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Item 1. Business

2022-02-25 compared with 2021-02-24 · 283 added, 196 removed, 132 unchanged (78% of the section changed)

We are a leader in transforming the pharmacy care delivery model.

Our medication management automation solutions and adherence tools empower healthcare systems and pharmacies to focus on clinical care, rather than administrative tasks.

Our solutions support the vision of a fully autonomous pharmacy, a roadmap designed to improve operational efficiencies through a fully automated, medication management infrastructure.

Our vision is to transform the pharmacy care delivery model through automation designed to replace manual, error-prone processes, combined with a single, cloud-based platform and advanced services offerings.

We believe our connected devices, products, and solutions will help our customers harness the power of data and analytics, and deliver improved patient outcomes.

In 2019, several pharmacy leaders published a framework that validates the need for greater automation of pharmacy workflows and outlines the levels to progress towards the fully autonomous pharmacy.

Through our medication management automation platform that spans the continuum of care, we are advancing the vision for the autonomous pharmacy.

By delivering a combination of automation, intelligence, and advanced services, to be powered by a single, cloud-based platform, we believe we are helping to empower healthcare and pharmacy providers to increase healthcare value and improve patient outcomes.

We believe our robust customer base and channel within the pharmacy automation market enable us to bring new solutions and innovations to market.

Over 7,000 facilities worldwide use our automation and analytics solutions which are designed to improve pharmacy workflows, increase operational efficiency, reduce medication errors, deliver actionable intelligence, and improve patient safety.

More than 50,000 institutional and retail pharmacies across North America and the United Kingdom leverage our innovative medication adherence and population health solutions to improve patient engagement, and adherence to prescriptions and vaccine scheduling, helping to reduce costly hospital readmissions.

We believe our broad portfolio of products and services, combined with innovation, align us with the long-term trends of the healthcare market to manage patients across the continuum of care while helping to control costs and improve patient outcomes.

Operating Segments

We manage our operations as a single segment for the purposes of assessing performance and making operating decisions.

Our Chief Operating Decision Maker ("CODM") is our Chief Executive Officer.

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

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

Omnicell, a leader in transforming the pharmacy care delivery model, is committed to elevating the role of pharmacy within healthcare and transforming medication management as an essential component of care delivery.

We are doing so with an industry-leading comprehensive intelligent infrastructure, bringing together technology, analytics, and expert services to equip and empower pharmacists and pharmacies to focus on clinical care rather than administrative tasks.

This intelligent infrastructure provides the critical foundation for realizing the industry vision of the Autonomous Pharmacy, a vision defined by pharmacy leaders for improving operational efficiencies and ultimately targeting zero-error medication management.

Medication management solutions are some of the most utilized solutions in healthcare.

According to a 2018 survey conducted by the Centers for Disease Control and Prevention, drugs are prescribed in approximately 69% of physician appointments and approximately 80% of hospital emergency room visits.

With close to 160,000 of our devices installed in hospitals around the globe, dispensing close to 5 million doses daily, and over 2 million users, we believe we play a critical role in day-to-day pharmacy operations.

Many pharmacy leaders utilize our intelligent infrastructure to harness the power of data and analytics, as well as leverage our expertise in medication management to deliver improved patient outcomes.

In 2019, a group of pharmacy leaders published a definition of the autonomous pharmacy, articulating specific objectives and targeted outcomes to progress towards the fully autonomous pharmacy, along with a framework outlining the path to achieving it through defined levels of automation.

This vision, along with its supporting framework, has become the industry’s North Star for elevating the role of pharmacy within healthcare.

Through our medication management platform that spans the continuum of care, we believe Omnicell provides the intelligent infrastructure necessary to advance the Autonomous Pharmacy and reach the industry vision.

By developing and delivering a combination of technology, analytics, and expert services utilizing a single, cloud-based platform, we believe we will empower healthcare and pharmacy providers to increase healthcare value and improve patient outcomes.

We believe our robust customer base and channel within the pharmacy care market creates a network of insights and understandings that enable us to bring new solutions and innovations to market.

Facilities worldwide use our automation and analytics solutions to increase operational efficiency, reduce medication errors, deliver actionable intelligence, and improve patient safety.

Institutional and retail pharmacies across North America, the United Kingdom, Germany, and Australia leverage our innovative medication adherence and population health solutions to improve patient engagement and adherence to prescriptions, helping to reduce costly hospital readmissions.

We believe our committed customer base and strategic planning, along with a broad portfolio of products and services, combined with innovation, aligns us with the long-term trends of the healthcare market to manage patients across the continuum of care while helping to control costs and improve patient outcomes.

Business Strategy

We are committed to being the care provider’s most trusted partner and executing on the vision of the autonomous pharmacy by delivering automation, intelligence, and advanced services, powered by a single, cloud-based platform.

We believe there are significant challenges in pharmacy practice including, but not limited to, medication errors, drug shortages, medication loss due to drug diversion, significant medication waste and expiration costs, a high level of manual steps in the medication management automation process, complexity around compliance requirements, high pharmacy employee turnover rates, hospitalizations from adverse drug events in outpatient settings, high variability in outcomes, and limited inventory visibility.

We believe that these significant challenges in pharmacy practice drive the demand for increased digitization and virtualization, and that our solutions enable this and represent large opportunities in four market categories:

We are committed to being the care providers’ and retail pharmacies’ most trusted partner and executing on the industry vision of the Autonomous Pharmacy by developing and delivering an intelligent medication management infrastructure composed of devices, digital workflows, analytics, and experts, all powered by the cloud.

We believe there are significant challenges facing the pharmacy practice today including, but not limited to, labor shortages, medication errors, drug shortages, medication loss due to drug diversion, significant medication waste and expiration costs, a high level of manual steps in the medication management process, complexity around compliance requirements, high pharmacy employee turnover rates affecting tenure and expertise, hospitalizations from adverse drug events in outpatient settings, high variability in outcomes, and limited inventory visibility.

We believe that these significant challenges to the pharmacy practice drive the demand for increased digitization, visibility, and insights that our solutions enable, and represent large opportunities in four market categories:

• Point of Care.

As a market leader, we expect to continue expansion of this product category as customers increase use of our dispensing systems in more areas within their hospitals.

In addition, we are early in the replacement, upgrade, and expansion cycle of our XT Series automated dispensing systems which we believe is a significant market opportunity and we expect to continue to focus on further penetrating markets through competitive conversions.

We are more than halfway through the replacement, upgrade, and expansion cycle of older models of automated dispensing systems with our XT Series automated dispensing systems within our own customer base, which we believe is a significant market opportunity.

We have been successful penetrating markets through competitive conversions and expect this success to continue.

We also believe there is an opportunity for us to define a new standard of care for dispensing systems in perioperative settings.

We believe our current portfolio within the Point of Care market and new innovation and services will continue to drive improved outcomes and lower costs for our customers.

• Central Pharmacy.

This market represents the beginning of the medication management process in acute care settings, and, we believe, the next big automation opportunity to replace manual and repetitive processes which are common in the pharmacy today.

Manual processes are prone to significant errors, and products such as IVX Workflow, our IV sterile compounding solutions, and the XR2 Automated Central Pharmacy system automate

these manual processes and are designed to reduce the risk of error for our healthcare partners.

We believe new products and innovations, including Omnicell One™, in the Central Pharmacy market create opportunities to replace prior generation Central Pharmacy robotics and carousels.

The Central Pharmacy also represents an opportunity to provide technology-enabled services designed to reduce the administrative burden on the pharmacy and allow clinicians to operate at the top of their license.

• 340B Software-Enabled Services.

This market is targeted to covered entities participating in Section 340B of the Public Health Services Act.

The act requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to health care organizations that care for many uninsured and low-income patients and results in a complex compliance environment.

We believe that there are significant opportunities for health systems to improve participation benefits and maximize program savings through software-enabled services and solutions.

Our Omnicell 340B platform of technology-enabled services includes split billing software, contract pharmacy administration, specialty contract pharmacy administration, and drug discount access solutions.

