Omnicell Inc Q2 2026 Earnings Call

Everyone. Thank you for joining us and welcome to the Omnicell Second Quarter 2026 Financial Results Conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to David Ungar, vice president of Investor Relations. David, please go ahead Good morning, and welcome to the Omnicell Second Quarter 2020 Financial Results Conference call. My name is David Ungar. I'm Omnicell new vice president of investor relations. On the call with me today are Randall Lipps, chairman, Chief Executive Officer and founder Nnamdi Njoku president and Chief Operating Officer. And Baird executive Vice president and chief Financial Officer. Before we begin, I would like to remind you that today's call will include forward looking statements within the meaning of federal securities laws, including statements regarding our financial outlook, business expectations and strategic priorities. These forward looking statements are based on current expectations and assumptions. As of today, and are subject to risks and uncertainties that could cause actual results to differ materially For additional information concerning these risks and uncertainties, please refer to our earnings press release issued this morning.

Our Annual Report on Form 10-K filed with the SEC on February 26th, 2026 and our subsequent SEC filings. We disclaim any obligation to update any forward looking statements, except as required by law. During. This call, we will also discuss certain non-GAAP financial measures Reconciliations of these measures to the most directly comparable GAAP measures are included in our second quarter 2020 earnings press release, which is available on the Investor Relations section of our website at ir dot omnicell.com. Turning to today's agenda. Randall will begin with an overview of our second quarter performance and strategic priorities. Nnamdi will then provide an update on our operational execution and key initiatives. Followed by Baird, who will review our financial results and updated outlook for 2026. We will then open the call for questions. With that, I will turn the call over to Randall. Randall. Good.

Morning, everyone, and thank you for joining us today. We delivered solid execution in the second quarter with results at or above our expectations across key financial metrics Total revenue was 312 million at the high end of our previously provided guidance range. While non-GAAP EBITDA of 67 million and non-GAAP earnings per share of $0.94 were well above our previously shared outlook. Baird will provide additional details on our financial performance and our third quarter and full year 2026 outlook. Later in the call. We believe this financial performance reflects continued discipline and execution, improving operational efficiency and the resilience of our business model as we strive to advance our strategy to become the market leader in autonomous medication management. Before I continue, I want to briefly address an organizational update we announced on July 1st. We have appointed Nnamdi Njoku as President and Chief Operating Officer of Omnicell Nnamdi. Has been a key leader within the company, playing an important role in advancing our strategic and operational priorities as President and Chief Operating Officer. He will be responsible for helping accelerate execution across the organization, driving greater operational focus and accountability. And ensuring alignment as we continue to work to scale the business.

This appointment reflects both his meaningful contributions to Omnicell and our strong confidence in his ability to continue leading the company as an exceptional executive. He brings. Deep experience across product strategy, innovation. Customer engagement, and operational execution. There is no change to my role as chairman of the Board of Directors and Chief Executive Officer, and our strategy remains unchanged. Nnamdi promotion reinforces our focus on execution and our commitment to delivering long term value for all stakeholders. From an industry demand perspective, we continue to monitor and evolving macroeconomic environment within health systems. Customers appear to continue to prioritize investments that improve operational efficiency, strengthen reliability and address ongoing staff and cost pressures. Because we see our solutions are increasingly being viewed as strategic enterprise wide platforms Purchasing decisions often involve broad, cross-functional evaluation and long planning cycles. We are seeing increased pipeline activity across Omnisphere and Titan XD solutions as customers appear to focus on enterprise wide visibility of medications, interoperability workflow transformation, and operational efficiency. These evaluations often involve multiple stakeholders, which reflects the strategic nature of these investments. This pipeline momentum is also supported by our expanding leasing programs, where leveraging our balance sheet helps support attractive lifetime value economics for both our customers and our business.

