Omnicell (OMCL) 2 May 242024 Q1 Earnings call transcript

Good morning, ladies and gentlemen. My name is John, and I will be your conference operator for today. Please note that today's call is being recorded. [Operator Instructions] After the speakers remarks, there will be a question-and-answer session. I will now turn the call over to Kathleen Nemeth, Senior Vice President, Investor Relations. ahead. go Please

welcome Results and Omnicell Quarter First Good Call. to Financial Conference XXXX morning, the

company On me Etta, objectives, plans, call international will financial CEO cause and business factors the projections with products expectations, Financial contain or and Chairman, Lipps, Chief statements statements Founder, or that President, goals, forward-looking or line, the from review of that to Omnicell or to to our statements, solutions, and subject implied. materially holistic related . This product streamline other strategy, Nchacha other Officer. market Executive including President expressed risks, today Vice call actual are outlook are to and or those Randall differ actions Omnicell's uncertainties results could regarding

that on detailed forward-looking filed more our and press For any description these refer the forward-looking the with the you risks on in Form place reliance SEC report today. other today the of aware undue Omnicell be SEC. information impact should on to filed XXXX, more annual not that statements February in XX-K release in please the Please with statements, recent a XX, made issued reports

the of release publicly we any date as hereof required to or otherwise All do obligation update statements. speak only by not the revisions call. forward-looking statements our as or the law, on of date specified Except assume forward-looking any to

posted website morning this are at released in of Investor were results and quarter first ir.omnicell.com. Relations the Our section our

these be as effort. measures, basis measures we posted. cannot items results in to reconciliation not to these on most release comparable to are measures GAAP of a these forward you estimate without With financial a this Reconciliations some that financial uncertain and call, inherently unreasonable measures measures during predicted difficult we GAAP press to respect the we the and looking provide of discuss Additionally, non-GAAP do non-GAAP financial our like are to will measures. comparable GAAP included remind would non-GAAP

the With that, turn I will call to Randall. Randall? over

were thank the our and key Technical our timing joining for and end within revenues primarily good quarter execution margin $XXX primarily XX.X%, provide solid our Illuminate our advanced volume demand our and results, I Kathleen, $X of XXX of for million, on guidance solid prior Non-GAAP lower previously financial top for our in on to in the to Total you will morning, from XXXX us quarter metrics. came Services on customer Thank and update first several current today. decrease basis and you, both above above guidance a XXXX due Total the and the revenue successful services. of event. quarter . Beginning were announced environment an walk through quarter the performance revenues our the leverage. first call XXXX points quarter, range, million due was first gross with

XXXX earnings quarter share $X.XX. were first Our per non-GAAP

was quarter $XX million. EBITDA non-GAAP First

management. First the with the of unlocking operations as earnings Since cost and retained value. of an review our our our consultant revenue non-GAAP external aim better-than-expected and quarter conduct per streamlining expense exceeded EBITDA earnings as a holistic well have share to operating and outlook XXXX our business we strong to update, last non-GAAP management due shareholder

our which prior active Today, investments. not was hiring sufficient under the to consultant. consideration one This product we our intention already line, action announced to international was exit external delivering on returns

determination a first indeed this urgency. forward While moving are and we was step, small with

and the macro to current environment turn Now industry let's landscape.

lengths contract XXXX year-to-date a primarily labor Hospital start approaching outpatient are revenues, to average into beginning strong due move XXXX, of we As operating to are calendar with accelerating reports X%, lower pointing system stabilize. stay. finances encouraging to some signs lower there finances health that reflect spending to and margins

that the what environment business time, to and of the facing constraints. continue rate customer unpredictable is a to see same base reductions for we and areas still believe our approach and prudent the cautious continuing we we to planning management. challenging At take are forecast with are remains rate interest budgetary Therefore,

