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SWOT Analysis of Omnicare Inc. (OCR)

SWOT Analysis of Omnicare Inc. (OCR)

1. Introduction

Company Mission Statement
According to Omnicare’s website, www.omnicare.com, their mission statement is: “The best way Omnicare can benefit the individuals we serve is to consistently provide excellent service. Through decades of experience, Omnicare has developed a deep understanding of the daily, practical needs of our long term care and specialty care customers. Most of what we do fulfills those needs directly or through technology products used by our customer base. Every Omnicare employee, at every level, recognizes their commitment to the people we serve. Taken all together, our work is the best evidence that Omnicare believes in and lives its mission.” (Omnicare Inc., 2013) They have built their company using 4 core values to describe what the company is about and what principles the company were founded upon, they are: 1. Excellence-We believe in building customers for life by strengthening and deepening our relationships through a commitment to excellence in each and every action; we do things right. (Omnicare Inc., 2013) 2. Integrity-We act with honor and do the right thing-for our employees, our customers, our company, and our society. We hold ourselves, each other, and our company accountable to the highest standard. We act with courage to question any actions inconsistent with our values, our mission, or our responsibility to all of our shareholders. (Omnicare Inc., 2013) 3. Service-We demonstrate in our actions that we respect and serve the best interests of our employees, our customers, and our company; we follow through. (Omnicare Inc., 2013) 4. Compassion-With every life we touch, we listen and act with understanding. We are open and honest with each other and in our interactions with those we serve. We demonstrate a respect for others that deepens our long-term relationships with customers and strengthens the community of our company. (Omnicare Inc., 2013)
Background
The history of the company can be found on their website, here is what they have listed, “Omnicare, Inc., a Fortune 400 company based in Cincinnati, Ohio, provides comprehensive pharmaceutical services to patients and providers across North America. As the market-leader in professional pharmacy, related consulting and data management services for skilled nursing, assisted living and other chronic care institutions, Omnicare leverages its unparalleled clinical insight into the geriatric market along with some of the industry’s most innovative technological capabilities to the benefit of its long term care customers. Omnicare also provides key commercialization services for the bio-pharmaceutical industry and end-of-life disease management through its Specialty Care Group.” (Omnicare Inc., 2013)

2. Current Stock Information
The current stock information as taken from yahoo finance is:
Omnicare Inc. (OCR) -NYSE
39.09 0.16(0.41%) Jan 25, 4:02PM EST | After Hours: 38.98 0.11 (0.28%) Jan 25, 4:10PM EST

| | | | | | | | Prev Close: | 38.93 | 52wk Range: | 29.24 - 39.09 | Open: | 39.03 | Volume: | 617,664 | Bid: | 35.56 x 100 | Avg Vol (3m): | 1,087,340 | Ask: | 42.56 x 100 | Market Cap: | 4.32B | 1y Target Est: | 40.44 | P/E (ttm): | 26.65 | Beta: | 1.41 | EPS (ttm): | 1.47 | Next Earnings Date: | 13-Feb-19 | Div & Yield: | 0.56 (1.40%) | Day's Range: | 38.73 - 39.09 | | |

(Yahoo Inc., 2013)
3. Company Strengths and Weaknesses

Company Strengths 1. Aggressive Acquisition Strategy a. The company has a keen eye on acquiring different firms that can bring expansion to the brand and still provide great service. A couple of the brands they have purchased, they have “nursed back to health” so to speak and then sold them for a profit later on down the road. 2. Diversified Service Offerings b. Omnicare is unique in that healthcare firms usually provide one service to focus their profit on; Omnicare has two main focus groups, Long Term Care and Pharmaceutical. They also provide technological services to all of their sites and they have a few smaller services they provide on a one off basis. With a good mix of services provided, they have diversified themselves and in turn make more profit from providing these services. 3. Technology Integration c. Omnicare has recently upgraded their infrastructure and technology associated with every site to make everything more uniform. They do not have EPIC to use at the different sites, but they have custom sites for ordering scripts, requesting services, letting hospitals access a secure part of the site to send information back and forth from hospital to pharmacy. They have made part of the business proprietary within the organization and that is one of the innovations that have served them well. 4. Large Customer Base d. They also have a large customer base built up from just the Omnicare name, but with all of the acquisitions they have initiated, they have also acquired those customers as well. People have been satisfied with the Omnicare’s service and support, and that is the main catalyst for them to make the decision to stay and continue to receive service from Omnicare.
I have compiled a strength chart to show some metrics where the company falls into place with some of the common strength areas that companies are evaluated on. (SWOT Analyzer, 2013)

Company Weaknesses 1. Declining Market Share in Sector a. Due to the economy being in the shape it is in, Omnicare has taken some hits in the NYSE and shares have fallen from what they have been in the past, even though the company is currently on a 52 week high, their market shares used to be almost double of what they are now. Omnicare has the ability to get back up to that mark, but it will not be in this economy. 2. Some facilities are obsolete and outdated b. Some of the facilities that Omnicare owns still have to be updated and made uniform with some of the pharmacies and long term care facilities that have been established as “flagship” facilities. They have the technological strength to lead the market, but some of the facilities lack the updated technology that is needed to lead the market. If these sites remain outdated and obsolete with older equipment it can be just enough to hurt Omnicare’s profit in the areas where they have outdated facilities.
I have compiled a weakness chart to show some metrics where the company falls into place with some of the common weakness areas that companies are evaluated on. (SWOT Analyzer, 2013)

4. Company Opportunities and Risks

Company Opportunities 1. Demographic Trends a. Favorable demographic trends favor this market because health care and peripheral industries will continue to grow into the foreseeable future. The health care industry has positive characteristics toward long term care, advanced care, and pharmaceutical, because the average age gap and number of older people from aging generations are increasing. Long-term demographic trends favor an increase in demand for health services worldwide. Consumers are getting older and continue to grow large in number. Demographic trends will benefit companies, which supply health, medical devices, and pharmaceutical aid over time. Demographic Trends will have a long-term positive impact on this entity, due to more and more people getting older and needing care, which adds to its value. The outlook of their core values and continued growth will ensure that Omnicare will continue to grow, diversify, and prosper. 2. Acquisition of Advanced Care Scripts b. With the acquisition of ACS (Advanced Care Scripts), Omnicare has the opportunity to enhance their dominance in the market by providing advanced care to treat cancer, infectious diseases, auto-immune disorders, multiple sclerosis, hemophilia and other advanced diseases. This will not only allow them to have market gain but increase revenue in areas where there are a small amount of competitors. This opportunity is growing smaller and smaller every year since more and more healthcare providers are looking at areas they have not been in before to increase revenue, so the competition is growing.
I have compiled an opportunity chart to show some metrics where the company falls into place with some of the common opportunity areas that companies are evaluated on. (SWOT Analyzer, 2013)

Company Threats 1. Regulatory Compliance a. Omnicare is a company of many roles and responsibilities, because of this they have to follow many regulatory requirements. For instance, Omnicare has to comply with HIPAA, HITECH, SOX, PCI DSS, FDA regulation, DEA regulation, and State Board of Pharmacies rules and regulations to continue doing business. Each one of these have specific and unique rules that need to be followed and administered to each facility that Omnicare owns and operates, depending on what state the facility is in then it can be completely different than another state. If the company is found not complying with any of these regulatory agencies then they can fine the company and cause major damage to the brand of the company. To mitigate this risk the company has put in place a privacy and compliance department with a Chief Privacy Officer and Chief Compliance Officer who make sure the company as a whole are following all regulatory guidelines and rules as set forth by the agencies mentioned above. 2. Rapid Technological Change b. In this industry there is major change to the equipment needed if you want to lead the competition, if you have sites that are outdated and obsolete then you will lose your foothold and your company will decline as a leader and innovator. A lot of technological change is dictated by the regulatory agencies referenced above as in healthcare you have to have certain types of encryption and IT security controls in place to make sure that PHI (Private Healthcare Information) or PII (Personally Identifiable Information) is not breached and out in the open or you will be fined and the company can incur brand damage. If you do not keep up on technology then the competition can move past you as a leader and innovator and gain revenue while you lose revenue. There are many forces that dictate the need to upgrade technology and if Omnicare continues to grow their technological prowess then they will have this threat mitigated. 3. Intense Competition c. Omnicare is not an international company, all of their facilities are based here in the US and they have no plans of taking the company international any time soon, but competition here in the US is continually growing and improving, if Omnicare wants to continue to prosper and grow then this means taking more risks than they would normally take and to continue to diversify what they do. With the FTC putting a hold on any more acquisitions they will have to rely on innovation and creating services that not many retailers offer. This can be an opportunity but with the pressure of competition in the air that makes this a threat to the prosperity of the company.
I have compiled an opportunity chart to show some metrics where the company falls into place with some of the common opportunity areas that companies are evaluated on. (SWOT Analyzer, 2013)

Conclusion
In conclusion I have shown that Omnicare is a robust and strong company who has some weaknesses to overcome but through the opportunities that is presented to Omnicare, they can strengthen their resolve and continue to be a leader. Through the technology accomplishments they have achieved, their large customer base, and their diversified service strategy through acquiring new smaller companies, they will continue to welcome increased profit and revenue. Even though the economy has taken a toll on the industry, they still have managed to stay positive in market share; they also must overcome a plague of sites that suffer from inadequate technological needs to maintain a strong hold on the market. Some things that are presented to the company that they can take advantage of are the ever changing demographic trends since more and more people are getting older and they have the need for care and medicine. The acquisition of ACS is another opportunity that they have and could reap major reward for the company if they use it to their full potential. They should also look at expanding the company internationally to make their services available worldwide. One of the biggest threats the company faces are following all of the regulatory rules and guidelines that are set by the federal, state, and local level in addition to various vendor guidelines, if they do not follow these it can cause a lot of brand damage to the company from which they might not fully recover from. Competition is always a risk for any company because they will always try to innovate and make solutions to put them ahead of you, but if Omnicare allows their technology to falter and they do nothing to innovate and accept change within the ever changing healthcare field then they will succumb to the competition and not be a leader. Omnicare has a strong outlook and by establishing a set of core values to follow and base their decisions on, they will continue to be strong and experience a steady growth once the economy is straightened out.
Looking back at the total strengths, weaknesses, opportunities, and threats, we can make a visual representation of this that I will include below. (SWOT Analyzer, 2013)

Works Cited
SWOT Analyzer. (2013, 1 26). Retrieved from Microsoft Office Templates: http://office.microsoft.com/en-us/templates/results.aspx?qu=SWOT&ex=2&av=zxl150#ai:TC010361038|
Omnicare Inc. (2013, 1 26). Core Values. Retrieved from About Us: Omnicare Inc.: http://www.omnicare.com/about-us/core-values.aspx
Omnicare Inc. (2013, 1 26). Corporate Profile. Retrieved from Omnicare Investor Relations: http://ir.omnicare.com/phoenix.zhtml?c=65516&p=irol-homeProfile&t=&id=&
Omnicare Inc. (2013, 1 26). Our Mission. Retrieved from About Us: Omnicare Inc.: http://www.omnicare.com/about-us/our-mission.aspx
Yahoo Inc. (2013, 1 26). Omnicare NYSE stock quote. Retrieved from Yahoo: http://finance.yahoo.com/q?s=OCR&ql=1