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Sunday, 04/23/2023 4:24:56 PM

Sunday, April 23, 2023 4:24:56 PM

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>>> Should You Hold Omnicell (OMCL)?

Insider Monkey

by Soumya Eswaran

Mar 20, 20233

Brown Capital Management, an investment management company, released its “The Brown Capital Management Mid Company Fund” fourth quarter 2022 investor letter. A copy of the same can be downloaded here. The Mid Company Fund returned 5.43% in the quarter compared to a 6.90% return for the Russell Midcap Growth Index. For the full year, the fund declined 37.12% compared to a -26.72% return for the benchmark. In addition, check the fund’s top five holdings to know its best picks in 2022.

The Brown Capital Management Mid Company Fund highlighted stocks like Omnicell, Inc. (NASDAQ:OMCL) in the Q4 2022 investor letter. Headquartered in Santa Clara, California, Omnicell, Inc. (NASDAQ:OMCL) is a medication management solutions and adherence tools provider for healthcare systems. On March 17, 2023, Omnicell, Inc. (NASDAQ:OMCL) stock closed at $55.60 per share. One-month return of Omnicell, Inc. (NASDAQ:OMCL) was 2.94%, and its shares lost 59.47% of their value over the last 52 weeks. Omnicell, Inc. (NASDAQ:OMCL) has a market capitalization of $2.563 billion.

The Brown Capital Management Mid Company Fund made the following comment about Omnicell, Inc. (NASDAQ:OMCL) in its Q4 2022 investor letter:

"Omnicell, Inc. (NASDAQ:OMCL) provides medication-management automation solutions for healthcare providers and pharmacies. Its tools include both hardware and software. Omnicell shares underperformed as the company took down fiscal year 2022 guidance 8% due to implementation delays and elongated sales cycles. More importantly, fiscal year 2022 bookings guidance was reduced $400 million, or 28%, as product bookings related mostly to one of the company’s products failed to materialize. However, our research suggests that this slowdown is being driven by a market-wide freeze in hospital capital expenditures, rather than by a company-specific issue. In addition, the mission-critical nature of Omnicell’s products that will replace/upgrade older versions is a priority over the next few years for hospitals. The company is well-positioned longer-term to become hospitals’ trusted partner for pharmacy safety, automation, earnings and strategy. Omnicell has one of the leading platforms for acute-care pharmacy services in the market. Moreover, November volumes for hospitals did improve, but we are not yet calling this the turning point for Omnicell. In short, inflation and lower hospital capital expenditures will likely weigh on the company in the near term. As care moves to retail and ambulatory sites, hospitals will need to partner with innovative companies like Omnicell in order to compete effectively. The company has an addressable market of about $90 billion and has created one of the largest and probably the best product suite on the market.

Omnicell operates primarily in the U.S., which has an aging population and the highest pharmaceutical spending per capita in the world. Omnicell’s products are positioned across the continuum of care, which gives it unique access to patient and hospital data. Nevertheless, we are revisiting our initial investment thesis to ensure that the company can deliver on our longer-term expectations."

Omnicell, Inc. (NASDAQ:OMCL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held Omnicell, Inc. (NASDAQ:OMCL) at the end of the fourth quarter which was 23 in the previous quarter.

We discussed Omnicell, Inc. (NASDAQ:OMCL) in another article and shared Meridian Growth Fund's views on the company. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.



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