CVS Health Subsidiary Omnicare Files for Bankruptcy After Civil Lawsuit Judgment
Omnicare, a CVS Health subsidiary that provides pharmacy services to skilled nursing facilities, independent and assisted living communities and other segments of the long-term care market, filed for bankruptcy Monday (Sept. 22).
The company said in a press release that it attributed the move to recent litigation and added that it will also use this process to address other financial challenges facing the entire long-term care pharmacy industry.
While doing so, Omnicare will evaluate the implementation of a standalone restructuring, a sale and other restructuring options, according to the release.
In the meantime, during the court-supervised Chapter 11 process, the company will continue to provide pharmacy services to its customers, per the release.
“As we move through this process, we remain fully committed to providing optimal care for the residents and customers we serve,” Omnicare President David Azzolina said in the release.
Bloomberg reported Monday that Omnicare was ordered to pay $949 million in a civil judgment in a case in which it was alleged that the company improperly dispensed prescription drugs to people in long-term care.
The company is challenging the judgment after a federal judge denied its request to overturn it in August, according to the report.
In its Monday press release, Azzolina said that the civil lawsuit alleged “technical violations of pharmacy law.”
Azzolina added that the suit did not allege any harm to Omnicare patients, “nor did the government allege that any patient got anything other than the medicine they needed when they needed it.”
“Given that ruling and a number of other issues facing our business, we now are taking necessary steps to move forward and ensure the continued delivery of safe and reliable pharmacy service to our customers,” Azzolina said.
CVS Health President and CEO David Joyner said during a July earnings call that CVS Health is navigating “what continues to be a dynamic and evolving environment.”
During a November 2024 earnings call, Joyner said: “The entire industry has seen pressure. The retail sector is pressured, lots of headwinds in this market.”
The challenges include increased competition from traditional and digital health players and rising costs in the company’s health benefits unit, PYMNTS reported at the time.
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