Kindred shifts allegiance to Omnicare from PharMerica

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Omnicare President and COO Nitin Sahney says his company is aligned with Kindred's infrastructure.
Omnicare President and COO Nitin Sahney says his company is aligned with Kindred's infrastructure.

Kindred Healthcare will split with PharMerica and instead partner with Omnicare in 2014, marking a significant change in the landscape of long-term care pharmacy services providers.

Securities and Exchange Commission documents filed June 21 confirmed that Kindred will not renew its PharMerica contract for skilled nursing services after it lapses Dec. 31. Under a separate contract, PharMerica will continue to provide pharmacy management for Kindred hospitals through 2014.

Omnicare, the sector's largest pharmacy provider, has an infrastructure that “aligns very well with Kindred's own operational footprint,” and the company will be able to provide “consistent service” to Kindred facilities nationwide, Omnicare President and Chief Operating Officer Nitin Sahney told McKnight's

Omnicare also will be able to support Kindred's strategic goals, thanks to its “clinical and operational capabilities” across the continuum of care, Sahney added.

PharMerica will have lower costs by not serving Kindred, a Bank of America analyst noted, preserving the company's “buy” rating. However, PharMerica share prices slid upon news of the contract loss. Kindred's nursing facilities accounted for 11.5% of PharMerica's revenue in 2012, according to the pharmacy's annual report. The SNF deal suggests Omnicare might also  take over Kindred's hospital contract in 2015, according to some observers. 

Last February, Omnicare abandoned a $441 million unsolicited takeover bid for PharMerica after the Federal Trade Commission filed suit to block the deal.

Later in the year, PharMerica lost major contracts when Fillmore Capital Partners, owner of Golden Living, created its own pharmaceutical services company, AlixaRx. The newcomer to the sector recently received a $100 million investment from FCP.


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