EXHIBIT 99.1
[OMNICARE, INC. LETTERHEAD]
Omnicare news release
- -------------------------------------------------------------------------------
[LOGO]
CONTACT:
Cheryl D. Hodges
(859) 392-3331
Omnicare Reports Record First Quarter 2003 Results
COVINGTON, Ky., May 1, 2003 -- Omnicare, Inc. (NYSE:OCR), a leading provider of
pharmaceutical care for the elderly, reported today financial results for its
first quarter ended March 31, 2003 versus the comparable prior year period, as
follows:
o Earnings per diluted share increased 40% to 42 cents
o Net income rose 40% to $40.4 million
o Earnings before interest, income taxes, depreciation and amortization
(EBITDA) increased 31% to $93.8 million
o Sales grew 26% to $805.9 million
To facilitate comparisons and to enhance understanding of core operating
performance, the discussion that follows will include financial measures that
are adjusted from the comparable amount under generally accepted accounting
principles (GAAP) to exclude the impact of special items. For a detailed
presentation of reconciling items and related definitions and components, please
refer to the attached schedules or to reconciliation schedules posted on the
company's Web site at www.omnicare.com.
Results for the 2002 first quarter included a special item charge of $4.8
million pretax ($3.0 million aftertax) related to the second phase of the
company's productivity and consolidation initiative completed in September 2002.
No special items were reported in the 2003 first quarter; accordingly, adjusting
for the restructuring charge in the 2002 first quarter results in comparisons
for the quarter ended March 31, 2003 as follows:
o Earnings per diluted share increased 24% to 42 cents
o Net income rose 27% to $40.4 million
o EBITDA increased 23% to $93.8 million
o Sales grew 26% to $805.9 million
Earnings in Line with Expectations
"The first quarter of 2003 was a period of great significance for Omnicare. Not
only did our earnings for the quarter meet expectations, marking our eleventh
consecutive quarter of sequential as well as year-over-year growth, but we also
completed the
Page 1 of 14
largest acquisition in our history, NCS HealthCare, Inc.," said Joel F.
Gemunder, president and chief executive officer of Omnicare. "In addition to the
contribution from NCS, our results for the quarter reflected our ongoing cost
control and productivity efforts and continued improvement in our overall
financial health.
"Our focus on working capital management continued to enhance our cash flow
despite a well-publicized and broad-based slowdown of payments to all providers
by the Illinois Department of Public Aid (Medicaid Program) for the entire
quarter. Nonetheless, the strength of our cash flow allowed us to both repay
debt and to take advantage of advance purchases of pharmaceuticals (pre-buys)
even with the delay of approximately $56 million in payments from the State of
Illinois on behalf of Medicaid beneficiaries Omnicare serves. On the plus side,
in late April we began to receive a higher level of payments from Illinois.
Moreover, the State of Illinois, which has in other years experienced slowdowns
in payments prior to the end of its fiscal year, recently announced its
intention to borrow funds sufficient to cover all Medicaid payments to
providers."
Cash flow from operations for the first quarter totaled $5.4 million versus
$22.9 million in the comparable 2002 period on a GAAP basis. The 2003 quarter
included $32.6 million in pre-buys versus $37.2 million in 2002. Adjusting for
these pre-buys in both periods and for the impact of the timing difference on
the Illinois Medicaid payments results in adjusted cash flow from operations of
$94.4 million for the 2003 first quarter versus $60.1 million in the comparable
2002 period. Adjusted free cash flow, which deducts capital expenditures and
cash dividends from adjusted cash flow from operations, totaled $88.3 million
versus $53.0 million in the comparable 2002 period.
During the quarter, the company maintained a strong financial position. In
January 2003, Omnicare borrowed $499 million on its revolving credit facility to
temporarily fund the acquisition of NCS HealthCare and is currently evaluating
longer-term financing options. By March 31, 2003, Omnicare had already repaid
$25 million of this debt and ended the quarter with cash balances of $134.8
million.
