Q2 2025 Omnicell Inc Earnings Call
Eric: Thank you for standing by. My name is Eric, and I'll be your conference operator today. At this time, I would like to welcome everyone to the OMNICELL second quarter 2025 financial results call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the call over to Kathleen Nemeth, Senior Vice President, Investor Relations. Please go ahead.
Thank you for standing by. My name is Eric, and I'll be your conference operator today.
At this time, I would like to welcome everyone to the Omnicell Second Quarter 2025 Financial Results Call.
Alliance have been placed on nuke to prevent any background noise.
After the speakers remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad,
If you would like to withdraw your question, press star 1 again.
Oh no, like to turn the call over to Kathleen Nemo. Senior vice president. Ambassador relations.
Please go ahead.
Nchacha Etta: Good morning and welcome to the OMNICELL second quarter 2025 financial results conference call. On the call with me today are Randall Lipps, OMNICELL Chairman, President, CEO and Founder, Nchacha Etta, Executive Vice President and Chief Financial Officer, and Nandu Njoko, Executive Vice President and Chief Operating Officer. The call today will contain forward-looking statements, including statements related to financial projections or performance and market or company outlook based on current expectations. These forward-looking statements speak only as of today on the date specified on the call. Actual results and other events may differ materially from those contemplated due to numerous factors that involve substantial risks and uncertainties. For more information, please refer to our press release issued today, OMNICELL's annual report on Form 10-K filed with the SEC on February 27th, 2025, and another more recent report filed with the SEC.
Good morning and welcome to the Omni sell second quarter, 2025 Financial results conference, call on the call with me today, are Randall lips. Amy Cell, chairman president, CEO and founder and Chacha ETA Executive Vice, President, and Chief Financial Officer and nandy naoko, Executive, Vice President and Chief Operating Officer.
Nchacha Etta: Except as required by law, we do not assume any obligation to update any forward-looking statements. During this call, we will discuss some non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most comparable GAAP financial measures are included in our financial results press releases. Our results were released this morning, and our financial results press releases are posted in the Investor Relations section of our website at ir.omnicel.com. With that, I will turn the call over to Randall. Randall?
The call today will contain forward-looking statements, including statements related to financial projections or performance and market or company outlook based on current expectations. These forward-looking statements speak only as of today, on the date specified on the call. Actual results and other events may differ materially from those contemplated due to numerous factors that involve substantial risks and uncertainties. For more information, please refer to our press release issued today, Omnicell's annual report on Form 10-K filed with the SEC on February 27, 2025, and in other more recent reports filed with the SEC. Except as required by law, we do not assume any obligation to update any forward-looking statements.
During this call, we will discuss some non-gaap Financial measures. Reconciliations of these non-gaap measures to the most comparable. Gaap Financial measures are included in our financial results. Press releases.
Our results were released this morning and our financial results press releases are posted in the investor relations section of our website at IR, Amy cell.com.
With that, I will turn the call over to Randall. Randall.
Randall Lipps: Good morning, everyone, and thank you for joining us today. We had a strong second quarter and first half of 2025, and I am pleased to announce today that we are reaffirming our full-year 2025 outlook for product bookings and annual reoccurring revenue, and modestly increasing our full-year 2025 guidance for total revenues, non-GAAP EBITDA, and non-GAAP earnings per share, which reflects our strong first half 2025 performance and greater visibility as we move through the back half of the year. I'm proud of the team's ability to deliver strongly despite the headwinds from tariffs and uncertainty in the macroeconomic environment. I'm also pleased to note that we are seeing that overall customer demand is tracking to our expectations, which we believe reflects the strength of our innovative portfolio of products and services.
Good morning, everyone. And thank you for joining us today.
We had a strong second quarter and first half of 2025.
And I am pleased to announce today that we are reaffirming our full year 2025 outlook for product, bookings and annual reoccurring Revenue.
And modestly increasing our full-year 2025 guidance for total revenues.
Non-gaap ibida and non-gaap earnings per share.
Which reflects our strong first half, 2025 performance, and greater visibility. As we move through the back, half of the year.
I'm proud of the team's ability to deliver strong despite the headwinds from terrorists and uncertainty in the macroeconomic environment.
I'm also pleased to note that we are seeing that overall customer demand is tracking to our expectations
Randall Lipps: Customers appear to continue to see the value in our products and have been receptive of broader pricing increases and strategies we have recently started to implement. Also, we think it's important to remember that our install base has grown significantly over the last several years, and as we continue to announce new innovations and capabilities, it should position us well as we move forward. I'm excited about the journey OMNICELL is on, evolving from a device-centric medication and medical supplies management company to an end-to-end medication and medical supplies management technology platform company combining both automation and intelligence that serves the entire continuum of care. This transformation is meant to allow us to serve our health system customers by providing high visibility of medications and medical supplies in every location and giving them accurate, actionable insights intended to enhance operational and clinical outcomes.
Which we believe reflects the strength of our innovative portfolio of products and services.
Customers appear to continue to see the value in our products and have been receptive. A broader pricing increases and strategies. We have recently started to implement
Also.
We think it's important to remember that our install base, has grown significantly over the last several years, and as we continue to announce new Innovations and capabilities, it should position us. Well, as we move forward, I'm excited about the journey. Amy cell is on,
End to end medication and medical supplies management technology platform company. Combining both Automation and intelligence that serves the entire Continuum of Care.
Randall Lipps: Now let's review the second quarter 2025 financial results. Total revenue was $291 million, representing an increase of $14 million or 5% over the second quarter of 2024, and an increase of $21 million or 8% compared to the previous quarter. Our second quarter 2025 earnings per share in accordance with GAAP were $0.12 per share compared to $0.08 per share in the second quarter of 2024, and a loss of $0.15 per share in the prior quarter. We believe that we are building customer awareness around our roadmap, which includes both automation with robotics and smart devices, and intelligence with software and analytics, and this appears to be resonating with the market. We believe we are increasingly viewed by our customers as a way for them to maximize their capital and strategic investment dollars.
This transformation is meant to allow us to serve our health system. Customers by providing high visibility of medications and medical supplies and every location and giving them accurate actionable, insights intended to enhance operational and clinical outcomes.
Now, let's review the second quarter, 2025 Financial results.
Total revenue was 291 million representing an increase of 14 million or 5% over the second quarter of 2024 and an increase of 21 million or 8% compared to the previous quarter.
Our second quarter 2025 earnings per share in accordance with gaap were 12 cents per share, compared to 8 cents per share. In the second quarter of 2024 and a loss of 15 cents per share in the prior quarter.
We believe that we are building customer awareness around our roadmap, which includes both automation with robotics and smart devices, and intelligence with software and analytics. This appears to be resonating with the market.
Randall Lipps: As I noted, we are pleased to see that customer demand is tracking to our initial expectations at the start of the year, despite the uncertainty customers are facing, whether from a legislative or economic environment. We expect our future growth to continue to be driven by three core levers. First, expanding our market presence. We are focused on capturing greater market share across both inpatient and outpatient settings. This includes nursing units, operating rooms, and pharmacies of all types, from central pharmacies to specialty pharmacies. Our recent customer wins and continued platform adoption reflect what we think is the strength of our solutions and the trust we believe we are building across the healthcare continuum. Second, scaling reoccurring revenue. We are taking actions to grow and scale our predictable recurring revenue base.
We believe we are an increasingly viewed by our customers, as a way for them to maximize their capital and Strategic investment dollars. As I noted, we are pleased to see that customer demand is tracking to our initial expectations at the start of the Year, despite the uncertainty customers are facing whether from legislative or economic environment.
We expect our future growth to continue to be driven by 3 core levers. First,
Expanding our markets presence.
