WOONSOCKET, R.I. — Omnicare has initiated a voluntary court-supervised Chapter 11 process after a judge ordered that the CVS Health subsidiary pay $949 million for fraudulently billing the federal government for prescriptions.
The company intends to use the bankruptcy protection process to also address other financial challenges facing the broader long-term care pharmacy industry and to evaluate its restructuring options, including the implementation of a standalone restructuring or sale strategy.
Omnicare remains fully focused on meeting the pharmacy needs of its customers and long-term care residents. During the court-supervised process, Omnicare is continuing to provide safe and reliable pharmacy services to long-term care facilities. Omnicare customers and patients can expect to continue to access pharmacy and clinical services without disruption.
“Omnicare has a proud history of providing industry-leading, pharmacy and clinical care solutions to long-term care providers and their residents," said president David Azzolina. "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.”
“Supporting our customers and residents is our top priority," added Azzolina. "As we move through this process, we remain fully committed to providing optimal care for the residents and customers we serve. We are grateful to our facility and senior living community partners for their continued support. I want to thank the entire Omnicare team for their unwavering dedication and passion they bring to delivering the high level of service and clinical expertise that sets Omnicare apart.”
Omnicare commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the Northern District of Texas.
In connection with this process, it entered into an agreement for $110 million in debtor-in-possession (DIP) financing. Upon court approval, Omnicare expects this financing, along with cash generated from operations, will provide sufficient liquidity to meet its ongoing business obligations during the court-supervised process.
Omnicare is filing a number of customary motions seeking court authorization to continue to support its ongoing operations during the court-supervised process. Subject to approval of these motions, Omnicare expects to uphold its go-forward commitments to its stakeholders, including continued payment of employee wages and benefits without interruption. Omnicare fully expects to pay vendors and suppliers in full under normal terms for goods and services provided after the filing date.
Additional information regarding Omnicare’s court-supervised process is available at www.OmnicareRestructuring.com.
Court filings and other information related to the proceedings, including instructions on how to file a proof of claim, are available on a separate website administered by Omnicare’s claims agent, Stretto, at https://cases.stretto.com/Omnicare, by calling Stretto representatives toll-free at (833) 570-5323 or (949) 276-9547 for calls originating outside of the U.S. or Canada, or by sending an email to TeamOmnicare@stretto.com.
Jenner & Block LLP and Haynes Boone are serving as legal counsel, Houlihan Lokey is serving as investment banker and Alvarez & Marsal is serving as restructuring advisor to Omnicare.
