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Omnicell (OMCL) Down 7.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Omnicell (OMCL - Free Report) . Shares have lost about 7.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Omnicell due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Omnicell Q2 Earnings Miss, Margins Down
Omnicell reported second-quarter 2020 adjusted earnings per share (EPS) of 37 cents, down 44.8% year over year. The metric lagged the Zacks Consensus Estimate by 13.9%.
The adjustments include expenses related to share-based compensation, amortization of acquired intangibles, and severance and other.
On a GAAP basis, loss per share was 10 cents for the quarter under review compared with EPS of 37 cents in the year-ago quarter.
Revenues in Detail
Second-quarter revenues of $199.6 million dropped 8.2% year over year on a reported basis (same on adjusted basis). The figure, however, beat the Zacks Consensus Estimate by 0.5%.
Segmental Details
On a segmental basis, Product revenues fell 12.3% year over year to $138.9 million in the reported quarter.
Service and other revenues climbed 2.8% year over year to $60.7 million.
With regard to COVID-19 impact on the company’s business, Omnicell noted that it has continued to see a delay in product bookings and expects this slowdown to continue along with the declining revenue trend through the year. However, the company is upbeat about the gradually changing environment, which is recording favorable impact with respect to both product bookings and revenues. Further, the overall level of system implementations is rising.
Additionally, through the second quarter, the company’s scope to access hospitals in order to implement capital equipment has been delayed in many cases, as many hospitals are used for treating coronavirus patients.
Operational Update
In the quarter under review, the company-provided adjusted gross profit declined 16.4% to $89.9 million. Further, adjusted gross margin contracted 440 basis points (bps) to 45%.
Adjusted operating expenses were $74.5 million in the second quarter, down 1.1% year over year. Adjusted operating profit totaled $15.4 million, reflecting a 52.2% fall from the prior-year quarter. Adjusted operating margin in the second quarter contracted 710 bps to 7.7%.
Financial Update
Omnicell exited the second quarter with cash and cash equivalents, and net accounts receivable and unbilled receivables of $322.5 million compared with $337.1 million at the end of the first quarter of 2020.
Cumulative cash flow from operating activities at the end of the second quarter was $72.7 million compared with $53.8 million a year ago.
Guidance
Omnicell is currently unable to gauge the scope, duration and impact of the pandemic and is also uncertain about the timing of global recovery and economic normalization. This time, too, the company was unable to provide the full-year guidance.
However, the company expects third-quarter 2020 adjusted product revenues at $143-$149 million and adjusted service revenues within $61-$63 million.
Adjusted EPS is expected within 44-52 cents for the third quarter. The Zacks Consensus Estimate for the same is currently pegged at 73 cents.
Given the gradually improving business environment, Omnicell anticipates sequential product bookings and revenue growth through the third quarter of 2020. However, management expects disruptions for hospital spending and access for implementations to continue in the near- to medium-term.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -45.61% due to these changes.
VGM Scores
Currently, Omnicell has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Omnicell has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Omnicell (OMCL) Down 7.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Omnicell (OMCL - Free Report) . Shares have lost about 7.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Omnicell due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Omnicell Q2 Earnings Miss, Margins Down
Omnicell reported second-quarter 2020 adjusted earnings per share (EPS) of 37 cents, down 44.8% year over year. The metric lagged the Zacks Consensus Estimate by 13.9%.
The adjustments include expenses related to share-based compensation, amortization of acquired intangibles, and severance and other.
On a GAAP basis, loss per share was 10 cents for the quarter under review compared with EPS of 37 cents in the year-ago quarter.
Revenues in Detail
Second-quarter revenues of $199.6 million dropped 8.2% year over year on a reported basis (same on adjusted basis). The figure, however, beat the Zacks Consensus Estimate by 0.5%.
Segmental Details
On a segmental basis, Product revenues fell 12.3% year over year to $138.9 million in the reported quarter.
Service and other revenues climbed 2.8% year over year to $60.7 million.
With regard to COVID-19 impact on the company’s business, Omnicell noted that it has continued to see a delay in product bookings and expects this slowdown to continue along with the declining revenue trend through the year. However, the company is upbeat about the gradually changing environment, which is recording favorable impact with respect to both product bookings and revenues. Further, the overall level of system implementations is rising.
Additionally, through the second quarter, the company’s scope to access hospitals in order to implement capital equipment has been delayed in many cases, as many hospitals are used for treating coronavirus patients.
Operational Update
In the quarter under review, the company-provided adjusted gross profit declined 16.4% to $89.9 million. Further, adjusted gross margin contracted 440 basis points (bps) to 45%.
Adjusted operating expenses were $74.5 million in the second quarter, down 1.1% year over year. Adjusted operating profit totaled $15.4 million, reflecting a 52.2% fall from the prior-year quarter. Adjusted operating margin in the second quarter contracted 710 bps to 7.7%.
Financial Update
Omnicell exited the second quarter with cash and cash equivalents, and net accounts receivable and unbilled receivables of $322.5 million compared with $337.1 million at the end of the first quarter of 2020.
Cumulative cash flow from operating activities at the end of the second quarter was $72.7 million compared with $53.8 million a year ago.
Guidance
Omnicell is currently unable to gauge the scope, duration and impact of the pandemic and is also uncertain about the timing of global recovery and economic normalization. This time, too, the company was unable to provide the full-year guidance.
However, the company expects third-quarter 2020 adjusted product revenues at $143-$149 million and adjusted service revenues within $61-$63 million.
Adjusted EPS is expected within 44-52 cents for the third quarter. The Zacks Consensus Estimate for the same is currently pegged at 73 cents.
Given the gradually improving business environment, Omnicell anticipates sequential product bookings and revenue growth through the third quarter of 2020. However, management expects disruptions for hospital spending and access for implementations to continue in the near- to medium-term.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -45.61% due to these changes.
VGM Scores
Currently, Omnicell has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Omnicell has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.