At this time I would like to welcome everyone to the Omnicell Second Quarter Earnings Conference Call. (Operator Instructions)

Welcome to the Omnicell 2008 second quarter results conference call. Joining me today is Randall Lipps, Omnicell president and CEO. You can find our results in the Omnicell second quarter press release posted in the Investor Relations section of our web site at www.omnicell.com. This call will include forward-looking statements subject to risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied. For a more detailed description of the risks that impact these forward-looking statements please refer to the information under the heading Risk Factors and under the heading Managements Discussions and Analysis of Financial Conditions and Results of Operations. In the Omnicell annual report on Form 10-K filed with the SEC on March 14, 2008 as well as our most recent filings with the SEC. Please be aware that you should not place undue reliance on any forward-looking statements made today. The date of the conference call is July 21, 2008. All forward-looking statements made on this call are made based on Omnicell’s beliefs as of this date only. Future events or simply the passage of time may cause these beliefs to change. Finally this conference call is the property of Omnicell Inc. and any taping, other duplication or rebroadcast without the express written consent of Omnicell is prohibited. During the call today I will start with an overview of the financial results for the quarter, followed by Randy who will cover some of the quarter’s business highlights. I will then discuss Omnicell’s guidance for 2008 and after that we will open the call to your questions. In the second quarter of 20087 we again posted record revenues and our profits exceeded expectation. The slowing economic conditions we saw in March did continue through Q2 and it is clearer now that…

With new reports highlighting a slowing economy published almost daily, the environment for our hospital customers to start new capital projects is challenging. Nonetheless, we are managing to optimize the business. We are balancing expense management with our continuing focus on the levels of customer satisfaction that we believe differentiate us in the market. We continue to see hospitals add on to their current installations, install automation for the first time and switch from our competitors products to ours. As Rob mentioned earlier, Q2 orders from new customers were 33% of our total orders and competitive conversions increased to over half of those new orders. In June we began shipping our SinglePointe solution which allows hospitals to manage up to 100% of the medications through an automated dispensing system. SinglePointe is the first of its kind in the marketplace and provides a solution available nowhere else. In April we hosted several regional road shows where our beta partners presented their findings after implementing SinglePointe. Both current and prospective customers learned about our new solutions at these meetings. Participants from over 100 hospitals attended and heard our beta partner’s present results that included a 31% decrease in missing doses, a 55% reduction in the time required to manage patient specific medications and a 70% reduction in potential medication errors during their use of the SinglePointe solution. SinglePointe has been very well received since we announced it last December. Looking forward to the remainder of 2008 we continue to see a pipeline that is very robust including excellent opportunities at large multi-hospital organizations. We see ourselves positioned well competitively and are optimistic about our ability to close these opportunities in the next two quarters. We have approximately 2 ½ quarters of product revenue and backlog and we continue to generate high marks in customer satisfaction. In light of recent and ongoing press coverage of medication errors, especially in pediatric areas, we see hospital customers continuing to seek our solutions to help them safely manage medications to prevent errors and increase patient safety. Rob, I will turn it over to you for some guidance.

Following the results of the second quarter is reaffirming our previous guidance for 2008. We expect revenues to be up 17 to 20% from 2007. We continue to believe product backlog will be between $135 and $145 million at the end of 2008 and will remain approximately 2 ½ quarters of future product revenue. The benefits of our earning performance in Q2 and of our stock repurchases that we have completed to date have caused us to expect earnings to be at the high end of our previously stated range of $0.65 to $0.70 per share non-GAAP excluding stock compensation expense. In this earnings guidance we have absorbed the cost of the Rioux shutdown. During Q3 we will incur the remainder of the cost to shut down our South Carolina facility and some additional expenses to complete strategic projects that we believe will make us stronger in the future. Now I would like to open the call to questions.

(Operator Instructions) Your first question comes from Newton Juhng - BB&T Capital. Newton Juhng - BB&T Capital Markets: After the last call we talked a lot about CFO concerns within the hospitals and I was just wondering if you could give us an idea as to what has gone on with your interaction with them that has caused you to believe that you are going to see the up tick in the back half of the year.

CFOs are definitely a concern. We don’t want to give the impression that we don’t still see that. We talked about the credit markets the last time just causing a lot of angst amongst the financial management at hospitals. That’s still there and I think it’s going to take some time for that to go away. On top of that we’re, as I said in the call, we have learned that a lot of hospitals have less interest income, less cash flow, even though their admissions are the same, their reimbursements may be the same, they just have a lot of less cash flowing through their systems and their operating costs are up with so many of the things that they purchase being based in petroleum or just the freight in on it. We still see that kind of environment. We have been working though, over the last six months to, of course make sure that we’re as competitive as we can possibly be. The SinglePointe product in the market place now is definitely gaining a lot of interest. There are just a lot of followings for it. There are always large hospital organizations that are in the process and as I said, Randy said, we see several large hospital organizations in our pipeline and moving through their process now where they had been at the beginning of last quarter more stalled. We have additional leasing partners on in case there are any concerns with financing with our customers; we have more lease capacity available to us. So, all of that gives us some visibility to what is coming. It is still a little bit unclear to us exactly how fast or how slow the market is moving, but we are 90-days smarter now from last quarter and we can see what is coming in front of us. Newton Juhng - BB&T Capital Markets: One of the things I was just wondering about was just with the share buyback here. You said that you had $25 million done at the end of the quarter. Can you give us an update as to where you are right now, is there still some room left there, because we are just trying to figure out what level of share count would be appropriate for the third quarter.

Right now, as of this point, we have not repurchased any more shares past the 25. We do have in our plans to continue repurchasing against that authorization once the open window opens for us. We don’t have any specific plan in place at this point in time. The board authorized us to execute that repurchase over the course of a year and we still intend to do so. Newton Juhng - BB&T Capital Markets: On competitive displacements, it sounds like it came back pretty strong this quarter. I was just wondering if you could give us any update as to one, how that is looking going forward for you guys in terms of your pipeline and then two, Cardinal did announce a bunch of announcements in June about some product changes and we are wondering if you had a chance to kind of take a look at that and see if it has any effect to what you’re expecting going forward.

First of all on a competitive front I think we are extremely well positioned. It really hasn’t changes any a bit since we announced the SinglePointe which is probably the most dramatic announcement and product release in the last couple of years in our industry and feel that that particular product is helping us drive a more competitive interest in our product and we see very robust pipeline as we move forward with that product line. We did see a new increment in the marketplace with a product that is mostly targeted to a different market than ours, not the hospital market, that has some features that our product already has, so we didn’t think that announcement really had any impact on our competitiveness in the marketplace and feel that we continue to be extremely well positioned as we move forward.

Your next question comes from Steven Crowley - Craig-Hallum Capital Group LLC.

I have a follow up question to the issue around the competitive landscape. Some of the insinuation by one of your competitors related to them doing a better job with customer satisfaction, service; the whole experience having looked at the MD Byline numbers or statistics for the first quarter, that didn’t seem to show up in those statistics in a meaningful way. You probably had to glance at the second quarter statistics and I’m wondering if you can give us a flavor for what kind of story they tell.

The MD Byline statistics continue to show Omnicell very favorably against any of our competitors. We are generally, for the overall composite, either above the competitors or consistent with the competitors. Usually above over the past, I think it’s, 18, 20 quarters. I don’t know what the particular claims are, but we don’t feel that we’ve seen any degradation in our service capability and in fact we have invested pretty heavily in that, to keep the service as a differentiating factor for us and we do a lot of surveying ourselves. I mean we talk to our own customers probably a lot more than MD Byline talks to them and we are pretty fair with ourselves and pretty harsh on ourselves in that regard and expect our customers to be also and our own internal surveys have been very favorable, so we are feeling pretty good about our customer satisfaction.