This market represents the beginning of the medication management process in acute care settings, and, we believe, the next big automation opportunity to replace high volumes of manual and repetitive processes that are common in pharmacies today.

Manual processes are prone to significant errors, and products such as IVX Workflow, our IV Sterile Compounding Service (including IV robotics), and our Central Pharmacy Dispensing Service (including the XR2 Automated Central Pharmacy System), automate these manual processes and are designed to reduce the risk of error for our healthcare partners.

Because automation adoption in the Central Pharmacy is still nascent, we believe that the adoption of solutions will be accelerated by bundling those solutions with technology-enabled services that are designed to deliver specific outcomes and leverage intelligence across the enterprise for more actionable insights, and are expected to reduce administrative burden, allowing clinicians to operate at the top of their license.

We think that these bundled solutions are becoming more critical than ever as health systems appear to face increasing labor shortages and supply chain disruption following the COVID-19 pandemic.

Additionally, we believe new products, innovations and our expertise in the Central Pharmacy market create opportunities to replace prior generation Central Pharmacy robotics, especially when combining those robotics with carousels and technology-enabled services to increase the percentage of medication managed through the intelligent infrastructure.

• Specialty Pharmacy and 340B Program.

We believe that health systems will invest in more revenue generating activities that improve patient outcomes, and pharmacy will be at the center with specialty pharmacies and the 340B Drug Pricing Program.

Studies have shown that specialty medications represent over 50% of the country’s total spending on retail, mail-order, and provider-administered drugs.

Used for treatment of complex conditions, these medications often require intensive patient management and specialized workflows for dispensing and care coordination.

Specialty pharmacies serve as the connection between patients, prescribing physicians, and payors to ensure streamlined access and adherence to these specialty drugs, helping to maintain continuity of care throughout the process, and are expected to improve margin and profitability for the health system.

The newly acquired ReCept Holdings, Inc.

(“ReCept”) solution provides implementation and managed services for health systems and other provider organizations to optimize their specialty pharmacy programs and the related pharmaceutical aspects of patient care.

The 340B market is targeted to covered entities participating in Section 340B of the Public Health Services Act.

The Public Health Services Act requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to healthcare organizations that care for many uninsured and low-income patients and creates a complex compliance environment.

According to the Health Resources and Services Administration, which is responsible for administering the 340B program, enrolled hospitals and other covered entities can achieve an average savings of 25% to 50% in pharmaceutical purchases.

Due to the complexities of adhering to the administrative process of the 340B program, we believe that there are significant opportunities for health systems to improve participation benefits and maximize program savings through our 340B technology-enabled services.

• Retail, Institutional, and Payer.

We believe the Retail, Institutional, and Payer market represents a large opportunity as the majority of drugs are distributed in the non-acute sector.

New technology and updated state board regulations are leading to innovation at traditional retail providers, which, combined with the move to value-based care, we believe will incentivize the market to adopt solutions to help providers and payers engage patients in new ways that lower the total cost of care.

We believe adoption of our EnlivenHealth (formerly Population Health Solutions) portfolio of software products and services, along with medication adherence packaging, will increase adherence performance rates, increase prescription volume for our customers, and reduce hospital and emergency room visits due to improved adherence.

As retail pharmacies play an increasingly vital role in population health following the onset of the COVID-19 pandemic, EnlivenHealth has extended solutions to assist with vaccination programs, testing protocols, and patient engagement efforts.

There are three main areas of focus:

◦ CareScheduler is an exclusive digital solution that automates the scheduling, reporting, and patient outreach for administering the COVID-19 vaccine and other vaccines and testing procedures.

◦ Medication Synchronization is an appointment-based solution that aligns a patient's medications to a single refill date, designed to improve medication adherence and reduce hospital readmissions.

◦ Medication Therapy Management is a platform that offers intuitive workflow with high-level decision support for efficiently completing CMS-compliant Comprehensive Medication Reviews using pharmacy claims data.

We believe our technology, services, and solutions within these market categories position us well to address the needs of retail, acute, and post-acute pharmacy providers.

Environmental, Social, and Governance Initiatives

We view Omnicell as a company with a social mission:

Our focus on reinventing the pharmacy care delivery model is designed to dramatically improve health outcomes and lower healthcare costs.

Our teams are motivated by knowing that our work to improve medication management has a tangible, real-world impact on healthcare workers, patients, and communities.

We recognize that we are accountable not only to our customers and shareholders, but also to the global community.

In December 2020, we published initial ESG disclosure and performance information, aligned to Sustainability Accounting Standards Board, Task Force on Climate-related Financial Disclosures, and Global Reporting Initiative guidelines.

We are focused on innovating to drive sustainability across our business;

ethically and responsibly sourcing materials by adhering to internationally-recognized Organisation for Economic Co-operation and Development guidance;

and elevating our diversity and inclusion initiatives.

Industry Background and Market

We believe our solutions support the vision for the fully autonomous pharmacy and are strongly aligned with trends in the healthcare market, and well positioned to address the evolving needs of healthcare institutions.

The healthcare industry continues to experience a significant degree of consolidation, with healthcare providers combining to create larger healthcare delivery organizations to achieve greater market power.

We believe this trend has increased the market need for more integrated medication management automation solutions on a single platform to help improve patient and financial outcomes for both inpatient and outpatient settings.

Our portfolio of connected devices, products, and services, combined with innovation, are designed with this objective in mind.

In addition, healthcare providers and facilities are affected by significant economic pressures.

Annual prescription drug expenditures in the United States were approximately $508 billion in 2019, according to the IQVIA National Sales Perspective database.

Also, based on a 2018 report by the Health Care Cost Institute, the largest growth in spending for professional services—defined as payments to physicians and other clinical care team members for services provided in physician offices and hospitals—occurred among administered drugs, which accounted for the biggest share, at 39%, of the total increase in professional services spending from 2014 to 2018.

Rising costs of labor, prescription drugs, and new medical technology all contribute to increased spending.

Governmental pressures surrounding healthcare reform and compliance have led to increased scrutiny of the cost and efficiency with which healthcare providers deliver their services.

These factors, combined with continuing consolidation in the healthcare industry, have increased the need for the efficient delivery of healthcare in order to control costs, and have elevated the strategic importance of medication management and pharmacy automation across the continuum of care.

Furthermore, over time, complexities in medication management have increased along with the volume of patients and medications, but many manual processes are still used, resulting in inefficient tracking and delivery of medications and supplies.

Many clinical staff are burdened with administrative tasks.

According to a survey conducted by the American Society of Health-System Pharmacists in 2019, approximately 75% of pharmacist activities are non-clinical in nature.

In addition, many existing healthcare information systems are unable to support the modernization of healthcare delivery processes or address mandated patient safety initiatives.

These factors contribute to medical errors and unnecessary process costs across the healthcare sector including in medication management.

Legislation and industry guidelines, such as those issued by the U.S.

Food and Drug Administration (the "FDA"), The Joint Commission, the U.S.

Pharmacopeial Convention and the Institute for Safe Medication Practices in the areas of medication management—including storage, security, and labeling—have created an environment of increased patient safety awareness and regulatory control.

Against this backdrop, healthcare organizations, desiring to improve quality and avoid

liability, have been driven to prioritize investments in capital equipment, including pharmacy automation, which is a standard of care, to improve patient safety.

While the overall storage and security of medications in hospitals have improved, there had been an increased focus on controlled substance management in recent years, particularly in light of the opioid crisis in the United States.

According to a research report published by the Butler Center for Research in 2015, studies in the United States have shown that 10% to 15% of healthcare professionals will misuse substances during their lifetime, with significantly higher levels of opioid abuse in particular.

Joint Commission surveyors are seeking more documentation from hospitals demonstrating that their medication policies and procedures are adequate.

Medication non-adherence is widely recognized as a common and costly problem.

Poor adherence results in increased hospital readmissions, deteriorated treatment outcomes, and avoidable healthcare costs.

The estimated annual cost of prescription drug-related morbidity and mortality resulting from non-optimized medication therapy, including medication non-adherence, was $528 billion in 2016, according to a study published in the Annals of Pharmacotherapy in 2018.