Institutional Pharmacy Business
Omnicare's institutional pharmacy business generated record revenues of $763.2
million for the first quarter, 28% higher than the $596.3 million reported in
the comparable prior-year quarter. Operating profit in this business reached
$85.4 million, 25% higher than the adjusted $68.2 million recorded in the first
quarter of 2002. It should be noted that first quarter 2003 results include the
operations of NCS only from mid-January when the acquisition was completed.
"Contributing significantly to growth was the addition of NCS HealthCare. After
reclassification to conform to Omnicare's reporting basis and, to a lesser
extent, to adjust for business largely lost by NCS prior to the closing, NCS
added approximately 182,000 beds served in the quarter (as compared with
199,000 beds originally estimated),
Page 2 of 14
bringing Omnicare's total beds served to approximately 935,000, an increase of
28% over the 729,500 served one year ago," said Gemunder.
"In addition to this substantial expansion of the customer base, pharmacy sales
growth also benefited from expansion of our clinical and other service
programs," Gemunder noted. "Moreover, growing market penetration of newer
branded drugs targeted at the diseases of the elderly, partially offset by
the increasing number and usage of generic drugs, also contributed to the
sales gain.
"All of these factors combined to produce a sales increase that was highly
leveraged by the completion of our integration of American Pharmaceutical
Services, Inc. (APS) as well as the ongoing benefits of our cost reduction
efforts. As expected, this leverage was offset by the addition of the large
base of lower-margin NCS business during the first quarter. We believe that
as the ongoing integration of this business proceeds over the next three
quarters and cost synergies are realized, we expect our pharmacy operating
margin to expand. To date, the integration is proceeding apace and is on
track to achieve the synergies that, in our view, made this important
transaction so compelling.
"We are also pleased to announce that we have renewed and extended our preferred
provider agreement with Mariner Health Care, Inc., one of Omnicare's largest
customers. The contract, originally signed in January 2002, coincident with our
acquisition of Mariner's institutional pharmacy business, APS, currently covers
service to nearly 25,000 beds and has been expanded to include Mariner nursing
facilities, comprising an additional 10,000 beds, not currently served by
Omnicare. Omnicare is slated to commence servicing these new facilities
beginning in June of 2003. The new contract, now covering nearly 35,000 beds, is
for a five-year term extending through July 2008.
"We are most gratified by the substantial expansion and extension of this
contract as it signifies the recognition of value created by this relationship
for both Mariner and its residents, as well as for Omnicare", said Gemunder.
CRO Business
Omnicare Clinical Research, the company's contract research (CRO) business,
generated revenues of $42.7 million on a GAAP basis for the first quarter, up
marginally from the prior-year quarter's revenues of $42.0 million. Included in
both periods were reimbursable out-of-pocket expenses totaling $8.1 million in
the 2003 period and $6.3 million in the 2002 period. Excluding these
reimbursable out-of-pocket expenses, adjusted revenues of $34.6 million were
marginally lower than the $35.8 million recorded on this basis in the 2002
period. Operating profit in the first quarter of 2003 was $4.7 million versus
the adjusted $4.9 million earned during the prior-year period. Backlog at March
31, 2003 was $180 million.
Page 3 of 14
"Our CRO business performed in line with expectations for the quarter," said
Gemunder. "While we, as others in the industry, continue to be impacted by
client-driven delays in project commencement or continuation, we are
nonetheless encouraged by reduced cancellation rates and an up-tick in
new business late in the quarter.
"We also continued to see steady growth in our book of business with Japanese
pharmaceutical manufacturers and biotechnology companies. In addition, our
strategic alliance with Loudon Far East, announced in February of this year, is
beginning to stimulate interest in our ability to provide clients with access to
large patient populations in the Asia/Pacific region as a means to accelerate
the drug development process."
Omnicare Outlook
"During the first quarter, we continued to experience relative stability in the
operating environment in the long-term care industry highlighted by increasing
Medicare admissions and improving occupancy reported in many areas," said
Gemunder. "While Congress has not acted to restore certain portions of Medicare
reimbursement for skilled nursing facilities that expired on October 1, 2002, we
remain hopeful that ultimately Congress or the Administration will address these
funding issues and restore reimbursement to our clients to more appropriate
levels.