Let me just also comment, we are just not, people are not just choosing us because we have a little bit better service or even a lot better service. It is a lot about product, types of releases in the future of our product, where we have taken our product, the roadmap; people are really looking for the next generation of product to help them deal with these difficult medication issues. We have seen that more in the news, as I mentioned, than we actually see some states stepping up and fining hospitals for improper medication management within hospitals, which is probably the first time those kinds of activities have happened; so there is a lot of pressure on hospitals to make significant movements to managing all of there medications and that’s important for us because that’s the road that we’ve taken with our product line. I think it rings very true to what hospitals are trying to accomplish in the marketplace.

I trust SinglePointe’s a rather significant arrow to have in that quiver.

Yes and that’s exactly it and whether you’re ready to roll out single port or not eventually you will be and so if you are about to make a five to ten year investment with Omnicell with our product line or switch out from a competitive product you want to understand what the roadmap is in order for you to get where you want to be which is 100% tracking of your medications to not only to be safe, but just to meet regulatory requirements. So we feel like we’re the best positioned in the marketplace to address those.

Is that just a product availability, or the prospects of it, or the thinking long-term in customers plans, definitely helped you win some sizable chunks of business as of yet?

No question, no question and we just started shipping it and we have got some robust orders for it, but whether they deploy it on the first order and we’ve had some customers order it the first time with us on order or your planning to roll it out later in your process, it has been a big point of discussion with our customers.

Related to the service gross profit margin in the quarter, is that where some of the Rioux expense had to knock that down, or is it just a utilization of personnel story that will resolve itself or likely resolve itself? Will it resolve itself and move back towards 40% over the back of the year?

Yes, there are periodic times, Steve, when we do stock up our service parts depots; we have some products, that we OEM and our central pharmacy line and then we had said that stock up more parts, carry more parts on those. Those affected the margins during the quarter and that’s kind of a one-time deal and there were some Rioux charges in the quarter in service also. We have invested a lot in service. We had fairly intentionally brought the margins down there, but continued to maintain our improve our product margins, so it has kind of been the overall strategy of how we deliver our products to the marketplace, but the 40% range is kind of where we’ve been, it’s in that business will be.

Your next question comes from Tom Gallucci - Merrill Lynch. Tom Gallucci – Merrill Lynch: The cost of the Rioux shut down, where are they just on this statement so we can make sure we identify that?

Yes, the cost of the Rioux shut down is not called out as a one-time charge or an extraordinary charge of any kind there. It is kind of small for the overall basis of the business, so they are just embedded in the various line items where they would naturally fall; so they are both in cost and OpEx. Tom Gallucci – Merrill Lynch: So not predominately in either?

Predominantly in costs. Tom Gallucci – Merrill Lynch: The DSOs went down a lot. What is driving that and does it change your cash flow expectations for the year?

In the past DSOs have fluctuated, there have been some explanations around different releasing content and things like that. But in this case, this quarter, it was just all collections. The collections team here did just a phenomenal job. I expect that DSOs will hover in the 60s. I don’t think that we’ve got anything that will really get the DSOs a lot better now. The aging is very good, so as I have said in the past, that is just kind of the natural place for this business. Tom Gallucci – Merrill Lynch: They may be up a little, they may be down a little, but we are sort of at 61, so that is almost as good as it gets and it should be sustainable in this range?

Yes, I think in the 60s is pretty normal for this business, as I said. Tom Gallucci – Merrill Lynch: Then given some of the dynamics that are out there around the health of the customer base, I have sort of two big picture questions: one, you note the CFOs are still sort of concerned. Is there anything out there that you see that sort of is a light at the end of the tunnel at some point? Is there any particular metric that CFOs are looking at or that you can tell that says, hey we are a couple of quarters away and things will be more back to normal? On that note, how do you sort of peg the market growth rates at this point for the business and what your market share is?

