) reported EPS of 7 cents in the first quarter of fiscal 2012,
ahead of the year-ago quarter EPS of 2 cents and surpassing the
Zacks Consensus Estimate by a penny.
However, including $1.0 million in pre-tax settlement expense
related to litigation claims in the year-ago period, adjusted EPS
came in at 4 cents for the first quarter of 2011. The reported
earnings increased 75% on a year-over-year basis primarily on the
back of revenues growth and improved margins during the
Revenues in the reported quarter increased 12.2% year over year
to $64.1 million, exceeding the Zacks Consensus Estimate of $63
million. Product revenue, contributing 75.6% of revenues, climbed
13.9% to $48.5 million in the quarter while the same from Services
and Others (contributing the rest) witnessed an upside of 7.1%.
MTS Medication Technologies Acquisition
In a separate development, Omnicell announced that it has
entered into a deal to acquire MTS Medication Technologies, a
global medication adherence packaging systems provider for $156
million in cash, subject to certain adjustments.
The company expects the acquisition to close in late second
quarter or third quarter of 2012. Omnicell exited the first quarter
with cash, cash equivalents and short-term investments of $209.5
million compared with $199.8 million at the end of December
The transaction is expected to be accretive in 2012 and boost
the bottom line in fiscal 2013 by roughly 15 -17 cents per
Omnicell remains optimistic regarding the acquisition as it will
enable it to access MTS' automated medication adherence packaging
equipment and consumables. This will facilitate the company to
offer a complete automated medication management system across the
acute and non-acute range of patient care.
Cost of Product sales were up 13.8% to $20.3 million in the
quarter. However, cost of services and Others revenues witnessed a
year-over-year rise of 5.5% to $7.6 million. Notwithstanding this,
gross margin expanded 30 basis points (bps) to 55.7% during the
The company's research and development (R&D) expenses jumped
34.2% to $6.5 million while selling, general and administrative
(SG&A) expenses dropped 1% to $25.6 million. Operating margin
during the quarter expanded a significant 390 bps to 5.7%.
We are encouraged with Omnicell's strong top and bottom-line
performance in the reported quarter. Moreover, the pending MTS
acquisition is concurrent with the company's strategy of
strengthening 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 working hard 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. As the
information technology market is growing in leaps and bounds
coupled with increasing investment 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, Omnicell retains a short-term Zacks
#1 Rank (Strong Buy).
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