Randy Lipps – Exec. Chairman, CEO and Pres Rob Seim – Chief Financial Officer and VP of Fin.

Glenn Garmont – Broadpoint Capital Eugene Goldinberg– BB&T Capital Markets Tom Gallucci – Merrill Lynch Sean Wieland – Piper Jaffray Alan Fishman – Thomas Weisel Partners Greg Stalsberg – Craig-Hallum Capital Leo Carpio – Caris & Company

Welcome to the Omnicell Fourth Quarter results conference call. Joining me today is Randall Lipps, Omnicell President and CEO.

You can find the results in the Omnicell Fourth Quarter Press Release posted in the Investor Relations section of our website at www.omnicell.com. This call will include forward-looking statements subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied.

For a more detailed description of the risks that impact these forward-looking statements, please refer to the information under the heading "Risk Factors", and under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operation", and the “Omnicell Annual Report” on Form 10-K filed with the SEC on March 23, 2007, as well as more recent filings with the SEC. Please be aware that you should not place undue reliance on any forward-looking statements made today.

The date of this conference call is January 31, 2008 and all forward-looking statements made on this call are made based on Omnicell's beliefs as of this date only. Future events or simply the passage of time may cause these beliefs to change.

Finally, this conference call is the property of Omnicell Incorporated and any taping or duplication or rebroadcast without the expressed written consent of Omnicell is prohibited. During the call today, I will start with an overview of the financial results for the quarter and for the full year of 2007 followed by Randy who will cover some of the quarter’s business highlights.

I will then discuss Omnicell’s guidance for 2008, after that, we will open the call for your questions. The fourth quarter of 2007 finished up a very strong year for Omnicell.

We posted record revenues and record profits again. The results of our sales and operations in Q407 met analyst consensus expectations in $0.28 per share including absorbing a modest net loss from our Rioux mobile cart product line acquired in December 2007.

As we have said several times, capital equipments business can be lumpy and this quarter, we did see a decline in our product backlogs of $3.6 million. Product order backlog now totals $137 million which including Rioux is a little more than 2.5 quarters of forward-looking revenue.

The mobile cart business that we acquired in Q4 operates with virtually no backlogs, which reduces the months of backlog metrics for us about half a month. As we have said before, our stated objective is to maintain backlogs between six to nine months of forward revenue.

Over the past several years, we have changed our business model property from backlog and this has allowed us to install on our customer schedule and to improve the installation experience. This also allowed us some stability in our financial performance when capital equipment orders are lumpy, and Q4 was one of those quarters.

We would like to note that we did not see any particular weakness or slow down in any product line or customer segment of our business. A few customers experienced challenges in obtaining credit, which has since been overcome.

We did not see any change in competitive pressures during the quarter, nor did we experience any degradation of pricing or other business terms during Q4. We have seen a very strong start in Q108 and we believe our momentum has not changed, in fact, momentum was corporate multi-hospital organizations continued to be strong.

New customers accounted for 30% of our bookings in Q4 comprised with a combination of competitive convergence in Greenfield accounts. Greenfield accounts are those customers installing automation for the first time.

In Q4, about two-thirds of the new business mix came from competitive wins. The dollar value of those wins is very consistent with prior quarters.

We do anticipate backlogs to continue to grow overtime, based on our pipeline for sales during 2008 and our revenue guidance, we expect product backlog at the end of 2008 beyond the range of $160 million to $170 million. As in previous quarters, we have continued to add customer installation and support staff to handle the growth in our sales to new customers.

We typically require longer installation cycles and to support our increased install base. During Q4, we grew to 749 employees on the base business and added 57 employees in the Rioux acquisition bringing our total regular staff to 806.

The traditional staff will help us in achieving our goals providing the best customer experience in the healthcare industry. We expect to continue to grow our overall staffing by about 20% throughout 2008.

Now, I would like to discuss our fourth quarter financial performance. I will first discuss our financial performance in accordance with generally accepted accounting principles with year-to-year comparison.

Revenue for the fourth quarter of fiscal 2007 was $57.9 million up 34% year-over-year and at 5% in the third quarter of 2007. Our GAAP basis gross margins were roughly flat quarter to quarter at 53.5% inclusive of stock compensation expense.

This is down from 56% in Q4 of last year and is driven primarily by a shift of allocated expenses from opex to cogs which had no effect on overall profitability. Operating expenses were $25.3 million including stock compensation expenses.

Operating expenses increased $4.9 million or 24% from $20.4 million in Q4 2006. The growth in operating expenses is consistent with our practice over the last 24 months of growing our expenses at a slower rate than our revenue growth.

