|                                                                                                  |  | 
|------------------------------------------------------------------------------------------------- |  | 
|UNITED
 STATES                                                                                   
|SECURITIES
 AND EXCHANGE COMMISSION                                                              
|Washington,
 D.C. 20549                                                                          
|                                                                                                 
|FORM 10-Q                                                                                        
|                                                                                                  |  | 
|(Mark
 One)                                                                                       |  | 
|[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF 
 THE SECURITIES EXCHANGE ACT OF 1934     
|For
 the quarterly period ended September 30, 2009 
 or                                          
|[    ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 
 THE SECURITIES EXCHANGE ACT OF 1934
|For
 the transition period from __________ to __________.                                        
|                                                                                                 
|Commission
 File Number 1-8269                                                                   

|                                                        |                | 
|------------------------------------------------------- | -------------- | 
|                                                        | OMNICARE, INC. | 
|                                                        |                | 
|(Exact
 name of registrant as specified in its charter)

|                                 |  |                                      
|-------------------------------- |  | -------------------------------------
|Delaware                         |  | 31-1001351                           
|                                 |  |                                      
|(State
 or other jurisdiction of |  | (I.R.S.
 Employer Identification No.)
|incorporation
 or organization)  |  |                                      

| |                                                                       | 
| | --------------------------------------------------------------------- | 
| | 100 East RiverCenter Boulevard, Covington, Kentucky 41011             | 
| |                                                                       | 
| | (Address
 of principal executive offices)                 (Zip
 Code) | 

|                                                      |                | 
|----------------------------------------------------- | -------------- | 
|                                                      | (859) 392-3300 | 
|                                                      |                | 
|(Registrants
 telephone number, including area code)

| |                                                                                     | 
| | ----------------------------------------------------------------------------------- | 
| |                                                                                     | 
| | (Former
 name, former address and former fiscal year, if changed since last report) | 

|                                                                                                                                                                                                                                                                                                                                                                 |    |                                                                                                                                                                                                                                   
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Indicate by check mark
 whether the registrant:                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                 | 1) | has filed all reports
 required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
 1934 during the preceding 12 months (or for such shorter period that the
 registrant was required to file such reports), and
|                                                                                                                                                                                                                                                                                                                                                                 | 2) | has been subject to such
 filing requirements for the past 90 days.                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                 |    |                                                                                                                                                                                                                                   
|Yes [ x ]     No [    ]                                                                                                                                                                                                                                                                                                                                         
|Indicate by check mark
 whether the registrant has submitted electronically and posted on its
 corporate Web site, if any, every Interactive Data File required to be
 submitted and posted pursuant to Rule 405 of Regulation S-T during the
 preceding 12 months (or for such shorter period that the registrant was
 required to submit and post such files).
|                                                                                                                                                                                                                                                                                                                                                                
|Yes [    ]     No [    ]                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                
|Indicate by check mark
 whether the registrant is a large accelerated filer, an accelerated filer, a
 non-accelerated filer, or a smaller reporting company. See the definitions of
 large accelerated filer, accelerated filer and smaller reporting
 company in Rule 12b-2 of the Exchange Act.                                                         

|                                                                                                                   |                                                                                |                           |       
|------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------ | ------------------------- | ------
|                                                                                                                   | Large accelerated
 filer [ x ]                                                 | Accelerated filer         | [    ]
|                                                                                                                   | Non-accelerated
 filer   [    ] (Do not check if a smaller reporting
 company) | Smaller reporting company | [    ]
|                                                                                                                   |                                                                                |                           |       
|Indicate by check mark
 whether the registrant is a shell company (as defined in Rule 12b-2 of the
 Exchange Act).
|Yes [    ]     No [ x ]                                                                                           

|                           |  |                    |  |                     | 
|-------------------------- |  | ------------------ |  | ------------------- | 
|COMMON STOCK OUTSTANDING   |  |                    |  |                     | 
|                           |  | Number
 of
 Shares |  | Date                | 
|                           |  |                    |  |                     | 
|Common Stock, $1 par value |  | 119,336,801        |  | September
 30, 2009 | 

---



OMNICARE, INC. AND

SUBSIDIARY COMPANIES

FORM 10-Q QUARTERLY REPORT SEPTEMBER 30, 2009

INDEX

|         |                                                                                               |  |     
|-------- | --------------------------------------------------------------------------------------------- |  | ----
|         |                                                                                               |  | PAGE
|         |                                                                                               |  |     
|         | PART I - FINANCIAL INFORMATION:                                                               |  |     
|         |                                                                                               |  |     
|ITEM 1.  | FINANCIAL STATEMENTS (UNAUDITED)                                                              |  |     
|         |                                                                                               |  |     
|         | Consolidated Statements of Income Three and nine months ended 
 September 30, 2009 and 2008 |  | 3   
|         |                                                                                               |  |     
|         | Consolidated Balance Sheets September 30, 2009 and December 31,
 2008                        |  | 4   
|         |                                                                                               |  |     
|         | Consolidated Statements of Cash Flows Nine months ended  September
 30, 2009 and 2008       |  | 5   
|         |                                                                                               |  |     
|         | Notes to Consolidated Financial Statements                                                    |  | 6   
|         |                                                                                               |  |     
|ITEM 2.  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
 RESULTS OF OPERATIONS        |  | 45  
|         |                                                                                               |  |     
|ITEM 3.  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                    |  | 77  
|         |                                                                                               |  |     
|ITEM 4.  | CONTROLS AND PROCEDURES                                                                       |  | 79  
|         |                                                                                               |  |     
|         | PART II - OTHER
 INFORMATION:                                                                 |  |     
|         |                                                                                               |  |     
|ITEM 1.  | LEGAL PROCEEDINGS                                                                             |  | 79  
|         |                                                                                               |  |     
|ITEM 1A. | RISK FACTORS                                                                                  |  | 82  
|         |                                                                                               |  |     
|ITEM 2.  | UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS                                    |  | 90  
|         |                                                                                               |  |     
|ITEM 6.  | EXHIBITS                                                                                      |  | 91  

---



PART I - FINANCIAL
INFORMATION:

ITEM 1. - FINANCIAL
STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME 
OMNICARE, INC. AND SUBSIDIARY COMPANIES
UNAUDITED(in thousands, except
per share data)

|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------- | --------- | --------------------------------- | - | --------- | - | -------------------------------- | --------- | - | - | --------- | -
|                                                                                                                                       |  | Three
 months ended,
 September 30, |           | Nine
 months ended
 September 30, |  
|                                                                                                                                       |  |                                     |           |                                   |  
|                                                                                                                                       |  | 2009                                |           | 2008
 as adjusted
 (Notes 2 & 3)  |   | 2009      |   | 2008
 as adjusted
 (Notes 2 & 3) |          
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |          
|Net sales                                                                                                                              |  | $                                   | 1,543,901 |                                   | $ | 1,578,251 |   | $                                | 4,626,513 |   | $ | 4,631,401 |  
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Cost of sales                                                                                                                          |  |                                     | 1,175,946 |                                   |   | 1,172,791 |   |                                  | 3,496,492 |   |   | 3,482,236 |  
|Repack matters (Note 11)                                                                                                               |  |                                     | 1,755     |                                   |   | 1,041     |   |                                  | 3,672     |   |   | 4,175     |  
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Gross profit                                                                                                                           |  |                                     | 366,200   |                                   |   | 404,419   |   |                                  | 1,126,349 |   |   | 1,144,990 |  
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Selling, general and administrative expenses                                                                                           |  |                                     | 203,394   |                                   |   | 228,325   |   |                                  | 623,018   |   |   | 681,503   |  
|Provision for doubtful accounts                                                                                                        |  |                                     | 23,098    |                                   |   | 27,180    |   |                                  | 71,079    |   |   | 79,425    |  
|Restructuring and other related charges (Note 10)                                                                                      |  |                                     | 6,295     |                                   |   | 7,655     |   |                                  | 19,095    |   |   | 24,887    |  
|Litigation and other related professional fees (Note 11)                                                                               |  |                                     | 1,739     |                                   |   | 13,479    |   |                                  | 71,761    |   |   | 51,143    |  
|Repack matters (Note 11)                                                                                                               |  |                                     | 277       |                                   |   | 129       |   |                                  | 1,549     |   |   | 628       |  
|Acquisition and other related costs (Note 4)                                                                                           |  |                                     | (632      | )                                 |   | -         |   |                                  | 2,218     |   |   | -         |  
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Operating income                                                                                                                       |  |                                     | 132,029   |                                   |   | 127,651   |   |                                  | 337,629   |   |   | 307,404   |  
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Investment income                                                                                                                      |  |                                     | 1,202     |                                   |   | 1,441     |   |                                  | 4,641     |   |   | 6,011     |  
|Interest expense                                                                                                                       |  |                                     | (29,588   | )                                 |   | (36,662   | ) |                                  | (90,650   | ) |   | (109,168  | )
|Amortization of discount on convertible notes (Note 6)                                                                                 |  |                                     | (7,059    | )                                 |   | (6,544    | ) |                                  | (20,783   | ) |   | (19,265   | )
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Income from continuing operations before income taxes                                                                                  |  |                                     | 96,584    |                                   |   | 85,886    |   |                                  | 230,837   |   |   | 184,982   |  
|Income tax provision                                                                                                                   |  |                                     | 17,838    |                                   |   | 31,536    |   |                                  | 77,869    |   |   | 69,601    |  
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Income from continuing operations                                                                                                      |  |                                     | 78,746    |                                   |   | 54,350    |   |                                  | 152,968   |   |   | 115,381   |  
|Loss from discontinued
 operations, including impairment charge of $12,065 aftertax during the nine
 months ended 2009 period (Note 3) |  |                                     | (6,231    | )                                 |   | (591      | ) |                                  | (20,840   | ) |   | (2,537    | )
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Net income                                                                                                                             |  | $                                   | 72,515    |                                   | $ | 53,759    |   | $                                | 132,128   |   | $ | 112,844   |  
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Earnings (loss) per common share - Basic:                                                                                              |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Continuing operations                                                                                                                  |  | $                                   | 0.67      |                                   | $ | 0.47      |   | $                                | 1.31      |   | $ | 0.98      |  
|Discontinued operations                                                                                                                |  |                                     | (0.05     | )                                 |   | (0.01     | ) |                                  | (0.18     | ) |   | (0.02     | )
|Net income                                                                                                                             |  | $                                   | 0.62      |                                   | $ | 0.46      |   | $                                | 1.13      |   | $ | 0.96      |  
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Earnings (loss) per common share - Diluted:                                                                                            |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Continuing operations                                                                                                                  |  | $                                   | 0.67      |                                   | $ | 0.46      |   | $                                | 1.30      |   | $ | 0.97      |  
|Discontinued operations                                                                                                                |  |                                     | (0.05     | )                                 |   | (0.01     | ) |                                  | (0.18     | ) |   | (0.02     | )
|Net income                                                                                                                             |  | $                                   | 0.61      |                                   | $ | 0.46      |   | $                                | 1.12      |   | $ | 0.95      |  
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Dividends per common share                                                                                                             |  | $                                   | 0.0225    |                                   | $ | 0.0225    |   | $                                | 0.0675    |   | $ | 0.0675    |  
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Weighted average number of common shares outstanding:                                                                                  |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Basic                                                                                                                                  |  |                                     | 117,598   |                                   |   | 115,983   |   |                                  | 116,970   |   |   | 117,904   |  
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Diluted                                                                                                                                |  |                                     | 118,145   |                                   |   | 117,483   |   |                                  | 117,711   |   |   | 118,764   |  
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  
|Comprehensive income                                                                                                                   |  | $                                   | 75,031    |                                   | $ | 54,540    |   | $                                | 132,929   |   | $ | 121,948   |  
|                                                                                                                                       |  |                                     |           |                                   |   |           |   |                                  |           |   |   |           |  

The Notes to Consolidated
Financial Statements are an integral part of these statements.

3

---



CONSOLIDATED
BALANCE SHEETS
OMNICARE, INC. AND SUBSIDIARY COMPANIES
UNAUDITED(in thousands, except share data)

|                                                                                                                       |  |                      |           |                                                 |   |           |  
|---------------------------------------------------------------------------------------------------------------------- |  | -------------------- | --------- | ----------------------------------------------- | - | --------- | -
|                                                                                                                       |  | September
 30,
 2009 |           | December
 31,
 2008
 as adjusted
 (Notes 2 & 3) |  
|ASSETS                                                                                                                 |  |                      |           |                                                 |   |           |  
|Current assets:                                                                                                        |  |                      |           |                                                 |   |           |  
|Cash and cash equivalents                                                                                              |  | $                    | 324,137   |                                                 | $ | 214,668   |  
|Restricted cash                                                                                                        |  |                      | 2,929     |                                                 |   | 1,891     |  
|Accounts receivable, less allowances of $327,729 (2008-$319,417)                                                       |  |                      | 1,248,370 |                                                 |   | 1,337,558 |  
|Unbilled receivables, CRO                                                                                              |  |                      | 26,239    |                                                 |   | 22,329    |  
|Inventories                                                                                                            |  |                      | 345,554   |                                                 |   | 449,023   |  
|Deferred income tax benefits                                                                                           |  |                      | 147,430   |                                                 |   | 134,249   |  
|Other current assets                                                                                                   |  |                      | 180,912   |                                                 |   | 176,989   |  
|Current assets of discontinued operations                                                                              |  |                      | 23,180    |                                                 |   | 34,986    |  
|Total current assets                                                                                                   |  |                      | 2,298,751 |                                                 |   | 2,371,693 |  
|Properties and equipment, at cost less accumulated depreciation of
 $317,341 (2008-$300,880)                           |  |                      | 212,331   |                                                 |   | 208,527   |  
|Goodwill                                                                                                               |  |                      | 4,246,320 |                                                 |   | 4,211,221 |  
|Identifiable intangible assets, less accumulated amortization of
 $176,365 (2008-$149,538)                             |  |                      | 305,678   |                                                 |   | 329,446   |  
|Rabbi trust assets for settlement of pension obligations                                                               |  |                      | 134,048   |                                                 |   | 134,587   |  
|Other noncurrent assets                                                                                                |  |                      | 150,048   |                                                 |   | 137,526   |  
|Noncurrent assets of discontinued operations                                                                           |  |                      | 44,724    |                                                 |   | 57,245    |  
|Total noncurrent assets                                                                                                |  |                      | 5,093,149 |                                                 |   | 5,078,552 |  
|Total assets                                                                                                           |  | $                    | 7,391,900 |                                                 | $ | 7,450,245 |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                   |  |                      |           |                                                 |   |           |  
|Current liabilities:                                                                                                   |  |                      |           |                                                 |   |           |  
|Accounts payable                                                                                                       |  | $                    | 256,484   |                                                 | $ | 333,728   |  
|Accrued employee compensation                                                                                          |  |                      | 33,419    |                                                 |   | 50,082    |  
|Deferred revenue, CRO                                                                                                  |  |                      | 12,964    |                                                 |   | 23,227    |  
|Current debt                                                                                                           |  |                      | 176,374   |                                                 |   | 1,784     |  
|Other current liabilities                                                                                              |  |                      | 289,736   |                                                 |   | 221,632   |  
|Current liabilities of discontinued operations                                                                         |  |                      | 9,098     |                                                 |   | 10,336    |  
|Total current liabilities                                                                                              |  |                      | 778,075   |                                                 |   | 640,789   |  
|Long-term debt, notes and convertible debentures (Note 6)                                                              |  |                      | 1,972,952 |                                                 |   | 2,352,824 |  
|Deferred income tax liabilities                                                                                        |  |                      | 571,197   |                                                 |   | 525,426   |  
|Other noncurrent liabilities                                                                                           |  |                      | 257,983   |                                                 |   | 276,284   |  
|Noncurrent liabilities of discontinued operations                                                                      |  |                      | 53        |                                                 |   | 53        |  
|Total noncurrent liabilities                                                                                           |  |                      | 2,802,185 |                                                 |   | 3,154,587 |  
|Total liabilities                                                                                                      |  |                      | 3,580,260 |                                                 |   | 3,795,376 |  
|Commitments and contingencies (Note 11)                                                                                |  |                      |           |                                                 |   |           |  
|                                                                                                                      
|Stockholders equity:                                                                                                  |  |                      |           |                                                 |   |           |  
|Preferred stock, no par value, 1,000,000 shares authorized, none
 issued and outstanding                               |  |                      | -         |                                                 |   | -         |  
|Common stock, $1 par value, 200,000,000 shares authorized,
 126,698,900 shares issued (2008-125,583,300 shares issued) |  |                      | 126,699   |                                                 |   | 125,583   |  
|Paid-in capital (Note 6)                                                                                               |  |                      | 2,261,669 |                                                 |   | 2,224,129 |  
|Retained earnings                                                                                                      |  |                      | 1,621,516 |                                                 |   | 1,498,171 |  
|Treasury stock, at cost-7,362,100 shares (2008-7,135,300 shares)                                                       |  |                      | (199,209  | )                                               |   | (193,178  | )
|Accumulated other comprehensive income (loss)                                                                          |  |                      | 965       |                                                 |   | 164       |  
|Total stockholders equity                                                                                             |  |                      | 3,811,640 |                                                 |   | 3,654,869 |  
|Total liabilities and stockholders equity                                                                             |  | $                    | 7,391,900 |                                                 | $ | 7,450,245 |  

The Notes to Consolidated
Financial Statements are an integral part of these statements.

4

---



CONSOLIDATED STATEMENTS OF
CASH FLOWS
OMNICARE, INC. AND SUBSIDIARY COMPANIES
UNAUDITED(in thousands)

|                                                                                                             |  |                                   |          |                                  |   |          |  
|------------------------------------------------------------------------------------------------------------ |  | --------------------------------- | -------- | -------------------------------- | - | -------- | -
|                                                                                                             |  | Nine
 months ended
 September 30, |         
|                                                                                                             |  | 2009                              |          | 2008
 as adjusted
 (Notes 2 & 3) |  
|Cash flows from operating activities:                                                                        |  |                                   |          |                                  |   |          |  
|Net income                                                                                                   |  | $                                 | 132,128  |                                  | $ | 112,844  |  
|Loss from discontinued operations                                                                            |  |                                   | 20,840   |                                  |   | 2,537    |  
|Adjustments to reconcile net income to net cash flows from operating
 activities:                            |  |                                   |          |                                  |   |          |  
|Depreciation expense                                                                                         |  |                                   | 37,335   |                                  |   | 35,637   |  
|Amortization expense                                                                                         |  |                                   | 68,022   |                                  |   | 67,358   |  
|Changes in assets and liabilities, net of effects from acquisition and
 divestiture of businesses:           |  |                                   |          |                                  |   |          |  
|Accounts receivable and unbilled receivables, net of provision for
 doubtful accounts                        |  |                                   | 96,353   |                                  |   | 30,349   |  
|Inventories                                                                                                  |  |                                   | 106,001  |                                  |   | 33,189   |  
|Other current and noncurrent assets                                                                          |  |                                   | 13,971   |                                  |   | 3,480    |  
|Accounts payable                                                                                             |  |                                   | (75,293  | )                                |   | (67,276  | )
|Accrued employee compensation                                                                                |  |                                   | (15,766  | )                                |   | 27,254   |  
|Deferred revenue                                                                                             |  |                                   | (10,246  | )                                |   | (2,059   | )
|Current and noncurrent liabilities                                                                           |  |                                   | 57,688   |                                  |   | 86,918   |  
|Net cash flows from operating activities of continuing operations                                            |  |                                   | 431,033  |                                  |   | 330,231  |  
|Net cash flows from operating activities of discontinued operations                                          |  |                                   | 568      |                                  |   | 1,654    |  
|Net cash flows from operating activities                                                                     |  |                                   | 431,601  |                                  |   | 331,885  |  
|Cash
 flows from investing activities:                                                                       |  |                                   |          |                                  |   |          |  
|Acquisition of businesses, net of cash received                                                              |  |                                   | (64,498  | )                                |   | (201,032 | )
|Capital expenditures                                                                                         |  |                                   | (26,266  | )                                |   | (45,679  | )
|Transfer of cash (to)/from trusts for employee health and severance
 costs, net of payments out of the trust |  |                                   | 538      |                                  |   | (11,419  | )
|Disbursements for loans and investments                                                                      |  |                                   | (5,600   | )                                |   | -        |  
|Other                                                                                                        |  |                                   | (1,929   | )                                |   | (574     | )
|Net cash flows used in investing activities of continuing operations                                         |  |                                   | (97,755  | )                                |   | (258,704 | )
|Net cash flows used in investing activities of discontinued operations                                       |  |                                   | (504     | )                                |   | (1,303   | )
|Net cash flows used in investing activities                                                                  |  |                                   | (98,259  | )                                |   | (260,007 | )
|Cash flows from financing activities:                                                                        |  |                                   |          |                                  |   |          |  
|Net payments on revolving credit facility and term A loan                                                    |  |                                   | (225,000 | )                                |   | (50,000  | )
|Payments on long-term borrowings and obligations                                                             |  |                                   | (1,376   | )                                |   | (2,291   | )
|(Decrease) in cash overdraft balance                                                                         |  |                                   | (1,723   | )                                |   | (2,312   | )
|Payments for Omnicare common stock repurchases                                                               |  |                                   | -        |                                  |   | (100,165 | )
|Proceeds / (payments) for stock awards and exercise of stock options,
 net of stock tendered in payment      |  |                                   | 10,164   |                                  |   | (1,183   | )
|Excess tax benefits from stock-based compensation                                                            |  |                                   | 2,367    |                                  |   | 750      |  
|Dividends paid                                                                                               |  |                                   | (8,043   | )                                |   | (8,080   | )
|Net cash flows used in financing activities of continuing operations                                         |  |                                   | (223,611 | )                                |   | (163,281 | )
|Net cash flows provided by financing activities of discontinued
 operations                                  |  |                                   | -        |                                  |   | 119      |  
|Net cash flows used in financing activities                                                                  |  |                                   | (223,611 | )                                |   | (163,162 | )
|                                                                                                            
|Effect of exchange rate changes on cash                                                                      |  |                                   | (198     | )                                |   | (2,056   | )
|                                                                                                            
|Net increase (decrease) in cash and cash equivalents                                                         |  |                                   | 109,533  |                                  |   | (93,340  | )
|Less increase in cash and cash equivalents of discontinued operations                                        |  |                                   | 64       |                                  |   | 470      |  
|Increase (decrease) in cash and cash equivalents of continuing
 operations                                   |  |                                   | 109,469  |                                  |   | (93,810  | )
|Cash and cash equivalents at beginning of period                                                             |  |                                   | 214,668  |                                  |   | 274,200  |  
|                                                                                                             |  |                                   |          |                                  |   |          |  
|Cash and cash equivalents at end of period                                                                   |  | $                                 | 324,137  |                                  | $ | 180,390  |  

The Notes to Consolidated
Financial Statements are an integral part of these statements.

5

---



NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
OMNICARE, INC. AND SUBSIDIARY COMPANIES
UNAUDITED

Note 1 - Interim Financial Data, Description
of Business and Summary of Significant Accounting Policies

Interim Financial Data

The interim financial data is unaudited; however, in the opinion of the
management of Omnicare, Inc., the interim data includes all adjustments (which
include only normal adjustments, except as described in the Restructuring and
Other Related Charges and Commitments and Contingencies notes) considered
necessary for a fair statement of the consolidated results of operations,
financial position and cash flows of Omnicare, Inc. and its consolidated
subsidiaries (Omnicare or the Company). These financial statements should
be read in conjunction with the Consolidated Financial Statements and related
notes included in Omnicares Annual Report on Form 10-K for the year ended
December 31, 2008 (Omnicares 2008 Annual Report) and any related updates
included in the Companys periodic quarterly Securities and Exchange Commission
(SEC) filings. Certain reclassifications and adjustments (see Change in
Method of Accounting for Convertible Debt note) of prior year amounts have
been made to conform with the current year presentation. Further, the Company
has discontinued a component of its pharmacy services business (see
Discontinued Operations note). All amounts disclosed in these consolidated
financial statements and related notes are presented on a continuing operations
basis unless otherwise stated.

Description of Business and Summary of
Significant Accounting Policies

The Companys description of business and significant accounting
policies have been disclosed in Omnicares 2008 Annual Report. As previously
stated, these financial statements should be read in conjunction with the
Consolidated Financial Statements and related notes included in Omnicares 2008
Annual Report and any applicable updates contained in the Companys periodic
quarterly SEC filings, including those presented below.

Concentration of Risk

The prescription drug benefit under Medicare Part D (Part D) became
effective on January 1, 2006. As a result, providers of long-term care pharmacy
services, including Omnicare, experienced a significant shift in payor mix
beginning in 2006. Approximately 39% of the Companys revenues in the nine
months ended September 30, 2009 were generated under the Part D program. The
Company estimates that approximately 25% of these Part D revenues during the
nine months ended September 30, 2009 relate to patients enrolled in Part D
prescription drug plans sponsored by UnitedHealth Group, Inc. and its
affiliates (United). United and a small number of other Part D Plan sponsors
and pharmaceutical benefit managers reimburse a significant portion of the
Companys Part D revenues. Prior to the implementation of the Medicare Part D
program, most of the Part D residents served by the Company were reimbursed
under state Medicaid programs and, to a lesser extent, private pay sources.

6

---



Under the Part D benefit, payment is determined in accordance with the
agreements Omnicare has negotiated with the Part D Plans. The remainder of
Omnicares billings are paid or reimbursed primarily by long-term care
facilities (including revenues for residents funded under Medicare Part A) and
other third party payors, including private insurers, state Medicaid programs,
as well as individual residents.

The Medicaid and Medicare programs are highly regulated. The failure,
even if inadvertent, of Omnicare and/or client facilities to comply with
applicable reimbursement regulations could adversely affect Omnicares
reimbursement under these programs and Omnicares ability to continue to
participate in these programs. In addition, failure to comply with these
regulations could subject the Company to other penalties.

As noted, the Company obtains reimbursement for drugs it provides to
enrollees of a given Part D Plan pursuant to the agreement it negotiates with
that Part D Plan. The Company has entered into such agreements with nearly all
Part D Plan sponsors under which it will provide drugs and associated services
to their enrollees. The Company continues to have ongoing discussions with Part
D Plans and renegotiates these agreements in the ordinary course. Further, the
proportion of the Companys Part D business serviced under specific agreements
may change over time based upon beneficiary choice, reassignment of dual
eligibles to different Part D Plans or Part D Plan consolidation. As such,
reimbursement under these agreements is subject to change. Moreover, as
expected in the transition to a program of this magnitude, certain
administrative and payment issues have arisen, resulting in higher operating
expenses, as well as outstanding gross accounts receivable (net of allowances
for contractual adjustments, and prior to any allowance for doubtful accounts),
particularly for copays. As of September 30, 2009, copays outstanding from Part
D Plans were approximately $17 million relating to 2006 and 2007. The Company
is pursuing solutions, including legal actions against certain Part D Plans, to
collect outstanding copays, as well as certain rejected claims.

On July 11, 2007, the Company commenced legal action against a group of
its customers for, among other things, the collection of past-due receivables
that are owed to the Company. Specifically, approximately $98 million
(excluding interest) is owed to the Company by this group of customers as of September
30, 2009, of which approximately $92 million is past-due based on applicable
payment terms (a significant portion of which is not reserved based on the
relevant facts and circumstances).

Until these administrative and payment issues relating to the Part D
Drug Benefit as well as the aforementioned legal action against a group of
Omnicares customers are fully resolved, there can be no assurance that these
matters will not adversely impact the Companys results of operations,
financial position or cash flows.

7

---



Fair Value

On January 1, 2008, the Company adopted the authoritative guidance for
fair value measurements, which defines a hierarchy which prioritizes the inputs
in fair value measurements. Level 1 measurements are measurements using quoted
prices in active markets for identical assets or liabilities. Level 2
measurements use significant other observable inputs. Level 3 measurements
are measurements using significant unobservable inputs which require a company
to develop its own assumptions. In recording the fair value of assets and
liabilities, companies must use the most reliable measurement available. The
impact to the Companys consolidated results of operations, financial position
and cash flows upon adoption of this authoritative guidance was not material.
The assets, as further described in detail at the Fair Value note of the
Notes to the Consolidated Financial Statements in Omnicares 2008 Annual
Report, measured at fair value as of September 30, 2009 were as follows:

|                                                 |  |                                    |         |                                              |          |                                      |  |                                 |       |  |   |   | 
|------------------------------------------------ |  | ---------------------------------- | ------- | -------------------------------------------- | -------- | ------------------------------------ |  | ------------------------------- | ----- |  | - | - | 
|                                                 |  |                                    |         |                                              | Based on |                                     
|                                                 |  | Fair Value
 at September 30,
 2009 |         | Quoted Prices
 in Active
 Markets
 (Level 1) |          | Other
 Observable
 Inputs
 (Level 2) |  | Unobservable
 Inputs
 (Level 3) |      
|Rabbi trust assets                               |  | $                                  | 134,048 |                                              | $        | 134,048                              |  | $                               | -     |  | $ | - | 
|Interest rate swap
 agreement - fair value hedge |  |                                    | 6,326   |                                              |          | -                                    |  |                                 | 6,326 |  |   | - | 
|Derivatives                                      |  |                                    | -       |                                              |          | -                                    |  |                                 | -     |  |   | - | 
|Total                                            |  | $                                  | 140,374 |                                              | $        | 134,048                              |  | $                               | 6,326 |  | $ | - | 

In 2009, the Company adopted the provisions of the authoritative
guidance for interim disclosures about the fair value of financial instruments,
which requires disclosures about fair value of financial instruments for
interim reporting periods. The fair value of the Companys fixed-rate debt
facilities is based on quoted market prices and is summarized as follows (in
thousands):

Fair Value of Financial Instruments

|                                                            |  |             |                     |               |                    |             |  |               |         |  |   |         |  | 
|----------------------------------------------------------- |  | ----------- | ------------------- | ------------- | ------------------ | ----------- |  | ------------- | ------- |  | - | ------- |  | 
|Financial Instrument:                                       |  |             | September
 30, 2009 |               | December
 31, 2008 |            
|                                                            |  | Book
 Value |                     | Market
 Value |                    | Book
 Value |  | Market
 Value |        
|6.125% senior subordinated
 notes, due 2013, gross          |  | $           | 250,000             |               | $                  | 243,400     |  | $             | 250,000 |  | $ | 208,800 | 
|6.75% senior subordinated
 notes, due 2013                  |  |             | 225,000             |               |                    | 218,800     |  |               | 225,000 |  |   | 189,000 | 
|6.875% senior subordinated
 notes, due 2015                 |  |             | 525,000             |               |                    | 501,400     |  |               | 525,000 |  |   | 446,000 | 
|                                                            |  |             |                     |               |                    |             |  |               |         |  |   |         | 
|4.00% junior subordinated
 convertible debentures, due 2033 |  |             |                     |               |                    |             |  |               |         |  |   |         | 
|Carrying
 value                                             |  |             | 198,545             |               |                    |             |  |               | 197,029 |  |   |         | 
|Unamortized
 debt discount                                  |  |             | 146,455             |               |                    |             |  |               | 147,971 |  |   |         | 
|Principal
 amount                                           |  |             | 345,000             |               |                    | 239,500     |  |               | 345,000 |  |   | 250,800 | 
|                                                            |  |             |                     |               |                    |             |  |               |         |  |   |         | 
|3.25% convertible senior
 debentures, due 2035              |  |             |                     |               |                    |             |  |               |         |  |   |         | 
|Carrying
 value                                             |  |             | 766,451             |               |                    |             |  |               | 747,185 |  |   |         | 
|Unamortized
 debt discount                                  |  |             | 211,049             |               |                    |             |  |               | 230,315 |  |   |         | 
|Principal
 amount                                           |  |             | 977,500             |               |                    | 692,900     |  |               | 977,500 |  |   | 565,100 | 

8

---



Common Stock Repurchase Program

During the second quarter of 2008, the Company repurchased approximately 4.1 million shares of Omnicares
common stock at a cost of approximately $100 million under a stock buyback program authorized by its Board of
Directors.

Accumulated Other Comprehensive Income (Loss)

The accumulated other comprehensive income (loss) balances at September
30, 2009 and December 31, 2008, net of aggregate applicable tax benefits of
$4.2 million and $2.5 million, respectively, by component and in the aggregate,
follow (in thousands):

|                                                               |  |                     |         |                    |   |         |  
|-------------------------------------------------------------- |  | ------------------- | ------- | ------------------ | - | ------- | -
|                                                               |  | September 30,
 2009 |         | December 31,
 2008 |  
|                                                               |  |                     |         |                    |  
|Cumulative foreign
 currency translation adjustments           |  | $                   | 7,691   |                    | $ | 4,112   |  
|Unrealized gain on fair
 value of investments                  |  |                     | 4,099   |                    |   | 7,340   |  
|Pension and postemployment
 benefits                           |  |                     | (10,825 | )                  |   | (11,288 | )
|                                                               |  |                     |         |                    |   |         |  
|Total accumulated other
 comprehensive income adjustments, net |  | $                   | 965     |                    | $ | 164     |  
|                                                               |  |                     |         |                    |   |         |  

Noncontrolling Interests

Effective January 1, 2009, the Company adopted the provisions of the
authoritative guidance for the reporting of noncontrolling interests in
consolidated financial statements, which primarily requires all entities to
report noncontrolling (minority) interests in subsidiaries in the same way as
equity in the consolidated financial statements. This guidance is effective for
the first annual reporting period beginning after December 15, 2008, and its
first quarter 2009 adoption had an immaterial effect on the Companys
consolidated results of operations, financial position and cash flows.

Subsequent Events

In the second quarter of 2009, the Company adopted the provisions of
the authoritative guidance for subsequent events, which requires that entities
disclose the date through which subsequent events have been evaluated, as well
as whether that date is the date the financial statements were issued or the
date the financial statements were available to be issued. The Company
evaluated subsequent events through November 5, 2009, which is the date the
financial statements were issued, and noted no material subsequent events had
occurred through this date warranting revision to the financial statements.

9

---



Income Taxes

The effective income tax rate was 18.5% and 33.7% for the three and
nine months ended September 30, 2009, respectively, as compared to the rate of
36.7% and 37.6%, respectively, for the same prior-year periods. The
year-over-year decrease in the effective tax rate is largely due to the
reduction of income tax expenses in the respective 2009 periods totaling
approximately $19 million, primarily attributable to the reversal of certain
unrecognized tax benefits for tax positions settled through the expiration of
statutes of limitations, partially offset by certain nondeductible expenses
recognized in the 2009 periods.

Recently Issued Accounting Standards

In December 2008, the Financial Accounting Standards Board (FASB)
issued authoritative guidance for employers disclosures about postretirement
benefit plan assets, which, among other items, requires increased disclosures
about plan assets in an employers defined benefit pension or other
postretirement plans such as how investment allocation decisions are made;
major categories of plan assets; inputs and valuation techniques used to
measure the fair value of plan assets; the effect of fair value measurements
using significant unobservable inputs on changes in plan assets for the period;
and significant concentrations of risk within plan assets. The disclosures
about plan assets required by the guidance shall be provided for fiscal years
ending after December 15, 2009. The Company continues to evaluate the impact of
this recently issued guidance on its disclosures.

In June 2009, the FASB issued authoritative guidance for accounting for
transfers of financial assets which removes the concept of a qualifying
special-purpose entity and also removes the exception from applying the
authoritative guidance for consolidation of variable interest entities to
qualifying special purpose entities. This guidance requires that a transferor
recognize and initially measure at fair value all assets obtained and
liabilities incurred as a result of a transfer of financial assets accounted
for as a sale. This new guidance is effective for an entitys first annual
reporting period that begins after November 15, 2009. The Company does not anticipate
the effect of this recently issued guidance to be material to its consolidated
results of operations, financial position and cash flows.

In June 2009, the FASB revised the authoritative guidance for variable
interest entities to require an enterprise to perform an analysis to determine
whether the enterprises variable interest or interests give it a controlling
financial interest in a variable interest entity. This guidance is effective
for an entitys first annual reporting period that begins after November 15,
2009. The Company does not anticipate the effect of this recently issued
guidance to be material to its consolidated results of operations, financial
position and cash flows.

In June 2009, the FASB revised the authoritative guidance regarding the
hierarchy of Generally Accepted Accounting Principles (GAAP), which
establishes the Accounting Standards Codification as the source of
authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental
entities.

