking
non-GAAP financial measures do not include certain items, which may
be significant, including, but not limited to, unusual gains and
losses, costs associated with future restructurings,
acquisition-related expenses, and certain tax and litigation
outcomes.
Omnicell Conference Call Information
Omnicell will hold a conference call today, Thursday, February
8, 2024 at 8:30 a.m. ET to discuss fourth quarter and year end 2023
financial results. The conference call can be monitored by dialing
(888) 550-5424 in the U.S. or (646) 960-0819 in international
locations. The Conference ID is 9581556. 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
care through outcomes-centric innovation designed to optimize
clinical and business outcomes across all settings of care. Through
a comprehensive portfolio of robotics, smart devices, intelligent
software, and expert services, Omnicell solutions are helping
healthcare facilities worldwide to reduce costs, improve labor
efficiency, establish new revenue streams, enhance supply chain
control, support compliance, and move closer to the industry 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 Twitter handle www.twitter.com/omnicell, LinkedIn page
www.linkedin.com/company/omnicell, and Facebook page
www.facebook.com/omnicellinc, to disclose material non-public
information and comply with its disclosure obligations under
Regulation Fair Disclosure (“Reg FD”).
OMNICELL and the Omnicell logo are registered trademarks of
Omnicell, Inc. or one of its subsidiaries.
Forward-Looking Statements
To the extent any statements contained in this press release
deal with information that is not historical, these statements are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Without limiting the
foregoing, statements including the words “expect,” “intend,”
“may,” “will,” “should,” “would,” “could,” “plan,” “potential,”
“anticipate,” “believe,” “forecast,” “guidance,” “outlook,”
“goals,” “target,” “estimate,” “seek,” “predict,” “project,” and
similar expressions are intended to identify forward-looking
statements. Forward-looking statements are subject to the
occurrence of many events outside Omnicell’s control. Such
statements include, but are not limited to, Omnicell’s projected
bookings, revenues, including product, service, technical services
and Advanced Services revenues, non-GAAP EBITDA, and non-GAAP
earnings per share; expectations regarding our products and
services and developing new or enhancing existing products and
solutions; results of our holistic review; our ability to deliver
long-term value; and statements about Omnicell’s strategy, plans,
objectives, goals, opportunities, vision, market or Company
outlook, and planned investments. 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) restructuring may take longer than
expected, costs may be greater than anticipated or that the savings
may be less than anticipated, (viii) the Company’s efforts may have
an adverse impact on the Company’s internal programs, and
Omnicell’s ability to recruit and retain skilled and motivated
personnel and may be distracting to management, (ix) risks related
to failing to maintain expected service levels when providing our
Advanced Services or retaining our Advanced Services customers, (x)
Omnicell’s ability to meet the demands of, or maintain
relationships with, its institutional, retail, and specialty
pharmacy customers, (xi) risks related to climate change, legal,
regulatory or market measures to address climate change and related
emphasis on ESG matters by various stakeholders, (xii) changes to
the 340B Program, (xiii) Omnicell’s substantial debt, which could
impair its financial flexibility and access to capital, (xiv)
covenants in our credit agreement could restrict our business and
operations, (xv) continued and increased competition from current
and future competitors in the medication management automation
solutions market and the medication adherence solutions market,
(xvi) risks presented by government regulations, legislative
changes, fraud and anti-kickback statues, products liability
claims, the outcome of legal proceedings, and other legal
obligations related to healthcare, privacy, data protection, and
information security, including any potential governmental
investigations and enforcement actions, litigation, fines and
penalties, exposure to indemnification obligations or other
liabilities, and adverse publicity as a result of the previously
disclosed ransomware incident, (xvii) 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, (xviii) risks associated with operating in foreign
countries, (xix) Omnicell’s ability to recruit and retain skilled
and motivated personnel, (xx) Omnicell’s ability to protect its
intellectual property, (xxi) risks related to the availability and
sources of raw materials and components or price fluctuations,
shortages, or interruptions of supply, (xxii) 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, (xxiii) fluctuations in quarterly and annual operating
results may make our future operating results difficult to predict,
(xxiv) failing to meet (or significantly exceeding) our publicly
announced financial guidance, and (xxv) other risks and
uncertainties further described in the “Risk Factors” section of
Omnicell’s most recent Annual Report on Form 10-K, as well as in
Omnicell’s other reports filed with or furnished to the United
States Securities and Exchange Commission (“SEC”), available at
www.sec.gov. Forward-looking statements should be considered in
light of these risks and uncertainties. Investors and others are
cautioned not to place undue reliance on forward-looking
statements. All forward-looking statements contained in this press
release speak only as of the date of this press release. Omnicell
assumes no obligation to update any such statements publicly, or to
update the reasons actual results could differ materially from
those expressed or implied in any forward-looking statements,
whether as a result of changed circumstances, new information,
future events, or otherwise, except as required by law.
Use of Non-GAAP Financial Information
This press release contains financial measures that are not
calculated in accordance with U.S. Generally Accepted Accounting
Principles (“GAAP”). Management evaluates and makes operating
decisions using various performance measures. In addition to
Omnicell’s GAAP results, we also consider non-GAAP revenues,
non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating
expenses, non-GAAP income from operations, non-GAAP operating
margin, non-GAAP net income, non-GAAP net income per diluted share,
non-GAAP diluted shares, non-GAAP EBITDA, non-GAAP EBITDA margin,
and non-GAAP free cash flow. These non-GAAP results and metrics
should not be considered as an alternative to revenues, gross
profit, operating expenses, income from operations, net income, net
income per diluted share, diluted shares, net cash provided by
operating activities, or any other performance measure derived in
accordance with GAAP. We present these non-GAAP results and metrics
because management considers them to be important supplemental
measures of Omnicell’s performance and refers to such measures when
analyzing Omnicell’s strategy and operations.
Our non-GAAP revenues, non-GAAP gross profit, non-GAAP gross
margin, non-GAAP operating expenses, non-GAAP income from
operations, non-GAAP operating margin, non-GAAP net income,
non-GAAP net income per diluted share, non-GAAP EBITDA, and
non-GAAP EBITDA margin are exclusive of certain items to facilitate
management’s review of the comparability of Omnicell’s core
operating results on a period-to-period basis because such items
are not related to Omnicell’s ongoing core operating results as
viewed by management. We define our “core operating results” as
those revenues recorded in a particular period and the expenses
incurred within such period that directly drive operating income in
such period. Management uses these non-GAAP financial measures in
making operating decisions because, in addition to meaningful
supplemental information regarding operating performance, the
measures give us a better understanding of how we believe we should
invest in research and development, fund infrastructure growth, and
evaluate the effectiveness of marketing strategies. In calculating
the above non-GAAP results: non-GAAP revenues excludes from its
GAAP equivalent item a) below; non-GAAP gross profit and non-GAAP
gross margin exclude from their GAAP equivalents items a), b), c),
f), and g) below; non-GAAP operating expenses excludes from its
GAAP equivalents items b), c), d), e), f), g), 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), f),
g), 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 k) below. Non-GAAP EBITDA is defined as earnings before
interest income and expense, taxes, depreciation, amortization, and
share-based compensation, as well as excluding certain other
non-GAAP adjustments. Non-GAAP EBITDA and non-GAAP EBITDA margin
exclude from their GAAP equivalents items a), b), d), e), f), g),
h), i), j) and k) below:
a)
Acquisition accounting impact
related to deferred revenues. In connection with the acquisition of
FDS Amplicare, we recorded a fair value adjustment to acquired
deferred revenues as part of the purchase accounting in accordance
with GAAP. The adjustment represents revenues that would have been
recognized in the normal course of business by FDS Amplicare if the
acquisition had not occurred, but was not recognized due to GAAP
purchase accounting requirements. The non-GAAP adjustment to our
revenues is intended to include the full amounts of such revenues.
We believe the adjustment to these revenues is useful as a measure
of the ongoing performance of our business.
b)
Share-based compensation expense.
We excluded from our non-GAAP results the expense related to
equity-based compensation plans as it represents expenses that do
not require cash settlement from Omnicell.
c)
Amortization of acquired
intangible assets. We excluded from our non-GAAP results the
intangible assets amortization expense resulting from our past
acquisitions. These non-cash charges are not considered by
management to reflect the core cash-generating performance of the
business and therefore are excluded from our non-GAAP results.
d)
Acquisition-related expenses. We
excluded from our non-GAAP results the expenses related to recent
acquisitions, including amortization of representations and
warranties insurance. These expenses are unrelated to our ongoing
operations, vary in size and frequency, and are subject to
significant fluctuations from period to period due to varying
levels of acquisition activity. We believe that excluding these
expenses provides more meaningful comparisons of the financial
results to our historical operations and forward-looking guidance,
and to the financial results of less acquisitive peer
companies.
e)
Impairment and abandonment of
operating lease right-of-use and other assets related to
facilities. We excluded from our non-GAAP results the impairment
and abandonment of certain operating lease right-of-use assets, as
well as property and equipment, incurred in connection with
restructuring activities for optimization of certain leased
facilities. These non-cash charges are not considered by management
to reflect the core cash-generating performance of the business and
therefore are excluded from our non-GAAP results.
f)
Ransomware-related expenses, net
of insurance recoveries. We excluded from our non-GAAP results the
net expenses related to the previously disclosed ransomware
incident identified by the Company on May 4, 2022. Expenses include
costs to investigate and remediate the ransomware incident, as well
as legal and other professional services, and are presented net of
expected insurance recoveries. These expenses are unrelated to our
ongoing operations and would not have otherwise been incurred by us
in the normal course of business. We believe that excluding these
expenses provides more meaningful comparisons of the financial
results to our historical operations and forward-looking guidance,
and to the financial results of peer companies.
g)
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.
h)
Amortization of debt issuance
costs. Debt issuance costs represent costs associated with the
issuance of term loan and revolving credit facilities, as well as
the issuance of convertible senior notes. The costs include
underwriting fees, original issue discount, ticking fees, and legal
fees. These non-cash expenses are not considered by management to
reflect the core cash-generating performance of the business and
therefore are excluded from our non-GAAP results.
i)
Executive 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.
j)
Impairment of certain long-lived
assets. We excluded from our non-GAAP results the impairment
charges of long-lived assets related to the anticipated
reorganization of certain product lines. 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.
k)
Certain litigation costs. We
excluded non-recurring charges and benefits, including litigation
expenses and settlements, related to litigation matters that are
outside of the ordinary course of our business or that are not
representative of those that we historically have incurred. 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.
Management adjusts for the above items because management
believes that, in general, these items possess one or more of the
following characteristics: their magnitude and timing is largely
outside of Omnicell’s control; they are unrelated to the ongoing
operation of the business in the ordinary course; they are unusual
and we do not expect them to occur in the ordinary course of
business; or they are non-operational or non-cash expenses
involving stock compensation plans or other items.
We believe that the presentation of non-GAAP revenues, non-GAAP
gross profit, non-GAAP gross margin, non-GAAP operating expenses,
non-GAAP income from operations, non-GAAP operating margin,
non-GAAP net income, non-GAAP net income per diluted share,
non-GAAP EBITDA, and non-GAAP EBITDA margin is warranted for
several reasons:
a)
Such non-GAAP financial measures
provide an additional analytical tool for understanding Omnicell’s
financial performance by excluding the impact of items which may
obscure trends in the core operating results of the business.
b)
Since we have historically
reported non-GAAP results to the investment community, we believe
the inclusion of non-GAAP numbers provides consistency and enhances
investors’ ability to compare our performance across financial
reporting periods.
c)
These non-GAAP financial measures
are employed by management in its own evaluation of performance and
are utilized in financial and operational decision-making
processes, such as budget planning and forecasting.
d)
These non-GAAP financial measures
facilitate comparisons to the operating results of other companies
in our industry, which also use non-GAAP financial measures to
supplement their GAAP results (although these companies may
calculate non-GAAP financial measures differently than Omnicell
does), thus enhancing the perspective of investors who wish to
utilize such comparisons in their analysis of our performance.
Set forth below are additional reasons why share-based
compensation expense is excluded from our non-GAAP financial
measures:
i)
While share-based compensation
calculated in accordance with Accounting Standards Codification
(“ASC”) 718 constitutes an ongoing and recurring expense of
Omnicell, it is not an expense that requires cash settlement by
Omnicell. We therefore exclude these charges for purposes of
evaluating core operating results. Thus, our non-GAAP measurements
are presented exclusive of share-based compensation expense to
assist management and investors in evaluating our core operating
results.
ii)
We present ASC 718 share-based
payment compensation expense in our reconciliation of non-GAAP
financial measures on a pre-tax basis because the exact tax
differences related to the timing and deductibility of share-based
compensation under ASC 718 are dependent upon the trading price of
Omnicell’s common stock and the timing and exercise by employees of
their stock options. As a result of these timing and market
uncertainties, the tax effect related to share-based compensation
expense would be inconsistent in amount and frequency and is
therefore excluded from our non-GAAP results.
Non-GAAP diluted shares is defined as our GAAP diluted shares,
excluding the impact of dilutive convertible senior notes for which
the Company is economically hedged through its anti-dilutive
convertible note hedge transaction. We believe non-GAAP diluted
shares is a useful non-GAAP metric because it provides insight into
the offsetting economic effect of the hedge transaction against
potential conversion of the convertible senior notes.
Non-GAAP free cash flow is defined as net cash provided by
operating activities less cash used for software development for
external use and purchases of property and equipment. We believe
free cash flow is important to enable investors to better
understand and evaluate our ongoing operating results and allows
for greater transparency in the review and understanding of our
overall financial, operational, and economic performance, because
free cash flow takes into account certain capital expenditures and
cash used for software development necessary to operate our
business.
As stated above, we present non-GAAP financial measures because
we consider them to be important supplemental measures of
performance. However, non-GAAP financial measures have limitations
as an analytical tool and should not be considered in isolation or
as a substitute for Omnicell’s GAAP results. In the future, we
expect to incur expenses similar to certain of the non-GAAP
adjustments described above and expect to continue reporting
non-GAAP financial measures excluding such items. Some of the
limitations in relying on non-GAAP financial measures are:
a)
Omnicell’s equity incentive plans
and stock purchase plans are important components of incentive
compensation arrangements and will be reflected as expenses in
Omnicell’s GAAP results for the foreseeable future under ASC
718.
b)
Other companies, including
companies in Omnicell’s industry, may calculate non-GAAP financial
measures differently than Omnicell, limiting their usefulness as a
comparative measure.
c)
A limitation of the utility of
free cash flow as a measure of financial performance is that it
does not represent the total increase or decrease in Omnicell’s
cash balance for the period.
A detailed reconciliation between Omnicell’s non-GAAP and GAAP
financial results is set forth in the financial tables at the end
of this press release. Investors are advised to carefully review
and consider this information strictly as a supplement to the GAAP
results that are contained in this press release as well as in
Omnicell’s other reports filed with or furnished to the SEC.
Omnicell, Inc.
Condensed Consolidated
Statements of Operations
(Unaudited, in thousands,
except per share data)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Revenues:
Product revenues
$
145,655
$
196,976
$
708,561
$
903,222
Services and other revenues
113,192
100,698
438,551
392,725
Total revenues
258,847
297,674
1,147,112
1,295,947
Cost of revenues:
Cost of product revenues
90,306
119,451
414,106
493,626
Cost of services and other revenues
63,137
56,470
236,166
213,334
Total cost of revenues
153,443
175,921
650,272
706,960
Gross profit
105,404
121,753
496,840
588,987
Operating expenses:
Research and development
26,819
28,413
97,115
104,969
Selling, general, and administrative
101,950
131,697
434,593
486,341
Total operating expenses
128,769
160,110
531,708
591,310
Loss from operations
(23,365
)
(38,357
)
(34,868
)
(2,323
)
Interest and other income (expense),
net
4,848
2,843
14,760
(130
)
Loss before income taxes
(18,517
)
(35,514
)
(20,108
)
(2,453
)
Provision for (benefit from) income
taxes
(4,142
)
(7,106
)
263
(8,101
)
Net income (loss)
$
(14,375
)
$
(28,408
)
$
(20,371
)
$
5,648
Net income (loss) per share:
Basic
$
(0.32
)
$
(0.64
)
$
(0.45
)
$
0.13
Diluted
$
(0.32
)
$
(0.64
)
$
(0.45
)
$
0.12
Weighted-average shares
outstanding:
Basic
45,495
44,678
45,212
44,398
Diluted
45,495
44,678
45,212
45,891
