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Omnicell, Inc. (OMCL)
Q3 2008 Earnings Call
October 23, 2008 5:30 pm
Randall A. Lipps - Chairman, President And Chief Executive Officer
Rob Seim - Vice President, Finance And Chief Financial Officer
K. Newton Juhng - BB&T Capital Markets
Steven F. Crowley -Craig-Hallum Capital Group LLC
Sean Wieland - Piper Jaffray & Co.
Steve Halper - Thomas Weisel Partners
Tom Gallucci - Merrill Lynch
Leo Carpio - Caris & Company
Gary Schwab - Valley Forge Capital
Previous Statements by OMCL
» Omnicell, Inc. Q4 2008 Earnings Call Transcript
» Omnicell, Inc. Q2 2008 Earnings Call Transcript
» Omnicell, Inc. Q1 2008 Earnings Call Transcript
Thank you. Good afternoon and welcome to the Omnicell 2008 third quarter results conference call. Joining me today is Randall Lipps, Omnicell President and CEO.
You can find our results in the Omnicell third quarter press release posted in the Industrial Relations Section of our website at www.omnicell.com. This call will include forward-looking statements subject to risks, uncertainties and other factors that could cause actual results to differ materially, and those expressed or implied.
For a more detailed description of the risks that impact these forward-looking statements, please refer to the information under the heading Risk Factors and under the heading Management Discussion and Analysis of Financial Conditions and Results of Operations in the Omnicell Annual Report on Form 10-K/A filed with the SEC on March 14, 2008, as well as more recent filings with the SEC.
Please be aware that you should not place undue reliance on any forward-looking statements made today. The date of this conference call is October 23, 2008 and all forward-looking statements made on this call based on the beliefs of Omnicell as of this date only.
Future events or simply the passage of time may cause these beliefs to change. Finally, this earnings call is the property of Omnicell Incorporated and any taping, other duplication or rebroadcast without the express written consent of Omnicell Incorporated is prohibited.
During the call today, I will start with an overview of the financial results for the quarter followed by Randy who will cover some of the quarter’s business highlights. I’ll then discuss our guidance for the remainder of 2008 and our initial guidance for 2009. After that, we’ll open the call to your questions.
For the third quarter of 2008, we’re happy to report that we experienced record bookings, posted record revenues and the profits exceeded expectations. We saw strength in every product line, in every geography and in every size and type of hospital. Our U.S. government business was strong, as it traditionally is in the third quarter of the year and we remain a leading provider of acute care automation to government healthcare facilities.
We also saw good sales development in the U.K. both in orders and in the sales pipeline indicating that medication safety and supply automation are becoming increasingly important outside the United States. While this is a developing market for us and orders were still less than 4% of our business, we believe international opportunities will be a good source of growth in the future.
We were pleased to see some larger deals that were delayed earlier in the year close during the quarter, driving an increase in orders from new customers to 45% of our total orders for the quarter. New customers are comprised of a combination of competitive conversions and Greenfield accounts, or accounts installing automation for the first time.
The split between Greenfield” and competitive conversions was about 50/50. The new customer volume was very broad-based. It was not driven by any one particular new customer. Needless to say, we are pleased with the continued strength of our new business volume.
Omnicell solutions, such as our new SinglePointe feature are finding high degrees of receptivity in the market and are helping to attract new customers. Though all the credit markets became challenging for some of our leasing partners during the quarter, we were able to shift our business to other leasing partners that are not as challenged by the current market.
Providing financing alternatives to our customers remains an important part of our business and one that we have so far been able to manage with no disruption through the sales process.
Our financial results for the third quarter net or exceeded consensus along with revenue slightly higher than expectations are non-GAAP earnings or $0.18 per share excluding stock compensation expenses which is $0.02 per share above analysts’ expectations. As a reminder, we are now fully taxed as compared to 2007 when we enjoyed the benefit from tax valuation allowances.
Our backlog continues to allow us stability in our financial performance and we remain within our backlog objective of six to nine months. We continue to drive customer satisfaction through our high touch sales, service and installation processes, and we continue to complete installations on the customers’ timetable.
The expansion of our sales staff has been a success and we’re pleased with the performance of our sales team during the quarter. Our total employee head count is now 845 full-time employees, a reduction of 35 from the last quarter after completion of the closure of our South Carolina facility.
We believe the staffing level is appropriate to maintain our customer satisfaction ratings and to continue new product development. We do not expect to expand head count further until the economic environment has improved.