In addition, a 2017 study published in the Journal of the American Pharmacists Association found that medication issues are responsible for 26% of hospital readmissions.

With more than 40 million Americans taking five or more maintenance medications routinely (based on statistics published by the National Center for Health Statistics in 2018), pharmacists need ways to support the arduous task of keeping patients compliant.

According to a 2011 article by the World Health Organization, “although these medications are effective in combating disease, their full benefits are often not realized because approximately 50% of patients do not take their medications as prescribed.” Medication adherence can be improved through attitudinal and behavioral changes, which pharmacists can encourage and help facilitate by providing interventional support, including adherence tools such as blister cards, reminders, prescription synchronization, and patient engagement tools.

We believe our EnlivenHealth portfolio has the potential to reduce hospitalizations and emergency department visits, and improve patient health by increasing medication adherence.

Government Regulation

Our operations are global and are affected by complex state, federal, and international laws and regulations.

These laws and regulations relate to healthcare, privacy and security, product compliance, import, export, trade, healthcare fraud and abuse (including anti-kickback and false claims laws), environmental standards, anti-corruption, anti-bribery, labor and employment, as well as other areas.

We receive, store, and process personal information and other data from and about our customers, in addition to our employees and service providers, and our customers use our solutions to obtain and store personal information, including personal health information.

As a result, we are subject to various laws and regulations related to privacy, data protection, and information security.

In the United States, these include federal health information privacy laws (such as the Health Information Portability and Accountability Act of 1996 ("HIPAA"), various state and federal security breach notification laws, consumer protection laws, as well as state laws addressing privacy and security.

Internationally, various foreign jurisdictions in which we operate have established, or are developing, their own data privacy and security legal framework with which we or our customers must comply, including the European Union’s General Data Protection Regulation (“GDPR”).

In addition, while the manufacture and sale of most of our current products are not regulated by the FDA or the Drug Enforcement Administration, through our acquisition of Aesynt Incorporated, we have both Class I and Class II, 510(k) exempt medical devices which are subject to FDA regulation and require compliance with the FDA Quality System Regulation as well as medical device reporting.

Furthermore, our operations are impacted by trade regulations in many countries that govern the import of raw materials and finished products, and we are also subject to laws and regulations that seek to prevent corruption and bribery in the marketplace (including the U.S.

Foreign Corrupt Practices Act and the United Kingdom Bribery Act) as well as laws and regulations pertaining to healthcare fraud and abuse, including state and federal anti-kickback and false claims laws in the United States.

Since we manufacture and sell our products outside of the United States, certain products of a local nature and variations of product lines must also meet other local regulatory requirements.

Additional risks are inherent in conducting business outside the United States, including more robust information governance and environmental regulations in the European Union, expropriation, nationalization, and other governmental action.

Demand for many of our existing and new products is, and will continue to be, affected by the extent to which local regulatory requirements increase our risk and/or expense to do business in those countries.

Compliance with the laws and regulations applicable to our global operations is costly and requires sufficient resources to actively maintain various governance, risk, and compliance systems in several areas, including FDA, quality, information governance and security, and environmental, health and safety, to enable Omnicell to keep abreast of the constantly evolving

regulatory landscape both in the United States and abroad.

Any failure to comply with these laws and regulations could result in a range of fines, penalties, and/or other sanctions.

We believe the Retail, Institutional, and Payer market represents a significant opportunity as healthcare evolves.

A majority of all prescription drugs are distributed in the non-acute sector.

The COVID-19 pandemic accelerated the shift of primary healthcare settings from hospitals and doctors’ offices to other convenient channels like the home, digital, and retail pharmacies.

We believe adoption of our EnlivenHealth ® portfolio of software products and services, along with medication adherence packaging, will increase adherence performance rates, increase prescription volume for our customers, and reduce hospital and emergency room visits due to improved adherence.

Our EnlivenHealth portfolio has been expanded with two recent acquisitions that will assist in adoption and drive innovation.

RxInnovation Inc., operating as FDS Amplicare (“FDS Amplicare”), is a leading provider of financial management, analytics, and population health solutions to the retail pharmacy industry, including independent pharmacies.

MarkeTouch Media, LLC (“MarkeTouch Media”) has longstanding pharmacy chain relationships that further broaden EnlivenHealth’s national pharmacy network.

We believe our technology, services, and solutions within these market categories position us well to address the needs of acute, post-acute, ambulatory, and retail pharmacy providers and health plans.

Products and Services

As we continue to execute on the vision of the autonomous pharmacy, we plan to integrate our current offerings and technologies on a cloud infrastructure, and invest in broadening our solutions across three key areas:

We provide a range of advanced automation, including robotics designed to digitize and streamline workflows and reduce human error in central pharmacy and clinical areas, and to support medication adherence initiatives in retail pharmacies.

Our automation products and technology-enabled services include central pharmacy automation solutions for both dispensing and IV compounding systems, medication and supply dispensing systems at the point of care, as well as medication adherence solutions which are used by retail, community, and outpatient pharmacies to help improve patient engagement and adherence to prescriptions.

As we continue to execute on the industry vision of the Autonomous Pharmacy, we are enabling our current offerings to operate on a cloud-based platform in an effort to build out an intelligent medication management infrastructure.

We have invested in broadening our solutions across two key areas:

automation and advanced services, as explained below.

Our automation products and technology-enabled services span the evolving continuum of care, including acute, post-acute, ambulatory, and retail pharmacies.

We provide a range of advanced automation, including robotics designed to automate work, streamline workflows, and reduce human error.

Across these settings, we provide central pharmacy automation solutions for both medication dispensing and IV compounding systems, as well as medication and supply dispensing systems at the point of care.

We also provide patient engagement solutions to help improve adherence to prescriptions.

With certain automation and technology-enabled service offerings, we provide expert services to optimize utilization through subscription agreements, inclusive of personnel to operate the equipment.

Our automation offerings include:

Point of Care

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Automated dispensing systems are an essential part of medication management because they safeguard medications—including controlled substances—and automatically track inventory.

We strive to continually develop new innovations for our automated dispensing systems to close gaps in safety and help enable clinicians to spend less time managing medications and more time caring for patients.

Our XT Series automated dispensing systems for medications and supplies used in nursing units and other clinical areas of the hospital can be customized with various software and hardware options.

Our interoperability solutions integrate our automated dispensing systems with key electronic health record systems to help streamline workflow and increase accuracy.

We also offer specialized automated dispensing systems for the operating room.

We strive to continually innovate our automated dispensing systems to close gaps in safety and enable clinicians to spend less time managing medications and more time caring for patients.

Our XT Series automated dispensing systems for medications and supplies, which are used in nursing units and other clinical areas of the hospital, are designed to support workflows specific to each area of the hospital, with various software and hardware options.

For the operating room, we also offer specialized automated dispensing systems.

Our interoperability solutions integrate all of our automated dispensing systems with key electronic health record systems to streamline workflow and increase accuracy.

Central Pharmacy

An efficient central pharmacy operation is vital to delivering exceptional patient care.

With pharmacist and technician labor requirements increasing over the years, it is critical for pharmacies to find new ways of increasing productivity.

Our broad medication management platform offers a range of automated hardware and software solutions.

Our central pharmacy automation solutions are designed to empower healthcare providers to increase staff efficiency, reduce inventory costs, prevent

medication errors, improve compliance, and strengthen security of controlled substances.

By automating manual, error-prone processes, our technology helps enable pharmacy staff to work more efficiently and directly contribute to clinical care.

With pharmacist and technician labor requirements increasing and resource shortages escalating over the years, it is critical for pharmacies to find new ways to increase productivity.

Our medication management platform offers a broad range of automated hardware and software solutions.

Our central pharmacy automation solutions are designed to empower healthcare providers to increase staff efficiency, reduce inventory costs, prevent medication errors, improve compliance, and strengthen security surrounding controlled substances.

By automating manual, error-prone processes, we believe our technology and advanced services directly contribute to clinical care by enabling pharmacy staff to work more efficiently.

