Omnicare Inc. (OCR)
Q3 2012 Results Earnings Call
October 31, 2012 9:00 AM ET
Patrick Lee - Vice President, Investor Relations
John Workman - Chief Executive Officer
Nitin Sahney - President and COO
Rocky Kraft - Chief Financial Officer
Charles Rhyee - Cowen & Company
Lisa Gill - JP Morgan
Steven Valiquette – UBS
Stephan Stewart - Goldman Sachs
Frank Morgan - RBC Capital Markets
Glen Santangelo - Credit Suisse
Previous Statements by OCR
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» Omnicare Inc. - Analyst/Investor Day
Thank you. I would now like to turn the call over to Patrick Lee, Omnicare’s Vice President of Investor Relations. Mr. Lee, you may begin your conference.
Thanks, Operator. Good morning, ladies and gentlemen, and thank you for joining us today. With me on the call are John Workman, Chief Executive Officer; Nitin Sahney, President and Chief Operating Officer; and Rocky Kraft, Chief Financial Officer.
Before we begin, let me remind you that during this call we will make remarks that constitute forward-looking statements. Actual results may differ as a result of a variety of factors including those identified in our earnings release and in our various filings with the SEC.
You are also cautioned that any forward-looking statements reflect management’s current views only and that the company undertakes no obligation to revise or update such statements in the future.
For simplicity sake and to focus on what we believe are the best indicators of our operating performance we will discuss results from continuing operations and we’ll also exclude special items for all periods in our discussion today.
The reconciliation of this non-GAAP information has been attached to our earnings release and is also available on our website. Also on our website you will find third quarter supplemental slides which we will follow during our discussion today.
Before turning the call over to John, I would like to remind analyst to limit themselves to one question and one follow-up during our question-and-answer session, so others may ask their questions.
With that, it is my pleasure to turn the call over to John Workman.
Thank you, Patrick, and good morning, everyone. We appreciate you are being on the call, especially those of you in the Northeast. First, we wanted to start by discussing the impact of Superstorm Sandy.
We had 11 sites across eight states impacted. All were backed up with emergency power or were able to divert the orders via hub-and-spoke network. Our dedicated employees worked tirelessly to meet all emergency needs. As of last night, we’re making routine deliveries though some are more challenging due to the roads.
Turning to the quarter, as you know I was named the CEO in early September 2012 and Nitin Sahney became the President and Chief Operating Officer. Rocky Kraft is also promoted the position of Chief Financial Officer at the same time, so we now have certainty on those positions and appreciate the Board’s confidence in us.
I’m going to provide an overview of the quarter. Nitin is going to discuss our operations and Rocky will cover our third quarter financial results. I will then conclude with comments on our 2012 guidance before we open up the call for questions.
Before covering our third quarter results, I would like to share the key priorities for the next 12 months that we covered with our Board of Directors recently. First, achieving sustainable net organic growth in Long-Term Care; second, continuing the momentum and the strong growth being demonstrated in our Specialty Care Group; and third, continuing to allocate capital efficiently. I will have some additional comments about these priorities after we hear from Nitin and Rocky.
Now, turning to the quarter’s financial results. It is evident we have had another strong quarter. Adjusted cash-based earnings per diluted share were $0.86 for the quarter, compared to $0.74 a year ago and $0.83 in the second quarter of 2012.
We now had four quarters in the row where we have seen year-over-year improvement. These strong results benefited from generic drug efficiencies and another strong specialty performance.
Cash flow from operations was $196 million for the quarter as a result of our earnings and strong quarterly working capital improvements.
Long-Term Care adjusted operating income from continuing operations of $154 million were the 10% improvement over the same quarter a year ago fueled by the branded generic wave we expected in 2012.
Specialty Care Group adjusted operating income of $33 million was a 26% improvement over the third quarter of 2011. Clearly, we had strong performance in both segments.
Next, turning to metrics, our retention rate for the quarter in Long-Term Care was 92.6% remaining in the 92% to 94% range we saw in 2011. Importantly, service-related losses were 39.6% lower as compared with the third quarter of 2011.
Our net organic bed activity for the quarter in Long-Term Care was a loss of 7,000 beds, excluding the acquired beds and those losses result the sale of our Canadian pharmacy. The organic loss number includes about 1,000 beds lost from Pharmacy Advantage acquisition in 2011 which were large anticipated.
Our total scripts dispensed in the third quarter were 29.8 million scripts, down approximately 300,000 scripts from the second quarter of 2012.