Omnicell, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited, in
thousands)
December 31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
467,972
$
330,362
Accounts receivable and unbilled
receivables, net
252,025
299,469
Inventories
110,099
147,549
Prepaid expenses
25,966
27,070
Other current assets
71,509
77,362
Total current assets
927,571
881,812
Property and equipment, net
108,601
93,961
Long-term investment in sales-type leases,
net
42,954
32,924
Operating lease right-of-use assets
24,988
38,052
Goodwill
735,810
734,274
Intangible assets, net
211,173
242,906
Long-term deferred tax assets
32,901
22,329
Prepaid commissions
52,414
59,483
Other long-term assets
90,466
105,017
Total assets
$
2,226,878
$
2,210,758
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
45,028
$
63,389
Accrued compensation
51,754
73,455
Accrued liabilities
149,276
172,655
Deferred revenues, net
121,734
118,947
Total current liabilities
367,792
428,446
Long-term deferred revenues
58,622
37,385
Long-term deferred tax liabilities
1,620
2,095
Long-term operating lease liabilities
33,910
39,405
Other long-term liabilities
6,318
6,719
Convertible senior notes, net
569,662
566,571
Total liabilities
1,037,924
1,080,621
Total stockholders’ equity
1,188,954
1,130,137
Total liabilities and stockholders’
equity
$
2,226,878
$
2,210,758
Omnicell, Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited, in
thousands)
Year Ended December
31,
2023
2022
Operating Activities
Net income (loss)
$
(20,371
)
$
5,648
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
87,319
86,931
Loss on disposal of property and
equipment
2,572
678
Share-based compensation expense
55,300
68,247
Deferred income taxes
(11,047
)
(37,316
)
Amortization of operating lease
right-of-use assets
8,239
12,238
Impairment and abandonment of operating
lease right-of-use assets related to facilities
9,998
9,382
Impairment of internal-use and
external-use software development costs, net
—
1,275
Impairment of certain long-lived
assets
1,014
—
Amortization of debt issuance costs
4,397
4,164
Changes in operating assets and
liabilities:
Accounts receivable and unbilled
receivables
49,150
(60,357
)
Inventories
38,016
(30,115
)
Prepaid expenses
1,149
(4,671
)
Other current assets
(6,821
)
6,360
Investment in sales-type leases
(10,411
)
(15,354
)
Prepaid commissions
7,069
4,312
Other long-term assets
2,111
5,027
Accounts payable
(17,525
)
(7,754
)
Accrued compensation
(21,461
)
2,446
Accrued liabilities
(10,343
)
16,651
Deferred revenues
24,058
24,469
Operating lease liabilities
(10,918
)
(13,781
)
Other long-term liabilities
(401
)
(699
)
Net cash provided by operating
activities
181,094
77,781
Investing Activities
External-use software development
costs
(13,542
)
(13,204
)
Purchases of property and equipment
(41,474
)
(47,536
)
Business acquisition, net of cash
acquired
—
(3,392
)
Purchase price adjustments from business
acquisitions
—
5,463
Net cash used in investing activities
(55,016
)
(58,669
)
Financing Activities
Payments for debt issuance costs for
revolving credit facility
(2,967
)
—
Proceeds from issuances under stock-based
compensation plans
23,216
40,182
Employees’ taxes paid related to
restricted stock units
(7,366
)
(13,506
)
Stock repurchases
—
(52,210
)
Change in customer funds, net
10,537
4,581
Net cash provided by (used in) financing
activities
23,420
(20,953
)
Effect of exchange rate changes on cash
and cash equivalents
(1,354
)
(944
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
148,144
(2,785
)
Cash, cash equivalents, and restricted
cash at beginning of period
352,835
355,620
Cash, cash equivalents, and restricted
cash at end of period
$
500,979
$
352,835
Reconciliation of cash, cash
equivalents, and restricted cash to the Condensed Consolidated
Balance Sheets:
Cash and cash equivalents
$
467,972
$
330,362
Restricted cash included in other current
assets
33,007
22,473
