Good afternoon my name is Holly and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Omnicell’s First Quarter Earnings Announcement. (Operator Instructions). After the speakers remarks there will be a question-and-answer session. (Operator Instructions). I’d now like to turn today’s conference over to Rob Seim. Please go ahead sir.

Good afternoon, and welcome to the Omnicell 2014 first quarter results conference call. Joining me today is Randall Lipps, Omnicell’s Chairman, President and CEO. You can find our results in the Omnicell first quarter earnings press release posted in the Investor Relations section of our website 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 in our press release today in the Omnicell Annual Report on Form 10-K filed with the SEC on March 17, 2014, and in other more recent reports filed with the SEC. Please be aware that you should not place undue reliance on any forward-looking statements made today. The date of this conference call is May 1, 2014, and all forward-looking statements made on this call are made based on the beliefs of Omnicell as of this date only. Future events or simply the passage of time may cause these beliefs to change. Finally, this conference call is a property of Omnicell Incorporated and any taping, other duplication or rebroadcast without the expressed written consent of Omnicell is prohibited. Today Randy will first cover an update on our business and then I'll go over our results for Q1 and our guidance for 2014. And following our prepared remarks, we'll take questions.

Good afternoon. Our momentum from 2013 has continued through the first quarter of 2014 and we are right on track to the growth guidance we gave 90 days ago. Our revenue is ahead of expectations and grew 17% from Q1 of 2013. Our earnings are also ahead of our guidance for the quarter. Investments in our three-leg strategy of differentiated products, expansion into new markets, acquisitions and partnerships have paid off and continue to drive our success. One of the major market trends we see is our customers moving toward more integrated, enterprise-wide system management. Whether it is a community hospital taking a more holistic approach to patient care, or a multi-hospital organization, driving consistency across the entire enterprise, these healthcare providers are seeking a consistent, safer patient experience and increased efficiency. Our solutions have the capabilities these institutions are asking for. The Unity Platform that the majority of our systems now run on creates a single point of management for all drug and supply information from receiving dock to bedside, saving administration, installation, and maintenance time, while improving patient safety. We believe Omnicell is the only company that provides this fully integrated solution. Some of the products we announced back in December that began shipping this month are great examples of our continued investment in this platform. Among them is an exciting new software solution for the Central Pharmacy. Central Pharmacy automation usually includes larger scale equipment that is often out of reach for smaller hospitals or hospitals with space constraints. Our new Central Pharmacy automation software gives these customers a solution, expanding our market, and improving workflows between the wholesaler, the pharmacy and our systems. Our latest Pandora Analytics release now consolidates information across dispensing systems in the nursing area, the perioperative area, and the Central Pharmacy. Finally,…

Thanks Randy. So Q1 was a great start to 2014 for us. Consistent with the last nine years in a row, 30% of our automated dispensing system orders were from new and competitive conversion customers, with approximately three-fourths coming from competitive conversions and one-fourth from Greenfield customers who have never purchased automation before. Our revenues were $101.8 million, which as Randy highlighted is up 17% from the same quarter last year. GAAP earnings per share were $0.17, up 70% from Q1 2013. In addition to GAAP financial results, we report our results on a non-GAAP basis which excludes stock compensation expense and amortization of intangible assets associated with acquisitions. We use non-GAAP financial statements in addition to GAAP financial statements because we believe it is useful for investors to understand acquisition related costs and non-cash stock compensation expenses that are part of our reported results. A full reconciliation of our GAAP to non-GAAP results is included in our first quarter earnings press release and is posted on our web site. On a non-GAAP basis earnings per share was $0.26 in Q1, up 24% from 2013 and $0.02 over analyst expectations. Non-GAAP earnings per share was down sequentially from $0.29 in Q4 2013, as expected, but up from $0.21 in Q1 of 2013. The sequential decline from Q4 2013 occurred because of an anticipated decline in revenue and because Omnicell has some seasonally high expenses in Q1 of every year that affect both cost and operating expenses. Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization, which also excludes stock compensation, amortization and the amortization of acquisition related costs was $17 million for the first quarter of 2014, up 39% from $12.2 million a year ago. And since acquiring MTS almost two years ago, we have reported our business on two segments…

All right, (Operator Instructions). Your first question will come from the line of Jamie Stockton with Wells Fargo.

The first question is the G4 upgrades. It seems like the pace didn't necessarily accelerate during the quarter, even though you had the Windows XP end-of-life in April. Do you have any thoughts on how that pace might, or based on the conversations you guys are having with customers, how that pace might change the rest of the year? Should we expect we're going to roll along at about a 4% clip of the legacy base upgrading each quarter, or do you think that that could accelerate some in the near term?

