Good afternoon. My name is Sherilyn, and I will be your conference operator today. At this time, I would like to welcome everyone to the Omnicell Fourth and Total Year 2015 Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]. I would now like to turn the conference over to Peter Kuipers. Please go ahead.

Thank you. Good afternoon and welcome to the Omnicell’s fourth quarter results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. Joining me today is Randall Lipps, Omnicell Founder, Chairman, President and CEO. 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 30, 2015, 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 February 4, 2016, and all forward-looking statements 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, Inc. and any taping, other duplication or rebroadcast without the expressed written consent of Omnicell, Inc. is prohibited. Randy will – Randall will first cover an update on our business today then I’ll cover our results for 2015 and our guidance for 2016. Following our prepared remarks, we will take your questions. Our fourth quarter and total year financial results are as usual included in our earnings announcement, which was released earlier today and is posted in the Investor Relations section of our website at www.omnicell.com. Let me turn over the call to Randall.

Good afternoon, everyone. We’re excited to discuss our fourth quarter and total year results, as well as our expectations for 2016, including the Aesynt business that we acquired on January 5 this year. I’m proud of our performance in the fourth quarter and 2015 overall and our consistent track record over the past several years. The full-year of 2015 was a company record for bookings, the annualized new and competitive conversion rate, revenues and earnings. For the fourth quarter, we exceeded our revenue guidance with record quarterly revenue of $130 million. Together with good cost execution, this revenue strength resulted in record non-GAAP EPS of $0.40, above analyst expectations. Total fiscal year bookings ended at $392.3 million, slightly below our bookings guidance. We saw very strong momentum in bookings at the end of the quarter continuing into first quarter 2016. We finished 2015 with the highest ever annualized new and competitive conversion rate of 41% of bookings. This is a great indicator of the strength of the business. Over three quarters of these were competitive conversions and the remainder were from Greenfield customers who have never automated before. For 10 consecutive years now we have received the top honors from KLAS, the prestigious third-party rating organization. For 11 consecutive years, we have increased our market share and gained new thought leader customers every quarter. Together with our customers, we are consistently delivering state-of-the-art medication management and workflow efficiency for caregivers and better health care for patients. On January 5 of this year, we closed the acquisition of Aesynt. The Aesynt business based in Cranberry Township, Pennsylvania is a leader in enterprise medication management with specific products in IV compounding, Central Pharmacy automation, point of care solutions, and enterprise software products. We had previously prepared a brief summary of the transaction,…

Thank you, Randall. I’ll discuss the summary of our 4Q 2015 and total year 2015 financial results and our guidance for 2016. Our 4Q 2015 revenues of $130.3 million were up 7.2% from the same quarter last year, and up 4% sequentially. Strong demand was driven by both expansion and upgrades at existing customers, as well as by new and competitive conversion customers. Revenue strengths in the fourth quarter resulted in records revenue for an $85 million for total year 2015, an increase of 10% year-over-year. Non-GAAP EPS of $1.33 per share for 2015 was also a record. Earnings per share in accordance with GAAP were $0.21 in the fourth quarter of 2015, which is down from $0.25 in 4Q 2014. GAAP gross margin was at 50% for the quarter. 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 and one-time acquisition-related expenses. We use non-GAAP financial statements in addition to GAAP financial statements, because we believe it is useful for investors to understand acquisition amortization related costs and non-cash stock compensation expenses that are a component of our reported results, as well as one-time events such as the gain on the Avantec investments in 2Q 2015, and one-time acquisition related expenses. A full reconciliation of our GAAP to non-GAAP results is included in our fourth quarter earnings press release and is posted on our corporate website. On a non-GAAP basis, earnings per share were $0.40 in 4Q 2015, up $0.01 from the same quarter last year. The acquisitions of Mach4 and Avantec contributed approximately $9 million of revenue and were neutral to non-GAAP EPS in the fourth quarter. Among the factors positively affecting both our GAAP and non-GAAP results is the…

Thanks, Peter. We had a great number of great new wins that installs in 2015, and we are off to a terrific start in 2016. We are looking forward to a very strong 2016 with mid double-digit bookings growth organically for the combined business. Expected reported 2016 non-GAAP EPS growth is strong as well. Revenue growth is more muted in this transitional and transformative year, as we integrate the Aesynt business, and expect modest adjustments related to sales force alignment and other integration activities. Revenue growth in this transitional year is impacted modestly as well from an initial pause by Aesynt customers, who are waiting to see the acquisition close. Some of these Aesynt customers are repapering their bookings, as they now have a choice of a broader product portfolio, resulting in modest booking to revenue conversion timing delays. We do see a great opportunity over the mid-term for the existing customer base to refresh their existing equipment with products from the combined broadened product portfolio. And we are executing our growth strategy well, delivering state-of-the-art medication management, and workflow efficiency to our customers, results for investors and better healthcare for patients, I believe we have all the ingredients for continued long-term success. With that operator, I’d like to open up the call for questions.

[Operator Instructions] Your first question comes from Matt Hewitt with Craig-Hallum Capital.

Good morning, gentlemen, congratulations on closing the transaction early and obviously the great performance in Q4?

Thank you.

Thanks, Matt.

Thank you, Matt.

A couple of questions regarding Aesynt. How should we be modeling for the combined company?Will yoube adding a new bucket for Aesynt or will be that – will that product portfolio be filtered into one of the two existing buckets and how should we be thinking about that?

Yes, for me – thanks for the question. The way to look at it on a second reporting perspective, essentially we have determined that the Aesynt products fit into the A&A segments, and effectively it’s an integrated business, as of the day of close. As a matter of fact, we have seen some customers already be paid for in bookings actually switch products within that same cycle. And so we are not providing separate breakouts of the Aesynt business, as it is essentially now a merged business with common customers and customers actually buying products from both kind of legacy entities, if you will.

Your next question comes from Jamie Stockton with Wells Fargo.

Yes, good evening. Thanks for taking my questions. I guess, maybe, Peter, could you give us some feel for what the 2015 bookings would have been, product bookings for the Aesynt business? I know, Randy mentioned that you guys are expecting mid, do we say double-digit or single-digit, I can’t remember organic wise?

Strong mid double-digit. So if you – you should take kind of the midrange of our bookings guidance and then back into the number.

Okay. Is there a number for what Aesynt did in bookings? It sounds like from your commentary that that the Aesynt bookings could actually be down some in 2016, just because of the transition, but is there a 2015 number do you have on hand?

That’s only for – what I can tell you is that on a combined basis, we’re expecting to be roughly up 15% organically, 2016 versus combined 2015.

Okay. So does that imply that the strong mid double-digit growth if you’re actually [pro-forming] [ph], when you say that you’re actually [pro-forming] [ph] a 2015 number for the two businesses combined, or when you say organic, are you just looking at the legacy Omnicell business?

Yes, both businesses combined off of that number.

Up 15%.

Up 15%. And actually after we’ve combined the business, it’s difficult to track if an Aesynt customer now buys an Omnicell product who switches over to an Omnicell product or vice versa, you can’t – it’s hard to track, which products people are buying based on which customers, because they may just – they may be originally an Aesynt customer ad now they’re buying Omnicell products and vice versa. But overall, it’s a strong growth profile for next year.

Okay, that’s great. And then maybe just one more Randy. Could you touch on what Greenfield opportunity really remains at this point maybe especially in the U.S.? And you obviously had a very good year in 2015 signing either competitive conversion or Greenfield deals. Do you think 2016 will shape up in a similar manner, or might we see a kind of a shift back toward the existing customer base driving higher percentage of bookings? I’ll leave it there. Thanks.

Well, yes, that’s a great question. Actually, we see consistently strong competitive conversions and more Greenfield, probably less on the Greenfield side because of just less of it. We also count on the A&A side Greenfield accounts on the international side, which is contributing to that number mostly. But inside the U.S., it’s mostly competitive conversion. Now that – since we’ve combined with Aesynt, we used to convert them as a competitor and now obviously they are inside the family. So the competitive conversion rate and actually we believe will drop around 25% that’s not because we were less competitive, it’s that the competitive conversions are now internal, if you will.

Your next question comes from Steve Halper with FBR.

Questions, first, when you look at the Aesynt business, obviously on a segment basis, right, it’s all going to go into automation, right, and not the other, the adherence sector, is that correct?

Correct.

Okay. So then when you look at the Aesynt revenue, what was the mix between your traditional segments on the income statement product versus service?

For 2015 or looking forward to 2016?

Just for 2015, just to give us some flavor as to what it’s going to look like in 2016?

