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Omnicell (OMCL) Q3 Earnings Top, Revenues Miss Estimates
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Omnicell, Inc. (OMCL - Free Report) reported third-quarter 2016 adjusted earnings per share (EPS) of 30 cents (considering stock-based compensation as a regular expense), reflecting year-over-year improvement of 20%. EPS also beat the Zacks Consensus Estimate of 26 cents by 15.4%.
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 income of 5 cent per share, a deterioration from the year-ago net income of 22 cents.
Revenues surged 41.1% year over year to $176.7 million, slightly below the Zacks Consensus Estimate of $177 million.
According to management, the company witnessed strong demand in the third 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, which offers tailored and scalable solutions for customers.
On a segmental basis, Omnicell’s Automation and Analytics segment’s revenues increased 48.1% during the quarter to $152.4 million. The year-over-year upside was driven by the recent buyout of Aesynt.
On a combined basis, new and competitive conversions accounted for approximately 34% of third-quarter bookings. Meanwhile, revenues from the Medication Adherence segment improved by 9.5% to $24.3 million.
Operational Update
Omnicell's gross profit during the reported quarter was up 27.9% to $81.5 million. Gross margin, however, contracted 475 basis points (bps) to 46.1%.
Adjusted operating expenses in the third quarter shot up 53.6% to $76.5 million. Adjusted operating income in the quarter was $4.9 million, down 64.4% from the adjusted operating profit of $138 million in the year-ago quarter. Operating margin also contracted 828 bps to 2.8%.
Financial Update
Omnicell exited the third quarter of 2016 with cash and cash equivalents of $47.2 million, compared with $41 million at the end of the second quarter. Year to date, operating cashflow was $24.4 million compared with $5.9 million in 2015.
Outlook
Omnicell reiterated its full-year 2016 earnings guidance. The company expects adjusted EPS in the $1.50–$1.60 range. However, the previous revenue projection’s higher end has been narrowed down to $700–$710 million. The company also continues to expect product bookings in the band of $540–$560 million during 2016.
Our Take
Omnicell’s third-quarter 2016 performance has been quite heartening. We are encouraged to note that the Aesynt acquisition has driven Omnicell’s share in the the medication automation and analytics market by 10%. 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 third-quarter margin contractions are however 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 & Key Picks
Omnicell currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the medical sector are GW Pharmaceuticals plc , Baxter International Inc. (BAX - Free Report) and Boston Scientific Corporation (BSX - Free Report) . GW Pharmaceuticals and Baxter international sport a Zacks Rank #1 (Strong Buy), while Boston Scientific carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GW Pharmaceuticals surged 68.3% year to date compared to the S&P 500’s 4% over the same period. The company’s four-quarter average earnings surprise is 41.6%.
Baxter international rallied 26.2% in the past one year, above the S&P 500’s 2.3%. It has a trailing four-quarter average positive earnings surprise of 27%.
Boston Scientific recorded a 21% gain in the past one year, higher than the S&P 500’s 2.3%. The company has a trailing four-quarter average earnings surprise of 6.3%.
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Omnicell (OMCL) Q3 Earnings Top, Revenues Miss Estimates
Omnicell, Inc. (OMCL - Free Report) reported third-quarter 2016 adjusted earnings per share (EPS) of 30 cents (considering stock-based compensation as a regular expense), reflecting year-over-year improvement of 20%. EPS also beat the Zacks Consensus Estimate of 26 cents by 15.4%.
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 income of 5 cent per share, a deterioration from the year-ago net income of 22 cents.
OMNICELL INC Price, Consensus and EPS Surprise
OMNICELL INC Price, Consensus and EPS Surprise | OMNICELL INC Quote
Revenues in Detail
Revenues surged 41.1% year over year to $176.7 million, slightly below the Zacks Consensus Estimate of $177 million.
According to management, the company witnessed strong demand in the third 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, which offers tailored and scalable solutions for customers.
On a segmental basis, Omnicell’s Automation and Analytics segment’s revenues increased 48.1% during the quarter to $152.4 million. The year-over-year upside was driven by the recent buyout of Aesynt.
On a combined basis, new and competitive conversions accounted for approximately 34% of third-quarter bookings. Meanwhile, revenues from the Medication Adherence segment improved by 9.5% to $24.3 million.
Operational Update
Omnicell's gross profit during the reported quarter was up 27.9% to $81.5 million. Gross margin, however, contracted 475 basis points (bps) to 46.1%.
Adjusted operating expenses in the third quarter shot up 53.6% to $76.5 million. Adjusted operating income in the quarter was $4.9 million, down 64.4% from the adjusted operating profit of $138 million in the year-ago quarter. Operating margin also contracted 828 bps to 2.8%.
Financial Update
Omnicell exited the third quarter of 2016 with cash and cash equivalents of $47.2 million, compared with $41 million at the end of the second quarter. Year to date, operating cashflow was $24.4 million compared with $5.9 million in 2015.
Outlook
Omnicell reiterated its full-year 2016 earnings guidance. The company expects adjusted EPS in the $1.50–$1.60 range. However, the previous revenue projection’s higher end has been narrowed down to $700–$710 million. The company also continues to expect product bookings in the band of $540–$560 million during 2016.
Our Take
Omnicell’s third-quarter 2016 performance has been quite heartening. We are encouraged to note that the Aesynt acquisition has driven Omnicell’s share in the the medication automation and analytics market by 10%. 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 third-quarter margin contractions are however 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 & Key Picks
Omnicell currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the medical sector are GW Pharmaceuticals plc , Baxter International Inc. (BAX - Free Report) and Boston Scientific Corporation (BSX - Free Report) . GW Pharmaceuticals and Baxter international sport a Zacks Rank #1 (Strong Buy), while Boston Scientific carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GW Pharmaceuticals surged 68.3% year to date compared to the S&P 500’s 4% over the same period. The company’s four-quarter average earnings surprise is 41.6%.
Baxter international rallied 26.2% in the past one year, above the S&P 500’s 2.3%. It has a trailing four-quarter average positive earnings surprise of 27%.
Boston Scientific recorded a 21% gain in the past one year, higher than the S&P 500’s 2.3%. The company has a trailing four-quarter average earnings surprise of 6.3%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>