OMNICARE INC, 424B1, 1996-03-21

OMNICARE INC
424B1, 1996-03-21
DRUG STORES AND PROPRIETARY STORES

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<PAGE> 1
Filed Pursuant
to Rule 424(b)(1);
Registration
No. 333-01203

5,000,000 Shares

LOGO
Common Stock
($1 par value)
------------------

Of the 5,000,000 shares being offered, 4,000,000 shares are initially being
offered in the United States and Canada (the "U.S. Shares") by the U.S.
Underwriters (the "U.S. Offering") and 1,000,000 shares are initially
being concurrently offered outside the United States and Canada (the
"International Shares") by the Managers (the "International
Offering" and, together with the U.S. Offering, the
"Offerings"). The offering price and underwriting discounts
and commissions of the U.S. Offering and the International
Offering are identical. On March 20, 1996, the reported
last sale price of the Common Stock on the New York
Stock Exchange Composite Tape was $51 7/8 per
share.
------------------

FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH
AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" BEGINNING ON PAGE 5.

------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
Underwriting
Discounts
Price to and Proceeds to
Public Commissions Company(1)
------------ ------------ ------------
<S> <C> <C> <C>
Per Share.................................... $51.875 $1.87 $50.005
Total(2)..................................... $259,375,000 $9,350,000 $250,025,000
</TABLE>

(1) Before deduction of expenses payable by the Company estimated at $510,000.

(2) The Company has granted the U.S. Underwriters and the Managers an option,
exercisable by CS First Boston Corporation for 30 days from the date of this
Prospectus, to purchase a maximum of 750,000 additional shares solely to
cover over-allotment of shares. If the option is exercised in full, the
total Price to Public will be $298,281,250, Underwriting Discounts and
Commissions will be $10,752,500 and Proceeds to Company will be
$287,528,750. See "Underwriting."

------------------

The U.S. Shares are offered by the several U.S. Underwriters when, as and
if issued by the Company, delivered to and accepted by the U.S. Underwriters and
subject to their right to reject orders in whole or in part. It is expected that
the U.S. Shares will be ready for delivery on or about March 26, 1996.

CS First Boston
Montgomery Securities
William Blair & Company
PaineWebber Incorporated
Smith Barney Inc.

The date of this Prospectus is March 21, 1996.

<PAGE> 2

IN CONNECTION WITH THE OFFERINGS, CS FIRST BOSTON CORPORATION ON BEHALF OF
THE U.S. UNDERWRITERS AND THE MANAGERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS
MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

DURING THE OFFERINGS, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE COMMON STOCK PURSUANT TO EXEMPTIONS FROM RULES 10b-6,
10b-7 AND 10b-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

AVAILABLE INFORMATION

Omnicare, Inc. ("Omnicare" or the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934 (the "Exchange
Act"), and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
These reports, proxy statements and other information may be inspected and
copied at the public reference facilities maintained by the commission at its
principal offices at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's regional offices located at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of such materials also can
be obtained from the Public Reference Section of the Commission at prescribed
rates at the principal offices of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. The Common Stock is listed on the New York
Stock Exchange (Symbol: OCR) and reports and information concerning the Company
can be inspected at such exchange, 20 Broad Street, New York, New York 10005.

The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act of 1933 (the "Act") with respect to the shares of
Common Stock offered hereby (including all amendments and supplements thereto,
the "Registration Statement"). This Prospectus, which forms a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement and the exhibits filed therewith, certain parts of which
have been omitted in accordance with the rules and regulations of the
Commission. Statements contained herein concerning the provisions of such
documents are not necessarily complete and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference. The Registration Statement and the exhibits thereto
can be inspected and copied at the public reference facilities and regional
offices referred to above.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company hereby incorporates into this Prospectus by reference the
following documents heretofore filed with the Commission pursuant to the
Exchange Act: (i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, as amended by the Company's Form 10-K/A-1 filed August 23,
1995; (ii) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995, June 30, 1995, and September 30, 1995; and (iii) the Company's
Current Reports on Form 8-K filed on August 23, 1995 and February 26, 1996.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
termination of the Offerings shall be deemed to be incorporated in this
Prospectus by reference and to be part hereof from the respective dates of the
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any subsequently filed document which also is,
or is deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute part of this Prospectus.

The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon the written or oral
request of any such person, a copy of any and all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents which are not specifically incorporated by
reference into such documents. Requests for such copies should be directed to
Cheryl D. Hodges, Secretary, Omnicare, Inc., 2800 Chemed Center, 255 East Fifth
Street, Cincinnati, Ohio 45202-4728, or telephone (513) 762-6666.

2
<PAGE> 3

PROSPECTUS SUMMARY

The following information is qualified in its entirety by the more detailed
information and financial data appearing elsewhere or incorporated by reference
in this Prospectus. Except as otherwise noted, the information in this
Prospectus (i) assumes no exercise of the over-allotment option granted to the
U.S. Underwriters and Managers and (ii) gives effect for all periods to a
two-for-one stock split distributed on June 21, 1995. See "Underwriting."

THE COMPANY

General. Omnicare is a leading independent provider of pharmacy services
to long-term care institutions such as nursing homes, retirement centers and
other institutional health care facilities. The Company purchases, repackages
and dispenses pharmaceuticals, both prescription and non-prescription, and
provides computerized medical recordkeeping and third-party billing for patients
in such facilities. The Company also provides consultant pharmacists services,
including evaluating monthly patient drug therapy, monitoring the control,
distribution and administration of drugs within the nursing facility and
assisting in compliance with state and federal regulations. In addition, the
Company provides ancillary services, such as infusion therapy, and distributes
medical supplies to its client nursing facilities. The Company provides these
services to approximately 225,000 residents in approximately 2,600 nursing homes
and other long-term care facilities principally in the states of Alabama,
Connecticut, Georgia, Illinois, Indiana, Kansas, Kentucky, Massachusetts,
Michigan, Missouri, New York, North Carolina, Ohio, Oklahoma, Oregon, South
Carolina, Virginia, Washington and West Virginia.

