OMCL 10-K & 10-Q changes, risk factors and insider trading

•Economic Conditions and Demand Risks. Weak or uncertain economic conditions may adversely impact our business, as well as any reduction in demand forfor, or adoption or installation of Omnicell’s medication management solutions, medication packaging systems, or related services. In addition, as we offer lease financing options to our customers, customer creditworthiness, payment timing, and collections may adversely impact our financial results.

•Market Risks. We are subject to continued and increased competition from current and future competitors in the medicationhospital managementand automationhealth system solutions market and theoutpatient medication adherencepharmacy solutions market,markets, including price competition, industry and competitor consolidation, competitor brand recognition, and in relationships with our suppliers and current and potential customers.

•Technology Risks. We may be unable to develop new solutions or enhance existing solutions to react to changes in technology and customer requirements in a timely and cost-effective mannermanner. Our products and services now in development, or that we may seek to develop in the future, may not achieve technological or economic feasibility, obtain regulatory approval or gain market acceptance and we may determine to stop the development of, or the continued offering of, a product or service. Furthermore, we may experience errors in the provision of our SaaS and Expert Services that could expose us to liability. In addition, we may incorporate artificial intelligence technologies into certain of our products, services, and processes or our vendors may incorporate artificial intelligence tools into their offerings that may result in enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical, confidentiality, or security concerns.

•Any conversion of our 2029 Notes or 2025 Notes (each as defined below) may dilute the ownership interest of our stockholders, depress the price of our common stock or, if the conditional conversion feature of the 2029 Notes or 2025 Notes is triggered, adversely affect our business, operating results, cash flow, or financial condition. Also, our convertible note hedge and warrant transactions may decreaseaffect the value of our common stock.

Customer demand for our products is significantly linked to the strength of the economy. From time to time, the U.S. and global economy has experienced cyclical downturns impacting economic activity, the results of which include decreased demand for goods and services, reduced government spending, rising inflation, increasing interest rates, liquidity or credit constraints, declines in corporate profitability, credit, equity, or foreign exchange market volatility, increased bankruptcies, and general economic uncertainty. If decreases in demand for capital equipment caused by weak or uncertain economic conditions and decreased corporate and government spending, any effects of fiscal budget balancing at the federal level or proposed legislative or regulatory changes, or generally reduced expenditures for capital solutions occur, we will experience decreased revenues and lower revenue growth rates, and our business, operating results, cash flow, or financial condition could be materially and adversely affected. In addition, we have seen some customers defer or delay implementation of capital equipment projects, along with longer timeframes both for capital equipment purchasing decisions and for entering into agreements for our products or solutions due to customer capital budget constraints or customers seeking to stagger or elongate the timeframes between the adoption of new or updated technologies, which has resulted in moderated demand, and may lead to decreased revenues and could result in our business, operating results, cash flow, or financial condition being materially and adversely affected. Furthermore, the foregoing factors may also impact the willingness or ability of our customers to pay their existing obligations or honor their contractual commitments, which could result in decreased revenue and negatively impact our business, operating results, cash flow, or financial condition.

The broader U.S. and global economy has continued to experience elevated inflationary pressures as well as continued supply chain disruptions, labor shortages and geopolitical instability. We are unable to predict future changes in the state of the U.S. or global economy or whether inflationary pressures will continue to intensify or subside. If the current inflationary trends remain elevated, or fail to improve, it could adversely affect our profits, margins or operating results as a result of increasing costs. In addition, we may take actions in response to existing or future economic, market or business conditions that may result in charges and costs related to those actions, unforeseen obstacles or operating inefficiencies, or we may fail to realize the expected benefits, which could have a material adverse effect on our business, operating results, cash flows and financial condition.

New product and service developments or enhancements may be delayed, have technical problems (including software defects or errors), fail to meet customer or market specifications, regulatory requirements, or industry standards, which could result in increased or unexpected expenses related to further developments or modifications. In addition, theyproducts and services now in development or that we may seek to develop in the future may not achieve technological or economic feasibility, obtain regulatory approval or gain market acceptance, which may result in a decision to cease development of, or the continued offering of, a product or service. Furthermore, our products and services also may not be competitive with, or rendered obsolete by, other products using new or alternative technologies that offer comparable performance and functionality, such as AI, machine-learning, and generative AI capabilities, may not be accepted in new or existing markets, or may not achieve expected return on investment. Competitors may have greater financial and marketing resources to more rapidly respond to changing product requirements, develop competitive products, or implement new features. Any of the foregoing could make our existing and future solutions obsolete and unmarketable, or result in loss of market share or a determination to optimize our portfolio or exit a particular business or product line, damage our reputation or otherwise harm our business, operating results, cash flow, or financial condition.

Failure to generate new sales and any reduction in the demand forfor, or adoption ofof, our medication management solutions, medication packaging systems, or related services would reduce our revenues.

In addition, our medication management solutions and our more complex automated packaging systems typically represent a sizable initial capital expenditure and potential time and labor commitment to implement for healthcare organizations. Changes in the budgets of these organizations and the timing of spending under these budgets, as well as customer labor shortages, can have a significant effect on the demand for our medication management solutions, medication packaging systems, and related services. Customer budgets are often supported by cash flows that can be negatively affected by declining investment income and influenced by limited resources, increased operational and financing costs, macroeconomic conditions, and conflicting spending priorities among different departments. Furthermore, in the current fluid tariff environment, the imposition of tariffs may raise the operating costs for healthcare organizations, which in turn could put increased pressure on their budgets or capital spending as well as impact the timing of their spending. Any decrease in expenditures or change in spending priorities by healthcare facilities or increased financing costs, including as a result of the impacts of public health crises, including pandemics, could decrease demand for our medication management solutions, medication packaging systems, and related services, and reduce our revenues.

The purchase of our medication management solutions, including our central pharmacy automation solutions, is often part of a customer’s larger initiative to re-engineer its pharmacy and distribution and materials management systems. The purchase of our systems often entails larger strategic purchases by customers that generally require more complex and stringent contractual requirements, involve a significant commitment of management attention and resources by prospective customers, and require the input and approval of many decision-makers. In addition, new product announcementsannouncements, cansuch as our recently announced Titan XT automated dispensing cabinet, may cause a delay in our customers’ decisions to purchase our products or convert pending orders for our older products to those of our newer products. For these and other reasons, the sales cycle associated with sales of our systems is often lengthy, unpredictable, and subject to a number of delays over some of which we have little or no control. A delay in, or loss of, sales of these systems (including as a result of the impacts of public health crises or due to customer labor shortages, increased healthcare worker turnover, or customer budgetary constraints) could have an adverse effect upon our business, operating results and could harm our business, cash flow, or financial condition.

Our competitive position and financial condition may suffer if we fail to keep pace with rapidly evolving technological developments related to advancesadvancements in artificial intelligence (“AI”), machine-learning, andgenerative generativeAI or agentic AI technologies. The potential introduction of these technologies into new and existing offerings may result in new or expanded risks and liabilities, including enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality, or security risks, as well as other factors that could adversely affect our business, reputation, and financial results. In addition, our vendors may incorporate AI tools into their offerings, and these tools may not meet existing or rapidly evolving regulatory or industry standards and may inhibit our or our vendors’ ability to maintain an adequate level of service and experience. The use of AI can lead to unintended consequences, including generating factually inaccurate content, misleading or otherwise flawed information, or unintended biases and skewed outcomes, which could expose us to risks related to inaccuracies or errors in the output of such technologies.technologies, as well as the unintended exposure of internal or confidential information or an inability to preserve our trademarks, copyrights, and trade secrets due to such exposure. We also face risks of competitive disadvantage if our competitors more effectively use AI to create new or enhanced products or services that we are unable to compete against. Malicious actors may also use generative AI to strengthen social engineering capabilities or create more targeted phishing narratives or otherwise, which may increase the threat of a cybersecurity incident. If we, or our vendors, experience an actual or perceived breach or privacy or security incident because of the use of generative AI, we may lose valuable intellectual property and confidential information and our reputation and the public perception of the effectiveness of our security measures could be harmed. In addition, many U.S. and international governmental bodies and regulators have proposed, or are in the process of developing, new regulations related to the use of AI and machine-learning technologies. The final form of these regulations may impose obligations related to our development, offering, and use of AI technologies and expose us to increased risk of regulatory enforcement and litigation.

