Omnicell Announces Fiscal Year and Fourth Quarter 2023 Results

Full Year 2023 GAAP Revenues of $1.147 billion

Full Year 2023 GAAP net loss of $20 million and GAAP net loss per diluted share of $0.45

Full Year 2023 Non-GAAP EBITDA of $138 million and Non-GAAP net income per diluted share of $1.91

Full Year 2023 Net Cash Provided by Operating Activities of $181 million

Full Year 2023 Non-GAAP Free Cash Flow of $126 million

Omnicell, Inc. (NASDAQ:OMCL) ("Omnicell," "we," "our," "us," "management," or the "Company"), a leader in transforming the pharmacy care delivery model, today announced results for its fiscal year and fourth quarter ended December 31, 2023.

Randall Lipps, chairman, president, chief executive officer, and founder of Omnicell, said, "Our team delivered 2023 financial results that were generally in line with what we originally anticipated for the year. We are enthusiastic about our robust innovation pipeline, particularly around our XT fleet of connected devices. We believe the Company is uniquely positioned to capture incremental market share as hospital cost pressures are expected to alleviate and as the macroeconomic environment is anticipated to improve. However, we recognize we have work to do to strengthen our performance and accelerate profitability. To that end, we are undertaking a holistic review of our business to determine how we can best optimize our investments in an effort to deliver strong returns for our stockholders. We remain confident in Omnicell's long-term opportunities as we work to transform the pharmacy care delivery model and ultimately help enable healthcare providers to deliver better outcomes around patient safety and overall efficiencies."

Financial Results

Total GAAP revenues for the fourth quarter of 2023 were $259 million, down $39 million, or 13%, from the fourth quarter of 2022. Total GAAP revenues for the year ended December 31, 2023 were $1.147 billion, down $149 million, or 11%, from the year ended December 31, 2022. The quarter-over-quarter and year-over-year decrease in total GAAP revenues reflects lower Point of Care revenues primarily as a result of ongoing healthcare systems' capital budget and labor constraints.

Total GAAP net loss for the fourth quarter 2023 was $14 million, or $0.32 per diluted share. This compares to GAAP net loss of $28 million, or $0.64 per diluted share, for the fourth quarter of 2022. Total GAAP net loss for the year ended December 31, 2023 was $20 million, or $0.45 per diluted share. This compares to GAAP net income of $6 million, or $0.12 per diluted share, for the year ended December 31, 2022.

Total non-GAAP net income for both the fourth quarter of 2023 and the fourth quarter of 2022 was $15 million, or $0.33 per diluted share. Total non-GAAP net income for the year ended December 31, 2023 was $87 million, or $1.91 per diluted share. This compares to non-GAAP net income of $136 million, or $3.00 per diluted share, for the year ended December 31, 2022.

Total non-GAAP EBITDA for the fourth quarter of 2023 was $24 million. This compares to non-GAAP EBITDA of $26 million for the fourth quarter of 2022. Total non-GAAP EBITDA for the year ended December 31, 2023 was $138 million. This compares to non-GAAP EBITDA of $193 million for the year ended December 31, 2022.

Bookings and Backlog

Total bookings ⁽¹⁾ for the year ended December 31, 2023 were $854 million compared to $1.054 billion for the year ended December 31, 2022, or a decrease of 19% year-over-year, primarily driven by lower-than-expected orders for our Advanced Services, particularly our technology-enabled services, which include Central Pharmacy Dispensing Service and IV Compounding Service.

Total backlog ⁽²⁾ for the years ended December 31, 2023 and 2022 was as follows:

Balance Sheet

As of December 31, 2023, Omnicell's balance sheet reflected cash and cash equivalents of $468 million, total debt (net of unamortized debt issuance costs) of $570 million, and total assets of $2.23 billion. Cash flows provided by operating activities in the fourth quarter of 2023 totaled $38 million. This compares to cash flows provided by operating activities totaling $82 million in the fourth quarter of 2022.

As of December 31, 2023, the Company had $350 million of availability under its revolving credit facility with no outstanding balance.