Let me just start with hospital CFOs a little bit. I think there is a lot of every institution has a story, but you see the academic centers doing fairly well and continuing to spend just because, I think, they have other resources of cash. You see people who have lots of building projects that they have got to buy our product because they have a new facility opening up and have to float products in place, so we don’t see a lot of slow down in some of those areas. Then you see some small hospitals where people are automating for the first time to meet regulatory requirements that they have to go out and spend that money. You see people that may have options to expand or to upgrade their products maybe move a little bit slower, because maybe they don’t have to do something at this moment because they have something in place and you don’t see them canceling their decision to move forward, you just see those kind of delaying out there, so I think those are the types that are really in question as to when people fell more comfortable. A lot of talking about pushing out their orders into the 2009, not pushing out their orders, but maybe push out some of their orders into the 2009 capital spend, which for some hospitals started July 1, others will start January 1. It is still all in the pipeline; it is just a matter of how quickly it thaws. Some of it is definitely thawed and I think depending on what kind of institution you’re in and the economics that you’re facing, it’ll just dictate the rate of thaw out, but it’s certainly not sort of a gridlock we saw, I think in the yearly end of March beginning of April. We will just have to continue to see what it looks like, but hospitals have to have our products and they’ve got to solve these problems and we’re best positioned for that. Tom Gallucci – Merrill Lynch: And then market growth and where your market share is these days?

Well we are 25% of the market and we think it’s a healthy market and will continue to grow. I mean historically it’s grown probably in aggregate somewhere between 10 and 15% and we’ve typically been able to grow faster than that and just a lot depends on what happens the back half of this year, particularly as to how fast we’ll grow immediately after that, but it’s again about how quickly we see some of these hospitals come back to life.

Your next question comes from Glenn Garmont - Broadpoint Securities Group, Inc.

First on the reuse side, have the sales forces started selling that integrated product at this point and what’s the reception been and then secondarily, when can we expect you to begin shipping that product? Then Rob, I just want to make sure I heard you correctly, sort of the average tax rate through the first two quarters, 43 about 43 ½%l that should be the expectation for the foreseeable future as well?

Let me take them in succession. The Rioux product, if you remember the integration plan for the Rioux company has already taken place. For the Rioux product to be integrated with our medication control software was a two phase. The first phase was to just put our bedside software, which is called SafetyMed on for the Rioux product and that has just been completed just announced that it is available. But the main product there is to put the full OmniRX capability onto the Rioux and mobile wireless type of cart environment so they work in tandem, work together, the cart and the OmniCenter OmniRX. That engineering work isn’t planned to be done until the beginning of next year, the first half of next year and that’s when we’ll put that in the market place. We’re selling the overall road map, but we aren’t selling the product yet. It is too early to really start taking orders on that product that really hasn’t even been through its data testing cycle yet. So, we’re on track with the development, but at this point the Rioux business is actually in the marketplace except for SafetyMed being available as the original Rioux business that we bought. As far as a tax rate, yes you heard right. We are at 43.5. You can kind of think of Federal tax as 35 and the states average about 5 to 6. Then right now we are not getting a deduction for the incentive stock option employee stock purchase plan expense. There is at timing difference going on. That will kick in when people start exercising or selling those shares, disposing of those shares.

Your next question comes from Steve Halper - Thomas Weisel Partners.

On the gross margin it looks like it’s declined from a year ago level. Can you just talk about that? Do you still have that the issue of the SG&A costs moving into the cost of goods sold or are there Rioux costs, shut down costs in that gross profit line? Just kind of give us some more insight into the gross margin erosion.

Well there is the main factor year- to-year is the dilutive effect of the addition of Rioux. You recall when we did the acquisition we said it would be $0.05 diluted and kind of strong, more diluted in the beginning of the year and less towards the end of the year and that is still the case, it is still effecting us. We also do have $400,000.00 of shut down costs associated with the Elgin, South Carolina facility in the quarter and most of that, as I said earlier, is in cost of goods sold.

Right, so is there any reason to believe once you have a more streamlined manufacturing process like you have for your existing products that Rioux wouldn’t have comparable margins to your cabinet business?

