OMNICELL, INC, 10-Q filed on 8/7/2014
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2014
Aug. 1, 2014
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
OMNICELL, Inc 
 
Entity Central Index Key
0000926326 
 
Document Type
10-Q 
 
Document Period End Date
Jun. 30, 2014 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--12-31 
 
Entity Well-known Seasoned Issuer
No 
 
Entity Voluntary Filers
No 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
35,872,538 
Document Fiscal Year Focus
2014 
 
Document Fiscal Period Focus
Q2 
 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Current assets:
 
 
Cash and cash equivalents
$ 126,379 
$ 104,531 
Accounts receivable, net of allowances of $942 and $490, respectively
82,560 
58,597 
Inventories
31,542 
31,457 
Prepaid expenses
16,739 
18,883 
Deferred tax assets
12,636 
12,635 
Other current assets
6,040 
7,675 
Total current assets
275,896 
233,778 
Property and equipment, net
37,257 
35,254 
Non-current net investment in sales-type leases
10,872 1
11,485 1
Goodwill
111,343 
111,343 
Intangible assets, net
79,561 
81,602 
Non-current deferred tax assets
1,102 
1,102 
Other assets
21,220 
17,937 
Total assets
537,251 
492,501 
Current liabilities:
 
 
Accounts payable
18,965 
16,471 
Accrued compensation
15,694 
19,604 
Accrued liabilities
16,170 
13,746 
Deferred service revenue
21,720 
22,626 
Deferred gross profit
30,745 
19,957 
Total current liabilities
103,294 
92,404 
Non-current deferred service revenue
21,309 
17,763 
Non-current deferred tax liabilities
29,023 
28,162 
Other long-term liabilities
6,004 
5,175 
Commitments and Contingencies (Note 10 and Note 11)
   
   
Stockholders’ equity:
159,630 
143,504 
Stockholders’ equity:
 
 
Total stockholders’ equity
377,621 
348,997 
Total liabilities and stockholders’ equity
$ 537,251 
$ 492,501 
CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Statement of Financial Position [Abstract]
 
 
Accounts receivable, allowances
$ 942 
$ 490 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Revenues:
 
 
 
 
Product revenues
$ 85,244 
$ 75,581 
$ 167,824 
$ 144,817 
Services and other revenues
19,808 
18,105 
38,992 
35,979 
Total revenues
105,052 
93,686 
206,816 
180,796 
Cost of revenues:
 
 
 
 
Cost of product revenues
41,003 
36,286 
79,903 
69,833 
Cost of services and other revenues
8,009 
8,032 
16,378 
16,228 
Total cost of revenues
49,012 
44,318 
96,281 
86,061 
Gross profit
56,040 
49,368 
110,535 
94,735 
Operating expenses:
 
 
 
 
Research and development
6,471 
7,150 
12,592 
15,104 
Selling, general and administrative
37,011 
32,859 
75,431 
66,104 
Total operating expenses
43,482 
40,009 
88,023 
81,208 
Income from operations
12,558 
9,359 
22,512 
13,527 
Interest and other income (expense), net
(40)
63 
(296)
(159)
Income before provision for income taxes
12,518 
9,422 
22,216 
13,368 
Provision for income taxes
4,729 
3,406 
8,233 
3,967 
Net income
$ 7,789 
$ 6,016 
$ 13,983 
$ 9,401 
Net income per share:
 
 
 
 
Net income per share-basic (in dollars per share)
$ 0.22 
$ 0.17 
$ 0.39 
$ 0.28 
Net income per share - diluted (in dollars per share)
$ 0.21 
$ 0.17 
$ 0.38 
$ 0.27 
Weighted average shares outstanding:
 
 
 
 
Basic (in shares)
35,661 
34,450 
35,451 
34,177 
Diluted (in shares)
36,618 
35,374 
36,478 
35,099 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net income
$ 7,789 
$ 6,016 
$ 13,983 
$ 9,401 
Other comprehensive income:
 
 
 
 
Changes in fair value of foreign currency forward contract
0 
0 
0 
(65)
Foreign currency translation adjustment
87 
5 
119 
(198)
Other comprehensive income (loss)
87 
5 
119 
(263)
Comprehensive income
$ 7,876 
$ 6,021 
$ 14,102 
$ 9,138 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Cash flows from operating activities:
 
 
Net income
$ 13,983 
$ 9,401 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
9,391 
9,244 
Loss on disposal of fixed assets
202 
141 
Impairment of software development costs
0 
1,759 
Provision for receivable allowance
436 
63 
Share-based compensation expense
5,449 
5,613 
Income tax benefits from employee stock plans
3,058 
739 
Excess tax benefits from employee stock plans
(3,326)
(1,258)
Provision for excess and obsolete inventories
250 
742 
Deferred income taxes
860 
(258)
Changes in operating assets and liabilities:
 
 
Accounts receivable, net
(24,408)
(8,757)
Inventories
(335)
(199)
Prepaid expenses
2,144 
(536)
Other current assets
1,602 
94 
Non-current net investment in sales-type leases
622 
160 
Other assets
228 
(129)
Accounts payable
2,494 
(796)
Accrued compensation
(3,910)
(374)
Accrued liabilities
2,424 
2,065 
Deferred service revenue
2,640 
(1,294)
Deferred gross profit
10,788 
4,578 
Other long-term liabilities
829 
230 
Net cash provided by operating activities
25,421 
21,228 
Cash flows from investing activities:
 
 
Acquisition of intangible assets and intellectual property
(191)
(64)
Software development for external use
(5,507)
(3,194)
Purchases of property and equipment
(7,335)
(5,711)
Net cash used in investing activities
(13,033)
(8,969)
Cash flows from financing activities:
 
 
Proceeds from issuances under stock-based compensation plans
11,813 
11,549 
Employees' taxes paid related to restricted stock units
(1,729)
0 
Common stock repurchases
(4,069)
0 
Excess tax benefits from employee stock plans
3,326 
1,258 
Net cash provided by financing activities
9,341 
12,807 
Effect of exchange rate changes on cash and cash equivalents
119 
(45)
Net increase in cash and cash equivalents
21,848 
25,021 
Cash and cash equivalents at beginning of period
104,531 
62,313 
Cash and cash equivalents at end of period
$ 126,379 
$ 87,334 
Organization and Summary of Significant Accounting Policies
Organization and Summary of Significant Accounting Policies
Organization and Summary of Significant Accounting Policies
 
Description of the Company. Omnicell, Inc. ("Omnicell," "our," "us," "we," or the "Company") was incorporated in California in 1992 under the name Omnicell Technologies, Inc. and reincorporated in Delaware in 2001 as Omnicell, Inc. Our major products are automated medication supply control systems and medical adherence solutions which are sold in our principal market, which is the healthcare industry. Our market is primarily located in the United States and Canada.

Basis of presentation. These interim condensed consolidated financial statements are unaudited but reflect, in the opinion of management, all adjustments, consisting of normal recurring adjustments and accruals, necessary to present fairly the financial position of Omnicell and our subsidiaries as of June 30, 2014, the results of our operations and comprehensive income for the three and six months ended June 30, 2014 and 2013 and our cash flows for the six months ended June 30, 2014 and 2013. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2013.
 
Our results of operations, comprehensive income for the three and six months ended June 30, 2014 and cash flows for the six months ended June 30, 2014 are not necessarily indicative of results that may be expected for the year ending December 31, 2014, or for any future period. 

Use of estimates. GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management's best knowledge of current events and actions that may impact the company in the future, actual results may be different from the estimates. Our critical accounting policies are those that affect our financial statements materially and involve difficult, subjective or complex judgments by management. Those policies are revenue recognition, share-based compensation, inventory valuation, valuation of goodwill and purchased intangibles, valuation of long-lived assets and accounting for income taxes.
 
Principles of consolidation. The condensed consolidated financial statements include the accounts of our wholly-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.

Concentration of credit risk. Financial instruments that may potentially subject us to concentrations of credit risk consist principally of cash equivalents and accounts receivable. Cash equivalents are maintained with several financial institutions and may exceed the amount of insurance provided on such balances. The majority of our accounts receivable are derived from sales to customers for commercial applications. We perform ongoing credit evaluations of our customers’ financial condition and limit the amount of credit extended when deemed necessary but generally require no collateral. We maintain reserves for potential credit losses. Our products are broadly distributed and there was no single customer accounting for 10% or more of revenues in the three and six months ended June 30, 2014 and 2013. Additionally, there was no single customer accounting for 10% or more of accounts receivable at June 30, 2014 or December 31, 2013. We believe that we have no significant concentrations of credit risk at June 30, 2014.

Dependence on suppliers. We have a supply agreement with one primary supplier for construction and supply of several sub-assemblies and inventory management of sub-assemblies used in our hardware products. There are no minimum purchase requirements. The contract may be terminated by either the supplier or by us without cause and at any time upon delivery of two months’ notice. Purchases from this supplier for the three months ended June 30, 2014 and 2013 totaled approximately $8.3 million and $6.7 million, respectively, and $17.2 million and $13.9 million for the six months ended June 30, 2014 and 2013, respectively.

There have been no material changes in our significant accounting policies as of and for the three and six months ended June 30, 2014, compared to the significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2013.

Recently Adopted Accounting Standards
In July 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU 2013-11 requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. We adopted the amendments in ASU 2013-11 in the first quarter of 2014. This update did not have a significant impact on our financial position, operating results or cash flows.
Recently Issued Accounting Standards

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers: Topic 606. ASU 2014-09 supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. Companies may use either of two methods: (i) full retrospective application to each prior reporting period presented with the option to elect certain practical expedients defined within ASU 2014-09; or (ii) modified retrospective application with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09. ASU 2014-09 is effective for us in the first quarter of 2017 and we are currently evaluating the impact of our pending adoption on our consolidated financial statements.
Net Income Per Share
Net Income Per Share
Net Income Per Share
 
Basic net income per share is computed by dividing net income for the period by the weighted average number of shares outstanding during the period, less shares subject to repurchase. Diluted net income per share is computed by dividing net income for the period by the weighted average number of shares, less shares subject to repurchase, plus, if dilutive, potential common stock outstanding during the period. Potential common stock includes the effect of outstanding dilutive stock options, restricted stock awards and restricted stock units computed using the treasury stock method. Since their impact is anti-dilutive, we excluded 353,422 and 366,021 shares, respectively, from the calculations of diluted net income per share for the three and six months ended June 30, 2014 and 1,346,561 and 1,581,335 shares, respectively, from the same calculations for the three and six months ended June 30, 2013.
 
