COVINGTON, Ky.--(BUSINESS WIRE)--Feb. 26, 2009-- Omnicare, Inc. (NYSE:OCR), one of the nation's leading providers of pharmaceutical care for the elderly, today reported financial results for its fourth quarter and full year ended December 31, 2008.

Commenting on the results for the quarter, Joel F. Gemunder, Omnicare’s president and chief executive officer, said, “We are pleased to report quarterly results that reflect not only strong year-over-year growth in earnings, but also mark the third consecutive quarter of sequential adjusted earnings growth, demonstrating the stabilization achieved in our business and the progress made throughout the year in the execution of our strategies to restore growth and enhance profitability. In addition to the benefit of certain favorable trends in the pharmaceutical marketplace, the fourth quarter saw strong performance in our institutional pharmacy and specialty pharmacy businesses, progress in our productivity improvement and cost reduction initiatives, including the Omnicare Full Potential Plan, as well as a sequential increase in the number of beds served.”

Financial results for the quarter ended December 31, 2008, as compared with the same prior-year period, including restructuring and related charges, special items (described below), and a previously reported incremental charge in the 2007 fourth quarter to increase the Company’s allowance for doubtful accounts, were as follows:

• Earnings per diluted share were 27 cents versus a net loss per share of 17 cents
• Net income was $31.7 million as compared with a net loss of $20.8 million
• Sales were $1,598.1 million as compared with $1,556.8 million

Results for both the fourth quarter of 2008 and 2007 include special items (described below) of $60.7 million pretax and $27.8 million pretax, respectively. Adjusting for these special items, but including a 2007 fourth quarter charge related to an incremental provision for doubtful accounts, results for the quarter ended December 31, 2008 and 2007, respectively, were as follows:

• Adjusted earnings per diluted share were 66 cents versus an adjusted net loss per share of 3 cents
• Adjusted net income was $76.8 million as compared to an adjusted net loss of $3.1 million
• Sales were $1,598.1 million as compared with $1,556.8 million

It should be noted that financial results for the fourth quarter of 2007 include a previously reported incremental charge of $94 million pretax ($60.1 million aftertax, or 50 cents per share), to increase the Company’s allowance for doubtful accounts.

Financial Position

Cash flow from operations for the quarter ended December 31, 2008 increased to $106.3 million from $74.3 million in the comparable prior-year quarter.

Full-year 2008 cash flow from operations was $438.2 million, as compared to $505.5 million for the full year 2007. It should be noted that operating cash flow in 2008 included one extra weekly payment to the Company’s drug wholesaler of approximately $65 million as compared with the prior year.

Earnings before interest, income taxes, depreciation and amortization (EBITDA) for the fourth quarter of 2008, including the special items discussed below, was $120.8 million versus $31.8 million in the fourth quarter of 2007, which also includes the special items discussed below as well as the previously mentioned incremental charge related to the allowance for doubtful accounts. Excluding the special items, adjusted EBITDA in the fourth quarter of 2008 was $181.4 million as compared to $59.5 million in the fourth quarter of 2007, which includes the incremental provision for doubtful accounts.

During 2008, the Company repaid $89.1 million in debt, and at December 31, 2008 had $217.0 million in cash on its balance sheet. Total debt to total capital at December 31, 2008 was 44.4%, down approximately 180 basis points from December 31, 2007.

Full-Year Results

Financial results for the year ended December 31, 2008, as compared with the full year 2007, including restructuring and related charges, and other special items as described below, as well as the incremental charge in the 2007 fourth quarter to increase the Company’s allowance for doubtful accounts of $94 million pretax ($60.1 million aftertax, or 50 cents per diluted share), were as follows:

• Earnings per diluted share were $1.32 versus 94 cents
• Net income was $156.1 million as compared with $114.1 million
• Sales reached $6,310.6 million as compared with $6,220.0 million

Results for both the full year 2008 and 2007 include special items (which are described below) of $141.5 million pretax and $87.6 million pretax, respectively. Adjusting for these special items, but including the 2007 fourth quarter incremental provision for doubtful accounts, financial results for the full year 2008 and 2007, respectively, were as follows:

• Adjusted earnings per diluted share were $2.12 versus $1.39
• Adjusted net income was $250.6 million as compared with $168.4 million
• Sales reached $6,310.6 million as compared with $6,220.0 million

EBITDA for the full year 2008, including special items, was $511.9 million versus $455.3 million in the comparable prior-year period, which also includes the incremental charge to increase the allowance for doubtful accounts. Excluding special items, adjusted EBITDA for 2008 was $653.4 million as compared with $542.9 million in 2007, which includes the incremental provision for doubtful accounts.

To facilitate comparisons and to enhance the understanding of core operating performance, the discussion which follows includes financial measures that are adjusted from the comparable amount under GAAP to exclude the impact of the special items described elsewhere herein. For a detailed presentation of reconciling items and related definitions and components, please refer to the attached schedules or to reconciliation schedules posted on the Company’s Web site at www.omnicare.com.

Pharmacy Services Business

Omnicare's pharmacy services business generated revenues of $1,549.0 million for the fourth quarter of 2008 as compared with sales of $1,507.8 million in the fourth quarter of 2007. Adjusted operating profit in this business was $177.8 million in the 2008 fourth quarter as compared with the $55.8 million earned in the same 2007 quarter, which includes the incremental charge of $94.0 million to increase the allowance for doubtful accounts. For the full year 2008, pharmacy services sales were $6,107.3 million as compared with sales of $6,024.9 million in 2007. Adjusted operating profit for the full year 2008 was $633.4 million versus $518.9 million in 2007, which includes the aforementioned incremental provision for doubtful accounts.

At December 31, 2008, Omnicare served long-term care facilities as well as chronic care and other settings comprising approximately 1,435,000 beds, including approximately 68,000 patients served under the patient assistance programs of its specialty pharmacy services business. At September 30, 2008, the comparable number was 1,432,000 beds (including approximately 67,000 patients served under patient assistance programs). The comparable number at December 31, 2007 was 1,449,000 beds (including approximately 57,000 patients served under the patient assistance programs of the specialty pharmacy services business). The Company also noted that sequential quarterly growth in beds served in the fourth quarter was achieved despite approximately 5,300 beds voluntarily foregone owing to pricing or payment issues as well as facility closures or sales.

Pharmacy services sales for the fourth quarter exceeded the fourth quarter of 2007 owing primarily to continued drug price inflation, the increased use of certain higher acuity drugs and biologic agents, and growth in specialty pharmacy services. These factors more than offset the increased availability and utilization of generic drugs, reductions in utilization and/or reimbursement for certain drugs and a lower net number of beds served, along with a shift in mix toward assisted living which typically has lower penetration rates. Aside from the year-over-year variance caused by the incremental provision for doubtful accounts in the fourth quarter of 2007, operating profit in the 2008 fourth quarter showed a strong year-over-year increase due largely to higher utilization of generic drugs, drug price inflation, the benefits of certain cost reduction and productivity improvement initiatives and favorable performance in the specialty pharmacy businesses.

For the full year, pharmacy services sales in 2008 were modestly higher than the previous year, owing primarily to drug price inflation, the increased use of certain higher acuity drugs and biologic agents and growth in specialty pharmacy services. Partially offsetting these factors were increased availability and utilization of generic drugs, a lower net number of beds served and the bed mix shift, reductions in utilization and/or reimbursement for certain drugs, competitive pricing issues and lower revenues reported from copays, rejected claims and from certain matters in litigation. Full-year adjusted operating profit increased substantially in 2008, aside from the 2007 fourth quarter incremental provision for doubtful accounts, due primarily to the greater mix of generic drugs, drug price inflation, favorable performance in the specialty pharmacy businesses and the benefit of cost reduction initiatives and productivity enhancements.

The Company noted that progress continues to be achieved in the implementation of the Omnicare Full Potential Plan as the Company implements the hub-and-spoke configuration for its institutional pharmacy operations. When completed, this major initiative is expected to reduce operating costs, increase efficiency and enhance customer growth.