We have initial of market offerings. traction Amplify XT begun program see some to for our

bed to Massachusetts XXX-plus academic The system converting Omnicell cabinets. in dispensing a medical new for automated center customer is amplified is its footprint and XT

by Kansas-based performance solution, through is pivotal that as XT a agreement, provide to a and maximize information of console improve a services experience. their value user data-driven Our was as extension to swap to decision. comprehensive which by the enhancing their for optimization unique solution a differentiator part the adoption created identified X-year a level CarePlus the expert supported source improve purchase And designed of value of high security of a Xtend, health seeking is system while technology sole XT designed customer

to country of that the transform care. Health services continue recognize value is systems help across the pharmacy Omnicell's designed to advanced offering

pharmacy to central our large plans accurate, service adopting sterile Southern more our compounding to provide Hospital California leverage to IV an and cost-effective effort compounding. in services, a addition dispensing safe In

specialty XXX customer hospitals pharmacy services clinics. now base exceeds for and Our

a decision to at pharmacy us. excited cited management to key in in new partner which expertise We're as experience Omnicell's announce Samaritan to program Hospital Indiana, specialty their the location Good and opening of with

with the an in We XXXB offering believe our for management to X second combination our Omnicell's growth pharmacy pharmacies specialty include additional open customers. customer quarter opportunities expect of services We our TPA is of program XXXX. delivering to base

innovative outcomes actionable efficiency. buying a quarter as strong patient and XT first well. insights on we had reduce complex investment. automated We to efficiency, April value wins Our cooperative its program works intended brand it Enliven's and the pharmacy waste, of EnlivenHealth system large the On nursing XXXX choosing XX, and and as data to transform enhance solution analytics announced quarter the dispensing operational a focused with errors other had care maximize pharmacy XT into medication and multiple in Amplify ultimately

XT care multiyear this XXXX solutions and learn about program leaders Health, San in benefits attendees. were completed to by set who Pharmacy recently our Director potential joined the pharmacy and with as University opportunity We AMPLIFY. of had the XT health of her part Hillman, event, introduced virtual We conversion Illuminate where experience the shared Executive of Jennifer project successful the first customer Antonio-based of at

XT confident taking well on can is necessary and products the you opportunities model early, pharmacy you we financial operational the will be increase customers which drive We reinvigorated intended to to that uniquely new our we that believe to it's we steps remain beginning assure services, Amplify strengthen performance, hope that we bode and on in I just profitable While of growth. and expect transform is enable our are the better the delivery long-term value. ultimately, to growth that help positioned for see and long-term their to drive believe investment. and care Omnicell's shareholder and returns company accelerate our outcomes continue focus

over with hand to Nchacha our it Nchacha? I'd that, discuss And like results. now to to

Thank to carefully the you, thank metrics, We delivering results all delivered employees quarter. our and Randall. I across manage strong want guidance key our responsibly. cash this all exceeded our expenses of and for flow

the are our start, strengthen do and work operational I pleased level and While across with our of we company. see performance, we and still I to good commitment engagement off financial to a to am have

Turning financial results. to our

over XXXX million The quarter decrease quarter environment in X% compared revenue of the $XXX of the total over the from the of timing of were cycle. million, Services first Technical quarter a the continue of an life XXXX. benefits for increase and continued prior challenging revenues was by year-over-year actions. Services installed of we and $XX a $XX base pricing reflects growth $XXX system of health Our quarter to first were the to million product customers GAAP a of XXXX, growing as impact million, some which decrease our and decrease driven our XT first see primarily

of gross were revenues the the primarily solid previously both guidance to to first leverage. million $X Technical execution XXXX was timing XXX decrease was Services Total primarily quarter volume lower end first XXXX XX.X%, range, the prior points first in of which quarter, to due margin quarter disclosed within and our Non-GAAP services. due our above quarter revenue the compared a for and of top basis advanced

we half as from to our the revenue. We expect leverage XXXX higher non-GAAP product in second expand gross margin volume anticipate of

