What changed in this filing

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Item 9A. Controls and Procedures

2021-02-24 compared with 2020-02-26 · 525 added, 449 removed, 1191 unchanged (45% of the section changed)

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Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2020.

Deloitte & Touche LLP, an independent registered public accounting firm, has issued its attestation report on our internal control over financial reporting as of December 31, 2019, which is included in Part IV, Item 15 of this annual report.

Deloitte & Touche LLP, an independent registered public accounting firm, has issued its attestation report on our internal control over financial reporting as of December 31, 2020, which is included in Part IV, Item 15 of this annual report on Form 10-K.

Changes in Internal Control over Financial Reporting

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OTHER INFORMATION

Certain information required by Part III is omitted from this annual report because the registrant will file with the U.S.

Securities and Exchange Commission a definitive proxy statement pursuant to Regulation 14A in connection with the solicitation of proxies for Omnicell’s Annual Meeting of Stockholders expected to be held in May 2020 (the “Proxy Statement”) not later than 120 days after the end of the fiscal year covered by this annual report, and certain information included therein is incorporated herein by reference.

Certain information required by Part III is omitted from this annual report on Form 10-K because the registrant will file with the United States Securities and Exchange Commission a definitive proxy statement pursuant to Regulation 14A in connection with the solicitation of proxies for Omnicell’s Annual Meeting of Stockholders expected to be held in May 2021 (the “Proxy Statement”) not later than 120 days after the end of the fiscal year covered by this annual report on Form 10-K, and certain information included therein is incorporated herein by reference.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item with respect to directors and executive officers may be found under the heading “Information About Our Executive Officers” in Part I, Item 1 of this annual report, and in the sections entitled “Board and Corporate Governance Matters—Election of Directors” and “Board and Corporate Governance Matters—Information about our Directors and Nominees” appearing in the Proxy Statement.

The information required by this Item with respect to directors and executive officers may be found under the heading “Information About Our Executive Officers” in Part I, Item 1 of this annual report on Form 10-K, and in the sections entitled “Board and Corporate Governance Matters—Election of Directors” and “Board and Corporate Governance Matters—Information about our Directors and Nominees” appearing in the Proxy Statement.

Such information is incorporated herein by reference.

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EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

The following documents are included as part of this annual report:

The following documents are included as part of this annual report on Form 10-K:

(1) Consolidated Financial Statements:

Index to Financial Statements Page Number

Index to Financial Statements Page

Reports of Independent Registered Public Accounting Firm

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Change in Accounting Principle

As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for leases in fiscal year 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases .

Effective January 1, 2019, the Company changed its method of accounting for leases due to the adoption of ASC Topic 842, Leases .

Basis for Opinion

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Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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These estimates require management judgment and are impacted by market and economic conditions, technology changes, and new product introductions.

The Company had a consolidated inventory balance of $108.0 million as of December 31, 2019.

We identified the inventory valuation as a critical audit matter because of the assumptions and judgments made by management to estimate the excess and slow-moving inventory, especially considering the presence of various inventory types and evolving product life cycles.

The analysis of inventory valuation required a high degree of auditor judgment and an increased extent of

effort when performing audit procedures to evaluate qualitative and quantitative factors considered and the reasonableness of the relevant management judgments.

The Company's consolidated inventory balance is $96.3 million as of December 31, 2020.

The analysis of inventory valuation required a high degree of auditor judgment when performing audit procedures to evaluate qualitative and quantitative factors considered and the reasonableness of the relevant management judgments.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures over the inventory valuation included the following, among others:

• We tested the effectiveness of internal controls over inventory valuation.

• We tested the effectiveness of controls over inventory for valuation.

• We evaluated the appropriateness of management’s method, assumptions, and judgments used in developing their estimate of the excess and slow-moving inventory, which included consideration of demand for its products, potential obsolescence of technology, product life cycles, and pricing trends.

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The Company capitalizes certain costs for software that is to be sold, leased, or otherwise marketed once technological feasibility has been established and amortizes these costs over the estimated lives of the related products.

The Company capitalized $45.8 million of software development costs in the year ended December 31, 2019, and had total capitalized software development costs, net of accumulated amortization, of $85.1 million as of December 31, 2019.

We identified management’s determination of capitalized software development costs to be a critical audit matter.

The determination of whether a project’s software development costs are capitalized or expensed could have a significant impact on the financial statements.

Evaluating management’s determination of the project and related software development activities to be capitalized under relevant accounting guidance, including the extent to which software development costs incurred were capitalized, required subjective auditor judgment.

The Company capitalized $32.0 million of software development costs in the year ended December 31, 2020 and had total external capitalized software development costs, net of accumulated amortization, of $94.0 million as of December 31, 2020.

We identified management’s determination of capitalized software development costs to be a critical audit matter.

Evaluating the Company’s determination of the project and related software development activities to be capitalized under relevant accounting guidance, including the extent to which software development costs incurred were capitalized, required subjective auditor judgment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures to assess the appropriateness of capitalized software development costs included the following, amongst others:

• We tested the effectiveness of management’s capitalized software development cost internal controls.

Our audit procedures to assess the appropriateness of capitalized software development costs included the following, among others:

• We tested the effectiveness of management’s capitalized software development cost controls.

• We obtained an understanding of management’s process for evaluating software development costs and the nature of software development costs capitalized.

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• For a sample of software development projects, we obtained an understanding of the new software enhancements and features planned for development by reviewing management’s project documentation and inquiring of project managers and engineers.

• For a sample of software development projects, we tested the timing of software development cost recognition as either a capitalized or an expensed development cost, depending on which stage of the project the software development cost was incurred.

We also inquired of project managers and engineers regarding the determination of the date technological feasibility was reached and observed new features developed in the working model.

We also inquired of project managers and engineers regarding the date technological feasibility was reached and observed the new features developed in the working model.

/s/ DELOITTE & TOUCHE LLP

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and our report, dated February 26, 2020, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s change in its method of accounting for leases in fiscal year 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases .

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated February 24, 2021, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s change in its method of accounting for leases in fiscal year 2019 due to the adoption of ASC Topic 842, Leases .

Basis for Opinion

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Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

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Other long-term liabilities 19,174 11,718

Long-term debt 50,000 135,417

Revolving credit facility — 50,000

Convertible senior notes, net 467,201 —

Total liabilities 857,001 395,556

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42,783 and 42,132 shares outstanding, respectively

Treasury stock at cost, 9,145 shares outstanding, respectively

Treasury stock at cost, 9,894 and 9,145 shares outstanding, respectively

( 238,109 ) ( 185,074 )

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Net income — — — — — 37,729 — 37,729

Other comprehensive income — — — — — — 3,406 3,406

Other comprehensive loss — — — — — — ( 4,741 ) ( 4,741 )

At the market equity offering, net of costs 557 1 — — 39,566 — — 39,567

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Tax payments related to restricted stock units — — — — ( 6,775 ) — — ( 6,775 )

Cumulative effect of a change in accounting principle related to share-based compensation — — — — — 1,582 — 1,582

Income tax benefits from employee stock plans — — — — 11 — — 11

Balances as of December 31, 2018 49,480 50 ( 9,145 ) ( 185,074 ) 678,041 197,454 ( 10,854 ) 679,617

Net income — — — — — 61,338 — 61,338

Other comprehensive loss — — — — — — ( 4,741 ) ( 4,741 )

Other comprehensive income — — — — — — 1,408 1,408

At the market equity offering, net of costs 460 — — — 37,806 — — 37,806

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Other comprehensive income — — — — — — 3,924 3,924

At the market equity offering, net of costs 460 — — — 37,806 — — 37,806

Share-based compensation — — — — 44,697 — — 44,697

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Tax payments related to restricted stock units — — — — ( 8,738 ) — — ( 8,738 )

Stock repurchases — — ( 749 ) ( 53,035 ) — — — ( 53,035 )

Equity component of convertible senior note issuance, net of issuance costs — — — — 97,830 — — 97,830

Purchase of convertible note hedge — — — — ( 100,625 ) — — ( 100,625 )

Sale of warrants — — — — 51,290 — — 51,290

Tax benefits related to convertible senior notes and convertible note hedge — — — — 706 — — 706

Cumulative effect of a change in accounting principle related to credit losses — — — — — ( 264 ) — ( 264 )

Balances as of December 31, 2020 52,677 $ 53 ( 9,894 ) $ ( 238,109 ) $ 920,359 $ 290,722 $ ( 5,522 ) $ 967,503

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Share-based compensation expense 44,697 34,049 28,885

Income tax benefits from employee stock plans — — 11

Deferred income taxes ( 6,546 ) ( 1,339 ) ( 5,705 )

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Amortization of debt issuance costs 1,597 2,204 2,292

Amortization of discount on convertible senior notes 4,766 — —

Changes in operating assets and liabilities:

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Investing Activities

Purchase of intangible assets, intellectual property, and patents — — ( 160 )

Software development for external use ( 32,024 ) ( 45,770 ) ( 30,677 )

Purchases of property and equipment ( 22,842 ) ( 15,894 ) ( 23,697 )

Business acquisitions, net of cash acquired — — ( 4,446 )

Business acquisition ( 225,000 ) — —

Net cash used in investing activities ( 279,866 ) ( 61,664 ) ( 54,374 )

Financing Activities

Proceeds from debt and revolving credit facility — — 59,000

Proceeds from revolving credit facility 150,000 — —

Repayment of debt and revolving credit facility ( 200,000 ) ( 90,000 ) ( 77,000 )

Payments for debt issuance costs ( 2,321 ) — ( 2,106 )

Payment for contingent consideration — — ( 2,400 )

At the market offering, net of offering costs 37,806 39,567 13,900

Payments for debt issuance costs for revolving credit facility ( 550 ) ( 2,321 ) —

Proceeds from issuance of convertible senior notes, net of issuance costs 559,665 — —

Purchase of convertible note hedge ( 100,625 ) — —

Proceeds from sale of warrants 51,290 — —

At the market equity offering, net of offering costs — 37,806 39,567

Proceeds from issuances under stock-based compensation plans 54,270 40,706 30,611

Employees’ taxes paid related to restricted stock units ( 8,738 ) ( 9,670 ) ( 6,775 )

Net cash used in financing activities ( 23,479 ) ( 13,597 ) ( 9,877 )

Stock repurchases ( 53,035 ) — —

Change in customer funds, net 3,992 — —

Net cash provided by (used in) financing activities 456,269 ( 23,479 ) ( 13,597 )

Effect of exchange rate changes on cash and cash equivalents 437 153 ( 1,227 )

Net increase (decrease) in cash and cash equivalents 60,018 34,768 ( 22,064 )

Cash and cash equivalents at beginning of period 67,192 32,424 54,488

Cash and cash equivalents at end of period $ 127,210 $ 67,192 $ 32,424

Net increase in cash, cash equivalents, and restricted cash 362,710 60,018 34,768

Cash, cash equivalents, and restricted cash at beginning of period 127,210 67,192 32,424

Cash, cash equivalents, and restricted cash at end of period $ 489,920 $ 127,210 $ 67,192

The accompanying notes are an integral part of these Consolidated Financial Statements.

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(In thousands)

Reconciliation of cash, cash equivalents, and restricted cash to the Consolidated Balance Sheets:

Cash and cash equivalents $ 485,928 $ 127,210 $ 67,192

Restricted cash included in Other current assets 3,992 — —

Cash, cash equivalents, and restricted cash at end of period $ 489,920 $ 127,210 $ 67,192

Supplemental cash flow information

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Supplemental disclosure of non-cash activities

Non-cash activity business acquisition $ — $ — $ 3,400

Unpaid purchases of property and equipment $ 405 $ 913 $ 1,123

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Transfers from prepaid expenses to property and equipment $ — $ 3,313 $ —

Right-of-use assets obtained in exchange for new operating lease liabilities $ 1,204 $ — $ —

Balance transfer from term loan to revolving credit facility $ — $ 80,000 $ —

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Generally Accepted Accounting Principles (“GAAP”) and include all adjustments necessary for the fair presentation of the Company’s consolidated financial position, results of operations, and cash flows for the periods presented.

During 2019, the Company completed a series of intercompany transactions in connection with an internal legal entity restructuring to simplify its organizational structure as described below.

In November 2019, Aesynt Holding B.V.

sold its shares in Aesynt Holdings, Inc.

("Aesynt Holdings") to Omnicell International, Inc.

(which was subsequently converted into a limited liability company and renamed Omnicell International, LLC) ("Omnicell International").

Omnicell International subsequently distributed the Aesynt Holdings shares to its parent company, Omnicell, Inc.

On December 31, 2019, the following series of mergers occurred:

(i) Dixie Drawl, LLC d/b/a InPharmics ("InPharmics") merged with and into its parent company, Aesynt Incorporated ("Aesynt"), with Aesynt as the surviving entity;

(ii) Aesynt merged with and into its parent company, Aesynt Holdings, with Aesynt Holdings as the surviving entity;

and (iii) Aesynt Holdings merged with and into its parent company, Omnicell, Inc., with Omnicell, Inc.

as the surviving entity.

On November 25, 2019, Aesynt Canada, Inc.

("Aesynt Canada") entered into an asset purchase agreement with Omnicell, Inc., under which Omnicell, Inc.

acquired all assets of Aesynt Canada.

On November 29, 2019, Aesynt Canada liquidated into its parent company, Aruba S.r.l ("Aruba").

Prior to the liquidation, all liabilities of Aesynt Canada were settled.

On November 21, 2019, Ateb Canada Ltd.

("Ateb Canada") entered into an asset purchase agreement with Ateb, Inc.

("Ateb"), under which Ateb acquired all assets of Ateb Canada.

On November 25, 2019, Ateb Canada liquidated into its parent company, Omnicell, Inc.

Prior to the liquidation, all liabilities of Ateb Canada were settled.

The transactions described above were accounted for as transactions between entities under common control as all entities involved were wholly owned subsidiaries of Omnicell, Inc.

The transactions did not have a material impact to the Company's Consolidated Financial Statements.

Principles of Consolidation

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All intercompany accounts and transactions have been eliminated in consolidation.

On April 12, 2017, the Company completed its acquisition of InPharmics.

The Consolidated Financial Statements include the results of operations of this recently acquired company, commencing as of its acquisition date.

On October 1, 2020, the Company completed its acquisition of the 340B Link business (the “340B Link Business”) of Pharmaceutical Strategies Group, LLC.

The Consolidated Financial Statements include the results of operations of this recently acquired company, commencing as of the acquisition date.

The significant accounting policies of the acquired business have been aligned to conform to the accounting policies of Omnicell.

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Certain prior-year amounts have been reclassified to conform with current-period presentation.

