Omnicell Fails to Meet Estimates - Analyst Blog

Omnicell Inc. (OMCL) reported an EPS of 2 cents during the fourth quarter of fiscal 2010, in line with the year-ago quarter's estimate but missing Zacks Consensus Estimate of 5 cents. For fiscal 2010, the company reported EPS of 15 cents, well above 10 cents in the previous year.

Revenue in the quarter increased 4.8% year over year and 1.7% sequentially to $57.3 million, marginally ahead of the Zacks Consensus Estimate of $57.0 million. For the full year, the company reported revenues of $ 222.4 million, up 4.2% compared with 2009 and in line with the Zacks Consensus Estimate.

Revenues derived from Products ($43.5 million) and Services and Others ($13.7 million) budged up 0.7% and 5.2%, respectively year over year. Annually Omnicell reported only 0.6% increase in revenue from products but a significant 18.2% increase from services and others.

Gross margin expanded 233 basic points to 72.03% in the fourth quarter 2010, as cost of sales declined 1.07% to $25.9 million for the quarter. Selling, general and administrative cost (SG&A) increased 23.1% to $24.4 million leading to a drastic fall of 630 basis points to 3.4% in operating margin. However research and development (R&D) cost reduced 11.2% for the quarter to $5.4 million.

At the end of the reported quarter, cash and cash equivalents were $175.6 million, up from $169.2 million at the end of December 2009.

Omnicell has undertaken several initiatives in the past few quarters which include the Savvy mobile medication management solution, partnership with Cardinal Health (CAH) and also the acquisitionof Pandora Data Systems.

Omnicell operates in the niche automated medication distribution industry and stands to benefit from favorable demographic trends, regulatory environments, and a lack of nursing staff.The company's products, primarily purchased by hospitals and nursing homes, are presently grappling with the weak credit markets and higher unemployment. However, we believe that a slowly recovering economy will help the company to tap the under-penetrated healthcare IT market.

 
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