Our central pharmacy automation solutions include:

automated storage and retrieval systems, including our XR2 Automated Central Pharmacy System – an important building block of the autonomous pharmacy vision;

automated storage and retrieval systems, including our XR2 Automated Central Pharmacy System – an important building block to the industry vision of the Autonomous Pharmacy;

IV compounding robots and workflow management systems;

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Medication Adherence

Our medication adherence solutions 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.

We offer automated systems to aid pharmacies in more accurately and efficiently filling our multimed adherence packaging based on individual patient medication orders.

These machines interface with pharmacy information systems to obtain prescription information for each patient receiving the medication blister cards.

In addition to robotic automation, we offer software that guides the user through the manual filling process to streamline workflow and increase packing accuracy.

Our single-dose automation solutions fill and label a variety of patient-specific, single-dose medication blister packaging based on incoming prescriptions.

Our semi-automated filling equipment is designed specifically for the long-term care institutional pharmacy with enough order volume to warrant pre-packaging frequently-used medications.

Our fully automated and semi-automated filling equipment is designed specifically for institutional pharmacies with enough order volume to warrant automated packaging of medications.

Our automated solutions interface with pharmacy information systems to obtain prescription information.

We also offer a wide range of medication blister card packaging and packaging supplies designed to enhance medication adherence in a variety of non-acute care settings.

For multi-medication prescriptions, we offer software that guides users through the manual filling process to streamline workflow and increase packaging accuracy.

In addition, we also offer a wide range of medication blister card packaging and packaging supplies designed to enhance medication adherence in a variety of non-acute care settings.

These products include multimed blister cards (adherence packaging) distributed by retail, community, and outpatient pharmacies to help patients manage their medication regimens at home.

These cards organize multiple drugs into a single blister cavity for each dosing time, helping to make it easier for patients on complex regimens to comply with their therapy.

For environments where a caregiver is present, institutional and retail pharmacies use our single dose blister cards, which provide up to 90-day doses of a specific single medication.

These cards organize multiple drugs into a single blister cavity for each dosing time, making it easier for patients on complex regimens to comply with their therapy.

For environments where a

caregiver is present, institutional and retail pharmacies use our single-dose blister cards, which provide up to 90 daily doses of a specific single medication.

Other Automation Products and Services

Omnicell ® Interface Software provides interface and integration between our medication-use products or our supply products and a healthcare facility’s in-house information management systems.

Customer service includes customer education and training, and post-installation technical support with phone support, on-site service, parts, and access to software upgrades.

Omnicell Interface Software provides interface and integration between our medication-use products or our supply products and healthcare facilities' in-house information management systems.

Our Technical Services include customer education, training, and post-installation technical support with phone and web-based support through our U.S.-based technical support centers, on-site service, parts, and access to software upgrades.

Product support is available through fixed-period service contracts and on a time-and-materials basis.

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Additional products sold outside the United States include robotic dispensing systems used in hospitals and retail pharmacies for handling the stocking and retrieval of boxed medications.

For management of medical supplies, a specialized cabinet that uses radio frequency identification is also available.

Leveraging data analytics and predictive intelligence, we provide actionable insights to help customers better understand their medication usage and improve pharmacy supply chain management.

For management of medical supplies, a specialized cabinet that uses radio frequency identification is also available, which is designed to improve the accuracy of inventory management.

Advanced Services

With nearly 30 years of experience delivering automation solutions, Omnicell believes that supporting the industry vision of the Autonomous Pharmacy requires the addition of digital workflows, analytics, and experts to achieve more sophisticated outcomes.

Leveraging data through predictive and prescriptive analytics, sourced from operational data generated by thousands of facilities utilizing our solutions, we believe we are able to provide actionable insights to help customers better understand their medication usage and improve pharmacy supply chain management.

We offer specialized services and analytics software designed to help healthcare facilities improve their bottom line and patient care by harnessing data from automation and other systems.

Our Omnicell One (formerly Performance Center) solution, a technology-enabled service, combines a cloud-based predictive intelligence platform with expert services designed to drive enterprise improvements in medication inventory optimization, medication waste reduction, and drug diversion monitoring.

Our comprehensive 340B solution provides a combination of software, deep knowledge of the 340B program, and software-enabled services, to help deliver superior outcomes in both savings and compliance, optimizing the 340B program for eligible entities.

Our Omnicell One TM solution, a technology-enabled service, combines cloud-based predictive analytics with expert services designed to drive enterprise improvements in medication inventory optimization, medication waste reduction, and drug diversion monitoring.

Our Central Pharmacy IV Compounding Service offers a comprehensive service model inclusive of IV robotic technology, data analytic tools, and clinical support for insourced sterile compounding programs that is intended to reduce medication costs while improving safety and supply chain dependability.

Our Central Pharmacy Dispensing Service, inclusive of the XR2 automated central pharmacy system, is a full-service central pharmacy automation solution designed to improve inventory control, compliance, safety, and efficiency through automation, supported by operational staff, maintenance, and optimization services.

Our 340B solution provides a combination of software, deep knowledge of the 340B program, and technology-enabled services, to help deliver superior outcomes in both savings and compliance, optimizing the 340B program for eligible entities.

The suite of offerings includes split billing software, contract pharmacy administration, specialty contract pharmacy administration, and drug discount access solutions.

EnlivenHealth™ offers a portfolio of medication management tools designed to help improve health outcomes.

The newly acquired ReCept solution is focused on specialty pharmacy management services, including specialty pharmacy expertise and operational capabilities, human resources, technology and integration, workflow management, payor access assistance, and other aspects of managing a specialty pharmacy.

This total solution for provider groups, federally qualified health centers, and health systems supports on-site management of specialty pharmacy services, including payor contracting, staffing, licensing, quality assurance, 340B administration, and preferred pricing agreements designed to improve margin and profitability, while keeping the patient at the center of care.

EnlivenHealth offers a portfolio of patient engagement and medication management tools designed to help improve health outcomes.

EnlivenHealth Patient Engagement is a web-based nexus of solutions designed to comprehensively support improvement in health outcomes related to medication use.

EnlivenHealth Patient Engagement includes clinical solutions such as Medication Synchronization, Immunization and Scheduling, Targeted Patient Interventions, Medication Therapy Management, and Opioid Mitigation Solution, and patient communications such as hosted Interactive Voice Response (IVR), Outbound

Communications, and Mobile App, which enable tailoring of patient contact to individual preferences.

Combined with advanced analytics to stratify populations and prioritize patient interventions, these solutions support improved performance for both pharmacies and health plans, helping them to succeed in value-based healthcare by driving health outcomes - better care, better health, and lower costs.

Technology-Enabled Services

We provide technology-enabled services that serve as an extension of pharmacy operations to support improved efficiency, regulatory compliance, and patient outcomes.

Our technology-enabled services provide comprehensive, customer-centric, outcome-based adoption services to help ensure successful adoption of our technology.

Our Central Pharmacy Dispensing Service is a turnkey, full service central pharmacy automation solution designed to improve inventory control, compliance, safety, and efficiency through automation, supported by operational staff, maintenance, and optimization services.

We also offer Professional Services, as the introduction of new innovations within our health system customers has become increasingly complex, with greater organizational impacts.

EnlivenHealth Patient Engagement includes clinical solutions such as CareScheduler, Medication Synchronization, Immunization and Scheduling, Targeted Patient Interventions, Medication Therapy Management, Opioid Mitigation Solution, and an Omnichannel communications platform, which enables tailoring of patient contact to individual preferences.

Additionally, we believe our recent acquisition of MarkeTouch Media’s mobile and web-based technology and patient engagement solutions will strengthen the EnlivenHealth suite of industry-leading software-as-a-service (“SaaS”) based solutions.

Combined with advanced analytics to stratify populations and prioritize patient interventions, we believe these solutions support improved performance for both pharmacies and health plans, helping them to succeed in value-based healthcare by driving health outcomes - better care, better health, and lower costs.

The recent acquisition of FDS Amplicare ® adds financial management, analytics, and population health solutions to the EnlivenHealth solution.

As retail pharmacies continue to play an increasingly vital role in population health following the onset of the COVID-19 pandemic, EnlivenHealth and FDS Amplicare have extended solutions to assist with vaccination programs, testing protocols, patient engagement, and Medicare health plan selection support for patients.

