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| 8-K - FORM 8-K LAZARD - OMNICARE INC | form8-k.htm |
Lazard Capital Markets 8th Annual
Healthcare Conference
November 16, 2011
Forward-Looking Statements
Forward-looking Statements
Certain of the statements made today and listed within the following presentation slides are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, all statements regarding the intent, belief or current
expectations regarding the matters discussed in this presentation. Such forward-looking statements are based on management’s current expectations and
involve known and unknown risks, uncertainties, contingencies and other factors that could cause results, performance or achievements to differ materially from
those stated. The most significant of these risks and uncertainties are described in the Company’s Form 10-K, Form 10-Q and Form 8-K reports filed with the
Securities and Exchange Commission. Investors are cautioned that such statements are only predictions and that actual events or results may differ materially.
Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, all statements regarding the intent, belief or current
expectations regarding the matters discussed in this presentation. Such forward-looking statements are based on management’s current expectations and
involve known and unknown risks, uncertainties, contingencies and other factors that could cause results, performance or achievements to differ materially from
those stated. The most significant of these risks and uncertainties are described in the Company’s Form 10-K, Form 10-Q and Form 8-K reports filed with the
Securities and Exchange Commission. Investors are cautioned that such statements are only predictions and that actual events or results may differ materially.
These forward-looking statements speak only as of the date this presentation was originally given. We undertake no obligation to publicly release the results of
any revisions to the forward-looking statements made today, to reflect events or circumstances after today or to reflect the occurrence of unanticipated events.
any revisions to the forward-looking statements made today, to reflect events or circumstances after today or to reflect the occurrence of unanticipated events.
To facilitate comparisons and enhance understanding of core operating performance, certain financial measures have been adjusted from the comparable
amount under Generally Accepted Accounting Principles (GAAP). A detailed reconciliation of adjusted numbers to GAAP is posted in the Investor Relations
section of our Web site at http://ir.omnicare.com. Additionally, all amounts are presented on a continuing operations basis, unless otherwise stated.
amount under Generally Accepted Accounting Principles (GAAP). A detailed reconciliation of adjusted numbers to GAAP is posted in the Investor Relations
section of our Web site at http://ir.omnicare.com. Additionally, all amounts are presented on a continuing operations basis, unless otherwise stated.
Important Additional Information
On September 7, 2011, Philadelphia Acquisition Sub, Inc. ("Purchaser"), a wholly owned subsidiary of Omnicare, Inc. ("Omnicare"), commenced a tender offer to
purchase all issued and outstanding shares of common stock, par value $0.01 per share (together with the associated preferred share purchase rights, the
"Shares") of PharMerica Corporation ("PharMerica") at a price of $15.00 per Share, net to the seller in cash, without interest and subject to any required
withholding of taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, constitute the "Offer"). The Offer is scheduled to expire at 5:00 p.m., New York City time, on December 2, 2011,
unless extended. If the Offer is extended, Omnicare will issue a press release announcing the extension no later than 9:00 a.m., New York City time, on the next
business day following the date the Offer was scheduled to expire. The Offer is conditioned on, among other things, there being validly tendered and not
withdrawn at least a majority of the total number of Shares outstanding on a fully diluted basis, the board of directors of PharMerica redeeming or invalidating its
"poison pill" stockholder rights plan, receipt of regulatory approvals and other customary closing conditions as described in the Offer to Purchase. The Offer is
not subject to any financing contingencies.
purchase all issued and outstanding shares of common stock, par value $0.01 per share (together with the associated preferred share purchase rights, the
"Shares") of PharMerica Corporation ("PharMerica") at a price of $15.00 per Share, net to the seller in cash, without interest and subject to any required
withholding of taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, constitute the "Offer"). The Offer is scheduled to expire at 5:00 p.m., New York City time, on December 2, 2011,
unless extended. If the Offer is extended, Omnicare will issue a press release announcing the extension no later than 9:00 a.m., New York City time, on the next
business day following the date the Offer was scheduled to expire. The Offer is conditioned on, among other things, there being validly tendered and not
withdrawn at least a majority of the total number of Shares outstanding on a fully diluted basis, the board of directors of PharMerica redeeming or invalidating its
"poison pill" stockholder rights plan, receipt of regulatory approvals and other customary closing conditions as described in the Offer to Purchase. The Offer is
not subject to any financing contingencies.
This communication does not constitute an offer to buy or solicitation of an offer to sell any securities. The Offer is being made pursuant to a tender offer
statement on Schedule TO (including the Offer to Purchase, Letter of Transmittal and other related tender offer materials) that was filed on September 7, 2011
by Omnicare and Purchaser with the SEC. These materials, as they may be amended from time to time, contain important information, including the terms and
conditions of the Offer, that should be read carefully before any decision is made with respect to the Offer. Investors and security holders of PharMerica are able
to obtain free copies of these documents and other documents filed with the SEC by Omnicare through the web site maintained by the SEC at
http://www.sec.gov or by directing a request to the Corporate Secretary of Omnicare, Inc., 100 East RiverCenter Boulevard, Suite 1600, Covington, Kentucky
41011. Free copies of any such documents can also be obtained by directing a request to Omnicare's information agent, D.F. King & Co., Inc., by phone at
(212) 269-5550 or toll-free at (800) 769-7666 or by email at info@dfking.com.
statement on Schedule TO (including the Offer to Purchase, Letter of Transmittal and other related tender offer materials) that was filed on September 7, 2011
by Omnicare and Purchaser with the SEC. These materials, as they may be amended from time to time, contain important information, including the terms and
conditions of the Offer, that should be read carefully before any decision is made with respect to the Offer. Investors and security holders of PharMerica are able
to obtain free copies of these documents and other documents filed with the SEC by Omnicare through the web site maintained by the SEC at
http://www.sec.gov or by directing a request to the Corporate Secretary of Omnicare, Inc., 100 East RiverCenter Boulevard, Suite 1600, Covington, Kentucky
41011. Free copies of any such documents can also be obtained by directing a request to Omnicare's information agent, D.F. King & Co., Inc., by phone at
(212) 269-5550 or toll-free at (800) 769-7666 or by email at info@dfking.com.
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Omnicare Today…
A Leading Provider of Pharmacy Services
A Leading Provider of Pharmacy Services
• Long-term care pharmacy
– Pharmacy services for skilled nursing,
assisted living, chronic care and other settings
assisted living, chronic care and other settings
– 47 states, District of Columbia and Canada
– Dispenses over 110 million prescriptions/year
– Industry leader
• Specialty care
– Supports patients, providers, care-givers,
nurses, physicians and bio-pharmaceutical
companies
nurses, physicians and bio-pharmaceutical
companies
– Dispenses over 8 million prescriptions/year
– Emerging provider with growth rates
outpacing industry average
outpacing industry average
Long-term care pharmacy and specialty care provide two attractive platforms for growth
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Transitioning to an Operations-Driven Company
Establishing Consistent Organic Growth in LTC
Establishing Consistent Organic Growth in LTC
• Focus on customer retention
– Revamp corporate culture, increase employee engagement
– Align incentive programs with customer service to improve retention
– Reshape the organization to bring it closer to the customer
– Organization-wide focus on the customer
– Objective is to a achieve 95% customer retention rate
• Investments being made to accelerate sales results
– Reorganization of sales force - improve coordination of selling process
– Investments in sales tools, training programs
– Deploy resources in attractive markets
– Refine go-to-market message
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Omnicare is further along with efforts to improve service delivery,
with sales and marketing investments now underway
3Q11 YTD net organic bed loss is 49.5% lower than 3Q10 YTD
Transitioning to an Operations-Driven Company
Establishing Consistent Organic Growth in LTC
Establishing Consistent Organic Growth in LTC
5
43.2%
better than
2010
better than
2010
Transitioning to an Operations-Driven Company
Repositioning Specialty Care Group for Elevated Growth
Repositioning Specialty Care Group for Elevated Growth
Omnicare specialty care growth has been robust…and opportunities
exist to further accelerate growth through:
exist to further accelerate growth through:
•Continued improvements to the organizational structure
– Investments made in manufacturer-focused sales organization
– Platform-specific experts added to expand breadth of knowledge
•Expanding into other specialty-focused platforms
•Penetrating additional disease states in specialty pharmacy platform
– Primary disease states currently multiple sclerosis and oncology
•Leveraging long-term care business to create new opportunities
Two-year CAGR(1) for Omnicare’s specialty care businesses > 20%
(1) Quarterly revenues based on fourth quarter 2009 results for Advanced Care Scripts, RxCrossroads and excelleRx
(as compared with third-quarter 2009 results)
(as compared with third-quarter 2009 results)
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Transitioning to an Operations-Driven Company
Creating More Standardization
Creating More Standardization
• Technological advancements
– On-site medication availability technology
(pilot)
(pilot)
• Establish benchmarks
– Performance targets drives greater
efficiencies
efficiencies
– Six Sigma quality standards
• Strategic Sourcing
– Leverage assets to maximize efficiencies
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Demographic Trends
Aging Population Shaping US Healthcare System
Aging Population Shaping US Healthcare System
• Life expectancy continues to lengthen
Source: U.S. Census Bureau
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Persons over age 85 more likely to reside in a skilled nursing facility
Pharmaceutical Market Dynamics
Increasing Utilization of Generics
Increasing Utilization of Generics
(1) Omnicare’s generic prescriptions dispensed as a percent of total scripts
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Generic dispensing rate has increased every quarter since 2006
Financial Elements
Third Quarter 2011 Highlights
• Gross profit increased 2.9% sequentially to $346.1M on 0.7% decrease in sales
– Gross margin sequentially higher by 79 bps to 22.4%, reflecting higher generic
dispensing rates
dispensing rates
• Cash flows from continuing operations of $167.1M increased 22.1% sequentially
and 43.7% over 3Q10.
and 43.7% over 3Q10.
• Adjusted EBITDA(1) increased 7.5% sequentially to $157.2 million
• Adjusted EPS(1) of $0.54 as compared to 2Q11 of $0.50 and 3Q10 of $0.53
• Scripts flat versus 3Q10; 0.7% lower than 2Q11
– Utilization weaker, consistent with industry
– Generic dispensing rate increased 60 basis points sequentially
• Qtr. ending number of beds/patient assistance program (PAP) patients up 2,000
sequentially
sequentially
– Beds 10,000 higher; PAP patients down 8,000
– Net organic bed loss of 8,000 decreased 27.3% from 2Q11 organic net bed loss of
11,000, and decreased 46.7% from 3Q10 organic net bed loss of 15,000
11,000, and decreased 46.7% from 3Q10 organic net bed loss of 15,000
• $54.6 million returned to shareholders through share repurchases and dividends
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(1) Excludes special items. A reconciliation of non-GAAP information has been attached to our press release and is also available on our Web site under
‘Supplemental Financial Information’ from the ‘Investors’ page.
‘Supplemental Financial Information’ from the ‘Investors’ page.
Financial Elements
Focus on Cash Flow
Focus on Cash Flow
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• 17.5% cash flow from operations yield based on current market
capitalization(2)
capitalization(2)
Quarterly Cash Flows from Continuing Operations(1) 2011 vs. 2010 (in $ millions)
(1) Excludes discontinued operations.
(2) As of the close of trading on 10/31/2011
Omnicare’s Fundamental Value Drivers
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Lazard Capital Markets 8th Annual
Healthcare Conference
November 16, 2011