Attached files
| file | filename |
|---|---|
| EX-23.1 - EXHIBIT 23.1 - OMNICELL, Inc | exhibit231-kpmgconsent.htm |
| EX-99.1 - EXHIBIT 99.1 - OMNICELL, Inc | exhibit991-aesyntauditedfi.htm |
| 8-K/A - 8-K/A - OMNICELL, Inc | a8-ka_aeysnt.htm |
Exhibit 99.2
OMNICELL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
On January 5, 2016, Omnicell, Inc. (“Omnicell”, the “Company”) completed its previously announced acquisition of all of the membership interests of Aesynt Holding, L.P., Aesynt, Ltd. and Aesynt Coöperatief U.A. (collectively, “Aesynt”) pursuant to that certain securities purchase agreement dated as of October 29, 2015, by and among the Company, Omnicell International, Inc. and Aesynt (the “Securities Purchase Agreement”). The purchase price paid by the Company was approximately $280 million, including the repayment of Aesynt indebtedness and after adjustments provided for in the Securities Purchase Agreement. The acquisition was funded with cash-on-hand and borrowings under the Credit Agreement discussed in explanatory note 1, Description of Transaction and Basis of Presentation.
The acquisition of Aesynt is accounted for as a business combination in accordance with the Accounting Standards Codification Topic 805 “Business Combinations” (ASC 805) issued by the Financial Accounting Standards Board. We use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. Goodwill as of the acquisition date is measured as the excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired.
The following unaudited pro forma condensed combined financial statements are based upon the historical consolidated financial statements of Omnicell and Aesynt, and after applying the assumptions, reclassifications and adjustments described in the accompanying notes based on current intentions and expectations relating to the combined business. The unaudited pro forma condensed combined balance sheet is presented as if the acquisition had occurred on December 31, 2015. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2015 are presented as if the acquisition had occurred on January 1, 2015. The historical consolidated financial information has been adjusted in the unaudited pro forma condensed combined financial statements to give effect to events that are (1) directly attributable to the acquisition, (2) factually supportable, and (3) with respect to the statements of operations, expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements. In addition, the unaudited pro forma condensed combined financial statements were based on and should be read in conjunction with the:
• | separate audited historical consolidated financial statements of Omnicell as of and for the year ended December 31, 2015, and the related notes, included in Omnicell’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2016. |
• | separate audited historical consolidated financial statements of Aesynt as of and for the years ended September 30, 2015 and 2014, and the related notes, attached hereto as Exhibit 99.1. |
The unaudited pro forma condensed combined financial statements have been presented for informational purposes only. The pro forma information is not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the acquisition been completed as of the dates indicated or that may be achieved in the future.
In addition, the unaudited pro forma condensed combined financial statements do not purport to project the future financial position or operating results of the combined company. The actual results reported by the combined company in periods following the acquisition may differ significantly from those reflected in these unaudited pro forma condensed combined financial statements for a number of reasons, including cost savings from operating efficiencies, synergies, asset dispositions or restructuring that could result from the acquisition. There were no intercompany transactions between Omnicell and Aesynt as of the dates and for the periods of these unaudited pro forma condensed combined financial statements.
The preliminary estimated purchase consideration, as calculated and described in Note 2 to the unaudited pro forma condensed combined financial statements, has been allocated to net tangible and intangible assets acquired based on their respective estimated fair values. We have made significant assumptions and estimates in determining the preliminary estimated purchase price consideration and the preliminary allocation of the estimated purchase price in the unaudited pro forma condensed combined financial statements. These preliminary estimates and assumptions are subject to change during the estimated purchase price allocation period (not to exceed one year from the acquisition date) as we finalize the valuations of the net tangible and intangible
assets. Differences between these preliminary estimates and the final acquisition accounting could have a material impact on the accompanying unaudited pro forma condensed combined financial statements and the combined company’s future results of operations and financial position. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed combined financial statements.
OMNICELL, INC. | ||||||||||||||
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET | ||||||||||||||
(in thousands) | ||||||||||||||
Historical | Pro Forma | |||||||||||||
Omnicell | Aesynt | Adjustments | Pro Forma | |||||||||||
December 31, 2015 | (Note 3) | Combined | ||||||||||||
Cash and cash equivalents | $ | 82,217 | $ | 7,397 | $ | (31,623 | ) | (a) | $ | 57,991 | ||||
Restricted Cash | — | 1,000 | (1,000 | ) | (a) | — | ||||||||
Accounts receivable, net of allowances | 107,957 | 45,302 | — | 153,259 | ||||||||||
Inventories | 46,594 | 23,810 | 421 | (d), (e) | 70,825 | |||||||||
Prepaid expenses | 19,586 | — | 3,227 | (d) | 22,813 | |||||||||
Other current assets | 7,774 | 5,934 | (5,128 | ) | (b), (d) | 8,580 | ||||||||
Total Current assets | 264,128 | 83,443 | (34,103 | ) | 313,468 | |||||||||
Property and equipment, net | 32,309 | 8,362 | — | 40,671 | ||||||||||
Long-term net investment in sales-type leases | 14,484 | — | — | 14,484 | ||||||||||
Goodwill | 147,906 | 22,248 | 111,141 | (f) | 281,295 | |||||||||
Intangible assets, net | 89,665 | 18,772 | 92,328 | (f) | 200,765 | |||||||||
Long-term deferred tax assets | 2,361 | — | — | 2,361 | ||||||||||
Other long-term assets | 27,894 | 2,727 | — | 30,621 | ||||||||||
Total assets | $ | 578,747 | $ | 135,552 | $ | 169,366 | $ | 883,665 | ||||||
Accounts payable | $ | 22,646 | $ | 9,151 | $ | — | $ | 31,797 | ||||||
Accrued compensation | 18,195 | — | 8,816 | (d) | 27,011 | |||||||||
Accrued liabilities | 30,133 | 19,823 | (8,816 | ) | (d) | 41,140 | ||||||||
Current maturity of long term debt | — | 3,250 | 5,160 | (b), (c) | 8,410 | |||||||||
Deferred gross profit | 53,656 | 40,407 | (11,514 | ) | (d), (e) | 82,549 | ||||||||
Total Current liabilities | 124,630 | 72,631 | (6,354 | ) | 190,907 | |||||||||
Long-term deferred service revenue | 17,975 | — | — | 17,975 | ||||||||||
Long-term deferred tax liabilities | 21,822 | — | — | 21,822 | ||||||||||
Long-term debt | — | 58,500 | 180,141 | (b), (c) | 238,641 | |||||||||
Other long-term liabilities | 11,932 | — | — | 11,932 | ||||||||||
Total liabilities | 176,359 | 131,131 | 173,787 | 481,277 | ||||||||||
Total stockholders’ equity | 402,388 | 4,421 | (4,421 | ) | (g) | 402,388 | ||||||||
Total liabilities and stockholders’ equity | $ | 578,747 | $ | 135,552 | $ | 169,366 | $ | 883,665 | ||||||
The accompanying notes are an integral part of this financial statement.
OMNICELL, INC. | ||||||||||||||||
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS | ||||||||||||||||
(in thousands) | ||||||||||||||||
Historical | ||||||||||||||||
Year ended | Pro Forma | |||||||||||||||
December 31, 2015 | September 30, 2015 | Adjustments | Pro Forma | |||||||||||||
Omnicell | Aesynt | (Note 3) | Combined | |||||||||||||
Revenues: | ||||||||||||||||
Product | $ | 388,397 | $ | 105,819 | $ | 2,334 | (h), (i) | $ | 496,550 | |||||||
Services and other revenues | 96,162 | 84,311 | (8,631 | ) | (h), (i) | 171,842 | ||||||||||
Total revenues | 484,559 | 190,130 | (6,297 | ) | 668,392 | |||||||||||
Cost of revenues: | — | |||||||||||||||
Cost of product revenues | 198,418 | 103,687 | (16,082 | ) | (f), (h), (i) | 286,023 | ||||||||||
Cost of services and other revenues | 38,211 | — | 34,381 | (h) | 72,592 | |||||||||||
Total cost of revenues | 236,629 | 103,687 | 18,299 | 358,615 | ||||||||||||
Gross profit | 247,930 | 86,443 | (24,596 | ) | 309,777 | |||||||||||
Operating expenses: | — | |||||||||||||||
Research and development | 35,160 | 15,760 | — | 50,920 | ||||||||||||
Selling, general and administrative | 167,581 | 68,300 | (1,531 | ) | (f) (j), (h) | 234,350 | ||||||||||
Gain on the equity investment | (3,443 | ) | — | — | (3,443 | ) | ||||||||||
199,298 | 84,060 | (1,531 | ) | 281,827 | ||||||||||||
Income from operations | 48,632 | 2,383 | (23,065 | ) | 27,950 | |||||||||||
Interest and other income (expense), net | (2,388 | ) | (5,126 | ) | (2,503 | ) | (j) | (10,017 | ) | |||||||
Income before taxes | 46,244 | (2,743 | ) | (25,568 | ) | 17,933 | ||||||||||
Income taxes Expense | 15,484 | 201 | (9,588 | ) | (k) | 6,097 | ||||||||||
Net income | $ | 30,760 | $ | (2,944 | ) | $ | (15,980 | ) | $ | 11,836 | ||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.86 | — | $ | 0.33 | |||||||||||
Diluted | $ | 0.84 | — | $ | 0.32 | |||||||||||
Shares used in computing income per share: | ||||||||||||||||
Basic | 35,857 | — | 35,857 | |||||||||||||
Diluted | 36,718 | 523 | (l) | 37,241 | ||||||||||||
The accompanying notes are an integral part of this financial statement.
1. | DESCRIPTION OF TRANSACTION AND BASIS OF PRO FORMA PRESENTATION |
Description of Transaction
Acquisition of Aesynt
On January 5, 2016, the Company completed its acquisition of all of the membership interests of Aesynt pursuant to the Securities Purchase Agreement dated as of October 29, 2015, by and among the Company, Omnicell International, Inc. and Aesynt. The purchase price paid by the Company was approximately $280 million, including the repayment of Aesynt indebtedness and after adjustments provided for in the Securities Purchase Agreement. The acquisition was funded with borrowings under the Credit Agreement and cash-on-hand.
Execution of the Credit Agreement
On January 5, 2016, the Company, as borrower, entered into a $400 million senior secured credit facility pursuant to a Credit Agreement, by and among the Company, the lenders from time to time party thereto, Wells Fargo Securities, LLC, as Sole Lead Arranger and Wells Fargo Bank, National Association, as administrative agent (the “Credit Agreement”). The Credit Agreement provides for (a) a five-year revolving credit facility of $200 million (the “Revolving Credit Facility”) and (b) a five-year $200 million term loan facility (the “Term Loan Facility” and together with the Revolving Credit Facility, the “Facilities”). On January 5, 2016, the Company borrowed the full $200 million under the Term Loan Facility and $55 million under the Revolving Credit Facility to complete the acquisition of all of the membership interests of Aesynt and to pay related fees and expenses.
Loans under the Facilities bear interest, at the Company’s option, at a rate equal to either (a) the LIBOR Rate, plus an applicable margin ranging from 1.50% to 2.25% per annum based on the Company’s Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement), or (b) an alternate base rate equal to the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50%, and (iii) LIBOR for an interest period of one month, plus an applicable margin ranging from 0.50% to 1.25% per annum based on the Company’s Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement). Undrawn commitments under the Revolving Credit Facility will be subject to a commitment fee ranging from 0.20% to 0.35% per annum based on the Company’s Consolidated Total Net Leverage Ratio on the average daily unused portion of the Revolving Credit Facility. A letter of credit participation fee ranging from 1.50% to 2.25% per annum based on the Company’s Consolidated Total Net Leverage Ratio will accrue on the average daily amount of letter of credit exposure.
Basis of Pro Forma Presentation
The acquisition of Aesynt is accounted for as a business combination in accordance with ASC 805. The accounting standards define the term “fair value” and set forth the valuation requirements for any asset or liability measured at fair value, and specifies a hierarchy of valuation techniques based on the inputs used to develop the fair value measures. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers in the principal (or most advantageous) market for the asset or liability. Fair value measurements for an asset assume the highest and best use by these market participants. As a result, Omnicell may be required to record assets which are not intended to be used or sold and/or to value assets at fair value measures that do not reflect Omnicell’s intended use of those assets. Many of these fair value measurements can be highly subjective and it is also possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts. We use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. Goodwill as of the acquisition date is measured as the excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired.
The unaudited pro forma condensed combined balance sheet is presented as if the acquisition had occurred on December 31, 2015. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2015 are presented as if the acquisition had occurred on January 1, 2015.
The unaudited pro forma adjustments described below were developed based on Omnicell’s management’s assumptions and estimates, including assumptions relating to the purchase price consideration and the allocation thereof to the assets acquired and liabilities assumed from Aesynt based on preliminary estimates of fair value. The final purchase consideration and the allocation of the purchase consideration may differ from that reflected in the unaudited pro forma condensed combined financial information after final valuation procedures are performed and amounts are finalized following the completion of the acquisition. The unaudited pro forma condensed combined financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or the
consolidated financial position of the combined company would have been had the acquisition occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or financial position. The unaudited pro forma condensed combined financial information does not reflect any integration activities or cost savings from operating efficiencies, synergies, asset dispositions or other restructuring that could result from the acquisition.
2. PRELIMINARY ESTIMATE OF PURCHASE PRICE CONSIDERATION AND RELATED ALLOCATION
Preliminary Estimate of Purchase Price Consideration
The following is a preliminary estimate of consideration transferred to effect the acquisition (in thousands):
Purchase Price Consideration | ||||
Cash on hand paid by Omnicell | $ | 32,623 | ||
Term Loan Facility amount used for the acquisition | 200,000 | |||
Revolving Credit Facility used for the acquisition | 55,000 | |||
Less: Facilities associated fees | (7,948 | ) | ||
Less: One time expenses associated with Facilities | (53 | ) | ||
Total preliminary purchase price consideration | $ | 279,622 | ||
Use of proceeds | ||||
Repayment of Aesynt' term loan on behalf of sellers | $ | 62,505 | ||
Transaction related expenses paid on behalf of sellers | 4,110 | |||
Payment to sellers | 213,007 | |||
Total preliminary purchase price consideration | $ | 279,622 | ||
Preliminary Allocation of Estimated Purchase Price to Assets Acquired and Liabilities Assumed
The following is the preliminary estimated allocation of the purchase price to the assets acquired and the liabilities assumed by Omnicell in the acquisition, reconciled to the purchase price transferred (in thousands):
Fair value | |||
Cash and cash equivalent | $ | 8,397 | |
Accounts Receivable | 45,302 | ||
Inventories | 24,231 | ||
Other current assets | 4,033 | ||
Property, plant and equipment | 8,362 | ||
Goodwill (2) | 133,389 | ||
Intangible assets (1) | 111,100 | ||
Other non-current assets | 2,727 | ||
Accounts payable | (9,151 | ) | |
Deferred revenue | (28,893 | ) | |
Accrued expenses and other liabilities | (19,875 | ) | |
Net assets acquired | $ | 279,622 | |
(1) | As of the effective date of the acquisition, identifiable intangible assets are required to be measured at fair value. For purposes of these unaudited pro forma condensed combined financial statements, it is assumed that all assets will be used and that all assets will be used in a manner that represents the highest and best use of those assets. Omnicell used an income approach to estimate the preliminary fair value of intangible assets. The acquired identifiable intangibles have a weighted-average useful life of approximately 9.1 years and will be amortized using straight-line method, except customer relationship which will be amortized using the double declining method. The definite-lived intangible assets include trade name, developed technologies, customer relationships, in-process technology, and backlog. |
(2) | Goodwill is calculated as the difference between the estimated fair value of the consideration transferred and the estimated fair values of the assets acquired and liabilities assumed. Goodwill is not amortized. |
For the purposes of the unaudited pro forma financial statements, the preliminary estimated purchase price consideration stated above has been allocated based on the preliminary estimates of the fair value of the assets acquired and liabilities assumed as of the balance sheet date presented. The final purchase price allocation will be based on the estimated fair values at the acquisition date and could vary significantly from the pro forma amounts.
3. PRO FORMA ADJUSTMENTS
This note should be read in conjunction with “Note 1. Description of Transaction and Basis of Presentation” and “Note 2. Preliminary Estimate of Purchase Price Consideration and Related Allocation”. Adjustments included in the column under the heading “Pro Forma Adjustments” represent the following:
(a) - To record (i) cash-on-hand payment of $32.6 million for the purchase price consideration paid by Omnicell, and (ii) the reclassification of the restricted cash of $1.0 million due to the release of the restriction.
(b) - To eliminate Aesynt's Secured Note Payable and the associated unamortized deferred financing cost (in thousands):
Financial Statement Line | Description | Balance prior to adjustments | Additions | Releases / Write-Offs | Balance after the adjustments | ||||||||
Other current assets | Deferred Financing Cost | $ | 5,934 | $ | — | $ | (1,901 | ) | $ | 5,185 | |||
Current maturity of long term debt | Term Loan / Deferred Financing Cost | 3,250 | — | (3,250 | ) | — | |||||||
Long-term debt | Term Loan / Deferred Financing Cost | $ | 58,500 | $ | — | $ | (58,500 | ) | $ | — | |||
(c) - To record the term loan facility and revolving credit facility, including the deferred financing cost associated with these facilities, entered into by the Company as part of the Aesynt acquisition (in thousands):
Description | December 31, 2015 | ||
Short-Term Portion of Term Loan Facility | $ | 10,000 | |
Debit Issuance Costs, Current Portion - 5 years | (1,590 | ) | |
Current maturity of long term debt | $ | 8,410 | |
Long-Term Portion of Term Loan Facility | $ | 190,000 | |
Debit Issuance Costs, L-T Portion - 5 years | (6,359 | ) | |
Revolving Credit Facility | 55,000 | ||
Long-Term Debt | $ | 238,641 | |
Year Ended | |||
Description | December 31, 2015 | ||
Interest Expense related to the Facilities | $ | 6,018 | |
(d) - To adjust certain asset and liability accounts to conform to Omnicell’s presentation (in thousands):
Description | Amount | ||
Reclassify prepaid expense from Other Current Assets to Prepaid Expenses | $ | 3,227 | |
Reclassify Accrued Liabilities to Accrued Compensation | 8,816 | ||
Reclassify deferred cost from Inventory to Deferred Gross Profit | $ | 3,530 | |
(e) - To record preliminary fair value adjustments to Aesynt’s acquired inventory and assumed deferred gross margin (in thousands):
Description | Increase / (Decrease) | ||
Inventory | $ | 3,951 | |
Deferred gross profit | $ | (7,984 | ) |
(f) - To (i) eliminate Aesynt’s historical identifiable goodwill of $22,248 thousands, intangible assets of $18,772 thousands, and related expenses of $7,481 thousands, and (ii) record preliminary fair value of goodwill of $133,389 thousands and intangible assets acquired in connection with the Aesynt acquisition and related amortization expense. The following table represents the intangible assets of $111,100 thousands acquired in connection with the Aesynt acquisition and the respective pro formal amortization expense (in thousands, except for estimated useful life):
Intangible | Preliminary Fair Value | Preliminary Estimated Useful Life (in years) | Amortization expense for Year Ended December 31, 2015 | Line item in Statement of Operations | ||||||
Trade Names | $ | 700 | 1 | $ | 700 | Selling, general, & administrative | ||||
Developed Technology | 44,300 | 8 | 5,537 | Cost of product revenue | ||||||
Customer Relationships | 38,200 | 16 | 4,511 | Selling, general, & administrative | ||||||
In-process R&D | 3,700 | - | — | - | ||||||
Backlog | 24,200 | 2 | 12,100 | Cost of product revenue | ||||||
Total | $ | 111,100 | $ | 22,848 | ||||||
(g) - To record the adjustments to shareholders’ equity to eliminate Aesynt's historical equity (in thousands):
Description | Increase / (Decrease) of Equity | ||
Eliminate Aesynt's stockholders’ equity | $ | (4,421 | ) |
(h) - To adjust certain statement of operations accounts to conform to Omnicell’s presentation (in thousands):
Description | Amount | ||
Reclassify installation revenue from "Service Revenue" to "Product Revenue" | $ | 5,024 | |
Reclassify cost of revenues between "Product Cost" and "Service Cost" | 34,381 | ||
Reclassify GPO fee from "Revenue" to cost to "SG&A Expense" | 836 | ||
Reclassify freight out cost from "Cost of Revenues" to "SG&A Expense" | $ | 1,786 | |
(i) - To adjust revenue and cost of sales for purchase price adjustments recorded for deferred revenue fair value adjustment and inventory step-up (in thousands):
Description | Amount | ||
Revenue: | |||
To adjust "Product Revenue" for deferred revenue fair value adjustment recorded by Aesynt in fiscal year 2015 | $ | 638 | |
To adjust "Service Revenue" for deferred revenue fair value adjustment recorded by Aesynt in fiscal year 2015 | 213 | ||
To adjust "Product Revenue" for deferred revenue fair value adjustment in connection with Aesynt acquisition | (4,164 | ) | |
To adjust "Service Revenue" for deferred revenue fair value adjustment in connection with Aesynt acquisition | (3,820 | ) | |
Total | $ | (7,133 | ) |
Cost of Revenue: | |||
To adjust "Cost of Product Revenue" for inventory step-up recorded by Aesynt in fiscal year 2015 | $ | (1,503 | ) |
To adjust "Cost of Product Revenue" for inventory step-up in connection with Aesynt acquisition | 3,951 | ||
Total | $ | 2,448 | |
(j) - To record the effect of multiple elimination and adjustment to "operating expenses" and "Interest and other income (expense)" (in thousands):
Description | Amount | Line Item | ||
To eliminate share based expense (SBC) recorded by Aesynt in fiscal year 2015 | $ | (490 | ) | Selling, general, & administrative |
To eliminate interest expense recorded by Aesynt in fiscal year 2015 | 4,541 | Interest and other income (expense), net | ||
To eliminate amortization of deferred financing cost recorded by Aesynt in fiscal year 2015 | 564 | Interest and other income (expense), net | ||
To eliminate acquisition related expenses which would occur prior to January 1, 2015 | (3,700 | ) | Selling, general, & administrative | |
To record SBC expense for fiscal year 2015 | 2,307 | Selling, general, & administrative | ||
To record interest expense for fiscal year 2015 | (6,018 | ) | Interest and other income (expense), net | |
To record amortization of deferred financing cost for fiscal year 2015 | $ | (1,590 | ) | Interest and other income (expense), net |
(k) - To adjust the income tax expense for the pro forma results of operations using the Omnicell fiscal year 2015 effective tax rate.
(l) - To calculate the dilution impact of shares granted to Aesynt employees.