Debt earnings includes a very large one time benefit associated with the partial release of the reserve against our deferred tax assets totaling $7 million. The deferred tax assets or the future tax benefits of net operating loss carry forwards and the other timing differences between cash and book taxes.

We took a one time partial release in the allowance against our deferred tax assets in our fiscal Q207 also, which provided a $12.8 million profit benefit or $0.39 share in that quarter. After releasing that allowance in Q2, we still have $13 million allowance remaining against our deferred tax assets, which we carry because of the variability in our historical profit levels.

Our consistent profit growth has continued to indicate that a full reserve is no longer warranted. In Q4, we released the remaining allowance associated with net operating loss carry forwards.

With this one time adjustment, our net earnings after taxes are $14.5 million or $0.40 per share in Q4 07. Included in this number is the tax benefit, which represents $0.19 per share.

This release has been contemplated in our tax rate guidance for the past year and will not change our tax rate guidance for 2008. The deferred tax assets are still available to offset cash and tax payments for 2008.

For the full year of 2007, revenue was $213.1 million up 38% from $154.7 million in 2006. Gross margin was 53.2% in 2007 compared to 55.3% in 2006.

Operating expenses were $94.8 million in 2007 up from $76.3 million in 2006. Net earnings were $43.5 million which included $19.8 million benefit from release of allowances against deferred tax assets.

2006 net earnings were $10.4 million. In 2007, the earnings per share were $1.29 and included $0.59 of tax benefit.

2006 earnings per share were $0.36 per share. Now, I would like to cover our non-GAAP results excluding stock compensation expenses and excluding the tax benefits in Q2 and Q4 and we will cover non-GAAP gross margins, operating expenses and earnings per share.

For each of discussions, the only adjustment to GAAP results is the exclusion of stock compensation expense and the tax benefit. Stock compensation expense included estimated future value of employee stock options, restricted stocks and our employee stock purchase plan.

The stock compensation expense is a non-cash expense. We use financial statements internally to exclude stock-based compensation expense in order to measure some of our operating results.

We use these statements in addition to GAAP financial statements. We feel it is useful for investors to understand the non-cash stock compensation expenses.

They are our components of our reported results. A full reconciliation of our GAAP to non-GAAP results is included in our press release and will be posted on our website.

Our non-GAAP gross margin for the fourth quarter of 2007 was 54.1% compared to non-GAAP gross margin of 56.7% in the same quarter last year. The business trends were the same as I explained for GAAP gross margins mainly driven by reallocation of cost from opex to components sold.

Our non-GAAP operating expenses were $22.9 million up $4.2 million or 23% from Q4 2006 non-GAAP operating expenses of $18.7 million were driven mainly by headcount growth. In Q4 07, non-GAAP net income was $10.3 million or $0.28 per share which met the analysts’ consensus, this did include a modest net loss from Rioux Vision.

Our Q4 2007 non-GAAP net income was up $4.2 million or 69% year-to-year from Q4 2006 non-GAAP income of $6.1 million. This is an increase of $0.08 per share year-to-year.

For the full year of 2007, non-GAAP gross margins were 53.9% compared to 56% in 2006. Non-GAAP operating expenses were $85.4 million, up from $69.3 million in 2006.

Non-GAAP net earnings were $34.5 million or $1.02 per share. 2006 non-GAAP net earnings were $18.5 million or $0.64 per share.

2007 was a very positive year for growth and revenue and profit. We have noticed that analysts who follow us deploy a variety of definitions of EBITDA or earnings before interest taxes, depreciation and amortization excludes non-cash expenses and focuses on operating results.

We are conforming the definition of EBITDA as earnings that exclude all tax expenses and tax benefits, all interest expenses and interest income, all depreciation and amortization including the exclusion of stock compensation amortization. The primary change in the definition we are deploying is the exclusion of interest income.

EBITDA for Q4 07 was $9.9 million compared to $9.1 million in Q3 07 and $6.9 million in Q4 of 2006. This is an increase of 9% sequentially and 44% from a year ago.

For the full year of 2007, EBITDA was $34 million, a 55% growth. Our cash and short term investments were $170 million at the end of Q4 2007, a decrease of $6 million from the third quarter of 2007.

During the quarter, we used $26 million in the purchase of Rioux Vision. This was offset by $2 million cash generated from stock option exercises and $18 million provided by the results of operations.

