OMNICELL, INC. — Call Transcript 2026

To have Omnicell here. We have CFO Baird Radford. Before I get started with questions, he has a couple of prepared remarks. Baird? Great. Morning, everybody. During the course of this discussion, I'll certainly make some forward-looking statements. I refer you back to our Form 10-Ks and 10-Qs, just normal, typical housekeeping things. Allen, thanks for having us at the conference. We're excited to be here. You know, as we think about where Omnicell is right now, we're at a pretty exciting time, entering a new product cycle, with the announcement of Titan XT and the OmniSphere platform, the cloud-based platform. At the same time, a large competitor launched a new product as well, really exciting time in the marketplace for us. We also had a really good first quarter. Solid revenues, strong performance on the earnings side, we kicked off 2026 in a pretty good way. We feel good about that and, you know, as we think about this upcoming year, this really is a year about Titan XT, our new product. As we enter the year and we enter this discussion, you know, we come in definitely with a lot of enthusiasm about where we are in the business. Yeah. It's definitely a really exciting time from our perspective as well, at Omnicell. You mentioned the new product launch with Titan XT, you know, you're moving to the cloud with OmniSphere, and you talked about competitive takeaways. There's a lot on your plate and a lot of transition going on in the business in 2026. You've been with the company for a little less than a year, I think. Yes, I have. As you think about your 2026 priorities, can you lay out what the goals are? Obviously, there's a lot going on. We'd love to get a sense of what are your main priorities for this year. Yeah. You know, I think it starts with having a great team. I definitely joined a really strong leadership team, and the layers that lay in beneath that are also really strong. We do think about in an orchestrated way how we can run this business effectively. As I think priorities, it really starts with Titan XT and OmniSphere, our new product. It's exiting our current product, the XT, bringing that to the end stages. This will be the 10th year of that product. Exiting strong while starting with a running start into our new product offering is a really important focus area for us. Inclusive of that is building interest within the customer set, competing with our primary competitor, and moving us forward in a way that we're really focused on delivering the value that we believe the new product has. The second thing that we're really focused on and is a priority for us is just about execution. The discipline in which we approach every day, every month, every quarter, and focus on the profitability of this business and the revenue growth of this business. The third thing for us, you can look back at our historic profitability levels. I like to look at non-GAAP EBITDA as a primary measure of profitability, and you'll see that we're at a relatively historic low. We know we have more work to do there. One of our priorities this year is being really focused and disciplined on the spend side and doing that in a way that allows us to invest in the product future through Titan and OmniSphere and then hold back in the areas where a little less investment is needed, typically in the back office and the G&A function. As we enter this year, we enter eyes wide open that the expansion of profitability is important to investors. As we think about the transition to Titan XT, you obviously have a legacy or current product in the market, XT. Yeah XTExtend. I would assume it's a balancing act between continuing to sell those products and then also preparing your customer base and prospects for the new product. Yeah. You know, can you talk a little bit about how you're, how you're handling that? Because obviously you have a 2026 guidance that's out there. You have 2027, where Titan XT is gonna be more generally available. How are you going to the sales force and telling them to pitch XT with Titan XT on the horizon? That's a great question, Allen. I think it starts with discipline, and it starts with focus on our customer base. Our customers don't all need the exact same product, and so meeting the customer with where they are in the journey allows us to bring our product offering to them. For customers who adopted XT in the early years, 2017, 2018, 2019, they're approaching years eight, nine, 10 on that hardware. We're engaging them in a way that is focused on the new product, Titan XT and OmniSphere. As we think about those customers that have acquired XT in the last few years, they have a relatively young installed base, and it makes sense for them to do their growth strategy on the same platform. Whether they're expanding through acquisition or they're expanding their footprint within their health system, those additional purchases make sense to align with the young installed base of XT. In the middle sits that group of customers that is not ready for a capital upgrade and won't be for several years, and that's the place where XTExtend fits nicely. It provides that customer base with a Bridge to OmniSphere, our cloud-based solution-workflow applications, and it is a really nice central point for that middle-aged set of cabinets that exist within our install base. Allen, I think it really starts with the customer, where they are in their install base, and then focusing our offering to meet those needs. Obviously you weren't with the company when they launched XT, but there's a lot of similarities and some differences between the XT launch back nine years ago. Yeah the Titan XT launch. I guess internally, you've talked a little bit about this cohort being a little bit younger than when the G-series was replaced. We'd love to get a sense, but now software is a much bigger part of the business. We'd love to get a sense of the major similarities and differences between this new launch, whether it's how you're going to market, how you're thinking about it, versus the learnings of the XT launch almost a decade ago. Yeah. You know, when I came on board, the focus was immediately on Titan XT for me, the refresh cycle and understanding where we had been out of G-series to XT and how that translates to us going forward. What I can say is that one of the biggest things we've learned was the importance of reliability of the cabinet. To our customers, the nurses who are on the floor trying to spend more time with patients, having a cabinet that's reliable is really important to them. As we designed Titan XT, we designed it in mind with all the learnings that we had from XT. XT was a great platform adjustment for us, improved reliability and usage for our customer base. We started there. We then extended it through OmniSphere. What OmniSphere was really intended to do is provide cloud-based solution, so improved security, improved infrastructure support for the health system, but more importantly, a platform for which we could put applications that meet the unique needs of the health institution. Some of the things that we've highlighted in demonstrations to customers already include workflow-related applications. This helps a nurse get through the machine to get the medications for their patient as efficiently as possible, so much more efficiently than on the current XT system, and we think that'll be a delight for our customer base. For the pharmacy technicians who are in short supply, the ability to get to a cabinet, to be guided through the restocking, the removal of medications, and efficient use, we believe will significantly reduce the amount of time and energy that the pharmacy technicians have to put into restocking the cabinets so the medication is close to the patient. Then there's the supply chain aspect of it. By having visibility to an enterprise-wide solution, the pharmacists and the supply chain teams at these institutions will be able to more effectively balance medication throughout their system. If we have too much medication in one machine, it can move down the floor to another machine or down a level or to another hospital. That load balancing, we believe, will be super insightful for the supply chain aspect of our customer base that is trying to figure out how to optimize their cash flow and their inventory management. Those are things that are different. When I look externally, a couple things that are different is we now have a large competitor introducing a new product at the same time, which means not only are Omnicell customers thinking about their path to upgrade and refresh and doing it in the lens of an enterprise solution, but it's occurring at the same time that our primary competitor's market is shifting. Those units are in play as well for us. That's really exciting and interesting for us. Allen, you alluded to that earlier about a lot happening and excitement in the space. I think it really comes from the amount of equipment that we'll be turning over in the next five to seven years gets a really nice cycle. With that said, you started with a younger install base, it's important that we also flag for investors the reality that when we exited the G-series, those units were a few years older than we're in the position right now. When I think about tailwinds, the technology, the competitive environment, and I think about potential headwinds, the age of the installed base, I think it allows investors to make a decision based on the thesis that they believe is most relevant at this time. On the call, Randy said, I'm trying to find the quote here, that prospects are increasingly reassessing current solutions that may not be performing well with interoperability. He talked a lot about meaningful opportunities for competitive conversions. Your peer said on a call that they're seeing momentum in their product as well. I think they said 75% of their wins are competitive conversions. I think there's a lot of optimism. Yeah On both sides here. It's obviously very early. Can you talk about what informs your confidence? Yeah Omnicell is has these opportunities and can be a shared gainer in this next launch? Yeah, that is the place where, being the smaller independent with unique focus on this space. We don't have conflicting constraints of other divisions. We know who we are as a company, and we're in the medication management business. When we think about the competitive set, we think about what differentiates us. How do we create a product offering that is unique to meeting the needs of the pharmacists and the nursing staffs that we support? We've been pretty good over the years at taking market share, and we continue to believe that we can do that with a really solid differentiated product. Now, at this point in time, we find ourselves in a nice place. When we announced the new product, Titan XT, at ASHP in December, we were able to display the use cases of it. Not only see the equipment firsthand, but have nurses and pharmacy techs go onto the machine as they would in their role and see how the software that we've created plays out in a live demo. Our ability to demonstrate that to customers has been really positive. We've received significant feedback from our ability to not have something on the horizon, but to have something that is living and breathing that can be demonstrated today that is a short window to public launch, which we've highlighted for the software side to be the first half of 2027. Physically touching that at conferences has been very helpful for the customer base. Yeah, I think that's where I'll leave it. That's great. As we think about the cadence of Titan XT, I think that Randy was, you know, very, you know, adamant in his or deliberate in his phrasing saying that this is a multi-quarter, multi-year capital cycle here. The size of the opportunity is $2.5 billion. As you think about the cadence of that opportunity over the next, you tell me how many years, what is a reasonable baseline assumption for the timing and pace of demand? You talked a little bit about Yeah it picking up in early 2027. How should we think about this opportunity over a multi-year period? I think if we step this through in types of years or segments of years, 2026 will largely be about refreshing the XT cycle. Existing XT customers with young installed bases that are expanding. We'll sell a fair share of XTs this year. Despite the product being in its 10th year, it's right for that customer base, given their young installed base, to stay on platform. We'll also sell a good amount of bridge XTExtend, helping set the stage for the ability to access OmniSphere and the workflow applications