Omnicell Announces Fiscal Year and Fourth Quarter 2022 Results

2022 Total Bookings of $1.054 billion

Full Year 2022 GAAP Revenues of $1.296 and non-GAAP Revenues of $1.297 billion

Ended Year with Over 150 Long-Term, Sole-Source Agreements with the Top 300 U.S. Health Systems

Year End 2022 Backlog of $1.215 billion

Chief Financial Officer to Step Down effective July 1, 2023

Omnicell, Inc. (NASDAQ:OMCL) (“Omnicell,” “we,” “our,” “us,” “management,” or the “Company”), a leading provider of medication management solutions and adherence tools for healthcare systems and pharmacies, today announced results for fiscal year and fourth quarter ended December 31, 2022.

“Omnicell delivered results generally exceeding our revised outlook for the fourth quarter and full year 2022 in the face of continued headwinds and macroeconomic uncertainty,” said Randall Lipps, Founder, Chairman, President and Chief Executive Officer of Omnicell. “Omnicell has strong customer relationships, unique expertise within medication management, and compelling Advanced Services offerings that we believe are helping our customers meet critical care needs, improve patient outcomes and realize return on their investments – and we think our long-term opportunities remain robust as we continue to transform the pharmacy care delivery model. We will continue to manage our business in a way that we believe is prudent, while we focus on integrating our recent acquisitions and strengthening our operational efficiencies. We remain confident in our strategy and our ability to drive long-term value creation for all of our stakeholders.”

Omnicell also announced today that Peter J. Kuipers will step down from his role as Executive Vice President, Chief Financial Officer, effective July 1, 2023. Pending his departure, Mr. Kuipers will continue to serve as Executive Vice President, Chief Financial Officer while the Company searches for a new Chief Financial Officer and will assist with the transition of his role and responsibilities. The Company has commenced a national search for his successor, and Peter will help to assist in a smooth transition. The Company would like to thank Mr. Kuipers for his contributions to the Company throughout his employment, and for playing an important role in the Company’s growth.

Randall Lipps added, “I would like to thank Peter for his contributions to Omnicell over the last seven years. Peter has played an important role in scaling the company from nearly $500 million in annual revenue to $1.3 billion in 2022. Peter also made significant contributions leading our international operations. I wish Peter the best as he transitions to the next chapter in his career.”

GAAP Results

Total GAAP revenues for the fourth quarter of 2022 were $298 million, down $13 million, or 4%, from the fourth quarter of 2021. The decrease in GAAP revenues reflects ongoing macroeconomic challenges and health systems capital budget freezes and delays, as well as ongoing customer labor shortages.

Total GAAP revenues for the year ended December 31, 2022 were $1.296 billion, up $164 million, or 14%, from the year ended December 31, 2021.

GAAP net loss for the fourth quarter 2022 was $28 million, or $0.64 per diluted share. This compares to GAAP net income of $14 million, or $0.28 per diluted share, for the fourth quarter of 2021.

GAAP net income for the year ended December 31, 2022 was $6 million, or $0.12 per diluted share. This compares to GAAP net income of $78 million, or $1.62 per diluted share, for the year ended December 31, 2021.

Non-GAAP Results

Total non-GAAP revenues for the fourth quarter of 2022 were $298 million, down $14 million, or 4%, from the fourth quarter of 2021. The decrease in non-GAAP revenues reflects ongoing macroeconomic challenges and health systems capital budget freezes and delays, as well as ongoing customer labor shortages.

Total non-GAAP revenues for the year ended December 31, 2022 were $1.297 billion, up $164 million, or 14%, from the year ended December 31, 2021.

Total non-GAAP net income for the fourth quarter of 2022 was $15 million, or $0.33 per diluted share. This compares to non-GAAP net income of $44 million, or $0.92 per diluted share, for the fourth quarter of 2021.

Total non-GAAP net income for the year ended December 31, 2022 was $136 million, or $3.00 per diluted share. This compares to non-GAAP net income of $175 million, or $3.81 per diluted share, for the year ended December 31, 2021.

Total non-GAAP EBITDA for the fourth quarter of 2022 was $26 million. This compares to non-GAAP EBITDA of $52 million for the fourth quarter of 2021.

Total non-GAAP EBITDA for the year ended December 31, 2022 was $193 million. This compares to non-GAAP EBITDA of $230 million for the year ended December 31, 2021.

Bookings and Backlog

Total bookings ⁽¹⁾ for the year ended December 31, 2022 were $1.054 billion compared to $1.217 billion for the year ended December 31, 2021, or a decrease of 13% year-over-year, primarily driven by reduced demand for connected devices, partially offset by strong demand for Advanced Services offerings and the impact of acquisitions.

Total backlog ⁽²⁾ for the years ended December 31, 2022 and 2021 was as follows:

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Balance Sheet

As of December 31, 2022, Omnicell’s balance sheet reflected cash and cash equivalents of $330 million, total debt (net of unamortized debt issuance costs) of $567 million, and total assets of $2.21 billion. Cash flows provided by operating activities in the fourth quarter of 2022 totaled $82 million. This compares to cash flows provided by operating activities totaling $60 million in the fourth quarter of 2021.

As of December 31, 2022, the Company had $500 million of availability under its revolving credit facility.

Business Highlights

• With the launch of Specialty Pharmacy Services in 2022, along with new technology advancements in IV compounding robotics and Inventory Optimization, Omnicell’s Advanced Services are designed to deliver a comprehensive offering that is expected to drive enhanced clinical and business outcomes for our customers across all settings of care.
• Market demand for our Advanced Services offerings appeared to continue to gain momentum in 2022, with health systems using these technologies to help enable them to achieve significant benefits and improved outcomes for their pharmacy care.
• Recognizing our belief that a combination of technology, expertise and intelligence are key to supporting safe medication management, Omnicell has entered into a strategic alliance with Long Island University (“LIU”) to launch a center for innovative medication management. This immersive experience, which is expected to open this Spring, is intended to help expand technological and analytical expertise for LIU Pharmacy students and support the continuing transformation of the pharmacy care delivery model.
• Continuous improvement for our environmental, social, and corporate governance (“ESG”) program: Omnicell was ranked in the 4^th percentile for the healthcare IT services subindustry for ESG risk management ⁽⁴⁾ and was ranked in the highest score range relative to global peers for Corporate Governance ⁽⁵⁾.

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2023 Guidance

For the full year 2023, the Company expects bookings to be between $1.000 billion and $1.100 billion. The Company expects full year 2023 total revenues to be between $1.150 billion and $1.190 billion. The Company expects full year 2023 product revenues to be between $740 million and $760 million, and full year 2023 service revenues to be between $410 million and $430 million. The Company expects full year 2023 technical services revenues to be between $210 million and $220 million, and full year 2023 Advanced Services revenues to be between $200 million and $210 million. The Company expects full year 2023 non-GAAP EBITDA to be between $120 million and $135 million. The Company expects full year 2023 non-GAAP earnings per share to be between $1.55 and $1.80 per share.

For the first quarter of 2023, the Company expects total revenues to be between $273 million and $283 million. The Company expects first quarter 2023 product revenues to be between $179 million and $184 million, and first quarter 2023 service revenues to be between $94 million and $99 million. The Company expects first quarter 2023 non-GAAP EBITDA to be between $6 million and $12 million. The Company expects first quarter 2023 non-GAAP earnings per share to be between $0.04 and $0.14 per share.

The table below summarizes Omnicell’s 2023 guidance outlined above.

The Company does not provide guidance for GAAP net income or GAAP earnings per share, nor a reconciliation of these forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures on a forward-looking basis because it is unable to predict certain items contained in the GAAP measures without unreasonable efforts. These forward-looking non-GAAP financial measures do not include certain items, which may be significant, including, but not limited to, unusual gains and losses, costs associated with future restructurings, acquisition-related expenses, and certain tax and litigation outcomes.

Omnicell Conference Call Information

Omnicell will hold a conference call today, Tuesday, February 28, 2023 at 4:30 p.m. ET to discuss fourth quarter and year end 2022 financial results. The conference call can be monitored by dialing 1-888-550-5424 within the U.S. or 1-646-960-0819 for all other locations. A link to the live and archived webcast will also be available on the Investor Relations section of Omnicell’s website at https://ir.omnicell.com/events-and-presentations/.

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About Omnicell

Since 1992, Omnicell has been committed to transforming the pharmacy care delivery model to dramatically improve outcomes and lower costs. Through the industry vision of the Autonomous Pharmacy, a combination of automation, intelligence, and technology-enabled services, powered by a cloud data platform, Omnicell supports more efficient ways to manage medications across all care settings. Healthcare facilities worldwide use Omnicell automation and analytics solutions to help increase operational efficiency, reduce medication errors, deliver actionable intelligence, and improve patient safety. Institutional and retail pharmacies across North America and the United Kingdom leverage Omnicell’s innovative medication adherence and population health solutions to improve patient engagement and adherence to prescriptions, helping to reduce costly hospital readmissions.

To learn more, visit www.omnicell.com. From time to time, Omnicell may use the Company’s investor relations website and other online social media channels, including its Twitter handle www.twitter.com/omnicell, LinkedIn page www.linkedin.com/company/omnicell, and Facebook page www.facebook.com/omnicellinc, to disclose material non-public information and comply with its disclosure obligations under Regulation Fair Disclosure (“Reg FD”).

OMNICELL and the Omnicell logo are registered trademarks of Omnicell, Inc. or one of its subsidiaries.

Forward-Looking Statements

To the extent any statements contained in this press 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. Without limiting the foregoing, statements including the words “expect,” “intend,” “may,” “will,” “should,” “would,” “could,” “plan,” “potential,” “anticipate,” “believe,” “forecast,” “guidance,” “outlook,” “goals,” “target,” “estimate,” “seek,” “predict,” “project,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to the occurrence of many events outside Omnicell’s control. Such statements include, but are not limited to, Omnicell’s projected bookings, revenues, including product, service, technical services and Advance Services revenues, respectively, non-GAAP EBITDA, and non-GAAP earnings per share; expectations regarding transitioning to selling more products and services on a subscription basis; and statements about Omnicell’s strategy, plans, objectives, goals, vision, planned investments, products and services and the expected benefits. Actual results and other events may differ significantly from those contemplated by forward-looking statements due to numerous factors that involve substantial known and unknown risks and uncertainties. These risks and uncertainties include, among other things, (i) unfavorable general economic and market conditions, including the impact and duration of inflationary pressures, (ii) ability to realize the benefits of our expense containment efforts, (iii) Omnicell’s ability to take advantage of growth opportunities and develop and commercialize new solutions and enhance existing solutions, (iv) reduction in demand in the capital equipment market or reduction in the demand for or adoption of our solutions, systems, or services, (v) delays in installations of our medication management solutions or our more complex medication packaging systems, (vi) risks related to Omnicell’s investments in new business strategies or initiatives, including its transition to selling more products and services on a subscription basis, and its ability to acquire companies, businesses, or technologies and successfully integrate such acquisitions, (vii) risks related to failing to maintain expected service levels when providing our Advanced Services or retaining our Advanced Services customers, (viii) Omnicell’s ability to meet the demands of, or maintain relationships with, its institutional, retail, and specialty pharmacy customers, (ix) continued and increased competition from current and future competitors in the medication management automation solutions market and the medication adherence solutions market, (x) changes to the 340B Program, (xi) Omnicell’s substantial debt, which could impair its financial flexibility and access to capital, (xii) risks presented by government regulations, legislative changes, fraud and anti-kickback statues, products liability claims, the outcome of legal proceedings, and other legal obligations related to healthcare, privacy, data protection, and information security, including any potential governmental investigations and enforcement actions, litigation, fines and penalties, exposure to indemnification obligations or other liabilities, and adverse publicity as a result of the previously disclosed ransomware incident, (xiii) risks related to the ongoing COVID-19 pandemic (including new variants of the virus), (xiv) any disruption in Omnicell’s information technology systems and breaches of data security or cyber-attacks on its systems or solutions, including the previously disclosed ransomware incident and any potential adverse legal, reputational, and financial effects that may result from it and/or additional cybersecurity incidents, as well as the effectiveness of business continuity plans during any future cybersecurity incidents, (xv) risks associated with operating in foreign countries, (xvi) Omnicell’s ability to recruit and retain skilled and motivated personnel, (xvii) Omnicell’s ability to protect its intellectual property, (xviii) risks related to the availability and sources of raw materials and components or price fluctuations, shortages, or interruptions of supply, (xix) Omnicell’s dependence on a limited number of suppliers for certain components, equipment, and raw materials, as well as technologies provided by third-party vendors, and (xx) other risks and uncertainties further described in the “Risk Factors” section of Omnicell’s most recent Annual Report on Form 10-K, as well as in Omnicell’s other reports filed with or furnished to the United States Securities and Exchange Commission (“SEC”), available at www.sec.gov. Forward-looking statements should be considered in light of these risks and uncertainties. Investors and others 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 of this press release. Omnicell assumes no obligation to update any such statements publicly, or to update the reasons actual results could differ materially from those expressed or implied in any forward-looking statements, whether as a result of changed circumstances, new information, future events, or otherwise, except as required by law.

