Big changes are expected at Omnicare after the departure of Joel Gemunder, 71, the longtime president and CEO, and the release of second-quarter earnings that were down markedly.
Late News: Changes set for Omnicare
Omnicare, a pharmaceutical services provider, named James Shelton, former chairman and CEO of Triad Hospitals and an Omnicare director, as interim president and CEO. In an earnings call Shelton, 57, said the search for a replacement CEO and changing Omnicare's top-down culture were priorities for the Covington, Ky.-based company's directors. “This company is not driven by the operations of this company,” he said. “It's not field-driven and it's more of a top-down process and that's had, I think, a negative impact on the company.”
Field employees lack corporate support for operations and growth, he said, and employees have seen pay cuts in the past year. Shelton said the company would reorganize to align its corporate and operational interests, which he said should not increases costs, but instead spend money more effectively. He said money currently spent on special teams to prevent losing customers should be invested to grow operations. “We've had too much corporate wealth and not enough field wealth,” he said.
Gemunder's July 31 retirement triggered a severance package worth about $130 million, according to the company's April 22 proxy statement. Cheryl Hodges, senior vice president and board secretary, also retired from the company. Omnicare's second-quarter income from continuing operations was $21.4 million on sales of $1.52 billion compared with $42 million on sales of $1.54 billion the same quarter the prior year.
Shelton said the CEO search was expected to take four to five months. A spokesman for Omnicare said that Gemunder and the company's board have been discussing succession planning for the past several years. Omnicare serves residents in long-term-care facilities and chronic-care settings.
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