10

---



Note 2  Change in Method of Accounting for
Convertible Debt

Effective January 1, 2009, the Company retrospectively adopted the
provisions of the authoritative guidance regarding the accounting for
convertible debt instruments that may be settled in cash upon conversion (including
partial cash settlement), which among other items, specifies that issuers of
convertible debt instruments that may be settled in cash upon conversion
(including partial cash settlement) should separately account for the liability
and equity components in a manner that reflects the entitys calculated
nonconvertible debt borrowing rate when the debt was issued. Comparative
financial statements for prior years have been adjusted to apply the new method
retrospectively. The affected financial statement line items and the amount of
the adjustments for the three and nine month periods ending September 30, 2008
follow (in thousands):

Income Statement
Three and Nine Months Ended September 30, 2008

|                                                       |  |                                          |        |                                         |   |         |  
|------------------------------------------------------ |  | ---------------------------------------- | ------ | --------------------------------------- | - | ------- | -
|                                                       |  | Three months
 ended
 September 30,
 2008 |        | Nine months
 ended
 September 30,
 2008 |  
|                                                       |  |                                          |        |                                         |  
|                                                       |  |                                          |        |                                         |  
|Amortization of discount on convertible notes (Note 6) |  | $                                        | (6,544 | )                                       | $ | (19,265 | )
|                                                       |  |                                          |        |                                         |   |         |  
|Interest expense                                       |  |                                          | 234    |                                         |   | 702     |  
|                                                       |  |                                          |        |                                         |   |         |  
|                                                      
|Income from continuing operations before income taxes  |  |                                          | (6,310 | )                                       |   | (18,563 | )
|                                                       |  |                                          |        |                                         |   |         |  
|Income tax provision                                   |  |                                          | 2,364  |                                         |   | 6,953   |  
|                                                       |  |                                          |        |                                         |   |         |  
|                                                       |  |                                          |        |                                         |   |         |  
|Income from continuing operations                      |  | $                                        | (3,946 | )                                       | $ | (11,610 | )
|                                                       |  |                                          |        |                                         |   |         |  
|                                                       |  |                                          |        |                                         |   |         |  
|Earnings per share from continuing operations:         |  |                                          |        |                                         |   |         |  
|Basic                                                  |  | $                                        | (0.03  | )                                       | $ | (0.10   | )
|                                                       |  |                                          |        |                                         |   |         |  
|Diluted                                                |  | $                                        | (0.03  | )                                       | $ | (0.10   | )
|                                                       |  |                                          |        |                                         |   |         |  
|                                                       |  |                                          |        |                                         |   |         |  
|Comprehensive income                                   |  | $                                        | (3,946 | )                                       | $ | (11,610 | )
|                                                       |  |                                          |        |                                         |   |         |  

11

---



Statement
of Cash Flows
Nine Months Ended September 30, 2008

|                                               |  |                                         |         |  
|---------------------------------------------- |  | --------------------------------------- | ------- | -
|                                               |  | Nine
 months
 ended
 September 30, 2008 |        
|                                               |  |                                         |        
|Cash flows from operating
 activities:         |  |                                         |         |  
|                                               |  |                                         |         |  
|Net income                                     |  | $                                       | (11,610 | )
|                                               |  |                                         |         |  
|Amortization expense                           |  |                                         | 19,265  |  
|                                               |  |                                         |         |  
|Change in other current and
 noncurrent assets |  |                                         | (702    | )
|                                               |  |                                         |         |  
|Change in current and
 noncurrent liabilities  |  |                                         | (6,953  | )
|                                               |  |                                         |         |  
|Net cash flows from
 operating activities      |  |                                         | -       |  

Note 3  Discontinued Operations

In the second quarter of 2009, the Company commenced activities to
divest certain home healthcare and related ancillary businesses (the disposal
group) that are non-strategic in nature. The disposal group, historically part
of Omnicares Pharmacy Services segment, primarily represents ancillary
businesses which accompanied other more strategic assets obtained by Omnicare
in connection with the Companys institutional pharmacy acquisition program.
The results from continuing operations for all periods presented have been
revised to reflect the results of the disposal group as discontinued
operations, including certain expenses of the Company related to the
divestiture. The Company anticipates completing the divestiture within twelve
months. Selected financial data related to the discontinued operations of this
disposal group for the three and nine months ended September 30, 2009 and 2008
follows:

|                                                  |  |                                     |         |                                   |   |        |   |      |         |   |   |        |  
|------------------------------------------------- |  | ----------------------------------- | ------- | --------------------------------- | - | ------ | - | ---- | ------- | - | - | ------ | -
|                                                  |  | Three
 months ended,
 September 30, |         | Nine
 months ended
 September 30, |  
|                                                  |  |                                     |         |                                   |  
|                                                  |  | 2009                                |         | 2008                              |   | 2009   |   | 2008 |        
|                                                  |  |                                     |         |                                   |   |        |   |      |        
|Net sales                                         |  | $                                   | 18,388  |                                   | $ | 25,138 |   | $    | 59,661  |   | $ | 81,119 |  
|                                                  |  |                                     |         |                                   |   |        |   |      |         |   |   |        |  
|Loss from operations of
 disposal group, pretax   |  |                                     | (10,107 | )                                 |   | (963   | ) |      | (14,329 | ) |   | (4,135 | )
|Income tax benefit                                |  |                                     | 3,876   |                                   |   | 372    |   |      | 5,554   |   |   | 1,598  |  
|                                                  |  |                                     |         |                                   |   |        |   |      |         |   |   |        |  
|Loss from operations of
 disposal group, aftertax |  |                                     | (6,231  | )                                 |   | (591   | ) |      | (8,775  | ) |   | (2,537 | )
|                                                  |  |                                     |         |                                   |   |        |   |      |         |   |   |        |  
|                                                  |  |                                     |         |                                   |   |        |   |      |         |   |   |        |  
|Impairment charge, pretax                         |  |                                     | -       |                                   |   | -      |   |      | (14,492 | ) |   | -      |  
|Income tax benefit on
 impairment charge          |  |                                     | -       |                                   |   | -      |   |      | 2,427   |   |   | -      |  
|                                                  |  |                                     |         |                                   |   |        |   |      |         |   |   |        |  
|Impairment charge, aftertax                       |  |                                     | -       |                                   |   | -      |   |      | (12,065 | ) |   | -      |  
|                                                  |  |                                     |         |                                   |   |        |   |      |         |   |   |        |  
|                                                  |  |                                     |         |                                   |   |        |   |      |         |   |   |        |  
|Loss from discontinued
 operations, aftertax      |  | $                                   | (6,231  | )                                 | $ | (591   | ) | $    | (20,840 | ) | $ | (2,537 | )
|                                                  |  |                                     |         |                                   |   |        |   |      |         |   |   |        |  

12

---



Note 4  Acquisitions

Since 1989, the Company has been involved in a program to acquire
providers of pharmaceutical products and related pharmacy services to long-term
care facilities and their residents as well as patients in other care settings.
The Companys strategy has included the acquisition of freestanding
institutional pharmacy businesses as well as other assets, generally
insignificant in size, which have been combined with existing pharmacy
operations to augment their internal growth. From time-to-time the Company may
acquire other businesses, such as pharmacy consulting companies, specialty
pharmacy companies, medical supply and service companies, hospice pharmacy
companies and companies providing distribution and product support services for
specialty pharmaceuticals, as well as contract research organizations, which
complement the Companys core businesses.

Effective January 1, 2009, the Company adopted the provisions of the
authoritative guidance for business combinations, which requires the acquiring
entity in a business combination to recognize all (and only) the assets
acquired and liabilities assumed in the transaction at fair value; and
establishes the acquisition-date fair value as the measurement objective for
all assets acquired and liabilities assumed, including earn-out provisions. The
2009 implementation resulted in acquisition and other related costs/(credits)
of approximately $(0.6) million and $2.2 million pretax ($(0.4) million and
$1.4 million, aftertax) during the three and nine months ended September 30,
2009, respectively, which were primarily related to professional fees and
acquisition related restructuring costs for acquisitions completed during the
2009 periods, partially offset by a third quarter 2009 reduction in the
Companys original estimate of contingent consideration payable for an
acquisition.

During the first nine months of 2009, Omnicare completed six
acquisitions of businesses in the Pharmacy Services segment, none of which
were, individually or in the aggregate, significant to the Company.
Acquisitions of businesses required outlays of $64.5 million (including amounts
payable pursuant to acquisition agreements relating to pre-2009 acquisitions)
in the nine months ended September 30, 2009. The impact of these aggregate
acquisitions on the Companys overall goodwill balance has been reflected in
the disclosures at the Goodwill and Other Intangible Assets note. The Company
continues to evaluate the tax effects, identifiable intangible assets and other
pre-acquisition contingencies relating to certain acquisitions. Omnicare is in
the process of completing its allocation of the purchase price for certain
acquisitions and, accordingly, the goodwill and other identifiable intangible
assets balances are preliminary and subject to change. The net assets and
operating results of acquisitions have been included in the Companys consolidated
financial statements from their respective dates of acquisition.

13

---



Note 5 - Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill for the nine months ended
September 30, 2009, by business segment, are as follows (in thousands):

|                                                               |  |                    |           |               |   |        |  |   |           | 
|-------------------------------------------------------------- |  | ------------------ | --------- | ------------- | - | ------ |  | - | --------- | 
|                                                               |  | Pharmacy
 Services |           | CRO
 Services |   | Total  | 
|                                                               |  |                    |           |               |   |        | 
|Balance as of December 31, 2008                                |  | $                  | 4,121,208 |               | $ | 90,013 |  | $ | 4,211,221 | 
|Goodwill acquired in the nine months ended
 September 30, 2009 |  |                    | 33,145    |               |   | -      |  |   | 33,145    | 
|Other                                                          |  |                    | (272      | )             |   | 2,226  |  |   | 1,954     | 
|                                                               |  |                    |           |               |   |        |  |   |           | 
|Balance as of September 30, 2009                               |  | $                  | 4,154,081 |               | $ | 92,239 |  | $ | 4,246,320 | 
|                                                               |  |                    |           |               |   |        |  |   |           | 

The Other caption above includes the settlement of acquisition
matters relating to prior-year acquisitions (including, where applicable, payments
pursuant to acquisition agreements such as deferred payments, indemnification
payments and payments originating from earnout provisions, as well as
adjustments for the finalization of purchase price allocations, including
identifiable intangible asset valuations). Other also includes the effect of
adjustments due to foreign currency translations, which relate primarily to the
Contract Research Organization (CRO) Services segment, as well as one
pharmacy located in Canada which is included in the Pharmacy Services segment.

The decrease in the September 30, 2009 net carrying amount of the
Companys other identifiable intangible assets of approximately $24 million
from December 31, 2008 primarily relates to amortization expense recorded
during the nine-month period, partially offset by increases due primarily to
customer relationship assets and non-compete agreements associated with recent
acquisitions, which have a weighted-average life of approximately 10 years.

14

---



Note 6 - Debt

A summary of
debt follows (in thousands):

|                                                            |  |                     |           |                    |   |           |  
|----------------------------------------------------------- |  | ------------------- | --------- | ------------------ | - | --------- | -
|                                                            |  | September 30,
 2009 |           | December 31,
 2008 |  
|                                                            |  |                     |           |                    |  
|Revolving
 loans, due 2010, $800 million                    |  | $                   | -         |                    | $ | -         |  
|Senior term
 A loan, due 2010                               |  |                     | 175,000   |                    |   | 400,000   |  
|6.125%
 senior subordinated notes, due 2013                 |  |                     | 250,000   |                    |   | 250,000   |  
|6.75% senior
 subordinated notes, due 2013                  |  |                     | 225,000   |                    |   | 225,000   |  
|6.875%
 senior subordinated notes, due 2015                 |  |                     | 525,000   |                    |   | 525,000   |  
|4.00% junior
 subordinated convertible debentures, due 2033 |  |                     | 345,000   |                    |   | 345,000   |  
|3.25%
 convertible senior debentures, due 2035              |  |                     | 977,500   |                    |   | 977,500   |  
|Capitalized
 lease and other debt obligations               |  |                     | 3,004     |                    |   | 4,381     |  
|                                                            |  |                     |           |                    |   |           |  
|Subtotal                                                    |  |                     | 2,500,504 |                    |   | 2,726,881 |  
|Add interest
 rate swap agreement                           |  |                     | 6,326     |                    |   | 6,013     |  
|(Subtract)
 unamortized debt discount                       |  |                     | (357,504  | )                  |   | (378,286  | )
|(Subtract)
 current portion of debt                         |  |                     | (176,374  | )                  |   | (1,784    | )
|                                                            |  |                     |           |                    |   |           |  
|Total
 long-term debt, net                                  |  | $                   | 1,972,952 |                    | $ | 2,352,824 |  
|                                                            |  |                     |           |                    |   |           |  

The Companys debt instruments, including related terms and certain
financial covenants as well as a description of Omnicares Credit Agreement,
have been disclosed in further detail at the Debt note of the Notes to
Consolidated Financial Statements in Omnicares 2008 Annual Report.

At September 30, 2009, there was no outstanding balance under the
Companys $800 million revolving credit facility, maturing on July 28, 2010
(Revolving Loans), and $175 million outstanding under the Companys senior
term A loan facility, maturing on July 28, 2010 (the Term Loans). The Company
repaid $225 million on the Term Loans during the nine months ended September
30, 2009. The interest rate on the Term Loans was 1.99% at September 30, 2009.
As of September 30, 2009, the Company had approximately $26 million outstanding
relating to standby letters of credit, substantially all of which are subject
to automatic annual renewals. The Company amortized to expense approximately
$4.2 million and $5.4 million of deferred debt issuance costs during the nine
months ended September 30, 2009 and 2008, respectively.

The estimated floating interest rate on the interest rate swap
agreement was 2.87% at September 30, 2009, as compared to the 6.125% stated
rate on the corresponding senior subordinated notes due 2013 with remaining
principal outstanding of $250 million at September 30, 2009.

The Company has two convertible debentures, the Series B 4.00% junior
subordinated convertible debentures, due 2033 (the New 4.00% Debentures) and
its 3.25% convertible senior debentures, due 2035 (3.25% Convertible
Debentures). For further description of the Companys convertible debt see the
Debt note of the Notes to Consolidated Financial

15

---



Statements in Omnicares 2008 Annual Report. Effective January 1,
2009, the Company retrospectively adopted the provisions of the authoritative
guidance regarding the accounting for convertible debt instruments that may be
settled in cash upon conversion (including partial cash settlement), which
among other items, specifies that issuers of convertible debt instruments that
may be settled in cash upon conversion (including partial cash settlement)
should separately account for the liability and equity components in a manner
that reflects the entitys calculated nonconvertible debt borrowing rate when
the debt was issued. The effect of this accounting change on the carrying
amounts of the Companys debt and equity balances, are as follows (in
thousands):

|                                        |  |                      |           |                     |   |           |  
|--------------------------------------- |  | -------------------- | --------- | ------------------- | - | --------- | -
|                                        |  | September
 30,
 2009 |           | December
 31,
 2008 |  
|                                        |  |                      |           |                     |  
|Carrying value of equity
 component     |  | $                    | 441,318   |                     | $ | 441,318   |  
|                                        |  |                      |           |                     |   |           |  
|                                        |  |                      |           |                     |   |           |  
|Principal amount of
 convertible debt   |  | $                    | 1,322,500 |                     | $ | 1,322,500 |  
|Unamortized debt discount               |  |                      | (357,504  | )                   |   | (378,286  | )
|                                        |  |                      |           |                     |   |           |  
|Net carrying value of
 convertible debt |  | $                    | 964,996   |                     | $ | 944,214   |  
|                                        |  |                      |           |                     |   |           |  

As of September 30, 2009, the remaining amortization period for the
debt discount was approximately 23.75 and 6.25 years for the New 4.00%
Debentures and 3.25% Convertible Debentures, respectively.

The effective interest rates for the liability components of the New
4.00% Debentures and the 3.25% Convertible Debentures were 8.01% and 7.625%,
respectively. The impact of this accounting change was an increase in pretax
interest expense of approximately $7.1 million and $20.8 million ($4.3 million
and $12.8 million aftertax) for the three and nine months ended September 30,
2009, respectively, and $6.5 million and $19.3 million ($4.1 million and $12.0
million aftertax) for the three and nine months ended September 30, 2008,
respectively.

Note 7 - Stock-Based Compensation

At September 30, 2009, the Company had four stock-based employee
compensation plans under which incentive awards were outstanding, which are
described in further detail at the Stock-Based Compensation note of the Notes
to Consolidated Financial Statements in Omnicares 2008 Annual Report. Omnicare
believes that the incentive awards issued under these plans serve to better
align the interests of its employees with those of its stockholders. As further
described in Omnicares 2008 Annual Report, non-vested stock awards are granted
to key employees at the discretion of the Compensation and Incentive Committee
of the Board of Directors.

16

---



Total pretax stock-based compensation expense recognized in the
Consolidated Statement of Income as part of S,G&A expense for stock options
and stock awards for the three and nine months ended September 30, 2009 and
2008 is as follows (in thousands):

|                                        |  |                                    |       |                                  |   |       |  |      |        |  |   |        | 
|--------------------------------------- |  | ---------------------------------- | ----- | -------------------------------- | - | ----- |  | ---- | ------ |  | - | ------ | 
|                                        |  | Three months ended,
 September 30, |       | Nine months ended
 September 30, |  
|                                        |  |                                    |       |                                  |  
|                                        |  | 2009                               |       | 2008                             |   | 2009  |  | 2008 |       
|                                        |  |                                    |       |                                  |   |       |  |      |       
|Stock awards                            |  | $                                  | 4,771 |                                  | $ | 5,572 |  | $    | 15,422 |  | $ | 16,636 | 
|Stock
 options                          |  |                                    | 1,299 |                                  |   | 1,370 |  |      | 3,950  |  |   | 3,615  | 
|                                        |  |                                    |       |                                  |   |       |  |      |        |  |   |        | 
|Total
 stock-based compensation expense |  | $                                  | 6,070 |                                  | $ | 6,942 |  | $    | 19,372 |  | $ | 20,251 | 
|                                        |  |                                    |       |                                  |   |       |  |      |        |  |   |        | 

The assumptions used to value stock options granted during the periods
ended September 30, 2009 and 2008 are as follows:

|                                     |  |      |   |      |  
|------------------------------------ |  | ---- | - | ---- | -
|                                     |  | 2009 |   | 2008 |  
|                                     |  |      |   |      |  
|Expected
 volatility                 |  | 35.3 | % | 31.3 | %
|Risk-free
 interest rate             |  | 2.9  | % | 3.4  | %
|Expected
 dividend yield             |  | 0.4  | % | 0.3  | %
|Expected
 term of options (in years) |  | 4.7  |   | 4.7  |  

|                                        |  |                                   |      |                                  |   |      |  |      |      |  |   |      | 
|--------------------------------------- |  | --------------------------------- | ---- | -------------------------------- | - | ---- |  | ---- | ---- |  | - | ---- | 
|                                        |  | Three months ended
 September 30, |      | Nine months ended
 September 30, |  
|                                        |  |                                   |      |                                  |  
|                                        |  | 2009                              |      | 2008                             |   | 2009 |  | 2008 |     
|                                        |  |                                   |      |                                  |   |      |  |      |     
|Weighted
 average fair value per option |  | $                                 | 7.98 |                                  | $ | 9.48 |  | $    | 8.69 |  | $ | 7.52 | 
|                                        |  |                                   |      |                                  |   |      |  |      |      |  |   |      | 

17

---



A summary of
stock option activity under the plans for the nine months ended September 30,
2009, is presented below (in thousands, except exercise price and term data):

|                                         |  |        |        |                                     |   |                                                  |  |                             |     |  |   |       | 
|---------------------------------------- |  | ------ | ------ | ----------------------------------- | - | ------------------------------------------------ |  | --------------------------- | --- |  | - | ----- | 
|                                         |  | Shares |        | Weighted-
 Average
 Exercise
 Price |   | Weighted-
 Average
 Remaining
 Contractual
 Term |  | Aggregate
 Intrinsic
 Value |    
|                                         |  |        |        |                                     |   |                                                  |  |                             |    
|Options outstanding, beginning of period |  |        | 7,348  |                                     | $ | 30.19                                            |  |                             |     |  |   |       | 
|Options granted                          |  |        | 102    |                                     |   | 26.15                                            |  |                             |     |  |   |       | 
|Options exercised                        |  |        | (1,045 | )                                   |   | 15.44                                            |  |                             |     |  |   |       | 
|Options forfeited                        |  |        | (83    | )                                   |   | 33.78                                            |  |                             |     |  |   |       | 
|                                         |  |        |        |                                     |   |                                                  |  |                             |     |  |   |       | 
|Options outstanding, end of period       |  |        | 6,322  |                                     | $ | 32.53                                            |  |                             | 4.9 |  | $ | 4,040 | 
|                                         |  |        |        |                                     |   |                                                  |  |                             |     |  |   |       | 
|Options exercisable, end of period       |  |        | 5,105  |                                     | $ | 32.91                                            |  |                             | 4.2 |  | $ | 3,979 | 
|                                         |  |        |        |                                     |   |                                                  |  |                             |     |  |   |       | 

The total exercise date intrinsic value of options exercised during the
nine months ended September 30, 2009 was $10.3 million.

A summary of non-vested restricted stock awards for the nine months
ended September 30, 2009 is presented below (in thousands, except grant price
data):

|                                        |  |        |       |                                       |   |       | 
|--------------------------------------- |  | ------ | ----- | ------------------------------------- | - | ----- | 
|                                        |  | Shares |       | Weighted-
 Average
 Grant Date
 Price |  
|                                        |  |        |       |                                       |  
|Non-vested
 shares, beginning of period |  |        | 2,167 |                                       | $ | 34.23 | 
|Shares
 awarded                         |  |        | 67    |                                       |   | 25.37 | 
|Shares
 vested                          |  |        | (469  | )                                     |   | 32.34 | 
|Shares
 forfeited                       |  |        | (23   | )                                     |   | 35.41 | 
|                                        |  |        |       |                                       |   |       | 
|Non-vested
 shares, end of period       |  |        | 1,742 |                                       | $ | 34.38 | 
|                                        |  |        |       |                                       |   |       | 

As of September 30, 2009, there was approximately $51 million of total
unrecognized compensation cost related to non-vested stock awards and stock
options granted to Omnicare employees, which is expected to be recognized as
expense prospectively over a remaining weighted-average period of approximately
five years. The total grant date fair value of shares vested during the nine
months ended September 30, 2009 related to stock awards and stock options was
approximately $17.1 million.

The Company recorded charges relating to the prior implementation of
the authoritative guidance for share-based payments, which primarily relate to
stock option expense, of approximately $1.1 million and $4.2 million pretax
($0.6 million and $2.6 million aftertax) for the three and nine months ended
September 30, 2009, respectively, and $1.4 million and $3.8 million pretax
($0.8 million and $2.3 million, aftertax) for the three and nine months ended
September 30, 2008, respectively.

18

---



Note 8 - Employee Benefit Plans

The
Company has various defined contribution savings plans under which eligible
employees can participate by contributing a portion of their salary for
investment, at the direction of each employee, in one or more investment funds,
as further described in Omnicares 2008 Annual Report. Expense relating
primarily to the Companys matching contributions for these defined
contribution plans was $1.6 million and $5.2 million for the three and nine
months ended September 30, 2009, respectively, and $1.9 million and $5.5
million for the three and nine months ended September 30, 2008, respectively.

The
Company has various defined benefit plans, as further described in Omnicares
2008 Annual Report. The following table presents the components of net periodic
pension cost for all pension plans for the three and nine months ended
September 30, 2009 and 2008 (pretax, in thousands):

|                                                                    |  |                                     |       |                                   |   |       |   |      |       |   |   |        |  
|------------------------------------------------------------------- |  | ----------------------------------- | ----- | --------------------------------- | - | ----- | - | ---- | ----- | - | - | ------ | -
|                                                                    |  | Three
 months ended,
 September 30, |       | Nine
 months ended
 September 30, |  
|                                                                    |  |                                     |       |                                   |  
|                                                                    |  | 2009                                |       | 2008                              |   | 2009  |   | 2008 |      
|                                                                    |  |                                     |       |                                   |   |       |   |      |      
|Service cost                                                        |  | $                                   | 375   |                                   | $ | 1,280 |   | $    | 1,124 |   | $ | 4,059  |  
|Interest cost                                                       |  |                                     | 1,499 |                                   |   | 2,374 |   |      | 4,497 |   |   | 7,133  |  
|Amortization of deferred amounts (primarily prior actuarial losses) |  |                                     | 250   |                                   |   | 3,674 |   |      | 750   |   |   | 11,021 |  
|Return on assets                                                    |  |                                     | (60   | )                                 |   | (54   | ) |      | (180  | ) |   | (162   | )
|Other                                                               |  |                                     | -     |                                   |   | -     |   |      | -     |   |   | (268   | )
|                                                                    |  |                                     |       |                                   |   |       |   |      |       |   |   |        |  
|Net periodic pension cost                                           |  | $                                   | 2,064 |                                   | $ | 7,274 |   | $    | 6,191 |   | $ | 21,783 |  
|                                                                    |  |                                     |       |                                   |   |       |   |      |       |   |   |        |  

As
of September 30, 2009, the aggregate defined benefit plans liabilities totaled
approximately $111 million. During the first nine months of 2009, the Company
made no payments related to funding the rabbi trusts for the settlement of the
Companys pension obligations. The fair value of these assets was approximately
$134 million at September 30, 2009. The aggregate defined benefit plans
liabilities are the projected benefit obligation to be paid based upon services
through retirement. The aggregate assets in the rabbi trusts are the amounts
required to fund the lump sum benefits of the Excess Benefit Plan. These
benefits were fully funded as of September 30, 2009.

19

---



Note 9 - Earnings Per Share Data

Basic earnings
per share are computed based on the weighted-average number of shares of common
stock outstanding during the period. Diluted earnings per share include the
dilutive effect of stock options, warrants and restricted stock awards, as well
as convertible debentures.

The following
is a reconciliation of the basic and diluted earnings per share (EPS)
computations for both the numerator and denominator (in thousands, except per
share data):

|                                                           |  |                                  |        |                             |  |                          |  |   |       |  
|---------------------------------------------------------- |  | -------------------------------- | ------ | --------------------------- |  | ------------------------ |  | - | ----- | -
|                                                           |  | Three months ended September 30, |       
|2009:                                                      |  | Income
(Numerator)               |        | Common
Shares
(Denominator) |  | Per
Common
Share
Amounts | 
|Basic EPS                                                  |  |                                  |        |                             |  |                          |  |   |       |  
|Income from continuing operations                          |  | $                                | 78,746 |                             |  |                          |  | $ | 0.67  |  
|Loss from discontinued operations                          |  |                                  | (6,231 | )                           |  |                          |  |   | (0.05 | )
|Net income                                                 |  |                                  | 72,515 |                             |  | 117,598                  |  | $ | 0.62  |  
|Effect of Dilutive Securities                              |  |                                  |        |                             |  |                          |  |   |       |  
|4.00% junior subordinated convertible debentures           |  |                                  | 71     |                             |  | 275                      |  |   |       |  
|Stock options, warrants and awards                         |  |                                  | -      |                             |  | 272                      |  |   |       |  
|Diluted EPS                                                |  |                                  |        |                             |  |                          |  |   |       |  
|Income from continuing operations plus assumed conversions |  |                                  | 78,817 |                             |  |                          |  | $ | 0.67  |  
|Loss from discontinued operations                          |  |                                  | (6,231 | )                           |  |                          |  |   | (0.05 | )
|Net income plus assumed conversions                        |  | $                                | 72,586 |                             |  | 118,145                  |  | $ | 0.61  |  
|                                                           |  |                                  |        |                             |  |                          |  |   |       |  
|2008:                                                      |  |                                  |        |                             |  |                          |  |   |       |  
|Basic EPS                                                  |  |                                  |        |                             |  |                          |  |   |       |  
|Income from continuing operations                          |  | $                                | 54,350 |                             |  |                          |  | $ | 0.47  |  
|Loss from discontinued operations                          |  |                                  | (591   | )                           |  |                          |  |   | (0.01 | )
|Net income                                                 |  |                                  | 53,759 |                             |  | 115,983                  |  | $ | 0.46  |  
|Effect of Dilutive Securities                              |  |                                  |        |                             |  |                          |  |   |       |  
|4.00% junior subordinated convertible debentures           |  |                                  | 70     |                             |  | 275                      |  |   |       |  
|Stock options, warrants and awards                         |  |                                  | -      |                             |  | 1,225                    |  |   |       |  
|Diluted EPS                                                |  |                                  |        |                             |  |                          |  |   |       |  
|Income from continuing operations plus assumed conversions |  |                                  | 54,420 |                             |  |                          |  | $ | 0.46  |  
|Loss from discontinued operations                          |  |                                  | (591   | )                           |  |                          |  |   | (0.01 | )
|Net income plus assumed conversions                        |  | $                                | 53,829 |                             |  | 117,483                  |  | $ | 0.46  |  

20

---



|                                                           |  |                                 |         |                             |  |                          |  |   |       |  
|---------------------------------------------------------- |  | ------------------------------- | ------- | --------------------------- |  | ------------------------ |  | - | ----- | -
|                                                           |  | Nine months ended September 30, |        
|2009:                                                      |  | Income
(Numerator)              |         | Common
Shares
(Denominator) |  | Per
Common
Share
Amounts | 
|Basic EPS                                                  |  |                                 |         |                             |  |                          |  |   |       |  
|Income from continuing operations                          |  | $                               | 152,968 |                             |  |                          |  | $ | 1.31  |  
|Loss from discontinued operations                          |  |                                 | (20,840 | )                           |  |                          |  |   | (0.18 | )
|Net income                                                 |  |                                 | 132,128 |                             |  | 116,970                  |  | $ | 1.13  |  
|Effect of Dilutive Securities                              |  |                                 |         |                             |  |                          |  |   |       |  
|4.00% junior subordinated convertible debentures           |  |                                 | 213     |                             |  | 275                      |  |   |       |  
|Stock options, warrants and awards                         |  |                                 | -       |                             |  | 466                      |  |   |       |  
|Diluted EPS                                                |  |                                 |         |                             |  |                          |  |   |       |  
|Income from continuing operations plus assumed conversions |  |                                 | 153,181 |                             |  |                          |  | $ | 1.30  |  
|Loss from discontinued operations                          |  |                                 | (20,840 | )                           |  |                          |  |   | (0.18 | )
|Net income plus assumed conversions                        |  | $                               | 132,341 |                             |  | 117,711                  |  | $ | 1.12  |  
|                                                           |  |                                 |         |                             |  |                          |  |   |       |  
|2008:                                                      |  |                                 |         |                             |  |                          |  |   |       |  
|Basic EPS                                                  |  |                                 |         |                             |  |                          |  |   |       |  
|Income from continuing operations                          |  | $                               | 115,381 |                             |  |                          |  | $ | 0.98  |  
|Loss from discontinued operations                          |  |                                 | (2,537  | )                           |  |                          |  |   | (0.02 | )
|Net income                                                 |  |                                 | 112,844 |                             |  | 117,904                  |  | $ | 0.96  |  
|Effect of Dilutive Securities                              |  |                                 |         |                             |  |                          |  |   |       |  
|4.00% junior subordinated convertible debentures           |  |                                 | 209     |                             |  | 275                      |  |   |       |  
|Stock options, warrants and awards                         |  |                                 | -       |                             |  | 585                      |  |   |       |  
|Diluted EPS                                                |  |                                 |         |                             |  |                          |  |   |       |  
|Income from continuing operations plus assumed conversions |  |                                 | 115,590 |                             |  |                          |  | $ | 0.97  |  
|Loss from discontinued operations                          |  |                                 | (2,537  | )                           |  |                          |  |   | (0.02 | )
|Net income plus assumed conversions                        |  | $                               | 113,053 |                             |  | 118,764                  |  | $ | 0.95  |  

EPS is
reported independently for each amount presented. Accordingly, the sum of the
individual amounts may not necessarily equal the separately calculated amounts
for the corresponding period.

During the
three and nine months ended September 30, 2009 and 2008, the anti-dilutive
effect associated with certain stock options, warrants and awards was excluded
from the computation of diluted EPS, since the exercise price was greater than
the average market price of the Companys common stock during these periods. The
aggregate number of stock options, warrants and awards excluded from the
computation of diluted EPS for the quarters ended September 30, 2009 and 2008
totaled 6.4 million and 4.5 million, respectively, and for the nine months
ended September 30, 2009 and 2008, totaled 6.2 million and 6.7 million,
respectively.

Effective
January 1, 2009, the Company adopted the provisions of the authoritative
guidance for determining whether instruments granted in share-based payment
transactions are participating securities, which clarifies that unvested
share-based payment awards that contain nonforfeitable rights to dividends or
dividend equivalents (whether paid or unpaid) are participating securities

21

---



and are to be
included in the computation of earnings per share under the two-class method.
This guidance is effective for financial statements issued for fiscal years
beginning after December 15, 2008, and interim periods within those years. The
adoption of this authoritative guidance did not have a material impact on the
Companys consolidated results of operations, financial position or cash flows.

Note 10 - Restructuring and Other Related
Charges

Omnicare Full Potential Program

In 2006, the
Company commenced the implementation of the Omnicare Full Potential Plan, a
major initiative primarily designed to re-engineer the Companys pharmacy
operating model to increase efficiency and enhance customer growth. The
Omnicare Full Potential Plan is expected to optimize resources across the
entire organization by implementing best practices, including the realignment
and right-sizing of functions, and a hub-and-spoke model, whereby certain key
administrative and production functions will be transferred to regional support
centers (hubs) specifically designed and managed to perform these tasks, with
local pharmacies (spokes) focusing on time-sensitive services and
customer-facing processes. Additionally, in connection with this productivity
enhancement initiative, the Company is also right-sizing and consolidating certain
CRO operations.

This program
is expected to be completed over a multi-year period and is estimated to result
in total pretax restructuring and other related charges of approximately $106
million. As presented in further detail below, the Company recorded
restructuring and other related charges for the Omnicare Full Potential Plan of
approximately $6 million and $19 million pretax (approximately $4 million and
$12 million aftertax) during the three and nine months ended September 30,
2009, respectively, and approximately $8 million and $25 million pretax in the
three and nine months ended September 30, 2008, or cumulative aggregate
restructuring and other related charges of approximately $102 million before
taxes through the third quarter of 2009. The remainder of the overall
restructuring and other related charges will be recognized and disclosed
prospectively, as the remaining portions of the project are finalized and
implemented. The Company eliminated approximately 1,200 positions in completing
its initial phase of the program. The remainder of the program is currently
estimated to result in a net reduction of approximately 1,200 positions (1,900
positions eliminated, net of 700 new positions filled in different geographic
locations as well as to perform new functions required by the hub-and-spoke
model of operations), of which approximately 860 positions had been eliminated
as of September 30, 2009. The foregoing reductions do not include additional
savings expected from lower levels of overtime and reduced temporary labor. The
Company currently estimates reductions in overtime, excess hours and temporary
help, as well as productivity gains, to equal an additional 820 full-time
equivalents. In addition, in July 2009, the Company implemented a temporary
payroll containment and reduction program across the organization designed to
facilitate the achievement of the productivity and efficiency goals associated
with the Full Potential Plan.

The
restructuring charges primarily include severance pay, the buy-out of
employment agreements, lease terminations, and other exit-related asset
disposals, professional fees and

22

---



facility exit
costs. The other related charges are primarily comprised of professional fees.
Details of the Omnicare Full Potential Plan restructuring and other related
charges follow (pretax, in thousands):

|                                              |  |                              |        |                         |   |                      |  |                               |         |   |   |      
|--------------------------------------------- |  | ---------------------------- | ------ | ----------------------- | - | -------------------- |  | ----------------------------- | ------- | - | - | -----
|Restructuring
charges:                        |  | Balance at
December 31,
2008 |        | 2009
Provision/
Accrual |   | Utilized
during
2009 |  | Balance at
September 30,
2009
|                                              |  |                              |        |                         |   |                      |  |                              
|Employee severance                            |  | $                            | -      |                         | $ | 5,123                |  | $                             | (5,097  | ) | $ | 26   
|Employment agreement
 buy-outs                |  |                              | 35     |                         |   | 135                  |  |                               | (170    | ) |   | -    
|Lease terminations                            |  |                              | 8,885  |                         |   | 4,021                |  |                               | (3,623  | ) |   | 9,283
|Other assets, fees and
 facility exit costs   |  |                              | 2,394  |                         |   | 4,945                |  |                               | (7,101  | ) |   | 238  
|Total restructuring charges                   |  | $                            | 11,314 |                         |   | 14,224               |  | $                             | (15,991 | ) | $ | 9,547
|                                              |  |                              |        |                         |   |                      |  |                               |         |   |   |      
|Other related charges                         |  |                              |        |                         |   | 4,871                |  |                               |         |   |   |      
|                                              |  |                              |        |                         |   |                      |  |                               |         |   |   |      
|Total restructuring and other related charges |  |                              |        |                         | $ | 19,095               |  |                               |         |   |   |      

As of
September 30, 2009, the Company has made cumulative payments of approximately
$21 million of severance and other employee-related costs for the Omnicare Full
Potential Plan. The remaining liabilities at September 30, 2009, represent
amounts not yet paid relating to actions taken in connection with the program
(primarily lease payments and professional fees) and will be settled as these
matters are finalized. The provision/accrual and corresponding payment amounts
relating to employee severance are being accounted for primarily in accordance
with the authoritative guidance for employers accounting for postemployment
benefits; and the provision/accrual and corresponding payment amounts relating
to employment agreement buy-outs are being accounted for primarily in
accordance with the authoritative guidance regarding accounting for costs
associated with exit or disposal activities.

Note 11 - Commitments and Contingencies

Omnicare
continuously evaluates contingencies based upon the best available information.
The Company believes that liabilities have been recorded to the extent
necessary in cases where the outcome is considered probable and reasonably
estimable. To the extent that resolution of contingencies results in amounts
that vary from the Companys recorded liabilities, future earnings will be
charged or credited accordingly.

As previously disclosed, the U.S. Attorneys
    Office, District of Massachusetts had been investigating allegations under
    the False Claims Act, 31 U.S.C. (§) 3729, et seq. and various state false
    claims statutes in five qui tam complaints
    (Maguire, Kammerer, Lisitza and two sealed complaints) concerning the Companys
    relationships with certain manufacturers and distributors of pharmaceutical
    products and certain customers, as well as with respect to contracts with
    certain companies acquired by the Company. The complaints in these cases,
    which have been dismissed with prejudice by the relators pursuant to the
    settlement described below, alleged that the Company violated the False Claims
    Act when it submitted claims for name brand drugs when actually providing
    generic versions of the same drug to nursing homes; provided consultant pharmacist
    services to its customers at below-market rates to induce the referral of
    pharmaceutical business; accepted discounts from drug manufacturers in return
    for recommending that certain pharmaceuticals be prescribed to nursing home
    residents; accepted rebates, post-purchase discounts, grants and other forms
    of remuneration from drug manufacturers in return for purchasing pharmaceuticals
    from those manufacturers and taking steps to increase the purchase of those
    manufacturers drugs; made false statements and omissions to physicians
    in connection with its recommendations of those pharmaceuticals; substituted
    certain pharmaceuticals without physician authorization; accepted payments
    from certain generic drug manufacturers in return for entering into purchase
    arrangements with them; acquired certain institutional pharmacies at above-market
    rates to obtain contracts between those pharmacies and nursing homes; and
    made a payment to certain nursing home chains in return for the referral
of pharmaceutical business.

23

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On November 2, 2009, the Company entered into a civil settlement agreement, without any finding of wrongdoing or any admission of liability, finalizing a previously disclosed agreement in principle, under which the Company has
agreed to pay the federal government and participating state governments $98 million plus interest from June 24, 2009 (the date of the agreement in principle referenced above) and related expenses to settle various alleged civil violations of
federal and state laws.  The settlement agreements release the Company from claims that the Company allegedly violated various federal and state laws due to the Company having allegedly made a payment to certain nursing home chains in return for the
referral of pharmaceutical business; allegedly provided consultant pharmacist services to its customers at rates below the Company's cost of providing the services and below fair market value to induce the referral of pharmaceutical business;
allegedly accepted a payment from a generic drug manufacturer allegedly in exchange for purchasing that manufacturers products and recommending that physicians prescribe such products to nursing home patients; and allegedly accepted rebates,
grants and other forms of remuneration from a drug manufacturer to induce the Company to recommend that physicians prescribe one of the manufacturers drugs, and the rebate agreements conditioned payment of the rebates upon the Company engaging
in an active intervention program to convince physicians to prescribe the drug and requiring that all competitive products be prior authorized for the drugs failure, where the Company failed to disclose to physicians that such
intervention activities were a condition of it receiving such rebate payments.

The Company denies the contentions of the the qui tam relators and the federal government as set forth in the settlement agreement and the complaints.  A substantial
majority of states in which the Company does business are expected to participate in this settlement. In addition, the Department of Justice has advised the Company that it has no present intention of pursuing an investigation and/or filing suit
under the False Claims Act against the Company with respect to allegations in the qui tam complaints that, during 1999-2003, pharmaceutical manufacturers named as defendants in the
complaints made payments to the Company in return for the Company recommending and/or purchasing such manufacturers' drugs.

Pursuant to stipulations of dismissal executed in connection with the settlement agreement, the five complaints were dismissed. As part of the settlement agreement, the Company also entered into an amended and restated corporate
integrity agreement (CIA) with the Department of Health and Human
Services Office of the Inspector General with a term of five years from November
2, 2009. Pursuant to the CIA,
the Company is required, among other things, to (i) create procedures designed to ensure that each existing, new or renewed arrangement with any actual or potential source of health care business or referrals to Omnicare or any actual or potential
recipient of health care business or referrals from Omnicare does not violate the Anti-Kickback Statute or related regulations, directives and guidance, including creating and maintaining a database of such arrangements; (ii) retain an independent
review organization to review the Companys compliance with the terms of the CIA and report to OIG regarding that compliance; and (iii) provide training for certain Company employees as to the Companys requirements under the CIA.  The
requirements of the Companys prior corporate integrity agreement obligating the Company to create and maintain procedures designed to ensure that all therapeutic interchange programs are developed and implemented by Omnicare consistent with
the CIA and federal and state laws for obtaining prior authorization from the prescriber before making a therapeutic interchange of a drug have been incorporated into the amended and restated CIA without modification. The requirements of the CIA are
expected to result in increased costs to maintain the Companys compliance program and greater scrutiny by federal regulatory authorities. Violations of the corporate integrity agreement could subject the Company to significant monetary
penalties.  Consistent with the CIA, the Company expects to review its contracts to ensure compliance with applicable laws and regulations. As a result of this review, the Company anticipates that pricing under its consultant pharmacist services
contracts will need to be reviewed and may increase, and there can be no assurance that such pricing will not result in the loss of certain contracts.

24

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As previously disclosed, on November 14, 2006, the Company entered into
a voluntary civil settlement of all federal and state civil claims arising from
allegations relating to three generic pharmaceuticals provided by the Company
in connection with the substitution of capsules for tablets (Ranitidine),
tablets for capsules (Fluoxetine) and two 7.5 mg tablets for one 15 mg tablet
(Buspirone). Another issue alleged by one qui
tam relator remains under seal and was not resolved by the
settlement. The settlement agreement did not include any finding of wrongdoing
or any admission of liability. As part of the settlement agreement, on November
9, 2006, the Company entered into a Corporate Integrity Agreement with the
Department of Health and Human Services Office of the Inspector General with a
term of five years from November 9, 2006. This Corporate Integrity Agreement
has been amended and restated as described above.

As previously disclosed, on October 5, 2006, the Company entered into a
voluntary settlement agreement and a Corporate Integrity Agreement with the
State of Michigan to resolve the Michigan Attorney Generals investigation
relating to certain billing issues under the Michigan Medicaid program at
Specialized Pharmacy Services, a subsidiary of the Company located in Michigan.
On October 26, 2007, the Company also entered into settlement agreements with
the federal government and the State of Michigan to resolve certain hospice
claims relating to Specialized Pharmacy Services. In connection with the
settlements, the November 9, 2006

25

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Corporate Integrity Agreement with the Department of Health and Human
Services Office of the Inspector General was also amended to cover certain
hospice billing matters. The settlement agreements do not include any finding
of wrongdoing or any admission of liability. The Corporate Integrity Agreement
with the State of Michigan requires that the Company and Specialized Pharmacy
Services maintain Specialized Pharmacy Services compliance program in
accordance with the terms of the Corporate Integrity Agreement. The agreement
contains specific requirements regarding compliance with Medicaid policies
governing access to pharmacy facilities and records, unit dose billing
agreements, consumption billing, hospice patient terminal illness prescriptions
and prescriptions dispensed after a patients death. The requirements of the
Corporate Integrity Agreement have resulted in increased costs to maintain
Specialized Pharmacy Services compliance program and could result in greater
scrutiny by Michigan regulatory authorities. Violations of the Corporate
Integrity Agreement could subject the Company to significant monetary and/or
administrative penalties.

On February 2 and February 13, 2006, respectively, two substantially
similar putative class action lawsuits, entitled Indiana State Dist. Council of Laborers & HOD Carriers Pension
& Welfare Fund v. Omnicare, Inc., et al., No. 2:06cv26 (HOD
Carriers), and Chi v. Omnicare, Inc., et
al., No. 2:06cv31 (Chi), were filed against Omnicare and two of
its officers in the United States District Court for the Eastern District of
Kentucky purporting to assert claims for violation of §§10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and
seeking, among other things, compensatory damages and injunctive relief. The
complaints, which purported to be brought on behalf of all open-market
purchasers of Omnicare common stock from August 3, 2005 through January 27,
2006, alleged that Omnicare had artificially inflated its earnings by engaging
in improper generic drug substitution and that defendants had made false and
misleading statements regarding the Companys business and prospects. On April
3, 2006, plaintiffs in the HOD Carriers
case formally moved for consolidation and the appointment of lead plaintiff and
lead counsel pursuant to the Private Securities Litigation Reform Act of 1995.
On May 22, 2006, that motion was granted, the cases were consolidated, and a
lead plaintiff and lead counsel were appointed. On July 20, 2006, plaintiffs
filed a consolidated amended complaint, adding a third officer as a defendant
and new factual allegations primarily relating to revenue recognition, the
valuation of receivables and the valuation of inventories. On October 31, 2006,
plaintiffs moved for leave to file a second amended complaint, which was
granted on January 26, 2007, on the condition that no further amendments would
be permitted absent extraordinary circumstances. Plaintiffs thereafter filed
their second amended complaint on January 29, 2007. The second amended
complaint (i) expands the putative class to include all purchasers of Omnicare
common stock from August 3, 2005 through July 27, 2006, (ii) names two members
of the Companys board of directors as additional defendants, (iii) adds a new
plaintiff and a new claim for violation of Section 11 of the Securities Act of
1933 based on alleged false and misleading statements in the registration
statement filed in connection with the Companys December 2005 public offering,
(iv) alleges that the Company failed to timely disclose its contractual dispute
with UnitedHealth Group, Inc. and its affiliates (United), and (v) alleges
that the Company failed to timely record certain special litigation reserves.
The defendants filed a motion to dismiss the second amended complaint on March
12, 2007, claiming that plaintiffs had failed adequately to plead loss
causation, scienter or any actionable misstatement or omission. That motion was
fully briefed as of May 1, 2007. In response to certain arguments relating to
the individual claims of the named

26

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plaintiffs that were raised in defendants pending motion to dismiss,
plaintiffs filed a motion to add, or in the alternative, to intervene an
additional named plaintiff, Alaska Electrical Pension Fund, on July 27, 2007.
On October 12, 2007, the court issued an opinion and order dismissing the case
and denying plaintiffs motion to add an additional named plaintiff. On
November 9, 2007, plaintiffs filed a notice of appeal with the United States
Court of Appeals for the Sixth Circuit with respect to the dismissal of their
case. Oral argument was held on September 18, 2008. On October 21, 2009, the
Sixth Circuit Court of Appeals generally affirmed the district courts
dismissal, dismissing plaintiffs claims for violation of §§10(b) and 20(a) of
the Securities Exchange Act of 1934 and Rule 10b-5, as well as affirming the
denial of Alaskan Electrical Pension Funds motion to intervene. However, the
appellate court reversed the dismissal of the claim brought for violation of
Section 11 of the Securities Act of 1933, remanding the case to the district
court for further proceedings, including application of the rule requiring
plaintiffs to allege fraud with particularity to their Section 11 claim. On November 3, 2009, plaintiffs filed a motion in the Court of
Appeals seeking a rehearing or a rehearing en banc with respect to a single aspect of the Courts decision, namely, whether the
federal rule requiring pleading with particularity should apply to their claim under Section 11 of the Securities Act.

On February 13, 2006, two substantially similar shareholder derivative
actions, entitled Isak v. Gemunder, et al.,
Case No. 06-CI-390, and Fragnoli v. Hutton,
et al., Case No. 06-CI-389, were filed in Kentucky State Circuit
Court, Kenton Circuit, against the members of Omnicares board of directors,
individually, purporting to assert claims for breach of fiduciary duty, abuse
of control, gross mismanagement, waste of corporate assets and unjust
enrichment arising out of the Companys alleged violations of federal and state
health care laws based upon the same purportedly improper generic drug
substitution that is the subject of the federal purported class action
lawsuits. The complaints seek, among other things, damages, restitution and
injunctive relief. The Isak and Fragnoli actions were later consolidated
by agreement of the parties. On January 12, 2007, the defendants filed a motion
to dismiss the consolidated action on the grounds that the dismissal of the
substantially identical shareholder derivative action, Irwin v. Gemunder, et al., 2:06cv62, by the United States
District Court for the Eastern District of Kentucky on November 20, 2006 should
be given preclusive effect and thus bars re-litigation of the issues already
decided in Irwin. Instead of
opposing that motion, on March 16, 2007, the plaintiffs filed an amended
consolidated complaint, which continues to name all of the directors as
defendants and asserts the same claims, but attempts to bolster those claims by
adding nearly all of the substantive allegations from the most recent complaint
in the federal securities class action (seediscussion
of HOD Carriers above) and an
amended complaint in Irwin that
added the same factual allegations that were added to the consolidated amended
complaint in theHOD Carriers
action. On April 16, 2007, defendants filed a supplemental memorandum of law in
further support of their pending motion to dismiss contending that the amended
complaint should be dismissed on the same grounds previously articulated for
dismissal, namely, the preclusive effect of the dismissal of the Irwin action. That motion has been fully
briefed, oral argument was held on August 21, 2007, and the court reserved
decision.

The Company believes the above-described purported class and derivative
actions are without merit and will be vigorously defended.

The three and nine months ended September 30, 2009 included a $1.7
million pretax charge ($1.1 million after taxes) and a $71.8 million pretax
charge ($55.6 million after taxes), respectively, and the three and nine months
ended September 30, 2008 included a $13.5 million pretax charge ($8.2 million
after taxes) and a $51.1 million pretax charge ($31.3 million after

27

---



taxes), respectively, reflected in the Litigation
    and other related professional fees line of the Consolidated Statements
    of Income, primarily for litigation-related settlements and professional
    expenses in connection with the investigation by the United States Attorneys
    Office, District of Massachusetts (including the aforementioned increase
    in the settlement reserve); the Companys lawsuit
against United; the Companys response to subpoenas it received relating
to other legal proceedings to which the Company is not a party; certain other
large customer disputes; the inquiry conducted by the Attorney Generals
Office in Michigan relating to certain billing issues under the Michigan Medicaid
program; the investigation by the federal government and certain states
relating to drug substitutions; and the purported class and derivative actions.

During 2006, the Company experienced certain quality control and
product recall issues, as well as fire damage, at one of its repackaging
facilities. As a precautionary measure, the Company voluntarily and temporarily
suspended operations at this facility. During the time that this facility was
closed, the Company conducted certain environmental tests at the facility.
Based on the results of these tests, which showed very low levels of beta
lactam residue, and the time and expense associated with completing the necessary
remediation procedures, as well as the short remaining term on the lease for
the current facility, the Company decided not to reopen this facility. The
Company has been cooperating with federal and state officials who have been
conducting investigations relating to the Repack Matters (as defined below).
The Company continues to work to address and resolve certain remaining issues,
and fully restore centralized repackaging to its original levels. In order to
replace the capacity of this facility, the Company ramped-up production in its
other repackaging facility, as well as onsite in its individual pharmacies.
Further, in order to replace the repackaging capacity of the closed facility,
on February 27, 2007, Omnicare entered into an agreement for the Repackaging
Services division of Cardinal Health to serve as the contract repackager for
pharmaceutical volumes previously repackaged at the closed facility. The
agreement initially extends through October 2010. As a result, the Company has
been and continues to be able to meet the needs of all of its client facilities
and their residents. Addressing these issues served to increase costs and, as a
result, the three months ended September 30, 2009 included special charges of
approximately $2.0 million pretax (approximately $1.8 million and approximately
$0.3 million was recorded in the cost of sales and operating expenses sections
of the Consolidated Statements of Income, respectively) ($1.2 million after
taxes) for additional costs precipitated by the quality control, product recall
and fire damage issues at this facility (Repack Matters). The associated
costs for the nine months ended September 30, 2009 totaled $5.2 million pretax
($3.7 million and $1.5 million was recorded in the cost of sales and operating
expenses sections of the Consolidated Statements of Income, respectively) ($3.2
million after taxes). The three months ended September 30, 2008 included
special charges of approximately $1.2 million pretax (approximately $1.0
million and approximately $0.1 million was recorded in the cost of sales and
operating expenses sections of the Consolidated Statements of Income,
respectively) ($0.7 million after taxes) for additional costs precipitated by
the Repack Matters. The associated costs for the nine months ended September
30, 2008 totaled $4.8 million pretax ($4.2 million and $0.6 million was
recorded in the cost of sales and operating expenses sections of the
Consolidated Statements of Income, respectively) ($2.9 million after taxes).
The Company maintains product recall, property and casualty and business
interruption insurance, and the extent of insurance recovery for these
expenses, if any, continues to be reviewed by its insurers and outside
advisors. As of September 30, 2009, the Company has received no material
insurance recoveries.

28

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Although the Company cannot know with certainty the ultimate outcome of
the matters described in the preceding paragraphs other than as disclosed,
there can be no assurance that the resolution of these matters will not have a
material adverse impact on the Companys consolidated results of operations,
financial position or cash flows or, in the case of the investigations
regarding certain drug substitutions and the Repack Matters, that these matters
will be resolved in an amount that would not exceed the amount of the pretax
charges recorded by the Company.

As part of its ongoing operations, the Company is subject to various
inspections, audits, inquiries and similar actions by third parties, as well as
governmental/regulatory authorities responsible for enforcing the laws and
regulations to which the Company is subject. The Company is also involved in
various legal actions arising in the normal course of business. These matters
are continuously being evaluated and, in many cases, are being contested by the
Company and the outcome is not predictable. Consequently, an estimate of the
possible loss or range of loss associated with certain actions cannot be made.
Although occasional adverse outcomes (or settlements) may occur and could
possibly have an adverse effect on the results of operations and cash flows in
any one accounting period, outside of the matters described in the preceding
paragraphs, the Company is not aware of any such matters whereby it is
presently believed that the final disposition will have a material adverse
affect on the Companys overall consolidated financial position.

The Company indemnifies the directors and officers of the Company for
certain liabilities that might arise from the performance of their job
responsibilities for the Company. Additionally, in the normal course of
business, the Company enters into contracts that contain a variety of
representations and warranties and which provide general indemnifications. The
Companys maximum exposure under these arrangements is unknown, as this
involves the resolution of claims made, or future claims that may be made,
against the Company, its directors and/or officers, the outcomes of which is
unknown and not currently predictable. Accordingly, no liabilities have been
recorded for the indemnifications.

29

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Note 12 - Segment Information

Based on the management approach, as defined in the authoritative
guidance for segment reporting, Omnicare has two operating segments. The
Companys larger segment is Pharmacy Services. Pharmacy Services primarily
provides distribution of pharmaceuticals, related pharmacy consulting and other
ancillary services, data management services, medical supplies, and
distribution and patient assistance services for specialty pharmaceuticals. The
Companys customers are primarily skilled nursing, assisted living, hospice and
other providers of healthcare services in 47 states in the United States, the
District of Columbia and in Canada at September 30, 2009. The Companys other
segment is CRO Services, which provides comprehensive product development and
research services to client companies in pharmaceutical, biotechnology,
nutraceutical, medical devices and diagnostics industries in 31 countries
around the world at September 30, 2009, including the United States.

The table below presents information about the segments as of and for
the three and nine months ended September 30, 2009 and 2008, and should be read
in conjunction with the paragraph that follows (in thousands):

|                                                       |  |                                   |           |               |   |                               |   |                      |         |   |   |           |  
|------------------------------------------------------ |  | --------------------------------- | --------- | ------------- | - | ----------------------------- | - | -------------------- | ------- | - | - | --------- | -
|                                                       |  | Three
 months ended September 30, |          
|2009:                                                  |  | Pharmacy
 Services                |           | CRO
 Services |   | Corporate
 and
 Consolidating |   | Consolidated
 Totals |        
|Net sales                                              |  | $                                 | 1,507,031 |               | $ | 36,870                        |   | $                    | -       |   | $ | 1,543,901 |  
|Depreciation and
 amortization expense                 |  |                                   | (19,455   | )             |   | (526                          | ) |                      | (14,023 | ) |   | (34,004   | )
|Restructuring and other
 related charges               |  |                                   | (2,448    | )             |   | (2,622                        | ) |                      | (1,225  | ) |   | (6,295    | )
|Litigation and other related
 professional fees        |  |                                   | (1,739    | )             |   | -                             |   |                      | -       |   |   | (1,739    | )
|Repack matters                                         |  |                                   | (2,032    | )             |   | -                             |   |                      | -       |   |   | (2,032    | )
|Acquisition and other
 related costs                   |  |                                   | 632       |               |   | -                             |   |                      | -       |   |   | 632       |  
|Operating income (expense)
 from continuing operations |  |                                   | 158,814   |               |   | (1,959                        | ) |                      | (24,826 | ) |   | 132,029   |  
|Total assets                                           |  |                                   | 6,726,811 |               |   | 167,875                       |   |                      | 497,214 |   |   | 7,391,900 |  
|Capital expenditures                                   |  |                                   | (10,227   | )             |   | (571                          | ) |                      | (153    | ) |   | (10,951   | )
|                                                       |  |                                   |           |               |   |                               |   |                      |         |   |   |           |  
|2008:                                                  |  |                                   |           |               |   |                               |   |                      |         |   |   |           |  
|Net sales                                              |  | $                                 | 1,526,787 |               | $ | 51,464                        |   | $                    | -       |   | $ | 1,578,251 |  
|Depreciation and
 amortization expense                 |  |                                   | (21,154   | )             |   | (473                          | ) |                      | (13,716 | ) |   | (35,343   | )
|Restructuring and other
 related charges               |  |                                   | (6,806    | )             |   | -                             |   |                      | (849    | ) |   | (7,655    | )
|Litigation and other related
 professional fees        |  |                                   | (13,479   | )             |   | -                             |   |                      | -       |   |   | (13,479   | )
|Repack matters                                         |  |                                   | (1,170    | )             |   | -                             |   |                      | -       |   |   | (1,170    | )
|Operating income (expense)
 from continuing operations |  |                                   | 152,783   |               |   | 4,544                         |   |                      | (29,676 | ) |   | 127,651   |  
|Total assets                                           |  |                                   | 6,870,171 |               |   | 186,192                       |   |                      | 350,405 |   |   | 7,406,768 |  
|Capital expenditures                                   |  |                                   | (17,968   | )             |   | (224                          | ) |                      | (57     | ) |   | (18,249   | )

30

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|                                                      |  |                                 |           |              |   |                             |   |                     |         |   |   |           |  
|----------------------------------------------------- |  | ------------------------------- | --------- | ------------ | - | --------------------------- | - | ------------------- | ------- | - | - | --------- | -
|                                                      |  | Nine months ended September 30, |          
|                                                      |  |                                
|2009:                                                 |  | Pharmacy
Services               |           | CRO
Services |   | Corporate and
Consolidating |   | Consolidated
Totals |        
|                                                     
|Net sales                                             |  | $                               | 4,504,097 |              | $ | 122,416                     |   | $                   | -       |   | $ | 4,626,513 |  
|Depreciation and amortization expense                 |  |                                 | (61,682   | )            |   | (1,469                      | ) |                     | (42,206 | ) |   | (105,357  | )
|Restructuring and other related charges               |  |                                 | (13,207   | )            |   | (3,327                      | ) |                     | (2,561  | ) |   | (19,095   | )
|Litigation and other related professional fees        |  |                                 | (71,761   | )            |   | -                           |   |                     | -       |   |   | (71,761   | )
|Repack matters                                        |  |                                 | (5,221    | )            |   | -                           |   |                     | -       |   |   | (5,221    | )
|Acquisition and other related costs                   |  |                                 | (2,218    | )            |   | -                           |   |                     | -       |   |   | (2,218    | )
|Operating income (expense) from continuing operations |  |                                 | 409,553   |              |   | 2,000                       |   |                     | (73,924 | ) |   | 337,629   |  
|Total assets                                          |  |                                 | 6,726,811 |              |   | 167,875                     |   |                     | 497,214 |   |   | 7,391,900 |  
|Capital expenditures                                  |  |                                 | (24,002   | )            |   | (1,313                      | ) |                     | (951    | ) |   | (26,266   | )
|                                                      |  |                                 |           |              |   |                             |   |                     |         |   |   |           |  
|2008:                                                 |  |                                 |           |              |   |                             |   |                     |         |   |   |           |  
|                                                      |  |                                 |           |              |   |                             |   |                     |         |   |   |           |  
|Net sales                                             |  | $                               | 4,477,133 |              | $ | 154,268                     |   | $                   | -       |   | $ | 4,631,401 |  
|Depreciation and amortization expense                 |  |                                 | (59,353   | )            |   | (1,362                      | ) |                     | (42,280 | ) |   | (102,995  | )
|Restructuring and other related charges               |  |                                 | (21,124   | )            |   | (1,374                      | ) |                     | (2,389  | ) |   | (24,887   | )
|Litigation and other related professional fees        |  |                                 | (51,143   | )            |   | -                           |   |                     | -       |   |   | (51,143   | )
|Repack matters                                        |  |                                 | (4,803    | )            |   | -                           |   |                     | -       |   |   | (4,803    | )
|Operating income (expense) from continuing operations |  |                                 | 382,684   |              |   | 11,012                      |   |                     | (86,292 | ) |   | 307,404   |  
|Total assets                                          |  |                                 | 6,870,171 |              |   | 186,192                     |   |                     | 350,405 |   |   | 7,406,768 |  
|Capital expenditures                                  |  |                                 | (43,074   | )            |   | (2,294                      | ) |                     | (311    | ) |   | (45,679   | )

In accordance with the authoritative guidance for income statement
characterization of reimbursements received for out-of-pocket expenses
incurred, Omnicare included in its reported CRO segment net sales amount, for
the three and nine month periods ended September 30, 2009, reimbursable
out-of-pockets totaling $3.4 million and $14.3 million, respectively and $8.3
million and $24.5 million for the three and nine months ended September 30,
2008, respectively.

Note 13 - Guarantor Subsidiaries

The Companys 6.125% senior subordinated notes due 2013, the 6.75%
senior subordinated notes due 2013 and the 6.875% senior subordinated notes due
2015 are fully and unconditionally guaranteed on an unsecured, joint and
several basis by certain wholly-owned subsidiaries of the Company (the
Guarantor Subsidiaries). The following condensed consolidating financial data
illustrates the composition of Omnicare, Inc. (Parent), the Guarantor
Subsidiaries and the Non-Guarantor Subsidiaries as of September 30, 2009 and
December 31, 2008 for the balance sheets as well as the three and nine months
ended September 30, 2009 and 2008 for the statements of income, and the
statements of cash flows for the nine months ended September 30, 2009 and 2008.
Management believes separate complete financial statements of the respective
Guarantor Subsidiaries would not provide information that would be necessary
for evaluating the sufficiency of the Guarantor Subsidiaries, and thus are not
presented. No consolidating/eliminating adjustment column is presented for the
condensed consolidating statements of cash flows since there were no
significant consolidating/eliminating adjustment amounts during the periods
presented.

31

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Note 13 - Guarantor Subsidiaries (Continued)

Summary Consolidating Statements of Income - Unaudited(in thousands)

|                                                                           |  |                                  |         |                        |   |                             |   |                                        |        |                                 |   |         |   |   |           |  
|-------------------------------------------------------------------------- |  | -------------------------------- | ------- | ---------------------- | - | --------------------------- | - | -------------------------------------- | ------ | ------------------------------- | - | ------- | - | - | --------- | -
|                                                                           |  | Three months ended September 30, |        
|                                                                           |  |                                 
|2009:                                                                      |  | Parent                           |         | Guarantor
Subsidiaries |   | Non-
Guarantor
Subsidiaries |   | Consolidating/
Eliminating
Adjustments |        | Omnicare,
Inc. and
Subsidiaries |  
|                                                                          
|Net sales                                                                  |  | $                                | -       |                        | $ | 1,499,286                   |   | $                                      | 44,615 |                                 | $ | -       |   | $ | 1,543,901 |  
|Cost of sales                                                              |  |                                  | -       |                        |   | 1,140,651                   |   |                                        | 35,295 |                                 |   | -       |   |   | 1,175,946 |  
|Repack matters                                                             |  |                                  | -       |                        |   | 1,755                       |   |                                        | -      |                                 |   | -       |   |   | 1,755     |  
|                                                                           |  |                                  |         |                        |   |                             |   |                                        |        |                                 |   |         |   |   |           |  
|Gross profit                                                               |  |                                  | -       |                        |   | 356,880                     |   |                                        | 9,320  |                                 |   | -       |   |   | 366,200   |  
|Selling, general
 and administrative expenses                              |  |                                  | 3,350   |                        |   | 192,716                     |   |                                        | 7,328  |                                 |   | -       |   |   | 203,394   |  
|Provision for
 doubtful accounts                                           |  |                                  | -       |                        |   | 22,627                      |   |                                        | 471    |                                 |   | -       |   |   | 23,098    |  
|Restructuring and
 other related charges                                   |  |                                  | -       |                        |   | 6,098                       |   |                                        | 197    |                                 |   | -       |   |   | 6,295     |  
|Litigation and
 other related professional fees                            |  |                                  | -       |                        |   | 1,739                       |   |                                        | -      |                                 |   | -       |   |   | 1,739     |  
|Repack matters                                                             |  |                                  | -       |                        |   | 277                         |   |                                        | -      |                                 |   | -       |   |   | 277       |  
|Acquisition and
 other related costs                                       |  |                                  | -       |                        |   | (632                        | ) |                                        | -      |                                 |   | -       |   |   | (632      | )
|                                                                           |  |                                  |         |                        |   |                             |   |                                        |        |                                 |   |         |   |   |           |  
|Operating income
 (loss)                                                   |  |                                  | (3,350  | )                      |   | 134,055                     |   |                                        | 1,324  |                                 |   | -       |   |   | 132,029   |  
|Investment income                                                          |  |                                  | 144     |                        |   | 1,058                       |   |                                        | -      |                                 |   | -       |   |   | 1,202     |  
|Interest expense,
 including amortization of discount on convertible notes |  |                                  | (36,432 | )                      |   | (215                        | ) |                                        | -      |                                 |   | -       |   |   | (36,647   | )
|                                                                           |  |                                  |         |                        |   |                             |   |                                        |        |                                 |   |         |   |   |           |  
|Income (loss)
 from continuing operations before income taxes              |  |                                  | (39,638 | )                      |   | 134,898                     |   |                                        | 1,324  |                                 |   | -       |   |   | 96,584    |  
|Income tax
 (benefit) expense                                              |  |                                  | (15,316 | )                      |   | 32,623                      |   |                                        | 531    |                                 |   | -       |   |   | 17,838    |  
|                                                                           |  |                                  |         |                        |   |                             |   |                                        |        |                                 |   |         |   |   |           |  
|Income (loss) from
 continuing operations                                  |  |                                  | (24,322 | )                      |   | 102,275                     |   |                                        | 793    |                                 |   | -       |   |   | 78,746    |  
|Loss from
 discontinued operations                                         |  |                                  | -       |                        |   | (5,351                      | ) |                                        | (880   | )                               |   | -       |   |   | (6,231    | )
|Equity in net
 income of subsidiaries                                      |  |                                  | 96,837  |                        |   | -                           |   |                                        | -      |                                 |   | (96,837 | ) |   | -         |  
|                                                                           |  |                                  |         |                        |   |                             |   |                                        |        |                                 |   |         |   |   |           |  
|Net income (loss)                                                          |  | $                                | 72,515  |                        | $ | 96,924                      |   | $                                      | (87    | )                               | $ | (96,837 | ) | $ | 72,515    |  
|                                                                           |  |                                  |         |                        |   |                             |   |                                        |        |                                 |   |         |   |   |           |  
|                                                                           |  |                                  |         |                        |   |                             |   |                                        |        |                                 |   |         |   |   |           |  
|2008:                                                                      |  |                                  |         |                        |   |                             |   |                                        |        |                                 |   |         |   |   |           |  
|                                                                           |  |                                  |         |                        |   |                             |   |                                        |        |                                 |   |         |   |   |           |  
|Net sales                                                                  |  | $                                | -       |                        | $ | 1,526,042                   |   | $                                      | 52,209 |                                 | $ | -       |   | $ | 1,578,251 |  
|Cost of sales                                                              |  |                                  | -       |                        |   | 1,132,662                   |   |                                        | 40,129 |                                 |   | -       |   |   | 1,172,791 |  
|Repack matters                                                             |  |                                  | -       |                        |   | 1,041                       |   |                                        | -      |                                 |   | -       |   |   | 1,041     |  
|                                                                           |  |                                  |         |                        |   |                             |   |                                        |        |                                 |   |         |   |   |           |  
|Gross profit                                                               |  |                                  | -       |                        |   | 392,339                     |   |                                        | 12,080 |                                 |   | -       |   |   | 404,419   |  
|Selling, general
 and administrative expenses                              |  |                                  | 4,690   |                        |   | 219,284                     |   |                                        | 4,351  |                                 |   | -       |   |   | 228,325   |  
|Provision for
 doubtful accounts                                           |  |                                  | -       |                        |   | 26,635                      |   |                                        | 545    |                                 |   | -       |   |   | 27,180    |  
|Restructuring and
 other related charges                                   |  |                                  | -       |                        |   | 7,655                       |   |                                        | -      |                                 |   | -       |   |   | 7,655     |  
|Litigation and
 other related professional fees                            |  |                                  | -       |                        |   | 13,479                      |   |                                        | -      |                                 |   | -       |   |   | 13,479    |  
|Repack matters                                                             |  |                                  | -       |                        |   | 129                         |   |                                        | -      |                                 |   | -       |   |   | 129       |  
|                                                                           |  |                                  |         |                        |   |                             |   |                                        |        |                                 |   |         |   |   |           |  
|Operating income
 (loss)                                                   |  |                                  | (4,690  | )                      |   | 125,157                     |   |                                        | 7,184  |                                 |   | -       |   |   | 127,651   |  
|Investment income                                                          |  |                                  | 105     |                        |   | 1,336                       |   |                                        | -      |                                 |   | -       |   |   | 1,441     |  
|Interest expense,
 including amortization of discount on convertible notes |  |                                  | (42,235 | )                      |   | (206                        | ) |                                        | (765   | )                               |   | -       |   |   | (43,206   | )
|                                                                           |  |                                  |         |                        |   |                             |   |                                        |        |                                 |   |         |   |   |           |  
|Income (loss)
 from continuing operations before income taxes              |  |                                  | (46,820 | )                      |   | 126,287                     |   |                                        | 6,419  |                                 |   | -       |   |   | 85,886    |  
|Income tax
 (benefit) expense                                              |  |                                  | (18,230 | )                      |   | 47,264                      |   |                                        | 2,502  |                                 |   | -       |   |   | 31,536    |  
|                                                                           |  |                                  |         |                        |   |                             |   |                                        |        |                                 |   |         |   |   |           |  
|Income (loss)
 from continuing operations                                  |  |                                  | (28,590 | )                      |   | 79,023                      |   |                                        | 3,917  |                                 |   | -       |   |   | 54,350    |  
|Loss from
 discontinued operations                                         |  |                                  | -       |                        |   | (21                         | ) |                                        | (570   | )                               |   | -       |   |   | (591      | )
|Equity in net
 income of subsidiaries                                      |  |                                  | 82,349  |                        |   | -                           |   |                                        | -      |                                 |   | (82,349 | ) |   | -         |  
|                                                                           |  |                                  |         |                        |   |                             |   |                                        |        |                                 |   |         |   |   |           |  
|Net income                                                                 |  | $                                | 53,759  |                        | $ | 79,002                      |   | $                                      | 3,347  |                                 | $ | (82,349 | ) | $ | 53,759    |  
|                                                                           |  |                                  |         |                        |   |                             |   |                                        |        |                                 |   |         |   |   |           |  

32

---



Note 13 - Guarantor Subsidiaries (Continued)

Summary
Consolidating Statements of Income - Unaudited(in thousands)

|                                                                                    |  |                                 |          |                        |   |                             |   |                                        |         |                                 |   |          |   |   |           |  
|----------------------------------------------------------------------------------- |  | ------------------------------- | -------- | ---------------------- | - | --------------------------- | - | -------------------------------------- | ------- | ------------------------------- | - | -------- | - | - | --------- | -
|                                                                                    |  | Nine
months ended September 30, |         
|                                                                                    |  |                                
|2009:                                                                               |  | Parent                          |          | Guarantor
Subsidiaries |   | Non-
Guarantor
Subsidiaries |   | Consolidating/
Eliminating
Adjustments |         | Omnicare,
Inc. and
Subsidiaries |  
|                                                                                   
|Net sales                                                                           |  | $                               | -        |                        | $ | 4,493,125                   |   | $                                      | 133,388 |                                 | $ | -        |   | $ | 4,626,513 |  
|Cost of sales                                                                       |  |                                 | -        |                        |   | 3,389,810                   |   |                                        | 106,682 |                                 |   | -        |   |   | 3,496,492 |  
|Repack matters                                                                      |  |                                 | -        |                        |   | 3,672                       |   |                                        | -       |                                 |   | -        |   |   | 3,672     |  
|                                                                                    |  |                                 |          |                        |   |                             |   |                                        |         |                                 |   |          |   |   |           |  
|Gross profit                                                                        |  |                                 | -        |                        |   | 1,099,643                   |   |                                        | 26,706  |                                 |   | -        |   |   | 1,126,349 |  
|Selling, general
 and administrative expenses                                       |  |                                 | 11,891   |                        |   | 591,944                     |   |                                        | 19,183  |                                 |   | -        |   |   | 623,018   |  
|Provision for
 doubtful accounts                                                    |  |                                 | -        |                        |   | 69,702                      |   |                                        | 1,377   |                                 |   | -        |   |   | 71,079    |  
|Restructuring and
 other related charges                                            |  |                                 | -        |                        |   | 18,603                      |   |                                        | 492     |                                 |   | -        |   |   | 19,095    |  
|Litigation and
 other related professional fees                                     |  |                                 | -        |                        |   | 71,761                      |   |                                        | -       |                                 |   | -        |   |   | 71,761    |  
|Repack matters                                                                      |  |                                 | -        |                        |   | 1,549                       |   |                                        | -       |                                 |   | -        |   |   | 1,549     |  
|Acquisition and
 other related costs                                                |  |                                 | -        |                        |   | 2,218                       |   |                                        | -       |                                 |   | -        |   |   | 2,218     |  
|                                                                                    |  |                                 |          |                        |   |                             |   |                                        |         |                                 |   |          |   |   |           |  
|Operating income
 (loss)                                                            |  |                                 | (11,891  | )                      |   | 343,866                     |   |                                        | 5,654   |                                 |   | -        |   |   | 337,629   |  
|Investment income                                                                   |  |                                 | 680      |                        |   | 3,961                       |   |                                        | -       |                                 |   | -        |   |   | 4,641     |  
|Interest expense,
 including amortization of discount on convertible notes          |  |                                 | (110,773 | )                      |   | (659                        | ) |                                        | (1      | )                               |   | -        |   |   | (111,433  | )
|                                                                                    |  |                                 |          |                        |   |                             |   |                                        |         |                                 |   |          |   |   |           |  
|Income (loss)
 from continuing operations before income taxes                       |  |                                 | (121,984 | )                      |   | 347,168                     |   |                                        | 5,653   |                                 |   | -        |   |   | 230,837   |  
|Income tax
 (benefit) expense                                                       |  |                                 | (46,805  | )                      |   | 122,453                     |   |                                        | 2,221   |                                 |   | -        |   |   | 77,869    |  
|                                                                                    |  |                                 |          |                        |   |                             |   |                                        |         |                                 |   |          |   |   |           |  
|Income (loss) from
 continuing operations                                           |  |                                 | (75,179  | )                      |   | 224,715                     |   |                                        | 3,432   |                                 |   | -        |   |   | 152,968   |  
|Loss from
 discontinued operations, including impairment charge of $12,065 aftertax |  |                                 | -        |                        |   | (18,589                     | ) |                                        | (2,251  | )                               |   | -        |   |   | (20,840   | )
|Equity in net
 income of subsidiaries                                               |  |                                 | 207,307  |                        |   | -                           |   |                                        | -       |                                 |   | (207,307 | ) |   | -         |  
|                                                                                    |  |                                 |          |                        |   |                             |   |                                        |         |                                 |   |          |   |   |           |  
|Net income                                                                          |  | $                               | 132,128  |                        | $ | 206,126                     |   | $                                      | 1,181   |                                 | $ | (207,307 | ) | $ | 132,128   |  
|                                                                                    |  |                                 |          |                        |   |                             |   |                                        |         |                                 |   |          |   |   |           |  
|                                                                                    |  |                                 |          |                        |   |                             |   |                                        |         |                                 |   |          |   |   |           |  
|2008:                                                                               |  |                                 |          |                        |   |                             |   |                                        |         |                                 |   |          |   |   |           |  
|                                                                                    |  |                                 |          |                        |   |                             |   |                                        |         |                                 |   |          |   |   |           |  
|Net sales                                                                           |  | $                               | -        |                        | $ | 4,466,375                   |   | $                                      | 165,026 |                                 | $ | -        |   | $ | 4,631,401 |  
|Cost of sales                                                                       |  |                                 | -        |                        |   | 3,352,441                   |   |                                        | 129,795 |                                 |   | -        |   |   | 3,482,236 |  
|Repack matters                                                                      |  |                                 | -        |                        |   | 4,175                       |   |                                        | -       |                                 |   | -        |   |   | 4,175     |  
|                                                                                    |  |                                 |          |                        |   |                             |   |                                        |         |                                 |   |          |   |   |           |  
|Gross profit                                                                        |  |                                 | -        |                        |   | 1,109,759                   |   |                                        | 35,231  |                                 |   | -        |   |   | 1,144,990 |  
|Selling, general
 and administrative expenses                                       |  |                                 | 8,987    |                        |   | 654,805                     |   |                                        | 17,711  |                                 |   | -        |   |   | 681,503   |  
|Provision for
 doubtful accounts                                                    |  |                                 | -        |                        |   | 78,037                      |   |                                        | 1,388   |                                 |   | -        |   |   | 79,425    |  
|Restructuring and
 other related charges                                            |  |                                 | -        |                        |   | 24,663                      |   |                                        | 224     |                                 |   | -        |   |   | 24,887    |  
|Litigation and
 other related professional fees                                     |  |                                 | -        |                        |   | 51,143                      |   |                                        | -       |                                 |   | -        |   |   | 51,143    |  
|Repack matters                                                                      |  |                                 | -        |                        |   | 628                         |   |                                        | -       |                                 |   | -        |   |   | 628       |  
|                                                                                    |  |                                 |          |                        |   |                             |   |                                        |         |                                 |   |          |   |   |           |  
|Operating income
 (loss)                                                            |  |                                 | (8,987   | )                      |   | 300,483                     |   |                                        | 15,908  |                                 |   | -        |   |   | 307,404   |  
|Investment income                                                                   |  |                                 | 1,496    |                        |   | 4,515                       |   |                                        | -       |                                 |   | -        |   |   | 6,011     |  
|Interest expense,
 including amortization of discount on convertible notes          |  |                                 | (124,319 | )                      |   | (1,631                      | ) |                                        | (2,483  | )                               |   | -        |   |   | (128,433  | )
|                                                                                    |  |                                 |          |                        |   |                             |   |                                        |         |                                 |   |          |   |   |           |  
|Income (loss)
 from continuing operations before income taxes                       |  |                                 | (131,810 | )                      |   | 303,367                     |   |                                        | 13,425  |                                 |   | -        |   |   | 184,982   |  
|Income tax
 (benefit) expense                                                       |  |                                 | (50,983  | )                      |   | 115,436                     |   |                                        | 5,148   |                                 |   | -        |   |   | 69,601    |  
|                                                                                    |  |                                 |          |                        |   |                             |   |                                        |         |                                 |   |          |   |   |           |  
|Income from
 continuing operations                                                  |  |                                 | (80,827  | )                      |   | 187,931                     |   |                                        | 8,277   |                                 |   | -        |   |   | 115,381   |  
|Loss from
 discontinued operations                                                  |  |                                 | -        |                        |   | (979                        | ) |                                        | (1,558  | )                               |   | -        |   |   | (2,537    | )
|Equity in net
 income of subsidiaries                                               |  |                                 | 193,671  |                        |   | -                           |   |                                        | -       |                                 |   | (193,671 | ) |   | -         |  
|                                                                                    |  |                                 |          |                        |   |                             |   |                                        |         |                                 |   |          |   |   |           |  
|Net income                                                                          |  | $                               | 112,844  |                        | $ | 186,952                     |   | $                                      | 6,719   |                                 | $ | (193,671 | ) | $ | 112,844   |  
|                                                                                    |  |                                 |          |                        |   |                             |   |                                        |         |                                 |   |          |   |   |           |  

