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Following the completion of the MTS Medication Technologies acquisition, Omnicell Inc. (OMCL - Analyst Report) increased its fiscal 2012 guidance. The market reacted positively to the news with shares gaining 1.1% on Tuesday to $13.95.

The MTS Medication products are mostly used by the institutional clients to supply long-term care and non-acute care facilities with medication packages to follow the prescriptions. Currently, the company serves 6,000 pharmacies across the world providing automated packaging systems for international epidemic. Thus Omnicell’s gain from the acquisition is expected to be strong triggering its growth prospects in the upcoming period.

The synergies from the acquisition of medication adherence packaging systems provider MTS Medication have prompted Omnicell to revise its expectation upwards. MTS Medication will continue to operate as a wholly-owned subsidiary of Omnicell but with the same brand name.

On the heels of the newly included MTS Medication business, Omnicell raised its 2012 adjusted EPS guidance to the range of 75 cents - 81 cents from its previous full-year adjusted EPS guidance of 67 cents - 72 cents. The acquisition also drove management’s revenues expectation to the range of $307-$315 million from the earlier range of $263-$267 million.

Product backlog (comprising Omnicell acute care medication and supply management products) for fiscal 2012 is expected to remain in the range of $138-$142 million (unchanged from the previous guidance). Given higher weightage of its revenue towards consumables, the company expects MTS Medication Technologies products will not impact its fiscal 2012 product backlog.  In addition, for the second quarter of 2012, Omnicell expects adjusted EPS in the range of 17-18 cents on revenues of $74 million.

This critical problem of medication non-adherence is alarming as the current data shows that it costs up to $290 billion annually and is the cause of death for approximately 125,000 people a year. According to the Centers for Medicare and Medicaid Services (“CMS”), 11% of all hospital admissions are related to this issue.

Omnicell remains optimistic regarding the acquisition of MTS as it will enable the company to access MTS’ automated medication adherence packaging equipment and consumables. This will allow the company to offer a complete automated medication management system across the acute and non-acute range of patient care.

Omnicell strongly believes that together with MTS, it will emerge as a market leader for medication management solutions across the broad range of health care beyond the acute care setting. The company also expects this to deliver superior results while lowering costs considerably.

However, several macroeconomic uncertainties as well as intense competition from major players such as CareFusion Corporation (CFN - Analyst Report) and McKesson Automation (MCK - Analyst Report) remain concerns. Currently, Omnicell retains a short-term Zacks #2 Rank (Buy).

Headquartered in Mountain View, California, Omnicell operates in a niche automated medication distribution industry and stands to benefit from favorable demographic trends and regulatory environments as well as lack of nursing staff.

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