CRO Business

The Company's CRO business generated revenues of $49.1 million on a GAAP basis for the fourth quarter of 2008 as compared with the $49.0 million in revenues generated in the same prior-year quarter. Included in the 2008 and 2007 periods were reimbursable out-of-pocket expenses totaling $6.8 million and $8.4 million, respectively. Excluding these reimbursable out-of-pocket expenses, adjusted revenues were $42.2 million for the 2008 fourth quarter as compared with $40.6 million for the same prior-year period. Adjusted operating profit for the 2008 fourth quarter totaled $5.2 million versus $3.6 million in the same prior-year period.

For the full year 2008, revenues within the Company’s CRO business, on a GAAP basis, were $203.3 million, as compared with the $195.1 million for 2007. Included in the 2008 and 2007 periods were reimbursable out-of-pocket expenses totaling $31.3 million and $31.7 million, respectively. Excluding these reimbursable out-of-pocket expenses, adjusted revenues were $172.0 million for 2008 as compared with $163.4 million for the same prior-year period. Adjusted operating profit increased to $17.6 million in 2008 from the $13.1 million earned in 2007. Backlog at December 31, 2008 was $302.9 million.

Special Items

As noted above, the results for the fourth quarter of 2008 include certain special items totaling $60.7 million pretax ($45.1 million aftertax, or approximately 39 cents per diluted share). Operating income for the fourth quarter of 2008 includes special litigation charges of $48.1 million pretax associated with litigation and other related professional fees in connection primarily with the Company’s lawsuit against UnitedHealth Group, Inc. and its affiliates ("United") and certain large customer disputes, as well as certain government inquiries, including a $40 million pretax settlement reserve pertaining to a previously disclosed investigation by the U.S. Attorney’s Office, District of Massachusetts. The fourth quarter 2008 results also include a pretax charge of $10.9 million for restructuring and other related costs associated primarily with the implementation of the Omnicare Full Potential Plan, and a pretax charge of $1.6 million relating to incremental costs associated with the closure of one of the Company’s repackaging operations.

As noted above, the results for the fourth quarter of 2007 include certain special items totaling $27.8 million pretax ($17.6 million aftertax, or approximately 15 cents per share). Operating income for the fourth quarter of 2007 includes a pretax charge of $7.5 million for restructuring and other related costs associated primarily with the implementation of the Omnicare Full Potential Plan. The fourth quarter of 2007 results also include special litigation charges of $17.4 million pretax associated with litigation and other related professional fees in connection primarily with the Company’s lawsuit against United and certain large customer disputes, as well as certain government inquiries, and a pretax charge of $2.8 million relating to incremental costs associated with the closure of one of the Company’s repackaging operations.

The full-year results for 2008 include special items totaling $141.5 million pretax ($94.5 million aftertax, or approximately 80 cents per diluted share), including $99.3 million pretax associated with the above-mentioned litigation, settlement reserve and related professional fees, $35.8 million pretax for restructuring and other related costs associated primarily with the implementation of the Omnicare Full Potential Plan, and $6.4 million pretax in incremental costs relating to the closure of one of the Company’s repackaging operations.

The full-year results for 2007 include special items totaling $87.6 million pretax ($54.3 million aftertax, or approximately 45 cents per diluted share). The 2007 full-year special items include $27.9 million pretax for restructuring and other related costs associated primarily with the implementation of the Omnicare Full Potential Plan, $42.5 million pretax associated with the above-mentioned litigation and related professional fees, and $17.2 million pretax in incremental costs relating to the closure of one of the Company’s repackaging operations.

Omnicare Outlook

“Our 2008 results reflect significant progress made in returning growth to the business, reducing costs and increasing productivity and enhancing shareholder value,” said Gemunder. “Given the strategies we have in place, the advantages of our scale position and the ongoing trends in the pharmaceutical marketplace, we believe we are positioned for continued growth. As a result, we expect Omnicare’s diluted earnings per share, as adjusted to exclude special items such as the impact of newly adopted accounting rules, to be in the range of $2.50 to $2.70 for the full year 2009.

“Longer term, we continue to believe our business is supported by sound fundamentals, including the aging of the U.S. population which should continue to drive demand for pharmacy services in the senior population. Further, we also believe there is significant opportunity for Omnicare in increasing access to drug therapy for the broader population through our hospice pharmacy and specialty pharmacy services businesses.”

Webcast Today

The Company will hold a conference call to discuss fourth-quarter and full-year results today, Thursday, February 26, at 11:00 a.m. ET. The conference call will be webcast live at Omnicare's Web site at www.omnicare.com by clicking on "Investors" and then on "Conference Calls," and will be accessible by telephone at the following numbers:

An online replay will be available at www.omnicare.com beginning approximately two hours after the completion of the live call and will remain available for 14 days.

Omnicare, Inc. (NYSE:OCR), a Fortune 500 company based in Covington, Kentucky, is a leading provider of pharmaceutical care for the elderly. Omnicare serves residents in long-term care facilities, chronic care and other settings comprising more than 1.4 million beds in 47 states, the District of Columbia and Canada. Omnicare is the largest U.S. provider of professional pharmacy, related consulting and data management services for skilled nursing, assisted living and other institutional healthcare providers as well as for hospice patients in homecare and other settings. Omnicare’s pharmacy services also include distribution and product support services for specialty pharmaceuticals. Omnicare offers clinical research services for the pharmaceutical and biotechnology, nutraceutical and medical device industries in 30 countries worldwide. For more information, visit the company's Web site at www.omnicare.com.

Forward-Looking Statements

In addition to historical information, this press release contains certain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, all statements regarding the intent, belief or current expectations regarding the matters discussed or incorporated by reference in this document (including statements as to “beliefs,” “expectations,” “anticipations,” “intentions” or similar words) and all statements which are not statements of historical fact. Such forward-looking statements, together with other statements that are not historical, are based on management’s current expectations and involve known and unknown risks, uncertainties, contingencies and other factors that could cause results, performance or achievements to differ materially from those stated. The most significant of these risks and uncertainties are described in the Company’s Form 10-K, Form 10-Q and Form 8-K reports filed with the Securities and Exchange Commission and include, but are not limited to: overall economic, financial, political and business conditions; trends in the long-term healthcare, pharmaceutical and contract research industries; the ability to attract new clients and service contracts and retain existing clients and service contracts; the ability to consummate pending acquisitions; trends for the continued growth of the Company’s businesses; trends in drug pricing; delays and reductions in reimbursement by the government and other payors to customers and to the Company; the overall financial condition of the Company’s customers and the ability of the Company to assess and react to such financial condition of its customers; the ability of vendors and business partners to continue to provide products and services to the Company; the continued successful integration of acquired companies; the continued availability of suitable acquisition candidates; the ability to attract and retain needed management; competition for qualified staff in the healthcare industry; the demand for the Company’s products and services; variations in costs or expenses; the ability to implement productivity, consolidation and cost reduction efforts and to realize anticipated benefits; the ability of clinical research projects to produce revenues in future periods; the potential impact of legislation, government regulations, and other government action and/or executive orders, including those relating to Medicare Part D, including its implementing regulations and any subregulatory guidance, reimbursement and drug pricing policies and changes in the interpretation and application of such policies; government budgetary pressures and shifting priorities; federal and state budget shortfalls; efforts by payors to control costs; changes to or termination of the Company’s contracts with Medicare Part D plan sponsors or to the proportion of the Company’s Part D business covered by specific contracts; the outcome of litigation; potential liability for losses not covered by, or in excess of, insurance; the impact of differences in actuarial assumptions and estimates as compared to eventual outcomes; events or circumstances which result in an impairment of assets, including but not limited to, goodwill; market conditions; the outcome of audit, compliance, administrative, regulatory or investigatory reviews; volatility in the market for the Company’s stock and in the financial markets generally; access to adequate capital and financing; changes in international economic and political conditions and currency fluctuations between the U.S. dollar and other currencies; changes in tax laws and regulations; changes in accounting rules and standards; and costs to comply with the Company’s Corporate Integrity Agreements. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, the Company’s actual results, performance or achievements could differ materially from those expressed in, or implied by, such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Except as otherwise required by law, the Company does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

For more information on Omnicare, Inc., visit www.omnicare.com.

Source: Omnicare, Inc.

Omnicare, Inc.
Cheryl D. Hodges, 859-392-3331