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OMNICELL, INC.

OMNICELL, INC.OMCLEarnings & Financial Report

Nasdaq · Industrials · Electronic Computers

Omnicell, Inc. is an American multinational healthcare technology company headquartered in Mountain View, CA. It manufactures automated systems for medication management in hospitals and other healthcare settings, and medication adherence packaging and patient engagement software used by retail pharmacies. Its products are sold under the brand names Omnicell and EnlivenHealth.

What changed in OMNICELL, INC.'s 10-K — 2023 vs 2024

Top changes in OMNICELL, INC.'s 2024 10-K

527 paragraphs added · 516 removed · 367 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

138 edited+78 added−33 removed58 unchanged
Because thousands of facilities utilize our solutions, we believe we can provide actionable insights to help customers better understand their medication usage and improve pharmacy supply chain management. We offer specialized services and analytics software designed to help healthcare facilities improve their bottom line and patient care by harnessing data from automation and other systems.
Because thousands of facilities utilize our services and solutions, we believe we can provide actionable insights to help customers better understand their medication usage and improve pharmacy supply chain management. We offer specialized services and analytics software designed to help healthcare facilities improve their bottom line and patient care by harnessing data from automation and other systems.
Our or our customers’ practices may not in all cases meet all of the criteria for safe harbor protection from anti-kickback liability. • The federal civil and criminal false claims laws, including the civil False Claims Act (“FCA”), which prohibits, among other things: (i) knowingly presenting, or causing to be presented, claims for payment of government funds that are false or fraudulent; (ii) knowingly making, or using or causing to be made or used, a false record or statement material to a false or fraudulent claim; (iii) knowingly making, using or causing to made or used a false record or statement material to an obligation to pay money to the government; or (iv) knowingly concealing or knowingly and improperly avoiding, decreasing, or concealing an obligation to pay money to the federal government.
Our or our customers’ practices may not in all cases meet all of the criteria for safe harbor protection from Anti-Kickback Statute liability. • Federal civil and criminal false claims laws, including the civil False Claims Act (“FCA”), which prohibits, among other things: (i) knowingly presenting, or causing to be presented, claims for payment of government funds that are false or fraudulent; (ii) knowingly making, or using or causing to be made or used, a false record or statement material to a false or fraudulent claim; (iii) knowingly making, using or causing to made or used a false record or statement material to an obligation to pay money to the government; or (iv) knowingly concealing or knowingly and improperly avoiding, decreasing, or concealing an obligation to pay money to the federal government.
Our arrangements with contract manufacturers generally set forth quality, cost, and delivery requirements, as well as manufacturing process terms, such as continuity of supply, inventory management, capacity flexibility, quality and cost management, oversight of manufacturing, and conditions for the use of our intellectual property. Our manufacturing organization procures components and schedules production based on the backlog of customer orders.
Our arrangements with contract manufacturers generally set forth quality, cost, and delivery requirements, as well as manufacturing process terms, such as continuity of supply, inventory management, capacity flexibility, quality and cost management, oversight of manufacturing, and conditions for the use of our intellectual property. Our operations organization procures components and schedules production based on the backlog of customer orders.
Products designated as medical devices are also subject to various other regulatory requirements, including as applicable, premarket clearance or approval, establishment registration and device listing, complaint handling, notification and repair, replace, refund, mandatory recalls, unique device identifier requirements, reports of removals and corrections, cybersecurity requirements, and post-marketing surveillance.
Products designated as medical devices are also subject to various other regulatory requirements, including as applicable, FDA premarket clearance or approval; establishment registration and device listing; complaint handling; notification and repair, replace, refund; mandatory recalls; unique device identifier requirements; reports of removals and corrections; cybersecurity requirements; and post-marketing surveillance.
Omnicell is focused on helping its customers to define and deliver a cost effective medication management strategy that is designed to equip and empower pharmacists and nurses to focus on patient care rather than administrative tasks, and to drive improved clinical, operational, and financial outcomes across all care settings.
Omnicell is focused on helping its customers define and deliver a cost-effective medication management strategy designed to equip and empower pharmacists and nurses to focus on patient care rather than administrative tasks, and to drive improved clinical, operational, and financial outcomes across all care settings.
ITEM 1. BUSINESS Overview Omnicell, a leader in transforming the pharmacy care delivery model, is committed to solving the critical challenges inherent in medication management and elevating the role of clinicians within healthcare as an essential component of care delivery.
ITEM 1. BUSINESS Overview Omnicell, a leader in transforming the pharmacy and nursing care delivery model, is committed to solving the critical challenges inherent in medication management and elevating the role of clinicians within healthcare as an essential component of care delivery.
In an effort to address these challenges and deliver solutions to help drive positive medication management outcomes, we continue to make significant investments in our research and development efforts to further advance the industry vision of the Autonomous Pharmacy.
In an effort to address these challenges and deliver solutions to help drive positive medication management outcomes, we continue to make significant investments in our research and development efforts to further advance the industry-defined vision of the Autonomous Pharmacy.
We believe this will help healthcare providers optimize the use of existing pharmacy staff, which is expected to free up clinicians’ time for higher-value, patient-engaging activities, such as medication therapy management, immunizations, point-of-care testing, and disease state management. 10 Table of Contents Government Regulation Our global operations may be affected by complex state, federal, and international laws and regulations.
We believe this will help healthcare providers optimize the use of existing pharmacy staff, which is expected to free up clinicians’ time for higher-value, patient-engaging activities, such as medication therapy management, immunizations, point-of-care testing, and disease state management. 10 Table of Contents Government Regulation Our global operations may be affected by a variety of complex state, federal, and international laws and regulations.
However, the pharmacy, dispensing, and compounding activities of other persons (our customers) that use our current medication management solutions may be subject to regulation by those agencies and by state boards of pharmacy.
However, the pharmacy, dispensing, and compounding activities of other persons (our customers) that use our current medication management solutions may be subject to regulation by those agencies and by individual state boards of pharmacy.
After the solutions are implemented, our Customer Success team provides remote and onsite experts who help our customers fully adopt and optimize utilization of our solutions in an effort to achieve their desired clinical and business outcomes. We offer telephone and web-based technical support through our U.S.-based technical support centers.
After the solutions are implemented, our Customer Success team provides remote and onsite experts who help our customers fully adopt and optimize utilization of our solutions in an effort to achieve their desired clinical and business outcomes. We offer telephone and web-based technical support and issue resolution through our U.S.-based technical support centers.
Etta served in financial roles of increasing responsibility at Microsoft Corporation, Eli Lilly & Company, and the Carlyle Group. He started his career with Orano Cycle (previously Cogema) in Bethesda, MD. Mr. Etta received a B.S. in accounting from George Mason University and an MBA in finance from Howard University. Corey J.
Etta served in financial roles of increasing responsibility at Microsoft Corporation, Eli Lilly & Company, and the Carlyle Group. He started his career with Orano Cycle (previously Cogema) in Bethesda, MD. Mr. Etta received a B.S. in accounting from George Mason University and an MBA in finance from Howard University.
Products and Services Our products and services span the evolving continuum of care, including inpatient, outpatient, and retail settings. We provide a range of point of care medication and supply dispensing systems, including automated systems. We also offer advanced automation solutions including robotics designed to automate work, streamline workflows, and reduce human error.
Products and Services Our products and services span the evolving continuum of care, including inpatient, outpatient, and retail settings. We provide a range of points of care medication and supply dispensing systems, including automated systems. We also offer advanced automation solutions including robotics designed to automate work, streamline workflows, and reduce human error.
Each of these challenges may lead to poor medication management outcomes including, but not limited to, medication errors, adverse drug events, lack of patient adherence, and medication waste. We also recognize that these challenges may impact the timing of contracting for, or implementing, our products, solutions, or services.
Each of these challenges may lead to poor medication management outcomes including, but not limited to, medication errors, adverse drug events, lack of patient adherence, and medication waste. We also recognize that these challenges may impact the timing of contracting for, or implementation of, our products, solutions, or services.
As a result, we or our customers are subject to various laws and regulations related to privacy, data protection, and information security.
As a result, we and our customers are subject to various laws and regulations related to privacy, data protection, and information security.
The GDPR imposes accountability and transparency requirements, data protection requirements, reporting obligations, and transfer restrictions. Additionally, data and digital services regulation continues to expand, particularly with respect to the artificial intelligence (“AI”) and automated decision making, which may further impact our or our customer’s business and regulatory compliance strategies.
The GDPR imposes accountability and transparency requirements, data protection requirements, reporting obligations, and transfer restrictions. Artificial Intelligence Data and digital services regulation continues to expand, particularly with respect to the artificial intelligence (“AI”) and automated decision making, which may further impact our and our customer’s business and regulatory compliance strategies.
Our website address is www.omnicell.com and our investor relations website is located at ir.omnicell.com. 19 Table of Contents Information About Our Executive Officers The following table sets forth certain information about our executive officers as of the date of this Annual Report on Form 10-K: Name Age Position Randall A.
Our website address is www.omnicell.com and our investor relations website is located at ir.omnicell.com. Information About Our Executive Officers The following table sets forth certain information about our executive officers as of the date of this Annual Report on Form 10-K: Name Age Position Randall A.
Etta served as Worldwide Vice President and Chief Financial Officer of Johnson & Johnson Vision, an operating company of Johnson & Johnson, a global healthcare company. From February 2006 to June 2015, Mr. Etta held senior finance roles at The Coca-Cola Company, a total beverage company. Prior to The Coca-Cola Company, Mr.
From June 2015 to May 2019, Mr. Etta served as Worldwide Vice President and Chief Financial Officer of Johnson & Johnson Vision, an operating company of Johnson & Johnson, a global healthcare company. From February 2006 to June 2015, Mr. Etta held senior finance roles at The Coca-Cola Company, a total beverage company. Prior to The Coca-Cola Company, Mr.
We adhere to internationally-recognized Organisation for Economic Co-operation and Development guidance for the responsible sourcing of raw materials and continually work to enhance the sustainability attributes of our products and improve the sustainability of our designs. In addition, we seek to ensure access to high-quality, equitable, and integrated care for all patients worldwide.
We adhere to internationally-recognized Organisation for Economic Co-operation and Development guidance for the responsible sourcing of raw materials and continually work to enhance the sustainability attributes of our products and improve the sustainability of our designs. In 19 Table of Contents addition, we seek to ensure access to high-quality, equitable, and integrated care for all patients worldwide.
During our fiscal year ended December 31, 2023, sales to members of the ten largest GPOs and federal agencies that purchase under the GSA Contract accounted for approximately 64% of our total consolidated revenues. We offer multi-year, non-cancelable lease payment terms to assist healthcare organizations in purchasing our systems by reducing their cash flow requirements in a lease structure.
During our fiscal year ended December 31, 2024, sales to members of the ten largest GPOs and federal agencies that purchase under the GSA Contract accounted for approximately 65% of our total consolidated revenues. We offer multi-year, non-cancelable lease payment terms to assist healthcare organizations in purchasing our systems by reducing their cash flow requirements in a lease structure.
We expect continued and increased competition from current and future competitors in the markets in which we operate, and are affected by evolving and new technologies, changes in industry standards (including standards of care), and dynamic customer requirements. Furthermore, the healthcare industry has experienced a significant degree of consolidation.
We expect continued and increased competition from current and future competitors in the markets in which we operate, and are affected by evolving and new technologies, changes in industry standards (including standards of care), and dynamic customer requirements. 16 Table of Contents Furthermore, the healthcare industry has experienced a significant degree of consolidation.
We are focused on delivering solutions to help our customers realize the industry vision of the Autonomous Pharmacy and drive positive medication management outcomes with outstanding customer experience through a mature channel in four market categories: • Point of Care.
We are focused on delivering solutions to help our customers realize the industry-defined vision of the Autonomous Pharmacy and drive positive medication management outcomes with outstanding customer experience through a mature channel in four market categories: • Points of Care.
The results of our research and development efforts will further drive the advancement of our cloud-based offerings and accelerate the realization of the industry vision of the Autonomous Pharmacy. Business under Government Contracts A number of our U.S. government-owned or government-run hospital customers have signed five-year leases, with payment terms that are subject to one-year government budget funding cycles.
The results of our research and development efforts are expected to drive the advancement of our cloud-based offerings and accelerate the realization of the industry-defined vision of the Autonomous Pharmacy. Business under Government Contracts A number of our U.S. government-owned or government-run hospital customers have signed five-year leases, with payment terms that are subject to one-year government budget funding cycles.
We believe we have a strongly differentiated outcome-centric approach to medication management that combines robotics, smart devices, software, and expert services. Intellectual Property and Proprietary Technology We rely on a combination of patents, trademarks, copyright and trade secret laws, confidentiality procedures, contractual restrictions, and licensing arrangements to protect our intellectual property rights.
We believe we have a strongly differentiated outcome-centric approach to medication management that combines robotics and smart devices, software workflows, expert services, and operational and optimization analytics. Intellectual Property and Proprietary Technology We rely on a combination of patents, trademarks, copyright and trade secret laws, confidentiality procedures, contractual restrictions, and licensing arrangements to protect our intellectual property rights.
For additional information regarding these leases, see the risk factor captioned “ Our U.S. government lease agreements are subject to annual budget funding cycles and mandated changes, which may affect our ability to recognize revenues and sell receivables based on such leases , ” under Item 1A “Risk Factors ”.
For additional information regarding these leases, see the risk factor captioned “ Our U.S. government lease 17 Table of Contents agreements are subject to annual budget funding cycles and mandated changes, which may affect our ability to recognize revenues and sell receivables based on such leases , ” under Item 1A “Risk Factors ”.
We typically sell the majority of the multi-year lease receivables (other than those associated with our Advanced Services, as described further below) to third-party leasing finance companies, although our ability to sell these receivables may be influenced by the perception of our customers’ ability to pay, or other restrictions, which may be influenced by factors outside of our control.
We typically sell the majority of the multi-year lease receivables (other than those associated with our SaaS and Expert Services , as described further below) to third-party leasing finance companies, although our ability to sell these receivables may be influenced by the perception of our customers’ ability to pay, or other restrictions, which may be influenced by factors outside of our control.
We offer market-competitive pay and a comprehensive benefits package. • Our quarterly bonus program is designed to incentivize our employees to focus on work that will further our strategic priorities. • We offer reward and recognition programs that embed our guiding principles into our culture and everything we do, allowing for peer-to-peer recognition and motivating our employees to continually work to advance our promise, our purpose, and our guiding principles. • Our quarterly performance review process is designed to enable our talent to reach their optimum levels of contribution to Omnicell’s business strategies, facilitates regular employee feedback, and supports our pay-for-performance philosophy.
We offer market-competitive pay and a comprehensive benefits package. • Our bonus program is designed to incentivize our employees to focus on work that will further the delivery of our annual priorities. • We offer reward and recognition programs that embed our guiding principles into our Culture of Care and everything we do, allowing for peer-to-peer recognition and motivating our employees to continually work to advance our promise, our purpose, and our guiding principles. • Our quarterly performance review process (Aspire) is designed to enable our talent to reach their optimum levels of contribution to Omnicell’s business strategies, facilitates regular employee feedback, and supports our pay-for-performance philosophy.
Our offerings include: Point of Care Our point of care automation solutions are designed to improve clinician workflows in patient care areas of the healthcare system, such as nursing units, patient wards, operating rooms, and emergency departments.
Our offerings include: Points of Care Our automation solutions for points of care are designed to improve clinician workflows in patient care areas of the healthcare system, such as nursing units, patient wards, operating rooms, and emergency departments.
According to a survey conducted by the American Society of Health-System Pharmacists in 2019, approximately 75% of pharmacist activities are non-clinical in nature. In addition, many existing healthcare information systems are unable to support the modernization of healthcare delivery processes or address mandated patient safety initiatives.
According to a survey conducted by the American Society of Health-System Pharmacists in 2023, approximately 73% of pharmacist activities are non-clinical in nature. In addition, many existing healthcare information systems are unable to support the modernization of healthcare delivery processes or address mandated patient safety initiatives.
We pursue patent protection in the United States and foreign jurisdictions for technology that we believe to be proprietary and that may offer a potential competitive advantage for our products. Our issued patents expire on various dates between 2024 and 2041. We intend to seek and obtain additional United States and foreign patents on our technology.
We pursue patent protection in the United States and foreign jurisdictions for technology that we believe to be proprietary and that may offer a potential competitive advantage for our products. Our issued patents expire on various dates between 2025 and 2043. We intend to seek and obtain additional United States and foreign patents on our technology.
We also offer a sterile disposable product that required FDA 510(k) review and clearance prior to marketing and distribution.
We also offer a sterile consumable product that required FDA 510(k) review and clearance prior to marketing and distribution.
These areas include, without limitation, FDCA and FDA, Controlled Substances Act and DEA regulations, state board of pharmacy regulations, and laws and regulations regarding quality, privacy, information governance and security, and environmental, health and safety.
These areas include, without limitation, FDCA and FDA, Controlled Substances Act and DEA regulations, individual state boards of pharmacy regulations, and laws and regulations regarding quality, privacy, information governance and security, and environmental, health and safety.
Companies engaged in distributing or dispensing compounded pharmaceuticals may be subject to a number of requirements enforced by the FDA or other regulators. These requirements may include compliance with United States Pharmacopoeia (“USP”) or National Formulary standards, certificates of analysis, facility registration, and compliance with current good manufacturing practice (“cGMP”).
Companies engaged in distributing or dispensing compounded pharmaceuticals may be subject to a number of requirements enforced by the FDA or other U.S. regulatory agencies. These requirements may include compliance with United States Pharmacopoeia (“USP”) and National Formulary standards, certificates of analysis, facility registration, and compliance with current good manufacturing practice (“cGMP”).
With respect to our products and solutions, we manufacture and develop specifications for products classified as Class I and Class II medical devices, which are subject to FDA regulation and require compliance with the FDA Quality System Regulation as well as medical device reporting.