and other applications that will reside on OmniSphere for general availability in the first half of next year. We'll also, I would anticipate in the back part of its year, this year, see increasing levels of Titan XT bookings as customers are thinking about their refresh cycle. As I move forward through 2027 and 2028, I think that balance shifts where you'll see more Titan XT, less XT. In between, you'll continue to see XTExtend as it is that bridge for those middle-aged cabinets to OmniSphere. To make sure I'm understanding this, is your expectation that bookings, the majority of bookings will shift from XT to Titan XT at some point between 2027 and 2028? I think we'll continue to see XT come down. Everybody's incented for that. The company's incented to get moved to the next platform. Customers are incented to have access to OmniSphere. I don't think customers with older equipment are going to want to bridge through Extend. I think they're gonna wanna take the reliability of the updated hardware along with the opportunity on OmniSphere and make that natural transition point from end of life for them of their equipment to start of new life with Titan XT. Yes, I think that'll continue to increase. Okay. How should we think about the product margins on Titan XT? The gross margins on the product side have been up and down over the past 10 years. Would love to get a sense of how you view those gross margins relative to, I'll just say where product margins are today in the business. Would you expect Titan XT to impact your gross margin profile in the product revenue line? Yeah, let me, I'll hit the question, then I'll provide a little context that I think will be useful for the investor base. We've announced that we anticipate a modest premium in pricing. With the cost structure in place, we would anticipate that we'd see a modest improvement in margins as a result of that. From a context perspective, the period in which you measure against is super relevant. We think about over the last couple years, because our booking cycle is such that when a booking lands roughly a year later, could be a little quicker, could be a little longer, those cabinets are actually placed in the field, implemented, and revenue recognized. As you can imagine, over the last couple years, we've been deploying and implementing capital that had been negotiated during a period of 2022, 2023, and 2024. For those of you who have followed the story, 2023 and 2024 were rough years in the business of declining revenue. As you can imagine, with less moxie in the marketplace, pricing was challenging to maintain while getting bookings and revenues. You do see a recent little hangover of our position in the marketplace and our ability to maintain price. As we go forward, the enthusiasm around the new product offering and the value that the new OmniSphere solution provides, we believe will allow us to better protect the top line, which goes a long way through the margin structure. As we think about the long-term margin structure of the business, your guidance this year calls for 12%-14% margins, which is below the cycle peak EBITDA margins, which were in the high teens. You know, at the same time, your recurring revenue continues to move higher. OmniSphere should add more high-margin revenue. Can you talk about the opportunity to expand margins over time from here? Is there any way or any reason why Omnicell shouldn't be able to get back to those peak margins at some point? Would love to get a sense. Is that a fair bar? Could they be higher? Could they be lower? Just trying to get a sense of the historical model here and how to think about some of the changes you've made and how that could influence long-term margins. Yeah. Not lost on me and not lost on the management team is where margins are at the current stage and where they are relative to where they had been years ago. We're really focused on it. When I came on board, one of the first things I did was spend a lot of time with investors hearing their perspective, hearing the history that they had with the company, and it was crystal clear to me that we needed to create stability in the top-line revenue and expand it. We also needed to be focused on a more disciplined way on our spending and improve margins. We've heard the message loud and clear. In 2025, we grew non-GAAP EBITDA at a rate of one half the rate of revenue growth. We set forth this year's plan, our goal was to do it by at least 2x the rate of revenue growth. We won't get back to historic levels immediately, but the management team recognizes that we're way under-delivering, and we've retained the focus and come back to this, that we believe it's important to expand profitability. You see us taking the step as we provided the 2026 guidance. We got into our Q1 earnings release, we signaled that we saw some positive benefits in the first quarter, some of which was positivity on the gross margins that flowed to the bottom line. That was, you know, at the upper end of a range. The second part was some spending that we had shifted out into Q2 and Q3. These were things that were more back-office G&A related, where you know you need to make the investment and it needs to be made this year. The discipline around every 30, 60, 90-day delay helps keep costs in control over the long term, and it allowed us to lean into those profit or opportunity, creating opportunities through focusing the money on Titan XT, OmniSphere development, and our sales force. We took a very disciplined approach of those things that could make the business go faster, got funded quickly and fully. Those things that we know we need to do from a support and infrastructure, we were a little more cautious, pausing, asking the hard questions of does it need to be done now? Does it need to be done to this full extent? I think that's a healthy discipline within a company. You know, from a margin perspective, I'll bring us back to we know where we are now is not good enough, and we're committed as a management team to making meaningful improvement. Related to that, as we think about the margin rate and some of the investments you're making in 2026, exiting this year, you mentioned ERP, some HR initiatives. How should we think about the size and cadence of those investments exiting the year? As we think about the sales force that you mentioned, before you joined, the company had gone through some RIFs, I believe, around the sales force. How does the size of your sales force today compare to back then, if you're aware of the difference? Maybe more importantly, do you have the appropriate sales force today to capture that $2.5 billion opportunity, or should we expect the company to be hiring more as we head into that opportunity? Yeah, we feel really good about the sales leadership that we have and the sales team. We made investments over 2025 that allowed us to bolster key places, whether it was in the middle markets, the government work, or it was in the competitive set, so big game hunters. We added a few people in strategic places over the course of 2025. We feel like we entered 2026 not only with a great product but with the momentum of a strong sales force. We feel really good about where we are commercially right now. Where we continue to be super disciplined is how we expand the support structure of this business. We're gonna be really focused on making sure that as we add heads, we know that they're gonna create immediate incremental value, or we'll pause on those till we get to the point where we know we can add immediate incremental value. We'll continue to be disciplined in that area. From a commercial perspective, I'm really excited about the team, really excited about the leadership of that team, and I think we find ourselves well-poised with a great product and a great team at a really important moment. That's great. We have about five minutes left. I wanna shift gears to the EnlivenHealth business. Would love to get a sense of the health of the retail pharmacy customer today. You know, there's been some within the industry, some store closures. Seems like maybe that's starting to moderate a little bit. Would love to get a sense for what's embedded in expectations for that business in 2026 and how does that outlook look? Yeah. 2025 was a rough year for the entirety of the retail pharmacy sector. Store closures with Rite Aid, struggles that Walgreens experienced, it definitely cast a cloud over the sector. Our business, they did a nice job at really trying to rightsize the cost structure, making some hard decisions, but they definitely faced headwinds on the top line side. That is a business that pulled back a little bit in 2025. You know, as we enter 2026, Nnamdi said on the Q1 earnings call, participation in recent conferences and trade shows, it's as if there's a renewed sense of optimism in the sector. As a company, we'll be cautious about that. We'll think about, how do we step into this moment? As we think more broadly about the industry, there's a view that there's promise on the future, which is a good place to be for the retail sector. It's important to recognize not all patients want to stay in the hospital or pick up medications in the hospital. They wanna get home, they wanna get back to their daily life, and they wanna get into a routine of picking up medications and prescriptions in their local community. There is absolutely a place for retail pharmacy, a very important place in retail pharmacy, we think that this is part of that ebb and flow. We'll be cautious as we head through this and very disciplined on the cost structure, but we like our offering in the space and, you know, hopefully, things continue to improve. One question I didn't ask, but was sort of related to the conversation at the top, just the macro environment, the spending environment for your hospital customers. I know there's a lot of things to go through with you and your biggest peer introducing new products, but maybe move that to the side for a second. What do hospital budgets look like today for CapEx, specifically for cabinets, relative to maybe a year ago or when you started? Does it seem like there's any material change, one way or another? It doesn't seem like there's a change going on right now. Health systems will always be cautious about the deployment of capital. Their approval cycles are from several quarters to several years, and that's intentional. The investments are large, and they wanna be mindful of where they're placing their bets and knowing that they'll get value from it. I'll not go down the path of what we think we can do in that space, but we do believe that the new offering really meets the needs of the hospitals. As these discussions go with hospitals, I think we're gonna continue to find there's gonna be an equal focus on procedure volumes within those institutions and the reimbursement that they're able to receive from their mix of payers. Hospitals will always be cautious in this space, but since I've joined and prior to joining, I think, you know, all the capital surveys that I've seen is there continues to be enthusiasm for investing in capital and health systems, but it's something that we and other industry participants are always mindful of. With the last 90 seconds or so, wanna touch on capital deployment. In the early 2020s, Omnicell did a few acquisitions- Hasn't really done anything since. Would love to get a sense of how you think about M&A versus share repo, given where the stock is and given the opportunity that you see ahead. You know, we view the stock as dislocated here, would love to get a sense of how you think about the relative opportunities between M&A and share repo. I'd step us back even one more place. When I think about capital deployment, I think about deploying it in a way where we know we have the right to win, and the place where we have the right to win is in our core business. We have a history of being able to sell cabinets and driving profit, which is good for shareholders. When I think about capital deployment, I start at the top. If I can take competitive share by offering a leasing or an extended period payment program similar to our competitor, I can stay in more deals. Our team can be competitive from a product offering and a timing of cash flows in a way that I think is valuable to investors. I start with capital deployment there. I think about, how do we get through constructive tuck-in investments that help accelerate our business? With that, we're out of time. Yeah. Baird, thank you so much for Awesome Conversation. Really appreciate it. Thank you, everyone, for joining. Yeah. Thanks for joining, everybody.

Speaker 1: To have Omnicell here. We have CFO Baird Radford. Before I get started with questions, he has a couple of prepared remarks. Baird? To have Omnicell here. to have omnicell here We have CFO Baird Radford. we have cfo baird radford Before I get started with questions, he has a couple of prepared remarks. before i get started with questions he has a couple of prepared remarks Baird? baird

Speaker 2: Great. Morning, everybody. During the course of this discussion, I'll certainly make some forward-looking statements. I refer you back to our Form 10-Ks and 10-Qs, just normal, typical housekeeping things. Allen, thanks for having us at the conference. We're excited to be here. You know, as we think about where Omnicell is right now, we're at a pretty exciting time, entering a new product cycle, with the announcement of Titan XT and the OmniSphere platform, the cloud-based platform. At the same time, a large competitor launched a new product as well, really exciting time in the marketplace for us. We also had a really good first quarter. Solid revenues, strong performance on the earnings side, we kicked off 2026 in a pretty good way. Great. great Morning, everybody. morning everybody During the course of this discussion, I'll certainly make some forward-looking statements. during the course of this discussion i'll certainly make some forward-looking statements I refer you back to our Form 10-Ks and 10-Qs, just normal, typical housekeeping things. i refer you back to our form 10-ks and 10-qs just normal typical housekeeping things Allen, thanks for having us at the conference. allen thanks for having us at the conference We're excited to be here. we're excited to be here You know, as we think about where Omnicell is right now, we're at a pretty exciting time, entering a new product cycle, with the announcement of Titan XT and the OmniSphere platform, the cloud-based platform. you know as we think about where omnicell is right now we're at a pretty exciting time entering a new product cycle with the announcement of titan xt and the omnisphere platform the cloud-based platform At the same time, a large competitor launched a new product as well, really exciting time in the marketplace for us. at the same time a large competitor launched a new product as well really exciting time in the marketplace for us We also had a really good first quarter. we also had a really good first quarter Solid revenues, strong performance on the earnings side, we kicked off 2026 in a pretty good way. solid revenues strong performance on the earnings side we kicked off 2026 in a pretty good way We feel good about that and, you know, as we think about this upcoming year, this really is a year about Titan XT, our new product. As we enter the year and we enter this discussion, you know, we come in definitely with a lot of enthusiasm about where we are in the business. We feel good about that and, you know, as we think about this upcoming year, this really is a year about Titan XT, our new product. we feel good about that and you know as we think about this upcoming year this really is a year about titan xt our new product As we enter the year and we enter this discussion, you know, we come in definitely with a lot of enthusiasm about where we are in the business. as we enter the year and we enter this discussion you know we come in definitely with a lot of enthusiasm about where we are in the business

Speaker 1: Yeah. It's definitely a really exciting time from our perspective as well, at Omnicell. You mentioned the new product launch with Titan XT, you know, you're moving to the cloud with OmniSphere, and you talked about competitive takeaways. There's a lot on your plate and a lot of transition going on in the business in 2026. You've been with the company for a little less than a year, I think. Yeah. yeah It's definitely a really exciting time from our perspective as well, at Omnicell. it's definitely a really exciting time from our perspective as well at omnicell You mentioned the new product launch with Titan XT, you know, you're moving to the cloud with OmniSphere, and you talked about competitive takeaways. you mentioned the new product launch with titan xt you know you're moving to the cloud with omnisphere and you talked about competitive takeaways There's a lot on your plate and a lot of transition going on in the business in 2026. there's a lot on your plate and a lot of transition going on in the business in 2026 You've been with the company for a little less than a year, I think. you've been with the company for a little less than a year i think

Speaker 2: Yes, I have. Yes, I have. yes i have

Speaker 1: As you think about your 2026 priorities, can you lay out what the goals are? Obviously, there's a lot going on. We'd love to get a sense of what are your main priorities for this year. As you think about your 2026 priorities, can you lay out what the goals are? as you think about your 2026 priorities can you lay out what the goals are Obviously, there's a lot going on. obviously there's a lot going on We'd love to get a sense of what are your main priorities for this year. we'd love to get a sense of what are your main priorities for this year

Speaker 2: Yeah. You know, I think it starts with having a great team. I definitely joined a really strong leadership team, and the layers that lay in beneath that are also really strong. We do think about in an orchestrated way how we can run this business effectively. As I think priorities, it really starts with Titan XT and OmniSphere, our new product. It's exiting our current product, the XT, bringing that to the end stages. This will be the 10th year of that product. Exiting strong while starting with a running start into our new product offering is a really important focus area for us. Inclusive of that is building interest within the customer set, competing with our primary competitor, and moving us forward in a way that we're really focused on delivering the value that we believe the new product has. Yeah. yeah You know, I think it starts with having a great team. you know i think it starts with having a great team I definitely joined a really strong leadership team, and the layers that lay in beneath that are also really strong. i definitely joined a really strong leadership team and the layers that lay in beneath that are also really strong We do think about in an orchestrated way how we can run this business effectively. we do think about in an orchestrated way how we can run this business effectively As I think priorities, it really starts with Titan XT and OmniSphere, our new product. as i think priorities it really starts with titan xt and omnisphere our new product It's exiting our current product, the XT, bringing that to the end stages. it's exiting our current product the xt bringing that to the end stages This will be the 10th year of that product. this will be the 10th year of that product Exiting strong while starting with a running start into our new product offering is a really important focus area for us. exiting strong while starting with a running start into our new product offering is a really important focus area for us Inclusive of that is building interest within the customer set, competing with our primary competitor, and moving us forward in a way that we're really focused on delivering the value that we believe the new product has. inclusive of that is building interest within the customer set competing with our primary competitor and moving us forward in a way that we're really focused on delivering the value that we believe the new product has The second thing that we're really focused on and is a priority for us is just about execution. The discipline in which we approach every day, every month, every quarter, and focus on the profitability of this business and the revenue growth of this business. The third thing for us, you can look back at our historic profitability levels. I like to look at non-GAAP EBITDA as a primary measure of profitability, and you'll see that we're at a relatively historic low. The second thing that we're really focused on and is a priority for us is just about execution. the second thing that we're really focused on and is a priority for us is just about execution The discipline in which we approach every day, every month, every quarter, and focus on the profitability of this business and the revenue growth of this business. the discipline in which we approach every day every month every quarter and focus on the profitability of this business and the revenue growth of this business The third thing for us, you can look back at our historic profitability levels. the third thing for us you can look back at our historic profitability levels I like to look at non-GAAP EBITDA as a primary measure of profitability, and you'll see that we're at a relatively historic low. i like to look at non-gaap ebitda as a primary measure of profitability and you'll see that we're at a relatively historic low We know we have more work to do there. One of our priorities this year is being really focused and disciplined on the spend side and doing that in a way that allows us to invest in the product future through Titan and OmniSphere and then hold back in the areas where a little less investment is needed, typically in the back office and the G&A function. As we enter this year, we enter eyes wide open that the expansion of profitability is important to investors. We know we have more work to do there. we know we have more work to do there One of our priorities this year is being really focused and disciplined on the spend side and doing that in a way that allows us to invest in the product future through Titan and OmniSphere and then hold back in the areas where a little less investment is needed, typically in the back office and the G&A function. one of our priorities this year is being really focused and disciplined on the spend side and doing that in a way that allows us to invest in the product future through titan and omnisphere and then hold back in the areas where a little less investment is needed typically in the back office and the g&a function As we enter this year, we enter eyes wide open that the expansion of profitability is important to investors. as we enter this year we enter eyes wide open that the expansion of profitability is important to investors

Speaker 1: As we think about the transition to Titan XT, you obviously have a legacy or current product in the market, XT. As we think about the transition to Titan XT, you obviously have a legacy or current product in the market, XT. as we think about the transition to titan xt you obviously have a legacy or current product in the market xt

Speaker 2: Yeah Yeah yeah

Speaker 1: XTExtend. I would assume it's a balancing act between continuing to sell those products and then also preparing your customer base and prospects for the new product. XTExtend. xtextend I would assume it's a balancing act between continuing to sell those products and then also preparing your customer base and prospects for the new product. i would assume it's a balancing act between continuing to sell those products and then also preparing your customer base and prospects for the new product

Speaker 2: Yeah. Yeah. yeah

Speaker 1: You know, can you talk a little bit about how you're, how you're handling that? Because obviously you have a 2026 guidance that's out there. You have 2027, where Titan XT is gonna be more generally available. How are you going to the sales force and telling them to pitch XT with Titan XT on the horizon? You know, can you talk a little bit about how you're, how you're handling that? you know can you talk a little bit about how you're how you're handling that Because obviously you have a 2026 guidance that's out there. because obviously you have a 2026 guidance that's out there You have 2027, where Titan XT is gonna be more generally available. you have 2027 where titan xt is gonna be more generally available How are you going to the sales force and telling them to pitch XT with Titan XT on the horizon? how are you going to the sales force and telling them to pitch xt with titan xt on the horizon

Speaker 2: That's a great question, Allen. I think it starts with discipline, and it starts with focus on our customer base. Our customers don't all need the exact same product, and so meeting the customer with where they are in the journey allows us to bring our product offering to them. For customers who adopted XT in the early years, 2017, 2018, 2019, they're approaching years eight, nine, 10 on that hardware. We're engaging them in a way that is focused on the new product, Titan XT and OmniSphere. As we think about those customers that have acquired XT in the last few years, they have a relatively young installed base, and it makes sense for them to do their growth strategy on the same platform. That's a great question, Allen. that's a great question allen I think it starts with discipline, and it starts with focus on our customer base. i think it starts with discipline and it starts with focus on our customer base Our customers don't all need the exact same product, and so meeting the customer with where they are in the journey allows us to bring our product offering to them. our customers don't all need the exact same product and so meeting the customer with where they are in the journey allows us to bring our product offering to them For customers who adopted XT in the early years, 2017, 2018, 2019, they're approaching years eight, nine , 10 on that hardware. for customers who adopted xt in the early years 2017 2018 2019 they're approaching years eight, nine 10 on that hardware We're engaging them in a way that is focused on the new product, Titan XT and OmniSphere. we're engaging them in a way that is focused on the new product titan xt and omnisphere As we think about those customers that have acquired XT in the last few years, they have a relatively young installed base, and it makes sense for them to do their growth strategy on the same platform. as we think about those customers that have acquired xt in the last few years they have a relatively young installed base and it makes sense for them to do their growth strategy on the same platform Whether they're expanding through acquisition or they're expanding their footprint within their health system, those additional purchases make sense to align with the young installed base of XT. In the middle sits that group of customers that is not ready for a capital upgrade and won't be for several years, and that's the place where XTExtend fits nicely. It provides that customer base with a Bridge to OmniSphere, our cloud-based solution-workflow applications, and it is a really nice central point for that middle-aged set of cabinets that exist within our install base. Allen, I think it really starts with the customer, where they are in their install base, and then focusing our offering to meet those needs. Whether they're expanding through acquisition or they're expanding their footprint within their health system, those additional purchases make sense to align with the young installed base of XT. whether they're expanding through acquisition or they're expanding their footprint within their health system those additional purchases make sense to align with the young installed base of xt In the middle sits that group of customers that is not ready for a capital upgrade and won't be for several years, and that's the place where XTExtend fits nicely. in the middle sits that group of customers that is not ready for a capital upgrade and won't be for several years and that's the place where xtextend fits nicely It provides that customer base with a Bridge to OmniSphere, our cloud-based solution-workflow applications, and it is a really nice central point for that middle-aged set of cabinets that exist within our install base. it provides that customer base with a bridge to omnisphere our cloud-based solution-workflow applications and it is a really nice central point for that middle-aged set of cabinets that exist within our install base Allen, I think it really starts with the customer, where they are in their install base, and then focusing our offering to meet those needs. allen i think it really starts with the customer where they are in their install base and then focusing our offering to meet those needs

Speaker 1: Obviously you weren't with the company when they launched XT, but there's a lot of similarities and some differences between the XT launch back nine years ago. Obviously you weren't with the company when they launched XT, but there's a lot of similarities and some differences between the XT launch back nine years ago. obviously you weren't with the company when they launched xt but there's a lot of similarities and some differences between the xt launch back nine years ago

Speaker 2: Yeah Yeah yeah

Speaker 1: the Titan XT launch. I guess internally, you've talked a little bit about this cohort being a little bit younger than when the G-series was replaced. We'd love to get a sense, but now software is a much bigger part of the business. We'd love to get a sense of the major similarities and differences between this new launch, whether it's how you're going to market, how you're thinking about it, versus the learnings of the XT launch almost a decade ago. the Titan XT launch. the titan xt launch I guess internally, you've talked a little bit about this cohort being a little bit younger than when the G-series was replaced. i guess internally you've talked a little bit about this cohort being a little bit younger than when the g-series was replaced We'd love to get a sense, but now software is a much bigger part of the business. we'd love to get a sense but now software is a much bigger part of the business We'd love to get a sense of the major similarities and differences between this new launch, whether it's how you're going to market, how you're thinking about it, versus the learnings of the XT launch almost a decade ago. we'd love to get a sense of the major similarities and differences between this new launch whether it's how you're going to market how you're thinking about it versus the learnings of the xt launch almost a decade ago

Speaker 2: Yeah. You know, when I came on board, the focus was immediately on Titan XT for me, the refresh cycle and understanding where we had been out of G-series to XT and how that translates to us going forward. What I can say is that one of the biggest things we've learned was the importance of reliability of the cabinet. To our customers, the nurses who are on the floor trying to spend more time with patients, having a cabinet that's reliable is really important to them. As we designed Titan XT, we designed it in mind with all the learnings that we had from XT. XT was a great platform adjustment for us, improved reliability and usage for our customer base. We started there. We then extended it through OmniSphere. Yeah. yeah You know, when I came on board, the focus was immediately on Titan XT for me, the refresh cycle and understanding where we had been out of G-series to XT and how that translates to us going forward. you know when i came on board the focus was immediately on titan xt for me the refresh cycle and understanding where we had been out of g-series to xt and how that translates to us going forward What I can say is that one of the biggest things we've learned was the importance of reliability of the cabinet. what i can say is that one of the biggest things we've learned was the importance of reliability of the cabinet To our customers, the nurses who are on the floor trying to spend more time with patients, having a cabinet that's reliable is really important to them. to our customers the nurses who are on the floor trying to spend more time with patients having a cabinet that's reliable is really important to them As we designed Titan XT, we designed it in mind with all the learnings that we had from XT. as we designed titan xt we designed it in mind with all the learnings that we had from xt XT was a great platform adjustment for us, improved reliability and usage for our customer base. xt was a great platform adjustment for us improved reliability and usage for our customer base We started there. we started there We then extended it through OmniSphere. we then extended it through omnisphere What OmniSphere was really intended to do is provide cloud-based solution, so improved security, improved infrastructure support for the health system, but more importantly, a platform for which we could put applications that meet the unique needs of the health institution. Some of the things that we've highlighted in demonstrations to customers already include workflow-related applications. This helps a nurse get through the machine to get the medications for their patient as efficiently as possible, so much more efficiently than on the current XT system, and we think that'll be a delight for our customer base. What OmniSphere was really intended to do is provide cloud-based solution, so improved security, improved infrastructure support for the health system, but more importantly, a platform for which we could put applications that meet the unique needs of the health institution. what omnisphere was really intended to do is provide cloud-based solution so improved security improved infrastructure support for the health system but more importantly a platform for which we could put applications that meet the unique needs of the health institution Some of the things that we've highlighted in demonstrations to customers already include workflow-related applications. some of the things that we've highlighted in demonstrations to customers already include workflow-related applications This helps a nurse get through the machine to get the medications for their patient as efficiently as possible, so much more efficiently than on the current XT system, and we think that'll be a delight for our customer base. this helps a nurse get through the machine to get the medications for their patient as efficiently as possible so much more efficiently than on the current xt system and we think that'll be a delight for our customer base For the pharmacy technicians who are in short supply, the ability to get to a cabinet, to be guided through the restocking, the removal of medications, and efficient use, we believe will significantly reduce the amount of time and energy that the pharmacy technicians have to put into restocking the cabinets so the medication is close to the patient. Then there's the supply chain aspect of it. By having visibility to an enterprise-wide solution, the pharmacists and the supply chain teams at these institutions will be able to more effectively balance medication throughout their system. If we have too much medication in one machine, it can move down the floor to another machine or down a level or to another hospital. For the pharmacy technicians who are in short supply, the ability to get to a cabinet, to be guided through the restocking, the removal of medications, and efficient use, we believe will significantly reduce the amount of time and energy that the pharmacy technicians have to put into restocking the cabinets so the medication is close to the patient. for the pharmacy technicians who are in short supply the ability to get to a cabinet to be guided through the restocking the removal of medications and efficient use we believe will significantly reduce the amount of time and energy that the pharmacy technicians have to put into restocking the cabinets so the medication is close to the patient Then there's the supply chain aspect of it. then there's the supply chain aspect of it By having visibility to an enterprise-wide solution, the pharmacists and the supply chain teams at these institutions will be able to more effectively balance medication throughout their system. by having visibility to an enterprise-wide solution the pharmacists and the supply chain teams at these institutions will be able to more effectively balance medication throughout their system If we have too much medication in one machine, it can move down the floor to another machine or down a level or to another hospital. if we have too much medication in one machine it can move down the floor to another machine or down a level or to another hospital That load balancing, we believe, will be super insightful for the supply chain aspect of our customer base that is trying to figure out how to optimize their cash flow and their inventory management. Those are things that are different. When I look externally, a couple things that are different is we now have a large competitor introducing a new product at the same time, which means not only are Omnicell customers thinking about their path to upgrade and refresh and doing it in the lens of an enterprise solution, but it's occurring at the same time that our primary competitor's market is shifting. Those units are in play as well for us. That's really exciting and interesting for us. Allen, you alluded to that earlier about a lot happening and excitement in the space. That load balancing, we believe, will be super insightful for the supply chain aspect of our customer base that is trying to figure out how to optimize their cash flow and their inventory management. that load balancing we believe will be super insightful for the supply chain aspect of our customer base that is trying to figure out how to optimize their cash flow and their inventory management Those are things that are different. those are things that are different When I look externally, a couple things that are different is we now have a large competitor introducing a new product at the same time, which means not only are Omnicell customers thinking about their path to upgrade and refresh and doing it in the lens of an enterprise solution, but it's occurring at the same time that our primary competitor's market is shifting. when i look externally a couple things that are different is we now have a large competitor introducing a new product at the same time which means not only are omnicell customers thinking about their path to upgrade and refresh and doing it in the lens of an enterprise solution but it's occurring at the same time that our primary competitor's market is shifting Those units are in play as well for us. those units are in play as well for us That's really exciting and interesting for us. that's really exciting and interesting for us Allen, you alluded to that earlier about a lot happening and excitement in the space. allen you alluded to that earlier about a lot happening and excitement in the space I think it really comes from the amount of equipment that we'll be turning over in the next five to seven years gets a really nice cycle. With that said, you started with a younger install base, it's important that we also flag for investors the reality that when we exited the G-series, those units were a few years older than we're in the position right now. When I think about tailwinds, the technology, the competitive environment, and I think about potential headwinds, the age of the installed base, I think it allows investors to make a decision based on the thesis that they believe is most relevant at this time. I think it really comes from the amount of equipment that we'll be turning over in the next five to seven years gets a really nice cycle. i think it really comes from the amount of equipment that we'll be turning over in the next five to seven years gets a really nice cycle With that said, you started with a younger install base, it's important that we also flag for investors the reality that when we exited the G-series, those units were a few years older than we're in the position right now. with that said you started with a younger install base it's important that we also flag for investors the reality that when we exited the g-series those units were a few years older than we're in the position right now When I think about tailwinds, the technology, the competitive environment, and I think about potential headwinds, the age of the installed base, I think it allows investors to make a decision based on the thesis that they believe is most relevant at this time. when i think about tailwinds the technology the competitive environment and i think about potential headwinds the age of the installed base i think it allows investors to make a decision based on the thesis that they believe is most relevant at this time

Speaker 1: On the call, Randy said, I'm trying to find the quote here, that prospects are increasingly reassessing current solutions that may not be performing well with interoperability. He talked a lot about meaningful opportunities for competitive conversions. Your peer said on a call that they're seeing momentum in their product as well. I think they said 75% of their wins are competitive conversions. I think there's a lot of optimism. On the call, Randy said, I'm trying to find the quote here, that prospects are increasingly reassessing current solutions that may not be performing well with interoperability. on the call randy said i'm trying to find the quote here that prospects are increasingly reassessing current solutions that may not be performing well with interoperability He talked a lot about meaningful opportunities for competitive conversions. he talked a lot about meaningful opportunities for competitive conversions Your peer said on a call that they're seeing momentum in their product as well. your peer said on a call that they're seeing momentum in their product as well I think they said 75% of their wins are competitive conversions. i think they said 75% of their wins are competitive conversions I think there's a lot of optimism. i think there's a lot of optimism

Speaker 2: Yeah Yeah yeah

Speaker 1: On both sides here. It's obviously very early. Can you talk about what informs your confidence? On both sides here. on both sides here It's obviously very early. it's obviously very early Can you talk about what informs your confidence? can you talk about what informs your confidence

Speaker 2: Yeah Yeah yeah

Speaker 1: Omnicell is has these opportunities and can be a shared gainer in this next launch? Omnicell is has these opportunities and can be a shared gainer in this next launch? omnicell is has these opportunities and can be a shared gainer in this next launch

Speaker 2: Yeah, that is the place where, being the smaller independent with unique focus on this space. We don't have conflicting constraints of other divisions. We know who we are as a company, and we're in the medication management business. When we think about the competitive set, we think about what differentiates us. How do we create a product offering that is unique to meeting the needs of the pharmacists and the nursing staffs that we support? We've been pretty good over the years at taking market share, and we continue to believe that we can do that with a really solid differentiated product. Now, at this point in time, we find ourselves in a nice place. When we announced the new product, Titan XT, at ASHP in December, we were able to display the use cases of it. Yeah, that is the place where, being the smaller independent with unique focus on this space. We don't have conflicting constraints of other divisions. yeah that is the place where being the smaller independent with unique focus on this space. we don't have conflicting constraints of other divisions We know who we are as a company, and we're in the medication management business. we know who we are as a company and we're in the medication management business When we think about the competitive set, we think about what differentiates us. when we think about the competitive set we think about what differentiates us How do we create a product offering that is unique to meeting the needs of the pharmacists and the nursing staffs that we support? how do we create a product offering that is unique to meeting the needs of the pharmacists and the nursing staffs that we support We've been pretty good over the years at taking market share, and we continue to believe that we can do that with a really solid differentiated product. we've been pretty good over the years at taking market share and we continue to believe that we can do that with a really solid differentiated product Now, at this point in time, we find ourselves in a nice place. now at this point in time we find ourselves in a nice place When we announced the new product, Titan XT, at ASHP in December, we were able to display the use cases of it. when we announced the new product titan xt at ashp in december we were able to display the use cases of it Not only see the equipment firsthand, but have nurses and pharmacy techs go onto the machine as they would in their role and see how the software that we've created plays out in a live demo. Our ability to demonstrate that to customers has been really positive. We've received significant feedback from our ability to not have something on the horizon, but to have something that is living and breathing that can be demonstrated today that is a short window to public launch, which we've highlighted for the software side to be the first half of 2027. Physically touching that at conferences has been very helpful for the customer base. Yeah, I think that's where I'll leave it. Not only see the equipment firsthand, but have nurses and pharmacy techs go onto the machine as they would in their role and see how the software that we've created plays out in a live demo. not only see the equipment firsthand but have nurses and pharmacy techs go onto the machine as they would in their role and see how the software that we've created plays out in a live demo Our ability to demonstrate that to customers has been really positive. our ability to demonstrate that to customers has been really positive We've received significant feedback from our ability to not have something on the horizon, but to have something that is living and breathing that can be demonstrated today that is a short window to public launch, which we've highlighted for the software side to be the first half of 2027. we've received significant feedback from our ability to not have something on the horizon but to have something that is living and breathing that can be demonstrated today that is a short window to public launch which we've highlighted for the software side to be the first half of 2027 Physically touching that at conferences has been very helpful for the customer base. physically touching that at conferences has been very helpful for the customer base Yeah, I think that's where I'll leave it. yeah i think that's where i'll leave it

Speaker 1: That's great. As we think about the cadence of Titan XT, I think that Randy was, you know, very, you know, adamant in his or deliberate in his phrasing saying that this is a multi-quarter, multi-year capital cycle here. The size of the opportunity is $2.5 billion. As you think about the cadence of that opportunity over the next, you tell me how many years, what is a reasonable baseline assumption for the timing and pace of demand? You talked a little bit about That's great. that's great As we think about the cadence of Titan XT, I think that Randy was, you know, very, you know, adamant in his or deliberate in his phrasing saying that this is a multi-quarter, multi-year capital cycle here. as we think about the cadence of titan xt i think that randy was you know very you know adamant in his or deliberate in his phrasing saying that this is a multi-quarter multi-year capital cycle here The size of the opportunity is $2.5 billion. the size of the opportunity is $2.5 billion As you think about the cadence of that opportunity over the next, you tell me how many years, what is a reasonable baseline assumption for the timing and pace of demand? as you think about the cadence of that opportunity over the next you tell me how many years what is a reasonable baseline assumption for the timing and pace of demand You talked a little bit about you talked a little bit about

Speaker 2: Yeah Yeah yeah

Speaker 1: it picking up in early 2027. How should we think about this opportunity over a multi-year period? it picking up in early 2027. it picking up in early 2027 How should we think about this opportunity over a multi-year period? how should we think about this opportunity over a multi-year period

Speaker 2: I think if we step this through in types of years or segments of years, 2026 will largely be about refreshing the XT cycle. Existing XT customers with young installed bases that are expanding. We'll sell a fair share of XTs this year. Despite the product being in its 10th year, it's right for that customer base, given their young installed base, to stay on platform. We'll also sell a good amount of bridge XTExtend, helping set the stage for the ability to access OmniSphere and the workflow applications and other applications that will reside on OmniSphere for general availability in the first half of next year. We'll also, I would anticipate in the back part of its year, this year, see increasing levels of Titan XT bookings as customers are thinking about their refresh cycle. I think if we step this through in types of years or segments of years, 2026 will largely be about refreshing the XT cycle. i think if we step this through in types of years or segments of years 2026 will largely be about refreshing the xt cycle Existing XT customers with young installed bases that are expanding. existing xt customers with young installed bases that are expanding We'll sell a fair share of XTs this year. we'll sell a fair share of xts this year Despite the product being in its 10th year, it's right for that customer base, given their young installed base, to stay on platform. despite the product being in its 10th year it's right for that customer base given their young installed base to stay on platform We'll also sell a good amount of bridge XTExtend, helping set the stage for the ability to access OmniSphere and the workflow applications and other applications that will reside on OmniSphere for general availability in the first half of next year. we'll also sell a good amount of bridge xtextend helping set the stage for the ability to access omnisphere and the workflow applications and other applications that will reside on omnisphere for general availability in the first half of next year We'll also, I would anticipate in the back part of its year, this year, see increasing levels of Titan XT bookings as customers are thinking about their refresh cycle. we'll also i would anticipate in the back part of its year this year see increasing levels of titan xt bookings as customers are thinking about their refresh cycle As I move forward through 2027 and 2028, I think that balance shifts where you'll see more Titan XT, less XT. In between, you'll continue to see XTExtend as it is that bridge for those middle-aged cabinets to OmniSphere. As I move forward through 2027 and 2028, I think that balance shifts where you'll see more Titan XT, less XT. as i move forward through 2027 and 2028 i think that balance shifts where you'll see more titan xt less xt In between, you'll continue to see XTExtend as it is that bridge for those middle-aged cabinets to OmniSphere. in between you'll continue to see xtextend as it is that bridge for those middle-aged cabinets to omnisphere

Speaker 1: To make sure I'm understanding this, is your expectation that bookings, the majority of bookings will shift from XT to Titan XT at some point between 2027 and 2028? To make sure I'm understanding this, is your expectation that bookings, the majority of bookings will shift from XT to Titan XT at some point between 2027 and 2028? to make sure i'm understanding this is your expectation that bookings the majority of bookings will shift from xt to titan xt at some point between 2027 and 2028

Speaker 2: I think we'll continue to see XT come down. Everybody's incented for that. The company's incented to get moved to the next platform. Customers are incented to have access to OmniSphere. I don't think customers with older equipment are going to want to bridge through Extend. I think they're gonna wanna take the reliability of the updated hardware along with the opportunity on OmniSphere and make that natural transition point from end of life for them of their equipment to start of new life with Titan XT. Yes, I think that'll continue to increase. I think we'll continue to see XT come down. i think we'll continue to see xt come down Everybody's incented for that. everybody's incented for that The company's incented to get moved to the next platform. the company's incented to get moved to the next platform Customers are incented to have access to OmniSphere. customers are incented to have access to omnisphere I don't think customers with older equipment are going to want to bridge through Extend. i don't think customers with older equipment are going to want to bridge through extend I think they're gonna wanna take the reliability of the updated hardware along with the opportunity on OmniSphere and make that natural transition point from end of life for them of their equipment to start of new life with Titan XT. i think they're gonna wanna take the reliability of the updated hardware along with the opportunity on omnisphere and make that natural transition point from end of life for them of their equipment to start of new life with titan xt Yes, I think that'll continue to increase. yes i think that'll continue to increase

Speaker 1: Okay. How should we think about the product margins on Titan XT? The gross margins on the product side have been up and down over the past 10 years. Would love to get a sense of how you view those gross margins relative to, I'll just say where product margins are today in the business. Would you expect Titan XT to impact your gross margin profile in the product revenue line? Okay. okay How should we think about the product margins on Titan XT? how should we think about the product margins on titan xt The gross margins on the product side have been up and down over the past 10 years. the gross margins on the product side have been up and down over the past 10 years Would love to get a sense of how you view those gross margins relative to, I'll just say where product margins are today in the business. would love to get a sense of how you view those gross margins relative to i'll just say where product margins are today in the business Would you expect Titan XT to impact your gross margin profile in the product revenue line? would you expect titan xt to impact your gross margin profile in the product revenue line

Speaker 2: Yeah, let me, I'll hit the question, then I'll provide a little context that I think will be useful for the investor base. We've announced that we anticipate a modest premium in pricing. With the cost structure in place, we would anticipate that we'd see a modest improvement in margins as a result of that. From a context perspective, the period in which you measure against is super relevant. We think about over the last couple years, because our booking cycle is such that when a booking lands roughly a year later, could be a little quicker, could be a little longer, those cabinets are actually placed in the field, implemented, and revenue recognized. Yeah, let me, I'll hit the question, then I'll provide a little context that I think will be useful for the investor base. yeah let me i'll hit the question then i'll provide a little context that i think will be useful for the investor base We've announced that we anticipate a modest premium in pricing. we've announced that we anticipate a modest premium in pricing With the cost structure in place, we would anticipate that we'd see a modest improvement in margins as a result of that. with the cost structure in place we would anticipate that we'd see a modest improvement in margins as a result of that From a context perspective, the period in which you measure against is super relevant. from a context perspective the period in which you measure against is super relevant We think about over the last couple years, because our booking cycle is such that when a booking lands roughly a year later, could be a little quicker, could be a little longer, those cabinets are actually placed in the field, implemented, and revenue recognized. we think about over the last couple years because our booking cycle is such that when a booking lands roughly a year later could be a little quicker could be a little longer those cabinets are actually placed in the field implemented and revenue recognized As you can imagine, over the last couple years, we've been deploying and implementing capital that had been negotiated during a period of 2022, 2023, and 2024. For those of you who have followed the story, 2023 and 2024 were rough years in the business of declining revenue. As you can imagine, with less moxie in the marketplace, pricing was challenging to maintain while getting bookings and revenues. You do see a recent little hangover of our position in the marketplace and our ability to maintain price. As we go forward, the enthusiasm around the new product offering and the value that the new OmniSphere solution provides, we believe will allow us to better protect the top line, which goes a long way through the margin structure. As you can imagine, over the last couple years, we've been deploying and implementing capital that had been negotiated during a period of 2022, 2023, and 2024. as you can imagine over the last couple years we've been deploying and implementing capital that had been negotiated during a period of 2022 2023 and 2024 For those of you who have followed the story, 2023 and 2024 were rough years in the business of declining revenue. for those of you who have followed the story 2023 and 2024 were rough years in the business of declining revenue As you can imagine, with less moxie in the marketplace, pricing was challenging to maintain while getting bookings and revenues. as you can imagine with less moxie in the marketplace pricing was challenging to maintain while getting bookings and revenues You do see a recent little hangover of our position in the marketplace and our ability to maintain price. you do see a recent little hangover of our position in the marketplace and our ability to maintain price As we go forward, the enthusiasm around the new product offering and the value that the new OmniSphere solution provides, we believe will allow us to better protect the top line, which goes a long way through the margin structure. as we go forward the enthusiasm around the new product offering and the value that the new omnisphere solution provides we believe will allow us to better protect the top line which goes a long way through the margin structure

Speaker 1: As we think about the long-term margin structure of the business, your guidance this year calls for 12%-14% margins, which is below the cycle peak EBITDA margins, which were in the high teens. You know, at the same time, your recurring revenue continues to move higher. OmniSphere should add more high-margin revenue. Can you talk about the opportunity to expand margins over time from here? Is there any way or any reason why Omnicell shouldn't be able to get back to those peak margins at some point? Would love to get a sense. Is that a fair bar? Could they be higher? Could they be lower? Just trying to get a sense of the historical model here and how to think about some of the changes you've made and how that could influence long-term margins. As we think about the long-term margin structure of the business, your guidance this year calls for 12%-14% margins, which is below the cycle peak EBITDA margins, which were in the high teens. as we think about the long-term margin structure of the business your guidance this year calls for 12%-14% margins which is below the cycle peak ebitda margins which were in the high teens You know, at the same time, your recurring revenue continues to move higher. you know at the same time your recurring revenue continues to move higher OmniSphere should add more high-margin revenue. omnisphere should add more high-margin revenue Can you talk about the opportunity to expand margins over time from here? can you talk about the opportunity to expand margins over time from here Is there any way or any reason why Omnicell shouldn't be able to get back to those peak margins at some point? is there any way or any reason why omnicell shouldn't be able to get back to those peak margins at some point Would love to get a sense. would love to get a sense Is that a fair bar? is that a fair bar Could they be higher? could they be higher Could they be lower? could they be lower Just trying to get a sense of the historical model here and how to think about some of the changes you've made and how that could influence long-term margins. just trying to get a sense of the historical model here and how to think about some of the changes you've made and how that could influence long-term margins

Speaker 2: Yeah. Not lost on me and not lost on the management team is where margins are at the current stage and where they are relative to where they had been years ago. We're really focused on it. When I came on board, one of the first things I did was spend a lot of time with investors hearing their perspective, hearing the history that they had with the company, and it was crystal clear to me that we needed to create stability in the top-line revenue and expand it. We also needed to be focused on a more disciplined way on our spending and improve margins. We've heard the message loud and clear. In 2025, we grew non-GAAP EBITDA at a rate of one half the rate of revenue growth. Yeah. yeah Not lost on me and not lost on the management team is where margins are at the current stage and where they are relative to where they had been years ago. not lost on me and not lost on the management team is where margins are at the current stage and where they are relative to where they had been years ago We're really focused on it. we're really focused on it When I came on board, one of the first things I did was spend a lot of time with investors hearing their perspective, hearing the history that they had with the company, and it was crystal clear to me that we needed to create stability in the top-line revenue and expand it. when i came on board one of the first things i did was spend a lot of time with investors hearing their perspective hearing the history that they had with the company and it was crystal clear to me that we needed to create stability in the top-line revenue and expand it We also needed to be focused on a more disciplined way on our spending and improve margins. we also needed to be focused on a more disciplined way on our spending and improve margins We've heard the message loud and clear. we've heard the message loud and clear In 2025, we grew non-GAAP EBITDA at a rate of one half the rate of revenue growth. in 2025 we grew non-gaap ebitda at a rate of one half the rate of revenue growth We set forth this year's plan, our goal was to do it by at least 2x the rate of revenue growth. We won't get back to historic levels immediately, but the management team recognizes that we're way under-delivering, and we've retained the focus and come back to this, that we believe it's important to expand profitability. You see us taking the step as we provided the 2026 guidance. We got into our Q1 earnings release, we signaled that we saw some positive benefits in the first quarter, some of which was positivity on the gross margins that flowed to the bottom line. That was, you know, at the upper end of a range. The second part was some spending that we had shifted out into Q2 and Q3. We set forth this year's plan, our goal was to do it by at least 2x the rate of revenue growth. we set forth this year's plan our goal was to do it by at least 2x the rate of revenue growth We won't get back to historic levels immediately, but the management team recognizes that we're way under-delivering, and we've retained the focus and come back to this, that we believe it's important to expand profitability. we won't get back to historic levels immediately but the management team recognizes that we're way under-delivering and we've retained the focus and come back to this that we believe it's important to expand profitability You see us taking the step as we provided the 2026 guidance. you see us taking the step as we provided the 2026 guidance We got into our Q1 earnings release, we signaled that we saw some positive benefits in the first quarter, some of which was positivity on the gross margins that flowed to the bottom line. we got into our q1 earnings release we signaled that we saw some positive benefits in the first quarter some of which was positivity on the gross margins that flowed to the bottom line That was, you know, at the upper end of a range. that was you know at the upper end of a range The second part was some spending that we had shifted out into Q2 and Q3. the second part was some spending that we had shifted out into q2 and q3 These were things that were more back-office G&A related, where you know you need to make the investment and it needs to be made this year. The discipline around every 30, 60, 90-day delay helps keep costs in control over the long term, and it allowed us to lean into those profit or opportunity, creating opportunities through focusing the money on Titan XT, OmniSphere development, and our sales force. We took a very disciplined approach of those things that could make the business go faster, got funded quickly and fully. Those things that we know we need to do from a support and infrastructure, we were a little more cautious, pausing, asking the hard questions of does it need to be done now? Does it need to be done to this full extent? I think that's a healthy discipline within a company. These were things that were more back-office G&A related, where you know you need to make the investment and it needs to be made this year. these were things that were more back-office g&a related where you know you need to make the investment and it needs to be made this year The discipline around every 30, 60, 90-day delay helps keep costs in control over the long term, and it allowed us to lean into those profit or opportunity, creating opportunities through focusing the money on Titan XT, OmniSphere development, and our sales force. the discipline around every 30 60 90-day delay helps keep costs in control over the long term and it allowed us to lean into those profit or opportunity creating opportunities through focusing the money on titan xt omnisphere development and our sales force We took a very disciplined approach of those things that could make the business go faster, got funded quickly and fully. we took a very disciplined approach of those things that could make the business go faster got funded quickly and fully Those things that we know we need to do from a support and infrastructure, we were a little more cautious, pausing, asking the hard questions of d oes it need to be done now? those things that we know we need to do from a support and infrastructure we were a little more cautious pausing asking the hard questions of d oes it need to be done now Does it need to be done to this full extent? does it need to be done to this full extent I think that's a healthy discipline within a company. i think that's a healthy discipline within a company You know, from a margin perspective, I'll bring us back to we know where we are now is not good enough, and we're committed as a management team to making meaningful improvement. You know, from a margin perspective, I'll bring us back to we know where we are now is not good enough, and we're committed as a management team to making meaningful improvement. you know from a margin perspective i'll bring us back to we know where we are now is not good enough and we're committed as a management team to making meaningful improvement

Speaker 1: Related to that, as we think about the margin rate and some of the investments you're making in 2026, exiting this year, you mentioned ERP, some HR initiatives. How should we think about the size and cadence of those investments exiting the year? As we think about the sales force that you mentioned, before you joined, the company had gone through some RIFs, I believe, around the sales force. How does the size of your sales force today compare to back then, if you're aware of the difference? Maybe more importantly, do you have the appropriate sales force today to capture that $2.5 billion opportunity, or should we expect the company to be hiring more as we head into that opportunity? Related to that, as we think about the margin rate and some of the investments you're making in 2026, exiting this year, you mentioned ERP, some HR initiatives. related to that as we think about the margin rate and some of the investments you're making in 2026 exiting this year you mentioned erp some hr initiatives How should we think about the size and cadence of those investments exiting the year? how should we think about the size and cadence of those investments exiting the year As we think about the sales force that you mentioned, before you joined, the company had gone through some RIFs, I believe, around the sales force. as we think about the sales force that you mentioned before you joined the company had gone through some rifs i believe around the sales force How does the size of your sales force today compare to back then, if you're aware of the difference? how does the size of your sales force today compare to back then if you're aware of the difference Maybe more importantly, do you have the appropriate sales force today to capture that $2.5 billion opportunity, or should we expect the company to be hiring more as we head into that opportunity? maybe more importantly do you have the appropriate sales force today to capture that $2.5 billion opportunity or should we expect the company to be hiring more as we head into that opportunity

Speaker 2: Yeah, we feel really good about the sales leadership that we have and the sales team. We made investments over 2025 that allowed us to bolster key places, whether it was in the middle markets, the government work, or it was in the competitive set, so big game hunters. We added a few people in strategic places over the course of 2025. We feel like we entered 2026 not only with a great product but with the momentum of a strong sales force. We feel really good about where we are commercially right now. Where we continue to be super disciplined is how we expand the support structure of this business. Yeah, we feel really good about the sales leadership that we have and the sales team. yeah we feel really good about the sales leadership that we have and the sales team We made investments over 2025 that allowed us to bolster key places, whether it was in the middle markets, the government work, or it was in the competitive set, so big game hunters. we made investments over 2025 that allowed us to bolster key places whether it was in the middle markets the government work or it was in the competitive set so big game hunters We added a few people in strategic places over the course of 2025. we added a few people in strategic places over the course of 2025 We feel like we entered 2026 not only with a great product but with the momentum of a strong sales force. we feel like we entered 2026 not only with a great product but with the momentum of a strong sales force We feel really good about where we are commercially right now. we feel really good about where we are commercially right now Where we continue to be super disciplined is how we expand the support structure of this business. where we continue to be super disciplined is how we expand the support structure of this business We're gonna be really focused on making sure that as we add heads, we know that they're gonna create immediate incremental value, or we'll pause on those till we get to the point where we know we can add immediate incremental value. We'll continue to be disciplined in that area. From a commercial perspective, I'm really excited about the team, really excited about the leadership of that team, and I think we find ourselves well-poised with a great product and a great team at a really important moment. We're gonna be really focused on making sure that as we add heads, we know that they're gonna create immediate incremental value, or we'll pause on those till we get to the point where we know we can add immediate incremental value. we're gonna be really focused on making sure that as we add heads we know that they're gonna create immediate incremental value or we'll pause on those till we get to the point where we know we can add immediate incremental value We'll continue to be disciplined in that area. we'll continue to be disciplined in that area From a commercial perspective, I'm really excited about the team, really excited about the leadership of that team, and I think we find ourselves well-poised with a great product and a great team at a really important moment. from a commercial perspective i'm really excited about the team really excited about the leadership of that team and i think we find ourselves well-poised with a great product and a great team at a really important moment

Speaker 1: That's great. We have about five minutes left. I wanna shift gears to the EnlivenHealth business. Would love to get a sense of the health of the retail pharmacy customer today. That's great. that's great We have about five minutes left. we have about five minutes left I wanna shift gears to the EnlivenHealth business. i wanna shift gears to the enlivenhealth business Would love to get a sense of the health of the retail pharmacy customer today. would love to get a sense of the health of the retail pharmacy customer today You know, there's been some within the industry, some store closures. Seems like maybe that's starting to moderate a little bit. Would love to get a sense for what's embedded in expectations for that business in 2026 and how does that outlook look? You know, there's been some within the industry, some store closures. you know there's been some within the industry some store closures Seems like maybe that's starting to moderate a little bit. seems like maybe that's starting to moderate a little bit Would love to get a sense for what's embedded in expectations for that business in 2026 and how does that outlook look? would love to get a sense for what's embedded in expectations for that business in 2026 and how does that outlook look

Speaker 2: Yeah. 2025 was a rough year for the entirety of the retail pharmacy sector. Store closures with Rite Aid, struggles that Walgreens experienced, it definitely cast a cloud over the sector. Our business, they did a nice job at really trying to rightsize the cost structure, making some hard decisions, but they definitely faced headwinds on the top line side. That is a business that pulled back a little bit in 2025. You know, as we enter 2026, Nnamdi said on the Q1 earnings call, participation in recent conferences and trade shows, it's as if there's a renewed sense of optimism in the sector. As a company, we'll be cautious about that. We'll think about, how do we step into this moment? Yeah. 2025 was a rough year for the entirety of the retail pharmacy sector. yeah 2025 was a rough year for the entirety of the retail pharmacy sector Store closures with Rite Aid, struggles that Walgreens experienced, it definitely cast a cloud over the sector. store closures with rite aid struggles that walgreens experienced it definitely cast a cloud over the sector Our business, they did a nice job at really trying to rightsize the cost structure, making some hard decisions, but they definitely faced headwinds on the top line side. our business they did a nice job at really trying to rightsize the cost structure making some hard decisions but they definitely faced headwinds on the top line side That is a business that pulled back a little bit in 2025. that is a business that pulled back a little bit in 2025 You know, as we enter 2026, Nnamdi said on the Q1 earnings call, participation in recent conferences and trade shows, it's as if there's a renewed sense of optimism in the sector. you know as we enter 2026 nnamdi said on the q1 earnings call participation in recent conferences and trade shows it's as if there's a renewed sense of optimism in the sector As a company, we'll be cautious about that. as a company we'll be cautious about that We'll think about, how do we step into this moment? we'll think about how do we step into this moment As we think more broadly about the industry, there's a view that there's promise on the future, which is a good place to be for the retail sector. It's important to recognize not all patients want to stay in the hospital or pick up medications in the hospital. They wanna get home, they wanna get back to their daily life, and they wanna get into a routine of picking up medications and prescriptions in their local community. There is absolutely a place for retail pharmacy, a very important place in retail pharmacy, we think that this is part of that ebb and flow. We'll be cautious as we head through this and very disciplined on the cost structure, but we like our offering in the space and, you know, hopefully, things continue to improve. As we think more broadly about the industry, there's a view that there's promise on the future, which is a good place to be for the retail sector. as we think more broadly about the industry there's a view that there's promise on the future which is a good place to be for the retail sector It's important to recognize not all patients want to stay in the hospital or pick up medications in the hospital. it's important to recognize not all patients want to stay in the hospital or pick up medications in the hospital They wanna get home, they wanna get back to their daily life, and they wanna get into a routine of picking up medications and prescriptions in their local community. they wanna get home they wanna get back to their daily life and they wanna get into a routine of picking up medications and prescriptions in their local community There is absolutely a place for retail pharmacy, a very important place in retail pharmacy, we think that this is part of that ebb and flow. there is absolutely a place for retail pharmacy a very important place in retail pharmacy we think that this is part of that ebb and flow We'll be cautious as we head through this and very disciplined on the cost structure, but we like our offering in the space and, you know, hopefully, things continue to improve. we'll be cautious as we head through this and very disciplined on the cost structure but we like our offering in the space and you know hopefully things continue to improve

Speaker 1: One question I didn't ask, but was sort of related to the conversation at the top, just the macro environment, the spending environment for your hospital customers. I know there's a lot of things to go through with you and your biggest peer introducing new products, but maybe move that to the side for a second. One question I didn't ask, but was sort of related to the conversation at the top, just the macro environment, the spending environment for your hospital customers. one question i didn't ask but was sort of related to the conversation at the top just the macro environment the spending environment for your hospital customers I know there's a lot of things to go through with you and your biggest peer introducing new products, but maybe move that to the side for a second. i know there's a lot of things to go through with you and your biggest peer introducing new products but maybe move that to the side for a second What do hospital budgets look like today for CapEx, specifically for cabinets, relative to maybe a year ago or when you started? Does it seem like there's any material change, one way or another? What do hospital budgets look like today for CapEx, specifically for cabinets, relative to maybe a year ago or when you started? what do hospital budgets look like today for capex specifically for cabinets relative to maybe a year ago or when you started Does it seem like there's any material change, one way or another? does it seem like there's any material change one way or another

Speaker 2: It doesn't seem like there's a change going on right now. Health systems will always be cautious about the deployment of capital. Their approval cycles are from several quarters to several years, and that's intentional. The investments are large, and they wanna be mindful of where they're placing their bets and knowing that they'll get value from it. I'll not go down the path of what we think we can do in that space, but we do believe that the new offering really meets the needs of the hospitals. As these discussions go with hospitals, I think we're gonna continue to find there's gonna be an equal focus on procedure volumes within those institutions and the reimbursement that they're able to receive from their mix of payers. It doesn't seem like there's a change going on right now. it doesn't seem like there's a change going on right now Health systems will always be cautious about the deployment of capital. health systems will always be cautious about the deployment of capital Their approval cycles are from several quarters to several years, and that's intentional. their approval cycles are from several quarters to several years and that's intentional The investments are large, and they wanna be mindful of where they're placing their bets and knowing that they'll get value from it. the investments are large and they wanna be mindful of where they're placing their bets and knowing that they'll get value from it I'll not go down the path of what we think we can do in that space, but we do believe that the new offering really meets the needs of the hospitals. i'll not go down the path of what we think we can do in that space but we do believe that the new offering really meets the needs of the hospitals As these discussions go with hospitals, I think we're gonna continue to find there's gonna be an equal focus on procedure volumes within those institutions and the reimbursement that they're able to receive from their mix of payers. as these discussions go with hospitals i think we're gonna continue to find there's gonna be an equal focus on procedure volumes within those institutions and the reimbursement that they're able to receive from their mix of payers Hospitals will always be cautious in this space, but since I've joined and prior to joining, I think, you know, all the capital surveys that I've seen is there continues to be enthusiasm for investing in capital and health systems, but it's something that we and other industry participants are always mindful of. Hospitals will always be cautious in this space, but since I've joined and prior to joining, I think, you know, all the capital surveys that I've seen is there continues to be enthusiasm for investing in capital and health systems, but it's something that we and other industry participants are always mindful of. hospitals will always be cautious in this space but since i've joined and prior to joining i think you know all the capital surveys that i've seen is there continues to be enthusiasm for investing in capital and health systems but it's something that we and other industry participants are always mindful of

Speaker 1: With the last 90 seconds or so, wanna touch on capital deployment. In the early 2020s, Omnicell did a few acquisitions- With the last 90 seconds or so, wanna touch on capital deployment. with the last 90 seconds or so wanna touch on capital deployment In the early 2020s, Omnicell did a few acquisitions- in the early 2020s omnicell did a few acquisitions- Hasn't really done anything since. Would love to get a sense of how you think about M&A versus share repo, given where the stock is and given the opportunity that you see ahead. You know, we view the stock as dislocated here, would love to get a sense of how you think about the relative opportunities between M&A and share repo. Hasn't really done anything since. hasn't really done anything since Would love to get a sense of how you think about M&A versus share repo, given where the stock is and given the opportunity that you see ahead. would love to get a sense of how you think about m&a versus share repo given where the stock is and given the opportunity that you see ahead You know, we view the stock as dislocated here, would love to get a sense of how you think about the relative opportunities between M&A and share repo. you know we view the stock as dislocated here would love to get a sense of how you think about the relative opportunities between m&a and share repo

Speaker 2: I'd step us back even one more place. When I think about capital deployment, I think about deploying it in a way where we know we have the right to win, and the place where we have the right to win is in our core business. We have a history of being able to sell cabinets and driving profit, which is good for shareholders. When I think about capital deployment, I start at the top. If I can take competitive share by offering a leasing or an extended period payment program similar to our competitor, I can stay in more deals. Our team can be competitive from a product offering and a timing of cash flows in a way that I think is valuable to investors. I start with capital deployment there. I'd step us back even one more place. i'd step us back even one more place When I think about capital deployment, I think about deploying it in a way where we know we have the right to win, and the place where we have the right to win is in our core business. when i think about capital deployment i think about deploying it in a way where we know we have the right to win and the place where we have the right to win is in our core business We have a history of being able to sell cabinets and driving profit, which is good for shareholders. we have a history of being able to sell cabinets and driving profit which is good for shareholders When I think about capital deployment, I start at the top. when i think about capital deployment i start at the top If I can take competitive share by offering a leasing or an extended period payment program similar to our competitor, I can stay in more deals. if i can take competitive share by offering a leasing or an extended period payment program similar to our competitor i can stay in more deals Our team can be competitive from a product offering and a timing of cash flows in a way that I think is valuable to investors. our team can be competitive from a product offering and a timing of cash flows in a way that i think is valuable to investors I start with capital deployment there. i start with capital deployment there I think about, how do we get through constructive tuck-in investments that help accelerate our business? With that, we're out of time. I think about, how do we get through constructive tuck-in investments that help accelerate our business? i think about how do we get through constructive tuck-in investments that help accelerate our business With that, we're out of time. with that we're out of time

Speaker 1: Yeah. Baird, thank you so much for Yeah. yeah Baird, thank you so much for baird thank you so much for

Speaker 2: Awesome Awesome awesome

Speaker 1: Conversation. Really appreciate it. Thank you, everyone, for joining. Conversation. conversation Really appreciate it. really appreciate it Thank you, everyone, for joining. thank you everyone for joining

Speaker 2: Yeah. Thanks for joining, everybody. Yeah. yeah Thanks for joining, everybody. thanks for joining everybody