Omnicell Inc. (OMCL) reported third quarter 2009 earnings per share of 10 cents yesterday, beating the Zacks Consensus Estimate of 2 cents. However, earnings per share came below the year-ago figure of 18 cents.

Total revenues for the reported quarter were $54.0 million, declining 16.1% year over year. The decline can be attributed to lower demand for the company’s products due to the current economic turbulence. Omnicell is a leading provider of systems and software solutions that develops end-to-end automation solutions for the medication-use process.

Omnicell’s products are primarily purchased by hospitals and nursing homes which are presently grappling with the current economic scenario of weak credit markets, rising expenses, higher unemployment, and erosion of wealth. This has ultimately resulted in a decline in net sales.

Omnicell reported a contraction in margins due to lower sales and higher expenses. Gross margin declined 40 basis points (bps) year over year to 50.5%. Research and development expenses as a percentage of sales increased 190 bps year over year to 9.2%. Selling, general and administrative expenses as a percentage of sales increased 240 bps year over year to 39.5%.

Lower gross margin coupled with higher operating expenses was primarily a drag on the company’s operating and net margins. Operating margin declined 490 bps year over year to 1.7%. Net margin declined 290 bps year over year to 1.6%.

Omnicell ended the reported quarter with cash and cash equivalents of roughly $146.3 million, an increase of 21.5% in the first nine months of the year. Inventories at the end of the quarter were $10.4 million, registering a decline of 19.4% year till date on account of a slowdown in business.

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