33

---



Note 13 - Guarantor Subsidiaries (Continued)

Condensed
Consolidating Balance Sheets(in thousands)

|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|--------------------------------------------------------------------- |  | ------ | --------- | ----------------------- | - | ----------------------------- |  | ---------------------------------------- | ------- | --------------------------------- | - | ---------- | - | - | --------- | 
|As of September 30, 2009
 (Unaudited):                                |  | Parent |           | Guarantor
 Subsidiaries |   | Non-
 Guarantor
 Subsidiaries |  | Consolidating/
 Eliminating
 Adjustments |         | Omnicare,
 Inc. and
 Subsidiaries |  
|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |  
|ASSETS                                                                |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|Cash and cash
 equivalents                                            |  | $      | 276,619   |                         | $ | 32,218                        |  | $                                        | 15,300  |                                   | $ | -          |   | $ | 324,137   | 
|Restricted cash                                                       |  |        | -         |                         |   | 2,929                         |  |                                          | -       |                                   |   | -          |   |   | 2,929     | 
|Accounts
 receivable, net (including intercompany)                    |  |        | -         |                         |   | 1,232,488                     |  |                                          | 19,353  |                                   |   | (3,471     | ) |   | 1,248,370 | 
|Unbilled
 receivables, CRO                                            |  |        | -         |                         |   | 26,239                        |  |                                          | -       |                                   |   | -          |   |   | 26,239    | 
|Inventories                                                           |  |        | -         |                         |   | 338,401                       |  |                                          | 7,153   |                                   |   | -          |   |   | 345,554   | 
|Deferred income
 tax benefits, net-current                            |  |        | -         |                         |   | 151,014                       |  |                                          | 149     |                                   |   | (3,733     | ) |   | 147,430   | 
|Other current assets                                                  |  |        | 1,076     |                         |   | 174,961                       |  |                                          | 4,875   |                                   |   | -          |   |   | 180,912   | 
|Current assets
 from discontinued operations                          |  |        | -         |                         |   | 17,234                        |  |                                          | 5,946   |                                   |   | -          |   |   | 23,180    | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|Total current
 assets                                                 |  |        | 277,695   |                         |   | 1,975,484                     |  |                                          | 52,776  |                                   |   | (7,204     | ) |   | 2,298,751 | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|Properties and
 equipment, net                                        |  |        | -         |                         |   | 208,030                       |  |                                          | 4,301   |                                   |   | -          |   |   | 212,331   | 
|Goodwill                                                              |  |        | -         |                         |   | 4,169,742                     |  |                                          | 76,578  |                                   |   | -          |   |   | 4,246,320 | 
|Identifiable
 intangible assets, net                                  |  |        | -         |                         |   | 294,649                       |  |                                          | 11,029  |                                   |   | -          |   |   | 305,678   | 
|Other noncurrent
 assets                                              |  |        | 33,993    |                         |   | 250,053                       |  |                                          | 50      |                                   |   | -          |   |   | 284,096   | 
|Noncurrent assets
 from discontinued operations                       |  |        | -         |                         |   | 21,189                        |  |                                          | 23,535  |                                   |   | -          |   |   | 44,724    | 
|Investment in
 subsidiaries                                           |  |        | 5,933,754 |                         |   | -                             |  |                                          | -       |                                   |   | (5,933,754 | ) |   | -         | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|Total assets                                                          |  | $      | 6,245,442 |                         | $ | 6,919,147                     |  | $                                        | 168,269 |                                   | $ | (5,940,958 | ) | $ | 7,391,900 | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|LIABILITIES
 AND STOCKHOLDERS EQUITY                                 |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|Current
 liabilities - continuing operations (including intercompany) |  | $      | 215,964   |                         | $ | 545,792                       |  | $                                        | 10,692  |                                   | $ | (3,471     | ) | $ | 768,977   | 
|Current
 liabilities - discontinued operations                        |  |        | -         |                         |   | 7,390                         |  |                                          | 1,708   |                                   |   | -          |   |   | 9,098     | 
|Long-term debt,
 notes and convertible debentures                     |  |        | 1,971,323 |                         |   | 1,626                         |  |                                          | 3       |                                   |   | -          |   |   | 1,972,952 | 
|Deferred income
 tax liabilities, net-noncurrent                      |  |        | 246,515   |                         |   | 318,052                       |  |                                          | 10,363  |                                   |   | (3,733     | ) |   | 571,197   | 
|Other noncurrent
 liabilities                                         |  |        | -         |                         |   | 257,983                       |  |                                          | -       |                                   |   | -          |   |   | 257,983   | 
|Noncurrent
 liabilities from discontinued operations                  |  |        | -         |                         |   | -                             |  |                                          | 53      |                                   |   | -          |   |   | 53        | 
|Stockholders
 equity                                                 |  |        | 3,811,640 |                         |   | 5,788,304                     |  |                                          | 145,450 |                                   |   | (5,933,754 | ) |   | 3,811,640 | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|Total liabilities
 and stockholders equity                           |  | $      | 6,245,442 |                         | $ | 6,919,147                     |  | $                                        | 168,269 |                                   | $ | (5,940,958 | ) | $ | 7,391,900 | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 

34

---



Note 13 - Guarantor Subsidiaries (Continued)

Condensed
Consolidating Balance Sheets - (Continued)(in thousands)

|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|--------------------------------------------------------------------- |  | ------ | --------- | ----------------------- | - | ----------------------------- |  | ---------------------------------------- | ------- | --------------------------------- | - | ---------- | - | - | --------- | 
|As of December 31, 2008 (Unaudited):                                  |  | Parent |           | Guarantor
 Subsidiaries |   | Non-
 Guarantor
 Subsidiaries |  | Consolidating/
 Eliminating
 Adjustments |         | Omnicare,
 Inc. and
 Subsidiaries |  
|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |  
|ASSETS                                                                |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|Cash and cash
 equivalents                                            |  | $      | 145,178   |                         | $ | 44,109                        |  | $                                        | 25,381  |                                   | $ | -          |   | $ | 214,668   | 
|Restricted cash                                                       |  |        | -         |                         |   | 1,891                         |  |                                          | -       |                                   |   | -          |   |   | 1,891     | 
|Accounts
 receivable, net (including intercompany)                    |  |        | -         |                         |   | 1,314,760                     |  |                                          | 54,862  |                                   |   | (32,064    | ) |   | 1,337,558 | 
|Unbilled
 receivables, CRO                                            |  |        | -         |                         |   | 22,329                        |  |                                          | -       |                                   |   | -          |   |   | 22,329    | 
|Inventories                                                           |  |        | -         |                         |   | 438,972                       |  |                                          | 10,051  |                                   |   | -          |   |   | 449,023   | 
|Deferred income
 tax benefits, net-current                            |  |        | 1,202     |                         |   | 132,991                       |  |                                          | 56      |                                   |   | -          |   |   | 134,249   | 
|Other current
 assets                                                 |  |        | 1,270     |                         |   | 170,615                       |  |                                          | 5,104   |                                   |   | -          |   |   | 176,989   | 
|Current assets
 from discontinued operations                          |  |        | -         |                         |   | 27,979                        |  |                                          | 7,007   |                                   |   | -          |   |   | 34,986    | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|Total current
 assets                                                 |  |        | 147,650   |                         |   | 2,153,646                     |  |                                          | 102,461 |                                   |   | (32,064    | ) |   | 2,371,693 | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|Properties and
 equipment, net                                        |  |        | -         |                         |   | 203,882                       |  |                                          | 4,645   |                                   |   | -          |   |   | 208,527   | 
|Goodwill                                                              |  |        | -         |                         |   | 4,138,754                     |  |                                          | 72,467  |                                   |   | -          |   |   | 4,211,221 | 
|Identifiable
 intangible assets, net                                  |  |        | -         |                         |   | 325,559                       |  |                                          | 3,887   |                                   |   | -          |   |   | 329,446   | 
|Other noncurrent
 assets                                              |  |        | 40,171    |                         |   | 231,895                       |  |                                          | 47      |                                   |   | -          |   |   | 272,113   | 
|Noncurrent assets
 from discontinued operations                       |  |        | -         |                         |   | 33,375                        |  |                                          | 23,870  |                                   |   | -          |   |   | 57,245    | 
|Investment in
 subsidiaries                                           |  |        | 6,075,308 |                         |   | -                             |  |                                          | -       |                                   |   | (6,075,308 | ) |   | -         | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|Total assets                                                          |  | $      | 6,263,129 |                         | $ | 7,087,111                     |  | $                                        | 207,377 |                                   | $ | (6,107,372 | ) | $ | 7,450,245 | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|LIABILITIES
 AND STOCKHOLDERS EQUITY                                 |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|Current
 liabilities - continuing operations (including intercompany) |  | $      | 28,460    |                         | $ | 624,900                       |  | $                                        | 9,157   |                                   | $ | (32,064    | ) | $ | 630,453   | 
|Current
 liabilities - discontinued operations                        |  |        | -         |                         |   | 8,170                         |  |                                          | 2,166   |                                   |   | -          |   |   | 10,336    | 
|Long-term debt,
 notes and convertible debentures                     |  |        | 2,350,227 |                         |   | 2,594                         |  |                                          | 3       |                                   |   | -          |   |   | 2,352,824 | 
|Deferred income
 tax liabilities, net-noncurrent                      |  |        | 229,573   |                         |   | 285,361                       |  |                                          | 10,492  |                                   |   | -          |   |   | 525,426   | 
|Other noncurrent
 liabilities                                         |  |        | -         |                         |   | 274,825                       |  |                                          | 1,459   |                                   |   | -          |   |   | 276,284   | 
|Noncurrent
 liabilities from discontinued operations                  |  |        | -         |                         |   | -                             |  |                                          | 53      |                                   |   | -          |   |   | 53        | 
|Stockholders
 equity                                                 |  |        | 3,654,869 |                         |   | 5,891,261                     |  |                                          | 184,047 |                                   |   | (6,075,308 | ) |   | 3,654,869 | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 
|Total liabilities
 and stockholders equity                           |  | $      | 6,263,129 |                         | $ | 7,087,111                     |  | $                                        | 207,377 |                                   | $ | (6,107,372 | ) | $ | 7,450,245 | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |         |                                   |   |            |   |   |           | 

35

---



Note 13 - Guarantor Subsidiaries (Continued)

Condensed
Consolidating Statements of Cash Flows - Unaudited(in thousands)

|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|------------------------------------------------------------------------------------------------------ |  | -------------------------------- | -------- | ----------------------- | - | --------------------------- | - | --------------------------------- | ------- | - | - | -------- | -
|                                                                                                       |  | Nine months ended
 September 30, |         
|                                                                                                       |  |                                  |         
|2009:                                                                                                  |  | Parent                           |          | Guarantor
 Subsidiaries |   | Non-Guarantor
 Subsidiaries |   | Omnicare, Inc.
 and
 Subsidiaries |        
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |        
|Cash flows from
 operating activities:                                                                 |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Net cash flows
 from operating activities                                                              |  | $                                | (23,070  | )                       | $ | 463,818                     |   | $                                 | (9,147  | ) | $ | 431,601  |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Cash flows from
 investing activities:                                                                 |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Acquisition of
 businesses, net of cash received                                                       |  |                                  | -        |                         |   | (64,498                     | ) |                                   | -       |   |   | (64,498  | )
|Capital
 expenditures                                                                                  |  |                                  | -        |                         |   | (25,528                     | ) |                                   | (738    | ) |   | (26,266  | )
|Transfer of cash
 to trusts for employee health and severance costs, net of payments out of the
 trust |  |                                  | -        |                         |   | 538                         |   |                                   | -       |   |   | 538      |  
|Other                                                                                                  |  |                                  | -        |                         |   | (8,033                      | ) |                                   | -       |   |   | (8,033   | )
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Net cash flows
 used in investing activities                                                           |  |                                  | -        |                         |   | (97,521                     | ) |                                   | (738    | ) |   | (98,259  | )
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Cash flows from
 financing activities:                                                                 |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Payments on line
 of credit facilities and term A loan                                                 |  |                                  | (225,000 | )                       |   | -                           |   |                                   | -       |   |   | (225,000 | )
|Payments on
 long-term borrowings and obligations                                                      |  |                                  | (1,376   | )                       |   | -                           |   |                                   | -       |   |   | (1,376   | )
|(Decrease)
 increase in cash overdraft balance                                                         |  |                                  | (2,398   | )                       |   | 675                         |   |                                   | -       |   |   | (1,723   | )
|Payments for
 stock awards and exercise of stock options, net of stock tendered in payment             |  |                                  | 10,164   |                         |   | -                           |   |                                   | -       |   |   | 10,164   |  
|Excess tax
 benefits from stock-based compensation                                                     |  |                                  | 2,367    |                         |   | -                           |   |                                   | -       |   |   | 2,367    |  
|Dividends paid                                                                                         |  |                                  | (8,043   | )                       |   | -                           |   |                                   | -       |   |   | (8,043   | )
|Other                                                                                                  |  |                                  | 378,797  |                         |   | (378,797                    | ) |                                   | -       |   |   | -        |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Net cash flows
 used in financing activities                                                           |  |                                  | 154,511  |                         |   | (378,122                    | ) |                                   | -       |   |   | (223,611 | )
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Effect of
 exchange rate changes on cash                                                               |  |                                  | -        |                         |   | -                           |   |                                   | (198    | ) |   | (198     | )
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Net increase
 (decrease) in cash and cash equivalents                                                  |  |                                  | 131,441  |                         |   | (11,825                     | ) |                                   | (10,083 | ) |   | 109,533  |  
|Less increase
 (decrease) in cash and cash equivalents of discontinued operations                      |  |                                  | -        |                         |   | 66                          |   |                                   | (2      | ) |   | 64       |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Increase
 (decrease) in cash and cash equivalents of continuing operations                             |  |                                  | 131,441  |                         |   | (11,891                     | ) |                                   | (10,081 | ) |   | 109,469  |  
|Cash and cash
 equivalents at beginning of period                                                      |  |                                  | 145,178  |                         |   | 44,109                      |   |                                   | 25,381  |   |   | 214,668  |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Cash and cash
 equivalents at end of period                                                            |  | $                                | 276,619  |                         | $ | 32,218                      |   | $                                 | 15,300  |   | $ | 324,137  |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  

36

---



Note 13 - Guarantor Subsidiaries (Continued)

Condensed
Consolidating Statements of Cash Flows - (Continued) - Unaudited(in thousands)

|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|------------------------------------------------------------------------------------------------------ |  | -------------------------------- | -------- | ----------------------- | - | --------------------------- | - | --------------------------------- | ------- | - | - | -------- | -
|                                                                                                       |  | Nine months ended
 September 30, |         
|                                                                                                       |  |                                  |         
|2008:                                                                                                  |  | Parent                           |          | Guarantor
 Subsidiaries |   | Non-Guarantor
 Subsidiaries |   | Omnicare, Inc.
 and
 Subsidiaries |        
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |        
|Cash flows from
 operating activities:                                                                 |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Net cash flows
 from operating activities                                                              |  | $                                | (45,536  | )                       | $ | 388,174                     |   | $                                 | (10,753 | ) | $ | 331,885  |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Cash flows from
 investing activities:                                                                 |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Acquisition of
 businesses, net of cash received                                                       |  |                                  | -        |                         |   | (201,032                    | ) |                                   | -       |   |   | (201,032 | )
|Capital
 expenditures                                                                                  |  |                                  | -        |                         |   | (45,840                     | ) |                                   | 161     |   |   | (45,679  | )
|Transfer of cash
 to trusts for employee health and severance costs, net of payments out of the
 trust |  |                                  | -        |                         |   | (11,419                     | ) |                                   | -       |   |   | (11,419  | )
|Other                                                                                                  |  |                                  | -        |                         |   | (1,877                      | ) |                                   | -       |   |   | (1,877   | )
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Net cash flows
 used in investing activities                                                           |  |                                  | -        |                         |   | (260,168                    | ) |                                   | 161     |   |   | (260,007 | )
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Cash flows from
 financing activities:                                                                 |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Payments on line
 of credit facilities and term A loan                                                 |  |                                  | (50,000  | )                       |   | -                           |   |                                   | -       |   |   | (50,000  | )
|Payments on
 long-term borrowings and obligations                                                      |  |                                  | (2,172   | )                       |   | (119                        | ) |                                   | -       |   |   | (2,291   | )
|(Decrease)
 increase in cash overdraft balance                                                         |  |                                  | (4,026   | )                       |   | 1,714                       |   |                                   | -       |   |   | (2,312   | )
|Payments for
 Omnicare common stock repurchase                                                         |  |                                  | (100,165 | )                       |   | -                           |   |                                   | -       |   |   | (100,165 | )
|Payments for
 stock awards and exercise of stock options, net of stock tendered in payment             |  |                                  | (1,183   | )                       |   | -                           |   |                                   | -       |   |   | (1,183   | )
|Excess tax
 benefits from stock-based compensation                                                     |  |                                  | 750      |                         |   | -                           |   |                                   | -       |   |   | 750      |  
|Dividends paid                                                                                         |  |                                  | (8,080   | )                       |   | -                           |   |                                   | -       |   |   | (8,080   | )
|Other                                                                                                  |  |                                  | 160,224  |                         |   | (160,105                    | ) |                                   | -       |   |   | 119      |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Net cash flows
 used in financing activities                                                           |  |                                  | (4,652   | )                       |   | (158,510                    | ) |                                   | -       |   |   | (163,162 | )
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Effect of
 exchange rate changes on cash                                                               |  |                                  | -        |                         |   | 1,752                       |   |                                   | (3,808  | ) |   | (2,056   | )
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Net (decrease) in
 cash and cash equivalents                                                           |  |                                  | (50,188  | )                       |   | (28,752                     | ) |                                   | (14,400 | ) |   | (93,340  | )
|Less increase
 (decrease) in cash and cash equivalents of discontinued operations                      |  |                                  | -        |                         |   | 492                         |   |                                   | (22     | ) |   | 470      |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|(Decrease) in
 cash and cash equivalents of continuing operations                                      |  |                                  | (50,188  | )                       |   | (29,244                     | ) |                                   | (14,378 | ) |   | (93,810  | )
|Cash and cash
 equivalents at beginning of period                                                      |  |                                  | 171,779  |                         |   | 69,976                      |   |                                   | 32,445  |   |   | 274,200  |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  
|Cash and cash
 equivalents at end of period                                                            |  | $                                | 121,591  |                         | $ | 40,732                      |   | $                                 | 18,067  |   | $ | 180,390  |  
|                                                                                                       |  |                                  |          |                         |   |                             |   |                                   |         |   |   |          |  

37

---



Note 13 - Guarantor Subsidiaries (Continued)

The Companys
3.25% convertible senior debentures due 2035 are fully and unconditionally
guaranteed on an unsecured basis by Omnicare Purchasing Company, LP, a
wholly-owned subsidiary of the Company (the Guarantor Subsidiary). The
following condensed consolidating financial data illustrates the composition of
Omnicare, Inc. (Parent), the Guarantor Subsidiary and the Non-Guarantor
Subsidiaries as of September 30, 2009 and December 31, 2008 for the balance sheets
as well as the three and nine months ended September 30, 2009 and 2008 for the
statements of income, and the statements of cash flows for the nine months
ended September 30, 2009 and 2008. Management believes separate complete
financial statements of the respective Guarantor Subsidiary would not provide
information that would be necessary for evaluating the sufficiency of the
Guarantor Subsidiary, and thus are not presented. The Guarantor Subsidiary does
not have any material net cash flows in the condensed consolidating statements
of cash flows. No consolidating/eliminating adjustments column is presented for
the condensed consolidating statements of cash flows since there were no
significant consolidating/eliminating adjustment amounts during the periods
presented.

38

---



Note 13 - Guarantor Subsidiaries (Continued)

|                                                                           |  |                                   |         |                         |   |                               |   |                                          |           |                                   |   |         |   |   |           |  
|-------------------------------------------------------------------------- |  | --------------------------------- | ------- | ----------------------- | - | ----------------------------- | - | ---------------------------------------- | --------- | --------------------------------- | - | ------- | - | - | --------- | -
|Summary Consolidating Statements of Income - Unaudited(in thousands)      
|                                                                           |  |                                   |        
|                                                                           |  | Three
 months ended September 30, |        
|                                                                           |  |                                   |        
|2009:                                                                      |  | Parent                            |         | Guarantor
 Subsidiaries |   | Non-
 Guarantor
 Subsidiaries |   | Consolidating/
 Eliminating
 Adjustments |           | Omnicare,
 Inc. and
 Subsidiaries |  
|                                                                           |  |                                   |         |                         |   |                               |   |                                          |           |                                   |  
|Net sales                                                                  |  | $                                 | -       |                         | $ | -                             |   | $                                        | 1,543,901 |                                   | $ | -       |   | $ | 1,543,901 |  
|Cost of sales                                                              |  |                                   | -       |                         |   | -                             |   |                                          | 1,175,946 |                                   |   | -       |   |   | 1,175,946 |  
|Repack matters                                                             |  |                                   | -       |                         |   | -                             |   |                                          | 1,755     |                                   |   | -       |   |   | 1,755     |  
|                                                                           |  |                                   |         |                         |   |                               |   |                                          |           |                                   |   |         |   |   |           |  
|Gross profit                                                               |  |                                   | -       |                         |   | -                             |   |                                          | 366,200   |                                   |   | -       |   |   | 366,200   |  
|Selling, general and administrative expenses                               |  |                                   | 3,350   |                         |   | 306                           |   |                                          | 199,738   |                                   |   | -       |   |   | 203,394   |  
|Provision for doubtful accounts                                            |  |                                   | -       |                         |   | -                             |   |                                          | 23,098    |                                   |   | -       |   |   | 23,098    |  
|Restructuring and other related charges                                    |  |                                   | -       |                         |   | -                             |   |                                          | 6,295     |                                   |   | -       |   |   | 6,295     |  
|Litigation and other related professional fees                             |  |                                   | -       |                         |   | -                             |   |                                          | 1,739     |                                   |   | -       |   |   | 1,739     |  
|Repack matters                                                             |  |                                   | -       |                         |   | -                             |   |                                          | 277       |                                   |   | -       |   |   | 277       |  
|Acquisition and other related costs                                        |  |                                   | -       |                         |   | -                             |   |                                          | (632      | )                                 |   | -       |   |   | (632      | )
|                                                                           |  |                                   |         |                         |   |                               |   |                                          |           |                                   |   |         |   |   |           |  
|Operating income (loss)                                                    |  |                                   | (3,350  | )                       |   | (306                          | ) |                                          | 135,685   |                                   |   | -       |   |   | 132,029   |  
|Investment income                                                          |  |                                   | 144     |                         |   | -                             |   |                                          | 1,058     |                                   |   | -       |   |   | 1,202     |  
|Interest expense, including amortization of discount on convertible
 notes |  |                                   | (36,432 | )                       |   | -                             |   |                                          | (215      | )                                 |   | -       |   |   | (36,647   | )
|                                                                           |  |                                   |         |                         |   |                               |   |                                          |           |                                   |   |         |   |   |           |  
|Income (loss) from continuing operations before income taxes               |  |                                   | (39,638 | )                       |   | (306                          | ) |                                          | 136,528   |                                   |   | -       |   |   | 96,584    |  
|Income tax (benefit) expense                                               |  |                                   | (15,316 | )                       |   | (116                          | ) |                                          | 33,270    |                                   |   | -       |   |   | 17,838    |  
|                                                                           |  |                                   |         |                         |   |                               |   |                                          |           |                                   |   |         |   |   |           |  
|Income (loss) from continuing operations                                   |  |                                   | (24,322 | )                       |   | (190                          | ) |                                          | 103,258   |                                   |   | -       |   |   | 78,746    |  
|Loss from discontinued operations                                          |  |                                   | -       |                         |   | -                             |   |                                          | (6,231    | )                                 |   | -       |   |   | (6,231    | )
|Equity in net income of subsidiaries                                       |  |                                   | 96,837  |                         |   | -                             |   |                                          | -         |                                   |   | (96,837 | ) |   | -         |  
|                                                                           |  |                                   |         |                         |   |                               |   |                                          |           |                                   |   |         |   |   |           |  
|Net income (loss)                                                          |  | $                                 | 72,515  |                         | $ | (190                          | ) | $                                        | 97,027    |                                   | $ | (96,837 | ) | $ | 72,515    |  
|                                                                           |  |                                   |         |                         |   |                               |   |                                          |           |                                   |   |         |   |   |           |  
|                                                                           |  |                                   |         |                         |   |                               |   |                                          |           |                                   |   |         |   |   |           |  
|2008:                                                                      |  |                                   |         |                         |   |                               |   |                                          |           |                                   |   |         |   |   |           |  
|                                                                           |  |                                   |         |                         |   |                               |   |                                          |           |                                   |   |         |   |   |           |  
|Net sales                                                                  |  | $                                 | -       |                         | $ | -                             |   | $                                        | 1,578,251 |                                   | $ | -       |   | $ | 1,578,251 |  
|Cost of sales                                                              |  |                                   | -       |                         |   | -                             |   |                                          | 1,172,791 |                                   |   | -       |   |   | 1,172,791 |  
|Repack matters                                                             |  |                                   | -       |                         |   | -                             |   |                                          | 1,041     |                                   |   | -       |   |   | 1,041     |  
|                                                                           |  |                                   |         |                         |   |                               |   |                                          |           |                                   |   |         |   |   |           |  
|Gross profit                                                               |  |                                   | -       |                         |   | -                             |   |                                          | 404,419   |                                   |   | -       |   |   | 404,419   |  
|Selling, general and administrative expenses                               |  |                                   | 4,690   |                         |   | 365                           |   |                                          | 223,270   |                                   |   | -       |   |   | 228,325   |  
|Provision for doubtful accounts                                            |  |                                   | -       |                         |   | -                             |   |                                          | 27,180    |                                   |   | -       |   |   | 27,180    |  
|Restructuring and other related charges                                    |  |                                   | -       |                         |   | -                             |   |                                          | 7,655     |                                   |   | -       |   |   | 7,655     |  
|Litigation and other related professional fees                             |  |                                   | -       |                         |   | -                             |   |                                          | 13,479    |                                   |   | -       |   |   | 13,479    |  
|Repack matters                                                             |  |                                   | -       |                         |   | -                             |   |                                          | 129       |                                   |   | -       |   |   | 129       |  
|                                                                           |  |                                   |         |                         |   |                               |   |                                          |           |                                   |   |         |   |   |           |  
|Operating income (loss)                                                    |  |                                   | (4,690  | )                       |   | (365                          | ) |                                          | 132,706   |                                   |   | -       |   |   | 127,651   |  
|Investment income                                                          |  |                                   | 105     |                         |   | -                             |   |                                          | 1,336     |                                   |   | -       |   |   | 1,441     |  
|Interest expense, including amortization of discount on convertible
 notes |  |                                   | (42,235 | )                       |   | -                             |   |                                          | (971      | )                                 |   | -       |   |   | (43,206   | )
|                                                                           |  |                                   |         |                         |   |                               |   |                                          |           |                                   |   |         |   |   |           |  
|Income (loss) from continuing operations before income taxes               |  |                                   | (46,820 | )                       |   | (365                          | ) |                                          | 133,071   |                                   |   | -       |   |   | 85,886    |  
|Income tax (benefit) expense                                               |  |                                   | (18,230 | )                       |   | (146                          | ) |                                          | 49,912    |                                   |   | -       |   |   | 31,536    |  
|                                                                           |  |                                   |         |                         |   |                               |   |                                          |           |                                   |   |         |   |   |           |  
|Income (loss) from continuing operations                                   |  |                                   | (28,590 | )                       |   | (219                          | ) |                                          | 83,159    |                                   |   | -       |   |   | 54,350    |  
|Loss from discontinued operations                                          |  |                                   | -       |                         |   | -                             |   |                                          | (591      | )                                 |   | -       |   |   | (591      | )
|Equity in net income of subsidiaries                                       |  |                                   | 82,349  |                         |   | -                             |   |                                          | -         |                                   |   | (82,349 | ) |   | -         |  
|                                                                           |  |                                   |         |                         |   |                               |   |                                          |           |                                   |   |         |   |   |           |  
|Net income (loss)                                                          |  | $                                 | 53,759  |                         | $ | (219                          | ) | $                                        | 82,568    |                                   | $ | (82,349 | ) | $ | 53,759    |  
|                                                                           |  |                                   |         |                         |   |                               |   |                                          |           |                                   |   |         |   |   |           |  

39

---



Note 13 - Guarantor Subsidiaries (Continued)

|                                                                                    |  |                                  |          |                         |   |                               |   |                                          |           |                                   |   |          |   |   |           |  
|----------------------------------------------------------------------------------- |  | -------------------------------- | -------- | ----------------------- | - | ----------------------------- | - | ---------------------------------------- | --------- | --------------------------------- | - | -------- | - | - | --------- | -
|Summary
 Consolidating Statements of Income - Unaudited(in thousands)              
|                                                                                    |  |                                  |         
|                                                                                    |  | Nine months ended
 September 30, |         
|                                                                                    |  |                                  |         
|2009:                                                                               |  | Parent                           |          | Guarantor
 Subsidiaries |   | Non-
 Guarantor
 Subsidiaries |   | Consolidating/
 Eliminating
 Adjustments |           | Omnicare,
 Inc. and
 Subsidiaries |  
|                                                                                    |  |                                  |          |                         |   |                               |   |                                          |           |                                   |  
|Net sales                                                                           |  | $                                | -        |                         | $ | -                             |   | $                                        | 4,626,513 |                                   | $ | -        |   | $ | 4,626,513 |  
|Cost of sales                                                                       |  |                                  | -        |                         |   | -                             |   |                                          | 3,496,492 |                                   |   | -        |   |   | 3,496,492 |  
|Repack matters                                                                      |  |                                  | -        |                         |   | -                             |   |                                          | 3,672     |                                   |   | -        |   |   | 3,672     |  
|                                                                                    |  |                                  |          |                         |   |                               |   |                                          |           |                                   |   |          |   |   |           |  
|Gross profit                                                                        |  |                                  | -        |                         |   | -                             |   |                                          | 1,126,349 |                                   |   | -        |   |   | 1,126,349 |  
|Selling, general
 and administrative expenses                                       |  |                                  | 11,891   |                         |   | 1,123                         |   |                                          | 610,004   |                                   |   | -        |   |   | 623,018   |  
|Provision for
 doubtful accounts                                                    |  |                                  | -        |                         |   | -                             |   |                                          | 71,079    |                                   |   | -        |   |   | 71,079    |  
|Restructuring and
 other related charges                                            |  |                                  | -        |                         |   | -                             |   |                                          | 19,095    |                                   |   | -        |   |   | 19,095    |  
|Litigation and
 other related professional fees                                     |  |                                  | -        |                         |   | -                             |   |                                          | 71,761    |                                   |   | -        |   |   | 71,761    |  
|Repack matters                                                                      |  |                                  | -        |                         |   | -                             |   |                                          | 1,549     |                                   |   | -        |   |   | 1,549     |  
|Acquisition and
 other related costs                                                |  |                                  | -        |                         |   | -                             |   |                                          | 2,218     |                                   |   | -        |   |   | 2,218     |  
|                                                                                    |  |                                  |          |                         |   |                               |   |                                          |           |                                   |   |          |   |   |           |  
|Operating income (loss)                                                             |  |                                  | (11,891  | )                       |   | (1,123                        | ) |                                          | 350,643   |                                   |   | -        |   |   | 337,629   |  
|Investment income                                                                   |  |                                  | 680      |                         |   | -                             |   |                                          | 3,961     |                                   |   | -        |   |   | 4,641     |  
|Interest expense,
 including amortization of discount on convertible notes          |  |                                  | (110,773 | )                       |   | -                             |   |                                          | (660      | )                                 |   | -        |   |   | (111,433  | )
|                                                                                    |  |                                  |          |                         |   |                               |   |                                          |           |                                   |   |          |   |   |           |  
|Income (loss)
 from continuing operations before income taxes                       |  |                                  | (121,984 | )                       |   | (1,123                        | ) |                                          | 353,944   |                                   |   | -        |   |   | 230,837   |  
|Income tax
 (benefit) expense                                                       |  |                                  | (46,805  | )                       |   | (431                          | ) |                                          | 125,105   |                                   |   | -        |   |   | 77,869    |  
|                                                                                    |  |                                  |          |                         |   |                               |   |                                          |           |                                   |   |          |   |   |           |  
|Income (loss)
 from continuing operations                                           |  |                                  | (75,179  | )                       |   | (692                          | ) |                                          | 228,839   |                                   |   | -        |   |   | 152,968   |  
|Loss from
 discontinued operations, including impairment charge of $12,065 aftertax |  |                                  | -        |                         |   | -                             |   |                                          | (20,840   | )                                 |   | -        |   |   | (20,840   | )
|Equity in net
 income of subsidiaries                                               |  |                                  | 207,307  |                         |   | -                             |   |                                          | -         |                                   |   | (207,307 | ) |   | -         |  
|                                                                                    |  |                                  |          |                         |   |                               |   |                                          |           |                                   |   |          |   |   |           |  
|Net income (loss)                                                                   |  | $                                | 132,128  |                         | $ | (692                          | ) | $                                        | 207,999   |                                   | $ | (207,307 | ) | $ | 132,128   |  
|                                                                                    |  |                                  |          |                         |   |                               |   |                                          |           |                                   |   |          |   |   |           |  
|                                                                                    |  |                                  |          |                         |   |                               |   |                                          |           |                                   |   |          |   |   |           |  
|2008:                                                                               |  |                                  |          |                         |   |                               |   |                                          |           |                                   |   |          |   |   |           |  
|                                                                                    |  |                                  |          |                         |   |                               |   |                                          |           |                                   |   |          |   |   |           |  
|Net sales                                                                           |  | $                                | -        |                         | $ | -                             |   | $                                        | 4,631,401 |                                   | $ | -        |   | $ | 4,631,401 |  
|Cost of sales                                                                       |  |                                  | -        |                         |   | -                             |   |                                          | 3,482,236 |                                   |   | -        |   |   | 3,482,236 |  
|Repack matters                                                                      |  |                                  | -        |                         |   | -                             |   |                                          | 4,175     |                                   |   | -        |   |   | 4,175     |  
|                                                                                    |  |                                  |          |                         |   |                               |   |                                          |           |                                   |   |          |   |   |           |  
|Gross profit                                                                        |  |                                  | -        |                         |   | -                             |   |                                          | 1,144,990 |                                   |   | -        |   |   | 1,144,990 |  
|Selling, general
 and administrative expenses                                       |  |                                  | 8,987    |                         |   | 1,011                         |   |                                          | 671,505   |                                   |   | -        |   |   | 681,503   |  
|Provision for
 doubtful accounts                                                    |  |                                  | -        |                         |   | -                             |   |                                          | 79,425    |                                   |   | -        |   |   | 79,425    |  
|Restructuring and
 other related charges                                            |  |                                  | -        |                         |   | -                             |   |                                          | 24,887    |                                   |   | -        |   |   | 24,887    |  
|Litigation and
 other related professional fees                                     |  |                                  | -        |                         |   | -                             |   |                                          | 51,143    |                                   |   | -        |   |   | 51,143    |  
|Repack matters                                                                      |  |                                  | -        |                         |   | -                             |   |                                          | 628       |                                   |   | -        |   |   | 628       |  
|                                                                                    |  |                                  |          |                         |   |                               |   |                                          |           |                                   |   |          |   |   |           |  
|Operating income
 (loss)                                                            |  |                                  | (8,987   | )                       |   | (1,011                        | ) |                                          | 317,402   |                                   |   | -        |   |   | 307,404   |  
|Investment income                                                                   |  |                                  | 1,496    |                         |   | -                             |   |                                          | 4,515     |                                   |   | -        |   |   | 6,011     |  
|Interest expense,
 including amortization of discount on convertible notes          |  |                                  | (124,319 | )                       |   | -                             |   |                                          | (4,114    | )                                 |   | -        |   |   | (128,433  | )
|                                                                                    |  |                                  |          |                         |   |                               |   |                                          |           |                                   |   |          |   |   |           |  
|Income (loss)
 from continuing operations before income taxes                       |  |                                  | (131,810 | )                       |   | (1,011                        | ) |                                          | 317,803   |                                   |   | -        |   |   | 184,982   |  
|Income tax
 (benefit) expense                                                       |  |                                  | (50,983  | )                       |   | (396                          | ) |                                          | 120,980   |                                   |   | -        |   |   | 69,601    |  
|                                                                                    |  |                                  |          |                         |   |                               |   |                                          |           |                                   |   |          |   |   |           |  
|Income (loss)
 from continuing operations                                           |  |                                  | (80,827  | )                       |   | (615                          | ) |                                          | 196,823   |                                   |   | -        |   |   | 115,381   |  
|Loss from
 discontinued operations                                                  |  |                                  | -        |                         |   | -                             |   |                                          | (2,537    | )                                 |   | -        |   |   | (2,537    | )
|Equity in net
 income of subsidiaries                                               |  |                                  | 193,671  |                         |   | -                             |   |                                          | -         |                                   |   | (193,671 | ) |   | -         |  
|                                                                                    |  |                                  |          |                         |   |                               |   |                                          |           |                                   |   |          |   |   |           |  
|Net income (loss)                                                                   |  | $                                | 112,844  |                         | $ | (615                          | ) | $                                        | 194,286   |                                   | $ | (193,671 | ) | $ | 112,844   |  
|                                                                                    |  |                                  |          |                         |   |                               |   |                                          |           |                                   |   |          |   |   |           |  