We believe these dynamics are creating meaningful, competitive conversion opportunities and reinforcing our position as a long term platform partner. We find that. Customers are seeking enterprise wide solutions that can drive outcomes and efficiency gains across the health system, including for nursing technicians, pharmacists, supply chain leadership, and the C-suite. Over the first half of 2026, we have seen strong interest in our Titan XT solution. Reflected in a meaningful increase in pipeline activity. We. Find that this increasing level of engagement reinforces the strategic role Titan XT plays as customers evaluate. Next generation, enterprise wide platforms. As we have discussed previously, 2026 represents the early stages of the next refresh cycle as customers evaluate the transition from XT to Titan XT and the broader adoption of the Omnisphere platform. Omnisphere. Is intended to serve as the unifying layer across our portfolio, designed to connect devices. Data, and workflows on a single, secure, cloud native platform and enable more guided and increasingly autonomous medication management At the same time, our strong cash flow generation should support our ability to continue investing in innovation and AI driven capabilities aimed at addressing our customers, evolving needs. As we enter this new refresh cycle, we are seeing increased customer engagement that appears driven by the capabilities of our next generation platform being introduced into the market and the potential integration opportunities with broad, cloud based workflows.

This is the first refresh cycle in which both Omnicell and our largest competitor have introduced new platform offerings at the same time. As a result, we're seeing that both the number and size of competitive opportunity deals are increasing, as well as signs that these potential new customers are conducting broad evaluations and taking time to assess the enterprise wide technology decisions before making long term commitments Importantly, this dynamic has not changed the level of interest we are seeing from our existing customers, nor the decision making process customers typically undertake to evaluate the strategic implications of these investments That said, our confidence in the long term. Opportunity remains strong. Customer engagement continues to increase. Our pipeline is robust and growing, and we continue to believe our innovation solutions represent an important strategic priority for health systems seeking to improve outcomes, efficiency, reliability and workflow productivity. In summary, we delivered a solid second quarter with meaningful outperformance in profitability, which we believe reflects disciplined execution by the team and progress against our strategy We remain confident in our ability to execute in the long term. Opportunity ahead. With that, I'll turn it over to Nnamdi.

Thank you. Randall, and good morning everyone. I'm excited to step into the role of President and Chief Operating Officer and to help advance Omnicell long term growth strategy and innovation roadmap My focus is on scaling our operations while driving seamless execution and operational excellence across the business. With a focus on improving leverage in our PNL. This includes driving alignment across the enterprise and in particular product strategy and customer engagement. As we continue to build on our foundation of innovation and position the company for sustained growth. A key priority for me is advancing our innovation roadmap. Including our Titan XT automated dispensing system and the continued expansion of our cloud native Omnicell platform Together, these solutions are intended to form the core of our platform strategy We also see meaningful opportunity to further integrate data analytics and AI driven capabilities across our platform to deliver more predictive and efficient workflows for our customers. I am happy to share that we remain on track to have Titan XT. Available for shipment in the second half of 2026, and Omnicell ads remains on track for the first half of 2027. General availability. Equally important, I am focused on deepening customer engagement and elevating our customer experience.

Over the past several quarters have been on the road meeting with existing customers and potential new customers. Sharing Omnicell innovation roadmap and our broader AI driven platform vision. What we are hearing is a consistent demand for enterprise wide, interoperable solutions that can drive efficiency, reliability and better outcomes. These. Reinforce our confidence in the opportunity ahead and in our position in the market. We are also seeing tangible proof points that reinforce this platform strategy During the quarter, we secured our first competitive Titan XD conversion win of the year with the health system in the southeast, which selected Titan XD alongside AWS IV workflow and other Omnicell solutions as part of a broader medication management transformation strategy. We believe this win validates several themes. We continue to hear in the market. Customers want a cloud based platform, connected solutions that enable improved workflows, standardization of best practices, and operational efficiency. The customer also viewed our flexible financing capabilities as an important differentiator. Intended to enable predictable spend and help address the cost of change associated with the broad enterprise deployment. Importantly, even as sales cycles continue to take time on competitive opportunities, we have not seen a meaningful change in our ability to compete and win.

