Delaware | 000-33043 | 94-3166458 | ||
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b– 2 of the Securities Exchange Act of 1934 (§240.12b–2 of this chapter). | Emerging growth company | o | |
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Number | Description of Document | |
99.1 |
OMNICELL, INC. | |||
Date: April 25, 2019 | /s/ Peter J. Kuipers | ||
Peter J. Kuipers, | |||
Executive Vice President and Chief Financial Officer |
Contact: | ||
Peter Kuipers | Omnicell, Inc. | |
Chief Financial Officer | 590 East Middlefield Road | |
800-850-6664 | Mountain View, CA 94043 | |
Peter.Kuipers@Omnicell.com |
Q2'19 | 2019 | |
Product Bookings | Not provided | $745 million - $780 million |
Non-GAAP Total Revenues | $211 million - $217 million | $880 million - $900 million |
Non-GAAP Product Revenues | $153 million - $158 million | $652 million - $668 million |
Non-GAAP Service Revenues | $58 million - $59 million | $228 million - $232 million |
Non-GAAP EPS | $0.61 - $0.66 | $2.62 - $2.82 |
a) | Share-based compensation expense. We excluded from our non-GAAP results the expense related to equity-based compensation plans as they represent expenses that do not require cash settlement from Omnicell. |
b) | Amortization of acquired intangible assets. We excluded from our non-GAAP results the intangible assets amortization expense resulting from our past acquisitions. 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. |
c) | Amortization of debt issuance cost. Debt issuance cost represents costs associated with the issuance of Term Loan and Revolving Line of Credit facilities. The cost includes underwriting fees, original issue discount, ticking fee, and legal fees. This non-cash expense is not considered by management to reflect the core cash-generating performance of the business and therefore is excluded from our non-GAAP results. |
d) | Severance and other related expenses. We excluded from our non-GAAP results the expenses which are related to restructuring events. These expenses are unrelated to our ongoing operations, and we do not expect them to occur in the ordinary course of business. We believe that excluding these expenses provides more meaningful comparisons of the financial results to our historical operations and forward-looking guidance, and the financial results of peer companies. |
e) | Tax impact from restructuring activity. We excluded from our non-GAAP results the tax impacts related to restructuring activity. These impacts are unrelated to our ongoing operations, and we do not expect them to occur in the ordinary course of business. We believe that excluding these impacts provides more meaningful comparisons of the financial results to our historical operations and forward-looking guidance, and the financial results of peer companies. |
f) | Tax impact from intellectual property (“IP”) restructuring. We excluded from our non-GAAP results the tax impacts related to IP restructuring. These impacts are unrelated to our ongoing operations, and we do not expect them to occur in the ordinary course of business. We believe that excluding these impacts provides more meaningful comparisons of the financial results to our historical operations and forward-looking guidance, and the financial results of peer companies. |
a) | 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. |
b) | 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. |
c) | 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. |
d) | 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. |
i) | While share-based compensation calculated in accordance with Accounting Standard Codification (“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 share-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. |
a) | 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. |
b) | Other companies, including companies in Omnicell’s industry, may calculate non-GAAP financial measures differently than Omnicell, limiting their usefulness as a comparative measure. |
Three months ended March 31, | |||||||
2019 | 2018 (a) | ||||||
Revenues: | |||||||
Product revenues | $ | 145,610 | $ | 130,659 | |||
Services and other revenues | 56,907 | 51,960 | |||||
Total revenues | 202,517 | 182,619 | |||||
Cost of revenues: | |||||||
Cost of product revenues | 78,811 | 75,417 | |||||
Cost of services and other revenues | 26,589 | 24,747 | |||||
Total cost of revenues | 105,400 | 100,164 | |||||
Gross profit | 97,117 | 82,455 | |||||
