What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-28 compared with 2023-03-01 · 269 added, 391 removed, 1398 unchanged (32% of the section changed)

16 unchanged sentences

OTHER INFORMATION

Securities Trading Plans of Directors and Officers

During the three months ended December 31, 2023, none of our directors or officers adopted or terminated a Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as each term is defined in Item 408(a) of Regulation S-K).

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

45 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2023, expressed an unqualified opinion on the Company’s internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2024, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

17 unchanged sentences

The Company’s consolidated inventory balance is $110.1 million as of December 31, 2023.

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

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

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

How the Critical Audit Matter Was Addressed in the Audit

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

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

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

• We tested certain underlying data used and considered in the excess and obsolete inventory assessment, including the amount of inventory on hand, forecasted demand, and historical sales.

• We compared actual inventory usage and write-off activity in the current year to the excess and obsolete estimate by management in the prior year to evaluate management’s ability to make accurate estimates.

• We evaluated the valuation of excess and obsolete inventory for understatement by making selections of individual inventory items and evaluating the appropriateness of the inventory valuation and management judgments based on relevant product specific information.

These procedures also included certain inquiries of production planning and supply chain employees.

• We evaluated whether the excess and obsolete inventory may be understated by evaluating write-off activity of inventory subsequent to December 31, 2022.

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

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

• We tested certain underlying data used and considered in the excess and obsolete equipment-related inventory assessment, including the amount of inventory on hand and forecasted demand.

• We compared actual equipment-related inventory usage and write-off activity in the current year to the excess and obsolete estimates by management of individual equipment-related inventory items selected for testing in the prior year to evaluate management’s ability to make reasonably accurate estimates.

• We evaluated the valuation of excess and obsolete equipment-related inventory for understatement by making selections of equipment-related individual inventory items and evaluating the appropriateness of the equipment-related inventory valuation and management judgments based on relevant product-specific information.

These procedures also included certain inquiries of purchasing employees.

Capitalized Software - Internal Software Development Costs — Refer to Notes 1 and 7 to the financial statements

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The Company capitalized $32.2 million of costs related to the application development of enterprise-level software and its subscription and cloud-based offerings in the year ended December 31, 2023.

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

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

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

How the Critical Audit Matter Was Addressed in the Audit

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

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

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

• We tested management’s method of calculating capitalized software development costs.

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

• We tested the effectiveness of internal controls related to management’s capitalized internal software development costs.

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

• We tested management’s method of calculating capitalized internal software development costs.

For a sample of projects, we performed audit procedures to agree capitalized labor costs to time records and made certain inquiries of project members to further assess the reasonableness of time allocated to the selected projects.

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

• For a sample of software development projects, we tested the timing of software development cost recognition as either a capitalized or an expensed development cost.

We also inquired of project managers and engineers regarding when application development was reached and observed the new features developed in the working model.

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

• For a sample of internal software development projects, we tested the timing of internal software development cost recognition as either a capitalized or an expensed development cost.

We also inquired of project managers and engineers regarding when application development was reached and observed the new features developed.

/s/ Deloitte & Touche LLP

San Jose, California

March 1, 2023

February 28, 2024

We have served as the Company’s auditor since 2014.

5 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated March 1, 2023, expressed an unqualified opinion on those financial statements.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 28, 2024, expressed an unqualified opinion on those financial statements.

Basis for Opinion

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San Jose, California

March 1, 2023

February 28, 2024

OMNICELL, INC.

24 unchanged sentences

Deferred revenues, net 121,734 118,947

Convertible senior notes, net — 488,152

Total current liabilities 367,792 428,446

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45,539 and 44,747 shares outstanding, respectively

Treasury stock at cost, 10,283 and 9,894 shares outstanding, respectively

Treasury stock at cost, 10,283 shares outstanding, respectively

( 290,319 ) ( 290,319 )

24 unchanged sentences

Interest and other income (expense), net 14,760 ( 130 ) ( 23,500 )

Income (loss) before provision for income taxes ( 2,453 ) 66,007 29,349

Benefit from income taxes ( 8,101 ) ( 11,842 ) ( 2,845 )

Net income $ 5,648 $ 77,849 $ 32,194

Net income per share:

Income (loss) before income taxes ( 20,108 ) ( 2,453 ) 66,007

Provision for (benefit from) income taxes 263 ( 8,101 ) ( 11,842 )

Net income (loss) $ ( 20,371 ) $ 5,648 $ 77,849

Net income (loss) per share:

Basic $ ( 0.45 ) $ 0.13 $ 1.79

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(In thousands)

Net income $ 5,648 $ 77,849 $ 32,194

Net income (loss) $ ( 20,371 ) $ 5,648 $ 77,849

Other comprehensive income (loss):

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Net income — — — — — 77,849 — 77,849

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

Other comprehensive loss — — — — — — ( 2,885 ) ( 2,885 )

Share-based compensation — — — 53,160 — — 53,160

1 unchanged sentence

Tax payments related to restricted stock units — — — — ( 16,286 ) — — ( 16,286 )

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

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

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

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

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

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

Balances as of December 31, 2021 54,073 54 ( 9,894 ) ( 238,109 ) 1,024,580 368,571 ( 8,407 ) 1,146,689

1 unchanged sentence

Other comprehensive loss — — — — — — ( 8,680 ) ( 8,680 )

Stock repurchases — — ( 389 ) ( 52,210 ) — — — ( 52,210 )

Share-based compensation — — — — 68,247 — — 68,247

1 unchanged sentence

Tax payments related to restricted stock units — — — ( 13,506 ) — — ( 13,506 )

Cumulative effect of a change in accounting principle related to convertible debt — — — — ( 72,742 ) 16,509 — ( 56,233 )

Balances as of December 31, 2022 55,030 55 ( 10,283 ) ( 290,319 ) 1,046,760 390,728 ( 17,087 ) 1,130,137

Net income — — — — — 5,648 — 5,648

Other comprehensive loss — — — — — — ( 8,680 ) ( 8,680 )

Stock repurchases — — ( 389 ) ( 52,210 ) — — — ( 52,210 )

Net loss — — — — — ( 20,371 ) — ( 20,371 )

Other comprehensive income — — — — — — 3,655 3,655

Share-based compensation — — — — 59,683 — — 59,683

1 unchanged sentence

Tax payments related to restricted stock units — — — — ( 7,366 ) — — ( 7,366 )

Cumulative effect of a change in accounting principle related to convertible debt — — — — ( 72,742 ) 16,509 — ( 56,233 )

Balances as of December 31, 2023 55,822 $ 56 ( 10,283 ) $ ( 290,319 ) $ 1,122,292 $ 370,357 $ ( 13,432 ) $ 1,188,954

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Operating Activities

Net income $ 5,648 $ 77,849 $ 32,194

Adjustments to reconcile net income to net cash provided by operating activities:

Net income (loss) $ ( 20,371 ) $ 5,648 $ 77,849

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 87,319 86,931 72,990

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Impairment and abandonment of operating lease right-of-use assets related to facilities 9,998 9,382 —

Impairment of externally and internally developed capitalized software, net 1,275 — —

Impairment of internal-use and external-use software development costs, net — 1,275 —

Impairment of certain long-lived assets 1,014 — —

Amortization of debt issuance costs 4,397 4,164 3,440

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Investing Activities

Software development for external use ( 13,204 ) ( 29,368 ) ( 32,024 )

External-use software development costs ( 13,542 ) ( 13,204 ) ( 29,368 )

Purchases of property and equipment ( 41,474 ) ( 47,536 ) ( 28,967 )

3 unchanged sentences

Financing Activities

Proceeds from revolving credit facility — — 150,000

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

Payments for debt issuance costs for revolving credit facility ( 2,967 ) — —

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

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

Proceeds from sale of warrants — — 51,290

Proceeds from issuances under stock-based compensation plans 23,216 40,182 67,348

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All intercompany accounts and transactions have been eliminated in consolidation.

On January 10, 2022, the Company completed its acquisition of Hub and Spoke Innovations Limited (“Hub and Spoke Innovations”).

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

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

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s Consolidated Financial Statements and accompanying Notes.

These estimates are based on historical experience and various other assumptions that management believes to be reasonable.

6 unchanged sentences

inventory valuation;

capitalized software development costs for internal and external use;

internal-use and external-use software development costs;

impairment of goodwill;

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Assets and liabilities denominated in a currency other than the functional currency are remeasured into the respective entity’s functional currency.

Monetary assets and liabilities are remeasured at exchange rates in effect at the end of each period,

and non-monetary assets and liabilities are remeasured at historical rates.

Monetary assets and liabilities are remeasured at exchange rates in effect at the end of each period, and non-monetary assets and liabilities are remeasured at historical rates.

Gains and losses from foreign currency remeasurement of monetary assets and liabilities are recorded in interest and other income (expense), net.

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

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

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

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

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

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

The Company performs a credit check for all significant customers or

transactions and where collectability is not probable, payment in full or a substantial down payment prior to shipment is typically required to help ensure the full agreed upon contract price will be collected.

Distinct goods or services are identified as performance obligations.

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When performance obligations are included in separate contracts, the Company considers an entire customer arrangement to determine if separate contracts should be considered combined for the purposes of revenue recognition.

Most of the Company’s sales, other than renewals of support and maintenance, contain multiple performance obligations, with a combination of hardware systems, software products, consumables, support and maintenance, and professional services.

Most of the Company’s sales, other than renewals of support and maintenance, contain multiple performance obligations, with a combination of hardware systems, software products, support and maintenance, and professional services.

The transaction price of a contract is determined based on the fixed consideration, net of an estimate for variable consideration such as various discounts or rebates provided to customers.

