Omnicare Beats, Turns to Profit - Analyst Blog

By Zacks Equity Research,

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Omnicare Inc. ( OCR ), which sells drugs to long-term care facilities and nursing homes, reported fourth quarter and fiscal 2011 adjusted (excluding one-time expenses) earnings per share of 58 cents and $2.13, respectively, beating the corresponding Zacks Consensus Estimates of 56 cents and $2.12.

Reported net income from continuing operations, for the quarter, was $38.3 million (or 34 cents per share) compared with a loss of $57.1 million (or 50 cents per share) in the year-ago quarter.

The company earned $31.2 million (or 27 cents per share), in the reported quarter compared with a loss of $65.3 million (or 57 cents per share), a year earlier, after taking into account extraordinary charges.

The results for the fourth quarter include the effect of special items amounting to about $38.7 million on a pre-tax basis compared with $167.2 million a year ago. 


Sales were $1,557.1 million in the fourth quarter, up 1.7% year over year, sailing past the Zacks Consensus Estimate of $1,524 million. Revenues were $6,182.9 million in fiscal 2011, up 2.5% year over year, beating the Zacks Consensus Estimate of $6,030.7 million. 

By segment, net sales of the Long Term Care Group were $5,124 million in fiscal 2011, down 1% year over year. Net sales of the Specialty Care Group were $1,044.2 million, up 24.5%.


Adjusted gross profit was $359.7 million in the fourth quarter, up 7.6% year over year. Adjusted EBITDA from continuing operations stood at $162.9 million, up 10.4% year over year. 

Balance Sheet, Cash Flow and Other

Omnicare had cash and cash equivalents of $582.6 million, as of December 31, 2011, up 17.3% year over year. Long-term debt (including notes and convertible debentures) was large at almost $2 billion, down 6.6% on a year-over-year basis. Total debt-to-capital ratio, as of December 31, 2011, was 34.5%, down about 110 basis points since December 31, 2010.

The company recorded $101 million in cash flows (from continuing operations) in the fourth quarter taking its total, for fiscal 2011, to $549 million, the highest in the history of the company.

Omnicare repurchased about 0.7 million shares in the fourth quarter for $20 million. The company had $58.9 million available under its recent share repurchase authorization.


Omnicare anticipates revenues, for fiscal 2012, between $6.1 billion and $6.2 billion. It expects adjusted earnings per share in a range of $3.10 to $3.20. The company forecasts operating cash flows (from continuing operations) in the range of $400 million to $500 million.

Omnicare is a market leader in providing pharmaceutical care for the elderly. The industry is essential to serving the needs of the long-term care population. It competes with PharMerica Corporation ( PMC ) in certain niche segments.

The company has cut down costs and increased efficiency through its Full Potential Plan. However, the beneficial effects are partly offset by pressure from reimbursement cuts. Over the long term, Omnicare will be able to offset some of these reimbursement cuts through better purchasing. Generics coming to market in the next few quarters present a major profitability opportunity due to Omnicare's greater exposure to the institutional pharmacy channel than in past years.

OMNICARE INC ( OCR ): Free Stock Analysis Report
PHARMERICA CORP ( PMC ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: OCR , PMC

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