non-GAAP reconciliation in included on Investor posted full of and XXXX of website. our fourth quarter GAAP first results is which quarter our are each A our press releases, to Relations earnings XXXX

prior Our quarter of loss XXXX. first and of the to per the XXXX loss loss was per first share earnings quarter in with of a accordance a compared $X.XX share share in quarter share $X.XX in per $X.XX of GAAP per a

law system for XXXX and incur $X council Our we related the to million, earnings we first the consultation already of $X announced share we total dispensing wind down million. product works If impact quarter of the potential incurred includes Medimax the today the subject $XX have per local million nonrecurring wind down line to to to statutory of GAAP wind proceeds, the approximately approximately are costs requirements. which down $XX million robotic estimate

We net incorporate XXXX to, plan expected LGS to a is to our do to XXXX. cost expect not or and restructuring profit, down the guidance. wind the our is increase year plan agreed operating If to in annualized full this we plan the restructuring do our expense in savings impact achieve not restructuring have and RDS to related significant we the operating on significant expect revenue, expectation

the share were prior to $X.XX and $X.XX $X.XX in XXXX same per share quarter per Our the quarter year. first period per in non-GAAP share compared last earnings

the the million, $XX compared Third million to of $XX a to decrease same quarter and previous was non-GAAP compared EBITDA last period year. million decrease of when a $XX quarter

believe EBITDA were operating investment due prudent revenue as tax from The exceeded XXXX timing share and and execution we management as expense. expense and we higher non-GAAP higher-than-expected take and strong earnings offset with to a income per primarily as our benefits what our continue quarter non-GAAP our expenses First partially lower decisions. approach well expectations, to revenue by is cost

expense up and XX%. be first was million, strong quarter as the timing working income the XXXX cash result of non-GAAP XX, The to higher to $XXX we of $XXX quarter year, we rate the tax $XX our was from free the as million continue December blended end capital a and collections balance to first see million cash during equivalent XXXX XXXX. management. tax cash continue XXXX, Non-GAAP flow of our of and effective of approximately was At expect quarter within first cash

in the decrease was million the terms of and of XXXX. of outstanding increase decrease the a a of the decrease due quarter of from quarter, were XXXX XX, $XX first million, over modest from million $XXX March primarily XXX, $X to the for as sales prior XXXX, of X an days receivable, prior Inventories accounts XX, revenues. quarter In March

supply global strong supply due our the inventory is to continue and chain The they improvements to of and primarily process progress initiatives. as efforts make our decrease management team chain execute on

the second are of the quarter we guidance. providing following XXXX, For

We million to quarter expect $XXX revenues product service total second $XXX be XXXX million. million million $XXX $XXX and $XXX and to between revenue between and be and be million $XXX between to with revenues million

to we a expect urgency And We be expect per second million and second quarter performance. share In $X.XX operational earnings strengthen XXXX we quarter $XX $X.XX per with between million. share. and EBITDA to be financial per working to non-GAAP share our sense non-GAAP of $XX and summary, between are XXXX

the our and We the well XT is fleet first future. dispensing and are many capabilities Omnicell of delivered for innovation for systems believe medication have pleased new expected positioned to we of

would like that, to for With the we call questions. open

Berenshteyn comes question from Stan from Your of [Operator Wells first Fargo. the Instructions] line

there? Just extend how base should the be does How many question upgrade of think Can upgraded. through XT to to add life What's walk this time about the years of we maybe expected much us And how a this? installed just the is mid-cycle cabinets? expectation to the upgrade. expect then frame you on

just we're don't will Well, go the There multitude stated we platform. XT ambulatory visibility. to journey services. Amplify, upgrade. the more include products allow of the with other than end it's that services before, and today, Stan. and areas, AMPLIFY excited really multiyear and have this We really just are And Thanks, we a and Amplify the get console more that of into to areas XT us they service products and that about like don't announced we centers surgery continue a as patient expanding good

