-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MYzHc6U27Onynsmxaplke8wdwITGM16qhncaX69YJu7IgZYKZS5e4QKOqetJhjUO 1sYeAeLtVYArZb8AlT2bsQ== 0000950152-95-002652.txt : 19951119 0000950152-95-002652.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950152-95-002652 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OMNICARE INC CENTRAL INDEX KEY: 0000353230 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 311001351 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08269 FILM NUMBER: 95592537 BUSINESS ADDRESS: STREET 1: 255 EAST FIFTH ST STREET 2: 2800 CHEMED CENTER CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137626666 MAIL ADDRESS: STREET 1: 2800 CHEMED CENTER STREET 2: 255 EAST FIFTH ST CITY: CINCINNATI STATE: OH ZIP: 45202-4728 10-Q 1 OMNICARE 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 For Quarter Ended September 30, 1995 Commission File Number 1-8269 OMNICARE, INC. -------------- Incorporated under the laws of I.R.S. Employer Identification State of Delaware No. 31-1001351 2800 Chemed Center, 255 E. Fifth Street, Cincinnati, Ohio 45202-4728 - --------------------------------------------------------------------- (Address of Principal Executive Offices and Zip Code) Registrant's telephone number, including area code (513) 762-6666 - ------------------------------------------------------------------- Indicate by check mark whether the registrant: 1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and 2) has been subject to such filing requirement for the past 90 days. Yes x No --- --- COMMON STOCK OUTSTANDING - ------------------------
Number of Shares Date ------ ---- Common Stock, $1 par value 26,315,076 September 30, 1995
2 OMNICARE, INC. AND ------------------ SUBSIDIARY COMPANIES -------------------- Index
Page ---- Part I. Financial Information: Item 1. Financial Statements Consolidated Balance Sheet - September 30, 1995 and December 31, 1994 3 Consolidated Statement of Income - Three and nine months ended - September 30, 1995 and 1994 4 Consolidated Statement of Cash Flow - Nine months ended - September 30, 1995 and 1994 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 9 Part II. Other Information: Item 6. Exhibits and Reports on Form 8-K 14
-2- 3 Item 1. Financial Statements OMNICARE, INC. AND SUBSIDIARY COMPANIES Consolidated Balance Sheet UNAUDITED (in thousands except share data)
September 30, December 31, ASSETS 1995 1994 ------------- ------------ Current assets: Cash and cash equivalents $ 17,120 $ 34,553 Marketable securities 26,444 45,245 Accounts receivable, less allowances 68,857 60,083 Inventories 26,804 21,116 Deferred income tax benefits 7,261 5,818 Other current assets 5,132 3,445 --------- --------- Total current assets 151,618 170,260 Properties and equipment, at cost less accumulated depreciation 30,688 23,452 Intangible assets, less accumulated amortization 150,917 117,832 Other assets 6,190 5,661 --------- --------- Total assets $ 339,413 $ 317,205 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 12,636 $ 17,666 Amounts payable pursuant to acquisition agreements 5,660 4,576 Current portion of long-term debt 1,035 5,549 Income taxes payable 2,298 1,875 Accrued employee compensation 4,578 3,230 Liabilities relating to discontinued operations 1,736 2,399 Other current liabilities 9,188 9,415 --------- --------- Total current liabilities 37,131 44,710 Long-term debt 87,844 85,323 Deferred income taxes 2,325 1,616 Amounts payable pursuant to acquisition agreements 1,799 2,910 Other noncurrent liabilities 3,019 2,542 --------- --------- Total liabilities 132,118 137,101 --------- --------- Stockholders' equity: Preferred stock-authorized 1,000,000 shares without par value; none issued Common stock-authorized 44,000,000 shares $1 par; 26,343,762 shares issued (1994-30,672,051 shares)(a) 26,344 15,336 Paid-in capital 99,542 129,971 Retained earnings 86,575 71,475 --------- --------- 212,461 216,782 Treasury stock, at cost-28,686 shares (1994-4,976,548 shares)(a) (530) (33,060) Deferred compensation (2,251) (858) Unallocated stock of ESOP (2,385) (2,760) --------- --------- Total stockholders' equity 207,295 180,104 --------- --------- Total liabilities and stockholders' equity $ 339,413 $ 317,205 ========= =========
(a) Adjusted for two-for-one stock split distributed on June 21, 1995. The Notes to Consolidated Financial Statements are an integral part of this statement. -3- 4 OMNICARE, INC. AND SUBSIDIARY COMPANIES Consolidated Statement of Income (In thousands except per share data)
Three Months Ended Nine Months Ended September 30, September 30, ----------------------------- ----------------------------- 1995 1994(a) 1995 1994(a) ---- ------- ---- ------- Sales $ 102,145 $ 79,832 $ 289,797 $ 221,948 Cost of sales 73,198 58,924 209,245 164,750 --------- --------- --------- --------- Gross profit 28,947 20,908 80,552 57,198 Selling, general and administrative expenses 16,789 13,173 48,751 35,682 Acquisition expenses -- 2,380 1,292 2,380 --------- --------- --------- --------- Operating income 12,158 5,355 30,509 19,136 Investment income 713 290 2,794 1,072 Interest expense (1,351) (1,627) (4,558) (4,944) --------- --------- --------- --------- Income before income taxes 11,520 4,018 28,745 15,264 Income taxes 4,585 1,956 11,663 6,230 --------- --------- --------- --------- Net income $ 6,935 $ 2,062 $ 17,082 $ 9,034 ========= ========= ========= ========= Earnings per share(b): Primary $ .26 $ .09 $ .65 $ .41 Fully diluted $ .24 $ .09 $ .60 $ .41 Dividends paid per share(b) $ .025 $ .023 $ .075 $ .068 Weighted average number of common shares outstanding(b): Primary 26,273 22,241 26,158 22,139 --------- --------- --------- --------- Fully diluted 32,830 28,223 32,537 28,079 ========= ========= ========= ========= (a) Restated for the June 30, 1995 acquisition of Specialized Pharmacy Services, Inc. in a pooling of interests transaction. (b) Adjusted for two-for-one stock split distributed June 21, 1995.
The Notes to Consolidated Financial Statements are an integral part of this statement. -4- 5 OMNICARE, INC. AND SUBSIDIARY COMPANIES Consolidated Statement of Cash Flow UNAUDITED
(in thousands) Nine Months Ended September 30, ----------------------- 1995 1994 -------- ------- Cash flow from operating activities: Net income $17,082 $ 9,034 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation and amortization 7,728 6,075 Provision for doubtful accounts 2,383 1,542 Deferred tax provision (397) 850 Change in assets and liabilities, net of effects from acquisition/disposal of businesses: Accounts receivable (8,581) (9,672) Inventory (3,374) (1,618) Current and noncurrent assets (1,293) (531) Income taxes payable 1,381 (453) Payables and accruals (4,438) 2,480 Current and noncurrent liabilities 362 2,708 -------- ------- Net cash flow from operating activities 10,853 10,415 -------- ------- Cash flow from investing activities: Acquisition of businesses (32,187) (38,960) Capital expenditures (10,633) (7,511) Marketable securities 18,801 -- Proceeds from sale of properties 209 433 Cash flow from discontinued operations (663) (601) -------- ------- Net cash flow from investing activities (24,473) (46,639) -------- ------- Cash flow from financing activities: Proceeds from long-term borrowings and revolving lines of credit 5,856 255 Principal payments on revolving lines of credit and long-term obligations (7,497) (3,203) Exercise of stock options and warrants, net of stock tendered in payment (246) 342 Dividends paid (1,926) (2,266) -------- ------- Net cash flow from financing activities (3,813) (4,872) -------- ------- Net decrease in cash and cash equivalents (17,433) (41,096) Cash and cash equivalents at beginning of period 34,553 63,422 -------- ------- Cash and cash equivalents at end of period $ 17,120 $22,326 ======== ======= Supplemental disclosures of cash flow information Income taxes paid $ 9,344 $ 4,736 Interest paid 4,933 3,265
The Notes to Consolidated Financial Statements are an integral part of this statement. -5- 6 OMNICARE, INC. AND SUBSIDIARY COMPANIES Notes to Consolidated Financial Statements 1. The interim financial data are unaudited; however, in the opinion of the management of Omnicare, Inc., the interim data include all adjustments (which include only normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial position, results of operations and cash flow of Omnicare, Inc. and its consolidated subsidiaries ("Company"). 2. During the period January 1, 1995 to September 30, 1995, the Company has completed nine acquisitions including Shore Pharmaceutical Providers, Inc. ("Shore"), in Westbury, New York, in January, North Shore Pharmacy Services, Inc. ("North Shore"), in Boston, Massachusetts, Genrex Nursing Home Pharmacy Division of Genovese Drug Stores, Inc. ("Genrex"), in Melville, New York, Consulting and Pharmaceutical Services, Inc. ("CAPS"), in Yakima, Washington, all in March, Pioneer I.V., Ltd. ("Pioneer") in Moline, Illinois, in May, Specialized Pharmacy Services, Inc. ("Specialized"), in Livonia, Michigan in June, CPM Datascript, Corp. ("Datascript"), in Hollis, New York, in July, the nursing home pharmacy business of Rite Aid Corp. ("Rite Aid"), and the Dynatran Computer Systems Division of Health Spectrum, Inc. ("Dynatran"), in Portland, Oregon, both in September. The Shore, North Shore, Genrex, CAPS, Pioneer, Datascript, Rite Aid and Dynatran acquisitions have been accounted for as purchase transactions and, accordingly, the purchase price paid for each -6- 7 has been allocated to the fair value of the assets acquired and liabilities assumed. The Company acquired all the outstanding stock of Specialized on June 30, 1995 for 403,185 shares of the Company's common stock, $1 par value, in a pooling of interests transaction, and, accordingly, the consolidated financial statements have been restated for all periods prior to the acquisition to include the historical results of operations, financial position and cash flow of Specialized. Summarized results of operations of the Company and Specialized for the period from January 1, 1995 through June 30, 1995, the date of acquisition, are as follows (in thousands):
Omnicare Specialized -------- ----------- Three months ended June 30, 1995: Sales $ 88,738 $ 8,387 Net income 4,674 222 Three months ended June 30, 1994: Sales $ 66,089 $ 7,812 Net income 3,536 27 Six months ended June 30, 1995: Sales $171,211 $ 16,441 Net income 9,861 286 Six months ended June 30, 1994: Sales $126,786 $ 15,330 Net income 6,918 54
-7- 8 3. On May 15, 1995, the Board of Directors declared a two-for-one split of the Company's $1 par value common stock effective June 21, 1995. As a result of the split, 12,944,180 additional shares were issued including 2,514,994 from treasury stock. Additional paid-in capital and treasury stock were reduced by $45,524,000 and $35,095,000, respectively. All references in the accompanying financial statements to the number of common shares and per share amounts for 1994 have been restated to reflect the stock split. -8- 9 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition. Results of Operations On June 30, 1995, the Company issued 403,185 shares of its common stock for all the outstanding common stock of Specialized Pharmacy Services, Inc. ("Specialized"). On September 30, 1994, the Company issued 2,222,644 shares of its common stock (adjusted for the June 1995 stock-split) for all the outstanding common stock of Kirkland, Washington-based Evergreen Pharmaceutical, Inc., and an affiliated company (collectively, "Evergreen"). These acquisitions were accounted for as poolings of interests and, accordingly, the Company's consolidated financial statements have been restated for all periods presented herein to include the results of operations, financial position and cash flows of Specialized and Evergreen. In accordance with accounting rules for pooling of interests transactions, charges to operating income for acquisition-related expenses were recorded in the quarter in which each of these acquisitions was completed. The 1995 nine-month period included a charge of $1,292,000, or $989,000 after taxes, for expenses required for the acquisition of Specialized. Both the three month and nine month periods ended September 30, 1994 included acquisition expenses of $2,380,000, or $1,860,000 after taxes, for the acquisition of Evergreen. The following table presents the Company's consolidated results of operations excluding the effect of acquisition expenses (in thousands except per share amounts):
Three Months Ended Nine Months Ended September 30, September 30, --------------------- --------------------- 1995 1994 1995 1994 ------- ------- ------- ------- Net income, as reported $ 6,935 $ 2,062 $17,082 $ 9,034 Acquisition expenses, net of taxes -- 1,860 989 1,860 ------- ------- ------- ------- Pro forma net income $ 6,935 $ 3,922 $18,071 $10,894 ======= ======= ======= ======= Pro forma earnings per share: Primary $ 0.26 $ 0.18 $ 0.69 $ 0.49 ======= ======= ======= ======= Fully diluted $ 0.24 $ 0.17 $ 0.63 $ 0.47 ======= ======= ======= =======
-9- 10 Excluding the aftertax charge for acquisition expenses, net income for the quarter ended September 30, 1995 rose 77% to $6,935,000 over net income of $3,922,000 earned in the same period of 1994, while earnings per share, on a primary basis, increased 44% to $0.26 and, on a fully diluted basis, were up 41% to $0.24 versus the $0.18 and $0.17 earned on a primary and fully diluted basis, respectively, in the third quarter of 1994. Net income, including acquisition expenses, for the quarter ended September 30, 1995 was $6,935,000 versus $2,062,000 for the 1994 period and earnings per share for the 1995 quarter were $0.26 on a primary basis and $0.24 fully diluted versus $0.09 on both a primary and fully diluted basis in the 1994 quarter. The average number of shares outstanding was higher by 18%, on a primary basis, and 16%, on a fully diluted basis, over the prior year quarter. Sales for the third quarter of 1995 of $102,145,000 were 28% higher than the $79,832,000 recorded in the comparable 1994 period. Excluding acquisition expenses, operating income of $12,158,000 for the 1995 quarter was 57% higher than in the prior year quarter. Excluding the acquisition expenses from the results for the first nine months of both periods, net income increased 66% to $18,071,000 over the $10,894,000 earned in the comparable 1994 period. Primary earnings per share, on this basis, of $0.69 were up 41% over the $0.49 earned in the first nine months of 1994 and fully diluted earnings per share of $0.63 were up 34% over the $0.47 earned in the 1994 period. Net income, including acquisition expenses, for the 1995 nine-month period was $17,082,000 versus $9,034,000 for the 1994 period and earnings per share for the 1995 period were $0.65 on a primary basis and $0.60 fully diluted versus $0.41 on both a primary and fully diluted basis in the first nine months of 1994. -10- 11 Sales for the nine months ended September 30, 1995 were $289,797,000, up 31% over the $221,948,000 earned in the first nine months of 1994. Operating income of $31,801,000 for the 1995 period, excluding acquisition expenses, was 48% higher than in the 1994 period. The increases in quarterly and year-to-date sales over comparable prior year periods are due to the Company's continued focus on advancing its growth strategy in the long-term care pharmacy market. The year-to-date results have benefitted from the contribution of acquisitions made to date in 1995, as well as internal growth. During the quarter, three acquisitions were completed (See Note 2 to the Consolidated Financial Statements). The September acquisition of the nursing home pharmacy business of Rite Aid Corp., based in Camp Hill, Pennsylvania, added approximately 15,000 new nursing facility residents (subject to post-closing adjustment) and the July acquisition of CPM Datascript, Corp., based in Hollis, New York, added over 3,400 residents on Long Island and in New York City. Furthermore, the third quarter acquisition of Dynatran Computer Systems, a Portland, Oregon-based software company specializing in resident assessment and care planning systems, provides the Company both growth prospects as a care planning software developer and the systems capability to access and analyze data related to patient diagnosis, treatment plans and health outcomes. The Company's existing pharmacy operations continued to generate solid growth through the addition of new clients, increases in drug utilization reflecting higher acuity levels of nursing home residents, and the rapid expansion of infusion therapy services. -11- 12 As a result of both acquisition activity and internal growth, the total number of nursing facility residents served by the Company as of September 30, 1995 rose to approximately 212,200, up 47% over the number served one year ago. Interest expense, net of investment income, of $638,000 and $1,764,000, for the three and nine month periods ended September 30, 1995, respectively, decreased by $699,000 and $2,108,000, respectively, over the same periods of 1994 due to an increase in the invested cash balance, owing primarily to the receipt of $59.2 million in net proceeds from a stock offering in November 1994. During the three and nine month periods ended September 30, 1995, the effective tax rates of 39.8% and 40.6%, respectively, decreased 8.9 and 0.2 percentage points, respectively, over the comparable prior year periods. The decrease in the 1995 third quarter rate versus the prior year is primarily due to the nondeductibility for income tax purposes of a portion of the expenses related to the 1994 Evergreen acquisition. Liquidity and Capital Resources Cash and cash equivalents and marketable securities at September 30, 1995 decreased $36,234,000 to $43,564,000 from the $79,798,000 at December 31, 1994. The Company's capital requirements are primarily related to its acquisition program. In the first nine months of 1995, the Company made nine acquisitions for an aggregate capital investment of approximately $42 million. Such acquisitions were financed from cash and cash equivalents and a total of 835,673 shares of the Company's common stock (adjusted for the June 1995 stock split). There are no material commitments outstanding at September 30, 1995 -12- 13 other than acquisition-related payments which may be made contingent on the performance of businesses acquired. In April 1995 the Company increased its revolving line of credit from $50 million to $135 million at significantly more favorable terms. The Company's current ratio at September 30, 1995 and December 31, 1994 was 4.1 to 1 and 3.8 to 1, respectively. On February 1, 1995, the Company's Board of Directors increased the quarterly cash dividend by 11% to 2.5 cents per share, as adjusted for a two-for-one stock split effective June 21, 1995, for an indicated annual rate of 10 cents per share in 1995. Dividends paid consisted of (in thousands):
Nine months ended September 30, ------------------- 1995 1994 ------ ------ Omnicare, Inc. quarterly dividend of 2.5 cents and 2.3 cents per share in 1995 and 1994, respectively $1,926 $1,269 Dividends paid to former Lo-Med owners (a) -- 402 Dividends paid to former Evergreen owners (a) -- 595 ------ ------ Total $1,926 $2,266 ====== ======
(a) Lo-Med and Evergreen were acquired in pooling of interests transactions on June 30, 1994 and September 30,1994, respectively. The Company believes its sources of capital are adequate for its needs. -13- 14 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit Number Exhibit ------- ------- 11 Computation of Earnings per Share (b) Reports on Form 8-K - On August 23, 1995, a Form 8-K dated July 31, 1995 was filed to report the Company's consolidated net sales and net income for the month of July 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Omnicare, Inc. (Registrant) Date November 14, 1995 By /s/ Joel F. Gemunder ----------------------------- Joel F. Gemunder President (Principal Executive Officer) Date November 14, 1995 By /s/ Thomas R. Marsh ----------------------------- Thomas R. Marsh Vice President Controller and Acting Treasurer (Principal Financial and Accounting Officer) -14- EX-11 2 EXHIBIT 11 1 Exhibit 11 Omnicare, Inc. and Subsidiary Companies Computation of Earnings Per Common Share (in thousands, except per share data)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------ ------------------------ 1995 1994 1995 1994 -------- -------- -------- -------- Primary Earnings* Net income $ 6,935 $ 2,062 $ 17,082 $ 9,034 Aftertax expense related to preferred stock dividend payable to minority interest in wholly-owned subsidiary 1 -- 7 -- Minority interest in net income of subsidiary (18) -- (28) -- -------- -------- -------- -------- Net income as adjusted $ 6,918 $ 2,062 $ 17,061 $ 9,034 ======== ======== ======== ======== Shares Weighted average number of common shares outstanding 26,273 22,241 26,158 22,139 Additional shares assuming conversion of: Stock options and stock warrants 847 398 697 350 -------- -------- -------- -------- Average common shares outstanding and equivalent as adjusted 27,120 22,639 26,855 22,489 ======== ======== ======== ======== Primary earnings per common share $ 0.26 $ 0.09 $ 0.64 $ 0.40 ======== ======== ======== ======== Fully Diluted Earnings Net income $ 6,935 $ 2,062 $ 17,082 $ 9,034 Aftertax expense related to preferred stock dividend payable to minority interest in subsidiary 1 -- 7 -- Minority interest in net income of subsidiary (18) -- (28) -- Aftertax interest expense related to 5 3/4% convertible subordinated debentures 802 794 2,407 2,415 -------- -------- -------- -------- Net income as adjusted $ 7,720 $ 2,856 $ 19,468 $ 11,449 ======== ======== ======== ======== Shares Weighted average number of common shares outstanding 26,273 22,241 26,158 22,139 Additional shares assuming conversion of: Stock options and stock warrants 985 406 807 364 Convertible subordinated debentures 5,572 5,576 5,572 5,576 -------- -------- -------- -------- Average common shares outstanding and equivalents as adjusted 32,830 28,223 32,537 28,079 ======== ======== ======== ======== Fully diluted earnings per common share $ 0.24 $ 0.10 $ 0.60 $ 0.41 -------- -------- -------- --------
* This calculation is submitted in accordance with Regulation S-K Item 601(b)(11) although not required by footnote 2 to paragraph 14 of APB Opinion No. 15 if it results in dilution of less than 3% or is anti-dilutive. EX-27 3 EXHIBIT 27
5 0000353230 OMNICARE INC. 9-MOS DEC-31-1995 SEP-30-1995 17,120 26,444 72,812 3,955 26,804 151,618 49,932 19,244 339,413 37,131 87,844 26,344 0 0 180,951 339,413 289,797 289,797 209,245 209,245 50,043 2,383 4,558 28,745 11,663 17,082 0 0 0 17,082 .65 .60
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