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Omnicare's CEO Discusses Q1 2012 Results - Earnings Call Transcript

A reconciliation of this non-GAAP information has been attached to our earnings release and is also available on our newly redesigned website. Also on our website, you will find first quarter supplemental slides and the historical data behind our adjusted cash-based EPS reporting methodology, which we'll follow during our discussion today.

[Operator Instructions] With that, it is my pleasure to turn the call over to John Figueroa.

John G. Figueroa

Thanks, Patrick. Good morning, everyone, and thank you for joining us. During today's call, I'd like to share with you some of the drivers behind our first quarter performance, as well as provide an update on the status of our core operating initiatives. John will then review our first quarter financial results and current outlook for the year. Following our remarks, we'll be happy to answer your questions.

We are pleased with our solid first quarter financial results, which reflect the continuation of our recently established earnings momentum. Our focus on becoming more operationally driven and customer focused has enabled us to become more efficient as an organization, while concurrently benefiting from the pharmaceutical market trends. I believe we have begun a successful 2012 by elevating Omnicare's growth profile and positioning our shareholders for value enhancement.

For the quarter, we generated adjusted cash EPS of $0.81, which represents a 17% increase over the first quarter of 2011. This robust earnings growth was driven largely by our ability to leverage a sales increase. With sales 4% higher on a year-over-year basis, we increased our gross profit by 10%, as we benefited from the introduction of new low-cost generic drug alternatives, while also driving more operational efficiency.

As a result, we expanded our gross margin by 115 basis points to 23.1% and we created further leverage at the operating income line as gross profit dollar growth outpaced the year-over-year increase in SG&A dollars, driving adjusted operating profit 19% higher. With SG&A expense remaining relatively even sequentially, we expanded our adjusted operating margin by 40 basis points to 9%.

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