With respect to our products and solutions, we manufacture and develop specifications for products classified as Class I and Class II medical devices, which are subject to FDA regulation and require compliance with certain FDA regulations and requirements, including the FDA Quality System Regulation as well as FDA regulations for medical device reporting.
Sales, installation, and service to healthcare facilities is handled through distribution partners in other parts of Europe, Asia, Australia, the Middle East, South Africa, and South America. Our products are available in a variety of languages including Traditional Chinese, Simplified Chinese, Japanese, Korean, French, Swedish, Dutch, Spanish, and German.
Sales, installation, and service to healthcare facilities are handled through distribution partners in other parts of Europe, Asia, Australia, the Middle East, and Latin America. Our products are available in a variety of languages including Traditional Chinese, Simplified Chinese, Croatian, Dutch, French, German, Japanese, Korean, Swedish, and Spanish.
We are doing this with an industry-leading medication management infrastructure which includes robotics, smart devices, intelligent software, and expert services. This comprehensive set of solutions provides the critical foundation for customers to realize the industry vision of the Autonomous Pharmacy, a vision defined by pharmacy leaders for improving operational efficiencies and ultimately targeting zero-error medication management.
We are doing this with an industry-leading medication management infrastructure which includes robotics and smart devices, software workflows, expert services, and operational and optimization analytics. This comprehensive set of solutions provides the critical foundation for customers to realize the Autonomous Pharmacy, an industry-wide vision defined by pharmacy leaders for improving operational efficiencies and ultimately targeting zero-error medication management.
Demand for many of our existing and new products is, and will continue to be, affected by the extent to which local regulatory requirements increase our risk and/or expense to do business in those countries.
Demand for many of our existing and new products is, and will continue to be, affected by the extent to which ex-U.S. regulatory requirements increase our risk and/or expense to do business in those countries.
Our combined direct, corporate sales support, and international distribution sales teams consisted of approximately 450 staff members as of December 31, 2023. Nearly all of our direct sales team members have hospital capital equipment, services, or clinical systems experience.
Our combined direct, corporate sales support, and international distribution sales teams consisted of approximately 460 staff members as of December 31, 2024. Nearly all of our direct sales team members have hospital capital equipment, services, or clinical systems experience.
We believe that a fully optimized specialty pharmacy operation represents one of the largest economic opportunities for hospitals and health systems. • Retail, Institutional, and Payer. We believe the Retail, Institutional, and Payer market represents a significant opportunity as healthcare evolves.
We believe that a fully optimized specialty pharmacy operation represents one of the largest economic opportunities for hospitals and health systems. • Ambulatory Care. We believe ambulatory care, especially the retail and institutional market, represents a significant opportunity as healthcare evolves.
Our Professional Services team assists customers with the technology installations of our solutions, including configuring our systems to address the specific needs of each individual customer.
Our Professional Services team assists customers with the implementation of our solutions, including configuring our systems to address the specific needs of each individual customer.
Many of the sub-assemblies and components we use are provided by third-party contract manufacturers or other suppliers. A portion of these contract manufacturers and other suppliers are based in Asia. We and our partners test these sub-assemblies and perform inspections to assure the quality and reliability of our products.
Many of the sub-assemblies and components we use are provided by third-party contract manufacturers or other suppliers. The majority of these contract manufacturers and other suppliers are based in Asia and the U.S. We and our partners test these sub-assemblies and perform inspections to assure the quality and reliability of our products.
Our single-dose automation solutions allow customers to fill and label a variety of patient-specific, single-dose medication blister packaging based on incoming prescriptions. Our fully automated and semi-automated filling equipment is designed specifically for institutional pharmacies with enough order volume to warrant automated packaging of medications. Our automated solutions interface with pharmacy information systems to obtain prescription information.
Our single-dose automation solutions allow customers to fill and label a variety of patient-specific, single-dose medication blister packages based on incoming prescriptions. Our fully automated and semi-automated filling equipment is designed specifically for institutional pharmacies with enough order volume to warrant automated packaging of medications.
The healthcare fraud and abuse laws and regulations that may impact our or our customers’ operations include but are not limited to: • The federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting, receiving, offering, or paying any remuneration (including any kickback or bribe), directly or indirectly, overtly or covertly, in 11 Table of Contents cash or in kind, to induce, or in return for, either the referral of an individual, or the purchase, lease, order, arranging for, or recommending the purchase, lease, or order of any item or service for which payment may be made, in whole or in part, under federal healthcare programs like Medicare or Medicaid.
The most common healthcare laws and regulations that may impact our or our customers’ operations include but are not limited to: • The federal Anti-Kickback Statute, a criminal law which prohibits, among other things, knowingly and willfully soliciting, receiving, offering, or paying any “remuneration” (including any kickback or bribe), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, either the referral of an individual, or the purchase, lease, order, arranging for, or recommending the purchase, lease, or order of any item or service for which payment may be made, in whole or in part, under federal healthcare programs (like Medicare or Medicaid).
Our Point of Care Service combines market-leading automation with expert services in an effort to improve solution adoption and optimization, enhance data-driven performance, and drive nursing and pharmacy efficiency. For the operating room, we also offer specialized automated dispensing systems.
Our Points of Care Service combines market-leading automation, software workflows, expert services, and operational and optimization analytics in an effort to improve solution adoption and optimization, enhance data-driven performance, and drive nursing and pharmacy efficiency. For the operating room, we also offer specialized automated dispensing systems.
We continually seek to innovate and improve our business practices as we strive to build “A Better Way.” More information on our ESG initiatives and a copy of our 2022 ESG Report are available on our corporate website, www.omnicell.com, under the “About Us―Corporate Responsibility” tab.
We continually seek to innovate and improve our business practices as we strive to build “A Better Way.” More information on our ESG initiatives and a copy of our 2023 ESG Report are available on our corporate website, www.omnicell.com, under the “Company ESG” tab.
Recent Acquisition s In addition to our own organic development, we have, from time to time, acquired businesses and technologies that expand our product lines and are strategic fits for our business, and we expect to continue to seek to acquire businesses, technologies, or products in the future.
Recent Acquisition s In addition to our own organic development, we have, from time to time, acquired businesses and technologies that expand our product lines and are strategic fits for our business, and although no acquisitions were completed in 2023 or 2024, we expect to continue to seek to acquire businesses, technologies, or products in the future.
We continue to invest in next-generation point of care enhancements and solutions and believe that customers will upgrade their current installed base over time as we deliver these new solutions to market. We also believe there is an opportunity for us to expand this offering and define a new standard for dispensing systems in ambulatory settings.
We believe that customers will upgrade their current installed base over time as we deliver these new solutions to market. We also believe there is an opportunity for us to expand this offering and define a new standard for dispensing systems in ambulatory settings.
Our sales in the United States and Canada are primarily made direct to end-user customers with the exception of some distribution of medication adherence consumables in parts of Canada. Outside of the 13 Table of Contents United States and Canada, we have direct sales employees in the United Kingdom, France, Germany, the United Arab Emirates, Belgium, and Australia.
Our sales in the United States and Canada are primarily made direct to end-user customers with the exception of some distribution of medication adherence consumables and automation in parts of Canada. Outside of the United States and Canada, we have direct sales employees in the United Kingdom, France, Germany, and Australia.
Etta served as Senior Vice President and Chief Financial Officer of Essilor of America, Inc., a subsidiary of EssilorLuxottica SA, a global leader in ophthalmic medical devices and products, from May 2019 to March 2022. From June 2015 to May 2019, Mr.
Etta joined Omnicell in June 2023 as Executive Vice President and Chief Financial Officer. Prior to joining Omnicell, Mr. Etta served as Senior Vice President and Chief Financial Officer of Essilor of America, Inc., a subsidiary of EssilorLuxottica SA, a global leader in ophthalmic medical devices and products, from May 2019 to March 2022.
Furthermore, we believe a combination of robotics, smart devices, intelligent software, and expert services is needed in every care setting where medications are managed.
Furthermore, we believe a combination of robotics and smart devices, software workflows, expert services, and operational and optimization analytics is needed in every care setting where medications are managed.
Likewise, the manual compounding of sterile IV preparations can be error-prone and create significant patient safety risks, and outsourcing sterile IV compounding could lead to increased medication costs and lack of access to needed medications as a result of being unable to source medications when they are required.
Likewise, the manual compounding of sterile IV preparations can be error-prone and create significant patient safety risks, and outsourcing sterile IV compounding could lead to increased medication costs and lack of access to needed medications due to an inability to source medications when they are required.
Medication Adherence Our medication adherence solutions, which include our consumables and medication packaging systems, are used by institutional pharmacies serving long-term care and other sites outside the acute care hospital, as well as retail, community, and outpatient pharmacies, and are designed to improve pharmacy operations and patient adherence to prescriptions.
Medication Adherence Our medication adherence solutions, which include consumables and medication packaging systems, are designed to improve pharmacy operations and patient adherence to prescriptions. These solutions are used by institutional pharmacies serving long-term care and other non-acute healthcare facilities, as well as retail, community, and outpatient pharmacies.
Furthermore, our financial workflows are designed to streamline payments, cashflow and claims for durable medical equipment, vaccination, clinical care, and specialty drugs through our medical billing and reconciliation solutions. By leveraging these digitally enabled services, we strive to provide data-driven intelligence to optimize pharmacy operations continuously, driving operational and execution excellence, as well as patient adherence and outcomes.
Furthermore, our financial workflows are designed to streamline payments, cashflow, and claims for durable medical equipment, vaccination, clinical care, and specialty drugs through medical billing and reconciliation solutions. These digitally enabled services provide data-driven intelligence to help optimize pharmacy operations, as well as patient adherence and outcomes.
Advanced Services include services such as Central Pharmacy Dispensing Service, IV Compounding Service, Point of Care Service, EnlivenHealth solutions, Specialty Pharmacy Services, 340B solutions, Inventory Optimization Service, and other software solutions and licensing support.
Software as a Service (“SaaS”) and Expert Services (formerly Advanced Services) include services such as Central Pharmacy Dispensing Service, IV Compounding Service, Points of Care Service, EnlivenHealth solutions, Specialty Pharmacy Services, 340B solutions, Inventory Optimization Service, and other software solutions and licensing support.
Larger or more complex implementations such as software-enabled connected devices for Central Pharmacy, including, but not limited to, our Central Pharmacy Dispensing Service and IV Compounding Service, are often installed and recognized as revenue between 12 and 24 months after booking. Service revenues from Advanced Services are recorded over the contractual term.
Larger or more complex implementations such as software-enabled connected devices for Central Pharmacy, including, but not limited to, our Central Pharmacy Dispensing Service and IV Compounding Service, are often installed and recognized as revenue between 12 and 24 months after booking.
Trade secrets and other confidential information are also important to our business. We protect our trade secrets through a combination of contractual restrictions and confidentiality and licensing agreements. Research and Development Our research and development efforts generally begin with customer collaboration.
Trade secrets and other confidential information are also important to our business. We protect our trade secrets through a combination of contractual restrictions and confidentiality and licensing agreements. Research and Development Our research and development efforts start with collaborating with our customers.
In addition, a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA.
In addition, as noted above, a claim including items or services resulting from a violation of the federal Anti-Kickback Statute 12 Table of Contents constitutes a false or fraudulent claim for purposes of the FCA.
Internationally, various foreign jurisdictions in which we operate, including the European Union (the “EU”), have established, or are developing, their own data privacy and security legal frameworks with which we or our customers are subject to including, for example, the UK and the EU’s General Data Protection Regulation (together, the “GDPR”).
Internationally, various foreign jurisdictions in which we operate, including the European Union (the “EU”), have established, or are developing, their own data privacy and security legal frameworks with which we or our customers are subject to including, for example, the United Kingdom’s Data Protection Act 2018 (being the UK’s implementation of the General Data Protection Regulation), and the EU’s General Data Protection Regulation (the “GDPR”).
For other geographies, we generally sell through distributors and resellers. Our foreign operations are discussed in Note 3, Revenues, and Note 7, Property and Equipment , of the Notes to Consolidated Financial Statements and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , of this Annual Report on Form 10-K.
Our foreign operations are discussed in Note 3, Revenues, and Note 7, Property and Equipment , of the Notes to Consolidated Financial Statements and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , of this Annual Report on Form 10-K.
In addition, the largest growth in spending for professional services—defined as payments to physicians and other clinical care team members for services provided in physician offices and hospitals—occurred among administered drugs, which accounted for the biggest share, at 76% of the total net cumulative increase in professional services spending from 2016 to 2020.
In addition, the second largest growth in spending for professional services—defined as payments to physicians and other clinical care team members for services provided in physician offices and hospitals—occurred among administered drugs, which accounted for 21% of the total net cumulative increase in professional services spending from 2018 to 2022.
In the United States, these include federal health information privacy and security laws (such as the Health Information Portability and Accountability Act of 1996), various state and federal security breach notification laws, consumer protection laws, and state laws addressing privacy and security.
In the United States, these include federal health information privacy and security laws (such as HIPAA), various state and federal privacy and security breach notification laws, consumer protection laws, and individual state laws addressing privacy and security of personal and health information.
Operating Segments We manage our operations as a single segment for the purposes of assessing performance and making operating decisions. Our Chief Operating Decision Maker (“CODM”) is our Chief Executive Officer. The CODM allocates resources and evaluates the performance of Omnicell at the consolidated level using information about our revenues, gross profit, income from operations, and other key financial data.
Operating Segments We manage our operations as a single segment for the purposes of assessing performance and making operating decisions. Our Chief Operating Decision Maker (“CODM”) is our Chief Executive Officer. The CODM allocates resources and evaluates the performance of Omnicell at the consolidated level using our consolidated net income.
Criminal penalties, including imprisonment and criminal fines, are also possible for making or presenting a false, fictitious or fraudulent claim to the federal government. • The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which, among other things, prohibits knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payers, and prohibits (i) knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false, fictitious, or fraudulent statement or representation and (ii) making or using any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items, or services.
HIPAA, which, among other things, prohibits knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payers, and prohibits (i) knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false, fictitious, or fraudulent statement or representation and (ii) making or using any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items, or services.
We believe our current solutions within the Point of Care market and new innovation and services will continue to help customers drive improved clinical and financial outcomes. • Central Pharmacy and IV Compounding.
We believe our current solutions for Points of Care and new innovations and services will continue to help customers drive improved clinical and financial outcomes. • Central Pharmacy and IV Compounding.
Manufacturing and Inventory The manufacturing process for our automation products allows us to uniquely configure hardware and software to meet a wide variety of individual customer needs. The automation product manufacturing process consists primarily of the final assembly of components and testing of the completed product.
Additional support to our field services is provided by certified external partners as needed. Manufacturing and Inventory The manufacturing process for our automation products allows us to uniquely configure hardware and software to meet a wide variety of individual customer needs. The automation product manufacturing process consists primarily of the final assembly of components and testing of the completed product.
Leveraging digital recruiting platforms, social media engagement, and university partnerships, we’re not just expanding our employer brand but also ensuring a talent pipeline that is both diverse and attuned to the evolving dynamics of our industry.
Leveraging digital recruiting platforms, social media engagement, and university partnerships, we are not just expanding our employer brand, but also working to create a talent pipeline that is both diverse and attuned to the evolving dynamics of our industry. • Our commitment to a robust and thoughtful hiring process is unwavering.
As a market leader, we expect to continue expansion into this product market as customers increase the use of our dispensing systems in more areas within their hospitals and increasingly in ambulatory care settings.
As a market leader, we expect to continue expansion into this product market as customers increase the use of our dispensing systems in more areas within their hospitals and increasingly in ambulatory care settings. Macroeconomic trends in our target market continue to improve as health system margins and volumes increase and stabilize in the post-pandemic environment.
Lipps has served as Chairman of the Board and a Director of Omnicell since founding Omnicell in September 1992. Mr. Lipps received both a B.S. in economics and a B.B.A. from Southern Methodist University. Nchacha E. Etta joined Omnicell in June 2023 as Executive Vice President and Chief Financial Officer. Prior to joining Omnicell, Mr.
Lipps was named Chief Executive Officer and President of Omnicell in October 2002. Mr. Lipps has served as Chairman of the Board and a Director of Omnicell since founding Omnicell in September 1992. Mr. Lipps received both a B.S. in economics and a B.B.A. from Southern Methodist University. Nchacha E.
We also provide services and solutions to independent and health system specialty pharmacies that may require us to observe U.S. Department of Health and Human Services regulations for credentialing of providers (pharmacists). These services and solutions may also be subject to DEA regulations concerning the management, storing, dispensing, and disposal of, and accounting for, controlled substances.
Additionally, our services and solutions may also be subject to DEA regulations, and applicable state regulations (including states boards of pharmacy), concerning the management, storing, dispensing, and disposal of, and accounting for, controlled substances. Credentialing and Reimbursement We also provide services and solutions to independent and health system specialty pharmacies that may require us to observe U.S.
Since we manufacture and sell our products outside of the United States, certain products of a local nature and variations of product lines must also meet other state and local regulatory requirements.
Considerations Since we manufacture and sell our products outside of the United States, certain products of a local nature and variations of product lines must also meet the applicable national, provincial, state and local regulatory requirements of the applicable country (“ex-U.S. regulatory requirements”).
Similarly, certain provisions of the Federal Food, Drug, and Cosmetic Act (“FDCA”) govern the approval, manufacture, handling, distribution, and tracking and tracing of pharmaceuticals. The FDCA also regulates which medications may be compounded, and how certain compounded medications may be manufactured, distributed, and dispensed.
Similarly, certain provisions of the FD&C Act govern the approval, manufacture, handling, distribution, and tracking and tracing of pharmaceuticals. The FD&C Act also regulates which medications may be compounded, and how certain 11 Table of Contents compounded medications may be manufactured, distributed, and dispensed.