So a beyond products is multi upgrade. that multiyear console program go services it with and just a

haven't really to So be this actually customers I that to careful expecting we some we think to to get solve. innovation want solve able our problems been

quick you Can update any Okay. a of us robots. Are solution maybe on the on regulatory the give you IVX that review front? real seeing

regulations were some forward. some going of last at year, there had the final end Definitely resolution the on of

So we've on of now they set what are to determination classify it more and interaction the robot regulations . of taken they a and that how information into our locations each customer melded as clear and deploy. under have

[indiscernible] first for maybe to question. And the just

console does the they that you [indiscernible] upgrade, just For they upgrade, the share can more many clients are just us of doing life with once how the cabinet so upgrade? years once get do

to of piece, upgrade. the lines, overly Well, order upgrade on eventually customer-dependent, next but focusing it the software have hardware, Amplify market. I the and you have And future you it's that to do or delivering version software key do in of probably the to access you includes both think and to the about changes, the think to product hardware we're the do but those get isn't is I get the solutions new really but the

from comes the question Matt of Craig-Hallum. line Hewitt from next The

the the a last position. it see there. Are But our customers. health Randy, feeling really We're year our improvement we're that customers that, nice was from positions. financial you're First staffing Obviously, in to the you okay, off, you about feeling seeing hearing was better with your of better starting tough. hear some regarding discussions. to change are

holding back standoffish, Now now and maybe still don't the kind bit. and but Or have you we're -- touch to to table about year, of I conversation say plans of had we still and to the little last ready? the a it is with kind proceed come ready go and we're want but that back they're thought

on deployment are institution, And seems some doing a of sensitivity There to the around be but there that that many particularly inpatient. depends think are at account. be equipment accounts there it seem really I just are Well, these well, not. around lot capital to

health we're I It's say I it. returning in environment And these want about term, timing So equipment capital in But think prudent the for accounts. of really good would we're position. about the I think the having discussions. the cautious they're products. pretty good these of long and just a People

XT bell we Amplify then And guess, that traditional question regarding it. change be curve? Amplify. curve Got How guess another the model, full I kind maybe adoption if of the XT I platform? of the separate you the a shape thinking Does about, should Or will, that XT that way change it next there's we a how few look these the me at with is to out look capabilities incremental to to the revenues services, from more the because it seems with the least services of as does that. over at years, component

of the So lifetime as over we rev does it rec change look out Amplify? the

new devices pipeline a customers Amplify We some it But are take generally platform, get Well, there's not still just say by Amplify the this the -- what's innovations. I that connected road we multiyear planning still more announce we move the going mostly It access they drive just moving. not. upgrade going of be to have and get other think won't be the year. are It only we connected decision to of we're . And does map into to to a devices that even these capital. were to console. our launched, innovations, while to to but areas yes, these to the that end want the which do year, will have innovations didn't and

comes question from next from the Schoenhaus KeyBanc. Scott line of The

focus billings you forward as customers Did from during labor any they you did then seen claims demand? and any on see change and on April the your your have your disruption had customer care any either operationally I the behavior end impact business now markets, see impact guess, getting or the you in from your on post first perspective and base May, into change health a from a file.

this seen on We for and impact. any our seen be have it point, to we're not business. impact business. to in we disruption any any But sure, our haven't looking monitoring cautiously But

guidance guidance of full for far, Okay. into traction And this Amplify. bookings XT of think seen the that does the your I included then the XT given you've year for bookings clearly on that noted some quarter baked last the change side, amount this Amplify the this upsell, so year you

I year slightly comfortable And our higher position and which our I that our think on in the this did of launch than was it contemplate guidance we're and was on Amplify. year. last outlook product, with believe

sneak sorry, we RDS the And read then going one, if markets Randy. does divesting I to should could last . The signal divestiture? this you're How that one going just RDS divestiture, forward? international to be into us from

is think market. don't to we investments generate the This an that -- that plan part of our of ensure right I the for taken we've or that shareholders. exiting taking this This returns Yes. ongoing that we considering signals Nchacha. we're is our action level that are international

