Omnicell, Inc. (NASDAQ:OMCL) Q1 2025 Earnings Conference Call May 6, 2025 8:30 AM ET Company Participants Kathleen Nemeth - SVP, IR Randall Lipps - Founder, Chairman, President and CEO Nchacha Etta - EVP and CFO Nnamdi Njoku - COO Conference Call Participants Jessica Datson - Piper Sandler Gene Mannheimer - Freedom Capital Markets Allen Lutz - Bank of America Bill Sutherland - Benchmark Stan Berenshteyn - Wells Fargo Matt Hewitt - Craig-Hallum Capital David Larsen - BTIG Operator Good morning, my name is Ca ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $270 million, an increase of $24 million from Q1 2024, but a decrease of $37 million from Q4 2024 [8][17] - Product revenues were $145 million, up $12 million year-over-year but down $37 million sequentially [9][18] - Service revenues were $125 million, an increase of $12 million from Q1 2024 and flat compared to Q4 2024 [9][18] - Non-GAAP gross margin for Q1 2025 was 42.1%, a decrease of 530 basis points from the prior quarter [9][19] - GAAP earnings per share for Q1 2025 was a loss of $0.15, compared to a loss of $0.34 in Q1 2024 [10][20] - Non-GAAP earnings per share for Q1 2025 was $0.26, compared to $0.03 in the same period last year [10][20] - Non-GAAP EBITDA for Q1 2025 was $24 million, an increase of $13 million year-over-year but a decrease of $23 million from the previous quarter [10][21] Business Line Data and Key Metrics Changes - The XT Amplify program contributed to revenue growth, alongside SaaS and XPath services, including specialty pharmacy services [17][18] - The company continues to see strong customer interest in its long-term innovation roadmap [8][17] Market Data and Key Metrics Changes - The demand environment tracked well with expectations, showing market share gains and continued interest in the product platform [7][8] - Leading health systems in various states have invested in Omnicell solutions to improve efficiency and patient safety [12][14] Company Strategy and Development Direction - The company aims to capture greater market share across inpatient and outpatient settings, grow predictable recurring revenue, and expand its cloud-based platform, Omnisphere [7][8] - The focus remains on redefining medication and supply management across healthcare [6][7] - The company is adapting its supply chain to mitigate tariff impacts, including dual sourcing and near-shoring efforts [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current tariff environment and emphasized the importance of supply chain optimization [11][15] - The company remains optimistic about long-term growth strategies aligning with the vision of the Autonomous Pharmacy [15][28] - Management noted that the first quarter typically has the lowest revenue and profitability, with expectations for growth throughout the year [20][21] Other Important Information - The anticipated impact from tariffs for 2025 is approximately $40 million to non-GAAP EBITDA, leading to adjustments in guidance [11][26] - Cash and cash equivalents at the end of Q1 2025 were $387 million, up from $369 million at the end of Q4 2024 [21] Q&A Session Summary Question: Can you describe the outlook for tariff distribution between Omnicell and customers? - Management indicated that currently, they are not passing significant price increases to customers but may adjust discounts in the future [32] Question: What is the cadence of the $40 million tariff impact? - The total impact is expected to be $40 million, with about $5 million in Q2 and the remainder in the second half of the year [39][41] Question: Are there any fundamentals driving reacceleration in demand for pharmacy IT? - Management noted that specialty pharmacy is a top topic among providers, leading to more strategic discussions about investments [48][50] Question: What are the assumptions behind the new EBITDA guidance range? - The guidance changes were primarily driven by tariff impacts, with mitigation actions including relocating supply chains and evaluating pricing [54][59] Question: How long will it take to disintermediate supply chain exposure to China? - Management stated that while some components will still flow through China, they are taking actions to move sourcing to other regions over time [66] Question: How does the hospital buying environment look currently? - Management reported no slowdown in revenue or installation processes, indicating a positive environment despite potential macroeconomic challenges [86]

Omnicell (OMCL) came out with quarterly earnings of $0.26 per share, beating the Zacks Consensus Estimate of $0.16 per share. This compares to earnings of $0.03 per share a year ago. These figures are adjusted for non- recurring items. This quarterly report represents an earnings surprise of 62.50%. A quarter ago, it was expected that this Omnicell Inc. Would post earnings of $0.57 per share when it actually produced earnings of $0.60, delivering a surprise of 5.26%. The sustainability of the stock's immedi ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $270 million, an increase of $24 million from Q1 2024, but a decrease of $37 million from Q4 2024 [6][15][19] - Product revenues were $145 million, up $12 million year-over-year but down $37 million sequentially [7][16] - Service revenues were $125 million, an increase of $12 million from the previous year and flat compared to the prior quarter [7][16] - Non-GAAP gross margin for Q1 2025 was 42.1%, a decrease of 530 basis points from the prior quarter [7][16] - Non-GAAP earnings per share for Q1 2025 was $0.26, compared to $0.03 in the same period last year and $0.60 in the prior quarter [8][17] - Non-GAAP EBITDA was $24 million, an increase of $13 million year-over-year but a decrease of $23 million from the previous quarter [8][18] Business Line Data and Key Metrics Changes - The XT Amplify program contributed to revenue growth, alongside SaaS and XPath services, particularly in specialty pharmacy services [15][16] - The company continues to see strong customer interest in its long-term innovation roadmap, particularly in medication management solutions [5][6] Market Data and Key Metrics Changes - The demand environment tracked well with expectations, showing market share gains and continued interest in the company's product offerings [5][6] - The company is focused on expanding its market share across inpatient and outpatient settings, including specialty and retail pharmacies [5][6] Company Strategy and Development Direction - The company aims to capture greater market share in various healthcare settings and grow its predictable recurring revenue [5][6] - The strategy includes expanding the Omnisphere cloud-based platform and integrating AI technologies across the continuum of care [5][6] - The company is committed to optimizing its supply chain and mitigating tariff impacts through dual sourcing and near-shoring efforts [9][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current tariff environment and emphasized the importance of supply chain optimization [9][13] - The company remains optimistic about long-term growth strategies aligning with the vision of the Autonomous Pharmacy [13][27] - Management noted that the first quarter typically has the lowest revenue and profitability, with expectations for growth throughout the year [17][19] Other Important Information - The anticipated impact from tariffs for 2025 is approximately $40 million to non-GAAP EBITDA, leading to adjustments in guidance [9][24] - The company continues to generate solid free cash flow, with cash and cash equivalents at $387 million as of Q1 2025 [19][20] Q&A Session Summary Question: Can you describe the outlook for tariff distribution between Omnicell and customers? - Management indicated that currently, they are not passing significant price increases to customers but may adjust discounts in the future [30][31] Question: What is the cadence of the $40 million tariff impact? - The total impact is expected to be $40 million for the year, with about $5 million in Q2 and the remainder in the second half, particularly in Q4 [36][38] Question: Are there any fundamentals driving reacceleration in demand for pharmacy IT? - Management noted that specialty pharmacy is a top topic among providers, leading to more strategic discussions about revenue generation and operational efficiency [45][47] Question: What are the assumptions behind the new EBITDA guidance range? - The guidance changes account for tariffs, with mitigation actions including relocating supply chains and evaluating pricing strategies [52][56] Question: How long will it take to reduce supply chain exposure to China? - Management stated that while some components will still flow through China, they are taking actions to move sourcing to other regions over time [63][64] Question: How is the hospital buying environment characterized? - Management reported no slowdown in revenue or installation processes, indicating a positive environment despite potential macroeconomic challenges [80][84]

Investor Presentation May 6, 2025 Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of federal securities laws. These forward-looking statements include statements with respect to 2025 guidance, strategic and growth opportunities, other expectations and other non-historical information. Without limiting the foregoing, statements including the words "expect," "intend," "may," "will," "should," "would," "could," "plan," "potential," "anticipate," "believe," ...

Financial Performance - Total revenues for Q1 2025 were $270 million, an increase of $24 million or 10% compared to Q1 2024, driven by growth in the XT Amplify program and SaaS services [3]. - Non-GAAP net income for Q1 2025 was $12 million, or $0.26 per diluted share, compared to $1 million, or $0.03 per diluted share in Q1 2024 [4]. - Non-GAAP EBITDA for Q1 2025 was $24 million, up from $11 million in Q1 2024 [5]. - Total revenues for Q1 2025 reached $269.7 million, a 9.5% increase from $246.2 million in Q1 2024 [29]. - Gross profit for Q1 2025 was $110.9 million, compared to $92.6 million in Q1 2024, reflecting a gross margin improvement [29]. - Net loss for Q1 2025 was $7.0 million, a reduction from a net loss of $15.7 million in Q1 2024, indicating improved operational efficiency [29]. - Non-GAAP net income for Q1 2025 was $12,354,000, significantly higher than $1,220,000 in Q1 2024 [39]. - Non-GAAP EBITDA for Q1 2025 reached $23,593,000, compared to $10,837,000 in Q1 2024, reflecting a non-GAAP EBITDA margin of 8.7% versus 4.4% [39]. - The company generated $25,924,000 in net cash from operating activities in Q1 2025, down from $49,953,000 in Q1 2024 [41]. - Non-GAAP free cash flow for Q1 2025 was $10,185,000, a decrease from $37,613,000 in Q1 2024 [41]. - The company reported a net loss of $7,023,000 for Q1 2025, an improvement from a net loss of $15,676,000 in Q1 2024 [35]. Balance Sheet and Cash Flow - As of March 31, 2025, cash and cash equivalents totaled $387 million, with total debt of $341 million and total assets of $2.2 billion [6]. - Cash and cash equivalents increased to $386.8 million as of March 31, 2025, up from $369.2 million at the end of 2024 [31]. - Total assets grew to $2.15 billion as of March 31, 2025, compared to $2.12 billion at the end of 2024, indicating solid asset management [31]. - Total stockholders' equity increased to $1.26 billion as of March 31, 2025, from $1.24 billion at the end of 2024, reflecting positive shareholder value [33]. - Omnicell has $350 million available under its revolving credit facility with no outstanding balance as of March 31, 2025 [7]. - The company’s total cash, cash equivalents, and restricted cash at the end of Q1 2025 was $414,402,000, down from $549,962,000 at the end of Q1 2024 [35]. Operational Efficiency and Cost Management - The company is focusing on mitigating potential tariff impacts on its supply chain while maintaining strong free cash flow [2]. - Omnicell plans to maintain its focus on operational efficiency and cost management while pursuing growth opportunities in the market [24]. - Research and development expenses decreased to $20.5 million in Q1 2025 from $22.1 million in Q1 2024, showing a focus on cost management [29]. - The company’s GAAP operating expenses were $122,555,000 in Q1 2025, representing 45.4% of total revenues, compared to 46.5% in Q1 2024 [37]. - Share-based compensation expense increased to $10,786,000 in Q1 2025 from $8,641,000 in Q1 2024 [39]. Future Guidance and Investments - The company updated its full-year 2025 guidance, projecting total revenues between $1.105 billion and $1.155 billion [10]. - Annual recurring revenue is expected to be between $610 million and $630 million for 2025 [10]. - The company continues to invest in research and development to enhance product offerings and market competitiveness [23]. - The company plans to open the Austin Innovation Lab on May 14, 2025, to enhance product development and innovation [15].

Core Insights - Zacks Premium provides various tools to enhance investor confidence and market engagement, including daily updates on Zacks Rank and Industry Rank, Equity Research reports, and Premium stock screens [1][2] Zacks Style Scores - Zacks Style Scores rate stocks based on value, growth, and momentum, serving as complementary indicators to the Zacks Rank, helping investors identify securities likely to outperform the market in the next 30 days [3][4] - Stocks are rated from A to F, with A indicating the highest potential for outperformance [4] Value Score - The Value Score identifies attractive and discounted stocks using ratios like P/E, PEG, Price/Sales, and Price/Cash Flow, appealing to value investors [4] Growth Score - The Growth Score focuses on a company's financial strength and future outlook, analyzing projected and historical earnings, sales, and cash flow to find stocks with sustainable growth [5] Momentum Score - The Momentum Score capitalizes on price trends, using factors like one-week price change and monthly earnings estimate changes to identify favorable times for investment [6] VGM Score - The VGM Score combines all three Style Scores, providing a comprehensive indicator that evaluates stocks based on value, growth, and momentum [7] Zacks Rank - The Zacks Rank is a proprietary model based on earnings estimate revisions, with 1 (Strong Buy) stocks achieving an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [8][9] - There are over 800 top-rated stocks available, making it essential for investors to utilize Style Scores to narrow down choices [10] Stock Highlight: Omnicell Inc. (OMCL) - Omnicell Inc. specializes in end-to-end automation solutions for the medication-use process, including dispensing systems and decision support applications [13] - Currently rated 3 (Hold) with a VGM Score of A and a Value Style Score of B, OMCL has a forward P/E ratio of 17.19, indicating attractive valuation [14] - Recent upward revisions in earnings estimates for fiscal 2025 have increased the Zacks Consensus Estimate to $1.78 per share, with an average earnings surprise of 99.5% [14][15]