Institutional Pharmacy Industry. The U.S. market for pharmacy services in
long-term care facilities is estimated by the Company to total approximately $4
billion (including consulting services and related supplies) and is highly
fragmented. The Company believes that the long-term care institutional pharmacy
industry will benefit from the rapid growth of the elderly population in the
U.S., the continued utilization of pharmaceuticals as the most cost-efficient
means of treating chronic ailments which afflict the elderly and the trend
toward delivering care in the lowest cost setting. Moreover, nursing homes
increasingly seek specialized pharmacy providers with trained consultant
pharmacists and computerized documentation programs to help ensure compliance
with increasing federal and state regulatory requirements.

Business Strategy for Growth. Recognizing these factors, along with the
fragmented nature of the long-term care pharmacy industry, the Company initiated
its pharmacy business in December 1988 following the acquisition of its first
institutional pharmacy provider. Since that time, the Company has been building
its institutional pharmacy business into a national organization dedicated to
serving the long-term care market in a cost-effective manner. The Company's
strategy combines an acquisition program with the development and support of
internal growth in the businesses acquired. Through December 31, 1995, the
Company made 33 acquisitions in the institutional pharmacy market for a total
capital investment of approximately $290 million. Since December 31, 1995, the
Company has completed four additional acquisitions for a total capital
investment of approximately $12 million. In addition, the Company has entered
into letters of intent for the acquisition of two additional institutional
pharmacy businesses. If such transactions are completed, the aggregate cost to
the Company is currently estimated to be approximately $41 million. The Company
also seeks to achieve strong internal growth through increased market
penetration, expansion of services and improved operating efficiencies. The
total number of nursing home residents served by the Company on February 23,
1996, was approximately 225,000, up 47% since February 23, 1995. This increase
reflects acquisitions as well as internal growth.

3
<PAGE> 4

its proprietary formulary, the OMNICARE GERIATRIC PHARMACEUTICAL CARE
GUIDELINES(TM) (the "OMNICARE GUIDELINES"). The Company believes that the
OMNICARE GUIDELINES is the first clinically based formulary for elderly
residents of long-term care institutions. The Company believes that since its
implementation the OMNICARE GUIDELINES has generated significant cost savings
for payors and provided improved clinical outcomes for the nursing facility
residents served.

The Company's executive offices are located at 2800 Chemed Center, 255 East
Fifth Street, Cincinnati, Ohio 45202-4728, and its telephone number is (513)
762-6666.

THE OFFERINGS

<TABLE>
<S> <C> <C>
Common Stock Offered
U.S. Offering................... 4,000,000 shares
International Offering.......... 1,000,000 shares
Total........................... 5,000,000 shares
Common Stock Outstanding
Pre-Offerings................... 26,573,990 shares
Post-Offerings.................. 31,573,990 shares
Use of Proceeds...................... The net proceeds of the Offerings will be used to
fund
business acquisitions and for general corporate
purposes. See "Use of Proceeds."
NYSE Symbol.......................... OCR
</TABLE>

4
<PAGE> 5

RISK FACTORS

Prospective investors should carefully consider the following matters,
together with the other information contained in this Prospectus, in evaluating
the Company and its business before making an investment decision with respect
to the Common Stock offered hereby.

Acquisition Program. In accordance with its strategy for growth, which is
to build its institutional pharmacy business into a national organization
dedicated to serving the long-term care market, Omnicare is presently engaged in
a geographic expansion program which incorporates an active acquisition program
in the long-term care pharmacy industry. The success of Omnicare's acquisition
program and of its underlying growth strategy will depend, among other things,
on the continued availability of suitable acquisition candidates. Although there
presently are numerous acquisition candidates nationwide and Omnicare to date
has not had difficulty in identifying suitable acquisition candidates, there can
be no assurance that Omnicare will consummate any additional acquisitions due to
the potential for increased competition for acquisitions from other firms
seeking to enter this market or to enhance their institutional pharmacy
businesses.

The Company's strategy also contemplates the continued internal growth of
the acquired businesses. Any business acquisition, however, involves inherent
uncertainties, such as the effect on the acquired businesses of integration into
a larger organization and the availability of management resources to oversee
the operations of acquired businesses. Even though an acquired business may have
enjoyed excellent growth as an independent company prior to the acquisition,
there can be no assurance that such growth would continue thereafter.

Regulation and Reimbursement. Omnicare's pharmacy business is subject to
federal, state and local regulations, and its pharmacies are required to be
licensed in the states in which they are located. The failure to obtain or renew
any required regulatory approvals or licenses could adversely affect the
continued operation of Omnicare's business. In addition, the long-term care
facilities that contract for Omnicare's services are also subject to federal,
state and local regulations and are required to be licensed in the states in
which they are located. The failure by these institutions to comply with such
regulations or to obtain or renew any required licenses could result in the loss
of the Company's ability to provide pharmacy services to their residents. The
Company is also subject to federal and state laws that prohibit certain direct
and indirect payments between health care providers that are intended, among
other things, to induce or encourage the referral of patients to, or the
recommendation of, a particular provider of items or services. Violation of
these laws can result in loss of licensure, civil and criminal penalties and
exclusion from the Medicare and Medicaid programs.

