Omnicare Reports First-Quarter 2012 Financial Results
(Thomson Reuters ONE) -
CINCINNATI, April 26, 2012 - Omnicare, Inc. (NYSE:OCR) reported today financial
results for its first quarter ended March 31, 2012.
Year-Over-Year Highlights:
* Gross profit increase of 9.9% to $368.1 million; 115 basis-point expansion
in gross margin
* Long-Term Care Group adjusted operating profit up 18.3%
* Specialty Care Group operating profit increase of 41.3%
* Adjusted diluted cash earnings per share from continuing operations 17.4%
higher to $0.81; GAAP earnings per diluted share of $0.48
"We are pleased with our first-quarter financial results, which reflect a
continuation of our recently established earnings momentum," said John Figueroa,
Omnicare's Chief Executive Officer. "Our focus on becoming more operationally
driven has enabled us to become more efficient as an organization while
concurrently benefiting from pharmaceutical market trends. With our solid
first-quarter results, I believe we have begun a successful 2012 by elevating
Omnicare's growth profile and positioning our shareholders for value
enhancement."
First-Quarter Results
Prior Year Comparison
Financial results from continuing operations for the quarter ended March
31, 2012, as compared with the same prior-year period, were as follows:
* Gross profit was $368.1 million as compared with $335.0 million
* GAAP income from continuing operations per diluted share was $0.48 versus
$0.43
* Adjusted diluted cash earnings per share from continuing operations (see
"per share" discussion below and attached supplemental information) was
$0.81 versus $0.69
* Adjusted EBITDA from continuing operations was $169.7 million versus $146.2
million
Cash flows from continuing operations for the quarter ended March 31, 2012 were
$100.4 million versus $143.9 million in the comparable prior-year quarter.
Sequential Comparison
In comparison to the fourth quarter of 2011, financial results from continuing
operations for the first quarter of 2012 were as follows:
* Gross profit was $368.1 million as compared with $359.7 million
* GAAP earnings per diluted share was $0.48 versus $0.34
* Adjusted diluted cash earnings per share from continuing operations (see
discussion below and attached supplemental information) was $0.81 versus
$0.78
* Adjusted EBITDA from continuing operations was $169.7 million compared to
$162.9 million
"During the quarter, we generated strong double-digit growth from both of our
core businesses," said Mr. Figueroa. "Utilization was slightly higher
sequentially within our Long-Term Care business, while margin expansion was
primarily the result of improved operating efficiencies and the benefit from the
introduction of new generic drugs, which lower costs for Omnicare, its customers
and payors. The outperformance of our Specialty Care Group, in comparison to
the prior year, was driven by robust growth across all operating platforms."
Financial Position
Omnicare concluded the first quarter of 2012 with no borrowings outstanding on
its revolving credit facility and $624.0 million in cash on its balance sheet.
Omnicare's total debt to total capital ratio of 34.2% at March 31, 2012, was
approximately 30 basis points lower from 34.5% at December 31, 2011.
On March 29, 2012, Omnicare announced it had entered into separate, privately
negotiated exchange agreements under which it retired $256.9 million in
aggregate amount of its outstanding 3.75% Convertible Senior Subordinated Notes
due 2025 (the "Existing Notes") in exchange for its issuance of $390 million in
aggregate principal amount of new 3.75% Convertible Senior Subordinated Notes
due 2042. These transactions closed on April 3, 2012, following which, $318.1
million in principal amount of the Existing Notes remain outstanding.
With respect to its share repurchase program, Omnicare repurchased approximately
0.7 million shares of common stock during the quarter and paid an aggregate
amount of $22 million. As of March 31, 2012, the Company had approximately $237
million of availability under its current share repurchase authorization.
"We generated over $100 million in cash flows from continuing operations during
the first quarter, enabling us to continue our disciplined and balanced approach
to capital allocation," said John L. Workman, Omnicare's President and Chief
Financial Officer. "Through share repurchases and dividends, we exceeded our
25% target of capital returned to shareholders. Additionally, we enhanced our
financial position while continuing to invest in capital initiatives that we
believe support Omnicare's long-term growth prospects"
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 discussed elsewhere herein, and to present results on a continuing
operations basis. For a detailed presentation of reconciling items and related
definitions and components, please refer to the attached schedules or to
reconciliation schedules posted at the Investor Relations section of Omnicare's
Web site at http://ir.omnicare.com. Additionally, the Company will make
supplemental slides available in the same section on its Web site today that
will include the number of scripts dispensed, beds served, and other information
relevant to Omnicare's operations.
Segment Information
Financial results for the Long-Term Care Group for the first quarter ended March
31, 2012 were as follows:
* Net sales of $1,296.3 million were up 1.5% from $1,277.4 million
sequentially and up 0.5% from $1,290.1 million over the same prior-year
period
* Adjusted operating income of $154.2 million was up 5.4% from $146.3 million
sequentially and up 18.3% from $130.4 million over the same prior-year
period
Financial results for the Specialty Care Group for the first quarter ended March
31, 2012 were as follows:
* Net sales of $293.3 million were up 6.2% from $276.2 million sequentially
and up 26.8% from $231.3 million over the same prior-year period
* Adjusted operating income of $30.1 million was up 10.3% from $27.3 million
sequentially and up 41.3% from $21.3 million over the same prior-year
period
Special Items
The results for the first quarter of 2012 and 2011 include the impact of special
items totaling approximately $25.1 million pretax ($17.7 million aftertax, or
approximately $0.15 per diluted share) and $14.9 million pretax ($9.3 million
aftertax, or approximately $0.08 per diluted share), respectively.
The special items have been described in further detail in the "Footnotes and
Definitions to Financial Information" section elsewhere herein.
Outlook
For the full-year 2012, Omnicare reaffirmed its previous expectations and
continues to expect the following:
* Revenues of $6.1 billion to $6.2 billion
* Adjusted cash-based income per diluted share from continuing operations of
$3.10 to $3.20, excluding special items
* Cash flow from continuing operations of $400 million to $500 million
"We believe we are well on-track to achieve our previously stated full-year
outlook," said Mr. Workman. "Upon concluding our second quarter, we anticipate
reassessing our financial guidance and providing any necessary update
accordingly."
Webcast Today
Omnicare will hold a conference call to discuss its first-quarter 2012 financial
results today, Thursday, April 26, at 9:00 a.m. ET. A live webcast of the
conference call and supplemental slides will be accessible from the Investor
Relations section of Omnicare's website at http://ir.omnicare.com. An archived
replay will be made available on the website following the conclusion of the
conference call.
About Omnicare
Omnicare, Inc., a Fortune 400 company based in Cincinnati, Ohio, provides
comprehensive pharmaceutical services to patients and providers across North
America. As the market-leader in professional pharmacy, related consulting and
data management services for skilled nursing, assisted living and other chronic
care institutions, Omnicare leverages its unparalleled clinical insight into the
geriatric market along with some of the industry's most innovative technological
capabilities to the benefit of its long-term care customers. Omnicare also
provides key commercialization services for the bio-pharmaceutical industry and
end-of-life disease management through its Specialty Care Group. For more
information, visit www.omnicare.com.
Forward-looking Statements
In addition to historical information, this report 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 and
pharmaceutical industries; the ability to attract new clients and service
contracts and retain existing clients and service contracts; the ability to
consummate pending acquisitions on favorable terms or at all; 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 successful integration of
acquired companies and realization of contemplated synergies; the continued
availability of suitable acquisition candidates; the ability to attract and
retain needed management; competition for qualified staff in the healthcare
industry; variations in 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 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, including changes in calculation of average
wholesale price; discontinuation of reporting average wholesale price, and/or
implementation of new pricing benchmarks; legislative and regulatory changes
impacting long term care pharmacies; 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 pharmaceutical
benefit managers, Medicare Part D Plan sponsors and/or commercial health
insurers or to the proportion of the Company's business covered by specific
contracts; the outcome of disputes and litigation; potential liability for
losses not covered by, or in excess of, insurance; the impact of executive
separations; the impact of benefit plan terminations; 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 and identifiable intangible assets; the final outcome of
divestiture activities; 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; the impacts of potential cybersecurity risks and/or incidents; and
costs to comply with the Company's Corporate Integrity Agreement. 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
# # #
Contact:
Patrick C. Lee
(859) 392-3444
patrick.lee(at)omnicare.com
Omnicare, Inc. and Subsidiary Companies
Summary Consolidated Statements of Income, GAAP Basis
($000s, except per share amounts)
Unaudited
Three months ended
-----------------------------------------------
March 31, December 31, March 31,
2012 2011 2011
--------------- --------------- ---------------
Net sales $ 1,593,068 $ 1,557,085 $ 1,525,571
Cost of sales 1,224,968 1,197,401 1,190,612
--------------- --------------- ---------------
Gross profit 368,100 359,684 334,959
Selling, general and
administrative expenses 200,124 199,902 190,166
Provision for doubtful
accounts 24,431 25,410 24,530
Other charges 18,715 28,257 7,902
--------------- --------------- ---------------
Operating income 124,830 106,115 112,361
Investment income 28 10 296
Interest expense (30,862 ) (36,090 ) (34,678 )
--------------- --------------- ---------------
Income from continuing
operations before income taxes 93,996 70,035 77,979
Income tax provision 38,257 31,723 28,824
--------------- --------------- ---------------
Income from continuing
operations 55,739 38,312 49,155
Loss from discontinued
operations - (7,129 ) (19,851 )
--------------- --------------- ---------------
Net income $ 55,739 $ 31,183 $ 29,304
--------------- --------------- ---------------
Earnings (loss) per common
share - Basic:
Continuing operations $ 0.50 $ 0.34 $ 0.43
Discontinued operations - (0.06 ) (0.17 )
Net income $ 0.50 $ 0.28 $ 0.26
--------------- --------------- ----------------
Earnings (loss) per common
share - Diluted:
Continuing operations $ 0.48 $ 0.34 $ 0.43
Discontinued operations - (0.06 ) (0.17 )
Net income $ 0.48 $ 0.27 $ 0.26
--------------- --------------- ---------------
Weighted average number of
common shares outstanding:
Basic 111,487 111,687 114,129
--------------- --------------- ---------------
Diluted 116,500 114,344 115,064
--------------- --------------- ---------------
The footnotes and definitions presented at the separate "Footnotes and
Definitions to Financial Information" pages are an integral part of this
financial information.
Omnicare, Inc and Subsidiary Companies
(000s)
Unaudited
Condensed Consolidated Balance Sheets Information, GAAP Basis:
March 31, December 31,
2012 2011
--------------- --------------
Assets:
Cash and cash equivalents, including restricted
cash $ 624,001 $ 582,598
Accounts receivable, net 992,792 931,314
Inventories 354,270 419,378
Total current assets 2,301,020 2,297,371
Properties and equipment, net 239,927 225,257
Goodwill 4,241,610 4,247,286
Total noncurrent assets 4,887,468 4,895,739
Total assets $ 7,188,488 $ 7,193,110
--------------- --------------
Liabilities and Stockholders Equity:
Total current liabilities $ 498,864 $ 540,067
Long-term debt, notes and convertible debentures 1,965,586 1,968,274
Total noncurrent liabilities 2,861,583 2,857,607
Total liabilities 3,360,447 3,397,674
Stockholders' equity 3,828,041 3,795,436
Total liabilities and stockholders' equity $ 7,188,488 $ 7,193,110
--------------- --------------
Condensed Consolidated Statement of Cash Flows Information, GAAP Basis:
Three months
ended
March 31, 2012
---------------
Cash flows from operating activities:
Net income $ 55,739
Adjustments to reconcile net income to net cash flows from
operating activities 44,678
---------------
Net cash flows from operating activities of continuing
operations 100,417
Cash flows used in investing activities:
Net cash flows used in investing activities of continuing
operations (20,290 )
Cash flows from used in financing activities:
Net cash flows from used in financing activities of continuing
operations (38,212 )
---------------
Net increase in cash and cash equivalents $ 41,915
---------------
The footnotes and definitions presented at the separate "Footnotes and
Definitions to Financial Information" pages are an integral part of this
financial information.
