FORT WORTH, Texas - Omnicell , Inc. (NASDAQ: NASDAQ:OMCL), a provider of medication management solutions, announced today its plans to offer $150 million of Convertible Senior Notes due 2029 in a private placement to qualified institutional buyers. The company also intends to grant an option to purchase up to an additional $22.5 million in notes within a 13-day period starting from the issue date.
The notes, set to mature on December 1, 2029, will be senior unsecured obligations of Omnicell. Interest will be paid semiannually, and upon conversion, the company may pay in cash, shares, or a combination, at its discretion. Specific terms regarding the interest rate, conversion rate, and other conditions will be determined at the time of the offering's pricing.
Omnicell has outlined the intended use of the proceeds from this offering, which includes funding convertible note hedge transactions and repurchasing up to $400 million of its outstanding 0.25% Convertible Senior Notes due 2025. If the option to purchase additional notes is exercised, the company plans to use the additional proceeds for more convertible note hedge transactions, repurchasing the 2025 notes, and for general corporate purposes.
In relation to the pricing of the notes, Omnicell aims to enter into convertible note hedge transactions to reduce potential stock dilution upon conversion of the notes or to offset cash payments above the principal amount. However, the associated warrant transactions could potentially dilute the common stock if the market price exceeds the strike price.
The company expects that the option counterparties or their affiliates may purchase Omnicell's common stock in secondary market transactions following the pricing of the notes, which could affect the stock's market price. Moreover, the unwinding of various derivatives related to the stock might be conducted in connection with any conversion, redemption, or repurchase of the notes, influencing the market price and the conversion value.
Concurrently with the note offering, Omnicell plans to negotiate repurchases of its 2025 notes. The repurchase of the 2025 notes and the unwind of existing call spread transactions may impact the market price of Omnicell's common stock and the trading price of the new notes.
This announcement is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy any securities. The notes and any shares of Omnicell's common stock issuable upon conversion of the notes have not been registered under the Securities Act and will not be offered or sold in the United States without registration or an applicable exemption from registration requirements.
In other recent news, Omnicell, a leading provider in pharmacy automation, has been the subject of several recent developments. BofA Securities adjusted its stance on Omnicell, reducing the price target to $54 from the previous $57 while maintaining a Neutral rating. This adjustment follows a quarterly capital expenditures survey projecting a stable increase of 4% year-over-year in pharmacy IT budgets for 2025.
In a separate development, BofA Securities downgraded Omnicell from Buy to Neutral due to concerns about the visibility of the company's product revenue growth in the coming years. Despite the downgrade, the firm acknowledges Omnicell's strong position in the market and potential for growth, especially with new product extensions like XT Amplify.
Omnicell recently reported mixed Q3 results, with total revenue standing at $282 million, a sequential increase from the previous quarter but a decline compared to the same period last year. GAAP earnings per share increased to $0.19, up from $0.08 in the previous quarter, while non-GAAP earnings per share were $0.56, down from $0.62 year-over-year.
Looking ahead, Omnicell's full-year 2024 guidance anticipates bookings between $800 million and $875 million, with total revenues expected to be between $1.1 billion and $1.110 billion. Non-GAAP EBITDA is projected to be between $129 million and $134 million, with non-GAAP earnings per share estimated to be $1.65 to $1.72.
InvestingPro Insights
Omnicell's decision to offer $150 million in Convertible Senior Notes comes at a time when the company is facing some financial challenges, but also showing signs of potential recovery. According to InvestingPro data, Omnicell's revenue for the last twelve months as of Q3 2023 stood at $1.06 billion, with a revenue growth decline of 10.26% over the same period. This context helps explain why the company might be seeking additional capital through this note offering.
Despite the revenue decline, there are positive indicators for Omnicell's future performance. An InvestingPro Tip reveals that net income is expected to grow this year, and analysts predict the company will be profitable this year. This optimism is reflected in the stock's performance, with InvestingPro data showing a substantial 50.03% price total return over the past six months.
The company's financial strategy, including the repurchase of existing notes and the implementation of convertible note hedge transactions, aligns with another InvestingPro Tip indicating that Omnicell operates with a moderate level of debt. This approach may help the company maintain financial flexibility while pursuing growth opportunities.
For investors considering Omnicell's stock in light of this new offering, it's worth noting that the company does not currently pay a dividend to shareholders, as per an InvestingPro Tip. Additionally, the stock is trading at a high EBITDA valuation multiple, which could be a point of consideration for value-oriented investors.
These insights are just a sample of the valuable information available on InvestingPro. The platform offers 7 additional tips for Omnicell, providing a more comprehensive analysis for investors looking to make informed decisions about this stock.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.