Omnicell (OMCL) Earnings Beat, Revenues Miss Estimates In Q4

Omnicell, Inc. (NASDAQ:OMCL) 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.

2017 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.

Our Take

Omnicell’s fourth-quarter 2017 performance was impressive with year-over-year increase in earnings and revenues. Further, both of the company’s segments witnessed year-over-year growth. We are encouraged to note that the company is working on product innovation through R&D. Also, Omnicell is expected to gain from its recent launches and strategic partnerships.

Last December, the company announced the XR2 Automated Central Pharmacy System. In the same month, the company announced that the IVX Workflow, which operates on IVX Cloud, creating a significant technological advancement for sterile compounding workflow processes and enabling pharmacies to safely and efficiently compound and prepare IV doses.The improvement in margin is also encouraging.

However, a tough competitive landscape acts as a dampener.

Zacks Rank & Key Picks

Omnicell has a Zacks Rank #3 (Hold).

A few better-ranked stocks that reported solid results this earnings season are PetMed Express (NASDAQ:PETS) , PerkinElmer (NYSE:PKI) and ResMed (NYSE:RMD) . While PetMed sports a Zacks Rank #1 (Strong Buy), PerkinElmer and ResMed carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed reported third-quarter fiscal 2018 results. Adjusted earnings per share were 44 cents, up 88.3% from the prior-year quarter. Revenues rose 13.7% on a year-over-year basis to $60.1 million.

PerkinElmer reported fourth-quarter 2017 adjusted earnings per share of 97 cents. Adjusted revenues were approximately $641.6 million, up from $567 million in the year-ago quarter.

ResMed posted second-quarter fiscal 2018 adjusted earnings per share of $1, up 36.9% from the prior-year quarter. Revenues in the reported quarter increased 13.4% year over year (up 11% at constant exchange rate or CER) to $601.3 million.

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