Well I think, we’re at 40% now and I think certainly by the end of the year we’ll be well over 50%, probably maybe closer to the 60% range and since I think most hospitals have the G4 upgrade in their sights either this year or next year so I think it’s just -- there were those who were sort of frightened and doing it right away and then those who probably said yes we got to do it, but we’re going to do it as -- we fit it into the budget cycle or an implementation time that made sense. So it’s a great product. A lot of people are looking at it, we’ll do more bookings this year than we did last year and I think the momentum continues.

Okay, that's great. And I know you guys aren't going to break out the non-acute piece from a revenue standpoint, but can you just qualitatively give us any color on whether or not you continued to see that business pick up within the Automation and Analytics segment or was the strength during the quarter more a result of the Acute business being strong?

Well, we saw a lot of like growth quarter -- year-over-year in the quarter on the Automation and Analytics, which I would characterize as most of the products that had the Omnicell brand originally. We do see, continue to see good pipeline, good growth in placing the automated sensing system into non-acute care facilities. That is -- businesses going for us mainly because of the channel orientation and relationships that MTS had that they’re helping in selling process. The medication adherence segment, which is predominantly the products that have the MTS brand on them -- those products, did well in the quarter. Also year-over-year the revenue is up about 10%. So we’re seeing good growth in all of our product segment and all our product lines.

Okay. I guess what I'm really asking, does it seem like the -- for the automation analytics, the non-acute really inflected, if I recall correctly, in the second quarter last year. And I'm wondering if it's kind of tracking at that same, if I remember correctly, $4 million or $5 million revenue level or if it has seen a further acceleration because you guys are seeing a broader base of customers that are ordering the cabinets for non-acute facilities.

Yes. So you’re correct. That revenue is ranging from $3 million to $6 million in a quarter and we’re continuing to see a go along in that pace and we have a very good pipeline for continued growth and expansion in that part of our business.

Okay. That's great. And my last question, international -- what's the -- any color on how the quarter went from an international standpoint? Did you see -- I know that you had a big quarter in the Middle East in the fourth quarter. Was the Middle East still strong in the first quarter? Are you seeing anything in Asia start to percolate?

Yeah. So our international business last year was about $34 million for across the two segments. In this, in the first quarter, we did another $7 million. So we’re tracking right on the same pace. We continue to see good acceptance of the medication adherence products mostly across Europe. We continue to see good pipeline in the Middle East, China is still in the beginning. We don’t have a hospital that’s house-wide yet but we do, as I reported last quarter have over 20 installations that they’ve completed or in progress. So we will continue to monitor that and we will continue to invest in the region because we think it’s a good opportunity. You might have noticed in one of our announcements that we have now opened an office in China, a sales and training oriented office. So we do believe there is great opportunity there and continue to invest in the region.

And you next question will come from the line of Charles with Cowen and Company.

Rob, I just had a couple of quick questions here. Well, actually, the first question -- medication adherence, you talk about 600,000 patients getting the multi-med packaging in Europe. Can you talk a little about the growth in terms of patients that represents either sequentially or year over year?

We’ve had double digit growth for the medication adherence usage in Europe for some time now. It’s coming from the small base but trying to build up to pretty sizable set of patients they are getting their medication on this packages. If once the patients start utilizing them, they are so intuitive and you can use that usually people stay on it.

No, I mean, that certainly makes sense. But when you say double digit, are we talking just over 10 or are we talking into the 20s? Can you give us any point…?

Yeah. Of course, it varies a little bit quarter to quarter, depending upon what pharmacies come on, but between 10% and 20%.

Okay. And can you sort of update where you're seeing opportunities for U.S. launch? Is that the way you think?

Well, the U.S. is behind Europe in the adoption of these products that we do have a number of customers utilizing the medication adherence packages in the United States, both hand packing them in small volume and utilizing our automation equipment. So as I’ve reported we do have other products that they were in the development stream to enhance the process of packaging these but we’ve already launched and we do have various pharmacies using them today.

Okay. Great. Just on the -- and I don't know if I might've missed it, but when you talked about the expenses, R&D ticked down sequentially, down year over year. Should we expect that -- is that -- is there something specific to that or is that sort of the level of investment that we should expect this year at least?

