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| 8-K - FORM 8-K - OMNICARE INC | form8k-barclays.htm |
Barclays Capital
2011 Global Healthcare Conference
2011 Global Healthcare Conference
March 16, 2011
Exhibit 99.1
Forward-Looking Statements
Except for historical information discussed, the statements made today are
forward-looking statements that involve risks and uncertainties. Investors
are cautioned that such statements are only predictions and that actual
events or results may differ materially.
forward-looking statements that involve risks and uncertainties. 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 this date. 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.
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.
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
the Investor Relations section of our Web site at http://ir.omnicare.com.
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
the Investor Relations section of our Web site at http://ir.omnicare.com.
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Omnicare Today
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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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Management Team Changes
New Team Focused on Execution and Growth
New Team Focused on Execution and Growth
• Appointment of John Workman to Additional Role of President
– In addition to CFO role, oversees purchasing, HR, IT and trade relations
• Additional talent added to Omnicare team
– Chief Executive Officer
– President of Specialty Care
– SVP of Finance
– SVP of Human Resources
– SVP of Trade Relations
– Promoted five operators to lead newly defined LTC divisions
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Transitioning to an Operations-Driven Company
• Focus on corporate culture
– Management team changes
– Instill collaborative environment,
encourage employee innovation
encourage employee innovation
– Organization-wide focus on the customer
– Reinforce a commitment to compliance
• Reallocation of resources
– Align employee interests
– Reshape the organization to bring it
closer to the customer
closer to the customer
– Improve accountability with divisional
realignment
realignment
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Objective is to minimize controllable losses and generate
at least 95% customer retention on a consistent basis
Focus on Customer Service
Early Response to Customer-Focused Initiatives
Early Response to Customer-Focused Initiatives
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Transitioning to an Operations-Driven Company
Improve Sales Performance
Improve Sales Performance
• Reorganization of the sales force
– Reassess alignment of sales force
– Deploy resources in attractive markets
– Improve coordination of selling process
• Investments to enhance selling effectiveness
– Develop industry-leading training program
– Reposition leading technology offering
– Create consistent market message
– Investments in sales tools
– Revamped compensation structure
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Transitioning to an Operations-Driven Company
Focus on Customer Service
Focus on Customer Service
Net Bed
Growth
Growth
Problem
Solution
Result
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Transitioning to an Operations-Driven Company
Initiatives Focused on Productivity Improvements
Initiatives Focused on Productivity Improvements
• Drug purchasing
• Strategic sourcing
• Operating initiatives
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Industry Outlook
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Demographic Trends
Aging Population Shaping Healthcare
Aging Population Shaping Healthcare
• Life expectancy continues to lengthen
• Significant population mix shift towards seniors
Source: U.S. Census Bureau
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Pharmaceutical Market
Trends
Trends
• Branded drugs
• Major market shift to generic drugs
• Development and utilization of
specialty drugs increasing
specialty drugs increasing
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Brand to Generic Drugs
Increasing Utilization of Generics
Increasing Utilization of Generics
(1) Omnicare’s generic prescriptions dispensed as a percent of total scripts
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Major Shift to Generic Drugs
Benefits
Benefits
• Omnicare’s sourcing abilities create unique
opportunity within industry
opportunity within industry
– #1 buyer of generics in long-term care
channel
channel
• Reduces sales, but increases gross profit -
both dollars and margins
both dollars and margins
• Favorable impact on working capital
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Major Shift to Generic Drugs
Typical Life Cycle of Nonexclusive Generic Drug
Typical Life Cycle of Nonexclusive Generic Drug
NOTE: Graph is for illustrative purposes only. Not representative of every generic drug, as each generic drug has unique
characteristics.
characteristics.
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(1) All generic launches are subject to change due to litigation or pediatric exclusivity.
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2011
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2012
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2013
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Fazaclo
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Actos
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Aciphex
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Femara
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Diovan
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Asacol
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Gabitril
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Geodon
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Avodart
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Levaquin
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Invega
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Cymbalta
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Lipitor
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Lexapro
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Humalog
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Primaxin Inj
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Lidoderm
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Lupron Depot
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Uroxatrol
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Plavix
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Niaspan SR
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Vancocin Caps
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Seroquel
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Oxycontin
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Xalatan
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Singulair
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Renagel
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Zyprexa
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Xopenex
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Travatan
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2011-2013 Potential Patent Expirations(1),(2)
Geriatric Market
Geriatric Market
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Specialty Pharmaceuticals
A Growth Industry
A Growth Industry
Pharmaceutical Market Share(1) by Drug Type
Mail order specialty pharmacy
Outsourced services for
biotechnology firms
biotechnology firms
Omnicare’s institutional
pharmacies
pharmacies
Conventional
Drugs, 72%
Drugs, 72%
Other, 19%
Omnicare’s Positioning Within Specialty Pharmaceuticals…
(1) Source: EvaluatePharma
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Growth
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Specialty Care
Growth Outside Institutional Setting
Growth Outside Institutional Setting
Omnicare specialty care growth has been robust…and opportunities
exist to further accelerate growth through:
exist to further accelerate growth through:
• Addition of new leadership
• Coordination of efforts
• Leveraging long-term care business and relationships to create new
opportunities
opportunities
• Penetrate additional disease states
– Primary disease states currently multiple sclerosis and oncology
• Potential additional acquisitions to fill-out portfolio in the future
Two-year CAGR(1) for Omnicare’s specialty care businesses > 20%
(1) Quarterly revenues based on fourth quarter 2010 results for Advanced Care Scripts, RxCrossroads and excelleRx
(as compared with fourth quarter 2008 results)
(as compared with fourth quarter 2008 results)
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Long-Term Care
• Skilled Nursing Facilities
– Organic growth through improved customer
service, technology
service, technology
– Selected acquisitions
• Assisted Living Facilities
– Three-pronged growth opportunity
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Financial Elements
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Fourth Quarter 2010 Highlights
• Scripts dispensed increased 2.1% sequentially
– Scripts benefitted from a full quarter’s impact of the CCRx acquisition
– Utilization relatively even sequentially
– Census was lower, although rate of decline improved again sequentially
• Qtr. ending number of beds served(1) even sequentially
– Patient assistance programs up 5,000; LTC beds 5,000 lower
– Losses 3.7% lower sequentially, 25.7% lower compared to 4Q09
• Net sales, gross profit higher sequentially; gross margin even at 22.0%(2),(3)
• Adjusted EBITDA(2),(3) up 4.4% sequentially to $146.9 million; margin
expansion of 30 basis points to 9.4%
expansion of 30 basis points to 9.4%
• Adjusted EPS(2),(3) of $0.51; 1.9% lower sequentially from $0.52 due to
higher effective tax rate in 4Q10
higher effective tax rate in 4Q10
• $21.9 million returned to shareholders through dividends and share
repurchases
repurchases
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(1) Includes patients served under patient assistance programs.
(2) Excludes discontinued operations.
(3) Excludes special items. A reconciliation of certain 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..
site under ‘Supplemental Financial Information’ from the ‘Investors’ page..
(1) Excludes discontinued operations.
(2) Excludes special items. A reconciliation of certain non-GAAP information is available on Omnicare’s Web site under ‘Supplemental
Financial Information’ from the ‘Investors’ page.
Financial Information’ from the ‘Investors’ page.
Financial Performance
2010 Progression (In $ millions, except per share data)
2010 Progression (In $ millions, except per share data)
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Focus on Cash Flows
(1) Excludes discontinued operations.
(2) Cash flows from continuing operations includes approximately $38 million of settlement payments and approximately $8 million in
tender premium payments in 2Q10, $21 million of settlement payments in 3Q10 and $7 million of separation-related payments
related to three former Omnicare executives in 3Q10.
tender premium payments in 2Q10, $21 million of settlement payments in 3Q10 and $7 million of separation-related payments
related to three former Omnicare executives in 3Q10.
(3) Excludes special items. A reconciliation of certain non-GAAP information is available on Omnicare’s Web site under
‘Supplemental Financial Information’ from the ‘Investors’ page.
‘Supplemental Financial Information’ from the ‘Investors’ page.
2010 YTD Cash Flows from Continuing Operations(1),(2) and Interest Expense vs.
YTD Adjusted EBITDA(1),(3) (in $ millions)
Significant amount of EBITDA translates into cash flow from operations.
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Cash Deployment
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(1) During the second quarter of 2010, Omnicare issued $400 million of 7.75% Senior Subordinated Notes due 2020 and tendered $217 million of 6.75% Senior
Subordinated Notes due 2013. During the fourth quarter of 2010, Omnicare issued $575 million convertible debentures due 2025 and repurchased $525
million of 3.25% convertible debentures due 2035 with a put option in 2015.
Subordinated Notes due 2013. During the fourth quarter of 2010, Omnicare issued $575 million convertible debentures due 2025 and repurchased $525
million of 3.25% convertible debentures due 2035 with a put option in 2015.
(2) Cumulative % Returned = (Dividends Paid + Share Repurchases) / 12/31/09 Market Capitalization of $2,908.4 million.
• Full-year 2010 acquisition spend
largely driven by CCRX acquisition
largely driven by CCRX acquisition
• 4Q10 dividend of $0.0325 per share
• Repurchased an additional 0.8
million shares ($18.2 million) during
4Q10 (4.4 million shares
repurchased in 2010)
million shares ($18.2 million) during
4Q10 (4.4 million shares
repurchased in 2010)
• $99.1 million of authorization
remaining under current share
repurchase program as of Dec. 31,
2010.
remaining under current share
repurchase program as of Dec. 31,
2010.
(1) Assumes convertible debentures due 2035 are put to the company in 2015 with related tax capture included.
(2) Debt amounts shown exclusive of unamortized debt discount.
(3) In $ millions
Capital Structure
Recent capital restructuring initiatives have extended maturities,
providing more flexibility for capital allocation strategies
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(1) Excludes special items and discontinued operations
(2) Effective January 1, 2009 the Company adopted the provisions of the authoritative guidance regarding Accounting for Convertible Debt
Instruments That May be Settled in Cash upon Conversion (Including Partial Cash Settlement). 2008 is restated for this change in accounting.
Instruments That May be Settled in Cash upon Conversion (Including Partial Cash Settlement). 2008 is restated for this change in accounting.
(3) Results have been revised to reflect results of certain home healthcare and related ancillary businesses as discontinued operations.
Credit Profile (1)
Three-Year Trend
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2008 (2),(3)
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2009
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2010
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• Debt/Total Capital
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39.2%
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35.2%
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35.6%
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• Net Debt/Total Capital
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36.9%
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31.9%
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29.7%
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• Cash Position (millions)
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$215
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$275
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$495
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Outlook
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Regulatory Environment
Current Issues
Current Issues
• RUG-IV
– Medicare reimbursement changes impacting SNFs
– Effective 10/1/10
– Intent is to drive up acuity levels in nursing homes
(through a greater mix of clinically complex residents)
(through a greater mix of clinically complex residents)
• Federal Upper Limit (“FUL”) definitions
– No less than 175% of the weighted average manufacturer’s price (“AMP”)
– Effective 10/1/10 (the first FUL list has not yet been published)
– Some Medicaid, facility contracts impacted (Part D contracts restructured to
another reimbursement benchmark)
another reimbursement benchmark)
– In most cases, new FULs would have to be lower than MACs to impact
reimbursement for relevant payers
reimbursement for relevant payers
Anticipate small positive to Omnicare
Anticipate small negative to Omnicare
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Regulatory Environment
Current Issues
Current Issues
• Short-cycle dispensing
– Weekly dispensing for branded drugs dispensed under Part D
– Effective 1/1/12 (although currently in 60-day
comment period)
comment period)
– Expected to impact approximately
6 million scripts, or 5% of prescriptions
dispensed
6 million scripts, or 5% of prescriptions
dispensed
– We believe the automation within
our pharmacies creates an advantage
over competitors not using automation
over competitors not using automation
Anticipate small negative to Omnicare in 2012;
we believe we are best positioned among peers
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2011 Drivers (1)
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Major 2011 Drivers
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1st Half 2011
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2nd Half 2011
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• Brand-to-generic and drug price inflation
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Positive
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Positive
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• Annualized pricing adjustments
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Negative
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Neutral
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• Annualized impact of bed losses
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Negative
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Neutral
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• Impact of payroll costs
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Negative
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Negative
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• Productivity improvements
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Positive
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Positive
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2011 drivers point to a stronger 2nd half than 1st half
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(1) Information on this slide is not intended to represent the company’s guidance for 2011.
Forward-Looking Major Drivers (1)
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Major Drivers
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2011
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2012
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2013
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• Brand-to-generic
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Positive
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Positive
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Neutral
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• Organic growth - Long-term care
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Neutral
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Positive
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Positive
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• Specialty care (2)
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Neutral
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Positive
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Positive
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• Omnicare-at-home
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Neutral
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Neutral
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Positive
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Omnicare expects a double digit CAGR in adjusted EPS
for the three-year period ending 2013.
for the three-year period ending 2013.
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(1) Information on this slide is not intended to represent the company’s financial guidance for 2011, 2012 or 2013
(2) Includes an assumption for acquisitions
Disciplined use of cash flow
Omnicare’s Fundamental Value Drivers
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Barclays Capital
2011 Global Healthcare Conference
2011 Global Healthcare Conference
March 16, 2011