Omnicare Inc. (OCR, Financial) filed Quarterly Report for the period ended 2010-03-31.
Omnicare Inc. has a market cap of $3.33 billion; its shares were traded at around $27.7 with a P/E ratio of 10 and P/S ratio of 0.6. The dividend yield of Omnicare Inc. stocks is 0.3%. Omnicare Inc. had an annual average earning growth of 7.8% over the past 10 years.OCR is in the portfolios of Wallace Weitz of Weitz Wallace R & Co, Steven Romick of FPA Crescent Fund, Richard Snow of Snow Capital Management, L.P., First Pacific Advisors of First Pacific Advisors, LLC, NWQ Managers of NWQ Investment Management Co, Arnold Schneider of Schneider Capital Management, David Dreman of Dreman Value Management, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC, Chuck Royce of Royce& Associates, George Soros of Soros Fund Management LLC.
The Company continues to be impacted by the unilateral reduction in April 2006 by UnitedHealth Group, Inc. and its affiliates (“United”) in the reimbursement rates paid by United to Omnicare by switching to its PacifiCare pharmacy network contract for services rendered by Omnicare to beneficiaries of United s drug benefit plans under the Medicare Part D program. The differential in reimbursement rates that resulted from United s action, as compared with reimbursement rates under the originally negotiated contract, reduced sales and operating profit in the first quarter of 2010 by approximately $21 million (approximately $13 million aftertax), and cumulatively since April 2006 by approximately $406 million (approximately $252 million aftertax). This matter is currently the subject of litigation initiated by Omnicare and is before the federal appellate court in the Seventh Circuit Court of Appeals. See further discussion at the “Legal Proceedings” section at Part II, Item 1 of this Filing.
The provision for doubtful accounts for the three months ended March 31, 2010 was $22.0 million versus $25.3 million in the comparable prior-year period. Net accounts receivable of approximately $1,183 million at March 31, 2010 was $26 million lower than the December 31, 2009 balance of approximately $1,209 million. Further, accounts receivable days sales outstanding were approximately 72 and 80 at March 31, 2010 and 2009, respectively, representing a year-over-year reduction of 8 days.
(ii) During 2006, the Company experienced certain quality control and product recall issues, as well as fire damage, at one of its repackaging facilities, as described in further detail at the “Commitments and Contingencies” note of the Notes to Consolidated Financial Statements (the “Repack Matters”). In addressing and resolving these Repack Matters, the Company continues to experience increased costs and, as a result, the three months ended March 31, 2010 included special charges of $1.2 million pretax (approximately $0.4 million and $0.8 million was recorded in the cost of sales and operating expense sections of the Consolidated Statements of Income, respectively) ($0.8 million aftertax) for these increased costs. The Company maintains product recall, property and casualty and business interruption insurance, and the extent of insurance recovery for these expenses continues to be reviewed by its insurers and outside advisors. As of March 31, 2010, the Company has received approximately $10 million in insurance recoveries.
(ii) In addressing and resolving the aforementioned Repack Matters, the Company continues to experience increased costs and as a result, the three months ended March 31, 2009 included special charges of $2.0 million pretax (approximately $1.1 million and $0.9 million was recorded in the cost of sales and operating expense sections of the Consolidated Statements of Income, respectively) ($1.2 million aftertax) for these increased costs. The Company maintains product recall, property and casualty and business interruption insurance, and the extent of insurance recovery for these expenses continues to be reviewed by its insurers and outside advisors. As of March 31, 2009, the Company had received no material insurance recoveries.
In recent years, SNFs have received the full market basket inflation increase to annual rates. For fiscal year 2009, beginning October 1, 2008, SNFs received a 3.4 percent inflation update that increased overall payments to SNFs by $780 million. However, for fiscal year 2010, beginning on October 1, 2009, payments to SNFs were reduced by 1.1 percent, or by $360 million to SNFs overall, compared to fiscal year 2009 levels. While the payment levels reflect a 2.2 percent market basket inflation update, that amount was more than offset by a 3.3 percent ($1.050 billion) adjustment intended to recalibrate case mix weights to compensate for increased expenditures resulting from refinements made in January 2006.
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Omnicare Inc. has a market cap of $3.33 billion; its shares were traded at around $27.7 with a P/E ratio of 10 and P/S ratio of 0.6. The dividend yield of Omnicare Inc. stocks is 0.3%. Omnicare Inc. had an annual average earning growth of 7.8% over the past 10 years.OCR is in the portfolios of Wallace Weitz of Weitz Wallace R & Co, Steven Romick of FPA Crescent Fund, Richard Snow of Snow Capital Management, L.P., First Pacific Advisors of First Pacific Advisors, LLC, NWQ Managers of NWQ Investment Management Co, Arnold Schneider of Schneider Capital Management, David Dreman of Dreman Value Management, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC, Chuck Royce of Royce& Associates, George Soros of Soros Fund Management LLC.
Highlight of Business Operations:
Total net sales for the three months ended March 31, 2010 were $1,524.2 million versus $1,542.1 million in the comparable prior-year period. Income from continuing operations for the three months ended March 31, 2010 was $54.3 million versus $32.2 million earned in the comparable 2009 period. Diluted earnings per share from continuing operations for the three months ended March 31, 2010 were $0.46 versus $0.28 in the same prior-year period. In total, including discontinued operations, net income for the three months ended March 31, 2010 was $50.9 million, or $0.43 per diluted share, as compared with $30.9 million, or $0.26 per diluted share, earned in the comparable prior-year period. EBITDA from continuing operations totaled $149.7 million for the three months ended March 31, 2010 as compared with $126.2 million for the same period of 2009. In mid-2009, the Company commenced activities to divest certain home healthcare and related ancillary businesses that are non-strategic in nature. The disposal group, historically part of Omnicare s Pharmacy Services segment, primarily represents ancillary businesses which accompanied other more strategic assets obtained by Omnicare in connection with the Company s institutional pharmacy acquisition program. The results from continuing operations for all periods presented have been revised to reflect the results of the disposal group as discontinued operations, including certain expenses of the Company related to the divestiture. The Company anticipates completing the divestiture within twelve months.The Company continues to be impacted by the unilateral reduction in April 2006 by UnitedHealth Group, Inc. and its affiliates (“United”) in the reimbursement rates paid by United to Omnicare by switching to its PacifiCare pharmacy network contract for services rendered by Omnicare to beneficiaries of United s drug benefit plans under the Medicare Part D program. The differential in reimbursement rates that resulted from United s action, as compared with reimbursement rates under the originally negotiated contract, reduced sales and operating profit in the first quarter of 2010 by approximately $21 million (approximately $13 million aftertax), and cumulatively since April 2006 by approximately $406 million (approximately $252 million aftertax). This matter is currently the subject of litigation initiated by Omnicare and is before the federal appellate court in the Seventh Circuit Court of Appeals. See further discussion at the “Legal Proceedings” section at Part II, Item 1 of this Filing.
The provision for doubtful accounts for the three months ended March 31, 2010 was $22.0 million versus $25.3 million in the comparable prior-year period. Net accounts receivable of approximately $1,183 million at March 31, 2010 was $26 million lower than the December 31, 2009 balance of approximately $1,209 million. Further, accounts receivable days sales outstanding were approximately 72 and 80 at March 31, 2010 and 2009, respectively, representing a year-over-year reduction of 8 days.
(ii) During 2006, the Company experienced certain quality control and product recall issues, as well as fire damage, at one of its repackaging facilities, as described in further detail at the “Commitments and Contingencies” note of the Notes to Consolidated Financial Statements (the “Repack Matters”). In addressing and resolving these Repack Matters, the Company continues to experience increased costs and, as a result, the three months ended March 31, 2010 included special charges of $1.2 million pretax (approximately $0.4 million and $0.8 million was recorded in the cost of sales and operating expense sections of the Consolidated Statements of Income, respectively) ($0.8 million aftertax) for these increased costs. The Company maintains product recall, property and casualty and business interruption insurance, and the extent of insurance recovery for these expenses continues to be reviewed by its insurers and outside advisors. As of March 31, 2010, the Company has received approximately $10 million in insurance recoveries.
(ii) In addressing and resolving the aforementioned Repack Matters, the Company continues to experience increased costs and as a result, the three months ended March 31, 2009 included special charges of $2.0 million pretax (approximately $1.1 million and $0.9 million was recorded in the cost of sales and operating expense sections of the Consolidated Statements of Income, respectively) ($1.2 million aftertax) for these increased costs. The Company maintains product recall, property and casualty and business interruption insurance, and the extent of insurance recovery for these expenses continues to be reviewed by its insurers and outside advisors. As of March 31, 2009, the Company had received no material insurance recoveries.
In recent years, SNFs have received the full market basket inflation increase to annual rates. For fiscal year 2009, beginning October 1, 2008, SNFs received a 3.4 percent inflation update that increased overall payments to SNFs by $780 million. However, for fiscal year 2010, beginning on October 1, 2009, payments to SNFs were reduced by 1.1 percent, or by $360 million to SNFs overall, compared to fiscal year 2009 levels. While the payment levels reflect a 2.2 percent market basket inflation update, that amount was more than offset by a 3.3 percent ($1.050 billion) adjustment intended to recalibrate case mix weights to compensate for increased expenditures resulting from refinements made in January 2006.
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