Approximately one-half of Omnicare's pharmacy services billings are
reimbursed by government sponsored programs, largely Medicaid and to a lesser
extent Medicare, and the remainder is paid or reimbursed by individual patients,
long-term care facilities and other third party payers, including private
insurers. Medicaid and Medicare are highly regulated. The failure, even if
inadvertent, of Omnicare and/or its client institutions to comply with
applicable reimbursement regulations could adversely affect Omnicare's business.
Additionally, changes in such reimbursement programs or in regulations related
thereto, such as reductions in the allowable reimbursement levels, modifications
in the timing or processing of payments and other changes intended to limit or
decrease the growth of Medicaid and Medicare expenditures, could adversely
affect the Company's business. See "Business--Government Regulation."

Health Care Reform and Federal Budget Legislation. In recent years, a
number of legislative proposals have been introduced in Congress that would
effect major changes in the health care system, either nationally or at the
state level. Currently, Congress is considering various initiatives to establish
a framework for balancing the federal budget. While President Clinton vetoed the
budget bill passed by Congress in November 1995, many of the budget reduction
proposals may still become part of final budget reconciliation legislation. The
bill passed by Congress would have resulted in significant reductions in
payments to providers under the Medicare program and a major restructuring of
the current Medicaid program. With respect to Medicare, proposals included
establishment of a prospective payment system for skilled nursing facilities
("SNFs"); limits on payments to Medicare SNFs for certain non-routine services,
including, among others, prescription drugs, diagnostic services, and physical
therapy and other rehabilitative services; requiring consolidated billing by a
SNF for all Part A and B claims for SNF residents; and other limits on
reimbursement of costs for Medicare SNF services.

5
<PAGE> 6

The budget legislation would have also replaced the current Medicaid
program with a new "MediGrant" program involving federal block grants to states
for medical assistance provided to low income individuals. While the states
would be subject to certain federal requirements, states would also have broad
flexibility to establish coverage, eligibility and payment standards. Given the
fixed federal funds that would be available under this Medicaid reform proposal,
there can be no assurance that, if enacted, this or any Medicaid reform proposal
would not have a material adverse effect on the business of Omnicare. While
budget negotiations are continuing, the Company cannot predict when, or whether,
such legislation will be enacted. In addition, several states are considering or
have enacted various health care reforms, including reforms through Medicaid
managed care demonstration projects. Several states in which the Company
operates have applied for, or received, approval from the Department of Health
and Human Services ("HHS") for waivers from certain Medicaid requirements, which
are generally required for such managed care projects. Although these
demonstration projects generally exempt institutional care, including nursing
facility and institutional pharmacy services, no assurances can be given that
these waiver projects ultimately will not change the reimbursement system for
long-term care, including pharmacy services, from fee-for-service to managed
care negotiated or capitated rates. It is not possible to predict the effect of
recent reforms of the health care system on Omnicare's business or the prospects
for or effects of additional reforms. See "Business--Government Regulation."

USE OF PROCEEDS

The net proceeds to the Company from the Offerings are estimated to be
approximately $249,515,000 (or approximately $287,018,750 if the over-allotment
option granted to the U.S. Underwriters and the Managers is exercised in full)
after deduction of underwriting discounts and estimated offering expenses. Such
net proceeds will be used to fund business acquisitions and for general
corporate purposes. Pending application, the net proceeds will be invested in
interest-bearing securities with maturity dates of less than one year or money
market funds.

Omnicare is engaged in an ongoing program of acquiring institutional
pharmacy businesses in selected markets throughout the United States. The
Company is in various stages of discussions with potential acquisition
candidates and has entered into letters of intent for the acquisition of two
institutional pharmacy businesses. There can be no assurance that these or any
other potential acquisitions in fact will be consummated.

6
<PAGE> 7

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

The Common Stock is traded on the New York Stock Exchange under the symbol
OCR. The table below sets forth the high and low closing prices of the Common
Stock as reported on the New York Stock Exchange Composite Tape as reported in
The Wall Street Journal and quarterly cash dividends declared per share of
Common Stock during the periods indicated. For a recent closing price of the
Common Stock, see the cover page of this Prospectus.

<TABLE>
<CAPTION>
PRICE RANGE CASH
----------------------- DIVIDENDS
LOW HIGH DECLARED
------- ------- ---------
<S> <C> <C> <C>
1993
First Quarter ended March 31, 1993................ $ 8.69 $ 15.50 $.020
Second Quarter ended June 30, 1993................ 7.00 9.69 .020
Third Quarter ended September 30, 1993............ 9.00 12.07 .020
Fourth Quarter ended December 31, 1993............ 11.07 16.07 .020
1994
First Quarter ended March 31, 1994................ 14.50 17.50 .0225
Second Quarter ended June 30, 1994................ 13.50 17.07 .0225
Third Quarter ended September 30, 1994............ 16.82 20.07 .0225
Fourth Quarter ended December 31, 1994............ 18.25 22.56 .0225
1995
First Quarter ended March 31, 1995................ 20.63 26.69 .025
Second Quarter ended June 30, 1995................ 22.44 28.13 .025
Third Quarter ended September 30, 1995............ 26.88 39.00 .025
Fourth Quarter ended December 31, 1995............ 34.13 44.75 .025
1996
First Quarter (through March 20, 1996)............ 39.38 54.38 .030
</TABLE>

The Company has paid quarterly dividends since March 2, 1989. On February
7, 1996, Omnicare's Board of Directors elected to increase the quarterly cash
dividend by 20% to $.03 per share. Future dividend policy will depend on the
Company's earnings, capital requirements, financial condition and other factors
considered relevant by the Company's Board of Directors. As of January 31, 1996,
there were 1,827 holders of record of the Common Stock.

7
<PAGE> 8

CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company at December 31, 1995, and as adjusted to reflect the issuance and sale
by the Company of 5,000,000 shares of Common Stock in the Offerings.