40

---



Note 13 - Guarantor Subsidiaries (Continued)

|                                                                      |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|--------------------------------------------------------------------- |  | ------ | --------- | ----------------------- | - | ----------------------------- |  | ---------------------------------------- | --------- | --------------------------------- | - | ---------- | - | - | --------- | 
|Condensed
 Consolidating Balance Sheets(in thousands)                
|                                                                      |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|As of September 30, 2009
 (Unaudited):                                |  | Parent |           | Guarantor
 Subsidiaries |   | Non-
 Guarantor
 Subsidiaries |  | Consolidating/
 Eliminating
 Adjustments |           | Omnicare,
 Inc. and
 Subsidiaries |  
|                                                                      |  |        |           |                         |   |                               |  |                                          |           |                                   |  
|ASSETS                                                                |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|Cash and cash
 equivalents                                            |  | $      | 276,619   |                         | $ | -                             |  | $                                        | 47,518    |                                   | $ | -          |   | $ | 324,137   | 
|Restricted cash                                                       |  |        | -         |                         |   | -                             |  |                                          | 2,929     |                                   |   | -          |   |   | 2,929     | 
|Accounts
 receivable, net (including intercompany)                    |  |        | -         |                         |   | 54                            |  |                                          | 1,248,370 |                                   |   | (54        | ) |   | 1,248,370 | 
|Unbilled
 receivables, CRO                                            |  |        | -         |                         |   | -                             |  |                                          | 26,239    |                                   |   | -          |   |   | 26,239    | 
|Inventories                                                           |  |        | -         |                         |   | -                             |  |                                          | 345,554   |                                   |   | -          |   |   | 345,554   | 
|Deferred income
 tax benefits, net-current                            |  |        | -         |                         |   | -                             |  |                                          | 151,163   |                                   |   | (3,733     | ) |   | 147,430   | 
|Other current
 assets                                                 |  |        | 1,076     |                         |   | -                             |  |                                          | 179,836   |                                   |   | -          |   |   | 180,912   | 
|Current assets
 from discontinued operations                          |  |        | -         |                         |   | -                             |  |                                          | 23,180    |                                   |   | -          |   |   | 23,180    | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|Total current
 assets                                                 |  |        | 277,695   |                         |   | 54                            |  |                                          | 2,024,789 |                                   |   | (3,787     | ) |   | 2,298,751 | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|Properties and
 equipment, net                                        |  |        | -         |                         |   | 21                            |  |                                          | 212,310   |                                   |   | -          |   |   | 212,331   | 
|Goodwill                                                              |  |        | -         |                         |   | -                             |  |                                          | 4,246,320 |                                   |   | -          |   |   | 4,246,320 | 
|Identifiable
 intangible assets, net                                  |  |        | -         |                         |   | -                             |  |                                          | 305,678   |                                   |   | -          |   |   | 305,678   | 
|Other noncurrent
 assets                                              |  |        | 33,993    |                         |   | 19                            |  |                                          | 250,084   |                                   |   | -          |   |   | 284,096   | 
|Noncurrent assets
 from discontinued operations                       |  |        | -         |                         |   | -                             |  |                                          | 44,724    |                                   |   | -          |   |   | 44,724    | 
|Investment in
 subsidiaries                                           |  |        | 5,933,754 |                         |   | -                             |  |                                          | -         |                                   |   | (5,933,754 | ) |   | -         | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|Total assets                                                          |  | $      | 6,245,442 |                         | $ | 94                            |  | $                                        | 7,083,905 |                                   | $ | (5,937,541 | ) | $ | 7,391,900 | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|LIABILITIES
 AND STOCKHOLDERS EQUITY                                 |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|Current
 liabilities - continuing operations (including intercompany) |  | $      | 215,964   |                         | $ | 7                             |  | $                                        | 553,060   |                                   | $ | (54        | ) | $ | 768,977   | 
|Current
 liabilities - discontinued operations                        |  |        | -         |                         |   | -                             |  |                                          | 9,098     |                                   |   | -          |   |   | 9,098     | 
|Long-term debt,
 notes and convertible debentures                     |  |        | 1,971,323 |                         |   | -                             |  |                                          | 1,629     |                                   |   | -          |   |   | 1,972,952 | 
|Deferred income
 tax liabilities, net-noncurrent                      |  |        | 246,515   |                         |   | -                             |  |                                          | 328,415   |                                   |   | (3,733     | ) |   | 571,197   | 
|Other noncurrent
 liabilities                                         |  |        | -         |                         |   | -                             |  |                                          | 257,983   |                                   |   | -          |   |   | 257,983   | 
|Noncurrent
 liabilities from discontinued operations                  |  |        | -         |                         |   | -                             |  |                                          | 53        |                                   |   | -          |   |   | 53        | 
|Stockholders
 equity                                                 |  |        | 3,811,640 |                         |   | 87                            |  |                                          | 5,933,667 |                                   |   | (5,933,754 | ) |   | 3,811,640 | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|Total liabilities
 and stockholders equity                           |  | $      | 6,245,442 |                         | $ | 94                            |  | $                                        | 7,083,905 |                                   | $ | (5,937,541 | ) | $ | 7,391,900 | 
|                                                                      |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 

41

---



Note 13 - Guarantor Subsidiaries (Continued)

|                                                                     |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|-------------------------------------------------------------------- |  | ------ | --------- | ----------------------- | - | ----------------------------- |  | ---------------------------------------- | --------- | --------------------------------- | - | ---------- | - | - | --------- | 
|Condensed
 Consolidating Balance Sheets - (Continued)               
|(in thousands)                                                      
|                                                                     |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|As of December 31, 2008 (Unaudited):                                 |  | Parent |           | Guarantor
 Subsidiaries |   | Non-
 Guarantor
 Subsidiaries |  | Consolidating/
 Eliminating
 Adjustments |           | Omnicare,
 Inc. and
 Subsidiaries |  
|                                                                     |  |        |           |                         |   |                               |  |                                          |           |                                   |  
|ASSETS                                                               |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|Cash and cash equivalents                                            |  | $      | 145,178   |                         | $ | -                             |  | $                                        | 69,490    |                                   | $ | -          |   | $ | 214,668   | 
|Restricted cash                                                      |  |        | -         |                         |   | -                             |  |                                          | 1,891     |                                   |   | -          |   |   | 1,891     | 
|Accounts receivable, net (including intercompany)                    |  |        | -         |                         |   | 56                            |  |                                          | 1,337,558 |                                   |   | (56        | ) |   | 1,337,558 | 
|Unbilled receivables, CRO                                            |  |        | -         |                         |   | -                             |  |                                          | 22,329    |                                   |   | -          |   |   | 22,329    | 
|Inventories                                                          |  |        | -         |                         |   | -                             |  |                                          | 449,023   |                                   |   | -          |   |   | 449,023   | 
|Deferred income tax benefits, net-current                            |  |        | 1,202     |                         |   | -                             |  |                                          | 136,399   |                                   |   | (3,352     | ) |   | 134,249   | 
|Other current assets                                                 |  |        | 1,270     |                         |   | -                             |  |                                          | 175,719   |                                   |   | -          |   |   | 176,989   | 
|Current assets from discontinued operations                          |  |        | -         |                         |   | -                             |  |                                          | 34,986    |                                   |   | -          |   |   | 34,986    | 
|                                                                     |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|Total current assets                                                 |  |        | 147,650   |                         |   | 56                            |  |                                          | 2,227,395 |                                   |   | (3,408     | ) |   | 2,371,693 | 
|                                                                     |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|Properties and equipment, net                                        |  |        | -         |                         |   | 29                            |  |                                          | 208,498   |                                   |   | -          |   |   | 208,527   | 
|Goodwill                                                             |  |        | -         |                         |   | -                             |  |                                          | 4,211,221 |                                   |   | -          |   |   | 4,211,221 | 
|Identifiable intangible assets, net                                  |  |        | -         |                         |   | -                             |  |                                          | 329,446   |                                   |   | -          |   |   | 329,446   | 
|Other noncurrent assets                                              |  |        | 40,171    |                         |   | 19                            |  |                                          | 231,923   |                                   |   | -          |   |   | 272,113   | 
|Noncurrent assets from discontinued operations                       |  |        | -         |                         |   | -                             |  |                                          | 57,245    |                                   |   | -          |   |   | 57,245    | 
|Investment in subsidiaries                                           |  |        | 6,075,308 |                         |   | -                             |  |                                          | -         |                                   |   | (6,075,308 | ) |   | -         | 
|                                                                     |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|Total assets                                                         |  | $      | 6,263,129 |                         | $ | 104                           |  | $                                        | 7,265,728 |                                   | $ | (6,078,716 | ) | $ | 7,450,245 | 
|                                                                     |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|                                                                     |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|LIABILITIES
 AND STOCKHOLDERS EQUITY                                |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|Current liabilities - continuing operations (including intercompany) |  | $      | 28,460    |                         | $ | 16                            |  | $                                        | 602,033   |                                   | $ | (56        | ) | $ | 630,453   | 
|Current liabilities - discontinued operations                        |  |        | -         |                         |   | -                             |  |                                          | 10,336    |                                   |   | -          |   |   | 10,336    | 
|Long-term debt, notes and convertible debentures                     |  |        | 2,350,227 |                         |   | -                             |  |                                          | 2,597     |                                   |   | -          |   |   | 2,352,824 | 
|Deferred income tax liabilities, net-noncurrent                      |  |        | 229,573   |                         |   | -                             |  |                                          | 299,205   |                                   |   | (3,352     | ) |   | 525,426   | 
|Other noncurrent liabilities                                         |  |        | -         |                         |   | -                             |  |                                          | 276,284   |                                   |   | -          |   |   | 276,284   | 
|Noncurrent liabilities from discontinued operations                  |  |        | -         |                         |   | -                             |  |                                          | 53        |                                   |   | -          |   |   | 53        | 
|Stockholders equity                                                 |  |        | 3,654,869 |                         |   | 88                            |  |                                          | 6,075,220 |                                   |   | (6,075,308 | ) |   | 3,654,869 | 
|                                                                     |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 
|Total liabilities and stockholders equity                           |  | $      | 6,263,129 |                         | $ | 104                           |  | $                                        | 7,265,728 |                                   | $ | (6,078,716 | ) | $ | 7,450,245 | 
|                                                                     |  |        |           |                         |   |                               |  |                                          |           |                                   |   |            |   |   |           | 

42

---



Note 13 - Guarantor Subsidiaries (Continued)

|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|----------------------------------------------------------------------------------------------------- |  | -------------------------------- | -------- | ----------------------- | - | --------------------------- |  | ---------------------------------- | -------- | - | - | -------- | -
|Condensed
 Consolidating Statements of Cash Flows - Unaudited                                        
|(in
 thousands)                                                                                      
|                                                                                                      |  | Nine
 months ended September 30, |         
|                                                                                                      |  |                                  |         
|2009:                                                                                                 |  | Parent                           |          | Guarantor
 Subsidiaries |   | Non-Guarantor
 Subsidiaries |  | Omnicare,
 Inc.
 and
 Subsidiaries |         
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |         
|Cash flows from operating activities:                                                                 |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Net cash flows from operating activities                                                              |  | $                                | (23,070  | )                       | $ | -                           |  | $                                  | 454,671  |   | $ | 431,601  |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Cash flows from investing activities:                                                                 |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Acquisition of businesses, net of cash received                                                       |  |                                  | -        |                         |   | -                           |  |                                    | (64,498  | ) |   | (64,498  | )
|Capital expenditures                                                                                  |  |                                  | -        |                         |   | -                           |  |                                    | (26,266  | ) |   | (26,266  | )
|Transfer of cash to trusts for employee health and severance costs,
 net of payments out of the trust |  |                                  | -        |                         |   | -                           |  |                                    | 538      |   |   | 538      |  
|Other                                                                                                 |  |                                  | -        |                         |   | -                           |  |                                    | (8,033   | ) |   | (8,033   | )
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Net cash flows used in investing activities                                                           |  |                                  | -        |                         |   | -                           |  |                                    | (98,259  | ) |   | (98,259  | )
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Cash flows from financing activities:                                                                 |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Payments on line of credit facilities and term A loan                                                 |  |                                  | (225,000 | )                       |   | -                           |  |                                    | -        |   |   | (225,000 | )
|Payments on long-term borrowings and obligations                                                      |  |                                  | (1,376   | )                       |   | -                           |  |                                    | -        |   |   | (1,376   | )
|(Decrease) increase in cash overdraft balance                                                         |  |                                  | (2,398   | )                       |   | -                           |  |                                    | 675      |   |   | (1,723   | )
|Payments for stock awards and exercise of stock options, net of stock
 tendered in payment            |  |                                  | 10,164   |                         |   | -                           |  |                                    | -        |   |   | 10,164   |  
|Excess tax benefits from stock-based compensation                                                     |  |                                  | 2,367    |                         |   | -                           |  |                                    | -        |   |   | 2,367    |  
|Dividends paid                                                                                        |  |                                  | (8,043   | )                       |   | -                           |  |                                    | -        |   |   | (8,043   | )
|Other                                                                                                 |  |                                  | 378,797  |                         |   | -                           |  |                                    | (378,797 | ) |   | -        |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Net cash flows used in financing activities                                                           |  |                                  | 154,511  |                         |   | -                           |  |                                    | (378,122 | ) |   | (223,611 | )
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Effect of exchange rate changes on cash                                                               |  |                                  | -        |                         |   | -                           |  |                                    | (198     | ) |   | (198     | )
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Net increase (decrease) in cash and cash equivalents                                                  |  |                                  | 131,441  |                         |   | -                           |  |                                    | (21,908  | ) |   | 109,533  |  
|Less increase in cash and cash equivalents of discontinued operations                                 |  |                                  | -        |                         |   | -                           |  |                                    | 64       |   |   | 64       |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Increase (decrease) in cash and cash equivalents of continuing
 operations                            |  |                                  | 131,441  |                         |   | -                           |  |                                    | (21,972  | ) |   | 109,469  |  
|Cash and cash equivalents at beginning of period                                                      |  |                                  | 145,178  |                         |   | -                           |  |                                    | 69,490   |   |   | 214,668  |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Cash and cash equivalents at end of period                                                            |  | $                                | 276,619  |                         | $ | -                           |  | $                                  | 47,518   |   | $ | 324,137  |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  

43

---



Note 13 - Guarantor Subsidiaries (Continued)

|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|----------------------------------------------------------------------------------------------------- |  | -------------------------------- | -------- | ----------------------- | - | --------------------------- |  | ---------------------------------- | -------- | - | - | -------- | -
|Condensed
 Consolidating Statements of Cash Flows - (Continued) - Unaudited                          
|(in
 thousands)                                                                                      
|                                                                                                      |  | Nine
 months ended September 30, |         
|                                                                                                      |  |                                  |         
|2008:                                                                                                 |  | Parent                           |          | Guarantor
 Subsidiaries |   | Non-Guarantor
 Subsidiaries |  | Omnicare,
 Inc.
 and
 Subsidiaries |         
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |         
|Cash flows from operating activities:                                                                 |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Net cash flows from operating activities                                                              |  | $                                | (45,536  | )                       | $ | -                           |  | $                                  | 377,421  |   | $ | 331,885  |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Cash flows from investing activities:                                                                 |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Acquisition of businesses, net of cash received                                                       |  |                                  | -        |                         |   | -                           |  |                                    | (201,032 | ) |   | (201,032 | )
|Capital expenditures                                                                                  |  |                                  | -        |                         |   | -                           |  |                                    | (45,679  | ) |   | (45,679  | )
|Transfer of cash to trusts for employee health and severance costs,
 net of payments out of the trust |  |                                  | -        |                         |   | -                           |  |                                    | (11,419  | ) |   | (11,419  | )
|Other                                                                                                 |  |                                  | -        |                         |   | -                           |  |                                    | (1,877   | ) |   | (1,877   | )
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Net cash flows used in investing activities                                                           |  |                                  | -        |                         |   | -                           |  |                                    | (260,007 | ) |   | (260,007 | )
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Cash flows from financing activities:                                                                 |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Payments on line of credit facilities and term A loan                                                 |  |                                  | (50,000  | )                       |   | -                           |  |                                    | -        |   |   | (50,000  | )
|Payments on long-term borrowings and obligations                                                      |  |                                  | (2,172   | )                       |   | -                           |  |                                    | (119     | ) |   | (2,291   | )
|(Decrease) increase in cash overdraft balance                                                         |  |                                  | (4,026   | )                       |   | -                           |  |                                    | 1,714    |   |   | (2,312   | )
|Payments for Omnicare common stock repurchase                                                         |  |                                  | (100,165 | )                       |   | -                           |  |                                    | -        |   |   | (100,165 | )
|Payments for stock awards and exercise of stock options, net of stock
 tendered in payment            |  |                                  | (1,183   | )                       |   | -                           |  |                                    | -        |   |   | (1,183   | )
|Excess tax benefits from stock-based compensation                                                     |  |                                  | 750      |                         |   | -                           |  |                                    | -        |   |   | 750      |  
|Dividends paid                                                                                        |  |                                  | (8,080   | )                       |   | -                           |  |                                    | -        |   |   | (8,080   | )
|Other                                                                                                 |  |                                  | 160,224  |                         |   | -                           |  |                                    | (160,105 | ) |   | 119      |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Net cash flows used in financing activities                                                           |  |                                  | (4,652   | )                       |   | -                           |  |                                    | (158,510 | ) |   | (163,162 | )
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Effect of exchange rate changes on cash                                                               |  |                                  | -        |                         |   | -                           |  |                                    | (2,056   | ) |   | (2,056   | )
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Net (decrease) in cash and cash equivalents                                                           |  |                                  | (50,188  | )                       |   | -                           |  |                                    | (43,152  | ) |   | (93,340  | )
|Less increase in cash and cash equivalents of discontinued operations                                 |  |                                  | -        |                         |   | -                           |  |                                    | 470      |   |   | 470      |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|(Decrease) in cash and cash equivalents of continuing operations                                      |  |                                  | (50,188  | )                       |   | -                           |  |                                    | (43,622  | ) |   | (93,810  | )
|Cash and cash equivalents at beginning of period                                                      |  |                                  | 171,779  |                         |   | -                           |  |                                    | 102,421  |   |   | 274,200  |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  
|Cash and cash equivalents at end of period                                                            |  | $                                | 121,591  |                         | $ | -                           |  | $                                  | 58,799   |   | $ | 180,390  |  
|                                                                                                      |  |                                  |          |                         |   |                             |  |                                    |          |   |   |          |  

44

---



ITEM 2 - MANAGEMENTS DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

The following discussion should be read in conjunction with the
Consolidated Financial Statements, related notes and other financial
information appearing elsewhere in this report. In addition, see Safe Harbor
Statement under the Private Securities Litigation Reform Act of 1995 Regarding
Forward-Looking Information. The reader should also refer to the Consolidated
Financial Statements and notes thereto and MD&A, including critical
accounting policies, for the year ended December 31, 2008, which appear in the
Companys Annual Report on Form 10-K, (Omnicares 2008 Annual Report), which
was filed with the Securities and Exchange Commission on February 26, 2009. All
amounts disclosed herein relate to the Companys continuing operations unless
otherwise stated.

|                                                                                     
|-------------------------------------------------------------------------------------
|Overview of
 Three and Nine Months Ended September 30, 2009 and Results of Operations
|                                                                                     

Omnicare, Inc. (Omnicare or the Company) is a leading geriatric
pharmaceutical services company. Omnicare is the nations largest provider of
pharmaceuticals and related pharmacy and ancillary services to long-term
healthcare institutions. Omnicares clients include primarily skilled nursing
facilities (SNFs), assisted living facilities (ALFs), retirement centers,
independent living communities, hospitals, hospice, and other healthcare
settings and service providers. At September 30, 2009, Omnicare served
long-term care facilities as well as chronic care and other settings comprising
approximately 1,389,000 beds relating to continuing operations, including
approximately 63,000 patients served by the patient assistance programs of its
specialty pharmacy services business. The comparable number at December 31,
2008 was 1,390,000 relating to continuing operations (including approximately
68,000 patients served by patient assistance programs). The comparable number
at September 30, 2008 was 1,387,000 relating to continuing operations
(including approximately 67,000 patients served by patient assistance
programs). Omnicare provides its pharmacy services in 47 states in the United
States, the District of Columbia and Canada at September 30, 2009. Omnicare
also provides comprehensive product development and research services for the
pharmaceutical, biotechnology, nutraceutical, medical devices and diagnostic
industries in 31 countries worldwide. For further description of the Companys
business activities see the Business caption of Part I, Item 1 of Omnicares
2008 Annual Report.

The following summary table presents consolidated net sales and results
of operations of Omnicare for the three and nine months ended September 30,
2009 and 2008 (in thousands, except per share amounts). In accordance with the
Securities and Exchange Commission (SEC) release entitled Conditions for Use
of Non-GAAP Financial Measures, the Company has disclosed in this MD&A,
with the exception of EBITDA (discussed below) and days sales outstanding, only
those measures that are in accordance with U.S. Generally Accepted Accounting
Principles (GAAP).

45

---



|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------- | --------- | --------------------------------- | - | --------- | - | ------------------------- | --------- | - | - | --------- | -
|                                                                                                                    |  | Three
 months ended,
 September 30, |           | Nine
 months ended
 September 30, |  
|                                                                                                                    |  |                                     |           |                                   |  
|                                                                                                                    |  | 2009
 (b)                           |           | 2008
 as
 adjusted (a)(b)         |   | 2009
 (b) |   | 2008
 as
 adjusted (a)(b) |          
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |          
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|Net sales                                                                                                           |  | $                                   | 1,543,901 |                                   | $ | 1,578,251 |   | $                         | 4,626,513 |   | $ | 4,631,401 |  
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|Income from continuing operations                                                                                   |  | $                                   | 78,746    |                                   | $ | 54,350    |   | $                         | 152,968   |   | $ | 115,381   |  
|Discontinued operations, including impairment charge of $12,065
 aftertax for the nine months ended 2009 period (b) |  |                                     | (6,231    | )                                 |   | (591      | ) |                           | (20,840   | ) |   | (2,537    | )
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|Net income                                                                                                          |  | $                                   | 72,515    |                                   | $ | 53,759    |   | $                         | 132,128   |   | $ | 112,844   |  
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|Earnings (loss) per common share - Basic:(c)                                                                        |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|Continuing operations                                                                                               |  | $                                   | 0.67      |                                   | $ | 0.47      |   | $                         | 1.31      |   | $ | 0.98      |  
|Discontinued operations (b)                                                                                         |  |                                     | (0.05     | )                                 |   | (0.01     | ) |                           | (0.18     | ) |   | (0.02     | )
|Net income                                                                                                          |  | $                                   | 0.62      |                                   | $ | 0.46      |   | $                         | 1.13      |   | $ | 0.96      |  
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|Earning (loss) per common share - Diluted:(c)                                                                       |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|Continuing operations                                                                                               |  | $                                   | 0.67      |                                   | $ | 0.46      |   | $                         | 1.30      |   | $ | 0.97      |  
|Discontinued operations (b)                                                                                         |  |                                     | (0.05     | )                                 |   | (0.01     | ) |                           | (0.18     | ) |   | (0.02     | )
|Net income                                                                                                          |  | $                                   | 0.61      |                                   | $ | 0.46      |   | $                         | 1.12      |   | $ | 0.95      |  
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|EBITDA from continuing operations(d)                                                                                |  | $                                   | 158,974   |                                   | $ | 156,450   |   | $                         | 422,203   |   | $ | 391,134   |  
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|EBITDA from continuing operations reconciliation to net cash flows
 from operating activities:                      |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|EBITDA from continuing operations(d)                                                                                |  | $                                   | 158,974   |                                   | $ | 156,450   |   | $                         | 422,203   |   | $ | 391,134   |  
|(Subtract)/Add:                                                                                                     |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|Interest expense, net of investment income                                                                          |  |                                     | (28,386   | )                                 |   | (35,221   | ) |                           | (86,009   | ) |   | (103,157  | )
|Income tax provision                                                                                                |  |                                     | (17,838   | )                                 |   | (31,536   | ) |                           | (77,869   | ) |   | (69,601   | )
|Changes in assets and liabilities, net of effects from acquisition
 and divestitures of businesses                  |  |                                     | 56,003    |                                   |   | 13,293    |   |                           | 172,708   |   |   | 111,855   |  
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|Net cash flows from operating activities of continuing operations                                                   |  |                                     | 168,753   |                                   |   | 102,986   |   |                           | 431,033   |   |   | 330,231   |  
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|Net cash flows from operating activities of discontinued operations                                                 |  |                                     | (94       | )                                 |   | 287       |   |                           | 568       |   |   | 1,654     |  
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  
|Net cash flows from operating activities                                                                            |  | $                                   | 168,659   |                                   | $ | 103,273   |   | $                         | 431,601   |   | $ | 331,885   |  
|                                                                                                                    |  |                                     |           |                                   |   |           |   |                           |           |   |   |           |  

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | Effective January 1, 2009, Omnicare adopted the provisions of the
 authoritative guidance for accounting for convertible debt instruments that
 may be settled in cash upon conversion (including partial cash settlement).
 Financial statements for all prior periods presented have been restated for
 this change in accounting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (b) | In the second quarter of 2009, the Company commenced activities to
 divest certain home healthcare and related ancillary businesses (the
 disposal group) that are non-strategic in nature. The disposal group, historically
 part of Omnicares Pharmacy Services segment, primarily represents ancillary
 businesses which accompanied other more strategic assets obtained by Omnicare
 in connection with the Companys institutional pharmacy acquisition program.
 The results from continuing operations for all periods presented have been
 revised to reflect the results of the disposal group as discontinued
 operations, including certain expenses of the Company related to the
 divestiture. The Company anticipates completing the divestiture within twelve
 months. See further discussion at the Discontinued Operations note of the
 Notes to Consolidated Financial Statements.

46

---



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (c) | Earnings per share is reported independently for each amount
 presented. Accordingly, the sum of the individual amounts may not necessarily
 equal the separately calculated amounts for the corresponding period.                                                                                                                                                                                                                                                                                                                                                                                                               
| | (d) | EBITDA represents earnings before interest (net of investment
 income), income taxes, depreciation and amortization. Omnicare uses EBITDA
 primarily as an indicator of the Companys ability to service its debt, and
 believes that certain investors find EBITDA to be a useful financial measure
 for the same purpose. However, EBITDA does not represent net cash flows from
 operating activities, as defined by U.S. GAAP, and should not be considered
 as a substitute for operating cash flows as a measure of liquidity. The
 Companys calculation of EBITDA may differ from the calculation of EBITDA by
 others.

|                                               
|-----------------------------------------------
|Three Months
 Ended September 30, 2009 vs. 2008
|                                               

Total net sales for the three months ended September 30, 2009 decreased
to $1,543.9 million from $1,578.3 million in the comparable prior-year period.
Income from continuing operations for the three months ended September 30, 2009
increased to $78.7 million from $54.4 million earned in the comparable 2008
period. Diluted earnings per share from continuing operations for the three
months ended September 30, 2009 were $0.67 versus $0.46 in the same prior-year
period. In total, including discontinued operations, net income for the three
months ended September 30, 2009 was $72.5 million, or $0.61 per diluted share,
as compared with $53.8 million, or $0.46 per diluted share, earned in the
comparable prior-year period. EBITDA from continuing operations totaled $159.0
million for the three months ended September 30, 2009 as compared with $156.5
million for the same period of 2008. In the second quarter of 2009, the Company
commenced activities to divest certain home healthcare and related ancillary
businesses that are non-strategic in nature. The disposal group, historically
part of Omnicares Pharmacy Services segment, primarily represents ancillary
businesses which accompanied other more strategic assets obtained by Omnicare
in connection with the Companys institutional pharmacy acquisition program.
The results from continuing operations for all periods presented have been
revised to reflect the results of the disposal group as discontinued
operations, including certain expenses of the Company related to the
divestiture. The Company anticipates completing the divestiture within twelve
months.

Net sales for the quarter were unfavorably impacted primarily by the
unfavorable sales impact of the increased availability and utilization of
generic drugs, reductions in reimbursement and/or utilization for certain drugs
as well as competitive pricing issues, a lower average number of beds served
year-over-year, along with a shift in mix towards assisted living, and lower
sales in the Companys clinical research business. Partially offsetting these
factors were the favorable impact of drug price inflation, the increased use of
certain higher acuity drugs, biologic agents and existing drugs with new
therapeutic indications, and acquisitions, as well as growth in specialty
pharmacy services. See discussion of sales and operating profit results in more
detail at the Pharmacy Services Segment and CRO Services Segment captions
below.

The Company continues to be impacted by the unilateral reduction in
April 2006 by UnitedHealth Group, Inc. and its affiliates (United) in the
reimbursement rates paid by United to Omnicare by switching to its PacifiCare
pharmacy network contract for services rendered by

47

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Omnicare to beneficiaries of Uniteds drug benefit plans under the
Medicare Part D program. The differential in reimbursement rates that resulted
from Uniteds action, as compared with reimbursement rates under the originally
negotiated contract, reduced sales and operating profit in the third quarter of
2009 by approximately $23 million (approximately $14 million aftertax), and
cumulatively since April 2006 by approximately $367 million (approximately $227
million aftertax). This matter is currently the subject of litigation initiated
by Omnicare and is before the federal appellate court in the Seventh Circuit
Court of Appeals. See further discussion at the Legal Proceedings section at
Part II, Item 1 of this Filing.

The Companys consolidated gross profit of $366.2 million for the three
months ended September 30, 2009, was lower than the same prior-year period
amount of $404.4 million. Gross profit as a percentage of total net sales of
23.7% in the three months ended September 30, 2009, was lower than the 25.6%
experienced during the comparable 2008 period. Gross profit was unfavorably
affected in the 2009 period largely by certain of the aforementioned items that
reduced net sales, primarily the reductions in reimbursement and/or utilization
for certain drugs, competitive pricing issues and the lower average number of
beds served year-over-year. Partially offsetting these factors were the
increased availability and utilization of higher margin generic drugs,
purchasing improvements, the continued integration of acquisitions and
productivity enhancements, and the favorable effect of drug price inflation.

Omnicares consolidated selling, general and administrative
(operating) expenses for the three months ended September 30, 2009 of $203.4
million were lower than the comparable prior-year amount of $228.3 million by
$24.9 million. Operating expenses as a percentage of net sales amounted to
13.2% in the third quarter of 2009, representing a decrease from the 14.5%
experienced in the comparable prior-year period. Operating expenses for the
quarter ended September 30, 2009 were favorably impacted largely by continued
progress in the Companys productivity improvement initiatives, non-drug
purchasing initiatives, reductions in employee benefit costs and the continued
integration of prior-period acquisitions. These favorable items were partially
offset by increased operating costs associated with recent acquisitions.

The provision for doubtful accounts for the three months ended
September 30, 2009 was $23.1 million versus $27.2 million in the comparable
prior-year period.

Investment income for the three months ended September 30, 2009 of $1.2
million was lower than the $1.4 million earned in the comparable prior-year
period, primarily due to lower interest rates versus the prior year.

Interest expense for the three months ended September 30, 2009 of $29.6
million is lower than the $36.7 million in the comparable prior-year period,
primarily due to lower debt outstanding resulting from payments aggregating
$225 million on the Companys senior term A loan facility, maturing on July 28,
2010 (the Term Loans) during the third quarter of 2008 through the third
quarter of 2009, payments of $39.1 million to pay off a term note payable in
the fourth quarter of 2008 and lower interest rates on variable rate loans.

The effective income tax rate was 18.5% for the three months ended
September 30, 2009, as compared to the third quarter of 2008 rate of 36.7%. The
year-over-year decrease in the

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effective tax rate is largely due to the reduction of income tax
expense in the 2009 period totaling approximately $19 million, primarily
attributable to the reversal of certain unrecognized tax benefits for tax
positions settled through the expiration of statutes of limitations.

Special Items and Accounting Changes:

Financial results for the three months ended September 30, 2009 from
continuing operations included the following charges totaling approximately
$17.5 million pretax ($10.8 million aftertax), which primarily impacted the
Pharmacy Services segment. Management believes that these items are either
infrequent occurrences or otherwise not related to Omnicares ordinary course
of business and/or are non-cash in nature:

(i)     Operating income included
restructuring and other related charges of approximately $6.3 million pretax
($3.9 million aftertax), relating to the implementation of the Omnicare Full
Potential Plan, a major initiative primarily designed to re-engineer the
pharmacy operating model to increase efficiency and enhance customer growth.
See further discussion at the Restructuring and Other Related Charges note of
the Notes to Consolidated Financial Statements and the Restructuring and Other
Related Charges section of this MD&A.

(ii)    During 2006, the Company experienced
certain quality control and product recall issues, as well as fire damage, at
one of its repackaging facilities, as described in further detail at the
Commitments and Contingencies note of the Notes to Consolidated Financial
Statements (the Repack Matters). In addressing and resolving these Repack
Matters, the Company continues to experience increased costs and, as a result,
the three months ended September 30, 2009 included special charges of $2.0
million pretax (approximately $1.8 million and $0.3 million was recorded in the
cost of sales and operating expense sections of the Consolidated Statements of
Income, respectively) ($1.2 million aftertax) for these increased costs. The
Company maintains product recall, property and casualty and business
interruption insurance, and the extent of insurance recovery for these
expenses, if any, continues to be reviewed by its insurers and outside
advisors. As of September 30, 2009, the Company has received no material
insurance recoveries.

(iii)    Operating income included special
litigation and other related professional fees of $1.7 million pretax ($1.1
million aftertax) for litigation-related professional expenses primarily in
connection with the investigation by the United States Attorneys Office,
District of Massachusetts, the Companys lawsuit against United, the Companys
response to subpoenas it received relating to other legal proceedings to which
the Company is not a party, the inquiry conducted by the Attorney Generals
Office in Michigan relating to certain billing issues under the Michigan
Medicaid program, certain other large customer disputes and the purported class
and derivative actions. With respect to these proceedings to which the Company
is a party, see further discussion at the Commitments and Contingencies note
of the Notes to Consolidated Financial Statements, and the Legal Proceedings
section at Part II, Item 1 of this Filing.

(iv)    Operating income included acquisition
and other related costs/(credit) of approximately $(0.6) million pretax ($(0.4)
million aftertax) related to the implementation of the authoritative guidance
for business combinations accounting change. These expenses were primarily
related

49

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to a reduction in the Companys original estimate of contingent
consideration payable for an acquisition, partially offset by professional fees
and acquisition related restructuring costs for 2009 acquisitions. See further
discussion at the Acquisitions note of the Notes to Consolidated Financial
Statements.

(v)     Operating expenses included
approximately $1.1 million in pretax charges ($0.6 million aftertax) relating
to the prior implementation of the authoritative guidance for share-based
payment accounting change, which primarily relates to stock option expense.
This guidance requires the Company to record compensation costs based on
estimated fair values relating to share-based payment transactions, including
stock options, in its consolidated financial statements.

(vi)    The Company recorded a $7.1 million
non-cash increase in pretax interest expense ($4.3 million aftertax) related to
the retrospective adoption of the authoritative guidance for accounting for
convertible debt instruments that may be settled in cash upon conversion
(including partial cash settlement) accounting change. See further discussion
of this authoritative guidance, including the aforementioned amortization of
discount on convertible notes, at the Debt note of the Notes to Consolidated
Financial Statements.

Financial results for the three months ended September 30, 2008 from
continuing operations included the following charges totaling approximately
$28.8 million pretax ($17.6 million aftertax), which primarily impacted the
Pharmacy Services segment. Management believes that these items are either
infrequent occurrences or otherwise not related to Omnicares ordinary course
of business and/or are non-cash in nature:

(i)     Operating income included
restructuring and other related charges of approximately $7.7 million pretax ($4.7
million aftertax), relating to the implementation of the Omnicare Full
Potential Plan, a major initiative primarily designed to re-engineer the
pharmacy operating model to increase efficiency and enhance customer growth.
See further discussion at the Restructuring and Other Related Charges note of
the Notes to Consolidated Financial Statements and the Restructuring and Other
Related Charges section of this MD&A.

(ii)     In addressing and resolving the
Repack Matters, the Company continues to experience increased costs and as a
result, the three months ended September 30, 2008 included special charges of
$1.2 million pretax (approximately $1.0 million and $0.1 million was recorded
in the cost of sales and operating expense sections of the Consolidated
Statements of Income, respectively) ($0.7 million aftertax) for these increased
costs. The Company maintains product recall, property and casualty and business
interruption insurance, and the extent of insurance recovery for these
expenses, if any, continues to be reviewed by its insurers and outside
advisors. As of September 30, 2008, the Company has received no material
insurance recoveries.

(iii)    Operating income included special
litigation and other related professional fees of $13.5 million pretax ($8.2
million aftertax) for litigation-related professional expenses primarily in
connection with the Companys lawsuit against United, certain other large
customer disputes, the investigation by the United States Attorneys Office,
District of Massachusetts, the purported class and derivative actions, the
investigation by the federal government and certain states

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relating to drug substitutions, and the Companys response to subpoenas
it received relating to other legal proceedings to which the Company is not a
party. With respect to these proceedings to which the Company is a party, see
further discussion at the Commitments and Contingencies note of the Notes to
Consolidated Financial Statements, and the Legal Proceedings section at Part
II, Item 1 of this Filing.

(iv)     The Company recorded a $6.5 million
non-cash increase in pretax interest expense ($4.1 million aftertax) related to
the retrospective adoption of the authoritative guidance for accounting for
convertible debt instruments that may be settled in cash upon conversion
(including partial cash settlement) accounting change. See further discussion
of this authoritative guidance, including this amortization of discount on
convertible notes, at the Debt note of the Notes to Consolidated Financial
Statements.

Pharmacy Services Segment

|                                             |  |                                    |           |                        |   |           | 
|-------------------------------------------- |  | ---------------------------------- | --------- | ---------------------- | - | --------- | 
|                                             |  | Three
 months ended
 September 30, |          
|                                             |  |                                    |          
|                                             |  | 2009                               |           | 2008
 as
 adjusted (a) |  
|                                             |  |                                    |           |                        |  
|                                            
|Net sales                                    |  | $                                  | 1,507,031 |                        | $ | 1,526,787 | 
|                                             |  |                                    |           |                        |   |           | 
|                                            
|Operating income from
 continuing operations |  | $                                  | 158,814   |                        | $ | 152,783   | 
|                                             |  |                                    |           |                        |   |           | 



|    |                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | As discussed
 elsewhere herein, during the second quarter of 2009, the Company commenced
 activities to divest certain non-core businesses within its Pharmacy Services
 segment. The financial results have been revised to reflect such businesses
 as discontinued operations.

Omnicares Pharmacy Services segment recorded sales of $1,507.0 million
for the three months ended September 30, 2009, as compared with the same 2008
period amount of $1,526.8 million, a decrease of $19.8 million, or 1.3%. At
September 30, 2009, Omnicare served long-term care facilities as well as
chronic care and other settings comprising approximately 1,389,000 beds
relating to continuing operations, including approximately 63,000 patients
served by the patient assistance programs of its specialty pharmacy business.
The comparable number at September 30, 2008 was 1,387,000 relating to
continuing operations (including approximately 67,000 patients served by
patient assistance programs). Pharmacy Services sales were unfavorably impacted
primarily by the increased availability and utilization of generic drugs,
reductions in reimbursement and/or utilization of certain drugs as well as
competitive pricing issues, a lower average number of beds served year-over-year,
along with a shift in mix towards assisted living, which typically has lower
penetration rates than skilled nursing facilities. Partially offsetting these
factors were the favorable impact of drug price inflation, the increased use of
certain higher acuity drugs, biologic agents and existing drugs with new
therapeutic indications, and acquisitions, as well as growth in specialty
pharmacy services. While the Company is focused on reducing its costs to
mitigate the impact of drug pricing and reimbursement issues, there can be no
assurance that such issues or other pricing and reimbursement pressures will
not adversely impact the Pharmacy Services segment.