Cash, cash equivalents, and restricted
cash at end of period
$
500,979
$
352,835
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,
2023
2022
2023
2022
Reconciliation of GAAP revenues to
non-GAAP revenues:
GAAP revenues
$
258,847
$
297,674
$
1,147,112
$
1,295,947
Acquisition accounting impact related to
deferred revenues
—
40
—
903
Non-GAAP revenues
$
258,847
$
297,714
$
1,147,112
$
1,296,850
Reconciliation of GAAP gross profit to
non-GAAP gross profit:
GAAP gross profit
$
105,404
$
121,753
$
496,840
$
588,987
GAAP gross margin
40.7
%
40.9
%
43.3
%
45.4
%
Share-based compensation expense
1,799
2,460
8,288
9,067
Amortization of acquired intangibles
2,607
3,115
11,165
13,204
Acquisition accounting impact related to
deferred revenues
—
40
—
903
Ransomware-related expenses, net of
insurance recoveries
—
—
—
317
Severance-related expenses, net of
reversals
2,987
7,418
3,089
8,018
Non-GAAP gross profit
$
112,797
$
134,786
$
519,382
$
620,496
Non-GAAP gross margin
43.6
%
45.3
%
45.3
%
47.8
%
Reconciliation of GAAP operating
expenses to non-GAAP operating expenses:
GAAP operating expenses
$
128,769
$
160,110
$
531,708
$
591,310
GAAP operating expenses % to total
revenues
49.7
%
53.8
%
46.4
%
45.6
%
Share-based compensation expense
(10,388
)
(15,056
)
(47,012
)
(59,180
)
Amortization of acquired intangibles
(5,007
)
(5,319
)
(20,409
)
(21,873
)
Acquisition-related expenses
(244
)
(246
)
(982
)
(2,155
)
Impairment and abandonment of operating
lease right-of-use and other assets related to facilities (a)
(1,587
)
(3,992
)
(10,007
)
(9,382
)
Impairment of certain long-lived
assets
(1,610
)
—
(1,610
)
—
Ransomware-related expenses, net of
insurance recoveries
624
(73
)
808
(2,157
)
Executive transition costs
—
—
(2,189
)
—
Severance-related, net of reversals, and
other expenses (b)
(7,098
)
(11,364
)
(12,450
)
(16,785
)
Non-GAAP operating expenses
$
103,459
$
124,060
$
437,857
$
479,778
Non-GAAP operating expenses as a % of
total non-GAAP revenues
40.0
%
41.7
%
38.2
%
37.0
%
Reconciliation of GAAP loss from
operations to non-GAAP income from operations:
GAAP loss from operations
$
(23,365
)
$
(38,357
)
$
(34,868
)
$
(2,323
)
GAAP operating loss % to total
revenues
(9.0
)%
(12.9
)%
(3.0
)%
(0.2
)%
Share-based compensation expense
12,187
17,516
55,300
68,247
Amortization of acquired intangibles
7,614
8,434
31,574
35,077
Acquisition accounting impact related to
deferred revenues
—
40
—
903
Acquisition-related expenses
244
246
982
2,155
Impairment and abandonment of operating
lease right-of-use and other assets related to facilities (a)
1,587
3,992
10,007
9,382
Impairment of certain long-lived
assets
1,610
—
1,610
—
Ransomware-related expenses, net of
insurance recoveries
(624
)
73
(808
)
2,474
Executive transition costs
—
—
2,189
—
Severance-related, net of reversals, and
other expenses (b)
10,085
18,782
15,539
24,803
Non-GAAP income from operations
$
9,338
$
10,726
$
81,525
$
140,718
Non-GAAP operating margin (non-GAAP
operating income as a % of total non-GAAP revenues)
3.6
%
3.6
%
7.1
%
10.9
%
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,
2023
2022
2023
2022
Reconciliation of GAAP net income
(loss) to non-GAAP net income:
GAAP net income (loss)
$
(14,375
)
$
(28,408
)
$
(20,371
)
$
5,648
Share-based compensation expense
12,187
17,516
55,300
68,247
Amortization of acquired intangibles
7,614
8,434
31,574
35,077
Acquisition accounting impact related to
deferred revenues
—
40
—
903
Acquisition-related expenses
244
246
982
2,155
Impairment and abandonment of operating
lease right-of-use and other assets related to facilities (a)
1,587
3,992
10,007
9,382
Impairment of certain long-lived
assets
1,610
—
1,610
—
Ransomware-related expenses, net of
insurance recoveries
(624
)
73
(808
)
2,474
Executive transition costs
—
—
2,189
—
Severance-related, net of reversals, and
other expenses (b)
10,085
18,782
15,539
24,803
Amortization of debt issuance costs
1,258