<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------------
AS
ACTUAL ADJUSTED
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Current portion of long-term debt................................ $ 1,051 $ 1,051
-------- --------
Long-term obligations, net of current portion:
Revolving Bank Loan (a) -- --
5 3/4% Convertible Subordinated Notes due 2003.............. 80,445 80,445
Other (primarily ESOP loan guaranty)........................ 2,247 2,247
-------- --------
Total long-term obligations............................ 82,692 82,692
-------- --------
Stockholders' equity:
Common Stock, $1 par value, 44,000,000 shares authorized,
26,344,588 shares issued as of December 31, 1995 (b), and
31,344,588 shares as adjusted............................. 26,345 31,345
Additional paid-in capital.................................. 99,686 344,201
Retained earnings........................................... 93,598 93,598
Treasury stock -- at cost (24,268 shares)........................ (482) (482)
Deferred Compensation and ESOP................................... (4,386) (4,386)
-------- --------
Total stockholders' equity.................................. 214,761 464,276
-------- --------
Total capitalization........................................ $298,504 $548,019
======== ========
</TABLE>

- ---------------

(a) The Company has a $135 million unsecured revolving credit agreement with six
banks that expires on March 31, 2000. The Company is required to pay a
commitment fee on the unused portion of such facility ranging from 10 to 25
basis points, based upon the Company's level of performance under certain
debt covenants. No amounts were outstanding at December 31, 1995 under the
credit facility.

(b) Excludes 1,636,886 shares of Common Stock issuable upon the exercise of
outstanding stock options and stock warrants as of December 31, 1995.

8
<PAGE> 9

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data as of and for each of the years in
the three-year period ended December 31, 1995, have been derived from and should
be read in conjunction with the related consolidated financial statements and
notes thereto contained in the Company's Current Report on Form 8-K, filed
February 26, 1996 and incorporated herein by reference. The information below
should also be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" herein.

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
-------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
INCOME STATEMENT DATA: (a)
Sales............................................ $399,636 $307,655 $223,129
Cost of sales.................................... 287,715 227,533 165,714
-------- -------- --------
Gross profit..................................... 111,921 80,122 57,415
Selling, general and administrative expenses..... 66,970 50,111 38,243
Acquisition expenses - pooling of interests...... 1,292(b) 2,380(c) --
-------- -------- --------
Operating income................................. $ 43,659 $ 27,631 $ 19,172
======== ======== ========
Income before accounting change.................. $ 24,760(b) $ 13,531(c) $ 10,970(d)
Accounting change................................ -- -- 280(e)
-------- -------- --------
Net income....................................... $ 24,760(b) $ 13,531(c) $ 11,250(d)
======== ======== ========
Earnings per share:
Primary:
Income before accounting change........ $ .94(b) $ .60(c) $ .52(d)
Accounting change...................... -- -- .01(e)
-------- -------- --------
Net income............................. $ .94(b) $ .60(c) $ .53(d)
======== ======== ========
Fully Diluted............................... $ .86(b) $ .59(c) $ .53(d)
======== ======== ========
Dividends per share.............................. $ .10 $ .09 $ .08
======== ======== ========
Weighted average number of common shares
outstanding
Primary..................................... 26,198 22,479 21,253
Fully Diluted............................... 32,642 28,429 22,861
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31, 1995
-------------------------
AS
ACTUAL ADJUSTED
-------- --------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital.................................. $106,384 $355,899
Total assets..................................... 360,836 610,351
Long-term debt................................... 82,692 82,692
Stockholders' equity............................. 214,761 464,276
</TABLE>

- ---------------

(a) Includes operating results for all periods of Evergreen Pharmaceutical, Inc.
and an affiliated company (collectively, "Evergreen") and Specialized
Pharmacy Services, Inc. ("Specialized"), which were acquired on September
30, 1994 and June 30, 1995, respectively, in pooling of interests
transactions. As required by the accounting rules for pooling of interests
transactions, the expenses associated with these transactions were charged
to operating income upon completion of the acquisitions. See footnotes (b)
and (c).

(b) Includes pooling of interests expenses of $1,292,000 relating to the
Specialized transaction. Such expenses, on an aftertax basis, were $989,000,
or $.04 per primary share ($.03 on a fully diluted basis). Net income,
excluding pooling of interests expenses, for the year ended December 31,
1995 was $25,749,000, or $.98 per primary share ($.89 on a fully diluted
basis).

(c) Includes pooling of interests expenses of $2,380,000 relating to the
Evergreen transaction. Such expenses, on an aftertax basis, were $1,860,000,
or $.08 per primary share ($.07 on a fully diluted basis). Net income,
excluding pooling of interests expenses, for the year ended December 31,
1994 was $15,391,000, or $.68 per primary share ($.66 on a fully diluted
basis).

(d) Includes a one-time cumulative tax benefit of $450,000, or $.02 per share,
arising from a change in tax laws enacted in August 1993 relating to
amortization of intangibles.

(e) Aftertax gain representing the cumulative effect of a change in accounting
for income taxes.

9
<PAGE> 10

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

On June 30, 1995, the Company issued 403,185 shares of its Common Stock for
all the outstanding common stock of Specialized. Specialized is a leading
provider of institutional pharmacy services for long-term care facilities in
Michigan with $32 million in sales for the year ended December 31, 1994. On
September 30, 1994, the Company issued 2,222,644 shares of its Common Stock for
all the outstanding common stock of Evergreen. Evergreen had $34 million in
sales for the year ended December 31, 1993. These acquisitions were accounted
for as poolings of interests and, accordingly, the Company's consolidated
financial statements have been restated for all periods to include the results
of operations, financial position and cash flow of Specialized and Evergreen. In
accordance with accounting rules for pooling of interests transactions, charges
to operating income for acquisition-related expenses were recorded upon
completion of these acquisitions. These pooling of interests expenses totaled
$1,292,000, or $989,000 after taxes, for the Specialized acquisition and
$2,380,000, or $1,860,000 after taxes, for the Evergreen acquisition.

