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Why Is Omnicell (OMCL) Up 9.7% Since Last Earnings Report?

It has been about a month since the last earnings report for Omnicell (OMCL). Shares have added about 9.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Omnicell due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Omnicell Q1 Earnings Top Estimates, Margins Down

Omnicell reported first-quarter 2023 adjusted earnings per share of 39 cents, down 53% year over year. However, the metric remarkably beat the Zacks Consensus Estimate of 7 cents.

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Adjustments include one-time expenses like share-based compensations, the amortization of acquired intangibles, acquisition-related expenses, severance-related expenses and others.

On a GAAP basis, the loss per diluted share was 33 cents in the first quarter compared to the earnings per share of 17 cents in the prior-year quarter.

Revenues in Detail

Revenues in the first quarter totaled $290.6 million, down 8.8% 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 5%.

Segmental Details

On a segmental basis, product revenues declined 17.8% year over year to $185.7 million in the reported quarter.

Service and other revenues climbed 12.9% year over year to $104.9 million.

Operational Update

In the quarter under review, the gross profit declined 16.7% to $125 million. The gross margin contracted 404 basis points (bps) to 43%.

Operating expenses were $148 million in the first quarter, up 2.1% year over year. The operating loss in the quarter totaled $23 million compared to the operating profit of $5.1 million in the year-ago quarter. In the first quarter, the adjusted operating margin contracted 950 bps to 7.9%.

Financial Update

Omnicell exited the first quarter of 2023 with cash and cash equivalents of $340.4 million compared with $330.4 million at the end of 2022.

The cumulative cash flow provided by operating activities at the end of the first quarter was $12.8 million compared to the cumulative net cash outflow of $16 million in the year-ago quarter.

In April 2023, OMCL launched the Center for Innovation Medication Management under a strategic alliance with Long Island University. The state-of-the-art laboratory features a wide range of Omnicell’s devices and is designed to provide an immersive pharmacy technology and analytics experience for LIU pharmacy students.

2023 Outlook

Omnicell reaffirmed its full-year 2023 guidance, which it originally announced during the 2022 fourth-quarter earnings call.

Total revenues for 2023 are expected in the range of $1.15-$1.19 billion (unchanged from the previous outlook). This comprises product revenues in the range of $740-$760 million (unchanged) and service revenues in the band of $410-$430 million (unchanged). The Zacks Consensus Estimate for total revenues is pegged at $1.17 billion.

The adjusted earnings per share for the full year is expected in the range of $1.55-$1.80 (unchanged). The Zacks Consensus Estimate for the same is pegged at $1.65.

For the second quarter of 2023, Omnicell expects revenues in the range of $278-$288 million, with product revenues expected in the band of $181-$186 million and service revenues in the range of $97-$102 million.

The Zacks Consensus Estimate for total revenues in the second quarter of 2023 is pegged at $287.5 million.

The adjusted earnings per share for the second quarter is anticipated in the range of 25-35 cents. The Zacks Consensus Estimate for the same is pegged at 36 cents.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -110.53% due to these changes.

VGM Scores

At this time, Omnicell has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Omnicell has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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