As the introduction of new innovations within our health system customers has become increasingly complex, we also offer Professional Services, such as technology and service implementations, as well as change management services.

We view our customers as partners in the pursuit of better health outcomes for patients and improved satisfaction for the clinicians who serve them.

Every engagement is an opportunity for us to help customers reach their clinical and business objectives.

In addition to our own development, we have, from time to time, acquired businesses and technologies that expand our product lines and are a strategic fit for our business.

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

The acquisition adds to our portfolio 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.

Every engagement is an opportunity for us to help our customers reach their clinical and business objectives while we accelerate the time to value for any initiative.

Through our Customer Success service, we provide technology-enabled services that serve as an extension of pharmacy operations to support improved efficiency, regulatory compliance, and patient outcomes.

Our technology-enabled services provide customer-centric, outcome-based adoption services designed to ensure the successful adoption of our technology.

Operating Segments

We manage our operations as a single segment for the purposes of assessing performance and making operating decisions.

Our Chief Operating Decision Maker (“CODM”) is our Chief Executive Officer.

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

Industry Background and Market

We believe our solutions support the industry vision of the Autonomous Pharmacy, are strongly aligned with trends in the healthcare market, and are well positioned to address the evolving needs of healthcare institutions.

We believe this trend has increased the market’s need for integrated medication management solutions on a single platform to help improve patient and financial outcomes for both inpatient and outpatient settings.

Our portfolio of connected devices, digital workflows, analytics, and experts, combined with innovation, is designed with this objective in mind.

In addition, healthcare providers and facilities are affected by significant economic pressures.

Annual prescription drug expenditures in the United States were approximately $535 billion in 2020, according to the IQVIA National Sales Perspective database.

Based on a 2018 report by the Health Care Cost Institute, the largest growth in spending for professional services—defined as payments to physicians and other clinical care team members for services provided in physician offices and hospitals—occurred among administered drugs, which accounted for the biggest share, at 39% of the total increase in professional services spending from 2014 to 2018.

Rising costs of labor, prescription drugs, and new medical technology all contribute to increased spending.

Governmental pressures surrounding healthcare reform and compliance have led to increased scrutiny of the cost and efficiency with which healthcare providers deliver their services.

These factors, combined with continuing consolidation in the healthcare industry, have increased the need for the efficient delivery of healthcare in order to control costs, and elevated the strategic importance of medication management and pharmacy automation across the continuum of care.

Furthermore, while complexities in medication management have increased over time along with the volume of patients and medications, many manual processes are still used, resulting in inefficient tracking and delivery of medications and supplies and increased administrative burden on many clinical staff.

According to a survey conducted by the American Society of Health-System Pharmacists in 2019, approximately 75% of pharmacist activities are non-clinical in nature.

In addition, many existing healthcare information systems are unable to support the modernization of healthcare delivery processes or address mandated patient safety initiatives.

These factors contribute to medical errors and unnecessary process costs across the healthcare sector including in medication management.

Legislation and industry guidelines, such as those issued by the U.S.

Food and Drug Administration (the “FDA”), the U.S.

Drug Enforcement Administration (the “DEA”), The Joint Commission, the U.S.

Pharmacopeial Convention, the Institute for Safe Medication Practices, and state boards of pharmacy in the areas of medication management—including storage, security, and labeling—have created an environment of increased patient safety, awareness, and regulatory control.

Against this backdrop, healthcare organizations, desiring to improve quality and avoid liability, are driven to prioritize investments in capital equipment, including pharmacy automation, which is a standard of care, to improve patient safety.

While the overall storage and security of medications in hospitals have improved, there has been an increased focus on controlled substance management in recent years, particularly in light of the opioid crisis in the United States.

According to a research report published by the

Butler Center for Research in 2015, studies in the United States have shown that 10% to 15% of healthcare professionals misuse substances during their lifetime, with significantly higher levels of opioid abuse in particular.

Joint Commission surveyors are seeking more documentation from hospitals demonstrating that their medication policies and procedures are adequate to prevent illicit use of controlled substances.

Medication non-adherence is widely recognized as a common and costly problem.

Poor adherence results in increased hospital readmissions, deteriorated treatment outcomes, and avoidable healthcare costs.

The estimated annual cost of prescription-drug related morbidity and mortality resulting from non-optimized medication therapy, including medication non-adherence, was $528 billion in 2016, according to a study published in the Annals of Pharmacotherapy in 2018.

In addition, a 2017 study published in the Journal of the American Pharmacists Association found that medication issues are responsible for 26% of hospital readmissions.

With more than 40 million Americans taking five or more maintenance medications routinely (based on statistics published by the National Center for Health Statistics in 2018), we believe pharmacists need ways to support the arduous task of maintaining patient compliance.

Medication adherence can be improved through attitudinal and behavioral changes, which pharmacists can encourage and help facilitate by providing interventional support, including adherence tools such as blister cards, reminders, prescription synchronization, and patient engagement tools.

We believe our EnlivenHealth portfolio has the potential to reduce hospitalizations and emergency department visits, improving patient health by increasing medication adherence.

Furthermore, according to the U.S.

Bureau of Labor Statistics, from February 2020 to September 2021 the healthcare industry lost 524,000 workers.

Discussions about the healthcare labor crisis tend to highlight the shortfall of nurses.

However, the shortage of pharmacy technicians, who are critical to clinical care in inpatient, outpatient and retail settings, is also acute.

A nationwide survey conducted in May 2021 by the National Community Pharmacists Association found that nearly 90% of the survey’s 278 independent pharmacy owner/manager respondents said they couldn’t find pharmacy technicians to staff their pharmacies at ideal capacity.

Healthcare workforce labor constraints have come at a time when hospitalizations continue to fluctuate dramatically.

In addition, even apart from the impact of the COVID-19 pandemic, patient volume is projected to rebound and exceed pre-pandemic levels.

A 2021 McKinsey & Co.

survey of the leaders of 100 large private-sector hospitals in the United States—which was conducted several months prior to the emergence of the COVID-19 Omicron variant—concluded that on average hospitals’ inpatient admissions have returned to 2019 levels, and inpatient admissions are projected to increase by 4% in 2022 relative to 2019.

Omnicell’s intelligent infrastructure—incorporating technologies such as automation, robotics, and data intelligence—is designed to automate many labor-intensive medication management tasks.

We believe this will help optimize the use of existing pharmacy staff, which is expected to free up clinicians’ time for higher-value, patient-engaging activities, such as medication therapy management, immunizations, point-of-care testing, and disease state management.

Government Regulation

Our global operations are affected by complex state, federal, and international laws and regulations.

As a result, we are subject to various laws and regulations related to privacy, data protection, and information security.

In the United States, these include federal health information privacy laws (such as the Health Information Portability and Accountability Act of 1996, various state and federal security breach notification laws, consumer protection laws, and state laws addressing privacy and security.

Internationally, various foreign jurisdictions in which we operate have established, or are developing, their own data privacy and security legal frameworks with which we or our customers must comply including, for example, the European Union’s General Data Protection Regulation.

The manufacture and sale of most of our current medication and management solutions products are not regulated by the FDA or the DEA, although they are used by other persons (our customers) whose pharmacy, dispensing, and compounding activities may be subject to regulation by those agencies and by state boards of pharmacy.

However, we manufacture and develop specifications for products classified as Class I and Class II medical devices, which are subject to FDA regulation and require compliance with the FDA Quality System Regulation as well as medical device reporting, including a sterile disposable product requiring FDA 510(k) review and clearance prior to market and distribution.

Medical devices may also be subject to various other regulatory requirements, including as applicable, premarket clearance or approval, clinical trial requirements,

establishment registration and device listing, complaint handling, notification and repair, replace, refund, mandatory recalls, unique device identifier requirements, reports of removals and corrections, postmarketing surveillance, and device tracking.

Similarly, certain provisions of the Federal Food, Drug, and Cosmetic Act (“FDCA”) govern the approval, manufacture, handling, distribution, and tracking and tracing of pharmaceuticals.

