Provider of automation solutions for the medication-use
) reported earnings per share (EPS) of 16 cents in the fourth
quarter of 2012, significantly up from 12 cents in the year-ago
quarter. However, excluding the impact of one-time items
associated with the MTS acquisition, the adjusted EPS soared 50%
on a year-over-year basis to 18 cents in the quarter, a beat of
12.5% over the Zacks Consensus Estimate.
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OMNICELL INC (OMCL): Free Stock Analysis
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Adjusted EPS in 2012 came in at 60 cents, up 27.7% from the Zacks
Consensus Estimate and 81.8% higher from 2011 adjusted EPS.
Omnicell sailed past earlier results (prior-year quarter and 2011
EPS) on the back of top-line growth with its foray into the
under-penetrated non-acute care market following the MTS
Revenues in the fourth quarter (including the results of MTS
Medication Technologies) jumped 43.3% year over year to $90.2
million, a milestone for the company, surpassing the Zacks
Consensus Estimate of $87 million. Product revenue, contributing
80.2% of total revenues, soared 53.1% to $72.4 million in the
quarter, while Services and Others (contributing the rest)
witnessed an upside of 13.4% to $17.8 million.
Full year revenues improved 24.9% from year-ago level to a record
high of $314 million in 2012, edging past the Zacks Consensus
Estimate of $311 million. As of Dec 31, 2012, product backlog was
$155 million, up 16% from Dec 31, 2011.
Cost of product sales surged 67.9% year over year to $32.9
million in the quarter while cost of services and others revenues
increased 6.7% to $6.7 million. Consequently, gross margin
contracted more than 240 basis points (bps) to 54.7% in the
Omnicell's research and development (R&D) expenses increased
3.4% to $6.1 million while selling, general and administrative
(SG&A) expenses soared 40.3% to $33.4 million. However,
operating margin expanded 100 bps to 10.9% in the fourth quarter.
Omnicell exited 2012 with cash and cash equivalents of $62.3
million, down 67.5% year over year.
Omnicell reported yet another positive quarter with record high
revenues. The consistent performance of the company implies that
its three-pronged strategy of domestic expansion, selective
acquisitions and targeted international expansion is yielding
positive results. While top-line synergies from the MTS
acquisition was a major catalyst in 2012, several contract wins
in the domestic and offshore market is likely to boost organic
growth as well. Further, high profitability of the non-acute care
division lends Omnicell another upside edge and should improve
margins going forward.
However, constrained hospital spending remains an overhang.
Further, competitive pressure and aggressive price competition
keeps us on the sidelines. Accordingly, the stock carries a Zacks
Rank #3 (Hold). However, medical stocks such as
), each carrying a Zacks Rank #1 (Strong Buy), are expected to
excel in the short term.