This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Omnicare Facing Ominous Trends

Some of Omnicare's (OCR - Get Report) biggest customers don't seem to like paying full freight.

Recently, two major operators of long-term care facilities have sought cheaper prices from the giant institutional pharmacy.

Closely held Life Care Centers of America has actually sued Omnicare, claiming that the company has been overcharging it for years. Meanwhile, Genesis Healthcare (GHCI) has already negotiated a new contract with Omnicare that's expected to save it money.

For its part, Omnicare has downplayed both developments as the ordinary course of business. Omnicare portrays the Life Care lawsuit as a mere contract dispute, lacking merit, and points out that the company remains a long-term customer. Similarly, Omnicare says that it saw the Genesis changes coming, adding that it "knew that a re-pricing of the contract was likely to occur to bring it more in line with market pricing," and that its guidance fully reflects that expectation.

Still, Omnicare continues to battle with even bigger players, such as the government and UnitedHealth (UNH - Get Report), over the rates it charges for its services. The government claims that Omnicare has been bilking Medicaid and has launched multiple investigations, including a criminal probe, in response. And UnitedHealth has decided to take matters into its own hands by paying Omnicare less money than the company has demanded.

Even some long-time Omnicare bulls have started feeling uneasy as a result. Several analysts have downgraded Omnicare's stock in recent months, expressing concern about the company's relationships with its customers and its compliance program as well. Meanwhile, bears have grown increasingly comfortable with their big bets against the company.

1 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
CHE $119.57 2.19%
GRA $97.26 -0.07%
OCR $89.85 1.95%
UNH $114.56 1.20%
AAPL $128.70 -0.19%

Markets

DOW 18,070.40 +46.34 0.26%
S&P 500 2,114.49 +6.20 0.29%
NASDAQ 5,016.9290 +11.5380 0.23%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs