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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

Omnicell, Inc.
(Exact name of registrant as specified in its charter)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

        As of September 30, 2002 there were 22,006,478 shares of the Registrant's Common Stock outstanding.

OMNICELL, INC.

FORM 10-Q

INDEX

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PART I—FINANCIAL INFORMATION

ITEM I. Financial Statements

OMNICELL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

(1)

Derived from the December 31, 2001 audited consolidated balance sheet. Certain amounts have been reclassified to conform to the current period presentation.

See accompanying notes.

3

OMNICELL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

See accompanying notes.

4

OMNICELL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

See accompanying notes.

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OMNICELL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1. Organization and Summary of Significant Accounting Policies

Description of the Company

        Omnicell, Inc. ("Omnicell" or the "Company") was incorporated in the State of California in September 1992 under the name OmniCell Technologies, Inc. In August 2001, the Company reincorporated in Delaware and changed its name to Omnicell, Inc.

        The Company provides solutions that improve patient care by enhancing the operational efficiency of healthcare organizations. Addressing the medication management and supply chain areas, Omnicell's medication and supply dispensing systems and decision support tools enable healthcare facilities to decrease costs, operate more efficiently and reduce medication errors. The Company sells and leases its products and related services to a wide range of healthcare facilities such as hospitals, integrated delivery networks and specialty care facilities, which include nursing homes, outpatient surgery centers, catheterization labs and clinics.

Basis of Presentation

        The accompanying unaudited condensed consolidated financial information has been prepared by management, in accordance with accounting principles generally accepted in the United States for interim financial information and pursuant to instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations. The consolidated financial statements include the Company and its wholly owned subsidiary, Omnicell HealthCare Canada, Inc. All significant intercompany accounts and transactions are eliminated in consolidation. In the opinion of management, all adjustments (which would include only normal recurring adjustments) necessary to present fairly the financial position at September 30, 2002 and the results of operations and cash flows for all periods presented have been made. The condensed consolidated balance sheet at December 31, 2001 has been derived from the audited financial statements at that date.

        The condensed consolidated financial statements should be read in conjunction with the Company's December 31, 2001 audited consolidated financial statements included in the Company's Annual Report on Form 10-K as filed with the Securities and Exchange Commission. The results of operations for the three and nine months ended September 30, 2002 are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire fiscal year ending December 31, 2002.

Stock Split

        All common stock share and per share amounts reflect a 1-for-1.6 reverse stock split effected on July 31, 2001.

Use of Estimates

        The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that materially affect the amounts reported in the consolidated financial statements. Actual results could differ from these estimates.

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Reclassifications

        Certain prior period amounts have been reclassified to conform to the current period presentation.

Revenue Recognition

        Revenues are derived primarily from sales of medication and supply dispensing systems and subsequent service agreements. The Company markets these systems for sale or for lease. Medication and supply dispensing system sales, which are accounted for in accordance with American Institute of Certified Public Accountants Statement of Position 97-2 (SOP 97-2), "Software Revenue Recognition," are recognized upon completion of the Company's installation obligation at the customer's site. Revenues from leasing arrangements are recognized in accordance with Statement of Financial Accounting Standards (SFAS) No. 13, "Accounting for Leases," upon completion of the Company's installation obligation and commencement of the noncancelable lease term. Deferred gross profit represents the profit to be earned by the Company, exclusive of installation costs, on medication and supply dispensing systems shipped to the customer but not yet installed at the customer site. Post-installation technical support, such as phone support, on-site service, parts and access to software upgrades, is provided by the Company under separate service agreements. Revenues on service agreements are recognized ratably over the related service contract period. Deferred service revenue represents amounts received under service agreements for which the services have not yet been performed and up-front fees received from certain distributors of our medication and supply dispensing systems. These up-front fees are recognized ratably over the periods of the distribution agreements. For governmental customers, the Company offers free service for the first year of service. The vendor-specific objective evidence of these services is deferred and recognized over the service period.

        Revenues from the Company's Internet-based procurement application, introduced in 1999, are recognized ratably over the subscription period. Internet-based procurement application revenues were not significant for the three and nine months ended September 30, 2002 and 2001, and are included in service and other revenues.

Concentration of Credit Risk

        Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of trade receivables and investments in a money market account. The Company's products are primarily sold to customers and to distributors. The Company performs ongoing credit evaluations of its customers and maintains reserves for credit losses. No one customer accounted for more than 10.0% of revenues in the three and nine months ended September 30, 2002 and 2001.

        One leasing company accounted for 18.0% of accounts receivable at September 30, 2002. The same leasing company accounted for 38.6% of accounts receivable at December 31, 2001.

        The majority of revenues is generated from customers in North America. Revenues generated from customers in North America for the three and nine months ending September 30, 2002 totaled 98.1% and 97.7%, respectively. Revenues generated from customers in North America for the three and nine months ending September 30, 2001 totaled 100% and 99.4%, respectively.

Impairment of Long-Lived Assets

        The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets." Recoverability of assets to be held and used, including assets to be disposed of other than by sale, is measured by a comparison of the carrying amount of any asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by

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the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be sold are reported at the lower of the carrying amount or fair value less costs to sell.

Software Development Costs

        Development costs related to software implemented in our medication and supply dispensing systems and incurred subsequent to the establishment of technological feasibility are capitalized and amortized over the estimated lives of the related products. Technological feasibility is established upon completion of a working model. At September 30, 2002 and December 31, 2001, the balance of capitalized software development costs was approximately $1.8 million and $1.1 million, respectively. These costs are reported as a component of other assets. Amortization of capitalized software development costs was $0.3 million and $0.6 million in the three and nine months ended September 30, 2002, respectively, and $0.1 million and $0.3 million in the three and nine months ended September 30, 2001, respectively.

Goodwill and Purchased Intangible Assets

        In accordance with the Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"), effective for fiscal years beginning after December 15, 2001, the Company has adopted a policy for measuring goodwill for impairment when indicators of impairment exist, and at least on an annual basis. No impairment of goodwill was recognized for the three and nine months ended September 30, 2002. The Company did not have any goodwill in 2001.

        Purchased intangible assets include software and customer relationships acquired in a business combination. In accordance with SFAS 142, purchased intangible assets are amortized on a straight-line basis over their useful lives of five or six years. Additionally, purchased intangible assets are tested for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable from future undiscounted cash flows. No impairment of purchased intangible assets was recognized for the three and nine months ended September 30, 2002. The Company did not have any purchased intangible assets in 2001.

Segment Information

        The Company reports segments in accordance with SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." SFAS No. 131 requires the use of a management approach in identifying segments of an enterprise. Prior to 1999, the Company consisted of one operating segment: medication and supply dispensing systems. A second operating segment was created in the second half of 1999 with the introduction of the Company's e-commerce business. The Company's chief operating decision-maker reviews information pertaining to reportable segments to the operating income level. There are no significant intersegment sales or transfers. Assets of the operating segments are not segregated and substantially all of the Company's long-lived assets are located in the United States.

        For the three and nine month periods ended September 30, 2002 and 2001, substantially all of the Company's total revenues and gross profits were generated by the medication and supply dispensing systems operating segment. The Internet-based e-commerce business operating segment generated less than one percent of consolidated revenues in the three and nine month periods ended September 30, 2002 and 2001. The operating loss generated by the segment was approximately $0.3 million and $0.8 million in the three and nine month periods ended September 30, 2002, respectively. The operating loss generated by the segment was approximately $0.9 million and $3.3 million in the three and nine month periods ended September 30, 2001, respectively.

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Net Income (Loss) Per Share

        Basic net income (loss) per common share is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period, less shares subject to repurchase. Diluted net income (loss) per common share is computed by dividing net income (loss) for the period by the weighted average number of common shares and, if dilutive, common stock equivalent shares outstanding during the period. Common stock equivalents include the effect of outstanding dilutive stock options and warrants, computed using the treasury stock method. All potentially dilutive securities have been excluded from the computation of diluted net loss per share for the three months ended September 30, 2002 and the nine months ended September 30, 2001, as their inclusion would be antidilutive. The total number of common shares excluded from the calculations of diluted net loss per share for the three months ended September 30, 2002 and nine months ended September 30, 2001 was 122,469 and 342,000, respectively. For the nine months ended September 30, 2002, options to purchase 1,935,459 shares with an exercise price greater than $6.56, the average fair market value per share for the period, were excluded from the calculation of diluted net income per share. For the three months ended September 30, 2001, options to purchase 1,933,253 shares with an exercise price greater than $7.55, the average fair market value per share for the period, were excluded from the calculation of diluted net income per share.

        The calculation of basic and diluted net income (loss) per common share is as follows (in thousands, except per share amounts):

Recent Accounting Pronouncement

        In July 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS 146"). SFAS 146 requires that a liability for costs associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred. SFAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002.

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Note 2. Acquisition

        On August 30, 2002, Omnicell acquired 100% of the outstanding common shares of APRS Inc., a privately held company headquartered in Houston, Texas. APRS Inc. was formed in 1997 to support, develop, and market integrated system solutions to health system pharmacies. The APRS solutions will complement Omnicell's pharmacy automation dispensing cabinets to provide customers with a total medication management solution for the pharmacy. The financial results of APRS Inc. have been included in the consolidated financial statements since the date of acquisition.

        In connection with the acquisition, the Company paid cash of $1.0 million and assumed liabilities of APRS Inc. totaling $0.5 million. The total purchase price of $1.5 million was allocated to the fair value of the assets acquired and liabilities assumed at the date of acquisition as follows (in thousands):

        Intangible assets consists of the following (in thousands):

        Estimated amortization expense of the purchased intangible assets for each of the next five years ending December 31 and thereafter is as follows (in thousands):

Note 3. Leasing Arrangements

        For the three and nine months ended September 30, 2002, net sales-type lease receivables sold under leasing agreements totaled approximately $8.0 million and $27.5 million, respectively. For the three and nine months ended September 30, 2001, net sales-type lease receivables sold under leasing agreements totaled approximately $4.2 million and $25.2 million, respectively. The Company records revenue at an amount equal to the cash to be received from the leasing company, which is equivalent to the net present value of the lease streams, utilizing the implicit interest rate under its funding

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agreements. The Company excludes from revenue any amount paid to the leasing company for the termination of an existing lease pursuant to a new lease. The Company has no obligation under the lease once it is sold to the leasing company. Revenue is recognized upon completion of the Company's installation obligation and commencement of the noncancelable lease term. At September 30, 2002 and December 31, 2001, accounts receivable included approximately $2.8 million and $4.3 million, respectively, due from finance companies for lease receivables sold.

Note 4. Inventories

        Inventories consist of the following (in thousands):

Note 5. Other assets—Purchased Residuals

        On July 2, 2002, Omnicell executed an agreement to purchase from Americorp Financial, Inc. ("AFI") all residual interests in Omnicell equipment covered by leasing agreements financed by AFI. The total purchase price was $3.1 million. The purchase price was assigned to the acquired lease residuals based on the original implied lease residual value, leased equipment type, and customer history. As leases are renewed or upgraded, the Company charges the assigned value to cost of product revenues. When leases are not renewed or upgraded at the end of the lease contract, the assigned value is written off. The leases associated with the purchased residuals expire at various dates within four years from the date of the purchase agreement. The value of purchased residuals at September 30, 2002 is $3.0 million.

Note 6. Note Payable

        On July 2, 2002, Omnicell signed a promissory note for $2.1 million payable to AFI as part of an agreement to purchase all residual interests in Omnicell equipment covered by leasing agreements financed by AFI. The promissory note has an interest rate of 3.0% and is payable in quarterly installments over a period of up to 18 months.

Note 7. Credit Facility

        On August 1, 2002, Omnicell established with a bank a revolving credit facility and a non-revolving credit facility which together total $12.5 million. The revolving credit facility provides the Company with advances of up to 80% of "eligible receivables" (as defined), up to $7.5 million, and expires on July 31, 2003. Any advances under the revolving credit facility would be secured by substantially all of the Company's assets. Interest under the revolving credit facility is payable at an annual rate equal to our lender's prime rate plus 1.0%. The non-revolving credit facility provides the Company with advances of up to $5.0 million, and expires on July 31, 2003. Upon expiration of the credit facility, the Company will have the option to amortize the outstanding balance over a 36-month period. Any advances under the non-revolving credit facility would be secured by substantially all of the Company's assets. Interest under the non-revolving credit facility is payable at an annual rate equal to our lender's prime rate plus 1.5%. For both the revolving and non-revolving credit facilities, the Company has agreed not to sell, transfer, assign, mortgage, pledge, lease, grant a security interest in, or encumber any of its intellectual property, including patents, copyrights and trademarks, without the prior consent

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of the lender. In addition, both credit facilities contain covenants that include limitations on indebtedness and liens, in addition to thresholds relating to stockholders' equity and balance sheet liquidity and restrictions on the payment of dividends. As of September 30, 2002, the Company had no outstanding borrowings under either of the credit facilities.

Note 8. Deferred Gross Profit

        Deferred gross profit consists of the following (in thousands):