Omnicell Announces First Quarter 2013 Results

May 02, 2013, 16:02 ET from Omnicell, Inc.

MOUNTAIN VIEW, Calif., May 2, 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 March 31, 2013. 

(Logo: http://photos.prnewswire.com/prnh/20120731/SF48971LOGO-a)

GAAP results: Revenue for the first quarter of 2013 was $87.1 million, up $23.0 million or 35.8% from the first quarter of 2012 and down $3.1 million or 3.4% from the fourth quarter of 2012.

First quarter 2013 net income as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $3.4 million, or $0.10 per diluted share. This compares to net income of $2.4 million, or $0.07 per diluted share in the first quarter of 2012 and net income of $5.5 million, or $0.16 per diluted share in the fourth quarter of 2012.

Non-GAAP results: Non-GAAP net income was $7.4 million for the first quarter of 2013, or $0.21 per diluted share. Non-GAAP net income for the first quarter excludes $2.9 million of stock-based compensation expense, $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, Inc. ("MTS"), and $1.1 million ($0.6 million net of the $0.5 million tax effect) of amortization expense for all intangible assets acquired in connection with the acquisition of MTS in May 2012 and earlier acquisitions by Omnicell. This compares to non-GAAP net income of $4.6 million, or $0.13 per diluted share for the first quarter of 2012, excluding $2.2 million of stock-based compensation expense. First quarter 2013 results compare to non-GAAP net income of $8.6 million, or $0.25 per diluted share for the fourth quarter of 2012. Non-GAAP net income for the fourth quarter excluded $2.4 million of stock-based compensation expense and $1.1 million ($0.6 million net of the $0.5 million tax effect) of amortization expense for all intangible assets acquired in connection with the acquisition of MTS and earlier acquisitions by Omnicell.

"Our overall results exceeded expectations for the first quarter of 2013," said Randall Lipps, Omnicell president, chairman and CEO. "Organizationally, we've taken important steps toward optimizing the growth opportunities in medication management across the spectrum of healthcare settings from hospitals to long term care to home care. We believe these actions and our solid performance this quarter positions the company for a strong fiscal 2013."  

Omnicell Conference Call Information

Omnicell will hold a conference call today at 1:30 p.m. PT to discuss first quarter financial results. The conference call can be monitored by dialing 1-866-830-5685 within the U.S. or 1-706-758-4883 for all other locations. The Conference ID # is 45591563. 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 3:30 p.m. PT and will be available until 8:59 p.m. PT on June 2. The replay access numbers are 1-855-859-2056 within the U.S. and 1-404-537-3406 for all other locations, conference code # 45591563.

About Omnicell

For over 20 years the mission of Omnicell (NASDAQ: OMCL) has been creating new efficiencies to 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 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 three months ended March 31, 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)  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 first quarter of fiscal 2013 non-GAAP results by $1.1 million ($0.6 million net of the $0.5 million tax effect) and the fourth quarter of fiscal 2012 non-GAAP results by $1.1 million ($0.6 million net of the $0.5 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:

  • Omnicell's stock option and stock purchase plans are important components of incentive compensation arrangements and will be reflected as expenses in Omnicell's GAAP results for the foreseeable future under ASC 718.
  • Other companies, including companies in Omnicell's industry, may calculate non-GAAP financial measures differently than Omnicell, limiting their usefulness as a comparative measure.

Pursuant to the requirements of SEC Regulation G, a detailed reconciliation between Omnicell's non-GAAP and GAAP financial results is set forth in the financial tables at the end of this press release. Investors are advised to carefully review and consider this information strictly as a supplement to the GAAP results that are contained in this press release and in Omnicell's SEC filings.

OMCL-E

 

 

Omnicell, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

Three Months Ended

March 31,

2013

(unaudited)

December 31,

2012

(unaudited)

March 31,

2012

(unaudited)

Revenues:

Product

$

69,236

$

72,415

$

48,524

Services and other revenues

17,874

17,754

15,619

Total revenue

87,110

90,169

64,143

Cost of revenues:

Cost of product revenues

33,547

32,837

20,296

Cost of services and other revenues

8,196

7,956

8,098

Total cost of revenues

41,743

40,793

28,394

Gross profit

45,367

49,376

35,749

Operating expenses:

