Omnicare initiates voluntary Chapter 11 process

December 2025 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

December 2025 Issue

Omnicare, a US-based healthcare company and subsidiary of CVS Health, has filed for Chapter 11 bankruptcy protection, alongside 110 affiliated entities. The filing follows a nearly $1bn civil judgment related to the fraudulent dispensing of prescription drugs.

In April 2025, the US Department of Justice found Omnicare liable for submitting over three million false claims to Medicare, Medicaid and TRICARE between 2010 and 2018. These claims involved dispensing medications without valid prescriptions to elderly and disabled individuals in assisted living and long-term care facilities. The jury awarded $135.6m in damages, which the government tripled under the False Claims Act, resulting in a total penalty of $406.8m plus statutory fines. In July, a federal judge upheld the verdict and ordered Omnicare to pay $948.8m in penalties and damages.

“Omnicare has a proud history of providing industry-leading, pharmacy and clinical care solutions to long-term care providers and their residents,” said David Azzolina, president of Omnicare, in response to the ruling. “Omnicare has been engaged in a civil lawsuit alleging technical violations of pharmacy law based on practices the government knew about and approved.

“There were no allegations of harm to any Omnicare patients nor did the government allege that any patient got anything other than the medicine they needed when they needed it,” he continued. “The court nevertheless imposed an extreme and, we believe, unconstitutional penalty. 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.”

CVS Health acquired Omnicare in 2015 for $12.7bn. The company provides pharmacy services to long-term care markets, including skilled nursing facilities and assisted living communities. However, CVS began exploring divestment options in 2022, citing declining strategic value and financial performance.

Omnicare’s Chapter 11 filing, made in the US Bankruptcy Court for the Northern District of Texas, aims to address both the litigation outcome and broader financial pressures within the long-term care pharmacy sector. The company has secured $110m in debtor-in-possession financing, which, pending court approval, will support ongoing operations and ensure liquidity throughout the restructuring process.

Despite the bankruptcy, Omnicare has pledged to maintain uninterrupted pharmacy and clinical services. It has filed customary motions seeking court authorisation to continue paying employee wages and benefits and to honour vendor agreements for goods and services provided after the filing date.

“As we move through this process, we remain fully committed to providing optimal care for the residents and customers we serve,” noted Mr Azzolina. “We are grateful to our facility and senior living community partners for their continued support. I want to thank the entire Omnicare team for their unwavering dedication and passion they bring to delivering the high level of service and clinical expertise that sets Omnicare apart.”

Recent developments indicate that Omnicare has begun consolidating operations, including the closure of its Sacramento pharmacy, resulting in 64 layoffs. Services from that location are being transferred to another facility in northern California to ensure continuity of care. CVS Health has stated that maintaining access to pharmacy services remains a key consideration in any closure decision.

Omnicare’s restructuring strategy remains under evaluation. Options include a standalone reorganisation or a potential sale, depending on market interest and the outcome of court proceedings. CVS Health has not confirmed whether it will retain the subsidiary or divest it entirely, though analysts suggest Omnicare represents only a small fraction of CVS’s overall business.

The Chapter 11 process is expected to take several months. A meeting of creditors is scheduled for 3 November 2025, and Omnicare is expected to provide further updates as proceedings advance.

Fraser Tennant