In Q3 07, we have a significant increase in day sale outstanding associated with a low mix of leases installed in the quarter. In Q4, our lease mix returned to more normal levels and in addition, we had improved cash collection quarter resulting in DSO of 61 days.

The decreasing DSO is purely a result of cash collection efforts, installation was very linear throughout Q4 and there were no reduction in installation rates during December. Finally, our inventories were $13.7 million and included an increase associated with the Rioux acquisition of $1.7 million and a decrease in all of other products of $0.7 million.

I would like to now turn the call over to Randy to provide an update on the business.

Thanks for joining us today. In Q4 2007, Omnicell announced two significant product additions at the American Society of Health System and Pharmacist meeting, an industry leading conference attracting more than 15,000 pharmacists.

Enthusiasm and momentum for our solutions were demonstrated by a substantial growth and the number of private demonstrations we hosted for current and potential multi-hospital customers. Our announcements at the meeting included a SinglePointe, which is the industry’s first medication management software that allows nursing and pharmacist staff to store, manage and track up to 100% of patient’s medications in an automated point of use medication dispensing system.

Today, medication dispensing systems typically stock drugs that represent about 80% of the medications used in an acute care facility. The addition of SinglePointes closes the remaining 20% gap, the SinglePointe software feature dynamically assigns medications to specific locations in the dispensing system on a patient-specific basis including infrequently used medications, multi used drugs and patient’s drugs brought from home.

With the SinglePointe solution, dangerous and inefficient manual processes in worker realms can be virtually eliminated. Also at the conference in Q4 07, we announced the acquisition of Rioux Vision and the addition of mobile cart technology to our product line.

The Rio cart technology which includes medication control modules integrates into the bed side point of care environment enabling nurses to have easy access to patient records and automate record keeping of the patient care process. During 2008, Omnicell intends to integrate the mobile cart technology with our medication control software including the SinglePointe solution to create a medication management system that will seamlessly flow from the automated dispensing system to the mobile cart and eventually to the bed side.

The addition of patient specific medication management software in a mobile cart will significantly extend the Omnicell product line and is intended to provide a hardware and software platform for up to 100% control of the medications to the patient’s bedside. Integrated, they make a brand new product that does not exist in the market place today.

Our momentum in the marketplace continues from 2006 through all of 2007. During 2007, we added one new account on average every three days to the Omnicell family of customers and the second half of 2007, we signed a record number of contracts with multi-hospital systems including organizations such as the Jackson Health System in Miami, Florida, Adventist Health System West, the Tenet Health Care Corporation, Methodist Le Bonheur Healthcare in Tennessee, Western North Carolina Health Network, and Hospital Partners of America.

With these new contracts, these large customer organizations should provide new business for years to come. Our customer base continues to be healthy, with nearly 85% of hospitals planning to expand services and facilities within the next two years, this is according to the recent 2007 Acute Care Market Report from the Health Industry Distributors Association.

Also, INPUT, a provider of government procurement and market information, recently predicted that state and local government healthcare technology spending will reach nearly $11 billion by 2012 that is up from $6.9 billion in 2007. The trends we have seen, and continue to see, make us very optimistic about the future of Omnicell and the improvements we can make to patient safety and care.

We have invested during 2007 to provide the best customer experience in healthcare. We have invested in bringing some of the industry’s most advanced products to the market.

And we go to great lengths to make sure that they work in each unique hospital environment. Our customers’ success is our success.

We enter 2008 with a robust pipeline and a strong revenue growth plan. Two and one half quarters of product revenue in backlog give us visibility and stability.

I am very confident of our future at Omnicell.

There are several changes will affect our business results in 2008, all of which have been included in our previous guidance, I would like to go over them here, first, we will be more fully taxed during 2008 and we expect the effective tax rate on GAAP earnings to be 38%. Secondly, our financial results will include the effects of our recent acquisition of Rioux Vision.

We expect the contribution from Rioux mobile cart technologies to be skewed to the latter part of the year when we intend to deliver the first version of the cart integrated with Omnicell software. We remain comfortable with our previous guidance of revenue growth to the level of $267 million to $273 million including mobile carts, which is 25% to 28% growth from 2007.

As mentioned earlier, we expect product backlog to be between $160 million and $170 million at the end of 2008. We are still on track to meet 15% operating margins on our core business in Q2 2008, but, as we previously guided, the addition of the Rioux acquisition will be dilutive in 2008.

Including Rioux we expect to be at or near 13% operating margins in Q2. We expect to achieve 15% operating margins for the entire business in 2009 when Rioux becomes accretive to earnings.

We are also reconfirming our guidance of $0.85 to $0.88 non-GAAP EPS during 2008. We expect the dilutive effect of Rioux to be greatest in Q1.

We expect revenues for Q1 of approximately $61 million and non-GAAP EPS of approximately $0.18 per share. I would like to now open the call to questions.

Thanks for the detail and the color around the backlog. I was a little surprised that it was down sequentially just simply given that the fourth quarter is historically very strong from a new sales perspective.

Can you provide us maybe a bit more detail? Did you have a cancellation?

I understand the business is lumpy, I guess, I was expecting just a little bit more in the backlog and then secondarily, with respect to your backlog guidance for the year of $160 to $170, could you walk through maybe sort of your process for coming up with that number.

Well, as we have stated before, our sales cycle is very long. It is very often that the sales cycle can be anywhere from six months to two years and sometimes, it feels close in the regular fashion and sometimes, things slip, so what we see looking at our sales pipeline right now is that it looks strong as it ever was.

We are comfortable with the guidance that we gave last quarter about our growth going into 2008. Now, Q4, we did not have as many deals closed as we would have needed to raise the backlog, but we are not really concerned about the long term effect of that and like I said, it is kind of lumpy.

As far as the backlog guidance for the end of 2008, as we said, we are going to be reporting backlog annually. We are going to give good flavor on where we see that coming in.

We have some pretty good visibility not only the customers that have already placed orders and are likely to order more, but new customers that are in the pipeline also, and since the deals do take quite some time to close and we have a pretty good idea of business for some time to come, and so clearly, every quarter, part of our process is to thoroughly examine what we have got in our pipeline and try to understand as best as possible so we can give guidance in this quarter with no difference, so once we do that, we are very comfortable with where we are going in the future.

Just a quick question, a little bit more in the backlog, is it more because some deals perhaps pushed or did not close in Q4 or is it the fact that your headcount growth is allowing you to recognize more revenue from the backlog?

Well, the headcount growth that we have put in place allows us to continue to recognize revenue at the kind of the growth rates that we were expecting. Q4 with a little bit higher revenue than we had guided to, but it was still pretty close to the range.

Really, what happened during the quarter like I said, the business is just kind of lumpy. A lot of our deals in the capital equipment, our deals are typically soar a hundred thousand dollars, a lot of the new deals can be multiple hundreds or multiple millions of dollars, so you see in the new business that we talked about each quarter, so that kind of fluctuates within the range of 30% to 50% and there will be fluctuations in the overall order rates too.

One more follow up and more of a modeling question, for stock based comp, are your expectations still about $2.5 million to $2.7 million and declining going forward?

I am sorry, for what?

For stock based comp?

Stock based comp, yes. We have been running it about $2.7 million per quarter.

So we are still kind of on the path of doing that until some of the amortization and older options burn off.

Maybe just two quick questions, the first is on the backlog, did you think about that growth. It looks like you are expecting maybe 20% growth in the backlog from year-to-year which I guess is similar to actually where it was from the end of ’06 to the end of ’07.

When you go and you project that, you just talked about customers and potential new business, are you expecting a similar, I guess, percentage from competitive wins versus Greenfield? Is there any difference to the mix that you might expect over time as either you mature or the industry matures a little bit or is it pretty steady where the business is coming from in your expectations?

Well the pipeline that we can see kind of immediately over the next year, it looks like it is about the same mix of business. Certainly, I would expect as you said as the industry matures over time, there will be fewer and new customers that have an installed automation, but the immediate pipeline looks like it is about the same mix.

And then just I guess two questions on acquisitions, one, you mentioned the bigger dilution earlier from the deal that you have done, so maybe can you just give us a little more granularity is there some cost cutting that happened or is there an extra cost that diminished and then of course the sales to kick in at some point and then on the acquisition front, generally, remind us again where you sort of stand on doing the next deal or how you might spend some of that cash that you still have?

Well, the Rioux cart business that we acquired is an existing business. We have over 200 customers and it is a very interesting product with a lot of functionality for hospitals, but we are actually going to significantly expand that product as we have talked about with the addition of our software essentially creating a new product in the marketplace.

When you add our software in all the medication control functionalities our software provides on to the cart, it becomes a combination of hardware and software platform that garners higher margins and higher price and what we expect is that in the latter half of 2008 to have that product into the marketplace and that is what we will be driving higher revenues and start to move the business to be accretive. As far as other acquisitions, well, we have just done one and we are certainly going to take some time to make sure that that is fully integrated and working well inside the company before we jump into another one, but we continue to run our normal process of assessing other technologies that exist in the marketplace that is ongoing and has not stopped and when the time is right and the technology is right, we will make moves.

