A Texas federal bankruptcy court on Friday canceled long-term care pharmacy services provider Omnicare’s auction and approved the stalking horse bid by GenieRx Holdings, setting up a sale hearing next week.
In a notice of cancellation of the May 5 auction, the US Bankruptcy Court for the Northern District of Texas, Dallas Division, announced GenieRx Holding’s stalking horse bid as the successful bidder to purchase substantially all of the company’s assets.
Cincinnati-based Omnicare announced last month that it had entered into a sales agreement with GenieRx Holdings, which offers virtual healthcare and medication services, in a joint partnership between private investment firm Milrose Capital and healthcare investment and management firm Integro Asset Management, doing business as Integro Healthcare Services. Judge Stacey G. Jernigan approved the agreement.
A sale hearing to consider approval of the sale of Omnicare’s assets is scheduled for May 13.
As a stalking horse bid, GenieRx set the floor for the sale of Omnicare’s assets, which was subject to higher or better offers from other qualified bidders. Last month when GenieRx was named as the stalking horse bidder, Omnicare President David Azzolina said the company was “pleased” to enter into the purchase agreement.
“GenieRx’s interest reflects the strength of Omnicare’s clinical expertise, the trust we have earned from the skilled nursing and senior living communities we serve, and the essential role our teams play in supporting high‑quality care for residents,” he said at the time.
Bankruptcy follows record judgment
A federal bankruptcy judge signed off on Omnicare’s bankruptcy sale process in December and established a timeline for that process. That timeline set the deadline for competing bids as April 30, and an auction for May 5 if qualified bids are received, followed by a May 13 sales hearing.
Omnicare had filed for Chapter 11 bankruptcy in September, citing the need to “resolve issues” related to senior living-related civil litigation that resulted in what the Department of Justice previously called “one of the largest damages verdicts rendered by a jury in a False Claims Act case.”
An almost $949 million judgment against Omnicare came after a jury found the company liable for fraudulently dispensing drugs without valid prescriptions to residents of assisted living communities and other non-skilled-nursing residential long-term care facilities.
In the case, United States of America ex rel. Uri Bassan, et al v. Omnicare, Inc., a judge awarded damages of more than $135 million against the company. The government was statutorily entitled to triple that amount, bringing the total damages award to $407 million.
The judge also imposed a $542 million statutory penalty for filing more than 3.3 million false claims to Medicare, Medicare and TRICARE and found parent company CVS Health jointly liable for $164.8 million of the penalty for “failure to stop Omnicare from continuing to submit false claims following its acquisition” of the company in 2015.
A CVS / Omnicare spokesperson previously told McKnight’s Senior Living: “This lawsuit centered on a highly technical prescription dispensing record keeping issue that was allowed by law in many states. The dispensing practices … ended in 2018, were used by many others in the industry at the time, and were accepted by CMS [the Centers for Medicare & Medicaid Services]. There was no claim in this case that any patient paid for a medication they shouldn’t have or that any patient was harmed.”
The company filed an appeal in the case, but that appeal was put on hold during the bankruptcy process.
In Omnicare’s bankruptcy announcement, Azzolina characterized the penalty imposed by the court as “extreme” and “unconstitutional.”
At the time of the bankruptcy announcement, Omnicare said it also intended to use the voluntary process “to address other financial challenges facing the broader long-term care pharmacy industry and to evaluate its restructuring options, including the implementation of a standalone restructuring or sale strategy.”