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Standalone selling price is best evidenced by the price the Company charges for the good or service when selling it separately in similar circumstances to similar customers.

Other than for the renewal of annual support services contracts, the Company’s products and services are not generally sold separately.

Other than for the renewal of annual technical services contracts, the Company’s products and services are not generally sold separately.

The Company uses an amount discounted from the list price as a best estimated selling price.

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

The portion of the transaction price allocated to the Company’s unsatisfied performance obligations recorded as deferred revenues, net of deferred cost of goods sold, at December 31, 2022 and 2021 were $ 156.3 million and $ 132.4 million, respectively, of which $ 118.9 million and $ 112.2 million, respectively, are expected to be completed within one year and are presented as current deferred revenues, net on the Consolidated Balance Sheets.

Remaining performance obligations are primarily recognized ratably over the remaining term of the contract, generally not more than ten years .

The portion of the transaction price allocated to the Company’s unsatisfied performance obligations for which invoicing has occurred is recorded as deferred revenues, net of deferred cost of goods sold.

Deferred revenues from product sales primarily relate to delivered and invoiced products, pending installation and acceptance.

Deferred revenues from service contracts primarily relate to services that have been invoiced, where services have not yet been provided.

Short-term deferred revenues are expected to be recognized within the next twelve months.

Long-term deferred revenues substantially consist of deferred revenues on long-term technical and Advanced Services contracts which have been invoiced and are expected to be recognized as revenue beyond twelve months, generally not more than ten years .

In addition, the Company has remaining performance obligations associated with contracts for which the associated products have been accepted or associated services have started, but where invoicing has not yet occurred and therefore are not reflected in deferred revenue.

These remaining performance obligations are comprised of the non-variable portions of technical services and Advanced Services provided under non-cancellable contracts with minimum commitments.

Remaining performance obligations which are not included in deferred revenues are $ 353.9 million as of December 31, 2023.

Remaining performance obligations are expected to be recognized ratably over the remaining terms of the associated contracts, which terms vary but are generally not more than ten years .

Remaining performance obligations do not include product obligations, services where the associated product has not been accepted, services which have not yet started, variable portions of services, and certain other obligations.

Revenues, contract assets, and contract liabilities are recorded net of associated taxes.

The Company generally invoices customers for products upon shipment.

Invoicing associated with the service portion of agreements are generally periodic and are billed on a monthly, quarterly, or annual basis.

In certain circumstances, multiple years are billed at one time.

Invoicing associated with the service portion of agreements is generally periodic and is billed on a monthly, quarterly, or annual basis, and in certain circumstances, multiple years are billed at one time.

Advanced Services agreements are generally invoiced periodically on a monthly, quarterly or annual basis over the life of the agreement.

In certain circumstances portions of these agreements may be invoiced lump sum.

The amount invoiced for equipment and software is typically reflected in both accounts receivable and deferred revenues, net.

1 unchanged sentence

Consumables are recorded as revenue upon shipment to or receipt by the customer, depending upon contract terms.

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

From time to time, the Company enters into change orders which modify the product to be received by the customer pursuant to certain contracts.

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Contract Assets and Contract Liabilities

A contract asset is a right to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditional and is not just subject to the passage of time.

A contract asset is a right to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditioned on something other than the passage of time.

A receivable will be recorded on the balance sheet when the Company has unconditional rights to consideration.

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

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

The remaining capitalized contract costs are recorded as expense ratably over the ten

year estimated initial and renewal service periods.

The Company recognized contract cost expense of $ 23.3 million, $ 30.6 million, and $ 25.8 million during the years ended December 31, 2023, 2022, and 2021, respectively.

3 unchanged sentences

Lessor Leases

The Company determines if an arrangement is a lease at inception.

The Company determines if an arrangement is or contains a lease at inception.

The transaction price is allocated to separate performance obligations, generally consisting of a combination of hardware systems, software products, support and maintenance, and professional services, proportionally based on the standalone selling price of each performance obligation.

Standalone selling price is best evidenced by the price the Company charges for the good or service when selling it separately in similar circumstances to similar customers.

Other than for the renewal of annual support services contracts, the Company’s products and services are not generally sold separately.

Other than for the renewal of annual technical services contracts, the Company’s products and services are not generally sold separately.

The Company uses an amount discounted from the list price as a best estimated selling price.

Sales-Type Leases

The Company enters into non-cancelable sales-type lease arrangements, most of which do not have an option to extend the lease term.

The Company enters into non-cancelable sales-type lease arrangements with the leases varying in length from one to ten years , most of which do not have an option to extend the lease term.

At the end of the lease term, the customer must either return the equipment or negotiate a new agreement, resulting in a new purchase or lease transaction.

2 unchanged sentences

The Company’s sales-type lease agreements do not contain any material residual value guarantees.

For sales-type leases, the Company recognizes revenues for its hardware and software products, net of lease execution costs, post-installation product maintenance, and technical support, at the net present value of the lease payment stream upon customer acceptance.

For sales-type leases, the Company recognizes revenues for its hardware and software products, net of lease execution costs, post-installation product maintenance, professional services associated with Advanced Services offerings, and technical support, at the net present value of the lease payment stream upon customer acceptance.

The Company recognizes service revenues associated with sales-type leases ratably over the term of the agreement in service revenues in the Consolidated Statements of Operations.

1 unchanged sentence

Both hardware and software revenues, and interest income from sales-types leases are recorded in product revenues in the Consolidated Statements of Operations.

The Company optimizes cash flows by selling a majority of its non-U.S.

government sales-type leases, other than Advanced Services sales-type leases, to third-party leasing finance companies on a non-recourse basis.

The Company optimizes cash flows by selling a majority of its sales-type leases, other than those relating to U.S.

government hospitals and Advanced Services products, including Central Pharmacy Dispensing Service and IV Compounding Service, to third-party leasing finance companies on a non-recourse basis.

The Company has no obligation to the leasing company once the lease has been sold.

Some of the Company’s sales-type leases, mostly those relating to U.S.

government hospitals which comprise approximately 38 % of the lease receivable balance, and those associated with financed service contracts related to certain Advanced Services products, including Central Pharmacy Dispensing Service and IV Compounding Service, are retained in-house.

Operating Leases

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

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

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

The Company’s operating lease agreements do not contain any material residual value guarantees.

For operating leases, rental income is generally recognized on a straight-line basis over the term of the associated lease, and recorded in services and other revenues in the Consolidated Statements of Operations.

Leased assets under operating leases are carried at amortized cost net of accumulated depreciation in property and equipment, net on the Consolidated Balance Sheets.

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

Allowance for Credit Losses

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The allowance for credit losses is measured on a collective (pool) basis by aggregating customer balances with similar risk characteristics.

The Company also records a specific allowance

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

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

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

2 unchanged sentences

Funds Held for Customers and Customer Fund Liabilities

With the acquisition of the 340B Link Business and ReCept Holdings, Inc., (“ReCept”), which was subsequently renamed Omnicell Specialty Pharmacy Services, Inc., the Company offers certain products and services in which it is customary for pharmacies or insurance payors to owe funds to the Company which are collected on behalf of, and, after a short holding period, disbursed to, the Company’s customers.

The Company offers certain products and services in which it is customary for pharmacies or insurance payors to owe funds to the Company which are collected on behalf of, and, after a short holding period, disbursed to, the Company’s customers.

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

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If inventory is written down, a new cost basis is established that cannot be increased in future periods.

Shipments from suppliers or contract manufacturers before the

Company receives them are recorded as in-transit inventory when title and the significant risks and rewards of ownership have passed to the Company.

Shipments from suppliers or contract manufacturers before the Company receives them are recorded as in-transit inventory when title and the significant risks and rewards of ownership have passed to the Company.

The Company has a supply agreement with one primary supplier for construction and supply of several sub-assemblies and inventory management of sub-assemblies used in its hardware products.

There are no minimum purchase requirements.

The contract with the Company’s supplier may be terminated by either the supplier or by the Company without cause and at any time upon delivery of six months ’ notice.

contract with the Company’s supplier may be terminated by either the supplier or by the Company without cause and at any time upon delivery of six months ’ notice.

Purchases from this supplier were $ 65.8 million, $ 105.7 million, and $ 103.2 million for the years ended December 31, 2023, 2022, and 2021, respectively.

7 unchanged sentences

The Company also develops molds and dies used in long-term manufacturing arrangements with suppliers and for production automation equipment used in the manufacturing of consumable blister card components.

Depreciation and amortization is computed by use of the straight-line method over the estimated useful lives of the assets as stated below:

Computer equipment and related software 3 - 5 years

Leasehold and building improvements Shorter of the lease term or the estimated useful life

Furniture and fixtures 5 - 7 years

Equipment 2 - 12 years

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

2 unchanged sentences

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

The Company capitalized $ 33.0 million and $ 12.7 million of costs related to the application development of enterprise-level software and its subscription and cloud-based offerings, which were included in property and equipment during the years ended December 31, 2022 and 2021, respectively.

Capitalized costs related to computer software developed or obtained for internal use were included in purchases of property and equipment in the Consolidated Statements of Cash Flows.

Software Development Costs for External Use

The Company capitalized $ 32.2 million and $ 33.0 million of costs related to the application development of enterprise-level software and its subscription and cloud-based offerings, which are included in property and equipment during the years ended December 31, 2023 and 2022, respectively.

Capitalized costs related to computer software developed or obtained for internal-use are included in purchases of property and equipment in the Consolidated Statements of Cash Flows.

Depreciation and amortization is computed by use of the straight-line method over the estimated useful lives of the assets as stated below:

Purchased software and internal-use software development costs 3 - 5 years

Leasehold and building improvements Shorter of the lease term or the estimated useful life

Furniture and fixtures 5 - 7 years

Equipment 2 - 12 years

External-Use Software Development Costs

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

2 unchanged sentences

All development costs prior to the completion of a detail program design or a working model are recognized as research and development expense.

The Company capitalized software development costs of $ 13.2 million and $ 29.4 million, that were included in other long-term assets as of December 31, 2022 and 2021, respectively.

The Company capitalized external-use software development costs of $ 14.6 million and $ 13.2 million, that were included in other long-term assets as of December 31, 2023 and 2022, respectively.

Lessee Leases

The Company determines if an arrangement is a lease at inception.

The Company determines if an arrangement is or contains a lease at inception.

Operating lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

1 unchanged sentence

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

The Company does not recognize a right-of-use asset and a lease liability for leases with an initial

term of twelve months or less.

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

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

1 unchanged sentence

The specific terms and conditions of the extension options vary from lease to lease, but are consistent with standard industry practices in each area that the Company operates.

The Company reviews each of its lease options at a time required by the terms of the lease contract, and notifies the lessor if it chooses to exercise the lease renewal option.

The Company reviews each of its lease options at a time required by the terms of the lease contract, and notifies the

lessor if it chooses to exercise the lease renewal option.

Until the Company is reasonably certain that it will extend the lease contract, the renewal option periods will not be recognized as right-of-use assets or lease liabilities.

58 unchanged sentences

Issuance costs are amortized using the effective interest method over the term of the convertible senior notes.

Refer to “Recently Adopted Authoritative Guidance” section below for further information regarding the Company’s adoption of ASU 2020-06.

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

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Recently Adopted Authoritative Guidance

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

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

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

ASU 2020-06 also requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method is no longer permitted for convertible instruments.

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

The Company adopted ASU 2020-06 on January 1, 2022, using the modified retrospective method of transition.

Upon adoption of ASU 2020-06, the previously separated equity component and associated debt issuance costs for the Company’s outstanding convertible senior notes were reclassified to the liability component, thereby eliminating the subsequent amortization of the debt discount as interest expense.

In addition, the Company derecognized the deferred tax liability related to the equity component.

The Company’s adoption of ASU 2020-06 impacted the Consolidated Balance Sheets at the beginning of the period of adoption as follows:

January 1, 2022

Pre-ASU 2020-06 Balances ASU 2020-06 Adoption Impact Post-ASU 2020-06 Balances

(In thousands)

Long-term deferred tax assets $ 15,883 $ ( 452 ) $ 15,431

Convertible senior notes, net 488,152 75,353 563,505

Long-term deferred tax liabilities 51,705 ( 19,572 ) 32,133

Additional paid-in capital 1,024,580 ( 72,742 ) 951,838

Retained earnings 368,571 16,509 385,080

Adoption of ASU 2020-06 did not have an impact on the Company’s Consolidated Statements of Operations or Consolidated Statements of Cash Flows as of January 1, 2022.

Refer to Note 11, Convertible Senior Notes , for further information regarding the Company’s convertible senior notes.

Recently Issued Authoritative Guidance

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

In October 2021, the Financial Accounting Standards Board (“FASB”) issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

The update addresses diversity in practice by requiring that an acquirer recognize and measure contract assets and liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers.

The Company will apply the guidance prospectively to acquisitions occurring on or after the effective date.

ASU 2021-08 will be effective for the Company beginning January 1, 2023.

The Company does not anticipate that the adoption of ASU 2021-08 will have a material impact on its Consolidated Financial Statements.

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

The Company adopted ASU 2021-08 beginning January 1, 2023 and will apply the guidance prospectively to acquisitions occurring on or after the adoption date.

Recently Issued Authoritative Guidance

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires public entities to disclose significant segment expenses that are regularly provided to the CODM.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis.

The amendments are effective for the Company’s annual periods beginning January 1, 2024, and for interim periods within fiscal years beginning January 1, 2025.

Retrospective application is required, with early adoption permitted.

The Company is currently evaluating the impact ASU 2023-07 will have on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

The amendments are effective for the Company’s annual periods beginning January 1, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively.

The Company is currently evaluating the impact ASU 2023-09 will have on its consolidated financial statements.

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

Business Combinations

The Company accounted for its acquisitions in accordance with ASC 805, Business Combinations .

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

Intangible assets eligible for recognition separate from goodwill were those that satisfied either the contractual or legal criterion or the separability criterion, each as set forth in the accounting guidance.

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

The Company’s Consolidated Financial Statements include the results of operations of each acquired company, commencing as of their respective acquisition dates.

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On December 29, 2021, the Company completed the acquisition of all outstanding equity securities of ReCept pursuant to the terms and conditions of the Agreement and Plan of Merger, dated December 1, 2021, by and among Omnicell, Inc., ReCept Holdings, Inc., Redfish Acquisition Corp, and the representative of the securityholders for a base purchase price of $ 100.0 million, prior to customary adjustments for closing cash, net working capital, and assumed indebtedness.

The addition of ReCept’s specialty pharmacy management services, now a part of the Company’s Specialty Pharmacy 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.

The addition of ReCept’s specialty pharmacy management services, now a part of the Company’s Specialty Pharmacy 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.

FDS Amplicare

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The backlog and trade names intangible assets are being amortized over their respective estimated useful lives using the straight-line method of amortization.

2020 Acquisition

340B Link Business

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

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

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

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

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

340B Link Business (1)

(In thousands)

Accounts receivable and unbilled receivables $ 8,197

Prepaid expenses 232

Other current assets 23,040

Total current assets 31,469

Property and equipment 531

Operating lease right-of-use assets 3,138

Goodwill 160,268

Intangible assets 62,800

Total assets 258,206

Accounts payable 568

Accrued liabilities 23,715

Long-term deferred tax liabilities 6,334

Long-term operating lease liabilities 2,589

Total liabilities 33,206

Total purchase price $ 225,000

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(1) During the third quarter of 2021, the Company recorded measurement period adjustments of $ 0.9 million to goodwill, consisting of an increase in other current assets, a decrease in accrued liabilities, and a decrease in long-term deferred tax liabilities of $ 0.3 million, $ 0.1 million, and $ 0.5 million, respectively.

The $ 160.3 million of goodwill arising from the 340B Link Business acquisition is primarily attributed to sales of future software-enabled services and solutions and the 340B Link Business’s assembled workforce.

Approximately $ 93.7 million of the 340B Link Business goodwill is expected to be deductible for tax purposes.

Tax deductible goodwill for U.S.

tax purposes is attributable to the asset acquisition portion of the transaction.

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

340B Link Business

Fair value Useful life

(In thousands, except for years)

Customer relationships $ 53,000 21

Acquired technology 9,000 5

Trade names 200 1

Non-compete agreements 600 3

Total purchased intangible assets $ 62,800

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

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

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

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

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

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

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

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

customer attrition rates;

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

discount rate of 14.0 % for all intangible assets;

and certain other assumptions.

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

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

Pro Forma Financial Information

The following table presents certain unaudited pro forma consolidated financial information for the years ended December 31, 2021 and 2020 as if the FDS Amplicare, ReCept, and MarkeTouch Media acquisitions had been completed on January 1, 2020 and the 340B Link Business acquisition had been completed on January 1, 2019.

The following table presents certain unaudited pro forma consolidated financial information for the year ended December 31, 2021 as if the FDS Amplicare, ReCept, and MarkeTouch Media acquisitions had been completed on January 1, 2020.

The pro forma effects of the Hub and Spoke Innovations acquisition were not material to the Company’s consolidated results of operations.

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

Short-term deferred revenues of $ 118.9 million and $ 112.2 million include deferred revenues from product sales and service contracts, net of deferred cost of sales of $ 15.8 million and $ 22.4 million, as of December 31, 2022 and 2021, respectively.

The short-term deferred revenues from product sales relate to delivered and invoiced products, pending installation and acceptance, expected to occur within the next twelve months.

Short-term deferred revenues, net of $ 121.7 million and $ 118.9 million include deferred revenues from product sales and service contracts, net of deferred cost of sales of $ 12.4 million and $ 15.8 million, as of December 31, 2023 and 2022, respectively.

During the year ended December 31, 2023, the Company recognized revenues of $ 115.7 million that were included in the corresponding gross short-term deferred revenues balance of $ 134.7 million as of December 31, 2022.

Long-term deferred revenues include deferred revenues from product and service contracts of $ 37.4 million and $ 20.2 million as of December 31, 2022 and 2021, respectively.

Remaining performance obligations are primarily recognized ratably over the remaining term of the contract, generally not more than ten years.

Significant Customers

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Also, there were no customers that accounted for more than 10% of the Company’s accounts receivable balance as of December 31, 2023 and 2022.

Net Income Per Share

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) for the period by the weighted-average number of shares outstanding during the period.

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Upon adoption of ASU 2020-06, effective January 1, 2022, the Company applies the if-converted method for calculating the dilutive impact of the convertible senior notes.

Refer to Note 1, Organization and Summary of Significant Accounting Policies , for further information.

Following the Company’s irrevocable election in December 2021 to settle the principal portion of the convertible senior notes in cash with any conversion consideration in excess of the principal portion in cash and/or shares of the Company’s common stock at the Company’s option upon conversion, only the amounts expected to be settled in excess of the principal portion are considered dilutive in calculating earnings per share under the if-converted method.

