Omnicell, Inc.

Good afternoon and welcome to OmniCell's second quarter 2023 financial results call. Please note that this call is being recorded. 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, please press star followed by the number one on your telephone keypad. To withdraw your question, again, press star one. I will now turn the call over to Kathleen Nemeth Senior Vice President of Investor Relations. You may begin your conference.

Good afternoon and welcome to the OmniCell Second Quarter 2023 Financial Results Conference Call. On the call with me today are Randall Lipps, OmniCell Chairman, President, CEO, and Founder, and Chacha Etta, Executive Vice President and Chief Financial Officer. This call will contain forward-looking statements, including statements related to financial projections or other statements regarding OmniCell's plans, strategy, objectives, goals, expectations, cost savings actions, or outlook 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 OmniCell Annual Report on Form 10-K filed with the SEC on March 1, 2023, 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 date 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 afternoon and are posted in the Investor Relations section of our website at ir.omnifil.com. Additionally, we would like to remind you that during this call, we will discuss some non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measures are included in our financial results press release issued today. With respect to forward-looking non-GAAP measures, we do not provide a reconciliation of forward-looking non-GAAP measures to the comparable GAAP 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. Randall?

Good afternoon, and thank you all for joining us today. Today, I will walk through our performance this quarter, including our key customer wins and trends we're seeing in our business and the industry. I'll also provide an update on our outlook for the remainder of 2023. Let me begin with our results, which reflect sequential revenue growth and we believe continued financial discipline from the OmniCell team. Through strong execution, we exceeded our second quarter 2023 guidance ranges for total product and service revenues, non-GAAP EBITDA, and non-GAAP EPS. We generated total revenues of $299 million, non-GAAP EBITDA of $47 million, and non-GAAP earnings per share of $0.57. Our better-than-expected performance this quarter was primarily driven by higher technical and advanced service revenues, favorable customer and product mix, and cost management. Cha-Cha, who we recently welcomed as OmniCell's CFO, will speak to our financial results and key drivers in more detail during his remarks. as well as walk through the outlook for the second half of the year. On last quarter's call, we provided an update on the integration of recent acquisitions, Recept, now called OmniCell Specialty Pharmacy Services, FDS Amplicare, and Market Touch Media, noting that integration was largely complete. Throughout the second quarter of 2023, we continue to focus on executing our go-to-market strategy for these acquisitions, and we are pleased with the progress we have seen to date. With this momentum underway and what we believe is a robust portfolio, we find that we remain uniquely positioned to continue to support pharmacy operations across the entire care continuum, delivering mission-critical medication management solutions for our customers globally. Now turning to the customer landscape and our recent customer wins. Customers continue to choose OmniSale solutions to maximize clinical and financial outcomes, which we think further demonstrates the important role we're playing in automating and modernizing global medication management infrastructure. We'll start with the customer wins for advanced services. Following the successful implementation of inventory optimization service for a group of its hospitals, a major southern health system is now expanding the service to approximately 20 hospitals across its health system. The customer indicated that its increased need for visibility, insights, and analytics for inventory control and cost savings led to the decision to expand the solution. In addition, with a continued challenge of labor shortages, This health system is also seeking insights from the OmniCell platform in an effort to improve pharmacy technician efficiency. Recognizing the potential value in delivering secure solutions in the pharmacy supply chain, a Florida health system has chosen OmniCell's IV compounding service to help it as it seeks to gain better control over medications and decreased reliance on 503B outsourcing. This customer is also expanding its central pharmacy automation footprint with OmniCell carousels and premium software license for their entire fleet of XT automated dispensing systems. In terms of competitive conversions, a central pharmacy customer in Minnesota has decided to convert their automated dispensing system footprint to OmniCell's XT cabinets. while expanding system-wide pharmacy inventory management with inventory optimization service. This combined technology strategy should increase visibility and efficiency, better aligning to the health system's patient safety initiatives. Furthermore, a current XD customer based in Southern California has chosen OmniCell's specialty pharmacy services to support the launch of a health system-owned specialty pharmacy. This customer not only cited OmniCell's deep expertise as a key factor in this decision, but also recognized what it saw as an opportunity for a comprehensive technology strategy to support continued growth across the care continuum. Enliven Health has also reached a significant milestone, entering the Medicaid market with a new medication synchronization