Core Insights - Zacks Premium provides various tools for investors to enhance their stock market strategies and confidence [1] - The Zacks Style Scores are designed to help investors select stocks with the highest potential to outperform the market in the short term [2] Zacks Style Scores Overview - Stocks are rated based on value, growth, and momentum characteristics, with scores ranging from A to F, where A indicates the highest potential for outperformance [3] - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score, each focusing on different investment strategies [3][4][5][6] Value Score - The Value Score identifies attractive stocks using various financial ratios, helping value investors find undervalued opportunities [3] Growth Score - The Growth Score emphasizes a company's financial health and future growth potential, analyzing projected and historical earnings, sales, and cash flow [4] Momentum Score - The Momentum Score assists investors in capitalizing on price trends, utilizing metrics like short-term price changes and earnings estimate revisions [5] VGM Score - The VGM Score combines the three Style Scores to highlight stocks with the best overall value, growth, and momentum characteristics [6] Zacks Rank Integration - The Zacks Rank, based on earnings estimate revisions, is a key tool for stock selection, with 1 (Strong Buy) stocks historically yielding an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [7][8] - Investors are encouraged to focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal investment potential [9] Stock Highlight: Omnicell Inc. (OMCL) - Omnicell Inc. specializes in automation solutions for the medication-use process, offering a range of products from dispensing systems to decision support applications [11] - Currently rated 3 (Hold) with a VGM Score of B, OMCL has a forward P/E ratio of 19.8, making it attractive for value investors [12] - Recent earnings estimates for fiscal 2025 have been revised upward, with the Zacks Consensus Estimate now at $1.78 per share, and an impressive average earnings surprise of 99.5% [12][13]

Core Viewpoint - Omnicell, Inc. has demonstrated strong performance with a 41.6% increase in share price over the past year, significantly outperforming the industry and the S&P 500, indicating solid growth potential and healthy fundamentals for investors [1]. Company Overview - Omnicell specializes in developing and marketing end-to-end automation solutions for the medication-use process, aimed at improving patient safety and increasing efficiency while lowering costs [2]. - The company's offerings are categorized into Product revenues, which include software-enabled devices and consumables, and Service and other revenues, which encompass technical support and SaaS services [3]. Factors Favoring Share Price Growth - The introduction of the XT Amplify program has gained significant market acceptance, contributing to the upward trend in Omnicell's share price [4]. - Recent product launches, including OmniSphere and Central Med Automation Service, have bolstered investor confidence and positively impacted stock performance [5][6]. - The company aims to achieve $1.9-$2 billion in revenues by 2025, with a non-GAAP gross margin target of 52-53% and a non-GAAP EBITDA margin of approximately 23%. In Q4 2024, Omnicell reported a non-GAAP EBITDA of $46 million, exceeding guidance [7]. - Omnicell's strong liquidity position is highlighted by cash and cash equivalents of $369.2 million and no short-term debt, indicating a solid solvency status [8]. Challenges and Risks - In Q4 2024, product revenues declined by 25.1% year-over-year due to supply chain disruptions, labor shortages, and inflationary pressures, which may affect future performance [10]. - The company faces intense competition in the medication management market, which could lead to pricing pressure and reduced margins [11]. - The Zacks Consensus Estimate for 2025 EPS has decreased by 3.3% to $1.74, indicating potential challenges ahead [12].

Core Viewpoint - Omnicell's fourth-quarter 2024 performance reflects its long-term development strategy, including innovative solutions, market expansion, strategic partnerships, and technology procurement, while facing macroeconomic challenges and competitive pressures [1][8]. Financial Performance - Omnicell's stock has increased by 47.1% over the past year, outperforming the industry, which declined by 7.9%, and the S&P 500, which rose by 18.5% [2]. - The company has a market capitalization of $1.84 billion and has consistently exceeded earnings estimates, achieving an average surprise of 99.53% over the last four quarters [2][7]. - In Q4 2024, Omnicell reported a non-GAAP EBITDA of $46 million, significantly above its guidance of $14-$20 million, and non-GAAP earnings per share of 60 cents, exceeding the pre-announced guidance of 10-20 cents [7]. Growth Drivers - Omnicell is focused on strategic imperatives such as offering innovative solutions, expanding into new markets, forming strategic partnerships, and acquiring new technologies to meet the evolving needs of healthcare institutions [3]. - The XT Amplify program is gaining market acceptance, with positive early feedback supporting enhanced clinical and operational outcomes [4]. - The Advanced Services offering, including Central Pharmacy Dispensing Services and IV Compounding Service, is gaining recognition, with notable wins in Q4, including service renewals and new contracts [5]. 2025 Financial Roadmap - Omnicell aims to achieve revenues of $1.9-$2 billion by 2025, representing a CAGR of 14-15% from 2021 to 2025, with targets for a non-GAAP gross margin of 52-53% and a non-GAAP EBITDA margin of approximately 23% [6]. Challenges - The company faces macroeconomic challenges, including elevated inflation, supply-chain disruptions, labor shortages, and geopolitical instability, which have impacted its Point-of-Care product line and led to a 25.1% year-over-year decrease in Q4 product revenues [8]. - Intense competition in the medication management and supply-chain solutions market poses threats, as major competitors continue to expand, potentially leading to pricing pressure and reduced margins [9]. Earnings Estimates - The Zacks Consensus Estimate for 2025 earnings per share remains at $1.78, while the revenue estimate is $1.13 billion, indicating a 1.4% increase from the previous year [10].