The FDCA also regulates which medications may be compounded, and how certain compounded medications may be manufactured, distributed and dispensed.

Companies engaged in distributing or dispensing compounded pharmaceuticals may be required to register their facilities with the FDA or operate their businesses according to appropriate quality standards.

The law applies to all parts of the drug distribution chain, but generally exempts dispensing pharmaceuticals as long as no drugs are adulterated or misbranded and all are dispensed in accordance with and pursuant to a valid prescription or subject to certain other limitations and controls, as applicable.

Since we manufacture and sell our products outside of the United States, certain products of a local nature and variations of product lines must also meet other local regulatory requirements.

Additional risks are inherent to conducting business outside the United States, including more robust information governance and environmental regulations in the European Union, expropriation, nationalization, and other governmental action.

Compliance with the laws and regulations applicable to our global operations is costly and requires sufficient resources to actively maintain various governance, risk, and compliance systems in several areas, including the FDCA and FDA regulations Controlled Substances Act and DEA regulations, state board of pharmacy regulations, quality, information governance and security, and environmental, health and safety, to enable Omnicell to keep abreast of the constantly evolving regulatory landscape both in the United States and abroad.

Any failure to comply with these laws and regulations could result in a range of fines, penalties, and/or other sanctions.

Recent Acquisitions

In addition to our own organic development, we have, from time to time, acquired businesses and technologies that expand our product lines and are strategic fits for our business, and we expect to continue to seek to acquire business, technologies, or products in the future.

The following highlights describe our acquisitions over the past fiscal year.

For more information, refer to Item 7, Management’s Discussion of Analysis and Financial Condition and Results of Operations, under the heading “Acquisitions.”

On December 31, 2021, we completed the acquisition of MarkeTouch Media, a pharmacy software solutions provider.

The MarkeTouch Media acquisition adds mobile and web-based technology and patient engagement solutions, which is expected to expand the footprint of EnlivenHealth across the retail pharmacy sector, while enhancing potential growth opportunities in new market segments like specialty pharmacy and pharmacy benefits management.

On December 29, 2021, we completed the acquisition of ReCept, a provider of specialty pharmacy management services.

The addition of ReCept’s specialty pharmacy management services for health systems, provider groups, and federally qualified health centers expands Omnicell’s Advanced Services portfolio in an effort to address the growing and complex specialty pharmacy market.

On September 9, 2021, we completed the acquisition of FDS Amplicare, a pharmacy technology provider.

The FDS Amplicare acquisition adds a comprehensive and complementary suite of SaaS financial management, analytics, and population health solutions to our EnlivenHealth offering.

Sales and Distribution

We sell our solutions primarily in the United States.

We sell our products and services primarily in the United States.

Approximately 90% of our revenue was generated in this market for the year ended December 31, 2021.

Our sales force is organized by geographic region in the United States and Canada,

where our sales are primarily made direct to end-user customers with the exception of some distribution of medication adherence consumables.

Outside the United States and Canada, we field direct sales employees in the United Kingdom, France, Germany, the United Arab Emirates, Belgium, and Australia.

Our sales force is organized by geographic region in the United States and Canada, with dedicated account management executives for our top 300 existing customers and dedicated health system executives focused on generating new business.

Our sales are primarily made direct to end-user customers with the exception of some distribution of medication adherence consumables.

Outside of the United States and Canada, we field direct sales employees in the United Kingdom, France, Germany, the United Arab Emirates, Belgium, and Australia.

For other geographies, we generally sell through distributors and resellers.

Our foreign operations are discussed in Note 3, Revenues, and Note 7, Property and Equipment , of the Notes to Consolidated Financial Statements and Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations , of this annual report on Form 10-K.

Our foreign operations are discussed in Note 3, Revenues, and Note 7,

Property and Equipment , of the Notes to Consolidated Financial Statements and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , of this Annual Report on Form 10-K.

Our combined direct, corporate, and international distribution sales teams consisted of approximately 477 staff members as of December 31, 2021.

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This is due in part to the relative cost of our systems and the number of people within each healthcare facility involved in the purchasing decision and installation process.

To initiate the selling process, the sales representative generally targets the director of pharmacy, the director of nursing, the director of materials management, or other decision makers, and educates each group within the healthcare facility about the economic, safety, and compliance benefits of our solutions relative to competing methods of managing medications or medical and surgical supplies.

To initiate the selling process, the sales representative generally targets the chief pharmacy officer, chief information officer, director of pharmacy, director of nursing, director of information technology, director of materials management, or other decision makers, and actively engages with each group within the healthcare facility about the economic, safety, efficiency, and compliance benefits of our solutions relative to competing methods of managing medications or medical and surgical supplies.

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

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Our current most significant GPO contracts include Vizient, Inc., Premier Inc., and HealthTrust Purchasing Group.

We also have 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 our products.

We also have 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 our products.

Some of our contracts with these organizations are terminable at the convenience of either party.

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 our fiscal 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.

We offer multi-year, non-cancelable lease payment terms to assist healthcare organizations in purchasing our systems by reducing their cash flow requirements.

During our fiscal year ended December 31, 2021, sales to members of the ten largest GPOs and Federal agencies that purchase under the GSA Contract accounted for approximately 67% of our total consolidated revenues.

We offer multi-year, non-cancelable lease payment terms to assist healthcare organizations in purchasing our systems by reducing their cash flow requirements in a capital lease structure.

We sell the majority of our multi-year lease receivables to third-party leasing finance companies.

Our field operations representatives support our sales force by providing operational and clinical expertise prior to the close of a sale and during installation of our automation systems.

This group assists the customer with the technical implementation of our automation systems, including configuring our systems to address the specific needs of each individual customer.

After the systems are installed, on-site support is provided by our field service team and technical support group.

We offer telephone technical support through our technical support centers in Illinois, Florida, Pennsylvania, and North Carolina.

Our clinical and technical consulting representatives support our sales force by providing operational and clinical expertise prior to the close of a sale and during the installation of our automation systems.

Along with professional services, this group assists customers with the technical implementation of our automation systems, including configuring our systems to address the specific needs of each individual customer.

After the systems are installed, customer success representatives provide support to our customers with a focus on adoption and optimization of our solutions.

We offer telephone and web-based technical support through our U.S.-based technical support centers.

Our support centers are staffed 24 hours a day, 365 days a year.

We have found that a majority of our customers’ service issues can be addressed either over the phone or by our support center personnel using their remote diagnostics tools.

In addition, we use remote dial-in software that monitors customer conditions on a daily basis.

We offer a suite of remote monitoring features, which proactively monitors system status and alerts service personnel to potential problems before they lead to system failure.

In addition, our international team handles direct sales, installation, and service to healthcare facilities in the United Kingdom, France, and Germany, and to non-acute customers in Australia.

We have found that a majority of our customers’ service issues can be addressed by our support engineers either by phone or with remote diagnostic tools.

In addition, our customers can enable access to allow us to remotely monitor system performance.

This suite of support tools proactively monitors system status and is designed to alert service personnel to potential problems to preempt system failure.

In addition, our international team handles direct sales, installation, and service for healthcare facilities in the United Kingdom, France, and Germany, and for non-acute customers in Australia.

Sales, installation, and service to healthcare facilities is handled through distribution partners in other parts of Europe, Asia, Australia, the Middle East, South Africa, and South America.

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Manufacturing and Inventory

The manufacturing process for our automation products allows us to configure hardware and software in unique combinations to meet a wide variety of individual customer needs.

The automation product manufacturing process primarily consists of the final assembly of components and testing of the completed product.

The manufacturing process for our automation products allows us to uniquely configure hardware and software to meet a wide variety of individual customer needs.

The automation product manufacturing process consists primarily of the final assembly of components and testing of the completed product.

Many of the sub-assemblies and components we use are provided by third-party contract manufacturers or other suppliers.

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We and our partners test these sub-assemblies and perform inspections to assure the quality and reliability of our products.

While many components of our systems are standardized and available from multiple sources, certain components or subsystems are fabricated by a sole supplier according to our specifications and schedule requirements,

or are only available from limited sources.

