Omnicell (NasdaqGS:OMCL) Q4 2025 Earnings call February 05, 2026 08:30 AM ET Company ParticipantsBaird Radford - EVP and CFODavid Larsen - Managing DirectorEugene Mannheimer - Managing DirectorKathleen Nemeth - VP of Investor RelationsNnamdi Njoku - EVP and COORandall Lipps - Chairman, President, CEO, and FounderScott Schoenhaus - Managing DirectorConference Call ParticipantsBill Sutherland - Director and Equity Research AnalystDev Naik - AnalystJessica Tassan - Senior Research AnalystMatt Hewitt - Senior R ...

Omnicell (NasdaqGS:OMCL) Q4 2025 Earnings call February 05, 2026 08:30 AM ET Speaker7Hello, and welcome to the Omnicell Fiscal Year and Fourth Quarter 2025 results. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press Star, followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press Star 1 again, and please note ...

Summary of Omnicell Conference Call Company Overview - **Company**: Omnicell - **Industry**: Managed care and healthcare IT - **Market Position**: Omnicell holds close to 50% of the automated dispensing cabinet market with its XT product in its eighth year of release [5][3] Key Points and Arguments Medication Management Solutions - Omnicell focuses on simplifying complex medication management processes for large healthcare providers, offering enterprise solutions that can be deployed easily without extensive onsite actions [3][4] - The company is excited about upcoming announcements at a trade show, emphasizing a holistic approach to medication management from inpatient to outpatient settings [3][4] Leadership Changes - The hiring of Baird Radford as CFO and Nnamdi as COO is part of a strategy to transition to a more recurring revenue model and improve margins [6][7] - The leadership changes aim to enhance growth predictability and customer engagement through flexible monetization strategies [9][10] Financial Performance - Omnicell has raised its revenue guidance twice in 2025, projecting a 5%-6% top-line growth at the midpoint and adjusted EBITDA guidance of $143 million [11][12] - The company has effectively managed tariff impacts through strategic supply chain management, allowing it to maintain profitability despite external pressures [13][15] Product and Revenue Strategy - Omnicell is shifting from a 10-year capital purchase model to more flexible leasing options, allowing customers to upgrade technology more frequently [9][10] - The company is seeing strong adoption of its XT Extend console upgrade, which helps extend the useful life of existing products [16][18] Market Dynamics - The healthcare equipment market is experiencing a significant replacement cycle, with many institutions waiting for new technology releases, which Omnicell is well-positioned to capitalize on [24][25] - Omnicell anticipates 2025 to be a trough year for bookings, with expectations for growth in subsequent years as new products are launched [26][28] Future Outlook - The company is optimistic about the financial health of hospitals in 2026, despite potential pressures from government payer mixes and policy changes [36][38] - Omnicell emphasizes the necessity of medication management systems for healthcare outcomes, positioning itself as a strategic partner for hospitals [39][40] Technology and Innovation - Omnicell's OmniSphere platform is designed to provide real-time updates and enhance customer experience, allowing for easier deployment and better cost management [31][32][34] - The company is focused on delivering high-tech, AI-driven solutions to meet the evolving needs of healthcare providers [40][41] Additional Important Insights - Omnicell's approach to pricing and service models is evolving to better align with customer needs and market conditions, reflecting a shift towards more dynamic and responsive business practices [19][20][33] - The company is committed to enhancing workflow efficiencies and data analytics capabilities, which are critical for optimizing medication management across healthcare systems [35][39]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $311 million, an increase of $28 million or approximately 10% compared to Q3 2024, and an increase of $20 million or approximately 7% compared to the previous quarter [15][23] - GAAP earnings per share for Q3 2025 were $0.12, down from $0.19 in Q3 2024, while non-GAAP earnings per share were $0.51, down from $0.56 in the same period last year [15][25] - Non-GAAP EBITDA for Q3 2025 was $41 million, compared to $39 million in Q3 2024 and $38 million in the prior quarter [25][29] - Cash and cash equivalents totaled $180 million as of September 30, 2025, down from $399 million as of June 30, 2025, due to debt repayment and stock repurchase [25][26] Business Line Data and Key Metrics Changes - Product revenue for Q3 2025 was $177 million, an increase of $19 million compared to Q3 2024, and an increase of $14 million over the previous quarter [23][24] - Service revenue in Q3 2025 was $133 million, which increased by $9 million from Q3 2024 and represented an increase of $6 million over the previous quarter [24] Market Data and Key Metrics Changes - The company noted strong adoption of its point of care solutions, particularly the XT Extend, across major health systems and government healthcare facilities [9][12] - The specialty pharmacy services offering is gaining traction, with new contracts being signed to expand access to high-acuity therapies [19][20] Company Strategy and Development Direction - The company is focused on three core pillars for future growth: expanding market presence, scaling recurring revenue, and accelerating the Omnisphere technology platform [12][13] - Omnicell aims to transform into an intelligent medication management technology company, emphasizing operational excellence, customer-centric innovation, and cybersecurity [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the resilience of hospital and health system markets despite macroeconomic challenges, noting a steady focus on strategic investments [16][20] - The company anticipates continued growth driven by strong demand for its solutions and a shift towards more technology investments in the pharmacy space [16][64] Other Important Information - The company completed a $75 million stock repurchase program, reducing the outstanding share count by 5% [25][75] - Omnisphere achieved HITRUST CSF i1 certification, highlighting the company's commitment to cybersecurity [14] Q&A Session Summary Question: Inquiry about hardware and robotics investments - Management confirmed engagement with startups to explore robotics in pharmacy, emphasizing the importance of AI and robotics in enhancing medication management [41][42] Question: Clarification on Omnisphere's integration - Omnisphere currently connects with existing products, with plans for broader integration in the future [46][48] Question: Discussion on IV opportunities - Management highlighted the potential for IV solutions, noting that implementation depends on the health system's goals and size [52][54] Question: Changes in bookings guidance - Management indicated strong momentum in bookings, particularly for point of care products, with no significant changes in the mix [59] Question: Buying environment and hospital spending - Management noted improvements in the buying environment, with hospitals preparing for a refresh cycle and seeking new technology investments [63][64] Question: 340B program and customer behavior - Management reported positive trends in the 340B program, with increased crossover sales and new contracts being signed [79]