We are focused on capturing greater market share across both inpatient and outpatient settings. This includes nursing units operating rooms and pharmacies of all types from Central pharmacies to Specialty, pharmacies
Our recent customer wins and continued platform adoption reflect what we think is the strength of our solutions and the trust. We believe we are building a cross the healthcare continuum.
Second.
Scaling reoccurring Revenue.
Randall Lipps: This includes service contracts, software subscriptions, and cloud-based offerings that are expected to provide long-term value to our customers and greater visibility in our own business. We are pleased to note that we are growing and scaling our predictable recurring revenue base, both from growth in market share and price levels. And third, accelerating our technology platform, Omnisphere. A key pillar of our transformation is Omnisphere, our cloud-native platform designed to be the connected backbone for all OMNICELL products. Omnisphere is intended to enable enterprise-wide visibility into medications and medical supplies inventory and provide a single point of access for all cloud-connected automation and intelligence. This quarter, we were proud to announce that Omnisphere received HITRUST CSF I-1 certification, an important milestone that affirms our commitment to cybersecurity and operational excellence.
We are taking actions to grow and scale our predictable, recurring Revenue base, this includes service, contracts, software subscriptions, and cloud-based offerings. That are expected to provide long-term value to our customers and greater visibility in our own business.
We are pleased to note that we are growing and scaling, our predictable, recurring Revenue based both from growth in market, share and price levers.
And third accelerating our technology platform omnisphere.
A key pillar of our transformation is omnisphere. Our Cloud native platform designed to be the connected backbone for all Omni sell products.
Omnisphere is intended to enable enterprise-wide visibility into medications and medical supplies inventory, and provide a single point of access for all Cloud connected Automation and intelligence
This quarter, we were proud to announce that omnisphere received High trust CSF.
I1 certification.
Randall Lipps: We believe we are the only med management company to achieve this milestone, and importantly, at a time when many customers are looking for solutions that achieve the highest data protection standards. In the second quarter, we unveiled our innovation lab in Austin, Texas. This facility is dedicated to solving customer-identified pain points through rapid prototyping and testing. We also hosted at our lab, Illuminate 2025, our fifth annual customer-focused event that aims to shine a light on customers' most pressing medication management challenges and OMNICELL's innovative solutions that are helping to drive enhanced clinical and operational outcomes. As more patient care shifts toward an outpatient model, we believe there is a growing need for better medication management at the clinic level.
An important Milestone that affirms our commitment to cyber security and operational excellence. We believe we are the only men management company to achieve this milestone.
and importantly, at a time when many customers are looking for solutions, that achieve the highest data protection standards,
In the second quarter, we unveiled our Innovation lab in Austin, Texas. This facility is dedicated to solving customer identified pain points through rapid prototyping and testing.
We also hosted at our lab illuminate, 2025, our fifth annual customer focused event, that aims to shine a light on customers. Most pressing medication management challenges and Omni sells innovative solutions that are helping to drive enhance clinical and operational outcomes.
Randall Lipps: To support health systems in managing growing inventory locations in outpatient settings, we launched MedVision, a software solution that is built to offer the ability to manage real-time medication inventory workflows in clinics. The product is designed to provide visibility through dynamic dashboards, insights into stock outs, stock values, usage, and high interoperability through automated reordering and replenishing at the clinic level. We are pleased with the market reception thus far. Also, to continue our path to increased visibility within the hospital to continue to lead the industry with innovation, we launched a new RFID product line, MedTrack. We are starting in the operating room with the first offering named MedTrack OR.
Need for better medication management at the clinic level.
To support Health Systems in managing, growing inventory, locations and outpatient settings.
We launched medvision a software solution and is built to offer the ability to manage real-time medication inventory workflows and Clinics.
The product is designed to provide visibility through dynamic dashboards, offering insights into stockouts.
Stock values, usage and high. Interoperability through automated reordering and replenishing at the clinic level. We are pleased with the market reception thus far.
Also, to continue our path to increase visibility within the hospital and to continue to lead the industry with innovation, we launched a new RFID product line, MedTrak.
Randall Lipps: The RFID-enabled drawer is designed to work in conjunction with an OMNICELL anesthesia workstation to allow non-controlled medications to be automatically tracked via RFID and allow providers to adopt grab-and-go, dispensing, and returning approaches within the operating room and procedural area environments. These exciting new products continue to add to our strategy that seeks to create visibility and provide actionable insights throughout the health system and reach the outcomes laid out in the Economist Pharmacy Framework. These innovative products also reflect our commitment to seeking to help healthcare providers improve outcomes, reduce costs, and alleviate staff burnout. I'm confident in our long-term strategy and our ability to lead the next era of medication management. We are building the infrastructure, the talent, and the technology that should support our customers as they navigate a rapidly evolving healthcare landscape.
We are starting in the operating room with the first offering named medtrak o r.
The RFID enabled drawer is designed to work. In conjunction with an omnicell. Anesthesia workstation to allow non-controlled medications to be automatically tracked via RFID and allow providers to adopt grab and go dispensing and returning approach.
Within the operating room and procedural area environments. These exciting new products continue to add to our strategy that seeks to create visibility and provide actionable insights throughout the health system and reach the outcomes laid out in the autonomous Pharmacy. Framework.
These Innovative products also reflect a commitment to seeking to help health care providers, improve outcomes, reduce costs and alleviate staff burnout.
I'm confident in our long-term strategy, and our ability to lead the next era of medication management.
Randall Lipps: Now let's turn to some of the customer win highlights from the second quarter. We continue to be pleased with the strong customer demand for our XDA Amplify offering, particularly XD Extend, which again helped drive our strong top-line performance in the second quarter of 2025. XD Extend was part of several larger portfolio deals this quarter, including a significant win at a large Northeast health organization with seven locations across New Jersey, along with other wins at healthcare entities in Nebraska, Northern Pennsylvania, and Southern and Central New York, and government healthcare facilities. In June 2025, we held our inaugural IV-Trust Summit, which brought together industry leaders, patient safety advocates, and policy advisors to explore opportunities for improving patient safety of intravenous medication compounding through automation and intelligence.
We are building the infrastructure, the talent, and the technology that should support our customers as they navigate a rapidly evolving Healthcare landscape.
Now, let's turn to some of the customer win highlights for the second quarter.
We continue to be pleased with the strong customer demand for our XDA. Amplify offering particularly XT extend which again helped Drive our strong Topline performance. In the second quarter of 2025 XT extend was part of several larger portfolio deals. This quarter including a significant win at a large Northeast Health Organization with 7 locations across New Jersey along with other wins at Healthcare entities in
Nebraska.
Northern Pennsylvania, and Southern and Central New York and government Healthcare facilities.
in June 2025, we held our inaugural IV trust Summit
Randall Lipps: Our IV automation solutions continue to gain traction in the market with a leading Southern California health system selecting OMNICELL to provide IV automation solutions that are intended to support safety and accuracy for their sterile compounding operations. Our central pharmacy footprint continues to grow with a large non-for-profit academic medical system in Illinois and a Mississippi-based Catholic health system selecting our central pharmacy dispensing service in its efforts to enhance safety and efficiency in central pharmacy inventory management and dispensing. Finally, a leading acute care regional hospital in Northern Georgia has selected OMNICELL Specialty Pharmacy Services to launch a specialty pharmacy designed to extend its advanced inpatient and outpatient services as it seeks to deliver comprehensive community-focused care.
Which brought together industry leaders patient safety Advocates and policy advisors to explore opportunities for improving patient. Safety of intravenous medication compounding through Automation and intelligence, our IV automation Solutions continue to gain Traction in the market. With a leading Southern California, Health System, collecting Omni sell to provide IV, automation solutions that are intended to support safety and accuracy for their sterile compounding operations.
our Central, Pharmacy footprint continues to grow with a large non-for-profit academic medical system in Illinois and in mississippi-based Catholic Health System, selecting our Central Pharmacy dispensing service in its efforts to enhance safety and efficiency in central Pharmacy, Inventory, management, and dispensing finally
Randall Lipps: In summary, while we are mindful of macroeconomic uncertainty and are working to navigate a dynamic cost structure environment relative to tariffs, we are pleased with the pace of innovation OMNICELL is delivering across the entire continuum of care and are excited about the opportunities ahead. We believe our focus on innovation and providing ROI solutions will resonate with customers during these uncertain times. Now, with that update, I'd like to turn over the call to Chacha. Chacha?