While many components of our systems are standardized and available through multiple sources, certain components or subsystems are fabricated by a sole supplier according to our specifications, schedules, and customer requirements, or are only available from limited sources.

Our medication adherence product manufacturing process consists of fabrication and assembly of equipment and mechanized process manufacturing of consumables.

We rely on a limited number of suppliers for the raw material that are necessary in the production of our consumable medication packages.

Our arrangements with our contract manufacturers generally set forth quality, cost, and delivery requirements, as well as manufacturing process terms, such as continuity of supply, inventory management, capacity flexibility, quality and cost management, oversight of manufacturing, and conditions for the use of our intellectual property.

We rely on a limited number of suppliers for the raw materials that are necessary in the production of our consumable medication packages.

Our arrangements with contract manufacturers generally set forth quality, cost, and delivery requirements, as well as manufacturing process terms, such as continuity of supply, inventory management, capacity flexibility, quality and cost management, oversight of manufacturing, and conditions for the use of our intellectual property.

Our manufacturing organization procures components and schedules production based on the backlog of customer orders.

Installation of equipment and software typically occurs between two weeks and twelve months after the initial order is received, depending upon the customer’s particular needs.

We deploy a key operational strategy of operating with backlog levels that approximate the average installation cycle of our customers, which allows us to more efficiently manage our installation teams, improve production efficiencies, reduce inventory scrap, and lower shipping costs.

Installation of equipment and software typically occurs anywhere between two weeks and twelve months after the initial order is received, depending upon the customer’s particular needs.

We utilize our backlog to efficiently manage our installation, procurement, and production activities that helps to improve inventory turns, reduce inventory scrap, and manage shipping costs.

Shipment of consumables typically occurs between one and four weeks after an order is received.

The markets in which we operate are intensely competitive.

We compete directly with a number of companies in the medication management automations solutions market, as well as the medication adherence solutions market, on the basis of many factors, including price, quality, customer outcome and cost of operation, innovation, product features and capabilities, installation and service, reputation and brand recognition, size of installed base, range of solutions, distribution, and promotion.

We compete directly with a number of companies in the medication management automation solutions market, as well as the medication adherence solutions market, on the basis of many factors, including price, quality, customer outcome and cost of operation, innovation, product features and capabilities, installation and service, reputation and brand recognition, size of installed base, range of solutions, distribution, and promotion.

We expect continued and increased competition from current and future competitors in the markets in which we operate, and are affected by evolving and new technologies, changes in industry standards, and dynamic customer requirements.

Furthermore, the healthcare industry has experienced a significant degree of consolidation.

This consolidation may require us to adapt how we market, sell, or distribute our products.

Similarly, healthcare providers have consolidated to create larger healthcare delivery organizations in order to achieve economies of scale and/or greater market power.

As market demands, government regulations, and societal pressures continue to cause the healthcare industry to evolve, it could result in further business consolidations and alliances among the industry participants with whom we engage and compete.

We believe our products and services compare favorably with the offerings of our competitors, particularly with respect to proprietary technological advancements, system performance, system reliability, installation, applications training, service response time, and service repair quality.

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All of our product software is subject to copyright protection under applicable United States and foreign copyright laws.

We have also obtained United States and, for certain marks, foreign registrations of various marks, and we intend to seek and obtain additional registrations of our trademarks in the United States and foreign jurisdictions.

We have also obtained United States and, for certain trademarks, foreign registrations of various trademarks, and we intend to seek and obtain additional registrations of our trademarks in the United States and foreign jurisdictions.

Trade secrets and other confidential information are also important to our business.

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The insight that we gain through this collaboration helps us to develop solutions to address the unmet needs and challenges faced by our customers.

We continue to make significant investments in the vision of the autonomous pharmacy, in particular, in our cloud-based platform, in the further development of technology-enabled software and services, and in the evolution of our robotic automation capabilities, while continuing to enhance the other elements of our product and service portfolio.

The results of our research and development efforts will further drive the advancement of our cloud-based offerings and amplify the vision of the autonomous pharmacy.

We continue to make significant investments in the industry vision of the Autonomous Pharmacy, in particular, on our cloud-based platform and in the migration of our customers from an on-premise infrastructure to our cloud-based platform.

We are also investing in the further development of technology-enabled software and services including further enhancements to our Advanced Services offerings, as well as continuing to build software that is designed to enable scaling of our current service offerings.

In addition, our robotic automation capabilities continue to evolve, while we work to further enhance new-to-market solutions, as well as new solutions currently in development.

We have also begun work on longer-term solutions that we believe will benefit our cloud platform offerings.

We also continue to enhance the other elements of our product and service portfolio.

The results of our research and development efforts will further drive the advancement of our cloud-based offerings and amplify the industry vision of the Autonomous Pharmacy.

Business under Government Contracts

A number of our U.S.

government-owned or government-run hospital customers have signed five-year leases, with payment terms that are subject to one-year government budget funding cycles.

Failure of any of our U.S.

government customers

to receive their annual funding could impair our ability to sell to these customers, or to collect payments on our existing unsold leases.

Effective September 2021, the U.S.

government mandated changes in its Federal Supply Services contract that has resulted in our determination not to enter into future leases with U.S.

government customers.

Our existing leases with U.S.

government customers are unaffected by this change.

As such, our volume of U.S.

government customer leases will likely decline over time and cease in the future.

For additional information regarding these leases, see the risk factor captioned “ Our U.S.

government lease agreements are subject to annual budget funding cycles and mandated changes, which may affect our ability to enter into such leases or to recognize revenues, and sell receivables based on these leases, ” under Item 1A “Risk Factors ”.

Financing Practices Relating to Working Capital

We assist healthcare facilities in financing their cash outlay requirements for the purchase of our systems by offering multi-year, non-cancelable lease payment terms.

We typically sell the majority of our multi-year lease receivables to third-party leasing finance companies, although our ability to sell these receivables may be influenced by the perception of our customers’ ability to pay, or other restrictions, which may be influenced by factors outside of our control.

For additional information regarding these financing activities, refer to Note 1, Organization and Summary of Significant Accounting Policies , of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K.

Product Backlog

Product backlog is the dollar amount of medication management solutions and adherence tools for which we have product bookings from our customers and have not yet recognized as revenue.

A majority of our connected devices and software license products are installable and recognized as revenues within twelve months of booking, while revenues from SaaS solutions are recorded over the contractual term.

Due to industry practice that allows customers to change order configurations with limited advance notice prior to shipment and occasional customer changes in installation schedules, we do not believe that backlog as of any particular date is necessarily indicative of future sales.

However, we do believe that backlog is an indication of a customer’s willingness to install our solutions.

Our product backlog was $1.25 billion and $924 million as of December 31, 2021 and 2020, respectively.

We consider backlog that is expected to be converted to revenues in more than twelve months to be long-term backlog.

The long-term portion of the product backlog was $439 million and $307 million as of December 31, 2021 and 2020, respectively.

Environmental, Social, and Governance (“ESG”) Initiatives

We view Omnicell as a company with a social mission:

Our focus on reinventing the pharmacy care delivery model is designed to dramatically improve health outcomes and lower healthcare costs.

Our teams are motivated by knowing that our work to improve medication management has a tangible, real-world impact on healthcare workers, patients, and communities.

We recognize that we are accountable not only to our customers and shareholders, but also to the global community.

In April 2021, we published our Corporate Responsibility Report, which outlines our approach to corporate responsibility and describes our contributions to achieve a more sustainable future.

We define corporate responsibility through four strategic pillars – Innovation, Environmental, Social, and Governance.

We are focused on innovating to drive sustainability across our business by adhering to internationally-recognized Organisation for Economic Co-operation and Development guidance for the responsible sourcing of raw materials, and through elevating our diversity and inclusion initiatives.

Furthermore, there are evolving and increasing expectations from regulators, customers, investors, and employees with respect to reducing and limiting greenhouse gas (“GHG”) emissions, without a clear and consistent framework in which to operate globally.

The enhanced stakeholder focus on matters relating to ESG activities requires deliberate, conscientious efforts to affect change while the reporting frameworks are still being developed.