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

The basic and diluted net income per share calculations for the years ended December 31, 2022, 2021, and 2020 were as follows:

The basic and diluted net income (loss) per share calculations for the years ended December 31, 2023, 2022, and 2021 were as follows:

Year Ended December 31,

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(In thousands, except per share data)

Net income $ 5,648 $ 77,849 $ 32,194

Net income (loss) $ ( 20,371 ) $ 5,648 $ 77,849

Weighted-average shares outstanding – basic 45,212 44,398 43,475

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Weighted-average shares outstanding – diluted 45,212 45,891 47,943

Net income per share – basic $ 0.13 $ 1.79 $ 0.76

Net income per share – diluted $ 0.12 $ 1.62 $ 0.74

Net income (loss) per share – basic $ ( 0.45 ) $ 0.13 $ 1.79

Net income (loss) per share – diluted $ ( 0.45 ) $ 0.12 $ 1.62

Anti-dilutive weighted-average shares related to stock award plans 3,368 725 156

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

As of December 31, 2022, the fair value of the convertible senior notes was $ 501.4 million, compared to their carrying value of $ 566.6 million, which is net of unamortized debt issuance costs (subsequent to the adoption of ASU 2020-06).

As of December 31, 2021, the fair value of the convertible senior notes was $ 1.085 billion, compared to their carrying value of $ 488.2 million, which is net of unamortized discount and debt issuance costs and excludes amounts classified within additional paid-in capital (prior to the adoption of ASU 2020-06).

As of December 31, 2023 and 2022, the fair value of the convertible senior notes was $ 527.2 million and $ 501.4 million, respectively, compared to their carrying values of $ 569.7 million and $ 566.6 million, respectively, which are net of unamortized debt issuance costs.

Refer to Note 10, Debt and Credit Agreement , for further information regarding the Company’s credit facility and Note 11, Convertible Senior Notes , for further information regarding the Company’s convertible senior notes.

Refer to Note 1, Organization and Summary of Significant Accounting Policies , for further information regarding the adoption of ASU 2020-06.

Balance Sheet Components

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Other long-term assets:

Capitalized software, net $ 80,760 $ 96,995

External-use software development costs, net $ 66,659 $ 80,760

Unbilled receivables, net 11,850 14,744

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(1) Includes restricted cash of $ 33.0 million and $ 22.5 million as of December 31, 2023 and 2022, respectively.

The following table summarizes the changes in accumulated balances of other comprehensive loss, which consisted of foreign currency translation adjustments, for the years ended December 31, 2022 and 2021:

The following table summarizes the changes in accumulated balances of other comprehensive income (loss), which consisted of foreign currency translation adjustments, for the years ended December 31, 2023 and 2022:

(In thousands)

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Balance as of December 31, 2022 ( 17,087 )

Other comprehensive loss ( 8,680 )

Other comprehensive income 3,655

Balance as of December 31, 2023 $ ( 13,432 )

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Leasehold improvements 17,919 19,510

Software 76,327 60,856

Purchased software and internal-use software development costs 118,004 76,327

Construction in progress 11,614 28,223

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(1) No individual country represented more than 10% of total property and equipment, net.

Software Development Costs for External Use

The carrying amounts of capitalized software as of December 31, 2022 and 2021 were as follows:

External-Use Software Development Costs

The carrying amounts of external-use software development costs as of December 31, 2023 and 2022 were as follows:

(In thousands)

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Accumulated amortization ( 172,379 ) ( 144,244 )

Capitalized software, net (1)

External-use software development costs, net (1)

$ 66,659 $ 80,760

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

The Company recorded $ 29.0 million, $ 26.4 million, and $ 23.1 million to cost of revenues for amortization of capitalized software development costs for the years ended December 31, 2022, 2021, and 2020, respectively.

The estimated future amortization expenses for capitalized software were as follows:

The Company recorded $ 28.7 million, $ 29.0 million, and $ 26.4 million to cost of revenues for amortization of external-use software development costs for the years ended December 31, 2023, 2022, and 2021, respectively.

The estimated future amortization expenses for external-use software development costs were as follows:

December 31, 2023

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Balance as of December 31, 2022 734,274

Additions (1)

Measurement period adjustments (1)

Foreign currency exchange rate fluctuations 1,536

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Gross carrying

amount Accumulated

amortization Foreign currency exchange

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Patents 2,404 ( 1,454 ) — 950 2 - 20

Non-compete agreements 600 ( 450 ) — 150 3

Total intangibles assets, net $ 405,698 $ ( 193,199 ) $ ( 1,326 ) $ 211,173

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Gross carrying

amount Accumulated

amortization Foreign currency exchange

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Total intangibles assets, net $ 417,185 $ ( 172,765 ) $ ( 1,514 ) $ 242,906

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

Amortization expense of intangible assets was $ 31.6 million, $ 35.2 million, and $ 26.5 million for the years ended December 31, 2023, 2022, and 2021, respectively.

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Debt and Credit Agreement

2019 Revolving Credit Facility

On November 15, 2019, the Company entered into an Amended and Restated Credit Agreement (as subsequently amended as discussed below, the “A&R Credit Agreement”) with the lenders from time to time party thereto, Wells Fargo Securities, LLC, Citizens Bank, N.A., and JPMorgan Chase Bank, N.A., as joint lead arrangers, and Wells Fargo Bank, National Association, as administrative agent.

The A&R Credit Agreement superseded the Company’s 2016 secured credit facility and provides for (a) a five-year revolving credit facility of $ 500.0 million (the “Revolving Credit Facility”) and (b) an uncommitted incremental loan facility of up to $ 250.0 million (the “Incremental Facility”).

In addition, the A&R Credit Agreement includes a letter of credit sub-limit of up to $ 15.0 million and a swing line loan sub-limit of up to $ 25.0 million.

The A&R Credit Agreement has an expiration date of November 15, 2024, upon which date all remaining outstanding borrowings will be due and payable.

Loans under the Revolving Credit Facility bear interest, at the Company’s option, at a rate equal to either (a) the LIBOR Rate, plus an applicable margin ranging from 1.25 % to 2.00 % per annum based on the Company’s Consolidated Total Net Leverage Ratio (as defined in the A&R Credit Agreement), or (b) an alternate base rate equal to the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50 %, and (iii) LIBOR for an interest period of one month plus 1.00 %, plus an applicable margin ranging from 0.25 % to 1.00 % per annum based on the Company’s Consolidated Total Net Leverage Ratio.

As of December 31, 2021, LIBOR has started being phased out and LIBOR is expected to be entirely discontinued on June 30, 2023.

The A&R Credit Agreement provides that upon the occurrence of certain triggering events related to the end of LIBOR, the Company and the administrative agent will select an alternative benchmark rate to replace the LIBOR Rate.

Upon the phasing out of LIBOR, the Company will work with its lenders to establish an alternative benchmark rate (such as the Secured Overnight Financing Rate) taking into account any relevant governmental body’s selection or recommendation of a replacement rate and/or the then-prevailing market convention for determining an alternative benchmark rate.

The Company does not anticipate that the discontinuance or phasing out of the LIBOR Rate will materially impact its liquidity or financial position.

Undrawn commitments under the Revolving Credit Facility are subject to a commitment fee ranging from 0.15 % to 0.30 % per annum based on the Company’s Consolidated Total Net Leverage Ratio on the average daily unused portion of the Revolving Credit Facility.

The applicable margin for, and certain other terms of, any term loans under the Incremental Facility will be determined prior to the incurrence of such loans.

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

On September 22, 2020, the parties entered into an amendment to the A&R Credit Agreement to, among other changes, permit the issuance of the convertible senior notes and the purchase of the convertible note hedge transactions, as described in Note 11, Convertible Senior Notes , expand the Company’s flexibility to repurchase its common stock and make other restricted payments, and replace the total net leverage covenant with a new secured net leverage covenant that requires the Company to maintain a consolidated secured net leverage ratio not to exceed 3.50 :1 for the calendar quarters ending September 30, 2020, December 31, 2020, and March 31, 2021 and 3.00 :1 for the calendar quarters ending thereafter.

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

The A&R Credit Agreement contains financial covenants that require the Company and its subsidiaries to not exceed a maximum total secured net leverage ratio (as described above) and maintain a minimum interest coverage ratio.

In addition, the A&R Credit Agreement contains certain customary events of default including, but not limited to, failure to pay interest, principal, and fees, or other amounts when due, material misrepresentations or misstatements in any representation or warranty, covenant defaults, certain cross defaults to other material indebtedness, certain judgment defaults, and events of bankruptcy.

The Company’s obligations under the A&R Credit Agreement and any swap obligations and banking services obligations owing to a lender (or an affiliate of a lender) are guaranteed by certain of its domestic subsidiaries and secured by substantially all of its and such subsidiary guarantors’ assets.

In connection with entering into the A&R Credit Agreement, and as a condition precedent to borrowing loans thereunder, the Company and certain of the Company’s other direct and indirect subsidiaries have entered into certain ancillary agreements, including, but not limited to, a reaffirmation agreement, which amends certain terms of the existing collateral agreement and reaffirms their obligations under the existing guaranty agreement.

On November 15, 2019, the Company entered into an Amended and Restated Credit Agreement (as amended, the “Prior A&R Credit Agreement”) with the lenders from time to time party thereto, Wells Fargo Securities, LLC, Citizens Bank, N.A., and JPMorgan Chase Bank, N.A., as joint lead arrangers, and Wells Fargo Bank, National Association, as administrative agent.

The Prior A&R Credit Agreement provided for (a) a five-year revolving credit facility of $ 500.0 million (the “Prior Revolving Credit Facility”) and (b) an uncommitted incremental loan facility of up to $ 250.0 million (the “Prior Incremental

In addition, the Prior A&R Credit Agreement included a letter of credit sub-limit of up to $ 15.0 million and a swing line loan sub-limit of up to $ 25.0 million.

The Prior A&R Credit Agreement had an expiration date of November 15, 2024, upon which date all remaining outstanding borrowings would be due and payable.