The calculation of basic and diluted net income per share is as follows (in thousands, except per share amounts):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Basic:
 

 
 

 
 
 
 
Net income
$
7,789

 
$
6,016

 
$
13,983

 
$
9,401

Weighted average shares outstanding — basic
35,661

 
34,450

 
35,451

 
34,177

Net income per share — basic
$
0.22

 
$
0.17

 
$
0.39

 
$
0.28

Diluted:
 

 


 
 
 
 
Net income
$
7,789

 
$
6,016

 
$
13,983

 
$
9,401

Weighted average shares outstanding — basic
35,661

 
34,450

 
35,451

 
34,177

Add: Dilutive effect of employee stock plans
957

 
924

 
1,027

 
922

Weighted average shares outstanding — diluted
36,618

 
35,374

 
$
36,478

 
35,099

Net income per share — diluted
$
0.21

 
$
0.17

 
$
0.38

 
$
0.27

Cash and Cash Equivalents and Fair Value of Financial Instruments
Cash and Cash Equivalents and Fair Value of Financial Instruments
Cash and Cash Equivalents and Fair Value of Financial Instruments
 
Cash and cash equivalents consist of the following significant asset investment classes as of June 30, 2014 and December 31, 2013 (in thousands):

 
June 30, 2014
 
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
 
Cash / Cash
Equivalents
 
Security
Classification
Cash
$
68,333

 
$
—

 
$
—

 
$
68,333

 
$
68,333

 
N/A
Money market fund
58,046

 
—

 
—

 
58,046

 
58,046

 
Available for sale
Total cash and cash equivalents
$
126,379

 
$
—

 
$
—

 
$
126,379

 
$
126,379

 
 

c
December 31, 2013
 
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
 
Cash / Cash
Equivalents
 
Security
Classification
Cash
$
38,823

 
$
—

 
$
—

 
$
38,823

 
$
38,823

 
N/A
Money market fund
65,708

 
—

 
—

 
65,708

 
65,708

 
Available for sale
Total cash and cash equivalents
$
104,531

 
$
—

 
$
—

 
$
104,531

 
$
104,531

 
 

 
The money market fund is a daily-traded cash equivalent with a price of $1.00, making it a Level 1 asset class, and its carrying cost closely approximates fair value. As demand deposit (cash) balances vary with the timing of collections and payments, the money market fund can cover any surplus or deficit, and thus is considered available-for-sale. We did not hold any Level 2 and Level 3 assets or liabilities as of June 30, 2014 and December 31, 2013.
    
The following table shows our financial assets measured at fair value, on a recurring basis, with money market funds recorded within cash and cash equivalents (in thousands):
 
Quoted Prices in Active
Markets for Identical
Instruments
 (Level 1)
 
Total Fair
Value
Money market fund at June 30, 2014
$
58,046

 
$
58,046

Money market fund at December 31, 2013
$
65,708

 
$
65,708

Inventories
Inventories
Inventories
 
Inventories consist of the following (in thousands):
 
June 30,
2014
 
December 31,
2013
Raw materials
$
11,197

 
$
10,765

Work in process
745

 
534

Finished goods
19,600

 
20,158

Total
$
31,542

 
$
31,457

Property and Equipment
Property and Equipment
Property and Equipment
 
Property and equipment consist of the following (in thousands):
 
June 30,
2014
 
December 31,
2013
Equipment
$
41,876

 
$
40,180

Furniture and fixtures
5,609

 
5,260

Leasehold improvements
8,070

 
7,394

Purchased software
25,173

 
20,199

Construction in process
2,142

 
2,649

Total property and equipment
82,870

 
75,682

Accumulated depreciation and amortization
(45,613
)
 
(40,428
)
Total property and equipment, net
$
37,257


$
35,254


 
Depreciation and amortization of property and equipment was approximately $2.7 million and $2.9 million for the three months ended June 30, 2014 and 2013, respectively, and $5.2 million and $5.6 million for the six months ended June 30, 2014 and 2013, respectively.
Net Investment in Sales-Type Leases
Net Investment Sales-Type Leases Disclosure
Net Investment in Sales-Type Leases
 
Our sales-type leases are for terms generally up to five years. Sales-type lease receivables are collateralized by the underlying equipment. The components of our net investment in sales-type leases are as follows (in thousands):
 
June 30,
2014
 
December 31,
2013
Net minimum lease payments to be received
$
17,559

 
$
18,172

Less unearned interest income portion
(1,214
)
 
(1,455
)
Net investment in sales-type leases
16,345

 
16,717

Less current portion(1)
(5,473
)
 
(5,232
)
Non-current net investment in sales-type leases(2)
$
10,872

 
$
11,485


 
 
 
 
 
(1)     A component of other current assets. This amount is net of an immaterial allowance for doubtful accounts as of June 30, 2014 and December 31, 2013.
(2)     This amount is net of an immaterial allowance for doubtful accounts as of June 30, 2014 and December 31, 2013.

The minimum lease payments under sales-type leases as of June 30, 2014 were as follows (in thousands):
Remainder of 2014
$
3,137

2015
5,438

2016
4,102

2017
3,154

2018
1,576

Thereafter
152

Total
$
17,559



The following table summarizes the credit losses and recorded investment in sales-type leases, excluding unearned interest (in thousands):
 
Allowance for Credit Losses
 
Recorded Investment
in Sales-type Leases Gross
 
Recorded Investment
in Sales-type Leases Net
Credit loss disclosure for June 30, 2014:
 

 
 

 
 

Accounts individually evaluated for impairment
$
—

 
$
—

 
$
—

Accounts collectively evaluated for impairment
157

 
16,502

 
16,345

Ending balances: June 30, 2014
$
157

 
$
16,502

 
$
16,345

 
 
 
 
 
 
Credit loss disclosure for December 31, 2013:
 

 
 

 
 

Accounts individually evaluated for impairment
$
—

 
$
—

 
$
—

Accounts collectively evaluated for impairment
167

 
16,884

 
16,717

Ending balances: December 31, 2013
$
167

 
16,884

 
$
16,717


 
The following table summarizes the activity for the allowance for credit losses for the investment in sales-type leases (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,

2014
 
2013
 
2014
 
2013
Allowance for credit losses, beginning of period
$
169

 
$
190

 
$
167

 
$
607

Current period provision (reversal)
(12
)
 
6

 
(10
)
 
19

Direct write-downs charged against the allowance
—

 
—

 
—

 
(413
)
Recoveries of amounts previously charged off
—

 
(12
)
 
—

 
(29
)
Allowance for credit losses, end of period
$
157


$
184

 
$
157

 
$
184

Goodwill and Other Intangible Assets
Goodwill and Intangible Assets
Goodwill and Intangible Assets
Goodwill
Goodwill is tested for impairment at least annually or more frequently if events or circumstances indicate that an impairment loss may have occurred, and we write down these assets when impaired. We perform our annual impairment tests during the fourth quarter of each fiscal year using the closing balance sheet as of the last day of the third quarter.
During the six months ended June 30, 2014, we noted no indications of impairment or triggering events to cause us to perform a goodwill impairment analysis.
There were no changes in the carrying amount of goodwill for the period from December 31, 2013 to June 30, 2014. Goodwill by reporting unit, which is the same for our operating segments, is as follows (in thousands):
 
Goodwill at December 31, 2013
 
Adjustments to Goodwill
 
Goodwill at June 30, 2014
Reporting units:
 
 
 
 
 
Automation and Analytics
$
28,543

 
$
—

 
$
28,543

Medication Adherence
82,800

 
—

 
82,800

Total
$
111,343

 
$
—

 
$
111,343


Intangible Assets, net
 
There were no indefinite-lived intangible assets as of June 30, 2014 or December 31, 2013. Finite-lived intangible assets consist of the following (in thousands):
 
June 30, 2014
 
December 31, 2013
 
 
 
Gross
 
 
 
Net
 
Gross
 
 
 
Net
 
 
 
Carrying
Amount
 
Accumulated
Amortization
 
Carrying
Amount
 
Carrying
Amount
 
Accumulated
Amortization
 
Carrying
Amount
 
Amortization
Life
Finite-lived intangibles:
 

 
 

 
 

 
 

 
 

 
 

 
 
Customer relationships
$
54,730

 
$
6,314

 
$
48,416

 
$
54,730

 
$
5,236

 
$
49,494

 
5-30 years
Acquired technology
27,580

 
3,333

 
24,247

 
27,580

 
2,598

 
24,982

 
3-20 years
Patents
1,613

 
319

 
1,294

 
1,493

 
254

 
1,239

 
20 years
Trade name
6,890

 
1,286

 
5,604

 
6,890

 
1,003

 
5,887

 
3-12 years
Non-compete agreements
—

 
—

 
—

 
60

 
60

 
—

 
3 years
Total finite-lived intangibles
$
90,813

 
$
11,252

 
$
79,561

 
$
90,753

 
$
9,151

 
$
81,602

 
 

 
Amortization expense for the intangible assets presented above was $1.1 million for both the three months ended June 30, 2014 and 2013, and $2.2 million and $2.1 million for the six months ended June 30, 2014 and 2013, respectively. The amortization of acquired technology is included within product cost of sales and amortization of other acquired intangibles is included within selling, general and administrative expenses.
Estimated future amortization expense of finite-lived intangible assets are as follows (in thousands):
Remainder of 2014
$
2,127

2015
4,225

2016
3,857

2017
3,822

2018
3,714

Thereafter
61,816

Total
$
79,561

Accrued Liabilities
Accrued Liabilities
Accrued Liabilities
 
Accrued liabilities consist of the following (in thousands):
 
June 30,
2014
 
December 31,
2013
Rebates and lease buyouts
$
4,596

 
$
1,699

Advance payments from customers
3,656

 
4,971

Accrued Group Purchasing Organization (GPO) fees(1)
2,848

 
2,324

Technology license purchase obligation, current portion
500

 
1,500

Taxes payable
2,719

 
1,664

Other
1,851

 
1,588

Total
$
16,170

 
$
13,746

 

(1) Fees paid pursuant to GPO agreements. Customers who buy our products pursuant to a GPO agreement obtain pre-negotiated contract terms and pricing.
Deferred Gross Profit
Deferred Gross Profit
Deferred Gross Profit
 
Deferred gross profit consists of the following (in thousands):
 
June 30,
2014
 
December 31,
2013
Sales of medication and supply dispensing systems and packaging equipment(1)
$
40,748

 
$
29,040

Cost of revenues, excluding installation costs
(10,003
)
 
(9,083
)
Deferred gross profit
$
30,745

 
$
19,957



(1) Sales that have been delivered and invoiced and not yet installed, or sales that have been shipped and not invoiced and not yet installed.
Commitments
Commitments
Commitments

We lease properties in California, Florida, Illinois, Tennessee, and the United Kingdom. We also have smaller rented offices in Ohio, the United Arab Emirates, the People's Republic of China and the Federal Republic of Germany.
 
At June 30, 2014, the minimum payments under our operating leases for each of the five succeeding fiscal years were as follows (in thousands):
Remainder of 2014
$
2,926

2015
5,583

2016
5,167

2017
4,468

2018
4,298

Thereafter
16,600

Total
$
39,042

 
We purchase components from a variety of suppliers and use contract manufacturers to provide manufacturing services for our products. During the normal course of business, we issue purchase orders with estimates of our requirements several months ahead of the delivery dates. Our near-term commitments to our contract manufacturers and suppliers totaled $11.3 million as of June 30, 2014.
Contingencies
Contingencies
Contingencies
 
Legal Proceedings

We may from time to time become involved in certain legal proceedings in the ordinary course of business. We are not a party to any legal proceedings that management believes may have a material impact on Omnicell's financial position or results of operations.