The following table presents the Company's results of operations excluding
certain unusual items of income and expense, which are comprised of pooling of
interests expenses, the cumulative effect of an accounting change and a one-time
favorable tax adjustment (in thousands except per share amounts):

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1995 1994 1993
-------- -------- -------
<S> <C> <C> <C>
Net income, as reported............................... $24,760 $13,531 $11,250
Acquisition expenses-pooling of interests, net of
taxes............................................... 989 1,860 --
Cumulative effect of accounting change................ -- -- (280)
Favorable tax adjustment.............................. -- -- (450)
------- ------- -------
Pro forma net income.................................. $25,749 $15,391 $10,520
======= ======= =======
Pro forma earnings per share:
Net income, as reported............................... $.94 $.60 $ .53
Acquisition expenses-pooling of interests, net of
taxes............................................... .04 .08 --
Cumulative effect of accounting change................ -- -- (.01)
Favorable tax adjustment.............................. -- -- (.02)
------- ------- -------
Primary............................................. $.98 $.68 $ .50
======= ======= =======
Fully diluted....................................... $.89 $.66 $ .50
======= ======= =======
</TABLE>

Excluding the impact of charges taken for acquisitions accounted for as
pooling of interests transactions, net income for the year ended December 31,
1995 increased 67% over net income earned in 1994. Primary earnings per share,
on this basis, for the full year 1995 increased 44% over 1994, and fully diluted
earnings per share increased 35%.

Pro forma net income for the year ended December 31, 1994 increased 46%
over 1993. Primary earnings per share, on a pro forma basis, increased 36% over
1993, and fully diluted earnings per share increased 32%. The 1994 pro forma
adjustment consisted of the Evergreen pooling of interests expenses. The 1993
pro forma adjustments were comprised of $450,000 arising from a change in tax
laws related to the amortization of intangibles and $280,000 related to the
change in accounting for income taxes.

Net income as reported for 1995 was $24,760,000, or $.94 per primary share
($.86 fully diluted), while 1994 net income was $13,531,000, or $.60 per primary
share ($.59 fully diluted), and 1993 net income was $11,250,000, or $.53 per
primary and fully diluted share.

10
<PAGE> 11

Sales for 1995 were 30% higher than in 1994. For 1994, sales were 38%
higher than in 1993. Omnicare entered the long-term pharmacy business with its
first acquisition of an institutional pharmacy provider in December 1988.
Omnicare has completed a total of thirty-three institutional pharmacy provider
acquisitions -- one in 1988, two in 1990, three in 1991, seven in 1992, four in
1993, seven in 1994 and nine in 1995. Except for the acquisitions of
Specialized, Evergreen and Lo-Med Prescription Services, Inc. ("Lo-Med"),
purchase accounting was used to record the acquisitions. The acquisitions of
Specialized and Evergreen are included in the financial results of all years
presented as these acquisitions were accounted for as poolings of interests. The
acquisition of Lo-Med in 1994 was also accounted for as a pooling of interests;
however, its operations were immaterial to the Company's results prior to 1994
and, therefore, prior year financial statements were not restated for this
business combination. Sales increases were caused by acquisitions, coupled with
the internal growth of the businesses previously acquired.

Increases in gross profit over the three-year period have generally
remained in line with or exceeded increases in sales, with margins of 25.7%,
26.0% and 28.0% for 1993, 1994 and 1995, respectively. Such increases were
caused primarily by changes in sales mix and the Company's increasing purchasing
leverage. Additionally, after excluding the aforementioned pro forma
adjustments, operating income as a percent of sales has increased from 8.6% to
9.8% to 11.2% in 1993, 1994 and 1995, respectively, reflecting the increased
gross profit margins.

NON-OPERATING INCOME AND EXPENSE

Investment income increased by 120% to $3,475,000 in 1995, as the Company
received the full-year benefit of invested cash during 1995 due to receipt of
$59.2 million of cash proceeds from the November 1994 stock offering. Investment
income increased by 149% to $1,580,000 in 1994 from $635,000 in 1993 due to the
increase in invested cash during 1994 resulting from the cash proceeds from the
October 1993 offering of $80.5 million in 5.75% Convertible Subordinated Notes
due 2003 (the "Notes").

Interest expense decreased by 9% from $6,533,000 in 1994 to $5,954,000 in
1995, due to reductions in outstanding debt associated with Specialized and
Evergreen prior to acquisition by the Company. Interest expense increased by
$3,709,000 in 1994 as a result of a full year's interest on the Notes as
compared to only three months in 1993.

INCOME TAXES

The Company's effective tax rates for 1993, 1994 and 1995 were 35.4%, 40.3%
and 39.9%, respectively. The 1995 and 1994 effective tax rates are slightly
higher than statutory rates due to the nondeductibility of certain acquisition
costs. As a result of the Omnibus Budget Reconciliation Act of 1993, the Company
was permitted to deduct from taxable income amortization of intangibles arising
from certain business acquisitions retroactive to July 1991. Accordingly, the
Company's effective tax rate in 1993 was favorably impacted by the tax benefit
of amortization of intangibles.

LIQUIDITY AND CAPITAL RESOURCES

In November 1994, the Company completed a public offering of 3,247,482
shares of Common Stock, resulting in net proceeds of $59,211,000.