partnership with a leading Medicaid plan. The partnership aims to enhance medication adherence among underserved populations by offering personalized support to patients. We are proud of the role OmniCell plays in improving patient health. And lastly, a Northeast pharmacy chain selected in Live and Health to support personalized IVR. In just 120 days, the chain saw a notable rise in automated prescription refills, a significant reduction in pharmacy interruptions, and lowered call transfers by approximately 17%. Moving on to the market environment and what we are currently seeing in the overall healthcare industry, we continue to take what we believe is a prudent approach to managing the business, But as evidenced by our customer wins this quarter, we are pleased that OmniSelf products, software, and tech-enabled services appear to be resonating with the market. Our health system customers have faced many challenges in the last few years and are evaluating technology and innovative solutions that are designed to help them achieve their long-term strategic goals. With salary cost pressures as well as labor constraints remaining key challenges for hospitals, we think OmniCell is an important part of the solution. For us, the need to automate, optimize, and modernize the medication management process is becoming clearer, which should help ease the pressure on hospitals to implement the services and solutions they purchase at the outset. While these should be a long-term tailwind for OmniCell, we are also seeing some near-term headwinds as some customers choose to delay adopting new technologies in order to mitigate additional training requirements for the workforces. As we look ahead to the second half of the year, we expect full-year bookings to trend towards the lower end of the full-year guidance range, we previously provided due to ongoing CapEx budget constraints and some of the factors I just outlined. Considering the strong first half performance and solid expense management, we are raising our full year 2023 guidance for total revenues, non-GAAP EBITDA, and non-GAAP earnings per share. As I mentioned, ChaCha will discuss our guidance in more detail. But long-term trends appear favorable, as we expect customers' need for automation tools and software-enabled services to offset continued pressure driven by labor constraints. Now moving on to ESG. At the start of the second quarter, we were pleased to publish our third annual ESG report. We continue to make progress toward our goal of creating positive change and delivering innovative technologies that are intended to help our customers build a healthier world. This entails designing our products with a view to minimize our environmental footprint while maximizing patient outcomes. We also continue to support our diversity, equity, inclusion, and belonging initiatives that are intended to foster an engaging and inclusive workplace. Through our ESG efforts, we aim to ensure healthy lives and promote well-being for all. Before I turn it over to Cha-Cha to discuss our financial results for the quarter in more detail, I want to note the most recent addition to our board and speak to some leadership changes. In July, we were pleased to have Kaushik Babi Ghoshal join our board as the independent director. As part of OmniCell's ongoing refreshment process, The addition of Bobby expands our board to 10 members. Bobby is an established leader who brings more than 30 years of global SAS and healthcare technology experience to OmniCell, currently serving as the president of SAS for ResMed Incorporated, and is an important addition to our board. He has an impressive track record leading high-performance teams in software products and is responsible for the vision, strategy, and day-to-day operations of ResMed's rapidly expanding SaaS portfolio. We are also pleased to have welcomed Chacha as OmniSell's new CFO at the beginning of June. Chacha is a seasoned financial and accounting executive with more than 20 years of experience leading and working in global financial organizations across healthcare and consumer products industries. It's a pleasure to work with Chacha thus far. He is commercially focused and collaborative leader and shares our passion for improving patients' health. We find we are already benefiting from his insights and I know he's looking forward to speaking to some of his priorities with you today. In addition to welcoming ChaCha, we also announced a number of other organizational changes designed to create a more streamlined organization with a continued focus on operational excellence. This included the appointment of new members to our leadership team, as well as a number of motions within the organization. We believe we have put the right team in place to lead the next phase of our performance as we seek to continue to deliver value for our shareholders, our employees, our healthcare partners, and their patients. With these changes, I want to emphasize that our strategy remains the same. We are simply moving into the next phase of OmniSales evolution. We believe we must adapt to continue meeting the ever-changing needs of the industry and our customers. This new leadership structure reflects this effort and should enable us to operate more nimbly and further strengthen our position as a leading medication management provider. We've worked hard to build a strategy that we believe will transform the pharmacy care delivery model globally. Now we're laser focused on execution and bringing in people with the right skill sets that are keenly focused on profitable growth, and I believe we are well positioned for the future. Now with that, I'll turn it over to Chacha to introduce himself and provide further details on our performance and outlook.