These reclassifications include (i) a change in the presentation of proceeds from debt and revolving credit facility and payments for debt issuance costs in the Consolidated Statements of Cash Flows for the year ended December 31, 2017, and (ii) a change in the presentation of certain items in the reconciliation of the provision for income taxes for the years ended December 31, 2018 and 2017 in Note 16, Income Taxes , of the Notes to Consolidated Financial Statements.

These reclassifications include (i) a change in the presentation of certain items in the disaggregation of revenues for the years ended December 31, 2020, 2019, and 2018 in Note 3, Revenues, and (ii) a change in the presentation of certain items in the reconciliation of the provision for (benefit from) income taxes for the years ended December 31, 2019 and 2018 in Note 17, Income Taxes .

These changes were not deemed material and were included to conform with current-period classification and presentation.

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GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s Consolidated Financial Statements and accompanying Notes.

Management bases its estimates on historical experience and various other assumptions believed to be reasonable.

Management bases its estimates on historical experience and various other assumptions believed to be reasonable, including any potential impacts from the COVID-19 pandemic.

Although these estimates are based on management’s best knowledge of current events and actions that may impact the Company in the future, actual results may be different from the estimates.

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Those policies are revenue recognition;

accounts receivable and notes receivable from investment in sales-type leases;

accounts receivable, unbilled receivables, and notes receivable from investment in sales-type leases;

operating lease right-of-use assets and liabilities;

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fair value of assets acquired and liabilities assumed in business combinations;

convertible senior notes;

share-based compensation;

and accounting for income taxes.

As of December 31, 2020, the Company is not aware of any events or circumstances that would require an update to its estimates, judgments, or revisions to the carrying value of its assets or liabilities.

Given the ongoing uncertainty surrounding the COVID-19 pandemic, events or circumstances may arise that could result in a change in estimates, judgments, or revisions to the carrying value of the Company’s assets or liabilities.

Segment Reporting

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.

The Company's Chief Operating Decision Maker ("CODM") is its Chief Executive Officer.

The CODM allocates resources and evaluates the performance of the Company using information about its revenues, gross profit, income from operations, and other key financial data.

The Company previously operated and reported its business in two segments:

Automation and Analytics, and Medication Adherence.

In the fourth quarter of 2018, the Company introduced the vision of the autonomous pharmacy, a more fully automated and digitized system of medication management, in order to address changes in the healthcare industry as the Company executes on its plan to deliver end-to-end solutions with greater emphasis on automating manual processes for its customers.

These industry changes include the continuing consolidation of healthcare systems, rising pharmaceutical costs, and increased scrutiny on controlled substances.

In an effort to deliver on its strategic vision, the Company initiated a company-wide organizational realignment in the fourth quarter of 2018 to centrally manage its business operations, including the development and marketing of all of the Company’s products, sales and distribution, supply chain and inventory management, as well as regulatory and quality functions.

As a result of this organizational realignment, all significant operating decisions are based upon an analysis of the Company as one operating segment.

Therefore, effective January 1, 2019, the Company started reporting as only one operating segment, which is the same as the reporting segment.

Accordingly, prior period segment information has been revised to conform with current period presentation.

The CODM allocates resources and evaluates the performance of the Company at the consolidated level using information about its revenues, gross profit, income from operations, and other key financial data.

All significant operating decisions are based upon an analysis of the Company as one operating segment, which is the same as its reporting segment.

Foreign Currency Translation and Remeasurement

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The Company earns revenues from sales of its products and related services, which are sold in the healthcare industry, its principal market.

The transaction price of each contract with a customer is allocated to the identified performance obligations based on the relative fair value of each obligation.

The Company’s customer arrangements typically include one or more of the following performance obligations:

Software-enabled equipment that manages and regulates the storage and dispensing of pharmaceuticals, consumable blister cards and packaging equipment and other medical supplies.

Additional software applications that enable incremental functionality of the Company’s equipment or services.

Installation.

Installation of equipment as integrated systems at customer sites.

Post-installation technical support.

Phone support, on-site service, parts, and access to unspecified software updates and enhancements, if and when available.

Professional services.

Other customer services, such as training and consulting.

The Company’s customer arrangements typically include one or more of the following revenue categories:

Connected devices, software licenses, and other.

Software-enabled connected devices and software licenses that manage and regulate the storage and dispensing of pharmaceuticals, consumables blister cards, and packaging equipment and other supplies.

This revenue category is often sold through long-term, sole-source agreements with multi-year co-development plans.

Solutions in this category include, but are not limited to, XT Series automated dispensing systems, the XR2 Automated Central Pharmacy system, and IV compounding automation solutions.

Technical services.

Post-installation technical support and other related services, including phone support, on-site service, parts, and access to unspecified software updates and enhancements, if and when available.

This revenue category is often supported by multi-year or annual contractual agreements.

Medication adherence packaging, labeling, and other one-time use packaging including multimed adherence packaging and single dose blister cards which are used by retail, community, and outpatient pharmacies, as well as by institutional pharmacies serving long-term care and other sites outside the acute care hospital, and are designed to improve patient engagement and adherence to prescriptions.

Software-as-a-service (“SaaS”), subscription software, and technology-enabled services.

Emerging software and service solutions which are offered on a subscription basis with fees typically based either on transaction volume or a fee over a specified period of time.

Solutions in this category include, but are not limited to, EnlivenHealth (formerly Population Health Solutions), 340B solutions, and services associated with Omnicell One (formerly Performance Center), Central Pharmacy Compounding Services, including the XR2 Automated Central Pharmacy system, and Central Pharmacy Compounding Services, including IV compounding automation solutions.

The following table summarizes revenue recognition for each revenue category which is further discussed below:

Revenue Category

Timing of Revenue Recognition

Income Statement Classification

Connected devices, software licenses, and other

Point in time, as transfer of control occurs, generally upon installation and acceptance by the customer

Technical services

Over time, as services are provided, typically ratably over the service term

Point in time, as transfer of control occurs, generally upon shipment to or receipt by customer

SaaS, subscription software, and technology-enabled services

Over time, as services are provided

Prior to recognizing revenue, the Company identifies the contract, performance obligations, and transaction price, and allocates the transaction price to the performance obligations.

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A majority of the Company’s contracts are evidenced by a non-cancelable written agreement.

Contracts for consumable products are generally evidenced by an order placed via phone or a manual purchase order.

Contracts for consumable products are generally evidenced by an order placed via phone or a purchase order.

Entity can identify each party’s rights regarding the goods or services to be transferred .

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Where a written contract does not exist, the Company’s standard payment terms are net 30 day terms.

The contract has commercial substance (that is the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract.) The Company’s agreements are an exchange of cash for a combination of products and services which result in changes in the amount of the Company’s future cash flows.

The contract has commercial substance (that is the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract).

The Company’s agreements are an exchange of cash for a combination of products and services which result in changes in the amount of the Company’s future cash flows.

It is probable the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer .

The Company performs a credit check for all significant customers or transactions and where collectability is not probable, payment in full or a substantial down payment is typically required to help assure the full agreed upon contract price will be collected.

The Company often enters into change orders which modify the product to be received by the customer pursuant to certain contracts.

Changes to any contract are accounted for as a modification of the existing contract to the extent the goods and services to be delivered as part of the contract are generally consistent with the nature and type of those to be provided under the terms of the original contract.

Examples of such change orders include the addition or removal of units of equipment or changes to the configuration of the equipment where the overall nature of the contract remains intact.

The Company’s change orders generally result in the change being accounted for as modifications of existing contracts given the nature of the impacted orders.

Distinct goods or services are identified as performance obligations.

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For maintenance contracts and certain other services provided on a subscription basis, control passes to the customer over time, generally ratably over the service term as the Company provides a stand-ready service to service the customer’s equipment.

Time and material services

transfer control to the customer at the time the services are provided.

Time and material services transfer control to the customer at the time the services are provided.

The portion of the transaction price allocated to the Company’s unsatisfied performance obligations recorded as deferred revenues, net of deferred cost of goods sold, at December 31, 2020 and 2019 were $ 105.7 million and $ 98.0 million, respectively, of which $ 100.1 million and $ 90.9 million, respectively, are expected to be completed within one year and are presented as current deferred revenues, net on the Consolidated Balance Sheets.

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The portion of deferred revenues, net, not expected to be recognized as revenue within twelve months of the balance sheet date are included in long-term deferred revenues on the Consolidated Balance Sheets.

The Company often enters into change orders which modify the product to be received by the customer pursuant to certain contracts.

Examples of such change orders include the addition or removal of units of equipment or changes to the configuration of the equipment where the overall nature of the contract remains intact.

The Company’s change orders generally result in the change being accounted for as modifications of existing contracts given the nature of the impacted orders.

In the normal course of business, the Company typically does not accept product returns unless the item is defective as manufactured or the configuration of the product is incorrect.

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The allowance for sales returns is not material to the Consolidated Financial Statements for any periods presented.

The Company contracts with Group Purchasing Organizations (“GPOs”), each of which functions as a purchasing agent on behalf of member hospitals and other healthcare providers, as well as with government entities and agencies.

Pursuant to the terms of GPO agreements, each member contracts directly with Omnicell and can purchase the Company’s product at pre-negotiated contract terms and pricing.

The Company contracts with Group Purchasing Organizations (“GPOs”), each of which functions as a purchasing agent on behalf of member hospitals and other healthcare providers.

The Company also has a Federal Supply Schedule contract with the Department of Veterans Affairs (the "GSA Contract"), allowing the Department of Veterans Affairs, the Department of Defense, and other Federal government customers to purchase or lease the Company's products.

Pursuant to the terms of GPO agreements and the GSA Contract, each member or agency contracts directly with Omnicell and can purchase the Company’s products at pre-negotiated contract terms and pricing.

GPOs are often owned fully or in part by the Company’s customers, and the Company pays fees to the GPO on completed contracts.

The Company also pays the Industrial Funding Fee ("IFF") to the Department of Veterans Affairs under the GSA Contract.

The Company considers these fees consideration paid to customers and records them as reductions to revenue.

Fees to GPOs were $ 11.1 million, $ 8.7 million, and $ 7.4 million for the years ended December 31, 2019, 2018, and 2017, respectively.

The accounts receivable balances are with individual members of the GPOs, and therefore no significant concentration of credit risk exists.

During the year ended December 31, 2019, sales to members of the ten largest GPOs accounted for approximately 64 % of total consolidated revenues.

Fees to GPOs and the IFF were $ 9.7 million, $ 11.1 million, and $ 8.7 million for the years ended December 31, 2020, 2019, and 2018, respectively.

The accounts receivable balances are with individual members of the GPOs and Federal agencies that purchase under the GSA Contract, and therefore no significant concentration of credit risk exists.

During the year ended December 31, 2020, sales to members of the ten largest GPOs and Federal agencies that purchase under the GSA Contract accounted for approximately 60 % of total consolidated revenues.

Contract Assets and Contract Liabilities

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Significant changes in the contract assets and the contract liabilities balances during the period are the result of the issuance of invoices and recognition of deferred revenues in the normal course of business.

Unbilled contract assets which were invoiced during the year ended December 31, 2019 as a result of the right to invoice for the transaction consideration becoming unconditional were not material.

As a result of the right to invoice for the transaction consideration becoming unconditional, unbilled contract assets as of December 31, 2019 which were invoiced during the year ended December 31, 2020 were not material.

The contract modifications entered into during the year ended December 31, 2020 did not have a significant impact on the Company’s contract assets or deferred revenues.

Contract Costs

The Company has determined that the incentive portions of its sales commission plans require capitalization since these payments are directly related to sales achieved during a time period.

The Company has determined that certain incentive portions of its sales commission plans require capitalization since these payments are directly related to sales achieved during a time period.

These commissions are earned on the basis of the total purchase order value of new product bookings.

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A pool of contracts is defined as all contracts booked in a particular quarter.

The amortization for the capitalized asset is an estimate of the pool’s original contract term, generally one to five years , plus an estimate of future

customer renewal periods resulting in a total amortization period of ten years .

The amortization for the capitalized asset is an estimate of the pool’s original contract term, generally one to five years , plus an estimate of future customer renewal periods resulting in a total amortization period of ten years .

Costs to obtain a contract are allocated amongst performance obligations and recognized as sales and marketing expense consistent with the pattern of revenue recognition.

Capitalized costs are periodically reviewed for impairment.

A portion of the pool’s capitalized asset is recorded as an expense over the first two quarters after booking, which represents the estimated period during which the product revenue associated with the contract is recorded.

The remaining contract cost is recorded as expense ratably over the ten year estimated initial and renewal service periods .

The Company recognized contract cost expense of $ 24.4 million, $ 21.1 million, and $ 17.9 million during the years ended December 31, 2019, 2018, and 2017, respectively.

In accordance with U.S.

GAAP, while certain compensation elements are expensed as incurred, a portion of the pool’s capitalized asset is recorded as an expense over the first two quarters after booking, which represents the estimated period during which the product revenue associated with the contract is recorded.

The remaining capitalized contract costs are recorded as expense ratably over the ten year estimated initial and renewal service periods .

The Company recognized contract cost expense of $ 22.1 million, $ 24.4 million, and $ 21.1 million during the years

ended December 31, 2020, 2019, and 2018, respectively.

The commission expenses paid or due to be paid as of the consolidated balance sheet date to be recognized in future periods are recorded in long-term prepaid commissions on the Consolidated Balance Sheets.

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Operating Leases

The Company entered into certain leasing agreements that were classified as operating leases prior to the adoption of the new lease accounting standard.

Those agreements in place prior to January 1, 2019 will continue to be treated as operating leases, however, any new leasing agreements entered into on or after January 1, 2019 under these programs are classified and accounted for as sales-type leases in accordance with the new lease accounting standard.

The Company entered into certain leasing agreements that were classified as operating leases prior to the adoption of Accounting Standards Codification ("ASC") 842, Leases .

Those agreements in place prior to January 1, 2019 continue to be treated as operating leases, however, any leasing agreements entered into on or after January 1, 2019 under these programs are classified and accounted for as sales-type leases in accordance with ASC 842.

The operating lease arrangements entered into prior to January 1, 2019 are non-cancelable, and most automatically renew for successive one year periods at the end of each lease term absent written notice from the customer.

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The depreciation expense of the leased assets is recognized on a straight-line basis over the contractual term of the associated lease, and recorded in cost of revenues in the Consolidated Statements of Operations.

Allowance for Credit Losses

The Company is exposed to credit losses primarily through sales of its products and services, as well as its sales-type leasing arrangements.

The Company performs credit evaluations of its customers’ financial condition in order to assess each customer’s ability to pay.

