Omnicare Reports
First-Quarter 2015 Financial Results;
Company Updates Full-Year 2015 Guidance
CINCINNATI, April 29,
2015 - Omnicare, Inc. (NYSE:OCR) reported today financial
results for its first quarter ended March 31, 2015.
First-Quarter
Highlights:
-
Net sales increase of 5.7% to
$1.7 billion
-
Adjusted cash earnings per
diluted share from continuing operations 12.1% higher to $1.02;
GAAP earnings per diluted share of $0.75
-
Adjusted operating income from
continuing operations increase of 8.5% to $163 million
-
Cash flows from continuing
operations increased 96% to a record quarter level of $336
million
"The first quarter marked a successful beginning
to the year with double-digit adjusted cash earnings per share
growth," said Nitin Sahney, Omnicare's President and Chief
Executive Officer. "We continued our disciplined approach to
growth by optimizing on our core competencies and driving
efficiency through our operations. The first quarter of 2015
attests to the success of our organization in providing
comprehensive services and positions us well as a key player in the
continued evolution of innovative and cost-effective patient care
solutions."
First-Quarter Results
Financial results from continuing operations for
the quarter ended March 31, 2015, as compared with the same
prior-year period, were as follows:
-
Net sales were $1,660 million versus $1,571
million
-
Gross profit was $349 million as compared with
$358 million
-
GAAP earnings per diluted share was $0.75 versus
$0.59
-
Adjusted cash earnings per diluted share was
$1.02 versus $0.91
-
Adjusted EBITDA was $190 million versus $178
million
Cash flows from continuing operations for the
quarter ended March 31, 2015 were $336 million versus $172
million in the comparable prior-year quarter.
"Both operating segments performed well in the
quarter and contributed to our solid first-quarter results,"
continued Mr. Sahney. "Our Long-Term Care group delivered
another consecutive quarter of year-over-year revenue growth and we
maintained our double-digit increases within our Specialty Care
Group in both revenue and operating profit. We continue to
leverage our expertise in both senior and specialty care in driving
organic growth and securing our position as a leader in complex
pharmaceutical patient care."
Financial Position
Omnicare concluded the first quarter of 2015 with
no borrowings outstanding on its revolving credit facility, other
than approximately $13 million in standby letters of credit, and
$322 million in cash on its balance sheet.
In the first quarter, Omnicare repurchased 1.8
million shares for an aggregate amount of $125 million. As of
March 31, 2015, the Company had approximately $140 million of
availability under its current share repurchase authorization.
"Our disciplined working capital management and
earnings growth, combined with the impact of our new wholesaler
agreement, enabled us to generate a record $336 million of
operating cash flows in the first quarter," said Rocky Kraft,
Omnicare's Chief Financial Officer. "Leveraging our strong
cash flow performance, we returned approximately $146 million to
shareholders through share repurchases and dividends, while also
investing in the growth of our business.
Segment Information
Financial results for the Long-Term Care Group for
the first quarter ended March 31, 2015 were as follows:
-
Net sales of $1,195 million were 0.3% higher
than $1,191 million in the same prior-year period
-
Adjusted operating income of $163 million
increased 0.5% versus the prior-year first quarter of $162
million.
Financial results for the Specialty Care Group for
the first quarter ended March 31, 2015 were as follows:
To facilitate comparisons and to
enhance the understanding of core operating performance,
discussions in this news release include financial measures that
are adjusted from the comparable amounts 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 website at http://ir.omnicare.com.
Additionally, the Company will make supplemental slides available
in the same section on its website today that will include the
number of scripts dispensed and other information relevant to
Omnicare's operations.
Special Items
The results for the first-quarters ended
March 31, 2015 and 2014 include the impact of special items
and cash EPS adjustments as follows:
|
Three Months Ended
March 31, |
|
2015 |
2014 |
|
After-tax impact |
Per diluted share |
After-tax impact |
Per diluted share |
Special Items Adj. |
$9.4M |
$0.09 |
$14.4M |
$0.13 |
Cash EPS Adj. |
$18.8M |
$0.18 |
$20.0M |
$0.19 |
All special items and cash EPS adjustments have
been described in further detail in the "Footnotes and Definitions
to Financial Information" section elsewhere herein.
Outlook
Based upon its solid first quarter results,
Omnicare increased the lower end of its expectations for cash flows
from operations and reaffirmed other elements of its full-year 2015
guidance to reflect the following:
|
Previous Guidance |
Current Guidance |
Revenue |
$6.5B to $6.7B |
$6.5 to $6.7B |
Adjusted cash earnings per diluted share (excluding
special items) |
$4.08 to $4.16 |
$4.08 to $4.16 |
Cash flows from operations |
$525M to $625M |
$550M to $625M |
Webcast Today
Omnicare will hold a conference call to discuss
its first-quarter 2015 financial results today, Wednesday,
April 29, 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.
Upcoming Investor Events
About Omnicare
Omnicare, Inc., a Fortune 500 company based in
Cincinnati, Ohio, provides comprehensive pharmaceutical services to
patients and providers across the United States. 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 specialty pharmacy and key commercialization services for
the bio-pharmaceutical industry 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 our 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; our ability to
attract and retain new and existing clients and service contracts;
our ability to identify, finance and consummate acquisitions on
favorable terms or at all; trends for the continued growth of our
businesses; changes in drug pricing; delays in payment and
reductions in reimbursement by the government and other payors to
Omnicare and our customers; the overall financial condition of our
customers and our ability to assess and react to such financial
condition; the ability and willingness of our vendors and business
partners to continue to provide products and services to Omnicare;
the successful integration of acquired companies and realization of
contemplated synergies; the ability to attract and retain skilled
management; competition for qualified staff in the healthcare
industry; variations in demand for our products and services;
variations in costs or expenses; our 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, 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 or specialty pharmacies; government
budgetary pressures and changes, including federal and state budget
shortfalls; efforts by payors to control costs; changes to or
termination of our contracts with pharmaceutical benefit managers,
Medicare Part D Plan sponsors and/or commercial health insurers or
changes in the proportion of our business covered by specific
contracts; the outcome of pending and future legal or contractual
disputes; 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 that could result in an
impairment of assets, including but not limited to, goodwill and
identifiable intangible assets; our ability to successfully
complete planned divestitures; market conditions; the outcome of
audit, compliance, administrative, regulatory, or investigatory
reviews; volatility in the market for our stock and in the
financial markets generally; timing of conversions of our
convertible debt securities; access to adequate capital and
financing on acceptable terms; changes in our credit ratings given
by rating agencies; changes in tax laws and regulations; changes in
accounting rules and standards; the impact of potential
cybersecurity risks and/or incidents; costs to comply with our
Corporate Integrity Agreement; and unexpected costs or business
interruptions from information technology projects. Should one or
more of these risks or uncertainties materialize or should
underlying assumptions prove incorrect, our 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, we do 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
(513) 719-1507
patrick.lee@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, 2015 |
|
March 31, 2014 |
Net
sales |
$ |
1,659,842 |
|
|
$ |
1,571,038 |
|
Cost
of sales |
1,310,379 |
|
|
1,212,584 |
|
Gross
profit |
349,463 |
|
|
358,454 |
|
Selling, general and administrative expenses |
167,423 |
|
|
186,813 |
|
Provision for doubtful accounts |
19,191 |
|
|
21,561 |
|
Settlement, litigation and other related charges |
9,820 |
|
|
7,052 |
|
Other
charges |
1,049 |
|
|
10,276 |
|
Operating income |
151,980 |
|
|
132,752 |
|
Interest expense, net of investment income |
(27,649 |
) |
|
(29,441 |
) |
Income
from continuing operations before income taxes |
124,331 |
|
|
103,311 |
|
Income
tax expense |
46,942 |
|
|
39,673 |
|
Income
from continuing operations |
77,389 |
|
|
63,638 |
|
Income
from discontinued operations |
- |
|
|
136 |
|
Net
income |
$ |
77,389 |
|
|
$ |
63,774 |
|
|
|
|
|
Earnings per common share - Diluted: |
|
|
|
Continuing operations |
$ |
0.75 |
|
|
$ |
0.59 |
|
Discontinued Operations |
- |
|
|
- |
|
Net
Income |
$ |
0.75 |
|
|
$ |
0.59 |
|
|
|
|
|
Weighted average number of common shares outstanding: |
|
|
|
Diluted |
$ |
103,195 |
|
|
$ |
107,767 |
|
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
Consolidated Balance Sheets
($000s)
Unaudited
|
March 31,
2015 |
|
December 31,
2014 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash
and cash equivalents |
$ |
322,493 |
|
|
$ |
153,799 |
|
Accounts receivable, less allowances |
632,606 |
|
|
578,761 |
|
Inventories |
463,912 |
|
|
519,584 |
|
Deferred income tax benefits |
60,227 |
|
|
59,200 |
|
Other
current assets |
201,684 |
|
|
287,560 |
|
Total
current assets |
1,680,922 |
|
|
1,598,904 |
|
Properties and equipment, at cost less accumulated
depreciation |
268,827 |
|
|
267,753 |
|
Goodwill |
4,064,951 |
|
|
4,061,806 |
|
Identifiable intangible assets, less accumulated amortization |
97,090 |
|
|
98,942 |
|
Other
noncurrent assets |
74,847 |
|
|
80,385 |
|
Total
noncurrent assets |
4,505,715 |
|
|
4,508,886 |
|
Total
assets |
$ |
6,186,637 |
|
|
$ |
6,107,790 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
327,842 |
|
|
$ |
219,358 |
|
Accrued employee compensation |
38,557 |
|
|
46,830 |
|
Current debt |
448,754 |
|
|
446,717 |
|
Other
current liabilities |
198,246 |
|
|
154,726 |
|
Total
current liabilities |
1,013,399 |
|
|
867,631 |
|
Long-term debt, notes and convertible debentures |
1,512,316 |
|
|
1,517,559 |
|
Deferred income tax liabilities |
943,262 |
|
|
936,247 |
|
Other
noncurrent liabilities |
44,111 |
|
|
45,926 |
|
Total
noncurrent liabilities |
2,499,689 |
|
|
2,499,732 |
|
Total
liabilities |
3,513,088 |
|
|
3,367,363 |
|
|
|
|
|
Convertible debt |
148,334 |
|
|
151,706 |
|
|
|
|
|
Stockholders' equity |
2,525,215 |
|
|
2,588,721 |
|
Total
liabilities and stockholders' equity |
$ |
6,186,637 |
|
|
$ |
6,107,790 |
|
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
Condensed Consolidated Statements of Cash Flows,
GAAP Basis
($000s)
Unaudited
|
Three Months Ended |
|
March 31, 2015 |
Cash
flows from operating activities: |
|
Net
income |
$ |
77,389 |
|
Loss
from discontinued operations |
- |
|
Adjustments to reconcile net income to net cash flows from
operating activities: |
|
Depreciation |
14,697 |
|
Amortization |
16,666 |
|
Changes in certain assets and liabilities, net of effects from
acquisition and divestiture of businesses: |
|
Accounts receivable, net of provision for doubtful accounts |
(63,352 |
) |
Inventories |
56,000 |
|
Current and noncurrent assets |
101,418 |
|
Accounts payable |
94,298 |
|
Accrued employee compensation |
(8,478 |
) |
Current and noncurrent liabilities |
47,618 |
|
Net
cash flows from operating activities |
336,256 |
|
Cash
flows used in investing activities: |
|
Acquisition of businesses, net of cash received |
(9,328 |
) |
Capital expenditures |
(13,473 |
) |
Net
cash flows used in investing activities |
(22,801 |
) |
Cash
flows used in financing activities: |
|
Payments on term loans |
(5,000 |
) |
Payments on long-term borrowings and obligations |
(2,385 |
) |
Fees
paid for financing activities |
(1,977 |
) |
Increase in cash overdraft balance |
13,734 |
|
Payments for Omnicare common stock repurchases |
(125,000 |
) |
Proceeds for stock awards and exercise of stock options and related
withholding taxes, net |
(6,512 |
) |
Dividends paid |
(21,171 |
) |
Other |
3,550 |
|
Net
cash flows used in financing activities |
(144,761 |
) |
Net
increase in cash and cash equivalents |
168,694 |
|
Cash
and cash equivalents at beginning of period |
153,799 |
|
Cash
and cash equivalents at end of period |
$ |
322,493 |
|
|
|
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, 2015 |
|
March 31, 2014 |
Adjusted earnings per share ("EPS") from
continuing operations: |
|
|
|
Diluted earnings per share from continuing operations |
$ |
0.75 |
|
|
$ |
0.59 |
|
|
|
|
|
Special Items: (a) |
|
|
|
Settlement, litigation and other related charges |
0.06 |
|
|
0.04 |
|
Other
charges |
0.01 |
|
|
0.06 |
|
Amortization of discount on convertible notes |
0.03 |
|
|
0.03 |
|
Total
Special items |
0.09 |
|
|
0.13 |
|
Cash
EPS Adjustments |
0.18 |
|
|
0.19 |
|
Adjusted cash earnings per diluted share from continuing
operations |
$ |
1.02 |
|
|
$ |
0.91 |
|
|
|
|
|
Adjusted earnings before interest, income taxes
("EBIT", "Operating income"), depreciation and amortization
("EBITDA") from continuing operations: |
|
|
|
EBIT
from continuing operations |
$ |
151,980 |
|
|
$ |
132,752 |
|
Depreciation and amortization |
31,363 |
|
|
33,736 |
|
Amortization of discount on convertible notes |
(4,326 |
) |
|
(6,131 |
) |
EBITDA
from continuing operations |
179,017 |
|
|
160,357 |
|
Special items (a) |
10,869 |
|
|
17,328 |
|
Adjusted EBITDA from continuing operations |
189,886 |
|
|
177,685 |
|
|
|
|
|
EBITDA from continuing operations to net cash
flows from operating activities: |
|
|
|
EBITDA
from continuing operations |
179,017 |
|
|
160,357 |
|
(Subtract)/Add: |
|
|
|
Interest expense, net of investment income and amortization of
discount on convertible notes |
(23,323 |
) |
|
(23,310 |
) |
Income
tax provision |
(46,942 |
) |
|
(39,673 |
) |
Changes in certain assets and liabilities, net of effects from
acquisition and
divestitures of businesses |
227,504 |
|
|
74,212 |
|
Net
cash flows from operating activities of continuing operations |
$ |
336,256 |
|
|
$ |
171,586 |
|
|
|
|
|
Segment Reconciliations - Long-Term Care Group
("LTC") |
|
|
|
Adjusted Operating Income - LTC: |
|
|
|
Operating income from continuing operations |
151,703 |
|
|
152,584 |
|
Special items (a) |
11,211 |
|
|
9,563 |
|
Adjusted operating income from continuing operations - LTC |
162,914 |
|
|
162,147 |
|
|
|
|
|
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 and also include certain tax
deduction amounts ("Special Items"), enhances investors'
understanding of how Omnicare management assesses the performance
of the Company's business. Omnicare's 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
included Special Items and Cash EPS adjustments as described
below:
|
|
Q1 2015 |
|
Q1 2014 |
|
|
|
Pretax |
After Tax (7) |
|
Pretax |
After Tax (7) |
|
EBIT: |
|
|
|
|
|
|
|
Settlement, litigation and other related charges (1) |
|
$ |
9,820 |
|
$ |
6,045 |
|
|
$ |
7,052 |
|
$ |
4,321 |
|
|
|
|
|
|
|
|
|
|
Other charges |
|
|
|
|
|
|
|
Acquisition and other related costs (2) |
|
478 |
|
294 |
|
|
- |
|
- |
|
|
Separation costs (3) |
|
571 |
|
351 |
|
|
10,276 |
|
6,298 |
|
|
Subtotal - Other charges |
|
1,049 |
|
645 |
|
|
10,276 |
|
6,298 |
|
|
Subtotal - EBIT Special Items |
|
10,869 |
|
6,690 |
|
|
17,328 |
|
10,619 |
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
Amortization of discount on convertible notes (4) |
|
4,326 |
|
2,663 |
|
|
6,131 |
|
3,757 |
|
|
Subtotal - Interest expense Special Items |
|
4,326 |
|
2,663 |
|
|
6,131 |
|
3,757 |
|
|
Subtotal - Special Items |
|
15,195 |
|
9,353 |
|
|
23,459 |
|
14,376 |
|
|
|
|
|
|
|
|
|
|
Cash EPS Items: |
|
|
|
|
|
|
|
Amortization of intangibles |
|
7,702 |
|
4,741 |
|
|
7,917 |
|
4,852 |
|
|
Goodwill amortization tax deduction (5) |
|
- |
|
6,804 |
|
|
- |
|
7,046 |
|
|
Convertible debt tax deduction (6) |
|
- |
|
7,220 |
|
|
- |
|
8,074 |
|
|
Subtotal - Cash EPS Items |
|
7,702 |
|
18,765 |
|
|
7,917 |
|
19,972 |
|
|
|
|
|
|
|
|
|
|
Grand
Total - Special Items |
|
$ |
22,897 |
|
$ |
28,118 |
|
|
$ |
31,376 |
|
$ |
34,348 |
|
|
(1)
Operating income includes settlement, litigation and other related
charges for resolution of certain large customer disputes,
regulatory matters with various states and regulatory agencies, qui
tam lawsuits 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 overpayments 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 Special item
reflected in the table.
(2)
Operating income includes acquisition and other related costs
primarily related to professional fees and acquisition related
restructuring costs for acquisitions.
(3) Operating income
includes separation related costs and accelerated stock-based
compensation expense for certain employees.
(4) The Company recorded
non-cash interest expense from the amortization of debt discount on
its convertible notes.
(5) The tax benefit of
being able to deduct goodwill amortization.
(6) The tax benefit of
being able to deduct higher interest expense on the Company's
convertible debt than what is actually paid.
(7) The tax effect was
calculated by multiplying the tax-deductible pretax amounts by the
appropriate effective tax rate.
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Omnicare via Globenewswire
HUG#1916193