OMNICELL, INC. 
By MOUNTAIN VIEW, Calif., Jan. 26, 2012 /PRNewswire/ -- Omnicell, Inc. (NASDAQ: OMCL), a leading provider of system solutions to healthcare facilities, today announced results for its fourth quarter and year ended December 31, 2011.
GAAP results: Revenue for the fourth quarter of 2011 was $62.9 million, up $5.7 million or 9.9% from the fourth quarter of 2010 and down $1.5 million or 2.3% from the third quarter of 2011. Revenue for the year ended December 31, 2011 was $245.5 million, up $23.1 million or 10.4% from the year ended December 31, 2010.
Fourth quarter 2011 net income as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $4.1 million, or $0.12 per diluted share. This compares to net income of $0.7 million, or $0.02 per diluted share in the fourth quarter of 2010 and net income of $3.0 million, or $0.09 per diluted share in the third quarter of 2011. For the year ended December 31, 2011, net income was $10.4 million, or $0.30 per diluted share. This compares to net income of $4.9 million, or $0.15 per diluted share for the year ended December 31, 2010.
Non-GAAP results: Non-GAAP net income was $6.4 million for the fourth quarter of 2011, or $0.19 per diluted share. Non-GAAP net income for the fourth quarter excludes $2.2 million of stock-based compensation expense. This compares to non-GAAP net income of $3.6 million, or $0.11 per diluted share for the fourth quarter of 2010, excluding $2.6 million of stock-based compensation expense and $0.4 million of income tax expense on the repatriation of profits from India associated with the facilities consolidation announced in the third quarter of 2010. Fourth quarter 2011 results compare to non-GAAP net income of $5.4 million, or $0.16 per diluted share for the third quarter of 2011, excluding $2.4 million of stock-based compensation expense. Non-GAAP net income was $20.5 million for the year ended December 31, 2011, or $0.60 per diluted share, excluding $9.5 million of stock-based compensation expense and $1.0 million of pre-tax litigation claims settlement expense, net of a $0.4 million tax effect. Non-GAAP net income was $14.5 million for the year ended December 31, 2010, or $0.43 per diluted share, excluding $9.0 million of stock-based compensation expense, a $2.4 million gain ($1.4 million, net of tax) related to the settlement of litigation claims, and $2.7 million of charges ($2.0 million, net of tax) related to restructuring, reduction-in-force and repatriation of profits from India associated with the facilities consolidation.
Product backlog as of December 31, 2011 totaled $134 million, up $7 million or 6% from December 31, 2010.
"Overall, 2011 was a very good year for Omnicell," said Randall Lipps, Omnicell's President, CEO, and Chairman of the Board. "Revenue was up 10%, non-GAAP net income was up 42%, and although year ending backlog was lower than expectations, backlog grew 6% from 2010. I'm very happy with our introduction of new products, our growth of the customer base, and our entry into new markets during the year."
Omnicell Conference Call Information
Omnicell will hold a conference call at 1:30 p.m. PST today to discuss fourth quarter and 2011 year-end 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 44215896. 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. PST and will be available until 11:45 p.m. PST on February 3, 2012. The replay access numbers are 1-855-859-2056 within the U.S. and 1-404-537-3406 for all other locations, conference code # 44215896.
About Omnicell
Omnicell, Inc. (NASDAQ: OMCL) is a leading provider of automated and business information solutions enabling hospitals and healthcare systems to streamline the medication administration process and manage costly medical supplies for increased operational efficiency and enhanced patient safety. Through seamless integration with a hospital's existing IT infrastructure, Omnicell solutions empower healthcare facilities to achieve comprehensive automation of medication and supply management from the arrival at the loading dock to the patient's bedside. Omnicell also provides healthcare facilities with business analytics software designed to improve medication diversion detection and regulatory compliance.
Since 1992, more than 2,200 hospital customers worldwide have relied on Omnicell's medication automation, supply chain, and hospital analytics solutions to increase patient safety, improve efficiency and address changing healthcare regulations while providing effective control of costs, charge capture for payer reimbursement and inventory management of medications and supplies.