These evaluations require significant judgment and are based on a variety of factors including, but not limited to, current economic trends, payment history, and a financial review of the customer.

The Company continues to monitor customers’ creditworthiness on an ongoing basis.

The Company maintains an allowance for credit losses for accounts receivable, unbilled receivables, and net investment in sales-type leases based on expected credit losses resulting from the inability of its customers to make required payments.

The allowance for credit losses is measured using a loss rate method, considering factors such as customers’ credit risk, historical loss experience, current conditions, and forecasts.

The allowance for credit losses is measured on a collective

(pool) basis by aggregating customer balances with similar risk characteristics.

The Company also records a specific allowance based on an analysis of individual past due balances or customer-specific information, such as a decline in creditworthiness or bankruptcy.

Actual collection losses may differ from management’s estimates, and such differences could be material to the Company’s financial position and results of operations.

The allowance for credit losses is presented in the Consolidated Balance Sheets as a deduction from the respective asset balance.

The following table summarizes the Company’s allowance for credit losses by asset type:

(In thousands)

Allowance for credit losses:

Accounts receivable and unbilled receivables $ 4,286 $ 3,227

Long-term unbilled receivables (1)

Net investment in sales-type leases (2)

_________________________________________________

(1) Included in other long-term assets in the Consolidated Balance Sheets.

(2) Includes both current and long-term portions presented in other current assets and long-term investment in sales-type leases, net, respectively.

Funds Held for Customers and Customer Fund Liabilities

With the acquisition of the 340B Link Business, the Company now offers certain products and services in which it is customary for pharmacies to owe funds to the Company which are collected on behalf of, and, after a short holding period, disbursed to, the Company’s customers.

The Company presents amounts due from pharmacies and amounts due to be disbursed to customers on a gross basis within other current assets and accrued liabilities, respectively, in the Consolidated Balance Sheets, as such amounts are expected to be settled within one year.

Any funds received from the pharmacies that are held by the Company are segregated from its other corporate cash accounts.

These funds are classified as restricted cash as the Company is contractually obligated to disburse these amounts to customers.

Sales of Accounts Receivable

The Company records the sale of its accounts receivables in accordance with accounting guidance for transfers and servicing of financial assets.

The Company transferred non-recourse accounts receivable totaling $ 58.8 million, $ 48.3 million, and $ 46.6 million during the years ended December 31, 2020, 2019, and 2018, respectively, which approximated fair value, to leasing companies on a non-recourse basis.

Accounts receivable balance included approximately $ 7.8 million and $ 4.6 million due from third-party leasing companies for transferred non-recourse accounts receivable as of December 31, 2020 and 2019, respectively.

Cash and Cash Equivalents

The Company classifies all highly-liquid investments with original maturities of three months or less as cash equivalents.

The Company’s cash and cash equivalent balances include bank accounts and highly-liquid U.S.

Government money market funds held in sweep accounts with financial institutions of high credit quality.

The Company continuously monitors the credit worthiness of the financial institutions in which it invests.

The Company has not experienced any credit losses from its cash equivalents.

Cash and cash equivalents were $ 485.9 million and $ 127.2 million as of December 31, 2020 and 2019, respectively.

As of December 31, 2020, cash equivalents were $ 447.2 million, which consisted of money market funds held in sweep accounts, and as of December 31, 2019, the Company had no cash equivalents.

Financial Instruments

1 unchanged sentence

The fair value may be based on assumptions that market participants would use in pricing an asset or liability.

authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs used in valuation techniques are assigned a hierarchical level.

The following methods were used to estimate the fair value of each class of financial instruments for which it is practical to estimate that value:

Cash and Cash Equivalents and Fair Value of Financial Instruments

The Company classifies investments as cash equivalents if their original or remaining contractual maturity is three months or less at the date of purchase.

Cash equivalents are carried at amounts that approximate fair value due to the short period of time to maturity.

The Company’s cash balances are maintained in demand deposit accounts with financial institutions of high credit quality.

The Company continuously monitors the credit worthiness of the financial institutions in which it invests.

The Company has not experienced any credit losses from its cash investments.

ASC 820, Fair Value Measurement , establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs used in valuation techniques are assigned a hierarchical level, as follows:

Level 1 – Observable inputs, such as quoted prices in active markets for identical instruments;

Level 2 – Quoted prices for similar instruments in active markets, or quoted prices for identical instruments in inactive markets;

Level 3 – Unobservable inputs for financial instruments reflecting Company’s assumptions.

Interest Rate Swap Agreements

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The Company does not hold or issue any derivative financial instruments for speculative trading purposes.

The Company's interest rate swap agreements qualify as cash flow hedging instruments in accordance with the Derivatives and Hedging topic of the Accounting Standards Codification.

The Company's interest rate swap agreements qualify as cash flow hedging instruments in accordance with ASC 815, Derivatives and Hedging .

The Company records its interest rate swap agreements on its Consolidated Balance Sheets at fair value.

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On a quarterly basis, the Company performs a qualitative assessment to determine effectiveness.

For further information, refer to Note 5, Cash and Cash Equivalents and Fair Value of Financial Instruments.

For further information, refer to Note 5, Fair Value of Financial Instruments .

As of December 31, 2020, the Company did not have any outstanding interest rate swap agreements.

On November 15, 2019, the Company entered into an amended and restated credit agreement which provides for a five -year revolving credit facility.

The amount borrowed under this facility is recorded at its carrying value at December 31, 2019.

The fair value of debt at December 31, 2019 approximates the carrying value.

Allowance for Doubtful Accounts and Notes Receivables from Investment in Sales-Type Leases

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments.

The Company records a specific allowance based on an analysis of individual past-due balances.

Additionally, based on historical write-offs and the Company’s collection experience, the Company records an additional allowance based on a percentage of outstanding receivables.

The Company performs credit evaluations of its customers’ financial condition.

These evaluations require significant judgment and are based on a variety of factors including, but not limited to, current economic trends, payment history, and a financial review of the customer.

Actual collection losses may differ from management’s estimates, and such differences could be material to the Company’s financial position and results of operations.

The retained in-house leases discussed above are considered financing receivables.

The Company’s credit policies and its evaluation of credit risk and write-off policies are applied alike to trade receivables and the net investment in sales-type leases.

For both, an account is generally past due after thirty days.

The financing receivables also have customer-specific reserves for accounts identified for specific impairment and a non-specific reserve applied to the remaining population, based on factors such as current trends, the length of time the receivables are past due, and historical collection experience.

The retained in-house leases are not stratified by portfolio or class.

Sales of Accounts Receivable

The Company records the sale of its accounts receivables in accordance with accounting guidance for transfers and servicing of financial assets.

The Company transferred non-recourse accounts receivable totaling $ 48.3 million, $ 46.6 million, and $ 40.0 million during the years ended December 31, 2019, 2018, and 2017, respectively, which approximated fair value, to leasing companies on a non-recourse basis.

Accounts receivable balance included approximately $ 4.6 million and $ 10.6 million due from third-party leasing companies for transferred non-recourse accounts receivable as of December 31, 2019 and 2018, respectively.

Inventories are stated at the lower of cost, computed using the first-in, first-out method, and net realizable value.

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The Company capitalizes costs related to computer software developed or obtained for internal use in accordance with ASC 350-40, Internal-Use Software .

Software obtained for internal use has generally been enterprise-level business and finance software that the Company customizes to meet its specific operational needs.

Software obtained for internal use includes enterprise-level business and finance software that the Company customizes to meet its specific operational needs, as well as certain costs for the development of its subscription and cloud-based offerings sold to its customers.

Costs incurred in the application development phase are capitalized and amortized over their useful lives, which is generally five years .

Costs recognized in the preliminary project phase and the post-implementation phase are expensed as incurred.

The Company capitalized $ 0.3 million and $ 1.1 million of costs related to the application development of enterprise-level software that were included in property and equipment during the years ended December 31, 2019 and 2018, respectively.

The Company capitalized $ 6.8 million and $ 0.3 million of

costs related to the application development of enterprise-level software and its subscription and cloud-based offerings that were included in property and equipment during the years ended December 31, 2020 and 2019, respectively.

Software Development Costs

The Company capitalizes software development costs in accordance with ASC 985-20, Costs of Software to Be Sold, Leased, or Marketed , under which certain software development costs incurred subsequent to the establishment of technological feasibility may be capitalized and amortized over the estimated lives of the related products.

The Company capitalizes certain software development costs in accordance with ASC 985-20, Costs of Software to Be Sold, Leased, or Marketed , under which those costs incurred subsequent to the establishment of technological feasibility may be capitalized and amortized over the estimated lives of the related products.

The Company establishes technological feasibility when it completes a detail program design or a working model.

The Company amortizes development costs over the estimated lives of the related products ranging from three to five years.

The Company amortizes development costs over the estimated lives of the related products, which is generally five years .

The Company capitalized software development costs of $ 32.0 million and $ 45.8 million, which are included in other long-term assets as of December 31, 2020 and 2019, respectively.

5 unchanged sentences

As most of its lease contracts do not provide an implicit rate, the Company uses its incremental borrowing rate based on information available at the commencement date in determining the present value of the lease payments.

Lease expense is recognized on a straight-line basis over the lease term.

The Company does not recognize a right-of-use asset and a lease liability for leases with an initial term of 12 months or less.

The Company elected the practical expedient to not separate lease components from nonlease components and applied that practical expedient to all material classes of leased assets.

Many of the Company’s operating leases include an option to extend the lease.

11 unchanged sentences

Business Combinations

The Company uses the acquisition method of accounting under the authoritative guidance on business combinations.

The Company uses the acquisition method of accounting under ASC 805, Business Combinations .

Each acquired company’s operating results are included in the Company's Consolidated Financial Statements starting on the date of acquisition.

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These estimates are based on historical experience and information obtained from the management of the acquired companies and the estimates are inherently uncertain.

The separately identifiable intangible assets generally include customer relationships, backlog, acquired technology, and trade names.

The separately identifiable intangible assets generally include customer relationships, acquired technology, backlog, trade names, and non-compete agreements.

Goodwill and Acquired Intangible Assets

16 unchanged sentences

Intangible Assets

In connection with its acquisitions, the Company generally recognizes assets for customer relationships, backlog, developed technology, and trade names.

In connection with its acquisitions, the Company generally recognizes assets for customer relationships, acquired technology, backlog, trade names, and non-compete agreements.

Intangible assets are carried at cost less accumulated amortization.

Such amortization is provided on a straight-line basis or on an accelerated basis based on a pattern of economic benefit that is expected to be obtained over the estimated useful lives of the respective assets, generally from one to 30 years.

Amortization for developed technology and backlog is recognized in cost of revenues, and amortization for customer relationships, non-compete agreements, trade names, and patents is recognized in selling, general, and administrative expenses.

Amortization for acquired technology and backlog is recognized in cost of revenues, and amortization for customer relationships, trade names, non-compete agreements, and patents is recognized in selling, general, and administrative expenses.

The Company assesses the impairment of identifiable intangible assets whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable.

6 unchanged sentences

For the years ended December 31, 2020 and 2019, there were no events or changes in circumstances to indicate that intangible assets carrying amounts may not be recoverable.

Convertible Debt

The Company accounts for convertible debt and related transactions in accordance with ASC 470-20, Debt with Conversion and Other Options, ASC 815, Derivatives and Hedging, and ASC 480, Distinguishing Liabilities from Equity.

The Company evaluates convertible debt instruments and related transactions at inception to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for.

Convertible debt instruments that may be settled in cash are separated into liability and equity components.

The allocation to the liability component is based on the fair value of a similar instrument that does not contain an equity conversion option.

Based on this debt-to-equity ratio, debt issuance costs are then allocated to the liability and equity components in a similar manner.

The difference between the principal amount of the convertible debt instruments and the liability component, inclusive of issuance costs, represents the debt discount, which is amortized to interest expense over the term of instruments.

The determination of the discount rate requires certain estimates and assumptions.

Convertible note hedge and warrant transactions associated with convertible debt instruments are accounted for as equity instruments, and are recorded in additional paid-in capital in the Consolidated Balance Sheet s.

Valuation of Share-Based Compensation

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Expense is recognized when it is probable that the performance condition will be met using the accelerated attribution method over the requisite service period.

Forfeiture rates are estimated based on the Company's historical experience with equity awards that were granted and forfeited prior to vesting.

The valuation assumptions used in estimating the fair value of employee share-based awards may change in future periods.

1 unchanged sentence

The Company records an income tax provision for (benefit from) the anticipated tax consequences of the reported results of operations.

In accordance with U.S.

GAAP, the provision for (benefit from) income taxes is computed using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.

In accordance with ASC 740, Income Taxes , the provision for (benefit from) income taxes is computed using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.

Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities and for operating losses and tax credit carryforwards.

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If the Company were to determine that all or part of the net deferred tax assets are not realizable in the future, it will record a valuation allowance that would be charged to earnings in the period such determination is made.

In accordance with ASC 740, Income Taxes , the Company recognizes the tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

In accordance with ASC 740, the Company recognizes the tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of U.S.

GAAP and complex tax laws.

The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of ASC 740 and complex tax laws.

Resolution of these uncertainties in a manner inconsistent with management’s expectations could have a material impact on the Company’s financial condition and operating results.

Recently Adopted Authoritative Guidance

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) .

The FASB amended lease accounting requirements to begin recording assets and liabilities arising from most leases on the balance sheet.

The new guidance also requires significant additional disclosures about the amount and timing of cash flows from leases.

The Company adopted this new guidance on January 1, 2019.

In July 2018, the FASB issued amendments in ASU 2018-11, which provide a transition election to not restate comparative periods for the effects of applying the new standard.

This transition election permits entities to change the date of initial application to the beginning of the year of adoption and to recognize the effects of applying the new standard as a cumulative-effect adjustment to the opening balance of retained earnings.

The Company has elected this transition approach as well as the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company to carry forward the historical lease classification of contracts entered into prior to January 1, 2019.

As a result of electing the package of practical expedients described above, existing leases and related initial direct costs have not been reassessed prior to the effective date, and therefore, adoption of the lease standard did not have an impact on the Company’s previously reported consolidated financial statements.

The Company also elected the following practical expedients:

(i) combining lease and non-lease components for all asset classes, (ii) leases with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheets, and the associated lease payments are recognized in the Consolidated Statements of Operations on a straight-line basis over the lease term, and (iii) applying discount rates to operating leases using a portfolio approach.

From a lessor perspective, certain agreements that were previously classified as operating leases are classified as sales-type leases under the new lease accounting standard.

