Omnicare Announced Its Bankruptcy Due To $950 Million Fine
- 23 sept
- 2 Min. de lectura
Omnicare LLC, a subsidiary of CVS Health Corp., has initiated a voluntary Chapter 11 bankruptcy process in the U.S. Bankruptcy Court for the Northern District of Texas. The filing by the pharmacy services provider occurred after the company was ordered to pay $949 million (or more than $948 million) in damages and penalties for claims related to the improper dispensing of prescription drugs to individuals in long-term care.
This civil judgment, listed as Omnicare’s largest unsecured debt, stems from a whistleblower lawsuit originally filed by a former Omnicare pharmacist in 2015. Court documents indicate that Omnicare allegedly filed more than 3.3 million false claims between 2010 and 2018, illegally charging the U.S. government (including Medicare, Medicaid, and the military program Tricare) for allegedly uncovered drugs. Omnicare has stated that it is challenging this ruling.
Matthew Frank, Omnicare Co-Chief Restructuring Officer, noted in a court filing that the company sought court protection after failing to reach a settlement with government authorities "and has received no assurance that the US would not immediately begin taking enforcement action with respect to the judgment".
The Chapter 11 process not only seeks to resolve the litigation, but also to address other financial challenges facing the broader long-term care pharmacy industry. These economic pressures include falling reimbursement rates, a tightening job market, and an overall decline in the use of long-term care facilities amid a shift toward outpatient care.
To fund its operations during the restructuring, Omnicare has secured a debtor-in-possession (DIP) financing agreement for $110 million. The company expects this financing, along with cash generated from its operations, will provide sufficient liquidity to meet its ongoing business obligations during the court-supervised process.
The company announced that the Chapter 11 process will give it time to evaluate options, which could include a standalone restructuring of its business or even a sale.
David Azzolina, President of Omnicare, stated that, despite the situation, the company "remains fully focused on meeting the pharmacy needs of its customers and long-term care residents". Omnicare expects to continue paying employee wages and benefits and to pay vendors and suppliers in full, under normal terms, for goods and services provided after the filing date. Customers and patients can expect to continue accessing pharmacy and clinical services without disruption.
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