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Omnicell (OMCL) Down 12.7% Since Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Omnicell, Inc.OMCL . Shares have lost about 12.7% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to its next earnings release, or is OMCL due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Recent Earnings

Omnicell reported adjusted earnings (excluding the one-time tax benefit from the tax reform) per share of 54 cents in fourth-quarter 2017, beating the Zacks Consensus Estimate by a couple of cents. The figure is at the high end of the guided range of 49-55 cents.

Earnings improved from the year-ago figure of 37 cents as well. Despite the revenue timing headwind for the fourth quarter, strong gross margin improvement, and solid control on operating expenses resulted in the upside in adjusted EPS.

Full-year adjusted earnings came in at $1.33 compared with the year-ago figure of $1.51. The figure surpassed the Zacks Consensus Estimate of $1.31.

Revenues in Detail

Adjusted revenues in the fourth quarter increased 15.1% year over year to $198.3 million, but missed the Zacks Consensus Estimate of $204.2 million. Also, the figure was down from the earlier provided guidance of $201-$207 million owing to the timing of two specific large install accounts delays.

Full-year adjusted revenues came in at $717.4 million, up 2% from the year-ago period. The figure missed the Zacks Consensus Estimate of $722.9 million.

On a segmental basis, Omnicell's Automation and Analytics revenues increased 13.6% year over year in the fourth quarter to $163.1 million.

However, revenues at the Medication Adherence segment rose 22.6% year over year to $34.8 million.

Operational Update

Omnicell's gross profit during the reported quarter increased 27.9% to $95.1 million. Gross margin expanded 480 basis points (bps) to 48%. According to the company, adjusted gross margin as provided by the company in the fourth quarter was 50.1%, reflecting an expansion of 200 bps year over year.

SG&A expenses in the fourth quarter increased 6.5% year over year to $63.5 million. Research and development expenses rose 6.7% year over year to $15.9 million. Operating expenses were $79.4 million in the fourth quarter, up 6.5% year over year.

Adjusted operating expenses in the quarter totaled $71.2 million, up 8.9% from the year-ago quarter.

Financial Update

Omnicell exited 2017 with cash and cash equivalents of $32.4 million, compared with $54.5 million at the end of 2016.

2018 Guidance

For the first quarter of 2018, Omnicell expects adjusted revenues in the band of $174-$179 million, which includes the impact of reclassification of selling costs as a reduction of revenues. The company expects first-quarter 2018 adjusted earnings in the range of 22-28 cents per share. The Zacks Consensus Estimate for first-quarter revenues is pegged at $190.2 million and earnings per share at 42 cents.

For 2018, Omnicell expects product bookings in the range of $625-$660 million. Also, the company expects adjusted revenues in the band of $780-$800 million, which includes the impact of reclassification of selling costs as a reduction of revenue. The company also expects adjusted earnings to be in the band of $1.85-$2.05 per share. The Zacks Consensus Estimate for full-year earnings per share is pegged at $1.29, below the company's guided range. The Zacks Consensus Estimate for full-year revenues stands at $730.3 million, above the company's guided range.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. In the past month, the consensus estimate has shifted lower by 144.4% due to these changes.

Omnicell, Inc. Price and Consensus

Omnicell, Inc. Price and Consensus | Omnicell, Inc. Quote

VGM Scores

Currently, OMCL has a nice Growth Score of B, though it is lagging a bit on the momentum front with a C. Following the exact same course, the stock was also allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.

Outlook

OMCL has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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