We continue. To see strong interest from these potential new customers. Evaluating next generation platforms and remain encouraged by our competitive positioning in the market. We also. Also, seeing excitement and momentum from Titan XD. Across our existing customer footprint. Including a world class academic medical center in North Carolina. A Texas based academic health system, and an Arizona Regional Medical Center. Each selecting the Titan x t automated dispensing system along with Central pharmacy and inventory optimization solutions. As they seek to support and modernize medication management operations. We saw encouraging momentum in specialty pharmacy, including a competitive greenfield win. Where the largest healthcare provider in northwest Arizona. Selected Omnicell Specialty pharmacy services to help enhance clinical outcomes and improve the patient experience. We also opened two new specialty pharmacy engagements with health systems located in Oregon and Missouri, expanding our footprint in this fast growing market. These examples reinforce our confidence that customers are engaging with Omnicell as a strategic platform partner, not simply as a point solution provider, but as a partner seeking to meet the evolving needs of pharmacists and the C-suite of health systems. More broadly. What we are seeing across our commercial organization is increasing engagement around enterprise wide medication management transformation.

Customers are. Appeared to be looking beyond individual products and evaluating how automation, cloud connectivity, analytics and workflow optimization can work together to drive measurable operational efficiencies and clinical outcomes. As we move forward, my focus will remain on driving disciplined execution, accelerating innovation, and ensuring we deliver consistent, high quality performance across the organization. We are focused. On accelerating adoption of Titan XT and Omnisphere, reducing friction in the customer buying process, and ensuring we are positioned to capture the significant opportunity associated with the refresh cycle that we see ahead of us I look forward to building on this momentum with. That I'll turn it over to Baird. Thank you.

Nnamdi, and good morning everyone.

We delivered.

Strong financial performance in the second quarter of 2026, with results at the high end of our revenue guidance and meaningful outperformance in profitability. We believe these results reflect disciplined execution and improved operating leverage across the business. Total revenue for the quarter was $312 million. At the high end of our previously provided guidance range This performance reflects steady execution across our connected Devices portfolio, as well as continued growth in our recurring revenue streams. Product revenue for the quarter was 175 million. This. Reflects continued demand for our connected Devices portfolio across both North America and international markets. Surface. For the quarter was 137 million. Growth in services continues to be driven by strong performance across our recurring revenue streams, including specialty pharmacy services, as well as maintenance support and software related offerings. From. A profitability standpoint, we saw meaningful improvement in our operating performance during the quarter. non-GAAP EBITDA totaled $67 million and non-GAAP earnings per share was $0.94. Both coming in well above our previously provided guidance ranges. We benefited. From a one time $15 million tariff refund during the quarter. Excluding this benefit, non-GAAP EBITDA would have been $52 million, which still represents meaningful outperformance versus the midpoint of our prior guidance range.

This underlying outperformance reflects favorable revenue mix, disciplined cost management and continued operating efficiency across the organization. GAAP earnings per share for the quarter was $0.52, compared to $0.12 in the prior year period. This outperformance was driven by several factors, including improved revenue mix, particularly continued growth in higher margin, recurring revenue streams, strong gross margin performance, ongoing cost discipline, and operating efficiency across the organization, as well as the tariff refund benefit. non-GAAP gross margin for the quarter was 50%, primarily driven by the $15 million tariff refund benefit. Turning to the balance sheet. We ended the quarter with cash and cash equivalents totaling 292 million. We continue to maintain a sound liquidity position while investing in the business and supporting our strategic initiatives. Free cash flow for the quarter was 56 million, reflecting strong profitability and continued discipline in working capital management, inclusive of the receipt of the $15 million tariff refund. We remain focused on driving consistent cash generation while maintaining flexibility to support growth initiatives, including our expanding leasing programs. Before. Turning to guidance, I'd like to briefly connect our second quarter 2026 performance to the broader operating environment. As. Randall discussed, we continue to see strong pipeline activity across Omnisphere and our Titan XT platform.

Customer and potential new customer engagement remains high as health systems evaluate enterprise wide solutions and long term platform investments. These. Involve broad operational clinical, financial and executive stakeholder groups. Which can create variability with respect to the approval timelines. But also expand the potential scope of deployment. This reflects the Multi-quarter to multi-year capital approval cycle that are typical in our business. We believe these dynamics reinforce the long term opportunity ahead while providing important context for how investors should think about bookings, pacing through the remainder of 2026. We are also seeing continued adoption of our leasing program as part of our go to market strategy. Our. Ability to leverage our balance sheet seeks to provide customers with flexible financing options while supporting attractive lifetime value economics for our business. We believe this remains a meaningful component of our offering as customers evaluate large scale, enterprise wide platform decisions. Turning now to our third quarter 2026 outlook. We expect. Total revenue to be in the range of 301 million to 307 million. Product revenue to be in the range of 169 million to 172 million. Service revenue to be in the range of 132 million to 135 million. non-GAAP. To be in the range of 32 million to 37 million. non-GAAP. Earnings per share to be in the range of $0.35 to $0.43.

Sequentially, the third quarter non-GAAP EBITDA and non-GAAP earnings per share outlook reflects the absence of the one time tariff refund recognized in the second quarter, as well as lower expected revenue, lower gross margin and higher operating expenses compared to the prior quarter. These items are partially offset by our continued focus on disciplined cost management. Guidance. Also assumes an estimated non-GAAP effective tax rate of approximately 18%. Based on our first half performance and current visibility into the business, we are updating our full year 2026 guidance for. The full year 2026. We now expect product bookings to be in the range of 425 to 560 million total. Revenue to be in the range of 1.225 billion to 1.245 billion. Product revenue to be in the range of 690 million to 700 million service. Revenue to be in the range of 535 million to 545 million year. To end 2026. A RR to be in the range of 660 million to 680 million. GAAP EBITDA to be in the range of 175 million to 185 million. non-GAAP earnings per share to be in the range of $2.15 to $2.30. Exiting Q2, our product bookings pipeline is meaningfully larger than we have seen in recent years. We continue to see significant active customer interest and engagement. Regularly on our Titan XT offering. We are also observing encouraging trends emerge regarding customers views of our reliability, service and innovation.

However, transaction decisions and timing remain dependent on multiple factors, including customer evaluation, capital approval, and contracting processes. And we are seeing purchasing decisions take time to progress through the sales process. For. Example, we are seeing competitive conversion opportunities. Take time as stakeholders evaluate our new solutions. We note again that the capital approval cycle for customers and potential customers. Typically takes orders to years, which may be further influenced by both. Our announcement of Titan XT and the fact that the current age of our XT installed base is younger than the G series installed base was at the time of the transition from the G series to XT. These factors, along with the current state of our pipeline, including decisions on and timing of potential transactions and the increasing numbers and size of potential customer opportunities, as well as the fact that purchasing decisions on one or more larger enterprise opportunities. Could have a material impact on our performance. Our introducing variability, making it more difficult to forecast which product bookings will come in during 2026. Based on all these factors, we are updating our full year 2026 product bookings guidance to a range of 425 million to 560 million to provide investors with a transparent view regarding the range of outcomes that we currently believe are possible in 2026, the.

Bottom end of this revised range, primarily reflects uncertainty around the timing of purchasing decisions, rather than the deterioration in demand for our solutions. The upper end of the guidance range remains unchanged from our prior guidance. At 560 million, and reflects the transactions currently in our pipeline that we continue to believe may be completed in 2026. As. Our pipeline exiting Q2 2026 is meaningfully larger than we have seen in recent years. However, our revised product bookings guidance range reflects our current view on the potential range of outcomes and timing for 2026. Purchasing decisions. This revision. Does not change our view of the long term growth opportunity. We continue to believe the fundamental needs across health systems for automation, medication management, efficiency. Labor productivity and advanced pharmacy workflows remain strong, and we believe our offerings are well positioned to address these needs. We also believe the breadth and depth of our engagement with potential competitive customers. In