The leading acute care, Regional Hospital in Northern Georgia, have selected Omni sells Specialty, Pharmacy services to launch a specialty. Pharmacy designed to extend its Advanced inpatient and outpatient services as it seeks to deliver comprehensive Community focused care.
In summary while we are mindful of macroeconomic uncertainty, in a working to navigate a dynamic cost structure environment relative to tariffs.
We are pleased with the pace of innovation on these cell is delivering the entire Continuum of Care.
We believe our focus on Innovation and providing Roi Solutions will resonate with customers during these uncertain times.
Now, with that update, I'd like to turn over the call to Chata.
ChaCha.
Nchacha Etta: Thank you, Randall. I want to start with a big thank you to the entire team at OMNICELL for delivering outstanding financial results for our second quarter of 2025. Your strategic thinking, resilience, and ability to navigate through challenging target headwinds has been nothing short of exceptional. This quarter, I am pleased to report that we delivered strong results, exceeding the upper end of nearly all of our previously stated guidance ranges. Now, I am going to walk you through some of the key drivers of our second quarter 2025 performance, as well as share our first quarter and updated full-year guidance. Looking at our second quarter 2025 results, total revenue was $291 million, representing an increase of $14 million, or approximately 5% from the second quarter of 2024, and an increase of $21 million, or nearly 8% compared to the previous quarter.
Thank you, Brenda.
I want to start with the big thank you to the entire team at Omnicell for delivering outstanding financial results for our second quarter of 2025.
Your strategic thinking resilience and ability to navigate through challenging target, headwinds has been nothing short of exceptional.
This quarter, I am pleased to report that we delivered strong results. Exceeding, the upper end of nearly all of our previously, stated guidance, ranges,
Now I am going to walk you through some of the key drivers of our second quarter, 2025 performance.
As well as share our first quarter and updated full year guidance.
Looking at our second quarter, 2025 results.
To, to our Revenue was 291 million.
Representing an increase of 40 million or approximately 5% from the second quarter of 2024.
And an increase of 21 million, or nearly 8% compared to the previous quarters.
Nchacha Etta: Compared to the second quarter 2024, we saw year-over-year growth from all four of our major product categories, including connected devices, which benefited from XD Extend, as well as key contributions from technical services, SaaS and expert services, and consumables. Compared to our second quarter 2025 product revenue guidance, we saw stronger than expected revenues from connected devices, including contributions from lease renewals as well as consumables. Second quarter 2025 product revenue was $163 million, representing an increase of $7 million compared to the second quarter of 2024, and an increase of $18 million over the previous quarter. Service revenue for the second quarter 2025 was $127 million, which increased by $7 million from the second quarter of 2024, and represented an increase of $3 million over the previous quarter.
Compared to the second quarter 2024. We saw year over year growth from All 4 of our major product categories, including connected devices with benefits from XT extend
As well as key contributions from technical services, start and expert services and consumables.
Compared to our second quarter 2025 product Revenue guidance. We saw stronger than expected revenues from connected devices including contributions from lease renewals as well as consumables.
Second quarter 2025 product, Revenue was 163 million.
Representing an increase of 7 million compared to the second quarter of 2024.
And an increase of 18 million over the previous quarter.
Service revenue for the second quarter, 2025 was 127 million.
Which increased by 7 million from the second quarter of 2024.
And represented an increase of 3 million over the previous quarter.
Nchacha Etta: Non-GAAP gross margin for the second quarter of 2025 was 44.7%, representing an increase of 50 basis points compared to the second quarter of 2024, and an increase of 260 basis points from the prior quarter. Second quarter 2025 non-GAAP gross margins, when compared to first quarter 2025 results, benefited from higher product revenue volumes, favorable pricing, customer and product mix, as well as some seasonal expenses, which were lower in the second quarter of 2025. A full reconciliation of our GAAP to non-GAAP results is included in each of our first quarter 2025 and second quarter 2025 quarterly earnings press releases, which are posted on our Investor Relations website. Our second quarter 2025 earnings per share in accordance with GAAP were $0.12 per share, compared to $0.08 per share in the second quarter of 2024, and a loss of $0.15 per share in the prior quarter.
Non-gaap gross margin for the second quarter of 2025 was 44.7%.
Representing an increase of 50 basis points, compared to the second quarter of 2024.
And an increase of 260 basis points from the prior quarter.
Second quarter, 2025, non-gaap cross margins. When compared to first quarter 2025 results benefited from higher product Revenue volumes, favorable pricing customer and product, mix as well as some seasonal expenses, which were lower in the second quarter of 2025.
A full reconciliation of our gaap to non-gaap results is included in each of our first quarter. 2025 and second quarter, 2025 quarterly, earnings press releases which are posted on our investor relations website.
our second quarter 2025 earnings per share in accordance with gaap where 12 cents per share compared to 8 cents per share in the second quarter of 2024
Nchacha Etta: We are very pleased to see earnings per share in accordance with GAAP swing to a positive compared to the prior quarter, with the improvements driven by higher revenues and continuous focus on prudent expense management. As we have noted in prior calls, our goal is to deliver consistent GAAP profitability. Our second quarter 2025 non-GAAP earnings per share was $0.45, compared to $0.51 per share in the same period last year, and $0.26 per share in the prior quarter. Second quarter non-GAAP EBITDA was $38 million, compared to $40 million in the same period last year, and $24 million in the prior quarter. As of June 30, 2025, our cash and cash equivalents were $399 million, compared to $387 million as of March 31, 2025.
And a loss of $0.15 per share in the prior quarters.
We are very pleased to see earnings per share in accordance with gaap swing to a positive compared to the prior quarter with the improvements driven by higher revenues and continuous focus on potential expense management.
As we have noted in prior calls, our goal is to deliver consistent GAAP profitability.
Our second quarter 2025 non-GAAP earnings per share were 45 cents, compared to 51 cents per share in the same period last year.
And 26 cents per share in the prior quarter.
Second quarter, non-gaap a that was 38 million compared to 40 million in the same period of last year.
And 24 million in the prior quarters.
Our cash and cash equivalents with 399 million.
Compared to 387 million as of March 312022.
Nchacha Etta: Our company continues to generate solid free cash flow, with free cash flow during the second quarter of 2025 of $27 million, which represents an increase of $17 million compared to the prior quarter. In terms of accounts receivable, day sales outstanding for the second quarter of 2025 was 75 days, which represents a decrease of 11 days compared to the prior quarter. Inventories as of June 30, 2025 were $106 million, an increase of $15 million from the prior quarter, and an increase of $13 million from June 30, 2024. As a reminder, during the second quarter of 2025, our Board of Directors authorized a new stock repurchase program of up to $75 million. As of June 30, 2025, we have bought back approximately $16 million worth of our stock. Going forward, we plan to continue buying back shares of our common stock opportunistically.
Company continued to generate, solid free cash flow with free cash flow during the second quarter of 2025 of 27 million.
Which represents an increase of 17 million compared to the prior quarters.
In terms of accounts receivable this sales outstanding for the second quarter of 2025 was 75 days.
Which represents a decrease of 11 days compared to the prior quarters.
Inventories, as of June 30, 2025, were $1,066 million.
An increase of 15 million dollars on the prior quarters.
And an increase of 13 million dollars from June 30th 2024.
As a reminder, during the second quarter of 2025, our board of directors, authorized a new stock repurchase program of up to 75 million.