The agreements in place prior to the adoption of the new lease accounting standard on January 1, 2019 will continue to be treated as operating leases.

The Company’s adoption of the new standard impacted the Consolidated Balance Sheets at the beginning of the period of adoption as follows:

January 1, 2019

Pre-ASC 842 Balances ASC 842 Adoption Impact Post-ASC 842 Balances

(In thousands)

Operating lease right-of-use-assets $ — $ 66,008 $ 66,008

Accrued liabilities (1)

43,047 10,067 53,114

Long-term operating lease liabilities — 59,791 59,791

Other long-term liabilities (2)

9,562 ( 3,850 ) 5,712

_________________________________________________

(1) Adjustment represents the current portion of the operating lease liabilities of $ 10.3 million, and reclassification of exit cost obligations and deferred rent of $ 0.1 million and $ 0.1 million, respectively, to reduce the operating lease right-of-use assets.

(2) Adjustment represents the reclassification of deferred rent to reduce the operating lease right-of-use assets.

Adoption of the standard did not have an impact on the Company’s stockholders’ equity, Consolidated Statements of Operations, and Consolidated Statements of Cash Flows as of January 1, 2019.

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which permits the reclassification of the income tax effects of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) on items within accumulated other comprehensive income to retained earnings.

These amounts are commonly referred to as “stranded tax effects.” ASU 2018-02 was effective for the Company beginning January 1, 2019.

The adoption of this guidance did not have a material effect on the Company’s Consolidated Financial Statements and therefore no adjustment to retained earnings was made.

Recently Issued Authoritative Guidance

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract , to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

ASU 2018-15 will be effective for the Company beginning January 1, 2020.

The Company anticipates adopting ASU 2018-15 prospectively and does not expect the standard to have a material impact on its Consolidated Financial Statements.

The Company adopted ASU 2018-15 on January 1, 2020 on a prospective basis.

The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments , that modifies or replaces existing models for trade and other receivables, debt securities, loans, and certain other financial instruments.

For instruments measured at amortized cost, including trade and lease receivables, loans and held-to-maturity debt securities, the standard will replace the current “incurred loss” approach with an “expected loss” model.

Entities will be required to estimate expected credit losses over the life of the instrument, considering available relevant information about the collectibility of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts.

For instruments measured at amortized cost, including trade and lease receivables, loans, and held-to-maturity debt securities, the standard replaced the current “incurred loss” approach with an

“expected loss” model.

Entities are required to estimate expected credit losses over the life of the instrument, considering available relevant information about the collectibility of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts.

The Company adopted the new standard on January 1, 2020 using the modified retrospective transition method, which resulted in the recognition of an immaterial cumulative-effect adjustment to retained earnings.

Recently Issued Authoritative Guidance

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes .

The update simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740, as well as improves consistent application of and simplifies the guidance for other areas of ASC 740 by clarifying and amending existing guidance.

ASU 2019-12 will be effective for the Company beginning January 1, 2021.

In preparation for adoption of the standard, the Company made appropriate changes to necessary processes and controls.

The Company’s adoption of the new standard is estimated to result in the recognition of an immaterial cumulative-effect adjustment to retained earnings, using the modified retrospective transition method.

The Company does not expect ASU 2019-12 to have a material impact on its Consolidated Financial Statements.

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) .

The update simplifies the accounting for convertible debt instruments by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract.

ASU 2020-06 also enhances transparency and improves disclosures for convertible instruments and earnings per share guidance.

This update permits the use of either the modified retrospective or fully retrospective method of transition.

ASU 2020-06 will be effective for the Company beginning January 1, 2022.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Company is currently evaluating the impact ASU 2020-06 will have on its Consolidated Financial Statements.

There was no other recently issued and effective authoritative guidance that is expected to have a material impact on the Company’s Consolidated Financial Statements through the reporting date.

Business Combinations

2017 Acquisitions

On April 12, 2017, the Company completed the acquisition of all of the membership interest of InPharmics, a technology and services company that provides advanced pharmacy informatics solutions to hospital pharmacies.

The total consideration for the transaction was $ 5.0 million, net of cash acquired of $ 0.3 million.

Approximately $ 0.5 million of the total consideration was classified as a long-term liability for potential settlement of performance obligations.

The Company accounted for the acquisition of InPharmics in accordance with the authoritative guidance on business combinations;

therefore, the tangible and intangible assets acquired and liabilities assumed were recorded at fair value on the acquisition date.

The purchase price was allocated to intangible assets in the amount of $ 1.9 million, which included developed technology and customer contracts, with the remainder allocated to goodwill.

The results of the InPharmics’ operations have been included in the consolidated results of operations.

340B Link Business Acquisition

On October 1, 2020, the Company completed the acquisition of all of the outstanding equity of the 340B Link Business pursuant to the terms and conditions of the Equity Purchase Agreement, dated August 11, 2020, as amended, by and among the Company, PSGH, LLC, BW Apothecary Holdings, LLC, the sellers identified therein and the sellers’ representative for total cash consideration of $ 225.0 million.

The 340B Link Business acquisition adds a comprehensive and differentiated suite of software-enabled services and solutions used by certain eligible hospitals, health systems, clinics, and entities to manage compliance and capture 340B drug cost savings on outpatient prescriptions filled through the eligible entity’s pharmacy or a contracted pharmacy partner.

The results of the 340B Link Business' operations have been included in the Company's consolidated results of operations, commencing as of the acquisition date.

The Company accounted for the acquisition of the 340B Link Business in accordance with ASC 805.

The tangible and intangible assets acquired and liabilities assumed were recorded at fair value on the acquisition date.

The preliminary fair values assume management's best estimates based on information available at the acquisition date and may change over the measurement period, which will end no later than one year form the acquisition date, as additional information is received.

The following table represents the preliminary allocation of the purchase price to the assets acquired and the liabilities assumed by the Company as part of the acquisition reconciled to the purchase price transferred included in the Company's Consolidated Balance Sheets:

340B Link Business

(Preliminary)

(In thousands)

Accounts receivable and unbilled receivables $ 8,197

Prepaid expenses 232

Other current assets 22,747

Total current assets 31,176

Property and equipment 531

Operating lease right-of-use assets 3,138

Goodwill 161,117

Intangible assets 62,800

Total assets 258,762

Accounts payable 568

Accrued liabilities 23,787

Long-term deferred tax liabilities 6,818

Long-term operating lease liabilities 2,589

Total liabilities 33,762

Total purchase price $ 225,000

The $ 161.1 million of goodwill arising from the 340B Link Business acquisition is primarily attributed to sales of future software-enabled services and solutions and the 340B Link Business’ assembled workforce.

Goodwill that is expected to be deductible for tax purposes is approximately $ 93.9 million.

Intangible assets eligible for recognition separate from goodwill were those that satisfied either the contractual/legal criterion or the separability criterion in the accounting guidance.

The identifiable intangible assets acquired and their estimated useful lives for amortization are as follows:

304B Link Business

Fair value Useful life

(In thousands, except for years)

Customer relationships $ 53,000 21

Acquired technology 9,000 5

Trade names 200 1

Non-compete agreements 600 3

Total purchased intangible assets $ 62,800

The customer relationships intangible asset represents the fair value of the underlying relationships and agreements with the 340B Link Business’ customers.

The acquired technology intangible asset represents the fair value of the 340B Link Business' portfolio of software and solutions that have reached technological feasibility and were part of the 340B Link Business’ offerings at the date of acquisition.

The trade names intangible asset represents the fair value of brand and name recognition associated with the marketing of the 340B Link Business' software-enabled services and solutions.

The non-compete agreements intangible asset represents the fair value of non-compete agreements with former key members of the 340B Link Business' management.

The fair value of the customer relationships intangible asset was determined based on the excess earnings method;

the fair values of the acquired technology and trade names intangible assets were determined based on the relief-from-royalty

and the fair value of the non-compete agreements intangible asset was determined based on the lost profits method.

The key assumptions used in estimating the fair values of intangible assets included forecasted financial information;

customer attrition rates;

royalty rates of 10.0 % and 0.5 % for the acquired technology and trade names intangible assets, respectively;

discount rate of 14.0 % for all intangible assets;

and certain other assumptions.

The customer relationships and acquired technology intangible assets are being amortized using a double-declining method of amortization as such method better represents the economic benefits to be obtained.

The trade names and non-compete agreements are being amortized over their estimated useful lives using the straight-line method of amortization.

The Company believes that the fair value assigned to the assets acquired and liabilities assumed are based on reasonable assumptions and estimates that market participants would use.

Actual results may differ from these estimates and assumptions.

The Company incurred approximately $ 6.5 million in acquisition-related costs related to the 340B Link Business acquisition during the year ended December 31, 2020.

These costs were expensed as incurred, and are included in selling, general, and administrative expenses in the Company's Consolidated Statements of Operations.

Revenues and earnings from the 340B Link Business operations since the acquisition date through December 31, 2020 were $ 10.2 million and $ 1.3 million, respectively.

Pro Forma Financial Information

The following table presents certain unaudited pro forma information for illustrative purposes only, for the year ended December 31, 2017 as if this acquisition had been completed on January 1, 2017.

The following table presents certain unaudited pro forma information for illustrative purposes only, for the years ended December 31, 2020 and 2019 as if this acquisition had been completed on January 1, 2019.

The pro forma information is not indicative of what would have occurred had the acquisition taken place on January 1, 2019.

The unaudited pro forma information combines the historical results of the acquisition with the Company’s consolidated historical results and includes certain adjustments reflecting the estimated impact of fair value adjustments.

December 31, 2017

The unaudited pro forma information combines the historical results of the acquisition with the Company’s consolidated historical results and includes certain adjustments including, but not limited to, amortization and depreciation of intangible assets and property and equipment acquired;

imputed interest, interest expense, and amortization of debt issuance costs for the indebtedness incurred to complete the acquisition;

and acquisition-related costs incurred.

Year Ended December 31,

(In thousands, except per share data)

Pro forma net revenues $ 713,272

Pro forma revenues $ 920,314 $ 929,106

Pro forma net income $ 37,559 $ 56,897

Pro forma net income per share $ 0.82

Weighted-average number of shares 37,483

Disaggregation of Revenues

The following table summarizes the Company’s product revenues disaggregated by revenue type for the years ended December 31, 2019, 2018, and 2017:

The following table summarizes the Company’s revenues disaggregated by revenue type for the years ended December 31, 2020, 2019, and 2018:

Year Ended December 31,

1 unchanged sentence

(In thousands)

Hardware and software $ 553,039 $ 464,500 $ 406,095

Connected devices, software licenses, and other $ 560,368 $ 573,844 $ 483,414

Technical services 202,383 194,183 183,202

Consumables 75,663 85,758 86,182

Other 17,687 15,566 16,006

Total product revenues $ 659,602 $ 569,595 $ 510,201

SaaS, subscription software, and technology-enabled services 53,794 43,242 34,511

Total revenues $ 892,208 $ 897,027 $ 787,309

The following table summarizes the Company’s revenues disaggregated by geographic region, which is determined based on customer location, for the years ended December 31, 2020, 2019, and 2018:

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(In thousands)

Short-term unbilled receivables (1)

Short-term unbilled receivables, net (1)

$ 13,895 $ 11,707

Long-term unbilled receivables (2)

Long-term unbilled receivables, net (2)

17,205 12,260

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In periods of net loss, all potential common shares are anti-dilutive, so diluted net loss per share equals the basic net loss per share.

In periods of net income, diluted net income per share is computed by dividing net income for the period by the basic weighted-average number of shares plus any dilutive potential common stock outstanding during the period.

Potential common stock includes the effect of outstanding dilutive stock options, restricted stock awards and restricted stock units computed using the treasury stock method.

Any anti-dilutive weighted-average dilutive shares related to stock award plans are excluded from the computation of the diluted net income per share.

Potential common stock includes the effect of outstanding dilutive stock options, restricted stock awards, and restricted stock units, as well as shares the Company could be obligated to issue from its convertible senior notes and warrants, as described in Note 10, Convertible Senior Notes .

Any anti-dilutive weighted-average dilutive shares related to stock award plans, convertible senior notes, and warrants are excluded from the computation of the diluted net income per share.

The basic and diluted net income per share calculations for the years ended December 31, 2020, 2019, and 2018 were as follows:

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Effect of dilutive securities from stock award plans 1,160 1,481 1,317

Effect of convertible senior notes and warrants — — —

Weighted-average shares outstanding - diluted 43,743 42,943 40,559

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Anti-dilutive weighted-average shares related to stock award plans 2,054 926 1,279

Cash and Cash Equivalents and Fair Value of Financial Instruments

Cash and cash equivalents of $ 127.2 million and $ 67.2 million as of December 31, 2019 and 2018, respectively, consisted of bank accounts with major financial institutions.

Anti-dilutive weighted-average shares related to convertible senior notes and warrants 11,816 — —

Fair Value of Financial Instruments

Fair Value Hierarchy

The Company measures its financial instruments at fair value.

The Company’s cash equivalents are classified within Level 1 of the fair value hierarchy as they are valued primarily using quoted market prices utilizing market observable inputs.

The Company's interest rate swap contracts are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments.

The following table represents the fair value hierarchy of the Company’s financial assets measured at fair value as of December 31, 2018:

Level 1 Level 2 Level 3 Total

(In thousands)

Interest rate swap contracts $ — $ 562 $ — $ 562

Total financial assets $ — $ 562 $ — $ 562

The Company’s interest rate swap agreement matured during the second quarter of 2019, and as of December 31, 2019, the Company did not have any outstanding interest rate swap agreements.

The Company’s cash, cash equivalents, and restricted cash are classified within Level 1 of the fair value hierarchy as they are valued primarily using quoted market prices utilizing market observable inputs.

The Company's interest rate swap contracts and credit facilities are classified within Level 2 as the valuation inputs are based on quoted prices or market observable data of similar instruments.

The Company's convertible senior notes are classified within Level 2 as the valuation inputs are based on quoted prices in an inactive market on the last day in the reporting period.

As of December 31, 2020, the fair value of the convertible senior notes was $ 782.3 million, compared to their carrying value of $ 467.2 million, which is net of unamortized discount and debt issuance costs and excludes amounts classified within additional paid-in capital.

Refer to Note 9, Debt and Credit Agreements , for further information regarding the Company’s credit facilities and Note 10, Convertible Senior Notes , for further information regarding the Company’s convertible senior notes.

Interest Rate Swap Contracts

The Company’s interest rate swaps, which are designated as cash flow hedges, involve the receipt of variable amounts from counterparties in exchange for the Company making fixed-rate payments over the life of the agreements.