1,043
4,397
4,164
Tax effect of the adjustments above
(c)
(4,573
)
(6,848
)
(13,754
)
(16,582
)
Non-GAAP net income
$
15,013
$
14,870
$
86,665
$
136,271
Reconciliation of GAAP net income
(loss) per share - diluted to non-GAAP net income per share -
diluted:
Shares - diluted GAAP
45,495
44,678
45,212
45,891
Shares - diluted non-GAAP (d)
45,532
44,993
45,439
45,417
GAAP net income (loss) per share -
diluted
$
(0.32
)
$
(0.64
)
$
(0.45
)
$
0.12
Share-based compensation expense
0.26
0.39
1.22
1.51
Amortization of acquired intangibles
0.17
0.19
0.69
0.77
Acquisition accounting impact related to
deferred revenues
—
0.00
—
0.02
Acquisition-related expenses
0.01
0.01
0.02
0.05
Impairment and abandonment of operating
lease right-of-use and other assets related to facilities (a)
0.03
0.09
0.22
0.21
Impairment of certain long-lived
assets
0.04
—
0.04
—
Ransomware-related expenses, net of
insurance recoveries
(0.01
)
0.00
(0.02
)
0.05
Executive transition costs
—
—
0.05
—
Severance-related, net of reversals, and
other expenses (b)
0.22
0.42
0.34
0.55
Amortization of debt issuance costs
0.03
0.02
0.10
0.09
Non-GAAP dilutive shares impact from
convertible note hedge transaction (d)
—
—
—
0.00
Tax effect of the adjustments above
(c)
(0.10
)
(0.15
)
(0.30
)
(0.37
)
Non-GAAP net income per share -
diluted
$
0.33
$
0.33
$
1.91
$
3.00
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,
2023
2022
2023
2022
Reconciliation of GAAP net income
(loss) to non-GAAP EBITDA (e):
GAAP net income (loss)
$
(14,375
)
$
(28,408
)
$
(20,371
)
$
5,648
Share-based compensation expense
12,187
17,516
55,300
68,247
Interest (income) and expense, net
(5,811
)
(2,410
)
(18,542
)
(3,721
)
Depreciation and amortization expense
21,723
22,088
87,319
86,931
Acquisition accounting impact related to
deferred revenues
—
40
—
903
Acquisition-related expenses
244
246
982
2,155
Impairment and abandonment of operating
lease right-of-use and other assets related to facilities (a)
1,587
3,992
10,007
9,382
Impairment of certain long-lived
assets
1,610
—
1,610
—
Ransomware-related expenses, net of
insurance recoveries
(624
)
73
(808
)
2,474
Executive transition costs
—
—
2,189
—
Severance-related, net of reversals, and
other expenses (b)
10,085
18,782
15,539
24,803
Amortization of debt issuance costs
1,258
1,043
4,397
4,164
Provision for (benefit from) income
taxes
(4,142
)
(7,106
)
263
(8,101
)
Non-GAAP EBITDA
$
23,742
$
25,856
$
137,885
$
192,885
Non-GAAP EBITDA margin (non-GAAP EBITDA as
a % of total non-GAAP revenues)
9.2
%
8.7
%
12.0
%
14.9
%
Reconciliation of GAAP net cash
provided by operating activities to non-GAAP free cash
flow:
GAAP net cash provided by operating
activities
$
38,414
$
82,153
$
181,094
$
77,781
External-use software development
costs
(3,302
)
(3,556
)
(13,542
)
(13,204
)
Purchases of property and equipment
(9,070
)
(13,675
)
(41,474
)
(47,536
)
Non-GAAP free cash flow
$
26,042
$
64,922
$
126,078
$
17,041
_________________________________________________
(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)
For the three months and year
ended December 31, 2022, other expenses included approximately $1.3
million and $2.0 million of certain litigation costs,
respectively.
(c)
Tax effects calculated for all
adjustments except share-based compensation expense, using an
estimated annual effective tax rate of 21% for both fiscal years
2023 and 2022.
(d)
For the year ended December 31,
2022, non-GAAP diluted shares exclude approximately 0.5 million
shares related to the impact of dilutive convertible senior notes
for which the Company is economically hedged through its
anti-dilutive convertible note hedge transaction.
(e)
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/20240208890330/en/
Kathleen Nemeth Senior Vice President, Investor Relations
650-435-3318 Kathleen.Nemeth@Omnicell.com
Omnicell (NASDAQ:OMCL)
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