As of June 30th 2025, we have bought back approximately 16 million dollars worth of our stocks.
going forward, we plan to continue buying back shares of our common stock opportunistically
Nchacha Etta: Before we move to the guidance, I would like to provide an update on the tariff impact during the second quarter and our current thoughts on tariffs for the second half of 2025. The impact of tariffs on our profitability in the second quarter of 2025, net of our mitigation efforts, was approximately $2 million, and we currently expect the net quarterly impact of tariffs for each of the third and fourth quarters of 2025 to be approximately $6 million per quarter. At this time, we expect our net tariff impact in 2025 to be approximately $15 million, which includes $32 million in gross tariff impact, which we expect to be partially offset by our estimates of the forecasted timing of the tariff impact on the income statement and our ongoing and planned mitigation efforts.
Before we move to the guidance, I would like to provide an update on the target impact, during the second quarter and our current thoughts on Paris for the second half of 2025.
The impact of studies on our profitability. In the second quarter of 2025 net of our mitigation efforts was approximately 2 million
and we currently expect the net quarterly impact of tires for each of the sets and fourth quarters of 2025 to be approximately 6 million per quarters.
At this time, we expect our net tax impact in 2025 to be approximately 15 million.
Which includes $32 million in gross, static impacts.
Which we expect to be partially offset by our estimates of the forecasted timing of the target impact on the income statement and our ongoing and planned mitigation efforts.
Nchacha Etta: As we have mentioned in previous calls, we are implementing various mitigation initiatives, but obviously, these take time to flow through our financial statements and to have the intended effect of offsetting a portion of our higher anticipated costs. As part of our mitigation efforts, we are reviewing our pricing strategies and have recently started implementing price increases. While it is early in this effort, we are pleased with the market reception we have seen, which we believe reflects the strength of our portfolio of products and solutions. We believe our products drive significant value for customers, given our focus on quality and superior return on investments. We would expect the benefits of the various mitigation plans to have a greater effect as we exit 2025.
As we have mentioned in previous calls, we are implementing various mitigation initiatives. Take time to flow through our financial statements
And to have the intended effect of of setting a portion of our higher anticipated cost.
As part of our mitigation efforts, we are reviewing our pricing strategies and have recently started implementing price increases.
While it is early. In this efforts, we are pleased with the market reception. We have seen which we believe reflects the strength of our portfolios.
Of products and solutions.
We believe our products, Drive significant value for customers, giving our focus on quality and Superior return on investments.
We would expect the benefits of the various mitigation plans to have a greater effect as we exit 2025.
Nchacha Etta: Therefore, our projected 2026 tariff impact is anticipated to be lower than the currently expected annualized run rate of the $6 million impact in the fourth quarter of 2025. Please keep that in mind as you are preparing your financial modeling for 2026. Even before this round of tariffs kicked off, we had already been taking steps intended to improve our supply chain resilience, ensure continuity of products, and reduce costs and enhance efficiencies. We are making good progress on our mitigation efforts and continue to feel confident in the steps we are taking to address these issues. Now turning to guidance, please note that our third quarter and updated full-year 2025 guidance is based on our current estimates of the potential impact of the tariffs as of today.
Therefore, our projected 2026 startup impact is anticipated to be lower than currently expected, with an annualized growth rate of the 6 million impacts in the fourth quarter of 2025.
Please keep that in mind as you are preparing your financial modeling for 2026.
Even before this round of Taris kicked off, we had already been taking steps intended to improve our supply chain resilience, ensure continuity of products, reduce costs, and enhance efficiencies.
We are making good progress on our mitigation efforts and continue to feel confident in the steps we are taking to address this issue.
Now turning to guidance.
Nchacha Etta: We recognize that the situation is fluid, and we will continue to monitor the potential impact as the remainder of the year progresses. For the third quarter of 2025, we are providing the following outlook. We expect third quarter 2025 total revenues to be between $290 million and $300 million, with product revenues anticipated to be between $165 million and $170 million, and services revenue expected to be between $125 million and $130 million. We expect third quarter 2025 non-GAAP EBITDA to be between $28 million and $32 million, and non-GAAP earnings per share to be between $0.30 per share and $0.37 per share. Please note that we expect to see some headwinds in the third quarter of 2025, including increased tariff expense and non-recurring software upgrade costs in the field that will modestly impact our non-GAAP EBITDA and non-GAAP earnings per share guidance.
Please note that our third quarter and updated full year 2025 guidance is based on our current estimates of the potential impact of the ties as of today.
We recognize that the situation is fluid and we will continue to monitor the potential impacts as the remainder of the Year. Progresses.
For the third quarter of 2025, we are providing the following outlooks.
Needs to be between 290 million and 300 million.
With product revenues anticipated to be between 165 million and 170 million.
And services, Revenue, expected to be between 125 million and 130 million.
We expect third quarter 2025, non-gaap either to be between 28 million and 32 million.
And non-gaap ending, special share to be between 30 cents, per share and 37 cents per share.
Nchacha Etta: For full-year 2025, we are maintaining our previously issued guidance ranges for product bookings and ARR and modestly raising our guidance ranges for total revenues, non-GAAP EBITDA, and non-GAAP earnings per share. As we move through the back half of the year, these adjustments to setting up our guidance metrics reflect both our strong first half performance and greater visibility into full-year results. Consistent with prior guidance, we continue to anticipate product bookings to be in the range of $500 million to $550 million, and our year-end 2025 ARR to be in the range of $610 million to $630 million. For total revenues, we are raising and narrowing our prior guidance ranges. Total revenues are now expected to be in the range of $1,130 million to $1,160 million, as compared to the prior expectation of $1,105 million to $1,155 million.
Please note that we expect to see some headwinds in the third quarter of 2025 including increased static expense and non-recurring software. Upgrade costs in the field, that will modestly impact our non-gaap inhibitor and non-gaap earnings per share guidance.
For 4 year 2025, we are maintaining our previously, issued guidance ranges for product, bookings and ARR.
And modesty raising our guidance. When used for total revenues non-gaap Aida and non-gaap earnings per share.
As we move through the back, half of the Year, these adjustments to setting up our guidance. Metrics reflect both, our strongest self performance.
And greater visibility into fully yet results.
Consistent with prior guidance. We continue to anticipate product bookings to be in the range of 500 million to 550 million.
And our year end 2025 ARR to be in the range of 610 million to 630 million.
For total revenues. We are raising and narrowing, our prior guidance ranges.
Total revenues are now expected to be in the range of 1 billion, 130 million to 1 billion 160 million.
As compared to the prior expectation of 1 billion, 105 million.
To 1 billion, 155 million.
Nchacha Etta: Non-GAAP EBITDA is now expected to be in the range of $130 million to $145 million, up from our previous guidance of $120 million to $145 million. Finally, non-GAAP earnings per share is expected to be in the range of $1.40 to $1.65, versus our prior expectation of $1.30 to $1.65. As we have mentioned previously, we are also facing an approximate $0.20 headwind to non-GAAP earnings per share in 2025 compared to 2024, due to a reduction in interest income as a result of repurchasing a significant portion of the principal amount of our previously outstanding convertible senior notes in the fourth quarter of 2024. For the full-year 2025, we are assuming an effective blended tax rate of approximately 18% in our non-GAAP earnings per share guidance.
Non-gaap Aid. That is not expected to be in the range of 130 million to 145 million.
Up from our previous.
Guidance of 120 million to 245 million.
finally non-gaap earnings per share is expected to be in the range of
$1.40 to $165.
This is our prior expectation, of $1.30 to $165.
As we have mentioned previously, we are also seeing an approximate 20 cent headwind to non-gaap earnings per share in 2025 compared to 2024 due to a reduction in interest income. As a result of repurchasing, a significant portion of the principal amount of our previously outstanding convertible, senior notes in the fourth quarter of 2024,
For the full year 2025, we are assuming an effective Blended tax rate of approximately 18% in our non-gaap earnings per share guidance.
