Omnicell, Inc.'s OMCL growth in the third quarter of 2024 can be attributed to the company’s long-term development strategy, driven by innovative solutions, expansion into new markets, strategic partnerships and procurement of new technologies. OMCL is on track to meet its 2025 financial goals, supported by increasing tech services and long-term customer partnerships. Stable solvency buoys optimism. However, a headwind from macroeconomic challenges could adversely impact the company’s performance. 

In the past year, this Zacks Rank #1 (Strong Buy) company’s shares have risen 38.4% against the industry’s  4.4% decline. The S&P 500 composite has increased 29.2% during the same time frame.

The renowned healthcare technology company has a market capitalization of $2.05 billion. Omnicell beat on earnings in each of the trailing four quarters, delivering an average surprise of 121.74%.

Key Tailwinds for OMCL Stock

Strategic Imperatives to Drive Growth: Omnicell believes challenges like increasing prescription drug costs in the United States, budget constraints and labor shortages will drive increased demand for automation, visibility, insights and improved medication management. By offering differentiated, innovative solutions, expanding into new markets, building strategic partnerships and acquiring new technologies, the company is positioning its solutions to support the evolving needs of healthcare institutions and create opportunities for long-term growth.

Omnicell is increasingly investing in next-gen upgrades and outcomes-based solutions for the XT fleet of automated medication dispensing systems as part of its strategy. The company’s multiyear innovation program — XT Amplify — maximizes value for hospitals, health systems and post-acute care facilities using the XT automated dispensing system. During the third-quarter earnings call, the company mentioned that XT Amplify is gaining market momentum, with several new customers choosing these offerings. 

Advanced Services delivered a solid performance in the third quarter, driven by EnlivenHealth and Specialty Pharmacy Services. Additionally, within Specialty Services, two new specialty pharmacies were opened for health system customers.

2025 Roadmap Looks Impressive: Omnicell is targeting to deliver $1.9-$2 billion in revenues by 2025, representing a CAGR of 14-15% in the 2021-2025 period. Additional targets include a non-GAAP gross margin of 52-53% and a non-GAAP EBITDA margin of approximately 23%. Driven by factors like growing tech services revenues, benefits from long-term sole source customer partnerships and more, the company looks poised to deliver on the 2025 total revenue growth target.

Per the latest update, it delivered a non-GAAP EBITDA of $39 million in the third quarter of 2024, outpacing the guidance. Additionally, non-GAAP earnings benefited from robust revenue execution and strong cost and operating expense management.

Strong Liquidity and Capital Structure: Omnicell exited the third quarter with cash and cash equivalents of $570.6 million, while short-term debt on its balance sheet was nil. This is indicative of a sound solvency position. Long-term debt increased slightly to $572 million. However, the debt-to-capital ratio of 31.7% was sequentially down 1.6%. 

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Key Headwind for OMCL Stock

Macroeconomic Issues: Heightened inflationary pressures, supply-chain disruptions, labor shortages and geopolitical instability are affecting the broader U.S. and global economies. These can potentially lead to higher costs for the company’s raw materials. Simultaneously, OMCL is navigating the ongoing healthcare system capital budget and labor constraints, which have continued to affect its Point-of-Care product line. This challenging environment has led to a 16.1% year-over-year decrease in product revenues for the third quarter.

OMCL Estimate Trend

The Zacks Consensus Estimate for 2024 earnings per share has increased 10.7% to $1.55 in the past 30 days.  

The Zacks Consensus Estimate for fourth-quarter 2024 revenues is pegged at $296.0 million, implying a 14.3% improvement from the year-ago reported number.

Top MedTech Stocks

Some other top-ranked stocks in the broader medical space are Haemonetics HAE, Globus Medical GMED and Penumbra PEN.

Haemonetics has an earnings yield of 5.02% compared with the industry’s 1.18%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 19.39%. Its shares have risen 1.8% compared with the industry’s 23.1% growth in the past year.

HAE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Globus Medical, carrying a Zacks Rank #2 at present, has a long-term estimated growth rate of 14.1%. Shares of the company have rallied 75.5% compared with the industry’s 19.9% growth. GMED’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.65%.

Penumbra, carrying a Zacks Rank #2 at present, has an estimated 2024 earnings growth rate of 33.5% compared with the industry’s 15.9%. Shares of Penumbra have risen 4.4% compared with the industry’s 20% growth over the past year. PEN’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 10.54%.

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