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Operating income of the Pharmacy Services segment was $158.8 million in
the third quarter of 2009 as compared with the $152.8 million earned in the
comparable period of 2008, or an increase of $6.0 million. As a percentage of
the segments sales, operating income was 10.5% for the third quarter of 2009,
compared with 10.0% in 2008. The 2009 quarter was favorably impacted largely by
the increased availability and utilization of higher margin generic drugs, drug
price inflation, growth in specialty pharmacy services, lower bad debt expense,
and purchasing improvements, as well as by the continued progress in the
Companys productivity improvement initiatives, the continued integration of
prior-period acquisitions and the year-over-year impact of the previously
mentioned special items. Operating income in 2009 was unfavorably affected
primarily by the operating income effect of certain of the aforementioned items
that reduced net sales.

The Company derives a significant portion of its revenues directly or
indirectly from government-sponsored programs, principally the federal Medicare
program and to a lesser extent state Medicaid programs. As part of ongoing
operations, the Company and its customers are subject to regulatory changes in
the level of reimbursement received from the Medicare and Medicaid programs.

In 1997 Congress mandated a prospective payment system (PPS) for
reimbursement to skilled nursing facilities (SNFs) for their
Medicare-eligible residents during a Medicare Part A-covered stay. Under PPS,
Medicare pays SNFs a fixed fee per patient per day based upon the acuity level
of the resident, covering substantially all items and services, including
pharmacy services. PPS initially resulted in a significant reduction of
reimbursement to SNFs. Although some of the reductions were subsequently
mitigated, the PPS fundamentally changed the payment for Medicare SNF services.

In recent years, SNFs have received the full market basket inflation
increase to annual rates. For fiscal year 2009, beginning October 1, 2008, SNFs
received a 3.4 percent inflation update that increased overall payments to SNFs
by $780 million. However, for fiscal year 2010, beginning on October 1, 2009,
payments to SNFs were reduced by 1.1 percent, or by $360 million to SNFs
overall, compared to fiscal year 2009 levels. While the payment levels reflect
a 2.2 percent market basket inflation update, that amount was more than offset
by a 3.3 percent ($1.050 billion) adjustment intended to recalibrate case mix
weights to compensate for increased expenditures resulting from refinements
made in January 2006. These or other reimbursement changes could have an
adverse effect on the financial condition of the Companys SNF clients, which,
in turn, could adversely affect the timing or level of their payments to
Omnicare.

In December 2003, Congress enacted the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA), which included a major
expansion of the Medicare prescription drug benefit under a new Medicare Part
D.

The Part D drug benefit permits Medicare beneficiaries to enroll in
prescription drug plans offered by private entities which provide coverage of
outpatient prescription drugs (collectively, Part D Plans). Part D Plans
include plans providing the drug benefit on a stand-alone basis (known as
prescription drug plans, or PDPs) and Medicare Advantage plans providing
drug

52

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coverage as a supplement to an existing medical benefit under that
Medicare Advantage plan (known as MA-PDs). Medicare beneficiaries generally
have to pay a premium to enroll in a Part D Plan, with the premium amount
varying from plan to plan, although the Centers for Medicare and Medicaid
Services (CMS) provides various federal subsidies to Part D Plans to reduce
the cost to beneficiaries. Medicare beneficiaries who are also entitled to
benefits under a state Medicaid program (so-called dual eligibles) have their
prescription drug costs covered by the Medicare drug benefit, unless they elect
to opt out of Part D coverage. Many nursing home residents Omnicare serves are
dual eligibles. In the third quarter of 2009, approximately 39% of Omnicares
revenue was derived from beneficiaries covered under the federal Medicare Part
D program.

CMS provides premium and cost-sharing subsidies to Part D Plans for
dual eligible residents of nursing homes. Such dual eligibles are not required
to pay a premium for enrollment in a Part D Plan, so long as the premium for
the Part D Plan in which they are enrolled does not exceed the premium subsidy,
nor are they required to meet deductibles or pay copayment amounts. Further,
all dual eligibles who do not affirmatively enroll in a Part D Plan are
automatically enrolled into a PDP by CMS on a random basis from among those
PDPs meeting CMS criteria for low-income premiums in the PDP region, unless
they elect to opt out of Part D coverage. Such dual eligible beneficiaries may
select a different Part D Plan at any time through the Part D enrollment
process. Also, dual eligibles who are qualifying covered retirees under an
employer or union-sponsored qualified retiree prescription drug plan (plans which
offer an alternative to Part D coverage supported by federal subsidies to the
plan sponsor) will be determined to have elected not to enroll in a Part D
Plan, unless they affirmatively enroll in a Part D Plan or contact CMS to
indicate they wish to be auto-enrolled. In sum, dual eligible residents of
nursing homes are entitled to have their prescription drug costs covered by a
Part D Plan, provided that the prescription drugs which they are taking are
either on the Part D Plans formulary, or an exception to the plans formulary
is granted, subject to prior authorization or similar utilization management
requirements for certain drugs. CMS requires the formularies of Part D Plans to
include the types of drugs most commonly needed by Medicare beneficiaries and
to offer an exceptions process to provide coverage for medically necessary
drugs.

The Company obtains reimbursement for drugs it provides to enrollees of
a given Part D Plan pursuant to the agreement it negotiates with that Part D
Plan. The Company has entered into such agreements with nearly all Part D Plan
sponsors under which it will provide drugs and associated services to their
enrollees. The Company continues to have ongoing discussions with Part D Plans
and renegotiates these agreements in the ordinary course. Further, the
proportion of the Companys Part D business serviced under specific agreements
may change over time based upon beneficiary choice, reassignment of dual
eligibles to different Part D Plans, Part D Plan consolidation and other
factors. As such, reimbursement under these agreements is subject to change.

Moreover, as expected in the transition to a new program of this
magnitude, certain administrative and payment issues have arisen, resulting in
higher operating expenses, as well as outstanding gross accounts receivable
(net of allowances for contractual adjustments, and prior to any allowance for
doubtful accounts), particularly for copays owed by Part D Plans for dual
eligibles and other low income subsidy eligible beneficiaries. As of September
30, 2009, copays

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outstanding from Part D Plans were approximately $17 million relating
to 2006 and 2007. The Company is pursuing solutions, including legal actions
against certain Part D payors, to collect outstanding copays, as well as
certain rejected claims. Participants in the long-term care pharmacy industry
continue to address these issues with CMS and the Part D Plans and attempt to
develop solutions. Among other things, on January 12, 2009, CMS finalized a
change in its regulations requiring Part D Plan sponsors to accept and act upon
certain types of documentation, referred to as best available evidence, to
correct copays. Similarly, on October 9, 2009, CMS issued proposed rules that
would make numerous changes to the regulations governing Part D, including
certain Part D Plan payment rules and processes. Language in the preamble to
the proposed rule suggests that Part D Plans would be required to correct and
pay copay amounts within 45 days of receiving complete information for the
copay reconciliation. However, until a final rule is issued and all
administrative and payment issues are fully resolved, there can be no assurance
that the Part D drug benefit will not adversely impact the Companys results of
operations, financial position or cash flows.

For Medicare beneficiaries covered under a Medicare Part A stay, the
Company receives reimbursement for drugs provided to such residents from the
SNFs, in accordance with the terms of the agreements it has negotiated with
each SNF. The Company also receives reimbursement from the state Medicaid
programs for those Medicaid beneficiaries not eligible for the Part D program,
including those under age 65 who are not disabled, and for certain drugs
specifically excluded from Medicare Part D.

CMS has issued subregulatory guidance on many aspects of the Part D
program, including the provision of pharmaceutical services to long-term care
residents. CMS has also expressed some concerns about pharmacies receipt of
discounts, rebates and other price concessions from drug manufacturers. For
2007 and 2008, CMS instructed Part D Plan sponsors to require pharmacies to
disclose to the Part D Plan sponsor any discounts, rebates and other direct or
indirect remuneration designed to directly or indirectly influence or impact
utilization of Part D drugs. The Company reported information specified by CMS
with respect to rebates received by the Company for 2007 and the first quarter
of 2008 to those Part D Plans which agreed to maintain the confidentiality of
such information. In November 2008, CMS suspended collection of the long-term
care pharmacy rebate data from Part D Plan sponsors for calendar years 2008 and
2009. Instead, CMS intends to collect different non-rebate information to focus
plan attention on network pharmacy compliance and appropriate drug utilization
management. The new data would include the number and the cost of formulary
versus non-formulary drugs dispensed by each pharmacy (whether long-term care
or non-long-term care) in the Part D Plans pharmacy network. CMS will test the
proposed reporting requirements with a small number of Part D Plan sponsors
prior to calendar year 2010, when the new reporting requirements will become
effective. CMS also issued a memo on November 25, 2008 reminding Part D Plan
sponsors of the requirement to (1) provide convenient access to network
long-term care pharmacies to all of their enrollees residing in long-term care
facilities, and (2) exclude payment for drugs that are covered under a Medicare
Part A stay that would otherwise satisfy the definition of a Part D drug. The
Company will continue to work with Part D Plan sponsors to ensure compliance
with CMSs evolving policies related to long-term care pharmacy services.

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On July 15, 2008, Congress enacted the Medicare Improvements for
Patients and Providers Act of 2008 (MIPPA). This law includes further
reforms to the Part D program. Among other things, as of January 1, 2010, the
law requires that long-term care pharmacies have between 30 and 90 days to
submit claims to a Part D Plan. As of January 1, 2009, Part D Plan sponsors
must update the prescription drug pricing data they use to pay pharmacies at
least every seven days. The law also expands the number of Medicare
beneficiaries who are entitled to premium and cost-sharing subsidies by
modifying previous income and asset requirements, eliminates late enrollment
penalties for beneficiaries entitled to these subsidies, and limits the sales
and marketing activities in which Part D Plan sponsors may engage. On September
18, 2008, CMS published final regulations implementing many of the MIPPA Part D
provisions, and the agency published another interim final rule with comment
period on January 16, 2009 implementing additional MIPPA provisions related to
drug formularies and protected classes of drugs. Additional legislative
proposals are pending before Congress that could further modify the Part D
benefit, including proposals that could impact the payment available or pricing
for drugs under Part D Plans. The Company cannot predict at this time whether
such legislation will be enacted or the form any such legislation would take.
The Company can make no assurances that future Part D legislation would not
adversely impact its business.

Moreover, CMS continues to issue guidance on and make other revisions
to the Part D program. The Company is continuing to monitor issues relating to
implementation of the Part D benefit, and until further agency guidance is
known and until all administrative and payment issues associated with this
massive program are fully resolved, there can be no assurance that the impact
of the Part D rules, future legislative changes, or the outcome of other
potential developments relating to its implementation on our business, results
of operations, financial position or cash flows will not change based on the
outcome of any unforeseen future developments.

The MMA also changed the Medicare payment methodology and conditions
for coverage of certain items of durable medical equipment prosthetics,
orthotics, and supplies (DMEPOS) under Medicare Part B. Approximately 1% of
the Companys revenue is derived from beneficiaries covered under Medicare Part
B. The changes include a temporary freeze in annual increases in payments for
durable medical equipment from 2004 through 2008, new clinical conditions for
payment, quality standards (applied by CMS-approved accrediting organizations),
and competitive bidding requirements. Only suppliers that are winning bidders
will be eligible to provide competitively-bid items to Medicare beneficiaries
in the selected areas.

In mid-2007, CMS conducted a first round of bidding for 10 DMEPOS
product categories in 10 competitive bidding areas, and announced winning
bidders in March 2008. In light of concerns about implementation of the bidding
program, in MIPPA Congress terminated the contracts awarded by CMS in the first
round of competitive bidding, required that new bidding be conducted for the
first round, and required certain reforms to the bidding process. Among other
things, the law requires CMS to rebid those areas in 2009, with bidding for
round two delayed until 2011. The delay is being financed by reducing Medicare
fee schedule payments for all items covered by the round one bidding program by
9.5 percent nationwide effective January 1, 2009, followed by a 2 percent
increase in 2014 (with certain exceptions). The legislation also includes a
series of procedural improvements to the bidding process. CMS published an
interim

55

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final rule with comment period to implement the MIPPA competitive
bidding changes on January 16, 2009, and on April 17, 2009 announced that it is
proceeding with implementation of the January 16, 2009 rule after a brief
delay. Bidding for the new round one of the program began October 21, 2009, and
ends December 21, 2009. Contract suppliers are expected to be announced in June
2010, and the program is scheduled to go into effect January 1, 2011. The
Company intends to participate in the new bidding process for round one.

CMS requires all existing DMEPOS suppliers to submit proof of
accreditation by a deemed accreditation organization by September 30, 2009.
MIPPA codifies the requirement that all suppliers be accredited by September
30, 2009 and extends the accreditation requirement to companies that
subcontract with contract suppliers under the competitive bidding program. The
Companys DMEPOS suppliers are accredited.

On January 2, 2009, CMS published a final rule requiring certain
Medicare DMEPOS suppliers to furnish CMS with a $50,000 surety bond, although
the required bond amount will be higher for certain high-risk suppliers with
previous adverse legal actions. A separate surety bond will be required for
each National Provider Identifier obtained for DMEPOS billing purposes, with
limited exceptions. CMS did not establish exceptions from the bond requirement
for pharmacies or for nursing facilities that bill for Medicare DMEPOS services
provided to their own residents. The Company has secured surety bonds for its
DMEPOS suppliers.

With respect to Medicaid, many states are facing budget pressures that
could result in increased cost containment efforts on healthcare providers.
States have considerable latitude in setting payment rates for nursing
facilities. States also have flexibility to establish Medicaid managed care
programs without the need to obtain a federal waiver. Although these waiver
programs generally exempt institutional care, including nursing facilities and
institutional pharmacy services, some states do use managed care principles in
their long-term care programs. The Deficit Reduction Act (DRA), enacted in
2006, also gives states greater flexibility to expand access to home and
community based services by allowing states to provide these services as an optional
benefit without undergoing the waiver approval process, and includes a new
demonstration to encourage states to provide long-term care services in a
community setting to individuals who currently receive Medicaid services in
nursing homes. Together, these provisions could increase state funding for home
and community-based services, while prompting states to cut funding for nursing
facilities. No assurances can be given that state Medicaid programs ultimately
will not change the reimbursement system for long-term care or pharmacy
services in a way that adversely impacts the Company.

The DRA also changed the so-called federal upper limit payment rules
for multiple source prescription drugs covered under Medicaid. Like the current
upper limit, it only applies to drug ingredient costs and does not include
dispensing fees, which will continue to be determined by the states. First, the
DRA redefined a multiple source drug subject to the upper limit rules to be a
covered outpatient drug that has at least one other drug product that is
therapeutically equivalent. Thus, the federal upper limit is triggered when
there are two or more therapeutic equivalents, instead of three or more as was
previously the case. Second, effective January 1, 2007, the DRA changed the
federal upper payment limit from 150 percent of the lowest published price for
a drug (which is usually the wholesale acquisition cost) to 250 percent of the
lowest average

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manufacturer price (AMP). Congress expected these DRA provisions to
reduce federal and state Medicaid spending by $8.4 billion over five years. On
July 17, 2007, CMS issued a final rule with comment period to implement changes
to the upper limit rules. Among other things, the final rule: established a new
federal upper limit calculation for multiple source drugs based on 250 percent
of the lowest AMP in a drug class; required CMS to post AMP amounts on its web
site; and established a uniform definition for AMP. Additionally, the final
rule provided that sales of drugs to long-term care pharmacies for supply to
nursing homes and assisted living facilities (as well as associated discounts,
rebates or other price concessions) are not to be taken into account in
determining AMP where such sales can be identified with adequate documentation,
and that any AMPs which are not at least 40% of the next highest AMP will not
be taken into account in determining the upper limit amount (the so-called
outlier test). However, on December 19, 2007, the United States District
Court for the District of Columbia issued a preliminary injunction that enjoins
CMS from implementing provisions of the July 17, 2007 rule to the extent that
it affects Medicaid reimbursement rates for retail pharmacies under the
Medicaid program. The order also enjoins CMS from posting AMP data on a public
website or disclosing it to states. As a result of this preliminary injunction,
CMS did not post AMPs or new upper limit prices in late December 2007 based
upon the July 17, 2007 final rule despite its earlier planned timetable, and
the schedule for states to implement the new upper limits has been delayed
until further notice. Separately, on March 14, 2008, CMS published an interim
final rule with comment period revising the Medicaid rebate definition of
multiple source drug set forth in the July 17, 2007 final rule. In short, the
effect of the rule will be that federal upper limits apply in all states unless
the state finds that a particular generic drug is not available within that
state. While the rules effective date was April 14, 2008, it was subject to
public comment. CMS also noted that the regulation is subject to the injunction
by the United States District Court for the District of Columbia to the extent
that it may affect Medicaid reimbursement rates for pharmacies. On October 7,
2008, CMS published the final version of this rule, responding to public
comments received on the March 14, 2008 regulation. The final rule adopted the
March 2008 interim final rule with technical changes effective November 6,
2008, although it continues to be subject to an injunction to the extent that
it affects Medicaid pharmacy reimbursement rates. Moreover, MIPPA delayed the
adoption of the DRAs new federal upper limit payment rules for Medicaid based
on AMP for multiple source drugs and prevented CMS from publishing AMP data
before October 1, 2009. To date, CMS has not issued a new rule or published
such AMP data. Therefore, at this time upper payment limits continue to be
determined under the pre-DRA rules. With the advent of Medicare Part D, the
Companys revenues from state Medicaid programs are substantially lower than
has been the case previously. However, some of the Companys agreements with
Part D Plans and other payors have incorporated the Medicaid upper limit rules
into the pricing mechanisms for prescription drugs. Until the litigation
regarding the final rule is resolved and new upper limit amounts are published
by CMS, the Company cannot predict the impact of the final rule on the
Companys business. Further, there can be no assurance that federal upper limit
payments under pre-DRA rules, CMS adoption of a revised rule under the DRA,
Congressional action, or other efforts by payors to limit reimbursement for
certain drugs will not adversely impact the Companys business.

MIPPA also seeks to promote e-prescribing by providing incentive
payments for physicians and other practitioners paid under the Medicare
physician fee schedule who are successful electronic prescribers.
Specifically, successful electronic prescribers are to receive a 2 percent

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bonus during 2009 and 2010, a 1 percent bonus for 2011 and 2012 and a
0.5 percent bonus for 2013; practitioners who are not successful electronic
prescribers are penalized by a 1 percent reduction from the current fee
schedule in 2012, a 1.5 percent reduction in 2013, and thereafter a 2 percent
reduction. CMS has announced that to be a successful electronic prescriber and
to receive an incentive payment for the 2009 e-prescribing reporting year, an
eligible professional must report, using a qualified e-prescribing system, one
of three e-prescribing measures in at least 50% of the cases in which the
measure is reportable by the eligible professional during 2009. CMS has issued
detailed guidelines on the specifications for qualified e-prescribing systems.
The Company is closely monitoring developments related to this initiative, and
will seek to make available systems under which prescribers may submit
prescriptions to the Companys pharmacies electronically so as to enable them to
qualify for the incentive payments.

Most recently, on February 17, 2009, President Obama signed into law
the American Recovery and Reinvestment Act of 2009. This $790 billion economic
stimulus package includes a number of health care policy provisions, including
approximately $19 billion in funding for health information technology
infrastructure and Medicare and Medicaid incentives to encourage doctors,
hospitals, and other providers to use health information technology to
electronically exchange patients health information. The law also strengthens
federal privacy and security provisions to protect personally-identifiable
health information. In addition, the legislation increases Federal Medical
Assistance Percentage (FMAP) payments by approximately $87 billion to help
support state Medicaid programs in the face of budget shortfalls. The law also
temporarily extends current Medicaid prompt payment requirements to nursing
facility and hospital claims, requiring state Medicaid programs to reimburse
providers for 90 percent of claims within 30 days of receipt and 99 percent of
claims within 90 days of receipt. The Company is reviewing the new law and
assessing the potential impact of the various provisions on the Company.

Two other recent actions at the federal level could impact Medicaid
payments to nursing facilities. The Tax Relief and Health Care Act of 2006
modified several Medicaid policies including, among other things, reducing the
limit on Medicaid provider taxes from 6 percent to 5.5 percent from January 1,
2008 through September 30, 2011. On February 22, 2008, CMS published a final
rule that implements this legislation, and makes other clarifications to the
standards for determining the permissibility of provider tax arrangements.
Provisions of the rule were repeatedly delayed; currently the enforcement is
delayed until June 30, 2010. Second, on May 29, 2007, CMS published a rule
designed to ensure that Medicaid payments to governmentally-operated nursing
facilities and certain other health care providers are based on actual costs
and that state financing arrangements are consistent with the Medicaid statute.
CMS estimates that the rule would save $120 million during the first year and
$3.87 billion over five years, but Congress blocked the rule through April 1,
2009. The American Recovery and Reinvestment Act of 2009 expressed the sense of
Congress that the Secretary of Health and Human Services should not promulgate
the provider cost limit rule, citing a ruling by the United States District
Court for the District of Columbia that the final rule was improperly
promulgated.

Broader changes in federal healthcare policy have been proposed by
President Obama and are currently under consideration by Congress.
Specifically, on February 26, 2009, the Obama

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Administration released its proposed federal budget for fiscal year
2010, which would establish a reserve fund of $633.8 billion over 10 years to
finance comprehensive health reform. The reserve fund would be paid for by tax
increases and health system savings. Among other things, the plan would reduce
payments to Medicare Advantage plans and bundle payments to hospitals and
certain post-acute providers for services provided within 30 days after
discharge from the hospital. The proposal would also increase the Medicaid drug
rebate level paid by pharmaceutical manufacturers to Medicaid for brand-name
drugs, apply the rebate levels paid by pharmaceutical manufacturers to Medicaid
on existing drugs to new formulations of those drugs, and allow states to
collect rebates from pharmaceutical manufacturers on drugs provided through
Medicaid managed care organizations. With regard to Medicare Part D, the plan
would impose higher premiums on certain higher-income beneficiaries and expand
oversight and program integrity activities related to the program. The proposal
also would establish a regulatory pathway for approval of follow-on
biologicals, take steps to promote generic drugs, and allow drug reimportation.
Many provisions of the proposed budget would require Congressional approval to
implement and would take effect after fiscal year 2010.

Congressional leaders have expressed their commitment to enacting major
health reform legislation this year, including expanded access to insurance,
possibly with a government health insurance option to compete with private
plans. As part of this reform, Congress may also seek to rein in healthcare
costs, which could include consideration of alternate healthcare delivery
systems, revised payment methodologies and changes in operational requirements
for healthcare providers. Congress is currently considering a
variety of comprehensive plans, which are subject to extensive revision during
the legislative process before a final plan emerges. Given the ongoing debate
regarding the cost of healthcare, managed care, universal healthcare coverage,
and other healthcare issues, we cannot predict with any degree of certainty
what additional healthcare initiatives, if any, will be implemented at the
federal or state level, or the effect any future legislation or regulation will
have on the Companys business.

On October 4, 2006, the plaintiffs in New
England Carpenters Health Benefits Fund et al. v. First DataBank, Inc. and
McKesson Corporation, CA No. 1:05-CV-11148-PBS (United States
District Court for the District of Massachusetts) and defendant First DataBank,
Inc. (First DataBank) entered into a settlement agreement relating to First
DataBanks publication of average wholesale price (AWP). AWP is a pricing benchmark
that is widely used to calculate a portion of the reimbursement payable to
pharmacy providers for the drugs and biologicals they provide, including under
State Medicaid programs, Medicare Part D Plans and certain of the Companys
contracts with long-term care facilities. The settlement agreement would have
required First DataBank to cease publishing AWP two years after the settlement
became effective unless a competitor of First DataBank was then publishing AWP,
and would have required that First DataBank modify the manner in which it
calculates AWP for over 8,000 distinct drugs (NDCs) from 125% of the drugs
wholesale acquisition cost (WAC) price established by manufacturers to 120%
of WAC until First DataBank ceased publishing same. In a related case, District Council 37 Health and Security Plan v.
Medi-Span,CA No. 1:07-CV-10988-PBS (United States District Court
for the District of Massachusetts), in which Medi-Span is accused of
misrepresenting pharmaceutical prices by relying on and publishing First
DataBanks price list, the parties entered into a similar settlement agreement.
The Court granted preliminary approval of both agreements, but later, after
hearing various objections to the

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proposed settlements, indicated that it would not approve them. On May
29, 2008, the plaintiffs and First DataBank filed a new settlement that
included a reduction in the number of NDCs to which a new mark-up over WAC
would apply (20% vs. 25%) from over 8,000 to 1,356, and removed the provision
requiring that AWP no longer be published in the future. First DataBank also
agreed to contribute approximately $2 million to a settlement fund and for
legal fees. On July 15, 2008, Medi-Span and the plaintiffs in that litigation
also proposed an amended settlement agreement under which Medi-Span agreed to
reduce the mark-up over WAC (from 20% to 25%) for only the smaller number of
NDCs, the requirement that AWP not be published in the future was removed, and
Medi-Span agreed to pay $500,000 for the benefit of the plaintiff class. First
DataBank and Medi-Span, independent of these settlements, announced that they
would, of their own volition, reduce to 20% the markup on all drugs with a
mark-up higher than 20% and stop publishing AWP within two years after the
changes in mark-up are implemented (in the case of First DataBank) or within
two years after the settlement is finally approved (in the case of Medi-Span).
On March 17, 2009 the Court approved the proposed settlements, with a
modification by the Court requiring that the change in mark-ups take place 180
days after the order approving the settlements is entered. The Court entered an
order approving the settlements on March 30, 2009. While several entities
appealed the Courts order to the United States Court of Appeals for the First
Circuit, on September 3, 2009 the Court of Appeals upheld the settlements.
First DataBank and Medi-Span implemented the changes in AWP on September 26,
2009.

The Company has taken a number of steps to prevent
     or mitigate the adverse effect on the Companys reimbursement for drugs
     and biologicals which could otherwise result from these settlements, including
negotiation of compensating adjustments to its rate formulas with nearly all
Part D Plans and commercial insurers. For its client facilities that have
historically been billed under formulas based on AWP, as of the effective date
of the settlement the Company began calculating drug prices using formulas that
are based on WAC rather than AWP in order to maintain the contract pricing in
place prior to such effective date. For most state Medicaid programs reimbursing
under an AWP formula, the Company is currently being reimbursed under old rate
formulas using the new AWPs published in accordance with the settlements,
resulting in lower reimbursement under these programs. Some states are currently
considering adjusting their rate formulas in light of the settlements, and
litigation has been commenced in certain states claiming that those states
Medicaid programs are required to increase their rates. Because regulatory or
legislative changes are typically required on a state-by-state basis in order
     to adjust Medicaid rate formulas and because of the pending litigation,
     the outcome, extent and timing of such actions is unclear. Given the continuing
developments related to these settlements, there can be no assurance that the
First DataBank and Medi-Span settlements and associated unilateral actions by
First DataBank and Medi-Span, or actions, if any, by the Companys payors
relating to AWP, will not have a further adverse impact on the Companys
results of operations, financial position or cash flows.

Longer term, funding for federal and state healthcare programs must
consider the aging of the population and the growth in enrollees as eligibility
is expanded; the escalation in drug costs owing to higher drug utilization
among seniors and the introduction of new, more efficacious but also more
expensive medications; the impact of the Medicare Part D program; and the
long-term financing of the Medicare and Medicaid programs. Given competing
national priorities, it remains

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difficult to predict the outcome and impact on the Company of any
changes in healthcare policy relating to the future funding of the Medicare and
Medicaid programs.

Demographic trends indicate that demand for long-term care will
increase well into the middle of this century as the elderly population grows
significantly. Moreover, those over 65 consume a disproportionately high level
of healthcare services, including prescription drugs, when compared with the
under-65 population. There is widespread consensus that appropriate
pharmaceutical care is generally considered the most cost-effective form of
treatment for the chronic ailments afflicting the elderly and also one that is
able to improve the quality of life. These trends not only support long-term
growth for the geriatric pharmaceutical industry but also containment of
healthcare costs and the well-being of the nations growing elderly population.

In order to fund this growing demand, the Company believes that the
government and the private sector will continue to review, assess and possibly
alter healthcare delivery systems and payment methodologies. While it cannot at
this time predict the ultimate effect of any of these initiatives on Omnicares
business, management believes that the Companys expertise in geriatric
pharmaceutical care and pharmaceutical cost management position Omnicare to
help meet the challenges of todays healthcare environment.

CRO Services Segment

|                         |  |                                   |        |      |   |        | 
|------------------------ |  | --------------------------------- | ------ | ---- | - | ------ | 
|                         |  | Three months ended
 September 30, |       
|                         |  |                                   |       
|                         |  | 2009                              |        | 2008 |  
|                         |  |                                   |        |      |  
|                         |  |                                   |        |      |   |        | 
|Revenues                 |  | $                                 | 36,870 |      | $ | 51,464 | 
|                         |  |                                   |        |      |   |        | 
|                         |  |                                   |        |      |   |        | 
|Operating
 (loss)/income |  | $                                 | (1,959 | )    | $ | 4,544  | 
|                         |  |                                   |        |      |   |        | 

Omnicares CRO Services segment recorded revenues of $36.9 million for
the three months ended September 30, 2009, which decreased by $14.6 million, or
28.4% from the $51.5 million recorded in the same prior-year period. In
accordance with the authoritative guidance for income statement
characterization of reimbursements received for out-of-pocket expenses
incurred, the Company included $3.4 million and $8.3 million of reimbursable
out-of-pockets in its CRO Services segment reported revenue and cost of sales
amounts for the three months ended September 30, 2009 and 2008, respectively.
Revenues for 2009 were lower than in the same prior-year period primarily due
to lower levels of new business added along with the early termination and
client-driven delays in the commencement of certain projects.

An operating loss in the CRO Services segment of $(2.0) million in the
third quarter of 2009 compared with operating income of $4.5 million in the
same quarter of 2008, a decrease of $6.5 million. As a percentage of
the segments revenue, the operating loss was (5.3)% in the third quarter of
2009 compared with operating income of 8.8% of revenue in the same period of
2008. This decrease is primarily attributable to the aforementioned factors
that reduced sales as well as restructuring charges of $2.6 million pretax
($1.6 million aftertax) in the three months ended September 30, 2009 incurred
to rightsize and reposition the cost structure of the business.

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Backlog at September 30, 2009 was $235.7 million, representing a
decrease of $67.2 million from the December 31, 2008 backlog of $302.9 million,
and a decrease of $92.3 million from the September 30, 2008 backlog of $328.0
million.

While volatility can occur from time to time in the contract research
business owing to factors such as the success or failure of its clients
compounds, the timing or budgetary constraints of its clients, or consolidation
within our client base, new drug discovery remains an important priority of
drug manufacturers. The Company believes that drug manufacturers, in order to
optimize their research and development efforts, will continue to turn to
contract research organizations to assist them in drug research development and
commercialization.

|                                              
|----------------------------------------------
|Nine Months
 Ended September 30, 2009 vs. 2008
|                                              

Total net sales for the nine months ended September 30, 2009 decreased
slightly to $4,626.5 million from $4,631.4 million in the comparable prior-year
period. Income from continuing operations for the nine months ended September
30, 2009 was $153.0 million versus $115.4 million earned in the comparable 2008
period. Diluted earnings per share from continuing operations for the nine
months ended September 30, 2009 were $1.30 versus $0.97 in the same prior-year
period. In total, including discontinued operations, net income for the nine
months ended September 30, 2009 was $132.1 million, or $1.12 per diluted share,
as compared with $112.8 million, or $0.95 per diluted share, earned in the
comparable prior-year period. EBITDA from continuing operations totaled $422.2
million for the nine months ended September 30, 2009 as compared with $391.1
million for the same period of 2008. In the second quarter of 2009, the Company
commenced activities to divest certain home healthcare and related ancillary
businesses that are non-strategic in nature. The disposal group, historically
part of Omnicares Pharmacy Services segment, primarily represents ancillary
businesses which accompanied other more strategic assets obtained by Omnicare
in connection with the Companys institutional pharmacy acquisition program.
The results from continuing operations for all periods presented have been
revised to reflect the results of the disposal group as discontinued
operations, including certain expenses of the Company related to the
divestiture. The Company anticipates completing the divestiture within twelve months.

Net sales for the nine months ended September 30, 2009 were favorably
impacted primarily by drug price inflation, the increased use of certain higher
acuity drugs, biologic agents and existing drugs with new therapeutic
indications, and acquisitions, as well as growth in specialty pharmacy
services. More than offsetting these factors were the unfavorable sales impact
of the increased availability and utilization of generic drugs, reductions in
reimbursement and/or utilization for certain drugs as well as competitive
pricing issues, a lower average number of beds served year-over-year, a shift
in mix towards assisted living and lower sales in the Companys clinical
research business. See discussion of sales and operating profit results in more
detail at the Pharmacy Services Segment and CRO Services Segment captions
below.

The Company continues to be impacted by the unilateral reduction in
April 2006 by United in the reimbursement rates paid by United to Omnicare by
switching to its PacifiCare pharmacy network contract for services rendered by
Omnicare to beneficiaries of Uniteds drug benefit plans under the Medicare
Part D program. The differential in reimbursement rates that resulted

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from Uniteds action, as compared with reimbursement rates under the
originally negotiated contract, reduced sales and operating profit in the first
nine months of 2009 by approximately $71 million (approximately $44 million
aftertax), and cumulatively since April 2006 by approximately $367 million
(approximately $227 million aftertax). This matter is currently the subject of
litigation initiated by Omnicare and is before the federal appellate court in
the Seventh Circuit Court of Appeals. See further discussion at the Legal
Proceedings section at Part II, Item 1 of this Filing.

The Companys consolidated gross profit of $1,126.3 million decreased
$18.7 million for the nine months ended September 30, 2009, from the same
prior-year period amount of $1,145.0 million. Gross profit as a percentage of
total net sales of 24.3% in the nine months ended September 30, 2009, was
slightly lower than the 24.7% experienced during the comparable 2008 period.
Gross profit was favorably affected in the 2009 period largely due to the
increased availability and utilization of higher margin generic drugs,
purchasing improvements, the continued integration of acquisitions and
productivity enhancements, and the favorable effect of drug price inflation.
More than offsetting these factors were certain of the aforementioned items
that reduced net sales, primarily the reductions in reimbursement and/or
utilization for certain drugs, competitive pricing issues and the lower average
number of beds served year-over-year.

Omnicares consolidated operating expenses for the nine months ended September
30, 2009 of $623.0 million were lower than the comparable prior-year amount of
$681.5 million by $58.5 million. Operating expenses as a percentage of net
sales amounted to 13.5% in the first nine months of 2009, representing a
decrease from the 14.7% experienced in the comparable prior-year period.
Operating expenses for the nine months ended September 30, 2009 were favorably
impacted largely by continued progress in the Companys productivity
improvement initiatives, non-drug purchasing initiatives, reductions in
employee benefit costs and the continued integration of prior-period
acquisitions. These favorable items were partially offset by increased
operating costs associated with recent acquisitions.

The provision for doubtful accounts for the nine months ended September
30, 2009 was $71.1 million versus $79.4 million in the comparable prior-year
period.

Investment income for the nine months ended September 30, 2009 of $4.6
million was lower than the $6.0 million earned in the comparable prior-year
period, primarily due to lower interest rates versus the prior year.

Interest expense for the nine months ended September 30, 2009 of $90.7
million is lower than the $109.2 million in the comparable prior-year period,
primarily due to lower debt outstanding resulting from payments aggregating
$275 million on the Term Loans throughout 2008 and through the first nine
months of 2009, payments of $39.1 million to pay off a term note payable in the
fourth quarter of 2008 and lower interest rates on variable rate loans.

The effective income tax rate was 33.7% for the nine months ended
September 30, 2009, as compared to the rate of 37.6% for the same prior year
period. The year-over-year decrease in the effective tax rate is largely due to
the reduction of income tax expense in the 2009 period totaling approximately
$19 million, primarily attributable to the reversal of certain unrecognized tax

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benefits for tax positions settled through the expiration of statutes
of limitations, partially offset by certain nondeductible litigation costs
recognized in the 2009 period.

Special Items and Accounting Changes:

Financial results for the nine months ended September 30, 2009 from
continuing operations included the following charges totaling approximately
$123.3 million pretax ($87.4 million aftertax), which primarily impacted the
Pharmacy Services segment. Management believes that these items are either
infrequent occurrences or otherwise not related to Omnicares ordinary course
of business and/or are non-cash in nature:

(i)     Operating income included
restructuring and other related charges of approximately $19.1 million pretax
($11.8 million aftertax), relating to the implementation of the Omnicare Full
Potential Plan, a major initiative primarily designed to re-engineer the
pharmacy operating model to increase efficiency and enhance customer growth.
See further discussion at the Restructuring and Other Related Charges note of
the Notes to Consolidated Financial Statements and the Restructuring and Other
Related Charges section of this MD&A.

(ii)     In addressing and resolving the
previously mentioned Repack Matters, the Company continues to experience
increased costs and, as a result, the nine months ended September 30, 2009
included special charges of $5.2 million pretax (approximately $3.7 million and
$1.5 million was recorded in the cost of sales and operating expense sections
of the Consolidated Statements of Income, respectively) ($3.2 million aftertax)
for these increased costs. The Company maintains product recall, property and
casualty and business interruption insurance, and the extent of insurance
recovery for these expenses, if any, continues to be reviewed by its insurers
and outside advisors. As of September 30, 2009, the Company has received no
material insurance recoveries.

(iii)     Operating income
    included special litigation and other related professional fees of $71.8
    million pretax ($55.6 million aftertax) for litigation-related settlements
    and professional expenses primarily in connection with the Companys
    lawsuit against United, the investigation by the United States Attorneys
    Office, District of Massachusetts, certain other large customer disputes,
    the Companys
    response to subpoenas it received relating to other legal proceedings to
    which the Company is not a party, the inquiry conducted by the Attorney Generals
    Office in Michigan relating to certain billing issues under the Michigan
    Medicaid program, the investigation by the federal government and certain
    states relating to drug substitutions, and the purported class and derivative
    actions. With respect to these proceedings to which the Company is a
party, see further discussion at the Commitments and Contingencies note
of the Notes to Consolidated Financial Statements, and the Legal Proceedings
section at Part II, Item 1 of this Filing.

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(iv)     Operating income included acquisition
and other related costs of approximately $2.2 million pretax ($1.4 million
aftertax) related to the implementation of the authoritative guidance for
business combinations accounting change. These expenses were primarily related
to professional fees for 2009 acquisitions, partially offset by a reduction in
the Companys original estimate of contingent consideration payable for an
acquisition. See further discussion at the Acquisitions note of the Notes to
Consolidated Financial Statements.

(v)      Operating expenses included
approximately $4.2 million in pretax charges ($2.6 million aftertax) relating
to the prior implementation of the authoritative guidance for share-based
payments accounting change, which primarily relate to stock option expense.
This guidance requires the Company to record compensation costs based on
estimated fair values relating to share-based payment transactions, including
stock options, in its consolidated financial statements.

(vi)     The Company recorded a $20.8 million
non-cash increase in pretax interest expense ($12.8 million aftertax) related
to the retrospective adoption of the authoritative guidance for accounting for
convertible debt instruments that may be settled in cash upon conversion
(including partial cash settlement) accounting change. See further discussion
of this authoritative guidance, including this amortization of discount on
convertible notes, at the Debt note of the Notes to Consolidated Financial
Statements.