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, without limitation, the unfavorable general economic and market conditions, volatility in the credit market, 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, retain key personnel, to cut expenses, to manage future changes in revenue levels, to develop new products and integrate acquired companies, products or intellectual property in a timely and cost-effective manner. 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) 2011 litigation settlement. We recorded an accrual in the first quarter of 2011 for settlement of litigation with Medacist Solutions Group, LLC for $1.0 million, which was paid in the second quarter of 2011. The net impact was $0.6 million after the $0.4 million income tax effect.
c) 2010 litigation settlement. In the third quarter of 2010 we settled two pending litigation matters with Flo Healthcare LLC (now part of InterMetro Industries Corporation), with payment to InterMetro of $2.7 million. The resulting $2.4 million credit to third quarter 2010 selling general and administrative expense reflected adjustment for the settlement with release of the liability in excess of the amounts settled.
d) 2010 restructuring charges In the third quarter of 2010 we incurred charges for restructuring and impairment in executing our plan for consolidation of our Bangalore, India and Woodlands, Texas offices with our California and Tennessee facilities. These charges consisted of severance for departing employees and relocation benefits for transferring employees, exit and disposal costs related to the closed facilities, and impairment of abandoned leasehold improvements.
e) 2010 reduction-in-force and other exit related charges. In the third quarter of 2010 we conducted a small reduction-in-force to rebalance the required workforce by function to our current business environment. Additionally, we incurred lease termination costs and leasehold improvement impairment costs (upon abandonment) in connection with merging our Lebanon, Tennessee office with our office in Nashville.
f) 2010 income taxes on repatriated foreign earnings. In the third quarter of 2010, the closure of our Bangalore, India office resulted in a charge for repatriation taxes and a valuation allowance against related deferred tax assets.
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 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 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 Year Ended
------------- ----------
December September December December December
31, 30, 31, 31, 31,
2010
2011 2011 2010 2011 (1)
(unaudited) (unaudited) (unaudited) (unaudited) ----
----------- ----------- ----------- -----------
Revenues:
Product $47,281 $49,790 $43,541 $185,864 $171,100
Services and
other
revenues 15,650 14,649 13,727 59,671 51,307
------ ------ ------ ------ ------
Total revenue 62,931 64,439 57,268 245,535 222,407
------ ------ ------ ------- -------
Cost of
revenues:
Cost of
product
revenues 19,572 22,429 18,649 79,567 76,372
Cost of
services and
other
revenues 7,480 7,562 7,256 30,184 28,079
Restructuring
charges - - - - 39
--- --- --- --- ---
Total cost of
revenues 27,052 29,991 25,905 109,751 104,490
------ ------ ------ ------- -------
Gross profit 35,879 34,448 31,363 135,784 117,917
Operating
expenses:
Research and
development 5,903 6,019 5,403 22,042 21,007
Selling,
general, and
administrative 23,807 23,635 24,438 97,520 86,227
Restructuring
charges - - - - 1,157
--- --- --- --- -----
Total
operating
expenses 29,710 29,654 29,841 119,562 108,391
------ ------ ------ ------- -------
Income from
operations 6,169 4,794 1,522 16,222 9,526
Other income
(expense),
net (67) (191) 145 (133) 431
--- ---- --- ---- ---
Income before
provision for
income taxes 6,102 4,603 1,667 16,089 9,957
Provision for
income taxes 1,964 1,609 995 5,700 5,065
----- ----- --- ----- -----
Net income $4,138 $2,994 $672 $10,389 $4,892
====== ====== ==== ======= ======
Net income per
share:
Basic $0.13 $0.09 $0.02 $0.31 $0.15
Diluted $0.12 $0.09 $0.02 $0.30 $0.15
Weighted
average
shares
outstanding:
Basic 33,097 33,209 32,997 33,123 32,651
Diluted 34,114 34,219 33,900 34,103 33,513
-------
(1)
Information
derived
from
our
December
31,
2010
audited
Consolidated
Financial
Statements.
Omnicell, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
December December
31, 31,
2011 2010
---- ----
(unaudited) (1)
ASSETS
Current assets:
Cash and cash equivalents $191,762 $175,635
Short-term investments 8,107 8,074
Accounts receivable, net 36,902 42,732
Inventories 18,107 9,785
Prepaid expenses 10,495 11,959
Deferred tax assets 7,914 13,052
Other current assets 6,107 7,266
----- -----
Total current assets 279,394 268,503
Property and equipment,
net 17,307 14,351
Non-current net
investment in sales-
type leases 8,785 9,224
Goodwill 28,543 28,543
Other intangible assets 4,231 4,672
Non-current deferred tax
assets 13,992 9,566
Other assets 9,716 8,365
----- -----
Total assets $361,968 $343,224
======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $11,000 $13,242
Accrued compensation 7,328 7,731
Accrued liabilities 7,020 8,684
Deferred service revenue 19,191 16,788
Deferred gross profit 14,210 11,719
------ ------
Total current liabilities 58,749 58,164
Long-term deferred
service revenue 18,966 19,171
Other long-term
liabilities 1,339 675
----- ---
Total liabilities 79,054 78,010
Stockholders' equity:
Total stockholders'
equity 282,914 265,214
------- -------
Total liabilities and
stockholders' equity $361,968 $343,224
--------------------- ======== ========
(1) Information derived from our
December 31, 2010 audited Consolidated
Financial Statements.