In line with Omnicare's plan to invest in the long-term pharmacy market,
acquisitions completed during 1995 required an aggregate capital investment of
approximately $63.7 million. Such acquisitions were financed with cash and cash
equivalents on hand as well as Common Stock of the Company. Shares of Common
Stock with a market value of approximately $22.7 million (879,919 shares) were
issued in connection with 1995 acquisitions. Additionally, $10.6 million of
other acquisition-related payments were made during 1995 related to businesses
acquired prior to 1995. Additional amounts totaling $11.2 million may become
payable through the year 2000 pursuant to the terms of various acquisition
agreements. Omnicare ended the year with $40,137,000 in cash and cash
equivalents and marketable securities as compared to $79,798,000 at year-end
1994. At December 31, 1995, the Company had invested $32,522,000 in U.S.
Treasury-backed repurchase agreements which represent investments under
agreements to resell, usually overnight, but in no case greater

11
<PAGE> 12

than 30 days. The Company has a collateralized interest in the underlying
securities which are segregated in the accounts of the counterparty bank.
Management believes these investments do not create any exposure to the
Company's liquidity. Omnicare's current ratio decreased to 2.9 to 1 at December
31, 1995 from 3.8 to 1 at December 31, 1994, and working capital at December 31,
1995 decreased to $106,384,000 from year-end 1994 working capital of
$125,550,000. This decrease is attributable to the cash outlays required for the
Company's 1995 acquisitions net of cash generated from 1995 operations. Book
value per common share increased to $8.16 per share as of December 31, 1995 from
$7.01 per share at the prior year-end, primarily attributable to current year
net income, less dividends paid.

On February 7, 1996, Omnicare's Board of Directors elected to increase the
quarterly cash dividend by 20% to 3 cents per share for an indicated annual rate
of 12 cents per share for 1996.

In February 1995, the Company entered into an agreement with a consortium
of six banks for a five-year $135 million revolving credit facility, replacing
the prior $50 million facility. Interest rates and commitment fees for this new
facility are based on the Company's level of performance under certain debt
covenants. No amounts were outstanding at December 31, 1995 under the credit
facility.

The Company believes that its sources of liquidity and capital are adequate
for its operating needs. There are no material commitments outstanding, other
than additional acquisition-related payments to be made. The Company believes
that the net proceeds of the Offerings, together with amounts available under
its credit facility, are sufficient to fund its current acquisition program.

12
<PAGE> 13

BUSINESS

The Company believes that the changes that have occurred in the health care
industry in recent years have emphasized the objective of providing high quality
services at the lowest cost. As a result of its growth strategy, the Company has
addressed this objective, developing the critical mass necessary for realizing
economies of scale, establishing a national market position, becoming a low cost
provider and positioning the Company to address the needs of the health care
industry as regulatory changes take place. For example, recognizing that a drug
formulary should not only recommend lower cost alternatives for frequently
prescribed medications, but also address the clinical effectiveness of drug
therapy, in June 1994 the Company introduced its proprietary formulary, the
OMNICARE GUIDELINES. The Company believes that the OMNICARE GUIDELINES is the
first clinically based formulary for elderly residents of long-term care
institutions. The Company believes that since its implementation the OMNICARE
GUIDELINES has generated significant cost savings for payors and provided
improved clinical outcomes for the nursing facility residents served.

13
<PAGE> 14

GOVERNMENT REGULATION

Institutional pharmacies, as well as the long-term care facilities they
serve, are subject to extensive federal, state and local regulation. These
regulations cover required qualifications, day-to-day operations, reimbursement
and the documentation of activities. Omnicare continuously monitors the effects
of regulatory activity on its operations.

Licensure, Certification and Regulation. States generally require that
companies operating a pharmacy within the state be licensed by the state board
of pharmacy. The Company currently has pharmacy licenses in each of the 19
states in which it operates a pharmacy. In addition, the Company currently
delivers prescription products from its licensed pharmacies to 5 states in which
the Company does not operate a pharmacy. These states regulate out-of-state
pharmacies, however, as a condition to the delivery of prescription products to
patients in such states. Omnicare's pharmacies hold the requisite licenses
applicable in these states. In addition, Omnicare's pharmacies are registered
with the appropriate state and federal authorities pursuant to statutes
governing the regulation of controlled substances.

Client nursing facilities are also separately required to be licensed in
the states in which they operate and, if serving Medicare or Medicaid patients,
must be certified to be in compliance with applicable program participation
requirements. Client nursing facilities are also subject to the nursing home
reforms of the Omnibus Budget Reconciliation Act of 1987, which imposed strict
compliance standards relating to quality of care for nursing home operations,
including vastly increased documentation and reporting requirements. In
addition, pharmacists, nurses and other health care professionals who provide
services on the Company's behalf are in most cases required to obtain and
maintain professional licenses and are subject to state regulation regarding
professional standards of conduct.

Federal and State Laws Affecting the Repacking, Labelling, and Interstate
Shipping of Drugs. Federal and state laws impose certain repackaging,
labelling, and package insert requirements on pharmacies that repackage drugs
for distribution beyond the regular practice of dispensing or selling drugs
directly to patients at retail. A drug repackager must register with the Food
and Drug Administration. The Company holds all required registrations and
licenses, and its repackaging operations are in compliance with applicable state
and federal requirements.

Medicare and Medicaid. The nursing home pharmacy business has long
operated under regulatory and cost containment pressures from state and federal
legislation primarily affecting Medicaid and, to a lesser extent, Medicare.

As is the case for nursing home services generally, Omnicare receives
reimbursement from the Medicaid and Medicare programs, directly from individual
residents (private pay), and from other payors such as third-party insurers. The
Company believes that its reimbursement mix is in line with nursing home
expenditures nationally. For the year ended December 31, 1995, Omnicare's payor
mix was approximately as follows: 53% private pay and nursing homes, 42%
Medicaid, 4% Medicare and 1% insurance and other private sources.

For those patients who are not covered by government-sponsored programs or
private insurance, Omnicare generally directly bills the patient or the
patient's responsible party on a monthly basis. Depending upon local market
prices, Omnicare may alternatively bill private patients through the nursing
facility. Pricing for private pay patients is based on prevailing regional
market rates or "usual and customary" charges.

