EXHIBIT 99.1
Omnicare, Inc. o 100 East RiverCenter Boulevard o Covington, Kentucky 41011
o 859/392-3300 o 859/392-3360 Fax
Omnicare news release
- --------------------------------------------------------------------------------
CONTACT:
[LOGO OF OMNICARE] Cheryl D. Hodges
(859) 392-3331
Omnicare Reports Strong Fourth-Quarter and Full-Year 2003 Results
COVINGTON, Ky. - February 12, 2004 - Omnicare, Inc. (NYSE:OCR), a leading
provider of pharmaceutical care for the elderly, reported today financial
results for its fourth quarter ended December 31, 2003 versus the comparable
prior-year period, as follows:
o Earnings per diluted share increased 44% to 59 cents
o Net income rose 59% to $61.6 million
o Earnings before interest, income taxes, depreciation and amortization
(EBITDA) increased 47% to $126.7 million
o Sales grew 40% to $947.6 million
"The fourth quarter of 2003 marked yet another strong performance in what has
been a transforming year for Omnicare," said Joel F. Gemunder, Omnicare
president and chief executive officer. "Over the past year, we saw dynamic
growth in our institutional pharmacy business, which increased in size by more
than 30%, culminating in Omnicare now serving long-term care facilities
comprising more than 1 million beds. Contributing significantly to our
performance was the successful integration of two strategically important
acquisitions, NCS HealthCare and SunScript, now largely complete and generating
anticipated synergies, as well as solid growth in our core business. As a
result, we achieved our fourteenth consecutive quarter of sequential as well as
year-over-year earnings growth while diligently maintaining our financial
strength.
"A hallmark of our financial performance continues to be strong operating cash
flow," continued Gemunder. "During the quarter, this strong operating cash flow
allowed us to take advantage of significant pre-buy opportunities."
On a generally accepted accounting principles (GAAP) basis, cash flow from
operations for the fourth quarter reflected a net use of cash of $12.9 million;
however, the fourth quarter of 2003 included $86.1 million in advance purchases
of pharmaceuticals (pre-buys) as compared with $52.3 million in pre-buys in the
comparable 2002 quarter. Excluding these pre-buys, cash flow from operations for
the fourth quarter of 2003 totaled $73.2 million. This brought cash flow from
operations for the full year 2003, on a
1
GAAP basis, to $169.5 million as compared with $159.1 million in 2002. Excluding
fourth-quarter pre-buys from both periods, cash flow from operations for 2003
was a record $255.5 million, as compared with the $211.4 million generated in
2002. Free cash flow, defined as operating cash flow less capital expenditures
and cash dividends, for the fourth quarter of 2003 was $65.0 million (excluding
the aforementioned pre-buys). This brought full-year free cash flow for 2003 to
a record $229.6 million, as compared with the $178.3 million generated in 2002,
excluding fourth-quarter pre-buys from both periods.
Gemunder also noted that at December 31, 2003, the Company had $188 million in
cash on its balance sheet and total debt to total capitalization stood at 40.2%,
down 110 basis points from the end of the third quarter of 2003.
Full-Year Results
Financial results for the year ended December 31, 2003, as compared with the
full-year 2002, were as follows:
o Earnings per diluted share increased 45% to $1.93
o Net income rose 54% to $194.4 million
o EBITDA increased 46% to $440.6 million
o Sales grew 33% to $3,499.2 million
Results for 2003 included a total charge of $12.7 million pretax ($7.9 million
aftertax) related to the redemption of the Company's 5% convertible subordinated
debentures. Results for the year 2002 included restructuring charges of $23.2
million ($14.4 million aftertax) related to the second phase of the Company's
productivity and consolidation initiative completed in September 2002. Adjusting
for these special items, full-year results for 2003 were as follows:
o Adjusted earnings per diluted share increased 36% to $2.01
o Adjusted net income rose 44% to $202.2 million
o Adjusted EBITDA increased 36% to $440.6 million
o Sales grew 33% to $3,499.2 million
To facilitate comparisons and to enhance understanding of core operating
performance, the discussion that follows includes financial measures that are
adjusted from the comparable amount under GAAP to exclude the impact of the
above-mentioned 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.