"We continue to monitor key issues related to healthcare funding, including the
increasing pressures on state Medicaid budgets arising from the economic
downturn coupled with growth in enrollees as eligibility is expanded; the
escalation in drug costs owing to higher drug utilization among seniors and the
introduction of new more efficacious but also more expensive medications; the
implementation of a Medicare drug benefit and the long-term financing of the
entire Medicare program. Given competing national priorities, it remains
difficult to predict the outcome and impact of any changes in healthcare policy
relating to the future funding of the Medicare and Medicaid programs.
"Nonetheless, we know that pharmaceuticals remain the most cost-effective means
of treating the chronic illnesses of the frailest members of our society and, as
such, should be considered nondiscretionary expenditures," continued Gemunder.
"The geriatric pharmaceutical business offers meaningful solutions to containing
healthcare costs while ensuring the well-being of the nation's growing elderly
population. Omnicare is positioned at the forefront of these trends, and has
demonstrated to payors, including state Medicaid programs, that our clinical
programs can yield substantially lower drug costs while enhancing quality of
care.
"We believe that our growth strategy, which has served us well in mitigating
reimbursement risks and strengthening our industry leading position, will allow
us to maximize cash flow, maintain a strong financial position, enhance the
efficiency of our operations and continue to develop our franchise in the
geriatric pharmaceutical market.
Page 4 of 14
"In the current environment, we see many opportunities to further leverage our
operating cost structure. The addition of NCS significantly enhanced our
leadership position and the combined company has substantial opportunities
for growth in the institutional pharmacy business.
"Our core growth strategy includes the continued expansion of our customer base
in institutional pharmacy, as well as growth of our clinical programs, such as
our proprietary formulary, the Omnicare Geriatric Pharmaceutical Care
Guidelines'r', and health management programs, dialysis services and in Omnicare
Senior Health Outcomes'sm', our pharmaceutical case management services for the
broader based senior marketplace. Moreover, the addition of NCS has brought new
and interesting business opportunities in information technology and services as
well as health management and specialty pharmaceutical distribution.
"Then too, we see a positive long-term outlook in Omnicare Clinical Research as
we benefit from the streamlining and globalization of our business, our unique
capabilities in the geriatric market and the strength of our presence in the
overall drug development marketplace.
"Our revenue and earnings growth outlook remains positive for 2003 given our
strong underlying fundamentals and our sound strategy, combined with our
demonstrated ability to maintain financial strength and flexibility, and the
numerous opportunities to leverage our business both through internal and
external growth," Gemunder concluded.
Webcast Today
Omnicare will hold a conference call to discuss first-quarter results today at
11 a.m. EDT. The conference call will be available live via webcast at
Omnicare's Web site at www.omnicare.com by clicking on "Investors" and then on
"Conference Calls." An online replay will be available at www.omnicare.com
beginning approximately two hours after the completion of the live call and will
remain available for 14 days.
Omnicare, based in Covington, Kentucky, is a leading provider of pharmaceutical
care for the elderly. Omnicare serves residents in long-term care facilities
comprising more than 935,000 beds in 47 states, making it the nation's largest
provider of professional pharmacy, related consulting and data management
services for skilled nursing, assisted living and other institutional healthcare
providers. Omnicare also provides clinical research services for the
pharmaceutical and biotechnology industries in 29 countries worldwide.
Statements in this press release concerning Omnicare's business outlook or
position or future economic performance; the impact of the acquisition of NCS;
the impact of Omnicare's cost control and productivity efforts; the financial
condition of Omnicare, including the strength of its cash flows; the impact of
delayed payment from Illinois Medicaid; expectations concerning borrowing by the
State of Illinois in order to fund Medicaid payments; the impact of pre-buys;
the impact of clinical programs; the impact of penetration of new drugs; trends
concerning the number and usage of generic drugs; the impact of the integration
of the APS and NCS acquisitions; expectations concerning margins; the impact of
new and renewed business;
Page 5 of 14
trends concerning delays in project commencement or continuation
by CRO clients, as well as those concerning new CRO business and
cancellation of CRO projects; the impact of the alliance with Loudon
Far East; the operating environment in the long-term care industry; trends
concerning occupancy and Medicare admissions; expectations concerning Medicare
reimbursement trends and Congressional action with respect thereto; the impact
of healthcare funding issues; opportunities to contain healthcare costs while
ensuring the well-being of the elderly population; expectations concerning
growth; the ability to further leverage Omnicare's operating cost structure;
opportunities to expand Omnicare's information technology and services, health
management and specialty pharmaceutical distribution businesses; the impact of
the streamlining and globalization of Omnicare's CRO operations; Omnicare's
capabilities in the geriatric market and its strength in the drug development
marketplace; expectations concerning growth; expectations concerning financing
alternatives, together with other statements that are not historical, are
forward-looking statements that are estimates reflecting the best judgment of
Omnicare based on currently available information. Such forward-looking
statements involve actual known and unknown risks, uncertainties, contingencies
and other factors that could cause actual results, performance or achievements
to differ materially from those stated. Such risks, uncertainties, contingencies
and other factors, many of which are beyond the control of Omnicare, include
overall economic, financial and business conditions; trends for the continued
growth of the businesses of Omnicare; the ability to implement productivity,
consolidation and cost reduction efforts and to realize anticipated benefits;
the impact and pace of pharmaceutical price increases; delays and further
reductions in reimbursement by the government and other payors to customers and
to Omnicare as a result of pressure on federal and state budgets due to the
continuing economic downturn and other factors; the overall financial condition
of Omnicare's customers; Omnicare's ability to assess and react to the financial
condition of its customers; the impact of seasonal illness trends on the
business of Omnicare; the ability of vendors and business partners to continue
to provide products and services to Omnicare; the continued successful
integration of acquired companies, including NCS, and the ability to realize
anticipated revenues, economies of scale, cost synergies and profitability; the
continued availability of suitable acquisition candidates; pricing and other
competitive factors in the industry; increases or decreases in reimbursement;
the effect of new government regulations, executive orders and/or legislative
initiatives, including those relating to reimbursement and drug pricing policies
and changes in the interpretation and application of such policies; government
budgetary pressures and shifting priorities; efforts by payors to control costs;
the outcome of litigation; the failure of Omnicare or the long-term care
facilities it serves to obtain or maintain required regulatory approvals or
licenses; loss or delay of contracts pertaining to Omnicare's contract research
organization business for regulatory or other reasons; the ability of clinical
research projects to produce revenues in future periods; the ability to attract
and retain needed management; the impact and pace of technological advances; the
ability to obtain or maintain rights to data, technology and other intellectual
property; the impact of consolidation in the pharmaceutical and long-term care
industries; volatility in the market for Omnicare's stock and in the financial
markets generally; changes in international economic and political conditions
and currency fluctuations between the U.S. dollar and other currencies; access
to capital and financing; the demand for Omnicare's products and services;
variations in costs or expenses; changes in tax law and regulation; changes in
accounting rules and standards; and other risks and uncertainties described in
Omnicare's reports and filings with the Securities and Exchange Commission.
For more information on Omnicare, Inc., via the Internet, including a full menu
of news releases, visit www.omnicare.com.
