Dive Brief:
- A judge in Texas last week approved a bankruptcy plan for CVS’ Omnicare, winding down the pharmacy services division after it sold its business operations for $250 million and settled an almost $1 billion judgment for improperly billing government healthcare programs.
- Judge Stacey G. C. Jernigan of the U.S. Bankruptcy Court for the Northern District of Texas greenlit the plan on Thursday, almost a year after Omnicare filed for Chapter 11 bankruptcy.
- The plan, which reorganizes some Omnicare assets and liquidates others, will pay all creditors in full, and go into effect in October, a lawyer for Omnicare told Bloomberg Law.
Dive Insight:
CVS acquired Omnicare, which provides pharmacy and medication management to long-term care facilities like nursing homes, in 2015, betting that demand for its services would grow as the Baby Boomer generation aged. But Omnicare has proved a recent headache for the retail pharmacy giant.
Last July, a federal judge ordered CVS to pay almost $949 million in penalties and damages after a whistleblower case successfully proved Omnicare filed millions of false claims to Medicare, Medicaid and the military’s Tricare program.
Two months later, Omnicare filed for bankruptcy, citing billions of dollars in debt. And now, a judge has approved a roadmap for the pharmacy services provider to make its creditors — including the Department of Justice — whole, while offloading future responsibility from CVS.
The plan is structured around Omnicare’s sale to GenieRx Holdings, a partnership between private equity firm Milrose Capital and healthcare investment firm Integro Asset Management, for $250 million. Jernigan approved the sale in May.
The final bankruptcy plan also includes a negotiated settlement between Omnicare and the DOJ. The government agreed to settle its judgment claim in July, as long as CVS paid the DOJ $130 million within two weeks of the final agreement, and another $310 million by the end of March 2028.
CVS did not respond to multiple requests for comment on the approval of the bankruptcy plan. But the looming end of the Omnicare saga will likely be welcomed by the company, which has been focusing on a larger financial turnaround this year, especially improving its insurance profits.
