Omnicell, Inc. (NASDAQ:OMCL) Q2 2015 Earnings Conference Call Transcript

Jul 30, 2015 • 04:30 pm ET

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Omnicell, Inc. (NASDAQ:OMCL) Q2 2015 Earnings Conference Call Transcript

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Presentation
Operator
operator

Good afternoon my name is Holly and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Omnicell Second Quarter Earnings announcement. All lines have been muted to prevent background noise. After the speakers' remarks, you'll have an opportunity to ask questions. (Operator Instructions) I'll now turn the conference over to Rob Seim, CFO. Please go ahead sir.

Executive
Rob Seim

Thank you. Good afternoon, and welcome to the Omnicell 2015 second quarter results conference call. Joining me today is Randall Lipps, Omnicell's Chairman, President and CEO.

You can find our results in the Omnicell second quarter earnings press release posted in the IR section of our website at www.omnicell.com. (Forward-Looking Cautionary Statements)

Finally, this conference call is the property of Omnicell Incorporated and any taping, other duplication or rebroadcast without the express written consent of Omnicell is prohibited. And today, I'll briefly cover an overview of the results for Q2. Randy will then cover an update on our business and then I'll finish up with a few more of the financial details about Q2 and our guidance for the remainder of 2015.

And following our prepared remarks, we'll take questions. So summarizing the results for Q2, I'd like to comment on the three aspects of our financial results that are most important in the ones, for which we give annual guidance, orders, revenue and non-GAAP earnings per share.

Order intake is a head of our own internal expectation so far in 2015. And our pipeline of sales in the late stage of the selling process is strong for the remainder of the year.

The competitiveness of our solutions and the propensity of the market to adopt our solutions has continued at the same pace as we expected and is consistent with our previous annual growth guidance. So we see no change in our position in the market, our customers' willingness to require [ph] our solutions.

And there were some trends in our historical bookings that had a more significant impact on Q2 than we anticipated. In the three quarters leading up to Q2, we had an average of 47% of our orders from new and competitive conversion customers, making first time installations, which is much higher than our 10-year historical range of 33% to 40%. We also booked considerably larger deals over those three past quarters than we had historically.

And these business dynamics provided us with a healthy backlog in our Automation and Analytics product segment, but drove a change in the composition of the backlog that we do not fully appreciate going into the quarter. Competitive conversion orders and larger orders often takes longer to install and with more of them in the backlog, the backlog will take longer to turn into revenues.

The result is that in Q2, we found our customers were not ready to complete installations at the rate we had originally estimated. As a consequence, our revenue is lighter than we had planned and Wall Street analysts had predicted. In Q2,