We recently reiterated our Neutral rating on Omnicell, Inc. (OMCL) with a target price of $15.50.
Omnicell reported disappointing results in the fourth quarter and fiscal 2009. In the fourth quarter, earnings per share were 2 cents, below the Zacks Consensus Estimate of 3 cents and the year-ago earnings of 10 cents.
In fiscal 2009, earnings per share were a penny, compared to the Zacks Consensus Estimate of 2 cents and the year-ago earnings of 38 cents.
Total revenues for the fourth quarter were $54.7 million, declining 11.9% year over year. Lower revenues can be attributed to lower demand for the company’s products due to the economic turbulence. Omnicell is a leading provider of systems and software solutions that develops end-to-end automation solutions for the medication-use process.
Omnicell’s products are primarily purchased by hospitals and nursing homes, which are presently grappling with the current economic scenario of weak credit markets, rising expenses, higher unemployment and erosion of wealth. This has ultimately resulted in the decline in net sales.
The company also witnessed erosion in its top-line in fiscal 2009. Total revenues for the year declined 15.2% year over year to $213.5 million.
However, Omnicell is likely to benefit from the recent Medicare Improvements for Patients and Providers Act of 2008 (H.R. 6331). The act provides more than $20 billion in spending on health-information technology.
The majority of the spending will be felt between 2011 and 2015. Starting from 2011, physicians who use electronic records will be eligible for more than $40,000 in Medicare incentive payments. Payments will be made over several years. This is going to be a real booster for Omnicell and will drive its top-line in future.
Read the full analyst report on “OMCL”
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