Yes. I think [indiscernible] back on that as well. So the way to think about it number wise is that, the Omnicell legacy business had about 30% or has about 35% pure recurring revenue between maintenance service and the consumables. If you add on the Aesynt business, that’s a – that business is 50-50 between product and recurring revenue from services, so…

Right. So it’s got a higher level, right, it’s got a higher level of service attached to it because of the robot staffing right?

Exactly, correct.

Correct.

Okay. So then what was the – do you have an estimate yet for what the amortization expense will be relating to the Aesynt acquisition?

Yes, we do. We’ll disclose of in actuals, but you should – we’re still of course doing the purchase price accounting and making sure we got a good estimate there. But initial indications on intangible amortization about $12 million for the acquisition for the year.

And I guess the only other – when you look at the last disclosure, this is my last question, when you indicated that the latest 12 months for Aesynt would be $190 million?

Right.

I’m assuming, it came in at 190 from whatever point of time you are measuring it. But and understanding that it’s hard to measure with any exact – in an exact form but based on some of those delays that you talked about, would that number be down the $190 million, or it’s too difficult to…?

No. So we’re – no, it’s a fair question. So we are finalizing the audit for Aesynt for calendar 2015, if you will, but it’s roughly in that ballpark, the LTM that we disclosed earlier it should be roughly in line with $190 million mark for calendar 2015.

But would that number decline because of some of those delays, or we are not going to be able to see any of that sort of breakdown?

Yes. So, like we commented on earlier, we really see it as one business now. We have some customers switching bookings actually between products, and so we are not measuring it kind of separately from that perspective.

We are not disclosing exact numbers. But there’s some assumption that most of the delays in the revenue conversion rate are from former Aesynt customer.

Yes.

So that’s the fact, right. So we are not losing the business, we’re just moving the product choices around, yes.

.:

Thanks for taking the question. We haven’t touched on the M5000. Can we get an update on that product development and when we expect that to launch?

Yes, I think, as I said publicly recently that the data completes this quarter and then is available Q2, and we feel like things are on schedule for that and getting good feedback.

Okay, great. And did you give a number for the percentage of G4 conversions?

We are at the end of the year at 78%, the 77.7%, I believe.

Was it 77% or 78%?

77.7%.

77.7%, very good.

Yes, go ahead.

Just the – given the overall color or tenure of your comments during this call, it sounds like the signings your ability excited about the changes of signings particularly in January entering this year? Can you give us a sense? Is that particularly high, usually high, or as this within the general positive trends that Omnicell has been experiencing?

Well, I think we are definitely finishing the year at high of 41% of annualized conversion rate is a record. And we’ve been very pleased with that kind of result in the marketplace. And I would just say that we continue to see that kind of success, and our pipeline is indicating that and gives us the confidence about 2016.

Your next question comes from Gene Mannheimer with Topeka Capital.

Thanks. Good afternoon, and congrats on a good finish and closing the Aesynt deal. So I wanted to go back to the prior question on the Aesynt contribution. So if we use that $190 million number, let’s talk about, then your combined guidance implies that core business be about 5%, 10% this year, up around 6%. So that’s below the high single-digit growth that your customer is seeing. Can you help reconcile that for us, am I looking at that the right way?

Well, you are and I think we said it was a transitional year. And what we mean by that, the bookings is still strong, continuing on. But we see a delay in some of the customers moving from bookings to revenue mainly out of the former Aesynt customer base that – not contribute get through this year to get through some of these transition. So it’s muting the revenue slightly for the year.

Your next question comes from [indiscernible] with Fidelity.

Hi. I just was hoping if you can give me a sense as to the $10 million of integration expenses. How we should look for that to flow through 2016? Is most of it going to be in the first quarter, or is it bit a much spread out?

It’s a fairly clear spread over the quarters.

Okay. And, again, if we had to look back in terms of this last quarter on the gross margin coming in little. Again it’s pretty much the issues you addressed already or was there anything else in the quarter?

No not specifically they’re little bit less over half cost absorption. We do have an upward trends in gross margin in medication adherence if I look at the different months and so October, November, December to the quarter so yes so we feel good about margins going forward.

[Operator Instructions] Your next question comes from Sean Wieland with Piper Jaffray.

Hi thanks you mentioned the sales force realignment, that you’re going to be going through. Can you just expand on what you’re doing there?

Yes I think we definitely today we for the first 90 days we get the sales force structure in place so that the former Aesynt employees could focus on closing their deals for the quarter obviously all could close focus on closing their stuff for Q1. And then beginning of April we’re going to rationalize the sales force into single face to the customer that’s more territory realignment so we don’t have overlaps like we have today.

And so can you give me a sense of what percentage of territories will be impacted from that?

I think it’s going to allow us to actually expand I don’t think we’re going to disrupt the geographic territories at the corporate levels, but we are going to expand sort of our name to count executives, which allows us to give dedicated accounts to key account that we haven’t had in the past. So I don’t think the disruption is going to be as big. But we will still make sure that people team up on former accounts to work together to have some overlapping commissions to pay up for both groups for the end of year make sure we don’t lose focus or lose contact with key accounts.

Okay and then just one more quick one on M5000 so you said I think to begin and complete this quarter and shifts in Q2 have you achieved customer acceptance on the product yes?

No but we’ve got several demarcation points and we’re on the last and we done two and got one left and we feel confident about getting that before the end of the quarter.

Okay fine. Thank you very much.

Okay.

Your next question is a follow-up from Matt Hewitt with Craig-Hallum Capital.

Hi, thanks I guess just a question about the general health. There was questions in Q3 I think there were some early in January regarding the health of the customer hospitals purchasing patterns maybe an update on what you’re seeing, what you’re hearing from the customers as far as spending expectations for 2016. Thank you.

No I think IT budgets are strong I think we see a lot of continued consolidation and the execution of rationalization of groups of hospital and IDNs providers, and patient, outpatient coming together and all of that activity, which is a really a macro trend is driving people to standardize on medication management strategies to reduce costs and put in best practices, which is historically is just been hospital by hospital, but now they’re trying to put incorporate best practices and they’re more and more engaging us to do that for them not just figure out the work flow, but how to institute those best practices. And so we really feel like there hasn’t been a slowdown in either engagement or funds allocated toward a specific area of growth in hospital spending.

Good. Thank you.

Your next question comes from Mohan Naidu with Oppenheimer.

Randy, Peter, thanks for taking my questions. I apologize if this has been asked already. I’m just joining late. With the new guidance, Randy, you had a long-term target of 15% growth and 15% margin. How should we look at coming back to those levels like how are you thinking about with this new acquisition?

Well, obviously this year was the additional burden of the integration costs and to mobilize some people as we work through the synergies. We’re around 13% this year and obviously next year we’re going to do better than that. We are not committing to what those are, but we should expect improvement. And as we – we’re committed to those targets, it’s very important to us. And as we look to get closer to 2017, we’ll have a better understanding of that, but especially we know for sure, it’s going to be an improvement over.

Got it.

13%, 14%, yes.

Yes. Maybe one question around the bookings commentary you made, Randy. You said you had some weakness in the beginning of the quarter, but it picked up towards the end. Is that the same weakness, I mean, should we think about this as you saw continued weakness from Q3 into Q4, but at the end of the Q4, it picked backup, and is it back to levels that it was in the beginning of 2015?

Yes, I think that, yes, we’ve had a really strong closeout to Q4, which has just continued to ride on into Q1, obviously, with the two announcements that we made on University of Wisconsin and Penn University closed almost first week or two of the quarter there is just a good sign of momentum that we have- we have strong pipeline. So we feel good about pretty our guidance in place and executing to the plan that we’ve now got before us.

Got it. Peter, maybe one quick question around backlog. Did you give out a year-end backlog number?

No, we don’t.

Okay. And I’m presuming somebody asked about the booking split into 2016 guidance between your core and Aesynt, I’ll check the transcript back.

We’re not providing that. It’s A&A business is one combined business.

All right. Thank you very much for taking my questions.

You bet.

At this time there are no further questions. I’ll turn the call back over to Randy Lipps for any closing remarks.

Thanks, everybody, joining the call. We’re really excited about the Aesynt acquisition, it’s already been 30 days, and we’ve already seen some just great results, spending time with customers, and employees, and all the things that we have before us. It’s just an exciting time to be at Omnicell, and being able to drive growth and really deliver on solutions for what customers need in order to get through the next phase in healthcare. Thanks for joining us today and see you next time.

Thank you for your participation. This concludes today’s conference call. You may now disconnect.