Reasons for the Decline of Omnicell (OMCL)
Brown Capital Management, an investment management company, released its “The Brown Capital Management Mid Company Fund” fourth quarter 2023 investor letter. A copy of the same can be downloaded here. The Mid Company Fund returns of 14.08% in the quarter slightly lagged the 14.55% return for the Russell Midcap Growth Index. The fund declined 27.14% for the full year compared to a 25.87% return for the benchmark. In addition, check the fund’s top five holdings to know its best picks in 2023.
Brown Capital Management Mid Company Fund featured stocks like Omnicell, Inc. (NASDAQ:OMCL) in the Q4 2023 investor letter. Headquartered in Fort Worth, Texas, Omnicell, Inc. (NASDAQ:OMCL) offers medication management solutions and adherence tools for healthcare systems and pharmacies. On March 26, 2024, Omnicell, Inc. (NASDAQ:OMCL) stock closed at $27.89 per share. One-month return of Omnicell, Inc. (NASDAQ:OMCL) was 6.65%, and its shares lost 49.77% of their value over the last 52 weeks. Omnicell, Inc. (NASDAQ:OMCL) has a market capitalization of $1.281 billion.
Brown Capital Management Mid Company Fund stated the following regarding Omnicell, Inc. (NASDAQ:OMCL) in its fourth quarter 2023 investor letter:
"Among the top detractors for the fourth quarter were Omnicell, Inc. (NASDAQ:OMCL) and Veeva Systems (VEEV). Omnicell is one of the leading manufacturers of medication-adherence solutions for healthcare-delivery systems. Studies have shown that wasted medications alone cost hospitals nearly $800 million annually. Omnicell aims to solve this problem. Its products, which consist of automated dispensing systems, medication cabinets and pharmacy robotics, ensure the right medication gets to the right person in the right quantity, saving lives, money and headaches. This is the second consecutive quarter Omnicell has been among our top detractors as macroeconomic factors plaguing the company persist. Hospital budgets remain tight, leading to delays in purchases and slower upgrade cycles, causing Omnicell management to reduce guidance once again. Given ongoing uncertainty around demand, management announced a restructuring plan that will generate $45 million to $55 million in annual cost savings.
Omnicell is in its toughest stretch since the 2008-2009 financial crisis. It is unlikely business will improve meaningfully until the economy does. Fortunately, the company has a solid balance sheet and remains cash flow positive. It also has a new CFO as of June 2023 which should bring some added discipline to expenses. Despite near-term challenges, the company’s products and value proposition remain as relevant as ever. And if the past is prologue, sales will recover sharply as the economy heals, and the stock price should follow. This long-term perspective keeps us patient and excited about its future."
A pharmacist wearing a lab coat standing in front of a pharmacy automation solution.
Omnicell, Inc. (NASDAQ:OMCL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Omnicell, Inc. (NASDAQ:OMCL) was held by 23 hedge fund portfolios, compared to 20 in the previous quarter, according to our database.
We discussed Omnicell, Inc. (NASDAQ:OMCL) in another article and shared the list of most valuable digital health companies in the US. In addition, please check out our hedge fund investor letters Q4 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