As part of our Advanced Services offering, we provide equipment and software at the inception of the contract period, which is accounted for as a multi-year sales-type lease. These agreements are generally multi-year and non-cancellable. We typically retain these lease receivables for such Advanced Services in-house and service them for the duration of the associated service term.
As part of our SaaS and Expert Services offering, we provide equipment and software at the inception of the contract period, which is accounted for as a multi-year sales-type lease. These agreements are generally multi-year and non-cancellable.
In April 2023, we published our 2022 ESG Report, which highlights our approach to being responsible corporate citizens and describes and updates our contributions and work towards achieving a more sustainable future. We define corporate responsibility through four strategic pillars – Environmental, Social, Governance, and Innovation.
In April 2024, we published our 2023 ESG Report, which highlights our approach to being responsible corporate citizens and describes and updates our contributions and work towards achieving a more sustainable future.
For management of medical supplies, a specialized cabinet that uses radio frequency identification is also available, which is designed to improve the accuracy of inventory management.
For management of medical supplies, a specialized cabinet that uses radio frequency identification is also available, which is designed to improve picking and restocking workflows for nurses and surgeons.
Manley was a partner in the law firm of Duane Morris LLP and prior to that he was a partner in the law firm of Kirkland & Ellis LLP from November 2009 until August 2014. Mr. Manley holds a J.D. from the University of Notre Dame Law School and a B.S. in mechanical engineering from Purdue University.
Manley was a partner in the law firm of Duane Morris LLP and prior to that he was a partner in the law firm of Kirkland & Ellis LLP from November 2009 until August 2014. Mr.
These state laws may contain statutory and regulatory exceptions that are different from those of the federal law and that may vary from state to state. • The federal payment transparency tracking and reporting requirements known as the Physician Payments Sunshine Act, implemented as the Open Payments Program, which requires certain manufacturers of drugs, devices, biologics and medical supplies, among others, to report annually to CMS information related to payments and other transfers of value made by that entity to U.S.-licensed physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, certified nurse midwives, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.
Certain manufacturers of drugs, devices, biologics and medical supplies, among others, are required to report annually to CMS information related to payments and other transfers of value made by that entity to U.S.-licensed physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, certified nurse midwives, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.
Rising costs of labor, prescription drugs, and new medical technology all contribute to increased spending. Governmental pressures surrounding healthcare reform and compliance have led to increased scrutiny of the cost and efficiency with which healthcare providers deliver their services.
Governmental pressures surrounding healthcare reform and compliance have led to increased scrutiny of the cost and efficiency with which healthcare providers deliver their services.
We believe a majority of long-term product backlog will be convertible into revenues in 12-24 months.
We consider backlog that is expected to be converted to revenues in more than twelve months to be long-term backlog. We believe a majority of long-term product backlog will be convertible into revenues in 12 to 24 months.
The insight that we gain through this collaboration helps us to develop solutions to address the unmet needs and challenges faced by our customers. We continue to make significant investments in enhancing the value of our XT Series automated dispensing systems through both hardware and software upgrades.
The insights we gain from this collaboration help us develop solutions that are designed to address the customer’s unmet needs and challenges. We continue to invest significantly in enhancing the value of our XT Series automated dispensing systems through both hardware and software upgrades.
Advancing Our Solutions With more than 30 years of experience delivering medication management solutions, Omnicell believes a combination of robotics, smart devices, intelligent software, and expert services, which we refer to as Advanced Services, will help deliver improved medication management outcomes.
Advancing Our Solutions With more than 30 years of experience delivering medication management solutions, Omnicell believes combining robotics and smart devices, software workflows, expert services, and operational and optimization analytics will help deliver improved medication management outcomes.
Our medication adherence product manufacturing process consists of fabrication and assembly of equipment and mechanized process manufacturing of consumables. We rely on a limited number of suppliers for the raw materials that are necessary in the production of our consumable medication packages.
We rely on a limited number of suppliers for the raw materials that are necessary in the production of our consumable medication packages.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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In addition, our customers include healthcare providers and facilities subject to regulation by the DEA, pharmacies subject to regulation by the FDA and individual state boards of pharmacy and hospitals subject to accreditation by accrediting organizations approved by the CMS, such as the Joint Commission, and the rules, regulations, and standards of such regulators and accrediting organizations.
In addition, our customers include healthcare providers and facilities subject to regulation by the DEA, pharmacies subject to regulation by the FDA and individual state boards of pharmacy and hospitals subject to accreditation by accrediting organizations approved by CMS, such as the Joint Commission, and the rules, regulations, and standards of such regulators and accrediting organizations.
In addition, our failure to timely file our periodic reports could eventually result in the delisting of our common stock, regulatory sanctions from the SEC, and/or the breach of the terms contained in our credit facility, or any preferred equity or debt securities we may issue in the future, any of which could have a material adverse impact on our operations and your investment in our common stock.
In addition, our failure to timely file our periodic reports could eventually result in the delisting of our common stock, regulatory sanctions from the SEC, and/or the breach of the terms contained in our credit facility, or any preferred equity or debt securities we may issue in the future, any of which could have a material adverse impact on our operations and investment in our common stock.
In addition to other factors discussed in this “Risk Factors” section, factors, many of which are outside of our control and are difficult to predict, that may cause our quarterly or annual operating results to fluctuate include, but are not limited to, the following: • the size, product mix, and timing of orders for our products, and their installation and integration and whether our estimates for the same were proper; 39 Table of Contents • our ability to successfully install our products on a timely basis and meet other contractual obligations necessary to recognize revenue; • fluctuations in customer demand for our products, including due to changes in our customers’ budgets, healthcare worker turnover rates and labor shortages and whether customer demand was properly estimated; • our ability to control costs, including operating expenses, and continue cost reduction efforts, such as our restructuring initiative; • changes in pricing policies by us or our competitors; • the number, timing, and significance of product enhancements and new product announcements by us or our competitors; • the timing and significance of any acquisition or business development transactions that we may consider or negotiate and the revenues, costs, and earnings that may be associated with these transactions; • the relative proportions of revenues we derive from products and services; • our ability to generate cash from our accounts receivable on a timely basis; • changes in, and our ability to successfully execute on, our business strategy; and • macroeconomic and political conditions, including fluctuations in interest rates, tax increases, availability of credit markets, and trade and tariff actions.
In addition to other factors discussed in this “Risk Factors” section, factors, many of which are outside of our control and are difficult to predict, that may cause our quarterly or annual operating results to fluctuate include, but are not limited to, the following: • the size, product mix, and timing of orders for our products, and their installation and integration and whether our estimates for the same were proper; • our ability to successfully install our products on a timely basis and meet other contractual obligations necessary to recognize revenue; • fluctuations in customer demand for our products, including due to changes in our customers’ budgets, healthcare worker turnover rates and labor shortages and whether customer demand was properly estimated; • our ability to control costs, including operating expenses, and continue cost reduction efforts, such as our restructuring initiative; • changes in pricing policies by us or our competitors; • the number, timing, and significance of product enhancements and new product announcements by us or our competitors; • the timing and significance of any acquisition or business development transactions that we may consider or negotiate and the revenues, costs, and earnings that may be associated with these transactions; • the relative proportions of revenues we derive from products and services; • our ability to generate cash from our accounts receivable on a timely basis; • changes in, and our ability to successfully execute on, our business strategy; and • macroeconomic and political conditions, including fluctuations in interest rates, tax increases, availability of credit markets, and trade and tariff actions.
Drug Enforcement Administration (“DEA”), or state boards of pharmacy, that we were not previously subject to; • failure to understand and compete effectively in markets in which we have limited previous experience; • substantial costs and diversion of management’s attention when evaluating and negotiating such transactions and then integrating an acquired business, including any unforeseen delays and expenditures that may result; • incurring additional debt in connection with the financing of an acquisition; • discovery, after completion of the acquisition, of liabilities assumed or internal control, regulatory or compliance issues in acquisitions that are broader in scope and magnitude or are more difficult to manage than originally assumed or identified; • difficulties assimilating and retaining key personnel of an acquired business; • failure to achieve anticipated benefits such as revenue enhancements and operational and cost efficiencies; • difficulties in integrating newly acquired products and solutions in our offerings, or inability or failure to provide high quality service, expand bookings and sales, or effectively coordinate sales and marketing efforts after the acquisition; • inability to maintain business relationships with customers and suppliers of newly acquired companies due to post-acquisition disruption; • inability or failure to successfully integrate financial reporting and information technology systems; and • other additional risks relating to legal, regulatory or tax matters.
Drug Enforcement Administration (“DEA”), or state boards of pharmacy, that we were not previously subject to; • failure to understand and compete effectively in markets in which we have limited previous experience; • substantial costs and diversion of management’s attention when evaluating and negotiating such transactions and then integrating an acquired business, including any unforeseen delays and expenditures that may result; • incurring additional debt in connection with the financing of an acquisition; • discovery, after completion of the acquisition, of liabilities assumed or internal control, regulatory or compliance issues in acquisitions that are broader in scope and magnitude or are more difficult to manage than originally assumed or identified; • difficulties assimilating and retaining key personnel of an acquired business; • failure to achieve anticipated benefits such as revenue enhancements and operational and cost efficiencies; 33 Table of Contents • difficulties in integrating newly acquired products and solutions in our offerings, or inability or failure to provide high quality service, expand bookings and sales, or effectively coordinate sales and marketing efforts after the acquisition; • inability to maintain business relationships with customers and suppliers of newly acquired companies due to post-acquisition disruption; • inability or failure to successfully integrate financial reporting and information technology systems; and • other additional risks relating to legal, regulatory or tax matters.
If we fail to do so, we may be unable to achieve the industry vision of the Autonomous Pharmacy or we may not realize the anticipated benefits of our investments in support of this vision, either of which could have a material adverse effect on our business, operating results, cash flow, or financial condition.
If we fail to do so, we may be unable to achieve the industry-defined vision of the Autonomous Pharmacy or we may not realize the anticipated benefits of our investments in support of this vision, either of which could have a material adverse effect on our business, operating results, cash flow, or financial condition.
The GDPR imposes stringent obligations on companies that fall within its scope, including inter alia: (i) accountability and transparency requirements, requiring controllers to demonstrate and record compliance with the GDPR and to provide more detailed information to data subjects regarding processing of their personal information; (ii) obligations to comply with data protection rights of data subjects including a right: (x) of access to, erasure of, or rectification of personal data; (y) to restriction of processing or to withdraw consent to processing; and (z) to object to processing or to ask for a copy of personal data to be provided to a third party; (iii) obligations to consider data protection as any new products or services are developed and designed (including e.g., to limit the amount of personal information processed); (iv) requirements to process personal information lawfully including specific requirements for obtaining valid consent where consent is the lawful basis for processing; (v) an obligation to report personal data breaches to: (x) the data supervisory authority without undue delay (and no later than 72 hours after discovering the personal data breach, where feasible), unless the personal data breach is unlikely to result in a risk to the data subjects’ rights and freedoms; and (y) affected data subjects, where the personal data breach is likely to result in a high risk to their rights and freedoms.
The GDPR imposes stringent obligations on companies that fall within its scope, including inter alia: (i) accountability and transparency requirements, requiring controllers to demonstrate and record compliance with the GDPR and to provide more detailed information to data subjects regarding processing of their personal information; (ii) obligations to comply with data protection rights of data subjects including a right: (x) of access to, erasure of, or rectification of personal data; (y) to restriction of processing or to withdraw consent to processing; and (z) to object to processing or to ask for a copy of personal data to be provided to a third party; (iii) obligations to consider data protection as any new products or services are developed and designed (including e.g., to limit the amount of personal information processed); (iv) requirements to process personal 30 Table of Contents information lawfully including specific requirements for obtaining valid consent where consent is the lawful basis for processing; (v) an obligation to report personal data breaches to: (x) the data supervisory authority without undue delay (and no later than 72 hours after discovering the personal data breach, where feasible), unless the personal data breach is unlikely to result in a risk to the data subjects’ rights and freedoms; and (y) affected data subjects, where the personal data breach is likely to result in a high risk to their rights and freedoms.
Our ability to execute successfully on the industry vision of the Autonomous Pharmacy depends on our ability to continue to develop and introduce new products and services or product and service enhancements, and integrate new products and services with existing offerings, in furtherance of this vision in a timely manner and on a cost-effective basis.
Our ability to execute successfully on the industry-defined vision of the Autonomous Pharmacy depends on our ability to continue to develop and introduce new products and services or product and service enhancements, and integrate new products and services with existing offerings, in furtherance of this vision in a timely manner and on a cost-effective basis.
Effective September 2021, the government has mandated changes in its Federal Supply Services contract that has resulted in our determination not to enter into future leases with U.S. government customers. Our existing leases with U.S. government customers are unaffected by this change.
Effective September 2021, the government mandated changes in its Federal Supply Services contract that resulted in our determination not to enter into future leases with U.S. government customers. Our existing leases with U.S. government customers are unaffected by this change.
The competitive challenges we face in the markets in which we operate include, but are not limited to, the following: • current or future competitors may offer or have the ability to offer a broader range of solutions than us, develop alternative solutions that provide a better customer outcome or lower cost of operation, develop new features or capabilities for their products, including artificial intelligence (“AI”), machine learning, and generative AI capabilities, which are part of an intensely competitive and rapidly evolving market, that could compete with our solutions, respond more quickly and efficiently to new or changing technologies, standards, or regulations, or devote greater resources to the development, promotion, and sale of their products than we do; 25 Table of Contents • competitive pressures could result in increased price competition for our products and services, fewer customer orders, and reduced gross margins; • current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties, including larger, more established healthcare supply companies, thereby increasing their ability to develop and offer a broader suite of products and services; • our industry has recently experienced a significant degree of consolidation which could lead to competitors developing new business models that require us to adapt how we market, sell, or distribute our products or could also lead to competitors with greater economies of scale that have lower cost of operations allowing them to sell their products and services at a lower cost; • certain competitors have greater brand name recognition and a more extensive installed base than we do, and such advantages could be used to increase their market share; • certain competitors may have existing business relationships with our current and potential customers, which may cause these customers to purchase competing products and services from these competitors; and • our competitors may secure products and services from suppliers on more favorable terms or secure exclusive arrangements with suppliers or buyers that may impede the sales of our products and services.
The competitive challenges we face in the markets in which we operate include, but are not limited to, the following: • current or future competitors may offer or have the ability to offer a broader range of solutions than us, develop alternative solutions that provide a better customer outcome or lower cost of operation, develop new features or capabilities for their products, including AI, machine-learning, and generative AI capabilities, which are part of an intensely competitive and rapidly evolving market, that could compete with our solutions, respond more quickly and efficiently to new or changing technologies, standards, or regulations, or devote greater resources to the development, promotion, and sale of their products than we do; • competitive pressures could result in increased price competition for our products and services, fewer customer orders, and reduced gross margins; • current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties, including larger, more established healthcare supply companies, thereby increasing their ability to develop and offer a broader suite of products and services; • our industry has recently experienced a significant degree of consolidation which could lead to competitors developing new business models that require us to adapt how we market, sell, or distribute our products or could also lead to competitors with greater economies of scale that have lower cost of operations allowing them to sell their products and services at a lower cost; • certain competitors have greater brand name recognition and a more extensive installed base than we do, and such advantages could be used to increase their market share; 28 Table of Contents • certain competitors may have existing business relationships with our current and potential customers, which may cause these customers to purchase competing products and services from these competitors; and • our competitors may secure products and services from suppliers on more favorable terms or secure exclusive arrangements with suppliers or buyers that may impede the sales of our products and services.
While we have implemented a number of security measures designed to protect our systems and data, including firewalls, antivirus and malware detection tools, patches, log monitors, routine back-ups, system audits, routine password modifications, and disaster recovery procedures, and have designed certain security features into our solutions, we and our third party service providers regularly defend against and respond to data security incidents and such measures may not be adequate or implemented properly to prevent or fully address the adverse effect of such events.
While we have implemented a number of security measures designed to protect our systems and data, including firewalls, antivirus and malware detection tools, patches, log monitors, routine back-ups, system audits, routine password modifications, employee training, and disaster recovery procedures, and have designed certain security features into our solutions, we and our third party service providers regularly defend against and respond to data security incidents and such measures may not be adequate or implemented properly to prevent or fully address the adverse effect of such events.
We cannot predict what actions may ultimately be taken with respect to tariffs or trade relations between the United States and other countries (including China), what products may be subject to such actions, or what actions may be taken by the other countries in retaliation.
We cannot predict what actions may ultimately be taken with respect to tariffs or trade relations between the United States and other countries (including China), what products may be subject to such actions, or what actions may be taken by the other countries in retaliation, including reciprocal tariffs.
These risks are likely to increase as we continue to grow our cloud-based offerings, including in support of the industry vision of the Autonomous Pharmacy, and as we receive, store, and process more of our customers’ data.
These risks are likely to increase as we continue to grow our cloud-based offerings, including in support of the industry-defined vision of the Autonomous Pharmacy, and as we receive, store, and process more of our customers’ data.
These consequences may include, but are not limited to: (1) refunding or retroactively adjusting amounts that have been paid under the relevant government program or from other payers; (2) state or federal agencies imposing significant fines, penalties and other sanctions on us; (3) losing our right to participate in certain governmental programs; and (4) damaging our reputation in various markets, which could adversely affect our ability to attract customers and employees.
These consequences may include, but are not limited to: (1) refunding or retroactively adjusting amounts that have been paid under the relevant government program or from other payors; (2) state or federal agencies imposing significant fines, penalties and other sanctions on us; (3) losing our right to participate in certain governmental programs; and (4) damaging our reputation in various markets, which could adversely affect our ability to attract customers and employees.
For these and other reasons, the sales cycle associated with sales of our systems is often lengthy and subject to a number of delays over which we have little or no control.