And you we so know, engage -- as outside consultant. an did with

financial strategy unlocking is for So that our the part to continue improve sustainable to performance our value ensure are this overall of and overall we shareholders. long-term

The next Jessica the question of Tassan from from Piper Sandler. comes line

So the maybe off, what what Amplify plus just are, these extend, solutions? help care the offerings are was of hoping scale, to we some them could today? of in available understand are server us And you I kick XT XT all so

Yes.

the workflows get to on the in as today. is to pieces allows a it of connected it to to demand they are to on greater -- pay new so meet number service it. included so server expanded servers, whenever the be budgets devices hospital redesign us for and to for All hardware servers the their are that have timing for able need be upgrade. allows console available to is not scale allows them extend for wait care of the The customers. of the our go order centerpiece to plus us The the on Server

get kind to to that of very singulate single the to of helps and really is SKU lot a it. you I refrigerated and customers control think product, [indiscernible] go of And exciting product a this locking have the which feedback We access just on pieces. one to down want

from pharmacy control you can standpoint be costly of but this deploying toxic and open or just confidence instead, them So a more refrigerator. of out better gives have products, which refrigerated an

demand there's them. to for and people good access them already know see these about we So that and products wanting highly get to engaged we're starting to

all year. I'm of now, this delivered of -- all be not are of sure all quite bookable will them be will them them

development kind of product has Got it. pharmacy of specialty consulting And all? [indiscernible] kind your know this if how inform at helped business pipeline,

Yes.

pharmacy the very really high that specialty a the of us on of impacts talk a both level has think it's and what ambulatory as of which a dependent it are road in to outpatient engages the nice basis, improve pharmacy I to really platform that need, Amplify or map health solutions other ways at what with address monthly crises. look operation. is revenues the those on of cost aspect we're solutions allows C-suite really, or its then and we about and that systems are that they clinics, And our through going lot excited so

question trends entity covered and is pharmacy on volumes on you on us XXX can the so just side And side? in update quarter-over-quarter, helpful. would just base, my be both contract the like last year-over-year, Maybe

were also XXXB continues TPA pretty a to product run think of and available having to extra it pharmacy is the with in administrative an combine is can with that where the we specialty sort through when pharmacy is side, offer of administrative the third-party instead it pharmacy. last I Well, so through line It or specialty on a it's benefit our be. drug to good is services on-site outpatient that we third-party year, much

in to think have with pharmacy product -- and . their service. it's to So a specialty we good offer combination

that $XX for the I'll last think is annually to I add we to expect and we time that, generating said XXXB we that about million to us, million Jess, that spoke, remember $XX just continue. I

it. Got

. year-over-year that growth side? on no in So 'XX. contract the XXXB Is split pharmacy billing

it correct. of to mentioned, we to and our part strategy, optimization combining Randall overall flat, be inventory with as it -- services. That's We forward do continue but expect we to our look it's

BTIG. the David The of Larsen question from next Instructions] [Operator comes from line

on Shen the Larsen. Jenny quarter. David for Congrats on is This

focus where certain those outcomes. mean some a focus what on solutions potentially and where, means, of a of amount approach. you that outcome-centric certain that? I outcomes-based you move some think of is you've a mentioned that on receive highlight and recognize Can key model Does just could an elaborate what payment would reach your cost on taking that about your clients a say, performance certain you or savings for to level adherence there

Yes.

where beyond management moment. I any as any we're whether as of the medication well big But finances outcome related patient think that's beta patient a a little the such -- activity. to at in certainly, is the event bit a of thinking

the it's the line those prudent upon think as activities bottom and to pharmacy between connections I of make as those the us eventually to So patient impact well the facility. to

easier are transaction access you access to episode patient's they data the and to get see of get a and throughout more the make more So visibility continue to as that. to we and

in to retail We and cloud-based probably medication regimens. eventually and where able our were most their patients through management adhering we retail set, software, solution they're how pharmacy doctors to well to we're the see our inform it inform able

