Why Is Omnicell (OMCL) Down 5% Since Last Earnings Report?

A month has gone by since the last earnings report for Omnicell (OMCL). Shares have lost about 5% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Omnicell due for a breakout? 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 Q4 Earnings Lag Estimates, Revenues Beat

Omnicell announced fourth-quarter fiscal 2019 results, wherein adjusted earnings per share were 77 cents, up 10% year over year. However, the metric missed the Zacks Consensus Estimate by a penny.

On a GAAP (reported) basis, earnings per share were 51 cents for the quarter under review, reflecting an increase of 41.7% from the year-ago period.

Full-year adjusted earnings per share were $2.81, reflecting a 34.4% increase from the year-ago period. Further, the metric lagged the Zacks Consensus Estimate of $2.82.

Revenues in Detail

Fourth-quarter revenues increased 17.3% year over year to $248.3 million. The figure surpassed the Zacks Consensus Estimate by 2.2%.

Yearly revenues were $897 million, reflecting a 13.9% increase from the year-ago period. Revenues beat the Zacks Consensus Estimate by 0.6%.

Segmental Details

On a segmental basis, Product revenues improved 21% year over year to $187.1 million in the reported quarter.

Service and other revenues rose 7% year over year to $61.2 million.

Operational Update

In the quarter under review, Omnicell's adjusted gross profit rose 19.1% to $127.1 million. Further, adjusted gross margin expanded 80 basis points (bps) to 51.2%.

However, adjusted operating expenses were $90.5 million in the fourth quarter, up 24.9% year over year. Adjusted operating profit totaled $36.6 million, reflecting a 6.5% increase from the prior-year quarter. However, adjusted operating margin in the fourth quarter dipped 9 bps to 14.7%.

Financial Update

Omnicell exited the year with cash and cash equivalents of $127.2 million compared with $67.2 million at the end of 2018.

At the end of 2019, cash flow from operating activities was $145 million compared with $103.9 million at the end of 2018.

Guidance

For the first quarter of 2020, Omnicell expects adjusted revenues between $221 million and $227 million. The Zacks Consensus Estimate for the metric is pegged at $224 million.

On an adjusted basis, product revenues are expected between $163 million and $168 million, while service revenues are projected to be $58-$59 million for the quarter.

Fourth-quarter adjusted earnings per share are envisioned to be 52-57 cents. The Zacks Consensus Estimate for the same is pegged at 56 cents.

For the year, the company expects adjusted revenues between $1 billion and $1.02 billion. The Zacks Consensus Estimate for the metric is pegged at $986.1 million.

For 2020, the anticipated ranges for product and service revenues are $752-$768 million and $248-$252 million, respectively.

Adjusted earnings per share are expected between $2.96 and $3.16 for fiscal 2020. The Zacks Consensus Estimate for the metric stands at $3.04.

How Have Estimates Been Moving Since Then?

Estimates revision followed a downward path over the past two months.

VGM Scores

At this time, Omnicell has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Omnicell has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.