Nchacha Etta: As we close, I once again would like to thank the entire team here at OMNICELL for driving our strong second quarter 2025 performance and setting a foundation for what should be a strong 2025 and beyond. I am extremely proud of how our team has remained resilient and committed to delivering on OMNICELL's mission to be the clinicians' most trusted partner for medication management. We would now like to open the call for questions.
As we close.
I once again would like to thank the entire team here at omico for driving our strong second quarter, 2025 performance and setting a foundation for what should be a strong 2025 and Beyond
I am extremely proud of how our team has remained resilient and committed to delivering on our sales mission to be the clinicians' most trusted partner for medication management.
We will now like to open the call for questions.
Eric: At this time, I would like to remind everyone, in order to ask a question, please press star followed by the number one on your telephone keypad. We ask that participants limit themselves to one question. Your first question comes from the line of Jessica Tasson with Piper Sandler. Please go ahead.
At this time, I would like to remind everyone in order to ask a question. Please press star followed by the number 1 on your telephone keypad. We ask that participants limit themselves to 1 question.
Your first question comes from the line of Jessica tan with Piper Sandler.
Please go ahead.
Jessica Tasson: Hi guys, thanks so much for taking the question. Randall, I'm wondering if you can just describe the competitive landscape. It sounded like you guys were gaining momentum in the kind of top 300 hospital space. Are those hospitals still in the market? Have macro, you know, headwinds or kind of the impending 2026 volatility in the marketplace? And, Medicaid kind of scared, some portion of your pipeline, or is it still strong? And then just in terms of competitor behavior, obviously we, we, are aware of a competitive launch. Is OMNICELL proactively approaching customers and prospects, in light of that, or is the launch just softer and and less threatening than maybe we and investors had feared? Thanks.
We we, um, are aware of a competitive launch. Its Omni sell proactively approaching customers and Prospects, um, in light of that or, or is the launch just softer, and, and less threatening than, than maybe we and investors have feared. Thanks.
Randall Lipps: Sure. good to hear from you, Jessica. I, really believe that hospitals are talking slightly differently, but their buying behavior has not changed. I think in the middle market, we tend to do very well, as we do in all the markets, I think. But I think it's a little bit easier to swap. And I think we line up very competitively with, in the competitive world against what's coming out and what we have out and what we're going to bring out. So, that momentum has continued in that market. Their financials, seem to be in line to continue to buy our products and make the swap. So, we feel confident about that. And I think as we have done here in Austin, Texas, we've launched our innovation center. we are really moving away from just being a product company to a tech company.
Sure, uh, good to hear from you, Jessica. Um I uh really believe that hospitals, uh are talking slightly differently but they're buying behavior, is has not changed. I think in the Middle Market we tend to do very well as we do in all the markets I think. But I think it's a little bit easier to swap.
Randall Lipps: So it's, it's more about an enterprise, high-tech solution that's cybersecure, that can answer a lot of different problems throughout, an institution's, continuum of care. And it's, it's probably less about one product here or there. So, I think we have the strongest solution set in the marketplace, and that continues to resonate really well with customers that we currently have and the ones that we're going after.
And I think we line up very competitively with, uh, uh, in the competitive World against what's coming out and what we have out and what we're going to bring out. So, um, that momentum has continued in that market, they're financials, uh, seem to be in line to continue to buy our products and make the swap. So, uh, we feel confident about that and I think as we have done here in Austin Texas, we've launched our Innovation Center. Uh, we are really moving away from just being a product company to a tech company. So it's it's more about an Enterprise high-tech.
um,
Solution that cyber secure that can answer a lot of different problems throughout uh an institution's uh, Continuum of Care. And it's it's probably less about 1 product here or there. So, uh, I think we have the strongest solution set in the marketplace and that continues to resonate really well with customers that we currently have. And the ones that we're going after
Jessica Tasson: Thanks, Jeff.
Thanks Jeff.
Eric: The next question comes from the line of Matt Hewitt with Craighallum Capital Group. Please go ahead.
Next question comes from the line of Matt Huitt with Craig-Hallum, Capital Group.
Matt Hewitt: Good morning and congratulations on the strong quarter. Maybe kind of an extension of the prior question, what are you hearing from customers regarding, you know, the Medicaid cuts and the impacts that they're facing on, on that side of the equation and its ability to, you know, purchase more products? Is it affecting the way that they're kind of lining up in queue, or is it changing the way that they look at the services, maybe looking to adopt your services more broadly as a way to kind of reduce their overhead? Any color there would be great. Thank you.
Please go ahead.
Randall Lipps: Yeah, I think as they, think about these, new legislative things coming down, they just haven't arrived yet. They have to go through the federal government, then through the state governments. And so, and I'm not sure that they really can assess the full impact yet. But we do see, these systems, these big providers really thinking about, can technology begin to really solve some of my bigger issues, not just fill the gap, but actually solve some of these problems. So it really puts us in a good position, to help reduce costs and prove, improve, improve efficiencies and really make a better experience for the users, which is really critical, particularly nursing. So I, I just feel that we are so well positioned, with what we have to offer, from an enterprise standpoint that it just seems to be resonating with customers.
Good morning and congratulations on the strong quarter, um, maybe kind of an extension of the prior question. What are you hearing from customers regarding, you know, the Medicaid cuts and the impacts that they're facing on, uh, on that side of the equation. And, and that's ability to, um, you know, purchase more products. Is it affecting the way that they're kind of lining up in queue? Or is it changing the way that they look at the services? Maybe looking to adopt your services more broadly as a way to kind of reduce their overhead any color. There would be great. Thank you.
Yeah, I think as they, uh, think about these new legislative things coming down, they just haven't arrived yet. They have to go through the federal government then through the state governments. And so, uh, and I'm not sure that they really can assess the full impact yet, but we do see, uh,
Randall Lipps: And I feel like, you know, as we move forward, it's just going to get better, even if the dollars get tight, which they haven't yet. So just to be clear, we haven't seen any customer change of behavior in our pipeline to push out things or slow things down. It's been steady.
these systems, these big providers really thinking about can technology began to really solve some of my bigger issues, not just fill the Gap, but actually solve some of these problems. So it really puts us in a good position uh, that to help reduce costs and prove it, if approved, um, improve efficiencies and really make a better experience for the users, which is really critical particularly nursing. So I I just feel that we are so well positioned uh with what we have to offer uh from a Enterprise standpoint that it just seems to be resonating with customers and I feel like
Um, you know, as we move forward, it's just going to get better even if the dollars get tight.
Which they haven't yet. So just to be clear, we haven't seen any customer.
Matt Hewitt: That's great. Thank you.
Change of behavior in our pipeline to push out things or slow things down. It's it's been steady.
So that's great. Thank you.
Jessica Tasson: Thanks, Jeff.
Eric: Your next question comes from the line of Stan Berenstein with Wells Fargo. Please go ahead.
Thanks.
Your next question comes from the line of Stan barenstein with Wells Fargo.
Stan Berenshteyn: Hi, thanks for taking my questions. I would love to maybe get some comments on the IV compounding product that you have. You just announced the inaugural Trust Summit that you just hosted. Can you just give us an update on the demand environment within compounding? And then also, I think previously you've mentioned, Randy, that the compounding robot has been getting fixed up and upgraded. Do you have a timeline of when that robot will graduate from being offered on a limited release basis? Thank you.
Randall Lipps: Yeah, we just released our fourth and final phase of completing the product substantially, and that was in time. That was lined up with the timing of the IV Summit. So we have a product that's ready to go and has been gaining momentum both in the pipeline, and we do have a backlog of customers that have begun to install. So that, that marketplace is picking up for us. We're pretty much the sole player in that market. And, the new features and functions and productivity and safety features, have been, accepted really well. And we have, you know, I think another key indicator of the momentum of that product is, the referenceability of all the customers now. Pretty much all the customers are a good reference for us as we go forward.