Institutional Pharmacy Business
Omnicare's institutional pharmacy business generated record revenues of
2
$913.4 million for the fourth quarter, 43% higher than the $637.3 million
reported in the comparable prior-year quarter. Operating profit in this business
reached $120.2 million, 50% higher than the $80.1 million recorded in the fourth
quarter of 2002. For the full year 2003, pharmacy sales reached $3,345.3
million, up 36% from the $2,467.2 million reported in 2002 and operating profit
was $413.0 million, 40% higher than the $295.0 million earned in 2002. At
December 31, 2003, Omnicare served approximately 1,003,000 beds versus
approximately 754,000 at December 31, 2002, an increase of 33%.
"The substantial growth we have seen in pharmacy sales for the year was largely
the product of the contribution of the NCS and SunScript acquisitions along with
new contract additions, increasing occupancy and the expansion of our clinical
and other service programs. In addition, market penetration of newer branded
drugs, offset in part by increasing use of generic drugs, also contributed to
the sales gain," said Gemunder.
"On top of this, we also saw a significant increase in acuity during the fourth
quarter relating primarily to the strong flu season, which produced higher drug
utilization in many areas and increased usage of intravenous therapies.
"All of these factors combined to produce a substantial increase in sales that
was highly leveraged through ongoing productivity efforts throughout the
pharmacy organization. The quarter-over-quarter trend in the pharmacy operating
margin tracked the expectations we described when we announced the NCS and
SunScript acquisitions. After the initial impact of adding these lower-margin
businesses, during the first and third quarters of 2003, respectively, the
integration has successfully produced the anticipated synergies and expanding
margins."
CRO Business
Omnicare Clinical Research, the Company's CRO business, generated revenues of
$34.2 million on a GAAP basis for the 2003 fourth quarter, versus the prior-year
quarter's revenues of $38.2 million. Included in both periods were reimbursable
out-of-pocket expenses totaling $5.3 million in the 2003 period and $5.5 million
in the 2002 period. Excluding these reimbursable out-of-pocket expenses,
adjusted revenues were $28.9 million in the 2003 fourth quarter compared with
revenues of $32.7 million in the comparable 2002 period. Operating profit in the
2003 fourth quarter was $1.7 million versus $5.5 million in 2002.
For the full year 2003, the CRO recorded revenues of $153.9 million versus
$165.5 million in 2002. Included in both full year periods were reimbursable
out-of-pocket expenses totaling $24.8 million and $26.3 million for the 2003 and
2002 periods, respectively. Excluding reimbursable out-of-pocket expenses in
both periods, revenues were $129.1 million in 2003 versus $139.2 million in
2002. Operating profit was $12.6 million in 2003 as compared with $21.0 million
in 2002. Backlog at December 31, 2003 was $183 million.
3
"As expected, and trending with previous quarters, we continued to experience
the impact of previous client-driven cancellations or start-up delays in the
commencement of projects," said Gemunder. "While 2003 was difficult for our CRO
business, and some others in the CRO industry as well, we are encouraged by the
increase in the number of new projects being booked early in the first quarter
of 2004 with major pharmaceutical manufacturers and biotechnology companies.
This, coupled with recent cost reduction efforts, points toward improving
performance beginning early in 2004."
Omnicare Outlook
"During the fourth quarter, we continued to experience relative stability in the
operating environment in the long-term care industry underscored by increasing
Medicare admissions and improving occupancy reported in many areas," said
Gemunder. "We see these positive trends continuing, given that on October 1,
2003 our skilled nursing facility customers began receiving an increase in
reimbursement rates under Medicare.
"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, albeit more expensive, medications,
offset somewhat by increasing use of generic medications. Though the economy is
not yet robust and healthcare costs continue to escalate, we are encouraged by a
recent study indicating that fewer states are reporting budget gaps and some are
posting higher tax revenues which we view positively."
Continuing, Gemunder said, "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 and should be
appropriately funded. 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."
Gemunder also noted, "During the quarter, Congress passed and the President
signed into law legislation establishing a Medicare drug benefit. Since the
regulations governing the implementation of this benefit are just now being
developed, it is difficult today to predict the impact or outcome of this
legislation or of any changes in healthcare policy relating to the future
funding of the Medicare and Medicaid programs. We believe, however, that our
extensive experience in geriatric pharmaceutical care, the expertise we have
developed in pharmaceutical case management and our vast database on drug
utilization and outcomes in the elderly has positioned us well as the
implementation of the Medicare drug benefit develops.
4
"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, both
internally and externally, in the geriatric pharmaceutical market.
"Following this strategy has enabled us to increase the size of our core
pharmacy business by approximately 50% in the last 24 months. This significant
expansion of our core business gives us substantially greater ability to
leverage our clinical services and information businesses, thereby enhancing our
cost advantages in the institutional pharmacy market.
"While our CRO business remains volatile in the short-run, 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 strong given our solid
underlying fundamentals and our proven strategy, combined with our financial
strength and flexibility, and the numerous opportunities to leverage our core
business in 2004 and beyond," Gemunder concluded.
Webcast Today
Omnicare will hold a conference call to discuss fourth-quarter and year-end
results today at 11:00 a.m. EST. 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 approximately 1,003,000 beds in 47 states and the District of
Columbia, 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.
This press release contains certain statements which are "forward looking"
statements under federal securities laws. These statements are made on the basis
of management's views and assumptions regarding business performance as of the
time the statements are made and management does not undertake any obligation to
update these statements. These statements include, but are not limited to,
Omnicare's business outlook or future economic performance, including revenue,
earnings and cash flow growth; expectations concerning margins and
profitability; expectations concerning Omnicare's financial strength and
flexibility; Omnicare's ability to successfully leverage its core business in
2004; the impact and penetration of new drugs; trends concerning the number and
usage of new and generic drugs; the operating environment in the long-term care
industry; uncertainty concerning the impact of the Medicare
5
Drug Benefit law; Omnicare's ability to leverage its experience and expertise in
geriatric pharmaceutical care and pharmaceutical case management, as well as its
database on drug utilization and outcomes, in implementing the Medicare Drug
Benefit; trends concerning occupancy and Medicare admissions; expectations
concerning Medicare and Medicaid reimbursement and funding rates; trends
concerning future drug costs; trends in healthcare funding issues, including
state Medicaid budgets and enrollee eligibility; the ability of the geriatric
pharmaceutical business to contain healthcare costs while ensuring the
well-being of the elderly population; volatility in the CRO business; trends
concerning delays in project commencement or continuation by CRO clients, as
well as those concerning backlog and new CRO business; 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; the impact of Omnicare's growth strategy and its efforts to expand
its core business, both internally and externally, and the ability to
effectively leverage such internal and external growth; the impact of the
integration of the NCS and SunScript acquisitions; the impact of Omnicare's cost
control and productivity efforts; the impact and amount of pre-buys;
expectations concerning state revenues and budget gaps; and the performance of
the economy generally. These "forward looking statements," together with other
statements that are not historical, 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, but are not limited to, overall economic,
financial, political 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 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 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 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 CRO 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; potential liability for losses not covered by, or
in excess of, insurance; competition for qualified staff in the healthcare
industry; 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; the demand
for Omnicare's products and services; variations in costs or expenses; changes
in tax laws and regulations; 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., including a full menu of news releases,
visit www.omnicare.com.
###
6
<Page>
Omnicare, Inc. and Subsidiary Companies
Summary Consolidated Statements of Income, GAAP Basis
(000s, except per share amounts)
Unaudited
Three Months Ended Year Ended
December 31, December 31,
------------------------------ ----------------------------
2003 2002 2003 2002
------------ ---------- ---------- ----------
Sales $ 942,319 $670,064 $3,474,354 $2,606,450
Reimbursable out-of-pockets (a) 5,307 (a) 5,503(a) 24,820 (a) 26,304 (a)
---------- -------- ----------- -----------
Total net sales 947,626 675,567 3,499,174 2,632,754
---------- -------- ----------- -----------
Cost of sales 700,952 489,712 2,576,794 1,915,397
Reimbursed out-of-pocket expenses (a) 5,307 (a) 5,503(a) 24,820 (a) 26,304 (a)
---------- -------- ----------- -----------
Total direct costs 706,259 495,215 2,601,614 1,941,701
---------- -------- ----------- -----------
Gross profit 241,367 180,352 897,560 691,053
Selling, general and administrative expenses 129,367 105,265 509,977 411,272
Restructuring charge (d) - - - 23,195 (d)
---------- -------- ----------- -----------
Operating income 112,000 75,087 387,583 256,586
Investment income 1,532 1,160 4,166 3,276
Interest expense (c) (16,653) (13,821) (81,300)(c) (56,811)
---------- -------- ----------- -----------
Income before income taxes 96,879 62,426 310,449 203,051
Income taxes 35,265 23,720 116,081 77,145
---------- -------- ----------- -----------
Net income $ 61,614 $ 38,706 $ 194,368 (c) $ 125,906 (d)
========== ======== =========== ===========
Earnings per share ("EPS"):
Basic $ 0.60 $ 0.41 $ 1.97 (c) $ 1.34 (d)
========== ======== =========== ===========
Diluted $ 0.59 $ 0.41(b) $ 1.93 (b)(c) $ 1.33 (d)
========== ======== =========== ===========
Weighted average number of common shares
outstanding:
Basic 102,688 94,286 98,800 94,168
========== ======== =========== ===========
Diluted 103,744 97,684(b) 103,243 (b) 94,905
========== ======== =========== ===========
The footnotes presented at the separate "Footnotes to Financial Information"
pages are an integral part of this financial information.
7
<Page>
Omnicare, Inc. and Subsidiary Companies
Summary Consolidated Statements of Income, Non-GAAP Basis (e)
Excluding EITF No. 01-14 and Special Items
(000s, except per share amounts)
Unaudited
Three Months Ended Year Ended
December 31, December 31,
---------------------------- -----------------------------
2003 2002 2003 2002
-------------- ------------ ------------- -----------
Adjusted sales $ 942,319 (f) $670,064 (f) $3,474,354 (f) $ 2,606,450 (f)
Adjusted cost of sales 700,952 (f) 489,712 (f) 2,576,794 (f) 1,915,397 (f)
---------- --------- ----------- ------------
Gross profit 241,367 180,352 897,560 691,053
Selling, general and administrative expenses 129,367 105,265 509,977 411,272
---------- --------- ----------- ------------
Adjusted operating income 112,000 75,087 387,583 279,781 (h)
Investment income 1,532 1,160 4,166 3,276
Interest expense (16,653) (13,821) (68,634)(g) (56,811)
---------- --------- ----------- ------------
Adjusted income before income taxes 96,879 62,426 323,115 226,246
Income taxes 35,265 23,720 120,894 85,959
---------- --------- ----------- ------------
Adjusted net income $ 61,614 $ 38,706 $ 202,221 (g) $ 140,287 (h)
========== ========= =========== ============
Adjusted EPS:
Basic $ 0.60 $ 0.41 $ 2.05 (g) $ 1.49 (h)
========== ========= =========== ============
Diluted $ 0.59 $ 0.41 (b) $ 2.01 (b)(g) $ 1.48 (h)
========== ========= =========== ============
Weighted average number of common shares outstanding:
Basic 102,688 94,286 98,800 94,168
========== ========= =========== ============
Diluted 103,744 97,684 (b) 103,243 (b) 94,905
========== ========= =========== ============
The footnotes presented at the separate "Footnotes to Financial Information"
pages are an integral part of this financial information.
8
<Page>
Omnicare, Inc. and Subsidiary Companies
Summary Segment Financial Data, Non-GAAP Basis (e)
Excluding EITF No. 01-14 and Special Item
(000s)
Unaudited
Corporate
Pharmacy CRO and Consolidated
Services Services Consolidating Totals
---------------- ------------- ------------- ------------
Three Months Ended December 31, 2003:
Adjusted sales $ 913,396 $ 28,923(f) $ - $ 942,319(f)
================ ============= ============= ===========
Operating income $ 120,204 $ 1,701 $ (9,905) $ 112,000
Depreciation and amortization 13,709 401 581 14,691
---------------- ------------- ------------- -----------
Earnings before interest, income taxes,
depreciation and amortization ("EBITDA") $ 133,913 $ 2,102 $ (9,324) $ 126,691
================ ============= ============= ===========
Three Months Ended December 31, 2002:
Adjusted sales $ 637,319 $ 32,745(f) $ - $ 670,064(f)
================ ============= ============= ===========
Operating income $ 80,062 $ 5,494 $ (10,469) $ 75,087
Depreciation and amortization 9,830 503 566 10,899
---------------- ------------- ------------- -----------
EBITDA $ 89,892 $ 5,997 $ (9,903) $ 85,986
================ ============= ============= ===========
Year Ended December 31, 2003:
Adjusted sales $ 3,345,301 $ 129,053(f) $ - $ 3,474,354(f)
================ ============= ============= ===========
Operating income $ 412,986 $ 12,562 $ (37,965) $ 387,583
Depreciation and amortization 48,915 1,770 2,335 53,020
---------------- ------------- ------------- -----------
EBITDA $ 461,901 $ 14,332 $ (35,630) $ 440,603
================ ============= ============= ===========
Year Ended December 31, 2002:
Adjusted sales $ 2,467,237 $ 139,213(f) $ - $ 2,606,450(f)
================ ============= ============= ===========
Adjusted operating income $ 294,965(h) $ 21,036(h) $ (36,220) $ 279,781(h)
Depreciation and amortization 40,389 2,237 2,637 45,263
---------------- ------------- ------------- -----------
Adjusted EBITDA $ 335,354(h) $ 23,273(h) $ (33,583) $ 325,044(h)
================ ============= ============= ===========
The footnotes presented at the separate "Footnotes to Financial Information"
pages are an integral part of this financial information.
9
<Page>
Omnicare, Inc. and Subsidiary Companies
Condensed Consolidated Balance Sheets, GAAP Basis
(000s)
Unaudited
December 31,
2003 2002
---------------- --------------
ASSETS
Cash and cash equivalents $ 187,413 $ 137,936
Restricted cash 714 3,147
Accounts receivable, net 678,255 522,857
Unbilled receivables 15,281 25,062
Inventories 326,550 190,464
Deferred income tax benefits and other current assets 174,875 122,092
---------------- --------------
Total current assets 1,383,088 1,001,558
---------------- --------------
Properties and equipment, net 148,307 139,908
Goodwill 1,690,558 1,188,907
Other noncurrent assets 173,068 97,212
---------------- --------------
Total assets $ 3,395,021 $ 2,427,585
================ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 296,089 $ 175,648
Deferred revenue 22,454 25,254
Current debt (i) 20,709 110
Other current liabilities 123,508 95,638
---------------- --------------
Total current liabilities 462,760 296,650
---------------- --------------
Long-term debt (i) 135,855 187
5.0% convertible subordinated debentures, due 2007 (i) - 345,000
8.125% senior subordinated notes, due 2011 375,000 375,000
6.125% senior subordinated notes, net, due 2013 (i) 226,822 -
4.0% contingent convertible notes, due 2033 (i) 345,000 -
Deferred income taxes and other noncurrent liabilities 173,560 135,686
---------------- --------------
Total liabilities 1,718,997 1,152,523
---------------- --------------
Stockholders' equity (i) 1,676,024 1,275,062
---------------- --------------
Total liabilities and stockholders' equity $ 3,395,021 $ 2,427,585
================ ==============
The footnotes presented at the separate "Footnotes to Financial Information"
pages are an integral part of this financial information.
10
<Page>
Omnicare, Inc. and Subsidiary Companies
Condensed Consolidated Statements of Cash Flows, GAAP Basis
(000s)
Unaudited
Three Months Year
--------------------------------------
Ended December 31, 2003
--------------------------------------
Cash flows from operating activities:
Net income $ 61,614 $ 194,368
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation 9,414 37,783
Amortization 5,277 15,237
Provision for doubtful accounts 10,004 44,680
Deferred tax provision 21,929 43,685
Write-off of debt issuance costs - 3,755
Changes in assets and liabilities, net of effects
from acquisition of businesses (121,117) (170,024)
-------------- -------------
Net cash flows from operating activities (12,879) 169,484
-------------- -------------
Cash flows from investing activities:
Acquisition of businesses (63,722) (663,411)
Capital expenditures (5,874) (17,115)
Other 5,091 2,477
-------------- -------------
Net cash flows from investing activities (64,505) (678,049)
-------------- -------------
Cash flows from financing activities:
Borrowings on line of credit facilities and term loans - 749,000
Payments on line of credit facilities and term loans (4,103) (593,103)
Proceeds from long-term borrowings and obligations 75 240,833
Fees paid for financing arrangements (5,030) (34,396)
Gross proceeds from stock offering - 188,629
Proceeds from stock awards and exercise of stock options,
net of stock tendered in payment 6,441 12,275
Dividends paid (2,317) (8,876)
Other - 122
-------------- -------------
Net cash flows from financing activities (4,934) 554,484
-------------- -------------
Effect of exchange rate changes on cash 1,481 3,558
-------------- -------------
Net (decrease) increase in cash and cash equivalents (80,837) 49,477
Cash and cash equivalents at beginning
of period - unrestricted 268,250 137,936
-------------- -------------
Cash and cash equivalents at
end of period - unrestricted $ 187,413 $ 187,413
============== =============
The footnotes presented at the separate "Footnotes to Financial Information"
pages are an integral part of this financial information.
11
<Page>
Omnicare, Inc. and Subsidiary Companies
Reconciliation Statement and Definitions, Non-GAAP Basis (e)
(000s)
Unaudited
Three Months Ended Year Ended
December 31, December 31,
------------------------- ---------------------
2003 2002 2003 2002
----------- ----------- --------- --------
Adjusted operating income (earnings before
interest and income taxes, "EBIT"):
EBIT $ 112,000 $ 75,087 $ 387,583 $ 256,586
Special item (j) - - - 23,195
----------- ---------- ----------- -----------
Adjusted EBIT (j) $ 112,000 $ 75,087 $ 387,583 $ 279,781
=========== ========== =========== ===========
Adjusted income before income taxes:
Income before income taxes $ 96,879 $ 62,426 $ 310,449 $ 203,051
Special items (k) - - 12,666 23,195
----------- ---------- ----------- -----------
Adjusted income before income taxes (k) $ 96,879 $ 62,426 $ 323,115 $ 226,246
=========== ========== =========== ===========
Adjusted net income:
Net income $ 61,614 $ 38,706 $ 194,368 $ 125,906
Special items, net of taxes (k) - - 7,853 14,381
----------- ---------- ----------- -----------
Adjusted net income (k) $ 61,614 $ 38,706 $ 202,221 $ 140,287
=========== ========== =========== ===========
Adjusted earnings per share ("EPS"): (l)
Basic EPS $ 0.60 $ 0.41 $ 1.97 $ 1.34
Special items, net of taxes (k) - - 0.08 0.15
Adjusted basic EPS (k) $ 0.60 $ 0.41 $ 2.05 $ 1.49
=========== ========== =========== ===========
Diluted EPS $ 0.59 $ 0.41 $ 1.93 $ 1.33
Special items, net of taxes (k) - - 0.08 0.15
Adjusted diluted EPS (k) $ 0.59 $ 0.41 $ 2.01 $ 1.48
=========== ========== =========== ===========
Adjusted earnings before interest, income taxes,
depreciation and amortization ("EBITDA"): (m)
EBIT $ 112,000 $ 75,087 $ 387,583 $ 256,586
Depreciation and amortization 14,691 10,899 53,020 45,263
----------- ---------- ----------- -----------
EBITDA (m) 126,691 85,986 440,603 301,849
Special item (j) - - - 23,195
----------- ---------- ----------- -----------
Adjusted EBITDA (j)(m) $ 126,691 $ 85,986 $ 440,603 $ 325,044
=========== ========== =========== ===========
Adjusted net cash flows from operating activities:
EBITDA (m) $ 126,691 $ 85,986 $ 440,603 $ 301,849
Subtract:
Interest expense, net of investment income (15,121) (12,661) (77,134) (53,535)
Income taxes (35,265) (23,720) (116,081) (77,145)
Changes in assets and liabilities, net of effects from
acquisition of businesses (121,117) (33,230) (170,024) (67,711)
Add:
Provision for doubtful accounts 10,004 9,049 44,680 31,163
Deferred tax provision 21,929 3,086 43,685 15,428
Write-off of debt issuance costs - - 3,755 -
Non-cash portion of restructuring charges - - - 9,060
----------- ---------- ----------- -----------
Net cash flows from operating activities (12,879) 28,510 169,484 159,109
Advanced purchases of pharmaceuticals ("pre-buys") (n) 86,062 52,291 86,062 52,291
----------- ---------- ----------- -----------
Adjusted net cash flows from operating activities (n) $ 73,183 $ 80,801 $ 255,546 $ 211,400
=========== ========== =========== ===========
The footnotes presented at the separate "Footnotes to Financial Information"
pages are an integral part of this financial information.
12
<Page>
Omnicare, Inc. and Subsidiary Companies
Reconciliation Statement and Definitions, Non-GAAP Basis (e)
(000s)
Unaudited
(continued from previous page)
Three Months Ended Year Ended
December 31, December 31,
----------------------------------- ----------------------------
2003 2002 2003 2002
---------------- ---------------- ------------ ----------
Adjusted free cash flow: (o)
Net cash flows from operating activities $ (12,879) $ 28,510 $ 169,484 $ 159,109
Capital expenditures (5,874) (7,886) (17,115) (24,648)
Dividends (2,317) (2,127) (8,876) (8,491)
----------- ------------ ----------- -----------
Free cash flow (o) (21,070) 18,497 143,493 125,970
Pre-buys (n) 86,062 52,291 86,062 52,291
----------- ------------ ----------- -----------
Adjusted free cash flow (n)(o) $ 64,992 $ 70,788 $ 229,555 $ 178,261
=========== ============ =========== ===========
Segment Reconciliations - Pharmacy Services
Adjusted EBIT - Pharmacy Services:
EBIT $ 120,204 $ 80,062 $ 412,986 $ 288,196
Special item (j) - - - 6,769
----------- ------------ ----------- -----------
Adjusted EBIT - Pharmacy Services (j) $ 120,204 $ 80,062 $ 412,986 $ 294,965
=========== ============ =========== ===========
Adjusted EBITDA - Pharmacy Services: (m)
EBITDA (m) $ 133,913 $ 89,892 $ 461,901 $ 328,585
Special item (j) - - - 6,769
----------- ------------ ----------- -----------
Adjusted EBITDA - Pharmacy Services (j)(m) $ 133,913 $ 89,892 $ 461,901 $ 335,354
=========== ============ =========== ===========
Segment Reconciliations - CRO Services
Adjusted Sales - CRO Services:
Total net sales (a) $ 34,230 $ 38,248 $ 153,873 $ 165,517
Reimbursable out-of-pockets (a) (5,307) (5,503) (24,820) (26,304)
----------- ------------ ----------- -----------
Adjusted sales (f) $ 28,923 $ 32,745 $ 129,053 $ 139,213
=========== ============ =========== ===========
Adjusted EBIT - CRO Services:
EBIT $ 1,701 $ 5,494 $ 12,562 $ 4,610
Special item (j) - - - 16,426
----------- ------------ ----------- -----------
Adjusted EBIT - CRO Services (j) $ 1,701 $ 5,494 $ 12,562 $ 21,036
=========== ============ =========== ===========
Adjusted EBITDA - CRO Services: (m)
EBITDA (m) $ 2,102 $ 5,997 $ 14,332 $ 6,847
Special item (j) - - - 16,426
----------- ------------ ----------- -----------
Adjusted EBITDA - CRO Services (j)(m) $ 2,102 $ 5,997 $ 14,332 $ 23,273
=========== ============ =========== ===========
Segment - Corporate and Consolidating
EBIT $ (9,905) $ (10,469) $ (37,965) $ (36,220)
----------- ------------ ----------- -----------
EBITDA (m) (9,324) (9,903) (35,630) (33,583)
----------- ------------ ----------- -----------
Consolidated Segment Totals
EBIT $ 112,000 $ 75,087 $ 387,583 $ 256,586
=========== ============ =========== ===========
Adjusted EBIT (j) $ 112,000 $ 75,087 $ 387,583 $ 279,781
=========== ============ =========== ===========
EBITDA (m) $ 126,691 $ 85,986 $ 440,603 $ 301,849
=========== ============ =========== ===========
Adjusted EBITDA (j)(m) $ 126,691 $ 85,986 $ 440,603 $ 325,044
=========== ============ =========== ===========
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"
pages are an integral part of this financial information.