During 2016, the Company entered into an interest rate swap agreement with a combined notional amount of $ 100.0 million with one counterparty that became effective on June 30, 2016 and matured on April 30, 2019.

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Amounts payable by or due to the Company were net settled with the respective counterparty on the last business day of each month, commencing July 31, 2016.

The interest rate swap agreement, at its inception, qualified for and was designated as a cash flow hedging instrument, and was recorded on the Company's Consolidated Balance Sheets at fair value.

The fair value of the interest rate swap agreement at December 31, 2018 was $ 0.6 million.

There were no amounts reclassified into current earnings due to ineffectiveness during the periods presented.

The Company’s interest rate swap agreement matured during the second quarter of 2019, and, as of December 31, 2020, the Company did not have any outstanding interest rate swap agreements.

Balance Sheet Components

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Total inventories $ 96,298 $ 108,011

Other current assets:

Funds held for customers, including restricted cash (1)

Net investment in sales-type leases, current portion 10,246 9,770

Prepaid income taxes 10,095 4,347

Other current assets 2,539 1,060

Total other current assets $ 41,044 $ 15,177

Other long-term assets:

Capitalized software, net $ 94,027 $ 85,070

Unbilled receivables 12,260 16,481

Unbilled receivables, net 17,205 12,260

Deferred debt issuance costs 4,253 4,700

Other assets 1,006 1,313

Other long-term assets 3,804 1,006

Total other long-term assets $ 119,289 $ 103,036

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Operating lease liabilities, current portion $ 12,197 $ 10,058

Customer fund liabilities 18,164 —

Advance payments from customers 6,981 4,006

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Total accrued liabilities $ 80,311 $ 55,567

_________________________________________________

(1) Includes $ 4.0 million of restricted cash.

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the years ended December 31, 2020 and 2019:

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Property and equipment, gross (1)

165,374 169,961

Accumulated depreciation and amortization (1)

( 106,301 ) ( 115,715 )

Total property and equipment, net $ 59,073 $ 54,246

_________________________________________________

(1) The change in balances between periods is primarily due to the disposal of certain fully depreciated property and equipment, partially offset by additions, and depreciation and amortization.

Depreciation and amortization expense of property and equipment was $ 18.3 million, $ 17.2 million, and $ 15.1 million for the years ended December 31, 2020, 2019, and 2018, respectively.

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Balance as of December 31, 2019 336,539

Additions (1)

Foreign currency exchange rate fluctuations 1,653

Balance as of December 31, 2020 $ 499,309

_________________________________________________

(1) Additions represent the preliminary value assigned to goodwill in connection with the 340B Link Business acquisition in October 2020.

Intangible Assets, Net

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Gross carrying

Foreign currency exchange rate fluctuations Net carrying

amortization Foreign currency exchange

rate fluctuations Net carrying

amount Useful life

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Patents 2,930 ( 1,455 ) 2 1,477 2 - 20

Non-compete agreements 600 ( 50 ) — 550 3

Total intangibles assets, net $ 286,448 $ ( 117,482 ) $ ( 755 ) $ 168,211

1 unchanged sentence

Gross carrying

Foreign currency exchange rate fluctuations Net carrying

amortization Foreign currency exchange

rate fluctuations Net carrying

amount Useful life

5 unchanged sentences

Patents 3,217 ( 1,603 ) 1 1,615 2 - 20

Non-compete agreements 1,900 ( 1,900 ) — — 3

Total intangibles assets, net $ 224,393 $ ( 98,485 ) $ ( 1,041 ) $ 124,867

_________________________________________________

(1) The differences in gross carrying amounts between periods are primarily due to the write-off of certain fully amortized intangible assets.

(1) The differences in gross carrying amounts between periods are primarily due to additions of intangible assets in connection with the 340B Link Business acquisition, partially offset by the write-off of certain fully amortized intangible assets.

Amortization expense of intangible assets was $ 19.7 million, $ 18.9 million, and $ 23.8 million for the years ended December 31, 2020, 2019, and 2018, respectively.

The estimated future amortization expenses for amortizable intangible assets were as follows:

December 31, 2019

(In thousands)

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The Company is permitted to make voluntary prepayments at any time without payment of a premium or penalty.

On September 22, 2020, the parties entered into an amendment (the “Amendment”) to the A&R Credit Agreement to, among other changes, permit the issuance of the convertible senior notes and the purchase of the convertible note hedge transactions as described in Note 10, Convertible Senior Notes , expand the Company’s flexibility to repurchase its common stock and make other restricted payments, and replace the total net leverage covenant with a new secured net leverage covenant that requires the Company to maintain a consolidated secured net leverage ratio not to exceed 3.50 :1 for the calendar quarters ending September 30, 2020, December 31, 2020, and March 31, 2021 and 3.00 :1 for the calendar quarters ending thereafter.

The A&R Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Company and its subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, dividends, and other distributions.

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In connection with the A&R Credit Agreement, the Company incurred and capitalized an additional $ 2.3 million of debt issuance costs.

In connection with the Amendment on September 22, 2020, the Company incurred and capitalized an additional $ 0.6 million of debt issuance costs.

The debt issuance costs are being amortized to interest expense using the straight-line method through 2024.

2 unchanged sentences

The following table represents changes in the carrying amount of the Company's debt obligations:

Prior Term Loan Facility Current Revolving Credit Facility Total

Current Revolving Credit Facility

(In thousands)

2 unchanged sentences

Repayments ( 200,000 )

Balance transfer ( 80,000 ) 80,000 —

Balance as of December 31, 2020 $ —

5 unchanged sentences

Balance as of December 31, 2020 $ 4,253

Convertible Senior Notes

0.25 % Convertible Senior Notes due 2025

On September 25, 2020, the Company completed a private offering of $ 575.0 million aggregate principal amount of 0.25 % convertible senior notes (the “Notes”), including the exercise in full of the initial purchasers’ option to purchase up to an additional $ 75.0 million principal amount of the Notes.

The Company received proceeds from the issuance of the Notes of $ 559.7 million, net of $ 15.3 million of transaction fees and other debt issuance costs.

The Notes bear interest at a rate of 0.25 % per year, payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2021.

The Notes were issued pursuant to an indenture, dated September 25, 2020 (the “Indenture”), between the Company and U.S.

Bank National Association, as trustee.

The Notes are general senior, unsecured obligations of the Company and will mature on September 15, 2025, unless earlier redeemed, repurchased, or converted.

The Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding May 15, 2025, only under the following circumstances:

(i) during any fiscal quarter commencing after the fiscal quarter ended on December 31, 2020 (and only during such fiscal quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price for the Notes on each applicable trading day;

(ii) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price (as defined in the Indenture) per $1,000 principal amount of the Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the conversion rate for the Notes on each such trading day;

(iii) if the Company calls such Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the Notes called (or deemed called) for redemption;

and (iv) upon the occurrence of specified corporate events, as specified in the Indenture.

On or after May 15, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the Notes may convert all or any portion of their Notes at any time, regardless of the foregoing conditions.

Upon conversion, the Company may satisfy its conversion obligation by paying or delivering, as the case may be, cash, shares of its common stock, or a combination of cash and shares of its common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the Indenture.

The initial conversion rate for the Notes is 10.2751 shares of the Company’s common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $ 97.32 per share of the Company’s common stock, subject to adjustment under certain circumstances in accordance with the terms of the Indenture.

In addition, following certain corporate events that occur prior to the maturity date of the Notes or if the Company delivers a notice of redemption in respect of the Notes, the Company will, under certain circumstances, increase the conversion rate of the Notes for a holder who elects to convert its Notes (or any portion thereof) in connection with such a corporate event or convert its Notes called (or deemed called) for redemption during the related redemption period (as defined in the Indenture), as the case may be.

If the Company undergoes a fundamental change, holders may require, subject to certain exceptions, the Company to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

As of December 31, 2020, none of the criteria for a fundamental change or a conversion rate adjustment had been met.

The Company may not redeem the Notes prior to September 20, 2023.

The Company may redeem for cash all or any portion of the Notes, at its option, on or after September 20, 2023, if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price for the Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 % of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

If the Company redeems less than all the outstanding Notes, at least $ 150.0 million aggregate

principal amount of Notes must be outstanding and not subject to redemption as of the date of the relevant notice of redemption.

No sinking fund is provided for in the Notes.

Convertible debt instruments that may be settled in cash are required to be separated into liability and equity components.

The allocation to the liability component is based on the fair value of a similar instrument that does not contain an equity conversion option.

Based on this debt-to-equity ratio, debt issuance costs are then allocated to the liability and equity components in a similar manner.

Accordingly, at issuance, the Company allocated $ 461.8 million to the debt liability and $ 72.7 million to additional paid in capital, net of applicable issuance costs and deferred taxes.

The difference between the principal amount of the Notes and the liability component, inclusive of issuance costs, represents the debt discount, which the Company will amortize to interest expense over the term of the Notes using an effective interest rate of 4.18 %.

The determination of the discount rate required certain estimates and assumptions.

As of December 31, 2020, the remaining life of the Notes and the related debt discount and issuance cost accretion is approximately 4.7 years.

The maximum number of shares issuable upon conversion, including the effect of a fundamental change and subject to other conversion rate adjustments, would be 8.1 million shares.

The Notes consisted of the following balances reported in the Consolidated Balance Sheets as of December 31, 2020:

(In thousands)

Principal amount $ 575,000

Unamortized discount ( 95,744 )

Unamortized debt issuance costs ( 12,055 )

Convertible senior notes, liability component $ 467,201

Embedded conversion option $ 100,510

Debt issuance costs ( 2,680 )

Deferred tax impact ( 25,098 )

Convertible senior notes, equity component (1)

_________________________________________________

(1) Presented as a direct deduction from the carrying amount of the debt liability in the Consolidated Balance Sheets.

(2) Presented in other long-term assets in the Consolidated Balance Sheets.

As of December 31, 2019, the carrying value of debt of $ 50.0 million approximates its fair value.

The fair value of the outstanding balance of the Current Revolving Credit Facility was calculated using a discounted cash flow model based on current market interest rates available to the Company.

The Company's debt is classified within Level 2 in the fair value hierarchy as the valuation inputs are based on market observable data of similar instruments.

(1) Included in additional paid-in capital in the Consolidated Balance Sheets.

The following table summarizes the components of interest expense resulting from the Notes recognized in interest and other income (expense), net in the Consolidated Statements of Operations for the year ended December 31, 2020:

(In thousands)

Contractual coupon interest $ 379

Amortization of discount $ 4,766

Amortization of debt issuance costs $ 600

Convertible Note Hedge and Warrant Transactions

In connection with the issuance of the Notes, the Company entered into convertible note hedge and warrant transactions with an affiliate of one of the initial purchasers of the Notes and certain other financial institutions (the “option counterparties”) with respect to the Company’s common stock.

The convertible note hedge consists of an option for the Company to purchase up to approximately 5.9 million shares of the Company’s common stock, which is equal to the number of shares of the Company’s common stock underlying the Notes, at an initial strike price of approximately $ 97.32 per share.

The convertible note hedge will expire upon the maturity of the Notes, if not earlier exercised or terminated.

The cost of the convertible note hedge was approximately $ 100.6 million and was accounted for as an equity instrument, which was recorded in additional paid-in capital in the Consolidated Balance Sheets.

The Company recorded a deferred tax asset of $ 25.8 million at issuance related to the convertible note hedge transaction.

convertible note hedge is expected generally to reduce the potential dilution to the Company’s common stock upon any conversion of Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes.

Separately from the convertible note hedge, the Company entered into warrant transactions to sell to the option counterparties warrants to acquire, subject to customary anti-dilution adjustments, up to approximately 5.9 million shares of its common stock in the aggregate at an initial strike price of $ 141.56 per share.

The warrants require net share or net cash settlement upon the Company’s election.

The Company received aggregate proceeds of approximately $ 51.3 million for the issuance of the warrants, which was recorded in additional paid in capital at issuance in the Consolidated Balance Sheets.

The warrants could separately have a dilutive effect to the Company’s common stock to the extent that the market price per share of its common stock exceeds the strike price of the warrants.

Lessor Leases

20 unchanged sentences

The carrying amount of the Company’s sales-type lease receivables is a reasonable estimate of fair value.

The Company evaluates its sales-type leases individually and collectively for impairment.

The allowance for credit losses was $ 0.2 million as of both December 31, 2019 and 2018.

The maturity schedule of future minimum lease payments under sales-type leases retained in-house and the reconciliation to the net investment in sales-type leases reported on the Consolidated Balance Sheets was as follows:

December 31, 2019

(In thousands)

5 unchanged sentences

Operating Leases

The Company entered into certain leasing agreements that were classified as operating leases prior to the adoption of the new lease accounting standard.

These agreements in place prior to January 1, 2019 will continue to be treated as operating leases, however any new leasing agreements entered into on or after January 1, 2019 under these programs are classified and accounted for as sales-type leases in accordance with the new lease accounting standard.

The Company entered into certain leasing agreements that were classified as operating leases prior to the adoption of ASC 842, Leases .

These agreements in place prior to January 1, 2019 continue to be treated as operating leases, however any leasing agreements entered into on or after January 1, 2019 under these programs are classified and accounted for as sales-type leases in accordance with ASC 842.

The operating lease arrangements generally have initial terms of one to seven years .

9 unchanged sentences

(In thousands)

2020 $ 10,415

Thereafter 89

15 unchanged sentences

The short-term portion of the operating lease liabilities is included in accrued liabilities in the Consolidated Balance Sheets.

Prior to the adoption of the new lease accounting standard, the maturity schedule of future minimum lease payments under operating leases was as follows:

December 31, 2018

(In thousands)

2019 $ 14,153

Thereafter 27,289

Total minimum future lease payments $ 87,418

Operating lease costs were $ 14.6 million for the year ended December 31, 2019.

Short-term lease costs and variable lease costs were immaterial for the year ended December 31, 2019.

Prior to the adoption of the new lease accounting standard, rent expense was $ 12.7 million and $ 11.5 million for the years ended December 31, 2018 and 2017.

The following table summarizes supplemental cash flow information related to the Company’s operating leases for the year ended December 31, 2019:

December 31, 2019

Operating lease costs were $ 14.3 million and $ 14.6 million for the years ended December 31, 2020 and 2019, respectively.

Short-term lease costs and variable lease costs were immaterial for the years ended December 31, 2020 and 2019, respectively.

