Omnicell, Inc. (OMCL), a leading developer and marketer of end-to-end automation solutions for the medication-use process, recently announced that its newly launched G4 platform received the ONC-ATCB certification as a Modular Electronic Health Record (“EHR"). Omnicell became the first hospital pharmacy automation company to achieve this certification and the company intends to support its clients to qualify for federal funding incentives under the American Recovery and Reinvestment Act (“ARRA”).
The Centers for Medicare & Medicaid Services, on May 19, 2011, made the first round of payments totaling $75 million to providers who successfully fulfilled the Stage One requirements for Meaningful Use. The fulfillment of Meaningful Use criteria is essential for securing federal incentives.
EHR automates the process of writing prescriptions and enables the physicians to send prescriptions directly to a pharmacy via e-mail. It has been proven that the effective use of EHR systems reduces medical errors, enhances clinical quality and leads to better patient outcomes by providing real-time access to patient records.
Earlier, in May 2011, Omnicell launched its new platform named G4 which consists of next-generation software and hardware. It is a single database that powers the company’s automated dispensing cabinet systems. Omnicell expects this platform to be the backbone of all its products, making medication management less susceptible to administrative errors and inefficiencies that can harm patients.
Omnicell operates in a niche automated medication distribution industry and stands to benefit from favorable demographic trends and regulatory environments as well as lack of nursing staff. The company has undertaken several initiatives in the past few quarters to drive revenues including the Savvy mobile medication management solution, partnership with Cardinal Health (CAH) and also the acquisition of Pandora Data Systems.
Although Omnicell expects to boost its sales in the upcoming quarters, constrained hospital spending remains a prime concern. Moreover, the company faces intense competition in the medication management and supply chain solutions market from major players such as CareFusion Corporation (CFN) and McKesson Automation (MCK).
However, we believe that a slowly recovering economy will help the company to tap the under-penetrated healthcare IT market. The new G4 platform, which is expected to drive the federal funding incentives, should help improve investment by the healthcare providers. In addition, the company’s recent acquisitions and collaborations leading to pipeline expansion are expected to drive growth further. Currently, we are ‘Neutral’ on the stock.
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