Omnicare profit rises after company resolves kickback case, reducing its legal expenses

Omnicare 4Q profit jumps as legal costs decrease

COVINGTON, Ky. — Omnicare Inc., which dispenses drugs to nursing homes and long-term care facilities, said Thursday its profit almost tripled in the fourth quarter after it resolved allegations it paid kickbacks to nursing homes, and received money for buying and recommending drugs.

In June, Omnicare agreed to pay $98 million to settle the investigation. The terms were completed in November. The Justice Department said Omnicare paid $50 million to a pair of Atlanta nursing homes to gain their business, while also asking for and getting kickbacks from two drug companies for recommending their products.

Some of those kickbacks involved drugmaker Johnson & Johnson. Federal prosecutors charged Johnson & Johnson with paying tens of millions in kickbacks to Omnicare so more nursing home patients would be prescribed drugs including Risperdal, a treatment for schizophrenia.

Omnicare did not acknowledge any wrongdoing as part of the settlement.

In the fourth quarter, the company said its profit rose to $80 million, or 68 cents per share, from $27.6 million, or 24 cents per share, a year earlier. Omnicare said it earned 74 cents per share from continuing operations, but that includes a tax benefit of 11 cents per share. Its revenue fell 2 percent to $1.54 billion from $1.57 billion

Analysts expected a profit of 63 cents per share and $1.55 billion in revenue, according to a Thomson Reuters survey.

The company reported a total of $5.7 million in pretax litigation costs in its latest quarter, compared to $48.1 million pretax a year ago.

Omnicare said its pharmacy services revenue fell 1 percent to $1.51 billion from $1.53 billion. The decline came from greater use of low-cost generic drugs, smaller reimbursement payments for certain drugs, and a decrease in the amount of beds served. The company said it did more business with assisted living facilities, which typically don’t buy as many drugs as acute care centers or other facilities it does business with.

Revenue from Omnicare’s clinical research business slipped to $34.3 million from $49.1 million.

In 2009, Omnicare said its profit jumped 51 percent to $211.9 million, or $1.80 per share, from $140.5 million, or $1.19 per share. Revenue decreased less than 1 percent to $6.17 billion from $6.21 billion.

The company is expecting a profit of $2.60 to $2.70 per share in 2010, excluding one-time times. Analysts are forecasting $2.66 per share.

In midday trading, Omnicare stock rose 47 cents to $25.97.