Omnicare Reports Second Quarter Results

- Quarterly Revenues and Adjusted Diluted EPS Exceed Expectations
-

- Quarterly Operating Cash Flow Continues Strong -

- Revised Earnings Guidance Reflects Favorable Performance -
COVINGTON, Ky.--(Business Wire)--
Omnicare, Inc. (NYSE:OCR), one of the nation's leading providers
of pharmaceutical care for the elderly, today reported financial
results for its second quarter ended June 30, 2008.

Financial results for the quarter ended June 30, 2008, as compared
with the same prior-year period, including restructuring and related
charges and other special items described below, were as follows:

-- Earnings per diluted share were 31 cents versus 41 cents

-- Net income was $36.8 million as compared with $49.2 million

-- Sales were $1,550.2 million as compared with $1,549.2 million

Results for both the second quarter of 2008 and 2007 include
special items (which are described below) of $28.5 million pretax and
$20.2 million pretax, respectively. Adjusting for these special items,
results for the quarter ended June 30, 2008 and 2007, respectively,
were as follows:

-- Adjusted earnings per diluted share were 46 cents versus 51
cents

-- Adjusted net income was $54.6 million as compared with $61.6
million

-- Sales were $1,550.2 million as compared with $1,549.2 million

The Company noted that its results continue to be impacted by the
unilateral reduction in April 2006 by UnitedHealth Group, Inc. and its
Affiliates ("United") in the reimbursement rates paid by United to
Omnicare by switching to its PacifiCare pharmacy network contract for
services rendered by Omnicare to beneficiaries of United's drug
benefit plans under the Medicare Part D program. The differential in
reimbursement rates that resulted from United's action, as compared
with reimbursement rates under the originally negotiated contract,
reduced sales and operating profit in the second quarter of 2008 by
approximately $24 million pretax (approximately $15 million aftertax),
by approximately $47 million pretax (approximately $29 million
aftertax) for the six months ended June 30, 2008, and cumulatively
since April 2006, by approximately $246 million pretax (approximately
$153 million aftertax). This matter is currently the subject of
litigation initiated by Omnicare and is before the federal court in
the Northern District of Illinois with a trial scheduled for October
2008.

The second quarter 2008 results were also impacted by a lower tax
rate owing largely to the favorable effect of certain state tax
benefits, including primarily a change in filing methodology for a
state taxing jurisdiction. The net effect of these matters was an
increase in aftertax income of approximately $1.8 million, or
approximately 1.5 cents per diluted share.

The Company also noted that it completed its previously announced
stock repurchase program during the second quarter of 2008. In
connection with this program, Omnicare repurchased approximately 4.1
million shares at a purchase price of approximately $100 million in
May 2008.

Commenting on the results for the quarter, Joel F. Gemunder,
Omnicare's president and chief executive officer, said, "Driven by the
continued stabilization and sequential improvements in the performance
of our pharmacy services business and the growth in our contract
research businesses, we are pleased to report revenues and adjusted
diluted earnings per share that exceeded expectations for the quarter.
Our strong cash flow provided the resources to fund attractive
acquisition opportunities during the quarter as well as successfully
complete our share repurchase program. Our performance, we believe,
reflects the progress we are making in the execution of strategies to
restore growth, increase profitability and enhance shareholder value."

Financial Position

Cash flow from operations for the quarter ended June 30, 2008 was
$86.3 million versus $61.1 million in the comparable prior-year
quarter.

Earnings before interest, income taxes, depreciation and
amortization (EBITDA) for the second quarter of 2008, including the
special items discussed below, was $120.5 million versus $149.5
million in the second quarter of 2007. Excluding the special items,
adjusted EBITDA in the 2008 quarter was $149.1 million versus $169.6
million in the 2007 quarter.

At June 30, 2008, Omnicare had $223.7 million in cash on its
balance sheet. Its total debt to total capital at June 30, 2008 was
45.9%, down approximately 100 basis points from June 30, 2007. Net
debt to total capital at June 30, 2008 was 43.9%, down approximately
150 basis points from June 30, 2007.

To facilitate comparisons and to enhance the understanding of core
operating performance, the discussion that follows includes financial
measures that are adjusted from the comparable amount under Generally
Accepted Accounting Principles ("GAAP") to exclude the impact of the
special items described elsewhere herein. For a detailed presentation
of reconciling items and related definitions and components, please
refer to the attached schedules or to reconciliation schedules posted
on the Company's Web site at www.omnicare.com.

Pharmacy Services Business

Omnicare's pharmacy services business generated revenues of
$1,496.5 million for the second quarter of 2008, as compared with the
$1,498.9 million reported in the second quarter of 2007. Adjusted
operating profit in this business was $144.5 million in the 2008
second quarter as compared with the $163.2 million earned in the same
2007 quarter.

At June 30, 2008, Omnicare served long-term care facilities as
well as chronic care and other settings comprising approximately
1,438,000 beds, including approximately 70,000 patients served by the
patient assistance programs of its specialty pharmacy services
business. At March 31, 2008, the comparable number was 1,446,000 beds
(including 69,000 specialty pharmacy services patients). The
comparable number at June 30, 2007 was 1,449,000 (including 60,000
specialty pharmacy services patients). The Company also noted that the
number of beds served at June 30, 2008 reflects approximately 7,900
beds that the Company had voluntarily foregone owing to pricing or
payment issues and facility closures or sales.

On a sequential basis, revenues in the pharmacy services business
were modestly lower owing largely to the increased availability and
use of generic drugs, seasonally lower acuity and reductions in
utilization and/or reimbursement for certain drugs, and a lower net
number of beds served. These factors were largely offset by drug price
inflation, increased use of certain higher acuity drugs and biologic
agents and growth in the specialty pharmacy services and hospice
pharmacy businesses. Adjusted operating profit for the second quarter
was higher sequentially due largely to the increased availability and
use of generic drugs, drug price inflation, lower bad debt expense and
improved performance in the specialty pharmacy services and hospice
pharmacy businesses.

Omnicare's pharmacy services sales for the second quarter of 2008
were essentially even with the comparable prior-year period owing to
the impact of the increased availability and use of generic drugs,
utilization and/or reimbursement reductions for certain drugs, a lower
net number of beds served along with a shift in mix toward assisted
living which typically has lower penetration rates, competitive
pricing issues and lower revenues reported from copays and rejected
claims as well as from certain matters in litigation. Largely
offsetting these factors were drug price inflation, increased use of
certain higher acuity drugs and biologic agents and growth in the
specialty pharmacy services business. Adjusted operating profit for
the second quarter of 2008 versus the same period of 2007 was impacted
largely by certain of the aforementioned factors reducing sales,
offset in part by higher generic drug utilization, drug price
inflation, lower bad debt expense and improved performance in the
specialty pharmacy services business.

The Company noted that progress continues in the Omnicare Full
Potential Plan as the Company implements the hub-and-spoke
configuration for its institutional pharmacy operations. When
completed, this major initiative is expected to reduce costs, increase
efficiency and enhance customer growth.

It should also be noted that the results for the quarter do not
include the acquisition of Advanced Care Scripts, Inc. which was
completed in July 2008. Advanced Care Scripts, based in Orlando,
Florida, is a specialty pharmacy services company currently focused on
disease states within oncology and neurology that, based on the
quarter ended June 30, 2008, is generating revenues at an annualized
rate of approximately $237 million.

CRO Business

The Company's CRO business, including Omnicare Clinical Research
and Clinimetrics Research Associates, generated revenues of $53.6
million on a GAAP basis for the second quarter of 2008 as compared
with the $50.2 million in revenues generated in the same prior-year
quarter. Included in the 2008 and 2007 periods were reimbursable
out-of-pocket expenses totaling $8.8 million and $8.2 million,
respectively. Excluding these reimbursable out-of-pocket expenses,
adjusted revenues were $44.8 million for the 2008 second quarter as
compared with $42.1 million for the same prior-year period. Adjusted
operating profit for the 2008 second quarter totaled $4.4 million
versus $3.2 million in the same prior-year period. Backlog at June 30,
2008 was $337.4 million as compared with $315.5 million at June 30,
2007.

Six Months Results

Financial results for the six months ended June 30, 2008, as
compared with the same prior-year period, including restructuring and
related charges and other special items described below were as
follows:

-- Earnings per diluted share were $0.56 versus $0.76

-- Net income was $66.7 million as compared with $92.2 million

-- Sales were $3,109.1 million as compared with $3,126.2 million

Results for both the first half of 2008 and 2007 include special
items (which are described later herein) of $58.5 million pretax and
$42.0 million pretax, respectively. Adjusting for these special items,
results for the six months ended June 30, 2008, as compared with the
same prior-year period, were as follows:

-- Adjusted earnings per diluted share were $0.86 versus $0.97

-- Adjusted net income was $102.6 million as compared with $118.1
million

-- Adjusted sales were $3,109.1 million as compared with $3,126.2
million

EBITDA for the first six months of 2008, including special items,
was $234.3 million versus $287.9 million in the comparable prior-year
period. Excluding the special items, adjusted EBITDA in the first half
of 2008 was $292.8 million as compared with $329.9 million in the
first half of 2007.

Cash flow from operations for the first half of 2008 totaled
$228.6 million. Cash flow from operations over the same period in 2007
was $235.9 million.

Special Items

As noted above, the results for the second quarter of 2008 include
certain special items totaling $28.5 million pretax ($17.8 million
aftertax, or approximately 15 cents per diluted share). Operating
income for the second quarter of 2008 includes a pretax charge of
$10.8 million for restructuring and other related costs associated
primarily with the implementation of the Omnicare Full Potential Plan.
The second quarter of 2008 results also include special litigation
charges of $16.0 million pretax associated with litigation and other
related professional fees in connection primarily with the Company's
lawsuit against United and certain large customer disputes, as well as
previously disclosed government inquiries, and a pretax charge of $1.7
million relating to incremental costs associated with the closure of
the Company's Heartland repackaging operations.

As noted above, the results for the second quarter of 2007 include
certain special items totaling $20.2 million pretax ($12.4 million
aftertax, or approximately 10 cents per diluted share). Operating
income for the second quarter of 2007 includes a net pretax charge of
$6.3 million for restructuring and other related costs associated
primarily with the implementation of the Omnicare Full Potential Plan.
The second quarter of 2007 results also include special litigation
charges of $9.0 million pretax associated with litigation-related
professional fees in connection with separately disclosed government
inquiries and litigation, as well as the Company's lawsuit against
United, and $4.9 million pretax in incremental costs associated with
the closure of the Company's Heartland repackaging operations.

The first half of 2008 includes special items totaling $58.5
million pretax ($35.9 million aftertax, or approximately 30 cents per
diluted share), including $17.2 million pretax for restructuring and
other related costs associated primarily with the implementation of
the Omnicare Full Potential Plan, $37.7 million pretax associated with
the above-mentioned litigation and related professional fees, and $3.6
million pretax in incremental costs relating to the closure of the
Company's Heartland repackaging operations.

The first half of 2007 includes special items totaling $42.0
million pretax ($25.9 million aftertax, or approximately 21 cents per
diluted share), including $15.4 million pretax for restructuring and
other related costs associated primarily with the implementation of
the Omnicare Full Potential Plan, $15.9 million pretax associated with
litigation-related professional fees, and $10.7 million pretax
relating to the incremental costs associated with the closure of the
Heartland repackaging operations.

Outlook

Commenting on the outlook for Omnicare, Gemunder said, "We are
encouraged that executing on our short and long-term initiatives is
producing stabilization and improvement in our business against the
backdrop of the dynamic operating environment we have faced over the
past 30 months largely brought about by the evolution of Medicare Part
D and the burgeoning trend toward generic drugs. Given that we have
performed favorably relative to expectations in the first and second
quarters of this year, along with the positive trend in earnings that
we see for the second half of the year, we now believe Omnicare's
full-year cash flow from operations will be in the range of $400
million to $450 million, and diluted earnings per share, as adjusted
for special items, will be in the range of $1.85 to $1.95 for 2008.

"Longer term, we believe the fundamentals underpinning our
business remain sound and that demand for pharmacy services for the
senior population should continue to grow over time. We believe that
our franchise and scale position us uniquely within our industry to
benefit from demographics and the importance of pharmaceutical care to
the treatment of the chronic diseases of aging. Moreover, we also see
significant opportunity for Omnicare in increasing access to drug
therapy for the broader population through our specialty pharmacy
services and CRO businesses."

Webcast Today

Omnicare will hold a conference call to discuss second-quarter
results today, Thursday, July 31, at 11:00 a.m. ET. The conference
call will be webcast live at Omnicare's Web site at www.omnicare.com
by clicking on "Investors" and then on "Conference Calls," and will be
accessible by telephone at the following numbers:

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Calling from the United States or Canada: 888-634-8522
Calling from other countries: 706-634-6522
Reference: Omnicare
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An online replay will be available at www.omnicare.com beginning
approximately two hours after the completion of the live call and will
remain available for 14 days.

Omnicare, Inc. (NYSE:OCR), a Fortune 500 company based in
Covington, Kentucky, is a leading provider of pharmaceutical care for
the elderly. Omnicare serves residents in long-term care facilities,
chronic care and other settings comprising more than 1.4 million beds
in 47 states, the District of Columbia and Canada. Omnicare is the
largest U.S. provider of professional pharmacy, related consulting and
data management services for skilled nursing, assisted living and
other institutional healthcare providers as well as for hospice
patients in homecare and other settings. Omnicare's pharmacy services
also include distribution and product support services for specialty
pharmaceuticals. Omnicare offers clinical research services for the
pharmaceutical and biotechnology and medical device industries in 30
countries worldwide. For more information, visit the company's Web
site at www.omnicare.com.

Forward-Looking Statements

In addition to historical information, this press release contains
certain statements that constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include, but are not limited to, all
statements regarding the intent, belief or current expectations
regarding the matters discussed or incorporated by reference in this
document (including statements as to "beliefs," "expectations,"
"anticipations," "intentions" or similar words) and all statements
which are not statements of historical fact. Such forward-looking
statements, together with other statements that are not historical,
are based on management's current expectations and involve known and
unknown risks, uncertainties, contingencies and other factors that
could cause results, performance or achievements to differ materially
from those stated. The most significant of these risks and
uncertainties are described in the Company's Form 10-K, Form 10-Q and
Form 8-K reports filed with the Securities and Exchange Commission and
include, but are not limited to: overall economic, financial,
political and business conditions; trends in the long-term healthcare,
pharmaceutical and contract research industries; the ability to
attract new clients and service contracts and retain existing clients
and service contracts; the ability to consummate pending acquisitions;
trends for the continued growth of the Company's businesses; trends in
drug pricing; delays and reductions in reimbursement by the government
and other payors to customers and to the Company; the overall
financial condition of the Company's customers and the ability of the
Company to assess and react to such financial condition of its
customers; the ability of vendors and business partners to continue to
provide products and services to the Company; the continued successful
integration of acquired companies; the continued availability of
suitable acquisition candidates; the ability to attract and retain
needed management; competition for qualified staff in the healthcare
industry; the demand for the Company's products and services;
variations in costs or expenses; the ability to implement
productivity, consolidation and cost reduction efforts and to realize
anticipated benefits; the ability of clinical research projects to
produce revenues in future periods; the potential impact of
legislation, government regulations, and other government action
and/or executive orders, including those relating to Medicare Part D,
including its implementing regulations and any subregulatory guidance,
reimbursement and drug pricing policies and changes in the
interpretation and application of such policies; government budgetary
pressures and shifting priorities; federal and state budget
shortfalls; efforts by payors to control costs; changes to or
termination of the Company's contracts with Medicare Part D plan
sponsors or to the proportion of the Company's Part D business covered
by specific contracts; the outcome of litigation; potential liability
for losses not covered by, or in excess of, insurance; the impact of
differences in actuarial assumptions and estimates as compared to
eventual outcomes; events or circumstances which result in an
impairment of assets, including but not limited to, goodwill; market
conditions; the outcome of audit, compliance, administrative,
regulatory or investigatory reviews; volatility in the market for the
Company's stock and in the financial markets generally; access to
adequate capital and financing; changes in international economic and
political conditions and currency fluctuations between the U.S. dollar
and other currencies; changes in tax laws and regulations; changes in
accounting rules and standards; and costs to comply with the Company's
Corporate Integrity Agreements. Should one or more of these risks or
uncertainties materialize or should underlying assumptions prove
incorrect, the Company's actual results, performance or achievements
could differ materially from those expressed in, or implied by, such
forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of
the date hereof. Except as otherwise required by law, the Company does
not undertake any obligation to publicly release any revisions to
these forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated
events.

For more information on Omnicare, Inc., visit www.omnicare.com.

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Omnicare, Inc. and Subsidiary Companies
Summary Consolidated Statements of Income, GAAP Basis
(000s, except per share amounts)
Unaudited

Three months ended
June 30,
-----------------------------
2008 2007
----------- -----------

Net sales $1,550,152 (a)(b) $1,549,157 (a)(b)
Cost of sales 1,166,461 (a) 1,150,109 (a)
Heartland matters 1,560 (c) 4,015 (c)
----------- -----------
Gross profit 382,131 (b)(c) 395,033 (b)(c)
Selling, general and
administrative expenses 237,019 228,008
Provision for doubtful accounts 25,767 29,899
Restructuring and other related
charges 10,784 (c) 6,250 (c)
Litigation and other related
professional fees 16,022 (c) 9,010 (c)
Heartland matters 180 (c) 896 (c)
----------- -----------
Operating income 92,359 (b)(c) 120,970 (b)(c)
Investment income 1,959 2,102
Interest expense (35,940) (41,718)
----------- -----------
Income before income taxes 58,378 81,354
Income tax expense 21,573 32,113
----------- -----------
Net income $ 36,805 (b)(c) $ 49,241 (b)(c)
=========== ===========

Earnings per share:(j)
Basic $ 0.31 $ 0.41
=========== ===========
Diluted $ 0.31 (b)(c) $ 0.41 (b)(c)
=========== ===========

Weighted average number of common
shares outstanding:
Basic 117,901 119,389
=========== ===========
Diluted 118,672 121,371
=========== ===========

Six months ended
June 30,
-----------------------------
2008 2007
----------- -----------

Net sales $3,109,131 (a)(b) $3,126,222 (a)(b)
Cost of sales 2,344,224 (a) 2,341,102 (a)
Heartland matters 3,134 (d) 8,311 (d)
----------- -----------
Gross profit 761,773 (b)(d) 776,809 (b)(d)
Selling, general and
administrative expenses 473,616 453,617
Provision for doubtful accounts 56,159 58,803
Restructuring and other related
charges 17,232 (d) 15,424 (d)
Litigation and other related
professional fees 37,664 (d) 15,917 (d)
Heartland matters 499 (d) 2,392 (d)
----------- -----------
Operating income 176,603 (b)(d) 230,656 (b)(d)
Investment income 4,570 4,023
Interest expense (72,996) (83,766)
----------- -----------
Income before income taxes 108,177 150,913
Income tax expense 41,428 58,685
----------- -----------
Net income $ 66,749 (b)(d) $ 92,228 (b)(d)
=========== ===========

Earnings per share:(j)
Basic $ 0.56 $ 0.77
=========== ===========
Diluted $ 0.56 (b)(d) $ 0.76 (b)(d)
=========== ===========

Weighted average number of common
shares outstanding:
Basic 118,874 119,233
=========== ===========
Diluted 119,606 121,375
=========== ===========

The footnotes presented at the separate "Footnotes to Financial
Information" pages are an integral part of this financial
information.
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Omnicare, Inc. and Subsidiary Companies
Summary Segment Financial Data, Non-GAAP Basis (e)
Excluding EITF No. 01-14 and Special Items
(000s)
Unaudited

Pharmacy CRO
Services Services
---------- --------
Three months ended June 30, 2008:
--------------------------------------------

Adjusted net sales $1,496,521(b) $ 44,816(f)
========== ========

Adjusted operating income (expense) $ 144,500(g) $ 4,400(g)
Depreciation and amortization 20,692 450
---------- --------

Adjusted earnings before interest, income
taxes, depreciation and amortization
("EBITDA") (h) $ 165,192(g) $ 4,850(g)
========== ========

Three months ended June 30, 2007:
--------------------------------------------

Adjusted net sales $1,498,918(b) $ 42,082(f)
========== ========

Adjusted operating income (expense) $ 163,199(g) $ 3,156(g)
Depreciation and amortization 21,269 477
---------- --------

Adjusted EBITDA (h) $ 184,468(g) $ 3,633(g)
========== ========

Six months ended June 30, 2008:
--------------------------------------------

Adjusted net sales $3,006,327(b) $ 86,623(f)
========== ========

Adjusted operating income (expense) $ 282,366(g) $ 7,842(g)
Depreciation and amortization 40,931 889
---------- --------

Adjusted EBITDA (h) $ 323,297(g) $ 8,731(g)
========== ========

Six months ended June 30, 2007:
--------------------------------------------

Adjusted net sales $3,028,561(b) $ 82,216(f)
========== ========

Adjusted operating income (expense) $ 316,240(g) $ 5,704(g)
Depreciation and amortization 42,880 954
---------- --------

Adjusted EBITDA (h) $ 359,120(g) $ 6,658(g)
========== ========

Corporate
and Consolidated
Consolidating Totals
------------- ------------
Three months ended June 30, 2008:
----------------------------------

Adjusted net sales $ - $ 1,541,337(b)(f)
============= ============

Adjusted operating income
(expense) $ (27,995)(g) $ 120,905(g)
Depreciation and amortization 7,006 28,148
------------- ------------

Adjusted earnings before interest,
income taxes, depreciation and
amortization ("EBITDA") (h) $ (20,989)(g) $ 149,053(g)
============= ============

Three months ended June 30, 2007:
----------------------------------

Adjusted net sales $ - $ 1,541,000(b)(f)
============= ============

Adjusted operating income
(expense) $ (25,214)(g) $ 141,141(g)
Depreciation and amortization 6,740 28,486
------------- ------------

Adjusted EBITDA (h) $ (18,474)(g) $ 169,627(g)
============= ============

Six months ended June 30, 2008:
----------------------------------

Adjusted net sales $ - $ 3,092,950(b)(f)
============= ============

Adjusted operating income
(expense) $ (55,076)(g) $ 235,132(g)
Depreciation and amortization 15,843 57,663
------------- ------------

Adjusted EBITDA (h) $ (39,233)(g) $ 292,795(g)
============= ============

Six months ended June 30, 2007:
----------------------------------

Adjusted net sales $ - $ 3,110,777(b)(f)
============= ============

Adjusted operating income
(expense) $ (49,244)(g) $ 272,700(g)
Depreciation and amortization 13,374 57,208
------------- ------------

Adjusted EBITDA (h) $ (35,870)(g) $ 329,908(g)
============= ============

The footnotes presented at the separate "Footnotes to Financial
Information" pages are an integral part of this financial
information.
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Omnicare, Inc. and Subsidiary Companies
Condensed Consolidated Balance Sheets, GAAP Basis
(000s)
Unaudited

June 30, December 31,
2008 2007
---------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 208,730 $ 274,448
Restricted cash 15,019 3,155
Accounts receivable, net 1,348,042 1,376,288
Unbilled receivables, CRO 28,509 24,855
Inventories 400,084 448,183
Deferred income tax benefits 129,507 126,239
Other current assets 204,101 202,982
---------- ------------
Total current assets 2,333,992 2,456,150
---------- ------------
Properties and equipment, net 203,665 199,449
Goodwill 4,377,813 4,342,169
Identifiable intangible assets, net 313,678 323,637
Other noncurrent assets 253,032 272,374
---------- ------------
Total noncurrent assets 5,148,188 5,137,629
---------- ------------
Total assets $7,482,180 $ 7,593,779
========== ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 329,355 $ 371,020
Accrued employee compensation 36,722 32,696
Deferred revenue, CRO 22,780 22,068
Current debt 2,819 3,192
Other current liabilities 195,102 223,184
---------- ------------
Total current liabilities 586,778 652,160
---------- ------------
Long-term debt, notes and convertible
debentures 2,766,063 2,820,751
Deferred income tax liabilities 498,910 449,789
Other noncurrent liabilities 361,126 379,376
---------- ------------
Total noncurrent liabilities 3,626,099 3,649,916
---------- ------------
Total liabilities 4,212,877 4,302,076
---------- ------------
Stockholders' equity (k) 3,269,303 3,291,703
---------- ------------
Total liabilities and stockholders'
equity $7,482,180 $ 7,593,779
========== ============

The footnotes presented at the separate "Footnotes to Financial
Information" pages are an integral part of this financial
information.
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Omnicare, Inc. and Subsidiary Companies
Condensed Consolidated Statement of Cash Flows, GAAP Basis
(000s)
Unaudited

Three months ended Six months ended
June 30, 2008 June 30, 2008
------------------ ----------------
Cash flows from operating
activities:
Net income $ 36,805 $ 66,749
Adjustments to reconcile net
income to net cash flows from
operating activities:
Depreciation 13,125 26,058
Amortization 15,023 31,605
Provision for doubtful accounts 25,767 56,159
Deferred tax provision 20,092 44,069

Changes in assets and
liabilities, net of effects
from acquisition of businesses (24,464) 3,972
------------------ ----------------
Net cash flows from operating
activities 86,348 228,612
------------------ ----------------

Cash flows from investing
activities:
Acquisition of businesses, net of
cash received (55,005) (90,988)
Capital expenditures (16,029) (28,468)
Transfer of cash to trusts for
employee health and severance
costs, net of payments out of
the trust (47) (11,589)
Other 26 (6)
------------------ ----------------
Net cash flows used by
investing activities (71,055) (131,051)
------------------ ----------------

Cash flows from financing
activities:
Proceeds from line of credit
facilities, term A loan and
long-term borrowings and
obligations 10,000 59,000
Payments on line of credit
facilities, term A loan and
long-term borrowings and
obligations (10,643) (110,606)
Change in cash overdraft balance (2,749) (3,606)
Payments for Omnicare common
stock repurchases (k) (100,165) (100,165)
Payments for stock awards and
exercise of stock options, net
of stock tendered in payment (219) (3,803)
Excess tax benefits from stock-
based compensation - 82
Dividends paid (2,666) (5,412)
------------------ ----------------
Net cash flows used by
financing activities (106,442) (164,510)
------------------ ----------------

Effect of exchange rate changes
on cash (1,381) 1,231
------------------ ----------------

Net decrease in cash and cash
equivalents (92,530) (65,718)

Cash and cash equivalents at
beginning of period 301,260 274,448
------------------ ----------------

Cash and cash equivalents at end
of period $ 208,730 $ 208,730
================== ================

The footnotes presented at the separate "Footnotes to Financial
Information" pages are an integral part of this financial
information.
*T

-0-
*T
Omnicare, Inc. and Subsidiary Companies
Reconciliation Statement and Definitions, Non-GAAP Basis (e)
(000s, except per share amounts)
Unaudited

Three months ended Six months ended
June 30, June 30,
----------------------- -----------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
Adjusted net sales:
Net sales (a)(b) $1,550,152 $1,549,157 $3,109,131 $3,126,222
Reimbursable out-of-
pockets (a) (8,815) (8,157) (16,181) (15,445)
----------- ----------- ----------- -----------
Adjusted net
sales, excluding
EITF No. 01-14
(b)(f) $1,541,337 $1,541,000 $3,092,950 $3,110,777
=========== =========== =========== ===========
Adjusted operating
income (earnings
before interest and
income taxes,
"EBIT"):
EBIT $ 92,359 $ 120,970 $ 176,603 $ 230,656
Special items (g) 28,546 20,171 58,529 42,044
----------- ----------- ----------- -----------
Adjusted EBIT
(g) $ 120,905 $ 141,141 $ 235,132 $ 272,700
=========== =========== =========== ===========
Adjusted income before
income taxes:
Income before income
taxes $ 58,378 $ 81,354 $ 108,177 $ 150,913
Special items (g) 28,546 20,171 58,529 42,044
----------- ----------- ----------- -----------
Adjusted income
before income
taxes (g) $ 86,924 $ 101,525 $ 166,706 $ 192,957
=========== =========== =========== ===========
Adjusted net income:
Net income $ 36,805 $ 49,241 $ 66,749 $ 92,228
Special items, net
of taxes (g) 17,838 12,385 35,867 25,903
----------- ----------- ----------- -----------
Adjusted net
income (g) $ 54,643 $ 61,626 $ 102,616 $ 118,131
=========== =========== =========== ===========

Adjusted earnings per
share:(j)
Basic earnings per
share $ 0.31 $ 0.41 $ 0.56 $ 0.77
Special items, net
of taxes (g) 0.15 0.10 0.30 0.22
Adjusted basic
earnings per
share (g) $ 0.46 $ 0.52 $ 0.86 $ 0.99
=========== =========== =========== ===========
Diluted earnings per
share $ 0.31 $ 0.41 $ 0.56 $ 0.76
Special items, net
of taxes (g) 0.15 0.10 0.30 0.21
Adjusted diluted
earnings per
share (g) $ 0.46 $ 0.51 $ 0.86 $ 0.97
=========== =========== =========== ===========

Adjusted earnings
before interest,
income taxes,
depreciation and
amortization
("EBITDA"): (h)
EBIT $ 92,359 $ 120,970 $ 176,603 $ 230,656
Depreciation and
amortization 28,148 28,486 57,663 57,208
----------- ----------- ----------- -----------
EBITDA (h) 120,507 149,456 234,266 287,864
Special items (g) 28,546 20,171 58,529 42,044
----------- ----------- ----------- -----------
Adjusted EBITDA
(g)(h) $ 149,053 $ 169,627 $ 292,795 $ 329,908
=========== =========== =========== ===========

The footnotes presented at the separate "Footnotes to Financial
Information" pages are an integral part of this financial
information.
*T

-0-
*T
Omnicare, Inc. and Subsidiary Companies
Reconciliation Statement and Definitions, Non-GAAP Basis (e)
(000s)
Unaudited

Three months ended Six months ended
June 30, June 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------

EBITDA to net cash flows from
operating activities:
EBITDA (h) $120,507 $149,456 $234,266 $287,864
(Subtract)/Add:
Interest expense, net of
investment income (33,981) (39,616) (68,426) (79,743)
Income tax provision (21,573) (32,113) (41,428) (58,685)
Changes in assets and
liabilities, net of effects
from acquisition of
businesses (24,464) (68,655) 3,972 (7,736)
Provision for doubtful
accounts 25,767 29,899 56,159 58,803
Deferred tax provision 20,092 22,167 44,069 35,424
--------- --------- --------- ---------
Net cash flows from
operating activities $ 86,348 $ 61,138 $228,612 $235,927
========= ========= ========= =========

Free cash flow: (i)
Net cash flows from
operating activities $ 86,348 $ 61,138 $228,612 $235,927
Capital expenditures (16,029) (10,644) (28,468) (18,925)
Dividends (2,666) (2,743) (5,412) (5,482)
--------- --------- --------- ---------
Free cash flow (i) $ 67,653 $ 47,751 $194,732 $211,520
========= ========= ========= =========

Segment Reconciliations -
Pharmacy Services:
------------------------------
Adjusted EBIT - Pharmacy
Services:
EBIT $117,516 $144,274 $226,751 $279,864
Special items (g) 26,984 18,925 55,615 36,376
--------- --------- --------- ---------
Adjusted EBIT - Pharmacy
Services (g) $144,500 $163,199 $282,366 $316,240
========= ========= ========= =========
Adjusted EBITDA - Pharmacy
Services: (h)
EBITDA (h) $138,208 $165,543 $267,682 $322,744
Special items (g) 26,984 18,925 55,615 36,376
--------- --------- --------- ---------
Adjusted EBITDA -
Pharmacy Services
(g)(h) $165,192 $184,468 $323,297 $359,120
========= ========= ========= =========

The footnotes presented at the separate "Footnotes to Financial
Information" pages are an integral part of this financial
information.
*T

-0-
*T
Omnicare, Inc. and Subsidiary Companies
Reconciliation Statement and Definitions, Non-GAAP Basis (e)
(000s)
Unaudited

Three months ended Six months ended
June 30, June 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Segment Reconciliations -
Corporate and Consolidating:
------------------------------
Adjusted EBIT - Corporate and
Consolidating:
EBIT $(28,957) $(26,208) $(56,616) $(52,842)
Special items (g) 962 994 1,540 3,598
--------- --------- --------- ---------
Adjusted EBIT -
Corporate and
Consolidating (g) $(27,995) $(25,214) $(55,076) $(49,244)
========= ========= ========= =========
Adjusted EBITDA - Corporate
and Consolidating: (h)
EBITDA (h) $(21,951) $(19,468) $(40,773) $(39,468)
Special items (g) 962 994 1,540 3,598
--------- --------- --------- ---------
Adjusted EBITDA -
Corporate and
Consolidating (g)(h) $(20,989) $(18,474) $(39,233) $(35,870)
========= ========= ========= =========
Segment Reconciliations - CRO
Services:
------------------------------
Adjusted net sales - CRO
Services:
Net sales (a) $ 53,631 $ 50,239 $102,804 $ 97,661
Reimbursable out-of-pockets
(a) (8,815) (8,157) (16,181) (15,445)
--------- --------- --------- ---------
Adjusted net sales - CRO
Services (f) $ 44,816 $ 42,082 $ 86,623 $ 82,216
========= ========= ========= =========
Adjusted EBIT - CRO Services:
EBIT $ 3,800 $ 2,904 $ 6,468 $ 3,634
Special items (g) 600 252 1,374 2,070
--------- --------- --------- ---------
Adjusted EBIT - CRO
Services (g) $ 4,400 $ 3,156 $ 7,842 $ 5,704
========= ========= ========= =========
Adjusted EBITDA - CRO
Services: (h)
EBITDA (h) $ 4,250 $ 3,381 $ 7,357 $ 4,588
Special items (g) 600 252 1,374 2,070
--------- --------- --------- ---------
Adjusted EBITDA - CRO
Services (g)(h) $ 4,850 $ 3,633 $ 8,731 $ 6,658
========= ========= ========= =========

DEFINITIONS:
------------------------------
GAAP: Amounts that conform with U.S. Generally Accepted Accounting
Principles ("GAAP").
Non-GAAP: Amounts that do not conform with U.S. GAAP.

The footnotes presented at the separate "Footnotes to Financial
Information" pages are an integral part of this financial
information.
*T

-0-
*T
Omnicare, Inc. and Subsidiary Companies
Footnotes to Financial Information
(000s, except per share amounts and unless otherwise stated)
Unaudited

(a) In accordance with Emerging Issues Task Force ("EITF") Issue No.
01-14, "Income Statement Characterization of Reimbursements
Received for 'Out-of-Pocket' Expenses Incurred" ("EITF No. 01-
14"), Omnicare, Inc. ("Omnicare" or the "Company") has recorded
reimbursements received for "out-of-pocket" expenses on a
grossed-up basis in the income statement as net sales and cost
of sales. The respective amounts are disclosed at the "Segment
Reconciliations - CRO Services" section of the Financial
Information. EITF No. 01-14 relates solely to the Company's
contract research services business.
(b) The Company continues to be impacted by the unilateral reduction
in April 2006 by UnitedHealth Group and its Affiliates
("United") in the reimbursement rates paid by United to Omnicare
by switching to its PacifiCare pharmacy network contract for
services rendered by Omnicare to beneficiaries of United's drug
benefit plans under the Medicare Part D program. The
differential in reimbursement rates that resulted from United's
action, as compared with reimbursement rates under the
originally negotiated contract, reduced sales and operating
profit for the three and six months ended June 30, 2008 by
approximately $24 million and $47 million (approximately $15
million and $29 million after taxes, or approximately $0.12 and
$0.24 per diluted share), respectively, and cumulatively since
April 2006 by approximately $246 million (approximately $153
million after taxes or approximately $1.26 per diluted share).
This matter is currently the subject of litigation initiated by
Omnicare and is before the federal court in the Northern
District of Illinois.
(c) The three months ended June 30, 2008 and 2007 include the
following special items:
(i) For the three months ended June 30, 2008 and 2007,
operating income includes restructuring and other related
charges of $10,784 and $6,250 before taxes ($6,682 and
$3,838 after taxes, or $0.06 and $0.03 per diluted share),
respectively. Approximately $10,784 and $7,829 of the
pretax charge for the three months ended June 30, 2008 and
2007 ($6,682 and $4,807 after taxes, or $0.06 and $0.04
per diluted share), respectively, relates to the
implementation of the "Omnicare Full Potential" Plan, a
major initiative primarily designed to re-engineer the
pharmacy operating model to increase efficiency and
enhance customer growth. Approximately $(1,579) of the
pretax charge for the three months ended June 30, 2007
($(970) after taxes, or $(0.01) per diluted share) relates
to the Company's previously disclosed consolidation and
productivity initiative related, in part, to the
integration of the NeighborCare, Inc. ("NeighborCare")
acquisition and other related activities ("2005 Program").
(ii) The three months ended June 30, 2008 and 2007 also include
special litigation and other related professional fees of
$16,022 and $9,010 before taxes ($10,067 and $5,532 after
taxes, or $0.08 and $0.05 per diluted share),
respectively. The $16,022 pretax charge for the three
months ended June 30, 2008 relates primarily to
litigation-related professional expenses in connection
with the Company's lawsuit against United, certain other
large customer disputes, the investigation by the United
States Attorney's Office, District of Massachusetts, the
purported class and derivative actions, the investigation
by the federal government, and certain states relating to
drug substitutions, and the Company's response to
subpoenas it received relating to other legal proceedings
to which the Company is not a party. The $9,010 pretax
charge for the three months ended June 30, 2007 relates
primarily to litigation-related professional expenses in
connection with the investigation by the United States
Attorney's Office, District of Massachusetts, the
purported class and derivative actions, the Company's
lawsuit against United, the inquiry conducted by the
Attorney General's office in Michigan relating to certain
billing issues under the Michigan Medicaid program, the
investigation by the federal government and certain
states relating to drug substitutions, and the Company's
response to subpoenas it received relating to other legal
proceedings to which the Company is not a party.
(iii) For the three months ended June 30, 2008, operating income
includes a special charge of $1,740 before taxes ($1,560
and $180 was recorded in the cost of sales and operating
expense sections of the income statement, respectively)
($1,089 after taxes, or $0.01 per diluted share) for costs
associated with the previously disclosed Heartland Repack
Services quality control, product recall and fire issues
("Heartland Matters"). For the three months ended June 30,
2007, operating income includes a special charge of $4,911
before taxes ($4,015 and $896 was recorded in the cost of
sales and operating expense sections of the income
statement, respectively) ($3,015 after taxes, or $0.02 per
diluted share) for costs associated with the Heartland
Matters.
(d) The six months ended June 30, 2008 and 2007 include the following
special items:
(i) For the six months ended June 30, 2008 and 2007, operating
income includes restructuring and other related charges of
$17,232 and $15,424 before taxes ($10,560 and $9,508 after
taxes, or $0.09 and $0.08 per diluted share),
respectively. Approximately $17,232 and $17,003 of the
pretax charge for the six months ended June 30, 2008 and
2007 ($10,560 and $10,477 after taxes, or $0.09 and $0.09
per diluted share), respectively, relates to the
implementation of the "Omnicare Full Potential" Plan, a
major initiative primarily designed to re-engineer the
pharmacy operating model to increase efficiency and
enhance customer growth. Approximately $(1,579) of the
pretax charge for the six months ended June 30, 2007
($(970) after taxes, or $(0.01) per diluted share) relates
to the 2005 Program.
(ii) The six months ended June 30, 2008 and 2007 also include
special litigation and other related professional fees of
$37,664 and $15,917 before taxes ($23,080 and $9,801 after
taxes, or $0.19 and $0.08 per diluted share),
respectively. The $37,664 pretax charge for the six months
ended June 30, 2008 relates primarily to litigation-
related professional expenses in connection with the
Company's lawsuit against United, certain other large
customer disputes, the investigation by the United States
Attorney's Office, District of Massachusetts, the
purported class and derivative actions, the investigation
by the federal government and certain states relating to
drug substitutions, and the Company's response to
subpoenas it received relating to other legal proceedings
to which the Company is not a party. The $15,917 pretax
charge for the six months ended June 30, 2007 relates
primarily to litigation-related professional expenses in
connection with the investigation by the United States
Attorney's Office, District of Massachusetts, the
purported class and derivative actions, the Company's
lawsuit against United, the inquiry conducted by the
Attorney General's office in Michigan relating to certain
billing issues under the Michigan Medicaid program, the
investigation by the federal government and certain states
relating to drug substitutions, and the Company's response
to subpoenas it received relating to other legal
proceedings to which the Company is not a party.
(iii) For the six months ended June 30, 2008, operating income
includes a special charge of $3,633 before taxes ($3,134
and $499 was recorded in the cost of sales and operating
expense sections of the income statement, respectively)
($2,227 after taxes, or $0.02 per diluted share) for costs
associated with the Heartland Matters. For the six months
ended June 30, 2007, operating income includes a special
charge of $10,703 before taxes ($8,311 and $2,392 was
recorded in the cost of sales and operating expense
sections of the income statement, respectively) ($6,594
after taxes, or $0.05 per diluted share) for costs
associated with the Heartland Matters.
(e) Omnicare believes that investors' understanding of Omnicare's
performance is enhanced by the Company's disclosure of certain
non-GAAP financial measures as presented in this financial
information. Omnicare management believes that the adjusted non-
GAAP financial results information is useful to investors by
providing added insight into the Company's performance through
focusing on the results generated by the Company's ongoing core
operations, which is also the primary purpose that Omnicare
management uses the adjusted non-GAAP financial results.
Omnicare's method of calculating these measures may differ from
those used by other companies and, therefore, comparability may
be limited.
(f) The noted presentation excludes amounts that Omnicare is required
to record in its income statement pursuant to EITF No. 01-14, as
previously discussed in footnote (a) above.
(g) The noted presentation for the three and six months ended June
30, 2008 and 2007 excludes the special items discussed in
footnotes (c) and (d) above. Management believes these special
items are not related to Omnicare's ordinary course of business,
as previously discussed in footnote (e) above.
(h) EBITDA represents earnings before interest expense (net of
investment income), income taxes, depreciation and amortization.
Omnicare uses EBITDA primarily as an indicator of the Company's
ability to service its debt, and believes that certain investors
find EBITDA to be a useful financial measure for the same
purpose. However, EBITDA does not represent net cash flows from
operating activities, as defined by U.S. GAAP, and should not be
considered as a substitute for operating cash flows as a measure
of liquidity. Omnicare's calculation of EBITDA may differ from
the calculation of EBITDA by others. Certain reclassifications
of prior-year depreciation and amortization amounts have been
made to conform with the current-year presentation.
(i) Free cash flow represents net cash flows from operating
activities less capital expenditures and dividends paid by the
Company. Omnicare believes that certain investors find free cash
flow to be a helpful measure of cash generated from current
operations, net of cash used for its ongoing capital
expenditures and dividend payment requirements. Omnicare's
calculation of free cash flow may differ from the calculation of
free cash flow by others.
(j) EPS (basic EPS; special items, net of taxes; adjusted basic EPS;
diluted EPS; and adjusted diluted EPS) is reported independently
for each amount presented. Accordingly, the sum of the
individual amounts may not necessarily equal the separately
calculated amounts for the corresponding period.
(k) On March 27, 2008, the Company announced that its Board of
Directors authorized a new program to repurchase, from time to
time, shares of Omnicare's outstanding common stock having an
aggregate value of up to $100 million, depending on market
conditions and other factors. In the three months ended June 30,
2008, the Company repurchased approximately 4.1 million shares
at a cost of approximately $100 million. Accordingly, as of June
30, 2008, the Company had utilized the full amount of share
repurchase authority and successfully completed the program.
These repurchases were made in open market or privately
negotiated transactions in compliance with Securities and
Exchange Commission Rule 10b-18 and other applicable legal
requirements. On June 30, 2008, Omnicare had approximately 118.2
million shares of common stock outstanding.
*T

Omnicare, Inc.
Cheryl D. Hodges, 859-392-3331

Copyright Business Wire 2008