OMNICELL, INC. Q4 FY2024 earnings call

• 2024 Highlights: Exceeded bookings guidance driven by connected devices, solidified product backlog, returned to year-over-year revenue growth, solidified balance sheet via convertible notes, and strong demand for XT Amplify program.
• Customer Wins: NYC Health + Hospitals selected Omnicell's solutions, North Carolina healthcare system adopted XT automated cabinets, East Coast healthcare org expanded pharmacy tech strategy, large healthcare system implemented XTExtend, IVCS increased robot installations, Specialty Pharmacy services had notable wins, and EnlivenHealth partnered with a Fortune 25 health insurer.
• Financials: Fourth quarter 2024 non-GAAP gross margin was 47.4%, GAAP EPS was $0.34, non-GAAP EPS was $0.60, and non-GAAP EBITDA was $46M. Full year 2024 non-GAAP EBITDA was $136M, above the revised guidance range.

In the fourth quarter of 2024, total revenues were $307 million, an increase of $24 million over the prior quarter and $48 million over fourth quarter 2023. Product revenues were $182 million, an increase of $24 million QoQ and $37 million YoY. Service revenues were $125 million, an increase of $1 million QoQ and $11 million YoY. For full year 2024, bookings were $923 million (exceeding guidance of $800M-$875M), total revenues were $1,112 million, product revenues were $631 million, and services revenues were $482 million (with technical services $238M and SaaS and Expert Services $244M). Product revenues in Q4 2024 were boosted by higher volumes and favorable mix. Service revenues saw growth in SaaS and Expert Services and technical services.

• 2025 Product bookings expected $500M-$550M, ARR $610M-$630M, total revenue $1.105B-$1.155B, non-GAAP EBITDA $140M-$155M.
• First quarter 2025: Total revenues expected $255M-$265M, product revenues $137M-$142M, services revenues $118M-$123M, non-GAAP EBITDA $19M-$25M, non-GAAP EPS $0.15-$0.25. The guidance reflects typical seasonal product revenue patterns and expectations of margin expansion as the year progresses.

• Forward-looking statements are subject to risks detailed in SEC filings.
• Tariff risks were discussed, with processes in place to mitigate potential impact on gross margin, expecting minimal to no impact on the business.

Q: Good morning and thanks for taking the questions. Randall, one question on the end-market demand. You mentioned seeing some green shoots. Can you expand on that a little bit? I think it's pretty clear that hospital performance has improved. Do you think - how do you think that is translating into budget growth? And then as it relates to the product revenue ramp throughout the course of the year, it seems very similar to last year. Can you kind of speak to what's driving the product revenue ramp?

A: Yes. Thanks, Allen, for the questions. Yes, I think the hospital financial conditions and providers have continued to improve. And that has really given us the opportunity and probably contributed to our fourth quarter exceeding in our bookings. And so I think that really sets us up well for 2025. In fact, those strong bookings are turn into revenues in 2025 mostly. And because we're - I have already pre-scheduled most of those, we're in-line to grow quarter - we're - the business is troughing out if so to speak. And so we'll see this quarter-over-quarter comparative growth that we hope grows and continues to grow into '26. So I think we're really well-positioned with the strong end of the year. The improved financial position of our customers makes it the decision process, I think a little bit easier to make. And the excitement around Amplify, frankly, allows us to get-in front of them and put these offerings and to get them to invest in now as opposed to later.

Q: Hi, thank you guys so much for taking the question and congrats on the strong results. I wanted to understand the upside to bookings in 2024. We are backing into product bookings up about $100 million year-over-year. And I'm just -- I'm curious if that was all kind of XTExtend in the Amplify portfolio exceeding expectations? Or was there some, I guess, you know, incremental or unanticipated strength in actual XT cabinet bookings, whether that's from competitive conversion or otherwise?

A: Yes, we did see some significant strength in-demand for connected devices as we closed the year. And then we also had additional bookings from XT upgrades as we're ending the successful upgrade cycle, including some market-share wins or gains that we saw. But also XTExtend did contribute. We saw solid demand for XTExtend, which contributed to our improved our bookings performance for the year.

Q: Good morning and congratulations on a strong finish to the year. I guess, first one, what are your thoughts as far as the new administration? What - they seem to be focused a lot more on technology innovation. I would think that plays well with your targets and goals, but what are your thoughts on how the new administration could impact your business?

A: Well, it's rather dynamic, but I think the overall theme, as you suggested is efficiency and safety and that is - that's our core strength and that's our core driver in our innovation is to make our customers more efficient and safe, easy-to-use, easier to deploy so that they can get a better return. And so I feel like that positions us well. And particularly as we deploy more products and higher densities into our customer-base, there's more data. And with that data, we're able to drive more outcomes and conclusions with analytics or AI to help customers really make tough decisions that can reduce costs just because they weren't visible before. So - but there's a lot of dynamics. There are some dynamics around 340B, a lot of discussions, nothing in play, but we're like the rest of us are - like the rest of everyone, I suppose we're all watching very closely and I think we're well-positioned.

Q: Hi. Can you talk a bit about your annual recurring revenue? Like what percent of total revenue do you expect that to be in '25? And what is your sort of longer-term goal there? And then just any color around the Enliven win. I think you mentioned you sold this to a couple of health plans.

A: I think our Enliven business is really getting traction as you know, we see the ramp-up of competition and the need to do better data analysis and engagement with patients. And we're proud that we can not only represent retailers and improving their efficiencies, but then also payers by helping them understand what patients of theirs are using their products and how well they're using those products. As well as we see other pharmacies, particularly larger pharmacies or nationwide pharmacies or institutional pharmacies looking for ways to employ their pharmacists in other activities other than dispensing meds. And so those activities would involve billing services to payers. And so we're excited that this is a big new frontier, if you will, for having pharmacists operate at the top of their license and then getting additional revenues and margins in these larger pharmacies that have been mostly dedicated to dispensing and not using billing activities.

Q: Thank you. Congrats on a great year and a good outlook. I wanted to drill down on the ARR a little bit further. Do you -- Nchacha, do you break the ARR out by those respective categories of services and consumables and SaaS?

A: Yes. So the new metric that we're providing, ARR is composed of our SaaS and Expert Services businesses, technical services as well as consumables. We do provide some details on the SaaS businesses, but again, those are the three components of ARR.

Q: Thank you. Congrats on a great year and a good outlook. I wanted to drill down on the ARR a little bit further. Do you -- Nchacha, do you break the ARR out by those respective categories of services and consumables and SaaS?

A: Yes. So the new metric that we're providing, ARR is composed of our SaaS and Expert Services businesses, technical services as well as consumables. We do provide some details on the SaaS businesses, but again, those are the three components of ARR.

Q: Can you talk a bit about your annual recurring revenue? Like what percent of total revenue do you expect that to be in '25? And what is your sort of longer-term goal there? And then just any color around the Enliven win. I think you mentioned you sold this to a couple of health plans.

A: I think our Enliven business is really getting traction as you know, we see the ramp-up of competition and the need to do better data analysis and engagement with patients. And we're proud that we can not only represent retailers and improving their efficiencies, but then also payers by helping them understand what patients of theirs are using their products and how well they're using those products. As well as we see other pharmacies, particularly larger pharmacies or nationwide pharmacies or institutional pharmacies looking for ways to employ their pharmacists in other activities other than dispensing meds. And so those activities would involve billing services to payers. And so we're excited that this is a big new frontier, if you will, for having pharmacists operate at the top of their license and then getting additional revenues and margins in these larger pharmacies that have been mostly dedicated to dispensing and not using billing activities.