Research and development

7,954

6,188

6,494

Selling, general, and administrative

33,244

33,354

25,620

Total operating expenses

41,198

39,542

32,114

Income from operations

4,169

9,834

3,635

Other income and (expense), net

(223)

(108)

96

Income before provision for income taxes

3,946

9,726

3,731

 Provision for income taxes

561

4,194

1,380

Net income

$

3,385

$

5,532

$

2,351

Net income per share:

Basic

$

0.10

$

0.17

$

0.07

Diluted

$

0.10

$

0.16

$

0.07

Weighted average shares outstanding:

Basic

33,900

33,282

33,365

Diluted

34,820

34,128

34,341

 

 

Omnicell, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

March 31,

December 31,

2013

2012

(unaudited)

(1)

ASSETS

Current assets:

Cash and cash equivalents

$

69,817

$

62,313

Short-term investments

Accounts receivable, net

65,703

55,116

Inventories

26,125

26,903

Prepaid expenses

16,049

15,392

Deferred tax assets

11,860

11,860

Other current assets

7,532

9,172

Total current assets

197,086

180,756

Property and equipment, net

34,697

34,107

Non-current net investment in sales-type leases

12,943

13,228

Goodwill

111,343

111,407

Other intangible assets

84,529

85,550

Non-current deferred tax assets

1,126

993

Other assets

15,633

15,778

Total assets

$

457,357

$

441,819

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

18,379

$

18,255

Accrued compensation

6,948

11,613

Accrued liabilities

12,525

11,988

Deferred service revenue

20,821

20,449

Deferred gross profit

26,938

20,772

Total current liabilities

85,611

83,077

Non-current deferred service revenue

19,463

19,892

Non-current deferred tax liabilities

25,548

26,491

Other long-term liabilities

4,942

4,809

Total liabilities

135,564

134,269

Stockholders' equity:

Total stockholders' equity

321,793

307,550

Total liabilities and stockholders' equity

$

457,357

$

441,819

 

(1)

Information derived from our December 31, 2012 audited Consolidated Financial Statements. 

 

 

Omnicell, Inc.

Reconciliation of GAAP to Non-GAAP

(In thousands, except per share data, unaudited)

Three Months Ended

March 31, 2013

December 31, 2012

March 31, 2012

Net

 income

Net income

 per share-

 diluted

Net

 income

Net income

 per share-

 diluted

Net

 income

Net income

 per share-

 diluted

GAAP

$

3,385

$

0.10

$

5,532

$

0.16

$

2,351

$

0.07

Non-GAAP adjustments:

Business acquisition costs

Reorganization costs (a)

732

Amortization of intangible assets acquired by acquisition (b)

1,060

1,057

Subtotal pretax adjustments

1,792

1,057

Income tax effect of non-GAAP adjustments (c) 

(716)

(423)

Subtotal after-tax adjustments

1,076

634

ASC 718 share-based compensation adjustment (d)

Gross profit

305

236

268

Operating expenses

2,621

2,197

1,939

Total after-tax adjustments

4,002

0.11

3,067

0.09

2,207

0.06

Non-GAAP

$

7,387

$

0.21

$

8,599

$

0.25

$

4,558

$

0.13

 

 

(a)

This adjustment is for reorganization costs related to our Non-Acute Care segment for the three months ended March 31, 2013.

(b)

Beginning with the second quarter of 2012, we are recognizing the amortization expense resulting from all intangible assets recorded from business acquisitions as a non-GAAP adjustment, including MTS and prior acquisitions.

(c)

Tax effects are calculated using the effective tax rates for the respective periods presented.

(d)

This adjustment reflects the accounting impact of non-cash stock-based compensation expense related to the impact of ASC 718 for the periods shown.

 

 

Omnicell, Inc.

Calculation of Adjusted EBITDA (1)

(In thousands, unaudited)

Three Months Ended

March 31,

 2013

December 31,

 2012

March 31,

 2012

GAAP net income

$

3,385

$

5,532

$

2,351

Add back:

ASC 718 stock compensation expense

2,926

2,433

2,207

Reorganization costs

732

Interest

106

(2)

(31)

Depreciation and amortization expense

4,471

4,077

2,335

Income tax expense

561

4,194

1,380

Non-GAAP adjusted EBITDA (1)

$

12,181

$

16,234

$

8,242

 

(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 also exclude transaction and integration costs for MTS, acquired in May 2012. 

 

SOURCE Omnicell, Inc.



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