Omnicell's New Contract - Analyst Blog

Omnicell, Inc. (OMCL) recently entered into a new contract with Carolinas HealthCare System (CHS) whereby the latter has selected Omnicell’s OmniRx automated medication dispensing cabinets (ADCs) to streamline management of medications in its hospitals. Carolinas HealthCare System is the largest healthcare system in the Carolinas and third largest non-profit public system in the U.S.
 
Omnicell offers its customers frequent software upgrades to help them remain current with ever-changing regulatory issues as well as pharmacy and nursing best practices. Omnicell's advanced automation solutions will help lower time and effort of CHS clinical staff for administrative processes. The advanced automation solutions enable clinical staff to monitor and control medication dispensing and reduce preventable medication errors. This helps the staff to focus more on patient care and improve clinical outcomes.

While the value of the contract has not been disclosed, we think that it is substantial and will increase Omnicell’s top-line. Omnicell is a leading provider of systems and software solutions, primarily focusing on end-to-end automation solutions for the medication-use process.
 Omnicell’s products are primarily purchased by hospitals and nursing homes which are presently grappling with the economic scenario of weak credit markets, rising expenses, higher unemployment, and erosion of wealth.

The company’s recent third-quarter earnings per share of 3 cents beat the Zacks Consensus Estimate of 2 cents. However, earnings were considerably lower than the year-ago figure of 9 cents. The economic turbulence has impacted the company’s top line.  

Based on Omnicell’s third quarter 2009 performance, we have a ‘Neutral’ recommendation on the company’s stock.

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