Dive Brief:
- CVS pharmacy services subsidiary Omnicare has filed for Chapter 11 bankruptcy after being hit with a $949 million federal judgment over improper billing of government healthcare programs.
- Omnicare claimed up to $500 million in assets and between $1 billion and $10 billion in debts in its bankruptcy petition with a Texas court on Monday.
- Omnicare has brokered an agreement to receive $110 million in debtor-in-possession financing, a type of loan which it expects will allow it to continue operating through the bankruptcy process, the company said.
Dive Insight:
In July, a federal judge ordered Omnicare to pay $948.8 million in penalties and damages after determining that the company, which provides pharmacy services to long-term care and post-acute facilities, illegally charged the U.S. government for prescription drugs. The decision, which CVS said it planned to appeal, sent Omnicare reeling — the business reportedly hired a consulting firm to help bolster operations, according to Bloomberg.
Omnicare is now seeking the protection of Chapter 11, which is likely to pause efforts from the government to collect the $949 million payment. The bankruptcy will help Omnicare reorganize its finances, which could include a potential sale, the company said in press release Monday.
“The Company also intends to use this process to address other financial challenges facing the broader long-term care pharmacy industry and to evaluate its restructuring options, including the implementation of a standalone restructuring or sale strategy,” Omnicare said.
Omnicare intends to continue providing services to its customers and said that the bankruptcy should not affect regular operations, including wages to employees.
