Following the completion of the MTS Medication Technologies
increased its fiscal 2012 guidance. The market reacted positively
to the news with shares gaining 1.1% on Tuesday to $13.95.
The MTS Medication products are mostly used by the institutional
clients to supply long-term care and non-acute care facilities with
medication packages to follow the prescriptions. Currently, the
company serves 6,000 pharmacies across the world providing
automated packaging systems for international epidemic. Thus
Omnicell's gain from the acquisition is expected to be strong
triggering its growth prospects in the upcoming period.
The synergies from the acquisition of medication adherence
packaging systems provider MTS Medication have prompted Omnicell to
revise its expectation upwards. MTS Medication will continue to
operate as a wholly-owned subsidiary of Omnicell but with the same
On the heels of the newly included MTS Medication business,
Omnicell raised its 2012 adjusted EPS guidance to the range of 75
cents - 81 cents from its previous full-year adjusted EPS guidance
of 67 cents - 72 cents. The acquisition also drove management's
revenues expectation to the range of $307-$315 million from the
earlier range of $263-$267 million.
Product backlog (comprising Omnicell acute care medication and
supply management products) for fiscal 2012 is expected to remain
in the range of $138-$142 million (unchanged from the previous
guidance). Given higher weightage of its revenue towards
consumables, the company expects MTS Medication Technologies
products will not impact its fiscal 2012 product backlog. In
addition, for the second quarter of 2012, Omnicell expects adjusted
EPS in the range of 17-18 cents on revenues of $74 million.
This critical problem of medication non-adherence is alarming as
the current data shows that it costs up to $290 billion annually
and is the cause of death for approximately 125,000 people a year.
According to the Centers for Medicare and Medicaid Services
("CMS"), 11% of all hospital admissions are related to this
Omnicell remains optimistic regarding the acquisition of MTS as
it will enable the company to access MTS' automated medication
adherence packaging equipment and consumables. This will allow the
company to offer a complete automated medication management system
across the acute and non-acute range of patient care.
Omnicell strongly believes that together with MTS, it will
emerge as a market leader for medication management solutions
across the broad range of health care beyond the acute care
setting. The company also expects this to deliver superior results
while lowering costs considerably.
However, several macroeconomic uncertainties as well as intense
competition from major players such as
) remain concerns. Currently, Omnicell retains a short-term Zacks
#2 Rank (Buy).
Headquartered in Mountain View, California, Omnicell operates in
a niche automated medication distribution industry and stands to
benefit from favorable demographic trends and regulatory
environments as well as lack of nursing staff.
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