Please go ahead. Uh, hi. Hi thanks for taking my questions. Um, would love to maybe get some comments on the ivy compounding product that you have you just announced the inaugural um trust Summit that you just hosted. Can you just give us an update on the the demand environment within compounding and then also I think previously you've you've mentioned Randy that the compound robot has been getting fixed up and upgraded. Um, do you have a timeline of when that robot will graduate from being offered on a limited release basis? Thank you.
yeah, we just released our
fourth and Final Phase of completing uh the product substantially. And that was in time that was
Go and has been gaining momentum. Both in the pipeline and we do have a backlog of customers that have begun to install. So that, um, that Marketplace is picking up for us. We're pretty much the sole player in that market and, um, the new features and functions and productivity, and safety features, uh, have been, uh, accepted really well. And we have, uh, you know, I think another key indicator of the momentum of that product is, uh, the reference.
The reference ability.
Randall Lipps: And, I'm just, I'm excited about it because this is a hard, difficult product to make and solves a hard problem for our customers. And, that's where you get good value and good return for them and for us.
Uh of all the customers. Now pretty much all the customers are a good reference for us as we go forward. And uh, I'm just, I'm excited about it because this is a hard difficult product to make.
and solves a hard problem for our customers and um that's where you get good value and good return for them and for us,
Stan Berenshteyn: Great. Thanks so much.
Jessica Tasson: Thanks, Dan.
Great. Thanks so much.
Eric: Your next question comes from the line of David Larson with BTIG. Please go ahead.
Thanks, Dan.
Your next question comes from the line of David Larsen with BTIG.
Matt Hewitt: Hey, congratulations on the good quarter. Randy, can you talk a little bit more about software in the clinics and any color around like your product roadmap? What are you doing for the docs and the offices at these hospital systems? And sort of what's your vision going forward? Thanks.
Please go ahead.
Randall Lipps: Well, it's really critical as we move to a fully automated world, the autonomous pharmacy, as I look at it, that you have to have full visibility of all the meds in all the locations, which include clinics, which include doctors' offices, that would include outpatient and surgery centers and the like. And in order to do that, you have to have solutions that fit those situations. And MedVision is a down payment on that. It really allows you to go anywhere that meds are. You can use hardware to manage and control those, or you could just use open shelves. It doesn't matter. But the key is that it's an integrated system into our entire enterprise platform. So you don't have to buy separate platforms or separate systems or integrate them in later. It's already totally integrated.
Hi uh, congratulations on the uh, the good quarter. Um, Randy. Can you talk a little bit more about software in the clinics? Um, and and any color around like your product roadmap, what are you doing for the docs in the offices? At these Hospital systems and sort of what's your vision going forward? Thanks.
Well, it's really critical as we move to fully automated world. The autonomous Pharmacy is I look at it that you have to have full visibility of all the meds and all the locations which include clinics.
Randall Lipps: So it's an easy add-on for our customers to move from inpatient to outpatient without having to deploy new servers, new systems, or even new training. And it works, you know, really well from smart devices or smart smart pads in order to, deploy it very quickly. So the key to reaching, the best systems you can on an enterprise level requires you to get to 100% visibility of the product in the supply chain and location at all times. And that's what we're striving for.
Uh, which include doctor's offices, uh, that would include outpatient and surgery centers and the like. And in order to do that, you have to have a solutions that fit those situations. And medvision is, uh, down payment on that. It really allows you to go anywhere that meds. Are you can use Hardware to manage and control those or you could just use open shelves, it doesn't matter. But the the key is that it's an integrated system into our entire Enterprise platform. So you don't have to buy separate platforms of separate systems or integrate them in later. It's already totally integrated. So, it's an easy add-on for our customers to move from inpatient to outpatient, without having to deploy new servers, new systems, or even new training and it works, uh, you know, really well from Smart devices or smart smart pads in order to, uh, deploy it very quickly. So, the key to reaching
Matt Hewitt: Okay, so as volume shifts towards outpatient settings, ASCs, doc offices, it sounds like you're meeting that demand and that need that hospital systems have. And then can you maybe just talk a little bit about your visibility into implementation schedules? We're here midway through the year. What is your visibility for 3Q and 4Q?
Uh, the best systems you can on an Enterprise level, require you to get to 100% visibility of the product, and the supply chain and location at all times. And that's what we're striving for.
Okay, so it's volume shift towards uh, outpatient settings, asc's doc offices. It sounds like you're meeting that demand and that need that Hospital Systems have. Um, and then can you maybe just talk a little bit about your visibility into implementation schedules. We're here. Midway through the year. What is your visibility for 3 q and 4 q?
Randall Lipps: Well, we've really worked on this, over the years and have really created a solid go-forward process. We almost have 95 to 100% visibility on the entire rest of the year as far as schedule of installs required to meet our revenue commitments. And it even goes beyond just the end of the year. It goes into next year. So we have changed this process, over the last few years, and we continue to, yield great benefits from it, not only for the customers and the predictability, but for employees who fly off to these customers to do the installs. They can schedule their lives around the known install dates and create a great experience for our customers.
Matt Hewitt: Okay, great. Nice quarter. I'll hop back in the queue.
Well, we've really worked on this uh uh, over the years and uh have really created a solid go forward process. Uh we almost have uh, 95 to 100% visibility on the entire risk of the year as far as scheduled and of installs required to meet our Revenue commitment. And it even goes beyond, just the end of the year, it goes into next year. So we have changed this process uh over the last few years and we continue to uh, yield great benefits from it. Uh, not only for the customers and the predictability, but for employees who fly off to these customers to do the installs, they can schedule their lives around the known installed dates and create a great experience for our customers.
Randall Lipps: Thank you, Dave.
Okay, great nice quarter. I'll hop back in the queue.
Jessica Tasson: Thanks.
Thank you, Dave.
Eric: Your next question comes from the line of Bill Sutherland with The Benchmark Company. Please go ahead.
Your next question comes from the line of Bill Sutherland with the Benchmark company.
Stan Berenshteyn: Hey, thanks. Good morning, everybody. Just a two-parter here on tariffs. Is the guidance assuming that the temporary, the 30% tariff that was for the 90 days sticks? And are you, and I'm curious about you, last time talked about shifting subassembly work from China and really getting a lot of the, just a lot of the cost of sales here. Just curious how the outlook for that looks.
Please go ahead.
Hey, thanks. Good morning everybody. Um, just a 2-part here on tariffs. Um, is the guidance assuming that the temporary, uh, the 30% tariff that was for the 90 days sticks and are you? Um, and I'm curious about you, uh, last time talked about shifting self assembly, work from China and, and really getting a lot of the, uh, um, just a lot of the, uh, cost of sales here. Uh, just curious how the outlook for that looks.
Randall Lipps: Thanks for the question, Bill. So I'll address the work we've been doing to build resiliency into our supply chain. With regards to the mitigation efforts that we talked about last time, I would say we're very well on our way to having most of that in place that allows us to move the allocations as needed. As we talked about, a big part of our exposure were components we were sourcing from particularly China. And we've put things in place that as we go into 2026, we feel pretty good about the resiliency that we've built into our process. So that's where we are right now. Good progress there.
The work we've been doing to build resilience into our supply chain. Um, with regards to the mitigation efforts that we talked about last time, I would say we're we're very well on our way to having most of that in place that allows us to move the allocations as needed. Um, as we talked about a big part of our exposure, where components were sourcing from particularly China. And we've put things in place that as we go into 2026, we feel pretty good about
the resiliency that we've built into our process. So, uh, that's where we are right now. Good progress there.