The Medicaid program is a cooperative federal-state program designed to
enable states to provide medical assistance to aged, blind, or disabled
individuals, or members of families with dependent children whose income and
resources are insufficient to meet the costs of necessary medical services.
State participation in the Medicaid program is voluntary. To become eligible to
receive federal funds, a state must submit a Medicaid "state plan" to the
Secretary of the Department of Health and Human Services ("HHS") for approval.
The federal Medicaid statute specifies a variety of requirements which the state
plan must meet, including requirements relating to eligibility, coverage of
services, payment and administration.

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<PAGE> 15

Federal law and regulations contain a variety of requirements relating to
the furnishing of prescription drugs under Medicaid. First, states are given
broad authority, subject to certain standards, to limit or specify conditions to
the coverage of particular drugs.

Second, federal Medicaid law establishes standards affecting pharmacy
practice. These standards include general requirements relating to patient
counseling and drug utilization review and more specific requirements for
nursing facilities relating to drug regimen reviews for Medicaid patients in
such facilities. Recent regulations clarify that, under federal law, a pharmacy
is not required to meet the general standards for drugs dispensed to nursing
facility residents if the nursing facility complies with the drug regimen review
requirements. However, the regulations indicate that states may nevertheless
require pharmacies to comply with the general standards, regardless of whether
the nursing facility satisfies the drug regimen review requirement, and the
states in which the Company operates currently do require its pharmacies to
comply therewith.

Third, federal regulations impose certain requirements relating to
reimbursement for prescription drugs furnished to Medicaid patients.

In addition to requirements imposed by federal law, states have substantial
discretion to determine administrative, coverage, eligibility and payment
policies under their state Medicaid programs which may affect the Company's
operations. For example, some states have enacted "freedom of choice"
requirements which may prohibit a nursing facility from requiring its residents
to purchase pharmacy or other ancillary medical services or supplies from
particular providers that deal with the nursing home. Such limitations may
increase the competition which the Company faces in providing services to
nursing facility patients.

The Medicare program is a federally funded and administered health
insurance program for individuals age 65 and over or who are disabled. The
Medicare program consists of two parts: Part A, which covers, among other
things, inpatient hospital, skilled nursing facility, home health care and
certain other types of health care services; and Medicare Part B, which covers
physicians' services, outpatient services, and certain items and services
provided by medical suppliers. Medicare Part B also covers a limited number of
specifically designated prescription drugs. The Medicare program establishes
certain requirements for participation of providers and suppliers in the
Medicare program. Pharmacies are not subject to such certification requirements.
Skilled nursing facilities and suppliers of medical equipment and supplies,
however, are subject to specified standards. Failure to comply with these
requirements and standards may adversely affect an entity's ability to
participate in the Medicare program and receive reimbursement for services
provided to Medicare beneficiaries.

The Medicare and Medicaid programs are subject to statutory and regulatory
changes, retroactive and prospective rate adjustments, administrative rulings,
and freezes and funding reductions, all of which may adversely affect the
Company's business. There can be no assurance that payments for pharmaceutical
supplies and services under governmental reimbursement programs will continue to
be based on the current methodology or remain comparable to present levels. In
this regard, the Company may be subject to rate reductions as a result of
federal budgetary legislation related to the Medicare and Medicaid programs. In
addition, various state Medicaid programs periodically experience budgetary
shortfalls which may result in Medicaid payment delays to the Company. To date,
the Company has not experienced any material adverse effect due to any such
budgetary shortfall.

In addition, the failure, even if inadvertent, of Omnicare and/or its
client institutions to comply with applicable reimbursement regulations could
adversely affect Omnicare's business. Additionally, changes in such
reimbursement programs or in regulations related thereto, such as reductions in
the allowable reimbursement levels, modifications in the timing or processing of
payments and other changes intended to limit or decrease the growth of Medicaid
and Medicare expenditures, could adversely affect the Company's business.

Referral Restrictions. The Company is subject to federal and state laws
which govern financial and other arrangements between health care providers.
These laws include the federal anti-kickback statute, which was originally
enacted in 1977 and amended in 1987, and which prohibits, among other things,
knowingly and

15
<PAGE> 16

willfully soliciting, receiving, offering or paying any remuneration directly or
indirectly in return for or to induce the referral of an individual to a person
for the furnishing of any item or service for which payment may be made in whole
or in part under Medicare or Medicaid. Many states have enacted similar statutes
which are not necessarily limited to items and services for which payment is
made by Medicare or Medicaid. Violations of these laws may result in fines,
imprisonment, and exclusion from the Medicare and Medicaid programs or other
state-funded programs. Federal and state court decisions interpreting these
statutes are limited, but have generally construed the statutes to apply if "one
purpose" of remuneration is to induce referrals or other conduct within the
statute.

Federal regulations establish "safe harbors," which give immunity from
criminal or civil penalties to parties in good faith compliance. While the
failure to satisfy all criteria for a safe harbor does not mean that an
arrangement violates the statute, it may subject the arrangement to review by
the HHS Office of Inspector General ("OIG"), which is charged with administering
the federal anti-kickback statute. There are no procedures for obtaining binding
interpretations or advisory opinions from the OIG on the application of the
federal anti-kickback statue to an arrangement or its qualification for a safe
harbor upon which the Company can rely.

The OIG issues "Fraud Alerts" identifying certain questionable arrangements
and practices which it believes may implicate the federal anti-kickback statute.
The OIG has issued a Fraud Alert providing its views on certain joint venture
and contractual arrangements between health care providers. The OIG also issued
a Fraud Alert concerning prescription drug marketing practices that could
potentially violate the federal statute. Pharmaceutical marketing activities may
implicate the federal anti-kickback statute because drugs are often reimbursed
under the Medicaid program. According to the Fraud Alert, examples of practices
that may implicate the statute include certain arrangements under which
remuneration is made to pharmacists to recommend the use of a particular
pharmaceutical product.

