Moody's lowers Omnicare

Moody's Investors Service said it downgraded Omnicare, Inc.'s corporate family and probability-of-default ratings to B1 from Ba3, its senior subordinated notes to B1 (LGD4, 54%) from Ba3 (LGD4, 53%) and convertible senior notes to B3 (LGD5, 82%) from B2 (LGD5, 82%).

The outlook is stable.

According to Moody's, the downgrade reflects expectations of persistent declines in bed count, pricing and reimbursement pressures, as well as reduced financial flexibility resulting from its share buyback program and longer-term uncertainty associated with relatively large ownership stakes by activist shareholders.

"Medicare Part D and competitive pressures continue to plague Omnicare," Diana Lee, a senior credit officer at Moody's, said in a written statement.

Competition from smaller local providers and ongoing bad debt expenses associated with Part D also are expected to hurt profitability, the agency said.

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