So tying so the yet We're we're of it not those are actual speak. quite looking scientific outcome, there the outcomes to to at. kinds

Anything else, Jenny.

costs. question quick A on

last quarters. some few over savings the cost taken good initiatives You've

can Just any you think there? pull levers additional you

us Jenny, structure. our strategy, financial our overall we and part that this cost increase will the value. do continue that necessary overall And Yes, will assess continue we right to is performance to of unlock our make think shareholder and help we and decisions -- ongoing evaluate

Davis question the Stephanie The Barclays. comes from next from line of

disruption change Anne better on if was about being My [indiscernible] pull levels. how I and the first is push by curious talk could of is you for impacted This hospital buying utilization is, Stephanie. the

you're I carefully. it impact monitoring seeing referring business, to any but change we're our in impact, the . if not we're think

it. Got

XQ pull a the XQ guidance? is guidance setting reflective just through bar? can or then forward softer us a recent lower given a backdrop you in the cadence as or And walk of the of forward follow-up, And Okay. just what this your in conservatism, are assumptions

I we changing very with provided. are plan outlook guidance our point. our know we first good we quarter, We're for that not a Yes. had and the this comfortable at

we provided. to continue track to We what

some of have year. We our for guidance our but headwinds we're seen customers, with maintaining some the

The Sutherland Company. Bill of comes question from from next the Benchmark line

in takeouts cost -- Nchacha, The initiatives, that we're cost XQ? you for, in they that the seeing now I model the the are planned, reflected fully guess,

Bill, cost I I make Are want referring to you sure question. -- you understand takeout are which your to?

ones been implemented that you've The correctly? remembering you Am -- I correct? year-end,

Yes.

Okay.

nothing so And been incremental year-to-date. there's

the from first first Well, the continue the was in beginning the with the smaller the majority the of benefit quarter. smaller cost a but portion actions were of this we year, realized a throughout of portion, year anticipate majority to realized at quarter the

you Okay. outlook the then to Enliven. and Randy, what potentially color, for more a benefited it? Can the And over on -- little business

Yes.

a of cautiously we've settling the but that think move portion we're we see result with but nice I of business. I and nice bit. think retail some good a pharmacists start the coming they as some year outlets are in because little it's there, the -- and And optimistic seen contracting will ARR down the that's those to wins, to forward, wins and

gives long put business is believe that in good new to so grow we it and in over And term. solid innovation. platform But the will come and a steadily and eventually doing us

about more current or new been Has it clients? adding services to rooftops

rooftops. -- bit of I think a the is I both, recent little most think most but the

have massive share. you such like seems it market a Because Okay.

Okay.

Fargo. Berenshteyn comes Wells question of line from from next The the Stan

Follow-up here.

in regarding us services your revenue color just as to pull forward. some Just comments impact contributed the on ask Can what the timing give quarter? to to the quickly wanted you

Yes. to we our go services. services as as demand advanced well Stan, we impact do primarily [indiscernible] the expect out We that year. the the throughout of in by saw technical timing as driven course give was

we're why tracking outlook that's guidance So provided. or that the maintaining we

concludes As further closing I the to Randall back there would questions to turn Lipps for the time, session. no this this remarks. at like over call our Q&A queue are

about multiyear pain this inpatient, us It's deliver see allows thank the innovate our haven't with automation points needs. industry have not with having time autonomous engage for and you to innovation problems new joining platform holistic Well, customers It's is but of outpatient really at addressed, roadmap. the on to an them, that it and allowing really approach us and really that really solving the been been pharmacy future us future talk and and Omnicell a only what exciting to to the today. more

want and to thank going employees, next And Cheers. QX thanks look I and work for the hard good refreshing launching to I Omnicell also the through a forward you time. year. off seeing

and this your Ladies concludes you call. conference participation. Thank for gentlemen, today's

may disconnect. You now