Financial Data and Key Metrics Changes - Total revenues for Q4 2024 were $307 million, an increase of $24 million from the previous quarter and an increase of $48 million compared to Q4 2023 [9][17] - Product revenues were $182 million, up $24 million from the previous quarter and up $37 million year-over-year [9][17] - Service revenues reached $125 million, an increase of $1 million from the previous quarter and an increase of $11 million from Q4 2023 [9][17] - Non-GAAP gross margin for Q4 2024 was 47.4%, an increase of 290 basis points from the prior quarter [9][18] - GAAP earnings per share for Q4 2024 was $0.34, compared to $0.19 in the prior quarter and a loss of $0.32 in Q4 2023 [10][19] - Non-GAAP earnings per share for Q4 2024 was $0.60, compared to $0.56 in the prior quarter and $0.33 in the same period last year [10][19] - Non-GAAP EBITDA for Q4 2024 was $46 million, an increase of $8 million from the previous quarter and an increase of $23 million year-over-year [10][19] Business Line Data and Key Metrics Changes - Strong performance in connected devices and SaaS services, particularly specialty pharmacy services, contributed to revenue growth [17][19] - Product backlog as of December 31, 2024, was $647 million, with $447 million expected to convert to revenue within twelve months [21] - SaaS and expert services backlog was $555 million, with $93 million expected to convert to revenue within twelve months [21][22] Market Data and Key Metrics Changes - The company noted an improving macroeconomic environment, which positively impacted customer financial conditions and decision-making [10][33] - Demand for XT systems and specialty pharmacy services continues to grow, with several notable customer wins in Q4 2024 [11][12] Company Strategy and Development Direction - The company is focused on transforming pharmacy care delivery through innovation, including robotics, smart devices, and data analytics [11][29] - A new bookings metric will be introduced in 2025, focusing on product bookings and annual recurring revenue (ARR) [6][24] - The company anticipates product bookings for 2025 to be in the range of $500 million to $550 million, reflecting a flat to modest decline compared to 2024 [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improved financial conditions of customers and the potential for continued growth in 2025 [33][34] - The company expects to see a strong quarter-over-quarter growth trajectory, driven by strong bookings and customer demand [34][35] - Management highlighted the importance of operational improvements and fiscal discipline in driving profitability [39][40] Other Important Information - Cash and cash equivalents at the end of Q4 2024 were $369 million, down from $571 million at the end of Q3 2024 [19] - Non-GAAP free cash flow for Q4 2024 was $43 million, significantly higher than the previous quarter [19][20] Q&A Session Summary Question: Can you expand on end market demand and budget growth? - Management noted that improved hospital financial conditions have contributed to strong bookings and set the company up well for 2025 [33][34] Question: What are the drivers of gross margin and operating expense growth in 2025? - Management expects continued improvement in gross margins due to effective expense management and favorable product mix [39][40] Question: What contributed to the upside in bookings for 2024? - Significant strength in demand for connected devices and XT upgrades, along with solid demand for XT Xtend, contributed to improved bookings performance [45] Question: How does the new administration's focus on technology innovation impact the business? - Management believes the focus on efficiency and safety aligns well with the company's strengths and innovation goals [52][53] Question: What is the outlook for annual recurring revenue (ARR) in 2025? - ARR is expected to grow and contribute significantly to overall revenue, with specialty pharmacy services being a key driver [77][78]