Certain of our SaaS and Expert Services offerings are highly complex and may be susceptible to errors, including human or technological error. We may be required to bear the cost of correcting any errors and the cost of such corrections may be significant, which could adversely affect our business, operating results, cash flow, or financial condition. In addition, our customers, or third parties such as our customers’ patients, may assert claims that they suffered damages due to our errors. These claims could result in litigation and substantial costs, including legal defense costs. Although we believe our aggregate insurance policy limits are sufficient to cover reasonably expected claims, there can be no assurance that any liability insurance we purchase will be adequate to cover claims asserted against us. We could also be subject to adverse publicity as a result of such claims, regardless of the merits or eventual outcome, which may negatively impact our ability to attract and retain customers. Furthermore, if we cannot maintain the expected level of service or if our customers fail to achieve agreed upon milestone improvements in financial or operating metrics, payments to us from such customers may be delayed, disputed, or lower than anticipated.

An increasing percentage of our revenue is derived from our subscription-based SaaS and Expert Services offerings. In connection with those offerings, our customers, generally, have no obligation to renew their subscriptions. If our SaaS and Expert Services customers decline to renew their subscriptions or decide to terminate their agreements early, if permitted, we would not derive the expected financial benefits from that customer, which could have a material adverse effect on our business, operating results, cash flow, or financial condition.

In addition, some of our SaaS and Expert Services agreements require us to adhere to additional data, security, network access, and other institutional procedures and requirements of our customers, and in certain cases may obligate us to agreed upon services levels. If we do not meet our obligations under any such SaaS and Expert Services agreement, we could be liable for damages. In addition, should a customer undergo a change in control or ownership, it may cause us or the customer to seek to modify or terminate an SaaS and Expert Services agreement.

A number of GPOs have negotiated standard contracts for our products on behalf of their member healthcare organizations. Members of these GPOs may purchase under the terms of these contracts, which obligate us to pay the GPO a fee. We also have a Federal Supply Schedule contract with the Department of Veterans Affairs, allowing the Department of Veterans Affairs, the Department of Defense, and other federal government customers to purchase our products. These contracts enable us to sell our products and services more readily to customers represented by these organizations. Some of our contracts with these organizations are terminable at the convenience of the applicable customer. The loss of any of these relationships could impact the breadth of our customer base and could impair our ability to meet our revenue or revenue growth rate targets or our ability to increase our revenues. The GPOs may increase the fees we pay or these organizations may not renew our contracts on similar terms, if at all, and they may choose to terminate our contracts before they expire, any of which could cause our revenues to decline.

Approximately 8% of our revenues during the year ended December 31, 20242025 werewas generated from the sale of consumable medication packages, most of which are produced in our St. Petersburg, Florida facility on a continuous basis and are shipped out to fulfill the demands of our institutional and retail pharmacy customers domestically and abroad. The demands placed on institutional and retail pharmacies by their customers represent real time requirements of those customers. Our customer agreements for the sale of consumable medication packages are typically short-term in nature and typically do not impose volume commitments on the customer. If we are unable to supply quality packaging to our customers in a timely manner, they may use alternative methods of distributing medications to their customers, including consumable medication packaging sold by our competitors, and our revenues will decline. Any disruption in the production capabilities of our St. Petersburg facilities,facility, including as a result of extreme weather conditions or natural disasters, which may become more frequent as a result of climate change,disasters will adversely affect our ability to ship our consumable medication packages globally and would reduce our revenues.

The markets in which we operate are intensely competitive. We expect continued and increased competition from current and future competitors, in the medicationhospital managementand automationhealth system solutions market and theoutpatient medication adherencepharmacy solutions market,markets, many of which have significantly greater financial, technical, marketing, and other resources than we do.

Our ability to make payments of the principal, to pay interest, or to refinance our indebtedness, including the 2025 Notes and the 2029 Notes, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. Our business may not continue to, and we cannot provide assurance that our business will, generate cash flow from operations in the future sufficient to fund our cash requirements, service our debt or make necessary capital expenditures. Our failure to generate sufficient cash flow to pay our debts could have a material adverse effect on our business. In addition, if we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as borrowing more money, selling assets, restructuring debt, or obtaining additional equity capital on terms that may be onerous or highly dilutive. Any of these actions still may not be sufficient to allow us to service our debt obligations, could increase the risks related to our business or our ability to service or repay our indebtedness or may otherwise have an adverse effect on our business.

We receive, store, and process personal information and other data from and about customers, in addition to our employees and services providers. In addition, our customers use our solutions to obtain and store personal information, including health information. For example, our customers use our EnlivenHealth platform to guide and track patient notes, interventions, and appointments, which involves the collection of personal health information of patients. Our handling of data is subject to a variety of laws and regulations by federal, state, local, and foreign agencies, as well as contractual obligations and industry standards. Regulatory focus on data privacy and security concerns continues to increase globally, and laws and regulations concerning the collection, use, and disclosure of personal information are expanding and becoming more complex. In the United States, these include federal health information privacy laws (such as the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), discussed below), security breach notification laws, and consumer protection laws, as well as state laws addressing privacyprivacy, security, and databreach securitynotification (such as the California Consumer Privacy Act of 2018 (“CCPA”), as amended by the California Privacy Rights Act of 2020 (collectively, the “CPRA”)).

While HIPAA does not create a private right of action, its standards have been used as the basis for civil suits and HIPAA is enforced by the U.S. Department of Health and Human Services (“HHS”) Office for Civil Rights (“OCR”), which can bring actions against entities for noncompliance, including for failures to implement security measures sufficient to reduce risks to electronic protected health information or to conduct an accurate and thorough risk analysis, among other violations. HIPAA enforcement actions may lead to monetary penalties and costly and burdensome corrective action plans. We are also required to report known breaches of protected health information consistent with applicable breach reporting requirements set forth in applicable laws and regulations. Additionally, on January 6, 2025, HHS OCR issued a Notice of Proposed Rulemaking (“NPRM”) aiming to strengthen cybersecurity protections and better defend against cyber threats targeting the U.S. health care system by bolstering the security safeguards required under the HIPAA Security Rule. While a final rule has not yet been issued (as the NPRM iswas open for public comment until March 7, 2025 and HHS is currently reviewing those comments), if adopted, these proposed changes would potentially require significant operational adjustments and potential cost increases to comply, and are expected to become final in approximately 180 days from publication of any final rule. Moreover, compliance with state laws related to health privacy may result in additional compliance costs.

The CPRA provides for civil penalties for violations, as well as a private right of action for data breaches which is expected to increase data breach litigation. Additionally, the CPRA, which came into effect in January 2023, imposed additional data protection obligations on companies doing business in California, created a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. In addition to California, at least twenty (20) other states in the U.S. have passedenacted comprehensive consumer privacy laws similar to the CPRA including, but not limited to, Virginia, Colorado, Connecticut, Oregon, Texas, and Utah (among many others). These laws are either in effect or will go into effect sometime before the end of 2026, and weWe expect other states to consider adopting similar laws in the future. Some of these new or existing laws may apply to our business activities, so additional compliance investment and potential business process changes may be required. Similar consumer privacy and data protection legislation has been introduced at the federal level that may ultimately have conflicting requirements and, if enacted, would further complicate compliance.

