Omnicell, Inc. (OMCL) September 2026 Conference Transcript

All righty. Welcome, everybody. My name is Stan Berenstein. I cover healthcare technology at Wells Fargo. With me today is Nnamdi Njoku. He's the president and COO. And Baird Radford, he is the CFO. Baird, did you want to maybe give us a quick preamble before we begin?

Yeah, thanks. Thanks, Stan, definitely for inviting us. We're excited to be here at the conference. Really appreciate the invite. Also, during the course of this presentation, we'll make various statements that may be forward-looking. We encourage everybody to go to our public filings, the SEC filings on draft, and take a look at the disclosures in their entirety. So, with that, turn it over.

Awesome, awesome. Well, maybe we'll kick it off to Nnamdi first. So why don't you, first of all, congrats on the new title. You know what? I'd love for you to tell us, you know, since you've joined the company, what you've learned, you know, what are you most excited about? And maybe we'll take it from there.

Well, thanks for having us here today. And I appreciate the congratulatory message here. So I joined OmniCell about two years ago, and it's been such a great ride. I'll tell you that my background being in the med tech space for the better part of 25 years and competing in a very different therapeutic categories, the one thing I will say that has been enlightening for me joining OmniCell is just how important medication management is to health systems. And I know we've put this out there a number of times that it's hard to get really the clinical and operational objectives of a health system right without getting medication management where it needs to be. So when I think about OmniCell, too, I'm excited about where we are because I do feel like we're at the cusp of really transforming how medication management is done with our announcement back in December with our Titan XD platform and Omnisphere. I think we're at the cusp of really designing something that health system customers have been looking for for a long time. And a lot of what I've been focused on since I joined the company is really about getting the solution ready for the marketplace, making sure our go-to-market is where it needs to be to take advantage of this moment, and also working with Barrett and the rest of the management team to make sure that as we move forward, we're scaling and we're driving profitability across the company as we go forward. So excited to be here.

Awesome. Awesome. Baird, you joined recently. The company's been an important transition point right now, moving from stabilizing the core business and coming up to a new refresh cycle. So can you talk about what you've learned and maybe what has sharpened the opportunity going forward here for you?

I'd say the piece that you don't know about a company until you get inside is its level of conviction. And I've been really impressed with the conviction of our employee base to solving the evolving set of needs for hospitals and health systems and the pharmacists and nurses that they serve. That has been really encouraging for me to see. It's not just a sticker on a wall at OmniCell, it's what drives our behaviors day in and day out and that's really important as we enter this new refresh cycle. I'd say the second thing I've learned is the opportunities that sit in front of us. You had highlighted heading into the new product cycle and the revenue opportunities that come with a refresh, but also our opportunities to maintain our discipline and to increase our focus on the bottom line, and how can we take this moment of revenue expansion and double down by being more disciplined about our spending decisions and thinking about how we can grow not just revenues over time, but also expand profitability. So, you know, I'm very impressed with the rigor of the management team, their willingness to think about things through the lens of the investor. And, you know, that's been a great place for us to be. And it's a good foundation for us heading into this new cycle.

Awesome. Awesome. We'll definitely dive into some of those topics shortly here.

But Nnamdi, I guess just from your perspective, I'd love to understand where do you think the business is maybe stronger than you had expected and and what do you think is the most misunderstood element of the narrative because obviously there's a lot of moving pieces here but I'd love to hear your thoughts on that well I'll tell you just to pick up on something Barrett said when I was evaluating the opportunity to come to OmniCell and having joined the company something flying around here it there's a couple of things that stood out to me innovation is the way the company started and it's part of the DNA of who we are as an organization for example we have an innovation center in Texas where we bring customers through and even if it's just a brainstorm and have a conversation about what their challenges are and what they can expect from us to explore to potentially deliver as products down the line it sort of gives them a window into the fact that we're innovating and we're thinking about their problems in a way that could lead to a product solution or a software solution over time so that's been a strength of the company. The other thing that really stood out for me as I've joined the company is just how much goodwill we have within the customer base. So that aspect of being customer centric is alive and well at OmniCell. I always say this internally at the company that we will do whatever it takes to deliver for a customer, particularly when they're in a bind. And that's something that continues to shine through in our focus every day. I'd say the areas where we need to continue to enhance is what I'm calling customer experience and we're doing a lot of work there to couple our technology solution with the best customer experience that we can muster as a company and that's going to be an area that we're continuing we're going to continue enhancing as we go forward with respect to what's been either misunderstood I think our investors are pretty savvy at least you know I'm spending a lot of time with Baird having those conversations, I don't know that I'd say there's anything that's misunderstood. The thing that I will say that maybe a through line that I see personally in those conversations is the fact that we need to continue reminding investors that a lot of the systems like automated dispensing cabinets that are standard of care within health systems, these things need to be refreshed on a certain cadence, meaning that you can only sort of defer that investment for so long before you start to create issues either financially or clinically or operationally so it's more of a timing element of the fact that these things will transact they need to be refreshed periodically they get beat up and um uh you know we we've set up nicely to take advantage

of where we are right now for this next refresh great maybe that's a lead-in for baird so you lowered the bottom end of the bookings guidance uh you continue to call out a very strong pipeline so can you just bridge the two are you confident that this is just like a timing issue on your guidance and what's your visibility in the pipeline converting eventually yeah a couple things there like we're really encouraged by the multi-year journey that we're on we know that our install base will refresh on their timeline and what we wanted to do when we introduced the new product in December was provide the visibility to the roadmap so that our customers could evaluate our innovation cycle and how we double down and maintained our commitment to the reliability and the high service standard for our equipment so that as they reach those natural decisions to make change they're well informed about our direction they've had a chance to demo our product and see the software and hardware interface interfacing in a software environment and they've been able to interact with customers who have experienced the cloud solution in those early accounts that we've we've landed so you know as we sit here today I feel really good about the multi-year journey we're on I also look at the pipeline and as it's evolved over the course of the year I've been you impressed by the efforts of our sales team, their ability to generate interest and translate that interest into action from our customers and our primary competitors' customers that are investing real time, both nursing staff and pharmacy, IT organizations to understand our cloud capabilities and what transition plans would be. And the C-suite to evaluate where we have taken our innovation journey over the last 30 years has put us in a place where I'm really excited about the size of the pipeline. Now, with that said, the translation of that pipeline through to bookings is the piece that we felt was important to share with investors. the variability that exists within a defined time period that'll end on December 31st of this year. So what we wanted to do is flag a number of medium and large-sized deals that could result in some variability in the short term, which we know are on the minds of our investors, and then provide our perspective on what this multi-year journey will look like, which will be bullish.

There's a splice. okay well that's that's that's helpful you know I think if we think about mental models you know investors think about you know did the refresh cycle is coming up they're kind of thinking about okay well what was the prior refresh cycle like prior refresh cycles a GC or is very dated product XT is pretty new relatively new you have the XT extend also in the middle there what's the new mental model that investors should be thinking about when they're thinking about this upcoming upgrade cycle maybe I'll start out with with with a few

things that we learned as part of the the last cycle so you called out the fact that the G series was a bit older before we you know introduced XT we're in a situation here where the XT platform is relatively younger than when we did this in the G series. So the fact that we announced it early was very intentional. So we wanted customers to get a chance to see where we were taking the roadmap, to get it into their planning cycle, to really just get that early visibility. So that's one thing. The second thing is one of the things we learned as part of the last cycle was we probably created an environment where customers had to sort of almost like make a choice to they have to basically move to the new platform so one of the things that we've been very intentional about as part of this cycle is to make sure that we have a conversation to be had with every customer or potential customer out there meaning that if you're a customer that is ready to refresh your hardware but you're not ready to go to the cloud we can refresh your hardware and that's still okay but we have a console that's built into the hardware that allows us to flip a switch and get that cloud connectivity when they're ready same thing if you're a customer that's ready to get sort of go all the way to the complete solution we can do that if you're a customer that has a younger fleet but you want cloud connectivity we can switch out the console and give you that ability to connect to the cloud so in other words what we're what I'm basically saying is every account out there has a conversation that we can and bring to them, to move them to the ultimate solution, which is the new platform we have, as well as the Omnisphere cloud platform. So that's a lot, a few of the things that we've tried to infuse into this particular cycle that should hopefully make things a bit smoother from a customer experience standpoint. I'll let Baird maybe talk about the mental model or add to that.

Yeah, you know, in terms of mental models, Stan, I think it's important to recognize that over this cycle, The medication cabinets have become largely standard of care in the United States in the acute care hospital setting. And I think that creates a foundation of operating necessity within these institutions. Now, hospitals will always be mindful about their capital outlay and the timing of purchase and utilization of assets. But over the last cycle, we've seen this become much more prominent. We've also seen two other dynamics take place. One, the expansion of the market opportunity as these have become more standard of care. And two, our consistent, modest share gain against our primary competitor.

And so those are things that have evolved in this last cycle that we want to lean into as we head into this new refresh. great and this this refresh cycle I think is is very unique and the fact that your primary competitor picks us out of back then they're also refreshing their cabinets you know what do you think gives you the right to win and do you think you can encroach into their territory since both of you are refreshing at the same time it's a good I'll kick off so when I take a step back and I think about what is going to be required to win there's three things that come to mind that's a confluence of where we are right now.

The first is around customers feeling like there's a solution that has been architected that is going to give them the ability to solve the problems that they've always had and really give them the tools that they require to get a lot of things addressed within their health system. Things like visibility, things like analytics that helps sort of optimize inventory, fleet management, cybersecurity, workflow, and intuitive sort of user interfaces. So just the ability to design something that customers feel nails their problem is I think going to be a key one. The second thing is, and I alluded to this, the customer experience and support experience. It's not about just implementing the first time. It's about supporting a customer through the life cycle of the usage of the product so the ability to really really deliver and optimize and enhance customer experience such that they understand that you're gonna stand right by them from a support standpoint and that experience is going to be optimal is going to be key right from implementation all the way through the life cycle and then the third thing is financing flexibility everybody knows they have to run their business and make capital decisions so when I think about those three elements I really feel like putting together that equation is what's going to be required to win and that's a lot of things that we've been focused on and making sure that we bring together. I think you hit it nicely.

Yeah maybe as a lead-in for Baird here I think your third point on the financing flexibility Baird you've kind of started calling out leasing as a sales motion that they can maybe convert potential accounts. Why is leasing important? Why do you think that's something that can maybe give you an extra playing field advantage when you're going up against Pixis?

Yeah, so from all the market intelligence that we've been able to gather, you know, a decent-sized market exists within leasing, whether it's a quarter to a third to maybe a little bit more. And it's predominantly within our primary competitors' customer base. These dynamics have emerged over time. And what we found is that with the introduction of an on-balance sheet leasing program, we were able to solve a really important initial need of matching the timing of payment for these critical medication management solutions that we provide with the cash inflows of the health systems that we aim aim to gain market share with and that allowed us to get by an initial barrier that allowed us to spend the time where the conversation is most fruitful and it's around the reliability of the cabinets it's around our service standard and it's about how we continue to innovate to meet the evolving needs of nursing staffs pharmacists and the pharmacy technicians and so as we enter this you know new on balance sheet leasing program we're excited because it allows us to shine the light on the places where we think we excel in the product and solution offering and the financing piece is just a nice enablement of it in my mind.

And how do you ensure that the balance sheet can manage the leasing component?

Yeah so we've got almost 300 million dollars of cash on the balance sheet as we exited Q2. We've got access to a line of capital that exists currently and we know that the market dynamics are such that leasing is much more prevalent in our competitors environment than in our own and you know it'd be a great problem to have to cap out our capacity. It would certainly mean a lot of market share gain now. With that said, I do think it's important for investors to appreciate the challenge in taking gain. We've been successful in doing it modestly for many years over time and we're committed to continuing that effort, but it is always a fight. And I think that's what a good healthy market dynamic needs is two competitive products that are finding their service offerings and how they meet the evolving customer needs and I think that ultimately helps the health systems get the best out of all participants in the marketplace.

