US Court Approves Chapter 11 Bankruptcy Plan for CVS Subsidiary Omnicare
A US bankruptcy court approved the Chapter 11 plan for CVS subsidiary Omnicare, ensuring full creditor repayment, a $250 million sale, and a major DOJ settlement.
A US bankruptcy court judge in the Northern District of Texas, Stacey J.C. Jernigan, has approved the Chapter 11 bankruptcy plan for Omnicare, a subsidiary of American pharmacy and healthcare giant CVS. The approval comes nearly a year after the company filed for bankruptcy.
Debt Restructuring and Full Creditor Repayment
An attorney representing Omnicare told Bloomberg that the plan, slated to take effect this October, will reorganize certain assets and liquidate others. Crucially, all creditors are expected to receive full repayment of their claims.
CVS originally acquired Omnicare in 2015, betting that demand for institutional pharmacy and medication management services would soar as the baby boomer generation aged. However, the acquisition quickly turned into a financial burden.
Massive Legal Penalties and Settlement
In July of last year, a federal judge ordered CVS to pay nearly $949 million in penalties and damages following a whistleblower lawsuit. The suit proved that Omnicare submitted millions of false claims to government healthcare programs, including Medicare, Medicaid, and the US military's Tricare program. Just two months later, Omnicare filed for Chapter 11 bankruptcy with billions of dollars in liabilities.
"The approved plan outlines the roadmap out of crisis, lifting future liability from CVS's shoulders through a structured sale and a settlement with the Department of Justice."
At the core of the restructuring is the sale of Omnicare to GenieRx Holdings—a partnership between private equity firm Milrose Capital and healthcare investment firm Integro Asset Management—for $250 million. Furthermore, the final plan includes a settlement with the US Department of Justice (DOJ), under which CVS agreed to pay $130 million within two weeks of the final agreement and an additional $310 million by the end of March 2028.
