Omnicell (OMCL) Q3 Earnings and Revenues Beat, Margins Down
Omnicell, Inc. OMCL reported third-quarter 2023 adjusted earnings per share (EPS) of 62 cents, down 38% year over year. However, the metric beat the Zacks Consensus Estimate of 45 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 12 cents in the quarter under review compared with 37 cents in the prior-year quarter.
Revenues in Detail
Revenues in the third quarter totaled $298.7 million, down 14.2% year over year. The decline was mainly due to lower point-of-care revenues as a result of ongoing health systems and capital budget and labor constraints. However, the figure beat the Zacks Consensus Estimate by 1.4%.
Omnicell, Inc. Price, Consensus and EPS Surprise
Omnicell, Inc. price-consensus-eps-surprise-chart | Omnicell, Inc. Quote
Segmental Details
On a segmental basis, Product revenues dropped 23.4% year over year to $188.8 million in the reported quarter. This compares with our model’s estimate of $186.4 million for the third quarter.
Service and other revenues climbed 8.3% year over year to $109.9 million, which also exceeded our model’s segmental projection of $107.4 million.
Operational Update
In the quarter under review, the gross profit declined 17.1% to $132 million. The gross margin contracted 152 basis points (bps) to 44.2%.
Operating expenses were $128.3 million in the third quarter, down 8.8% year over year. The operating profit in the quarter totaled $3.7 million, down 79.9% year over year. In the third quarter, the adjusted operating margin contracted 406 bps to 1.2%.
Financial Update
Omnicell exited the third quarter of 2023 with cash and cash equivalents of $446.8 million compared with $399.5 million at the end of the second quarter.
The cumulative cash flow provided by operating activities at the end of the third quarter was $142.7 million compared to the cumulative net cash outflow of $4.4 million in the comparable period last year.
2023 Outlook
Omnicell provided an updated outlook for the full-year 2023.
Total revenues for 2023 are expected in the range of $1.135 billion-$1.155 billion (previously $1.160 billion-$1.200 billion). Of this, product revenues are expected in the range of $705 million-$715 million (earlier $740 million-$760 million) and service revenues in the band of $430 million-$440 million (earlier $420 million-$440 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 $1.65-$1.80, down from the previous guidance in the band of $1.75-$2.00. The Zacks Consensus Estimate is pegged at $1.76.
For the fourth quarter of 2023, Omnicell expects revenues in the range of $247-$267 million, including anticipated product revenues in the band of $142-$152 million and service revenues in the range of $105-$115 million.
The Zacks Consensus Estimate for fourth-quarter 2023 revenues is pegged at $298.3 million.
The adjusted EPS for the fourth quarter is anticipated in the range of 7-22 cents. The Zacks Consensus Estimate is pegged at 36 cents.
Our Take
Omnicell ended the third quarter of 2023 with better-than-expected earnings and revenues. The company delivered strong cost management and operational discipline and also plans to take actions related to cost containment across the business. The steps are intended to better align with Omnicell’s anticipated top-line performance as it heads into 2024 while positioning the company for continuous investment in innovation.
Omnicell’s Central Pharmacy Dispensing Service appears to be gaining momentum in the market, which is encouraging. Moreover, health systems are opting for the company’s management services expertise to help drive financial and clinical outcomes in the rapidly growing healthcare industry.
Meanwhile, both earnings and revenues were down compared to the year-ago quarter. Omnicell reduced its 2023 financial guidance as weakness in demand prevails. The company is also struggling in terms of its gross and adjusted operating margins, both of which contracted during the quarter.
Zacks Rank and Other Key Picks
Omnicell currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the broader medical space that have announced quarterly results are DexCom DXCM, Medpace MEDP and The Ensign Group ENSG.
DexCom, carrying a Zacks Rank of 2 (Buy), reported a third-quarter 2023 adjusted EPS of 50 cents, beating the Zacks Consensus Estimate by 47.1%. Revenues of $975 million outpaced the consensus mark by 4.0%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DexCom has a long-term estimated growth rate of 33.6%. DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%.
Medpace reported a third-quarter 2023 adjusted EPS of $2.22, beating the Zacks Consensus Estimate by 8.8%. Revenues of $492.5 million surpassed the Zacks Consensus Estimate by 3.4%. It currently carries a Zacks Rank #2.
Medpace has an estimated earnings growth rate of 16.2% for the next year. MEDP’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 14.6%.
The Ensign Group reported a third-quarter 2023 adjusted EPS of $1.20, beating the Zacks Consensus Estimate by 1.7%. Revenues of $940.8 million surpassed the Zacks Consensus Estimate by 0.2%. It currently carries a Zacks Rank #2.
The Ensign Group has a long-term estimated growth rate of 15%. ENSG’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 1.5%.
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Omnicell, Inc. (OMCL) : Free Stock Analysis Report
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