###
Page 6 of 14
Omnicare, Inc. and Subsidiary Companies
Summary Consolidated Statements of Income, GAAP Basis
(000s, except per share amounts)
Unaudited
Three Months Ended
March 31,
-------------------------
2003 2002
--------- ---------
Sales $ 797,753 $ 632,015
Reimbursable out-of-pockets (a) 8,108(a) 6,299(a)
--------- ---------
Total net sales 805,861 638,314
--------- ---------
Cost of sales 589,792 467,811
Reimbursed out-of-pocket expenses (a) 8,108(a) 6,299(a)
--------- ---------
Total direct costs 597,900 474,110
--------- ---------
Gross profit 207,961 164,204
Selling, general and administrative expenses 126,928 99,618
Restructuring charge (c) -- 4,797(c)
--------- ---------
Operating income 81,033 59,789
Investment income 588 798
Interest expense (16,456) (14,176)
--------- ---------
Income before income taxes 65,165 46,411
Income taxes 24,742 17,635
--------- ---------
Net income $ 40,423 $ 28,776(c)
========= =========
Earnings per share ("EPS"):
Basic $ 0.43 $ 0.31(c)
========= =========
Diluted $ 0.42(b) $ 0.30(c)
========= =========
Weighted average number of common shares outstanding:
Basic 94,386 93,963
========= =========
Diluted 104,029(b) 94,598
========= =========
The footnotes presented at the separate "Footnotes to Financial Information"
page are an integral part of this financial information.
Page 7 of 14
Omnicare, Inc. and Subsidiary Companies
Summary Consolidated Statements of Income, Non-GAAP Basis (d)
Excluding EITF No. 01-14 and Special Item
(000s, except per share amounts)
Unaudited
Three Months Ended
March 31,
-------------------------
2003 2002
--------- ---------
Adjusted sales $ 797,753(e) $ 632,015(e)
Adjusted cost of sales 589,792(e) 467,811(e)
--------- ---------
Gross profit 207,961 164,204
Selling, general and administrative expenses 126,928 99,618
--------- ---------
Adjusted operating income 81,033 64,586(f)
Investment income 588 798
Interest expense (16,456) (14,176)
--------- ---------
Adjusted income before income taxes 65,165 51,208
Income taxes 24,742 19,458
--------- ---------
Adjusted net income $ 40,423 $ 31,750(f)
========= =========
Adjusted earnings per share:
Basic $ 0.43 $ 0.34(f)
========= =========
Diluted $ 0.42(b) $ 0.34(f)
========= =========
Weighted average number of common shares outstanding:
Basic 94,386 93,963
========= =========
Diluted 104,029(b) 94,598
========= =========
The footnotes presented at the separate "Footnotes to Financial Information"
page are an integral part of this financial information.
Page 8 of 14
Omnicare, Inc. and Subsidiary Companies
Summary Segment Financial Data, Non-GAAP Basis (d)
Excluding EITF No. 01-14 and Special Item
(000s)
Unaudited
Corporate
Pharmacy CRO and Consolidated
Services Services Consolidating Totals
--------- --------- ------------- ------------
Three Months Ended March 31, 2003:
Adjusted sales $ 763,154 $ 34,599(e) $ -- $ 797,753(e)
========= ========= ========= =========
Operating income $ 85,370 $ 4,730 $ (9,067) $ 81,033
Depreciation and amortization 11,748 418 595 12,761
--------- --------- --------- ---------
Earnings before interest, income taxes,
depreciation and amortization ("EBITDA") $ 97,118 $ 5,148 $ (8,472) $ 93,794
========= ========= ========= =========
Three Months Ended March 31, 2002:
Adjusted sales $ 596,265 $ 35,750(e) $ -- $ 632,015(e)
========= ========= ========= =========
Adjusted operating income $ 68,205(f) $ 4,915(f) $ (8,534) $ 64,586(f)
Depreciation and amortization 10,435 618 638 11,691
--------- --------- --------- ---------
Adjusted EBITDA $ 78,640(f) $ 5,533(f) $ (7,896) $ 76,277(f)
========= ========= ========= =========
The footnotes presented at the separate "Footnotes to Financial Information"
page are an integral part of this financial information.
Page 9 of 14
Omnicare, Inc. and Subsidiary Companies
Condensed Consolidated Balance Sheets, GAAP Basis
(000s)
Unaudited
March 31, December 31,
2003 2002
---------- ------------
ASSETS
Cash and cash equivalents $ 128,990 $ 137,936
Restricted cash 5,801 3,147
Accounts receivable, net 634,236 522,857
Unbilled receivables 25,790 25,062
Inventories 232,338 190,464
Deferred income tax benefits and other current assets 133,817 122,092
---------- ----------
Total current assets 1,160,972 1,001,558
---------- ----------
Properties and equipment, net 157,482 139,908
Goodwill, net 1,605,168 1,188,907
Other noncurrent assets 104,932 97,212
---------- ----------
Total assets $3,028,554 $2,427,585
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 214,208 $ 175,648
Deferred revenue 33,042 25,254
Current debt 474,407(g) 110
Other current liabilities 131,598 95,638
---------- ----------
Total current liabilities 853,255 296,650
---------- ----------
Long-term debt 411 187
5.0% convertible subordinated debentures, due 2007 345,000 345,000
8.125% senior subordinated notes, due 2011 375,000 375,000
Deferred income taxes and other noncurrent liabilities 142,598 135,686
---------- ----------
Total liabilities 1,716,264 1,152,523
---------- ----------
Stockholders' equity 1,312,290 1,275,062
---------- ----------
Total liabilities and stockholders' equity $3,028,554 $2,427,585
========== ==========
The footnotes presented at the separate "Footnotes to Financial Information"
page are an integral part of this financial information.
Page 10 of 14
Omnicare, Inc. and Subsidiary Companies
Condensed Consolidated Statements of Cash Flows, GAAP Basis
(000s)
Unaudited
Three Months Ended
March 31, 2003
------------------
Cash flows from operating activities:
Net income $ 40,423
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation 9,568
Amortization 3,193
Provision for doubtful accounts 11,045
Deferred tax provision 13,469
Changes in assets and liabilities, net of effects
from acquisition of businesses (72,347)
---------
Net cash flows from operating activities 5,351
---------
Cash flows from investing activities:
Acquisition of businesses (476,999)
Capital expenditures (3,990)
Other (2,609)
---------
Net cash flows from investing activities (483,598)
---------
Cash flows from financing activities:
Borrowings on line of credit facilities 499,000
Payments on line of credit facilities (25,000)
Payments for stock awards and exercise of stock options,
net of stock tendered in payment (3,117)
Dividends paid (2,125)
Other (146)
---------
Net cash flows from financing activities 468,612
---------
Effect of exchange rate changes on cash 689
---------
Net decrease in cash and cash equivalents (8,946)
Cash and cash equivalents at beginning
of period - unrestricted 137,936
---------
Cash and cash equivalents at
end of period - unrestricted $ 128,990
=========
The footnotes presented at the separate "Footnotes to Financial Information"
page are an integral part of this financial information.
Page 11 of 14
Omnicare, Inc. and Subsidiary Companies
Reconciliation Statement and Definitions, Non-GAAP Basis (d)
(000s)
Unaudited
Three Months Ended March 31,
----------------------------
2003 2002
---------- ----------
Adjusted operating income (earnings before interest and income taxes, "EBIT"):
EBIT $ 81,033 $ 59,789
Special item (h) -- 4,797
---------- ----------
Adjusted EBIT (h) $ 81,033 $ 64,586
========== ==========
Adjusted income before income taxes:
Income before income taxes $ 65,165 $ 46,411
Special item (h) -- 4,797
---------- ----------
Adjusted income before income taxes (h) $ 65,165 $ 51,208
========== ==========
Adjusted net income:
Net income $ 40,423 $ 28,776
Special item, net of taxes (h) -- 2,974
---------- ----------
Adjusted net income (h) $ 40,423 $ 31,750
========== ==========
Adjusted earnings per share ("EPS"): (i)
Basic EPS $ 0.43 $ 0.31
Special item, net of taxes (h) -- 0.03
Adjusted basic EPS (h) $ 0.43 $ 0.34
========== ==========
Diluted EPS $ 0.42 $ 0.30
Special item, net of taxes (h) -- 0.03
Adjusted diluted EPS (h) $ 0.42 $ 0.34
========== ==========
Adjusted earnings before interest, income taxes, depreciation and
amortization ("EBITDA"): (j)
EBIT $ 81,033 $ 59,789
Depreciation and amortization 12,761 11,691
---------- ----------
EBITDA (j) 93,794 71,480
Special item (h) -- 4,797
---------- ----------
Adjusted EBITDA (h)(j) $ 93,794 $ 76,277
========== ==========
Adjusted net cash flows from operating activities:
EBITDA (j) $ 93,794 $ 71,480
Subtract:
Interest expense, net of investment income (15,868) (13,378)
Income taxes (24,742) (17,635)
Changes in assets and liabilities, net of effects from acquisition of businesses (72,347) (28,589)
Add:
Provision for doubtful accounts 11,045 6,558
Deferred tax provision 13,469 2,042
Non-cash portion of restructuring charges -- 2,420
---------- ----------
Net cash flows from operating activities 5,351 22,898
Illinois Medicaid payment slowdown (k) 56,460 --
Advanced purchases of pharmaceuticals ("pre-buys") (l) 32,591 37,225
---------- ----------
Adjusted net cash flows from operating activities (k)(l) $ 94,402 $ 60,123
========== ==========
The footnotes presented at the separate "Footnotes to Financial Information"
page are an integral part of this financial information.
(continued on next page)
Page 12 of 14
Omnicare, Inc. and Subsidiary Companies
Reconciliation Statement and Definitions, Non-GAAP Basis (d)
(000s)
Unaudited
(continued from previous page)
Three Months Ended March 31,
----------------------------
2003 2002
---------- ----------
Adjusted free cash flow: (m)
Net cash flows from operating activities $ 5,351 $ 22,898
Capital expenditures (3,990) (4,975)
Dividends (2,125) (2,118)
---------- ----------
Free cash flow (m) (764) 15,805
Illinois Medicaid payment slowdown (k) 56,460 --
Pre-buys (l) 32,591 37,225
---------- ----------
Adjusted free cash flow (k)(l)(m) $ 88,287 $ 53,030
========== ==========
Segment Reconciliations - Pharmacy Services
Adjusted EBIT - Pharmacy Services:
EBIT $ 85,370 $ 67,079
Special item (h) -- 1,126
---------- ----------
Adjusted EBIT - Pharmacy Services (h) $ 85,370 $ 68,205
========== ==========
Adjusted EBITDA - Pharmacy Services: (j)
EBITDA (j) $ 97,118 $ 77,514
Special item (h) -- 1,126
---------- ----------
Adjusted EBITDA - Pharmacy Services (h)(j) $ 97,118 $ 78,640
========== ==========
Segment Reconciliations - CRO Services
Adjusted EBIT - CRO Services:
EBIT $ 4,730 $ 1,244
Special item (h) -- 3,671
---------- ----------
Adjusted EBIT - CRO Services (h) $ 4,730 $ 4,915
========== ==========
Adjusted EBITDA - CRO Services: (j)
EBITDA (j) $ 5,148 $ 1,862
Special item (h) -- 3,671
---------- ----------
Adjusted EBITDA - CRO Services (h)(j) $ 5,148 $ 5,533
========== ==========
Segment - Corporate and Consolidating
EBIT $ (9,067) $ (8,534)
---------- ----------
EBITDA (j) (8,472) (7,896)
---------- ----------
Consolidated Segment Totals
EBIT $ 81,033 $ 59,789
========== ==========
Adjusted EBIT (h) $ 81,033 $ 64,586
========== ==========
EBITDA (j) $ 93,794 $ 71,480
========== ==========
Adjusted EBITDA (h)(j) $ 93,794 $ 76,277
========== ==========
DEFINITIONS:
GAAP: Amounts that conform with U.S. Generally Accepted Accounting
Principles ("GAAP").
Non-GAAP: Amounts that do not conform with U.S. GAAP.
The footnotes presented at the separate "Footnotes to Financial Information"
page are an integral part of this financial information.
Page 13 of 14
Omnicare, Inc. and Subsidiary Companies
Footnotes to Financial Information
(000s)
Unaudited
(a) In accordance with the adoption of Emerging Issues Task Force ("EITF")
Issue No. 01-14, "Income Statement Characterization of Reimbursements
Received for 'Out-of-Pocket' Expenses Incurred" ("EITF No. 01-14"),
Omnicare has recorded reimbursements received for "out-of-pocket" expenses
on a grossed-up basis in the income statement as revenues and direct
costs. EITF No. 01-14 relates solely to the Company's contract research
services business.
(b) The three month period ended March 31, 2003 includes the dilutive effect
of the $345.0 million of Convertible Debentures, which assumes conversion
using the "if converted" method. Under that method, the Convertible
Debentures are assumed to be converted to common shares (weighted for the
number of days assumed to be outstanding during the period) and interest
expense, net of taxes, related to the Convertible Debentures is added back
to net income.
(c) The three month period ended March 31, 2002 includes a restructuring
charge of $4,797 before taxes and $2,974 after taxes. The restructuring
charge relates to the Company's previously disclosed Phase II productivity
and consolidation initiative.
(d) Omnicare believes that investors' understanding of Omnicare's performance
is enhanced by the Company's disclosure of certain non-GAAP financial
measures as presented in this financial information. Omnicare management
believes that the adjusted results provide added insight into the
Company's performance by focusing on the results generated by the
Company's ongoing core operations. Management uses the adjusted results
for measurement purposes. Omnicare's method of calculating these measures
may differ from those used by other companies and, therefore,
comparability may be limited.
(e) The noted presentation excludes amounts that Omnicare is required to
record in its income statement relating to EITF Issue No. 01-14, as
discussed in further detail at footnote (a) above.
(f) The noted presentation for the three month period ended March 31, 2002
excludes the restructuring charge discussed in further detail at footnote
(c) above.
(g) Includes $474,000 relating to borrowings on the Revolving Credit Facility
to finance the Company's acquisition of NCS HealthCare, Inc. ("NCS"), due
in March 2004. Omnicare has classified this liability as current based on
its March 2004 maturity date. However, the Company is currently evaluating
its capital requirements and considering financing alternatives to
restructure currently outstanding borrowings over a longer term (in
connection with the Shelf Registration Statement filed by the Company in
February 2003 or otherwise).
(h) The special item represents the restructuring charge discussed in footnote
(c) above, and relates to the Company's previously disclosed Phase II
productivity and consolidation initiative (which management believes is
not related to the ongoing operations of Omnicare).
(i) EPS (basic EPS; special item, net of taxes; adjusted basic EPS; diluted
EPS; and adjusted diluted EPS) is reported independently for each amount
presented. Accordingly, the sum of the individual amounts may not
necessarily equal the separately calculated adjusted EPS amount for the
corresponding period.
(j) EBITDA represents earnings before interest expense (net of investment
income), income taxes, depreciation and amortization. Omnicare believes
that certain investors find EBITDA to be a useful tool for measuring a
company's ability to service its debt. However, EBITDA does not represent
net cash flows from operating activities, as defined by U.S. GAAP, and
should not be considered as a substitute for net income as an indicator of
Omnicare's operating performance or operating cash flows as a measure of
liquidity. Omnicare's calculation of EBITDA may differ from the
calculation of EBITDA by others.
(k) Represents the estimated cash flow impact of a broad-based slowdown in
payments made by the State of Illinois to providers of services to
beneficiaries of that State's Medicaid program.
(l) Represents pre-buys for the quarter, primarily comprised of the purchasing
of pharmaceuticals in advance of price increases.
(m) Free cash flow represents net cash flows from operating activities less
capital expenditures and dividends paid by the Company. Omnicare believes
that certain investors find free cash flow to be a helpful measure of cash
generated from current operations, net of cash used for its ongoing
capital expenditures and dividend payment requirements. Omnicare's
calculation of free cash flow may differ from the calculation of free cash
flow by others.
Page 14 of 14