1-8269 | 31-1001351 |
(Commission File Number) | (I.R.S. Employer Identification No.) |
OMNICARE, INC. 900 OMNICARE CENTER 201 E. FOURTH STREET CINCINNATI, OH 45202 |
(Address of Principal Executive Offices, Including Zip Code) |
99.2 | Supplemental slides provided in connection with the third quarter 2013 earnings call of Omnicare, Inc. |
By: | /s/ Robert O. Kraft | |
Name: Title: | Robert O. Kraft Senior Vice President and Chief Financial Officer |
• | Net sales increase of 5.3% to $1.6 billion |
• | Adjusted cash earnings per diluted share 5.8% higher to $0.91; GAAP loss per share of $0.65 attributable to a voluntary civil settlement, described in further detail in the "Footnotes and Definitions to Financial Information" section below |
• | Cash flows from operations of $192 million |
• | Net sales were $1,581 million versus $1,501 million |
• | Gross profit was $370 million as compared with $371 million |
• | GAAP earnings (loss) per share was $(0.65) versus $0.55 |
• | Adjusted cash earnings per diluted share (see “per share” discussion below and attached supplemental information) was $0.91 versus $0.86 |
• | Adjusted EBITDA was $179 million versus $172 million |
• | Net sales were $4.7 billion versus $4.6 billion |
• | Gross profit was $1,119 million as compared with $1,107 million |
• | GAAP earnings per diluted share was $0.37 versus $1.19 |
• | Adjusted cash earnings per diluted share was $2.71 versus $2.50 |
• | Adjusted EBITDA was $530 million versus $512 million |
• | Net sales of $1,220 million were 0.1% higher than $1,218 million in the same prior-year period |
• | Adjusted operating income of $160 million decreased 1.4% from $163 million in the same prior-year period |
• | Net sales of $361 million were 29% higher than $280 million in the same prior-year period |
• | Adjusted operating income of $30 million increased 20% from $25 million in the same prior-year period |
Three months ended September 30, | Nine months ended September 30, | |||||||
2013 | 2012 | 2013 | 2012 | |||||
After-tax impact | Per diluted share | After-tax impact | Per diluted share | After-tax impact | Per diluted share | After-tax impact | Per diluted share | |
Special Items Adj. | $144.7M | $1.30 | $10.9M | $0.10 | $190.0M | $1.73 | $80.9M | $0.71 |
Cash EPS Adj. | $23.0M | $0.21 | $23.5M | $0.21 | $66.8M | $0.61 | $67.6M | $0.59 |
Original Guidance | Previous Guidance | Current Guidance | |
Revenue | $6.1B to $6.2B | $6.1B to $6.3B | $6.2B to $6.3B |
Adjusted cash earnings per diluted share (excluding special items) | $3.47 to $3.57 | $3.56 to $3.64 | $3.60 to $3.62 |
Cash flows from operations (excluding settlement payments) | $450M to $500M | $475M to $525M | $500M to $525M |
Three months ended | Nine months ended | ||||||||||||||
September 30, 2013 | September 30, 2012 | September 30, 2013 | September 30, 2012 | ||||||||||||
Net sales | $ | 1,581,001 | $ | 1,501,348 | $ | 4,675,901 | $ | 4,630,443 | |||||||
Cost of sales | 1,211,183 | 1,130,053 | 3,556,809 | 3,523,702 | |||||||||||
Gross profit | 369,818 | 371,295 | 1,119,092 | 1,106,741 | |||||||||||
Selling, general and administrative expenses | 195,382 | 203,550 | 600,896 | 605,552 | |||||||||||
Provision for doubtful accounts | 25,177 | 24,047 | 74,749 | 72,556 | |||||||||||
Settlement, litigation and other related charges | 143,484 | 4,931 | 169,615 | 38,227 | |||||||||||
Other charges | 61,632 | 5,036 | 96,906 | 65,757 | |||||||||||
Operating income (loss) | (55,857 | ) | 133,731 | 176,926 | 324,649 | ||||||||||
Interest expense, net of investment income | (34,922 | ) | (39,036 | ) | (94,005 | ) | (105,444 | ) | |||||||
Income (loss) from continuing operations before income taxes | (90,779 | ) | 94,695 | 82,921 | 219,205 | ||||||||||
Income tax provision (benefit) | (24,470 | ) | 33,270 | 42,657 | 83,349 | ||||||||||
Net income (loss) | (66,309 | ) | 61,425 | 40,264 | 135,856 | ||||||||||
Earnings (loss) per common share - Diluted: | $ | (0.65 | ) | $ | 0.55 | $ | 0.37 | $ | 1.19 | ||||||
Weighted average number of common shares outstanding: | |||||||||||||||
Diluted (a) | 101,811 | 111,951 | 109,612 | 113,968 |
September 30, 2013 | December 31, 2012 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 505,687 | $ | 454,213 | |||
Restricted cash | 5 | 1,066 | |||||
Accounts receivable, less allowances | 741,053 | 857,052 | |||||
Inventories | 421,799 | 385,698 | |||||
Deferred income tax benefits | 98,089 | 136,186 | |||||
Other current assets | 312,226 | 254,644 | |||||
Total current assets | 2,078,859 | 2,088,859 | |||||
Properties and equipment, at cost less accumulated depreciation | 310,225 | 282,660 | |||||
Goodwill | 4,253,461 | 4,256,959 | |||||
Identifiable intangible assets, less accumulated amortization | 166,105 | 196,873 | |||||
Other noncurrent assets | 106,876 | 163,913 | |||||
Total noncurrent assets | 4,836,667 | 4,900,405 | |||||
Total assets | $ | 6,915,526 | $ | 6,989,264 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 210,459 | $ | 200,125 | |||
Accrued employee compensation | 55,811 | 73,791 | |||||
Current debt | 548,519 | 27,713 | |||||
Other current liabilities | 309,211 | 180,385 | |||||
Total current liabilities | 1,124,000 | 482,014 | |||||
Long-term debt, notes and convertible debentures | 1,426,472 | 2,030,030 | |||||
Deferred income tax liabilities | 983,000 | 914,660 | |||||
Other noncurrent liabilities | 55,833 | 56,848 | |||||
Total noncurrent liabilities | 2,465,305 | 3,001,538 | |||||
Total liabilities | 3,589,305 | 3,483,552 | |||||
Stockholders' equity | 3,326,221 | 3,505,712 | |||||
Total liabilities and stockholders' equity | $ | 6,915,526 | $ | 6,989,264 |
September 30, 2013 | |||||||
Three months ended | Nine months ended | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | (66,309 | ) | $ | 40,264 | ||
Adjustments to reconcile net income to net cash flows from operating activities: | |||||||
Depreciation | 15,228 | 43,748 | |||||
Amortization | 20,545 | 61,073 | |||||
Debt redemption loss and costs, net | 55,652 | 55,652 | |||||
Disposition of business, net | 7,276 | 36,062 | |||||
Changes in certain assets and liabilities, net of effects from acquisition and divestiture of businesses: | |||||||
Accounts receivable, net of provision for doubtful accounts | (502 | ) | 70,628 | ||||
Inventories | (19,669 | ) | (36,988 | ) | |||
Current and noncurrent assets | 18,928 | (9,431 | ) | ||||
Accounts payable | 20,677 | 21,823 | |||||
Accrued employee compensation | (9,068 | ) | (17,941 | ) | |||
Current and noncurrent liabilities | 149,238 | 189,775 | |||||
Net cash flows from operating activities | 191,996 | 454,665 | |||||
Cash flows from investing activities: | |||||||
Acquisition of businesses, net of cash received | (3,500 | ) | (3,798 | ) | |||
Divestiture of businesses, net | 10,408 | 11,083 | |||||
Marketable Securities | (184 | ) | (620 | ) | |||
Capital expenditures | (27,290 | ) | (74,127 | ) | |||
Other | — | 1,061 | |||||
Net cash flows used in investing activities | (20,566 | ) | (66,401 | ) | |||
Cash flows from financing activities: | |||||||
Payments on term loans | (5,312 | ) | (15,938 | ) | |||
Payments on long-term borrowings and obligations | (186,969 | ) | (190,403 | ) | |||
Fees paid for financing activities | (4,851 | ) | (4,851 | ) | |||
Decrease in cash overdraft balance | (1,257 | ) | (11,490 | ) | |||
Payments for Omnicare common stock repurchases | 9,043 | (91,259 | ) | ||||
Proceeds for stock awards and exercise of stock options, net of stock tendered in payment | 1,402 | 17,934 | |||||
Dividends paid | (14,245 | ) | (43,011 | ) | |||
Other | 1,086 | 2,228 | |||||
Net cash flows used in financing activities | (201,103 | ) | (336,790 | ) | |||
Net increase (decrease) in cash and cash equivalents | (29,673 | ) | 51,474 | ||||
Cash and cash equivalents at beginning of period | 535,360 | 454,213 | |||||
Cash and cash equivalents at end of period | $ | 505,687 | $ | 505,687 | |||
Three months ended | Nine months ended | ||||||||||||||
September 30, 2013 | September 30, 2012 | September 30, 2013 | September 30, 2012 | ||||||||||||
Adjusted earnings (loss) per share ("EPS") from continuing operations: | |||||||||||||||
Diluted earnings (loss) per share from continuing operations | $ | (0.65 | ) | $ | 0.55 | $ | 0.37 | $ | 1.19 | ||||||
Amount related to adjusted diluted shares | 0.05 | — | — | — | |||||||||||
Special Items: (a) | |||||||||||||||
Settlement, litigation and other related charges | 0.87 | 0.03 | 1.03 | 0.21 | |||||||||||
Other charges | 0.37 | (0.01 | ) | 0.57 | 0.34 | ||||||||||
Amortization of discount on convertible notes | 0.03 | 0.03 | 0.10 | 0.10 | |||||||||||
Debt redemption costs | 0.03 | 0.05 | 0.03 | 0.07 | |||||||||||
Total Special Items | 1.30 | 0.10 | 1.73 | 0.71 | |||||||||||
Cash EPS Adjustments | 0.21 | 0.21 | 0.61 | 0.59 | |||||||||||
Adjusted cash earnings per diluted share from continuing operations | $ | 0.91 | $ | 0.86 | $ | 2.71 | $ | 2.50 | |||||||
Adjusted diluted share count: | |||||||||||||||
Diluted shares outstanding | 101,811 | N/A | N/A | N/A | |||||||||||
Convertible securities | 8,926 | ||||||||||||||
Stock options, warrants and awards | 723 | ||||||||||||||
Adjusted diluted shares outstanding | 111,460 | ||||||||||||||
Adjusted earnings before interest, income taxes ("EBIT", "Operating income"), depreciation and amortization ("EBITDA") from continuing operations: | |||||||||||||||
EBIT from continuing operations | $ | (55,857 | ) | $ | 133,731 | 176,926 | $ | 324,649 | |||||||
Depreciation and amortization | 35,773 | 34,329 | 104,821 | 101,633 | |||||||||||
Amortization of discount on convertible notes | (6,218 | ) | (5,839 | ) | (18,474 | ) | (18,118 | ) | |||||||
EBITDA from continuing operations | (26,302 | ) | 162,221 | 263,273 | 408,164 | ||||||||||
Special items (a) | 205,116 | 9,967 | 266,521 | 103,984 | |||||||||||
Adjusted EBITDA from continuing operations | 178,814 | 172,188 | 529,794 | 512,148 | |||||||||||
EBITDA from continuing operations to net cash flows from operating activities: | |||||||||||||||
EBITDA from continuing operations | (26,302 | ) | 162,221 | 263,273 | 408,164 | ||||||||||
(Subtract)/Add: | |||||||||||||||
Interest expense, net of investment income and amortization of discount on convertible notes | (28,704 | ) | (33,197 | ) | (75,531 | ) | (87,326 | ) | |||||||
Income tax provision | 24,470 | (33,270 | ) | (42,657 | ) | (83,349 | ) | ||||||||
Other operating activities (including debt redemption costs) | 55,652 | 8,270 | 55,652 | 47,558 | |||||||||||
Disposition of business, net | 7,276 | — | 36,062 | — | |||||||||||
Changes in certain assets and liabilities, net of effects from acquisition and divestitures of businesses | 159,604 | 92,264 | 217,866 | 131,856 | |||||||||||
Net cash flows from operating activities of continuing operations | $ | 191,996 | $ | 196,288 | $ | 454,665 | $ | 416,903 | |||||||
Segment Reconciliations - Long-Term Care Group ("LTC") | |||||||||||||||
Adjusted Operating Income - LTC: | |||||||||||||||
Operating income from continuing operations (b) | 6,213 | 165,180 | 273,994 | 440,102 | |||||||||||
Special items (a) | 154,248 | (2,524 | ) | 213,680 | 41,701 | ||||||||||
Adjusted operating income from continuing operations - LTC (b) | 160,461 | 162,656 | 487,674 | 481,803 | |||||||||||
Segment Reconciliations - Specialty Care Group ("SCG") | |||||||||||||||
Adjusted Operating Income - SCG: | |||||||||||||||
Operating income from continuing operations (b) | 29,758 | 24,879 | 90,610 | 72,557 | |||||||||||
Special items (a) | — | — | — | 200 | |||||||||||
Adjusted operating income from continuing operations - SCG (b) | 29,758 | 24,879 | 90,610 | 72,757 | |||||||||||
(a) | Financial results included Special Items and Cash EPS adjustments as described below: |
Q3 2013 | YTD 2013 | Q3 2012 | YTD 2012 | |||||||||||||||||||||||||
Pretax | After Tax (9) | Pretax | After Tax (9) | Pretax | After Tax (9) | Pretax | After Tax (9) | |||||||||||||||||||||
EBIT: | ||||||||||||||||||||||||||||
Settlement, litigation and other related charges (1) | $ | 143,484 | $ | 97,074 | $ | 169,615 | $ | 113,160 | $ | 4,931 | $ | 2,970 | $ | 38,227 | $ | 23,414 | ||||||||||||
Other charges | ||||||||||||||||||||||||||||
Acquisition and other related costs (2) | — | — | 2,300 | 1,416 | (3,830 | ) | (2,352 | ) | 396 | 243 | ||||||||||||||||||
Disposition of businesses (3) | 10,116 | 9,391 | 38,902 | 27,112 | (7,680 | ) | (8,485 | ) | (1,777 | ) | (2,582 | ) | ||||||||||||||||
Separation costs (4) | 648 | 384 | 4,836 | 2,962 | 5,500 | 3,346 | 21,000 | 12,863 | ||||||||||||||||||||
Restructuring | — | — | — | — | 11,046 | 6,766 | 11,046 | 6,766 | ||||||||||||||||||||
Loss on debt repurchase (5) | 50,868 | 31,138 | 50,868 | 31,138 | — | — | 35,092 | 21,546 | ||||||||||||||||||||
Subtotal - Other charges | 61,632 | 40,913 | 96,906 | 62,628 | 5,036 | (725 | ) | 65,757 | 38,836 | |||||||||||||||||||
Subtotal - EBIT Special Items | 205,116 | 137,987 | 266,521 | 175,788 | 9,967 | 2,245 | 103,984 | 62,250 | ||||||||||||||||||||
Interest Expense: | ||||||||||||||||||||||||||||
Amortization of discount on convertible notes (6) | 6,218 | 3,767 | 18,474 | 11,312 | 5,839 | 3,559 | 18,118 | 11,098 | ||||||||||||||||||||
Debt redemption costs (5) | 4,784 | 2,929 | 4,784 | 2,929 | 8,270 | 5,059 | 12,363 | 7,572 | ||||||||||||||||||||
Subtotal - Interest Expense Special Items | 11,002 | 6,696 | 23,258 | 14,241 | 14,109 | 8,618 | 30,481 | 18,670 | ||||||||||||||||||||
Subtotal - Special Items | 216,118 | 144,683 | 289,779 | 190,029 | 24,076 | 10,863 | 134,465 | 80,920 | ||||||||||||||||||||
Cash EPS Items: | ||||||||||||||||||||||||||||
Amortization of intangibles | 9,233 | 5,591 | 28,246 | 17,295 | 11,259 | 6,897 | 32,764 | 20,101 | ||||||||||||||||||||
Goodwill amortization tax deduction (7) | — | 9,203 | — | 28,037 | — | 10,930 | — | 32,704 | ||||||||||||||||||||
Convertible debt tax deduction (8) | — | 8,198 | — | 21,481 | — | 5,660 | — | 14,747 | ||||||||||||||||||||
Subtotal - Cash EPS Items | 9,233 | 22,992 | 28,246 | 66,813 | 11,259 | 23,487 | 32,764 | 67,552 | ||||||||||||||||||||
Grand Total - Special Items | $ | 225,351 | $ | 167,675 | $ | 318,025 | $ | 256,842 | $ | 35,335 | $ | 34,350 | $ | 167,229 | $ | 148,472 |
(1) | Operating income (loss) 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 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 special item reflected in the table. |
(2) | Operating income (loss) includes acquisition and other related costs primarily related to professional fees and acquisition related restructuring costs for acquisitions. |
(3) | In 2013, the Company completed the disposition of certain assets, primarily in its medical supply services business and in 2012, completed the dispositions of its Canadian pharmacy and the Company's pharmacy operational software businesses, which were not considered, individually or in the aggregate, significant to the operations of Omnicare. The Company recorded charges (credits) related to the disposition of these assets in the three and nine months ended September 30, 2013, and 2012. |
(4) | Operating income (loss) includes separation related costs for certain former employees. |
(5) | Operating income (loss) and interest expense includes charges for debt redemption losses and costs related to the Company’s previously announced refinancing transactions. |
(6) | The Company recorded non-cash interest expense from the amortization of debt discount on its convertible notes. |
(7) | The tax benefit of being able to deduct goodwill amortization. |
(8) | The tax benefit of being able to deduct higher interest expense on our convertible debt than what is actually paid. |
(9) | The tax effect was calculated by multiplying the tax-deductible pretax amounts by the appropriate effective tax rate. |
(b) | Beginning in the second quarter of 2013, the Company concluded that the operations of its hospice pharmacy business were better aligned with the operation of its LTC, and began to review and manage the operations of this business as part of LTC. Accordingly, to align the reporting segments with the current way management reviews information to make operating decisions, assess performance and allocate resources, the results of the Company's hospice business are now reported in LTC. All prior period segment information has been recast to reflect the new segment reporting. |
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