Senior Living Pharmacy Omnicare Files For Ch. 11 Bankruptcy

Long-term care pharmacy Omnicare has filed for Chapter 11 bankruptcy.

Omnicare is a subsidiary of CVS Health (NYSE: CVS) and provides pharmacy services to the long-term care market, including skilled nursing facilities, independent living communities and assisted living communities.

The business is entering into Ch. 11 bankruptcy proceedings in the U.S. Bankruptcy Court for the Northern District of Texas. According to the company’s Chapter 11 bankruptcy filing, Omnicare has between $100 million and $500 million in assets, with somewhere between $1 billion and $10 billion in liabilities. Omnicare is estimated to have between 200 and 999 creditors.

Omnicare has arranged $110 million of debtor-in-possession financing, which the company’s leaders expect will provide “sufficient liquidity” to stay in business, according to a press release. Omnicare has also asked the court to continue operations throughout its bankruptcy process, including paying employee wages and benefits.

“During the court-supervised process, Omnicare is continuing to provide safe and reliable pharmacy services to long-term care facilities. Omnicare customers and patients can expect to continue to access pharmacy and clinical services without disruption,” a representative for Omnicare said in a statement to Senior Housing News Monday.

Omnicare declined to comment on how many customers it has.

The company’s chapter 11 filing is linked to recent litigation in the U.S. District Court for the Southern District of New York.

In April, Omnicare was found liable for improperly billing the United States government, resulting in $135 million in damages in “one of the largest damages verdicts rendered by a jury in a False Claims Act case,” according to the U.S. Dept. of Justice.

Omnicare was found to have distributed drugs that were not supported by valid prescriptions under state law between 2010 and 2018 and billed Medicare, Medicaid and TRICARE. In July, a judge ordered Omnicare to pay $948.8 million in penalties and damages.

David Azzolina, president of Omnicare, said the district court imposed “an extreme and … unconstitutional penalty.”

“Omnicare has been engaged in a civil lawsuit alleging technical violations of pharmacy law based on practices the government knew about and approved,” Azzolina said. “There were no allegations of harm to any Omnicare patients nor did the government allege that any patient got anything other than the medicine they needed when they needed it.”

The chapter 11 bankruptcy filing and related cases are just the latest setbacks for the long-term care pharmacy. In 2022, CVS noted that its long-term care services business line “was no longer a strategic asset” and the company explored selling it. But the company halted its sale exploration in 2023 after determining the pharmacy’s value to CVS exceeded what the company would get in a sale.

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