Eric: Your next question comes from the line of Alan Lutz with Bank of America. Please go ahead.
Please go ahead.
Allen Lutz: Good morning, and thanks for taking the questions. Really nice gross margins on the product side. And you talked in the prepared remarks about raising prices. I'm curious, did that impact gross margins in the quarter? Is raising prices specifically related to tariffs, or is it broader than that around the value prop that you're providing? And then can you just talk about expectations for gross margins into the second half of the year? Thank you.
Randall Lipps: Well, I'll do the pricing. I'll answer the pricing question. We put a pricing process in place a few years ago, and it's continued to pay off because as you put prices in, it takes a while for them to flow through. But what we have been doing of late is being able to raise the range of pricing, the increases that we've had, maybe a little bit higher due to the higher rates of inflation that are permitted in our contracts. And that's beginning to flow through. And so, but it wasn't specifically around tariffs per se, but it has been just about the increased cost overall that we have borne as a company, and those have kind of gone through without too much pressure. So we feel really good about that.
Good morning and thanks for taking the questions. Um, really nice gross margins on the product side. Um, and you talked, uh, in the prepared remarks about raising prices. I'm curious, um, did that impact gross margins in the quarter, um, is the is Raising prices, uh, specifically related to tariffs, or is it broader than that, around the value prop that you're providing and then, can you just talk about expectations for gross, margins into the second half of the Year? Thank you.
Randall Lipps: And, you know, a lot of them continue to be implemented, and we'll continue to see the results of those price increases as we move forward.
A lot of the uh, pricing. We put a, I'll answer the pricing question. We, we put pricing process in place a few years ago and what uh, and it's continuing to pay off because as you put prices in, it takes a while for them to to flow through. But what we have been doing, uh, of late is, uh, being able to range, uh, raise the range of pricing, uh, increases that we've had, uh, maybe a little bit higher due to the higher rates of inflation that are permitted in our contracts and that's beginning to flow through and so, but it wasn't specifically around tariffs per se. Um, and but it has been just about the increased cost overall that we have borne as a company. And those have kind of gone through without, uh, too much pressure. So, uh, we feel really good about that. And, and, you know, a lot of them are continued to be implemented and we'll continue to see the results of those prices increases in.
Nchacha Etta: With regards to gross margin expectations, we've been very pleased with the progress that we're making with gross margin. Like we've said this before, you know, we're investing in our SaaS and expert services businesses. And as those businesses continue to scale, we expect to see them contributing to our gross margin going forward. Also, just speaking about our multi-year innovation program, you know, XD Amplify has been getting very good reception from our customers. And as, you know, the business continues or starts contributing to meaningful revenues going forward, we should see that have a positive impact on our gross margin.
As we move forward.
Yeah, with regards to gross margin expectations. You know, we we've been very pleased with the progress that we're making gross margin like we've, we've said this before, you know, we're investing in our assessment expert Services businesses. And as those businesses continue to scale, we expect to see them contributing to our um gross margin going forward. Also um just speaking, about our multi-year, Innovation program, you know, XT amplify has been getting very good.
Reception from our customers. And as you know, the business continues or starts contributing to meaningful revenues going forward. We should see that have a positive impact on our gross margin.
Eric: Perfect. Thank you very much, guys. Your next question comes from the line of Scott Shohnauz with KeyBank. Please go ahead.
Perfect. Thank you very much, guys.
Your next question comes from the line of Scott showing house with KeyBank.
Scott Schoenhaus: Thanks. Congrats on the really good quarter. Mine's a two-part question. So you clearly noted more visibility in your business, and I think advanced services and the recurring revenue nature there is clearly contributing. My question is, as we roll off the XT series replacement cycle, in addition to new software and service modules and offerings, should we see much more of a revenue mix shift? We only saw, you know, 100 basis points of mix shift this year per your expectations. You know, how should we think about this mix shift going forward and the margin opportunities there as you build traction in advanced services? And then secondly, I think Chacha mentioned strong lease renewals in the quarter supporting product revenues. Could you remind us what percentage of your customers pursue leases now versus CapEx payments?
Scott Schoenhaus: And is there a change in behavior in regarding, you know, advanced services purchasing decisions with these sort of lease renewal customers versus full CapEx? Thanks.
Please go ahead. Thanks. Um, congrats on the really good quarter. Mine's a 2-part question. Um, so you clearly noted more visibility in your business and I think Advanced Services and the recurring Revenue nature. There is clearly contributing. My question is, is as we roll off the XT series replacement cycle, in addition to new software and service modules, and offerings should be seen much more of a revenue mix shift. We only saw, you know, 100 basis points of mixed shifts this year. Prior expectations, you know, how should we think about this mix shift going forward and the margin opportunities there as you build traction and Advanced Services? And then, secondly, I think, um, Chacha mentioned strong lease renewals in the quarter supporting product revenues. Could you remind us what percentage of your customers pursue leases Now versus, um, capex, uh, payments? And is there a change in behavior in regarding, you know, Advanced Services, purchasing decisions with these um sort of lease renewal customers versus full cap.
Thanks.
Randall Lipps: Yeah, most of our customers do purchase, and some of those then execute a lease back through their own banking relationships, and some go through our leasing facilities. It's really a small portion of our business that really goes through our own facilities. And so it's not, it's probably 10% of our business or something around that number. I think the customer, I think the mix is growing slowly, but nicely on the more reoccurring that we're about 50/50 now, and we're going a little bit more. But as we see customers beginning to renew with the Amplify, we know that.That's
Yeah. Most of our customers do purchase and some of those then execute a lease back through their own, uh, banking relationships and some go through our leasing facilities. It's really a small portion of our
Business that really goes through our own facilities. And so, it's not,
It's probably 10% of our business or or something, uh, around that number. Um,
Eric: going to drive more product revenues through. And, also our consumable business is continuing to grow, nicely, which is also flows through the product line. So I I think it'll kind of go back and forth, but I think it's a lot better positioned than we have been historically, where, maybe it's been 30% of our business has been reoccurring, 70% has been product. And, this really allows us to, weather storms when their capital freezes. I don't, I don't really see any shift in behavior and wanting to buy one way or the other. It is, it is a different environment from the years past when interest rates were 0%. And so people had large lines of their own, to execute on, leasebacks of equipment. And now that interest rates are higher, you know, perhaps we could do more leasing and lean in more into reoccurring revenue products.
See customers beginning to re renew with the amplify. We know that that's going to drive more product revenues through. And um also our consumable business is continuing to grow uh nicely which is also flows through the product line. So I I think it'll kind of go back and forth but I think it's a lot better position than we have been historically. Where, uh, maybe it's been 30% of our business has been reoccurring. 70% has been product and uh this really allows us to um whether storms when they're Capital freezes. Um,
I don't, um,
I I don't really see any shift in behavior and wanting to buy 1 way. The other it is it is a different environment from the years past when
Eric: But it's it's a slow movement.
Interest rates were 0% and so people had large lines of their own, uh, to execute on, uh, lease backs of equipment and now that interest rates are higher, uh, you know, perhaps we could do more Leasing and lean in more into reoccurring Revenue products. But it's, it's a slow movement.
Speaker 2: Thanks, Randall.
Eric: You bet.
Kathleen Nemeth: Thank you. Operator, could you reopen the line for Bill Sutherland? Bill, I don't think we addressed your question on tariffs. We want to make sure to get to that.
Thanks Randall.
Thank you. Operator, could you reopen the line for Bill Sutherland? Um, bill, I don't think we addressed your question on tariffs. We want to make sure to get to that.
Speaker 2: Am I on?
Kathleen Nemeth: We can hear you. Yep. Go ahead.
Am I on?
Speaker 2: Okay. Cool. Yeah. The first part of it was about the rate assumed in the back half guide for tariffs. That was the 30% that's been, you know, in place, I guess, until August 12th or if that gets pushed. I'm just wondering what you guys assumed. Thank you.