Financial results for the nine months ended September 30, 2008 from
continuing operations included the following charges totaling approximately
$100.1 million pretax ($61.5 million aftertax), which primarily impacted the
Pharmacy Services segment. Management believes that these items are either
infrequent occurrences or otherwise not related to Omnicares ordinary course
of business and/or are non-cash in nature:

(i)       Operating income included
restructuring and other related charges of approximately $24.9 million pretax
($15.2 million aftertax), relating to the implementation of the Omnicare Full
Potential Plan, a major initiative primarily designed to re-engineer the
pharmacy operating model to increase efficiency and enhance customer growth.
See further discussion at the Restructuring and Other Related Charges note of
the Notes to Consolidated Financial Statements and the Restructuring and Other
Related Charges section of this MD&A.

(ii)      In addressing and resolving the
Repack Matters, the Company continues to experience increased costs and as a
result, the nine months ended September 30, 2008 included special charges of
$4.8 million pretax (approximately $4.2 million and $0.6 million was recorded
in the cost of sales and operating expense sections of the Consolidated
Statements of Income, respectively) ($2.9 million aftertax) for these increased
costs. The Company maintains product recall, property and casualty and business
interruption insurance, and the extent of insurance recovery for these expenses,
if any, continues to be reviewed by its insurers and outside advisors. As of
September 30, 2008, the Company has received no material insurance recoveries.

(iii)     Operating income included special
litigation and other related professional fees of $51.1 million pretax ($31.3
million aftertax) for litigation-related professional expenses primarily in
connection with the Companys lawsuit against United, certain other large
customer disputes, the

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investigation by the United States Attorneys Office, District of
Massachusetts, the purported class and derivative actions, the investigation by
the federal government and certain states relating to drug substitutions, and
the Companys response to subpoenas it received relating to other legal proceedings
to which the Company is not a party. With respect to these proceedings to which
the Company is a party, see further discussion at the Commitments and
Contingencies note of the Notes to Consolidated Financial Statements, and the
Legal Proceedings section at Part II, Item 1 of this Filing.

(iv)     The Company recorded a $19.3 million
non-cash increase in pretax interest expense ($12.0 million aftertax) related
to the retrospective adoption of the authoritative guidance for accounting for
convertible debt instruments that may be settled in cash upon conversion
(including partial cash settlement) accounting change. See further discussion
of this authoritative guidance, including this amortization of discount on
convertible notes, at the Debt note of the Notes to Consolidated Financial
Statements.

Pharmacy Services Segment

|                                             |  |                                   |           |                        |   |           | 
|-------------------------------------------- |  | --------------------------------- | --------- | ---------------------- | - | --------- | 
|                                             |  | Nine
 months ended
 September 30, |          
|                                             |  |                                   |          
|                                             |  | 2009                              |           | 2008
 as
 adjusted (a) |  
|                                             |  |                                   |           |                        |  
|                                            
|Net sales                                    |  | $                                 | 4,504,097 |                        | $ | 4,477,133 | 
|                                             |  |                                   |           |                        |   |           | 
|                                            
|Operating income from
 continuing operations |  | $                                 | 409,553   |                        | $ | 382,684   | 
|                                             |  |                                   |           |                        |   |           | 

|    |                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | As discussed elsewhere herein, during the second quarter of 2009, the
 Company commenced activities to divest certain non-core businesses within its
 Pharmacy Services segment. The financial results have been revised to reflect
 such businesses as discontinued operations.

Omnicares Pharmacy Services segment recorded sales of $4,504.1 million
for the nine months ended September 30, 2009, an increase from the comparable
2008 amount of $4,477.1 million by $27.0 million, or 0.6%. At September 30,
2009, Omnicare served long-term care facilities as well as chronic care and
other settings comprising approximately 1,389,000 beds relating to continuing
operations, including approximately 63,000 patients served by the patient
assistance programs of its specialty pharmacy business. The comparable number
at September 30, 2008 was 1,387,000 relating to continuing operations
(including approximately 67,000 patients served by patient assistance
programs). Pharmacy Services sales were favorably impacted primarily by drug
price inflation, the increased use of certain higher acuity drugs, biologic
agents and existing drugs with new therapeutic indications, and acquisitions,
as well as growth in specialty pharmacy services. Partially offsetting these
factors were the increased availability and utilization of generic drugs,
reductions in reimbursement and/or utilization of certain drugs as well as
competitive pricing issues, a lower average number of beds served year-over-year,
and a shift in mix towards assisted living, which typically has lower
penetration rates than skilled nursing facilities. While the Company is focused
on reducing its costs to mitigate the impact of drug pricing and reimbursement
issues, there can be no assurance that such issues or other pricing and
reimbursement pressures will not adversely impact the Pharmacy Services
segment.

66

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Operating income of the Pharmacy Services segment was $409.6 million in
the first nine months of 2009, a $26.9 million increase as compared with the
$382.7 million earned in the comparable period of 2008. As a percentage of the
segments sales, operating income was 9.1% for the nine months ended September
30, 2009, compared with 8.5% in 2008. Operating income in 2009 was favorably
impacted largely by the increased availability and utilization of higher margin
generic drugs, drug price inflation, growth in specialty pharmacy services,
lower bad debt expense, and purchasing improvements, as well as by the
continued progress in the Companys productivity improvement initiatives and
the continued integration of prior-period acquisitions. Operating income in
2009 was unfavorably affected primarily by the operating income effect of
certain of the aforementioned items that reduced net sales and the
year-over-year impact of the previously mentioned special items.

CRO Services Segment

|                  |  |                                  |         |      |   |         | 
|----------------- |  | -------------------------------- | ------- | ---- | - | ------- | 
|                  |  | Nine months ended
 September 30, |        
|                  |  |                                  |        
|                  |  | 2009                             |         | 2008 |  
|                  |  |                                  |         |      |  
|                 
|Revenues          |  | $                                | 122,416 |      | $ | 154,268 | 
|                  |  |                                  |         |      |   |         | 
|                 
|Operating
 income |  | $                                | 2,000   |      | $ | 11,012  | 
|                  |  |                                  |         |      |   |         | 

Omnicares CRO Services segment recorded revenues of $122.4 million for
the nine months ended September 30, 2009, which decreased by $31.9 million, or
20.6% from the $154.3 million recorded in the same prior-year period. In
accordance with the authoritative guidance for income statement
characterization of reimbursements received for out-of-pocket expenses
incurred, the Company included $14.3 million and $24.5 million of reimbursable
out-of-pockets in its CRO Services segment reported revenue and cost of sales
amounts for the nine months ended September 30, 2009 and 2008, respectively.
Revenues for 2009 were lower than in the same prior-year period primarily due
to lower levels of new business added along with the early termination and client-driven
delays in the commencement of certain projects.

Operating income in the CRO Services segment was $2.0 million in the
first nine months of 2009 compared with $11.0 million in 2008, a decrease of
$9.0 million or 81.8%. As a percentage of the segments revenue, operating
income was 1.6% in the first nine months of 2009 compared with 7.1% in the same
period of 2008. This decrease is primarily attributable to the aforementioned
factors that reduced sales as well as restructuring charges of $3.3 million
pretax ($2.1 million aftertax) in the nine months ended September 30, 2009
incurred to rightsize and reposition the cost structure of the business.

While volatility can occur from time to time in the contract research
business owing to factors such as the success or failure of its clients
compounds, the timing or budgetary constraints of its clients, or consolidation
within our client base, new drug discovery remains an important priority of
drug manufacturers. The Company believes that drug manufacturers, in order to
optimize

67

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their research and development efforts, will continue to turn to
contract research organizations to assist them in drug research development and
commercialization.

Discontinued Operations

In the second quarter of 2009, the Company commenced activities to
divest certain home healthcare and related ancillary businesses (the disposal
group) that are non-strategic in nature. The disposal group, historically part
of Omnicares Pharmacy Services segment, primarily represents ancillary
businesses which accompanied other more strategic assets obtained by Omnicare
in connection with the Companys institutional pharmacy acquisition program.
The results from continuing operations for all periods presented have been
revised to reflect the results of the disposal group as discontinued
operations, including certain expenses of the Company related to the
divestiture. The Company anticipates completing the divestiture within twelve
months. Selected financial data related to the discontinued operations of this
disposal group for the three and nine months ended September 30, 2009 and 2008
follows:

|                                                 |  |                                     |         |                                   |   |        |   |      |         |   |   |        |  
|------------------------------------------------ |  | ----------------------------------- | ------- | --------------------------------- | - | ------ | - | ---- | ------- | - | - | ------ | -
|                                                 |  | Three
 months ended,
 September 30, |         | Nine
 months ended
 September 30, |  
|                                                 |  | 2009                                |         | 2008                              |   | 2009   |   | 2008 |        
|Net sales                                        |  | $                                   | 18,388  |                                   | $ | 25,138 |   | $    | 59,661  |   | $ | 81,119 |  
|Loss from operations of disposal group, pretax   |  |                                     | (10,107 | )                                 |   | (963   | ) |      | (14,329 | ) |   | (4,135 | )
|Income tax benefit                               |  |                                     | 3,876   |                                   |   | 372    |   |      | 5,554   |   |   | 1,598  |  
|Loss from operations of disposal group, aftertax |  |                                     | (6,231  | )                                 |   | (591   | ) |      | (8,775  | ) |   | (2,537 | )
|                                                 |  |                                     |         |                                   |   |        |   |      |         |   |   |        |  
|Impairment charge, pretax                        |  |                                     | -       |                                   |   | -      |   |      | (14,492 | ) |   | -      |  
|Income tax benefit on impairment charge          |  |                                     | -       |                                   |   | -      |   |      | 2,427   |   |   | -      |  
|Impairment charge, aftertax                      |  |                                     | -       |                                   |   | -      |   |      | (12,065 | ) |   | -      |  
|                                                 |  |                                     |         |                                   |   |        |   |      |         |   |   |        |  
|Loss from discontinued operations, aftertax      |  | $                                   | (6,231  | )                                 | $ | (591   | ) | $    | (20,840 | ) | $ | (2,537 | )

The loss from operations of disposal group for the three and nine month
periods ended September 30, 2009, in comparison to the same prior year periods,
primarily reflects the impact of reimbursement reductions from Medicare and
other payor groups as well as increased provision for doubtful accounts,
partially offset by reduced operating costs.

68

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Restructuring and Other Related Charges

Omnicare Full Potential Program

In 2006, the Company commenced the implementation of the Omnicare Full
Potential Plan, a major initiative primarily designed to re-engineer the
Companys pharmacy operating model to increase efficiency and enhance customer
growth. The Omnicare Full Potential Plan is expected to optimize resources
across the entire organization by implementing best practices, including the
realignment and right-sizing of functions, and a hub-and-spoke model whereby
certain key administrative and production functions will be transferred to
regional support centers (hubs) specifically designed and managed to perform
these tasks, with local pharmacies (spokes) focusing on time-sensitive
services and customer-facing processes. Additionally, in connection with this
productivity enhancement initiative, the Company is also right-sizing and
consolidating certain CRO operations.

This program is expected to be completed over a multi-year period and
is estimated to generate pretax savings in the range of $100 million to $120
million annually upon completion of the initiative. It is anticipated that
approximately one-half of these savings will be realized in cost of sales, with
the remainder being realized in operating expenses. The program is estimated to
result in total pretax restructuring and other related charges of approximately
$106 million over this implementation period. The Company recorded
restructuring and other related charges for the Omnicare Full Potential Plan of
approximately $6 million and $19 million pretax (approximately $4 million and
$12 million aftertax) during the three and nine months ended September 30,
2009, respectively, and approximately $8 million and $25 million pretax in the
three and nine months ended September 30, 2008, or cumulative aggregate
restructuring and other related charges of approximately $102 million before
taxes through the third quarter of 2009. The remainder of the overall
restructuring and other related charges will be recognized and disclosed
prospectively, as the remaining portions of the project are finalized and
implemented. Incremental capital expenditures related to this program are
expected to total approximately $50 million to $55 million over the entire
implementation period. The Company eliminated approximately 1,200 positions in
completing its initial phase of the program. The remainder of the program is
currently estimated to result in a net reduction of approximately 1,200
positions (1,900 positions eliminated, net of 700 new positions filled in
different geographic locations as well as to perform new functions required by
the hub-and-spoke model of operations), of which approximately 860 positions
had been eliminated as of September 30, 2009. The foregoing reductions do not
include additional savings expected from lower levels of overtime and reduced
temporary labor. The aforementioned savings anticipated upon completion of the
program also include reductions in overtime, excess hours and temporary help,
and other productivity gains, equal to an additional 820 full-time equivalents.
In addition, in July 2009, the Company implemented a temporary payroll
containment and reduction program across the organization designed to
facilitate the achievement of the productivity and efficiency goals associated
with the Full Potential Plan.

69

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The restructuring charges primarily include severance pay, the buy-out
of employment agreements, lease terminations, and other exit-related asset
disposals, professional fees and facility exit costs. The other related charges
are primarily comprised of professional fees.

While the Company is working diligently to achieve the estimated savings
as discussed above, there can be no assurances as to the ultimate outcome of
the program, including the savings and/or related timing thereof, due to the
inherent risks associated with the implementation of a project of this
magnitude and the related new technologies. Specifically, the potential
inability to successfully mitigate implementation risks, including but not
necessarily limited to, dependence on third-party suppliers and consultants for
the timely delivery of technology as well as its performance at expected
capacities, compliance with federal, state and local regulatory requirements;
reliance on information technology and telecommunications support, timely
completion of facility lease transactions and/or leasehold improvements, and
the ability to obtain adequate staffing levels, individually or in the
aggregate, could affect the overall success of the program from a savings
and/or timing standpoint.

See further discussion at the Restructuring and Other Related Charges
note of the Notes to Consolidated Financial Statements.

|                                                     
|-----------------------------------------------------
|Financial
 Condition, Liquidity and Capital Resources
|                                                     

Cash and cash equivalents and restricted cash at September 30, 2009
were $327.1 million compared with $216.6 million at December 31, 2008
(including restricted cash amounts of $2.9 million and $1.9 million,
respectively).

The Company generated positive net cash flows from operating activities
of continuing operations of $431.0 million during the nine months ended
September 30, 2009, compared with net cash flows from operating activities of
continuing operations of $330.2 million during the nine months ended September
30, 2008. Compared to the same prior-year period, cash flow from operating
activities was primarily favorably impacted by a reduction in inventory and accounts
receivable during the period.

Net cash used in investing activities of continuing operations was
$97.8 million and $258.7 million for the nine months ended September 30, 2009
and 2008, respectively. Acquisitions of businesses, primarily funded by operating
cash flows, required outlays of $64.5 million (including amounts payable
pursuant to acquisition agreements relating to pre-2009 acquisitions) in the
first nine months of 2009. Acquisitions of businesses during the first nine
months of 2008 required $201.0 million of cash payments (including amounts
payable pursuant to acquisition agreements relating to pre-2008 acquisitions)
which were primarily funded by invested cash and operating cash flows.
Omnicares capital requirements, in addition to the payment of debt and
dividends, are primarily comprised of its acquisition program and capital
expenditures, largely relating to investments in the Companys information
technology systems and the implementation of the Omnicare Full Potential
Plan.

Net cash used in financing activities of continuing operations was
$223.6 million for the nine months ended September 30, 2009 as compared to
$163.3 million for the comparable prior-year

70

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period. During the first nine months of 2009 and 2008, the Company paid
down $225 million and $50 million, respectively, on the Term Loans.

At September 30, 2009, there were no outstanding borrowings under the
$800 million revolving credit facility, and $175 million in borrowings were
outstanding under Term Loans.

On August 10, 2009, the Companys Board of Directors declared a
quarterly cash dividend of 2.25 cents per common share for an indicated annual
rate of 9 cents per common share for 2009, which is consistent with the annual
dividends per share actually paid in 2008. Aggregate dividends paid of $8.0
million during the nine month period ended September 30, 2009 were consistent
with those paid in the comparable prior-year period.

During the second quarter of 2008, the Company repurchased
approximately 4.1 million shares of Omnicares common stock at a cost of
approximately $100 million under a stock buyback program authorized by its
Board of Directors.

There were no known material commitments and contingencies outstanding
at September 30, 2009, other than the contractual obligations summarized in the
Disclosures About Aggregate Contractual Obligations and Off-Balance Sheet
Arrangements caption below; certain acquisition-related payments potentially
due in the future, including deferred payments, indemnification payments and
payments originating from earnout and other provisions that may become payable;
as well as the matters discussed in the Commitments and Contingencies note of
the Notes to Consolidated Financial Statements, and the Legal Proceedings
section at Part II, Item 1 of this Filing.

The Company believes that net cash flows from operating activities,
credit facilities and existing cash balances will be sufficient to satisfy its
future working capital needs, acquisition contingency commitments, debt
servicing, capital expenditures and other financing requirements for the
foreseeable future. Additionally, the Company believes that external sources of
financing, including short- and long-term debt financings, are available. Due
to turmoil in the credit markets, Omnicare may not be able to refinance maturing
debt at terms that are as favorable as those from which the Company previously
benefited or at terms that are acceptable to Omnicare. In addition, no
assurances can be given regarding the Companys ability to obtain additional
financing in the future.

71

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Disclosures About Aggregate Contractual Obligations and Off-Balance
Sheet Arrangements

Aggregate Contractual Obligations:

The following table summarizes the Companys aggregate contractual
obligations as of September 30, 2009, the nature of which is described in
further detail at the Aggregate Contractual Obligations caption of the
MD&A section at Part II, Item 7 of Omnicares 2008 Annual Report, and the
effect such obligations are expected to have on the Companys liquidity and
cash flows in future periods (in thousands):

|                                                                       |  |       |           |                   |   |           |  |           |         |               |   |         |  |   |          
|---------------------------------------------------------------------- |  | ----- | --------- | ----------------- | - | --------- |  | --------- | ------- | ------------- | - | ------- |  | - | ---------
|                                                                       |  | Total |           | Less Than 1
 Year |   | 1-3 Years |  | 4-5 Years |         | After 5 Years
|                                                                       |  |       |           |                   |   |           |  |           |         |              
|Debt obligations                                                       |  | $     | 2,497,500 |                   | $ | 175,000   |  | $         | 250,000 |               | $ | 225,000 |  | $ | 1,847,500
|Capital lease obligations                                              |  |       | 3,004     |                   |   | 1,374     |  |           | 1,237   |               |   | 205     |  |   | 188      
|Operating lease obligations                                            |  |       | 145,683   |                   |   | 38,940    |  |           | 46,432  |               |   | 32,827  |  |   | 27,484   
|Purchase obligations                                                   |  |       | 68,741    |                   |   | 55,856    |  |           | 12,184  |               |   | 701     |  |   | -        
|Other current obligations                                              |  |       | 283,954   |                   |   | 283,954   |  |           | -       |               |   | -       |  |   | -        
|Other long-term obligations                                            |  |       | 257,983   |                   |   | -         |  |           | 209,171 |               |   | 23,490  |  |   | 25,322   
|Subtotal                                                               |  |       | 3,256,865 |                   |   | 555,124   |  |           | 519,024 |               |   | 282,223 |  |   | 1,900,494
|Future interest costs
 relating to debt and capital lease
 obligations |  |       | 1,477,410 |                   |   | 107,144   |  |           | 208,190 |               |   | 186,516 |  |   | 975,560  
|Total contractual cash
 obligations                                    |  | $     | 4,734,275 |                   | $ | 662,268   |  | $         | 727,214 |               | $ | 468,739 |  | $ | 2,876,054

As of September 30, 2009, the Company had approximately $26 million
outstanding relating to standby letters of credit, substantially all of which
are subject to automatic annual renewals.

Off-Balance Sheet Arrangements:

A description of the Companys Off-Balance Sheet Arrangements, for
which there were no significant changes during the 2009 third quarter, is
presented at the Off-Balance Sheet Arrangements caption of Part II, Item 7 of
Omnicares 2008 Annual Report.

Critical Accounting Policies

Allowance for Doubtful Accounts

Collection of accounts receivable from customers is the Companys
primary source of operating cash flow and is critical to Omnicares operating
performance, cash flows and financial condition. Omnicares primary collection
risk relates to facility, private pay and Part D customers. The Company
provides a reserve for accounts receivable considered to be at increased risk
of becoming uncollectible by establishing an allowance to reduce the carrying
value of such receivables to their estimated net realizable value. Omnicare
establishes this allowance for doubtful accounts using the specific
identification approach, and considering such factors as historical collection
experience (i.e., payment history and credit losses) and creditworthiness,
specifically identified credit risks, aging of accounts receivable by payor

72

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category, current and expected economic conditions and other relevant
factors. Management reviews this allowance for doubtful accounts on an ongoing
basis for appropriateness. Judgment is used to assess the collectability of
account balances and the economic ability of customers to pay.

The Company computes and monitors its accounts receivable days sales
outstanding (DSO), a non-GAAP measure, in order to evaluate the liquidity and
collection patterns of its accounts receivable. DSO is calculated by averaging
the beginning and end of quarter accounts receivable, less contractual
allowances and the allowance for doubtful accounts, to derive average accounts
receivable and dividing average accounts receivable by the sales amount
(excluding reimbursable out-of-pockets) for the related quarter. The resultant
percentage is multiplied by 92 days to derive the DSO amount. Omnicares DSO
approximated 75 days at September 30, 2009, which was lower than the December
31, 2008 amount of 79 days by approximately 4 days. Unfavorably impacting the
overall DSO, as well as the 181 days and over past-due accounts receivable balance,
is the aging in accounts receivable relating to several of the Companys larger
nursing home chain customers, and the continued aging of copays and rejected
claims. On July 11, 2007, the Company commenced legal action against a group of
its customers for, among other things, the collection of past-due receivables
that are owed to the Company. Specifically, approximately $98 million
(excluding interest and prior to any allowance for doubtful accounts) is owed
to the Company by this group of customers as of September 30, 2009, of which
approximately $92 million is past-due based on applicable payment terms (a
significant portion of which is not reserved based on the relevant facts and
circumstances). The $98 million represents approximately 6 days of the overall
DSO at September 30, 2009. As previously disclosed, the Company has experienced
on-going administrative and payment issues associated with the Medicare Part D
implementation, resulting in outstanding gross accounts receivable (net of
allowances for contractual adjustments, and prior to any allowance for doubtful
accounts), particularly for copays. As of September 30, 2009, copays
outstanding from Part D Plans were approximately $17 million relating to 2006
and 2007. The Company is pursuing solutions, including legal actions against
certain Part D payors, to collect outstanding copays, as well as certain
rejected claims. Until all administrative and payment issues relating to the
Part D Drug Benefit as well as the aforementioned legal action against a group
of Omnicares customers are fully resolved, there can be no assurance that the
impact of these matters on the Companys results of operations, financial
position or cash flows will not change based on the outcome of any unforeseen
future developments.

The allowance for doubtful accounts as of September 30, 2009 was $327.7
million, compared with $319.4 million at December 31, 2008. The allowance for
doubtful accounts represented 20.8% and 19.3% of gross receivables (net of
contractual allowances) as of September 30, 2009 and December 31, 2008,
respectively. Unforeseen future developments could lead to changes in the
Companys provision for doubtful accounts levels and future allowance for
doubtful accounts percentages, which could materially impact the overall
financial results, financial position or cash flows of the Company. For
example, a one percentage point increase in the allowance for doubtful accounts
as a percentage of gross receivables (net of allowances for contractual
adjustments, and prior to allowances for doubtful accounts) as of September 30,
2009 would result in an increase to the provision for doubtful accounts and
related allowance for doubtful accounts on the balance sheet of approximately
$15.8 million pretax.

73

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The following table is an aging of the Companys September 30, 2009,
June 30, 2009 and December 31, 2008 gross accounts receivable (net of
allowances for contractual adjustments, and prior to allowances for doubtful
accounts), aged based on payment terms and categorized based on the four
primary overall types of accounts receivable characteristics (in thousands):

|                                                                            |  |                                   |           |                              |   |         |  |   |           | 
|--------------------------------------------------------------------------- |  | --------------------------------- | --------- | ---------------------------- | - | ------- |  | - | --------- | 
|                                                                            |  | September 30, 2009                |          
|                                                                            |  |                                   |          
|                                                                            |  | 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              |  | $                                 | 348,102   |                              | $ | 178,267 |  | $ | 526,369   | 
|Facility payors                                                             |  |                                   | 418,920   |                              |   | 362,291 |  |   | 781,211   | 
|Private Pay payors                                                          |  |                                   | 108,052   |                              |   | 142,023 |  |   | 250,075   | 
|CRO                                                                         |  |                                   | 16,071    |                              |   | 2,373   |  |   | 18,444    | 
|                                                                            |  |                                   |           |                              |   |         |  |   |           | 
|Total gross accounts receivable (net of
 contractual allowance adjustments) |  | $                                 | 891,145   |                              | $ | 684,954 |  | $ | 1,576,099 | 
|                                                                            |  |                                   |           |                              |   |         |  |   |           | 
|                                                                            |  |                                   |           |                              |   |         |  |   |           | 
|                                                                            |  | June 30, 2009                     |          
|                                                                            |  |                                   |          
|                                                                            |  | 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              |  | $                                 | 340,069   |                              | $ | 175,802 |  | $ | 515,871   | 
|Facility payors                                                             |  |                                   | 446,817   |                              |   | 363,006 |  |   | 809,823   | 
|Private Pay payors                                                          |  |                                   | 110,231   |                              |   | 137,755 |  |   | 247,986   | 
|CRO                                                                         |  |                                   | 17,601    |                              |   | 2,040   |  |   | 19,641    | 
|                                                                            |  |                                   |           |                              |   |         |  |   |           | 
|Total gross accounts receivable (net of
 contractual allowance adjustments) |  | $                                 | 914,718   |                              | $ | 678,603 |  | $ | 1,593,321 | 
|                                                                            |  |                                   |           |                              |   |         |  |   |           | 
|                                                                            |  |                                   |           |                              |   |         |  |   |           | 
|                                                                            |  | December 31, 2008                 |          
|                                                                            |  |                                   |          
|                                                                            |  | 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              |  | $                                 | 377,765   |                              | $ | 173,307 |  | $ | 551,072   | 
|Facility payors                                                             |  |                                   | 479,185   |                              |   | 352,036 |  |   | 831,221   | 
|Private Pay payors                                                          |  |                                   | 117,543   |                              |   | 129,530 |  |   | 247,073   | 
|CRO                                                                         |  |                                   | 27,609    |                              |   | -       |  |   | 27,609    | 
|                                                                            |  |                                   |           |                              |   |         |  |   |           | 
|Total gross accounts receivable (net of
 contractual allowance adjustments) |  | $                                 | 1,002,102 |                              | $ | 654,873 |  | $ | 1,656,975 | 
|                                                                            |  |                                   |           |                              |   |         |  |   |           | 

74

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Fair Value

On January 1, 2008, the Company adopted the provisions of the
authoritative guidance for fair value measurements, which defines a hierarchy
which prioritizes the inputs in fair value measurements. Level 1 measurements
are measurements using quoted prices in active markets for identical assets or
liabilities. Level 2 measurements use significant other observable inputs.
Level 3 measurements are measurements using significant unobservable inputs
which require a company to develop its own assumptions. In recording the fair
value of assets and liabilities, companies must use the most reliable
measurement available. The impact to the Companys consolidated results of
operations, financial position and cash flows upon adoption of this guidance
was not material.

See further discussion at the Fair Value note of the Notes to
Consolidated Financial Statements.

Legal Contingencies

The status of certain legal proceedings has been updated at the
Commitments and Contingencies note of the Notes to Consolidated Financial
Statements, and the Legal Proceedings section at Part II, Item 1 of this
Filing.

Acquisitions

Effective January 1, 2009, the Company adopted the provisions of the
authoritative guidance for business combinations, which requires the acquiring
entity in a business combination to recognize all (and only) the assets
acquired and liabilities assumed in the transaction at fair value; and
establishes the acquisition-date fair value as the measurement objective for
all assets acquired and liabilities assumed, including earn-out provisions.

See further discussion at the Acquisitions note of the Notes to
Consolidated Financial Statements.

Interest Expense

Effective January 1, 2009, the Company retrospectively adopted the
provisions of the authoritative guidance for accounting for convertible debt
instruments that may be settled in cash upon conversion (including partial cash
settlement). Among other items, this guidance specifies that issuers of
convertible debt instruments that may be settled in cash upon conversion
(including partial cash settlement) should separately account for the liability
and equity components in a manner that reflects the entitys calculated nonconvertible
debt borrowing rate when the debt was issued. The 2009 implementation resulted
in a non-cash increase in pretax interest expense of approximately $7 million
and $21 million during the three and nine months ended September 30, 2009,
respectively. Further, the Company reclassified approximately $441 million of
convertible debt and related deferred debt issuance costs to equity in
accordance with this new authoritative guidance.

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See further discussion at the Debt note of the Notes to Consolidated
Financial Statements.

Recently Issued Accounting Standards

Information pertaining to recently issued accounting standards is
further discussed at the Recently Issued Accounting Standards section of the
Interim Financial Data, Description of Business and Summary of Significant
Accounting Policies note of the Notes to Consolidated Financial Statements of
this Filing.

|                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------
|Safe Harbor
 Statement under the Private Securities Litigation Reform Act of 1995
 Regarding Forward-Looking Information
|                                                                                                                        

In addition to historical information, this report contains certain
statements that constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements include, but are not limited to, all statements regarding the
intent, belief or current expectations regarding the matters discussed or
incorporated by reference in this document (including statements as to
beliefs, expectations, anticipations, intentions or similar words) and
all statements which are not statements of historical fact. Such
forward-looking statements, together with other statements that are not
historical, are based on managements current expectations and involve known
and unknown risks, uncertainties, contingencies and other factors that could
cause results, performance or achievements to differ materially from those
stated. The most significant of these risks and uncertainties are described in
the Companys Form 10-K, Form 10-Q and Form 8-K reports filed with the
Securities and Exchange Commission and include, but are not limited to: overall
economic, financial, political and business conditions; trends in the long-term
healthcare, pharmaceutical and contract research industries; the ability to
attract new clients and service contracts and retain existing clients and
service contracts; the ability to consummate pending acquisitions; trends for
the continued growth of the Companys businesses; trends in drug pricing;
delays and reductions in reimbursement by the government and other payors to
customers and to the Company; the overall financial condition of the Companys
customers and the ability of the Company to assess and react to such financial
condition of its customers; the ability of vendors and business partners to
continue to provide products and services to the Company; the continued
successful integration of acquired companies; the continued availability of
suitable acquisition candidates; the ability to attract and retain needed
management; competition for qualified staff in the healthcare industry; the
demand for the Companys products and services; variations in costs or
expenses; the ability to implement productivity, consolidation and cost
reduction efforts and to realize anticipated benefits; the ability of clinical
research projects to produce revenues in future periods; the potential impact
of legislation, government regulations, and other government action and/or
executive orders, including those relating to Medicare Part D, including its
implementing regulations and any subregulatory guidance; reimbursement and drug
pricing policies and changes in the interpretation and application of such
policies, including changes in calculation of average wholesale price;
government budgetary pressures and shifting priorities; federal and state
budget shortfalls; efforts by payors to control costs; changes to or
termination of the Companys contracts with Medicare Part D plan sponsors or to
the proportion of the Companys Part D business covered by

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specific contracts; the outcome of litigation; potential liability for
losses not covered by, or in excess of, insurance; the impact of differences in
actuarial assumptions and estimates as compared to eventual outcomes; events or
circumstances which result in an impairment of assets, including but not
limited to, goodwill and identifiable intangible assets; the final outcome of
divestiture activities; market conditions; the outcome of audit, compliance,
administrative, regulatory, or investigatory reviews; volatility in the market
for the Companys stock and in the financial markets generally; access to
adequate capital and financing; changes in international economic and political
conditions and currency fluctuations between the U.S. dollar and other currencies;
changes in tax laws and regulations; changes in accounting rules and standards;
and costs to comply with our Corporate Integrity Agreements. Should one or more
of these risks or uncertainties materialize or should underlying assumptions
prove incorrect, the Companys actual results, performance or achievements
could differ materially from those expressed in, or implied by, such
forward-looking statements. Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date hereof.
Except as otherwise required by law, the Company does not undertake any
obligation to publicly release any revisions to these forward-looking
statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.

ITEM 3 - QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Omnicares primary market risk exposure relates to variable interest
rate risk through its borrowings. Accordingly, market risk loss is primarily
defined as the potential loss in earnings due to higher interest rates on
variable-rate debt of the Company. The modeling technique used by Omnicare for
evaluating interest rate risk exposure involves performing sensitivity analysis
on the variable-rate debt, assuming a change in interest rates of 100
basis-points. The Companys debt obligations at September 30, 2009 include
$175.0 million outstanding under the variable-rate Senior term A loan, due
2010, at an interest rate of 1.99% at September 30, 2009 (a 100 basis-point
change in the interest rate would increase or decrease pretax interest expense
by approximately $1.8 million per year); $250.0 million outstanding under its
fixed-rate 6.125% Senior Notes, due 2013; $225.0 million outstanding under its
fixed-rate 6.75% Senior Notes, due 2013; $525 million outstanding under its
fixed-rate 6.875% Senior Notes, due 2015; $345.0 million outstanding under its
fixed-rate 4.00% Convertible Debentures, due 2033; and $977.5 million
outstanding under its fixed-rate 3.25% Convertible Debentures, due 2035 (with
an optional repurchase right of holders on December 15, 2015). In connection
with its offering of $250.0 million of 6.125% Senior Notes during 2003, the
Company entered into a Swap Agreement on all $250.0 million of its aggregate
principal amount of the 6.125% Senior Notes. Under the Swap Agreement, which
hedges against exposure to long-term U.S. dollar interest rates, the Company
receives a fixed rate of 6.125% and pays a floating rate based on LIBOR with a
maturity of six months, plus a spread of 2.27%. The estimated LIBOR-based
floating rate (including the 2.27% spread) was 2.87% at September 30, 2009 (a
100 basis-point change in the interest rate would increase or decrease pretax
interest expense by approximately $2.5 million per year). The Swap Agreement,
which matches the terms of the 6.125% Senior Notes, is designated and accounted
for as a fair value hedge. The Company is accounting for the Swap Agreement in
accordance with the authoritative guidance on derivatives and hedging, so
changes in the fair value of the Swap Agreement are offset by changes in the
recorded carrying value of

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the related 6.125% Senior Notes. The fair value of the Swap Agreement
is recorded as a noncurrent asset or (liability), with an offsetting increase
or (decrease), respectively, to the book carrying value of the related 6.125%
Senior Notes, and amounted to approximately $6.3 million at the end of the 2009
third quarter. Additionally, at September 30, 2009, the fair value of Omnicares
variable rate debt facilities approximated the carrying value, as the effective
interest rates fluctuate with changes in market rates.

The fair value of the Companys fixed-rate debt facilities is based on
quoted market prices and is summarized as follows (in thousands):

Fair Value of
Financial Instruments

|                                                            |  |   |                    |  |                   |         |            |   |              |  |   |         |  | 
|----------------------------------------------------------- |  | - | ------------------ |  | ----------------- | ------- | ---------- | - | ------------ |  | - | ------- |  | 
|                                                            |  |   | September 30, 2009 |  | December 31, 2008 |        
|                                                            |  |   |                    |  |                   |        
|Financial Instrument:                                       |  |   | Book Value         |  | Market Value      |         | Book Value |   | Market Value | 
|                                                            |  |   |                    |  |                   |         |            |   |              | 
|                                                            |  |   |                    |  |                   |         |            |   |              |  |   |         | 
|6.125% senior subordinated notes, due 2013, gross           |  | $ | 250,000            |  | $                 | 243,400 |            | $ | 250,000      |  | $ | 208,800 | 
|6.75% senior subordinated notes, due 2013                   |  |   | 225,000            |  |                   | 218,800 |            |   | 225,000      |  |   | 189,000 | 
|6.875% senior subordinated notes, due 2015                  |  |   | 525,000            |  |                   | 501,400 |            |   | 525,000      |  |   | 446,000 | 
|                                                            |  |   |                    |  |                   |         |            |   |              |  |   |         | 
|4.00% junior subordinated convertible debentures, due
 2033 |  |   |                    |  |                   |         |            |   |              |  |   |         | 
|                                                            |  |   |                    |  |                   |         |            |   |              |  |   |         | 
|Carrying value                                              |  |   | 198,545            |  |                   |         |            |   | 197,029      |  |   |         | 
|Unamortized debt
 discount                                  |  |   | 146,455            |  |                   |         |            |   | 147,971      |  |   |         | 
|                                                            |  |   |                    |  |                   |         |            |   |              |  |   |         | 
|Principal amount                                            |  |   | 345,000            |  |                   | 239,500 |            |   | 345,000      |  |   | 250,800 | 
|                                                            |  |   |                    |  |                   |         |            |   |              |  |   |         | 
|3.25% convertible senior debentures, due 2035               |  |   |                    |  |                   |         |            |   |              |  |   |         | 
|                                                            |  |   |                    |  |                   |         |            |   |              |  |   |         | 
|Carrying value                                              |  |   | 766,451            |  |                   |         |            |   | 747,185      |  |   |         | 
|Unamortized debt
 discount                                  |  |   | 211,049            |  |                   |         |            |   | 230,315      |  |   |         | 
|                                                            |  |   |                    |  |                   |         |            |   |              |  |   |         | 
|Principal amount                                            |  |   | 977,500            |  |                   | 692,900 |            |   | 977,500      |  |   | 565,100 | 

Embedded in
the Old Trust PIERS, the New Trust PIERS and the 3.25% Convertible Debentures
are two derivative instruments, specifically, a contingent interest provision
and a contingent conversion parity provision. In addition, the 3.25%
Convertible Debentures include an interest reset provision. The embedded
derivatives are periodically valued, and at period end, the values of the
derivatives embedded in the Old Trust PIERS, the New Trust PIERS and the 3.25%
Convertible Debentures were not material. However, the values are subject to
change, based on market conditions, which could affect the Companys future
consolidated results of operations, financial position or cash flows.

The Company
has operations and revenue that occur outside of the U.S. and transactions that
are settled in currencies other than the U.S. dollar, exposing it to market
risk related to changes in foreign currency exchange rates. However, the
substantial portion of the Companys operations and revenues and the substantial
portion of the Companys overall consolidated cash settlements are exchanged in
U.S. dollars. Therefore, changes in foreign currency exchange rates do not
represent a substantial market risk exposure to the Company.

The Company
does not have any financial instruments held for trading purposes.

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ITEM 4 - CONTROLS AND
PROCEDURES

(a)          Under
applicable SEC regulations, management of a reporting company, with the
participation of the principal executive officer and principal financial officer,
must periodically evaluate the Companys disclosure controls and procedures,
which are defined generally as controls and other procedures of a reporting
company designed to ensure that information required to be disclosed by the
reporting company in its periodic reports filed with the SEC (such as this Form
10-Q) is recorded, processed, accumulated and communicated to the Companys
management as appropriate to allow timely decisions regarding disclosure.
Omnicare is an acquisitive company that continuously acquires and integrates
new businesses. Throughout and following an acquisition, Omnicare focuses on
analyzing the acquirees procedures and controls to determine their
effectiveness and, where appropriate, implements changes to conform them to the
Companys disclosure controls and procedures. The Companys Chief Executive
Officer and Chief Financial Officer evaluated the Companys disclosure controls
and procedures as of the end of the period covered by this Quarterly Report on
Form 10-Q and concluded that they are effective.

(b)          There
were no changes in the Companys internal control over financial reporting that
occurred during the Companys quarter ended September 30, 2009 that have
materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.

PART II - OTHER INFORMATION:

ITEM 1 - LEGAL PROCEEDINGS

On May 18,
2006, an antitrust and fraud action entitled Omnicare,
Inc. v. UnitedHealth Group, Inc., et al., 2:06-cv-00103-WOB, was
filed by the Company in the United States District Court for the Eastern
District of Kentucky against UnitedHealth Group, Inc., PacifiCare Health
Systems, Inc., and RxSolutions, Inc. d/b/a Prescription Solutions, asserting
claims of violations of federal and state antitrust laws, civil conspiracy and
common law fraud arising out of an alleged conspiracy by defendants to
illegally and fraudulently coordinate their negotiations with the Company for
Medicare Part D contracts as part of an effort to defraud the Company and fix
prices. The complaint seeks, among other things, damages, injunctive relief and
reformation of certain contracts. On June 5, 2006, the Company filed a first
supplemental and amended complaint in which it asserted the identical claims. In
an order dated November 9, 2006, a motion by defendants to transfer venue to
the United States District Court for the Northern District of Illinois was
granted, but a motion to dismiss the antitrust claims was denied without
prejudice, with leave to refile in the transferee court. On January 16, 2009
the United States District Court for the Northern District of Illinois granted a motion for summary judgment
filed by the defendants. On January 21, 2009, the Company filed a Notice of
Appeal of the judgment and the related orders to the Seventh Circuit Court of
Appeals. On June 9, 2009, the Company filed its appellate brief in the Seventh
Circuit Court of Appeals. On July 10, 2009, defendants filed their appellate
brief, and on July 23, 2009, the Company filed its reply brief. The Seventh
Circuit Court of Appeals has scheduled oral argument on the matter for November
13, 2009.

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The Company
intends to pursue the appeal vigorously and seek reversal of the judgment and
the lower courts orders.

As previously disclosed, the U.S. Attorneys Office,
District of Massachusetts had been investigating allegations under the False Claims Act, 31 U.S.C. (§) 3729, et seq. and various state false claims statutes in five
qui tamcomplaints (Maguire, Kammerer, Lisitza and two sealed complaints) concerning the Companys relationships with certain manufacturers and distributors of pharmaceutical products
and certain customers, as well as with respect to contracts with certain
companies acquired by the Company. The complaints in these cases, which have
been dismissed with prejudice by the relators pursuant to the settlement
described below, alleged that the Company violated the False Claims Act when it
submitted claims for name brand drugs when actually providing generic versions
of the same drug to nursing homes; provided consultant pharmacist services to
its customers at below-market rates to induce the referral of pharmaceutical
business; accepted discounts from drug manufacturers in return for recommending
that certain pharmaceuticals be prescribed to nursing home residents; accepted
rebates, post-purchase discounts, grants and other forms of remuneration from
drug manufacturers in return for purchasing pharmaceuticals from those
manufacturers and taking steps to increase the purchase of those
manufacturers drugs; made false statements and omissions to physicians in
connection with its recommendations of those pharmaceuticals; substituted
certain pharmaceuticals without physician authorization; accepted payments from
certain generic drug manufacturers in return for entering into purchase
arrangements with them; acquired certain institutional pharmacies at
above-market rates to obtain contracts between those pharmacies and nursing
homes; and made a payment to certain nursing home chains in return for the
referral of pharmaceutical business.

On November 2, 2009, the Company entered into a civil settlement agreement, without any finding of wrongdoing or any admission of liability, finalizing a previously disclosed agreement in principle, under which the Company has
agreed to pay the federal government and participating state governments $98 million plus interest from June 24, 2009 (the date of the agreement in principle referenced above) and related expenses to settle various alleged civil violations of
federal and state laws.  The settlement agreements release the Company from claims that the Company allegedly violated various federal and state laws due to the Company having allegedly made a payment to certain nursing home chains in return for the
referral of pharmaceutical business; allegedly provided consultant pharmacist services to its customers at rates below the Company's cost of providing the services and below fair market value to induce the referral of pharmaceutical business;
allegedly accepted a payment from a generic drug manufacturer allegedly in exchange for purchasing that manufacturers products and recommending that physicians prescribe such products to nursing home patients; and allegedly accepted rebates,
grants and other forms of remuneration from a drug manufacturer to induce the Company to recommend that physicians prescribe one of the manufacturers drugs, and the rebate agreements conditioned payment of the rebates upon the Company engaging
in an active intervention program to convince physicians to prescribe the drug and requiring that all competitive products be prior authorized for the drugs failure, where the Company failed to disclose to physicians that such
intervention activities were a condition of it receiving such rebate payments.

The Company denies the contentions of the the qui tam relators and the federal government as set forth in the settlement agreement and the complaints.  A substantial
majority of states in which the Company does business are expected to participate in this settlement. In addition, the Department of Justice has advised the Company that it has no present intention of pursuing an investigation and/or filing suit
under the False Claims Act against the Company with respect to allegations in the qui tam complaints that, during 1999-2003, pharmaceutical manufacturers named as defendants in the
complaints made payments to the Company in return for the Company recommending and/or purchasing such manufacturers' drugs.

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Pursuant to stipulations of dismissal executed in connection with the settlement agreement, the five complaints were dismissed. As part of the settlement agreement, the Company also entered into an amended and restated corporate
integrity agreement (CIA) with the Department of Health and Human Services Office of the Inspector General with a term of five years from November 2, 2009. Pursuant to the CIA,
the Company is required, among other things, to (i) create procedures designed to ensure that each existing, new or renewed arrangement with any actual or potential source of health care business or referrals to Omnicare or any actual or potential
recipient of health care business or referrals from Omnicare does not violate the Anti-Kickback Statute or related regulations, directives and guidance, including creating and maintaining a database of such arrangements; (ii) retain an independent
review organization to review the Companys compliance with the terms of the CIA and report to OIG regarding that compliance; and (iii) provide training for certain Company employees as to the Companys requirements under the CIA.  The
requirements of the Companys prior corporate integrity agreement obligating the Company to create and maintain procedures designed to ensure that all therapeutic interchange programs are developed and implemented by Omnicare consistent with
the CIA and federal and state laws for obtaining prior authorization from the prescriber before making a therapeutic interchange of a drug have been incorporated into the amended and restated CIA without modification. The requirements of the CIA are
expected to result in increased costs to maintain the Companys compliance program and greater scrutiny by federal regulatory authorities. Violations of the corporate integrity agreement could subject the Company to significant monetary
penalties.  Consistent with the CIA, the Company expects to review its contracts to ensure compliance with applicable laws and regulations. As a result of this review, the Company anticipates that pricing under its consultant pharmacist services
contracts will need to be reviewed and may increase, and there can be no assurance that such pricing will not result in the loss of certain contracts.

On February 2 and February 13, 2006, respectively, two substantially similar putative class action lawsuits, entitledIndiana State Dist. Council of Laborers & HOD Carriers Pension & Welfare Fund v. Omnicare, Inc., et al., No. 2:06cv26 (HOD Carriers), andChi v. Omnicare, Inc., et al.,No. 2:06cv31 (Chi), were filed against Omnicare and two of its officers in the United States District Court for the Eastern District of Kentucky purporting to assert claims for violation of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and seeking, among other things, compensatory damages and injunctive relief.  The complaints, which purported to be brought on behalf of all open-market purchasers of Omnicare common stock from August 3, 2005
through January 27, 2006, alleged that Omnicare had artificially inflated its earnings by engaging in improper generic drug substitution and that defendants had made false and misleading statements regarding the Companys business and prospects.  On April 3, 2006, plaintiffs in theHOD Carrierscase formally moved for consolidation and the appointment of lead plaintiff and lead counsel pursuant to the Private Securities Litigation Reform Act of 1995.  On May 22, 2006, that motion was granted, the cases were consolidated, and a lead plaintiff and lead counsel were appointed.  On July 20, 2006, plaintiffs filed a consolidated amended complaint, adding a third officer as a defendant and new factual allegations primarily relating to revenue recognition, the valuation of receivables and the valuation of inventories.  On October 31, 2006, plaintiffs moved for leave to file a second amended complaint, which was granted on January 26, 2007,
on the condition that no further amendments would be permitted absent extraordinary circumstances.  Plaintiffs thereafter filed their second amended complaint on January 29, 2007.  The second amended complaint (i) expands the putative class to include all purchasers of Omnicare common stock from August 3, 2005 through July 27, 2006, (ii) names two members of the Companys board of directors as additional defendants, (iii) adds a new plaintiff and a new claim for violation of Section 11 of the Securities Act of 1933 based on alleged false and misleading statements in the registration statement filed in connection with the Companys December 2005 public offering, (iv) alleges that the Company failed to timely disclose its contractual dispute with UnitedHealth Group, Inc. and its affiliates (United), and (v) alleges that the Company failed to timely record certain special litigation reserves.  The defendants filed a motion to dismiss the second amended complaint on
March 12, 2007, claiming that plaintiffs had failed adequately to plead loss causation, scienter or any actionable misstatement or omission.  That motion was fully briefed as of May 1, 2007.  In response to certain arguments relating to the individual claims of the named plaintiffs that were raised in defendants pending motion to dismiss, plaintiffs filed a motion to add, or in the alternative, to intervene an additional named plaintiff, Alaska Electrical Pension Fund, on July 27, 2007.  On October 12, 2007, the court issued an opinion and order dismissing the case and denying plaintiffs motion to add an additional named plaintiff.  On November 9, 2007, plaintiffs filed a notice of appeal with the United States Court of Appeals for the Sixth Circuit with respect to the dismissal of their case.  Oral argument was held on September 18, 2008.  On October 21, 2009, the Sixth Circuit Court of Appeals generally affirmed the district courts dismissal, dismissing plaintiffs claims for violati
on of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, as well as affirming the denial of Alaskan Electrical Pension Funds motion to intervene.  However, the appellate court reversed the dismissal of the claim brought for violation of Section 11 of the Securities Act of 1933, remanding the case to the district court for further proceedings, including application of the rule requiring plaintiffs to allege fraud with
particularity to their Section 11 claim.  On November 3, 2009, plaintiffs filed a motion in the Court of Appeals seeking a rehearing or a rehearing en banc with respect to a single aspect of the Court's decision, namely, whether the federal rule requiring pleading with particularity should apply to their claim under Section 11 of the Securities Act.

Information
pertaining to other Legal Proceedings involving the Company is further
discussed in the Commitments and Contingencies note of the Notes to
Consolidated Financial Statements of this Filing.

Although the
Company cannot predict the ultimate outcome of the matters described in the
preceding paragraphs other than as disclosed and elsewhere in this Filing,
there can be no

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assurance that
the resolution of these matters will not have a material adverse impact on the
Companys consolidated results of operations, financial position or cash flows.

As part of its ongoing operations, the Company is subject to various
inspections, audits, inquiries and similar actions by governmental/regulatory
authorities responsible for enforcing laws and regulations to which the Company
is subject, including reviews of individual Omnicare pharmacys reimbursement
documentation and administrative practices.

ITEM 1A - RISK FACTORS

The Omnicare 2008 Annual Report on Form 10-K includes a detailed
discussion of our risk factors. The information presented below updates and
should be read in conjunction with the risk factors and information disclosed in
that Form 10-K.

Risks Relating to Our Business

Federal and state
healthcare legislation has significantly impacted our business, and future
legislation and regulations are likely to affect us.

In recent years, federal legislation has resulted in major changes in
the healthcare system, which significantly affected healthcare providers. Under
PPS, Medicare pays SNFs a fixed fee per patient per day based upon the acuity
level of the resident, covering substantially all items and services furnished
during a Medicare-covered stay, including pharmacy services. PPS initially
resulted in a significant reduction of reimbursement to SNFs. Congress
subsequently sought to restore some of the reductions in reimbursement
resulting from PPS. Although some of the reductions were subsequently
mitigated, the PPS fundamentally changed the payment for Medicare SNF services.

In recent years, SNFs have received the full market basket increase to
annual rates. For fiscal year 2009, beginning October 1, 2008, SNFs received a 3.4
percent inflation update that increased overall payments to SNFs by $780
million. However, for fiscal year 2010, beginning on October 1, 2009, payments
to SNFs were reduced by 1.1 percent, or $360 million to SNFs overall, compared
to fiscal year 2009 levels. While the payment levels reflect a 2.2 percent
market basket inflation update, that amount was more than offset by a 3.3
percent ($1.050 billion) adjustment intended to recalibrate case mix weights to
compensate for increased expenditures resulting from refinements made in
January 2006. These or other reimbursement changes could have an adverse effect
on the financial condition of the Companys SNF clients, which could, in turn,
adversely affect the timing or level of their payments to Omnicare.

Similarly, the Medicare Part D prescription drug benefit significantly
shifted the payor mix for our pharmacy services. Effective January 1, 2006, the
Part D drug benefit permits Medicare beneficiaries to enroll in Part D Plans
for their drug coverage. Medicare beneficiaries generally have to pay a premium
to enroll in a Part D Plan, with the premium amount varying from plan to plan,
although the Centers for Medicare and Medicaid Services (CMS) provides
various federal subsidies to Part D Plans to reduce the cost to beneficiaries.
Medicare beneficiaries who are also entitled to benefits under a state Medicaid
program (so-called dual eligibles) have their

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prescription drug costs covered by the new Medicare drug benefit,
unless they elect to opt out of Part D coverage. Many nursing home residents
Omnicare serves are dual eligibles, whose drug costs were previously covered by
state Medicaid programs. In the nine months ended September 30, 2009,
approximately 39% of Omnicares revenue was derived from beneficiaries covered
under the federal Medicare Part D program.

The Company obtains reimbursement for drugs it provides to enrollees of
a given Part D Plan pursuant to the agreement it negotiates with that Part D
Plan. We have entered into such agreements with nearly all Part D Plan sponsors
under which we provide drugs and associated services to their enrollees. We
continue to have ongoing discussions with Part D Plans and renegotiate these
agreements in the ordinary course. Further, the proportion of our Part D
business serviced under specific agreements may change over time based upon
beneficiary choice, reassignment of dual eligibles to different Part D Plans,
Part D Plan consolidation and other factors. As such, reimbursement under these
agreements is subject to change.

Moreover, as expected in the transition to a program of this magnitude,
certain administrative and payment issues have arisen, resulting in higher
operating expenses, as well as outstanding gross accounts receivable (net of
allowances for contractual adjustments, and prior to any allowance for doubtful
accounts), particularly for copays owed by Part D Plans for dual eligibles and
other low income subsidy eligible beneficiaries. As of September 30, 2009,
copays outstanding from Part D Plans were approximately $17 million relating to
2006 and 2007. The Company is pursuing solutions, including legal actions
against certain Part D payors, to collect outstanding copays, as well as
certain rejected claims. Participants in the long-term care pharmacy industry
continue to address these issues with CMS and the Part D Plans and attempt to
develop solutions. Among other things, on January 12, 2009, CMS finalized a
change in its regulations requiring Part D Plan sponsors to accept and act upon
certain types of documentation, referred to as best available evidence, to
correct co-pays. Similarly, on October 9, 2009, CMS issued proposed rules that
would make numerous changes to the regulations governing Part D, including
certain Part D Plan payment rules and processes. Language in the preamble to
the proposed rule suggests that Part D Plans would be required to correct and
pay copay amounts within 45 days of receiving complete information for the
copay reconciliation. However, until a final rule is issued and all
administrative and payment issues are fully resolved, there can be no assurance
that the Part D Drug benefit will not adversely impact our results of
operations, financial position or cash flows.

CMS has issued subregulatory guidance on many aspects of the Part D
program, including the provision of pharmaceutical services to long-term care
residents. CMS has also expressed some concerns about pharmacies receipt of
discounts, rebates and other price concessions from drug manufacturers. For
2007 and 2008, CMS instructed Part D Plan sponsors to require pharmacies to
disclose to the Part D Plan sponsor any discounts, rebates and other direct or
indirect remuneration designed to directly or indirectly influence or impact
utilization of Part D drugs. The Company reported information specified by CMS
with respect to rebates received by the Company for 2007 and the first quarter
of 2008 to those Part D Plans which agreed to maintain the confidentiality of
such information. In November 2008, CMS suspended collection of the long-term
care pharmacy rebate data from Part D Plan sponsors for calendar years 2008 and
2009. Instead, CMS intends to collect different non-rebate information to focus
plan attention on

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network pharmacy compliance and appropriate drug utilization
management. The new data would include the number and the cost of formulary
versus non-formulary drugs dispensed by each pharmacy (whether long-term care
or non-long-term care) in the Part D Plans pharmacy network. CMS will test the
proposed reporting requirements with a small number of Part D Plan sponsors
prior to calendar year 2010, when the new reporting requirements will become
effective. CMS also issued a memo on November 25, 2008 reminding Part D Plan
sponsors of the requirement to (1) provide convenient access to network
long-term care pharmacies to all of their enrollees residing in long-term care
facilities, and (2) exclude payment for drugs that are covered under a Medicare
Part A stay that would otherwise satisfy the definition of a Part D drug. The
Company will continue to work with Part D Plan sponsors to ensure compliance
with CMSs evolving policies related to long-term care pharmacy services.

MIPPA includes further reforms to the Part D program. As of January 1,
2009, the law also requires Part D Plan sponsors to update the prescription
drug pricing data they use to pay pharmacies at least every seven days. As of
January 1, 2010, the law requires that long-term care pharmacies have between
30 and 90 days to submit claims to a Part D Plan. The law also expands the
number of Medicare beneficiaries who will be entitled to premium and
cost-sharing subsidies by modifying previous income and asset requirements,
eliminates late enrollment penalties for beneficiaries entitled to these subsidies,
and limits the sales and marketing activities in which Part D Plan sponsors may
engage, among other things. On September 18, 2008, CMS published final
regulations implementing many of the MIPPA Part D provisions, and the agency
published another interim final rule with comment period on January 16, 2009
implementing additional MIPPA provisions related to drug formularies and
protected classes of drugs. Additional legislative proposals are pending before
Congress that could further modify the Part D benefit, including proposals that
could impact the payment available or pricing for drugs under Part D Plans. We
cannot predict at this time whether such legislation will be enacted or the
form any such legislation would take. We can make no assurances that future
Part D legislation would not adversely impact our business.

Moreover, CMS continues to issue guidance on and make revisions to the
Part D program. We are continuing to monitor issues relating to implementation
of the Part D benefit, and until further agency guidance is known and until all
administrative and payment issues associated with the transition to this
massive program are fully resolved, there can be no assurance that the impact
of the Part D rules, future legislative changes, or the outcome of other
potential developments relating to its implementation on our business, results
of operations, financial position or cash flows will not change based on the
outcome of any unforeseen future developments.

The MMA also changed the Medicare payment methodology and conditions
for coverage of certain items of DMEPOS under Medicare Part B. Approximately 1%
of our revenue is derived from beneficiaries covered under Medicare Part B. The
changes include a temporary freeze in annual increases in payments for durable
medical equipment from 2004 through 2008, new clinical conditions for payment,
quality standards (applied by CMS-approved accrediting organizations), and
competitive bidding requirements. Only suppliers that are winning bidders will
be eligible to provide competitively-bid items to Medicare beneficiaries in the
selected areas.

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In mid-2007, CMS conducted a first round of bidding for 10 DMEPOS
product categories in 10 competitive bidding areas, and announced winning
bidders in March 2008. In light of concerns about implementation of the bidding
program, in MIPPA Congress terminated the contracts awarded by CMS in the first
round of competitive bidding, required that new bidding be conducted for the
first round, and required certain reforms to the bidding process. The law
requires CMS to rebid those areas in 2009, with bidding for round two delayed
until 2011. The delay is being financed by reducing Medicare fee schedule
payments for all items covered by the round one bidding program by 9.5 percent
nationwide effective January 1, 2009, followed by a 2 percent increase in 2014
(with certain exceptions). The legislation also includes a series of procedural
improvements to the bidding process. CMS published an interim final rule with
comment period to implement the MIPPA competitive bidding changes on January
16, 2009, and on April 17, 2009 announced that it is proceeding with
implementation of the January 16, 2009 rule after a brief delay. According to a
tentative schedule CMS announced at a public meeting on June 4, 2009, while
bidding for the new round one of the program will take place later this year,
CMS does not expect the program to go into effect until January 1, 2011. We
intend to participate in the new bidding process for round one. There is no
assurance that we will be a successful bidder in the DMEPOS competitive bidding
process.

With respect to Medicaid, many states are facing budget pressures that
could result in increased cost containment efforts on healthcare providers.
States have considerable latitude in setting payment rates for nursing facility
services. States also have flexibility to establish Medicaid managed care
programs without the need to obtain a federal waiver. Although these waiver
programs generally exempt institutional care, including nursing facilities and
institutional pharmacy services, some states do use managed care principles in
their long-term care programs. The DRA also gives states greater flexibility to
expand access to home and community based services by allowing states to
provide these services as an optional benefit without undergoing the waiver
approval process, and includes a new demonstration to encourage states to
provide long-term care services in a community setting to individuals who
currently receive Medicaid services in nursing homes. Together, these
provisions could increase state funding for home and community-based services,
while prompting states to cut funding for nursing facilities. No assurances can
be given that state Medicaid programs ultimately will not change the
reimbursement system for long-term care or pharmacy services in a way that
adversely impacts the Company.

The DRA also changed the so-called federal upper limit payment rules
for multiple source prescription drugs covered under Medicaid. Like the current
upper limit, it only applies to drug ingredient costs and does not include
dispensing fees, which will continue to be determined by the states. First, the
DRA redefined a multiple source drug subject to the upper limit rules to be a
covered outpatient drug that has at least one other drug product that is
therapeutically equivalent. Thus, the federal upper limit is triggered when
there are two or more therapeutic equivalents, instead of three or more as was
previously the case. Second, effective January 1, 2007, the DRA changed the
federal upper payment limit from 150 percent of the lowest published price for
a drug (which is usually the wholesale acquisition cost) to 250 percent of the
lowest average manufacturer price (AMP). Congress expected these DRA
provisions to reduce federal and state Medicaid spending by $8.4 billion over
five years. On July 17, 2007, CMS issued a final

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rule with comment period to implement changes to the upper limit rules.
Among other things, the final rule: established a new federal upper limit
calculation for multiple source drug based on 250 percent of the lowest AMP in
a drug class; required CMS to post AMP amounts on its web site; and established
a uniform definition for AMP. Additionally, the final rule provided that sales
of drugs to long-term care pharmacies for supply to nursing homes and assisted
living facilities (as well as associated discounts, rebates or other price
concessions) are not to be taken into account in determining AMP where such
sales can be identified with adequate documentation, and that any AMPs which
are not at least 40% of the next highest AMP will not be taken into account in
determining the upper limit amount (the so-called outlier test). However, on
December 19, 2007, the United States District Court for the District of
Columbia issued a preliminary injunction that enjoins CMS from implementing
provisions of the July 17, 2007 rule to the extent that it affects Medicaid
reimbursement rates for retail pharmacies under the Medicaid program. The order
also enjoins CMS from posting AMP data on a public website or disclosing it to
states. As a result of this preliminary injunction, CMS did not post AMPs or
new upper limit prices in late December 2007 based upon the July 17, 2007 final
rule despite its earlier planned timetable, and the schedule for states to
implement the new upper limits has been delayed until further notice.
Separately, on March 14, 2008, CMS published an interim final rule with comment
period revising the Medicaid rebate definition of multiple source drug set
forth in the July 17, 2007 final rule. In short, the effect of the rule will be
that federal upper limits apply in all states unless the state finds that a
particular generic drug is not available within that state. While the rules
effective date was April 14, 2008, it is subject to public comment. CMS also
noted that the regulation is subject to the injunction by the United States
District Court for the District of Columbia to the extent that it may affect
Medicaid reimbursement rates for pharmacies. On October 7, 2008, CMS published
the final version of this rule, responding to public comments received on the
March 14, 2008 regulation. The final rule adopted the March 2008 interim final
rule with technical changes effective November 6, 2008, although it continues
to be subject to an injunction to the extent that it affects Medicaid pharmacy
reimbursement rates. Moreover, MIPPA delayed the adoption of the DRAs new
federal upper limit payment rules for Medicaid based on AMP for multiple source
drugs and prevented CMS from publishing AMP data before October 1, 2009. To
date, CMS has not issued a new rule or published such AMP data. Therefore, at
this time upper payment limits continue to be determined under the pre-DRA
rules. With the advent of Medicare Part D, our revenues from state Medicaid
programs are substantially lower than has been the case previously. However,
some of our agreements with Part D Plans and other payors have incorporated the
Medicaid upper limit rules into the pricing mechanisms for prescription drugs.
Until the litigation regarding the final rule is resolved and new upper limit
amounts are published by CMS, we cannot predict the impact of the final rule on
our business. Further, there can be no assurance that federal upper limit
payments under pre-DRA rules, CMS adoption of a revised rule under the DRA,
Congressional action, or other efforts by payors to limit reimbursement for
certain drugs will not adversely impact our business.

On February 17, 2009, President Obama signed into law the American
Recovery and Reinvestment Act of 2009. This $790 billion economic stimulus
package includes a number of health care policy provisions, including
approximately $19 billion in funding for health information technology
infrastructure and Medicare and Medicaid incentives to encourage doctors,
hospitals, and other providers to use health information technology to
electronically exchange patients health information. The law also strengthens
federal privacy and security

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provisions to protect personally-identifiable health information. In
addition, the legislation increases Federal Medical Assistance Percentage
(FMAP) payments by approximately $87 billion to help support state Medicaid
programs in the face of budget shortfalls. The law also temporarily extends
current Medicaid prompt payment requirements to nursing facility and hospital
claims, requiring state Medicaid programs to reimburse providers for 90 percent
of claims within 30 days of receipt and 99 percent of claims within 90 days of
receipt. Omnicare is reviewing the new law and assessing the potential impact
of the various provisions on the Company.

Two other recent actions at the federal level could impact Medicaid
payments to nursing facilities. The Tax Relief and Health Care Act of 2006
modified several Medicaid policies including, among other things, reducing the
limit on Medicaid provider taxes from 6 percent to 5.5 percent from January 1,
2008 through September 30, 2011. On February 22, 2008, CMS published a final
rule that implements this legislation, and makes other clarifications to the
standards for determining the permissibility of provider tax arrangements.
Provisions of the rule were repeatedly delayed; currently enforcement is
delayed until June 30, 2010. Second, on May 21, 2007, CMS published a rule
designed to ensure that Medicaid payments to governmentally-operated nursing
facilities and certain other health care providers are based on actual costs
and that state financing arrangements are consistent with the Medicaid statute.
CMS estimates that the rule would save $120 million during the first year and
$3.87 billion over five years, but Congress blocked the rule through April 1,
2009. The American Recovery and Reinvestment Act of 2009 expresses the sense of
Congress that the Secretary of Health and Human Services should not promulgate
the provider cost limit rule, citing a ruling by the United States District
Court for the District of Columbia that the final rule was improperly
promulgated.

Broader changes in federal healthcare policy have been proposed by
President Obama and are currently under consideration by Congress this year.
Specifically, on February 26, 2009, the Obama Administration released its
proposed federal budget for fiscal year 2010, which would establish a reserve
fund of $633.8 billion over 10 years to finance comprehensive health reform.
The reserve fund would be paid for by tax increases and health system savings.
Among other things, the plan would reduce payments to Medicare Advantage plans
and bundle payments to hospitals and certain post-acute providers for services
provided within 30 days after discharge from the hospital. The proposal would
also increase the Medicaid drug rebate level paid by pharmaceutical
manufacturers to Medicaid for brand-name drugs, apply the rebate levels paid by
pharmaceutical manufacturers to Medicaid on existing drugs to new formulations
of those drugs, and allow states to collect rebates from pharmaceutical
manufacturers on drugs provided through Medicaid managed care organizations.
With regard to Medicare Part D, the plan would impose higher premiums on
certain higher-income beneficiaries and expand oversight and program integrity
activities related to the program. The proposal also would establish a
regulatory pathway for approval of follow-on biologicals, take steps to promote
generic drugs, and allow drug reimportation. It should be noted that many
provisions of the proposed budget would require Congressional approval to
implement and would take effect after fiscal year 2010.

Congressional leaders have expressed their commitment to enacting major
health reform legislation this year, including expanded access to insurance,
possibly with a government health insurance option to compete with private
plans. As part of this reform, Congress may also seek

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to rein in healthcare costs, which could include
    consideration of alternate healthcare delivery systems, revised payment methodologies
    and changes in operational requirements for healthcare providers. Congress
    is currently considering a variety of comprehensive plans, which
are subject to extensive revision during the legislative process before a final
plan emerges. Given the ongoing debate regarding the cost of healthcare,
managed care, universal healthcare coverage, and other healthcare issues, we
cannot predict with any degree of certainty what additional healthcare
initiatives, if any, will be implemented at the federal or state level, or the
effect any future legislation or regulation will have on our business.

Changes in the use
of the average wholesale price as a benchmark from which pricing in the
pharmaceutical industry is negotiated could adversely affect the Company.

On October 4, 2006, the plaintiffs in New
England Carpenters Health Benefits Fund et al. v. First DataBank, Inc. and
McKesson Corporation, CA No. 1:05-CV-11148-PBS (United States
District Court for the District of Massachusetts) and defendant First DataBank,
Inc. (First DataBank) entered into a settlement agreement relating to First
DataBanks publication of average wholesale price (AWP). AWP is a pricing
benchmark that is widely used to calculate a portion of the reimbursement
payable to pharmacy providers for the drugs and biologicals they provide,
including under State Medicaid programs, Medicare Part D Plans and certain of
the Companys contracts with long-term care facilities. The settlement
agreement would have required First DataBank to cease publishing AWP two years
after the settlement became effective unless a competitor of First DataBank was
then publishing AWP, and would have required that First DataBank modify the
manner in which it calculates AWP for over 8,000 distinct drugs (NDCs) from
125% of the drugs wholesale acquisition cost (WAC) price established by
manufacturers to 120% of WAC until First DataBank ceased publishing same. In a
related case, District Council 37 Health and
Security Plan v. Medi-Span,CA No. 1:07-CV-10988-PBS (United States
District Court for the District of Massachusetts), in which Medi-Span is
accused of misrepresenting pharmaceutical prices by relying on and publishing
First DataBanks price list, the parties entered into a similar settlement
agreement. The Court granted preliminary approval of both agreements, but later
after hearing various objections to the proposed settlements, indicated that it
would not approve them. On May 29, 2008, the plaintiffs and First DataBank
filed a new settlement that included a reduction in the number of NDCs to which
a new mark-up over WAC would apply (20% vs. 25%) from over 8,000 to 1,356, and
removed the provision requiring that AWP no longer be published in the future.
First DataBank also agreed to contribute approximately $2 million to a
settlement fund and for legal fees. On July 15, 2008, Medi-Span and the
plaintiffs in that litigation also proposed an amended settlement agreement
under which Medi-Span agreed to reduce the mark-up over WAC (from 20% to 25%)
for only the smaller number of NDCs, the requirement that AWP not be published
in the future was removed, and Medi-Span agreed to pay $500,000 for the benefit
of the plaintiff class. First DataBank and Medi-Span, independent of these
settlements, announced that they would, of their own volition, reduce to 20%
the mark-up on all drugs with a mark-up higher than 20% and stop publishing AWP
within two years after the changes in mark-up are implemented (in the case of
First DataBank) or within two years after the settlement is finally approved
(in the case of Medi-Span). On March 17, 2009 the Court approved the proposed
settlements, with a modification by the Court requiring that the change in
mark-ups take place 180 days after the order approving the settlements is
entered. The Court entered an order approving the settlements

88

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on March 30, 2009. While several entities appealed the Courts order to
the United States Court of Appeals for the First Circuit, on September 3, 2009
the Court of Appeals upheld the settlements. First DataBank and Medi-Span implemented
the changes in AWP on September 26, 2009.

The Company has taken a number of steps to prevent
or mitigate the adverse effect on the Companys reimbursement for drugs and
biologicals which could otherwise result from these settlements. For most state
Medicaid programs reimbursing under an AWP formula, the Company is currently
being reimbursed under old rate formulas using the new AWPs published in
accordance with the settlements, resulting in lower reimbursement under these
programs. There can be no assurance  that the First DataBank and
Medi-Span settlements and associated unilateral actions by First DataBank and
Medi-Span, or actions, if any, by the Companys payors relating to AWP,
will not have a further adverse impact on the Companys results of
operations, financial position or cash flows. (See Managements Discussion
and Analysis of Results of Operation and Financial Condition 
Pharmacy Services.)

89

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ITEM 2 - UNREGISTERED SALE OF EQUITY
SECURITIES AND USE OF PROCEEDS

|    |                                                                        
|--- | -----------------------------------------------------------------------
|(c) | Purchases of
 Equity Securities by the Issuer and Affiliated Purchasers

A summary of the Companys repurchases of Omnicare, Inc. common stock
during the quarter ended September 30, 2009 is as follows (in thousands, except
per share data):

|                       |  |                                        |  |                                |       |                                                                                    |   |                                                                                                                    |   |   | 
|---------------------- |  | -------------------------------------- |  | ------------------------------ | ----- | ---------------------------------------------------------------------------------- | - | ------------------------------------------------------------------------------------------------------------------ | - | - | 
|Period                 |  | Total
 Number
 of Shares
 Purchased(a) |  | Average
 Price Paid
 per Share |       | Number
 of
 Shares
 Purchased as
 Part of
 Publicly
 Announced
 Plans or
 Programs |   | Maximum
 Number (or
 Approximate Dollar
 Value) of Shares that
 May Yet Be Purchased
 Under the Plans or
 Programs |  
|                       |  |                                        |  |                                |       |                                                                                    |   |                                                                                                                    |  
|July 1 - 31, 2009      |  | 10                                     |  | $                              | 23.91 |                                                                                    | - |                                                                                                                    | $ | - | 
|August 1 - 31, 2009    |  | 1                                      |  |                                | 23.35 |                                                                                    | - |                                                                                                                    |   | - | 
|September 1 - 30, 2009 |  | 1                                      |  |                                | 23.42 |                                                                                    | - |                                                                                                                    |   | - | 
|                       |  |                                        |  |                                |       |                                                                                    |   |                                                                                                                    |   |   | 
|Total                  |  | 12                                     |  | $                              | 23.83 |                                                                                    | - |                                                                                                                    | $ | - | 
|                       |  |                                        |  |                                |       |                                                                                    |   |                                                                                                                    |   |   | 

|    |                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | During the third quarter
 of 2009, the Company purchased 12 shares of Omnicare common stock in
 connection with its employee benefit plans, including any purchases
 associated with the vesting of restricted stock awards. These purchases were
 not made pursuant to a publicly announced repurchase plan or program.

90

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ITEM 6 - EXHIBITS

See Index of Exhibits.

91

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SIGNATURE

Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.

| |                
| | ---------------
| | Omnicare,
 Inc.
| |                
| | Registrant     

|                        |     |                           
|----------------------- | --- | --------------------------
|Date:
 November 5, 2009 | By: | /s/ David W.
 Froesel, Jr.
|                        |     |                           
|                        |     | David
 W. Froesel, Jr.    
|                        |     | Senior
 Vice President and
|                        |     | Chief
 Financial Officer  
|                        |     | (Principal Financial and  
|                        |     | Accounting
 Officer)      

---



INDEX OF EXHIBITS

|                                                                                       |  |                                                                                                                                              |  |                            
|-------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------
|Number and
 Description of Exhibit
 (Numbers Coincide with Item 601 of Regulation S-K) |  | Document
 Incorporated by Reference from a Previous Filing, Filed Herewith or Furnished
 Herewith, as Indicated Below                       
|                                                                                       |  |                                                                                                                                             
|(3.1)                                                                                  |  | Restated
 Certificate of Incorporation of Omnicare, Inc. (as amended)                                                                        |  | Form 10-K
 March 27, 2003  
|                                                                                       |  |                                                                                                                                              |  |                            
|(3.3)                                                                                  |  | Third
 Amended and Restated By-Laws of Omnicare, Inc.                                                                                        |  | Form 8-K
 December 23, 2008
|                                                                                       |  |                                                                                                                                              |  |                            
|(10.1)                                                                                 |  | Letter,
 dated July 27, 2009, to Joel F. Gemunder Regarding Temporary Salary Reduction
 Program                                              |  | Form 10-Q
 July 30, 2009   
|                                                                                       |  |                                                                                                                                              |  |                            
|(10.2)                                                                                 |  | Letter,
 dated July 27, 2009, to Patrick E. Keefe Regarding Temporary Salary Reduction
 Program                                              |  | Form 10-Q
 July 30, 2009   
|                                                                                       |  |                                                                                                                                              |  |                            
|(10.3)                                                                                 |  | Letter,
 dated July 27, 2009, to David W. Froesel, Jr. Regarding Temporary Salary
 Reduction Program                                         |  | Form 10-Q
 July 30, 2009   
|                                                                                       |  |                                                                                                                                              |  |                            
|(10.4)                                                                                 |  | Letter,
 dated July 27, 2009, to Cheryl D. Hodges Regarding Temporary Salary Reduction
 Program                                              |  | Form 10-Q
 July 30, 2009   
|                                                                                       |  |                                                                                                                                              |  |                            
|(10.5)                                                                                 |  | Letter,
 dated July 27, 2009, to Jeffrey M. Stamps Regarding Temporary Salary
 Reduction Program                                             |  | Form 10-Q
 July 30, 2009   
|                                                                                       |  |                                                                                                                                              |  |                            
|(12)                                                                                   |  | Statement of
 Computation of Ratio of Earnings to Fixed Charges                                                                              |  | Filed
 Herewith            
|                                                                                       |  |                                                                                                                                              |  |                            
|(31.1)                                                                                 |  | Rule
 13a-14(a) Certification of Chief Executive Officer of Omnicare, Inc. in
 accordance with Section 302 of the Sarbanes-Oxley Act of 2002 |  | Filed
 Herewith            
|                                                                                       |  |                                                                                                                                              |  |                            
|(31.2)                                                                                 |  | Rule
 13a-14(a) Certification of Chief Financial Officer of Omnicare, Inc. in
 accordance with Section 302 of the Sarbanes-Oxley Act of 2002 |  | Filed
 Herewith            

E-1

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|                                                                                       |  |                                                                                                                                              |  |                    
|-------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------
|Number and
 Description of Exhibit
 (Numbers Coincide with Item 601 of Regulation S-K) |  | Document
 Incorporated by Reference from a Previous Filing, Filed Herewith or Furnished
 Herewith, as Indicated Below                       
|                                                                                       |  |                                                                                                                                             
|(32.1)                                                                                 |  | Section 1350
 Certification of Chief Executive Officer of Omnicare, Inc. in accordance with
 Section 906 of the Sarbanes-Oxley Act of 2002** |  | Furnished
 Herewith
|                                                                                       |  |                                                                                                                                              |  |                    
|(32.2)                                                                                 |  | Section 1350
 Certification of Chief Financial Officer of Omnicare, Inc. in accordance with
 Section 906 of the Sarbanes-Oxley Act of 2002** |  | Furnished
 Herewith

** A signed original of this
written statement required by Section 906 has been provided to Omnicare, Inc.
and will be retained by Omnicare, Inc. and furnished to the Securities and
Exchange Commission or its staff upon request.

E-2

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