Rioux will not have comparable margins to the cabinet business until we have the fully integrated product out. As it sits right now, it does not have software other than the battery management software on it and it was I think I’ve said before it, depending upon the model, a kind of 30%, and 40% margin products as they’re designed. So, yes that business will not bring the same margins as the cabinets until the integrated product is out.

Remind us of the timeline on that again?

The fully integrated product is the first half of next year.

Your next question comes from Sean Wieland - Piper Jaffray & Co. Sean Wieland - Piper Jaffray & Co. : I just want to pick away at this rate of thaw question that we’ve been touching on. Have any of the customers that are in the pipeline that delayed out of Q1, have any of them given you a verbal commitment or indication on when they intend to sign a contract?

Q1, you mean the people at the end of Q1 who haven’t signed contracts that got pushed out, yes absolutely. Sean Wieland - Piper Jaffray & Co.: You have verbal commitments for those contracts to be signed in the second half?

Verbal or they’ve actually already been signed. Some of them had signed and ordered. Sean Wieland - Piper Jaffray & Co.: What percentages of them have been signed?

I don’t have that in front of me, but they’re all in the pipeline and I would say fairly much in the near term. [Interposing] Sean Wieland - Piper Jaffray & Co.: Of the deals that haven’t signed yet, how are they factored into your current thoughts on the backlog guidance?

I think that the difference is that depending kind of on how we’ve re-segmented our business based on the probability of being pushed down again and what we generally see is people who are buying for the first time from us in a large order may be more susceptible to things like timing difference based on pushing through the contract and reconfirming budget cycles, but current customers or accounts that are better positioned to make acquisitions faster or generally at more cash or whatever, we rate at a different pace. But, the thing that we feel real confident about is that the pipeline has not really diminished at all. It continues to increase, it is bigger than what it was last quarter and it is, it just depends on really handicapping some of the larger deals based on their individual timing issues. Sean Wieland - Piper Jaffray & Co.: Great and then one other thing, on the Rioux, the Q3 cost Rob, what was that again?

Between $500,000 and $700,000 it is kind of the facility shut down costs itself as we exit the building. Sean Wieland - Piper Jaffray & Co.: Then that goes away for Q4?

Yes.

Your next question comes from Scott [Haugen] - PYGH Capital. Scott [Haugen] - PYGH Capital : What was the month one, two and three linear read of sales this quarter versus last quarter when you had a tougher time?

Well I don’t know that Q1 is actually a very good measure. It was such an odd quarter. As you recall in Q1 we had a very, very strong January. We had the strongest January we’d ever had, which gave us a level of confidence going into the quarter and then it went very dry through the middle of the quarter and then the end of the quarter was not as strong as they typically are. This quarter Q2 had a pattern that was very consistent with all of the patterns of quarters in the past and I don’t think any sales quarter is linear, but it was very consistent with patterns in the past; so that’s another indicator that deals are starting to move and people are kind of moving a little bit back towards normal. Scott [Haugen] - PYGH Capital: Yes, I guess I’m just trying to wonder here if there is any sort of spill over. Did you have a particularly strong first month of the quarter with spill over from some of those cancellations or delays you saw in Q1?

No, no we didn’t and I think I actually said that on the call back in April. We did not see a bunch of spill over from March into April like we did from December to January. In December to January it really appeared to be a timing issue, because all of the deals that spilled from December all closed in January. We did not see that from March to April. Scott [Haugen] - PYGH Capital: Do you see any changes with the percentage of business you’re doing in leases now versus Q1, given the credit markets and the news we have heard out of GE Capital and all that?

No, well I guess leases are a little bit stronger during Q2, but it’s nothing that is a material trend. Our lease business still remains around 40% of our business. As I mentioned, we did bring on additional leasing partners though to just get us more capability during the quarter. Scott [Haugen] - PYGH Capital: I’m just kind of wondering how much of an impact that leasing and the credit environment had on your weaker Q1 versus more economic fears from the CFOs or if you could wait, kind of credit weakness versus fears of economic weakness what would you pin it on more?

