Omnicell Announces Third Quarter 2008 Results

MOUNTAIN VIEW, Calif., Oct. 23 /PRNewswire-FirstCall/ -- Omnicell, Inc.
(Nasdaq: OMCL), a leading provider of system solutions to acute healthcare
facilities, today announced results for its quarter ended September 30, 2008.
GAAP results: Revenues for the third quarter of 2008 totaled $64.3
million, up $1.0 million or 1.5% from the second quarter of 2008 and up $9.2
million or 16.7% from the third quarter of 2007.
Third quarter 2008 net income as reported in accordance with U.S.
generally accepted accounting principles (GAAP) was $2.9 million, or $0.09 per
fully diluted share. This compares to net income of $2.8 million, or $0.08
per fully diluted share, in the second quarter of 2008, and $6.9 million, or
$0.19 per fully diluted share, in the third quarter of 2007. Year to year
decreases in earnings per share are primarily caused by Omnicell becoming
fully taxed in 2008, as compared to an effective tax rate of 6% in 2007.
Non-GAAP results: Non-GAAP net income for the third quarter of 2008 was
$5.7 million, or $0.18 per fully diluted share. This compares to non-GAAP net
income of $5.7 million, or $0.17 per fully diluted share, in the second
quarter of 2008, and non-GAAP net income of $9.8 million, or $0.27 per fully
diluted share, in the third quarter of 2007. Non-GAAP results exclude stock-
based compensation expense related to SFAS No. 123R. Year to year decreases
in non-GAAP earnings per share are also caused primarily by Omnicell becoming
fully taxed in 2008.
"Our strong quarterly performance demonstrates our ability to compete,"
said Randall A. Lipps, Omnicell President and Chief Executive Officer. "Our
winning strategy is to offer our customers products that will help them
deliver patient safety and prevent medication errors in an environment where
they see continued regulation pressures. These same pressures will drive the
adoption of medication automation now and into the future."
Omnicell Conference Call Information
Omnicell will hold a conference call today at 2:30 p.m. PDT to discuss
third quarter financial results. The conference call can be monitored by
dialing 1-888-803-5209 within the U.S. or 1-706-679-1978 for all other
locations. The Conference ID # is 69298710. Internet users can access the
conference call at http://www.omnicell.com. A replay of the call will be
available today at approximately 5:00 p.m. PDT and will be available until
5:00 pm PDT on October 30. The replay access numbers are 1-800-642-1687
within the U.S. and 1-706-645-9291 for all other locations, conference code #
69298710.
About Omnicell
Omnicell, Inc. (NASDAQ: OMCL) is a leading provider of systems and
software solutions targeting patient safety and operational efficiency in
healthcare facilities. Since 1992, Omnicell has worked to enhance patient
safety and allow clinicians to spend more time with their patients.
Omnicell's medication-use product line includes solutions for the central
pharmacy, nursing unit, operating room, and patient bedside. Solutions range
from large central pharmacy "smart inventory" carousels to small handheld
devices. From the point at which a medication arrives at the receiving dock to
the time it is administered, Omnicell systems store it, package it, bar code
it, order it, issue it, and provide information and controls on its use and
reorder.
Omnicell's supply product lines provide a healthcare institution with
fast, effective control of costs, capture of charges for payer reimbursement,
and timely reorder of supplies. Products range from high-security
closed-cabinet systems and software to open-shelf and combination solutions in
the nursing unit, cath lab and operating room.
Omnicell's mission is to provide the best customer experience in
healthcare, helping hospitals reduce medication errors, operate more
efficiently, and decrease costs. For more information, visit
http://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, without
limitation, the unfavorable general economic and market conditions, the
tightening in the credit markets, the continued growth and acceptance of our
products and services and the continued growth of the clinical automation and
workflow automation market generally, the potential of increasing competition,
the ability of the company to grow product backlog, retain key personnel,
develop new products and integrate acquired products or intellectual property
in a timely and cost-effective manner, and improve sales productivity.
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 margin, non-GAAP operating expenses, non-GAAP net income, and non-GAAP
earnings per diluted share. These non-GAAP results should not be considered
as an alternative to gross margin, operating expenses, net income, earnings
per fully 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 margin, non-GAAP operating expenses, non-GAAP net
income, non-GAAP earnings per fully 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 operation performance, the
measures give us a better understanding of how we should invest in research
and development, fund infrastructure growth and evaluate marketing strategies.
In calculating the above non-GAAP results, management specifically adjusted
for the following excluded item:
Stock-based compensation expense impact of SFAS No. 123R. 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 SFAS No. 123 (revised 2004), "Share-Based Payment"
(SFAS No. 123R).
Management adjusts for stock-based compensation expenses related to SFAS
No. 123R because management believes that, in general, this item possesses the
following characteristics: it is unrelated to the ongoing operation of the
business in the ordinary course; it is non-operational and 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 specific items are excluded
from our non-GAAP financial measures:
a) While stock-based compensation calculated in accordance with SFAS
No.123R constitutes an ongoing and recurring expense of Omnicell, it is not an
expense which 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 expenses to
assist management and investors in evaluating our core operating results.
b) We present our reconciliation of non-GAAP financial measures on a net
of tax basis because the exact tax differences related to the timing and
deductibility of stock-based compensation, pursuant to the adoption of SFAS
No. 123R, is dependent upon the trading price of Omnicell's common stock and
the timing and exercise by employees of their stock options. We analyze and
measure operating results net of tax when evaluating core operating results
because the tax effect related to stock-based compensation expenses is
inconsistent in amount and frequency.
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 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:
-- Omnicell's stock option and stock purchase plans are important
components of incentive compensation arrangements and compensation related to
these plans will be reflected as expenses in Omnicell's GAAP results for the
foreseeable future under SFAS No. 123R.
-- Other companies, including other 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 the GAAP and non-GAAP financial results is set forth in
the financial statements 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
the Company's SEC filings.

