Omnicare Inc. (OCR), a geriatric pharmaceutical services company, Thursday reported a drop in second quarter profit, negatively impacted by certain special items including litigation charges and accounting changes totaling $45.8 million pretax. Revenue from pharmacy service segment boosted total sales. Omnicare, however, reduced its full year 2009 earnings outlook that came in below consensus. OCR is currently trading down, more than 16%, on the NYSE.
For the second quarter, net income of the Covington, Kentucky-based company declined to $28.72 million or $0.24 per share from $32.94 million or $0.28 per share in the same quarter a year ago.
Income from continuing operations was $41.99 million or $0.36 per share, compared to $33.49 million or $0.28 per share in the year-ago quarter. Loss from discontinued operations, including impairment charge of $12,065 after-tax amounted to $13.28 million, compared to $0.56 million in the same quarter last year.
Quarterly results include the impact of special items and accounting changes totaling $45.8 million pretax, while in the prior-year it was $35 million pretax.
Adjusting for these special items and accounting changes, net income was $61.51 million or $0.52 per share, up from $54.79 million or $0.46 per share in the corresponding quarter last year. Adjusted income from continuing operations was $74.78 million or $0.36 per share, up from $55.35 million or $0.28 per share in the year-earlier quarter.
On average, twelve analysts polled by Thomson Reuters expected earnings of $0.64 per share for the quarter. Analysts' estimate typically excludes one-time items.
Sales for the quarter improved to $1.54 billion from $1.52 billion in the prior-year quarter. The Street expected revenues of $1.58 billion for the quarter.
In the preceding first quarter, Omnicare reported a profit of $30.89 million or $0.26 per share, benefiting from year-on-year growth in revenues. Revenues were up at $1.56 billion.
For the quarter under review, Omnicare's pharmacy services business generated sales of $1.50 billion, up from $1.47 billion in the corresponding quarter last year. CRO business generated revenues of $40.8 million, as compared with the $53.6 million generated in the same prior-year quarter.
Operating income was $108.08 million, compared to $93.26 million in the year-ago quarter. Operating income includes special litigation charges of $28.4 million pretax, associated with litigation and other professional fees in connection primarily with the company's lawsuit against UnitedHealth Group, Inc. and its affiliates.
Interest expense was down at $29.78 million, compared to $35.69 million in the comparable quarter a year ago.
During the quarter, the company repaid $75 million of its senior term A loan, had no borrowings outstanding on its revolving credit facility and, at June 30, 2009, had $276.2 million in cash on its balance sheet. Total debt to total capital at June 30, 2009 was 37.2%, down approximately 320 basis points from 40.4% at June 30, 2008.
For the six-month period, net income was $59.61 million or $0.51 per share, compared to $59.09 million or $0.50 per share in the year-ago period.
Income from continuing operations was $41.99 million or $0.36 per share for the period, while adjusted earnings for the period was $136.24 million or $1.16 per share. Results include impact of special items and accounting changes of $105.8 million pretax
Sales for the period grew to $3.08 billion from $3.05 billion in the year-ago period.
Looking ahead to the full-year 2009, the company said it continue to believe that earnings from continuing operations, as adjusted for special items, will be within its original range of guidance, albeit toward the lower end of that range. Based on which, company now expects full year earnings in the range of $2.50 to $2.55 per share. Earlier expectation was in the range of $2.50 - $2.70 per share. Street currently expects earnings of $2.61 per share for the year.
Joel Gemunder, president and chief executive officer said, "Our financial performance continues to benefit from the execution of strategic objectives to enhance Omnicare's growth and profitability along with certain favorable trends in the pharmaceutical marketplace."
Omnicare also noted that, upon completion of a strategic review, it would divest certain non-core home healthcare and related ancillary businesses, in order to focus on growth opportunities that better utilize Omnicare's core competencies.
On February 27, 2009, brokerage Thomas Weisel Upgraded Omnicare shares to 'Overweight' from 'Marketweight, ' with a mean target of $35.05.
OCR is currently trading at $22.59, down $4.50 or 16.61%, on a volume of 11.41 million shares. In the last 52-week period, the stock traded in the range of $19.14 to $32.78, with an average volume of 1.40 million shares.
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