Significant Accounting Policies Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2015

Significant Accounting Policies [Abstract]

Fair Value Measurement, Policy [Policy Text Block]

Embedded in certain series of the Company’s convertible debt securities are derivative instruments - contingent interest provisions, interest reset provisions and contingent conversion parity provisions. The embedded derivatives are valued quarterly using Level 3 inputs, and at March 31, 2015 and December 31, 2014, the values of the derivatives embedded in the convertible debt securities were not material. See “Note 5 - Debt”.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-based compensation expense recognized in the Consolidated Statement of Comprehensive Income for stock options, restricted stock units, performance share units and stock awards totaled approximately $5 million for the three months ended March 31, 2015 and $6 million for the three months ended March 31, 2014.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company’s quarterly effective tax rates are different than the federal statutory rate for the three months ended March 31, 2015 and 2014 primarily as a result of the impact of state and local income taxes. Additionally, the effective rate for the three months ended March 31, 2014 was impacted by the favorable resolution of the Internal Revenue Service exam of the Company’s tax returns for the 2011 and 2012 tax years.

Finance, Loans and Leases Receivable, Policy [Policy Text Block]

As of March 31, 2015 and December 31, 2014, gross notes receivable were approximately $77 million and $81 million, respectively, of which approximately $50 million and $52 million, respectively, were included in “Other current assets” on the Consolidated Balance Sheets. As of March 31, 2015 and December 31, 2014, the allowance for credit losses on the notes receivable was approximately $11 million and $13 million, respectively, which was included in “Other current assets” on the Consolidated Balance Sheets.

Interest income on the notes receivable is recognized on an accrual basis when earned. Interest income was $1 million for the three months ended March 31, 2015 and 2014.

Significant Accounting Policies [Text Block]

Interim Financial Data

The interim financial data is unaudited; however, in the opinion of Omnicare management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the Omnicare consolidated results of operations, financial position and cash flows for the interim periods presented have been made. All significant intercompany accounts and transactions have been eliminated.

Accounts Receivable

The following table is an aging of the Company’s gross accounts receivable (net of allowances for contractual adjustments), aged based on payment terms and categorized based on the three primary types of payors (in thousands):



March 31, 2015	Current and 0-180 Days Past Due		181 Days and Over Past Due		Total
Medicare (Part D and Part B), Medicaid and third-party payors	$	221,631	$	36,072	$	257,703
Facility payors	321,127		93,482		414,609
Private pay payors	71,930		102,793		174,723
Total gross accounts receivable	$	614,688	$	232,347	$	847,035
December 31, 2014
Medicare (Part D and Part B), Medicaid and third-party payors	$	184,492	$	28,818	$	213,310
Facility payors	297,308		99,036		396,344
Private pay payors	69,693		101,289		170,982
Total gross accounts receivable	$	551,493	$	229,143	$	780,636

Sourcing Agreement

Effective January 1, 2015, the Company entered into a pharmaceutical sourcing agreement with McKesson Corporation (“McKesson”). The agreement has a five-year term, but both parties are able to terminate the agreement at the end of 2017. Under the agreement, with limited exceptions, the Company will purchase its branded and generic pharmaceutical products from McKesson.

Notes Receivable

Interest income on the notes receivable is recognized on an accrual basis when earned. Interest income was $1 million for the three months ended March 31, 2015 and 2014.

Fair Value

Stock-Based Compensation

Other Charges

Other charges (on a pre-tax basis) consist of the following (in thousands):



	Three Months Ended March 31,
	2015		2014
Separation and other employee related costs	$	571	$	10,276
Acquisition and other related costs	478		—
Total - other charges	$	1,049	$	10,276

Separation and Other Costs

In the three months ended March 31, 2015 and 2014, the Company incurred separation-related costs and accelerated stock based compensation expense for certain employees of approximately $0.6 million and $10 million, respectively. These charges are reflected in “Other charges” on the Consolidated Statement of Comprehensive Income.

Acquisition and Other Related Costs

The Company completed one acquisition, which was not significant to the operations of the Company, in the three months ended March 31, 2015. The Company incurred professional fees and acquisition related costs, which are included in “Other charges” on the Consolidated Statement of Comprehensive Income.

Income Taxes

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss (“AOCI”) consists of the following (in thousands):



	March 31, 2015			December 31, 2014
Unrealized loss on fair value of investments	$	(300	)	$	(300	)
Pension and post-employment benefits	(2,375		)	(2,525		)
Total accumulated other comprehensive loss, net	$	(2,675	)	$	(2,825	)

The amounts are net of applicable tax benefits, which were not material at March 31, 2015 and December 31, 2014. The reclassifications out of AOCI did not materially affect any individual line item on the Consolidated Statement of Comprehensive Income.