The credit weaknesses were isolated and they were kind of oddities. It wasn’t that a hospital couldn’t get credit that couldn’t in previous quarters, it was more that hospitals had credit partners that, not us, but their own lines of credit that occasionally something was going wrong with some of those credit partners, I think those things have kind of been in the news and the hospital had to change partners; so that slowed them down. There was a period of time that they had to go through to make that change. I would say the general just kind of overall fear as you described it would be the thing that we saw as slowing down the general environment more. Scott [Haugen] - PYGH Capital: Then if you look into your pipeline of business versus this backlog and then your revenue guidance, how dependent on hitting your actual numbers in guidance this year are you on a couple of very large deals or kind of mega deals what not? What would be the dispersion of deals you need to see to hit your revenue and earnings guidance?

For this year, all the business is in backlog now, so for the 2008 guidance that’s pretty much, we pretty much know what’s going to happen there in terms of revenue. Scott [Haugen] - PYGH Capital: Then to see your backlog stay the same and hit your guidance then?

For earnings guidance, of course there is always the element of managing your costs and expenses and inventories and so forth. As far as hitting the backlog guidance, of course hitting the backlog guidance is dependent upon some large deals being in the mix. As I have said before, we always have many deals in a quarter, hundreds, five, six hundred deals in a quarter, but there are a few of those deals that typically are quite large and have an impact on a quarter with the timing of them where they hit one quarter or hit the next can have a pretty substantive impact.

Your last question comes from Leo Carpio - Caris & Company. Leo Carpio - Caris & Company: Going back to the comparative environment, in terms of this quarter versus the prior quarter, what changes did you notice in particular from Pyxis and some of the other emerging competitors? Did they change their path in terms of products or leasing terms that they offered? Just any color would be appreciated.

No we didn’t see any dramatic changes. I think you know we go after about 100 competitive conversions a year and about half of those we land and half we don’t and we’ve continued to run along at that pace and don’t see that pace slowing down at all. There was a new introduction of a product, but we have had no impact from that and I don’t even know if it’s been involved in a deal, but it’s been involved that we’ve had. We have seen, I haven’t really seen much that’s really changed our positioning, which is really based upon the SinglePointe software we discussed and that becomes the real topic, is how do you really deploy the next generations systems to address the increased regulatory environment and patient safety requirements to get to and so, there’s been nothing in the marketplace that’s stemmed that kind of discussion and so I think that positions us really well and we have a reputation on service and installation and response time and a bunch of other things that we also talk about, so those continue to put us in a good position to win a fair number of highly contested deals. Leo Carpio - Caris & Company: In terms of the credit crunch impact, was that mostly focused on the midsized community hospitals or the large hospital systems and was there any like region specific that was weak versus other regions in terms of.

Well it seemed to be pretty individual stories throughout the country where the credit impact took place and it just depended on whose partner was with which hospital group and what the terms of their deal were and whether they could get a better deal because the interest rates were changed, or risk factors had changed at these institutions where they were going to charge higher amounts so they went out and got a different group to — and it takes time for hospitals to do this. A lot of these large hospitals, it takes a lot of time to go through and set these lines of credit or leasing up. I think the people that needed a change have changed, but I still think that capital acquisition committees and folks are still cautious on exactly when they want to spend the dollars with Omnicell. Not necessarily if, but how and when and we pretty much reconfirm those in the market place and feel good about going forward.

I would like to just summarize by reiterating that we are doing well considering an environment that has become less favorable to large capital equipment projects. Omnicell, we’re profitable and cash flow positive, the technology products and services we provide do differentiate us somewhat from our competitors and we deliver a custom experience that we believe is the absolute best in the industry. The market we serve needs medication management solutions to provide the safe patient environment that everyone wants and I believe our products offer the absolute best solutions to meet those needs. Thanks for joining us today and we’ll see you next time.