Short Seller Accuses Omnicell Of 'Accounting Gimmicks'

Short seller GlassHouse Research has chosen Omnicell, Inc. OMCL as its latest target, accusing the company of deceptive financial practices.

GlassHouse alleges Onicell has prematurely recorded revenues and intentionally failed to not write-off its legacy inventory, thereby artificially inflating its balance sheet. In fact, Glasshouse said Omnicell has one of the worst accounts receivable positions the firm has ever seen in a public company.

“Concealed long-term receivables and declining deferred revenues lead us to believe the company prematurely recognized approximately $38.3 million in sales over the LTM,” GlassHouse said in the report.

GlassHouse said the problems are so bad that Omnicell may be forced to restate past financials at some point. The firm claims Omnicell got to this point thanks to extreme inventory mismanagement, which has created an obsolete and bloated balance.

“We calculate at minimum, management needs to write-off over $23 million (22.4% of total) of obsolete inventory,” GlassHouse wrote.

GlassHouse also attacked the credibility of Omnicell’s accountants.

“The lack of accounting experience among the CFO, audit chairman and audit committee present massive red flags to GlassHouse at a time when accounting gimmicks are highly prevalent at Omnicell,” GlassHouse wrote.

As a result of the alleged nefarious accounting practices, GlassHouse said Omnicell’s stock is significantly overvalued. GlassHouse has a $35.50 price target, suggesting more than 57% downside from current levels.

A representative from Omnicell was not immediately available for comment.

The stock traded lower by 5.7% to $81.58 at time of publication.

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