For these and other reasons, the sales cycle associated with sales of our systems is often lengthy, unpredictable, and subject to a number of delays over which we have little or no control.
Furthermore, as we execute on the industry vision of the Autonomous Pharmacy and grow and develop our cloud-based software as a service and solution as a service offerings, more specialized expertise will be required.
Furthermore, as we execute on the industry-defined vision of the Autonomous Pharmacy and grow and develop our cloud-based software as a service and solution as a service offerings, more specialized expertise will be required.
In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Notes (and are likely to do so in connection with any conversion of the Notes or redemption or repurchase of the Notes), which could cause or avoid an increase or a decrease in the market price of our common stock.
In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the 2029 Notes or 2025 Notes (and are likely to do so in connection with any conversion of the 2029 Notes or 2025 Notes or redemption or repurchase of the 2029 Notes or 2025 Notes), which could cause or avoid an increase or a decrease in the market price of our common stock.
If any of our government-owned or government-run hospital customers decide to terminate their agreements early for any reason, we would not derive the expected financial benefits from any such customer which could result in lower than expected revenue and adversely affect our business, operating results, cash flow, or financial condition.
If any of our g overnment-owned or government-run hospital customers decide to terminate their agreements early for any reason, we would not derive the expected financial benefits from any such customer, which could result in lower than expected revenue and adversely affect our business, operating results, cash flow, or financial condition.
The GDPR has direct effect where an entity is established in the European Economic Area (“EEA”) or the UK (as applicable) and has extraterritorial effect, including where an organization outside of the EEA or the UK processes personal information in relation to the offering of goods or services to those individuals or the monitoring of their behavior.
The GDPR has direct effect where an entity is established in the European Economic Area (“EEA”) or the UK (as applicable) and has extraterritorial effect, including where an organization outside of the EEA or the UK processes personal information in relation to the offering of goods or services to those individuals or the monitoring of their behavior while those individuals are in the EEA or UK.
The broader U.S. and global economy has experienced elevated inflationary pressures as well as continued supply chain disruptions, labor shortages and geopolitical instability. We are unable to predict future changes in the state of the U.S. or global economy or whether inflationary pressures will continue to intensify or subside.
The broader U.S. and global economy has continued to experience elevated inflationary pressures as well as continued supply chain disruptions, labor shortages and geopolitical instability. We are unable to predict future changes in the state of the U.S. or global economy or whether inflationary pressures will continue to intensify or subside.
Our international operations subject us to a variety of risks, including: • our reliance on distributors for the sale of our medication management solutions outside the United States, Canada, the UK, France, and Germany; • the difficulty of managing an organization operating in various countries; • reduced protection for intellectual property rights in certain jurisdictions; • the imposition of, or adverse changes in, international laws and regulations, including privacy and security, labor, import, export, trade, environmental standards, product compliance, tax, anti-bribery, and employment laws; • fluctuations in currency exchange rates and difficulties in repatriating funds from certain countries; • additional investment, coordination, and lead-time necessary to successfully interface our automation solutions with the existing information systems of our customers or potential customers outside of the United States; • political unrest, terrorism, and other potential hostilities (such as the ongoing conflicts between Russia and Ukraine or Israel and Hamas), including in areas in which we have facilities or operations; and • epidemics, pandemics, or other major public health crises, such as the COVID-19 pandemic.
Our international operations subject us to a variety of risks, including: • our reliance on distributors for the sale of our medication management solutions outside the United States, Canada, the UK, France, and Germany; • the difficulty of managing an organization operating in various countries; • reduced protection for intellectual property rights in certain jurisdictions; 36 Table of Contents • the imposition of, or adverse changes in, international laws and regulations, including privacy and security, labor, import, export, trade, environmental standards, product compliance, tax, anti-bribery, and employment laws; • fluctuations in currency exchange rates and difficulties in repatriating funds from certain countries; • additional investment, coordination, and lead-time necessary to successfully interface our automation solutions with the existing information systems of our customers or potential customers outside of the United States; • political unrest, terrorism, and other potential hostilities (such as the ongoing conflicts between Russia and Ukraine or Israel and Hamas), including in areas in which we have facilities or operations; and • epidemics, pandemics, or other major public health crises.
The convertible note hedge transactions are expected generally to reduce the potential dilution to our common stock upon any conversion of Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be.
The convertible note hedge transactions are expected generally to reduce the potential dilution to our common stock upon any conversion of 2029 Notes or 2025 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2029 Notes or 2025 Notes, as the case may be.
Additionally, the American Taxpayer Relief Act of 2012, among other things, reduced Centers for Medicare & Medicaid Services (“CMS”) payments to several types of providers, including hospitals, and increased the statute of limitations period for the government to recover Medicare overpayments to providers from three to five years.
For example, the American Taxpayer Relief Act of 2012, among other things, reduced Centers for Medicare & Medicaid Services (“CMS”) payments to several types of providers, including hospitals, and increased the statute of limitations period for the government to recover Medicare overpayments to providers from three to five years.
Disruptions to, or the failure of any of these systems, and the resulting loss of critical data, which is not quickly 35 Table of Contents recoverable by the effective execution of disaster recovery plans designed to reduce such disruption, could cause delays in our product development, prevent us from fulfilling our customers’ orders, and could severely affect our ability to conduct normal business operations, the result of which would adversely affect our operating results.
Disruptions to, or the failure of any of these systems, and the resulting loss of critical data, which is not quickly recoverable by the effective execution of disaster recovery plans designed to reduce such disruption, could cause delays in our product development, prevent us from fulfilling our customers’ orders, and could severely affect our ability to conduct normal business operations, the result of which would adversely affect our operating results.
If we are unable to raise additional funds through equity or debt financing when needed, our ability to market, sell, or distribute our products and/or fund our operations may be negatively impacted and could harm our business, operating results, cash flow, or financial condition.
If we are unable to raise additional funds through equity or debt financing when needed, our ability to market, sell, or distribute our solutions and/or fund our operations may be negatively impacted and could harm our business, operating results, cash flow, or financial condition.
Our ability to make payments of the principal, to pay interest, or to refinance our indebtedness, including the Notes, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control.
Our ability to make payments of the principal, to pay interest, or to refinance our indebtedness, including the 2025 Notes and the 2029 Notes, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control.
In addition, the existence of the Notes may encourage short selling of our common stock by market participants because the conversion of the Notes could be used to satisfy short positions, or the anticipated conversion of the Notes into shares of our common stock could depress the price of our common stock.
In addition, the existence of the 2029 Notes or the 2025 Notes may encourage short selling by market participants because the conversion of the 2029 Notes or the 2025 Notes could be used to satisfy short positions, or anticipated conversion of the 2029 Notes or the 2025 Notes into shares of our common stock could depress the price of our common stock .
In addition, since revenues are generally recognized over the term of the subscription, any decrease in customer purchases of our subscription-based products and services will not be fully reflected in our operating results until future periods, which may result in inflated revenue growth rates that do not reflect such decreases initially.
In addition, since revenues are generally recognized over the term of the subscription, any decrease in customer purchases of our 26 Table of Contents subscription-based products and services will not be fully reflected in our operating results until future periods, which may result in inflated revenue growth rates that do not reflect such decreases initially.
Certain of our Advanced Services offerings are highly complex and may be susceptible to errors, including human or technological error. We may be required to bear the cost of correcting any errors and the cost of such corrections may be significant, which could adversely affect our business, operating results, cash flow, or financial condition.
Certain of our SaaS and Expert Services offerings are highly complex and may be susceptible to errors, including human or technological error. We may be required to bear the cost of correcting any errors and the cost of such corrections may be significant, which could adversely affect our business, operating results, cash flow, or financial condition.
In addition, as more fully described below in the risk factor captioned “ Covenants in our Second A&R Credit Agreement restrict our business and operations in many ways, and if we do not effectively manage our compliance with these covenants, our business, operating results, cash flow, or financial condition could be adversely affected, ” our second amended and restated agreement with certain lenders, and Wells Fargo Bank, National Association, as administrative agent (the “Second A&R Credit Agreement”) includes customary restrictive covenants that impose operating and financial restrictions on us.
In addition, as more fully described below in the risk factor captioned “ Covenants in our Second A&R Credit Agreement restrict our business and operations in many ways, and if we do not effectively manage our compliance with these covenants, our financial conditions and operating results could be adversely affected, ” our second amended and restated agreement, as amended, with certain lenders, and Wells Fargo Bank, National Association, as administrative agent (the “Second A&R Credit Agreement”) includes customary restrictive covenants that impose operating and financial restrictions on us.
Any of the foregoing could 22 Table of Contents make our existing and future solutions obsolete and unmarketable, or result in loss of market share or a determination to exit a particular business or product line, damage our reputation or otherwise harm our business, operating results, cash flow, or financial condition.
Any of the foregoing could make our existing and future solutions obsolete and unmarketable, or result in loss of market share or a determination to exit a particular business or product line, damage our reputation or otherwise harm our business, operating results, cash flow, or financial condition.
Risks Related to Our Notes • Any conversion of our Notes (as defined below) may dilute the ownership interest of our stockholders, depress the price of our common stock or, if the conditional conversion feature of the Notes is triggered, adversely affect our business, operating results, cash flow, or financial condition.
Risks Related to Our Notes • Any conversion of our 2029 Notes or 2025 Notes (each as defined below) may dilute the ownership interest of our stockholders, depress the price of our common stock or, if the conditional conversion feature of the 2029 Notes or 2025 Notes is triggered, adversely affect our business, operating results, cash flow, or financial condition.
In addition, certain provisions of the Federal Food, Drug and Cosmetic Act (“FDCA”) related to the handling, distribution and compounding of pharmaceuticals, govern all parts of the drug 32 Table of Contents distribution chain, which our customers may be required to comply with and which may influence customer demand for our products.
In addition, certain provisions of the Federal Food, Drug and Cosmetic Act (“FDCA”) related to the handling, distribution and compounding of pharmaceuticals, govern all parts of the drug distribution chain, which our customers may be required to comply with and which may influence customer demand for our products.
Petersburg facilities, including as a result of extreme weather conditions or natural disasters, which may become more frequent as a result of climate change, will adversely affect our ability to ship our consumable medication packages globally and would reduce our revenues.
Petersburg facilities, including as a result of extreme weather conditions or natural disasters, which may become more frequent 27 Table of Contents as a result of climate change, will adversely affect our ability to ship our consumable medication packages globally and would reduce our revenues.
As a result, if our financial results fail to meet (or significantly exceed) our publicly announced financial guidance or the expectations of analysts or investors, analysts could downgrade our common stock or publish unfavorable research that could cause our stock price or trading volume to decline, potentially significantly.
As a result, if our financial results fail to meet (or significantly exceed) our publicly announced financial guidance or 42 Table of Contents the expectations of analysts or investors, analysts could downgrade our common stock or publish unfavorable research that could cause our stock price or trading volume to decline, potentially significantly.
Our Board 40 Table of Contents of Directors may use these provisions to prevent changes in the management and control of our Company. Also, under applicable Delaware law, our Board of Directors may adopt additional anti-takeover measures in the future including, without limitation, a stockholder rights plan.
Our Board of Directors may use these provisions to prevent changes in the management and control of our Company. Also, under applicable Delaware law, our Board of Directors may adopt additional anti-takeover measures in the future including, without limitation, a stockholder rights plan.
The purchase of our systems often entails larger strategic purchases by customers that generally require more complex and stringent contractual requirements, involve a significant commitment of management attention and resources by prospective customers, and require the input and approval of many decision-makers.
The purchase of our systems often entails larger strategic purchases by customers that generally require more complex and stringent contractual requirements, involve a significant commitment of management attention and resources by prospective customers, 25 Table of Contents and require the input and approval of many decision-makers.
Furthermore, uncertainty around the 340B Program could lead to lower levels of participation by 340B covered entities, which could reduce demand for our 340B Program-related businesses and could adversely affect our business. In addition, Congress has considered legislative changes to the 340B Program.
Furthermore, uncertainty around the 340B Program could lead to lower levels of participation by 340B covered entities, which could reduce demand for our 340B Program-related businesses and could adversely affect our business. In addition, Congress has considered legislative changes to the 340B Program. Any legislative changes to the 340B Program could also affect our 340B Program-related services.
We carry some inventory of critical components and are otherwise working to secure supplies necessary 36 Table of Contents to ensure fulfillment of customer demand, but global shortages could result in our need to secure supplies at higher costs as well as manufacturing delays.
We carry some inventory of critical components and are otherwise working to secure supplies necessary to ensure fulfillment of customer demand, but global shortages could result in our need to secure supplies at higher costs as well as manufacturing delays.
A delay in, or loss of, sales of these systems (including as a result of the impacts of public health crises such as the COVID-19 pandemic or due to customer labor shortages , increased healthcare worker turnover, or customer budgetary constraints) could have an adverse effect upon our business, operating results and could harm our business, cash flow, or financial condition.
A delay in, or loss of, sales of these systems (including as a result of the impacts of public health crises or due to customer labor shortages , increased healthcare worker turnover, or customer budgetary constraints) could have an adverse effect upon our business, operating results and could harm our business, cash flow, or financial condition.
Any reduction in the demand for or adoption of our medication management solutions, medication packaging systems, or related services would reduce our revenues. A significant portion of domestic and international healthcare facilities still use traditional approaches to medication and/or supply management in some form that do not include fully automated methods of medication management.
Failure to generate new sales and any reduction in the demand for or adoption of our medication management solutions, medication packaging systems, or related services would reduce our revenues. A significant portion of domestic and international healthcare facilities still use traditional approaches to medication and/or supply management in some form that do not include fully automated methods of medication management.
These laws could restrict the ability of Omnicell and/or our customers to obtain, use, or disseminate patient information, which could reduce the demand for our products or services or force us to redesign our products or services in order to meet regulatory requirements.
These laws could 35 Table of Contents restrict the ability of Omnicell and/or our customers to obtain, use, or disseminate patient information, which could reduce the demand for our products or services or force us to redesign our products or services in order to meet regulatory requirements.
Approximately 7% of our revenues during the year ended December 31, 2023 were generated from the sale of consumable medication packages, most of which are produced in our St. Petersburg, Florida facility on a continuous basis and are shipped out to fulfill the demands of our institutional and retail pharmacy customers domestically and abroad.
Approximately 8% of our revenues during the year ended December 31, 2024 were generated from the sale of consumable medication packages, most of which are produced in our St. Petersburg, Florida facility on a continuous basis and are shipped out to fulfill the demands of our institutional and retail pharmacy customers domestically and abroad.
Our investments in new business strategies or initiatives, including our transition to selling more products and services on a subscription basis, are inherently risky and may not be successful or we may be unable to maintain our Advanced Services customers.
Our investments in new business strategies or initiatives, including our transition to selling more products and services on a subscription basis, are inherently risky and may not be successful or we may be unable to maintain our SaaS and Expert Services customers.
In certain circumstances, the failure of any of our suppliers or us to perform adequately could result in quality control issues affecting end users’ acceptance of our products, which could damage customer relationships and harm our business.
In certain circumstances, the failure of any of our suppliers or us to perform adequately could 39 Table of Contents result in quality control issues affecting end users’ acceptance of our products, which could damage customer relationships and harm our business.
However, these policies and protective contractual terms may not be adequate against product liability claims and in the past we have been subject to certain lawsuits asserting, among other allegations, claims of product liability.
However, these policies and protective contractual terms may not be adequate against product liability claims and in the past we have been subject to certain lawsuits asserting, 40 Table of Contents among other allegations, claims of product liability.
ITEM 1B. UNRESOLVED STAFF COMMENTS There are currently no unresolved issues with respect to any SEC staff’s written comments. 42 Table of Contents
ITEM 1B. UNRESOLVED STAFF COMMENTS There are currently no unresolved issues with respect to any SEC staff’s written comments. 45 Table of Contents
These new ventures may be inherently risky and may not be successful. Even if successful, they may not have the projected or actual impact that we initially expected or that recoups our initial 38 Table of Contents investment and we may make a determination to exit a particular business strategy, initiative, product line or solution.
These new ventures may be inherently risky and may not be successful. Even if successful, they may not have the projected or actual impact that we initially expected or that recoups our initial investment and we may make a determination to exit a particular business strategy, initiative, product line or solution.
If we are unable to meet the demands of, or maintain our relationships with, our institutional and retail pharmacy customers, our revenue from sales of medication packages, other consumables, or our Advanced Services may decline .
If we are unable to meet the demands of, or maintain our relationships with, our institutional and retail pharmacy customers, our revenue from sales of medication packages, other consumables, or our SaaS and Expert Services may decline .
Furthermore, regulators’, customers’, investors’, and employees’ expectations for ESG matters have been rapidly evolving and increasing. The enhanced stakeholder focus on these issues requires continuous monitoring of various and evolving standards and the associated reporting requirements.
Furthermore, regulators’, customers’, investors’, and employees’ expectations for ESG matters have been rapidly evolving. The heightened stakeholder focus on these issues requires continuous monitoring of various and evolving standards and the associated reporting requirements.
These systems are susceptible to disruption or failure in the event of an extreme weather condition, including earthquake, fire, flood, ice and snowstorms or other natural disasters, as well as cyber-attack, terrorist attack, telecommunications failure, health emergencies, including epidemics or pandemics (such as the COVID-19 pandemic), or other catastrophic event.
These systems are susceptible to disruption or failure in the event of an extreme weather condition, including earthquake, fire, flood, ice and snowstorms or other natural disasters, as well as cyber-attack, terrorist attack, telecommunications failure, health emergencies, including epidemics or pandemics, or other catastrophic event.
We are subject to continued and increased competition from current and future competitors in the medication management automation solutions market and the medication adherence solutions market, including price competition, industry and competitor consolidation, competitor brand recognition, and in relationships with our suppliers and current and potential customers . 20 Table of Contents • Technology Risks.