Omnicell,
Inc.
Reconciliation
of
GAAP
to
Non-
GAAP
(In
thousands,
except
per
share
data,
unaudited)
Three months ended
------------------
December September December
31, 2011 30, 2011 31, 2010
--------- ---------- ---------
Net Net Net
Net income Net income Net income
per per per
income share- income share- income share-
------ diluted ------ diluted ------ diluted
------- ------- -------
GAAP $4,138 $0.12 $2,994 $0.09 $672 $0.02
Non-GAAP
adjustments:
Taxes on
repatriated
foreign
earnings - - 383
ASC 718
share-
based
compensation
adjustment
(a)
Gross profit 290 358 356
Operating
expenses 1,955 2,053 2,208
----- ----- -----
Total after
tax
adjustments 2,245 0.07 2,411 0.07 2,947 0.09
Non-GAAP $6,383 $0.19 $5,405 $0.16 $3,619 $0.11
-------- ====== ===== ====== ===== ====== =====
(a)
This
adjustment
reflects
the
accounting
impact
of
non-
cash
stock-
based
compensation
expense
related
to the
impact
of ASC
718
(formerly
referred
to as
SFAS
No.
123R)
for
the
periods
shown.
Omnicell, Inc.
Reconciliation of GAAP to
Non-GAAP
(In thousands, except per
share data, unaudited)
Year ended
----------
December December
31, 2011 31, 2010
--------- ---------
Net Net
Net income Net income
per per
income share- income share-
------ diluted ------ diluted
------- -------
GAAP $10,389 $0.30 $4,892 $0.15
Non-GAAP
adjustments:
Restructuring cost
Gross profit - 39
Operating expenses - 1,157
Reduction-in-
force, other
exit-related
charges
Gross profit - 285
Operating expenses - 219
Litigation
settlement (a) 1,000 (2,439)
----- ------
Subtotal pretax
adjustments 1,000 (739)
Income tax effect
of non-GAAP
adjustments (380) 326
Taxes on
repatriated
foreign earnings - 957
ASC 718 share-
based
compensation
adjustment (b)
Gross profit 1,398 1,350
Operating expenses 8,101 7,665
----- -----
Total after tax
adjustments 10,119 0.30 9,559 0.28
Non-GAAP $20,508 $0.60 $14,451 $0.43
-------- ======= ===== ======= =====
(a) The 2011 adjustment is
for the accrual of a $1.0
million pre-tax
litigation settlement in
operating expenses ($0.6
million, net of tax
effect of $0.4 million)
in the first quarter of
2011. The 2010 adjustment
reflects the reversal in
operating expenses for
the settlement of
litigation in the third
quarter of 2010 for
amounts less than
accrued.
(b) This adjustment
reflects the accounting
impact of non-cash
stock-based compensation
expense related to the
impact of ASC 718
(formerly referred to as
SFAS No. 123R) for the
periods shown.
Omnicell, Inc.
Calculation of
Adjusted EBITDA
(1)
(In thousands,
unaudited)
Three Months Year
Ended Ended
------------- -----
December September December December December
31, 30, 31, 31, 31,
2011 2011 2010 2011 2010
---- ---- ---- ---- ----
GAAP net income $4,138 $2,994 $672 $10,389 $4,892
Add back:
ASC 718 stock
compensation
expense 2,245 2,411 2,564 9,499 9,015
Restructuring
charges - - - - 1,196
Reduction-in-
force, other
exit-related
charges - - - - 504
Litigation
settlement - - - 1,000 (2,439)
Interest (21) (34) (79) (205) (420)
Depreciation and
amortization
expense 2,163 2,027 2,130 7,984 8,619
Income tax
expense 1,964 1,609 995 5,700 5,065
----- ----- --- ----- -----
Non-GAAP
adjusted EBITDA
(1) $10,489 $9,007 $6,282 $34,367 $26,432
---------------- ======= ====== ====== ======= =======
(1) Defined as
earnings before
interest income
and expense,
taxes,
depreciation and
amortization, and
non-cash
expenses,
including stock
compensation
expense, per ASC
718, formerly FAS
123R. Also
excludes non-GAAP
adjustments for
restructuring,
reduction-in-
force and other
exit-related
charges, and
litigation
settlement.
SOURCE Omnicell, Inc.