On September 22, 2020 and March 29, 2023, the Company entered into amendments to the Prior A&R Credit Agreement to, among other changes, permit the issuance of the convertible senior notes and the purchase of the convertible note hedge transactions, as described in Note 11, Convertible Senior Notes , expand the Company’s flexibility to repurchase its common stock and make other restricted payments, and replace the total net leverage covenant with a new secured net leverage covenant that requires the Company to maintain a consolidated secured net leverage ratio not to exceed 3.50 :1 for the calendar quarters ending September 30, 2020, December 31, 2020, and March 31, 2021 and 3.00 :1 for the calendar quarters ending thereafter, as well as to remove and replace the interest rate benchmark based on the London interbank offered rate (“LIBOR”) and related LIBOR-based mechanics applicable to borrowings under the A&R Credit Agreement with an interest rate benchmark based on the secured overnight financing rate (“SOFR”) as administered by the Federal Reserve Bank of New York and related SOFR-based mechanics.

Subsequent to the March 29, 2023 amendment, loans under the Prior Revolving Credit Facility bore interest, at the Company’s option, at a rate equal to either (a) the Adjusted Term SOFR (as defined in the Prior A&R Credit Agreement), plus an applicable margin ranging from 1.25 % to 2.00 % per annum based on the Company’s Consolidated Total Net Leverage Ratio (as defined in the Prior A&R Credit Agreement), or (b) an alternate base rate equal to the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50 %, and (iii) the Adjusted Term SOFR for a one month tenor plus 1.00 %, plus an applicable margin ranging from 0.25 % to 1.00 % per annum based on the Company’s Consolidated Total Net Leverage Ratio.

Undrawn commitments under the Prior Revolving Credit Facility were subject to a commitment fee ranging from 0.15 % to 0.30 % per annum based on the Company’s Consolidated Total Net Leverage Ratio on the average daily unused portion of the Prior Revolving Credit Facility.

The applicable margin for, and certain other terms of, any term loans under the Prior Incremental Facility would be determined prior to the incurrence of such loans.

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

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

The Prior A&R Credit Agreement also contained financial covenants that required the Company and its subsidiaries to not exceed a maximum total secured net leverage ratio (as described above) and maintain a minimum interest coverage ratio.

In addition, the Prior A&R Credit Agreement contained certain customary events of default including, but not limited to, failure to pay interest, principal, and fees, or other amounts when due, material misrepresentations or misstatements in any representation or warranty, covenant defaults, certain cross defaults to other material indebtedness, certain judgment defaults, and events of bankruptcy.

The Company entered into a Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”) on October 10, 2023, with the lenders from time to time party thereto, Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., PNC Capital Markets LLC and TD Securities (USA) LLC as joint lead arrangers and Wells Fargo Bank, National Association, as administrative agent.

The Second A&R Credit Agreement supersedes the Prior A&R Credit Agreement and provides for (a) a five-year revolving credit facility of $ 350.0 million (the “Current Revolving Credit Facility”) and (b) an uncommitted incremental loan facility of up to an amount equal to the sum of (i) the greater of $ 250.0 million or 100 % of the adjusted consolidated EBITDA for the last four quarters and (ii) additional amounts subject to pro forma compliance with certain consolidated secured net leverage ratio (the “Current Incremental Facility”).

In addition, the Second A&R Credit Agreement includes a letter of credit sub-limit of up to $ 15.0 million and a swing line loan sub-limit of up to $ 25.0 million.

The Second A&R Credit Agreement has an expiration date of October 10, 2028, subject to acceleration under certain conditions, upon which date all remaining outstanding borrowings will be due and payable.

Loans under the Current Revolving Credit Facility bear interest, at the Company’s option, at a rate equal to either (a) the Adjusted Term SOFR (as defined in the Second A&R Credit Agreement), plus an applicable margin ranging from 1.50 % to 2.25 % per annum based on the Company’s Consolidated Total Net Leverage Ratio (as defined in the Second A&R Credit Agreement), or (b) an alternate base rate equal to the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50 %, and (iii) the Adjusted Term SOFR for an interest period of one month plus 1.00 %, plus an applicable margin ranging from 0.50 % to 1.25 % per annum based on the Company’s Consolidated Total Net Leverage Ratio.

Undrawn commitments under the Current Revolving Credit Facility are subject to a commitment fee ranging from 0.20 % to 0.35 % per annum based on the Company’s Consolidated Total Net Leverage Ratio on the average daily unused portion of the Current Revolving Credit Facility.

Subject to the terms and conditions of the Current Revolving Credit Facility or Current Incremental Facility the Company is permitted to make voluntary prepayments at any time without payment of a premium or penalty.

The availability of funds under the Current Revolving Credit Facility may be subject to reduction in order to maintain compliance with the financial covenants under the Second A&R Credit Agreement.

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

The Second A&R Credit Agreement contains financial covenants that require the Company and its subsidiaries to not exceed a maximum consolidated secured net leverage ratio (not to exceed 3.00 :1) and maintain a minimum consolidated interest coverage ratio (not to be less than 3.00 :1).

In addition, the Second A&R Credit Agreement contains certain customary events of default including, but not limited to, failure to pay interest, principal, and fees, or other amounts when due, material misrepresentations or misstatements in any representation or warranty, covenant defaults, certain cross defaults to other material indebtedness, certain judgment defaults, and events of bankruptcy.

The Company’s obligations under the Second A&R Credit Agreement and, at the election of the Company and the contracting counterparty, any secured swap obligations and banking services obligations owing to a lender (or an affiliate of a lender) are guaranteed by certain of its domestic subsidiaries and secured by substantially all of its and such subsidiary guarantors’ assets.

In connection with entering into the Second A&R Credit Agreement, and as a condition precedent to borrowing loans thereunder, the Company and certain of the Company’s other direct and indirect subsidiaries have entered into certain ancillary agreements, including, but not limited to, a reaffirmation agreement, which amends certain terms of the existing collateral agreement and reaffirms their obligations under the existing guaranty agreement.

The refinancing of the Prior Credit Agreement was evaluated in accordance with ASC 470-50, Debt - Modifications and Extinguishments.

In determining whether the refinancing was to be accounted for as a debt extinguishment or a debt modification, the Company considered whether lenders within the syndicate remained the same or changed and whether the changes in debt terms were substantial.

This assessment was performed on an individual lender basis within the syndicate.

As a result, the refinancing was accounted for as a modification with the exception of certain lenders that exited the syndicate.

The exit of certain lenders resulted in an immaterial write-off of existing unamortized debt issuance costs.

The remaining unamortized debt issuance costs related to debt modification, along with the new deferred costs, will be amortized over the remaining term of the Second A&R Credit Agreement.

In connection with the Second A&R Credit Agreement, the Company incurred and capitalized an additional $ 3.0 million of debt issuance costs.

The debt issuance costs are being amortized to interest expense using the straight-line method through 2028.

As of December 31, 2023, the Company had $ 350.0 million of funds available under the Current Revolving Credit Facility and as of December 31, 2022, the Company had $ 500.0 million of funds available under the Prior Revolving Credit Facility.

As of December 31, 2023 and 2022, the Company had no outstanding balance under the Prior or Current Revolving Credit Facility.

The Company was in compliance with all covenants as of December 31, 2023.

As of December 31, 2022 and 2021, there was no outstanding balance for the Revolving Credit Facility.

Convertible Senior Notes

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

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

During the three months ended December 31, 2021, the conditional conversion feature of the Notes was triggered, based on the price of the Company’s common stock, as the last reported sale price of the Company’s common stock was greater than or equal to 130 % of the then applicable conversion price for the Notes for at least 20 trading days during the period of 30 consecutive trading days ending on December 31, 2021, the last trading day of the respective fiscal quarter.

Accordingly, the Notes were convertible during the first quarter of 2022 and were classified as a current liability in the Consolidated Financial Statements as of December 31, 2021.

During the three months ended December 31, 2022, none of the conditional conversion features of the Notes were triggered, and therefore, the Notes are not convertible during the first quarter of 2023, commencing on January 1, 2023.

Accordingly, the Company classified the Notes as a long-term liability in its Consolidated Financial Statements as of December 31, 2022.

On or after May 15, 2025 until the close of business on

the second scheduled trading day immediately preceding the maturity date, holders of the Notes may convert all or any portion of their Notes at any time, regardless of the foregoing conditions.

During the three months ended December 31, 2023 and 2022, none of the conditional conversion features of the Notes were triggered, and therefore, the Notes are not convertible during the first quarter of 2024, commencing on January 1, 2024, and were not convertible during the first quarter of 2023, commencing on January 1, 2023.

Accordingly, the Company classified the Notes as a long-term liability in its Consolidated Financial Statements as of December 31, 2023 and 2022.

Whether the Notes will be convertible following the first fiscal quarter of 2024 will depend on the satisfaction of the conversion conditions in the future.

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As of December 31, 2023, none of the criteria for a fundamental change or a conversion rate adjustment had been met.

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

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

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

If the Company redeems less than all of the outstanding Notes, at least $ 150.0 million aggregate principal amount of Notes must be outstanding and not subject to redemption as of the date of the relevant notice of redemption.

No sinking fund is provided for in the Notes.

Prior to the adoption of ASU 2020-06, convertible debt instruments that could be settled in cash were required to be separated into liability and equity components.

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

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

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

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

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

Upon adoption of ASU 2020-06, effective January 1, 2022, the Notes are no longer separated into liability and equity components, and are accounted for as a single liability measured at its amortized cost.

Refer to Note 1, Organization and Summary of Significant Accounting Policies , for further information.

The debt issuance costs associated with the Notes are being amortized to interest expense over the term of the Notes using an effective interest rate of 0.80 %.

As of December 31, 2023, the remaining life of the Notes and the related issuance cost accretion is approximately 1.7 years.

