), a Fortune 400 company, recently announced that its Board has
approved a hike in its quarterly cash dividend by 100% to 14 cents
a share. The revised dividend, with a record date of September 24,
2012, is payable on September 28.
Simultaneously, the Board approved an additional share buyback
of up to $350 million of the company's common stock, which it can
repurchase from time to time through December 31, 2014. Omnicare's
existing share repurchase authorization is effective through
February 28, 2014, of which $148 million remains to be bought back.
As a result, the total shares repurchase authorization stands at
$498 million, as of September 11, 2012.
The Board's decisions reflect Omnicare's balanced approach
towards achieving its objective of returning wealth to its
shareholders. The dividend hike marks the fourth authorized
increase in the quarterly cash dividend since August, 2010. This
trend echoes the company's ability to sustain profitable growth in
the longer-term. It is also expected to add investment value to the
otherwise undervalued stock.
The share repurchase program will reduce the number of shares
outstanding, which stood at 113,472,000, as of June 30, 2012.
Omnicare ended the second quarter with cash and equivalents of
$564.5 million, up 7.7% year over year. Cash flows from continuing
operations, in the quarter, were $120.2 million, down 12.2% year
over year. Management remains committed to return at least 25% of
the company's operating cash flows to its stockholders.
The share buyback underlines Omnicare's strategy to increase
shareholder value in the long run. The announcement is not only
expected to reinforce shareholders' confidence but also to boost
the market value of the outstanding shares.
Omnicare is a market leading provider of long-term care pharmacy
services and health care environment for individuals directly and
indirectly, through subsidiaries, across North America. It
National Healthcare Corp
) in certain niche segments.
Omnicare's business model ensures that it is well placed to
sustain profitability in the long-run. Its performance in the most
recent quarter negated external pricing pressure and reimbursement
cuts. Moreover, generics coming to the market in the next few
quarters present a major opportunity due to the company's direct
access to manufacturers and current greater exposure to the
institutional pharmacy channel than in the past couple of
The stock currently retains a Zacks #1 Rank, which translates
into a short-term Strong Buy rating.
NATL HEALTHCARE (NHC): Free Stock Analysis
OMNICARE INC (OCR): Free Stock Analysis Report
PHARMERICA CORP (PMC): Free Stock Analysis
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