Additionally, the Federal Trade Commission (“FTC”) and many state attorneys general are interpreting existing federal and state consumer protection laws to impose evolving standards for the collection, use, dissemination and security of health-related and other personal information. Courts may also adopt the standards for fair information practices promulgated by the FTC, which concern consumer notice, choice, security and access. Consumer protection laws require us to publish statements that describe how we handle personal information and the choices individuals may have about the way we handle their personal information. If such information that we publish is considered untrue, we may be subject to government claims of unfair or deceptive trade practices, which could lead to significant liabilities and consequences. Furthermore, according to the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair acts or practices in, or affecting, commerce in violation of Section 5 of the FTC Act.

Internationally, various jurisdictions outside of the United States in which we operate have established, or are currently developing, their own data privacy and security legal frameworks with which we or our customers must comply. In certain cases, these international laws and regulations are more restrictive than many regulations in the United States. For example, within the European Union (“EU”), the General Data Protection Regulation 2016/679 (“EU GDPR”) went into effect on May 25, 2018, and introduced strict requirements for the processing of personal informationdata of individuals. The EU GDPR governs the collection, use, disclosure, transfer, and other processing of personal informationdata (i.e., data which identifies an individual or from which an individual is identifiable). The UK has implemented the EU GDPR as the UK GDPR which sits alongside the UK Data Protection Act 2018 (the UK GDPR, together with the EU GDPR, the “GDPR”). The GDPR has direct effect where an entity is established in the European Economic Area (“EEA”) or the UK (as applicable) and has extraterritorial effect, including where an organization outside of the EEA or the UK processes personal informationdata in relation to the offering of goods or services to those individuals or the monitoring of their behavior while those individuals are in the EEA or UK.

The GDPR imposes stringent obligations on companies that fall within its scope, including inter alia: (i) accountability and transparency requirements, requiring controllers to demonstrate and record compliance with the GDPR and to provide more detailed information to data subjects regarding processing of their personal informationdata; (ii) obligations to comply with data protection rights of data subjects including a right: (x) of access to, erasure of, or rectification of personal data; (y) to restriction of processing or to withdraw consent to processing; and (z) to object to processing or to ask for a copy of personal data to be provided to a third party; (iii) obligations to consider data protection as any new products or services are developed and designed (including e.g., to limit the amount of personal informationdata processed); (iv) requirements to process personal informationdata lawfully including specific requirements for obtaining valid consent where consent is the lawful basis for processing; (v) an obligation to report personal data breaches to: (x) the dataapplicable supervisory authority without undue delay (and no later than 72 hours after discovering the personal data breach, where feasible), unless the personal data breach is unlikely to result in a risk to the data subjects’ rights and freedoms; and (y) affected data subjects, where the personal data breach is likely to result in a high risk to their rights and freedoms. The EU GDPR also provides that EU Member States may introduce further laws and regulations limiting the processing of genetic, biometric, or health data, which could limit our ability to collect, use, and share EU personal information,data, cause our compliance costs to increase, require us to change our practices, adversely impact our business, and harm our financial condition.

In addition, the EU GDPR prohibits the international transfer of personal informationdata from the EEA to the United States and other jurisdictions that the European Commission does not recognize as having “adequate” data protection laws unless a data transfer mechanism has been put in place or a derogation under the EU GDPR can be relied upon. In July 2020, the Court of Justice of the EU (“CJEU”) in its Schrems II judgement limited how organizations could lawfully transfer personal data from the EEA to the US by invalidating the EU-US Privacy Shield for purposes of international transfers and imposing further restrictions on the use of standard contractual clauses (“EU SCCs”), which Omnicell utilizes such standard contractual clauses for cross-border transfers of personal data from the EEA and UK to the U.S. The Schrems II judgement also includes a requirement for companies to carry out a transfer privacy impact assessment (“TIAs”). A TIA, among other things, assesses laws governing access to personal data in the recipient country and considers whether supplementary measures that provide privacy protections additional to those provided under EU SCCs will need to be implemented to ensure an “essentially equivalent” level of data protection to that afforded in the EEA.

The UK GDPR also imposes similar restrictions on transfers of personal data from the UK to jurisdictions that the UK Government does not consider adequate, including the United States. The UK Government has published its own form of the EU SCCs, known as the International Data Transfer Agreement and an International Data Transfer Addendum to the new EU SCCs.SCCs, Thewhich Omnicell utilizes for cross-border transfers of personal data from the UK Information(and, Commissioner’sin Officecertain hascases, also published its version of the TIA and guidance on international transfers, although entities may choose to adopt either the EU or UK style TIA.EEA).

In addition, certain healthcare legislation and regulations may be challenged from time to time, in an effort to modify or repeal that legislation or those regulations. For example, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”), which was passed in March 2010 and substantially changed the way healthcare is financed by both governmental and private insurers, has been subject to numerous judicial, legislative, and regulatory efforts to replace it or to alter its interpretation or implementation. The One Big Beautiful Bill Act (“OBBBA”), which was passed in 2025, reverses ACA expansions by scaling back certain ACA subsidies, introducing work requirements and other eligibility requirements for participating in Medicaid, as well as other requirements for marketplace access and is expected to result in a $910 billion Medicaid spending reduction across states. As a result of these changes, our customers’ budgets or spending decisions may be impacted, which in turn could negatively impact our business, operating results, cash flow, or financial condition. It is unclear how the OBBBA or future efforts to challenge, repeal, replace, or otherwise modify, or alter the implementation or interpretation of the ACA will affect our business, operating results, cash flow, or financial condition.

The manufacture and sale of most of our current medication management solutions are not directly regulated by the FDA or the DEA, although such products and services are used by other persons (our customers) whose pharmacy, dispensing, and compounding activities may be subject to regulation by those agencies and by state boards of pharmacy. However, we manufacture and develop specifications for products classified as Class I and Class II medical devices, which are subject to FDA regulation and require compliance with the FDA Quality System Regulation as well as medical device reporting, including a sterile disposable product that required FDA 510(k) review and clearance prior to marketing and distribution. Medical devices are also subject to various other regulatory requirements, including as applicable, premarket clearance or approval, establishment registration and device listing, complaint handling, notification and repair, replace, refund, mandatory recalls, unique device identifier (“UDI”) requirements, reports of removals and corrections, cybersecurity requirements and post-marketing surveillance. Additional products and services may require us to observe HHS regulations for credentialing of providers (pharmacists) or be subject to DEA regulations concerning the management, storing, dispensing, and disposal of, and accounting for, controlled substances, and may be regulated in the future by the FDA, DEA, or other federal agencies due to future legislative and regulatory initiatives or reforms. In addition, certain provisions of the Federal Food, Drug and Cosmetic Act (“FDCA”) related to the handling, distribution and compounding of pharmaceuticals, govern all parts of the drug distribution chain, which our customers may be required to comply with and which may influence customer demand for our products. Direct regulation of our business and products by the FDA, DEA, CMS, or other federal agencies could substantially increase the cost to produce our products or deliver our services and increase the time required to bring those products and services to market, reduce the demand for our products and services, and reduce our revenues. In addition, our customers include healthcare providers and facilities subject to regulation by the DEA, pharmacies subject to regulation by the FDA and individual state boards of pharmacy and hospitals subject to accreditation by accrediting organizations approved by CMS, such as the Joint Commission, and the rules, regulations, and standards of such regulators and accrediting organizations. Any failure of our customers to comply with the applicable rules, regulations, and standards could reduce demand for our products or services and harm our business, competitive position, operating results, cash flow, or financial condition. Given our customers, products, services, and industry relationships, we may also be subject to rules, regulations, standards, and civil or criminal enforcement imposed by HHS, the U.S. Department of Justice, the HHS Office of Inspector General, CMS, the Health Resources and Services Administration, and state attorneys general, including with respect to state and federal False Claims Act statutes, federal Anti-Kickback Statute, and federal Physician Payments Sunshine Act, among others. As such, from time to time, we may be subject to various state or federal governmental inspections, reviews, audits and investigations to verify our compliance with governmental rules and regulations to the extent governing our products and services. The costs to respond to or defend any such reviews, audits and investigations can be significant and are likely to increase in the current enforcement environment. These cases may, from time to time, originate from whistleblowers, which have separate indemnity and reimbursement rights under state and federal laws. These cases, audits and investigations may result in other adverse consequences, particularly if the underlying conduct is found to be pervasive or systemic. These consequences may include, but are not limited to: (1) refunding or retroactively adjusting amounts that have been paid under the relevant government program or from other payors; (2) state or federal agencies imposing significant fines, penalties and other sanctions on us; (3) losing our right to participate in certain governmental programs; and (4) damaging our reputation in various markets, which could adversely affect our ability to attract customers and employees. As previously disclosed, on May 5, 2025, Omnicell entered into a settlement agreement with the U.S. Attorney’s Office for the Eastern District of Washington to resolve certain potential non-compliances with our previous Federal Supply Schedule contract and associated potential violations of the False Claims Act, which required us to pay $4.6 million to cover damages and other statutorily provided amounts under the False Claims Act, which settled the matter without admission of liability. If thesesuch events were to occur,occur in the future, the consequences could have a material adverse effect on our business, operating results, cash flow, or financial condition.

While we have implemented apolicies, Privacyprocedures, practices and Usecontrols appropriate to our processing of Informationregulated Policypatient health information (as well as the known risks associated with such processing), and adhere to established privacy principles, use of customer information guidelines, and related federal and state statutes, we cannot assure you that we will be in compliance with all international, federal and state healthcare information privacy and security laws that we are directly or indirectly subject to, including, without limitation, HIPAA.to. Under HIPAA, we are considered a “business associate” in relation to many of our customers that are covered entities, and, as such, most of these customers have required that we enter into written agreements governing the way we handle and safeguard certain patient health information we may encounter in providing our products and services, and may impose liability on us for failure to meet our contractual obligations. Furthermore, pursuant to changes in HIPAA under the American Recovery and Reinvestment Act of 2009,2009 and the 2013 Omnibus Final Rule, we are covered under HIPAA similar to other covered entities and, in some cases, subject to the same civil and criminal penalties as a covered entity. A number of states and countries have also enacted privacy and security statutes and regulations that, in some cases, are more stringent than HIPAA and may also apply directly to us. If our past or present operations are found to violate any of these laws, we may be subject to fines, penalties, and other sanctions.

The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and related Notes to Consolidated Financial Statements in this Annual Report on Form 10-K. This discussion and analysis may contain forward-looking statements based upon our current expectations and assumptions that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under Item 1A, “Risk Factors,” and elsewhere in this Annual Report on Form 10-K. Unless otherwise stated, references in this Annual Report to particular years or quarters refer to our fiscal year and the associated quarters of those fiscal years.

Omnicell, a leaderleading inhealthcare transformingtechnology theprovider pharmacyfocused andon nursingempowering careautonomous deliverymedication model,management, is committed to solving the critical challenges inherent in medication management and elevating the role of clinicians within healthcare as an essential component of care delivery. Omnicell is focused on helping its customers define and deliver a cost-effective medication management strategy designed to equip and empower pharmacists and nurses to focus on patient care rather than administrative tasks, and to drive improved clinical, operational, and financial outcomes across all care settings. We are doing this with an industry-leading medication management infrastructure which includes roboticsstorage and smartdispensing devices,automation softwarepowered workflows,by expertan services,intelligence andecosystem. operational and optimization analytics. ThisOur comprehensive set of solutions provides the critical foundation for customers to realize the Autonomous Pharmacy, an industry-wide vision defined by pharmacy leaders for improving operational efficiencies and ultimately targeting zero-error medication management.management alongside 5 other outcomes laid out in the Autonomous Pharmacy framework.

Omnicell solutions are helping healthcare facilities worldwide to uncover cost savings, improve labor efficiency, establish new revenue streams, enhance supply chain control, support compliance, and move closer to the industry-defined vision of the Autonomous Pharmacy. We sell our producthardware, software, and consumable solutions together with related service offerings. Revenues generated in the United States represented 91%90% of our total revenues for the year ended December 31, 2024.2025.

Over the past several years, ourOur business has expanded from a single-point solution to a platform of products and services that will help further advance the industry-defined vision of the Autonomous Pharmacy. This expansion has resulted in larger deal sizes across multiple products, services, and implementations for customers and, we believe, more comprehensive, valuable, and enduring relationships. As our business evolves, we continue to evaluate the metrics and methods we use to measure the success of our business.

2025 Product Bookings and Annual Recurring Revenue

Starting in 2025, we willWe utilize product bookings and Annual Recurring Revenue (“ARR”), each as further described below)below, as key performance metrics for our business. We view product bookings as an indicator of the success of certain portions of our business that generate nonrecurring revenue and Annualwe Recurringview RevenueARR as an indicator of the success of the portionportions of our business that generatesgenerate recurring revenues. The definitions and descriptions included below are relevant to these key performance metrics that will replace our prior bookings metric in 2025 and beyond.metrics.

We utilize product bookings as an indicator of the success of certain portions of our business that generate non-recurring revenue. We define product bookings generally as the value of non-cancelable contracts for our connected devices and software licenses. We typically exclude freight revenue and other less significant items ancillary to our products from product bookings. In addition, dependent upon counterparty or credit risk, which is evaluated at the time of contract signing, for a given multi-year subscription contract we may reduce the value of the contractual commitment booked at a given time. Connected devices and software license bookings are recorded as revenue upon customer acceptance of the installation or receipt of goods. UsingAs part of most connected device product sales, we generally provide installation planning and consulting, which is typically included in the newinitial definitionprice of the metric,solution. productProduct bookings were $535 million and $558 million asduring ofthe years ended December 31, 2024.2025 and 2024, respectively.

We consider revenues generated from our consumables, technical services, and SaaS and Expert Services to be recurring revenues. For the portions of our business which generate recurring revenues, we utilize Annual Recurring Revenue (“ARR”) as a key metric to measure our progress in growing our recurring revenue business. We define ARR at a measurement date as the revenue we expect to receive from our customers over the course of the following year for providing them with products or services. ARR includes expected revenue from all customers who are using our products or services at the reported date. For technical services and SaaS and Expert Services, solutions are generally on a contractual basis, typically with contracts for a period of 12 months or more, with a high probability of renewal. Probability of renewal is based on historic renewal experience of the individual revenue streams or management’s best estimates if historical renewal experience is not available. Consumables orders are placed by customers through our Omnicell Storefront online platform or through written or telephonic orders and are sold to a customer base who utilize the consumable product and place recurring orders when customer inventory is depleted. ARR is generally calculated based on revenues received in the most recent quarter and changes to expected revenues where solutions were added to or removed from the install or customer base in the quarter. Revenues from technical services and SaaS and Expert Services are generally recorded ratably over the service term. As part of our SaaS and Expert Services offerings, we provide a range of services to our customers including Central Pharmacy Dispensing Service (service portion), IV Compounding Service (service portion), EnlivenHealth, Specialty Pharmacy Services, 340B solutions, Inventory Optimization Service, and other software solutions, which typically are provided over two to seven years. In addition, to help ensure the maximum availability of our systems, our customers typically purchase technical services contracts (support and maintenance) in increments of one to five years. Revenue from consumables are recorded when the product has shipped and title has passed. Our measure of ARR may be different than that used by other companies. Because ARR is based on expected future revenue, it does not represent revenue recognized during a particular reporting period or revenue to be recognized in future reporting periods. ARR should not be viewed as a substitute for revenues. Under the new metric, ARR was $636 million and $580 million as of December 31, 2024.2025 and 2024, respectively.

We manage our operations as a single segment for the purposes of assessing performance and making operating decisions. Our Chief Operating Decision Maker (“CODM”) is our Chief Executive Officer. The CODM allocates resources and evaluates the performance of Omnicell at the consolidated level using our consolidated net income.income (loss). In addition, the CODM is provided with certain segment assets,assets and liabilities, primarily those that impact liquidity, as well as certain significant expenses. All significant operating decisions are based upon an analysis of Omnicell as one operating segment, which is the same as our reporting segment.

In 2023,2024, the United States spent $723$806 billion on prescription drugs, a 13.6%10.2% increase from 2022. This was the largest annual spending increase in 20 years and impacted patients in virtually all settings of care.2023. We believe there are significant challenges facing the practice of pharmacy todaytoday. including,These challenges include, but are not limited to, budget constraints,constraints increasedand healthcareacute worker turnover rates, laborworkforce shortages, drugwhere shortages,88% of hospitals report technician deficits and 92% lack sufficient sterile compounding expertise. In addition, health systems face rising liability related to drug diversion, manualwith anda error-prone61% processes,increase complexin compliancethe requirements,average and limited inventory visibility. Eachnumber of theseinvestigations challengesper mayhospital leadsince tothe poor medication management outcomes including, but not limited to, medication errors, adverse drug events, lackbeginning of patient adherence, and medication waste.2023. We also recognize that these challenges may impact the timing of contracting for, or implementation of, our products, solutions, or services. However, we believe that over time these significant challenges tofacing the practice of pharmacypharmacists will drive demand for increased automation, visibility, insights, and improved medication management outcomes that our solutions are designed to enable. Because of this, we believe that our solutions are well-positioned to address the evolving needs of healthcare institutions and therefore present opportunities for long-term growth.

In an effort to address these challenges and deliver solutions to help drive positive medication management outcomes, we continue to make significant investments in our research and development efforts to further advance the industry-defined vision of the Autonomous Pharmacy. Furthermore, we believe a combination of roboticsdispensing automation and smartan devices,intelligence software workflows, expert services, and operational and optimization analyticsecosystem is needed in every care setting where medications are managed. We are focused on delivering solutions to help our customers realize the industry-defined vision of the Autonomous Pharmacy and drivedriving positive medication management outcomes with outstandingsuperior customer experience through a mature channel in fourtwo core market categories through:

•Central Pharmacy and IV Compounding.Pharmacy. This market represents the beginning of the medication management process in acute care settings,settings. andGiven the current environment, we believe itthere is a significant automation opportunity for highautomation volumesas ofmany health systems aim to eliminate manual, repetitive, and error-prone processes thatto areaddress acute workforce shortages. With hospitals facing technician shortages and often commonlacking inadequate pharmaciessterile today.compounding Manualexpertise, medicationwe dispensingthink processes are usually labor intensive, error-prone, and may lead to excess medication waste and expirations for our healthcare partners. Automating theautomating central pharmacy dispensing processand shouldcompounding enableis customerscrucial tofor reallocatereallocating pharmacylimited labor, enhance dispensing accuracy andenhancing patient safety, and reduceenabling medicationcompliance waste and expirations. Likewise,with the manualnew Drug Supply Chain Security Act (“DSCSA”) requirements. Manual compounding of sterile IV preparations can be error-prone and create significant patientposes safety risks,risks andand, outsourcingwhen sterileoutsourced, IVcan compounding could lead to increased medicationincrease costs and lacksupply ofvolatility. access to needed medications due to an inability to source medications when they are required. As a result, we believeTherefore, IV automation providesoffers a significantkey opportunity to enhancestandardize patientsterile safetyworkflows, offset the resources currently used for managing drug shortages, and reduce costs.the annual cost of non-optimized medication therapy. We anticipate thatexpect these technology-enabledtechnology-driven services willto become moreincreasingly criticalvital as health systems continuefocus toon faceoperational laborresilience shortages,amid increasedsevere financial pressure, and supply chain disruptions.pressures.

•Specialty Pharmacy and 340B Program. We believe that health systems will continue to investaccelerate investment in programs that are intended to improve patient outcomes and drive cost savings by utilizing specialty pharmacies and the federal 340B Drug Pricing Program (the “340B Program”).Program. The 340B Program allows qualifyingqualified hospitals and health systems to stretch federal resourcesresources, anda expandcritical patientcapability accessas the program is on track to healthcareexceed $200 billion in gross sales by requiring2026, manufacturerssurpassing participatingthe inentire MedicaidMedicare toPart sellB outpatientmarket. In 2024, specialty drugs at discounted prices to eligible healthcare organizations and covered entities. Specialty drugs are used for treatment of complex conditions andconstituted oftenthe requiremajority intensive(51.7%) patientof managementtotal andprescription specializedexpenditures. workflowsThis forsector dispensingcontinues andto caregrow coordination.at Specialtya medicationshigher rate than other drug classes. However, regulatory pressures are projected to account for nearly 60% of U.S. total spending on medications,intensifying with totalsite-neutral spendingpayment projected to be approximately $420 billion in 2025.cuts. Specialty pharmacies serve as the connection between patients, prescribing physicians,providers, and payers and work to streamline access and adherence to these specialty drugs.adherence. We believe a solution that is designed to help health systems start or optimize their specialtyHealth pharmacySystem-Owned programsSpecialty Pharmacy (“HSSP”) and thenavigate relatedthese pharmaceutical aspects of patient carecompliance-complexities will help ensure continuity of care and should contribute to the revenue and profitability of those organizations.care. We believe that a fully optimized specialty pharmacy operation represents one of the largest economic opportunities for hospitals and health systems.

•AmbulatoryRetail. Care.Total WeU.S. believeprescription ambulatorydispensing revenues across retail, mail-order, long-term care, especiallyand specialty pharmacies reached approximately $683 billion in 2024, up 9% from 2023, a surge driven primarily by the retailrapid adoption of GLP-1 agonists and institutionalspecialty market,immunotherapies representsrather athan significantvolume opportunity as healthcare evolves. Retail pharmacies are expected to fill 4.98 billion prescriptions in 2025 and grow at a compound annual growth rate of around 7.1%, which would result in an approximate $1.2 trillion market valuation by 2032.alone. Additionally, the shift of outpatient care from hospitals and physician offices to other,other more convenient settings, such as retail pharmacies and the homehome, continues to be a growing trend. New technologies and increased scope of practice for pharmacists appear to be spurring innovation and expansion of the provision of clinical services by retail pharmacies. We believe this development, combined with the move to value-based care, will drive the adoption of our patient engagement offerings. These solutions are intended to help providers (including pharmacists) engage patients in new ways that are expected to improve outcomes, reduce the total cost of care, and lead to more profitable operations.

These judgments have been applied consistently for all periods presented. Changes in the assumptions or judgementsjudgments used in determining the standalone selling price or timing of revenue recognition could impact the amount and timing of revenue reported in a particular period.

We make certain estimates and judgments in determining income tax expense or benefit for financial statement purposes. These estimates and judgments occur in the calculation of income tax credits, uncertain tax positions, and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of the recognition of certain income and expenses for tax and financial statement purposes. We assess the likelihood of the realization of deferred tax assets and the need for a valuation allowance in each reporting period. As of December 31, 2025, we do not maintain a valuation allowance against deferred tax assets based on our assessment that it is more likely than not these assets will be realized. In reaching our conclusion, we evaluate certain relevant criteria as provided in ASC 740, Income Taxes, including having sufficient taxable income of the appropriate character in future years. Our judgment regarding future taxable income may change due to future changes in the company’s profitability dueas toa result of changes in market conditions, changes in U.S. or international tax laws, and other factors. Changes in judgment may require material adjustments to deferred tax assets, which may result in an increase or decrease to our income tax provision in the period of adjustment. For additional details, refer to Note 17, Income Taxes, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.

As a global company, we use significant judgment to calculate and provide for income taxes in each of the tax jurisdictions in which we operate. In the ordinary course of business, transactions and calculations occur whose ultimate tax outcome cannot be certain. Some of these uncertainties arise due to transfer pricing for transactions with our subsidiaries and the determination of tax nexus. We also monitor global tax developments, including the OECD Pillar Two Framework, which may impact our effective tax rate in future periods.

We account for uncertain tax positions in accordance with ASC 740. We estimate and recognize the tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of ASC 740 and complex tax laws. Due to the inherent uncertainties in tax regulations and the complexity of our global operations, it is impracticable to provide a detailed quantitative analysis of our uncertain tax positions.

Product revenues represented 57%56% and 62%57% of total revenues for the years ended December 31, 20242025 and 2023,2024, respectively. Product revenues decreasedincreased by $78.1$35.2 million, primarily due to athe challengingincrease environmentin throughrevenues a significant portion of 2024 for some offrom our healthXTExtend systemoffering, customerspartially andoffset by lower volumes from our XT Series automated dispensing systems business due to the timing of our XT Series systems lifecycle, as we are largely through the replacement cycle.cycle, as well as the decrease in revenues from products related to our Central Pharmacy Dispensing Service offering.

Service revenues represented 43%44% and 38%43% of total revenues for the years ended December 31, 20242025 and 2023,2024, respectively. Services and otherService revenues include revenues from technical services and SaaS and Expert Services offerings. Service revenues increased by $43.2$37.4 million, primarily due to an increase of $12.4$21.9 million in technical services revenues primarily as a result of growth in our installed customer base and the impact of pricing actions,actions. asThe wellincrease asis also driven by an increase of $30.8$15.6 million in SaaS and Expert Services revenues due to continued customer demand.demand, including an increase in revenues from our Specialty Pharmacy Services offering, partially offset by lower revenues from the EnlivenHealth portfolio.

Our international sales represented 9%10% and 12%9% of total revenues for the years ended December 31, 20242025 and 2023,2024, respectively,respectively. andIn arefuture expectedperiods, we expect our revenues to be affected by foreign currency exchange rate fluctuations. We are unable to predict the extent to which revenues in future periods will be impacted by changes in foreign currency exchange rates.

Our ability to grow product and service revenues is dependent on our ability to continue to obtain orders from customers, including contract renewals, which may be dependent upon customers’ capital equipment budgets and/or capital equipment approval cycles, our ability to produce quality products and consumables to fulfill customer demand, the volume of installationsimplementations we are able to complete, our ability to meet customer needs by providing a quality installationimplementation experience,experience and solutions that meet expected service levels, our ability to develop new or enhance existing solutions, and our flexibility in workforce allocations among customers to complete installationsimplementations on a timely basis. The timing of our product revenues for equipment is primarily dependent on when our customers’ schedules and/or staffing levels allow for installations.implementations.

Cost of revenues for the year ended December 31, 20242025 compared to the year ended December 31, 20232024 decreasedincreased by $9.0$40.2 million, primarily driven by a $31.1$44.0 million increase in cost of service revenues, partially offset by a $3.9 million decrease in cost of product revenues, partially offset by a $22.0 million increase in cost of service revenues.

The overall decrease in gross margin primarilyremained relatesrelatively to lower product revenuesconsistent for the year ended December 31, 20242025 compared to the year ended December 31, 2023 whereas the decrease in cost of product revenues has not decreased proportionally with the decrease in product revenues,2024 primarily due to the decrease in revenuesimpact of highermore marginfavorable productsmaterials costs as well as thefavorable impact offrom certain fixed costs, such as laborproduct and overhead.customer Themix and a decrease in costrestructuring ofcosts, productincluding revenuesinventory iswrite-down charges, partially offset by inventory write-down charges related to the RDSimpact productof line wind downtariffs and an increase in restructuringemployee-related costsand incurredcertain duringnon-recurring thesoftware yearupgrade ended December 31, 2024.expenses. Our gross profit for the year ended December 31, 20242025 was $471.0$503.4 million, as compared to $496.8$471.0 million for the year ended December 31, 2023.2024.

Selling, General, and Administrative. Selling, general, and administrative expenses decreasedincreased by $54.3$29.4 million for the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024. The decreaseincrease was primarily due to aan decreaseincrease of $23.3$19.8 million in employee-related expensesexpenses, primarilywhich asincluded aan resultincrease of lower headcount, a decrease of $11.0$7.3 million in impairmentshare-based compensation expense. The increase in employee-related expenses was primarily due to higher headcount, annual merit increases, and abandonmentthe chargestiming of operatingshare-based leasecompensation right-of-useexpense recognition. The increase in selling, general, and otheradministrative assetsexpenses was also attributable to an increase in connection with restructuring activitiescommissions of certain$3.9 leasedmillion, facilities,an aincrease decreasein consulting expenses of $8.4$2.6 million, and an increase of $2.7 million in restructuringthe costs,allowance afor decreasecredit oflosses $4.1for millionthe inyear commissionsended expenses,December a31, decrease2025 ofcompared $2.9to millionthe inyear freightended out,December and31, a decrease of $2.2 million in executives transition costs.2024.

Interest and Other Income (Expense), Net. Interest and other income (expense), net, changed by $10.5$19.1 million for the year ended December 31, 20242025 compared to the year ended December 31, 2023,2024, primarily driven by a $12.2$20.6 million increasedecrease in other income and a $1.7$1.5 million increasedecrease in other expense. The increasedecrease in other income during the year ended December 31, 20242025 compared to the year ended December 31, 20232024 is primarily attributable to a $7.5 million gain on extinguishment of the 2025 convertible senior notes and related unwind of note hedges and warrants,warrants during the year ended December 31, 2024, as well as higherlower interest income received. The decrease in interest income received was primarily due to higherlower interest rates and higherlower cash and cash equivalents balances throughoutfollowing the majoritypartial repurchase of the year.2025 convertible senior notes in November 2024 and maturity of the remaining 2025 Notes in September 2025, and repurchases of our common stock during the second and third quarters of 2025.

We recorded an income tax expense of $9.3 million on an income before income taxes of $11.3 million, which resulted in an effective tax rate of 82% for the year ended December 31, 2025, compared to an income tax expense of $13.1 million on an income before income taxes of $25.6 million, which resulted in a positivean effective tax rate of 51% for the year ended December 31, 2024, compared to an income tax expense of $0.3 million on a loss before income taxes of $20.1 million, which resulted in a negative effective tax rate of 1% for the year ended December 31, 2023.2024. The 20242025 annual effective tax rate differed from the statutory tax rate of 21%, primarily due to anthe unfavorable impact of state taxes and non-deductible equity compensation chargescharges, partially offset by a favorable impact of research and development credits.

We had cash and cash equivalents of $196.5 million at December 31, 2025, compared to $369.2 million at December 31, 2024, compared to $468.0 million at December 31, 2023.2024. All of our cash and cash equivalents are invested in bank accounts and money market funds held in sweep and asset management accounts with financial institutions of high credit quality. As of December 31, 2025, a substantial portion of the Company’s cash and cash equivalents were held with a limited number of financial institutions and money market funds, which may expose the Company to concentration risk in the event of a failure or adverse condition affecting those entities.

Our ratio of current assets to current liabilities was 1.4:1 andat 2.5:1 atboth December 31, 20242025 and 2023, respectively.2024.

Our future uses of cash are expected to be primarily for working capital, capital expenditures, and other contractual obligations. We may also use cash for potential acquisitions and acquisition-related activities, as well as repurchases of our common stock. In addition, we may also use a portion of our cash as we consider various options related to our outstanding debt.

InDuring Novemberthe 2024,year ended December 31, 2025, we completedrepurchased aapproximately partial2,523,000 shares of our common stock under the 2016 and 2025 repurchase programs at an average price of $400.0$30.74 millionper share for an aggregate principalpurchase amountprice of approximately $77.6 million, which completed the 2016 Repurchase Program and substantially completed the 2025 NotesRepurchase for approximately $391.2 million in cash.Program. Refer to Note 11,16, ConvertibleStock SeniorRepurchase Notes,Programs, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.

Based on our current business plan and backlog, we believe that our existing cash and cash equivalents, our anticipated cash flows from operations, cash generated from the exercise of employee stock options and purchases under our Employee Stock Purchase Plan (“ESPP”), along with the availability of funds under the Current Revolving Credit Facility will be sufficient to meet our cash needs for working capital, capital expenditures, potential acquisitions, outstanding debt, and other contractual obligations for at least the next twelve months. For periods beyond the next twelve months, we also anticipate that our net operating cash flows plus existing balances of cash and cash equivalents will suffice to fund the growth of our business.

(3)We issued the 2025 Notes in September 2020 that are due in September 2025 and issued the 2029 Notes in November 2024 that are due in December 2029. The obligations presented above include both principal and interest on these notes. Although these notes mature in 2025 and 2029, respectively, they may be converted into cash and shares of our common stock prior to maturity if certain conditions are met. Any conversion prior to maturity can result in repayment of the principal amounts sooner than the scheduled repayment as indicated in the table above. Refer to Note 11, Convertible Senior Notes, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.

•delays in installations of our medication management solutions or our more complex medication packaging systemssystems, or in the timing of purchasing decisions;

Omnicell solutions are helping healthcare facilities worldwide to uncover cost savings, improve labor efficiency, establish new revenue streams, enhance supply chain control, support compliance, and move closer to the industry-defined vision of the Autonomous Pharmacy. We sell our hardware, software, and consumable solutions together with related service offerings. Revenues generated in the United States represented 90% and 92%91% of our total revenues for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and 90% and 92% of our total revenues for the six months ended June 30, 2026 and 2025, respectively.

In recent years, the U.S. government has advocated forfor, and in certain cases implemented, greater restrictions on trade generally.trade. For example, in 2025,2025 and 2026, the U.S. imposed or announced tariffs and other trade measures on a wide variety of products manufactured in multiple foreign jurisdictions, including China, Mexico, and Malaysia.Malaysia, In response to the ongoing changes in tariffs,and several foreign countries have imposed or threatened reciprocal tariffs on goods manufactured in the United States. These tariff rates have fluctuated and may continue to fluctuate going forward. In an effort to address these actions, we have implemented various mitigation measures, including dual-sourcing of components and nearshoring manufacturing. While these actions have effectively mitigated some of the impact of these costs, there can be no assurance that we will be able to offset future increased costs or other adverse impacts. Although we continue to work to mitigate the impact of current or potential tariffs, we may incorrectly anticipate outcomes, forgo or pass up business opportunities, or fail to appropriately adapt or manage our business strategies in response to these changes. As a result of these factors, we may experience direct and indirect adverse effects on our business, operating results, cash flow, or financial condition.

In addition, onOn February 20, 2026, the U.S. Supreme Court struck down certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). Subsequent to this ruling the U.S. Court of International Trade issued an order that directed the U.S. Customs and Border Protection (“CBP”) to formalize a process for refunding IEEPA tariffs. On April 20, 2026, the CBP launched an online portal to submit IEEPA tariff refund requests. Submitted requests are reviewed by the CBP to determine validity prior to the issuance of any refund. AsDuring the recoverabilitysecond and timingquarter of any2026, suchthe refundCompany remainsreceived uncertain,$14.5 wemillion havein refunds for previously paid IEEPA tariffs, which were recorded primarily as a reduction to cost of product revenues. The Company does not recordedexpect any potentialadditional benefitrefunds aspotentially ofcollectible Marchin 31,the 2026.future for IEEPA tariffs paid through the U.S. Supreme Court’s February 20, 2026 ruling to be material.

Our full-time employee headcount was approximately 3,5253,485 as of MarchJune 31,30, 2026.

There have been no material changes in our critical accounting policies and estimates during the threesix months ended MarchJune 31,30, 2026 as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Product revenues represented 56% and 54% of total revenues for both the three months ended MarchJune 31,30, 2026 and 2025, respectively.2025. Product revenues increased by $29.6$11.9 million, primarily driven by an increase in revenues from our automated dispensing systems and XTExtend offering, partially offset by a decrease in revenues from robotics, including products related to our Central Pharmacy Dispensing Service and IV Compounding Service offering.

Service revenues represented 44% and 46% of total revenues for both the three months ended MarchJune 31,30, 2026 and 2025. Service revenues include revenues from technical services and SaaS and Expert Services offerings. Service revenues increased by $10.6$9.8 million due to an increase of $5.5$4.8 million in technical services revenues primarily as a result of growth in our installed customer base and the impact of pricing actions, as well as an increase of $5.0 million in SaaS and Expert Services revenues due to continued customer demand, including an increase in revenues from our Specialty Pharmacy Services offering.

Our international sales represented 10% and 8%9% of total revenues for the three months ended MarchJune 31,30, 2026 and 2025, respectively. In future periods, we expect our revenues to be affected by foreign currency exchange rate fluctuations. We are unable to predict the extent to which revenues in future periods will be impacted by changes in foreign currency exchange rates.

Our ability to grow product and service revenues is dependent on our ability to continue to obtain orders from customers, including contract renewals,renewals and competitive conversions, which may be dependent upon customers’ capital equipment budgets and/or capital equipment approval cycles, our ability to produce quality products and consumables to fulfill customer demand, the volume of implementations we are able to complete, our ability to meet customer needs by providing a quality implementation experience and solutions that meet expected service levels, our ability to develop new or enhance existing solutions, and our flexibility in workforce allocations among customers to complete implementations on a timely basis. The timing of our revenues is primarily dependent on when our customers’ schedules and/or staffing levels allow for implementations.

Cost of revenues for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 increaseddecreased by $10.8$3.6 million, ofprimarily whichdriven $9.9by a $6.3 million was attributed to the increasedecrease in cost of product revenuesrevenues, andpartially $0.9offset by a $2.6 million was attributed to the increase in cost of service revenues.

The overall increasedecrease in grosscost marginof primarily relates to higherproduct revenues for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025,2025 thewas favorableprimarily impactdriven ofby scalea and$14.0 efficienciesmillion inrefund installations, product and customer mix, and certain non-recurring costs, including software upgrade expenses, incurredreceived during the three months ended MarchJune 31,30, 2025,2026 for previously paid IEEPA tariffs, partially offset by the impact of tariffs.costs Ourof grosshigher profitrevenues forand ongoing tariffs during the three months ended MarchJune 31,30, 2026 was $140.4 million, as compared to $110.9 million for the three months ended MarchJune 31,30, 2025.

Research and Development. Research and development expenses increaseddecreased by $1.0$1.3 million for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025.

Selling, General, and Administrative. Selling, general, and administrative expenses remainedincreased relativelyby consistent$2.2 million for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025, primarily due to an increase of $2.8$3.3 million in employee-related expenses and $2.6an million in consulting expenses, offset by a decrease in expenses incurred during the three months ended March 31, 2025increase of $2.7 million for legal and regulatory expenses, and $1.5$1.9 million in certain restructuring and severance charges.charges, partially offset by a decrease of $3.5 million in the allowance for credit losses compared to the three months ended June 30, 2025.

Interest and Other Income (Expense), Net. Interest and other income (expense), net changed by $2.0$0.9 million for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025, primarily driven by a $2.4$1.2 million decrease in other income and a $0.4 million decrease in other expense.income. The decrease in other income during the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025 is primarily attributable to lower interest income received due to lower cash and cash equivalents balances following the repurchases of our common stock during the second and third quarters of 2025 and maturity of the remaining 2025 Notes in September 2025, aspartially welloffset asby lower$0.5 million of interest rates.income received in connection with the IEEPA tariffs refund during the three months ended June 30, 2026.

Provision for (Benefit from) Income Taxes

For the threesix months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, we recorded income tax expense of $5.5$15.1 million and income tax benefit of $2.5$2.3 million, respectively. The change in the income tax expense for the threesix months ended MarchJune 31,30, 20262026, compared to the income tax benefit for the same period in 20252025, was primarily due to higherchanges in income before income taxes generated during the current period.taxes.

We had cash and cash equivalents of $239.2$292.2 million at MarchJune 31,30, 2026 compared to $196.5 million at December 31, 2025. All of our cash and cash equivalents are invested in bank accounts and money market funds held in sweep and asset management accounts with financial institutions of high credit quality. As of MarchJune 31,30, 2026, a substantial portion of the Company’s cash and cash equivalents were held with a limited number of financial institutions and money market funds, which may expose the Company to concentration risk in the event of a failure or adverse condition affecting those entities.

Our cash position and working capital at MarchJune 31,30, 2026 and December 31, 2025 were as follows:

Our ratio of current assets to current liabilities was 1.51.6:1 at MarchJune 31,30, 2026 and 1.4:1 at December 31, 2025.

As of MarchJune 31,30, 2026, we had $350.0 million of funds available under the Current Revolving Credit Facility. As of MarchJune 31,30, 2026, there was no outstanding balance under the Current Revolving Credit Facility and we were in full compliance with all covenants.

Based on our current business plan and backlog, we believe that our existing cash and cash equivalents, our anticipated cash flows from operations, cash generated from the exercise of employee stock options and purchases under our Employee Stock Purchase Plan (“ESPP”), along with the availability of funds under the Current Revolving Credit FacilityFacility, will be sufficient to meet our cash needs for working capital, capital expenditures, potential acquisitions, and other contractual obligations for at least the next twelve months. For periods beyond the next twelve months, we also anticipate that our net operating cash flows plus existing balances of cash and cash equivalents will suffice to fund the growth of our business.

Net cash provided by operating activities was $54.5$122.8 million for the threesix months ended MarchJune 31,30, 2026, primarily consisting of operating inflows of $46.2$110.7 million and favorable working capital movements of $8.3$12.1 million. Operating inflows consisted of net income of $11.4$35.6 million, adjusted for non-cash items of $34.8$75.1 million, which consisted primarily of depreciation and amortization expense of $18.6$37.4 million andmillion, share-based compensation expense of $9.5$21.7 million, and a change in deferred income taxes of $10.9 million. The favorable working capital was primarily due to an increase in deferred revenues of $40.3$13.1 million, driven primarily by an increase in billings for certain technical services, SaaS and Expert Services, and connected devices offerings, and an increase in accounts payable of $16.2$7.2 million primarily due to an increase in inventory spend andthe timing of payments.payments, a decrease in inventories of $4.2 million, and a decrease in investment in sales-type leases of $4.0 million. These cash inflows were partially offset by an increase in accounts receivable and unbilled receivables of $33.3$10.2 million primarily due to the timing of billings, shipments, and collections andcollections, a decrease in accruedoperating compensationlease liabilities of $10.8$6.0 millionmillion, primarilyand duean toincrease thein timingother current assets of employee$5.1 bonuses and commissions, as well as ESPP purchases.million.

Net cash provided by operating activities was $25.9$68.7 million for the threesix months ended MarchJune 31,30, 2025, primarily consisting of operating inflows of $22.6$63.0 million and favorable working capital movements of $3.3$5.7 million. Operating inflows consisted of a net loss of $7.0$1.4 million, adjusted for non-cash items of $29.6$64.4 million, which consisted primarily of depreciation and amortization expense of $20.0$39.6 million and share-based compensation expense of $10.8$21.3 million. The favorable working capital was primarily due to an increase in deferred revenues of $20.2 million, driven primarily by an increase in billings for certain technical service and SaaS and Expert Services offerings, and a decrease in accounts receivable and unbilled receivables of $5.5$25.9 million,million primarily due to the timing of billings, shipments, and collections.collections, Thean increase in deferred revenues of $15.1 million, due to the timing of billings and customers’ installation schedules, and an increase in accounts payable of $10.7 million primarily due to an increase in inventory spend and timing of payments. These cash inflows were partially offset by an increase in inventories of $15.9 million to support production requirements, including advanced purchases of certain components, a decrease in accrued liabilities of $14.9 million primarily due a decrease in taxes payable, a decrease in accrued compensation of $14.2$8.6 million,million primarily due to thea timingdecrease in accrued employee bonuses and commissions, and a decrease in operating lease liabilities of bonus$5.8 payments, as well as ESPP purchases.million.

Net cash used in investing activities was $15.9$28.4 million for the threesix months ended MarchJune 31,30, 2026, which consisted primarily of capital expenditures of $12.4$21.4 million for property and equipment.equipment and $7.0 million for external-use software development costs.

Net cash used in investing activities was $15.7$31.7 million for the threesix months ended MarchJune 31,30, 2025, which consisted primarily of capital expenditures of $11.2$23.0 million for property and equipment.equipment and $8.7 million for external-use software development costs.

Net cash providedused byin financing activities was $2.4$21.0 million for the threesix months ended MarchJune 31,30, 2026, primarily due to $7.8a net change in the customer funds balances of $23.9 million, partially offset by $7.9 million in proceeds from employee stock option exercises and ESPP purchases.

Net cash providedused byin financing activities was $4.0$7.4 million for the threesix months ended MarchJune 31,30, 2025, primarily due to $15.7 million paid for repurchases of shares of our common stock, partially offset by $8.3 million in proceeds from employee stock option exercises and ESPP purchases.

There have been no significant changes during the threesix months ended MarchJune 31,30, 2026 to the contractual obligations disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” set forth in Part II, Item 7, of our Annual Report on Form 10-K for the year ended December 31, 2025.

Contractual obligations as of MarchJune 31,30, 2026 were as follows: