Attached files
| file | filename |
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| 8-K - 8-K - OMNICARE INC | a8-kq32014pressreleaseshell.htm |
| EX-99.2 - EXHIBIT - OMNICARE INC | ocrerex992q32014.htm |
Exhibit 99.1
news release
Omnicare Reports Third-Quarter 2014 Financial Results;
Company Updates Full-Year 2014 Guidance
CINCINNATI, October 24, 2014 - Omnicare, Inc. (NYSE:OCR) reported today financial results for its third quarter ended September 30, 2014.
Third-Quarter Highlights:
• | Net sales increase of 6.1% to $1.6 billion |
• | Adjusted cash earnings per diluted share from continuing operations 6.8% higher to $0.94; GAAP earnings per diluted share of $0.65 |
• | Adjusted operating income from continuing operations increase of 5.8% to $153 million |
"We are pleased with our solid quarterly financial performance," said Nitin Sahney, Omnicare's Chief Executive Officer. "Throughout the year, we have continued our progress in executing our long-term strategic plan through an ongoing focus on growing our core platforms and demonstrating discipline within our operations. The third quarter marked a continuation of this journey, as we exhibited further strength in our operating results while making greater inroads within the markets in which we compete. As we further transform our organization into an integrated and diversified healthcare services company, we believe we will continue to produce favorable results for our shareholders, clients and employees."
Third-Quarter Results
Financial results from continuing operations for the quarter ended September 30, 2014, as compared with the same prior-year period, were as follows:
• | Net sales were $1,608 million versus $1,515 million |
• | Gross profit was $351 million as compared with $352 million |
• | GAAP earnings (loss) per diluted share was $0.65 versus $(0.68) |
• | Adjusted cash earnings per diluted share was $0.94 versus $0.88 |
• | Adjusted EBITDA was $180 million versus $172 million |
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Cash flows used in continuing operations for the quarter ended September 30, 2014 were $36 million, including previously announced and recorded litigation settlement payments of $120 million, versus $189 million in the comparable prior-year quarter.
Mr. Sahney continued, "For the third quarter, we reported solid year-over-year revenue growth of 6.1%, with each of our core businesses contributing to the increase. Our operating performance was also bolstered by another solid performance within our Specialty Care Group, which generated a 27.4% increase in operating profit. Additionally, we continued to realize the benefit of our ongoing efficiency initiatives across our business, with operating efficiencies contributing to a 23 basis-point sequential expansion in adjusted operating margin to 9.5%."
Year-to-Date Results
Financial results from continuing operations for the nine months ended September 30, 2014, as compared with the same prior-year period, were as follows:
• | Net sales were $4,790 million versus $4,477 million |
• | Gross profit was $1,064 million as compared with $1,061 million |
• | GAAP earnings per diluted share was $1.81 versus $0.24 |
• | Adjusted cash earnings per diluted share was $2.77 versus $2.57 |
• | Adjusted EBITDA was $534 million versus $502 million |
Cash flows from operating activities of continuing operations for the nine months ended September 30, 2014, including the previously announced and recorded litigation settlement payments of $120 million, were $355 million versus $456 million in the comparable prior-year period.
Segment Information
Financial results for the Long-Term Care Group for the third-quarter ended September 30, 2014 were as follows:
• | Net sales of $1,183 million were 2.2% higher than $1,158 million in the same prior-year period |
• | Adjusted operating income of $159 million was in-line with the same prior-year period |
Financial results for the Specialty Care Group for the third-quarter ended September 30, 2014 were as follows:
• | Net sales of $425 million were 18.9% higher than $357 million in the same prior-year period |
• | Operating income of $34 million increased 27.4% from $27 million in the same prior-year period |
To facilitate comparisons and to enhance the understanding of core operating performance, discussions in this news release include financial measures that are adjusted from the comparable amounts under GAAP to exclude the impact of the
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special items discussed elsewhere herein, and to present results on a continuing operations basis. For a detailed presentation of reconciling items and related definitions and components, please refer to the attached schedules or to reconciliation schedules posted at the Investor Relations section of Omnicare's website at http://ir.omnicare.com. Additionally, the Company will make supplemental slides available in the same section on its website today that will include the number of scripts dispensed and other information relevant to Omnicare's operations.
Special Items
The results for the third-quarters ended September 30, 2014 and 2013 include the impact of special items and cash EPS adjustments as follows:
Three months ended September 30, | Nine months ended September 30, | |||||||
2014 | 2013 | 2014 | 2013 | |||||
After-tax impact | Per diluted share | After-tax impact | Per diluted share | After-tax impact | Per diluted share | After-tax impact | Per diluted share | |
Special Items Adj. | $11.5M | $0.11 | $144.7M | $1.30 | $41.8M | $0.39 | $190.0M | $1.73 |
Cash EPS Adj. | $19.7M | $0.19 | $22.3M | $0.20 | $59.5M | $0.56 | $64.8M | $0.59 |
All special items and cash EPS adjustments have been described in further detail in the “Footnotes and Definitions to Financial Information” section elsewhere herein.
Outlook
Based upon its solid nine-month results, Omnicare increased the lower end of its expectations for adjusted cash earnings per diluted share and reaffirmed other elements of its full-year guidance to reflect the following:
Original Guidance | Previous Guidance | Current Guidance | |
Revenue | $6.3B to $6.4B | $6.3B to $6.4B | $6.3B to $6.4B |
Adjusted cash earnings per diluted share (excluding special items) | $3.64 to $3.72 | $3.64 to $3.72 | $3.70 to $3.72 |
Cash flows from operations (excluding settlement payments) | $475M to $550M | $500M to $550M | $500M to $550M |
Webcast Today
Omnicare will hold a conference call to discuss its third-quarter 2014 financial results today, Friday, October 24, at 9:00 a.m. ET. A live webcast of the conference call and supplemental slides will be accessible from the Investor Relations section of Omnicare's website at http://ir.omnicare.com. An archived replay will be made available on the website following the conclusion of the conference call.
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About Omnicare
Omnicare, Inc., a Fortune 500 company based in Cincinnati, Ohio, provides comprehensive pharmaceutical services to patients and providers across the United States. As the market-leader in professional pharmacy, related consulting and data management services for skilled nursing, assisted living and other chronic care institutions, Omnicare leverages its unparalleled clinical insight into the geriatric market along with some of the industry's most innovative technological capabilities to the benefit of its long-term care customers. Omnicare also provides specialty pharmacy and key commercialization services for the bio-pharmaceutical industry through its Specialty Care Group. For more information, visit www.omnicare.com.
Forward-looking Statements
In addition to historical information, this report contains certain statements that constitute “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 or incorporated by reference in this document (including statements as to “beliefs,” “expectations,” “anticipations,” “intentions” or similar words) and all statements which are not statements of historical fact. Such forward-looking statements, together with other statements that are not historical, 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 and include, but are not limited to: overall economic, financial, political and business conditions; trends in the long-term healthcare and pharmaceutical industries; the Company’s ability to attract new clients and service contracts and retain existing clients and service contracts; the Company’s ability to identify, finance and consummate acquisitions on favorable terms or at all; trends for the continued growth of the Company's businesses; changes in drug pricing; delays and reductions in reimbursement by the government and other payors to the Company and its customers; the overall financial condition of the Company's customers and the ability of the Company to assess and react to such financial condition; the ability and willingness of the Company’s vendors and business partners to continue to provide products and services to the Company; the successful integration of acquired companies and realization of contemplated synergies; the continued availability of suitable acquisition candidates; the ability to attract and retain skilled management; competition for qualified staff in the healthcare industry; variations in demand for the Company's products and services; variations in costs or expenses; the Company’s ability to implement productivity, consolidation and cost reduction efforts and to realize anticipated benefits; the potential impact of legislation, government regulations, and other government action and/or executive orders, including those relating to Medicare Part D, its implementing regulations and any subregulatory guidance; reimbursement and drug pricing policies and changes in the interpretation and application of such policies, including changes in calculation of average wholesale price; discontinuation of reporting average wholesale price, and/or implementation of new pricing benchmarks; legislative and regulatory changes impacting long term care pharmacies or specialty pharmacies; government budgetary pressures and changes, including federal and state budget shortfalls; efforts by payors to control costs; changes to or termination of the Company's contracts with pharmaceutical benefit managers, Medicare Part D Plan sponsors and/or commercial health insurers or changes in the proportion of the Company's business covered by specific contracts; the outcome of pending and future legal or contractual disputes; potential liability for losses not covered by, or in excess of, insurance; the impact of executive separations; the impact of benefit plan terminations; the impact of differences in actuarial assumptions and estimates as compared to eventual outcomes; events or circumstances that could result in an impairment of assets, including but not limited to, goodwill and identifiable intangible assets; our ability to successfully complete planned divestitures; market conditions; the outcome of audit, compliance, administrative, regulatory, or investigatory reviews; volatility in the market for the Company's stock and in the financial markets generally; access to adequate capital and financing on acceptable terms; changes in our credit ratings given by rating agencies; timing of conversions of our convertible debt securities; changes in tax laws and regulations; changes in
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accounting rules and standards; the impacts of potential cybersecurity risks and/or incidents; costs to comply with the Company's Corporate Integrity Agreement; and unexpected costs and interruptions from the implementation of our new information technology system. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, the Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Except as otherwise required by law, the Company does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
# # #
Contact:
Patrick C. Lee
(513) 719-1507
patrick.lee@omnicare.com
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Omnicare, Inc. and Subsidiary Companies
Summary Consolidated Statements of Income, GAAP Basis
($000s, except per share amounts)
Unaudited
Three months ended | Nine months ended | ||||||||||||||
September 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | ||||||||||||
Net sales | $ | 1,608,055 | $ | 1,515,168 | $ | 4,789,677 | $ | 4,477,229 | |||||||
Cost of sales | 1,256,595 | 1,163,197 | 3,725,533 | 3,416,039 | |||||||||||
Gross profit | 351,460 | 351,971 | 1,064,144 | 1,061,190 | |||||||||||
Selling, general and administrative expenses | 178,940 | 182,668 | 549,816 | 565,276 | |||||||||||
Provision for doubtful accounts | 19,911 | 24,963 | 62,562 | 75,113 | |||||||||||
Settlement, litigation and other related charges | 12,868 | 143,484 | 27,467 | 169,615 | |||||||||||
Other charges | 3,999 | 61,632 | 25,559 | 96,906 | |||||||||||
Operating income (loss) | 135,742 | (60,776 | ) | 398,740 | 154,280 | ||||||||||
Interest expense, net of investment income | (28,717 | ) | (34,925 | ) | (88,138 | ) | (94,011 | ) | |||||||
Income (loss) from continuing operations before income taxes | 107,025 | (95,701 | ) | 310,602 | 60,269 | ||||||||||
Income tax provision | 38,948 | (26,350 | ) | 117,641 | 34,004 | ||||||||||
Income (loss) from continuing operations | 68,077 | (69,351 | ) | 192,961 | 26,265 | ||||||||||
(Loss) income from discontinued operations | (3,246 | ) | 3,042 | (42,385 | ) | 13,999 | |||||||||
Net income (loss) | $ | 64,831 | $ | (66,309 | ) | $ | 150,576 | $ | 40,264 | ||||||
Earnings (loss) per common share - Diluted: | |||||||||||||||
Continuing operations | $ | 0.65 | $ | (0.68 | ) | $ | 1.81 | $ | 0.24 | ||||||
Discontinued Operations | (0.03 | ) | 0.03 | (0.40 | ) | 0.13 | |||||||||
Net Income (loss) | $ | 0.61 | $ | (0.65 | ) | $ | 1.42 | $ | 0.37 | ||||||
Weighted average number of common shares outstanding: | |||||||||||||||
Diluted | $ | 105,548 | $ | 101,811 | $ | 106,450 | $ | 109,612 | |||||||
The footnotes and definitions presented at the separate "Footnotes and Definitions to Financial Information" pages are an integral part of this financial information.
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Omnicare, Inc. and Subsidiary Companies
Consolidated Balance Sheets
($000s)
Unaudited
September 30, 2014 | December 31, 2013 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 286,943 | $ | 356,001 | |||
Accounts receivable, less allowances | 651,224 | 695,684 | |||||
Inventories | 494,563 | 512,418 | |||||
Deferred income tax benefits | 56,084 | 135,094 | |||||
Other current assets | 315,165 | 265,536 | |||||
Current assets of discontinued operations | — | 49,995 | |||||
Total current assets | 1,803,979 | 2,014,728 | |||||
Properties and equipment, at cost less accumulated depreciation | 330,601 | 305,888 | |||||
Goodwill | 4,060,683 | 4,057,456 | |||||
Identifiable intangible assets, less accumulated amortization | 106,425 | 129,974 | |||||
Other noncurrent assets | 95,649 | 96,722 | |||||
Noncurrent assets of discontinued operations | — | 87,078 | |||||
Total noncurrent assets | 4,593,358 | 4,677,118 | |||||
Total assets | $ | 6,397,337 | $ | 6,691,846 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 220,288 | $ | 181,022 | |||
Accrued employee compensation | 56,394 | 50,240 | |||||
Current debt | 495,713 | 527,204 | |||||
Other current liabilities | 166,324 | 355,845 | |||||
Current liabilities of discontinued operations | — | 18,846 | |||||
Total current liabilities | 938,719 | 1,133,157 | |||||
Long-term debt, notes and convertible debentures | 1,411,470 | 1,418,819 | |||||
Deferred income tax liabilities | 1,022,857 | 1,012,733 | |||||
Other noncurrent liabilities | 60,701 | 53,835 | |||||
Noncurrent liabilities of discontinued operations | — | 1,398 | |||||
Total noncurrent liabilities | 2,495,028 | 2,486,785 | |||||
Total liabilities | 3,433,747 | 3,619,942 | |||||
Convertible debt | 308,787 | 331,101 | |||||
Stockholders' equity | 2,654,803 | 2,740,803 | |||||
Total liabilities and stockholders' equity | $ | 6,397,337 | $ | 6,691,846 | |||
The footnotes and definitions presented at the separate "Footnotes and Definitions to Financial Information" pages are an integral part of this financial information.
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Omnicare, Inc. and Subsidiary Companies
Condensed Consolidated Statements of Cash Flows, GAAP Basis
($000s)
Unaudited
September 30, 2014 | |||||||
Three months ended | Nine months ended | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 64,831 | $ | 150,576 | |||
Loss from discontinued operations | 3,246 | 42,385 | |||||
Adjustments to reconcile net income to net cash flows from operating activities: | |||||||
Depreciation | 14,733 | 43,010 | |||||
Amortization | 18,599 | 57,419 | |||||
Debt redemption loss and costs, net | 5 | 8,419 | |||||
Disposition of business, net | 285 | 805 | |||||
Gale/Silver settlement payments, net | (120,000 | ) | (120,000 | ) | |||
Changes in certain assets and liabilities, net of effects from acquisition and divestiture of businesses: | |||||||
Accounts receivable, net of provision for doubtful accounts | 30,284 | 15,848 | |||||
Inventories | (86,773 | ) | 17,807 | ||||
Current and noncurrent assets | (10,435 | ) | (20,853 | ) | |||
Accounts payable | (13,030 | ) | 58,399 | ||||
Accrued employee compensation | (6,462 | ) | 6,389 | ||||
Current and noncurrent liabilities | 69,051 | 94,350 | |||||
Net cash flows (used in) from operating activities of continuing operations | (35,666 | ) | 354,554 | ||||
Net cash flows (used in) from operating activities of discontinued operations | (5,297 | ) | 863 | ||||
Net cash flows (used in) from operating activities | (40,963 | ) | 355,417 | ||||
Cash flows from investing activities: | |||||||
Divestiture of businesses, net | 64,080 | 71,194 | |||||
Capital expenditures | (19,848 | ) | (67,871 | ) | |||
Other | (58 | ) | (18 | ) | |||
Net cash flows from investing activities of continuing operations | 44,174 | 3,305 | |||||
Net cash flows used in investing activities of discontinued operations | (133 | ) | (863 | ) | |||
Net cash flows from investing activities | 44,041 | 2,442 | |||||
Cash flows from financing activities: | |||||||
Payments on term loans | (5,313 | ) | (15,938 | ) | |||
Payments on long-term borrowings and obligations | (1,868 | ) | (176,983 | ) | |||
Decrease in cash overdraft balance | (12,916 | ) | (19,786 | ) | |||
Payments for Omnicare common stock repurchases | — | (160,438 | ) | ||||
Proceeds for stock awards and exercise of stock options, net of stock tendered in payment | 2,427 | (293 | ) | ||||
Dividends paid | (19,440 | ) | (58,419 | ) | |||
Other | 819 | 4,940 | |||||
Net cash flows used in financing activities | (36,291 | ) | (426,917 | ) | |||
Net decrease in cash and cash equivalents | (33,213 | ) | (69,058 | ) | |||
Less decrease in cash and cash equivalents from discontinued operations | (5,430 | ) | — | ||||
Decrease in cash and cash equivalents from continuing operations | (27,783 | ) | (69,058 | ) | |||
Cash and cash equivalents at beginning of period | 314,726 | 356,001 | |||||
Cash and cash equivalents at end of period | $ | 286,943 | $ | 286,943 | |||
The footnotes and definitions presented at the separate "Footnotes and Definitions to Financial Information" pages are an integral part of this financial information.
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Omnicare, Inc. and Subsidiary Companies
Reconciliation Statement and Definitions, Non-GAAP Basis
($000s, except per share amounts)
Unaudited
Three months ended | Nine months ended | ||||||||||||||
September 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | ||||||||||||
Adjusted earnings per share ("EPS") from continuing operations: | |||||||||||||||
Diluted earnings (loss) per share from continuing operations | $ | 0.65 | $ | (0.68 | ) | $ | 1.81 | $ | 0.24 | ||||||
Amount related to adjusted diluted shares | — | 0.05 | — | — | |||||||||||
Special Items: (a) | |||||||||||||||
Settlement, litigation and other related charges | 0.05 | 0.87 | 0.13 | 1.03 | |||||||||||
Other charges | 0.02 | 0.37 | 0.15 | 0.57 | |||||||||||
Amortization of discount on convertible notes | 0.04 | 0.03 | 0.11 | 0.10 | |||||||||||
Debt redemption costs | — | 0.03 | — | 0.03 | |||||||||||
Total Special Items | 0.11 | 1.30 | 0.39 | 1.73 | |||||||||||
Cash EPS Adjustments | 0.19 | 0.20 | 0.56 | 0.59 | |||||||||||
Adjusted cash earnings per diluted share from continuing operations | $ | 0.94 | $ | 0.88 | $ | 2.77 | $ | 2.57 | |||||||
Adjusted diluted share count: | |||||||||||||||
Diluted shares outstanding | N/A | 101,811 | N/A | N/A | |||||||||||
Convertible securities | 8,926 | ||||||||||||||
Stock options, warrants and awards | 723 | ||||||||||||||
Adjusted diluted shares outstanding | 111,460 | ||||||||||||||
Adjusted earnings before interest, income taxes ("EBIT", "Operating income"), depreciation and amortization ("EBITDA") from continuing operations: | |||||||||||||||
EBIT from continuing operations | $ | 135,742 | $ | (60,776 | ) | 398,740 | $ | 154,280 | |||||||
Depreciation and amortization | 33,332 | 34,040 | 100,429 | 99,527 | |||||||||||
Amortization of discount on convertible notes | (6,139 | ) | (6,218 | ) | (18,484 | ) | (18,474 | ) | |||||||
EBITDA from continuing operations | 162,935 | (32,954 | ) | 480,685 | 235,333 | ||||||||||
Special items (a) | 16,867 | 205,116 | 53,026 | 266,521 | |||||||||||
Adjusted EBITDA from continuing operations | 179,802 | 172,162 | 533,711 | 501,854 | |||||||||||
EBITDA from continuing operations to net cash flows from operating activities: | |||||||||||||||
EBITDA from continuing operations | 162,935 | (32,954 | ) | 480,685 | 235,333 | ||||||||||
(Subtract)/Add: | |||||||||||||||
Interest expense, net of investment income and amortization of discount on convertible notes | (22,578 | ) | (28,707 | ) | (69,654 | ) | (75,537 | ) | |||||||
Income tax provision | (38,948 | ) | 26,350 | (117,641 | ) | (34,004 | ) | ||||||||
Other operating activities (including debt redemption costs) | 5 | 55,652 | 8,419 | 55,652 | |||||||||||
Disposition of business, net | 285 | 7,276 | 805 | 36,062 | |||||||||||
Gale/Silver settlement payments, net | (120,000 | ) | — | (120,000 | ) | — | |||||||||
Changes in certain assets and liabilities, net of effects from acquisition and divestitures of businesses | (17,365 | ) | 161,205 | 171,940 | 238,480 | ||||||||||
Net cash flows from operating activities of continuing operations | $ | (35,666 | ) | $ | 188,822 | $ | 354,554 | $ | 455,986 | ||||||
Segment Reconciliations - Long-Term Care Group ("LTC") | |||||||||||||||
Adjusted Operating Income - LTC: | |||||||||||||||
Operating income from continuing operations | 142,285 | 4,207 | 444,402 | 259,953 | |||||||||||
Special items (a) | 16,421 | 154,248 | 36,451 | 213,680 | |||||||||||
Adjusted operating income from continuing operations - LTC | 158,706 | 158,455 | 480,853 | 473,633 | |||||||||||
The footnotes and definitions presented at the separate "Footnotes and Definitions to Financial Information" pages are an integral part of this financial information.
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Omnicare, Inc. and Subsidiary Companies
Footnotes and Definitions to Financial Information
($000s, except per share amounts and unless otherwise stated)
Unaudited
Footnotes:
Non-GAAP Information:
Omnicare, Inc. (“Omnicare” or the “Company”) management believes that presenting certain non-GAAP financial measures, which exclude items not considered part of the core operating results of the Company and certain non-cash charges and also includes certain tax deduction amounts ("Special Items"), enhances investors' understanding of how Omnicare management assesses the performance of the Company's business. Omnicare's management uses non-GAAP measures for budgeting purposes, measuring actual results, allocating resources and in determining employee incentive compensation. Omnicare's method of calculating non-GAAP financial results may differ from those used by other companies and, therefore, comparability may be limited.
(a) | Financial results included Special Items and Cash EPS adjustments as described below: |
Q3 2014 | YTD 2014 | Q3 2013 | YTD 2013 | |||||||||||||||||||||||||
Pretax | After Tax (9) | Pretax | After Tax (9) | Pretax | After Tax (9) | Pretax | After Tax (9) | |||||||||||||||||||||
EBIT: | ||||||||||||||||||||||||||||
Settlement, litigation and other related charges (1) | $ | 12,868 | $ | 5,360 | $ | 27,467 | $ | 14,340 | $ | 143,484 | $ | 97,074 | $ | 169,615 | $ | 113,160 | ||||||||||||
Other charges | ||||||||||||||||||||||||||||
Acquisition and other related costs (2) | — | — | — | — | — | — | 2,300 | 1,416 | ||||||||||||||||||||
Disposition of businesses (3) | 285 | 174 | 805 | 494 | 10,116 | 9,391 | 38,902 | 27,112 | ||||||||||||||||||||
Separation costs (4) | 3,642 | 2,213 | 16,922 | 10,382 | 648 | 384 | 4,836 | 2,962 | ||||||||||||||||||||
Loss on debt repurchase (5) | 72 | 32 | 7,832 | 4,805 | 50,868 | 31,138 | 50,868 | 31,138 | ||||||||||||||||||||
Subtotal - Other charges | 3,999 | 2,419 | 25,559 | 15,681 | 61,632 | 40,913 | 96,906 | 62,628 | ||||||||||||||||||||
Subtotal - EBIT Special Items | 16,867 | 7,779 | 53,026 | 30,021 | 205,116 | 137,987 | 266,521 | 175,788 | ||||||||||||||||||||
Interest Expense: | ||||||||||||||||||||||||||||
Amortization of discount on convertible notes (6) | 6,139 | 3,746 | 18,484 | 11,339 | 6,218 | 3,767 | 18,474 | 11,312 | ||||||||||||||||||||
Debt redemption costs (5) | — | — | 647 | 398 | 4,784 | 2,929 | 4,784 | 2,929 | ||||||||||||||||||||
Subtotal - Interest Expense Special Items | 6,139 | 3,746 | 19,131 | 11,737 | 11,002 | 6,696 | 23,258 | 14,241 | ||||||||||||||||||||
Subtotal - Special Items | 23,006 | 11,525 | 72,157 | 41,758 | 216,118 | 144,683 | 289,779 | 190,029 | ||||||||||||||||||||
Cash EPS Items: | ||||||||||||||||||||||||||||
Amortization of intangibles | 7,747 | 4,727 | 23,549 | 14,447 | 8,169 | 4,934 | 25,054 | 15,324 | ||||||||||||||||||||
Goodwill amortization tax deduction (7) | — | 7,098 | — | 21,106 | — | 9,203 | — | 28,037 | ||||||||||||||||||||
Convertible debt tax deduction (8) | — | 7,901 | — | 23,921 | — | 8,198 | — | 21,481 | ||||||||||||||||||||
Subtotal - Cash EPS Items | 7,747 | 19,726 | 23,549 | 59,474 | 8,169 | 22,335 | 25,054 | 64,842 | ||||||||||||||||||||
Grand Total - Special Items | $ | 30,753 | $ | 31,251 | $ | 95,706 | $ | 101,232 | $ | 224,287 | $ | 167,018 | $ | 314,833 | $ | 254,871 | ||||||||||||
(1) | Operating income includes settlement, litigation and other related charges for resolution of certain large customer disputes, regulatory matters with various states and regulatory agencies, qui tam lawsuits and purported class and derivative actions against the Company. Additionally, Omnicare has made, and will continue to make, disclosures to the applicable governmental agencies of amounts, if any, determined to represent over-payments from the respective programs and, where applicable, those amounts, as well as any amounts relating to certain inspections, audits, inquiries and investigations activity are included in the pretax special item reflected in the table. |
(2) | Operating income includes acquisition and other related costs primarily related to professional fees and acquisition related restructuring costs for acquisitions. |
(3) | In the second quarter of 2013, the Company completed the disposition of certain assets in its Medical Supply Services business which was not considered significant to the operations of Omnicare. |
(4) | Operating income includes separation related costs and accelerated stock based compensation expense for certain employees. |
(5) | Operating income (loss) and interest expense include charges for debt redemption losses and costs related to the Company’s previously announced refinancing transactions. |
(6) | The Company recorded non-cash interest expense from the amortization of debt discount on its convertible notes. |
(7) | The tax benefit of being able to deduct goodwill amortization. |
(8) | The tax benefit of being able to deduct higher interest expense on our convertible debt than what is actually paid. |
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(9) | The tax effect was calculated by multiplying the tax-deductible pretax amounts by the appropriate effective tax rate. |
Discontinued Operations:
During the fourth quarter of 2013, the Company's end-of-life hospice pharmacy business as well as certain retail operations qualified for discontinued operations treatment. As such, the results from continuing operations for all periods presented have been revised to reflect the results of these businesses as discontinued operations, including certain expenses of the Company related to the classification as discontinued operations.
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