Omnicare, Inc. and Subsidiary Companies
Reconciliation Statement and Definitions, Non-GAAP Basis
($000s, except per share amounts)
Unaudited
Three months ended
------------------------------------------
March 31, December 31, March 31,
2012 2011 2011
------------- --------------- ------------
Adjusted earnings per share ("EPS")
from continuing operations:
Diluted earnings per share from
continuing operations $ 0.48 $ 0.34 $ 0.43
Special items: (a)
Amortization of discount on
convertible notes 0.03 0.03 0.03
Debt redemption costs, net - 0.02 0.01
Other charges 0.12 0.18 0.04
Total - special items (a) 0.15 0.24 0.08
Cash EPS adjustments 0.18 0.21 0.19
Adjusted diluted cash EPS from
continuing operations $ 0.81 $ 0.78 $ 0.69
Adjusted earnings before interest, income taxes ("EBIT"), depreciation and
amortization ("EBITDA") from continuing operations:
EBIT from continuing operations $ 124,830 $ 106,115 $ 112,361
Depreciation and amortization 32,461 35,806 31,810
Amortization of discount on
convertible notes (6,350 ) (6,226 ) (5,873 )
------------- --------------- ------------
EBITDA from continuing operations 150,941 135,695 138,298
Special items (a) 18,715 27,213 7,902
------------- --------------- ------------
Adjusted EBITDA from continuing
operations $ 169,656 $ 162,908 $ 146,200
------------- --------------- ------------
EBITDA from continuing operations to net cash flows from operating activities:
EBITDA from continuing operations $ 150,941 $ 135,695 $ 138,298
(Subtract)/Add:
Interest expense, net of investment
income and amortization of discount
on convertible notes (24,484 ) (29,854 ) (28,509 )
Income tax provision (38,257 ) (31,723 ) (28,824 )
Goodwill impairment charge 5,903
Write-off of debt issuance costs,
net 103 752 198
Debt redemption tender premium - (3,438 ) (1,277 )
Changes in assets and liabilities,
net of effects from acquisition and
divestitures of businesses 6,211 30,026 64,043
------------- --------------- ------------
Net cash flows from operating
activities of continuing operations 100,417 101,458 143,929
------------- --------------- ------------
Segment Reconciliations - Long-Term
Care Group ("LTC")
Adjusted Operating Income - LTC:
Operating income from continuing
operations $ 137,979 $ 119,696 $ 122,490
Special items (a) 16,215 26,570 7,902
------------- ------------- ------------
Adjusted operating income from
continuing operations - LTC $ 154,194 $ 146,266 $ 130,392
------------- ------------- ------------
Segment Reconciliations - Specialty
Care Group ("SCG")
Adjusted Operating Income - SCG:
Operating income from continuing
operations $ 30,149 $ 26,684 $ 21,295
Special items (a) - 643 -
------------- ------------- ------------
Adjusted operating income from
continuing operations - SCG $ 30,149 $ 27,327 $ 21,295
------------- ------------- ------------
The footnotes and definitions presented at the separate "Footnotes and
Definitions to Financial Information" pages are an integral part of this
financial information.
Omnicare, Inc. and Subsidiary Companies
Footnotes and Definitions to Financial Information
(000s, except per share amounts and unless otherwise stated)
Unaudited
Footnotes:
Non-GAAP Information:
Omnicare, Inc. ("Omnicare" or the "Company") management believes that presenting
certain non-GAAP financial measures, which exclude items not considered part of
the core operating results of the Company and certain non-cash charges, enhances
investors' understanding of how Omnicare management assesses the performance of
the Company's business. Omnicare management uses non-GAAP measures for
budgeting purposes, measuring actual results, allocating resources and in
determining employee incentive compensation. Omnicare's method of calculating
non-GAAP financial results may differ from those used by other companies and,
therefore, comparability may be limited.
a. Financial results from continuing operations included special item charges
of approximately $25.1 million, $38.7 million and $14.9 million in the three
months ended March 31, 2012 and December 31 and March 31, 2011,
respectively. Additional information regarding the special item charges
follows:
i. Financial results from continuing operations for the three months ended
March 31, 2012 and December 31, and March 31, 2011 included the
following special item charges which are included in the other charges
and interest expense captions of the income statement:
i. Operating income includes settlement, litigation and other related
charges (including related professional expenses) of approximately
$7.2 million, $23.1 million and $6.0 million, respectively, for
resolution of certain regulatory matters with various states and
regulatory agencies, as well as costs associated with certain
large customer disputes and purported class and derivative actions
against the Company. Additionally, Omnicare has made, and will
continue to make, disclosures to the applicable governmental
agencies of amounts, if any, determined to represent over-payments
from the respective programs and, where applicable, those amounts,
as well as any amounts relating to certain inspections, audits,
inquiries and investigations activity are included in the pretax
items recognized.
ii. Operating income for the three months ended March 31, 2012 and
December 31 and March 31, 2011 included acquisition and other
related costs of approximately $3.1 million, $14.6 million and
$1.9 million, respectively. These expenses were primarily related
to professional fees and acquisition related restructuring costs
for acquisitions, offset by reductions in the Company's purchase
accounting reserves in December 2011.
iii. Operating income for the three months ended March 31, 2012 and
December 31, 2011 includes separation costs of approximately $2.5
million and $1.0 million, respectively, related to separation
related costs for three former executives in the 2012 period and
restricted stock amortization for a former executive in the 2011
period.
iv. On April 2, 2012, Omnicare signed a letter of intent ("LOI") with
a third party to sell the Company's Canadian Pharmacy. In the
three months ended March 31, 2012, the Company recorded an
impairment loss of approximately $6 million to reduce the carrying
value of the Canadian Pharmacy to fair value based on the terms of
the LOI.
v. Financial results from continuing operations for the three months
ended December 31 and March 31, 2011 include charges of
approximately $4.2 million and $1.1 million, respectively,
primarily due to net debt redemption costs for the early
redemption of the 6.875% Senior Subordinated Notes, due 2015, and
costs related to the early redemption of the 6.125% Senior
Subordinated Notes, due 2013.
vi. For the three months ended December 31, 2011, operating income
includes a special (credit) of approximately $(10.5) million for
insurance recoveries related to the quality control, product
recall and fire issues at one of the Company's repackaging
locations ("Repack Matters").
vii. The Company recorded non-cash interest expense from the
amortization of debt discount on its convertible notes of
approximately $6 million in the three months ended March 31, 2012
and December 31 and March 31, 2011, respectively.
Discontinued Operations:
In 2009, the Company commenced activities to divest certain home healthcare and
related ancillary businesses ("the Disposal Group") that are non-strategic in
nature. Also, in connection with the reallocation of resources started in the
second half of 2010 and the previously disclosed unfavorable market conditions
experienced by its Contract Research Services organization ("CRO Services")
business, the Company committed to a plan to divest of its CRO Services business
in the first quarter of 2011 and completed the divestiture in April 2011. Also,
in the second quarter of 2011, the Company divested its Tidewater Group
Purchasing Organization ("Tidewater"). The Company determined that the CRO
Services and Tidewater businesses were no longer good strategic fits within the
Company's portfolio of assets. In the fourth quarter of 2011, the Company
divested the remaining durable medical equipment ("DME") portion of the Disposal
Group. In connection with these activities, Omnicare recorded an impairment
loss in discontinued operations for CRO Services in the three months ended March
31, 2011 to reduce the carrying value to fair value based on the final terms of
the divestiture.
Definitions:
GAAP:
Amounts that conform with U.S. Generally Accepted Accounting Principles
("GAAP").
Non-GAAP:
Amounts that do not conform with U.S. GAAP.
Earnings Per Share:
EPS (basic EPS; special items, net of taxes; adjusted basic EPS; diluted EPS;
adjusted diluted cash EPS) is reported independently for each amount presented.
Accordingly, the sum of the individual amounts may not necessarily equal the
separately calculated amounts for the corresponding period.
EBIT:
EBIT represents earnings before interest expense (net of investment income) and
income taxes.
EBITDA:
EBITDA represents earnings before interest expense (net of investment income),
income taxes, depreciation and amortization. Omnicare uses EBITDA primarily as
an indicator of the Company's ability to service its debt, and believes that
certain investors find EBITDA to be a useful financial measure for the same
purpose. EBITDA does not represent net cash flows from operating activities, as
defined by U.S. GAAP, and should not be considered as a substitute for operating
cash flows as a measure of liquidity. Omnicare's calculation of EBITDA may
differ from the calculation of EBITDA by others. Certain special items must be
added back to (or deducted from) EBITDA and/or Adjusted EBITDA to avoid "double-
counting" in the Company's calculation of EBITDA.
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Omnicare via Thomson Reuters ONE
[HUG#1606092]
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