Omnicare Sickness Spreads

Omnicare (OCR Quote) keeps getting sicker.

Hit hard by reimbursement changes and quality control issues, the giant institutional pharmacy has once again fallen short of Wall Street expectations.

Moreover, the company has warned that ongoing challenges -- including the shutdown of a major drug repackaging facility -- will pressure its results for the remainder of the year.

During the third quarter, Omnicare saw profits tumble 11% to $52.2 million as the company continued to struggle under the new Medicare Part D program.

Excluding special items, the company's earnings per share of 63 cents missed the consensus estimate by a full 9 cents. Its revenue of $1.59 billion, while up 10% from a year ago, missed the mark as well.

"The third-quarter results reflect the dynamic and challenging environment in which we currently operate and the number of complex and unanticipated issues which we were required to address," stated Omnicare CEO Joel Gemunder.

"Notably, the voluntary closing of one of our repackaging facilities, as well as the ongoing complexities associated with the transition to Medicare Part D, inhibited our short-term ability to achieve planned revenue growth and cost savings from certain productivity initiatives and the early implementation of best practices.

"Taken together, these issues resulted in earnings that were lower than expectations," he continued.

Omnicare expects that pain to continue.

The company now predicts that fourth-quarter earnings will be "roughly equivalent to those in the third," or 63 cents a share, compared to the 82-cent target Wall Street analysts have set.

Meanwhile, Omnicare has given up on reopening its current Heartland Repack Services facility altogether.