13
<Page>
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 December 31, 2002 and the year ended December
31, 2003 include the dilutive effect of the 5% convertible subordinated
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. For
purposes of the "if converted" calculation, 2,904 and 3,630 shares were
assumed to be converted for the three month period ended December 31, 2002
and year ended December 31, 2003, respectively. Additionally, interest
expense, net of taxes, of $974 and $4,870 for the three month period ended
December 31, 2002 and year ended December 31, 2003, respectively, was
added back to net income for purposes of calculating diluted earnings per
share using this method.
(c) The year ended December 31, 2003 includes a call premium and the write-off
of unamortized debt issuance costs, aggregating $12,666 before taxes
($7,853 after taxes), relating to the Company's 2003 purchase of the
aggregate principal amount of its outstanding 5.0%, $345,000 of
convertible subordinated debentures, as discussed in further detail at (i)
below.
(d) The year ended December 31, 2002 includes a restructuring charge of
$23,195 before taxes ($14,381 after taxes), relating to the Company's
previously disclosed Phase II productivity and consolidation initiative.
(e) 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.
(f) The noted presentation excludes amounts that Omnicare is required to
record in its income statement relating to EITF No. 01-14, as discussed in
further detail at footnote (a) above.
(g) The noted presentation for the year ended December 31, 2003 excludes the
call premium and the write-off of unamortized debt issuance costs, as
discussed in further detail at footnote (c) above.
(h) The noted presentation for the year ended December 31, 2002 excludes the
restructuring charge discussed in further detail at footnote (d) above.
(continued on next page)
14
<Page>
Omnicare, Inc. and Subsidiary Companies
Footnotes to Financial Information
(000s)
Unaudited
(continued from previous page)
(i) During the second quarter of 2003, the Company completed a refinancing in
which it raised $250,000 in a term loan (a portion of which is due within
one year), and completed an offering of $250,000 of 6.125% senior
subordinated notes ("6.125% Senior Notes"), $345,000 of 4.0% contingent
convertible notes and 6,469 shares of its common stock. Omnicare used the
net proceeds from the 6.125% senior subordinated notes and the term loan
to repay the existing credit facility. A portion of the 4.0% contingent
convertible notes and a portion of the net proceeds from the common stock
offering were used to purchase and retire the Company's outstanding 5.0%,
$345,000 of convertible subordinated debentures. The Company also entered
into a four-year $500,000 revolving credit facility during the second
quarter of 2003, which was undrawn at December 31, 2003. The 6.125% Senior
Notes are net of an interest rate swap agreement, which reduced the
carrying value of the 6.125% Senior Notes by $23,178 as of December 31,
2003.
(j) The special item represents the restructuring charge discussed in footnote
(d) above, and relates to the Company's previously disclosed Phase II
productivity and consolidation initiative. Management believes this item
is not related to the ongoing operations of Omnicare.
(k) The special items represent the call premium and the write-off of
unamortized debt issuance costs for the year ended December 31, 2003 and
the restructuring charge for the year ended December 31, 2002, as
discussed in footnotes (c) and (d) above, respectively. The call premium
and the write-off of unamortized debt issuance costs relates to the
Company's purchase of its outstanding 5.0%, $345,000 of convertible
subordinated debentures, and the restructuring charge relates to the
Company's previously disclosed Phase II productivity and consolidation
initiative. Management believes these items are not related to the ongoing
operations of Omnicare.
(l) EPS (basic EPS; special items, 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.
(m) 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 operating cash flows as a
measure of liquidity or net income as an indicator of Omnicare's operating
performance. Omnicare's calculation of EBITDA may differ from the
calculation of EBITDA by others.
(n) Represents pre-buys for the quarter, primarily comprised of the purchasing
of pharmaceuticals in advance of price increases.
(o) 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.
15