Al right. Welcome, everybody. My name is Stan Berenshteyn. I cover healthcare technology at Wells Fargo. With me today is Nnamdi Njoku, he is 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, Stan, definitely for inviting us. We are excited to be here at the conference. Really appreciate the invite. Also, during the course of this presentation, we will 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. With that, turn it over.
Awesome. Well, maybe we will kick it off to Nnamdi first.
Okay.
First of all, congrats on the new title.
Thank you.
I'd love for you to tell us, since you've joined the company, what you've learned. What are you most excited about? Maybe we can take it from there.
All right. Well, thanks for having us here today. I appreciate the congratulatory message here. 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 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. I know we've put this out there a number of times, that it's hard to get really the clinical and operational objective of a health system right without getting medication management where it needs to be.
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 XT 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. 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 Baird 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. Excited to be here.
Awesome. Baird, you joined recently. The company's been in an important transition point right now, moving from stabilizing the core business and coming up to a new refresh cycle. 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. 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. 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.
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. I'm very impressed with the rigor of the management team, their willingness to think about things through the lens of the investor, and that's been a great place for us to be, and it's a good foundation for us heading into this new cycle.
Awesome. We'll definitely dive into some of those topics shortly here. 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 what do you think is the most misunderstood element of the narrative? There's a lot of moving pieces here but would love to get your thoughts on that.
Well, I'll tell you, just to pick up on something Baird said. When I was evaluating the opportunity to come to Omnicell and having joined the company, something's flying around here. 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. Even if it's just to 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.
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. 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. That's something that continues to shine through in our focus every day. I'd say the areas where we need to continue to sort of enhance is what I'm calling customer experience. 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. That's going to be an area that 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, 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. 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 we've set up nicely to take advantage of where we are right now for this next refresh.
Great. Maybe that is a lead-in for Baird. You lowered the bottom end of the booking's guidance. You continued to call out a very strong pipeline. Can you just bridge the two? Are you confident that this was just like a timing issue on your guidance? What is your visibility in the pipeline converting eventually?
Yeah, a couple things there. We are really encouraged by the multi-year journey that we are on. We know that our installed base will refresh on their timeline.
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 doubled 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 are well-informed about our direction. They have had a chance to demo our product and see the software and hardware interfacing in a software environment. They have been able to interact with customers who have experienced the cloud solution in those early accounts that we have landed. As we sit here today, I feel really good about the multi-year journey we are on.
I also look at the pipeline, and as it has evolved over the course of the year, I have been 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 am really excited about the size of the pipeline.
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 will end on December 31st of this year.
What we wanted to do is flag a number of medium and large-size 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 this fly that just keeps
This fly is monstrous. Okay, well, that's helpful. If we think about mental models, investors think about the refresh cycle that's coming up. They're kind of thinking about, okay, well, what was the prior refresh cycle like?
Prior refresh cycle is a G-Series. It was a very dated product.
XT is pretty new, relatively new. You have the XTExtend 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 a few things that we learned as part of the last cycle. You called out the fact that the G-Series was a bit older before we introduced XT. We're in a situation here where the XT platform is relatively younger than when we did this in the G-Series. The fact that we announced it early was very intentional. 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. 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 make a choice. They had to basically move to the new platform.
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 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.
In other words, what I'm basically saying is every account out there has a conversation that we can bring to them to move them to the ultimate solution, which is the new platform we have, as well as the OmniSphere cloud platform. That's 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, 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. This refresh cycle, I think, is very unique in the fact that your primary competitor, Pyxis, out of Becton, they are also refreshing their cabinets. 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?
That is a good. I will kick off. When I take a step back and I think about what is going to be required to win, there are three things that come to mind that is a confluence of where we are right now. The first is around customers feeling like there is a solution that has been architected that is going to give them the ability to solve the problems that they have 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 help sort of optimize inventory, fleet management, cybersecurity, workflow, and intuitive sort of user interfaces. 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 is not about just implementing the first time. It is about supporting a customer through the life cycle of the usage of the product. The ability to really deliver and optimize an enhanced customer experience such that they understand that you are going to 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. Then the third thing is financing flexibility. Everybody knows they have to run their business and make capital decisions. When I think about those three elements, I really feel like putting together that equation is what is going to be required to win, and that is a lot of things that we have 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 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 Pyxis?
Yeah. From all the market intelligence that we've been able to gather, 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 competitor's 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 to gain market share with.
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. As we enter this 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. The financing piece is just a nice enablement of it in my mind.
How do you ensure that the balance sheet can manage the leasing component?
Yeah. So we've got almost $300 million of cash on the balance sheet as we exited Q2. We've got access to a line of capital that exists currently. We know that the market dynamics are such that leasing is much more prevalent in our competitor's environment than in our own. It'd be a great problem to have to cap out our capacity. It would certainly mean a lot of market share gain. 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. It is always a fight. 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.
I think that ultimately helps the health systems get the best out of all participants in the marketplace.
Nnamdi, have you found that leasing changes the outcome of an RFP process? Is that something that actually, down to the line, it could swing a client one way or another?
So it could. The way I would describe it is, it is not the thing that will get you to win a deal. It is the thing that keeps you in the hunt and the fight. And when it comes down to it and you have checked all the other elements, clinically, operationally, service, it could be the thing that gets you across the finish line.
Okay
is the way I would describe it.
Related to the Titan refresh cycle, you have announced OmniSphere, which it is really, I think, coming to market early next year.
Yep.
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 is the rubric that we should be thinking about here?
What I will say is, I always have a hard time splitting those two things, and I will tell you why. Because I think having a reliable hardware is a critical piece of the infrastructure. It allows you to sort of do all the things that OmniSphere will enable us to do. I do not know that I would say it is more important or less important. They have to work together. That is the first thing. Now, what I will say is OmniSphere, as designed, that we intend to GA in the first half of next year, in my view, is 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. I really feel like we have worked really hard to design the system in a way that is going to resonate and is resonating with customers. But it has to work with a reliable hardware system because you cannot deploy just a software-only solution to manage your medication, at least as of today. We are excited, and I think that OmniSphere is going to be the platform that we will continue to build upon and connect further devices 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 have said you are still trying to pinpoint the pricing strategy there and what will ultimately happen. I do not 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. 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-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. Think of this as a journey over time on the top line, vis-à-vis attach rates to new sales or bridging over of our existing installed base that is enabled through our XTExtend console upgrade. Then think about as we get this flywheel of experience and usage going, there will be a scalability moment in which it should punch above its weight in terms of EBITDA. Those things moving forward will provide more guidance as we go forward, but I am 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. Baird, you are investing across various products, right? Titan, OmniSphere. You are investing in your commercial capabilities. At the same time, you are saying, I think we started the talk, you are focused on margins. You are focused on margin expansion. How are you balancing your need to invest and reinvest at the same time while managing a positive trajectory on margin expansion?
I think it is threefold. One, it is important to have alignment at the executive level, and we have that. We understand the importance of the Titan XT hardware refresh and the OmniSphere opportunity in front of us. Having high-quality products ready for timely release and a sales force that is 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. The second thing we have done is we have identified opportunities within our cost areas, so outside of that innovation or new product launch cycle to our traditional back-office and support capabilities.
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 are 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. 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. We are continuing to double down on that.
We've heard our investors loud and clear on this. I'd say the last part of this is, this is part of being new to an organization. At one year in for me and two years in for Nnamdi, 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. 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.
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. I think those are three things that are pretty important.
Okay, if we pull back a little bit, I'm just curious if the conversations that you're having with clients-
Yep
is there anything that's changed in what you're discussing with them, their eagerness in talking about their roadmap versus maybe a year ago? Has anything- Obviously, they're getting more seasoned and closer to the upgrade cycle. But outside from that, just from a macro lens, like-
Yeah
How are health systems positioned, and what are the conversations like?
I do not know that. Well, number one, prior to the announcement, yes, we were engaging customers, but it was not as rich as what we see today because we had not been as transparent about where the roadmap was. Fast-forward post the announcement, now there is clarity of where we are taking the company and where we are taking the roadmap. I would say I like where the conversations are because it is not only about, "Hey, I am promising you something." It is we can actually give them the experience that they are going to get should they make the decision to move to Titan XT and OmniSphere. We have had a handful of customers who have been on it, so those customers are our reference customers as they help us shape the work that we are doing before we get to GA.
With regards to what we are hearing from them, I would say that the OmniSphere conversations are, in my view, very positive because a lot of times, when they are articulating the things that they have always been looking to this community of players, BD as well as ourselves, to deliver, it has not been a mystery.
We have been talking about the concept of the Autonomous Pharmacy and the autonomous medication management for a 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. I think those conversations, they are positive. It is landing well. But the pipeline is robust. Now I look forward to driving that into bookings and ultimately into revenue. But the response, I would say, has been very good.
The clarity is resonating now, and the specific value proposition around the elements of the solution is also resonating.
Awesome. To close, Baird, if you can maybe just comment on your capital allocation priorities over the next 12 months or so.
Yeah. 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. We view the use of capital to bring that product to bear in the best possible light and also to use 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.
We're being mindful about how we make those decisions and making sure we hold ourselves accountable to a high bar. So those are 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 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 end it here. Thank you for joining us. Thanks, everybody. Awesome.
Thank you.
Thanks, Stan. Appreciate it.