MOUNTAIN VIEW, Calif., Jan. 31 /PRNewswire-FirstCall/ -- Omnicell, Inc. , a leading provider of system solutions to acute healthcare facilities, today announced results for its fourth quarter ended December 31, 2007.
GAAP results: Revenues for the fourth quarter of 2007 totaled $57.9 million, up $2.8 million or 5.1% from third quarter 2007 revenue of $55.2 million, and up $14.9 million or 34.5% from the fourth quarter of 2006.
Fourth quarter 2007 net income as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $14.5 million, or $0.40 per fully diluted share. Included in fourth quarter net income is $7.0 million, or $0.19 per fully diluted share, income tax benefit related to the partial reversal of the Company's tax valuation allowance. This compares to net income of $6.9 million, or $0.19 per fully diluted share in the third quarter of 2007 and $4.1 million in the fourth quarter of 2006 or $0.14 per fully diluted share. For the twelve months ended December 31, 2007, net income was $43.5 million, or $1.29 per fully diluted share, including $19.8 million or $0.59 per fully diluted share in income tax benefit related to the partial reversal of the Company's tax valuation allowance. This compares to net income of $10.4 million or $0.36 per fully diluted share for the twelve months ended December 31, 2006.
Product backlog totaled $137.0 million, down $3.6 million or 2.6% from the third quarter of 2007 and up $23.0 million or 20.2% from December 31, 2006.
Non-GAAP results: Excluding the impact on Omnicell's results of recording $2.8 million in share-based compensation expenses related to SFAS No. 123(R) and $7.0 million in income tax benefit related to the partial reversal of its tax valuation allowance, non-GAAP net income was $10.3 million for the quarter ended December 31, 2007, or $0.28 per fully diluted share. This compares to non-GAAP income of $6.1 million or $0.20 per fully diluted share for the fourth quarter of 2006. Excluding $10.8 million in share-based compensation expenses related to SFAS No. 123(R) and $19.8 million in income tax benefit related to a partial reversal of the Company's tax valuation allowance, non-GAAP net income was $34.5 million for the twelve months ended December 31, 2007, or $1.02 per fully diluted share. Excluding $8.1 million in share-based compensation expenses relating to SFAS No. 123(R), non-GAAP net income was $18.5 million for the twelve months ended December 31, 2006, or $0.64 per fully diluted share.
"Omnicell delivered another quarter of solid financial performance as demonstrated by our earnings, with new customers expressing their confidence in our solutions," said Randall A. Lipps, Omnicell president and chief executive officer. "In the fourth quarter, we extended our product offerings with the addition of mobile cart technology through our acquisition of Rioux Vision, Inc, and the announcement of SinglePointe, our patient-specific medication management software. These two new product solutions are key to our continued success in helping our customers deliver patient safety all the way to the bedside. We remain focused on delivering the best customer experience in healthcare that enables our customers to continually improve patient safety."
Omnicell Conference Call Information
Omnicell will hold a conference call today at 3:00 p.m. PST to discuss fourth quarter financial results. The number is 1-800-257-1836 within the U.S. or 1-303-262-2137 for all other locations. No pass code is required. 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. PST and will be available until February 8. The replay access numbers are 1-800-405-2236 within the U.S. and 1-303-590-3000 for all other locations, conference code 11107657#.
About Omnicell
Omnicell, Inc. 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 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, cut expenses, 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 items:
a) Stock-based compensation expense impact of SFAS 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 123R). b) Income tax benefit from tax valuation allowance release. This refers to the recognition of an income tax benefit from the partial reversal of our tax valuation allowance on specific deferred tax assets that is no longer required. Under Statement of Financial Accounting Standards No. 109, the release of the tax valuation allowance is necessary, primarily as a result of achieving sustained profitability in certain tax jurisdictions.
Management adjusts for the excluded 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 specific items are excluded from our non-GAAP financial measures:
a) While stock-based compensation calculated in accordance with SFAS 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 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. c) We concluded under Statement of Financial Accounting Standards No. 109 that a portion of our tax valuation allowance on specific deferred tax assets was no longer required, primarily as a result of achieving sustained profitability in certain tax jurisdictions. Therefore, we reversed a portion of our tax valuation allowance which favorably impacted income tax expense and net income.
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 will be reflected as expenses in Omnicell's GAAP results for the foreseeable future under SFAS 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 company's 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 for per share data, unaudited) Three Months Ended Twelve Months Ended December September December December December 31, 30, 31, 31, 31, 2007 2007 2006 2007 2006 Revenues: Product $48,735 $46,376 $34,994 $178,006 $123,196 Services and other revenues 9,211 8,776 8,092 35,075 31,514 Total revenue 57,946 55,152 43,086 213,081 154,710 Cost of revenues: Cost of product revenues 21,641 20,479 15,827 80,417 56,338 Cost of services and other revenues 5,285 4,860 3,137 19,240 12,851 Total cost of revenues 26,926 25,339 18,964 99,657 69,189 Gross profits 31,020 29,813 24,122 113,424 85,521 Operating expenses: Research and development 3,918 3,848 3,364 14,917 11,222 Selling, general, and administrative 21,416 20,732 17,012 79,913 65,043 Total operating expenses 25,334 24,580 20,376 94,830 76,265 Income from operations 5,686 5,233 3,746 18,594 9,256 Other income and expense 1,978 2,055 636 6,053 1,913 Income before (benefit from) provision for income taxes 7,664 7,288 4,382 24,647 11,169 (Benefit from) provision for income taxes (6,851) 348 282 (18,866) 804 Net income $14,515 $6,940 $4,100 $43,513 $10,365 Net income per share: Basic $0.42 $0.20 $0.15 $1.36 $0.38 Diluted $0.40 $0.19 $0.14 $1.29 $0.36 Shares used in computing net income per share: Basic 34,482 34,127 28,018 32,080 27,345 Diluted 36,203 35,833 30,001 33,820 28,902 Omnicell, Inc. Condensed Consolidated Balance Sheet (In thousands) December 31, September 30, December 31, 2007 2007 2006 (1) (unaudited) (unaudited) Current Assets: Cash and cash equivalents $169,812 $175,748 $60,856 Accounts receivable, net 37,522 46,927 34,021 Inventories 13,732 12,665 15,724 Prepaid expenses 9,482 9,273 8,033 Current deferred tax asset 11,878 7,973 --- Other current assets 10,001 5,782 9,183 Total current assets 252,427 258,368 127,817 Property and equipment, net 10,184 7,945 5,226 Non-current net investment in sales-type leases 12,633 11,257 12,244 Goodwill 23,076 3,127 3,127 Other intangible assets 9,467 1,353 1,797 Non-current deferred tax asset 12,833 4,810 --- Other assets 7,998 8,054 4,419 Total Assets $328,618 $294,914 $154,630 Current Liabilities: Accounts payable $10,116 $9,749 $8,792 Accrued compensation 8,306 7,532 7,702 Advance payments from customers 156 1,062 9,124 Accrued liabilities 13,071 5,276 5,174 Deferred service revenue 11,263 10,298 7,707 Deferred gross profit 14,566 15,308 13,964 Obligation resulting from sale of receivables 538 398 1,093 Total current liabilities 58,016 49,623 53,556 Long-term deferred service revenue 15,726 14,676 10,083 Other long-term liabilities 237 327 995 Total Liabilities 73,979 64,626 64,634 Stockholders' equity 254,639 230,288 89,996 Total Liabilities and Stockholders' Equity $328,618 $294,914 $154,630 (1) Information derived from the audited Consolidated Financial Statements. Omnicell, Inc. Reconciliation of GAAP to Non-GAAP (in thousands, except for per share data, unaudited) Three months ended December 31, 2007 December 31, 2006 Earnings per Earnings per Net income share-diluted Net income share-diluted GAAP $14,515 $0.40 $4,100 $0.14 Non-GAAP Adjustments: SFAS No. 123(R) adjustment(a) Gross Margin 354 315 Operating Expenses 2,425 1,699 Income tax adjustment(b) (7,032) (4,253) ($0.12) 2,014 $0.06 Non-GAAP $10,262 $0.28 $6,114 $0.20 Twelve months ended December 31, 2007 December 31, 2006 Earnings per Earnings per Net income share-diluted Net income share-diluted GAAP $43,513 $1.29 $10,365 $0.36 Non-GAAP Adjustments: SFAS No. 123(R) adjustment(a) Gross Margin 1,373 1,143 Operating Expenses 9,419 6,987 Income tax adjustment (b) (19,820) ($9,028) ($0.27) $8,130 $0.28 Non-GAAP $34,485 $1.02 $18,495 $0.64 (a) This adjustment reflects the accounting impact of non-cash share-based compensation expense related to the impact of SFAS No.123R for the three and twelve months ended December 31, 2007 and 2006. (b) This adjustment reflects the accounting impact of income tax provision and tax benefit from release of valuation allowance reserve for the three and twelve months ended December 31, 2007. There was no adjustment for the comparable period in 2006.
