Omnicell Inc. (OMCL, Financial) filed Quarterly Report for the period ended 2011-09-30.
Omnicell Inc. has a market cap of $519.6 million; its shares were traded at around $15.68 with a P/E ratio of 68.2 and P/S ratio of 2.3.
Research and Development. Research and development expenses decreased by $0.1 million, or 1.1% in the three months ended September 30, 2011 as compared to the same period in 2010. Research and development expenses represented 9.3% and 10.8% of total revenues in the three months ended September 30, 2011 and 2010, respectively. The decrease was due primarily to a $0.8 million increase in compensation costs related to increased staffing, offset by decreased spending of $0.4 million and $0.3 million for outside services and prototypes, respectively, and a $0.2 million decrease reflecting higher labor capitalized for software development in the current period. The capitalization of software development costs increased from $0.2 million for the third quarter of 2010 to $0.4 million for the third quarter of 2011, due to modestly higher beta testing of new products in the current period.
Research and development expenses increased $0.5 million, or 3.4% in the nine months ended September 30, 2011 as compared to the corresponding period in 2010. Research and development represented 8.8% and 9.4% of total revenues in the nine months ended September 30, 2011 and 2010, respectively. The increase was due primarily to a $2.3 million increase in compensation costs related to increased staffing, $0.3 million from the year ago periods favorable timing effect on expenses due to a reduction in accrued vacation and $0.3 million in other increases. These increases were offset by decreased spending of $0.5 million for outside services and a $1.9 million decrease reflecting higher labor capitalized for software development in the current period. The capitalization of software development costs increased from $1.6 million for the nine months ended September 30, 2010 to $3.5 million for the nine months ended September 30, 2011, due to the higher level of beta testing that preceded several new product introductions in the third quarter of 2011.
Selling, General and Administrative. Selling, general and administrative expenses increased by $3.8 million, or 19.1% in the three months ended September 30, 2011 compared to the same period in 2010. This increase was primarily due to a $1.4 million increase in compensation costs related to increased sales and marketing staffing and a $0.8 million increase in freight and travel costs, as well as a $2.4 million increase due to the non-recurrence, in the 2011 period, of the September 2010 Flo litigation settlement, which resulted in release of the $2.4 million liability in excess of the amounts settled as a favorable third quarter 2010 expense adjustment. These increases were partially offset by reductions of $0.6 million in professional services and $0.2 million of other costs. Selling, general and administrative expenses represented 36.7% and 35.3% of total revenues in the three months ended September 30, 2011 and 2010, respectively.
Selling, general and administrative expenses increased $11.9 million, or 19.3% in the nine months ended September 30, 2011 as compared to the corresponding period in 2010. This increase was primarily due to a $6.3 million increase in compensation costs related to increased sales and marketing staffing, $0.6 million from the year ago periods favorable timing effect on expenses due to a reduction in accrued vacation, the aforementioned $2.4 million increase from the September 2010 Flo litigation liability release, a $1.0 million increase for the 2011 Medacist litigation settlement and related legal costs, and a $2.2 million increase in freight, travel and other costs. Reduced outside service spending of $0.6 million partially offset these increases. Selling, general and administrative expenses represented 40.4% and 37.4% of total revenues in the nine months ended September 30, 2011 and 2010, respectively.
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Omnicell Inc. has a market cap of $519.6 million; its shares were traded at around $15.68 with a P/E ratio of 68.2 and P/S ratio of 2.3.
Highlight of Business Operations:
During the third quarter of 2011, we achieved higher performance in total revenues and net income compared to the second quarter of 2011. Product revenue increased by $3.6 million or 7.7%, while service revenue decreased slightly, by $0.1 million. Overall gross margins for the third quarter of 2011 declined to 53.5% from 55.4% in the prior quarter. Product gross margins declined to 55.0% on revenue of $49.8 million as compared with 57.3% on revenue of $46.2 million in the second quarter of 2011. Service gross margins also declined, to 48.4% on revenue of $14.7 million as compared to 49.5% margins on $14.8 million in revenue in the prior quarter. The initial supply of our new computer console for the G4 platform was produced in our factory in California to assure a smooth transition and quick correction of any initial production issues. Consequently, we carried inventories of components and finished goods normally carried by our suppliers. That early production carried a higher cost than products supplied through our normal manufacturing partners in China, which contributed to a decrease in gross margin to 53.4% between the second and third quarters. We have now transitioned the bulk of our production to China, and expect to see product gross margins increase again as the California-based production is consumed.Research and Development. Research and development expenses decreased by $0.1 million, or 1.1% in the three months ended September 30, 2011 as compared to the same period in 2010. Research and development expenses represented 9.3% and 10.8% of total revenues in the three months ended September 30, 2011 and 2010, respectively. The decrease was due primarily to a $0.8 million increase in compensation costs related to increased staffing, offset by decreased spending of $0.4 million and $0.3 million for outside services and prototypes, respectively, and a $0.2 million decrease reflecting higher labor capitalized for software development in the current period. The capitalization of software development costs increased from $0.2 million for the third quarter of 2010 to $0.4 million for the third quarter of 2011, due to modestly higher beta testing of new products in the current period.
Research and development expenses increased $0.5 million, or 3.4% in the nine months ended September 30, 2011 as compared to the corresponding period in 2010. Research and development represented 8.8% and 9.4% of total revenues in the nine months ended September 30, 2011 and 2010, respectively. The increase was due primarily to a $2.3 million increase in compensation costs related to increased staffing, $0.3 million from the year ago periods favorable timing effect on expenses due to a reduction in accrued vacation and $0.3 million in other increases. These increases were offset by decreased spending of $0.5 million for outside services and a $1.9 million decrease reflecting higher labor capitalized for software development in the current period. The capitalization of software development costs increased from $1.6 million for the nine months ended September 30, 2010 to $3.5 million for the nine months ended September 30, 2011, due to the higher level of beta testing that preceded several new product introductions in the third quarter of 2011.
Selling, General and Administrative. Selling, general and administrative expenses increased by $3.8 million, or 19.1% in the three months ended September 30, 2011 compared to the same period in 2010. This increase was primarily due to a $1.4 million increase in compensation costs related to increased sales and marketing staffing and a $0.8 million increase in freight and travel costs, as well as a $2.4 million increase due to the non-recurrence, in the 2011 period, of the September 2010 Flo litigation settlement, which resulted in release of the $2.4 million liability in excess of the amounts settled as a favorable third quarter 2010 expense adjustment. These increases were partially offset by reductions of $0.6 million in professional services and $0.2 million of other costs. Selling, general and administrative expenses represented 36.7% and 35.3% of total revenues in the three months ended September 30, 2011 and 2010, respectively.
Selling, general and administrative expenses increased $11.9 million, or 19.3% in the nine months ended September 30, 2011 as compared to the corresponding period in 2010. This increase was primarily due to a $6.3 million increase in compensation costs related to increased sales and marketing staffing, $0.6 million from the year ago periods favorable timing effect on expenses due to a reduction in accrued vacation, the aforementioned $2.4 million increase from the September 2010 Flo litigation liability release, a $1.0 million increase for the 2011 Medacist litigation settlement and related legal costs, and a $2.2 million increase in freight, travel and other costs. Reduced outside service spending of $0.6 million partially offset these increases. Selling, general and administrative expenses represented 40.4% and 37.4% of total revenues in the nine months ended September 30, 2011 and 2010, respectively.
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