And Nnamdi have you found that leasing changes the outcome of an RFP process is that something that actually down to the line it could be swing a client one way or another?

The way I would so it could the way I would describe it is it's not it's not the thing that will get you to win a deal it's the thing that keeps you in the in the hunt and the fight and when it comes down to it and you've checked all the other elements you know clinically operationally service it could be the thing that gets you across the finish line okay is the way I would describe it and related to the Titan refresh cycle, you've announced OmniSphere, which it's really, I think, coming to market early next year.

From a strategic standpoint, can you just level set, is OmniSphere perhaps more strategically important to the business than Titan, or is Titan more important than OmniSphere? What's the rubric that we should be thinking about here?

So what I will say is I always have a hard time splitting those two things and I'll tell you why because I think having a reliable hardware is a critical piece of the infrastructure that allows you to sort of do all the things that Omnisphere will sort of enable us to do so I don't know that I would say it's more important or less important they have to work together that's that's the first thing now what I will say is Omnisphere as design that we intend to GA in the first half of next next year In my view, it's going to be a step change in how medication management has been done to date. This is a cloud-native build. It gives us the ability to get out of physical servers in the basement. It gives us the ability to centralize data, deploy analytics. It gives us the ability to connect all the connected devices across the health system. the visibility that you need to optimize not only your IT infrastructure spend but also your inventory management from a medication standpoint so I really feel like we've worked really hard to design the system in a way that is gonna resonate and is resonating with customers and but it has to work with a reliable hardware system because you know you can deploy just a software only solution to manage your Medicaid at least as of today so we're excited and and I think that Omnisphere is going to be the platform that will continue to sort of build upon and connect further devices as we as we move on here and we

have our roadmap to reflect that as well and Baird if we think about Omnisphere I know you've said you know you're still trying to pinpoint the pricing strategy there and what will ultimately happen I don't want to jump the shark on that. But if we think about the impact on revenue and margins and EBITDA, can you kind of level set the importance of Omnisphere to the operational structure of the business going forward?

Yeah, to play a little bit on what Nnamdi said, this is a full ecosystem. And what impresses me most about the Omnisphere platform is the ability to rapidly iterate upon it. And I think in the on-premises world I think we were limited in our ability in some ways to meet the evolving needs of our customers through data and through information access and so I look forward as we move into the future with workflow visibility and management of data and information to being a better partner with our customers from a financial perspective this is an area where I would anticipate that attach rates will evolve over time as customers naturally make their continued progression out of on on-premises server based maintained by local IT into more robust scalable secure cloud offerings that that adoption or attachment will take place over time. What I share with investors is we will provide more information as we get closer to general availability, but think of this as a journey over time on the top line vis-a-vis attach rates to new sales or bridging over of our existing installed base that is enabled through our XT extend console upgrade. And then think about as we get this fly wheel of experience and usage going there'll be a scalability moment in which it should punch above its weight in terms of EBITDA and so those things moving forward will provide more guidance as we go forward but I'm most impressed with our ability to be more timely in the ways in which we service our customers and I think that just opens opportunities to be an increasing part of their value need.

Okay. And Baird, you're investing, you know, across various products, right? Titan, Omnisear, you're investing in your commercial capabilities. At the same time, you're saying, I think we started the talk, you're focused on margins. You're focused on margin expansion.

