MOUNTAIN VIEW, Calif., Oct. 23 /PRNewswire-FirstCall/ -- Omnicell, Inc. , 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. 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
