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]