) reported earnings per share (EPS) of 20 cents in the third
quarter of fiscal 2012, significantly up from the year-ago
quarter EPS of 9 cents. However, excluding the impact of certain
one-time items associated with the MTS acquisition, the adjusted
EPS for the third quarter came in at 22 cents, well above the
Zacks Consensus Estimate of 13 cents.
Revenues in the reported quarter (including the results of MTS
Medication Technologies) increased 30.9% year over year to $84.3
million, nominally missing the Zacks Consensus Estimate of $85
million. Product revenue, contributing 79.9% of revenues, climbed
35.3% to $67.4 million in the quarter, while the same from
Services and Others (contributing the rest) witnessed an upside
of 15.8% to $16.9 million.
Cost of product sales were up 36.6% to $30.6 million in the
quarter. However, cost of services and others revenues remained
almost flat year over year at $7.6 million. Gross margin expanded
114 basis points (bps) to 54.6% during the quarter.
The company's research and development (R&D) expenses were
up 8.5% to $5.5 million while selling, general and administrative
(SG&A) expenses jumped 24.2% to $29.3 million. However,
operating margin during the quarter expanded a significant 586
bps to 13.28%.
At the end of the reported quarter, the company had cash and
cash equivalents and short-term investments of $54.8 million
compared with $199.9 million at the end of fiscal 2011.
We are encouraged by Omnicell's strong top- and bottom-line
performances in the reported quarter. After quarters of margin
contractions, the improvement in this reported quarter came as an
encouragement for the company. We expect that the MTS acquisition
is concurrent with the company's strategy to strengthen its
foothold in the automation and business information solutions
Additionally, given the fact that very few hospitals have
adopted medication control systems in the international market,
Omnicell is presently striving to establish its presence in the
global arena, especially in markets with huge potential.
Omnicell stands to benefit from favorable demographic trends,
regulatory environment and lack of nursing staff. Owing to the
growth in the information technology market along with increasing
investments from healthcare industries, Omnicell is confident
about its success in the near to medium term, specially aided by
its SinglePointe and Anywhere RN products.
However, several macroeconomic uncertainties as well as
intense competition from major players such as
) remain concerns.
Currently, the stock retains a short-term Zacks #2 Rank (Buy).
Over the long term, we are 'Neutral' on Omnicell.
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