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Omnicell (OMCL) Q1 Earnings Top, Operating Margin Rises

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Omnicell, Inc. (OMCL - Free Report) first-quarter 2020 adjusted earnings per share (EPS) were 66 cents, up 8.2% year over year. The metric exceeded the Zacks Consensus Estimate by 22.2%.

On a GAAP (reported) basis, EPS was 26 cents for the quarter under review, reflecting a stupendous rise from 8 cents in the year-aqo quarter.

Revenues in Detail

First-quarter revenues of $229.7 million increased 13.4% year over year on a reported basis (same on an adjusted basis). The figure beat the Zacks Consensus Estimate by 1.6%.

Segmental Details

On a segmental basis, Product revenues improved 16.8% year over year to $170.1 million in the reported quarter.

Service and other revenues climbed 4.8% year over year to $59.6 million.

Omnicell Inc Price, Consensus and EPS Surprise

Omnicell Inc Price, Consensus and EPS Surprise

Omnicell Inc price-consensus-eps-surprise-chart | Omnicell Inc Quote

With regard to COVID-19 impact on the company’s business, Omnicell noted that during the second half of March 2020, it started to see a slowdown in product bookings. With respect to bookings for new sales, beginning the second half of March, the company started witnessing slowdown in hospital purchasing decisions.

Operational Update

In the quarter under review, Omnicell's adjusted gross profit rose 12.8% to $113.5 million. However, adjusted gross margin contracted 30 basis points (bps) to 49.4%.

Adjusted operating expenses were $82.2 million in the first quarter, up 10.5% year over year. Adjusted operating profit totaled $31.3 million, reflecting a 19.5% increase from the prior-year quarter. Adjusted operating margin in the first quarter expanded 60 bps to 13.6%.

Financial Update

Omnicell exited the first quarter with cash and cash equivalents of $337.1 million compared with $345.6 million at the end of 2019.

At the end of the first quarter, cash flow from operating activities was $25.2 million compared with $26.5 million a year ago.

Guidance

Omnicell is currently unable to gauge the scope, duration, and impact of the pandemic and is also uncertain about the timing of global recovery and economic normalization. This has compelled the company to withdraw its previously issued 2020 guidance.

Our Take

Omnicell exited the first quarter with better-than-expected results. The top line registered strong year-over-year growth and the company continued to see solid segmental contributions. Expansion of margins in the reported quarter was encouraging as well.

However, the company noted that since the second half of March till the time of the earnings call, it witnessed significantly lower product bookings as well as slowdown in purchasing decisions by hospitals. Additionally, through the second quarter, the company’s scope to access hospitals in order to implement capital equipment will likely be delayed in many cases, as many hospitals are used for treating coronavirus patients. Overall, the company noted that its bookings are behind the internal estimates as of now.

Zacks Rank and Key Picks

Omnicell currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are Aphria Inc. (APHA - Free Report) , Biogen Inc. (BIIB - Free Report) and Eli Lilly and Company (LLY - Free Report) .

Aphria carries a Zacks Rank #2 (Buy). It reported third-quarter fiscal 2020 adjusted earnings per share (EPS) of 2 cents in contrast to the Zacks Consensus Estimate of a loss of 4 cents. Net revenues of $64.4 million outpaced the consensus estimate by 14.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Biogen currently carries a Zacks Rank #2. It reported first-quarter 2020 adjusted EPS of $9.14, surpassing the Zacks Consensus Estimate by 18.1%. Revenues of $3.53 billion outpaced the consensus mark by 3.2%.

Eli Lilly sports a Zacks Rank #1. It delivered first-quarter 2020 EPS of $1.75, outpacing the Zacks Consensus Estimate by 12.9%. Revenues of $145.3 million surpassed the consensus estimate by 6.3%.

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