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The Notes consisted of the following balances reported in the Consolidated Balance Sheets as of December 31, 2023 and 2022:

(In thousands)

Principal amount $ 575,000 $ 575,000

Unamortized discount — ( 77,136 )

Unamortized debt issuance costs ( 5,338 ) ( 8,429 )

Convertible senior notes, liability component (1)

$ 566,571 $ 488,152

Convertible senior notes, equity component $ — $ 72,732

_________________________________________________

(1) Classified as a long-term liability as of December 31, 2022, and a current liability as of December 31, 2021, in the Consolidated Balance Sheets.

(2) Refer to Note 1, Organization and Summary of Significant Accounting Policies , for further information regarding the impact of the adoption of ASU 2020-06, effective January 1, 2022.

Convertible senior notes, net $ 569,662 $ 566,571

The following table summarizes the components of interest expense resulting from the Notes recognized in interest and other income (expense), net in the Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021:

Year Ended December 31,

2023 2022 (1)

(In thousands)

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_________________________________________________

(1) Refer to Note 1, Organization and Summary of Significant Accounting Policies , for further information regarding the impact of the adoption of ASU 2020-06, effective January 1, 2022.

(1) Refer to Note 1, Organization and Summary of Significant Accounting Policies , for further information regarding the adoption of ASU 2020-06, effective January 1, 2022.

Convertible Note Hedge and Warrant Transactions

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Sales-Type Leases

On a recurring basis, the Company enters into multi-year, sales-type lease agreements with the majority of such leases varying in length from one to five years .

The following table presents the Company’s income recognized from sales-type leases for the years ended December 31, 2023, 2022, and 2021:

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Operating Leases

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

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

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

The following table represents the Company’s income recognized from operating leases for the years ended December 31, 2023, 2022, and 2021:

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The Company has operating leases for office buildings, data centers, office equipment, and vehicles.

The Company’s leases have initial terms of one to 12 years.

The Company’s leases have initial terms of one to twelve years .

As of December 31, 2023, the Company did not have any additional material operating leases that were entered into, but not yet commenced.

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Short-term lease costs and variable lease costs were not material for the years ended December 31, 2023, 2022, and 2021.

During the year ended December 31, 2022, the Company recorded impairment and abandonment charges to operating lease right-of-use assets of $ 9.4 million, in connection with restructuring activities for optimization of certain leased facilities.

During the year ended December 31, 2023, the Company recorded impairment and abandonment charges to operating lease right-of-use assets of $ 10.0 million, in connection with restructuring activities to reduce its real estate footprint and for optimization of certain leased facilities.

The impairment and abandonment charges were recorded to selling, general, and administrative expenses on the Company’s Consolidated Statements of Operations.

Refer to Note 18, Restructuring Expenses, for additional information regarding the Company’s restructuring activities.

The following table summarizes supplemental cash flow information related to the Company’s operating leases for the years ended December 31, 2023, 2022, and 2021:

12 unchanged sentences

Ransomware Incident

On May 4, 2022, the Company determined that certain of its information technology systems were affected by ransomware impacting certain internal systems.

Upon detecting the security event, the Company took immediate steps designed to contain the incident and implement its business continuity plans to restore and support continued operations.

The Company has contained the incident and restored substantially all of its critical information technology systems.

During the year ended December 31, 2023, the Company did not incur any material expenses or recoveries related to the previously disclosed ransomware incident in May 2022.

During the year ended December 31, 2022, the Company incurred $ 13.6 million of expenses related to the ransomware incident, partially offset by $ 11.1 million of expected insurance recoveries.

Expenses include costs to investigate and remediate the ransomware incident, as well as legal and other professional services, all of which were expensed as incurred.

Expenses included costs to investigate and remediate the ransomware incident, as well as legal and other professional services, all of which were expensed as incurred.

For the year ended December 31, 2022, the Company included net expenses related to the ransomware incident in cost of revenues of $ 0.3 million, in research and development of $ 0.2 million, and in selling general and administrative expenses of $ 2.0 million, in the Company’s Consolidated Statements of Operations.

As of December 31, 2023, the Company has incurred $ 13.6 million of cumulative expenses related to the ransomware incident since it was detected, partially offset by $ 12.2 million of insurance recoveries, all of which have been received as of December 31, 2023.

Legal Proceedings

The Company is currently involved in various legal proceedings.

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

Omnicell, Inc., Case No.

2019-CH-06817 (the “Heard Action”).

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

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

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

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

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

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

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

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

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

Plaintiff filed an amended complaint on September 30, 2020 and the Company subsequently filed a motion to dismiss the amended complaint on October 28, 2020, which was fully briefed, but the Court had not heard oral argument on the motion.

The parties entered into a settlement agreement on January 25, 2022, (the “Settlement Agreement”).

On February 1, 2022, the Court granted preliminary approval of the settlement.

Following preliminary approval, plaintiff conducted discovery to identify class members and to determine the class size.

Pursuant to the terms of the Settlement Agreement, and following class size discovery, the parties participated in non-binding mediation on November 21, 2022.

A settlement was reached at the mediation and the parties executed an addendum to the Settlement Agreement (the “Addendum”) reflecting the changes to the original settlement terms.

On November 30, 2022, the Court granted preliminary approval of the settlement including the Addendum.

The hearing on final approval of the settlement is currently set for April 6, 2023.

Subject to final approval of the settlement, the Company intends to defend the lawsuit vigorously.

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

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

Further, the estimated range of loss in this matter is not deemed material.

Company believes that it has valid defenses with respect to the legal proceeding pending against it.

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

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

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

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

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

The Company is not a party to any legal proceedings that management believes may have a material impact on the Company’s financial position or results of operations.

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

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However, no assurances can be given that the insurers will not attempt to dispute the validity, applicability, or amount of coverage without expensive and time-consuming litigation against the insurers.

Additionally, the Company undertakes indemnification obligations in its ordinary course of business in connection with, among other things, the licensing of its products and the provision of its support services.

In the ordinary course of the Company’s business, the Company has in the past and may in the future agree to indemnify another party, generally its business affiliates or customers, against certain losses suffered or incurred by the indemnified party in connection with various types of claims, which may include, without limitation, claims of intellectual property infringement, certain tax liabilities, its gross negligence or intentional acts in the performance of support services, and violations of laws.

The term of these indemnification obligations is generally perpetual.

Additionally, the Company undertakes indemnification obligations in its ordinary course of business in connection with, among other things, the sale or licensing of its products and the provision of its support services.

The term of these indemnification obligations is generally perpetual, but typically will not extend beyond the applicable statute of limitation pursuant to applicable law.

In general, the Company attempts to limit the maximum potential amount of future payments that it may be required to make under these indemnification obligations to the amounts paid to it by a customer, but in some cases the obligation may not be so limited.

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

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

Sales contracts for certain of the Company’s medication packaging systems may have in the past and may in the future include limited warranties for up to six months , but the periodic activity and ending warranty balances the Company records have historically not been material.

From time to time, the Company may also warrant that its professional services will be performed in a good and workmanlike manner or in a professional manner consistent with industry standards.

From time to time, the Company may also warrant that its professional services will conform to certain representations, which may include that such services will be performed in a good and workmanlike manner or in a professional manner consistent with industry standards.

The Company generally seeks to disclaim most warranties, including any implied or statutory warranties such as warranties of merchantability, fitness for a particular purpose, title, quality, and non-infringement, as well as any liability with respect to incidental, consequential, special, exemplary, punitive, or similar damages.

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Awards of restricted stock to non-employee directors are granted on the date of the annual meeting of stockholders and vest in full on the date of the next annual meeting of stockholders, provided such non-employee director remains a director on such date.

The fair value of the awards on the date of issuance is amortized to expense from the date of grant to the date of vesting and are expensed ratably on a straight-line basis over the vesting period.

PSUs granted to the Company’s executives may include performance and market conditions.

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Total share-based compensation expense $ 55,300 $ 68,247 $ 53,160

The Company did not capitalize any material share-based compensation amounts to inventory, capitalized software, or internal-use software for the years ended December 31, 2022 and 2021.

Income tax benefits realized from share-based compensation were $ 5.2 million, $ 26.6 million, and $ 10.3 million, for the years ended December 31, 2022, 2021, and 2020, respectively.

During the year ended December 31, 2023, the Company capitalized approximately $ 4.4 million of non-cash share-based compensation expense to internal-use and external-use software development costs related to internal labor.

The Company did not capitalize any material non-cash share-based compensation expense to inventory during the years ended December 31, 2023, 2022, and 2021, or any material non-cash share-based compensation expense to internal-use and external-use software development costs during the years ended December 31, 2022 and 2021.

Income tax benefit (expense) realized from share-based compensation was an expense of $ 6.5 million for the year ended December 31, 2023, and a benefit of $ 5.2 million and $ 26.6 million for the years ended December 31, 2022 and 2021, respectively.

Employee Stock Purchase Plan (“ESPP”)

The following assumptions were used to value shares granted under the ESPP for the years ended December 31, 2022, 2021, and 2020:

The following assumptions were used to value shares under the ESPP for the years ended December 31, 2023, 2022, and 2021:

Year Ended December 31,

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Outstanding at December 31, 2022 2,434 $ 68.65 6.1 $ 7,887

Granted 200 55.60

Exercised ( 165 ) 41.01

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The intrinsic value of options exercised during the years ended December 31, 2023, 2022, and 2021 was $ 3.2 million, $ 23.9 million, and $ 88.0 million, respectively.

The tax benefit realized from stock options exercised was $ 4.4 million, $ 18.3 million, and $ 7.1 million, for the years ended December 31, 2022, 2021, and 2020, respectively.