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”). Management evaluates and makes operating decisions using various performance measures. In addition to Omnicell’s GAAP results, we also consider non-GAAP revenues, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share, non-GAAP diluted shares, non-GAAP EBITDA, non-GAAP EBITDA margin, and non-GAAP free cash flow. These non-GAAP results and metrics should not be considered as an alternative to revenues, gross profit, operating expenses, income from operations, net income, net income per diluted share, diluted shares, net cash provided by operating activities, or any other performance measure derived in accordance with GAAP. We present these non-GAAP results and metrics because management considers them to be important supplemental measures of Omnicell’s performance and refers to such measures when analyzing Omnicell’s strategy and operations.

Our non-GAAP revenues, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share, non-GAAP EBITDA, and non-GAAP EBITDA margin 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 such period that directly drive operating income in such 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 believe we should invest in research and development, fund infrastructure growth, and evaluate the effectiveness of marketing strategies. In calculating the above non-GAAP results: non-GAAP revenues excludes from its GAAP equivalent item a) below; non-GAAP gross profit and non-GAAP gross margin exclude from their GAAP equivalents items a), b), c), f), and g) below; non-GAAP operating expenses excludes from its GAAP equivalents items b), c), d), e), f), g), and j) below; non-GAAP income from operations and non-GAAP operating margin exclude from their GAAP equivalents items a), b), c), d), e), f), g), and j) below; and non-GAAP net income and non-GAAP net income per diluted share exclude from their GAAP equivalents items a) through k) below. Non-GAAP EBITDA is defined as earnings before interest income and expense, taxes, depreciation, amortization, and share-based compensation, as well as excluding certain other non-GAAP adjustments. Non-GAAP EBITDA and non-GAAP EBITDA margin exclude from their GAAP equivalents items a), b), d), e), f), g), h), i), and j) below:

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 compensation plans or other items.

We believe that the presentation of non-GAAP revenues, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share, non-GAAP EBITDA, and non-GAAP EBITDA margin is warranted for several reasons:

Set forth below are additional reasons why share-based compensation expense is excluded from our non-GAAP financial measures:

Non-GAAP diluted shares is defined as our GAAP diluted shares, excluding the impact of dilutive convertible senior notes for which the Company is economically hedged through its anti-dilutive convertible note hedge transaction. We believe non-GAAP diluted shares is a useful non-GAAP metric because it provides insight into the offsetting economic effect of the hedge transaction against potential conversion of the convertible senior notes.

Non-GAAP free cash flow is defined as net cash provided by operating activities less cash used for software development for external use and purchases of property and equipment. We believe free cash flow is important to enable investors to better understand and evaluate our ongoing operating results and allows for greater transparency in the review and understanding of our overall financial, operational, and economic performance, because free cash flow takes into account certain capital expenditures and cash used for software development necessary to operate our business.

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:

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 as well as in Omnicell’s other reports filed with or furnished to the SEC.

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