How are you balancing your need to invest and reinvest at the same time while managing a you know positive trajectory on margin expansion I think it's threefold one it's important to have alignment at the executive level and we have that we understand the importance of the Titan XT hardware refresh in the Omnisphere opportunity in front of us having high quality products ready for timely release and a sales force that's ready to meet the needs of customers and to sell into that refresh cycle is critical. That alignment that we have has allowed Nnamdi and the leadership team and I to ring fence certain investments that we know are critical to giving the refresh cycle its best chance of success. Say the second thing we've done is we've identified opportunities within our cost areas so outside of that innovation or new product launch cycle to our traditional back office and support capabilities. And all of our leaders are empowered with the ideas of how do we meet the evolving needs of our customers by being more disciplined about what we spend on internally and the extent to which we spend. We're really excited about the progress so far year to date has been positive. Last year in 2025, we grew EBITDA at a rate of one-half the rate of revenue growth. We made a concerted effort as a management team and as a company leading into this year to reestablish an emphasis on bottom-line margin while continuing to invest in those growth areas. And, you know, at the midway point of the year, we find ourselves seeing the early fruits of those opportunities play out. And the current midpoint of the 2026 EBITDA guidance is at roughly three times the rate of revenue growth. And so we're continuing to double down on that. We've heard our investors loud and clear on this. And I'd say the last part of this is, and this is part of being new to an organization, one year in for me and two years in for NAMD. We've had a chance to listen. to experience the customer needs, and to understand and appreciate the history of the company that has led us to this point with these offerings. And I think it positions us well to think about where are the areas where we want to double down and increase our investment, and where are the areas where maybe the revenue growth is not as meaningful as we had hoped, or maybe the profitability profile looks like it's not as positive as we want. And so I think as we head into the upcoming budgetary cycle, it allows us to think about the portfolio of assets and think about in an informed way how to optimize it that appreciates the history of innovation and progress with the discipline of balancing a portfolio. And I think those are three things that are pretty important.

Okay, and if we pull back a little bit, I'm just curious if, you know, the conversations that you're having with clients, is there anything that's changed in what, you know, you're discussing with them, their eagerness in, you know, talking about their roadmap versus maybe a year ago? Is anything, obviously they're getting more seasoned and closer to the upgrade cycle, but outside from that, just from like a macro lens, like how are health systems positioned and what are the conversations like?

So I don't know that, well, number one, prior to the announcement, yes, we were engaging customers, but it wasn't as rich as what we see today because we hadn't been as transparent about where the roadmap was. So fast forward post the announcement, now there's clarity of where we're taking the company and where we're taking the roadmap. So I would say I like where the conversations are because it's not only about, hey, I'm promising you something. It's we can actually give them the experience that they're going to get should they make the decision to move to Titan XD and Omnisphere. We've had a handful of customers who've been on it. So those customers are reference customers as they help us shape the work that we're doing before we get to GA. with regards to what we're hearing from them I would say that they definitely the the the Omnisphere conversations are in my view very positive because you know a lot of times you know when they're articulating the things that they've always been looking to this you know community of players BD as well as ourselves to deliver it hasn't been a mystery we've been talking about the concept of the autonomous pharmacy and the autonomous medication management for long time longer than I can remember but I feel like for the first time we have the technology tools and we as a company have taken the time to design our solution to meet the needs so I think those conversations are getting their positive it's landing well but the pipeline is robust now I look forward to sort of driving that into bookings and ultimately into revenue but but the response I would say has been has been very good the clarity is resonating now in the specific value proposition around the elements of the solution is also resonating awesome awesome and just just to close Baird if you can maybe just comment on your capital allocation priorities over the next 12 months or so yeah you know when we think about capital allocation as a management team

we think about how do we fund the places where we believe we have the biggest right to win and that's in our core offering cabinets that we provide as we head into this refresh cycle you know we view the use of capital to bring that product to bear in the best possible light and also to use the the financing option as an opportunity to gain share that's a place where we see having a healthy balance sheet as important to our long-term success on top of that we continue to remain very focused on opportunities to make strategic acquisitions we look for tuck-in capabilities whether it's in our core platform whether it's innovation enablement or it's in our specialty business we're looking at ways to use our capital to accelerate the momentum within those elements of our business and we're being mindful about how we make those decisions and making sure we hold ourselves accountable to high bar so those are the the primary places where we're focused at this stage we currently do not have a stock repurchase program in place we're absolutely not opposed to it but at this point we find that the opportunities that sit in front of us with our core offering with the leasing opportunity and potential you know tuck-ins should they present themselves from an acquisition perspective are gaining the biggest part of our attention at this point but we're not dogmatic about an approach awesome well that's great we'll we'll end it here thank you for joining us thanks everybody thank you thanks Dan