The following table summarizes supplemental cash flow information related to the Company’s operating leases for the years ended December 31, 2020 and 2019:

Year Ended December 31,

(In thousands)

Cash paid for amounts included in the measurement of lease liabilities $ 14,490 $ 14,636

Right-of-use assets obtained in exchange for new lease liabilities $ 1,204

The following table summarizes the weighted-average remaining lease term and weighted-average discount rate related to the Company’s operating leases as of December 31, 2019:

(In thousands)

Right-of-use assets obtained in exchange for new lease liabilities, including leases obtained from recent acquisitions $ 10,025 $ 1,204

The following table summarizes the weighted-average remaining lease term and weighted-average discount rate related to the Company’s operating leases as of December 31, 2020 and 2019:

Weighted-average remaining lease term, years 5.9 6.4

6 unchanged sentences

The Company is currently involved in various legal proceedings.

As required under ASC 450, Contingencies, the Company accrues for contingencies when it believes that a loss is probable and that it can reasonably estimate the amount of any such loss.

The Company has not recorded any accrual for contingent liabilities associated with the legal proceedings described below based on its belief that any potential loss, while reasonably possible, is not probable.

Further, any possible range of loss in these matters cannot be reasonably estimated at this time.

The Company believes that it has valid defenses with respect to legal proceedings pending against it.

However, litigation is inherently unpredictable, and it is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of this contingency or because of the diversion of management’s attention and the creation of significant expenses.

On January 10, 2018, a lawsuit was filed against a number of individuals, governmental agencies, and corporate entities, including the Company and one of its former subsidiaries, Aesynt Incorporated (“Aesynt”), which, through a series of mergers, has been merged into the Company, in the Circuit Court for the City of Richmond, Virginia, captioned Ruth Ann Warner, as Guardian of Jonathan James Brewster Warner v.

Centra Health, Inc., et al., Case No.

The complaint sought monetary recovery of compensatory and punitive damages in addition to certain declaratory relief based upon, as against the individuals, governmental agencies, and corporate entities other than the Company and Aesynt, allegations of the use of excessive force, unlawful detention, false imprisonment, battery, simple and gross negligence and negligent hiring, detention, and training;

and, as against the Company and Aesynt, claims of product liability, negligence, and breach of implied warranties.

The Company and Aesynt were never served with the complaint.

Upon motion of the plaintiff, the Court issued an order on February 21, 2019 nonsuiting (dismissing) the case without prejudice.

On August 21, 2019, a new lawsuit was filed against the Company and Aesynt, in the Circuit Court for the County of Albemarle, Virginia, captioned Ruth Ann Warner, as Guardian of Jonathan James Brewster Warner v.

Aesynt Incorporated, et al., Case No CL19-1301 .

The complaint seeks monetary recovery of damages based upon claims of product liability, negligence, and breach of implied warranties.

The Company and Aesynt have not been served with the complaint.

The Company intends to defend the lawsuit vigorously.

On June 6, 2018, a class action lawsuit was filed against a customer of the Company, the customer’s parent company, and two vendors of medication dispensing systems, one of which is the Company, in the Circuit Court of Cook County, Illinois, Chancery Division, captioned Yana Mazya, individually and on behalf of all others similarly situated v.

Northwestern Lake Forest Hospital, Northwestern Memorial Healthcare, Omnicell, Inc.

and Becton Dickinson, Case No.

2018-CH-07161 .

The complaint sought class certification, monetary damages in the form of statutory damages for willful and/or reckless or, in the alternative, negligent violation of the Illinois Biometric Information Privacy Act (“BIPA”), and certain declaratory, injunctive, and other relief based on causes of action directed to allegations of violation of BIPA and of negligence by the defendants.

The complaint was served on the Company on June 15, 2018.

The Company’s obligation to respond to the complaint was held in abeyance pending a decision of the Illinois Supreme Court in a separate case involving BIPA issues.

The Illinois Supreme Court issued its decision in that case on January 25, 2019.

On April 10, 2019, subsequent to the Court’s issuance of an order granting the plaintiff leave to file an amended complaint, the plaintiff filed an amended complaint adding a second named plaintiff and an affiliate of the Company’s customer as an additional defendant and, in addition to making other modifications to the complaint, removing the separate cause of action directed to negligence.

The Court established a deadline of May 13, 2019 for the defendants to answer or otherwise respond to the amended complaint.

On May 10, 2019, defendants Northwestern Lake Forest Hospital, Northwestern Memorial Healthcare, and Northwestern Memorial Hospital removed the case to the United States District Court for the Northern District of Illinois, Eastern Division.

Subsequently, on May 17, 2019, the Company and the other defendants in the case each filed a motion to dismiss the complaint for failure to state a cause of action upon which relief could be granted.

On June 14, 2019, plaintiffs filed a motion to remand the case to state court.

The Court then entered an order, on June 19, 2019, denying plaintiffs’ motion to remand, granting defendants’ motions to dismiss with respect to the additionally-named plaintiff, and continuing the motions to dismiss with respect to the originally-named plaintiff.

On July 2, 2019, the Court entered an order remanding the case to state court and denying the defendants’ motions to dismiss without prejudice to renewal of the motions in state court.

On September 5, 2019, plaintiff filed a motion to voluntarily dismiss the Company from the case without prejudice.

The motion was granted by order of the Court dated October 10, 2019 and, as a result, the Company has been finally dismissed from the case without prejudice to plaintiff refiling the action.

A declaratory judgment action was filed against the Company, on August 30, 2018, in the United States District Court for the Northern District of California, captioned Zurich American Insurance Company;

American Guarantee & Liability Company v.

Omnicell, Inc.

and Does 1-10, inclusive, Case No.

3:18-CV-05345 .

The complaint seeks a declaration that the plaintiffs have no duty to defend or indemnify the Company in connection with the underlying litigation, the Yana Mazya, et al.

Northwestern Lake Forest Hospital, et al., Case No.

2018-CH-07161 pending in the Circuit Court of Cook County, Illinois, Chancery Division (“Mazya Action”), disclosed above, together with claims for reimbursement and unjust enrichment relating to the defense of the Mazya Action in the form of attorneys’ fees and other related costs.

The Company has not responded to the complaint.

On February 12, 2019, the Court stayed the action pending the outcome of the Mazya Action and administratively closed the case.

On October 15, 2019, the plaintiffs filed a notice advising the Court of the dismissal of the Company from the Mazya Action and requesting that the Court lift the stay in the case and set dates for filing a responsive pleading by the Company and initial discovery and scheduling matters.

By order dated November 13, 2019, the Court (i) lifted the stay in the case, (ii) set a case management conference for February 5, 2020, and (iii) ordered the parties to file a joint case management statement by January 29, 2020.

The parties subsequently reached a settlement of the case in principle and the Court, after notice of the parties, continued the case management conference until April 29, 2020 and ordered the parties to file a joint case management statement by April 22, 2020.

The Company intends to defend the lawsuit vigorously.

A class action lawsuit was filed against the Company, on June 5, 2019, in the Circuit Court of Cook County, Illinois, Chancery Division, captioned Corey Heard, individually and on behalf of all others similarly situated, v.

1 unchanged sentence

2019-CH-06817 .

The complaint seeks class certification, monetary damages in the form of statutory damages for willful and/or reckless or, in the alternative, negligent violation of BIPA, and certain declaratory, injunctive, and other relief based on causes of action directed to allegations of violation of BIPA by the Company.

The complaint seeks class certification, monetary damages in the form of statutory damages for willful and/or reckless or, in the alternative, negligent violation of the Illinois Biometric Information Privacy Act (“BIPA”), and certain declaratory, injunctive, and other relief based on causes of action directed to allegations of violation of BIPA by the Company.

The complaint was served on the Company on June 13, 2019.

On July 31, 2019, the Company filed a motion to stay or consolidate the case with the Mazya Action.

On July 31, 2019, the Company filed a motion to stay or consolidate the case with the action Yana Mazya, et al.

Northwestern Lake Forest Hospital, et al., Case No.

2018-CH-07161, pending in the Circuit Court of Cook County, Illinois, Chancery Division (the “Mazya Action”).

The Court subsequently, on October 10, 2019, denied the motion, without prejudice, as being moot in view of the Company’s dismissal from the Mazya Action.

The Company filed a motion to dismiss the complaint on October 31, 2019.

The motion to dismiss is fully-briefed and the Court has scheduled a hearing on the motion for March 16, 2020.

The hearing on the Company’s motion to dismiss was held on September 2, 2020.

The Court ruled from the bench and dismissed the complaint without prejudice giving plaintiff leave to file an amended complaint by September 30, 2020.

Plaintiff filed an amended complaint on September 30, 2020 and the Company subsequently filed a motion to dismiss the complaint on October 28, 2020.

The Company's motion to dismiss is now fully briefed and the Court has scheduled oral argument on the motion for June 4, 2021.

The Company intends to defend the lawsuit vigorously.

On July 18, 2019, a putative class action lawsuit was filed against the Company and certain of its officers in the U.S.

District Court for the Northern District of California.

The complaint, captioned Bursick v.

Omnicell, Inc.

et al., Case No.

3:19-cv-04150 , alleged that the defendants violated federal securities laws by making materially false and misleading statements beginning in October 2018 regarding revenue recognition, customer concerns about implementation issues, and a purported need to write off inventory.

The plaintiff sought unspecified monetary damages and other relief.

On October 24, 2019, Frank Bursick was appointed Lead Plaintiff.

On December 5, 2019, Lead Plaintiff filed a Notice of Voluntary Dismissal of this action as to all defendants, instead of filing an amended complaint.

This action is now concluded.

In August 2019, the Company received a letter from the Denver office of the SEC seeking information related to the Company’s accounting processes and procedures.

The Company responded and fully cooperated with the SEC.

On February 12, 2020, the Company received a letter from the SEC confirming that it has concluded its investigation and that the SEC does not intend to recommend any enforcement action against the Company.

As permitted under Delaware law and the Company’s certificate of incorporation and bylaws, the Company has agreed to indemnify its directors and officers against certain losses that they may suffer by reason of the fact that such persons are, were or become its directors or officers.

The term of the indemnification period is for the director’s or officer’s lifetime and there is no limit on the potential amount of future payments that the Company could be required to make under these indemnification agreements.

On December 21, 2020, Becton, Dickinson and Company (“BD”) filed a complaint against the Company in the United States District Court for the Middle District of North Carolina, asserting claims of misappropriation under the Defend Trade Secrets Act, misappropriation under the North Carolina Trade Secrets Protection Act, unfair competition, and unfair/deceptive trade practices in violation of North Carolina law (the “Omnicell Complaint”).

This action was commenced in relation to another action brought by BD, in the same Court, (the “Related Matter”) against a former BD employee who is also a former Company employee (the “Former Employee”) alleging that the Former Employee had violated the Former Employee’s legal obligations to BD regarding BD’s confidential and trade secret information when the Former Employee allegedly downloaded certain documents from BD’s information technology system following the end of the Former Employee’s employment with BD.

In connection with the Related Matter, BD, the Former Employee, and the Company entered into a protocol to facilitate the return to BD of any BD documents that may have been resident, as a result of the Former Employee’s actions, on any devices belonging to the Former Employee or the Company.

The Omnicell Complaint seeks injunctive relief and monetary damages in the form of compensatory, punitive, and exemplary damages, attorneys’ fees and costs, and pre-judgment and post-judgment interest.

BD has not yet served the Omnicell Complaint on the Company, and, therefore, there are no response dates pending.

The Company intends to defend the lawsuit vigorously.

As required under ASC 450, Contingencies , the Company accrues for contingencies when it believes that a loss is probable and that it can reasonably estimate the amount of any such loss.

The Company has not recorded any material accrual for contingent liabilities associated with the legal proceedings described above based on its belief that any potential loss, while reasonably possible, is not probable.

Further, any possible range of loss in these matters cannot be reasonably estimated at this time or is not deemed material.

The Company believes that it has valid defenses with respect to these legal proceedings pending against it.

However, litigation is inherently unpredictable, and it is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of any of these legal proceedings or because of the diversion of management’s attention and the creation of significant expenses.

Under the Company’s certificate of incorporation and bylaws, the Company has agreed to indemnify its directors and executive officers to the fullest extent not prohibited by Delaware and other applicable law, subject to certain exceptions.

The Company has entered into individual indemnification agreements with its directors and officers.

The term of the indemnification period is for the entirety of the director’s or officer’s service to the Company and continues so long as the director or officer may be subject to any claim, action, or proceeding, and there is no limit on the potential amount of future payments that the Company could be required to make under these indemnification agreements.

The Company has purchased a directors’ and officers’ liability insurance policy that may enable it to recover a portion of any future payments that it may be required to make under these indemnification agreements.

4 unchanged sentences

The term of these indemnification obligations is generally perpetual.

In general, the Company attempts to limit the maximum potential amount of future payments that it may be required to make under these indemnification obligations to the amounts paid to it by a customer, but in some

cases the obligation may not be so limited.

In addition, the Company has in the past and may in the future warrant to its customers that its products will conform to functional specifications for a limited period of time following the date of installation (generally not exceeding 30 days) or that its software media is free from material defects.

33 unchanged sentences

Total share-based compensation expense $ 44,697 $ 34,049 $ 28,885

The Company did not capitalize any share-based compensation as inventory as such amounts were not material for the years ended December 31, 2019 and December 31, 2018.

The Company did not capitalize any share-based compensation as inventory as such amounts were not material for the years ended December 31, 2020 and 2019.

Income tax benefits realized from share-based compensation were $ 10.3 million, $ 11.0 million, and $ 6.5 million, for the years ended December 31, 2020, 2019, and 2018, respectively.

In the first quarter of 2019, the Company modified the terms of its stock options by extending the post-employment exercise period for certain employees.

The Company recorded share-based compensation expense related to this modification of approximately $ 0.2 million on the stock options modification date.

As of December 31, 2019, share-based compensation expense related to unvested stock options impacted by the modification was approximately $ 0.6 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.9 years.

Stock Options and ESPP Shares

37 unchanged sentences

The intrinsic value of options exercised during the years ended December 31, 2020, 2019, and 2018 was $ 39.8 million, $ 32.8 million, and $ 20.1 million, respectively.

The tax benefit realized from stock options exercised was $ 7.1 million, $ 6.3 million, and $ 3.6 million, for the years ended December 31, 2020, 2019, and 2018, respectively.

As of December 31, 2020, total unrecognized compensation cost related to unvested stock options was $ 52.7 million, which is expected to be recognized over a weighted-average vesting period of 2.8 years.

Employee Stock Purchase Plan Activity

For the year ended December 31, 2019, employees purchased approximately 374,000 shares of common stock under the ESPP at a weighted-average price of $ 41.44 .

For the years ended December 31, 2020 and 2019, employees purchased approximately 333,000 and 374,000 shares of common stock, respectively, under the ESPP at a weighted-average price of $ 48.77 and $ 41.44 , respectively.