Well, R&D spending is pretty consistent from quarter to quarter but depending upon where we are and the product announcement, test and announcement cycle, there’s different amounts that may be capitalized and then amortized through cost of goods sold at a later point in time. We did just as you might have seen, announce that we released 18.5 and Randy went over some of the pretty interesting products that are in 18.5 and through the quarter we were in last parts of the testing cycle. So we capitalized $2.9 million of R&D expense in the quarter.

Okay. That's helpful. And then just last question on tax rate. You -- did I hear you right? You're saying that we should still assume a GAAP tax rate of 38% for the remainder of the year?

Yes, we expect to have 38% for the full year. So there might be some quarters that are a little more than 38% but we expect it to average out. The thing that, that makes the tax rate fluctuate is just the timing of stock, employee stock activity and I think that’s almost impossible to forecast.

And your next question will come from the line of Sean Wieland with Piper Jaffray.

So question on operating margin. So Q1 is always the low watermark by a long shot on operating margin, but you're off on the right foot this year. What's the likelihood we get to that 15% target by year end, and do you have any thoughts on operating margin longer term?

So the forecast that we gave does assume that we get to the 15% by year end and we average out through the year. There’ll be quarter to quarter fluctuations, there always are. Long term we are still planning to manage to the 15% operating margin and when we have any opportunity we take any additional funds we have and invest them in the growth of the business. We believe that we’ve got quite a few growth areas, Randy talked about the three-leg strategy and those are exactly the things that we’re investing in and they’re all great opportunities.

So am I hearing you that you'll revisit that long-term 15% margin, or am I putting words in your mouth?

No, we intend to manage to the 15% at this point.

And your next question comes from the line of Matt Hewitt at Craig-Hallum Capital.

A couple of questions from me. First from the competitive landscape perspective, obviously one of your peers was having issues last summer. You were able to get their software out the door finally later in the year. When you reported Q4, it sounds like the market had kind of evened out a little bit. Where do we sit today from a competitive standpoint? It’s essentially a two horse race. The third horse has been sold. I would assume that both parties, both you and the other one are picking up share but maybe just an overview of the competitive landscape would be helpful.

Sure, Matt, the fact that that landscape for us continues to position the company extremely well. Our products as we said are really leaning towards the large enterprises that want to have multihospital implementations and drive best practice across the whole group and having a single platform to not only manage that across multi-hospitals but to manage all the areas of drug movement in the hospital is quite essential to making that happen and having a server that can facilitate that and in the nurse workflow products where it really helped to smooth transition particularly, in the integration of for instance our Cerner eMAR-ADC connection points have been huge home runs. We could see that at the University of Alabama which we announced earlier in the year, which was a huge IDN win that been with a competitor’s product for 20 years, and it hasn’t slowed down. We had Capital Health and usually what happens when hospitals combine their, with another site and they go through a more formal process to look at the situation with their technologies and that again bodes really well for us in the marketplace. I think our technology is positioned well. We have a lot of the features and functions and architecture that customers want today and it works today. It’s out and about and fully implementable, and I think our reputation in the market place is second to none and it really pushes people over the edge to make the switch, and I think that you described it well. I think we have a formidable competitor and one that gives us opportunity to take some more market share out there and I think that they’re going to continue to do that.

All right thanks. Another one for me, as far as the analytics is concerned, obviously it's going to become, it sounds like a bigger contributor to your growth. You launched Pandora Analytics at ASHP last December. What do you -- when you talk to -- when you lead with that product or when customers reach out to you and are looking for a product, what exactly about the analytics has them most excited? When you're pitching it, what is the one or two key points that you're trying to hammer home?

Well, again it’s on the enterprise side; it's both depth and breadth of the product. They don’t just want to know what the tracking at meds are in few areas. They want to know total hospital and then across the enterprise and then they want to have some way of managing drug shortages which are a big issue. And so, and now a lot of the hospitals have a corporate pharmacy group which is trying drive thus practice manage through the shortage issues. And also drive some clients particularly around the version which has gotten, I would say increased scrutiny over the last couple of years as diversion of drugs creates, institutional liabilities, when trying to treat patients when you have issues with drug diversions either in the integrity of the drugs that you have or on personnel who maybe have abusive situation. So that’s become a newer highlight and I think it’s certainly been pushed by the government regulatory folks.

Great. Maybe one more for me and I'll hop back in the queue. As far as the Q1 performance is concerned, it was a nice beat on the top-line. How much of that upside or how much was from Sidra? Was the Guy's St. Thomas incorporated in Q1 or is that still coming?