Guarantees
As permitted under Delaware law and our certificate of incorporation and bylaws, we have agreed to indemnify our directors and officers against certain losses that they may suffer by reason of the fact that such persons are, were or become our directors or officers. The term of the indemnification period is for the director’s or officer’s lifetime and there is no limit on the potential amount of future payments that we could be required to make under these indemnification agreements. We have purchased a directors’ and officers’ liability insurance policy that may enable us to recover a portion of any future payments that we may be required to make under these indemnification agreements. Assuming the applicability of coverage and the willingness of the insurer to assume coverage and subject to certain retention, loss limits and other policy provisions, we believe it is unlikely that we will be required to pay any material amounts pursuant to these indemnification obligations. However, no assurances can be given that the insurers will not attempt to dispute the validity, applicability or amount of coverage without expensive and time-consuming litigation against the insurers.
Additionally, we undertake indemnification obligations in our ordinary course of business in connection with, among other things, the licensing of our products and the provision of our support services. In the ordinary course of our business, we have in the past and may in the future agree to indemnify another party, generally our business affiliates or customers, against certain losses suffered or incurred by the indemnified party in connection with various types of claims, which may include, without limitation, claims of intellectual property infringement, certain tax liabilities, our gross negligence or intentional acts in the performance of support services and violations of laws. The term of these indemnification obligations is generally perpetual. In general, we attempt to limit the maximum potential amount of future payments that we may be required to make under these indemnification obligations to the amounts paid to us by a customer, but in some cases the obligation may not be so limited. In addition, we have in the past and may in the future warrant to our customers that our products will conform to functional specifications for a limited period of time following the date of installation (generally not exceeding 30 days) or that our software media is free from material defects. Sales contracts for certain of our medication packaging systems often include limited warranties for up to six months, but the periodic activity and ending warranty balances we record have historically been immaterial.
From time to time, we may also warrant that our professional services will be performed in a good and workmanlike manner or in a professional manner consistent with industry standards. We generally seek to disclaim most warranties, including any implied or statutory warranties such as warranties of merchantability, fitness for a particular purpose, title, quality and non-infringement, as well as any liability with respect to incidental, consequential, special, exemplary, punitive or similar damages. In some states, such disclaimers may not be enforceable. If necessary, we would provide for the estimated cost of product and service warranties based on specific warranty claims and claim history. We have not been subject to any significant claims for such losses and have not incurred any material costs in defending or settling claims related to these indemnification obligations. Accordingly, we believe it is unlikely that we will be required to pay any material amounts pursuant to these indemnification obligations or potential warranty claims and, therefore, no material liabilities have been recorded for such indemnification obligations as of June 30, 2014 or December 31, 2013.
Stockholders' Equity
Stockholders' Equity
Stockholders’ Equity
 
Treasury Stock
 
2012 Stock Repurchase Program

On August 1, 2012, our Board of Directors established a stock repurchase program (the “2012 Repurchase Program”) authorizing share repurchases of up to $50.0 million of our common stock, with no termination date. The timing, price and volume of repurchases will be based on market conditions, relevant securities laws and other factors. The stock repurchases may be made from time to time on the open market, in privately negotiated transactions or pursuant to a Rule 10b-18 plan. The 2012 Repurchase Program does not obligate us to repurchase any specific number of shares, and we may terminate or suspend the repurchase program at any time.

For the six months ended June 30, 2014, we repurchased a total of $4.1 million or 145,737 shares, at an average cost of $27.92, including commissions. For details regarding our 2012 Stock Repurchase Program, please refer to Note 15, Stockholders' Equity, of our Annual Report on Form 10-K for the year ended December 31, 2013.

From the inception of the 2012 Repurchase Program, we have repurchased a total of $25.0 million, or 1,030,382 shares at an average cost of $24.29 per share, including commissions. As of June 30, 2014, the maximum dollar value of shares that may yet be purchased under the plan is $25.0 million.
Stock Option Plans and Share-Based Compensation
Stock Option Plans and Share-Based Compensation
Stock Option Plans and Share-Based Compensation
Share-Based Plans
Equity Incentive Plan
For a detailed explanation of our stock plan and subsequent changes please refer to Note 16, Stock Option Plans, Share-Based Compensation and 401(k) Plan, of our Annual Report on Form 10-K for the year ended December 31, 2013.
At June 30, 2014, 2,361,284 shares of common stock were reserved for future issuance our 2009 Equity Incentive Plan, as amended (the "2009 Plan"), and $5.9 million of total unrecognized compensation cost related to non-vested stock options was expected to be recognized over a weighted average period of 2.7 years.
 A summary of option activity under the 2009 Plan for the six months ended June 30, 2014 is presented below:
Options:
 
Number of Shares
 
Weighted-Average
 Exercise Price
 
 
(in thousands)
 
 
Outstanding at December 31, 2013
 
3,143

 
$15.82
Granted
 
304

 
$25.75
Exercised
 
(582
)
 
$14.29
Forfeited
 
(59
)
 
$18.56
Expired
 
(7
)
 
$17.47
Outstanding at June 30, 2014
 
2,799

 
$17.15
Vested and expected to vest at June 30, 2014
 
2,770

 
$17.10
Exercisable at June 30, 2014
 
1,727

 
$15.39

    
The aggregate intrinsic value of options exercised under our stock plans for the three and six months ended June 30, 2014 was $5.3 million and $7.9 million, respectively, determined as of the date of option exercise.

Restricted Stock and Restricted Stock Units
 
A summary of activity of both restricted stock and restricted stock units ("RSUs") for the six months ended June 30, 2014 is presented below:
 
Restricted Stock
 
Restricted Stock Units
 
Number of
Shares
 
Weighted-Average
Grant Date
Fair Value Per
Share
 
Number of
Shares
 
Weighted-Average
Grant Date
Fair Value Per
Share
 
(in thousands)
 
 
 
(in thousands)
 
 
Non-vested, December 31, 2013
52

 
$18.43
 
362

 
$17.15
Granted
39

 
$26.46
 
98

 
$25.56
Vested
(54
)
 
$26.47
 
(84
)
 
$16.54
Forfeited
—

 
$0.00
 
(16
)
 
$15.83
Non-vested, June 30, 2014
37

 
$26.47
 
360

 
$19.64

The fair value of restricted stock is the product of the number of shares granted and the closing market price of our common stock on the grant date. Our unrecognized compensation cost related to non-vested restricted stock is approximately $6.3 million and is expected to be recognized over a weighted-average period of 2.5 years.
Performance-Based Restricted Stock Units
Performance-based restricted stock units ("PSUs") are an element of our executive compensation plans. In 2012, we granted 125,000 PSUs to our executive officer of which 62,500 became eligible for vesting upon the achievement of a certain level of shareholder return for 2012 as described below. In 2013, we granted 137,500 PSUs to our executive officers, all of which became eligible for vesting upon the achievement of a certain level of shareholder return for the period from January 1, 2013 through February 28, 2014, as described below. In 2014, we granted 132,500 PSUs to our executive officers, all, none or a portion of which may become eligible for vesting depending on the level of shareholder return for 2014 and eligibility for further time-based vesting based on the ranking of our total shareholder return. For a more detailed explanation of our PSUs and subsequent changes, please refer to Note 16, Stock Option Plans, Share-Based Compensation and 401(k) Plan on our Annual Report on Form 10-K for the year ended December 31, 2013.
Our unrecognized compensation cost related to non-vested performance-based restricted stock units at June 30, 2014 was approximately $2.3 million and is expected to be recognized over a weighted-average period of 1.5 years. For the three months ended June 30, 2014 and 2013, we recognized $0.5 million and $0.4 million, respectively, of compensation expense for the PSUs. For the six months ended June 30, 2014 and 2013, we recognized $1.0 million and $0.8 million, respectively, of compensation expense for the PSUs.
The following table shows the percent of PSUs granted in 2012 eligible for further time-based vesting based on our percentile placement:
Percentile Placement of Our Total Shareholder Return
% of PSUs Eligible for Time-
Based Vesting
Below the 35th percentile
—%
At least the 35th percentile, but below the 50th percentile
50%
At least the 50th percentile
100%

On January 22, 2013, the Compensation Committee of our Board of Directors ("the Compensation Committee") confirmed 35.3% as the percentile rank of Omnicell's 2012 total stockholder return. This resulted in 50% of the 2012 PSU awards, or 62,500 shares, as eligible for further time-based vesting. The eligible performance-based restricted stock unit awards will vest as follows: 25% of the eligible shares vested immediately on January 22, 2013 with the remaining eligible awards vesting in equal increments, semi-annually, over the subsequent three year period beginning on June 15th and December 15th of the year after the date of grant and each subsequent year. Vesting is contingent upon continued service.
The following table shows the percent of PSUs granted in 2013 eligible for further time-based vesting based on our percentile placement:
Percentile Placement of Our Total Shareholder Return
% of PSUs Eligible for Time-
Based Vesting
Below the 35th percentile
—%
At least the 35th percentile, but below the 50th percentile
50%
At least the 50th percentile
100%

    
On March 20, 2014, the Compensation Committee confirmed 63.94% as the percentile rank of Omnicell's 2013-2014 total stockholder return. This resulted in 100% of the 2013 PSU awards, or 137,500 shares, as eligible for further time-based vesting. The eligible performance-based restricted stock unit awards will vest as follows: 25% of the eligible shares vested immediately on March 20, 2014 with the remaining eligible awards vesting in equal increments, semi-annually, over the subsequent three year period beginning on June 15th and December 15th of the year after the date of grant and each subsequent year. Vesting is contingent upon continued service.
On February 5, 2014, the Compensation Committee approved PSU awards of 132,500 shares. If the minimum performance threshold is met as determined by the Compensation Committee in 2015, the eligible performance-based restricted stock unit awards will vest as follows: 25% of the eligible shares will vest immediately, with the remaining eligible awards vesting in equal increments, semi-annually, over the subsequent three year period beginning on June 15th and December 15th of the year after the date of grant and each subsequent year. Vesting is contingent upon continued service.
A summary of activity of the PSUs for the six months ended June 30, 2014 is presented below:
Performance-based Stock Units
Number of Shares
 
Weighted-Average
Grant Date
Fair Value Per
Share
 
(in thousands)
 
 
Non-vested, December 31, 2013
225

 
$13.32
   Granted
135

 
$16.49
   Vested
(74
)
 
$13.66
   Forfeited
(8
)
 
$10.93
Non-vested, June 30, 2014
278

 
$14.72

1997 Employee Stock Purchase Plan
 
We have an Employee Stock Purchase Plan (the “ESPP”) under which employees can purchase shares of our common stock based on a percentage of their compensation, but not greater than 15% of their earnings, up to a maximum of $25,000 of fair value per year. The purchase price per share must be equal to the lower of 85% of the fair value of the common stock at the beginning of a 24-month offering period or the end of each six-month purchasing period.

At the 2009 Annual Meeting of Stockholders, the stockholders approved an amendment to the ESPP, which added 2,622,426 shares to the reserve for future issuance. As of June 30, 2014, there were 846,891 shares reserved for future issuance under the ESPP. For the three months ended June 30, 2014, no shares of common stock were purchased under the ESPP. For the six months ended June 30, 2014, 254,009 shares of common stock were purchased under the ESPP.

As of June 30, 2014, our unrecognized compensation cost related to the shares to be purchased under our ESPP was approximately $0.9 million and is expected to be recognized over a weighted average period of approximately 1.0 year.

Share-based Compensation
 
We account for share-based awards granted to employees and directors, including employee stock option awards, restricted stock, PSUs and RSUs issued pursuant to the 2009 Plan and employee stock purchases made under our ESPP using the estimated grant date fair value method of accounting in accordance with ASC 718, Stock Compensation.

We value options and ESPP shares using the Black-Scholes-Merton option-pricing model. Restricted stock and time-based RSUs are valued at the grant date fair value of the underlying common shares. The PSUs are valued via Monte Carlo simulation.

 The following table shows a summary of the share-based compensation expense included in the condensed consolidated statements of operations (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Cost of revenues
$
264

 
$
324

 
$
532

 
$
629

Research and development
380

 
326

 
749

 
615

Selling, general and administrative
2,076

 
2,037

 
4,168

 
4,369

Total share-based compensation expenses
$
2,720

 
$
2,687

 
$
5,449

 
$
5,613

Segments
Segments
Segments
    
Prior to the first quarter of 2014, we organized our business into two operating business segments, the Acute Care and Non-Acute Care segments, which were based on the products' target customers. The Acute Care segment primarily included products and services sold to hospital customers, and the Non-Acute Care segment primarily included products and services sold to customers outside of hospital settings.

In the first quarter of 2014, we realigned our segments based on the products we sell, regardless of who they are sold to because our business has evolved to be managed more on a product basis, rather than on a customer-type basis. It has become more difficult to determine whether a customer is a hospital or a blend of hospitals and non-acute care facilities. We are at a point where many of our Acute Care and Non-Acute Care customers are converging to provide services across the continuum of care. These customers seek automation and analytics products that function across the various facilities they manage. We find ourselves providing solutions across multiple types of care environments. These customers are also interested in obtaining higher levels of adherence to prescribed medication regimens that our blister card products provide.
Our two reportable segments are the Automation and Analytics segment and the Medication Adherence segment. The Automation and Analytics segment is organized around the design, manufacturing, selling and servicing of medication and supply dispensing systems, pharmacy inventory management systems, and related software. The Medication Adherence segment includes primarily the manufacturing and selling of consumable medication blister cards, packaging equipment and ancillary products and services.

Prior period amounts in the tables below have been recast to conform to the way we internally manage and monitor performance at the segment level during the current period.
We report segment information based on the management approach. The management approach designates the internal reporting used by the Chief Operating Decision Maker (the "CODM") for making decisions and assessing performance as the source of our operating segments. The CODM is our Chief Executive Officer. The CODM allocates resources to and assesses the performance of each operating segment, using information about its revenues, gross profit and income (loss) from operations. The CODM does not evaluate operating business segments using discrete asset information; accordingly, we do not report segment assets.
Since 1992, Omnicell has provided automation and business information solutions to healthcare facilities in general, but with a focus on acute care hospitals. We have developed product solutions that help optimize various workflows utilized in hospitals. We have also developed sophisticated sales, installation, and service capabilities to serve the specific and special needs of hospitals. As the healthcare market evolves, acute care facilities are beginning to merge operationally with non-acute care facilities. The new healthcare organizations desire medication and supply inventory control and business analytics across the continuum of care environments they serve. Our Automation and Analytics segment represents the products we sell to fulfill these needs.
Since 1984, MTS has provided medication adherence solutions to the non-acute care market. In 2012, we acquired MTS. The solutions supplied by MTS provide automated and semi-automated equipment to assist institutional and retail pharmacists in filling medication orders into blister cards, the primary method of medication control in non-acute care settings. Completing the product solution are the consumables used by institutional and retail pharmacists to make the medication adherence package. MTS has developed process manufacturing capabilities as well as sales capabilities to market medication adherence solutions to institutional and retail pharmacies. As healthcare evolves, these medication adherence solutions are finding application in acute care settings as well. Our Medication Adherence segment represents all the products we sell to fulfill medication adherence needs through blister cards, blister card packaging equipment, and related software.
The contributions of our operating segments to net revenues and income from operations, and the reconciliation to total net income, were as follows (amounts in thousands):
 
Three Months Ended June 30, 2014
 
Three Months Ended June 30, 2013
 
Automation and Analytics
 
Medication Adherence
 
Total
 
Automation and Analytics
 
Medication Adherence
 
Total
Total revenues
$
84,702

 
$
20,350

 
$
105,052

 
$
73,866

 
$
19,820

 
$
93,686

Cost of revenues
35,992

 
13,020

 
49,012

 
31,936

 
12,382

 
44,318

Gross profit
$
48,710

 
$
7,330

 
$
56,040

 
$
41,930

 
$
7,438

 
$
49,368

Gross margin %
57.5
%
 
36.0
%
 
53.3
%
 
56.8
%
 
37.5
%
 
52.7
%
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
36,508

 
6,974

 
43,482

 
33,808

 
6,201

 
40,009

Income from operations
$
12,202

 
$
356

 
$
12,558

 
$
8,122

 
$
1,237

 
$
9,359

Operating margin %
14.4
%
 
1.7
%
 
12.0
%
 
11.0
%
 
6.2
%
 
10.0
%
 
 
 
 
 
 
 
 
 
 
 
 
Interest and other income (expense), net
 
 
 
 
(40
)
 
 
 
 
 
63

Income before provision for income taxes
 
 
 
 
12,518

 
 
 
 
 
9,422

Provision for income taxes
 
 
 
 
4,729

 
 
 
 
 
3,406

Net income
 
 
 
 
$
7,789

 
 
 
 
 
$
6,016



 
Six Months Ended June 30, 2014
 
Six Months Ended June 30, 2013
 
Automation and Analytics
 
Medication Adherence
 
Total
 
Automation and Analytics
 
Medication Adherence
 
Total
Total revenues
$
166,201

 
$
40,615

 
$
206,816

 
$
142,579

 
$
38,217

 
$
180,796

Cost of revenues
70,932

 
25,349

 
96,281

 
62,212

 
23,849

 
86,061

Gross profit
$
95,269

 
$
15,266

 
$
110,535

 
$
80,367

 
$
14,368

 
$
94,735

Gross margin %
57.3
%
 
37.6
%
 
53.4
%
 
56.4
%
 
37.6
%
 
52.4
%
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
73,910

 
14,113

 
88,023

 
66,912

 
14,296

 
81,208

Income from operations
$
21,359

 
$
1,153

 
$
22,512

 
$
13,455

 
$
72

 
$
13,527

Operating margin %
12.9
%
 
2.8
%
 
10.9
%
 
9.4
%
 
0.2
%
 
7.5
%
 
 
 
 
 
 
 
 
 
 
 
 
Interest and other income (expense), net
 
 
 
 
(296
)
 
 
 

 
(159
)
Income before provision for income taxes
 
 
 
 
22,216

 
 
 
 
 
13,368

Provision for income taxes
 
 
 
 
8,233

 
 
 
 
 
3,967

Net income
 
 
 
 
$
13,983

 
 
 
 
 
$
9,401


Segment depreciation and amortization, and capital expenditures were as follows (amounts in thousands):
 
Three Months Ended June 30, 2014
 
Three Months Ended June 30, 2013
 
Automation and Analytics
 
Medication Adherence
 
Total
 
Automation and Analytics
 
Medication Adherence
 
Total
Depreciation and amortization
$
3,044

 
$
1,735

 
$
4,779

 
$
2,963

 
$
1,809

 
$
4,772

Capital expenditures
$
4,419

 
$
365

 
$
4,784

 
$
1,018

 
$
1,395

 
$
2,413


 
Six Months Ended June 30, 2014
 
Six Months Ended June 30, 2013
 
Automation and Analytics
 
Medication Adherence
 
Total
 
Automation and Analytics
 
Medication Adherence
 
Total
Depreciation and amortization
$
5,942

 
$
3,449

 
$
9,391

 
$
5,862

 
$
3,382

 
$
9,244

Capital expenditures
$
6,167

 
$
1,168

 
$
7,335

 
$
2,018

 
$
3,733

 
$
5,751

Impairment of Software Development Costs
Impairment of Software Development Costs
Impairment of Software Development Costs
    
2013 Impairment
    
As part of the continuing integration of MTS, in the first quarter of 2013, we reorganized our management team, including the software development department, within the Medication Adherence segment (formerly known as Non-Acute segment). Through the end of the first quarter of 2013, the Medication Adherence segment had capitalized approximately $1.8 million of software development costs associated with a software solution under development which was intended to assist pharmacies in manual packaging of prescriptions. In connection with our financial statement close process for the quarter ended March 31, 2013, our management reassessed the viability of this project and the net realizable value of capitalized costs in light of its decision to change the related product road map and redesign this product based on evolving market demands. As part of this redesign process, new functionality and capabilities will need to be added to the product before commercialization. This redesign is intended to provide a more robust global platform providing larger scalability and significant functionality not contained in our current beta version. As such, we have determined we can no longer support the technological feasibility of this project in conjunction with our software capitalization policy. Therefore, we charged these costs, in the amount of $1.8 million, ($0.03 per diluted share, net of tax), to expense as a component of research and development in the accompanying condensed consolidated statement of operations.
Credit Agreement
Credit Agreement
Credit Agreement
    In September 2013, we entered into a credit agreement (the "Credit Agreement") with Wells Fargo Bank, National Association, as administrative agent, and the lenders from time to time thereto. The Credit Agreement provides for a $75.0 million revolving credit facility with a $10.0 million letter of credit sub-limit. Loans under the Credit Agreement mature on September 25, 2018. The Credit Agreement permits us to request one or more increases in the aggregate commitments provided that such increases do not exceed $25.0 million in the aggregate. We expect to use the proceeds from any revolving loans under the credit facility for general corporate purposes, including future acquisitions. Our obligations under the Credit Agreement are guaranteed by certain of our domestic subsidiaries and secured by substantially all of our and the subsidiary guarantors’ assets.
Amounts drawn under the Credit Agreement bear interest, at our election, at a Eurodollar rate plus a margin of 1.75% per annum, or an alternate base rate equal to the highest of (a) the prime rate, (b) the federal funds rate plus 0.50%, and (c) LIBOR for an interest period of one month plus 1.75%. We are required to pay a commitment fee of 0.25% per annum on the aggregate undrawn amount of the commitments under the credit facility.
The Credit Agreement contains customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, dividends and other distributions. The Credit Agreement contains financial covenants that require us to, among other things, maintain a maximum consolidated total leverage ratio and a minimum consolidated fixed charge coverage ratio, in each case, as of the last day of each fiscal quarter.
To date, we have not yet drawn any funds under the credit facility. We were in full compliance with all covenants at June 30, 2014 and for all periods since the commencement of the Credit Agreement.
Income Taxes
Income Taxes
Income Taxes

We provide for income taxes for each interim period based on the estimated annual effective tax rate for the year, adjusting for discrete items in the quarter in which they arise. The annual effective tax rate before discrete items was 39.2% and 38.7% for the six months ended June 30, 2014 and 2013, respectively. The 2014 annual effective tax rate differed from the statutory rate of 35% primarily due to the unfavorable impact of state income taxes, non-deductible equity charges, and other non-deductible expenditures, which were partially offset by the domestic production activities deduction.

The 2013 annual effective tax rate differed from the statutory rate of 35% primarily due to the unfavorable impact of state income taxes, non-deductible equity charges, and other non-deductible expenditures, which were partially offset by the federal research and development credit claimed and the domestic production activities deduction.
Organization and Summary of Significant Accounting Policies (Policies)
Basis of presentation 
Basis of presentation. These interim condensed consolidated financial statements are unaudited but reflect, in the opinion of management, all adjustments, consisting of normal recurring adjustments and accruals, necessary to present fairly the financial position of Omnicell and our subsidiaries as of June 30, 2014, the results of our operations and comprehensive income for the three and six months ended June 30, 2014 and 2013 and our cash flows for the six months ended June 30, 2014 and 2013. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2013.
 
Our results of operations, comprehensive income for the three and six months ended June 30, 2014 and cash flows for the six months ended June 30, 2014 are not necessarily indicative of results that may be expected for the year ending December 31, 2014, or for any future period. 

Use of estimates 
Use of estimates. GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management's best knowledge of current events and actions that may impact the company in the future, actual results may be different from the estimates. Our critical accounting policies are those that affect our financial statements materially and involve difficult, subjective or complex judgments by management. Those policies are revenue recognition, share-based compensation, inventory valuation, valuation of goodwill and purchased intangibles, valuation of long-lived assets and accounting for income taxes.
Principles of consolidation 
Principles of consolidation. The condensed consolidated financial statements include the accounts of our wholly-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation
Concentrations of credit risk 
Concentration of credit risk. Financial instruments that may potentially subject us to concentrations of credit risk consist principally of cash equivalents and accounts receivable. Cash equivalents are maintained with several financial institutions and may exceed the amount of insurance provided on such balances. The majority of our accounts receivable are derived from sales to customers for commercial applications. We perform ongoing credit evaluations of our customers’ financial condition and limit the amount of credit extended when deemed necessary but generally require no collateral. We maintain reserves for potential credit losses. Our products are broadly distributed and there was no single customer accounting for 10% or more of revenues in the three and six months ended June 30, 2014 and 2013. Additionally, there was no single customer accounting for 10% or more of accounts receivable at June 30, 2014 or December 31, 2013. We believe that we have no significant concentrations of credit risk at June 30, 2014.
Recently adopted and issued accounting standards 
Recently Adopted Accounting Standards
In July 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU 2013-11 requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. We adopted the amendments in ASU 2013-11 in the first quarter of 2014. This update did not have a significant impact on our financial position, operating results or cash flows.
Recently Issued Accounting Standards

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers: Topic 606. ASU 2014-09 supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. Companies may use either of two methods: (i) full retrospective application to each prior reporting period presented with the option to elect certain practical expedients defined within ASU 2014-09; or (ii) modified retrospective application with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09. ASU 2014-09 is effective for us in the first quarter of 2017 and we are currently evaluating the impact of our pending adoption on our consolidated financial statements.
Earnings per share 
Basic net income per share is computed by dividing net income for the period by the weighted average number of shares outstanding during the period, less shares subject to repurchase. Diluted net income per share is computed by dividing net income for the period by the weighted average number of shares, less shares subject to repurchase, plus, if dilutive, potential common stock outstanding during the period. Potential common stock includes the effect of outstanding dilutive stock options, restricted stock awards and restricted stock units computed using the treasury stock method. Since their impact is anti-dilutive, we excluded 353,422 and 366,021 shares, respectively, from the calculations of diluted net income per share for the three and six months ended June 30, 2014 and 1,346,561 and 1,581,335 shares, respectively, from the same calculations for the three and six months ended June 30, 2013.
Share-based compensation 
 
We account for share-based awards granted to employees and directors, including employee stock option awards, restricted stock, PSUs and RSUs issued pursuant to the 2009 Plan and employee stock purchases made under our ESPP using the estimated grant date fair value method of accounting in accordance with ASC 718, Stock Compensation.

We value options and ESPP shares using the Black-Scholes-Merton option-pricing model. Restricted stock and time-based RSUs are valued at the grant date fair value of the underlying common shares. The PSUs are valued via Monte Carlo simulation
Net Income Per Share (Tables)
Schedule of Earnings Per Share, Basic and Diluted
The calculation of basic and diluted net income per share is as follows (in thousands, except per share amounts):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Basic:
 

 
 

 
 
 
 
Net income
$
7,789

 
$
6,016

 
$
13,983

 
$
9,401

Weighted average shares outstanding — basic
35,661

 
34,450

 
35,451

 
34,177

Net income per share — basic
$
0.22

 
$
0.17

 
$
0.39

 
$
0.28

Diluted:
 

 


 
 
 
 
Net income
$
7,789

 
$
6,016

 
$
13,983

 
$
9,401

Weighted average shares outstanding — basic
35,661

 
34,450

 
35,451

 
34,177

Add: Dilutive effect of employee stock plans
957

 
924

 
1,027

 
922

Weighted average shares outstanding — diluted
36,618

 
35,374

 
$
36,478

 
35,099

Net income per share — diluted
$
0.21

 
$
0.17

 
$
0.38

 
$
0.27

Cash and Cash Equivalents and Fair Value of Financial Instruments (Tables)
Schedule of Cash, Cash Equivalents and Investments 
Cash and cash equivalents consist of the following significant asset investment classes as of June 30, 2014 and December 31, 2013 (in thousands):

 
June 30, 2014
 
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
 
Cash / Cash
Equivalents
 
Security
Classification
Cash
$
68,333

 
$
—

 
$
—

 
$
68,333

 
$
68,333

 
N/A
Money market fund
58,046

 
—

 
—

 
58,046

 
58,046

 
Available for sale
Total cash and cash equivalents
$
126,379

 
$
—

 
$
—

 
$
126,379

 
$
126,379

 
 

c
December 31, 2013
 
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
 
Cash / Cash
Equivalents
 
Security
Classification
Cash
$
38,823

 
$
—

 
$
—

 
$
38,823

 
$
38,823

 
N/A
Money market fund
65,708

 
—

 
—

 
65,708

 
65,708

 
Available for sale
Total cash and cash equivalents
$
104,531

 
$
—

 
$
—

 
$
104,531

 
$
104,531

 
 
Fair Value, Assets Measured on Recurring Basis 
The following table shows our financial assets measured at fair value, on a recurring basis, with money market funds recorded within cash and cash equivalents (in thousands):
 
Quoted Prices in Active
Markets for Identical
Instruments
 (Level 1)
 
Total Fair
Value
Money market fund at June 30, 2014
$
58,046

 
$
58,046

Money market fund at December 31, 2013
$
65,708

 
$
65,708

Inventories (Tables)
Schedule of Inventory
Inventories consist of the following (in thousands):
 
June 30,
2014
 
December 31,
2013
Raw materials
$
11,197

 
$
10,765

Work in process
745

 
534

Finished goods
19,600

 
20,158

Total
$
31,542

 
$
31,457

Property and Equipment (Tables)
Schedule of Property, Plant and Equipment
Property and equipment consist of the following (in thousands):
 
June 30,
2014
 
December 31,
2013
Equipment
$
41,876

 
$
40,180

Furniture and fixtures
5,609

 
5,260

Leasehold improvements
8,070

 
7,394

Purchased software
25,173

 
20,199

Construction in process
2,142

 
2,649

Total property and equipment
82,870

 
75,682

Accumulated depreciation and amortization
(45,613
)
 
(40,428
)
Total property and equipment, net
$
37,257


$
35,254

Net Investment in Sales-Type Leases (Tables)
Components of Sales Type Lease Investments 
Our sales-type leases are for terms generally up to five years. Sales-type lease receivables are collateralized by the underlying equipment. The components of our net investment in sales-type leases are as follows (in thousands):
 
June 30,
2014
 
December 31,
2013
Net minimum lease payments to be received
$
17,559

 
$
18,172

Less unearned interest income portion
(1,214
)
 
(1,455
)
Net investment in sales-type leases
16,345

 
16,717

Less current portion(1)
(5,473
)
 
(5,232
)
Non-current net investment in sales-type leases(2)
$
10,872

 
$
11,485


 
 
 
 
 
(1)     A component of other current assets. This amount is net of an immaterial allowance for doubtful accounts as of June 30, 2014 and December 31, 2013.
(2)     This amount is net of an immaterial allowance for doubtful accounts as of June 30, 2014 and December 31, 2013.
Schedule of Future Minimum Lease Payments for Capital Leases 
The minimum lease payments under sales-type leases as of June 30, 2014 were as follows (in thousands):
Remainder of 2014
$
3,137

2015
5,438

2016
4,102

2017
3,154

2018
1,576

Thereafter
152

Total
$
17,559

Allowance for Credit Losses on Financing Receivables 
The following table summarizes the credit losses and recorded investment in sales-type leases, excluding unearned interest (in thousands):
 
Allowance for Credit Losses
 
Recorded Investment
in Sales-type Leases Gross
 
Recorded Investment
in Sales-type Leases Net
Credit loss disclosure for June 30, 2014:
 

 
 

 
 

Accounts individually evaluated for impairment
$
—

 
$
—

 
$
—

Accounts collectively evaluated for impairment
157

 
16,502

 
16,345

Ending balances: June 30, 2014
$
157

 
$
16,502

 
$
16,345

 
 
 
 
 
 
Credit loss disclosure for December 31, 2013:
 

 
 

 
 

Accounts individually evaluated for impairment
$
—

 
$
—

 
$
—

Accounts collectively evaluated for impairment
167

 
16,884

 
16,717

Ending balances: December 31, 2013
$
167

 
16,884

 
$
16,717

Schedule of Credit Losses Related to Financing Receivables, Noncurrent 
The following table summarizes the activity for the allowance for credit losses for the investment in sales-type leases (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,

2014
 
2013
 
2014
 
2013
Allowance for credit losses, beginning of period
$
169

 
$
190

 
$
167

 
$
607

Current period provision (reversal)
(12
)
 
6

 
(10
)
 
19

Direct write-downs charged against the allowance
—

 
—

 
—

 
(413
)
Recoveries of amounts previously charged off
—

 
(12
)
 
—

 
(29
)
Allowance for credit losses, end of period
$
157


$
184

 
$
157

 
$
184

Goodwill and Other Intangible Assets (Tables)
Schedule of Goodwill 
 
Goodwill at December 31, 2013
 
Adjustments to Goodwill
 
Goodwill at June 30, 2014
Reporting units:
 
 
 
 
 
Automation and Analytics
$
28,543

 
$
—

 
$
28,543

Medication Adherence
82,800

 
—

 
82,800

Total
$
111,343

 
$
—

 
$
111,343


Intangible Assets, net
 
There were no indefin
Schedule of Finite-Lived Intangible Assets 
There were no indefinite-lived intangible assets as of June 30, 2014 or December 31, 2013. Finite-lived intangible assets consist of the following (in thousands):
 
June 30, 2014
 
December 31, 2013
 
 
 
Gross
 
 
 
Net
 
Gross
 
 
 
Net
 
 
 
Carrying
Amount
 
Accumulated
Amortization
 
Carrying
Amount
 
Carrying
Amount
 
Accumulated
Amortization
 
Carrying
Amount
 
Amortization
Life
Finite-lived intangibles:
 

 
 

 
 

 
 

 
 

 
 

 
 
Customer relationships
$
54,730

 
$
6,314

 
$
48,416

 
$
54,730

 
$
5,236

 
$
49,494

 
5-30 years
Acquired technology
27,580

 
3,333

 
24,247

 
27,580

 
2,598

 
24,982

 
3-20 years
Patents
1,613

 
319

 
1,294

 
1,493

 
254

 
1,239

 
20 years
Trade name
6,890

 
1,286

 
5,604

 
6,890

 
1,003

 
5,887

 
3-12 years
Non-compete agreements
—

 
—

 
—

 
60

 
60

 
—

 
3 years
Total finite-lived intangibles
$
90,813

 
$
11,252

 
$
79,561

 
$
90,753

 
$
9,151

 
$
81,602

 
 
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense 
Estimated future amortization expense of finite-lived intangible assets are as follows (in thousands):
Remainder of 2014
$
2,127

2015
4,225

2016
3,857

2017
3,822

2018
3,714

Thereafter
61,816

Total
$
79,561

Accrued Liabilities (Tables)
Schedule of Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
 
June 30,
2014
 
December 31,
2013
Rebates and lease buyouts
$
4,596

 
$
1,699

Advance payments from customers
3,656

 
4,971

Accrued Group Purchasing Organization (GPO) fees(1)
2,848

 
2,324

Technology license purchase obligation, current portion
500

 
1,500

Taxes payable
2,719

 
1,664

Other
1,851

 
1,588

Total
$
16,170

 
$
13,746

Deferred Gross Profit (Tables)
Schedule of Deferred Gross Profit
Deferred gross profit consists of the following (in thousands):
 
June 30,
2014
 
December 31,
2013
Sales of medication and supply dispensing systems and packaging equipment(1)
$
40,748

 
$
29,040

Cost of revenues, excluding installation costs
(10,003
)
 
(9,083
)
Deferred gross profit
$
30,745

 
$
19,957

Commitments (Tables)
Schedule of Future Minimum Rental Payments for Operating Leases
At June 30, 2014, the minimum payments under our operating leases for each of the five succeeding fiscal years were as follows (in thousands):
Remainder of 2014
$
2,926

2015
5,583

2016
5,167

2017
4,468

2018
4,298

Thereafter
16,600

Total
$
39,042

 
Stock Option Plans and Share-Based Compensation (Tables)
Schedule of Stock Options Roll Forward 
A summary of option activity under the 2009 Plan for the six months ended June 30, 2014 is presented below:
Options:
 
Number of Shares
 
Weighted-Average
 Exercise Price
 
 
(in thousands)
 
 
Outstanding at December 31, 2013
 
3,143

 
$15.82
Granted
 
304

 
$25.75
Exercised
 
(582
)
 
$14.29
Forfeited
 
(59
)
 
$18.56
Expired
 
(7
)
 
$17.47
Outstanding at June 30, 2014
 
2,799

 
$17.15
Vested and expected to vest at June 30, 2014
 
2,770

 
$17.10
Exercisable at June 30, 2014
 
1,727

 
$15.39
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity 
A summary of activity of both restricted stock and restricted stock units ("RSUs") for the six months ended June 30, 2014 is presented below:
 
Restricted Stock
 
Restricted Stock Units
 
Number of
Shares
 
Weighted-Average
Grant Date
Fair Value Per
Share
 
Number of
Shares
 
Weighted-Average
Grant Date
Fair Value Per
Share
 
(in thousands)
 
 
 
(in thousands)
 
 
Non-vested, December 31, 2013
52

 
$18.43
 
362

 
$17.15
Granted
39

 
$26.46
 
98

 
$25.56
Vested
(54
)
 
$26.47
 
(84
)
 
$16.54
Forfeited
—

 
$0.00
 
(16
)
 
$15.83
Non-vested, June 30, 2014
37

 
$26.47
 
360

 
$19.64

PSU % eligible vesting vs Total Shareholder Return - Second year 
The following table shows the percent of PSUs granted in 2013 eligible for further time-based vesting based on our percentile placement:
Percentile Placement of Our Total Shareholder Return
% of PSUs Eligible for Time-
Based Vesting
Below the 35th percentile
—%
At least the 35th percentile, but below the 50th percentile
50%
At least the 50th percentile
100%
PSU % eligible vesting vs total Shareholder Return placement - First year 
The following table shows the percent of PSUs granted in 2012 eligible for further time-based vesting based on our percentile placement:
Percentile Placement of Our Total Shareholder Return
% of PSUs Eligible for Time-
Based Vesting
Below the 35th percentile
—%
At least the 35th percentile, but below the 50th percentile
50%
At least the 50th percentile
100%
Schedule of Nonvested Performance-based Units Activity 
A summary of activity of the PSUs for the six months ended June 30, 2014 is presented below:
Performance-based Stock Units
Number of Shares
 
Weighted-Average
Grant Date
Fair Value Per
Share
 
(in thousands)
 
 
Non-vested, December 31, 2013
225

 
$13.32
   Granted
135

 
$16.49
   Vested
(74
)
 
$13.66
   Forfeited
(8
)
 
$10.93
Non-vested, June 30, 2014
278

 
$14.72
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs 
 The following table shows a summary of the share-based compensation expense included in the condensed consolidated statements of operations (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Cost of revenues
$
264

 
$
324

 
$
532

 
$
629

Research and development
380

 
326

 
749

 
615

Selling, general and administrative
2,076

 
2,037

 
4,168

 
4,369

Total share-based compensation expenses
$
2,720

 
$
2,687

 
$
5,449

 
$
5,613

Segments (Tables)
Reconciliation of Operating Profit (Loss) from Segments to Consolidated 
The contributions of our operating segments to net revenues and income from operations, and the reconciliation to total net income, were as follows (amounts in thousands):
 
Three Months Ended June 30, 2014
 
Three Months Ended June 30, 2013
 
Automation and Analytics
 
Medication Adherence
 
Total
 
Automation and Analytics
 
Medication Adherence
 
Total
Total revenues
$
84,702

 
$
20,350

 
$
105,052

 
$
73,866

 
$
19,820

 
$
93,686

Cost of revenues
35,992

 
13,020

 
49,012

 
31,936

 
12,382

 
44,318

Gross profit
$
48,710

 
$
7,330

 
$
56,040

 
$
41,930

 
$
7,438

 
$
49,368

Gross margin %
57.5
%
 
36.0
%
 
53.3
%
 
56.8
%
 
37.5
%
 
52.7
%
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
36,508

 
6,974

 
43,482

 
33,808

 
6,201

 
40,009

Income from operations
$
12,202

 
$
356

 
$
12,558

 
$
8,122

 
$
1,237

 
$
9,359

Operating margin %
14.4
%
 
1.7
%
 
12.0
%
 
11.0
%
 
6.2
%
 
10.0
%
 
 
 
 
 
 
 
 
 
 
 
 
Interest and other income (expense), net
 
 
 
 
(40
)
 
 
 
 
 
63

Income before provision for income taxes
 
 
 
 
12,518

 
 
 
 
 
9,422

Provision for income taxes
 
 
 
 
4,729

 
 
 
 
 
3,406

Net income
 
 
 
 
$
7,789

 
 
 
 
 
$
6,016



 
Six Months Ended June 30, 2014
 
Six Months Ended June 30, 2013
 
Automation and Analytics
 
Medication Adherence
 
Total
 
Automation and Analytics
 
Medication Adherence
 
Total
Total revenues
$
166,201

 
$
40,615

 
$
206,816

 
$
142,579

 
$
38,217

 
$
180,796

Cost of revenues
70,932

 
25,349

 
96,281

 
62,212

 
23,849

 
86,061

Gross profit
$
95,269

 
$
15,266

 
$
110,535

 
$
80,367

 
$
14,368

 
$
94,735

Gross margin %
57.3
%
 
37.6
%
 
53.4
%
 
56.4
%
 
37.6
%
 
52.4
%
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
73,910

 
14,113

 
88,023

 
66,912

 
14,296

 
81,208

Income from operations
$
21,359

 
$
1,153

 
$
22,512

 
$
13,455

 
$
72

 
$
13,527

Operating margin %
12.9
%
 
2.8
%
 
10.9
%
 
9.4
%
 
0.2
%
 
7.5
%
 
 
 
 
 
 
 
 
 
 
 
 
Interest and other income (expense), net
 
 
 
 
(296
)
 
 
 

 
(159
)
Income before provision for income taxes
 
 
 
 
22,216

 
 
 
 
 
13,368

Provision for income taxes
 
 
 
 
8,233

 
 
 
 
 
3,967

Net income
 
 
 
 
$
13,983

 
 
 
 
 
$
9,401

Schedule of Segment Reporting Information, by Segment 
Segment depreciation and amortization, and capital expenditures were as follows (amounts in thousands):
 
Three Months Ended June 30, 2014
 
Three Months Ended June 30, 2013
 
Automation and Analytics
 
Medication Adherence
 
Total
 
Automation and Analytics
 
Medication Adherence
 
Total
Depreciation and amortization
$
3,044

 
$
1,735

 
$
4,779

 
$
2,963

 
$
1,809

 
$
4,772

Capital expenditures
$
4,419

 
$
365

 
$
4,784

 
$
1,018

 
$
1,395

 
$
2,413


 
Six Months Ended June 30, 2014
 
Six Months Ended June 30, 2013
 
Automation and Analytics
 
Medication Adherence
 
Total
 
Automation and Analytics
 
Medication Adherence
 
Total
Depreciation and amortization
$
5,942

 
$
3,449

 
$
9,391

 
$
5,862

 
$
3,382

 
$
9,244

Capital expenditures
$
6,167

 
$
1,168

 
$
7,335

 
$
2,018

 
$
3,733

 
$
5,751

Organization and Summary of Significant Accounting Policies - Accounts Receivable Concentration (Details)
3 Months Ended 6 Months Ended
Mar. 31, 2014
customer
Jun. 30, 2014
customer
Dec. 31, 2013
customer
Accounting Policies [Abstract]
 
 
 
Customers with 10% revenue concentration
0 
0 
 
Customers with 10 % accts rec concentration
 
0 
0 
Organization and Summary of Significant Accounting Policies - Significant Supplier Disclosure (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
 
 
 
Purchases from significant supplier
$ 8.3 
$ 6.7 
$ 17.2 
$ 13.9 
Net Income Per Share (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Earnings Per Share [Abstract]
 
 
 
 
Antidilutive securities excluded from computation of earnings per share
353,422 
1,346,561 
366,021 
1,581,335 
Basic:
 
 
 
 
Net income
$ 7,789 
$ 6,016 
$ 13,983 
$ 9,401 
Weighted Average Number of Shares Outstanding, Basic
35,661,000 
34,450,000 
35,451,000 
34,177,000 
Net income per share-basic
$ 0.22 
$ 0.17 
$ 0.39 
$ 0.28 
Diluted:
 
 
 
 
Weighted Average Number of Shares Outstanding, Basic
35,661,000 
34,450,000 
35,451,000 
34,177,000 
Dilutive Effect of Employee Stock Plans
$ 957 
$ 924 
$ 1,027 
$ 922 
Weighted Average Number of Shares Outstanding, Diluted
36,618,000 
35,374,000 
36,478,000 
35,099,000 
Net income per share - diluted
$ 0.21 
$ 0.17 
$ 0.38 
$ 0.27 
Cash and Cash Equivalents and Fair Value of Financial Instruments - Schedule of Cash and Cash Equivalents (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Jun. 30, 2013
Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Cash and cash equivalents, Amortized Cost
$ 126,379 
$ 104,531 
$ 87,334 
$ 62,313 
Cash, cash equiv and S-T-I: Amortized cost
126,379 
104,531 
 
 
Cash, cash equiv and S-T-I: Gross unrealized gains
0 
0 
 
 
Cash, cash equiv and S-T-I: Gross unrealized losses
0 
0 
 
 
Cash, Cash Equivalents, and Short-term Investments
126,379 
104,531 
 
 
Cash
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Cash and cash equivalents, Amortized Cost
68,333 
38,823 
 
 
Cash and cash equivalents - gross unrealized gain
0 
0 
 
 
Cash and cash equivalents - Gross unrealized losses
0 
0 
 
 
Cash and Cash Equivalents, Fair Value Disclosure
68,333 
38,823 
 
 
Money Market Funds
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Cash and cash equivalents, Amortized Cost
58,046 
65,708 
 
 
Cash and cash equivalents - gross unrealized gain
0 
0 
 
 
Cash and cash equivalents - Gross unrealized losses
0 
0 
 
 
Cash and Cash Equivalents, Fair Value Disclosure
58,046 
65,708 
 
 
Cash and Cash Equivalents
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Cash, Cash Equivalents, and Short-term Investments
126,379 
104,531 
 
 
Cash and Cash Equivalents |
Cash
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Cash and Cash Equivalents, Fair Value Disclosure
68,333 
38,823 
 
 
Cash and Cash Equivalents |
Money Market Funds
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Cash and Cash Equivalents, Fair Value Disclosure
$ 58,046 
$ 65,708 
 
 
Cash and Cash Equivalents and Fair Value of Financial Instruments - Assets Measured at Fair Value (Details) (USD $)
6 Months Ended
Jun. 30, 2014
Jun. 30, 2014
Money Market Funds
Dec. 31, 2013
Money Market Funds
Jun. 30, 2014
Fair Value, Measurements, Recurring [Member]
Money Market Funds
Dec. 31, 2013
Fair Value, Measurements, Recurring [Member]
Money Market Funds
Jun. 30, 2014
Fair Value, Measurements, Recurring [Member]
Fair Value, Inputs, Level 1 [Member]
Money Market Funds
Dec. 31, 2013
Fair Value, Measurements, Recurring [Member]
Fair Value, Inputs, Level 1 [Member]
Money Market Funds
Cash and Cash Equivalents [Line Items]
 
 
 
 
 
 
 
Money Market Fund - daily traded value
$ 1.00 
 
 
 
 
 
 
Cash and Cash Equivalents, Fair Value Disclosure
 
$ 58,046,000 
$ 65,708,000 
$ 58,046,000 
$ 65,708,000 
$ 58,046,000 
$ 65,708,000 
Inventories (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Inventory [Abstract]
 
 
Raw materials
$ 11,197 
$ 10,765 
Work in process
745 
534 
Finished goods
19,600 
20,158 
Total
$ 31,542 
$ 31,457 
Property and Equipment (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Dec. 31, 2013
Property, Plant and Equipment [Line Items]
 
 
 
 
 
Property and Equipment, Gross
$ 82,870,000 
 
$ 82,870,000 
 
$ 75,682,000 
Accumulated Depreciation
(45,613,000)
 
(45,613,000)
 
(40,428,000)
Property and equipment, net
37,257,000 
 
37,257,000 
 
35,254,000 
Depreciation expense
2,700,000 
2,900,000 
5,200,000 
5,600,000 
 
Equipment [Member]
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
Property and Equipment, Gross
41,876,000 
 
41,876,000 
 
40,180,000 
Furniture and Fixtures [Member]
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
Property and Equipment, Gross
5,609,000 
 
5,609,000 
 
5,260,000 
Leasehold Improvements [Member]
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
Property and Equipment, Gross
8,070,000 
 
8,070,000 
 
7,394,000 
Software [Member]
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
Property and Equipment, Gross
25,173,000 
 
25,173,000 
 
20,199,000 
Construction in Progress [Member]
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
Property and Equipment, Gross
$ 2,142,000 
 
$ 2,142,000 
 
$ 2,649,000 
Net Investment in Sales-Type Leases - Components of Sales-Type Leases (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Jun. 30, 2014
Dec. 31, 2013
Net Investment in Sales-Type Leases [Abstract]
 
 
Sales type leases, lease term
5 years 
 
Capital Leases, Net Investment in Sales Type Leases [Abstract]
 
 
Net minimum lease payments to be received
$ 17,559 
$ 18,172 
Less unearned interest income portion
(1,214)
(1,455)
Net investment in sales-type leases
16,345 
16,717 
Less current portion
(5,473)1
5,232 1
Non-current net investment in sales-type leases
$ 10,872 2
$ 11,485 2
Net Investment in Sales-Type Leases - Minimum Lease Payments Under Sales-Type Leases (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Net Investment in Sales-Type Leases [Abstract]
 
Remainder of 2014
$ 3,137 
2015
5,438 
2016
4,102 
2017
3,154 
2018
1,576 
Thereafter
152 
Total
$ 17,559 
Net Investment in Sales-Type Leases - Credit Losses and Recorded Investment in Sales-Type Leases (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Net Investment in Sales-Type Leases [Abstract]
 
 
 
 
 
 
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment
$ 0 
 
$ 0 
 
 
 
Financing Receivable Gross - individually evaluated for impairment
 
0 
0 
 
 
 
Financing Receivable, Individually Evaluated for Impairment
0 
 
0 
 
 
 
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment
157 
 
167 
 
 
 
Financing Receivable Gross - collectively evalauated for impairment
16,502 
 
16,884 
 
 
 
Financing Receivable, Collectively Evaluated for Impairment
16,345 
 
16,717 
 
 
 
Financing Receivable, Allowance for Credit Losses
157 
169 
167 
184 
190 
607 
Financing Receivable, Gross
16,502 
 
16,884 
 
 
 
Financing Receivable, Net
$ 16,345 
 
$ 16,717 
 
 
 
Net Investment in Sales-Type Leases - Allowance for Credit Losses (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Financing Receivable, Allowance for Credit Losses [Roll Forward]
 
 
 
 
Allowance for credit losses, beginning of period
$ 169 
$ 190 
$ 167 
$ 607 
Current period provision (reversal)
(12)
6 
(10)
19 
Direct write-downs charged against the allowance
0 
0 
0 
(413)
Recoveries of amounts previously charged off
0 
(12)
0 
(29)
Allowance for credit losses, end of period
$ 157 
$ 184 
$ 157 
$ 184 
Goodwill and Other Intangible Assets - Goodwill Rollforward by Segment (details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Goodwill [Roll Forward]
 
Goodwill, Beginning balance
$ 111,343 
Goodwill acquired
0 
Goodwill, Ending balance
111,343 
Automation and Analytics
 
Goodwill [Roll Forward]
 
Goodwill, Beginning balance
28,543 
Goodwill acquired
0 
Goodwill, Ending balance
28,543 
Medication Adherence
 
Goodwill [Roll Forward]
 
Goodwill, Beginning balance
82,800 
Goodwill acquired
0 
Goodwill, Ending balance
$ 82,800 
Goodwill and Other Intangible Assets - Intangible Assets, Net (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended 6 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2014
Dec. 31, 2013
Jun. 30, 2014
Customer Relationships [Member]
Dec. 31, 2013
Customer Relationships [Member]
Jun. 30, 2014
Customer Relationships [Member]
Minimum [Member]
Jun. 30, 2014
Customer Relationships [Member]
Maximum [Member]
Jun. 30, 2014
Acquired technology [Member]
Dec. 31, 2013
Acquired technology [Member]
Jun. 30, 2014
Acquired technology [Member]
Minimum [Member]
Jun. 30, 2014
Acquired technology [Member]
Maximum [Member]
Jun. 30, 2014
Patents [Member]
Dec. 31, 2013
Patents [Member]
Jun. 30, 2014
Trade Names [Member]
Dec. 31, 2013
Trade Names [Member]
Jun. 30, 2014
Trade Names [Member]
Minimum [Member]
Jun. 30, 2014
Trade Names [Member]
Maximum [Member]
Dec. 31, 2013
Noncompete Agreements [Member]
Jun. 30, 2014
Noncompete Agreements [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Finite-Lived Intangible Assets, Gross
$ 90,813 
$ 90,753 
$ 54,730 
$ 54,730 
 
 
$ 27,580 
$ 27,580 
 
 
$ 1,613 
$ 1,493 
$ 6,890 
$ 6,890 
 
 
$ 60 
$ 0 
Finite-Lived Intangible Assets, Accumulated Amortization
11,252 
9,151 
6,314 
5,236 
 
 
3,333 
2,598 
 
 
319 
254 
1,286 
1,003 
 
 
60 
0 
Finite-Lived Intangible Assets, Net
$ 79,561 
$ 81,602 
$ 48,416 
$ 49,494 
 
 
$ 24,247 
$ 24,982 
 
 
$ 1,294 
$ 1,239 
$ 5,604 
$ 5,887 
 
 
$ 0 
$ 0 
Finite-Lived Intangible Asset, Useful Life
 
 
 
 
5 years 
30 years 
 
 
3 years 
20 years 
20 years 
 
 
 
3 years 
12 years 
3 years 
 
Goodwill and Other Intangible Assets - Narrative (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Dec. 31, 2012
Sep. 30, 2012
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
 
 
 
 
Indefinite-Lived Intangible Assets
 
 
 
 
$ 0 
$ 0 
Amortization of Intangible Assets
$ 1,100,000 
$ 1,100,000 
$ 2,200,000 
$ 2,100,000 
 
 
Goodwill and Other Intangible Assets - Future Amortization of Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
Remainder of 2014
$ 2,127 
 
2015
4,225 
 
2016
3,857 
 
2017
3,822 
 
2018
3,714 
 
Thereafter
61,816 
 
Finite-Lived Intangible Assets, Net
$ 79,561 
$ 81,602 
Accrued Liabilities (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Accrued Liabilities, Current [Abstract]
 
 
Rebates and lease buyouts
$ 4,596 
$ 1,699 
Advance payments from customers
3,656 
4,971 
Accrued Group Purchasing Organization (GPO) fees(1)
2,848 1
2,324 1
Technology license purchase obligation, current portion
500 
1,500 
Taxes payable
2,719 
1,664 
Other
1,851 
1,588 
Total
$ 16,170 
$ 13,746 
Deferred Gross Profit (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Deferred Gross Profit [Abstract]
 
 
Sales of medication and supply dispensing systems and packaging equipment(1)
$ 40,748 1
$ 29,040 1
Cost of revenues, excluding installation costs
(10,003)
(9,083)
Deferred gross profit
$ 30,745 
$ 19,957 
Commitments (Details) (USD $)
Jun. 30, 2014
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
 
Remainder of 2014
$ 2,926,000 
2015
5,583,000 
2016
5,167,000 
2017
4,468,000 
2018
4,298,000 
Thereafter
16,600,000 
Total
39,042,000 
Purchase commitment, remaining minimum amount committed
$ 11,300,000 
Contingencies (Details)
6 Months Ended
Jun. 30, 2014
Product Liability Contingency [Line Items]
 
Net Amount at Risk by Product and Guarantee, Weighted Average Period Remaining
30 days 
Medication Packaging Systems
 
Product Liability Contingency [Line Items]
 
Net Amount at Risk by Product and Guarantee, Weighted Average Period Remaining
6 months 
Stockholders' Equity (Details) (USD $)
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 23 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
2012 Repurchase Program
Jun. 30, 2014
2012 Repurchase Program
Jun. 30, 2014
2012 Repurchase Program
Class of Stock [Line Items]
 
 
 
 
 
 
 
Stock repurchase program, authorized amount
 
 
 
 
 
$ 50,000,000 
 
Payments for repurchase of common stock
 
 
4,069,000 
0 
4,100,000 
 
25,000,000 
Allocated share-based compensation expense
2,720,000 
2,687,000 
5,449,000 
5,613,000 
 
 
 
Treasury stock, shares acquired
 
 
 
 
145,737 
 
1,030,382 
Treasury stock, average cost per share
 
 
 
 
$ 27.92 
 
$ 24.29 
Stock repurchase program, remaining authorized repurchase amount
 
 
 
 
$ 25,000,000 
 
 
Stock Option Plans and Share-Based Compensation - Narrative (Details) (USD $)
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended 3 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Restricted Stock
Jun. 30, 2014
Restricted Stock
Jun. 30, 2014
Performance-Based Restricted Stock Units
Jun. 30, 2013
Performance-Based Restricted Stock Units
Jun. 30, 2014
Performance-Based Restricted Stock Units
Jun. 30, 2013
Performance-Based Restricted Stock Units
Dec. 31, 2012
Performance-Based Restricted Stock Units
Jan. 22, 2013
Performance-Based Restricted Stock Units
2012 PSU
Dec. 31, 2012
Performance-Based Restricted Stock Units
2012 PSU
Mar. 20, 2014
Performance-Based Restricted Stock Units
2013 PSU
Mar. 31, 2014
Performance-Based Restricted Stock Units
2013 PSU
Jun. 30, 2014
Performance-Based Restricted Stock Units
2013 PSU
Jun. 30, 2014
Employee Stock [Member]
Jun. 30, 2014
Employee Stock [Member]
Jun. 30, 2014
2009 Equity Incentive Plan
Jun. 30, 2014
2009 Equity Incentive Plan
Stock Options
Mar. 31, 2014
Below the 75th percentile ranking [Member]
Minimum [Member]
PSU program year one [Member]
Performance-Based Restricted Stock Units
Mar. 31, 2014
Below the 75th percentile ranking [Member]
Maximum [Member]
PSU program year one [Member]
Performance-Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PSU percentage eligible for time-based vesting
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
110.00% 
119.00% 
Capital shares reserved for future issuance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
846,891 
846,891 
2,361,284 
 
 
 
Compensation cost not yet recognized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 5,900,000 
 
 
Compensation cost not yet recognized, period for recognition
 
 
 
 
2 years 6 months 
 
 
 
1 year 6 months 6 days 
 
 
 
 
 
 
 
 
 
 
2 years 8 months 12 days 
 
 
Options, exercises in period, intrinsic value
5,300,000 
 
7,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation costs not yet recognized
 
 
 
 
6,300,000 
6,300,000 
2,300,000 
 
2,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Awards granted
 
 
 
 
 
39,000 
 
 
135,000 
 
 
 
125,000 
 
132,500 
132,500 
 
 
 
 
 
 
Number of shares eligible for vesting
 
 
 
 
 
 
 
 
 
 
62,500 
 
 
 
 
 
 
 
 
 
 
 
PSU shares eligible for vesting based on actual shareholder return
 
 
 
 
 
 
 
 
 
 
 
62,500 
 
137,500 
 
 
 
 
 
 
 
 
Allocated share-based compensation expense
$ 2,720,000 
$ 2,687,000 
$ 5,449,000 
$ 5,613,000 
 
 
$ 500,000 
$ 400,000 
$ 1,000,000 
$ 800,000 
 
 
 
 
 
 
 
 
 
 
 
 
Percentile ranking of 2012 shareholder return
 
 
 
 
 
 
 
 
 
 
 
35.30% 
 
 
 
 
 
 
 
 
 
 
PSU percentage eligible for vesting based on actual return
 
 
 
 
 
 
 
 
 
 
 
50.00% 
 
100.00% 
 
 
 
 
 
 
 
 
First year share vesting rate
 
 
 
 
 
 
 
 
 
 
 
25.00% 
 
25.00% 
 
 
 
 
 
 
 
 
Percentile ranking of 2013 shareholder return
 
 
 
 
 
 
 
 
 
 
 
 
 
63.94% 
 
 
 
 
 
 
 
 
Shares issued in period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0 
254,009 
 
 
 
 
Stock Option Plans and Share-Based Compensation - Stock Option Rollforward (Details) (Stock Options, USD $)
In Thousands, except Per Share data, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Stock Options
 
Options, Number of Shares:
 
Outstanding at beginning of period
3,143 
Granted
304 
Exercised
(582)
Forfeited
(59)
Expired
(7)
Outstanding at end of period
2,799 
Vested and expected to vest
2,770 
Exercisable
1,727 
Options, Weighted-Average Exercise Price (in dollars per share):
 
Outstanding, beginning of period
$ 15.82 
Granted
$ 25.75 
Exercised
$ 14.29 
Forfeited
$ 18.56 
Expired
$ 17.47 
Outstanding, end of period
$ 17.15 
Vested and expected to vest
$ 17.10 
Exercisable
$ 15.39 
Stock Option Plans and Share-Based Compensation - Restricted Stock Awards and RSUs rollforward (Details) (USD $)
6 Months Ended
Jun. 30, 2014
Restricted Stock
 
Number of Shares:
 
Nonvested, Beginning Balance
52,000 
Granted
39,000 
Vested
(54,000)
Forfeited
0 
Nonvested, Ending Balance
37,000 
Weighted-Average Grant Date Fair Value Per Share (in dollars per share):
 
Nonvested, Beginning Balance
$ 18.43 
Granted
$ 26.46 
Vested
$ 26.47 
Forfeited
$ 0.00 
Nonvested, Ending Balance
$ 26.47 
Restricted Stock Units
 
Number of Shares:
 
Nonvested, Beginning Balance
362,000 
Granted
98,000 
Vested
(84,000)
Forfeited
(16,000)
Nonvested, Ending Balance
360,000 
Weighted-Average Grant Date Fair Value Per Share (in dollars per share):
 
Nonvested, Beginning Balance
$ 17.15 
Granted
$ 25.56 
Vested
$ 16.54 
Forfeited
$ 15.83 
Nonvested, Ending Balance
$ 19.64 
Stock Option Plans and Share-Based Compensation - Percent of PSUs Granted (Details) (PSU Program Year Three, Performance-Based Restricted Stock Units)
6 Months Ended
Jun. 30, 2014
Below the 35th percentile
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
PSU percentage eligible for time-based vesting
0.00% 
At least the 35th percentile, but below the 50th percentile
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
PSU percentage eligible for time-based vesting
50.00% 
At least the 50th percentile
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
PSU percentage eligible for time-based vesting
100.00% 
Stock Option Plans and Share-Based Compensation - PSU Rollforward (Details) (Performance-Based Restricted Stock Units, USD $)
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Performance-Based Restricted Stock Units
 
 
Number of Shares:
 
 
Nonvested, Beginning Balance
225,000 
 
Granted
135,000 
 
Vested
(74,000)
 
Forfeited
(8,000)
 
Nonvested, Ending Balance
278,000 
 
Weighted-Average Grant Date Fair Value Per Share (in dollars per share):
 
 
Nonvested, Beginning Balance
$ 13.32 
 
Granted
 
$ 16.49 
Vested
 
$ 13.66 
Forfeited
 
$ 10.93 
Nonvested, Ending Balance
 
$ 14.72 
Stock Option Plans and Share-Based Compensation - ESPP- Employee stock purchase plan (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2014
Employee Stock [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
ESPP max percent of earnings contributable
 
15.00% 
ESPP max annual contribution
 
$ 25,000 
ESPP purchase price as percent of begin and-or ending fair value
 
85.00% 
Capital shares reserved for future issuance
846,891 
846,891 
Shares issued in period
0 
254,009 
Employee Stock Purchase Plan [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Number of additional shares authorized
 
2,622,426.000 
Compensation not yet recognized
$ 900,000 
$ 900,000 
Compensation cost not yet recognized, period for recognition
 
1 year 0 months 
Stock Option Plans and Share-Based Compensation - Stock expense by P&L caption (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Allocated share-based compensation expense
$ 2,720 
$ 2,687 
$ 5,449 
$ 5,613 
Cost of revenues
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Allocated share-based compensation expense
264 
324 
532 
629 
Research and development
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Allocated share-based compensation expense
380 
326 
749 
615 
Selling, general and administrative
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Allocated share-based compensation expense
$ 2,076 
$ 2,037 
$ 4,168 
$ 4,369 
Segments - Reconciliation of Operationg Profit (Loss) from Segments to Consolidated (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
segment
Jun. 30, 2013
Segment Reporting Information [Line Items]
 
 
 
 
Number of Reportable Segments
 
 
2 
 
Revenues
$ 105,052 
$ 93,686 
$ 206,816 
$ 180,796 
Cost of Revenue
49,012 
44,318 
96,281 
86,061 
Gross profit
56,040 
49,368 
110,535 
94,735 
Gross Margin Percentage
53.30% 
52.70% 
53.40% 
52.40% 
Operating Expenses
43,482 
40,009 
88,023 
81,208 
Operating Income (Loss)
12,558 
9,359 
22,512 
13,527 
Operating margin percentage
12.00% 
10.00% 
10.90% 
7.50% 
Interest and other income (expense), net
(40)
63 
(296)
(159)
Income before provision for income taxes
12,518 
9,422 
22,216 
13,368 
Provision for income taxes
4,729 
3,406 
8,233 
3,967 
Net income
7,789 
6,016 
13,983 
9,401 
Medication Adherence
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Revenues
20,350 
19,820 
40,615 
38,217 
Cost of Revenue
13,020 
12,382 
25,349 
23,849 
Gross profit
7,330 
7,438 
15,266 
14,368 
Gross Margin Percentage
36.00% 
37.50% 
37.60% 
37.60% 
Operating Expenses
6,974 
6,201 
14,113 
14,296 
Operating Income (Loss)
356 
1,237 
1,153 
72 
Operating margin percentage
1.70% 
6.20% 
2.80% 
0.20% 
Automation and Analytics
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Revenues
84,702 
73,866 
166,201 
142,579 
Cost of Revenue
35,992 
31,936 
70,932 
62,212 
Gross profit
48,710 
41,930 
95,269 
80,367 
Gross Margin Percentage
57.50% 
56.80% 
57.30% 
56.40% 
Operating Expenses
36,508 
33,808 
73,910 
66,912 
Operating Income (Loss)
$ 12,202 
$ 8,122 
$ 21,359 
$ 13,455 
Operating margin percentage
14.40% 
11.00% 
12.90% 
9.40% 
Segments - Deprecation and Amortization and Capital Expenditures (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Segment Reporting Information [Line Items]
 
 
 
 
Depreciation and amortization
$ 4,779 
$ 4,772 
$ 9,391 
$ 9,244 
Capital Expenditures
4,784 
2,413 
7,335 
5,751 
Automation and Analytics [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Depreciation and amortization
3,044 
2,963 
5,942 
5,862 
Capital Expenditures
4,419 
1,018 
6,167 
2,018 
Medication Adherence
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Depreciation and amortization
1,735 
1,809 
3,449 
3,382 
Capital Expenditures
$ 365 
$ 1,395 
$ 1,168 
$ 3,733 
Impairment of Software Development Costs (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2014
Jun. 30, 2013
Asset Impairment [Abstract]
 
 
 
Impairment of software development costs
 
$ 0 
$ 1,759 
Change in accounting estimate impact on dilted eps
$ 0.03 
 
 
Credit Agreement (Details) (USD $)
3 Months Ended
Jun. 30, 2014
Line of Credit Facility [Line Items]
 
Line of credit, maximum borrowing capacity
$ 75,000,000 
Line of credit, unused capacity, commitment fee percentage
0.25% 
Potential Increase in Aggregate Commitments [Member]
 
Line of Credit Facility [Line Items]
 
Line of credit, maximum borrowing capacity
25,000,000 
Letter of Credit [Member]
 
Line of Credit Facility [Line Items]
 
Line of credit, maximum borrowing capacity
$ 10,000,000 
Eurodollar Rate [Member]
 
Line of Credit Facility [Line Items]
 
Basis spread on variable rate
1.75% 
Federal Funds Rate [Member]
 
Line of Credit Facility [Line Items]
 
Basis spread on variable rate
0.50% 
LIBOR [Member]
 
Line of Credit Facility [Line Items]
 
Basis spread on variable rate
1.75% 
Income Taxes (Details)
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Income Tax Disclosure [Abstract]
 
 
Effective tax rate before discrete items
39.20% 
38.70% 
Effective income tax rate reconciliation, statutory rate
35.00%