Omnicell Inc.
(
OMCL
) reported EPS of 4 cents in the second quarter of fiscal 2012,
lower than the year-ago quarter EPS of 8 cents. The Zacks Consensus
EPS for the second quarter 2012 was 6 cents. However excluding the
impact of certain one-time items associated with the MTS
acquisition, the adjusted EPS for the quarter came in at 13
cents.
Revenues in the reported quarter increased 23.6% year over year
to $75.4 million, exceeding the Zacks Consensus Estimate of $73
million. Product revenue, contributing 78.6% of revenues, climbed
28.4% to $59.3 million in the quarter while the same from Services
and Others (contributing the rest) witnessed an upside of 8.9 to
$16.1 million%.
Margins
Cost of Product sales were up 44.9% to $20.3 million in the
quarter. However, cost of services and others revenues edged down
by 0.8% to $7.4 million. Gross margin contracted 329 basis points
(bps) to 52.2% during the quarter.
The company's research and development (R&D) expenses were
up 4.1% to $5.5 million while selling, general and administrative
(SG&A) expenses jumped 29.4% to $31.4 million. As a result,
operating margin during the quarter contracted a significant 370
bps to 3.2%.
At the end of the reported quarter, the company had cash and
cash equivalents and short-term investments of $54.1 million
compared with $99.9 million at the end of fiscal 2011.
Our take
We are encouraged by Omnicell's strong top-line performance in
the reported quarter. In this quarter, the company achieved the
seventh consecutive annual top KLAS ranking for its automated
medication dispensing system. However, margin contractions remained
a matter of concern. Still, we expect that the MTS acquisition is
concurrent with the company's strategy to strengthen its foothold
in the automation and business information solutions market.
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
CareFusionCorporation
(
CFN
) and
McKessonAutomation
(
MCK
) remain concerns.
Currently, the stock retains a short-term Zacks #2 Rank (Buy).
Over the long term, we are Neutral on Omnicell.
CAREFUSION CORP (CFN): Free Stock Analysis
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MCKESSON CORP (MCK): Free Stock Analysis Report
OMNICELL INC (OMCL): Free Stock Analysis Report
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