2024 Guidance

For the full year 2024, the Company expects bookings to be between $750 million and $875 million. The Company expects full year 2024 total revenues to be between $1.045 billion and $1.120 billion. The Company expects full year 2024 product revenues to be between $605 million and $650 million, and full year 2024 service revenues to be between $440 million and $470 million. The Company expects full year 2024 technical services revenues to be between $220 million and $235 million, and full year 2024 Advanced Services revenues to be between $220 million and $235 million. The Company expects full year 2024 non-GAAP EBITDA to be between $90 million and $120 million. The Company expects full year 2024 non-GAAP earnings per share to be between $0.90 and $1.40 per share.

For the first quarter of 2024, the Company expects total revenues to be between $232 million and $242 million. The Company expects first quarter 2024 product revenues to be between $128 million and $133 million, and first quarter 2024 service revenues to be between $104 million and $109 million. The Company expects first quarter 2024 non-GAAP EBITDA to be between ($2) million and $4 million. The Company expects first quarter 2024 non-GAAP earnings per share to be between a net loss of ($0.10) and breakeven per share.

The table below summarizes Omnicell's 2024 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, Thursday, February 8, 2024 at 8:30 a.m. ET to discuss fourth quarter and year end 2023 financial results. The conference call can be monitored by dialing (888) 550-5424 in the U.S. or (646) 960-0819 in international locations. The Conference ID is 9581556. 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 pharmacy care through outcomes-centric innovation designed to optimize clinical and business outcomes across all settings of care. Through a comprehensive portfolio of robotics, smart devices, intelligent software, and expert services, Omnicell solutions are helping healthcare facilities worldwide to reduce costs, improve labor efficiency, establish new revenue streams, enhance supply chain control, support compliance, and move closer to the industry vision of the Autonomous Pharmacy. To learn more, visit 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 Advanced Services revenues, non-GAAP EBITDA, and non-GAAP earnings per share; expectations regarding our products and services and developing new or enhancing existing products and solutions; results of our holistic review; our ability to deliver long-term value; and statements about Omnicell's strategy, plans, objectives, goals, opportunities, vision, market or Company outlook, and planned investments. 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) Omnicell's ability to take advantage of growth opportunities and develop and commercialize new solutions and enhance existing solutions, (iii) reduction in demand in the capital equipment market or reduction in the demand for or adoption of our solutions, systems, or services, (iv) delays in installations of our medication management solutions or our more complex medication packaging systems, (v) 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, (vi) ability to realize the benefits of our expense containment initiatives, (vii) restructuring may take longer than expected, costs may be greater than anticipated or that the savings may be less than anticipated, (viii) the Company's efforts may have an adverse impact on the Company's internal programs, and Omnicell's ability to recruit and retain skilled and motivated personnel and may be distracting to management, (ix) risks related to failing to maintain expected service levels when providing our Advanced Services or retaining our Advanced Services customers, (x) Omnicell's ability to meet the demands of, or maintain relationships with, its institutional, retail, and specialty pharmacy customers, (xi) risks related to climate change, legal, regulatory or market measures to address climate change and related emphasis on ESG matters by various stakeholders, (xii) changes to the 340B Program, (xiii) Omnicell's substantial debt, which could impair its financial flexibility and access to capital, (xiv) covenants in our credit agreement could restrict our business and operations, (xv) continued and increased competition from current and future competitors in the medication management automation solutions market and the medication adherence solutions market, (xvi) 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, (xvii) 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, (xviii) risks associated with operating in foreign countries, (xix) Omnicell's ability to recruit and retain skilled and motivated personnel, (xx) Omnicell's ability to protect its intellectual property, (xxi) risks related to the availability and sources of raw materials and components or price fluctuations, shortages, or interruptions of supply, (xxii) 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, (xxiii) fluctuations in quarterly and annual operating results may make our future operating results difficult to predict, (xxiv) failing to meet (or significantly exceeding) our publicly announced financial guidance, and (xxv) 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), i), j) and k) below; non-GAAP income from operations and non-GAAP operating margin exclude from their GAAP equivalents items a), b), c), d), e), f), g), i), j) and k) 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), j) and k) 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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