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Omnicell (OMCL) Q4 Earnings Top Estimates, Gross Margin Down
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Omnicell, Inc. (OMCL - Free Report) reported fourth-quarter 2023 adjusted earnings per share (EPS) of 33 cents, in line with the year-over-year figure. However, the metric beat the Zacks Consensus Estimate of 17 cents.
Adjustments include one-time expenses like share-based compensations, the amortization of acquired intangibles, acquisition-related expenses, executive transition costs, severance-related expenses and others.
GAAP loss was 32 cents per share in the quarter under review compared with 64 cents in the prior-year quarter.
For the full year, adjusted earnings were $1.91 per share, down 36.3% from the year-ago period.
Revenues in Detail
Revenues in the fourth quarter totaled $258.8 million, down 13% year over year. The decline was mainly due to lower point-of-care revenues as a result of ongoing health systems and capital budget and labor constraints. However, the figure beat the Zacks Consensus Estimate by 1.1%.
Total revenues for 2023 were $1.15 billion, down 11.5% from the year-ago period.
Segmental Details
On a segmental basis, Product revenues dropped 26.1% year over year to $145.7 million in the reported quarter. Service and other revenues climbed 12.4% year over year to $113.2 million.
Operational Update
In the quarter under review, the gross profit declined 13.4% to $105.4 million. The gross margin contracted 18 basis points (bps) to 40.7% despite a 12.8% fall in the cost of revenues.
Operating expenses were $128.8 million in the fourth quarter, down 19.6% year over year. The operating loss in the quarter totaled $23.4 million compared with $38.4 million in the prior-year period.
Financial Update
Omnicell exited the fourth quarter of 2023 with cash and cash equivalents of $468 million compared with $330.4 million at the end of 2022.
The cumulative cash flow provided by operating activities at the end of the fourth quarter was $181.1 million compared with $77.8 million in the comparable period last year.
2024 Outlook
Omnicell initiated its financial outlook for the full year 2024.
Total revenues for 2024 are expected in the range of $1.045 billion-$1.120 billion. Of this, product revenues are expected in the range of $605 million-$650 million and service revenues in the band of $440 million-$470 million. The Zacks Consensus Estimate for total revenues is pegged at $1.09 billion.
The adjusted EPS for the full year is expected in the range of 90 cents-$1.40. The Zacks Consensus Estimate is pegged at $1.41.
For the first quarter of 2024, Omnicell expects revenues in the range of $232 million-$242 million, including anticipated product revenues in the band of $128 million-$133 million and service revenues in the range of $104 million-$109 million.
The Zacks Consensus Estimate for the first-quarter 2024 revenues is pegged at $251 million.
The adjusted earnings for the first quarter are expected between a loss of 10 cents per share and breakeven per share. The Zacks Consensus Estimate is pegged at 17 cents.
Our Take
Omnicell ended the fourth quarter of 2023 with better-than-expected earnings and revenues. The cost savings actions implemented throughout the year strongly benefitted the performance of its key metrics, which is encouraging. In addition, the company’s innovation pipeline remains robust, particularly around its XT fleet of connected devices.
During the quarter, the company had some key customer wins, which continually demonstrated the value of its multi-year contractual partnerships with health system customers. Omnicell’s opportunity to capture more market share is encouraging due to the expected easing of hospital cost pressures and the forecasted improvement of macroeconomic conditions.
Meanwhile, revenues were down year over year in the fourth quarter. The contraction of the gross margin does not bode well for the stock.
Zacks Rank and Key Picks
Omnicell currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Stryker Corporation (SYK - Free Report) , Cencora, Inc. (COR - Free Report) and Cardinal Health (CAH - Free Report) .
Stryker, carrying a Zacks Rank #2 (Buy), reported a fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.
Cencora, carrying a Zacks Rank #2, reported a first-quarter fiscal 2024 adjusted EPS of $3.28, which beat the Zacks Consensus Estimate by 14.7%. Revenues of $72.3 billion outpaced the Zacks Consensus Estimate by 5.1%.
COR has an earnings yield of 5.75% compared with the industry’s 1.85%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 6.7%.
Cardinal Health reported second-quarter fiscal 2024 adjusted earnings of $1.82, which beat the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion improved 11.6% on a year-over-year basis and also topped the Zacks Consensus Estimate by 1.1%.
CAH has a long-term estimated earnings growth rate of 15.3% compared with the industry’s 11.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%.
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Omnicell (OMCL) Q4 Earnings Top Estimates, Gross Margin Down
Omnicell, Inc. (OMCL - Free Report) reported fourth-quarter 2023 adjusted earnings per share (EPS) of 33 cents, in line with the year-over-year figure. However, the metric beat the Zacks Consensus Estimate of 17 cents.
Adjustments include one-time expenses like share-based compensations, the amortization of acquired intangibles, acquisition-related expenses, executive transition costs, severance-related expenses and others.
GAAP loss was 32 cents per share in the quarter under review compared with 64 cents in the prior-year quarter.
For the full year, adjusted earnings were $1.91 per share, down 36.3% from the year-ago period.
Revenues in Detail
Revenues in the fourth quarter totaled $258.8 million, down 13% year over year. The decline was mainly due to lower point-of-care revenues as a result of ongoing health systems and capital budget and labor constraints. However, the figure beat the Zacks Consensus Estimate by 1.1%.
Omnicell, Inc. Price, Consensus and EPS Surprise
Omnicell, Inc. price-consensus-eps-surprise-chart | Omnicell, Inc. Quote
Total revenues for 2023 were $1.15 billion, down 11.5% from the year-ago period.
Segmental Details
On a segmental basis, Product revenues dropped 26.1% year over year to $145.7 million in the reported quarter. Service and other revenues climbed 12.4% year over year to $113.2 million.
Operational Update
In the quarter under review, the gross profit declined 13.4% to $105.4 million. The gross margin contracted 18 basis points (bps) to 40.7% despite a 12.8% fall in the cost of revenues.
Operating expenses were $128.8 million in the fourth quarter, down 19.6% year over year. The operating loss in the quarter totaled $23.4 million compared with $38.4 million in the prior-year period.
Financial Update
Omnicell exited the fourth quarter of 2023 with cash and cash equivalents of $468 million compared with $330.4 million at the end of 2022.
The cumulative cash flow provided by operating activities at the end of the fourth quarter was $181.1 million compared with $77.8 million in the comparable period last year.
2024 Outlook
Omnicell initiated its financial outlook for the full year 2024.
Total revenues for 2024 are expected in the range of $1.045 billion-$1.120 billion. Of this, product revenues are expected in the range of $605 million-$650 million and service revenues in the band of $440 million-$470 million. The Zacks Consensus Estimate for total revenues is pegged at $1.09 billion.
The adjusted EPS for the full year is expected in the range of 90 cents-$1.40. The Zacks Consensus Estimate is pegged at $1.41.
For the first quarter of 2024, Omnicell expects revenues in the range of $232 million-$242 million, including anticipated product revenues in the band of $128 million-$133 million and service revenues in the range of $104 million-$109 million.
The Zacks Consensus Estimate for the first-quarter 2024 revenues is pegged at $251 million.
The adjusted earnings for the first quarter are expected between a loss of 10 cents per share and breakeven per share. The Zacks Consensus Estimate is pegged at 17 cents.
Our Take
Omnicell ended the fourth quarter of 2023 with better-than-expected earnings and revenues. The cost savings actions implemented throughout the year strongly benefitted the performance of its key metrics, which is encouraging. In addition, the company’s innovation pipeline remains robust, particularly around its XT fleet of connected devices.
During the quarter, the company had some key customer wins, which continually demonstrated the value of its multi-year contractual partnerships with health system customers. Omnicell’s opportunity to capture more market share is encouraging due to the expected easing of hospital cost pressures and the forecasted improvement of macroeconomic conditions.
Meanwhile, revenues were down year over year in the fourth quarter. The contraction of the gross margin does not bode well for the stock.
Zacks Rank and Key Picks
Omnicell currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Stryker Corporation (SYK - Free Report) , Cencora, Inc. (COR - Free Report) and Cardinal Health (CAH - Free Report) .
Stryker, carrying a Zacks Rank #2 (Buy), reported a fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.
Cencora, carrying a Zacks Rank #2, reported a first-quarter fiscal 2024 adjusted EPS of $3.28, which beat the Zacks Consensus Estimate by 14.7%. Revenues of $72.3 billion outpaced the Zacks Consensus Estimate by 5.1%.
COR has an earnings yield of 5.75% compared with the industry’s 1.85%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 6.7%.
Cardinal Health reported second-quarter fiscal 2024 adjusted earnings of $1.82, which beat the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion improved 11.6% on a year-over-year basis and also topped the Zacks Consensus Estimate by 1.1%.
CAH has a long-term estimated earnings growth rate of 15.3% compared with the industry’s 11.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%.