Omnicell, Inc.
Condensed Consolidated Statement of Operations
(in thousands, except per share data, unaudited)

Three Months Ended Nine Months Ended
September June September September September
30, 2008 30, 2008 30, 2007 30, 2008 30, 2007

Revenues:
Product $54,294 $52,870 $46,376 $159,580 $129,271
Services and other
revenues 10,051 10,504 8,776 30,230 25,864
Total revenue 64,345 63,374 55,152 189,810 155,135

Cost of revenues:
Cost of product revenues 24,940 24,349 20,479 73,259 58,776
Cost of services and
other revenues 6,642 6,665 4,860 19,083 13,955
Total cost of revenues 31,582 31,014 25,339 92,342 72,731

Gross profit 32,763 32,360 29,813 97,468 82,404
Operating expenses:
Research and development 4,685 4,978 3,848 13,939 10,999
Selling, general, and
administrative 23,862 22,878 20,732 69,947 58,497
Total operating expenses 28,547 27,856 24,580 83,886 69,496
Income from operations 4,216 4,504 5,233 13,582 12,908
Other income and expense 673 722 2,055 2,804 4,075
Income before provision for
income taxes 4,889 5,226 7,288 16,386 16,983

Provision for (benefit
from) income taxes 1,975 2,473 348 6,985 (12,015)
Net income $2,914 $2,753 $6,940 $9,401 $28,998

Net income per share:
Basic $0.09 $0.09 $0.20 $0.29 $0.93
Diluted $0.09 $0.08 $0.19 $0.28 $0.88

Weighted average shares
outstanding:
Basic 31,128 31,716 34,127 32,345 31,278
Diluted 32,138 32,549 35,833 33,498 32,996

Omnicell, Inc.
Condensed Consolidated Balance Sheet
(In thousands)

September 30, December 31,
2008 2007
(unaudited)

Current Assets:
Cash and cash equivalents $125,032 $169,812
Accounts receivable, net 47,391 37,521
Inventories 13,856 13,732
Prepaid expenses 9,846 9,482
Deferred tax assets 11,830 11,830
Other current assets 8,921 9,807
Total current assets 216,876 252,184
Property and equipment, net 14,668 10,184
Non-current net investment in
sales-type leases 10,882 12,634
Goodwill 24,310 23,076
Other intangible assets 7,480 9,466
Non-current deferred tax asset 9,994 12,881
Other assets 9,300 7,998
Total assets $293,510 $328,423

Current Liabilities:
Accounts payable $11,675 $10,116
Accrued compensation 7,657 8,306
Advance payments from customers - 156
Accrued liabilities 11,044 12,877
Deferred service revenue 12,418 11,263
Deferred gross profit 14,509 14,565
Obligation resulting from sale of
receivables 222 538
Total current liabilities 57,525 57,821
Long-term deferred service revenue 17,296 15,726
Other long-term liabilities 116 237
Total liabilities 74,937 73,784

Stockholders' equity 218,573 254,639
Total liabilities and
stockholders' equity $293,510 $328,423

Omnicell, Inc.
Reconciliation of GAAP to Non-GAAP
(in thousands, except per share data, unaudited)

Three months ended
September 30, 2008 September 30, 2007 June 30, 2008

Earnings Earnings Earnings
per per per
Net share- Net share- Net share-
income diluted income diluted income diluted

GAAP $2,914 $0.09 $6,940 $0.19 $2,753 $0.08
Non-GAAP Adjustments:
SFAS No. 123(R)
adjustment
Gross Margin 401 294 416
Operating Expenses 2,367 2,522 2,517
2,768 0.09 2,816 0.08 2,933 0.09

Non-GAAP $5,682 $0.18 $9,756 $0.27 $5,686 $0.17

SOURCE Omnicell, Inc.

Rob Seim, Chief Financial Officer of Omnicell, Inc., 1-800-850-6664, ext.
6478, rob.seim@omnicell.com