We are carefully studying ways we can contribute to the reduction in GHG emissions, as well as enhance our Social and Governance initiatives, taking cues from our stakeholders and internal assessments and direction from the Governance Committee of Omnicell’s Board of Directors.

As an organization, we have adopted a risk-management approach to assessing and reducing the impact of climate change on our operations.

We continually work to innovate and improve our business practices in an effort to ensure the greatest positive impact as we continue to do things in “A Better Way.”

More information on our ESG initiatives and a copy of our Corporate Responsibility Report are available on our corporate website, www.omnicell.com, under the “About Us―Corporate Responsibility” tab.

Human Capital Management

As of December 31, 2020, we had approximately 2,860 employees worldwide (with approximately 2,470 in the United States and Canada), excluding individuals who are classified as temporary or contractors.

As of December 31, 2021, we had approximately 3,800 employees worldwide (with approximately 3,351 located in either the United States or Canada), excluding individuals who are classified as temporary or contractors, an increase of approximately 940 employees since December 31, 2020.

This increase reflects our efforts to grow Omnicell’s operations,

including through the impact of incremental headcount in connection with recent acquisitions, while continuing to drive profitability and optimizing resource allocation.

We regularly conduct employee engagement surveys, most recently via the Glint platform.

Through continued investment in talent processes and acting on employee feedback, we have achieved an overall employee satisfaction (ESAT) score of 77, which exceeds the average score of similarly-sized companies identified by Glint that use the Glint platform by four points.

Through continued investment in talent processes and acting on employee feedback, we have achieved an overall employee satisfaction score of 74, which is consistent with the average score of similarly-sized companies identified by Glint that use the Glint platform.

We believe this reflects our positive employee relations and that Omnicell is viewed by our employees as a good place to work.

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• We offer reward and recognition programs that embed our core values into our culture and everything we do, allowing for peer-to-peer recognition and motivating our employees to continually work to advance our mission, vision, and values.

• Our performance review process enables our talent to reach their optimum levels of contribution to Omnicell’s business strategies and supports our pay-for-performance philosophy.

Health and Wellness

We offer a comprehensive wellness program designed to promote a healthy lifestyle, including exercise challenges, on-site gym facilities, virtual workouts, and health coaching.

In addition to making physical health a priority, we offer mental health counseling and resources, financial coaching, and Teladoc Health services.

Learning and Development

• Our Talent and Leadership development function plays a strategic role in helping us attract and retain talent.

We strive to develop career growth capabilities while delivering a consistent learning experience irrespective of role, function, or location.

• We invest in our employees’ learning through robust training programs including Omnicell University, our Core Values in Action training, our New Employee Orientation and our Leading at Omnicell training.

• Our People Manager Talent Development curriculum creates one unique global Omnicell approach to talent development.

In addition to making physical health a priority, we offer mental health counseling and resources, financial coaching, and Teladoc Health services (i.e., telephone health services).

Employee Development

• Our Employee & Organizational Development function plays a strategic role in helping us attract, develop, and retain talent.

We strive to develop career growth opportunities while delivering consistent learning experiences irrespective of role, function, or location.

• We invest in our employees’ learning through robust training programs including Omnicell University, which provides our Core Values in Action training series, our Leadership in Action training series, and our New Employee Orientation program.

All employees also have access to LinkedIn Learning for their “on-demand” learning needs.

• Our People Manager Leadership in Action series creates one unique global Omnicell approach to talent development.

It is designed to enable our organizational transformation by aligning how we lead across all levels.

Recruiting & Retention

• Our Talent Acquisition team has recently increased its focus on digital recruiting, social media outlets, and university partnerships to expand Omnicell’s employer brand and reach the evolving talent pool to enhance our ability to hire the right talent to drive the organization forward.

• In 2022, we plan to add a new applicant tracking system and best-in-class talent experience platform to enhance recruiting efforts.

The combination of the two are intended increase recruiter efficiency, enable faster and better decisions, save time for value-added work, improve ease of job posting, and in turn, reduce cost per hire and increase quality of hire.

Diversity, Equity, and Inclusion

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We realize we have an opportunity to take more action and that our journey to improve diversity, equity, and inclusion (“DEI”) at Omnicell will continue to evolve.

A focus on understanding our related data will be critical to our success.

With a continued commitment to DEI, we are taking the steps to build a truly diverse and inclusive culture and plan to create and launch a more comprehensive strategy that we anticipate publicizing in 2021.

Business under Government Contracts

A number of our U.S.

government-owned or government-run hospital customers sign five-year leases, with payment terms that are subject to one-year government budget funding cycles.

Failure of any of our U.S.

government customers to receive their annual funding could impair our ability to sell to these customers, or to collect payments on our existing unsold leases.

For additional information regarding these leases, see the section titled “Risk Factors” under Part I, Item 1A below.

Financing Practices Relating to Working Capital

We assist healthcare facilities in financing their cash outlay requirements for the purchase of our systems by offering multi-year, non-cancelable sales contracts.

Product Backlog

Product backlog is the dollar amount of medication management automation solutions and adherence tools for which we have purchase orders from our customers and for which we believe the majority we will install, bill, and gain customer acceptance within one year.

However, we do believe that backlog is an indication of a customer’s

willingness to install our solutions.

Our product backlog was $924 million and $588 million as of December 31, 2020 and 2019, respectively.

With a continued commitment to DEI, we plan to hire a leader of Inclusion and Belonging with responsibility to design, support, and implement Omnicell’s DEI strategy.

We remain focused on understanding

how our related data is critical to our success and committed to identifying DEI gaps within the organization and intend to create additional goals that drive and improve overall outcomes.

Available Information

We file reports and other information with the United States Securities and Exchange Commission (“SEC”) including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and proxy or information statements.

Those reports and statements as well as all amendments to those documents filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available (1) at the SEC’s Internet site (www.sec.gov) and (2) free of charge through our website as soon as reasonably practicable after electronic filing with, or furnishing to, the SEC.

Our website address is www.omnicell.com.

Information posted on or accessible through these websites is not incorporated by reference nor otherwise included in this report, and any references to these websites are intended to be inactive textual references only.

We file reports and other information with, and furnish reports and other information to, the United States Securities and Exchange Commission (“SEC”) including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and Proxy or Information Statements.

Those reports and statements as well as all amendments to those documents filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available:

(1) at the SEC’s Internet site (www.sec.gov) and (2) free of charge through our investor relations website, under the heading “Financials,” as soon as reasonably practicable after electronic filing with, or furnishing to, the SEC.

Our website address is www.omnicell.com and our investor relations website is located at ir.omnicell.com.

Information About Our Executive Officers

4 unchanged sentences

Kuipers 50 Executive Vice President and Chief Financial Officer

Christine Mellon 59 Executive Vice President and Chief People Officer

Seidelmann 46 Executive Vice President and Chief Commercial Officer

28 unchanged sentences

Kuipers received a Master’s Degree in Economics and Business Administration from Maastricht University and is a Chartered Accountant in the Netherlands.

Christine Mellon joined Omnicell in February 2021 as Executive Vice President and Chief People Officer.

Prior to joining Omnicell she was Chief Human Resources Officer of CSG International, Inc., a software company, from July 2016 to January 2021.

From June 2013 to June 2016, Ms.

Mellon served as Vice President, Human Capital Management with Oracle Corporation, a leading global information technology company.

Prior to Oracle Corporation, Ms.

Mellon served in HR leadership roles for EchoStar Corporation, Aepona Limited, and Cigna Corporation.

Mellon received a B.A.

in Psychology from Villanova University.

Seidelmann joined Omnicell in April 2018 as Executive Vice President and Chief Commercial Officer.

2 unchanged sentences

From 2005 to 2014, Mr.

Seidelmann served as co-founder and Chief Executive Officer of Radisphere, Inc., a national radiology practice, prior to its acquisition by Sheridan Healthcare.

Seidelmann served as co-founder and Chief Executive Officer of Radisphere, Inc., a national radiology practice, prior to its acquisition by Sheridan

Earlier in his career, Mr.

3 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 1. Business