Can you comment on any changes you have seen in the competitive landscape specifically with Cerner shipping and cabinets this past quarter and anything going on with Texas?

Yes, at this most recent trade show, let me just cover Texas, there were no new product announcements and so we have seen no impact or change in sort of the competitive landscape which is where we compete mostly, and while we understand there is some Cerner activity, it has not impacted any of our business lines or sales pipeline today. So it is pretty low on the radar.

Could you just a couple of minutes articulate your competitive positioning against Cerner and your competitive positioning against Texas?

Well, I think the major difference is this is the only business we do, so we focus on delivering, not only a great product but also a great product experience. It is a lot of risk that goes into implementing systems in the hospitals and we want to mitigate that risk, and so by focusing on this one area of sweet spot in hospitals if they want to address the medication issue, they want to put in a system that can easily be installed and be easily modified to meet their specific needs.

And so we think our system fits that profile the best. As well as, we have been competing with other companies like McKesson who has an automated box that goes on with their software systems and we compete very well against them.

In fact, I do not know the exact numbers, but I am sure we are more than McKesson hospitals with their software than they are with their system, so, we competed very well against HIS companies that have offerings in this area.

I just had a quick question around the tax rate guidance that you are providing. A non-GAAP EPS guidance, would you please give us some idea of what the tax rate should be for a non-GAAP number?

Well the tax dollars that will be in the provision are the same for the GAAP and the non-GAAP, so 38% GAAP tax rates though non-GAAP number equates typically in the 30% range.

A couple of quick questions, Rob, you mentioned part of the bookings for this quarter may have been challenged by some customers that had a difficult time obtaining credit, can we get a little more color on that? It sounds like it has been resolved, but I guess, why were there problems and how was it exactly resolved and what do you see going forward in that respect?

Well, every quarter there are individual customers that have some credit challenges, nothing really different about that, the top goals are in pretty good shape financially, but some have challenges. Usually it works itself out one way or another, we find someone who is willing to finance the hospital or they find someone who is willing to finance the hospital.

Kind of careful not to say that we have seen anything materially different from other quarters, we did have a couple of isolated instances that spilled over the quarter boundaries for Q4 because the deals did not get done because of credit, but I would not say that the overall credit crunch has caused us any big material problems with our customers into having material problems, but of course, we all know that there is a credit crunch in the environment. You see that by looking at the newspaper everyday.

So, right now, it is isolated instances and not really any different than previous quarters.

Regarding SinglePointe, I know customers were pretty fired up about that at the Ashby show, has that been rolled out yet and what do you guys think that means for you from a financial standpoint going forward?

SinglePointe is a feature that we did roll out at the hospital pharmacist show in December and we will be shipping it in the summer. It is contemplated in our forecast.

We believe it features will be very attractive to a lot of customers and we will continue to help us have a competitive differentiation against our other competitors. It is figured into our forecast at this point and I guess it is a great evolution for us.

It is something that we have and others do not have and we are really looking forward to being a part of that product set. One of the things that makes us most excited about is it really makes our systems even safer for the hospitals really.

We think it makes our systems the safest in the market and in addition, we have the other safety features we have and that is everything we can do to help in the patient safety is great news.

My question is regarding acquisitions, did I hear that it sounds like you are going to be taking a pause from acquisitions and besides the pause, are you still looking at the same possible targets that you have mentioned in the past in terms of the three other areas that you have been focused on?

I do not know if we are taking a pause, but I think we have been pretty calculated in how we have been working through the acquisition process since we did our secondary public offering in May of last year. Once we got to that point, we knew where all the acquisition potential technologies were, we went about the process of assessing them.

Rioux seemed to be the best. It is something that was natural to go with our SinglePointe software announcement.

It is natural to extend our platform and that is why we went there first. We are absorbing that company now.

We definitely want to make sure that we do not take our eyes off the ball with the rest of our business while we are bringing Rioux into Omnicell and we are doing that right now, but the rest of our process has not slowed down or stopped. We continue to assess the other technologies and like I said, when we come across one that is the right fit for us, I do not think we will really hesitate bringing that into the company.

I would like to summarize the call by reiterating that our financial performance really comes as a result of our ability to deliver a differentiated customer experience and product solution. Expect continued growth momentum for our business in 2008 and I am very confident we can continue to deliver the medication and supply management solutions that our customers really want.

Thanks for joining us today.