Operating expenses: | |||||||
Research and development | 16,078 | 16,537 | |||||
Selling, general, and administrative | 68,278 | 65,285 | |||||
Total operating expenses | 84,356 | 81,822 | |||||
Income from operations | 12,761 | 633 | |||||
Interest and other income (expense), net | (1,410 | ) | (2,729 | ) | |||
Income (loss) before provision for income taxes | 11,351 | (2,096 | ) | ||||
Provision for (benefit from) income taxes | 8,067 | (4,816 | ) | ||||
Net income | $ | 3,284 | $ | 2,720 | |||
Net income per share: | |||||||
Basic | $ | 0.08 | $ | 0.07 | |||
Diluted | $ | 0.08 | $ | 0.07 | |||
Weighted-average shares outstanding: | |||||||
Basic | 40,692 | 38,635 | |||||
Diluted | 42,281 | 39,691 |
(a) | Includes a $0.6 million reclassification from services and other revenues to product revenues to conform with current-period presentation. |
March 31, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 77,244 | $ | 67,192 | |||
Accounts receivable and unbilled receivables, net | 203,489 | 196,238 | |||||
Inventories | 103,909 | 100,868 | |||||
Prepaid expenses | 17,048 | 20,700 | |||||
Other current assets | 12,017 | 12,136 | |||||
Total current assets | 413,707 | 397,134 | |||||
Property and equipment, net | 52,039 | 51,500 | |||||
Long-term investment in sales-type leases, net | 19,469 | 17,082 | |||||
Operating lease right-of-use assets | 63,851 | — | |||||
Goodwill | 336,119 | 335,887 | |||||
Intangible assets, net | 138,893 | 143,686 | |||||
Long-term deferred tax assets | 32,043 | 15,197 | |||||
Prepaid commissions | 43,669 | 46,143 | |||||
Other long-term assets | 77,270 | 74,613 | |||||
Total assets | $ | 1,177,060 | $ | 1,081,242 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 38,466 | $ | 38,038 | |||
Accrued compensation | 29,056 | 41,660 | |||||
Accrued liabilities | 52,996 | 43,047 | |||||
Deferred revenues, net | 90,104 | 81,835 | |||||
Total current liabilities | 210,622 | 204,580 | |||||
Long-term deferred revenues | 10,302 | 10,582 | |||||
Long-term deferred tax liabilities | 61,405 | 41,484 | |||||
Long-term operating lease liabilities | 57,470 | — | |||||
Other long-term liabilities | 9,786 | 9,562 | |||||
Long-term debt, net | 96,990 | 135,417 | |||||
Total liabilities | 446,575 | 401,625 | |||||
Total stockholders’ equity | 730,485 | 679,617 | |||||
Total liabilities and stockholders’ equity | $ | 1,177,060 | $ | 1,081,242 |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
Operating Activities | |||||||
Net income | $ | 3,284 | $ | 2,720 | |||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||
Depreciation and amortization | 12,637 | 12,310 | |||||
Loss on disposal of fixed assets | 355 | — | |||||
Share-based compensation expense | 8,410 | 6,528 | |||||
Deferred income taxes | 3,075 | (5,128 | ) | ||||
Amortization of operating lease right-of-use assets | 2,602 | — | |||||
Amortization of debt financing fees | 573 | 573 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable and unbilled receivables | (7,251 | ) | (632 | ) | |||
Inventories | (2,936 | ) | (6,881 | ) | |||
Prepaid expenses | 3,652 | (769 | ) | ||||
Other current assets | 373 | (997 | ) | ||||
Investment in sales-type leases | (2,641 | ) | (1,491 | ) | |||
Prepaid commissions | 2,474 | 1,796 | |||||
Other long-term assets | 5,206 | (1,673 | ) | ||||
Accounts payable | (233 | ) | (9,416 | ) | |||
Accrued compensation | (12,604 | ) | 2,391 | ||||
Accrued liabilities | 127 | 4,276 | |||||
Deferred revenues | 7,989 | 15,118 | |||||
Operating lease liabilities | (2,669 | ) | — | ||||
Other long-term liabilities | 4,074 | 131 | |||||
Net cash provided by operating activities | 26,497 | 18,856 | |||||
Investing Activities | |||||||
Software development for external use | (11,717 | ) | (5,272 | ) | |||
Purchases of property and equipment | (4,980 | ) | (9,268 | ) | |||
Net cash used in investing activities | (16,697 | ) | (14,540 | ) | |||
Financing Activities | |||||||
Repayment of debt and revolving credit facility | (39,000 | ) | (2,500 | ) | |||
At the market offering, net of offering costs | 20,216 | — | |||||
Proceeds from issuances under stock-based compensation plans | 20,526 | 9,541 | |||||
Employees’ taxes paid related to restricted stock units | (1,920 | ) | (1,300 | ) | |||
Net cash provided by (used in) financing activities | (178 | ) | 5,741 | ||||
Effect of exchange rate changes on cash and cash equivalents | 430 | 1,292 | |||||
Net increase in cash and cash equivalents | 10,052 | 11,349 | |||||
Cash and cash equivalents at beginning of period | 67,192 | 32,424 | |||||
Cash and cash equivalents at end of period | $ | 77,244 | $ | 43,773 |
Three months ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Reconciliation of GAAP revenues to non-GAAP revenues: | |||||||
GAAP revenues | $ | 202,517 | $ | 182,619 | |||
Non-GAAP revenues | $ | 202,517 | $ | 182,619 | |||
Reconciliation of GAAP gross profit to non-GAAP gross profit: | |||||||
GAAP gross profit | $ | 97,117 | $ | 82,455 | |||
GAAP gross margin | 48.0% | 45.2% | |||||
Share-based compensation expense | 1,462 | 1,019 | |||||
Amortization of acquired intangibles | 2,066 | 2,791 | |||||
Non-GAAP gross profit | $ | 100,645 | $ | 86,265 | |||
Non-GAAP gross margin | 49.7% | 47.2% | |||||
Reconciliation of GAAP operating expenses to non-GAAP operating expenses: | |||||||
GAAP operating expenses | $ | 84,356 | $ | 81,822 | |||
GAAP operating expenses % to total revenues | 41.7% | 44.8% | |||||
Share-based compensation expense | (6,948 | ) | (5,509 | ) | |||
Amortization of acquired intangibles | (2,716 | ) | (3,238 | ) | |||
Severance and other expenses | (286 | ) | (1,512 | ) | |||
Non-GAAP operating expenses | $ | 74,406 | $ | 71,563 | |||
Non-GAAP operating expenses % to total non-GAAP revenues | 36.7% | 39.2% | |||||
Reconciliation of GAAP income from operations to non-GAAP income from operations: | |||||||
GAAP income from operations | $ | 12,761 | $ | 633 | |||
GAAP operating income % to total revenues | 6.3% | 0.3% | |||||
Share-based compensation expense | 8,410 | 6,528 | |||||
Amortization of acquired intangibles | 4,782 | 6,029 | |||||
Severance and other expenses | 286 | 1,512 | |||||
Non-GAAP income from operations | $ | 26,239 | $ | 14,702 | |||
Non-GAAP operating income % to total non-GAAP revenues | 13.0% | 8.1% |
Three months ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Reconciliation of GAAP net income to non-GAAP net income: | |||||||
GAAP net income | $ | 3,284 | $ | 2,720 | |||
Tax benefit for restructuring activity | — | (4,205 | ) | ||||
Tax impact of IP restructuring | 9,624 | — | |||||
Share-based compensation expense | 8,410 | 6,528 | |||||
Amortization of acquired intangibles | 4,782 | 6,029 | |||||
Severance and other expenses(a) | 859 | 2,085 | |||||
Tax effect of the adjustments above(b) | (1,184 | ) | (1,703 | ) | |||
Non-GAAP net income | $ | 25,775 | $ | 11,454 | |||
Reconciliation of GAAP net income per share - diluted to non-GAAP net income per share - diluted: | |||||||
Shares - diluted GAAP | 42,281 | 39,691 | |||||
Shares - diluted Non-GAAP | 42,281 | 39,691 | |||||
GAAP net income per share - diluted | $ | 0.08 | $ | 0.07 | |||
Tax benefit for restructuring activity | — | (0.10 | ) | ||||
Tax impact of IP restructuring | 0.23 | — | |||||
Share-based compensation expense | 0.20 | 0.16 | |||||
Amortization of acquired intangibles | 0.11 | 0.15 | |||||
Severance and other expenses | 0.02 | 0.05 | |||||
Tax effect of the adjustments above(b) | (0.03 | ) | (0.04 | ) | |||
Non-GAAP net income per share - diluted | $ | 0.61 | $ | 0.29 | |||
Reconciliation of GAAP net income to non-GAAP Adjusted EBITDA(c): | |||||||
GAAP net income | $ | 3,284 | $ | 2,720 | |||
Share-based compensation expense | 8,410 | 6,528 | |||||
Interest (income) and expense, net | 706 | 1,772 | |||||
Depreciation and amortization expense | 12,637 | 12,310 | |||||
Severance and other expenses | 859 | 2,085 | |||||
Income tax expense (benefit) | 8,067 | (4,816 | ) | ||||
Non-GAAP adjusted EBITDA | $ | 33,963 | $ | 20,599 |
(a) | For the three months ended March 31, 2019, other expenses include $0.4 million and $0.2 million of amortization of debt issuance costs related to prior acquisitions and credit facilities amendments, respectively, and $0.3 million of IP restructuring costs. For the three months ended March 31, 2018, other expenses include $0.4 million and $0.2 million of amortization of debt issuance costs related to prior acquisitions and credit facilities amendments, respectively. |
(b) | Tax effects calculated for all adjustments except tax benefits and expenses, and share-based compensation expense, using an estimated annual effective tax rate of 21% for both fiscal years 2019 and 2018. |
(c) | Defined as earnings before interest income and expense, taxes, depreciation and amortization, share-based compensation, as well as excluding certain non-GAAP adjustments. |