We are subject to continued and increased competition from current and future competitors in the medication management automation solutions market and the medication adherence solutions market, including price competition, industry and competitor consolidation, competitor brand recognition, and in relationships with our suppliers and current and potential customers . • Technology Risks.
As a result, our volume of U.S. government customer leases will decline over time and cease in the future. In addition, under the terms of the Federal Supply Schedule contract, certain of our U.S. government customer contracts are terminable at the convenience of the applicable U.S. government customer.
As a result, our volume of U.S. government customer leases has declined and will continue to decline over time and cease in the future. In addition, under the terms of the Federal Supply Schedule contract, certain of our U.S. government customer contracts are terminable at the convenience of the applicable U.S. government customer.
In addition, the ability to collect payments on unsold receivables could be impaired and may result in a write-down of our unsold receivables from U.S. government customers. The balance of our unsold leases to U.S. government customers was $10.6 million as of December 31, 2023.
In addition, the ability to collect payments on unsold receivables could be impaired and may result in a write-down of our unsold receivables from U.S. government customers. The unsold receivables balance from leases to our U.S. government customers was $4.6 million as of December 31, 2024.
If we fail to maintain effective internal control over financial reporting, as such standards are modified, supplemented, or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting.
If we fail to maintain effective internal control over financial reporting, as such standards are modified, supplemented, 44 Table of Contents or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting.
The loss of any of these relationships could impact the breadth of our customer base and could impair our ability to meet our revenue or revenue growth 24 Table of Contents rate targets or our ability to increase our revenues.
The loss of any of these relationships could impact the breadth of our customer base and could impair our ability to meet our revenue or revenue growth rate targets or our ability to increase our revenues.
If our Advanced Services customers decline to renew their subscriptions or decide to terminate their agreements early, we would not derive the expected financial benefits from that customer, which could have a material adverse effect on our business, operating results, cash flow, or financial condition.
If our SaaS and Expert Services customers decline to renew their subscriptions or decide to terminate their agreements early, if permitted, we would not derive the expected financial benefits from that customer, which could have a material adverse effect on our business, operating results, cash flow, or financial condition.
The market price of our common stock has been and may continue to be highly volatile in response to various factors discussed in this “Risk Factors” section, many of which are beyond our control, including: • actual or anticipated changes in our operating results or forecasts, and whether our operating results meet our publicly announced guidance or expectations of securities analysts or investors; • changes in the ratings of our common stock by securities analysts or changes in their earnings estimates; • changes in our business model and initiatives, such as our ongoing transition to focus on a subscription-based business model o r a decision to exit a particular business or product line, and our ongoing restructuring initiatives to contain costs; • developments in our customer relationships; • changes in our Board of Directors, senior management, or key personnel; • announcements by us or our competitors of technological innovations or new products; • mergers, acquisitions, combinations, and other significant transactions involving us or our competitors; • our sale of our common stock or other securities; • level of demand for our common stock, and actions by stockholders or short sellers of our common stock; • changes in laws or regulations applicable to our products or services; • our involvement in any litigation or investigations by government authorities, including litigation judgments, settlements, or other litigation-related costs; • cyber events, such as the ransomware incident we experienced in May 2022; • epidemics, pandemics, or other major public health crises, such as the COVID-19 pandemic; or • general economic, regulatory, political and market conditions.
The market price of our common stock has been and may continue to be highly volatile in response to various factors discussed in this “Risk Factors” section, many of which are beyond our control, including: • actual or anticipated changes in our operating results or forecasts, and whether our operating results meet our publicly announced guidance or expectations of securities analysts or investors; • changes in the ratings of our common stock by securities analysts or changes in their earnings estimates; • changes in our business model and initiatives, such as our ongoing transition to focus on a subscription-based business model o r a decision to exit a particular business or product line, and our ongoing restructuring initiatives to contain costs; • developments in our customer relationships; • changes in our Board of Directors, senior management, or key personnel; • announcements by us or our competitors of technological innovations or new products; • mergers, acquisitions, combinations, and other significant transactions involving us or our competitors; • our sale of our common stock or other securities; • level of demand for our common stock, and actions by stockholders or short sellers of our common stock; • changes in laws or regulations applicable to our products or services; • our involvement in any litigation or investigations by government authorities, including litigation judgments, settlements, or other litigation-related costs; 41 Table of Contents • cyber events, such as breaches of data security or cyber-attacks on our systems or solutions; • epidemics, pandemics, or other major public health crises; or • general economic, regulatory, political and market conditions.
Any decrease in expenditures or change in spending priorities by healthcare facilities or increased financing costs, including as a result of the impacts of public health crises such as the COVID-19 pandemic, could decrease demand for our medication management solutions, medication packaging systems, and related services, and reduce our revenues.
Any decrease in expenditures or change in spending priorities by healthcare facilities or increased financing costs, including as a result of the impacts of public health crises, including pandemics, could decrease demand for our medication management solutions, medication packaging systems, and related services, and reduce our revenues.
Our IT systems and third-party cloud services are potentially vulnerable to disruption due to breakdown, malicious intrusion and computer viruses, public health crises such as the COVID-19 pandemic, other catastrophic events or environmental impact, as well as due to system upgrades and/or new system implementations.
Our IT systems and third-party cloud services are potentially vulnerable to disruption due to breakdown, malicious intrusion and computer viruses, public health crises, other catastrophic events or environmental impact, as well as due to system upgrades and/or new system implementations.
Climate change, legal, regulatory or market measures to address climate change and related emphasis on environmental, social and corporate governance (“ESG”) matters by various stakeholders may negatively affect our business and operating results.
Climate change, legal, regulatory or market measures to address climate change and a focus on environmental, social and corporate governance (“ESG”) matters by various stakeholders may negatively affect our business and operating results.
An increasing percentage of our revenue is derived from our subscription-based Advanced Services offerings. In connection with those offerings, our customers, generally, have no obligation to renew their subscriptions.
An increasing percentage of our revenue is derived from our subscription-based SaaS and Expert Services offerings. In connection with those offerings, our customers, generally, have no obligation to renew their subscriptions.
Furthermore, if we cannot maintain the expected level of service or if our customers fail to achieve agreed upon milestone improvements in financial or operating metrics, payments to us from such customers may be lower than anticipated. We may not be able to retain our Advanced Services customers.
Furthermore, if we cannot maintain the expected level of service or if our customers fail to achieve agreed upon milestone improvements in financial or operating metrics, payments to us from such customers may be delayed, disputed, or lower than anticipated. We may not be able to retain our SaaS and Expert Services customers.
In addition, within the current macroeconomic environment, we have seen some customers defer or delay implementation of capital equipment projects, including due to customer labor shortages and increased healthcare worker turnover, along with longer timeframes both for capital equipment purchasing decisions and for entering into agreements for our products or solutions due to customer capital budget constraints or customers seeking to stagger or elongate the timeframes between the adoption of new or updated technologies, which has resulted in moderated demand, and may lead to decreased revenues and could result in our business, operating results, cash flow, or financial condition being materially and adversely affected.
In addition, we have seen some customers defer or delay implementation of capital equipment projects, along with longer timeframes both for capital equipment purchasing decisions and for entering into agreements for our products or solutions due to customer capital budget constraints or customers seeking to stagger or elongate the timeframes between the adoption of new or updated technologies, which has resulted in moderated demand, and may lead to decreased revenues and could result in our business, operating results, cash flow, or financial condition being materially and adversely affected.
It is unclear how this decision, and other efforts to challenge, repeal, replace, or otherwise modify, or alter the implementation or interpretation of the ACA will affect our business, operating results, cash flow, or financial condition.
It is unclear how future efforts to challenge, repeal, replace, or otherwise modify, or alter the implementation or interpretation of the ACA will affect our business, operating results, cash flow, or financial condition.
The convertible note hedge and warrant transactions may affect the value of our common stock. In connection with the offering of the Notes, we entered into convertible note hedge transactions with an affiliate of one of the initial purchasers of the Notes and certain other financial institutions (the “option counterparties”). We also entered into warrant transactions with the option counterparties.
The convertible note hedge and warrant transactions may affect the value of our common stock. In connection with the offering of the 2029 Notes and 2025 Notes, respectively, we entered into convertible note hedge transactions with an affiliate of one of the initial purchasers of the 2029 Notes and 2025 Notes and certain other financial institutions (the “option counterparties”).
Additionally, data and digital services regulation continues to expand, particularly with respect to the artificial intelligence (“AI”) and automated decision making, which may further impact our business and regulatory compliance strategies.
Additionally, data and digital services regulation continues to expand, particularly with respect to AI and automated decision making, which may further impact our business and regulatory compliance strategies.
We may be unable to develop new solutions or enhance existing solutions to react to changes in technology and customer requirements in a timely and cost-effective manner or we may experience errors in the provision of our Advanced Services that could expose us to liability. • Institutional, Retail, and Specialty Pharmacy Risks.
We may be unable to develop new solutions or enhance existing solutions to react to changes in technology and customer requirements in a timely and cost-effective manner or we may experience errors in the provision of our SaaS and Expert Services that could expose us to liability.
As a result, such initiatives may materially adversely affect our business, operating results, cash flow, or financial condition. Risks Related to Ownership of Our Common Stock The market price of our common stock may continue to be highly volatile. Our common stock traded between $77.14 and $28.72 per share during the year ended December 31, 2023.
As a result, such initiatives may materially adversely affect our business, operating results, cash flow, or financial condition. Risks Related to Ownership of Our Common Stock The market price of our common stock may continue to be highly volatile. Our common stock traded between $25.12 and $55.75 per share during the year ended December 31, 2024.
(“Omnicell Specialty Pharmacy Services”), MarkeTouch Media, LLC (“MarkeTouch Media”), and Hub and Spoke Innovations, and risks related to investments in new business strategies and initiatives could disrupt ongoing business and present risks not originally contemplated. • Market Risks.
(“Omnicell Specialty Pharmacy Services”), MarkeTouch Media, LLC (subsequently merged into EnlivenHealth, Inc.), and Hub and Spoke Innovations, and risks related to investments in new business strategies and initiatives could disrupt ongoing business and present risks not originally contemplated. • Market Risks.
Furthermore, external (such as the COVID-19 pandemic) and internal (such as our continued growth or internal restructuring initiatives) factors may result in greater workloads for our employees compared to those at companies with which we compete for personnel, which may lead to higher levels of employee burnout and turnover.
Furthermore, external and internal (such as our continued growth or internal restructuring initiatives) factors may result in greater workloads for our employees compared to those at companies with which we compete for personnel, which may lead to higher levels of employee burnout and turnover. Competitors have in the past attempted, and may in the future attempt, to recruit our employees.
Any increase in our effective tax rate would reduce our profitability. Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could cause our stock price to decline.
Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could cause our stock price to decline.
If we are unable to maintain our relationships with the major institutional pharmacies we do business with, they may purchase consumable blister card components from alternative sources, or choose to use alternatives to blister cards for medication control, and our revenues would decline.
If we are unable to maintain our relationships with the major institutional pharmacies we do business with, they may purchase consumable blister card components from alternative sources, or choose to use alternatives to blister cards for medication control, and our revenues would decline. Similarly, our EnlivenHealth brand extends beyond the inpatient setting and into ambulatory care.
We rely on our network infrastructure, data centers, enterprise applications, and technology systems for the development, marketing, support, and sales of our products, and for the internal operation of our business.
Catastrophic events may disrupt our business and harm our operating results. We rely on our network infrastructure, data centers, enterprise applications, and technology systems for the development, marketing, support, and sales of our products, and for the internal operation of our business.
The healthcare industry has faced, and will likely continue to face, significant financial constraints. U.S. government legislation and program rulemaking may cause customers to postpone purchases of our products due to reductions in federal healthcare program reimbursement rates and/or needed changes to their operations in order to meet the requirements of legislation or in anticipation of future rulemaking.
U.S. government legislation and program rulemaking may cause customers to postpone purchases of our products due to reductions in federal healthcare program reimbursement rates and/or needed changes to their operations in order to meet the requirements of legislation or in anticipation of future rulemaking.
Additionally, the CPRA, came into effect in January 2023, and imposes additional data protection obligations on companies doing business in California, created a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. Additional compliance investment and potential business process changes may be required.
Additionally, the CPRA, which came into effect in January 2023, imposed additional data protection obligations on companies doing business in California, created a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement.
We have also experienced fluctuations in our customer and transaction size mix, which makes our ability to forecast our bookings more difficult.
We have also experienced fluctuations in our customer and transaction size mix, which has made our ability to forecast our bookings and may make our ability to forecast our product bookings more difficult.
In addition, they also may not be competitive with other products using new or alternative technologies that offer comparable performance and functionality, may not be accepted in new or existing markets, or may not achieve expected return on investment.
In addition, they also may not be competitive with, or rendered obsolete by, other products using new or alternative technologies that offer comparable performance and functionality, such as AI, machine-learning, and generative AI capabilities, may not be accepted in new or existing markets, or may not achieve expected return on investment.
We may encounter vendors that engage in information blocking practices that may inhibit our ability to access the relevant data on behalf of patients or impose new or additional costs.
Moreover, compliance with state laws related to health privacy may result in additional compliance costs. We may encounter vendors that engage in information blocking practices that may inhibit our ability to access the relevant data on behalf of patients or impose new or additional costs.
Any failure to prevent such security breaches or privacy violations, or implement satisfactory remedial measures, could require us to expend significant resources to investigate security breaches and notify affected individuals, remediate any damage, disrupt our operations or the operations of our customers, damage our reputation or cause us incur costs to manage public relations issues, damage our relationships with our customers, or expose us to a risk of financial loss, litigation, regulatory penalties, contractual indemnification obligations, or other liability. 30 Table of Contents We may fail to realize the potential benefits of acquired businesses, which could negatively affect our business, operating results, cash flow, or financial condition.
Any failure to prevent such security breaches or privacy violations, or implement satisfactory remedial measures, could require us to expend significant resources to investigate security breaches and notify affected individuals, remediate any damage, disrupt our operations or the operations of our customers, damage our reputation or cause us to incur costs to manage public relations issues, damage our relationships with our customers, or expose us to a risk of financial loss, litigation, regulatory penalties, contractual indemnification obligations, or other liability.
In addition, we may be unable to realize the potential benefits of our expense containment measures or our acquired businesses, including RxInnovation Inc., operating as FDS Amplicare ® (“FDS Amplicare”), ReCept Holdings, Inc., (“ReCept”), which was subsequently renamed Omnicell Specialty Pharmacy Services, Inc.
In addition, we may be unable to realize the potential benefits of our acquired businesses, including RxInnovation Inc., operating as FDS Amplicare ® (“FDS Amplicare”), Omnicell Specialty Pharmacy Services, Inc.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Enterprise Risk Management Omnicell utilizes a structured, biannual ERM process to identify, assess, and address material risks facing the Company, including cybersecurity risks, during which business leaders across the Company are surveyed about current and emerging risk areas.
Enterprise Risk Management The Company utilizes a structured, biannual ERM process to identify, assess, and address material risks facing the Company, including cybersecurity risks, during which business leaders across the Company are surveyed about current and emerging risk areas.
In addition, the Board also provides quarterly input on its views regarding potential emerging risk areas for the Company. The Audit Committee then reports to the full Board on a quarterly basis regarding its oversight activities and the risk management activities of the Company.
The Board also provides quarterly input on its views regarding potential emerging risk areas for the Company. The Audit Committee then reports to the full Board on a quarterly basis regarding its oversight activities and the risk management activities of the Company.
Incident Response In the event of a cybersecurity incident, dependent upon the nature of the incident, the Company has a Security Incident Response Team (“SIRT”) that is comprised of employees who have responsibility and authority to act during a cyber incident without delay, including, dependent upon the nature of the incident, the Company’s Chief Legal Officer, Chief 43 Table of Contents Information Security Officer and Chief Information Officer.
Incident Response In the event of a cybersecurity incident, dependent upon the nature of the incident, the Company has a Security Incident Response Team (“SIRT”) that is comprised of employees who have responsibility and authority to act during a cyber incident without delay, including, dependent upon the nature of the incident, the Company’s Chief Legal Officer, Chief Information Security Officer and Chief Information Officer.
The Chief Information Officer works closely with Omnicell’s management team in all facets of its ERM risk mitigation activities related to cybersecurity and information security risks.
The Chief Information Officer works closely with the Company’s management team in all facets of its ERM risk mitigation activities related to cybersecurity and information security risks.
He holds a Bachelor of Science in Computer Science and Engineering from Andhra University in India and an MBA from the Indian School of Business. In addition, the Company has recently engaged a Chief Information Security Officer (“CISO”). The Company’s CISO has built and managed world-class information security programs and technology teams for industry leading global companies.
He holds a Bachelor of Science in Computer Science and Engineering from Andhra University in India and an MBA from the Indian School of Business. In addition, the Company has engaged a Chief Information Security Officer (“CISO”) that has built and managed world-class information security programs and technology teams for industry leading global companies.
In addition, the Company maintains insurance that includes coverage for cyber-attacks, which coverage is discussed and reviewed with the Audit Committee annually. The Company has what it believes are appropriate physical, technical, and administrative controls in place that are designed to protect customers’ data.
In addition, the Company maintains insurance that responds to cyber-attacks, which coverage limit and cost is discussed and reviewed with the Audit Committee annually. The Company has what it believes are appropriate physical, technical, and administrative controls in place that are designed to protect customers’ data.
After the ERM survey is completed and risk areas are identified, the results are discussed with the relevant management personnel across the organization in the key risk areas, root causes are analyzed and risk mitigation plans are developed.
After the ERM survey is completed and risk areas are identified, the results are discussed with the relevant management personnel across the organization in the key risk areas, root causes are analyzed, risk mitigation plans are developed, and key risk indicators are utilized to monitor mitigation efforts.
During a cybersecurity incident, as warranted, the SIRT keeps the Company’s senior leadership and Board apprised of the response to the incident, any operational or business impacts, and any internal or external communications regarding the incident. The SIRT will also seek the input of the Company’s senior leadership and Board, as needed, when addressing a cybersecurity incident.
During a cybersecurity incident, as warranted, the SIRT keeps the Company’s senior leadership and Board apprised of the response to the incident, any material operational or 46 Table of Contents business impacts, and any material internal or external communications regarding the incident.
Upon resolution of a cybersecurity incident, generally, the Audit Committee will review the incident, the impact and the mitigation efforts and remediation actions the Company will implement. The Audit Committee then monitors the completion of the remediation actions and mitigation efforts.
The SIRT will also seek the input of the Company’s senior leadership and Board, as needed, when addressing a cybersecurity incident. Upon resolution of a cybersecurity incident, generally, the Audit Committee will review the incident, the impact and the mitigation efforts and remediation actions the Company will implement.
In addition, the full Board receives periodic presentations from management on emerging information security and cybersecurity risks, as well as incident reports as significant matters may arise.
In addition, the full Board periodically participates in cybersecurity-related table-top exercises and receives incident reports from the SIRT (as defined herein) as significant matters may arise .
Subsequently, the Company contained the incident and restored substantially all of its critical information technology systems. Following this cybersecurity event, the Company immediately implemented several key learnings from the incident, including using a three-pronged approach focused on further reducing exposure, raising greater security awareness, and further strengthening the Company’s cybersecurity defenses.
The Company uses a three-pronged approach focused on further reducing exposure, raising greater security awareness, and further strengthening the Company’s cybersecurity defenses.
Removed
However, as previously disclosed, on May 4, 2022, the Company determined that certain of its information technology systems were affected by ransomware impacting certain internal systems. Upon detecting the security event, the Company took immediate steps designed to contain the incident and implement its business continuity plans to restore and support continued operations.
Added
The Audit Committee then monitors the completion of the remediation actions and mitigation efforts.
Removed
Impact of Recent Cyber Incident While the previously disclosed ransomware incident led to (i) temporarily delayed invoicing that impacted the timing of cash collections and free cash flow in 2022 and (ii) customer implementation delays in 2022, as the Company recovered from the impacts of the ransomware incident, substantially all delayed implementations due to the ransomware incident were completed as of the end 2022.
Removed
Furthermore, any delayed or impacted processes have returned to normal operations. To date, the Company does not believe the ransomware incident, or other identified cyber risks, have had, or will have, a material adverse effect on its business, operating results, cash flow, or financial condition. 44 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed3 unchanged
LEGAL PROCEEDINGS Refer to the information set forth under “Legal Proceedings” in Note 14, Commitments and Contingencies , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 45 Table of Contents PART II
LEGAL PROCEEDINGS Refer to the information set forth under “Legal Proceedings” in Note 14, Commitments and Contingencies , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 47 Table of Contents PART II
Petersburg, Florida Administration, marketing, research and development, sales, and manufacturing 167,700 Warrendale, Pennsylvania Manufacturing and research and development 107,400 Cranberry Township, Pennsylvania Administration, marketing, research and development, sales, technical support, and training 58,400 Irlam, United Kingdom Administration, sales, marketing, and distribution center 61,000 Milpitas, California Administration, manufacturing, and research and development 46,300 Waukegan, Illinois Technical services, support, training, and repair center 38,500 Fort Worth, Texas Administration, sales, marketing, and research and development 34,400 Bochum, Germany Administration, sales, marketing, distribution, and manufacturing center 19,000 We also have smaller rented facilities in Strongsville, Ohio; Grapevine, Texas; New York, New York; Germany; France; India; Italy; the People’s Republic of China; the United Arab Emirates; Australia; and the United Kingdom.
Petersburg, Florida Administration, marketing, research and development, sales, and manufacturing 167,700 Warrendale, Pennsylvania Manufacturing and research and development 107,400 Cranberry Township, Pennsylvania Administration, marketing, research and development, sales, technical support, and training 58,400 Irlam, United Kingdom Administration, sales, marketing, and distribution center 61,000 Milpitas, California Administration, manufacturing, and research and development 46,300 Fort Worth, Texas Administration, sales, marketing, and research and development 34,400 We also have smaller rented facilities in Strongsville, Ohio; Austin, Texas; Grapevine, Texas; Germany; France; India; Italy; the People’s Republic of China; the United Arab Emirates; Australia; and the United Kingdom.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed7 unchanged
The stock price performance shown on the graph is based on historical results and should not be relied upon as an indication of future price performance. 46 Table of Contents COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN (1) (2) Among Omnicell, Inc., the NASDAQ Composite Index, and the NASDAQ Health Care Index _________________________________________________ (1) $100 invested on December 31, 2018 in stock or index, including reinvestment of dividends.
The stock price performance shown on the graph is based on historical results and should not be relied upon as an indication of future price performance. 48 Table of Contents COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN (1) (2) Among Omnicell, Inc., the NASDAQ Composite Index, and the NASDAQ Health Care Index _________________________________________________ (1) $100 invested on December 31, 2019 in stock or index, including reinvestment of dividends.
The graph assumes $100 was invested in each of Omnicell’s common stock, the NASDAQ Composite Index, and the NASDAQ Health Care Index as of the market close on December 31, 2018.
The graph assumes $100 was invested in each of Omnicell’s common stock, the NASDAQ Composite Index, and the NASDAQ Health Care Index as of the market close on December 31, 2019.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Our Common Stock Our common stock is traded on the NASDAQ Global Select Market under the symbol “OMCL.” Stockholders There were 76 registered stockholders of record as of February 21, 2024.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Our Common Stock Our common stock is traded on the NASDAQ Global Select Market under the symbol “OMCL.” Stockholders There were 74 registered stockholders of record as of February 19, 2025.
Year Ended December 31, 2018 2019 2020 2021 2022 2023 Omnicell, Inc. $ 100.00 $ 133.44 $ 195.98 $ 294.64 $ 82.33 $ 61.45 NASDAQ Composite 100.00 136.69 198.10 242.03 163.28 236.17 NASDAQ Health Care 100.00 110.75 140.85 126.71 95.29 96.06 Stock Repurchase Program We did not repurchase any shares of our common stock during the year ended December 31, 2023.
Year Ended December 31, 2019 2020 2021 2022 2023 2024 Omnicell, Inc. $ 100.00 $ 146.87 $ 220.80 $ 61.70 $ 46.05 $ 54.48 NASDAQ Composite 100.00 144.92 177.06 119.45 172.77 223.87 NASDAQ Health Care 100.00 127.18 114.41 86.04 86.74 84.53 Stock Repurchase Program We did not repurchase any shares of our common stock during the year ended December 31, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

82 edited+37 added−82 removed28 unchanged
We generally provide installation planning and consulting as part of most connected device product sales, which is typically included in the initial price of the solution. To help ensure the maximum availability of our systems, our customers typically purchase technical services contracts (maintenance and support) in increments of one to five years.
We generally provide installation planning and consulting as part of most connected device product sales, which is typically included in the initial price of the solution. To help ensure the maximum availability of our systems, our customers typically purchase technical services contracts (support and maintenance) in increments of one to five years.
Actual results may differ from these estimates and assumptions. We believe the following critical accounting policies are affected by significant judgments and estimates used in the preparation of our Consolidated Financial Statements: Revenue Recognition We earn revenues from sales of our products and related services, which are sold in the healthcare industry, our principal market.
Actual results may differ from these estimates and assumptions. We believe the following critical accounting estimates are affected by significant judgments used in the preparation of our Consolidated Financial Statements: Revenue Recognition We earn revenues from sales of our products and related services, which are sold in the healthcare industry, our principal market.
Omnicell is focused on helping its customers to define and deliver a cost effective medication management strategy that is designed to equip and empower pharmacists and nurses to focus on patient care rather than administrative tasks, and to drive improved clinical, operational, and financial outcomes across all care settings.
Omnicell is focused on helping its customers define and deliver a cost-effective medication management strategy designed to equip and empower pharmacists and nurses to focus on patient care rather than administrative tasks, and to drive improved clinical, operational, and financial outcomes across all care settings.
OVERVIEW Our Business Omnicell, a leader in transforming the pharmacy care delivery model, is committed to solving the critical challenges inherent in medication management and elevating the role of clinicians within healthcare as an essential component of care delivery.
OVERVIEW Our Business Omnicell, a leader in transforming the pharmacy and nursing care delivery model, is committed to solving the critical challenges inherent in medication management and elevating the role of clinicians within healthcare as an essential component of care delivery.
This discussion and analysis may contain forward-looking statements based upon our current expectations and assumptions that involve risks and uncertainties. 47 Table of Contents Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under Item 1A, “Risk Factors,” and elsewhere in this Annual Report on Form 10-K.
This discussion and analysis may contain forward-looking statements based upon our current expectations and assumptions that involve risks and uncertainties. 49 Table of Contents Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under Item 1A, “Risk Factors,” and elsewhere in this Annual Report on Form 10-K.
Based on our current business plan and backlog, we believe that our existing cash and cash equivalents, our anticipated cash flows from operations, cash generated from the exercise of employee stock options and purchases under our Employee Stock Purchase Plan (“ESPP”), along with the availability of funds under the Current Revolving Credit Facility will be sufficient to meet our cash needs for working capital, capital expenditures, potential acquisitions, and other contractual obligations for at least the next twelve months.
Based on our current business plan and backlog, we believe that our existing cash and cash equivalents, our anticipated cash flows from operations, cash generated from the exercise of employee stock options and purchases under our Employee Stock Purchase Plan (“ESPP”), along with the availability of funds under the Current Revolving Credit Facility will be sufficient to meet our cash needs for working capital, capital expenditures, potential acquisitions, outstanding debt, and other contractual obligations for at least the next twelve months.
Each of these challenges may lead to poor medication management outcomes including, but not limited to, medication errors, adverse drug events, lack of patient adherence, and medication waste. We also recognize that these challenges may impact the timing of contracting for, or implementing, our products, solutions, or services.
Each of these challenges may lead to poor medication management outcomes including, but not limited to, medication errors, adverse drug events, lack of patient adherence, and medication waste. We also recognize that these challenges may impact the timing of contracting for, or implementation of, our products, solutions, or services.
Sources of Cash Revolving Credit Facility On November 15, 2019, we entered into an Amended and Restated Credit Agreement (as amended, the “Prior A&R Credit Agreement”) with the lenders from time to time party thereto, Wells Fargo Securities, LLC, Citizens Bank, N.A., and JPMorgan Chase Bank, N.A., as joint lead arrangers, and Wells Fargo Bank, National Association, as administrative agent.
Sources of Cash Revolving Credit Facility On November 15, 2019, Omnicell, Inc. entered into an Amended and Restated Credit Agreement (as amended, the “Prior A&R Credit Agreement”) with the lenders from time to time party thereto, Wells Fargo Securities, LLC, Citizens Bank, N.A., and JPMorgan Chase Bank, N.A., as joint lead arrangers, and Wells Fargo Bank, National Association, as administrative agent.
On October 10, 2023, we entered into a Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”) with the lenders from time to time party thereto, Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., PNC Capital Markets LLC and TD Securities (USA) LLC as joint lead arrangers and Wells Fargo Bank, National Association, as administrative agent.
On October 10, 2023, Omnicell, Inc. entered into a Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”) with the lenders from time to time party thereto, Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., PNC Capital Markets LLC and TD Securities (USA) LLC as joint lead arrangers and Wells Fargo Bank, National Association, as administrative agent.
We also expect a continued use of cash for potential acquisitions and acquisition-related activities, as well as repurchases of our common stock. In addition, we may also use a portion of our cash, as we consider various options related to our outstanding debt.
We may also use cash for potential acquisitions and acquisition-related activities, as well as repurchases of our common stock. In addition, we may also use a portion of our cash as we consider various options related to our outstanding debt.
(2) Includes Central Pharmacy Dispensing Service (service portion), IV Compounding Service (service portion), EnlivenHealth, Specialty Pharmacy Services, 340B solutions, Inventory Optimization Service, and other software solutions. (3) For those Advanced Services contracts without a minimum commitment, bookings only include the amount of revenue that has been recognized once the services have been provided.
(2) Includes Central Pharmacy Dispensing Service (service portion), IV Compounding Service (service portion), EnlivenHealth, Specialty Pharmacy Services, 340B solutions, Inventory Optimization Service, and other software solutions. (3) For those SaaS and Expert Services contracts without a minimum commitment, bookings only include the amount of revenue that has been recognized once the services have been provided.
We are focused on delivering solutions to help our customers realize the industry vision of the Autonomous Pharmacy and drive positive medication management outcomes with outstanding customer experience through a mature channel in four market categories: • Point of Care.
We are focused on delivering solutions to help our customers realize the industry-defined vision of the Autonomous Pharmacy and drive positive medication management outcomes with outstanding customer experience through a mature channel in four market categories: • Points of Care.
We believe a solution that is designed to help health systems start or optimize their specialty pharmacy programs and the related pharmaceutical aspects of patient care will help ensure continuity of care and should contribute to the revenue and profitability of those organizations.
We believe a solution that is designed to help health systems start or optimize 52 Table of Contents their specialty pharmacy programs and the related pharmaceutical aspects of patient care will help ensure continuity of care and should contribute to the revenue and profitability of those organizations.
As of December 31, 2023 and 2022, there was no outstanding balance under the Prior or Current Revolving Credit Facility and we were in full compliance with all covenants. Refer to Note 10, Debt and Credit Agreement , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.
As of December 31, 2024, there was no outstanding balance under the Current Revolving Credit Facility and we were in full compliance with all covenants. Refer to Note 10, Debt and Credit Agreement , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.
(4) Refer to Note 14, Commitments and Contingencies , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.
Refer to Note 11, Convertible Senior Notes , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information. (4) Refer to Note 14, Commitments and Contingencies , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.
Revenues generated in the United States represented 88% of our total revenues for the year ended December 31, 2023. Over the past several years, our business has expanded from a single-point solution to a platform of products and services that will help to further advance the industry vision of the Autonomous Pharmacy.
Revenues generated in the United States represented 91% of our total revenues for the year ended December 31, 2024. Over the past several years, our business has expanded from a single-point solution to a platform of products and services that will help further advance the industry-defined vision of the Autonomous Pharmacy.
Financing Activities Net cash provided by financing activities was $23.4 million for the year ended December 31, 2023, primarily due to $23.2 million in proceeds from employee stock option exercises and ESPP purchases and a net change in the customer funds balances of $10.5 million, partially offset by $7.4 million in employees’ taxes paid related to restricted stock unit vesting and $3.0 million in payments for debt issuance costs.
Net cash provided by financing activities was $23.4 million for the year ended December 31, 2023, primarily due to $23.2 million in proceeds from employee stock option exercises and ESPP purchases and a net change in the customer funds balances of $10.5 million, partially offset by $7.4 million in employees’ taxes paid related to restricted stock unit vesting.
Our international sales represented 12% and 10% of total revenues for both of the years ended December 31, 2023 and 2022, respectively, and are expected to be affected by foreign currency exchange rate fluctuations. We are unable to predict the extent to which revenues in future periods will be impacted by changes in foreign currency exchange rates.
Our international sales represented 9% and 12% of total revenues for the years ended December 31, 2024 and 2023, respectively, and are expected to be affected by foreign currency exchange rate fluctuations. We are unable to predict the extent to which revenues in future periods will be impacted by changes in foreign currency exchange rates.
Such omitted discussion can be found under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” located in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 1, 2023, for reference to discussion of the fiscal year ended December 31, 2021, the earliest of the three fiscal years presented.
Such omitted discussion can be found under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” located in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 28, 2024, for reference to discussion of the fiscal year ended December 31, 2022, the earliest of the three fiscal years presented.
We are doing this with an industry-leading medication management infrastructure which includes robotics, smart devices, intelligent software, and expert services. This comprehensive set of solutions provides the critical foundation for customers to realize the industry vision of the Autonomous Pharmacy, a vision defined by pharmacy leaders for improving operational efficiencies and ultimately targeting zero-error medication management.
We are doing this with an industry-leading medication management infrastructure which includes robotics and smart devices, software workflows, expert services, and operational and optimization analytics. This comprehensive set of solutions provides the critical foundation for customers to realize the Autonomous Pharmacy, an industry-wide vision defined by pharmacy leaders for improving operational efficiencies and ultimately targeting zero-error medication management.
These cash inflows were partially offset by (i) a decrease in accrued compensation of $21.5 million primarily due to a decrease in the accrual for restructuring initiatives, lower commissions, as well as timing of ESPP purchases, (ii) a decrease in accounts payables of $17.5 million primarily due to an overall decrease in spending, as well as timing of payments, (iii) a decrease in operating lease liabilities of $10.9 million, (iv) an increase in investment in sales-type leases of $10.4 million primarily due to the acceptance of certain Advanced Services products under sales-type lease arrangements, (v) a decrease in accrued liabilities of $10.3 million, and (vi) an increase in other current assets of $6.8 million.
These cash inflows were partially offset by a decrease in accrued compensation of $21.5 million primarily due to a decrease in the accrual for restructuring initiatives, lower commissions, as well as timing of ESPP purchases, a decrease in accounts payables of $17.5 million primarily due to an overall decrease in spending, as well as timing of payments, a decrease in operating lease liabilities of $10.9 million, an increase in investment in sales-type leases of $10.4 million primarily due to the acceptance of certain SaaS and Expert Services products under sales-type lease arrangements, a decrease in accrued liabilities of $10.3 million, and an increase in other current assets of $6.8 million.
Omnicell solutions are helping healthcare facilities worldwide to reduce costs, improve labor efficiency, establish new revenue streams, enhance supply chain control, support compliance, and move closer to the industry vision of the Autonomous Pharmacy. We sell our product and consumable solutions together with related service offerings.
Omnicell solutions are helping healthcare facilities worldwide to uncover cost savings, improve labor efficiency, establish new revenue streams, enhance supply chain control, support compliance, and move closer to the industry-defined vision of the Autonomous Pharmacy. We sell our product and consumable solutions together with related service offerings.
We define bookings generally as: (i) the value of non-cancelable contracts f or our connected devices, software products, and Advanced Services (although, for those Advanced Services contracts without a minimum commitment, bookings only include the amount of revenue that has been recognized once the services have been provided); and (ii) for our consumables, the value of orders placed through our Omnicell Storefront online platform or through written or telephonic orders.
During 2024, we defined bookings generally as: (i) the value of non-cancelable contracts for our connected devices, software products, and SaaS and Expert Services (although, for those SaaS and Expert Services contracts without a minimum commitment, bookings only include the amount of revenue that has been recognized once the services have been provided); and (ii) for our consumables, the value of orders placed through our Omnicell Storefront online platform or through written or telephonic orders.
The overall decrease in gross margin primarily relates to lower product revenues for the year ended December 31, 2023 compared to the year ended December 31, 2022 whereas the decrease in cost of product revenues has not decreased proportionally with the decrease in product revenues, primarily due to certain fixed costs, such as labor and overhead.
The overall decrease in gross margin primarily relates to lower product revenues for the year ended December 31, 2024 compared to the year ended December 31, 2023 whereas the decrease in cost of product revenues has not decreased proportionally with the decrease in product revenues, primarily due to the decrease in revenues of higher margin products as well as the impact of certain fixed costs, such as labor and overhead.
We continue to invest in next-generation point of care enhancements and solutions and believe that customers will upgrade their current installed base over time as we deliver these new solutions to market. We also believe there is an opportunity for us to expand this offering and define a new standard for dispensing systems in ambulatory settings.
We believe that customers will upgrade their current installed base over time as we deliver these new solutions to market. We also believe there is an opportunity for us to expand this offering and define a new standard for dispensing systems in ambulatory settings.
Furthermore, we believe a combination of robotics, smart devices, intelligent software, and expert services is needed in every care setting where medications are managed.
Furthermore, we believe a combination of robotics and smart devices, software workflows, expert services, and operational and optimization analytics is needed in every care setting where medications are managed.
Refer to Note 17, Income Taxes , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information. LIQUIDITY AND CAPITAL RESOURCES We had cash and cash equivalents of $468.0 million at December 31, 2023, compared to $330.4 million at December 31, 2022.
Refer to Note 17, Income Taxes , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information. 56 Table of Contents LIQUIDITY AND CAPITAL RESOURCES We had cash and cash equivalents of $369.2 million at December 31, 2024, compared to $468.0 million at December 31, 2023.
Likewise, the manual compounding of sterile IV preparations can be error-prone and create significant patient safety risks, and outsourcing sterile IV compounding could lead to increased medication costs and lack of access to needed medications as a result of being unable to source medications when they are required.
Likewise, the manual compounding of sterile IV preparations can be error-prone and create significant patient safety risks, and outsourcing sterile IV compounding could lead to increased medication costs and lack of access to needed medications due to an inability to source medications when they are required.
Research and development expenses decreased by $7.9 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Research and development expenses decreased by $6.7 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
We believe that a fully optimized specialty pharmacy operation represents one of the largest economic opportunities for hospitals and health systems. 50 Table of Contents • Retail, Institutional, and Payer. We believe the Retail, Institutional, and Payer market represents a significant opportunity as healthcare evolves.
We believe that a fully optimized specialty pharmacy operation represents one of the largest economic opportunities for hospitals and health systems. • Ambulatory Care. We believe ambulatory care, especially the retail and institutional market, represents a significant opportunity as healthcare evolves.
For periods beyond the next twelve months, we also anticipate that our net operating cash flows plus existing balances of cash and cash equivalents will suffice to fund the continued growth of our business. 59 Table of Contents Cash Flows The following table summarizes, for the periods indicated, selected items in our Consolidated Statements of Cash Flows: Year Ended December 31, 2023 2022 (In thousands) Net cash provided by (used in): Operating activities $ 181,094 $ 77,781 Investing activities (55,016) (58,669) Financing activities 23,420 (20,953) Effect of exchange rate changes on cash and cash equivalents (1,354) (944) Net increase (decrease) in cash, cash equivalents, and restricted cash $ 148,144 $ (2,785) Operating Activities We expect cash from our operating activities to fluctuate in future periods as a result of a number of factors, including the timing of our billings and collections, our operating results, and the timing of other liability payments.
For periods beyond the next twelve months, we also anticipate that our net operating cash flows plus existing balances of cash and cash equivalents will suffice to fund the growth of our business. 58 Table of Contents Cash Flows The following table summarizes, for the periods indicated, selected items in our Consolidated Statements of Cash Flows: Year Ended December 31, 2024 2023 (In thousands) Net cash provided by (used in): Operating activities $ 187,722 $ 181,094 Investing activities (52,793) (55,016) Financing activities (235,578) 23,420 Effect of exchange rate changes on cash and cash equivalents (1,716) (1,354) Net increase (decrease) in cash, cash equivalents, and restricted cash $ (102,365) $ 148,144 Operating Activities We expect cash from our operating activities to fluctuate in future periods as a result of a number of factors, including the timing of our billings and collections, our operating results, and the timing of other liability payments.
The decrease in cost of product revenues has not decreased proportionally with the decrease in product revenues for the year ended December 31, 2023, primarily due to certain fixed costs, such as labor and overhead.
The decrease in cost of product revenues has not decreased proportionally with the decrease in product revenues for the year ended December 31, 2024, primarily due to the decrease in revenues of higher margin products as well as the impact of certain fixed costs, such as labor and overhead.
The 2023 annual effective tax rate differed from the statutory tax rate of 21%, primarily due to an unfavorable impact of non-deductible equity compensation charges partially offset by a favorable impact of research and development credits, and foreign-derived intangible income (“FDII”) deduction.
The 2024 annual effective tax rate differed from the statutory tax rate of 21%, primarily due to an unfavorable impact of non-deductible equity compensation charges partially offset by a favorable impact of research and development credits.
The amounts under such contracts are included in the table above because we believe that cancellation of these contracts is unlikely and we expect to make future cash payments according to the contract terms or in similar amounts for similar materials. (3) We issued convertible senior notes in September 2020 that are due in September 2025.
The amounts under such contracts are included in the table above because we believe that cancellation of these contracts is unlikely and we expect to make future cash payments according to the contract terms or in similar amounts for similar materials.
In accordance with ASC 740, we recognize the tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
We estimate and recognize the tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position.
The decrease in cost of product revenues was primarily driven by the decrease in product revenues of $194.7 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
The decrease in cost of product revenues was primarily driven by the decrease in product revenues of $78.1 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
The non-cash items primarily consisted of depreciation and amortization expense of $87.3 million, share-based compensation expense of $55.3 million, impairment and abandonment of operating lease right-of-use assets related to facilities of $10.0 million, amortization of operating lease right-of-use assets of $8.2 million, amortization of debt issuance costs of $4.4 million, and a change in deferred income taxes of $11.0 million.
Operating inflows consisted of net loss of $20.4 million, adjusted for non-cash items of $157.8 million, which consisted primarily of depreciation and amortization expense of $87.3 million, share-based compensation expense of $55.3 million, impairment and abandonment of operating lease right-of-use assets related to facilities of $10.0 million, amortization of operating lease right-of-use assets of $8.2 million, and a change in deferred income taxes of $11.0 million.
We believe our current solutions within the Point of Care market and new innovation and services will continue to help customers drive improved clinical and financial outcomes. • Central Pharmacy and IV Compounding.
We believe our current solutions for Points of Care and new innovations and services will continue to help customers drive improved clinical and financial outcomes. • Central Pharmacy and IV Compounding.
The results of the operations of Hub and Spoke Innovations have been included in our consolidated results of operations beginning January 10, 2022. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our discussion and analysis of our financial condition and results of operations are based on our Consolidated Financial Statements, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).
CRITICAL ACCOUNTING ESTIMATES Our discussion and analysis of our financial condition and results of operations are based on our Consolidated Financial Statements, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).
Refer to Note 16, Stock Repurchase Programs , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.
Refer to Note 11, Convertible Senior Notes , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.
Selling, general, and administrative expenses decreased by $51.7 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Selling, general, and administrative expenses decreased by $54.3 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
The 2016 Repurchase Program has a total of $2.7 million remaining for future repurchases as of December 31, 2023, which may result in additional use of cash.
The 2016 Repurchase Program has a total of $2.7 million remaining for future repurchases as of December 31, 2024, which may result in additional use of cash. There were no stock repurchases during the year ended December 31, 2024.
As a market leader, we expect to continue expansion into this product market as customers increase the use of our dispensing systems in more areas within their hospitals and increasingly in ambulatory care settings.
As a market leader, we expect to continue expansion into this product market as customers increase the use of our dispensing systems in more areas within their hospitals and increasingly in ambulatory care settings. Macroeconomic trends in our target market continue to improve as health system margins and volumes increase and stabilize in the post-pandemic environment.
Services and other revenues represented 38% and 30% of total revenues for the years ended December 31, 2023 and 2022, respectively. Services and other revenues include revenues from technical services and Advanced Services offerings.
Service revenues represented 43% and 38% of total revenues for the years ended December 31, 2024 and 2023, respectively. Services and other revenues include revenues from technical services and SaaS and Expert Services offerings.
On September 22, 2020 and March 29, 2023, we entered into amendments to the Prior A&R Credit Agreement to, among other changes, permit the issuance of the convertible senior notes and the purchase of the convertible note hedge 58 Table of Contents transactions, as described in Note 11, Convertible Senior Notes , expand our flexibility to repurchase our common stock and make other restricted payments, and replace the total net leverage covenant, as well as to remove and replace the interest rate benchmark based on the London interbank offered rate (“LIBOR”) and related LIBOR-based mechanics applicable to borrowings under the A&R Credit Agreement with an interest rate benchmark based on the secured overnight financing rate (“SOFR”) as administered by the Federal Reserve Bank of New York and related SOFR-based mechanics.
The Prior A&R Credit Agreement was subsequently amended on September 22, 2020 and March 29, 2023 to permit the issuance of the convertible senior notes and the purchase of the convertible note hedge transactions (as described in Note 11, Convertible Senior Notes , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K), expand our flexibility to make restricted payments (including common stock repurchases), and replace the total net leverage covenant, as well as to remove and replace the interest rate benchmark based on the London interbank offered rate (“LIBOR”) and related LIBOR-based mechanics with an interest rate benchmark based on the secured overnight financing rate (“SOFR”) as administered by the Federal Reserve Bank of New York and related SOFR-based mechanics.
We expect to use future loans under the Current Revolving Credit Facility, if any, for working capital, potential acquisitions, and other general corporate purposes. Uses of Cash Our future uses of cash are expected to be primarily for working capital, capital expenditures, and other contractual obligations.
We expect to use future loans under the Current Revolving Credit Facility, if any, for working capital, potential acquisitions, and other general corporate purposes.
However, we believe that over time these significant challenges to the practice of pharmacy will drive demand for increased automation, visibility, insights, and improved medication management outcomes that our solutions are designed to enable.
However, we believe that over time these significant challenges to the practice of pharmacy will drive demand for increased automation, visibility, insights, and improved medication management outcomes that our solutions are designed to enable. Because of this, we believe that our solutions are well-positioned to address the evolving needs of healthcare institutions and therefore present opportunities for long-term growth.
Interest and other income (expense), net, changed by $14.9 million for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily driven by a $14.6 million increase in other income.
Interest and Other Income (Expense), Net. Interest and other income (expense), net, changed by $10.5 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily driven by a $12.2 million increase in other income and a $1.7 million increase in other expense.
Generally, for products requiring a complex implementation, control passes when the product is installed and ready for use. For all other products, control generally passes when product has been shipped and title has passed.
We review our performance obligations in a contract and evaluate when transfer of control occurs. Generally, for products requiring a complex implementation, control passes when the product is installed and functionally ready for use. For all other products, control generally passes when product has been shipped and title has passed.
Changes in assets and liabilities include cash inflows from (i) a decrease in accounts receivable and unbilled receivables of $49.2 million primarily due to the timing of billings, shipments, and collections, as well as the impacts of lower revenues, (ii) a decrease in inventories of $38.0 million primarily due to management of inventory levels to align with the current forecasted demand, (iii) an increase in deferred revenues of $24.1 million primarily due to an increase in billings for certain technical service and Advanced Service offerings, (iv) a decrease in prepaid commissions of $7.1 million, (v) a decrease in other long-term assets of $2.1 million, and (vi) a decrease in prepaid expenses of $1.1 million.
The favorable working capital was primarily due to a decrease in accounts receivable and unbilled receivables of $49.2 million primarily due to the timing of billings, shipments, and collections, as well as the impacts of lower revenues, a decrease in inventories of $38.0 million primarily due to management of inventory levels to align with the current forecasted demand, an increase in deferred revenues of $24.1 million primarily due to an increase in billings for certain technical service and SaaS and Expert Services offerings, and a decrease in prepaid commissions of $7.1 million.
The increase in cost of services and other revenues was primarily driven by the increase in services and other revenues of $45.8 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
The increase in cost of service revenues was primarily driven by the increase in service revenues of $43.2 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
New technologies and increased scope of practice for pharmacists appear to be spurring innovation and expansion of the provision of clinical services by retail pharmacies, which, combined with the move to value-based care, we believe will drive the adoption of our patient engagement solutions, that are intended to help providers (including pharmacists) and payers engage patients in new ways that are expected to improve outcomes, reduce the total cost of care, and lead to more profitable operations.
We believe this development, combined with the move to value-based care, will drive the adoption of our patient engagement offerings. These solutions are intended to help providers (including pharmacists) engage patients in new ways that are expected to improve outcomes, reduce the total cost of care, and lead to more profitable operations.
Provision for (Benefit from) Income Taxes Year Ended December 31, Change in 2023 2022 $ % (Dollars in thousands) Provision for (benefit from) income taxes $ 263 $ (8,101) $ 8,364 (103)% Effective tax rate on earnings (1)% 330% We recorded a provision for income taxes of $0.3 million on a loss before taxes of $20.1 million, which resulted in a negative effective tax rate of 1% for the year ended December 31, 2023, compared to an income tax benefit of $8.1 million on a loss before taxes of $2.5 million, which resulted in an effective tax rate of 330% for the year ended December 31, 2022.
Provision for Income Taxes Year Ended December 31, Change in 2024 2023 $ % (Dollars in thousands) Provision for income taxes $ 13,062 $ 263 $ 12,799 4,867% Effective tax rate on earnings 51% (1)% We recorded an income tax expense of $13.1 million on an income before income taxes of $25.6 million, which resulted in a positive effective tax rate of 51% for the year ended December 31, 2024, compared to an income tax expense of $0.3 million on a loss before income taxes of $20.1 million, which resulted in a negative effective tax rate of 1% for the year ended December 31, 2023.
Services and other revenues increased by $45.8 million, primarily due to an increase of $26.7 million in Advanced Services revenues due to continued customer demand and an increase of $19.1 million in technical services revenues as a result of growth in our installed customer base as well as the impact of pricing actions.
Service revenues increased by $43.2 million, primarily due to an increase of $12.4 million in technical services revenues as a 54 Table of Contents result of growth in our installed customer base and the impact of pricing actions, as well as an increase of $30.8 million in SaaS and Expert Services revenues due to continued customer demand.
Because of this, we believe that our solutions are well-positioned to address the evolving needs of healthcare institutions and therefore present opportunities for long-term growth. 49 Table of Contents In an effort to address these challenges and deliver solutions to help drive positive medication management outcomes, we continue to make significant investments in our research and development efforts to further advance the industry vision of the Autonomous Pharmacy.
In an effort to address these challenges and deliver solutions to help drive positive medication management outcomes, we continue to make significant investments in our research and development efforts to further advance the industry-defined vision of the Autonomous Pharmacy.
The obligations presented above include both principal and interest for these notes. Although these notes mature in 2025, they may be converted into cash and shares of our common stock prior to maturity if certain conditions are met.
Although these notes mature in 2025 and 2029, respectively, they may be converted into cash and shares of our common stock prior to maturity if certain conditions are met. Any conversion prior to maturity can result in repayment of the principal amounts sooner than the scheduled repayment as indicated in the table above.
Net cash provided by operating activities was $181.1 million for the year ended December 31, 2023, primarily consisting of net loss of $20.4 million adjusted for non-cash items of $157.8 million and changes in assets and liabilities of $43.7 million.
Net cash provided by operating activities was $181.1 million for the year ended December 31, 2023, primarily consisting of operating inflows of $137.4 million and favorable working capital movements of $43.7 million.
For maintenance contracts and certain other services, including Advanced Services provided on a subscription basis, control passes to the customer over time, generally ratably over the service term as we provide a stand-ready service for the customer’s equipment. Time and material services transfer control to the customer at the time the services are provided.
For support and maintenance contracts and certain other services, including SaaS and Expert Services provided on a subscription basis, control passes to the customer over time, generally ratably over the service term. Time and material services transfer control to the customer at the time the services are provided. These judgments have been applied consistently for all periods presented.
We also provide Advanced Services such as Central Pharmacy Dispensing Service (service portion), IV Compounding Service (service portion), EnlivenHealth, Specialty Pharmacy Services, 340B solutions, Inventory Optimization Service, and other software solutions, which typically are provided over 2-7 years. 48 Table of Contents The following table summarizes each revenue category: Revenue Category Revenue Type Income Statement Classification Included in Bookings Connected devices, software licenses, and other Nonrecurring Product Yes (1) Consumables Recurring Product Yes Technical services Recurring Service No Advanced Services (2) (3) Recurring Service Yes _________________________________________________ (1) Certain other insignificant revenue streams ancillary to our products and services, such as freight revenue, are not included in bookings.
The following table summarizes each revenue category: Revenue Category Revenue Type Income Statement Classification Included in Bookings (through 2024) Included in Product Bookings (2025 onwards) Included in ARR (2025 onwards) Connected devices, software licenses, and other Nonrecurring Product Yes (1) Yes (1) No Consumables Recurring Product Yes No Yes Technical services Recurring Service No No Yes SaaS and Expert Services (2) Recurring Service Yes (3) No Yes _________________________________________________ (1) Certain other insignificant revenue streams ancillary to our products and services, such as freight revenue, are not included in bookings.
Standalone selling price is best evidenced by the price we charge for the good or service when selling it separately in similar circumstances to similar customers. Other than for the renewal of annual technical services contracts, our products and services are not generally sold separately. We use an amount discounted from the list price as a best estimated selling price.
Other than for the renewal of annual technical services contracts, our products and services are not generally sold separately. We use an amount discounted from the list price as a best estimated standalone selling price. Additionally, judgment is required to determine the timing of revenue recognition for each performance obligation based upon when control transfers to a customer.
In addition, the Second A&R Credit Agreement includes a letter of credit sub-limit of up to $15.0 million and a swing line loan sub-limit of up to $25.0 million. The Second A&R Credit Agreement has an expiration date of October 10, 2028, subject to acceleration under certain conditions, upon which date all remaining outstanding borrowings will be due and payable.
The Second A&R Credit Agreement has an expiration date of October 10, 2028, subject to acceleration under certain conditions, upon which date all remaining outstanding borrowings will be due and payable. 57 Table of Contents As of December 31, 2024, we had $350.0 million of funds available under the Current Revolving Credit Facility.
The increase in other income during the year ended December 31, 2023 compared to the year ended December 31, 2022 is primarily attributable to higher interest income received due to higher interest rates and higher cash and cash equivalents balances.
The increase in other income during the year ended December 31, 2024 compared to the year ended December 31, 2023 is primarily attributable to a $7.5 million gain on extinguishment of convertible senior notes and related unwind of note hedges and warrants, as well as higher interest income received due to higher interest rates and higher cash and cash equivalents balances throughout the majority of the year.
The decrease was primarily attributed to a decrease of $5.4 million in consulting expenses, a decrease in employee-related expenses of $4.8 million, and other decreases from cost saving initiatives, partially offset by an increase of $4.3 million due to the timing of capitalized software projects. Selling, General, and Administrative .
The decrease was primarily attributed to a decrease of $10.8 million in employee-related expenses primarily as a result of lower headcount and a decrease of $3.4 million in restructuring costs, partially offset by an increase of $3.8 million in cloud hosting services expenses, and an increase of $3.1 million in consulting expenses. Selling, General, and Administrative .
Our Chief Operating Decision Maker (“CODM”) is our Chief Executive Officer. The CODM allocates resources and evaluates the performance of Omnicell at the consolidated level using information about our revenues, gross profit, income from operations, and other key financial data.
Operating Segments We manage our operations as a single segment for the purposes of assessing performance and making operating decisions. Our Chief Operating Decision Maker (“CODM”) is our Chief Executive Officer. The CODM allocates resources and evaluates the performance of Omnicell at the consolidated level using our consolidated net income.
Cost of Revenues and Gross Profit Cost of revenues is primarily comprised of three general categories: (i) standard product costs which account for the majority of the product cost of revenues that are provided to customers, and are inclusive of purchased material, labor to build the product, and overhead costs associated with production; (ii) costs of providing services and installation costs, including costs of personnel and other expenses; and (iii) other costs, including variances in standard costs and overhead, scrap costs, rework, provisions for excess and obsolete inventory, and amortization of software development costs and intangibles. 56 Table of Contents Year Ended December 31, Change in 2023 2022 $ % (Dollars in thousands) Cost of revenues: Cost of product revenues $ 414,106 $ 493,626 $ (79,520) (16)% As a percentage of related revenues 58% 55% Cost of services and other revenues 236,166 213,334 22,832 11% As a percentage of related revenues 54% 54% Total cost of revenues $ 650,272 $ 706,960 $ (56,688) (8)% As a percentage of total revenues 57% 55% Gross profit $ 496,840 $ 588,987 $ (92,147) (16)% Gross margin 43% 45% Cost of revenues for the year ended December 31, 2023 compared to the year ended December 31, 2022 decreased by $56.7 million, primarily driven by a $79.5 million decrease in cost of product revenues, partially offset by a $22.8 million increase in cost of services and other revenues.
Cost of Revenues and Gross Profit Cost of revenues is primarily comprised of three general categories: (i) standard product costs which account for the majority of the product cost of revenues that are provided to customers, and are inclusive of purchased material, labor to build the product, and overhead costs associated with production; (ii) costs of providing services and installation costs, including costs of personnel and other expenses; and (iii) other costs, including variances in standard costs and overhead, scrap costs, rework, provisions for excess and obsolete inventory, and amortization of software development costs and intangibles.
RESULTS OF OPERATIONS Total Revenues Year Ended December 31, Change in 2023 2022 $ % (Dollars in thousands) Product revenues $ 708,561 $ 903,222 $ (194,661) (22)% Percentage of total revenues 62% 70% Services and other revenues 438,551 392,725 45,826 12% Percentage of total revenues 38% 30% Total revenues $ 1,147,112 $ 1,295,947 $ (148,835) (11)% Product revenues represented 62% and 70% of total revenues for the years ended December 31, 2023 and 2022, respectively.
RESULTS OF OPERATIONS Total Revenues Year Ended December 31, Change in 2024 2023 $ % (Dollars in thousands) Product revenues $ 630,507 $ 708,561 $ (78,054) (11)% Percentage of total revenues 57% 62% Service revenues 481,731 438,551 43,180 10% Percentage of total revenues 43% 38% Total revenues $ 1,112,238 $ 1,147,112 $ (34,874) (3)% Product revenues represented 57% and 62% of total revenues for the years ended December 31, 2024 and 2023, respectively.
The non-cash items primarily consisted of depreciation and amortization expense of $86.9 million, share-based compensation expense of $68.2 million, amortization of operating lease right-of-use assets of $12.2 million, impairment and abandonment of operating lease right-of-use assets related to facilities of $9.4 million, amortization of debt issuance costs of $4.2 million, and a change in deferred income taxes of $37.3 million.
Operating inflows consisted of net income of $12.5 million, adjusted for non-cash items of $116.9 million, which consisted primarily of depreciation and amortization expense of $82.2 million, share-based compensation expense of $39.3 million, amortization of operating lease right-of-use assets of $7.5 million, a net gain on extinguishment of convertible senior notes of $7.5 million, inventory write-down charges of $5.4 million, and a change in deferred income taxes of $14.9 million.
Contractual Obligations Contractual obligations as of December 31, 2023 were as follows: Payments Due By Period Total 2024 2025 - 2026 2027 - 2028 2029 and thereafter (In thousands) Operating leases (1) $ 50,600 $ 12,722 $ 20,324 $ 15,720 $ 1,834 Purchase obligations (2) 93,901 84,215 9,621 65 — Convertible senior notes (3) 577,876 1,438 576,438 — — Total (4) $ 722,377 $ 98,375 $ 606,383 $ 15,785 $ 1,834 _________________________________________________ (1) Commitments under operating leases relate primarily to leased office buildings, data centers, office equipment, and vehicles.
Contractual Obligations Contractual obligations as of December 31, 2024 were as follows: Payments Due By Period Total 2025 2026 - 2027 2028 - 2029 2030 and thereafter (In thousands) Operating leases (1) $ 46,952 $ 12,787 $ 22,127 $ 10,506 $ 1,532 Purchase obligations (2) 118,776 109,316 9,439 21 — Convertible senior notes (3) 356,606 177,201 3,450 175,955 — Total (4) $ 522,334 $ 299,304 $ 35,016 $ 186,482 $ 1,532 _________________________________________________ (1) Commitments under operating leases relate primarily to leased office buildings, data centers, office equipment, and vehicles.
Net cash used in investing activities was $58.7 million for the year ended December 31, 2022, which consisted of capital expenditures of $47.5 million for property and equipment, $13.2 million for external-use software development costs, and $3.4 million consideration paid for the acquisition of Hub and Spoke Innovations, net of cash acquired, partially offset by purchase price adjustments from business acquisitions of $5.5 million.
Investing Activities Net cash used in investing activities was $52.8 million for the year ended December 31, 2024, which consisted of capital expenditures of $36.5 million for property and equipment and $16.3 million for external-use software development costs. 59 Table of Contents Net cash used in investing activities was $55.0 million for the year ended December 31, 2023, which consisted of capital expenditures of $41.5 million for property and equipment and $13.5 million for external-use software development costs.
Operating Expenses and Interest and Other Income (Expense), Net Year Ended December 31, Change in 2023 2022 $ % (Dollars in thousands) Operating expenses: Research and development $ 97,115 $ 104,969 $ (7,854) (7)% As a percentage of total revenues 8% 8% Selling, general, and administrative 434,593 486,341 (51,748) (11)% As a percentage of total revenues 38% 38% Total operating expenses $ 531,708 $ 591,310 $ (59,602) (10)% As a percentage of total revenues 46% 46% Interest and other income (expense), net $ 14,760 $ (130) $ 14,890 (11454)% Research and Development.
Our gross profit for the year ended December 31, 2024 was $471.0 million, as compared to $496.8 million for the year ended December 31, 2023. 55 Table of Contents Operating Expenses and Interest and Other Income (Expense), Net Year Ended December 31, Change in 2024 2023 $ % (Dollars in thousands) Operating expenses: Research and development $ 90,412 $ 97,115 $ (6,703) (7)% As a percentage of total revenues 8% 8% Selling, general, and administrative 380,254 434,593 (54,339) (13)% As a percentage of total revenues 34% 38% Total operating expenses $ 470,666 $ 531,708 $ (61,042) (11)% As a percentage of total revenues 42% 46% Interest and other income (expense), net $ 25,256 $ 14,760 $ 10,496 71% Research and Development.
Our cash position and working capital at December 31, 2023 and 2022 were as follows: December 31, 2023 2022 (In thousands) Cash and cash equivalents $ 467,972 $ 330,362 Working capital $ 559,779 $ 453,366 Our ratio of current assets to current liabilities was 2.5:1 and 2.1:1 at December 31, 2023 and 2022, respectively.
Our cash position and working capital at December 31, 2024 and 2023 were as follows: December 31, 2024 2023 (In thousands) Cash and cash equivalents $ 369,201 $ 467,972 Working capital (1) $ 219,815 $ 559,779 (1) The decrease in working capital as of December 31, 2024 was partially due to the classification of our convertible senior notes as a current rather than long-term liability.
Standalone selling price is best evidenced by the price we charge for the good or service when selling it separately in similar 52 Table of Contents circumstances to similar customers. Other than for the renewal of annual technical services contracts, our products and services are not generally sold separately.
We allocate the transaction price to separate performance obligations based on the estimated standalone selling price of each performance obligation. Standalone selling price is best evidenced by the price we would charge for the good or service when selling it separately in similar circumstances to similar customers.
Any conversion prior to maturity can result in repayment of the principal amounts sooner than the scheduled repayment as indicated in the table above. Refer to Note 11, Convertible Senior Notes , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.
Refer to Note 11, Convertible Senior Notes , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information. Uses of Cash Our future uses of cash are expected to be primarily for working capital, capital expenditures, and other contractual obligations.
Net cash used in financing activities was $21.0 million for the year ended December 31, 2022, primarily due to $52.2 million for repurchases of our stock and $13.5 million in employees’ taxes paid related to restricted stock unit vesting, partially offset by $40.2 million in proceeds from employee stock option exercises and ESPP purchases and a net change in the customer funds balances of $4.6 million.
Financing Activities Net cash used in financing activities was $235.6 million for the year ended December 31, 2024, primarily due to the partial repurchase of $400.0 million of aggregate principal amount of the 2025 Notes for approximately $391.0 million and the net cash used in the purchase of the convertible note hedge and sale of warrants in connection with the 2029 Notes of $15.1 million, partially offset by net proceeds from the issuance of the 2029 Notes of $166.3 million and $13.4 million in proceeds from employee stock option exercises and ESPP purchases.
Most of our sales, other than renewals of support and maintenance, contain multiple performance obligations, with a combination of hardware systems, software products, support and maintenance, and professional services. The transaction price of a contract is determined based on the fixed consideration, net of an estimate for variable consideration such as various discounts or rebates provided to customers.
Many of our sales contain multiple performance obligations, with a combination of hardware systems, software products, support and maintenance, and professional services. A significant level of judgment is involved in contractual arrangements with multiple performance obligations to determine appropriate allocation of the transaction price.
All significant operating decisions are based upon an analysis of Omnicell as one operating segment, which is the same as our reporting segment.
In addition, the CODM is provided with certain segment assets, primarily those that impact liquidity, as well as certain significant expenses. All 51 Table of Contents significant operating decisions are based upon an analysis of Omnicell as one operating segment, which is the same as our reporting segment. Our full-time employee headcount was approximately 3,670 on December 31, 2024.
The decrease was primarily due to a decrease 57 Table of Contents of $21.9 million in employee-related expenses, including the impact of restructuring activities, a decrease of $9.8 million in consulting expenses, a decrease of $7.3 million in commissions expenses, a decrease of $6.0 million in freight out, and a decrease of $4.8 million in travel expenses.
The decrease was primarily due to a decrease of $23.3 million in employee-related expenses primarily as a result of lower headcount, a decrease of $11.0 million in impairment and abandonment charges of operating lease right-of-use and other assets in connection with restructuring activities of certain leased facilities, a decrease of $8.4 million in restructuring costs, a decrease of $4.1 million in commissions expenses, a decrease of $2.9 million in freight out, and a decrease of $2.2 million in executives transition costs.
Business Strategy The U.S. spent a total of $634 billion on prescription drugs in 2022, an increase of 9% compared to 2021, and pr escription drugs impact the vast majority of patients in virtually all settings of care.
Business Strategy In 2023, the United States spent $723 billion on prescription drugs, a 13.6% increase from 2022. This was the largest annual spending increase in 20 years and impacted patients in virtually all settings of care.
Net cash provided by operating activities was $77.8 million for the year ended December 31, 2022, primarily consisting of net income of $5.6 million adjusted for non-cash items of $145.6 million, offset by changes in assets and liabilities of $73.5 million.
Net cash provided by operating activities was $187.7 million for the year ended December 31, 2024, primarily consisting of operating inflows of $129.4 million and favorable working capital movements of $58.3 million.
Retail drug prescriptions represent 85% of all prescription drugs dispensed in the U.S., growing at a rate of 1.7% annually through 2022. Additionally, the COVID-19 pandemic accelerated the shift of outpatient care from hospitals and physician offices to other, more convenient settings, such as retail pharmacies and the home (including through telehealth technologies).
Additionally, the shift of outpatient care from hospitals and physician offices to other, more convenient settings, such as retail pharmacies and the home continues to be a growing trend. New technologies and increased scope of practice for pharmacists appear to be spurring innovation and expansion of the provision of clinical services by retail pharmacies.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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As of December 31, 2023, we did not have any outstanding interest rate swap agreements. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Report of Independent Auditors and Consolidated Financial Statements are included in Item 15 of this Annual Report on Form 10-K beginning on page F-1 and are incorporated herein by reference. ITEM 9.
As of December 31, 2024, we did not have any outstanding interest rate swap agreements. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Report of Independent Auditors and Consolidated Financial Statements are included in Item 15 of this Annual Report on Form 10-K beginning on page F-1 and are incorporated herein by reference. ITEM 9.
In general, the market risk related to these contracts is offset by corresponding gains and losses on the hedged transactions. By working only with major banks and closely monitoring current market conditions, we seek to limit the risk that counterparties to these contracts may be unable to perform. We do not enter into derivative contracts for trading purposes.
By working only with major banks and closely monitoring current market conditions, we seek to limit the risk that counterparties to these contracts may be unable to perform. We do not enter into derivative contracts for trading purposes.
Although our convertible senior notes are based on a fixed rate, changes in interest rates could impact the fair value of such notes. As of December 31, 2023, the fair market value of our convertible senior notes was $527.2 million.
Although our convertible senior notes are based on a fixed rate, changes in interest rates could impact the fair value of such notes. As of December 31, 2024, the fair market value of the 2025 Notes and the 2029 Notes was $167.1 million and $181.3 million, respectively.
As of December 31, 2023, we did not have any outstanding foreign exchange forward contracts. Interest Rate Fluctuation Risk We are exposed to interest rate risk through our borrowing activities. As of December 31, 2023, there was no outstanding balance under the Current A&R Credit Agreement, and the net carrying amount under our convertible senior notes was $569.7 million.
As of December 31, 2024, we did not have any outstanding foreign exchange forward contracts. 60 Table of Contents Interest Rate Fluctuation Risk We are exposed to interest rate risk through our borrowing activities. As of December 31, 2024, there was no outstanding balance under the current Second A&R Credit Agreement.
In order to manage foreign currency risk, at times we enter into foreign exchange forward contracts to mitigate risks 61 Table of Contents associated with changes in spot exchange rates of mainly non-functional currency denominated assets or liabilities of our foreign subsidiaries.
In order to manage foreign currency risk, at times we enter into foreign exchange forward contracts to mitigate risks associated with changes in spot exchange rates of mainly non-functional currency denominated assets or liabilities of our foreign subsidiaries. In general, the market risk related to these contracts is offset by corresponding gains and losses on the hedged transactions.
Added
Refer to Note 10, Debt and Credit Agreement, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information. As of December 31, 2024, the net carrying amount under the 2025 Notes and the 2029 Notes was $174.3 million and $166.4 million, respectively.

Other OMCL 10-K year-over-year comparisons