Omnicell Q3 Earnings: Look At The Growth Segment

seekingalpha11-01

Omnicell, Inc. is a pharmacy management provider working towards the goal of an autonomous pharmacy.Q3 earnings looked weak on the surface with revenue and EBITDA down, but results by business show a ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2480855661?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/2029319729/image_2029319729.jpg","is_english":true,"pubTime":"2024-11-01 23:58","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2480855661","market":"nz","top_or_hot":-1,"title":"Omnicell Q3 Earnings: Look At The Growth Segment","media":"seekingalpha","content":"<div>\n<p>Omnicell, Inc. is a pharmacy management provider working towards the goal of an autonomous pharmacy.Q3 earnings looked weak on the surface with revenue and EBITDA down, but results by business show a ...</p>\n\n<a href=\"https://seekingalpha.com/article/4732072-omnicell-q3-earnings-look-at-the-growth-segment\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Omnicell Q3 Earnings: Look At The Growth Segment</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nOmnicell Q3 Earnings: Look At The Growth Segment\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-01 23:58 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4732072-omnicell-q3-earnings-look-at-the-growth-segment><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Omnicell, Inc. is a pharmacy management provider working towards the goal of an autonomous pharmacy.Q3 earnings looked weak on the surface with revenue and EBITDA down, but results by business show a ...</p>\n\n<a href=\"https://seekingalpha.com/article/4732072-omnicell-q3-earnings-look-at-the-growth-segment\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"OMCL","symbol_name":"Omnicell","start_time":0,"source_url":"https://seekingalpha.com/article/4732072-omnicell-q3-earnings-look-at-the-growth-segment","article_id":"2480855661","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/2029319729/image_2029319729.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2480855661","pubTimestamp":1730476711,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Omnicell, Inc. is a pharmacy management provider working towards the goal of an autonomous pharmacy.Q3 earnings looked weak on the surface with revenue and EBITDA down, but results by business show a ","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"OMCL":"Omnicell"},"translate_title":"Omnicell第三季度收益：看看增长部分","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"OMCL":0.9},"content_text":"Omnicell, Inc. is a pharmacy management provider working towards the goal of an autonomous pharmacy.Q3 earnings looked weak on the surface with revenue and EBITDA down, but results by business show a strong and growing service business.Omnicell has unique technology with strong market tailwinds that support long-term growth.   timnewman  I am initiating coverage on Omnicell, Inc. (NASDAQ:OMCL) in light of Q3 2024 earnings. Omnicell is a pharmacy management provider working across robotics, smart devices, software, and services working towards the goal of an autonomous pharmacy. The majority of their revenue today comes from sales of connected devices and software licenses. Over the last year, Omnicell is up 37%, although the stock has fallen more than 8% since earnings on October 30th.   OMCL Price Trend (Seeking Alpha) Omnicell's results look disappointing on the surface as revenue, gross margin, and EBITDA moved backward. Digging in, the story is much more compelling as the service businesses are strong, and the highest growth business is accelerating and carrying a sizeable backlog. Further, industry trends highly support aggressive growth rates in this area. At a DCF-generated price target of $59.38, which is 23% upside from today's pricing, I rate Omnicell a buy. Q3 Earnings Recap Omnicell reported earnings on Wednesday, October consensus with EPS of $0.56 beating by $0.14 and revenue of $282 million beating by $2 million.   OMCL Earnings Summary (Seeking Alpha) The market initially reacted strongly, rewarding the stock with a $13 jump, before pulling back some as results were digested. The biggest holdback was the fact that Omnicell has not provided forward-looking revenue growth information beyond Q4. And looking at Q3 results in isolation, it didn't look great as revenue fell 5% in line with the decrease in EBITDA.   Q3 2024 Financial Snapshot (OMCL Investor Relations) The story becomes much more compelling when you dig in. The revenue decrease was driven by non-recurring products, while the services business was up materially. In recurring service-based businesses, I place little stock on the timing and volatility in product, so long as service continues to strengthen.   Revenue Detail (OMCL Investor Relations) Earnings keep Omnicell on track for guidance, if not on the high track for 2024. We do not have management visibility into 2025, but as I will discuss below, we can look at the service business with a strong degree of confidence.   2024 Guidance (OMCL Investor Relations) Valuation I ran a DCF analysis on Omnicell using the following assumptions:  8% discount rate based on estimated WACC of 6% and 2 percentage point risk premium due to lack of profitability 8% near-term growth rate based on industry CAGR  4% long-term growth rate based on 50% of industry CAGR to hedge for scale and cost base Cost base scales and improves margin as the business grows No material change in operating cash or capital expense  This DCF analysis yields a price target of $59.38, 23% upside from today's prices.   OMCL DCF Analysis (Data: Seeking Alpha; Analysis: Mike Dion) Wall Street analysts land in a similar range at $54.71, and my target sits in the average-high range of their overall guidance.   OMCL Price Target (Seeking Alpha) Service Business Is Built On A Great Market The service business, which, I believe, is the value driver for Omnicell, is perfectly positioned at a crossroad of trends in the pharmacy and medical space. First, pharmacy management systems are expected to grow at a CAGR of 8.3% through 2031, well ahead of the pharmacy market overall.   Pharmacy Tech CAGR (Verified Market Research) McKinsey does a study of profitability across healthcare segments through 2027. Two trends here benefit Omnicell. First, Omnicell falls into “Software and Platforms” which is one of the high-growth businesses. Second, dispensers are expected to shrink in profitability, meaning they will be motivated to find automation and streamlining solutions, the exact solutions Omnicell provides.   Profitability By Healthcare Segment (McKinsey & Co) The advanced services business has grown from 6% of revenue in 2020 to 22% of revenue in 2024 with no signs of stopping. This is the business poised to capitalize on all the favorable industry trends.   Advanced Services Share (OMCL Investor Relations) While we don't have forward-looking revenue information, we do have the backlog. Current customers are current service revenue and future service revenue. Future customers are future service revenue. So when the backlog grows, barring a major customer loss, future service revenue grows. And the advanced services backlog continues to grow well above the market rate.   Product Backlog (OMCL Investor Relations) Looking at the cost base in isolation, it does look like the business has a cost problem. However, management has repeatedly affirmed during earnings discussions that cost growth supports the advanced services business, and other parts of the business are being cost managed. The growth in this business alone, combined with a stagnant to declining product base, supports the DCF price target above. Downside Risk On the downside, there are two primary risks to consider. The first is that the product business falls too far, too fast, creating a cash crunch on the large fixed cost base. This is largely mitigated by the trends in the service business, but something I will be keeping a close eye on for future earnings. The second downside risk is execution risk on advanced services sales, specifically for sales and marketing. This is still a fairly diversified industry and the business does not seem to have consistent performance across markets based on discussion during earnings. Execution on sales is critical, not necessarily to drive product revenue, but to support product sales to drive future service revenue. Verdict I do not believe investors should be concerned about top-line revenue declines in 2024, or the lack of 2025 guidance. The breakdown by segment shows a strong and growing service business, specifically advanced services, which are beating the overall market. The business also has industry tailwinds, both sitting in a business with growing profitability and having customers who need more and more help to the bottom line. While there are execution risks to consider, trends in the growth business and the industry overall largely mitigate this risk.  At a DCF-generated price target of $59.38, 23% upside from today's pricing, I rate Omnicell a buy.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2480855661"}