Common Stock Repurchase Program

In the three months ended March 31, 2015 and 2014, the Company repurchased approximately 1.8 million shares of its common stock for $125 million, and approximately 1.6 million shares of its common stock for $95 million, respectively. Through March 31, 2015, the Company has repurchased approximately 29.3 million shares under its share repurchase programs at an aggregate cost of approximately $1 billion and had authority to repurchase approximately $140 million of additional shares of common stock.

As part of its share repurchase programs, in December 2014, the Company entered into two accelerated share repurchase agreements (“ASRs”) with third-party financial institutions. Under the first ASR, the Company paid $75 million and received approximately 0.8 million shares of its common stock valued at $60 million in December 2014. The $15 million balance was recorded as an equity forward contract, included in paid-in capital at December 31, 2014, and settled in January 2015 with approximately 0.2 million additional shares of common stock. Under the second ASR, the Company paid $100 million and received approximately 1.1 million shares valued at $80 million in January 2015. The $20 million equity forward contract settled in February 2015 with approximately 0.2 million additional shares of common stock.

Recently Issued Accounting Standards

In April 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-03 “Simplifying the Presentation of Debt Issuance Costs”. The update requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. The Company is currently in the process of evaluating the impact of adoption of this ASU on its Consolidated Financial Statements.

In February 2015, the FASB issued ASU 2015-02 “Amendments to the Consolidation Analysis”. The amendments in this update change the analysis that a reporting entity must conduct to determine whether limited partnerships and similar legal entities should be consolidated. The guidance responds to public concerns that current accounting for certain legal entities might require a reporting entity to consolidate another legal entity in situations in which the reporting entity’s contractual rights do not give it the ability to act primarily on its own behalf, the reporting entity does not hold a majority of the legal entity’s voting rights, or the reporting entity is not exposed to a majority of the legal entity’s economic benefits or obligations. The update is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company does not anticipate that the adoption of this standard will have a material impact on its Consolidated Financial Statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, which provides guidance for revenue recognition. The standard’s core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosures. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016. The Company is currently in the process of evaluating the impact of adoption of this ASU on its Consolidated Financial Statements.

Trade and Other Accounts Receivable, Policy [Policy Text Block]

Accounts Receivable



March 31, 2015	Current and 0-180 Days Past Due		181 Days and Over Past Due		Total
Medicare (Part D and Part B), Medicaid and third-party payors	$	221,631	$	36,072	$	257,703
Facility payors	321,127		93,482		414,609
Private pay payors	71,930		102,793		174,723
Total gross accounts receivable	$	614,688	$	232,347	$	847,035
December 31, 2014
Medicare (Part D and Part B), Medicaid and third-party payors	$	184,492	$	28,818	$	213,310
Facility payors	297,308		99,036		396,344
Private pay payors	69,693		101,289		170,982
Total gross accounts receivable	$	551,493	$	229,143	$	780,636

Common Stock Repurchase Agreement [Policy Text Block]

Common Stock Repurchase Program

- Definition

Disclosure of accounting policy for finance, loan and lease receivables, including those held for investment and those held for sale. This disclosure may include (1) the basis at which such receivables are carried in the entity's statements of financial position (2) how the level of the allowance for loan and lease losses is determined (3) when impairments, charge-offs or recoveries are recognized for such receivables (4) the treatment of origination fees and costs, including the amortization method for net deferred fees or costs (5) the treatment of any premiums or discounts or unearned income (6) the entity's income recognition (revenues, expenses and gains and losses arising from committing to issue, issuing, granting, collecting, terminating, modifying and holding loans) policies for such receivables, including those that are impaired, past due or placed on nonaccrual status and (7) the treatment of foreclosures or repossessions.

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- Definition

Disclosure of accounting policy for income taxes, which may include its accounting policies for recognizing and measuring deferred tax assets and liabilities and related valuation allowances, recognizing investment tax credits, operating loss carryforwards, tax credit carryforwards, and other carryforwards, methodologies for determining its effective income tax rate and the characterization of interest and penalties in the financial statements.

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- Definition

The entire disclosure for all significant accounting policies of the reporting entity.

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- Definition

Disclosure of accounting policy for trade and other accounts receivables. This disclosure may include the basis at which such receivables are carried in the entity's statements of financial position (for example, net realizable value), how the entity determines the level of its allowance for doubtful accounts, when impairments, charge-offs or recoveries are recognized, and the entity's income recognition policies for such receivables, including its treatment of related fees and costs, its treatment of premiums, discounts or unearned income, when accrual of interest is discontinued, how the entity records payments received on nonaccrual receivables and its policy for resuming accrual of interest on such receivables. If the enterprise holds a large number of similar loans, disclosure may include the accounting policy for the anticipation of prepayments and significant assumptions underlying prepayment estimates for amortization of premiums, discounts, and nonrefundable fees and costs.

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