) reported first-quarter 2013 net operating earnings of 14 cents
per share, missing the Zacks Consensus Estimate of 19 cents.
Results nevertheless improved 7.7% year over year.
Including $0.4 million reorganization costs related to the
continued integration of MTS Medication Technologies and $0.6
million amortization expense for all intangible assets acquired
in connection with the acquisition of MTS in May 2012 and earlier
acquisitions by Omnicell, net income was 10 cents per share,
higher than 7 cents earned in the year-ago quarter.
Revenues in the first quarter (including the results of MTS
Medication Technologies) jumped 35.8% year over year to $87.1
million. Despite the massive improvement, top-line marginally
missed the Zacks Consensus Estimate of $88 million. Product
revenue, contributing 79.5% of total revenues, surged 42.7% to
$69.2 million in the quarter, while Services and Others
(contributing the rest) witnessed an upside of 14.4% to $17.9
Cost of product sales increased 65.3% year over year to $33.5
million in the quarter while cost of services and others revenues
increased 1.2% to $8.2 million. Consequently, gross margin
contracted more than 270 basis points (bps) to 52.1% in the
Omnicell's research and development (R&D) expenses shot up
22.5% to $8 million while selling, general and administrative
(SG&A) expenses increased 29.8% to $33.2 million. Due to
declining gross margin and higher operating expenses, operating
margin decreased a whopping 900 bps to 4.8% in the first
Omnicell exited first quarter with cash and cash equivalents
of $69.8 million, compared with $62.3 million at the end of
Omnicell envisages revenue in the range of $370-$380 million
(up 18%-21%) for 2013. The current Zacks Consensus Estimate is
pegged at $375 million. While the expected revenue growth for
Acute Care segment is 10%-12% (organic growth), the same for
Non-Acute segment is 60%-70%. The company forecasts EPS in the
band of 99 cents -$1.07 (14%-22%) compared with the prior outlook
of 97 cents -$1.05 for the ongoing year. The Zacks Consensus
Estimate of $1.02 lies within the outlook band.
At the end of 2013, Omnicell expects backlog to come in at
$160-$165 million while it projects product bookings of $305-$315
Omnicell's first-quarter results missed the Zacks Consensus
Estimate despite year-over-year growth on the back of synergies
from MTS acquisition. Margin pressure was another cause of
On the other hand, Omnicell's three-pronged strategy of
domestic expansion, selective acquisitions and targeted
international expansion is yielding positive results. Further,
geographic expansion into lucrative markets such as the Middle
East and China, should accelerate growth.
The stock carries a Zacks Rank #3 (Hold). While we remain on
the sidelines for Omnicell, other medical sector stocks such as
Intuitive Surgical Inc.
) are worth considering. These stocks carry a Zacks Rank #2
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