Speaker 4: Okay. Yeah. So we did assume a 30% rate, which is based on, you know, the tariffs that we announced at the beginning of the second quarter. And that's what that's the assumption that we use for the full-year projection.
We can hear you. Yep. Go ahead. Okay. Cool. Yeah. Um, the first part of it was about the uh rate assumed um in the back half guide for tariffs that was the 30% that's been, you know, in place uh I guess until August 12th or if that gets pushed just wondering what you guys assume. Thank you.
Speaker 2: Okay. Thanks.
Yes we we need that. See me 30% rate which is based on you know the tariffs that we announced at the beginning of the second quarter. And that's what that's the assumption that we use for the full year. Um projection
Kathleen Nemeth: You're welcome. Next question.
Okay, thanks.
You're welcome.
Next question.
Speaker 5: Your last question comes from the line of Gene Mannheimer with Freedom Capital Markets. Please go ahead.
Yeah, your your last question comes from the line of Dean mannheimer with freedom Capital markets.
Please go ahead.
Nchacha Etta: Hey, thanks. Thank you. Good morning and congrats on the good numbers.
Kathleen Nemeth: Good morning, Gene.
Nchacha Etta: Good morning. I was wondering if you could elaborate a little more on OMNICELL in terms of what you're seeing with respect to customer adoption and rollout. And should we be thinking about this as a multi-year evolution? And how does it impact revenue and, in particular, recurring revenue over time?
Thanks, thank you. Good morning, and congrats on the good numbers. Good morning, Jane.
Good morning. I, I was wondering if you could elaborate a little more on omnisphere in terms of what you're seeing with respect to customer adoption and roll out. And should we be thinking about this as a multi-year Evolution and, and how how does it impact revenue and in particular recurring Revenue over time?
Eric: Yeah, Gene, and good to hear from you again. Yeah. OMNICELL is a key platform as we move forward. And our entire customer base over several years will be moving to OMNICELL as it will represent the enterprise solution engine to all of our products. I think it's one of the most exciting pieces when you sit down with customers and talk about because, you know, these customers are massive. They're large. And they want to deal with one single vendor that can provide everything they need, through a cybersecure, that has flexibility both in compute power and storage power without having to buy any servers, without having to, do anything in their IT room, where it's all managed, on the outside by us.
Yeah, Gene. And um, good to hear from you again. Yeah, omnisphere is I keep platform as we move forward and I, and our entire customer base over several years, we'll be moving to omnisphere as it will be represent the Enterprise.
Eric: And so you can see that that kind of product is one that really lends itself to the ever-changing landscapes of these providers as they add more outpatient facilities or they acquire an inpatient facility. It becomes really easy to deploy and use. And with that, we are going to drive additional revenues, to to get connected into that device, into that, backend system. And, yeah, you'll start to see more reoccurring revenues as we move forward. Now, we're just at the beginning of the deployment. We've been working on this product for, gee, five years. We've had it in beta for two years, and we're now just rolling it out. So it is a hardened product, as we mentioned, HITRUST certified, that, we're going to connect everything, every device out there we have to to it to collect the data and manage the system.
Solution engine to all of our products I think, is 1 of the most exciting pieces when you sit down with customers and talk about because, uh, you know, these customers are massive, they're large. And they want to deal with 1 single. Vendor that can provide everything they need, uh, through a cyber secure, uh, that has flexibility both in compute power and storage power without having to buy any servers without having to uh do anything in their, it room uh where it's all managed uh on the outside by us. And so you can see that that kind of product is 1 that really lends itself to the ever-changing landscape of these providers as they add more outpatient facilities or they acquire an inpatient facility.
Eric: And eventually, it will be the backbone to apply all of our AI engine pieces to, which are also great revenue generators for us as we solve really big, complicated problems for a customer in a simple, elegant way.
It becomes really easy to deploy and use and what that we are going to drive additional revenues, uh, to to get connected into that device, uh, into that, uh, back-end system. And uh, yeah, you'll start to see more reoccurring revenues as we move forward. Now, we're just at the beginning of the deployment, uh, we've been working on this product for gee 5 years. We've had it in beta for 2 years and we're now just rolling it out. So it is a hardened product. Uh, as we mentioned High trust certified, uh, that, um, we're going to connect everything, every device out there, we have to, to it, to collect the data and manage these systems and eventually, uh, it will be the backbone to apply all of our a AI engine pieces to, which are also great Revenue. Generators for us, as we saw really big complicated problems for our customer in a simple. Elegant way.
Nchacha Etta: That sounds exciting, Randy. Thank you for that explanation. And just my follow-up is on some of the new innovations you've been introducing: MedTrack, MedVision, MedChill, going back to last earlier in the year. Are these products in response to solutions that your competitors already provide, or are these unique and unmatched by your your competitors today? Thanks.
Eric: Well, we kind of we kind of try to go figure out where the customer's problems are and build out solutions. And we really think that these will meet our customers' needs. And most of these are fairly unique solution sets in the marketplace. And most importantly, these solutions are integrated into a platform. One of the feedbacks that we get from customers is they don't want to buy third-party products that integrate into our platform. They want to buy products from us that are totally integrated into the platform. And so it's really important that we continue to innovate and deliver new products that can be easily deployed and automatically connect into the network of the OMNICELL as we move forward.
Explanation and just my follow-up is on some of the new Innovations. You've been introducing medtrak, medvision, Medill going back to last earlier. In the year. Are these products in response to solutions that your competitors already provide or these unique and unmatched by your uh your competitors today? Thanks.
Well we kind of we kind of try to go figure out where the customer's problems are and build out Solutions and we really think that these will meet our our customers needs and most of these are fairly unique.
Uh, Solutions sets in the marketplace. And most importantly, these Solutions are integrated into a platform 1 of the feedbacks.
That we get from customers is they don't want to buy third-party products that integrate into our platform, they want to buy products from us that are totally integrated into the platform.
Eric: It makes it really easy to come out with new hardware platforms that automatically plug into our OMNICELL network, are immediately identified, don't take a lot of time to configure, and easy to deploy. So it's just I think because we have this enterprise platform, it's easy to add on more solution sets quicker. That is our goal.
And, um, so it's really important that we continue to innovate and deliver new products that can be easily deployed and automatically connect into the network of the Omnisphere as we move forward. It makes it really easy to come out with new hardware platforms that automatically plug into our Omnisphere Network or are immediately identified.
Don't take a lot of time to uh, configure and uh, easy to deploy.
So it's just, um, I think you'll, because we have this Enterprise platform, it's easy to add on more solution sets quicker.
That is our goal.
Nchacha Etta: Gotcha. Thanks very much. Congrats.
Kathleen Nemeth: Thanks, Gene.
Gotcha. Thanks very much. Congrats.
Nchacha Etta: Thanks, Gene.
Speaker 5: I'll now turn the call back over to Randall Lips for closing remarks. Please go ahead.
Question. Thanks, Jane.
Eric: Well, thanks for joining us today. And as you can see, OMNICELL does have momentum out there. A nice quarter to the team, nice delivering on the results, exciting times as we move from a product to a tech company. We deploy these new solutions, and it's just a privilege to work in the industry. So thanks for being with us, and we'll see you next time.
I will now turn the call back over to Randall lips for closing remarks, please go ahead.
Well, thanks for joining us today and as you can see Omni sell does have momentum out there. Uh, a nice quarter to the team. Uh, nice delivering on the results. Exciting times as we move from a product to a tech company, we deploy these new Solutions and it it's just a privilege to work in the industry. So thanks for being with us and we'll see you next time.
Speaker 5: Ladies and gentlemen, this concludes today's call. Thank you all for joining, and you may now
ladies and gentlemen, this concludes today's call thank you all for joining and you may now disconnect