Interview With The VP, Finance, And CFO: Omnicell, Inc. (OMCL) - Rob Seim
October 31, 2011 - The Wall Street Transcript has just published Health Care IT Report offering a timely review of the sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
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Rob Seim is Vice President, Finance, and Chief Financial Officer at Omnicell, Inc. He joined Omnicell in January 2006. Before that, Mr. Seim served as CFO of three early-stage technology companies, including Villa Montage Systems, Inc., a provider of residential broadband access management systems that he cofounded in 1999; Candera, a maker of network-based storage controllers; and Mirra, a vendor of personal backup servers, which was acquired by Seagate Technology LLC. Previously, he held a number of senior financial management positions at Bay Networks, which was acquired by Nortel Networks in 1998. Mr. Seim began his business career in 1982 with International Business Machines Corp., serving in a variety of financial positions at three divisions over 14 years. He has a B.S. in accounting from California State University, Sacramento.
TWST: Omnicell offers medications management and systems as well as supply systems. Would you please explain the company's product offerings in depth?
Mr. Seim: Omnicell's technology is exclusively focused on medication and supply dispensing automation. These are systems that are used in acute care settings, predominantly hospitals but also some long-term health care facilities and surgery centers and other facilities of the like. The systems are comprised of a lot of software and some hardware that dispense medications or medical-surgical supplies. All of the medication administration information is connected back to a central server that can interface with the rest of the health care institutions' information systems, such as electronic health records and computerized physician order-entry software. In some respects, you can think of it like an ATM.
Of course, it's much more complicated than that because there are many more details and variations around drugs than there are around $20 bills, but the general concept is the same. Users have controlled access to the drugs or medical-surgical supplies, which are protected by safety controls provided by Omnicell (OMCL). When the nurse or other user needs to dispense a drug, they access the stock of inventory stored in an automated dispensing machine. If the nurse has the access, he or she can gain entry into the machine and get the medical-surgical supply or the drug they need to administer to the patient at that point in time.
TWST: Another trend in health care is analytics. Does Omnicell play a role in that area as well?
Mr. Seim: Yes, we absolutely do. We've always maintained an analytical database and provided reports to clinicians that help them understand the efficiency of the stock that they are keeping. These reports help them make sure that they have all the right drugs or medical-surgical supplies that are necessary for the hospital to run, but not have too many of them. They also help clinicians understand the costs of their operations and help them understand if anybody happens to be diverting or stealing drugs. We have quite a few reporting packages and capabilities in our systems, but we also have a specific reporting package that's called PandoraVIA. PandoraVIA runs both on our systems and all our major competitors' systems and it provides more advanced inventory control and analytics.
TWST: Does greater penetration of U.S. markets remain a major goal for Omnicell, and how have you had success over the past year in that area?
Mr. Seim: Yes, absolutely. In fact, our strategy has not changed. All three of the growth drivers, penetration of our existing markets, international growth, and expansion of our product lines through both organic growth and M And A remain our key strategies. In terms of increased penetration in the existing markets, we've actually done quite a lot of investment during the whole downturn over the last couple of years in order to differentiate ourselves to firmly penetrate that existing market.
Today in the market, most health care institutions have some medication-control systems, but they don't have these systems in all the places inside their facilities. Eventually, they will have those systems throughout the facility. The market currently is only about 60% penetrated, so whenever you walk into a hospital, you will find our type of medication control systems in about 60% of the places where you would ideally want to have them. Now, a lot of that has to do with budgets and how fast hospitals move, but eventually there will be 100% penetration. In order to further penetrate the market and even take some market from our competitors, we have invested in this whole product line refresh, or upgrade, that I talked about with the G4 platform.
TWST: In addition to the new platform, what are some of the other highlights for Omnicell over the past year?
Mr. Seim: One of the biggest highlights besides all those products is that we continue to make inroads in increasing our market share. We consistently take 50 to 75 competitive accounts a year, and we also consistently add 75 to 100 new accounts. Over the last three years, we've added 500 customers to our installed base, which is pretty phenomenal in the health care industry. We believe that's happening because we have differentiated product offerings and we maintain a very consultative process with our customers and very high-touch sales, service and installation processes that we are proud of. We have outstanding records in third-party surveys for our service support. And KLAS, the leading research firm for health care vendors, has honored Omnicell for six consecutive years as category leader in automated medication dispensing units.
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