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Omnicell, Inc. (OMCL - Free Report) reported earnings per share of 2 cents in second-quarter 2017, in line with the Zacks Consensus Estimate. Earnings improved from the year-ago loss of 3 cents.

Considering stock-based compensation expenses as a regular one, adjusted earnings per share came in at 19 cents, as compared with earnings of 28 cents in the year-ago quarter.

Revenues in Detail

Revenues during the second quarter increased 20.1% year over year to $180.9 million, surpassing the Zacks Consensus Estimate of $174 million. Revenues also exceeded the company’s guided range of $172 million to $178 million.

According to management, the company witnessed strong customer acceptance and popularity of its new XT Series products and revenue performance was also driven by related ramp-up of the XT Series launch. To be precise, the second quarter revenue strength was driven by XT revenue and IV Solutions.

Omnicell, Inc. Price, Consensus and EPS Surprise

 

Omnicell, Inc. Price, Consensus and EPS Surprise | Omnicell, Inc. Quote

On a segmental basis, Omnicell’s Automation and Analytics revenues fell 0.2% year over year in the second quarter to $148.4 million.

However, revenues at the Medication Adherence segment rose 33.9% year over year to $32.5 million.

Operational Update

Omnicell's gross profit during the reported quarter was down 0.1% to $77.9 million. Gross margin contracted 200 basis points (bps) to 43.1%. According to the company, the adjusted gross margin in the second quarter was 45.3%, reflecting a contraction of 460 bps year over year.

SG&A expenses in the second quarter declined 1.4% year over year to $63.5 million. Research and development expenses increased 22.6% year over year to $16.9 million. Operating expenses were $80.4 million in the second quarter, up 2.9% year over year.

According to the company, adjusted operating expenses in the quarter totaled $71.1 million, up 4.9% from the year-ago quarter.

Financial Update

Omnicell exited second-quarter 2017 with cash and cash equivalents of $26.9 million, compared with $46.3 million at the end of first-quarter 2017.

2017 Guidance

For full-year 2017, Omnicell expects product bookings in the range of $570–$590 million (unchanged from the earlier forecast). The company also reaffirmed adjusted revenue estimates at the band of $720 million to $740 million and adjusted earnings guidance at $1.22 to $1.34 per share. The Zacks Consensus Estimate for full-year earnings per share is pegged at 29 cents. The Zacks Consensus Estimate for full-year revenues stands at $731.8 million.

The company also issued its third-quarter of 2017 guidance. Management expects adjusted revenue in the band of $188 million to $194 million. Omnicell projects third-quarter 2017 adjusted earnings between 38 cents and 45 cents. The Zacks Consensus Estimate for third-quarter revenues is pegged at $199.0 million and third-quarter earnings per share at 20 cents.

Our Take

Omnicell’s second-quarter 2017 performance was impressive with year-over-year increase in both earnings and revenues. Also, the company is expected to gain in terms of revenues and profits from its recent launches and strategic partnerships.

The company recently launched AcuDose software on XT hardware which allows the Aesynt customers to take full advantage of XT. The company also launched XT Series Automated Supply Dispensing system in late Jul 2017. During the second quarter, the company also launched the controlled substance dispenser, a module-providing secured workflow for dispensing and administration of controlled substance.

However, weak margin is a matter of concern.

Zacks Rank & Key Picks

Omnicell currently has a Zacks Rank #3 (Hold). A few better-ranked medical stocks are Mesa Laboratories, Inc. (MLAB - Free Report) , INSYS Therapeutics, Inc. (INSY - Free Report) and Align Technology, Inc. (ALGN - Free Report) . Notably, INSYS Therapeutics and Align Technology sport a Zacks Rank #1 (Strong Buy), while Mesa Laboratories carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

INSYS Therapeutics has a long-term expected earnings growth rate of 20%. The stock has gained around 1.7% over the last three months.

Align Technology has an expected long-term adjusted earnings growth of almost 24.1%. The stock has added roughly 29.5% over the last three months.

Mesa Laboratories has a positive earnings surprise of 2.8% for the last four quarters. The stock has added roughly 16.5% over the last six months.

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