Omnicare says cash flow will significantly improve with more generic drugs available

By Jennifer Lanning Drey

Portland, Ore., Sept. 5 - Omnicare, Inc. expects its cash flow to significantly improve over the next few years as a projected surge in generic drugs comes onto the market, David W. Froesel Jr., chief financial officer of Omnicare, said Friday during a presentation at the Thomas Weisel Healthcare Conference in Boston.

Omnicare's margins are higher on generic drugs than on branded drugs, which is expected to help the company decrease receivables and inventory levels, freeing up a significant amount of cash, he said.

Inventory levels could drop from $400 million, where they sit today, to below $300 million over the next several years, Froesel said.

Additionally, changes implemented through the company's "Full Potential" plan are expected to increase cash flow by another $50 million to $100 million.

Omnicare's cash flow priorities include putting the cash back into the business through capital expenditures or acquisitions of pharmacies, paying down debt and buying back stock, Joel Gemunder, chief executive officer of the company, said during the presentation.

Omnicare evaluates each of the potential cash flow uses regularly and adjusts its priorities on an ongoing basis, he said.

Omnicare is a Covington, Ky.-based provider of pharmaceutical care for the elderly.

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