UPDATE 1-Omnicare profit misses, outlook cut; shares slump

Thu Aug 5, 2010 10:58am EDT

* Q2 EPS ex-items 48 cents vs Street view 62 cents

* Chops 2010 EPS view to $2.00-$2.10 from $2.60-$2.70

* Shares fall 10 pct

By Ransdell Pierson

NEW YORK, Aug 5 (Reuters) - Omnicare Inc (OCR.N), which provides pharmacy services to nursing homes, posted disappointing quarterly earnings and issued a full-year profit forecast far below Wall Street estimates, sending its shares down 10 percent.

The company, whose longtime CEO retired unexpectedly on Saturday, said the volume of drug prescriptions filled was down 3.8 percent.

It earned $11.6 million, or 10 cents a share, in the second quarter, down from $28.7 million, or 24 cents per share, a year earlier.

Excluding one-time items, it earned 48 cents per share. Analysts on average expected 62 cents, according to Thomson Reuters I/B/E/S.

Revenue fell 1.4 percent to $1.52 billion, a bit below Wall Street expectations of $1.53 billion.

During the quarter, Omnicare dispensed 29.8 million prescriptions, 3.8 percent fewer than in the year-earlier period.

Citing the weak trends, Omnicare slashed its full-year profit forecast to between $2.00 and $2.10 per share excluding special items. Just three months ago, it forecast $2.60 to $2.70 per share.

"While we are disappointed to be lowering our full-year 2010 guidance, we are looking at a variety of strategies to restore profitable top-line growth," James Shelton, Omnicare's interim chief executive, said in a statement.

Omnicare shares fell $2.52 to $22.74 in morning trading on the New York Stock Exchange.

WEAKNESS A SURPRISE - ANALYST

Leerink Swann analyst Jason Gurda said Omnicare's weak quarterly results caught Wall Street by surprise.

"When we visited with the company in mid-June, we didn't see any sign, or get any indication, that operations had deteriorated this much," Gurda said in a research note.

Gurda speculated the company was being conservative in its new 2010 profit view. He called the retirement of CEO Joel Gemunder a long-term positive that could lead to a "new or fresh growth strategy" for the Covington, Kentucky-based company.

Gemunder, 71, had been with Omnicare for decades, serving as president since 1981 and CEO since 2001.

Shelton, a board member of Omnicare and former chairman of Triad Hospitals, was picked to serve as Omnicare president and CEO until a permanent replacement for Gemunder is selected.

During the second quarter, Omnicare said it served nursing homes and other long-term care facilities with a total of 1.35 million beds, down from 1.37 million beds in the year-earlier period.

The company -- which operates in 47 states, the District of Columbia and Canada -- is the largest U.S. provider of pharmacy services to the elderly. (Reporting by Ransdell Pierson; editing by John Wallace)