Omnicell, Inc.

Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the OmniCell third quarter 2022 financial results conference call. 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 at that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, Again, press star 1. Thank you. It is now my pleasure to turn today's call over to Kathleen Nemeth, Senior Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to the OmniCell Third Quarter Financial Results Conference Call. On the call with me today are Randall Lipps, OmniCell Chairman, President, CEO, and Founder, Scott Seidelman, Executive Vice President and Chief Commercial Officer, and Peter Kuipers, Executive Vice President and Chief Financial Officer. This call will contain forward-looking statements, including statements related to financial projections or other statements regarding ONUSEL's plans, objectives, expectations, targets, expense management, or outlooks that are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied. For a more detailed description of the risks that impact these forward-looking statements, please refer to the information in our press release issued today in the OmniFIL Annual Report on Form 10-K filed with the SEC on February 25, 2022, and in other more recent reports filed with the SEC. Please be aware that you should not place undue reliance on any forward-looking statements made today. All forward-looking statements speak only as of the day hereof or the date specified on the call. Except as required by law, we do not assume any obligation to update or otherwise release publicly any revisions to our forward-looking statements. Our results were released this morning and are posted in the investor relations section of our website at ir.omnicell.com. Additionally, we'd like to remind you that during this call, we will discuss some non-GAAP financial measures. Reconciliation of these non-GAAP measures to the most comparable GAAP financial measures are included in our financial results press release posted in the investor relations section of our website. With respect to forward-looking non-GAAP measures, such as guidance and targets, we do not provide a reconciliation of forward-looking non-GAP measures to the comparable GAP measures on a forward-looking basis, as these items are inherently uncertain and difficult to estimate and cannot be predicted without unreasonable effort. With that, I will turn the call over to Randall.

Thank you, Kathleen. Good morning, and thank you for joining us today. This quarter, we continued to advance our strategy to transform the pharmacy care delivery model and deliver mission-critical medication management solutions to our customers. As I said at our recent investor day, I started this company 30 years ago to improve medication management and enable medical caregivers to spend more time with their patients. We continue to innovate each day to further this objective as well as to achieve our mission to be the clinician's most trusted partner. Our go-forward strategy is not only to continue to advance these important objectives, but also to deliver on the tremendous growth we see ahead of us as we transition our business to an as-a-service model. It is clear to us that our strategy is working as the demand for advanced services including retail SaaS solutions, remains strong. Advanced services are OmniSale's future, and we are especially encouraged by the strong results we're seeing for these solutions. We continue to focus on the long-term value we believe we can create by delivering cloud-based platform solutions designed to enable SaaS and tech-enabled pharmacy operations across the entire continuum of care. With that said, in the near term, we are seeing significant headwinds in our point-of-care products. The economic environment, including its effect on our health system customers, shifted rapidly toward the end of third quarter. This has caused many health systems to implement capital budget freezes and additional budget approval processes which is resulting in elongated sales cycles. At the same time, ongoing health system labor constraints have continued to increase, which has resulted in a higher than typical number of customers requesting to temporarily defer point of care implementations. These factors have adversely affected bookings and revenue in our point of care business, And we are updating our overall bookings and revenue outlook for the year accordingly. I do want to point out that despite the current environment, we are continuing to see major implementations move forward. We continue to believe our customers recognize the need for our point of care products to meet compliance. Like many other companies across industries, we are navigating a dynamic macroeconomic environment. We will continue to respond to this changing environment, including by implementing appropriate actions on expenses where needed to take what we believe is a prudent and disciplined approach to managing our business through this period. I'll speak more about these actions in a minute. Let's walk through the third quarter financial results. Third quarter revenue of $348 million was below our guidance range. driven primarily by customer requests to reschedule delivery and implementation of our point of care products. GAAP net income for the third quarter of 2022 was $17 million, or $0.37 for diluted share. Non-GAAP net income for the third quarter of 2022 was $45 million, or $1 per diluted share. This was in line with our guidance due to strong expense management, as well as reductions in performance-based compensation expense. Non-GAAP EBITDA for the third quarter of 2022 was $61 million. As I mentioned, despite headwinds in point of care, our advanced services, including our enlivened health products and solutions, continue to see robust demand. One example of this demand is the fact that in the third quarter, we installed a record number of CPDS, or that's our XR2 robot, as a service installation. We are also pleased with the momentum we are seeing in OmniCell1 and the strong demand for our IV compounding service. During the third quarter, Enliven Health closed a deal with a major northeast-based pharmacy chain, contracted for two key digital solutions. Enliven Health is expected to exit 2022 with an approximate annual revenue run rate, or ARR, of $90 million. As our retail customers appear to increasingly turn to Enliven Health, for our uniquely positioned SAS offerings. As well, we now have 152 of the top 300 US health systems under long-term sole source contracts. Many recent long-term sole source wins have been competitive conversions. This was the case for one of our two new long-term sole source customers, with the other being an existing OmniSale customer. that expanded its relationship with us. Whether a competitive conversion or a current customer, we believe health systems are choosing to enter into long-term sole source contracts with OmniSale due to our strong positioning with our advanced services offerings. Scott will provide more color on this growth shortly, but I wanted to acknowledge that our strong presence across the US health system is a testament through our 30 years of hard work by OmniCell employees. We find that the breadth and depth of our channel, our comprehensive portfolio of solutions, and our singular focus on the pharmacy continue to be important points of competitive differentiation for the company. We believe that we are uniquely positioned to capitalize on the growth opportunities ahead and that we're just getting started. We are facing headwinds and operating in a difficult environment. But as I said on our last call, OmniCell has been through many different market cycles in the past 30 years. We have navigated each of those cycles and evolved our business to ensure we meet our customers' needs, and we will continue to do so. On that note, I want to address how we intend to navigate the headwinds we are seeing we plan to take actions to significantly reduce expenses with a review of all areas of our cost structure underway. We intend and believe we have the ability to adjust our spending to align with revised bookings and revenue levels. At the same time, we plan to continue to invest in our advanced services. We believe they are OmniCell's future and that our continued investment in R&D and our innovation roadmap will enable us to continue to transform our business and support our growth agenda. Near term, we anticipate operating against the challenging backdrop, and we have revised our outlook for the year, taking this expectation into account. That said, we continue to be confident in our strategy And we believe OmniCell is well positioned to enable the digital transformation of the entire medication management continuum. Our healthcare system customers recognize the value OmniCell provides, and we look forward to delivering long-term value to all of our stakeholders. So with that, let me turn it over to Scott for some details on the quarter.