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Omnicell (OMCL) Q1 Earnings Top Estimates, Margins Down
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Omnicell, Inc. (OMCL - Free Report) reported first-quarter 2023 adjusted earnings per share (EPS) of 39 cents, down 53% year over year. However, the metric remarkably beat the Zacks Consensus Estimate of 7 cents.
Adjustments include one-time expenses like share-based compensations, the amortization of acquired intangibles, acquisition-related expenses, severance-related expenses and others.
On a GAAP basis, the loss per diluted share was 33 cents in the first quarter compared to the EPS of 17 cents in the prior-year quarter.
Revenues in Detail
Revenues in the first quarter totaled $290.6 million, down 8.8% year over year. The decline was mainly due to lower point-of-care revenues as a result of ongoing health systems and capital budget constraints. However, the figure beat the Zacks Consensus Estimate by 5%.
On a segmental basis, product revenues declined 17.8% year over year to $185.7 million in the reported quarter.
Service and other revenues climbed 12.9% year over year to $104.9 million.
Operational Update
In the quarter under review, the gross profit declined 16.7% to $125 million. The gross margin contracted 404 basis points (bps) to 43%.
Operating expenses were $148 million in the first quarter, up 2.1% year over year. The operating loss in the quarter totaled $23 million compared to the operating profit of $5.1 million in the year-ago quarter. In the first quarter, the adjusted operating margin contracted 950 bps to 7.9%.
Financial Update
Omnicell exited the first quarter of 2023 with cash and cash equivalents of $340.4 million compared with $330.4 million at the end of 2022.
The cumulative cash flow provided by operating activities at the end of the first quarter was $12.8 million compared to the cumulative net cash outflow of $16 million in the year-ago quarter.
In April 2023, OMCL launched the Center for Innovation Medication Management under a strategic alliance with Long Island University. The state-of-the-art laboratory features a wide range of Omnicell’s devices and is designed to provide an immersive pharmacy technology and analytics experience for LIU pharmacy students.
2023 Outlook
Omnicell reaffirmed its full-year 2023 guidance, which it originally announced during the 2022 fourth-quarter earnings call.
Total revenues for 2023 are expected in the range of $1.15-$1.19 billion (unchanged from the previous outlook). This comprises product revenues in the range of $740-$760 million (unchanged) and service revenues in the band of $410-$430 million (unchanged). The Zacks Consensus Estimate for total revenues is pegged at $1.17 billion.
The adjusted EPS for the full year is expected in the range of $1.55-$1.80 (unchanged). The Zacks Consensus Estimate for the same is pegged at $1.65.
For the second quarter of 2023, Omnicell expects revenues in the range of $278-$288 million, with product revenues expected in the band of $181-$186 million and service revenues in the range of $97-$102 million.
The Zacks Consensus Estimate for total revenues in the second quarter of 2023 is pegged at $287.5 million.
The adjusted EPS for the second quarter is anticipated in the range of 25-35 cents. The Zacks Consensus Estimate for the same is pegged at 36 cents.
Our Take
Omnicell ended the first quarter of 2023 with better-than-expected earnings and revenues, driven by strong execution, disciplined cost management and revenue timing. Reported revenues exceeded the high end of OMCL’s previous revenue outlook in the band of $273-$283 million (announced on the 2022 fourth-quarter earnings call), which is highly appreciated. The year-over-year increase in Omnicell’s service revenues positively emphasizes its digital transformation strategy.
The company’s adjusted EPS in the quarter also surpassed the top end of the previous guidance in the band of 4-14 cents for the first quarter, led by a capable product and service mix, expense timing and solid execution.
OMCL remains well-positioned to meet pharmacy and hospital needs, backed by the recent acquisitions and expansion of its advanced services solutions. The company’s Central Pharmacy Dispensing Service continues to receive more demand from health systems, which buoys optimism.
However, mounting operating costs and expenses are putting pressure on Omnicell’s margins. OMCL’s 2023 anticipated annual operating expense of nearly $50 million is expected to be derived from the recent reductions in force and other expense payment efforts from functions included in SG&A. However, the inflation impact on employee salaries, increased compensation costs and investments in R&D are most likely to outweigh savings.
Zacks Rank & Key Picks
Omnicell currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Edwards Lifesciences Corporation (EW - Free Report) , Intuitive Surgical, Inc. (ISRG - Free Report) and Johnson & Johnson (JNJ - Free Report) .
Edwards Lifesciences, carrying a Zacks Rank #2 (Buy), reported a first-quarter 2023 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion outpaced the consensus mark by 4.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in two of the trailing four quarters, missed the same in one and broke even in the other, the average being 1.2%.
Intuitive Surgical, having a Zacks Rank #2, reported a first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate by 3.4%. Revenues of $1.70 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 1.9%.
Johnson & Johnson reported first-quarter 2023 adjusted earnings of $2.68 per share, beating the Zacks Consensus Estimate by 6.8%. Revenues of $24.75 billion surpassed the Zacks Consensus Estimate by 5%. It currently carries a Zacks Rank #2.
Johnson & Johnson has a long-term estimated growth rate of 5.5%. JNJ’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.9%.
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Omnicell (OMCL) Q1 Earnings Top Estimates, Margins Down
Omnicell, Inc. (OMCL - Free Report) reported first-quarter 2023 adjusted earnings per share (EPS) of 39 cents, down 53% year over year. However, the metric remarkably beat the Zacks Consensus Estimate of 7 cents.
Adjustments include one-time expenses like share-based compensations, the amortization of acquired intangibles, acquisition-related expenses, severance-related expenses and others.
On a GAAP basis, the loss per diluted share was 33 cents in the first quarter compared to the EPS of 17 cents in the prior-year quarter.
Revenues in Detail
Revenues in the first quarter totaled $290.6 million, down 8.8% year over year. The decline was mainly due to lower point-of-care revenues as a result of ongoing health systems and capital budget constraints. However, the figure beat the Zacks Consensus Estimate by 5%.
Omnicell, Inc. Price, Consensus and EPS Surprise
Omnicell, Inc. price-consensus-eps-surprise-chart | Omnicell, Inc. Quote
Segmental Details
On a segmental basis, product revenues declined 17.8% year over year to $185.7 million in the reported quarter.
Service and other revenues climbed 12.9% year over year to $104.9 million.
Operational Update
In the quarter under review, the gross profit declined 16.7% to $125 million. The gross margin contracted 404 basis points (bps) to 43%.
Operating expenses were $148 million in the first quarter, up 2.1% year over year. The operating loss in the quarter totaled $23 million compared to the operating profit of $5.1 million in the year-ago quarter. In the first quarter, the adjusted operating margin contracted 950 bps to 7.9%.
Financial Update
Omnicell exited the first quarter of 2023 with cash and cash equivalents of $340.4 million compared with $330.4 million at the end of 2022.
The cumulative cash flow provided by operating activities at the end of the first quarter was $12.8 million compared to the cumulative net cash outflow of $16 million in the year-ago quarter.
In April 2023, OMCL launched the Center for Innovation Medication Management under a strategic alliance with Long Island University. The state-of-the-art laboratory features a wide range of Omnicell’s devices and is designed to provide an immersive pharmacy technology and analytics experience for LIU pharmacy students.
2023 Outlook
Omnicell reaffirmed its full-year 2023 guidance, which it originally announced during the 2022 fourth-quarter earnings call.
Total revenues for 2023 are expected in the range of $1.15-$1.19 billion (unchanged from the previous outlook). This comprises product revenues in the range of $740-$760 million (unchanged) and service revenues in the band of $410-$430 million (unchanged). The Zacks Consensus Estimate for total revenues is pegged at $1.17 billion.
The adjusted EPS for the full year is expected in the range of $1.55-$1.80 (unchanged). The Zacks Consensus Estimate for the same is pegged at $1.65.
For the second quarter of 2023, Omnicell expects revenues in the range of $278-$288 million, with product revenues expected in the band of $181-$186 million and service revenues in the range of $97-$102 million.
The Zacks Consensus Estimate for total revenues in the second quarter of 2023 is pegged at $287.5 million.
The adjusted EPS for the second quarter is anticipated in the range of 25-35 cents. The Zacks Consensus Estimate for the same is pegged at 36 cents.
Our Take
Omnicell ended the first quarter of 2023 with better-than-expected earnings and revenues, driven by strong execution, disciplined cost management and revenue timing. Reported revenues exceeded the high end of OMCL’s previous revenue outlook in the band of $273-$283 million (announced on the 2022 fourth-quarter earnings call), which is highly appreciated. The year-over-year increase in Omnicell’s service revenues positively emphasizes its digital transformation strategy.
The company’s adjusted EPS in the quarter also surpassed the top end of the previous guidance in the band of 4-14 cents for the first quarter, led by a capable product and service mix, expense timing and solid execution.
OMCL remains well-positioned to meet pharmacy and hospital needs, backed by the recent acquisitions and expansion of its advanced services solutions. The company’s Central Pharmacy Dispensing Service continues to receive more demand from health systems, which buoys optimism.
However, mounting operating costs and expenses are putting pressure on Omnicell’s margins. OMCL’s 2023 anticipated annual operating expense of nearly $50 million is expected to be derived from the recent reductions in force and other expense payment efforts from functions included in SG&A. However, the inflation impact on employee salaries, increased compensation costs and investments in R&D are most likely to outweigh savings.
Zacks Rank & Key Picks
Omnicell currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Edwards Lifesciences Corporation (EW - Free Report) , Intuitive Surgical, Inc. (ISRG - Free Report) and Johnson & Johnson (JNJ - Free Report) .
Edwards Lifesciences, carrying a Zacks Rank #2 (Buy), reported a first-quarter 2023 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion outpaced the consensus mark by 4.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in two of the trailing four quarters, missed the same in one and broke even in the other, the average being 1.2%.
Intuitive Surgical, having a Zacks Rank #2, reported a first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate by 3.4%. Revenues of $1.70 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 1.9%.
Johnson & Johnson reported first-quarter 2023 adjusted earnings of $2.68 per share, beating the Zacks Consensus Estimate by 6.8%. Revenues of $24.75 billion surpassed the Zacks Consensus Estimate by 5%. It currently carries a Zacks Rank #2.
Johnson & Johnson has a long-term estimated growth rate of 5.5%. JNJ’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.9%.