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Omnicell, Inc. (OMCL - Free Report) reported second-quarter 2016 adjusted earnings per share (EPS) of 29 cents (considering stock-based compensation as a regular expense), reflecting year-over-year improvement of 61.1%. EPS was also 38.1% ahead of the Zacks Consensus Estimate of 21 cents.
Per management, strong revenue growth drove the year-over-year improvement in the quarter’s adjusted EPS.
Including one-time items, the company reported net loss of 3 cent per share, a deterioration from the year-ago loss of 1 cents per share.
Revenues in Detail
Revenues surged 53.3% year over year to $172.9 million, beating the Zacks Consensus Estimate of $171 million.
According to management, the company witnessed strong demand in the second quarter on account of both expansion and upgrades by existing customers, as well as new and competitive conversion customers. Strength has been noted particularly in the combined product portfolio to enable strategic, tailored and scalable solutions for customers.
On a segmental basis, during the quarter, Omnicell’s Automation and Analytics segment’s revenues increased 86% to $148.7 million. The year-over-year surge was driven by the inclusion of Aesynt with which Omnicell has gained an additional 10% of the Automation & Analytics market.
On a combined basis, new and competitive conversions accounted for approximately 30% of second-quarter bookings. Meanwhile, revenues from the Medication Adherence segment improved slightly by 0.4% to $24.2 million.
Operational Update
Omnicell's gross profit during the reported quarter was up 41% to $78 million. Gross margin however, contracted 393 basis points (bps) to 45.1%.
Adjusted operating expenses in the second quarter shot up 61.2% to $78.1 million. Adjusted operating loss in the quarter was lying at $118 million compared to adjusted operating profit of $68.5 million in the year-ago quarter.
Financial Update
Omnicell exited the second quarter of 2016 with cash and cash equivalents of $41 million, compared with $53.5 million at the end of the first quarter.
Outlook
Omnicell reiterated its earlier provided full-year 2016 earnings guidance. The company still expects to deliver adjusted EPS in the range of $1.50–$1.60. However revenues expectation has been narrowed to the higher end of the earlier-provided range of $695–$715 million. The company also expects to generate product bookings in the range of $540–$560 million, during 2016 (unchanged).
For the third quarter of 2016, management expects to deliver adjusted EPS in the 38–42 cents range on revenues of $176–$183 million.
Our Take
Omnicell’s outperformance in second-quarter 2016, both on the EPS and revenue front is heartening. We are encouraged to note that with the recent completion of the acquisition of Aesynt, Omnicell has gained an additional 10% of the medication automation and analytics market. This quarter was strong in terms of bookings for the company’s legacy products. It was a robust quarter for the Aesynt products as well.
Management expects this acquisition to widen Omnicell’s product portfolio for the point-of-care and centralized medication management equipment and solutions. It should also expand Omnicell’s presence in hospitals by adding world leading IV solutions, while also accelerating the development of enterprise software and real-time analytics.
Omnicell’s second-quarter margin contractions are disappointing. Nevertheless, post the Aesynt takeover, management’s confidence in delivering significant revenue and earnings growth over the coming years, bolsters our confidence in the stock. Going forward, its recent Aesynt buyout is expected to be accretive to Omnicell’s adjusted earnings in 2016. We believe such strategic acquisitions will add value to the company’s growth profile significantly, apart from expanding its product portfolio and geographic presence.
Zacks Rank
Currently, Omnicell sports a Zacks Rank #1 (Strong Buy). Some other favorably ranked medical stocks are LeMaitre Vascular, Inc. (LMAT - Free Report) , NuVasive, Inc. and Quidel Corp. (QDEL - Free Report) . All these stocks carry the same Zacks Rank as Omnicell.
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Omnicell (OMCL) Tops Q2 Earnings & Revenues, Margins Drag
Omnicell, Inc. (OMCL - Free Report) reported second-quarter 2016 adjusted earnings per share (EPS) of 29 cents (considering stock-based compensation as a regular expense), reflecting year-over-year improvement of 61.1%. EPS was also 38.1% ahead of the Zacks Consensus Estimate of 21 cents.
Per management, strong revenue growth drove the year-over-year improvement in the quarter’s adjusted EPS.
Including one-time items, the company reported net loss of 3 cent per share, a deterioration from the year-ago loss of 1 cents per share.
Revenues in Detail
Revenues surged 53.3% year over year to $172.9 million, beating the Zacks Consensus Estimate of $171 million.
According to management, the company witnessed strong demand in the second quarter on account of both expansion and upgrades by existing customers, as well as new and competitive conversion customers. Strength has been noted particularly in the combined product portfolio to enable strategic, tailored and scalable solutions for customers.
OMNICELL INC Price, Consensus and EPS Surprise
OMNICELL INC Price, Consensus and EPS Surprise | OMNICELL INC Quote
On a segmental basis, during the quarter, Omnicell’s Automation and Analytics segment’s revenues increased 86% to $148.7 million. The year-over-year surge was driven by the inclusion of Aesynt with which Omnicell has gained an additional 10% of the Automation & Analytics market.
On a combined basis, new and competitive conversions accounted for approximately 30% of second-quarter bookings. Meanwhile, revenues from the Medication Adherence segment improved slightly by 0.4% to $24.2 million.
Operational Update
Omnicell's gross profit during the reported quarter was up 41% to $78 million. Gross margin however, contracted 393 basis points (bps) to 45.1%.
Adjusted operating expenses in the second quarter shot up 61.2% to $78.1 million. Adjusted operating loss in the quarter was lying at $118 million compared to adjusted operating profit of $68.5 million in the year-ago quarter.
Financial Update
Omnicell exited the second quarter of 2016 with cash and cash equivalents of $41 million, compared with $53.5 million at the end of the first quarter.
Outlook
Omnicell reiterated its earlier provided full-year 2016 earnings guidance. The company still expects to deliver adjusted EPS in the range of $1.50–$1.60. However revenues expectation has been narrowed to the higher end of the earlier-provided range of $695–$715 million. The company also expects to generate product bookings in the range of $540–$560 million, during 2016 (unchanged).
For the third quarter of 2016, management expects to deliver adjusted EPS in the 38–42 cents range on revenues of $176–$183 million.
Our Take
Omnicell’s outperformance in second-quarter 2016, both on the EPS and revenue front is heartening. We are encouraged to note that with the recent completion of the acquisition of Aesynt, Omnicell has gained an additional 10% of the medication automation and analytics market. This quarter was strong in terms of bookings for the company’s legacy products. It was a robust quarter for the Aesynt products as well.
Management expects this acquisition to widen Omnicell’s product portfolio for the point-of-care and centralized medication management equipment and solutions. It should also expand Omnicell’s presence in hospitals by adding world leading IV solutions, while also accelerating the development of enterprise software and real-time analytics.
Omnicell’s second-quarter margin contractions are disappointing. Nevertheless, post the Aesynt takeover, management’s confidence in delivering significant revenue and earnings growth over the coming years, bolsters our confidence in the stock. Going forward, its recent Aesynt buyout is expected to be accretive to Omnicell’s adjusted earnings in 2016. We believe such strategic acquisitions will add value to the company’s growth profile significantly, apart from expanding its product portfolio and geographic presence.
Zacks Rank
Currently, Omnicell sports a Zacks Rank #1 (Strong Buy). Some other favorably ranked medical stocks are LeMaitre Vascular, Inc. (LMAT - Free Report) , NuVasive, Inc. and Quidel Corp. (QDEL - Free Report) . All these stocks carry the same Zacks Rank as Omnicell.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>