As of December 31, 2020, the unrecognized compensation cost related to the shares to be purchased under the ESPP was approximately $ 4.1 million and is expected to be recognized over a weighted-average period of 1.3 years.

25 unchanged sentences

The weighted-average grant date fair value per share of RSAs granted during the years ended December 31, 2020, 2019, and 2018 was $ 68.11 , $ 81.86 , and $ 46.60 , respectively.

The total fair value of RSAs that vested in the years ended December 31, 2019, 2018, and 2017 was $ 1.0 million, for each period.

The total fair value of RSAs that vested in the years ended December 31, 2020, 2019, and 2018 was $ 1.4 million, $ 1.0 million, and $ 1.0 million, respectively.

As of December 31, 2020, total unrecognized compensation cost related to RSAs was $ 0.5 million, which is expected to be recognized over the remaining weighted-average vesting period of 0.4 years.

2 unchanged sentences

In 2020, the Company granted 62,759 PSUs to its executive officers, all, none, or a portion of which may become eligible for vesting depending on the level of shareholder return for the period from March 1, 2020 through March 1, 2021.

The fair value of a PSU award is determined using a Monte Carlo simulation model.

The fair value of PSU awards to executive officers is determined using a Monte Carlo simulation model.

The number of shares that vest at the end of the performance period depends on the percentile ranking of the total shareholder return for Omnicell stock over the performance period relative to the total shareholder return of each of the other companies in the NASDAQ Healthcare Index (the “Index”).

13 unchanged sentences

Of the 61,098 shares eligible for time-based vesting under the 2019 PSUs, 30,548 shares, net of forfeitures, have vested as of December 31, 2020.

In addition to executive officers' PSU awards, from time to time, the Company may grant PSUs with specific performance and service conditions to certain employees on an ad hoc basis.

Historically such grants have not been material.

A summary of the performance-based restricted stock activity under the 2009 Plan is presented below for the year ended December 31, 2020:

19 unchanged sentences

Total shares reserved for future issuance 7,144

The Company has established a pre-tax savings plan under Section 401(k) of the Internal Revenue Code.

The Company has established a pre-tax savings plan under Section 401(k) of the Internal Revenue Code of 1986, as amended.

The 401(k) Plan allows eligible employees in the United States to voluntarily contribute a portion of their pre-tax salary, subject to a maximum limit specified in the Internal Revenue Code.

3 unchanged sentences

On August 2, 2016, the Company’s Board of Directors (the “Board”) authorized a stock repurchase program providing for the repurchase of up to $ 50.0 million of the Company’s common stock (the “2016 Repurchase Program”).

The 2016 Repurchase Program is in addition to the stock repurchase program approved by the Board on November 4, 2014 (the “2014 Repurchase Program”).

The 2016 Repurchase Program is in addition to the stock repurchase program approved by the Board on November 4, 2014 providing for the repurchase of up to $ 50.0 million of the Company’s common stock (the “2014 Repurchase Program”).

As of December 31, 2020, the maximum dollar value of shares that may yet be purchased under the two repurchase programs was $ 54.9 million.

The timing, price, and volume of repurchases are to be based on market conditions, relevant securities laws, and other factors.

The stock repurchases may be made from time to time on the open market, in privately negotiated transactions, or pursuant to a Rule 10b-18 plan, subject to the terms and conditions of that certain A&R Credit Agreement, dated as of November 15, 2019, among the Company, the Lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent.

The stock repurchase programs do not obligate the Company to repurchase any specific number of shares, and the Company may terminate or suspend the repurchase programs at any time.

During the years ended December 31, 2019, 2018, and 2017, the Company did no t repurchase any of its outstanding common stock.

On September 17, 2020, the Board authorized a one-time stock repurchase transaction providing for the repurchase of up to $ 75.0 million of the Company’s common stock in privately negotiated transactions concurrently with the issuance of the Notes, described in Note 10, Convertible Senior Notes .

In September 2020, the Company repurchased 749,300 shares of its common stock from purchasers of the Notes in the offering in privately negotiated transactions effected through one of the

initial purchasers or its affiliate at an average price of $ 70.78 per share for an aggregate purchase price of approximately $ 53.0 million.

There will be no further repurchases under this one-time authorization.

During the years ended December 31, 2020, 2019, and 2018, the Company did no t repurchase any of its outstanding common stock, including under the 2014 Repurchase Program or the 2016 Repurchase Program, other than the separately-authorized one-time stock repurchase concurrent with the offering of the Notes in September 2020.

Equity Offerings

On November 3, 2017, the Company entered into a Distribution Agreement (the “Distribution Agreement”) with J.P.

Morgan Securities LLC, Wells Fargo Securities, LLC, and HSBC Securities (USA) Inc., as its sales agents, pursuant to which the Company may offer and sell from time to time through the sales agents up to $ 125.0 million maximum aggregate offering price of the Company’s common stock.

Morgan Securities LLC, Wells Fargo Securities, LLC, and HSBC Securities (USA) Inc., as its sales agents, pursuant to which the Company was able to offer and sell from time to time through the sales agents up to $ 125.0 million maximum aggregate offering price of the Company’s common stock.

Sales of the common stock pursuant to the Distribution Agreement may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, including sales made directly on the Nasdaq Stock Market, or sales made to or through a market maker other than on an exchange.

1 unchanged sentence

For the year ended December 31, 2019, the Company received gross proceeds of $ 38.5 million from sales of its common stock under the Distribution Agreement and incurred issuance costs of $ 0.7 million on sales of approximately 460,000 shares of its common stock at an average price of approximately $ 83.81 per share.

As of December 31, 2019, the Company had an aggregate of $ 31.5 million available to be offered under the Distribution Agreement.

For the year ended December 31, 2020, the Company did not sell any of its common stock under the Distribution Agreement.

The registration statement under which the shares that could have been sold pursuant to the Distribution Agreement expired on November 3, 2020, and, accordingly, no additional sales will be made pursuant to the Distribution Agreement.

The following is a geographical breakdown of income (loss) before the provision for income taxes:

24 unchanged sentences

State taxes ( 601 ) 2,258 651

Section 162(m) limitation 2,550 2,279 738

Non-deductible expenses 325 619 686

2 unchanged sentences

Research tax credits ( 4,038 ) ( 3,805 ) ( 3,230 )

Domestic production deduction — — ( 621 )

Restructuring impact — 7,432 ( 4,205 )

1 unchanged sentence

Foreign rate differential ( 102 ) ( 1,424 ) 561

One-time impact of the Tax Act — — ( 20,005 )

Other 385 524 ( 27 )

Total provision for (benefit from) income taxes $ ( 2,845 ) $ 12,595 $ ( 2,113 )

Due to continuing global operational centralization activities during the year ended December 31, 2019, the Company recognized gain on the sale of certain intellectual property rights by Aesynt B.V.

to Omnicell, Inc.

and by Mach4 Automatisierungstechnik GmbH to Omnicell, Inc., which resulted in a tax expense, net of tax benefit, of $ 7.4 million.

As a result of global operational centralization activities during the year ended December 31, 2018, the Company recognized $ 4.2 million of tax benefit associated with making a check-the-box election to treat Aesynt Holding Coöperatief U.A.

(Netherlands) as a U.S.

(Netherlands) as the U.S.

disregarded entity beginning in the first quarter of 2018.

Subsequently, during the year ended December 31, 2019, the Company recognized gain on the sale of certain intellectual property rights by Aesynt B.V.

to Omnicell, Inc.

and by Mach4 Automatisierungstechnik GmbH ("Mach4") to Omnicell, Inc., which resulted in a tax expense, net of tax benefit, of $ 7.4 million.

As the Company continued with global operational centralization activities during the year ended December 31, 2020, Aesynt B.V.

merged with and into Aesynt Holding B.V., with Aesynt Holding B.V.

surviving and changing its name to Omnicell B.V., Aesynt Holding Coöperatief U.A.

liquidated into Omnicell, Inc., and Omnicell GmbH merged with and into Mach4, with Mach4 surviving and changing its name to Omnicell GmbH.

During the year ended December 31, 2020, the Company also recognized a gain on Omnicell Limited’s transferring shares of Omnicell GmbH to Omnicell International, LLC, which resulted in an immaterial tax expense.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law in response to the COVID-19 pandemic.

The CARES Act, among other provisions, includes provisions related to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating losses carryback periods, alternative minimum tax credit refunds, modification to the net interest expense deduction limitation, and technical amendments to tax depreciation methods for qualified improvement property placed in service after December 31, 2017.

The provisions of the CARES Act did not have a material impact on the Company’s income taxes.

Significant components of the Company’s deferred tax assets (liabilities) were as follows:

22 unchanged sentences

On the basis of this evaluation, as of December 31, 2020, $ 1.2 million of valuation allowance was recorded on certain foreign net operating losses carried forward, as the Company believes that such deferred tax assets are not more likely than not to be realized.

As of December 31, 2019, the Company had $ 3.2 million of federal net operating loss carryforwards expiring 2037, $ 7.4 million of state net operating loss carryforwards expiring at various dates beginning 2023, and $ 29.5 million of foreign net operating loss carryforwards expiring at various dates beginning 2024.

For the year ended December 31, 2019, the Company did not generate a net operating loss.

As of December 31, 2020, the Company had $ 6.0 million of state net operating loss carryforwards expiring at various dates beginning in 2024, and $ 29.7 million of foreign net operating losses carried forward indefinitely.

For income tax purposes, the Company has federal and California research tax credits carryforwards of $ 1.3 million and $ 17.0 million, respectively.

5 unchanged sentences

federal income, withholding, and state income taxes on the outside basis difference related to certain foreign subsidiaries because earnings are intended to be indefinitely reinvested in operations outside the U.S.

The Company files income tax returns in the United States and various states and foreign jurisdictions.

The Company files income tax returns in the United States and various state and foreign jurisdictions.

In the normal course of business, the Company is subject to examination by taxing authorities, including major jurisdictions such as the United States, Germany, Italy, Netherlands, and the United Kingdom.

21 unchanged sentences

Balance as of December 31, 2020 $ 18,246

The total amounts of gross unrecognized tax benefit that, if realized, would favorably affect the Company's effective income tax rate in future periods, was $ 16.8 million as of December 31, 2019.

The Company recognizes interest and/or penalties related to uncertain tax positions in interest and other income (expense), net in Consolidated Statements of Operations, accruing $ 0.5 million, $ 0.5 million, and $ 0.3 million for the years ended December 31, 2019, 2018, and 2017, respectively.

The total amounts of gross unrecognized tax benefit that, if realized, would favorably affect the Company's effective income tax rate in future periods, was $ 18.2 million and $ 16.8 million as of December 31, 2020 and 2019, respectively.

The Company recognizes interest and/or penalties related to uncertain tax positions in interest and other income (expense), net in the Consolidated Statements of Operations, accruing $ 0.4 million, $ 0.5 million, and $ 0.5 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Accrued interest and penalties are included within other long-term liabilities on the Consolidated Balance Sheets.

2 unchanged sentences

Restructuring Expenses

In the first quarter of 2020, the Company announced a company-wide organizational realignment initiative in order to more effectively align its organizational infrastructure and operations with the strategic vision of the autonomous pharmacy.

In the second quarter of 2020, the Company continued its organizational realignment initiative, as well as initiated a restructuring plan to help mitigate the adverse impact of the COVID-19 pandemic on its business and financial results.

During the year ended December 31, 2020, the Company incurred and accrued $ 10.0 million of employee severance costs and related expenses.

As of December 31, 2020, the unpaid balance related to this restructuring plan was $ 0.6 million.

In the fourth quarter of 2018, the Company announced a company-wide organizational realignment initiative in order to align its organizational infrastructure for future expected growth.

During the year ended December 31, 2018, the Company incurred and accrued for $ 1.3 million of restructuring expenses, which includes severance and consulting-related expenses.

As of December 31, 2019, there was no unpaid balance related to this realignment initiative.

During the year ended December 31, 2018, the Company accrued and paid out $ 1.3 million of restructuring expenses, which includes severance and consulting-related expenses.

On March 2, 2018, the Company initiated the realignment of its Automation and Analytics commercial group in North America and France.

During the year ended December 31, 2018, the Company accrued and paid out $ 3.0 million of employee severance costs and related expenses.

On February 15, 2017, the Company announced its plan to reduce its workforce by approximately 100 full-time employees and close the Company’s Nashville, Tennessee, and Slovenia facilities, which was completed in fiscal year 2017.

The total cost for the plan was $ 4.2 million, which includes employee severance costs of approximately $ 3.7 million, and facility-related costs of approximately $ 0.6 million.

For the year ended December 31, 2017, the Company made payments of $ 4.2 million and the restructuring program was completed.

The following table summarizes the total restructuring expenses recognized in the Company’s Consolidated Statements of Operations for the years ended December 31, 2020, 2019, and 2018:

Year Ended December 31,

2020 2019 2018

(In thousands)

Cost of product and service revenues $ 2,564 $ — $ 186

Research and development 3,716 — —

Selling, general, and administrative 3,681 — 4,160

Total restructuring expenses $ 9,961 $ — $ 4,346

VALUATION AND QUALIFYING ACCOUNTS

Beginning of Period (1)

Charged (Credited) to Costs and Expenses (2)

Debited (Credited) to Other Accounts (3)

Charged (Credited) to

Costs and Expenses (2)

Debited (Credited) to

Other Accounts (3)

Written Off (4)

Translation Adjustments (5)

Other Adjustments (5)

End of Period (1)

1 unchanged sentence

Year ended December 31, 2018

Accounts receivable $ 4,796 $ 1,008 $ 3 $ ( 402 ) $ 333 $ 5,738

Investment in sales-type leases 254 ( 62 ) — — — 192

Accounts receivable and unbilled receivables $ 5,738 $ ( 127 ) $ 12 $ ( 3,010 ) $ ( 31 ) $ 2,582

Long-term unbilled receivables — — — — — —

Net investment in sales-type leases 192 10 12 — — 214

Total allowances deducted from assets $ 5,930 $ ( 117 ) $ 24 $ ( 3,010 ) $ ( 31 ) $ 2,796

Year ended December 31, 2019

Accounts receivable $ 5,738 $ ( 127 ) $ 12 $ ( 3,010 ) $ ( 31 ) $ 2,582

Investment in sales-type leases 192 10 12 — — 214

Accounts receivable and unbilled receivables $ 2,582 $ 2,488 $ — $ ( 1,986 ) $ 143 $ 3,227

Long-term unbilled receivables — — — — — —

Net investment in sales-type leases 214 11 — — — 225

Total allowances deducted from assets $ 2,796 $ 2,499 $ — $ ( 1,986 ) $ 143 $ 3,452

Year ended December 31, 2020

Accounts receivable $ 2,582 $ 2,488 $ — $ ( 1,986 ) $ 143 $ 3,227

Investment in sales-type leases 214 11 — — — 225

Accounts receivable and unbilled receivables $ 3,227 $ 1,095 $ — $ ( 535 ) $ 499 $ 4,286

Long-term unbilled receivables — — — — 30 30

Net investment in sales-type leases 225 40 — — — 265

Total allowances deducted from assets $ 3,452 $ 1,135 $ — $ ( 535 ) $ 529 $ 4,581

__________________________________________________

(1) Allowance for doubtful accounts.