So Sidra was fully recognized as revenue last year. So there’s no Sidra in the quarter and Guy’s St. Thomas was in order but it’s not been installed yet. So it does not get the revenue. Q1 was all the orders that we, of course, had scheduled but we do have more of an order flow now for the upgrades and the upgrades tend to be installed much faster than rest of our orders. So it’s giving a little bit more durability for our revenue.

And you next question will come from the line of Gene Mannheimer with B. Riley.

If I could just follow up on what you just said, Rob. I mean the revenue performance, very impressive, beat our model by about $5 million in product alone. If you had to characterize where the upside came from, was it G4, was it government? Was it medication adherence, competitive wins? How could we sort of summarize the beat here? Thanks.

Yes. So relative to the guidance that we gave, medication adherence did better than we had anticipated and the rest of it is all in the scheduling of orders and how fast people want to install upgrades that they order inside the quarter. And most of our orders in the Automation and Analytics segment would not be installed in the quarter, but they’re ordered. Usually it just takes a hospital longer to plan out the installations but the G4 upgrade are actually installed quite easily. They were designed to install easily and so they can go pretty fast.

Okay. Okay. So if there's some variability in the install schedules that sort of led to outperformance in this quarter, should I be inferring that that may -- you might back off from that next quarter, or is it tough to say that?

Well, we stayed with the revenue guidance that we gave. There’s nothing in Q1 that right now makes us think things that the year will come out for the same guidance that we gave 90 years ago -- 90 days ago.

And your next question will come from the line of Leo Carpio with HM Global.

Two quick questions. First on ICD-10. Now that deadline delay has been implemented, have you seen any feedback from your customers coming back and inquiring if they can add their -- do some upgrades or other things that they had previously postponed? And then on MTS, we've been hearing hospitals talking about soft census. Did that flow through in MTS' performance in any way or just you didn't see it?

Let me address the first question, I’ll give the second one to Rob. I don’t think, ICD-10, our systems are really driven from the clinician side; don't have a lot of impact on the operations up from the IT side. And so whether the ICD-10 was in or out probably didn’t have as much impact on us. I think clinicians are really driving our installed cycles and they really need to standardize and drive best practice and get the cost out. So those tend to be the big drivers in our selection.

Yes. And regarding the soft census, I think you’re talking about the soft hospital census, possibly the patients not necessarily disappearing, but getting care in longer term care facilities or secondary facilities. We do see that happening with hospitals. I don’t know that it’s necessarily driving anything particular in the MTS medication adherence business for the quarter, but we do think over time as patients move more into, in lower cost facilities for care, that there’ll be not only more demand for the medication adherence products but also more demand for our dispensing products because those are sometimes more acute patients and they’re still on more of a unit dose medication regimen, and to manage that of course you need some sort of dispensing system.

Okay. And just back again on the ICD-10 question, the question -- perhaps maybe I’ll try to rephrase it, whether you've been hearing from hospitals is that now that the deadline's been delayed, they're reviewing their IT staffing, tackling other projects that had previously deferred, for example, the sunset of XP, going to Windows 7, and since they're tackling it, more resources to learn those projects or other things that had been on their wish list. Although you probably could see maybe a feedback more of people saying they want more G4 upgrades faster or more reallocating those resources to projects that happen to be in your sweet spot and the products and services that you'd be able to provide [ph].

Well, that may happen. I think hospitals move slow enough that we’re not necessarily going to see it make a material change in our pipeline. If it’s going to make a material change or a little bit, we wouldn’t necessarily have seen it already in Q1.

As Randy said our systems are really a clinical base system. IT definitely does support them and the server in place and networking of course, but the implementation of our system from a local standpoint is predominantly in the pharmacy and a little but in nursing for the training. The pharmacy has to do all the set up work and test the interfaces actually physically, well drugs, things like that. So for our systems the implementation of ICD-10 wasn’t really a major impediment and so we don’t really expect to see a major change now that ICD-10 has been performing.

(Operator Instructions). And your next question will come from the line of Raymond Myers with Alere Financial.

My first question is kind of a high level. How are you seeing the rollout of the Affordable Care Act just updating hospital purchasing patterns? Is it having an effect at all, and anything surprising at all?

Well I think everything and it’s universal about the Affordable Care Act is that, two things. Acute care’s got to get less expensive and more patients with higher acuities are going to move to more non-acute facilities and on the cost effective side, what you see is these lean teams being put together and we when we walk into a new institution or a major upgrade, we have a lean team that works with our lean team to -- that really gets the stakeholders engaged in cutting out cost in processes. I think in the past that was a little more and we had to do a lot more arm-twisting to get people to engage in that level of process change. Now you see that hospitals are lot more ready to listen to you and take on our best practice as what they can really do to reduce the cost. And on the other side of that is sicker patients are definitely showing up in more venues other than hospitals. That means they need automation and medication management that really requires higher levels of scrutiny and particularly the distribution of narcotics, which also takes a lot of extra work to doing. You need automation in order to meet those regulatory compliance in these other venues. And so both those things bode really well for our company and why we feel really good about the future.

Yes, thanks, Randy. That sounds positive. Help me to understand the timing of when that starts to affect your business. Has that already affected the business, or do you think that that is a continuing trend that will garner support in an increasing fashion over time?

I think it started. I don’t know that it’s fully impacted. I think a year or two ago, you saw us having to push in to do some industrial engineering so to speak when we entered the facilities and trying to convince people to do that. We actually get hospitals now requiring us on a new RP before we come in to do a five to 10 day study just to give them an idea about what we would suggest and how it would work. And so I think it’s still moving along and it’s very market specific. Certain areas of the country our hospitals are kind of still working much in the fee service world. Others are starting to experiment with ACOs and bundled payments. So I think they’re all trying to figure out how to lower their cost and a big part of lowering their cost is getting everybody on the same system, whether it’s their HIS system or health record system or medication management system. They see benefits to that and I think in the past they would sort of tolerate where everybody can choose their own medication system at the local hospital. Now they’re seeing needs to make one decision and move to a single vendor.

Good. That sounds like positive trends. Now, I want to shift for a second to medication adherence packaging. I understand there's been some product development ongoing for some time now to develop new packaging systems. Can you give us an update on how that's going and when we might expect some new product announcements?

Well, we -- as you know we don’t normally talk a lot about products that in developments for a lot of obvious reasons but we do have other products in development right now. Just everybody knows on the call what we’re talking about. In the medication adherence packaging role there’s packages that hold multiple doses of one type of medication. Those are called single dose blister cards. And we have a full line of automation products that range from every expensive entry points to $1 million fully robotic, fully automated systems for very large facilities, very large institutional pharmacy facilities. And that’s provides us the ability to help any pharmacist get into the business and sustain their business as they grow. The multi dose blister cards, which are used more of assisted living facilities in patients that are home, that don't have caregivers. For those we have one piece of automation equipment today that is sort of in the middle of that spectrum. As a customer you would need some volume to justify buying that machine and if you don’t have that volume you tend to pack by hand. And if you’re much larger institutional pharmacy, you start to hit the limits of that machine. You need bigger types of automation equipment. So it is our intent to fill out that product line overtime. And as you said, we have had development in process. You might recall that into Q1 last year, we changed our direction a bit of the development. We were targeting more the lower end of that product line. And we changed it to target a higher end of the product line. And that, those products are still under development. I really can’t talk about when exactly they would come to market or what the steps we would in development other than directorially we intend to have a full product line for multi dose products, just like we do for single dose.

And I don't know if you're able to give an update on SurgiChem. I know it's something that's in process. Are you able to give us a sense of when you think that might close?

SurgiChem is going through regulatory reviews still at this point and we understand from the regulatory agencies that it would be Q3 before we have a final answer from there.

Are you aware of any issues that they're working through, or is this a standard review?

Well, it is their standard review. They are examining everything. It’s a little bit of a different process in the UK that it is in the United States but overall they are going through everything that’s associated with this market and new products.

We do have a follow-up question from the line of Charles with Cowen and Company.

Hey, just a quick follow-up on medication adherence. Rob, can you give us sort of what the mix in the revenue today is for medication adherence?

Yes, it varies a little bit quarter-to-quarter but it’s very high consumable mix. It’s predominately the single dose-poster cards, the multi dose poster cards which is the fastest growing segment, the smaller piece in the overall consumables, but it tends to be 85% to 90% consumables. And the equipment business has a small service component to it.

I know we were looking about mix of total revenue? What would you ball park that at?

I am sorry say again?

What would you ballpark as a percent of total revenue?

Medication adherence is about 20% overall of our total revenue.

And at this time there are no further questions I’d like to turn the conference over to Randall Lipps for closing remarks.

Thank you very much for joining the call. I’d like to congratulate the Omnicell team for another record quarter delivering great products. Congratulations on the 18.5 release. It was another great set of features that so served the market, and helped us move the needle in patient outcomes. And another great job in the marketplace of winning more competitive wins to keep our growth continuing to grow. Thank you all for being on the team and listening on the call. We will see you next time.

And that concludes today's conference call. We appreciate your participation. You may now disconnect.