Another Best in KLAS for Omnicell

Omnicell (OMCL - Analyst Report) recently announced that it has received recognition for its OmniRx automated dispensing system from leading research firm, KLAS for the seventh consecutive year. With the 2012 “Best in KLAS" award, Omnicell’s Automated Medication Dispensing Units have emerged as the leader for the third consecutive year. The company was also acknowledged for its WorkflowRx Carousel and OmniLinkRx for the third consecutive year.

The KLAS awards that recognize excellence in respective markets, are generally attributed based on data from customer surveys of hospital and clinic executives, administrators, physicians, nurses and others interacting with healthcare equipment and infrastructure solutions. Thus, Omnicell remains optimistic that with these new awards, more institutes will come up to switch over to the automated mode by procuring medication and supply solutions to address the shortage of nursing facilities in the US, thereby driving the demand for its offerings.

Omnicell primarily operates in the niche automated medication distribution industry and stands to benefit from favorable demographic trends, regulatory environments, and the lack of nursing staff. As the information technology market is growing in leaps and bounds with increased investment by healthcare industries and gradual modernization of the healthcare system, the demand for automated healthcare management systems has also been on the rise. The company expects its customers to save up to 70% to 80% of their investment while upgrading their installed systems to next-generation G4 product platform.

Furthermore, the company is hyper active on the acquisition front and has won a number of deals. With the acquisition of MTS Medication Technologies in May 2012, Omnicell plans to become 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 and reduce costs considerably.

However, the company’s products, primarily catering to hospitals and nursing homes, are still suffering from weak credit markets and higher unemployment. Constrained hospital spending is a primary headwind for the company. Moreover, the company faces intense competition in the medication management and supply chain solutions market from major players such as CareFusion Corporation (CFN - Snapshot Report) and McKesson Automation (MCK - Analyst Report).

Currently, Omnicell retains a short-term Zacks #3 Rank (Hold). Over the long term we are Neutral on the stock.