[LETTERHEAD OF OMNICARE]
FOR IMMEDIATE RELEASE
CONTACT:
Cheryl D. Hodges
(606)392-3331
OMNICARE ANNOUNCES PRELIMINARY SECOND QUARTER 1999 RESULTS
COVINGTON, KENTUCKY, June 17, 1999. . . . Omnicare, Inc.
(NYSE:OCR) today announced that based upon a review of its recent operating
results the Company expects to report earnings per diluted share of $.25 to $.30
for the second quarter ended June 30, 1999 as compared with consensus analysts'
estimates of $.33 to $.34. Final results for the quarter are expected to be
reported in late July.
The expected shortfall in earnings results primarily from
lower-than-anticipated occupancy in many client skilled nursing facilities,
particularly relating to Medicare-funded residents, and, more importantly, a
significantly diminished acuity level among residents of these facilities.
Joel F. Gemunder, President of Omnicare, explained, "It has
become increasingly apparent in recent weeks that the new Prospective Payment
System for Medicare residents of skilled nursing facilities ("PPS") has created
a much more turbulent environment than anticipated. While we experienced
PPS-related pricing pressure from our skilled nursing facility clients late in
1998 and early in 1999, much of this pressure was offset by market share gains
through the addition of new business; the benefits of increased compliance with
our proprietary geriatric formulary, the Omnicare Geriatric Pharmaceutical Care
Guidelines'r'; reduced operating costs and increased efficiency. However, the
reluctance on the part of skilled nursing facilities to admit Medicare
residents, particularly those requiring complex care, owing to concerns relating
to the inadequacy of reimbursement under PPS has caused Medicare census to
weaken in many areas.
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Moreover, the mix of residents in skilled nursing facilities also has adversely
affected our results as skilled nursing facilities have attempted to avoid
certain high acuity patients which impacts overall utilization of drugs,
particularly infusion therapy. Reimbursement concerns have increasingly driven
many nursing facilities to admit patients with lower cost drug needs or those
funded by payors other than Medicare."
"We continue to believe that the confusion surrounding the
complexities of PPS reimbursement, and even its inadequacy, are being addressed
and that, long-term, skilled nursing facilities should find it in their best
interests to admit all patients, including those with higher acuity needs funded
by Medicare; however, today the difficulty in transitioning to PPS is creating
volatility and has adversely impacted the predictability and outlook for our
near-term earnings. Nevertheless, we believe that, even in this environment,
Omnicare is well-positioned to gain additional market share owing to the success
of its geriatric formulary and other clinical programs in lowering costs for
skilled nursing facilities while providing enhanced quality of care.
Additionally, we are aggressively pursuing opportunities to lower our operating
costs through consolidation of functions and facilities, re-negotiation or
elimination of uneconomic PPS contracts, productivity initiatives and other cost
reduction measures," he added.
Concluding, Mr. Gemunder said, "While we are frustrated that the
implementation of PPS has created near-term volatility in our earnings, we
nonetheless remain convinced of the strength of the underlying fundamentals of
our business and the soundness of our growth strategy. The U.S. population
continues to age and pharmaceuticals are the most cost-effective means of
treating the elderly. Our pharmaceutical distribution and clinical services are
in line with the need to lower health care costs. The acceleration of new drug
discovery will drive continued outsourcing of research and development services
which bodes well for our contract research (CRO) business. Strategically, we
view the institutional pharmacy business as a sound one with ample growth
prospects and continued
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opportunities to leverage and diversify the revenue and profit stream of
Omnicare's business."
Omnicare, based in Covington, Kentucky, is a leading geriatric
pharmaceutical care company. Currently serving approximately 617,000 residents
in more than 8,600 long-term care facilities in 43 states, Omnicare is the
nation's largest provider of professional pharmacy, related consulting and data
management services for skilled nursing assisted living and other institutional
health care providers. Omnicare also provides comprehensive clinical research
services for the pharmaceutical and biotechnology industries.
Statements in this press release concerning Omnicare's business
outlook or position or future economic performance, including expectations
concerning second quarter earnings; expectations concerning Medicare census;
expectations concerning market share; the impact of Omnicare's clinical
programs; expectations regarding cost reduction opportunities; opportunities for
growth; 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 known and unknown risks, uncertainties, contingencies and
other factors that could cause 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; variations in Omnicare's quarterly
operating results, particularly the impact of results in May and June 1999;
trends for the continued growth of the businesses of Omnicare; the realization
of anticipated revenues, profitability and costs synergies; the continued
availability of suitable acquisition candidates and the successful integration
of acquired companies; pricing and other competitive factors in the industry;
the effect of new government regulations and/or legislative initiatives,
including those relating to reimbursement policies and in the interpretation and
application of such policies; the failure of Omnicare to obtain or maintain
required
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regulatory approvals or licenses; loss or delay of contracts pertaining to
Omnicare's contract research organization business for regulatory or other
reasons; the impact of consolidation in the pharmaceutical industry; volatility
in Omnicare's stock price; the demand for Omnicare's products and services;
variations in costs or expenses; the impact of the Year 2000 issues; 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 our Corporate News on the Net site
at http://www.Businesswire.com/cnn/ocr.htm.
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