UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.  20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 31, 2014

OMNICELL, INC.
(Exact name of registrant as specified in its charter)

Delaware
 
000-33043
 
94-3166458
(State or other jurisdiction of
incorporation or organization)
 
(Commission File Number)
 
(IRS Employer Identification Number)

590 East Middlefield Road
Mountain View, CA 94043
(Address of principal executive offices, including zip code)

(650) 251-6100
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))










Item 2.02 Results of Operations and Financial Condition

On July 31, 2014, Omnicell, Inc. issued a press release announcing its financial results for the second quarter ended June 30, 2014. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Number
 
Description of Document
99.1
 




2



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 
OMNICELL,  INC.
 
 
 
Dated: July 31, 2014
 
 
 
 
/s/ Dan S. Johnston
 
 
Dan S. Johnston
 
 
Executive Vice President and General Counsel
                                                      
                                                                           



3



EXHIBIT INDEX

Number
 
Description of Document
99.1
 
Press release entitled “Omnicell Announces Second Quarter Results” dated July 31, 2014




4

Exhibit991Q214


Exhibit 99.1


Contact:
 
 
Rob Seim
 
Omnicell, Inc.
Chief Financial Officer
 
590 East Middlefield Road
800-850-6664, ext. 6478
 
Mountain View, CA 94043
rob.seim@omnicell.com
 
 


Omnicell Announces Second Quarter Results


MOUNTAIN VIEW, Calif. — July 31, 2014— Omnicell, Inc. (NASDAQ: OMCL), a leading provider of medication and supply management solutions to healthcare systems, today announced results for its second quarter ended June 30, 2014. 

GAAP results: Revenue for the second quarter of 2014 was $105.1 million, up $3.3 million or 3.2% from the first quarter of 2014, and up $11.4 million or 12.1% from the second quarter of 2013. Revenue for the six months ended June 30, 2014 was $206.8 million, up $26.0 million or 14.4% from the six months ended June 30, 2013.

GAAP net income for the second quarter of 2014 was $7.8 million, or $0.21 per diluted share. This compares to GAAP net income of $6.2 million, or $0.17 per diluted share, for the first quarter of 2014, and GAAP net income of $6.0 million, or $0.17 per diluted share, for the second quarter of 2013.

GAAP net income for the six months ended June 30, 2014 was $14.0 million, or $0.38 per diluted share. This compares to GAAP net income of $9.4 million, or $0.27 per diluted share, for the six months ended June 30, 2013.

Non-GAAP results: Non-GAAP net income for the second quarter of 2014 was $11.2 million, or $0.30 per diluted share, excluding $2.7 million of stock-based compensation expense and $1.0 million ($0.6 million net of $0.4 million tax effect) of amortization expense for all intangible assets associated with past acquisitions. This compares to non-GAAP net income of $9.4 million, or $0.27 per diluted share, for the second quarter of 2013. Non-GAAP net income for the second quarter of 2013 excluded $2.7 million of stock-based compensation expense and $1.1 million ($0.7 million net of $0.4 million tax effect) of amortization expense for all intangible assets associated with past acquisitions. Second quarter 2014 results compare to non-GAAP net income of $9.6 million, or $0.26 per diluted share, for the first quarter of 2014. Non-GAAP net income for the first quarter of 2014 excludes $2.7 million of stock-based compensation expense and $1.0 million ($0.6 million net of $0.4 million tax effect) of amortization expense for all intangible assets associated with past acquisitions.

Non-GAAP net income for the six months ended June 30, 2014 was $20.8 million, or $0.57 per diluted share, excluding $5.4 million of stock-based compensation expense and $2.1 million ($1.3 million net of $0.8 million tax effect) of amortization expense for all intangible assets associated with past acquisitions. This compares to non-GAAP net income of $16.8 million, or $0.48 per diluted share, for the six months ended June 30, 2013. Non-GAAP net income for the six months ended June 30, 2013 excluded $5.6 million of stock-based compensation expense $2.1 million ($1.3 million net of $0.8 million tax effect) of amortization expense for all intangible assets associated with past acquisitions, and $0.7 million ($0.4 million net of the $0.3 million tax effect) of non-recurring reorganization costs related to our Medication Adherence segment.
 
“Omnicell delivered an outstanding second quarter, with revenue and earnings results ahead of expectations,” said Randall Lipps, Omnicell President, Chairman and CEO. “We are experiencing continued healthy customer demand, with 47% of Automation and Analytics bookings from new customers and competitive conversions such as the 12-hospital, 2500-bed Allina Health System, which selected Omnicell as their system-wide medication automation vendor.”
 





“Further affirming our strong performance against competition, KLAS, a leading independent healthcare research firm, this week named Omnicell the 2014 number one overall pharmacy automation vendor - the second consecutive year we received this distinction,” he added. “In addition Omnicell achieved top honors in five major KLAS categories, including “Best in KLAS” for our automated medication dispensing system, the ninth consecutive year we have led this category.”

Omnicell Conference Call Information
 
Omnicell will hold a conference call today, Thursday, July 31, 2014 at 1:30 p.m. PT to discuss second quarter financial results. The conference call can be monitored by dialing 1-800-696-5518 within the U.S. or 1-706-758-4883 for all other locations. The Conference ID # is 76720101. Internet users can access the conference call at http://ir.omnicell.com/events.cfm. A replay of the call will be available today at approximately 4:30 p.m. PT and will be available until 11:59 p.m. PT on August 15, 2014. The replay access numbers are 1-855-859-2056 within the U.S. and 1-404-537-3406 for all other locations, Conference ID # is 76720101.

About Omnicell

For over 20 years, the mission of Omnicell (NASDAQ: OMCL) has been creating new efficiencies to help improve patient care, anywhere it is delivered. Omnicell is a leading supplier of comprehensive automation and business analytics software solutions for patient-centric medication and supply management across the entire healthcare continuum, from the acute care hospital setting to post-acute skilled nursing and long-term care facilities to the home.
  
More than 2,800 Automation and Analytics 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 Medication Adherence 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 “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. 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. Such statements include, but are not limited to Omnicell’s expectations of revenue and earnings growth and the success of Omnicell’s strategy. Risks that contribute to the uncertain nature of the forward-looking statements include our ability to take advantage of the growth opportunities in medication management across the spectrum of healthcare settings from long term care to home care, unfavorable general economic and market conditions, risks to growth and acceptance of our products and services, including competitive conversions, and to growth of the clinical automation and workflow automation market generally, the potential of increasing competition, potential regulatory changes, and the ability of the company to improve sales productivity to grow product bookings, and to develop new products and integrate acquired companies. These and other risks and uncertainties are described more fully in Omnicell’s most recent filings with the Securities and Exchange Commission. Prospective investors 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 on which they were made. Omnicell undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.
 
Use of Non-GAAP Financial Information
 
This press release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). Our management evaluates and makes operating decisions using various performance measures. In addition to Omnicell’s GAAP results, we also consider non-GAAP gross profit, non-GAAP operating expenses, non-GAAP net income, and non-GAAP net income per diluted share. Additionally, we calculate Adjusted EBITDA (another non-GAAP measure) by means of adjustments to GAAP Net Income. These non-GAAP results should not be considered as an alternative to gross profit, operating expenses, net income, net income per diluted share, or any other performance measure derived in accordance with GAAP. We present these non-GAAP results because we consider them to be important supplemental measures of Omnicell’s performance.






Our non-GAAP gross profit, non-GAAP operating expenses, non-GAAP net income and non-GAAP net income per diluted share are exclusive of certain items to facilitate management’s review of the comparability of Omnicell’s core operating results on a period to period basis because such items are not related to Omnicell’s ongoing core operating results as viewed by management. We define our “core operating results” as those revenues recorded in a particular period and the expenses incurred within that period that directly drive operating income in that period. Management uses these non-GAAP financial measures in making operating decisions because, in addition to meaningful supplemental information regarding operating performance, the measures give us a better understanding of how we should invest in research and development, fund infrastructure growth and evaluate the effectiveness of marketing strategies. In calculating the above non-GAAP results, management specifically adjusted for the following excluded items:

a)  Stock-based compensation expense impact of Accounting Standards Codification (ASC) 718. We recognize equity plan-related compensation expenses, which represent the fair value of all share-based payments to employees, including grants of employee stock options, as required under ASC 718, “Stock Compensation” as non-GAAP adjustments in each period.

b) Reorganization costs. During the six months ended June 30, 2013, we recorded $0.7 million ($0.4 million net of $0.3 million tax effect) of reorganization costs related to our Medication Adherence segment. 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 of certain intangible assets associated with past business acquisitions. This impacts second quarter 2014 non-GAAP results and first quarter 2014 non-GAAP results by $1.0 million ($0.6 million net of $0.4 million tax effect), and second quarter 2013 non-GAAP results by $1.1 million ($0.7 million net of $0.4 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 are 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.
 
We define adjusted EBITDA as GAAP net income excluding: (i) ASC 718 stock compensation expense; (ii) interest (income) and expense, net; (iii) depreciation and amortization; (iv) provision for income taxes; and (v) other unusual and non-recurring costs and expenses. 

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; and
 
• 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.






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

 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
2014
 
March 31,
2014
 
June 30,
2013
 
June 30,
2014
 
June 30,
2013
Revenues:
 
 
 
 
 
 
 
 
 
 
Product
 
$
85,244

 
$
82,580

 
$
75,581

 
$
167,824

 
$
144,817

Services and other revenues
 
19,808

 
19,184

 
18,105

 
38,992

 
35,979

Total revenue
 
105,052

 
101,764

 
93,686

 
206,816

 
180,796

 
 
 
 
 
 
 
 
 
 
 
Cost of revenues:
 
 
 
 
 
 
 
 
 
 
Cost of product revenues
 
41,003

 
38,900

 
36,286

 
79,903

 
69,833

Cost of services and other revenues
 
8,009

 
8,369

 
8,032

 
16,378

 
16,228

Total cost of revenues
 
49,012

 
47,269

 
44,318

 
96,281

 
86,061

Gross profit
 
56,040

 
54,495

 
49,368

 
110,535

 
94,735

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Research and development
 
6,471

 
6,121

 
7,150

 
12,592

 
15,104

Selling, general and administrative
 
37,011

 
38,420

 
32,859

 
75,431

 
66,104

Total operating expenses
 
43,482

 
44,541

 
40,009

 
88,023

 
81,208

Income from operations
 
12,558

 
9,954

 
9,359

 
22,512

 
13,527

Interest and other income (expense), net
 
(40
)
 
(256
)
 
63

 
(296
)
 
(159
)
Income before provision for income taxes
 
12,518

 
9,698

 
9,422

 
22,216

 
13,368

Provision for income taxes
 
4,729

 
3,504

 
3,406

 
8,233

 
3,967

Net income
 
$
7,789

 
$
6,194

 
$
6,016

 
$
13,983

 
$
9,401

 
 
 
 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.22

 
$
0.18

 
$
0.17

 
$
0.39

 
$
0.28

Diluted
 
$
0.21

 
$
0.17

 
$
0.17

 
$
0.38

 
$
0.27

 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
35,661

 
35,225

 
34,450

 
35,451

 
34,177

Diluted
 
36,618

 
36,305

 
35,374

 
36,478

 
35,099







Omnicell, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)

 
 
June 30,
2014
 
December 31,
2013
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
 
$
126,379

 
$
104,531

 
Accounts receivable, net
 
82,560

 
58,597

 
Inventories
 
31,542

 
31,457

 
Prepaid expenses
 
16,739

 
18,883

 
Deferred tax assets
 
12,636

 
12,635

 
Other current assets
 
6,040

 
7,675

 
Total current assets
 
275,896

 
233,778


Property and equipment, net
 
37,257

 
35,254

 
Non-current net investment in sales-type leases
 
10,872

 
11,485

 
Goodwill
 
111,343

 
111,343

 
Intangible assets, net
 
79,561

 
81,602

 
Non-current deferred tax assets
 
1,102

 
1,102

 
Other assets
 
21,220

 
17,937

 
Total assets
 
$
537,251

 
$
492,501


 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
 
18,965

 
16,471

 
Accrued compensation
 
15,694

 
19,604

 
Accrued liabilities
 
16,170

 
13,746

 
Deferred service revenue
 
21,720

 
22,626

 
Deferred gross profit
 
30,745

 
19,957

 
Total current liabilities
 
103,294

 
92,404

 
 
 
 
 
 
 
Non-current deferred service revenue
 
21,309

 
17,763

 
Non-current deferred tax liabilities
 
29,023

 
28,162

 
Other long-term liabilities
 
6,004

 
5,175

 
Total liabilities
 
56,336

 
143,504

 
 
 
 
 
 
 
Stockholders’ equity:
 
 
 
 
 
Total stockholders’ equity
 
377,621

 
348,997

 
 
 
 
 
 
 
Total liabilities and stockholders’ equity
 
$
537,251

 
$
492,501

 







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

 
 
Three Months Ended
 
 
June 30, 2014
 
March 31, 2014
 
June 30, 2013
 
 
Net Income
 
Net Income per Share-Diluted
 
Net Income
 
Net Income per Share-Diluted
 
Net Income
 
Net Income per Share-Diluted
GAAP
 
$
7,789

 
$
0.21

 
$
6,194

 
$
0.17

 
$
6,016

 
$
0.17

Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangible assets acquired by acquisition
 
1,048

 
 
 
1,048

 
 
 
1,060

 
 
Subtotal pretax adjustments
 
1,048

 
 
 
1,048

 
 
 
1,060

 
 
Income tax effect of non-GAAP adjustments (a)
 
(395
)
 
 
 
(379
)
 

 
(382
)
 
 
Subtotal after-tax adjustments
 
653

 
 
 
669

 
 
 
678

 
 
ASC 718 share-based compensation adjustment (b):
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
264

 

 
268

 
 
 
325

 
 
Operating expenses
 
2,456

 

 
2,461

 
 
 
2,362

 
 
Subtotal ASC 718 share-based compensation adjustments
 
2,720

 
 
 
2,729

 
 
 
2,687

 
 
Total non-GAAP adjustments
 
3,373

 
0.09

 
3,398

 
0.09

 
3,365

 
0.10

 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP
 
$
11,162

 
$
0.30

 
$
9,592

 
$
0.26

 
$
9,381

 
$
0.27


____________________________________________

(a) Tax effect amounts are calculated using the effective tax rates for the respective periods presented.

(b) This adjustment reflects the accounting impact of non-cash stock-based compensation expense for the periods shown.










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

 
 
Six Months Ended
 
 
June 30, 2014
 
June 30, 2013
 
 
Net Income
 
Net Income per Share-Diluted
 
Net Income
 
Net Income per Share-Diluted
GAAP
 
$
13,983

 
$
0.38

 
$
9,401

 
$
0.27

Non-GAAP adjustments:
 
 
 
 
 
 
 
 
Reorganization costs (a)
 

 
 
 
732

 
 
Amortization of intangible assets acquired by acquisition
 
2,096

 
 
 
2,120

 
 
Subtotal pretax adjustments
 
2,096

 

 
2,852

 
 
Income tax effect of non-GAAP adjustments (b)
 
(774
)
 
 
 
(1,099
)
 
 
Subtotal after-tax adjustments
 
1,322

 
 
 
1,753

 
 
ASC 718 share-based compensation adjustment (c):
 
 
 
 
 
 
 
 
Gross profit
 
532

 

 
629

 
 
Operating expenses
 
4,917

 
 
 
4,984

 
 
Subtotal 718 share-based compensation adjustment (c)
 
5,449

 
 
 
5,613

 
 
Total non-GAAP adjustments
 
6,771

 
0.19

 
7,366

 
0.21

 
 
 
 
 
 
 
 
 
Non-GAAP
 
$
20,754

 
$
0.57

 
16,767
 
$
0.48


____________________________________________

(a) Non-recurring reorganization costs related to our Medication Adherence segment.

(b) Tax effect amounts are calculated using the effective tax rates for the respective periods presented.

(c) This adjustment reflects the accounting impact of non-cash stock-based compensation expense for the periods shown.






Omnicell, Inc.
Calculation of Adjusted EBITDA (1)
(Unaudited, in thousands)


 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
2014
 
March 31,
2014
 
June 30,
2013
 
June 30,
2014
 
June 30,
2013
 
 
 
 
 
 
 
 
 
 
 
GAAP net income
 
$
7,789

 
$
6,194

 
$
6,016

 
$
13,983

 
$
9,401

Add back:
 
 
 
 
 
 
 
 
 
 
ASC 718 stock compensation expense
 
2,720

 
2,729

 
2,687

 
5,449

 
5,613

Reorganization costs
 

 

 

 

 
732

Interest (income) and expense, net
 
(32
)
 
(2
)
 
(7
)
 
(35
)
 
99

Depreciation and amortization expense
 
4,779

 
4,612

 
4,773

 
9,391

 
9,244

Income tax expense
 
4,729

 
3,504

 
3,406

 
8,233

 
3,967

Non-GAAP adjusted EBITDA (1)
 
$
19,985

 
$
17,037

 
$
16,875

 
$
37,021

 
$
29,056


____________________________________________

(1)
Defined as GAAP net income excluding: (i) ASC 718 stock compensation expense, (ii) unusual and non-recurring costs and expenses, (iii) interest (income) and expense, net, (iv) depreciation and amortization, and (v) provision for income taxes.