The tax benefit (expense) realized from stock options exercised was expense of $ 1.3 million for the year ended December 31, 2023, and benefit of $ 4.4 million and $ 18.3 million for the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2023, total unrecognized compensation cost related to unvested stock options was $ 3.3 million, which is expected to be recognized over a weighted-average vesting period of 0.7 years.

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Performance-Based Stock Unit Awards (“PSUs”)

During the year ended December 31, 2021, the Company granted 51,110 PSUs to its executive officers, all of which became eligible for vesting upon the achievement of a certain level of shareholder return.

During the year ended December 31, 2022, the Company granted 56,237 PSUs to its executive officers, none of which became eligible for vesting as the achievement of a certain level of shareholder return was not achieved.

During the year ended December 31, 2023, the Company granted 65,000 PSUs to its executive officers, of which 0 % to 200 % may become eligible for vesting depending on the level of shareholder return for the period from March 1, 2023 through March 1, 2024.

1 unchanged sentence

Stock price appreciation is calculated based on the trailing 20 -day average stock price just prior to the first trading day of March in the grant year, compared to the trailing 20 -day average stock price just prior to the first trading day of March in the year subsequent to the grant year.

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

PSUs generally vest over periods of up to four years , with one-fourth of the shares vesting approximately one year from the vesting commencement date with respect to initial grants and upon confirmation by the Compensation Committee that the performance target has been met, and the remaining shares vesting in six equal semi-annual installments thereafter.

PSUs generally vest over periods of up to four years , with one-fourth of the shares vesting approximately one year from the vesting commencement date with respect to initial grants and upon confirmation by the Compensation Committee that the performance target has been met, and the remaining shares generally vesting in equal semi-annual or quarterly installments over the remaining three years .

Vesting is contingent upon continued service.

2 unchanged sentences

Weighted-Average

Grant Date Fair Value Per Unit

Grant Date Fair Value

(In thousands, except per share data)

1 unchanged sentence

Granted 65 122.29

Additional granted based on performance achievement 51 156.79

Vested ( 55 ) 111.05

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(In thousands)

Share options outstanding 2,434

Stock options outstanding 2,023

Non-vested restricted stock awards 1,177

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The stock repurchases may be made from time to time on the open market, in privately negotiated transactions, or pursuant to a Rule 10b-18 plan, subject to the terms and conditions of that certain A&R Credit Agreement, as amended.

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

On September 17, 2020, the Board authorized a one-time stock repurchase transaction providing for the repurchase of up to $ 75.0 million of the Company’s common stock in privately negotiated transactions concurrently with the issuance of the Notes, described in Note 11, Convertible Senior Notes .

In September 2020, the Company repurchased 749,300 shares of its common stock from purchasers of the Notes in the offering in privately negotiated transactions effected through one of the initial purchasers or its affiliate at an average price of $ 70.78 per share for an aggregate purchase price of approximately $ 53.0 million.

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

The 2016 Repurchase Program does not obligate the Company to repurchase any specific number of shares, and the Company may terminate or suspend the 2016 Repurchase Program at any time.

During the year ended December 31, 2022, the Company repurchased approximately 389,300 shares of its common stock under the repurchase programs at an average price of $ 134.11 per share for an aggregate purchase price of approximately $ 52.2 million.

During the years ended December 31, 2021 and 2020, the Company did not repurchase any of its outstanding common stock under the repurchase programs other than the separately-authorized one-time stock repurchase concurrent with the offering of the Notes in September 2020.

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

During the years ended December 31, 2023 and 2021, the Company did no t repurchase any of its outstanding common stock under the stock repurchase programs.

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

Year Ended December 31,

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Foreign 7,997 ( 2,822 ) ( 1,096 )

Income (loss) before provision for income taxes $ ( 2,453 ) $ 66,007 $ 29,349

The benefit from income taxes consisted of the following:

Income (loss) before income taxes $ ( 20,108 ) $ ( 2,453 ) $ 66,007

The provision for (benefit from) income taxes consisted of the following:

Year Ended December 31,

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Total deferred income taxes ( 10,604 ) ( 34,290 ) ( 3,954 )

Total benefit from income taxes $ ( 8,101 ) $ ( 11,842 ) $ ( 2,845 )

The benefit from income taxes differs from the amount computed by applying the statutory federal tax rate as follows:

Total provision for (benefit from) income taxes $ 263 $ ( 8,101 ) $ ( 11,842 )

The provision for (benefit from) income taxes differs from the amount computed by applying the statutory federal tax rate as follows:

Year Ended December 31,

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Uncertain tax positions ( 620 ) ( 776 ) ( 835 )

Share-based compensation tax benefit ( 3,264 ) ( 20,717 ) ( 6,929 )

Share-based compensation tax expense (benefit) 7,384 ( 3,264 ) ( 20,717 )

Research tax credits ( 4,587 ) ( 6,948 ) ( 5,170 )

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Transaction cost — 68 1,097

Provision to return true up 697 ( 84 ) 205

State rate true up 528 ( 135 ) ( 80 )

Other ( 9 ) ( 32 ) 34

Total benefit from income taxes $ ( 8,101 ) $ ( 11,842 ) $ ( 2,845 )

The Company has executed various global operational centralization activities and legal entity rationalization in recent years.

During the year ended December 31, 2022, the Company underwent legal entity rationalization through tax free reorganizations.

During the year ended December 31, 2021, the Company recognized a benefit on the release of previously recorded uncertain tax positions related to the sale of certain intellectual property rights by Aesynt B.V.

to Omnicell, Inc.

and a gain on the transfer of certain assets to Omnicell Pty Ltd, which resulted in a tax benefit, net of tax expense, of $ 6.1 million.

Total provision for (benefit from) income taxes $ 263 $ ( 8,101 ) $ ( 11,842 )

On August 16, 2022, the Inflation Reduction Act of 2022, (the “IRA”), was signed into law.

Among other things, the IRA imposes a 15% corporate alternative minimum tax for tax years beginning after December 31, 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy.

The Company is in the process of analyzing the potential impacts of the IRA’s provisions on its business.

However, these provisions are not currently expected to have a material impact on the Company’s results of operations or financial position.

On March 11, 2021, the President of the United States signed into law the “American Rescue Plan Act of 2021” (the “ARP Act”), which provides additional economic stimulus and tax credits, including the expansion and modification of the employee retention tax credit enacted by the Coronavirus Aid, Relief and Economic Security Act and the refundable tax credits for COVID-related paid sick and family leave enacted by the Family First Act.

The ARP Act further expands the “covered employees” definition for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, used in determining the limitation on the deduction for excessive employee remuneration rules to be applicable for taxable years beginning after December 31, 2026.

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

The provisions of the IRA did not have a material impact on the Company’s results of operations or financial position.

The Organization for Economic Co-Operation and Development (“OECD”) introduced Base Erosion and Profit Shifting (“BEPS”) Pillar Two rules that impose a global minimum tax rate of 15% on multi-national corporations.

The rules are effective for the Company’s financial year beginning January 1, 2024.

Numerous countries have enacted or substantively enacted legislation to implement these rules.

While the Company does not expect Pillar Two to have a material impact on its tax provision or effective tax rate, the Company continues to monitor evolving tax legislation in the jurisdictions in which it operates.

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

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Total deferred tax liabilities ( 86,260 ) ( 98,942 )

Net deferred tax assets (liabilities) $ 20,234 $ ( 35,822 )

Net deferred tax assets $ 31,281 $ 20,234

Deferred income tax assets (liabilities) are provided for temporary differences that will result in future tax deductions or future taxable income, as well as the future benefit of tax credit carryforwards.

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As of December 31, 2023 and 2022, the Company does no t have a valuation allowance against any of its deferred tax assets.

As of December 31, 2022, the Company had $ 10.9 million of federal net operating losses and $ 15.0 million of state net operating loss carryforwards expiring at various dates beginning in 2024, and $ 22.2 million of foreign net operating losses carried forward indefinitely.

For income tax purposes, the Company has no federal research tax credit carryforward and a California research tax credit carryforward of $ 20.0 million.

California credits are carried forward indefinitely to reduce cash taxes payable.

As of December 31, 2023, the Company had no federal net operating loss carryforward, $ 19.0 million of state net operating loss carryforwards expiring at various dates beginning in 2029, and $ 22.3 million of foreign net operating losses carried forward indefinitely.

For income tax purposes, the Company had no federal research tax credit carryforward and a California research tax credit carryforward of $ 20.9 million.

California research tax credits are carried forward indefinitely to reduce cash taxes payable.

It is the Company’s practice and intention to reinvest the earnings of its non-U.S.

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

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

With few exceptions, as of December 31, 2023, the Company was no longer subject to U.S., state, and foreign tax examinations for years before 2020, 2019, and 2019, respectively.

5 unchanged sentences

Increases related to tax positions taken during the current period 1,219

Decreases related to settlements —

Decreases related to expiration of statute of limitations ( 1,636 )

3 unchanged sentences

Increases related to tax positions taken during the current period 1,629

Decreases related to settlements —

Decreases related to expiration of statute of limitations ( 1,238 )

3 unchanged sentences

Increases related to tax positions taken during the current period 1,566

Decreases related to settlements —

Decreases related to expiration of statute of limitations ( 703 )

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Restructuring Expenses

During 2020, the Company announced a company-wide organizational realignment initiative in order to more effectively align its organizational infrastructure and operations with the industry vision of the Autonomous Pharmacy.

The Company also initiated a restructuring plan to help mitigate the adverse impact of the COVID-19 pandemic on its business and financial results.

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

During the first quarter of 2021, the Company continued its organizational realignment initiative, incurring $ 2.0 million of employee severance costs and related expenses.

During the first quarter of 2021, the Company continued its organizational realignment initiative that was announced in 2020, incurring $ 2.0 million of employee severance costs and related expenses.

During the first quarter of 2022, the Company initiated certain domestic and international restructuring initiatives in order to enhance and streamline certain engineering functions for its domestic operations and to realign its international sales organization to better serve its customers in various international markets.

During the third quarter of 2022, the Company initiated restructuring initiatives associated with the integration and functionalization of certain acquisitions, primarily the 340B Link business acquisition, to further accelerate the expansion of the Company’s pharmacy inventory management capabilities.

On November 23, 2022, the Company committed to a plan to reduce the Company’s headcount as part of the Company’s expense containment efforts being implemented due to ongoing macroeconomic headwinds, primarily consisting of employee severance and benefits costs.

On November 23, 2022, the Company committed to a plan to reduce the Company’s headcount (“the 2022 Plan”) as part of the Company’s expense containment efforts being implemented due to ongoing macroeconomic headwinds, primarily consisting of employee severance and benefits costs.

During the year ended December 31, 2022, the restructuring plans incurred $ 22.8 million of employee severance costs and related expenses.

As of December 31, 2023, there was no material unpaid balance related to these restructuring plans.

During the first quarter of 2023, as a result of continued exploration of expense containment measures, the Company committed to further reduce its headcount across many of its functions as a continuation of the 2022 Plan, and also committed to reduce its real estate footprint to align with its broader hybrid work strategy and in an effort to further reduce costs.

During the year ended December 31, 2023, the Company recorded an immaterial reversal of previously recognized restructuring expenses associated with the 2022 Plan.

On November 2, 2023, the Company committed to a plan to reduce the Company’s headcount and real estate footprint (the “2023 Plan”) as part of the Company’s expense containment initiatives and other actions to reduce discretionary spending being implemented due to challenging industry dynamics and macroeconomic conditions.

During the year ended December 31,

2023, the restructuring plans incurred $ 15.5 million of employee severance costs and related expenses, net of reversals.

As of December 31, 2023, the unpaid balance related to these restructuring plans was $ 8.9 million.

Refer to Note 13, Lessee Leases for information regarding the Company’s restructuring activities for optimization of certain leased facilities.

The following table summarizes the total restructuring expenses recognized in the Company’s Consolidated Statements of Operations for the years ended December 31, 2022, 2021, and 2020:

Refer to Note 13, Lessee Leases for information regarding the Company’s restructuring activities for the reduction of its real estate footprint and optimization of certain leased facilities.

The following table summarizes the total employee-related restructuring expenses recognized in the Company’s Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021:

Year Ended December 31,

4 unchanged sentences

Selling, general, and administrative 8,621 11,170 1,526

Total restructuring expense $ 22,803 $ 2,020 $ 9,961

Subsequent Events

As previously disclosed, on November 23, 2022, the Company committed to a plan to reduce the Company’s headcount (the “Plan”), as part of the Company’s expense containment efforts being implemented due to ongoing macroeconomic headwinds.

As a result of continued exploration of expense containment measures, on February 28, 2023, the Company committed to further reduce its headcount as part of the Plan.

The Company expects to further reduce its workforce across many of its functions affecting approximately 60 additional employees.

As part of the Plan, on February 28, 2023, the Company also committed to reduce its real estate footprint to align with its broader hybrid work strategy and in an effort to further reduce costs.

The Company estimates that the additional headcount reductions and office closures will result in additional incremental nonrecurring restructuring and related charges of approximately $ 13.0 million in 2023.

Total restructuring expenses, net of reversals $ 15,539 $ 22,803 $ 2,020

VALUATION AND QUALIFYING ACCOUNTS

25 unchanged sentences

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

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

(4) Represents other adjustments, such as foreign currency translation and purchase price accounting adjustments in connection with acquisitions.

INDEX TO EXHIBITS

29 unchanged sentences

8-K 4.2 9/25/2020

10.1* Amended and Restated 1997 Employee Stock Purchase Plan, as amended

10.1* Omnicell, Inc Amended and Restated 1997 Employee Stock Purchase Plan, as amended

S-8 99.1 5/26/2023

19 unchanged sentences

8-K 10.1 3/17/2010

10.11* Omnicell, Inc.

Amended and Restated Severance Benefit Plan effective as of March 7, 2017

10-Q 10.1 5/5/2017

Incorporated By Reference

Exhibit Number Exhibit Description Form Exhibit Filing Date

10.12* Form of Director and Officer Indemnity Agreement

S-1 10.12 3/14/2001

10.13* Amended and Restated Executive Officer Change of Control Agreement

10-Q 10.4 11/6/2015

10.14* Employment Agreement, dated October 31, 2003, between Omnicell, Inc.

10-K 10.26 3/8/2004

10.15* Addendum to Offer Letter, dated December 30, 2010, between Omnicell, Inc.

10-K 10.14 3/11/2011

10.11* Offer letter between Omnicell, Inc.

26 unchanged sentences

10-K 10.39 2/26/2020

10.26 Amended and Restated Credit Agreement, dated as of November 15, 2019, by and among Omnicell, Inc., the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent

8-K 10.1 11/18/2019

10.27 First Amendment to Amended and Restated Credit Agreement, dated as of September 22, 2020, by and among Omnicell, Inc., the subsidiary guarantors party thereto, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent

8-K 10.1 9/22/2020

10.21 Form of Convertible Note Hedge Confirmation

2 unchanged sentences

8-K 10.2 9/25/2020

10.30* Letter Agreement between Omnicell, Inc.

Johnston, dated July 29, 2022

10-Q 10.2 8/9/2022

10.23* Promotion letter between Omnicell, Inc.

Manley dated May 18, 2022

10K 10.31 03/01/2023

10.24* Offer Letter between Omnicell, Inc.

and Nchacha E.

Etta dated April 30, 2023

10Q 10.3 08/04/2023

10.25* Form of Option Grant Notice and Form of Global Option Agreement for 2009 Equity Incentive Plan, as amended (May 2023)

10Q 10.4 08/04/2023

10.26* Omnicell, Inc.

Executive Severance Plan

10Q 10.1 11/03/2023

10.27* Separation Agreement dated August 4, 2023 by and between Omnicell, Inc.

10Q 10.2 11/03/2023

10.28* Form of Restricted Stock Unit Notice and Form of Global Restricted Stock Unit Award Agreement for 2009 Equity Incentive Plan, as amended (August 2023)

10Q 10.3 11/03/2023

10.29* Separation Agreement dated October 4, 2023 by and between Omnicell, Inc.

and Christine M.

10Q 10.4 11/03/2023

10.30 Second Amended and Restated Credit Agreement, dated as of October 10, 2023, among Omnicell, Inc., the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent

8-K 10.1 10/16/2023

10.31* Separation Agreement dated November 3, 2023 by and between Omnicell, Inc.

8-K 10.1 11/09/2023

Form of Director and Officer Indemnity Agreement

Subsidiaries of the Registrant

Consent of Independent Registered Public Accounting Firm

Power of Attorney (included on the signature pages hereto)

Incorporated By Reference

Exhibit Number Exhibit Description Form Exhibit Filing Date

Power of Attorney (included on the signature pages hereto)

Certification of Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a)

1 unchanged sentence

Certification of Chief Executive Officer and Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C.

Compensation Clawback Policy

Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

10 unchanged sentences

OMNICELL, INC.

March 1, 2023 By:

February 28, 2024 By:

/s/ NCHACHA E.

Executive Vice President & Chief Financial Officer

1 unchanged sentence

KNOW ALL PERSONS BY THESE PRESENTS, that each of the persons whose signature appears below hereby constitutes and appoints Randall A.

Lipps and Peter J.

Kuipers, each of them acting individually, as his or her attorney-in-fact, each with the full power of substitution, for him or her in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming our signatures as they may be signed by our said attorney-in-fact and any and all amendments to this Annual Report on Form 10-K.

Lipps and Nchacha E.

Etta, each of them acting individually, as his or her attorney-in-fact, each with the full power of substitution, for him or her in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming our signatures as they may be signed by our said attorney-in-fact and any and all amendments to this Annual Report on Form 10-K.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

1 unchanged sentence

/s/ RANDALL A.

LIPPS Chief Executive Officer, President and Chairman of the Board (Principal Executive Officer) March 1, 2023

KUIPERS Executive Vice President & Chief Financial Officer

(Principal Financial Officer) March 1, 2023

LIPPS Chief Executive Officer, President and Chairman of the Board (Principal Executive Officer) February 28, 2024

/s/ NCHACHA E.

ETTA Executive Vice President & Chief Financial Officer

(Principal Financial Officer) February 28, 2024

/s/ JOSEPH B.

SPEARS Senior Vice President, Chief Accounting Officer and Corporate Controller (Principal Accounting Officer) March 1, 2023

SPEARS Senior Vice President, Chief Accounting Officer and Corporate Controller (Principal Accounting Officer) February 28, 2024

/s/ JOANNE B.

BAUER March 1, 2023

BAUER February 28, 2024

Bauer Director

/s/ EDWARD P.

BOUSA March 1, 2023

BOUSA February 28, 2024

Bousa Director

GARRETT March 1, 2023

GARRETT February 28, 2024

Garrett Director

MOORE March 1, 2023

/s/ KAUSHIK GHOSHAL February 28, 2024

Kaushik Ghoshal Director

MOORE February 28, 2024

Moore Director

PARRISH March 1, 2023

PARRISH February 28, 2024

Parrish Director

SCOTT March 1, 2023

SCOTT February 28, 2024

Scott Director

SEIM March 1, 2023

SEIM February 28, 2024

Seim Director

WHITE March 1, 2023

White Director

/s/ EILEEN J.

VOYNICK February 28, 2024

Voynick Director

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures