Omnicell (OMCL) Q2 Earnings and Revenues Top, '23 View Raised
Omnicell, Inc. OMCL reported second-quarter 2023 adjusted earnings per share (EPS) of 57 cents, down 32.1% year over year. However, the metric remarkably beat the Zacks Consensus Estimate of 28 cents.
Adjustments include one-time expenses like share-based compensations, the amortization of acquired intangibles, acquisition-related expenses, executive transition costs, severance-related expenses and others.
GAAP EPS was 8 cents in the quarter under review compared with 20 cents in the prior-year quarter.
Revenues in Detail
Revenues in the second quarter totaled $299 million, down 9.8% year over year. The decline was mainly due to lower point-of-care revenues as a result of ongoing health systems and capital budget constraints. However, the figure beat the Zacks Consensus Estimate by 4.8%.
Segmental Details
On a segmental basis, Product revenues dropped 19.4% year over year to $188.4 million in the reported quarter. This compares with our model’s estimate of a 20.7% decline year over year for the second quarter.
Omnicell, Inc. Price, Consensus and EPS Surprise
Omnicell, Inc. price-consensus-eps-surprise-chart | Omnicell, Inc. Quote
Service and other revenues climbed 13.3% year over year to $110.5 million. This outpaced our model’s segmental projection of a 1.8% improvement year over year.
Operational Update
In the quarter under review, the gross profit declined 15% to $134.4 million. The gross margin contracted 274 basis points (bps) to 45%.
Operating expenses were $126.7 million in the second quarter, down 13% year over year. The operating profit in the quarter totaled $7.8 million, down 37.9% year over year.
In the second quarter, the adjusted operating margin contracted 118 bps to 2.6%.
Financial Update
Omnicell exited the second quarter of 2023 with cash and cash equivalents of $399.5 million compared with $330.4 million as of Dec 31, 2022.
The cumulative cash flow provided by operating activities at the end of the second quarter was $85.7 million compared to the cumulative net cash outflow of $25.5 million in the year-ago quarter.
2023 Outlook
Omnicell provided an updated outlook for the full-year 2023.
Total revenues for 2023 are expected in the range of $1.16 billion-$1.20 billion (previously $1.15 billion-$1.90 billion). Of this, product revenues are expected in the range of $740 million-$760 million (unchanged) and service revenues in the band of $420 million-$440 million (earlier $410 million-$430 million). The Zacks Consensus Estimate for total revenues is pegged at $1.18 billion.
The adjusted EPS for the full year is expected in the range of $1.75-$2.00, up from the previous guidance in the band of $1.55-$1.80. The Zacks Consensus Estimate for the same is pegged at $1.65.
For the third quarter of 2023, Omnicell expects revenues in the range of $290-$300 million, including anticipated product revenues in the band of $185-$190 million and service revenues in the range of $105-$110 million.
The Zacks Consensus Estimate for third-quarter 2023 revenues is pegged at $298.4 million.
The adjusted EPS for the third quarter is anticipated in the range of 25-35 cents. The Zacks Consensus Estimate for the same is pegged at 44 cents.
Our Take
Omnicell ended the second quarter of 2023 with better-than-expected earnings and revenues, driven by higher technical and advanced service revenues, a favorable customer and product mix and cost management. Reported revenues were higher than the top end of the previously disclosed second-quarter 2023 guidance range ($278 million-$288 million). Higher service revenues and the company’s prior cost-containment actions contributed to the adjusted EPS growth in the quarter.
OMCL continued to execute its go-to-market strategy, following the near completion of the three key acquisitions made to enhance the company’s advanced services offerings. Omnicell had several key customer wins in the quarter, including a new medication synchronization partnership of EnlivenHealth with a leading Medicaid plan. Further, the raised guidance for the 2023 top and bottom lines bodes well for the stock.
Meanwhile, reported revenues were impacted by ongoing CapEx budget constraints, resulting in a year-over-year decline in the quarter. A contraction of both margins raises apprehension too.
Zacks Rank and Key Picks
Omnicell currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories ABT, Elevance Health, Inc. ELV and Intuitive Surgical, Inc. ISRG.
Abbott, carrying a Zacks Rank of 2 (Buy), reported a second-quarter 2023 adjusted EPS of $1.08, beating the Zacks Consensus Estimate by 3.8%. Revenues of $9.98 billion outpaced the consensus mark by 2.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 12.4%.
Elevance Health reported a second-quarter 2023 adjusted EPS of $9.04, beating the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. It currently carries a Zacks Rank #2.
Elevance Health has a long-term estimated growth rate of 12.1%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 2.8%.
Intuitive Surgical reported a second-quarter 2023 adjusted EPS of $1.42, beating the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the Zacks Consensus Estimate by 1.4%. It currently carries a Zacks Rank #2.
Intuitive Surgical has a long-term estimated growth rate of 14.5%. ISRG’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 4.2%.
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