(2) Represents amounts charged and credited to bad debt expense.

(3) Represents amounts debited to trade accounts receivable as recoveries, increasing the allowance.

(4) Represents amounts written-off from the allowance and accounts receivable.

(5) Represents foreign currency translation adjustments.

(1) Allowance for credit losses.

(2) Represents amounts charged and credited for provisions for credit losses.

(3) Represents amounts debited to receivables as recoveries, increasing the allowance.

(4) Represents amounts written off from the allowance and receivable.

(5) Represents other adjustments, such as foreign currency translation, adoption of new accounting guidance, and purchase price accounting adjustments in connection with acquisitions.

INDEX TO EXHIBITS

2 unchanged sentences

Exhibit Filing Date

2.1 Securities Purchase Agreement, dated October 29, 2015, among Omnicell, Inc., Aesynt Holding, L.P., Aesynt, Ltd., and Aesynt Coöperatief U.A.

2.1 Securities Purchase Agreement, dated October 29, 2015, by and among Omnicell International, Inc., Omnicell, Inc., Aesynt Holding, L.P., Aesynt, Ltd., and Aesynt Holding Coöperatief U.A.

8-K 000-33043 2.1 10/29/2015

2.2 Stock Purchase Agreement, dated November 28, 2016, among Ateb, Inc., Ateb Canada, Ltd., the related stockholders and option holders and Omnicell, Inc.

2.2 Stock Purchase Agreement, dated November 28, 2016, among Omnicell, Inc., Ateb, Inc., Ateb Canada Ltd., the related stockholders and optionholders, and the stockholders' agent

8-K 000-33043 2.1 11/29/2016

2.3 Equity Purchase Agreement, dated August 11, 2020, by and among Omnicell, Inc., PSGH, LLC, BW Apothecary Holdings, LLC, the sellers identified therein and the sellers’ representative

8-K 000-33043 2.1 8/12/2020

2.4 Amendment No.

1, dated October 1, 2020, to Equity Purchase Agreement, by and among Omnicell, Inc.

and the sellers’ representative

10-Q 000-33043 2.2 10/30/2020

3.1 Amended and Restated Certificate of Incorporation of Omnicell, Inc.

4 unchanged sentences

10-K 000-33043 3.2 3/28/2003

3.4 Amended and Restated Bylaws of Omnicell, Inc.

10-Q 000-33043 3.4 5/4/2018

3.4 Second Amended and Restated Bylaws of Omnicell, Inc.

8-K 000-33043 3.1 8/12/2020

4.1 Reference is made to Exhibits 3.1, 3.2, 3.3, and 3.4

1 unchanged sentence

S-1/A 333-57024 4.1 7/24/2001

4.3 Form of Indenture

S-3ASR 333-221332 4.5 11/3/2017

4.4 Form of Common Stock Warrant Agreement and Warrant Certificate

S-3ASR 333-221332 4.7 11/3/2017

4.5 Form of Preferred Stock Warrant Agreement and Warrant Certificate

S-3ASR 333-221332 4.8 11/3/2017

4.6 Form of Debt Securities Warrant Agreement and Warrant Certificate

S-3ASR 333-221332 4.9 11/3/2017

4.3 Description of Omnicell, Inc.'s Securities Registered Pursuant to Section 12 of the Exchange Act

10.1* 2018 Executive Officer Annualized Base Salaries

10-K 000-33043 4.7 2/26/2020

10.2* 2019 Executive Officer Annualized Base Salaries

8-K 000-33043 10.1 2/19/2019

10.3 Lease, effective July 1, 1999, between AMLI Commercial Properties Limited Partnership and Omnicell, Inc.

S-1 333-57024 10.2 3/14/2001

10.4 First Amendment to Lease, dated September 30, 1999, between AMLI Commercial Properties Limited Partnership and Omnicell, Inc.

4.4 Indenture, dated as of September 25, 2020, by and between Omnicell, Inc.

Bank National Association, as Trustee

8-K 000-33043 4.1 9/25/2020

10.5 Lease Agreement, dated October 20, 2011, between Middlefield Station Associates, LLC, and Omnicell, Inc.

4.5 Form of Global Note, representing Omnicell, Inc.’s 0.25% Convertible Senior Notes due 2025 (included as Exhibit A to the Indenture filed as Exhibit 4.4)

8-K 000-33043 4.2 9/25/2020

10.6 Form of Director and Officer Indemnity Agreement

S-1 333-57024 10.12 3/14/2001

10.7* 1997 Employee Stock Purchase Plan, as amended

10.1* Amended and Restated 1997 Employee Stock Purchase Plan, as amended

S-8 333-205465 99.2 7/2/2015

10.2* 2009 Equity Incentive Plan, as amended

10-K 000-33043 10.14 3/23/2007

10.9* 2009 Equity Incentive Plan, as amended

S-8 333-231669 99.1 5/22/2019

10.10* Form of Option Grant Notice and Form of Option Agreement for 2009 Equity Incentive Plan, as amended

8-K 000-33043 10.1 3/8/2019

10.3* Form of Restricted Stock Unit Grant Notice and Form of Restricted Stock Unit Award Agreement for 2009 Equity Incentive Plan, as amended

10-K 000-33043 10.17 3/11/2011

10.4* Form of Restricted Stock Unit Award Agreement for the 2009 Equity Incentive Plan, as amended

10-Q 000-33043 10.4 8/9/2012

10.5* Form of Performance Cash Award Grant Notice and Form of Performance Cash Award Agreement for the 2009 Equity Incentive Plan, as amended

10-Q 000-33043 10.5 8/9/2012

10.6* Form of Restricted Stock Bonus Grant Notice and Form of Restricted Stock Bonus Agreement for 2009 Equity Incentive Plan, as amended

S-8 333-225179 99.4 5/24/2018

10.7* Form of Option Grant Notice and Form of Option Agreement for 2009 Equity Incentive Plan, as amended

8-K 000-33043 10.1 3/8/2019

10.8* Form of Option Grant Notice and Form of Global Option Agreement for 2009 Equity Incentive Plan, as amended

10-Q 000-33043 10.1 7/31/2020

Incorporated By Reference

1 unchanged sentence

Exhibit Filing Date

10.13* 2010 Omnicell Quarterly Executive Bonus Plan

8-K 000-33043 10.1 3/17/2010

10.14* Employment Agreement, dated October 31, 2003, between Omnicell and Dan S.

10-K 000-33043 10.26 3/8/2004

10.15* Addendum to Offer Letter, dated December 30, 2010, between Omnicell and Dan S.

10-K 000-33043 10.14 3/11/2011

10.16* Employment Agreement, dated October 17, 2008, between Omnicell and Nhat H.

10-K 000-33043 10.29 2/24/2009

10.17 Lease between Omnicell, Inc.

and Sycamore Drive Holdings, LLC, dated March 16, 2012

Form of Restricted Stock Unit Grant Notice and Form of Global Restricted Stock Unit Award Agreement for 2009 Equity Incentive Plan, as amended (July 2020)

Form of Restricted Stock Unit Grant Notice and Form of Global Restricted Stock Unit Award Agreement for 2009 Equity Incentive Plan, as amended (February 2021)

10.11* Omnicell, Inc.

2010 Quarterly Executive Bonus Plan

8-K 000-33043 10.1 3/17/2010

2 unchanged sentences

10-Q 000-33043 10.1 5/5/2017

10.19* Form of Restricted Stock Unit Award Agreement for the 2009 Equity Incentive Plan, as amended

10-Q 000-33043 10.4 8/9/2012

10.20* Form of Performance Cash Award Grant Notice and Form of Performance Cash Award Agreement for the 2009 Equity Incentive Plan, as amended

10-Q 000-33043 10.5 8/9/2012

10.21 Lease, between Medical Technologies Systems, Inc.

and Gateway Business Centre, Ltd., dated March 31, 2004

10-Q 000-33043 10.6 8/9/2012

10.22 First Lease Amendment, between Medical Technologies Systems, Inc.

and Gateway Business Centre, Ltd., dated July 26, 2004

10-Q 000-33043 10.7 8/9/2012

10.23 Lease, between MTS Medication Technologies, Ltd.

and SAL Pension Fund, Ltd., dated June 9, 2011

10-Q 000-33043 10.8 8/9/2012

10.24 Third Amendment to Lease, between PR Amhurst Lake LLC and Omnicell, Inc., dated July 1, 2013

10.13* Omnicell, Inc.

Board of Directors Compensation Plan

10-K 000-33043 10.34 2/26/2020

10.14* Form of Director and Officer Indemnity Agreement

S-1 333-57024 10.12 3/14/2001

10.15* Amended and Restated Executive Officer Change of Control Agreement

10-Q 000-33043 10.4 11/6/2015

10.25 Agreement for Lease relating to Two Omega Drive, River Bend Technology Centre, Irlam, dated January 14, 2015, between Omega Technologies Limited and MTS Medication Technologies Limited and Omnicell, Inc.

10.16* Employment Agreement, dated October 31, 2003, between Omnicell, Inc.

10-K 000-33043 10.26 3/8/2004

10.26* Offer letter between Omnicell and Peter J.

10.17* Addendum to Offer Letter, dated December 30, 2010, between Omnicell, Inc.

10-K 000-33043 10.14 3/11/2011

10.18* Employment Agreement, dated October 17, 2008, between Omnicell, Inc.

10-K 000-33043 10.29 2/24/2009

10.19* Offer letter between Omnicell, Inc.

Kuipers dated August 11, 2015

10-Q 000-33043 10.3 11/6/2015

10.27* Amended and Restated Executive Officer Change of Control Letter Agreement

10-Q 000-33043 10.4 11/6/2015

10.28 Lease Agreement dated November 30, 1998, by and between Aesynt Incorporated (formerly McKesson Automated Healthcare, Inc).

and The Northwestern Mutual Life Insurance Company, as amended

10-Q 000-33043 10.2 5/6/2016

10.20* Offer Letter between Omnicell, Inc.

Seidelmann, dated March 29, 2018

10-K 000-33043 10.41 2/27/2019

10.21 Lease Agreement, dated October 20, 2011, between Middlefield Station Associates, LLC and Omnicell, Inc.

10-K 000-33043 10.9 3/8/2012

First Amendment to Lease, dated September 28, 2012, by and between Middlefield Station Associates, LLC and Omnicell, Inc.

10.23 Lease Agreement, dated December 21, 2001, by and between TC Northeast Metro, Inc.

and Aesynt Incorporated (formerly McKesson Automated Healthcare, Inc.), as amended

and Aesynt Incorporated (formerly McKesson Automation Inc.)

10-Q 000-33043 10.3 5/6/2016

10.30 Second Amendment to Industrial Lease, dated February 25, 2016, by and between Evergreen Propco IV, LLC and Omnicell, Inc.

First Amendment to Lease, dated April 8, 2005, by and between Multi-Employer Property Trust and Aesynt Incorporated (formerly McKesson Automation Inc.)

Second Amendment to Lease, dated April 21, 2008, by and between NewTower Trust Company Multi-Employer Property Trust and Aesynt Incorporated (formerly McKesson Automation Inc.)

Third Amendment to Lease, dated January 11, 2011, between Cranberry Cochran Road, L.P., et al.

and Aesynt Incorporated (formerly McKesson Automation Inc.)

Fourth Amendment to Lease, dated October 29, 2013, between McKnight Cranberry III, L.P.

and Aesynt Incorporated (formerly McKesson Automation Inc.)

10.28 Fifth Amendment to Lease, dated April 28, 2017, between McKnight Cranberry III, L.P.

and Aesynt Incorporated

10-Q 000-33043 10.3 5/5/2017

10.31 Lease, between Ateb Properties LLC and Ateb, Inc.

dated November 28, 2016

10.29 Sixth Amendment to Lease, dated November 11, 2019, between McKnight Cranberry III, L.P.

and Aesynt Incorporated

10-K 000-33043 10.39 2/26/2020

10.32 Fifth Amendment to Lease, dated April 28, 2017 between McKnight Cranberry III, L.P., a Delaware limited Partnership, and Aesynt Incorporated

10-Q 000-33043 10.3 5/5/2017

10.33 First Amendment to Lease, dated May 10, 2017, by and between Sycamore Drive Holdings, LLC and Omnicell, Inc.

10-Q 000-33043 10.3 8/4/2017

Incorporated By Reference

1 unchanged sentence

Exhibit Filing Date

Omnicell, Inc.

Board of Directors Compensation Plan

10.30 Distribution Agreement, dated November 3, 2017, among Omnicell, Inc.

1 unchanged sentence

8-K 000-33043 1.1 11/3/2017

10.36 Offer Letter between Omnicell and Scott P.

Seidelmann, dated March 29, 2018

10.31 Amended and Restated Credit Agreement, dated as of November 15, 2019, by and among Omnicell, Inc., the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent

8-K 000-33043 10.1 11/18/2019

10.37 Seventh Amendment to Lease Agreement, dated March 15, 2019, between Aesynt Incorporated and The Northwestern Mutual Life Insurance Company

10-Q 000-33043 10.3 5/3/2019

10.38 Fourth Amendment to Lease, between PR Amhurst Lake LLC and Omnicell, Inc., dated September 13, 2019

10-Q 000-33043 10.1 11/1/2019

Sixth Amendment to Lease, dated November 11, 2019, between McKnight Cranberry III, L.P.

and Aesynt Incorporated

10.40 Amended and Restated Credit Agreement, dated as of November 15, 2019, among Omnicell, Inc., the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent

10.32 First Amendment to Amended and Restated Credit Agreement, dated as of September 22, 2020, by and among Omnicell, Inc., the subsidiary guarantors party thereto, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent

8-K 000-33043 10.1 9/22/2020

10.33 Form of Convertible Note Hedge Confirmation

8-K 000-33043 10.1 9/25/2020

10.34 Form of Warrant Confirmation

8-K 000-33043 10.2 9/25/2020

Subsidiaries of the Registrant

48 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures