Omnicare Navigates Through Financial Turbulence: Bankruptcy Filing After Multimillion-Dollar Verdict

The pharmacy services subsidiary Omnicare of CVS Health is in a legal and financial bind following a devastating judgment of $949 million and has filed for bankruptcy under Chapter 11. The allegations involve the improper dispensing of prescription drugs in long-term care. Omnicare, based in Texas, reports assets of at least $100 million and liabilities between $1 billion and $10 billion. The amount from the civil judgment accounts for the largest part of the unsecured debt, and the company continues to fight this high-profile claim. To ensure business operations during the bankruptcy process, Omnicare has secured $110 million in financing. This financial buffer and the ongoing cash flow are expected to be sufficient, according to the company, to meet all business obligations during the proceedings. The bankruptcy process offers Omnicare the opportunity to consider strategic options to address the judgment and other financial industry challenges. The options include a possible standalone restructuring or even the sale of the company. A few weeks ago, it became known that Omnicare is working with Alvarez & Marsal on solutions for its liquidity and operational issues. The bankruptcy filing could temporarily halt the government's attempts to enforce the judgment immediately. A federal judge in August denied a request from Omnicare and CVS to overturn the judgment following an earlier jury trial. A former Omnicare pharmacist filed the whistleblower lawsuit in 2015, and the government joined in 2019. Despite the financial challenges, Omnicare emphasizes that the focus remains unchanged on meeting the pharmacy needs of customers and residents in long-term care. The availability of pharmacy and clinical services, according to the company, remains ensured.