What You Should Know:
– Omnicare, LLC, a subsidiary of CVS Health, has initiated a voluntary Chapter 11 process supervised by a court to resolve issues related to a recent lawsuit in the U.S. District Court for the Southern District of New York.
– The company also intends to use this process to address other financial challenges facing the long-term care pharmacy industry. This will allow the company to evaluate its restructuring options, which may include a standalone restructuring or a sale.
A Focus on Uninterrupted Patient Care
Despite the Chapter 11 filing, Omnicare remains fully focused on meeting the pharmacy needs of its customers and residents. The company is committed to providing safe and reliable pharmacy services to long-term care facilities without disruption. According to David Azzolina, President of Omnicare, the company is taking these necessary steps to “ensure the continued delivery of safe and reliable pharmacy service to our customers”.
Omnicare has commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the Northern District of Texas. To support its ongoing operations during this process, Omnicare has secured an agreement for $110M in debtor-in-possession (“DIP”) financing. The company was ordered to pay $949M in a civil judgement over claims it improperly dispensed prescription drugs to individuals in long-term care.Subject to court approval, this financing, along with cash generated from operations, is expected to provide enough liquidity to meet the company’s business obligations. The company also expects to continue paying employee wages and benefits without interruption and to pay vendors and suppliers in full for goods and services provided after the filing date.
“Omnicare has a proud history of providing industry-leading, pharmacy and clinical care solutions to long-term care providers and their residents. Omnicare has been engaged in a civil lawsuit alleging technical violations of pharmacy law based on practices the government knew about and approved. There were no allegations of harm to any Omnicare patients nor did the government allege that any patient got anything other than the medicine they needed when they needed it. The District Court nevertheless imposed an extreme and, we believe, unconstitutional penalty. Given that ruling and a number of other issues facing our business, we now are taking necessary steps to move forward and ensure the continued delivery of safe and reliable pharmacy service to our customers,” said David Azzolina, President of Omnicare.
