Omnicell, Inc.

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Case Summary

Company Name
Omnicell, Inc.
Stock Symbol
Class Period
October 25, 2018 to July 11, 2019
Motion Deadline
September 16, 2019
Northern District of California

The complaint charges Omnicell and certain of its officers with violations of the Securities Exchange Act of 1934.  Omnicell provides automation and business analytics software solutions for patient-centric medication and supply management to customers in the healthcare industry.

The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose material adverse information about Omnicell’s business, operations, and prospects.  Specifically, defendants failed to disclose that the Company had recognized revenue for certain transactions before fulfilling its performance obligations, had engaged in improper accounting practices to meet revenue targets, was experiencing weaker demand for new product lines than it had previously projected, which would result in the Company writing off certain inventory, and had misclassified certain expenses as capitalized expenditures.  As a result of this information being withheld from the market, Omnicell securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of more than $90 per share.

On July 11, 2019, GlassHouse Research LLC published a report entitled “Ominous Omnicell Inc. Delays the Inevitable.”  Based on a review of concealed long-term receivables and declining deferred revenues, the report alleged that Omnicell had prematurely recognized over $38 million in sales that should have been recognized long term consistent with the Company’s performance obligations, that new product lines had been pushed onto customers, who were hesitant to purchase more inventory because of implementation issues, and that, due to these accounting practices, the Company would need to write off $23 million in obsolete inventory.  On this news, the price of Omnicell stock fell $11.41 per share, or nearly 14%, to close at $75.11 per share on July 11, 2019.

Class Period: October 25, 2018 - July 11, 2019
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