In addition, a number of states have recently undertaken enforcement
actions against pharmaceutical manufacturers involving pharmaceutical marketing
programs, including programs containing incentives to pharmacists to dispense
one particular product rather than another. These enforcement actions arose
under state consumer protection laws which generally prohibit false advertising,
deceptive trade practices, and the like.

Further, a number of states involved in these enforcement actions have
requested that the Federal Food and Drug Administration ("FDA") exercise greater
regulatory oversight in the area of pharmaceutical promotional activities by
pharmacists. It is not possible to determine whether FDA will act in this regard
or what effect, if any, FDA involvement would have on the Company's operations.

The Company believes its contract arrangements with other health care
providers, its pharmaceutical suppliers and its pharmacy practices are in
compliance with these laws. There can be no assurance that such laws will not,
however, be interpreted in the future in a manner inconsistent with the
Company's interpretation and application.

Health Care Reform and Federal Budget Legislation. The Clinton
administration and members of Congress have proposed plans to reform the health
care system. Currently, Congress is considering such reforms in the context of
federal budget reconciliation legislation. This legislation could result in
significant reductions in payments to providers under the Medicare program and a
complete restructuring and reduced payments to providers under the Medicaid
program. With respect to Medicare, proposals include establishment of a
prospective payment system for SNFs; limits on payments to Medicare SNFs for
certain non-routine services, including, among others, prescription drugs,
diagnostic services, and physical therapy and other rehabilitative services;
requiring consolidated billing by a SNF for all Part A and B claims for SNF
residents; and other limits on reimbursement of costs for Medicare SNF services.
If enacted, there can be no assurance that such proposals could not have a
material adverse effect on the business of Omnicare. While budget negotiations
are continuing, the future of any reform proposals in Congress is unknown.

In addition, a number of states have enacted and are considering various
health care reforms, including reforms through Medicaid demonstration projects.
Federal law allows HHS to authorize waivers of federal

16
<PAGE> 17

Medicaid program requirements, including requirements relating to coverage, free
choice of providers and payment for health care services, in connection with
state demonstration projects that promote Medicaid program objectives. HHS
published procedures and public notice requirements designed to open the waiver
approval process to public comment and to expedite processing. Legal actions
have been initiated challenging the waiver process and the authority of HHS to
approve waivers for broad-based Medicaid managed care programs. The federal
budget legislation restructuring the Medicaid program would effectively
eliminate Medicaid managed care demonstration projects.

Several state Medicaid programs have established mandatory statewide
managed care programs for Medicaid beneficiaries to control costs through
negotiated or capitated rates, as opposed to traditional cost-based
reimbursement for Medicaid services, and propose to use savings achieved through
these programs to expand coverage to those not previously eligible for Medicaid.
HHS has approved waivers for statewide managed care demonstration projects in
several states, and are pending for several other states. These demonstration
projects generally exempt institutionalized care, including nursing facility
services, from the programs, and the Company's operations have not been
adversely affected in the one state (Oregon) with a managed care demonstration
project in effect. The Company is unable to predict what impact, if any, future
projects might have on the Company's operations.

Because there are currently various reform proposals under consideration at
the federal and state levels, it is uncertain at this time what health care
reform initiatives, if any, will be implemented, or whether there will be other
changes in the administration of governmental health care programs or
interpretations of governmental policies or other changes affecting the health
care system. There can be no assurance that future health care or budget
legislation or other changes will not have an adverse effect on the business of
the Company.

17
<PAGE> 18

DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company consists of 44,000,000 shares
of Common Stock, par value $1.00 per share, and 1,000,000 shares of preferred
stock, without par value. At March 20, 1996, 26,573,990 shares of Common Stock
were issued and outstanding. The Board of Directors, without further action by
the stockholders, is authorized to issue preferred stock in one or more series
and to designate as to any such series the dividend rate, redemption prices,
preferences on liquidation or dissolution, sinking fund terms, conversion
rights, voting rights and any other preferences or special rights and
qualifications. As of the date of this Prospectus, there is no preferred stock
issued or outstanding, and the Board of Directors has not authorized the
issuance of any preferred stock.

COMMON STOCK

The Common Stock has no preemptive rights and no redemption, sinking fund
or conversion provisions. All shares of Common Stock have one vote on any matter
submitted to the vote of stockholders. The Common Stock does not have cumulative
voting rights. Upon any liquidation of the Company, the holders of Common Stock
are entitled to receive, on a pro rata basis, all assets then legally available
for distribution after payment of debts and liabilities and preferences on
preferred stock, if any. Holders of Common Stock are entitled to receive
dividends when and as declared by the Board of Directors out of funds legally
available therefor (subject to the prior rights of preferred stock, if any). All
outstanding shares of Common Stock are fully paid and nonassessable.

CERTAIN ANTITAKEOVER PROVISIONS

With certain exceptions, in the event a person owns 10% or more of the
Company's stock entitled to vote, a majority of the shares not so owned is
required to authorize (1) any merger of the Company with such person, (2) any
sale, lease or other disposition of all or substantially all of the Company's
assets to such person or (3) certain issuances and transfers of securities of
the Company to such person. Directors may be removed without cause only by the
affirmative vote of the holders of two-thirds of the Company's capital stock
entitled to vote on the election of directors. The Board of Directors of the
Company, when evaluating any offer of another person to make a tender or
exchange offer, merge or purchase or otherwise acquire all or substantially all
of the assets of the Company, shall, in connection with the exercise of its
judgment in determining what is in the best interests of the Company and its
stockholders, give due consideration to all relevant factors, including the
social and economic effects on employees, customers, suppliers and other
constituents of Omnicare and on the communities in which Omnicare operates or is
located. The sections of the Company's Restated Certificate of Incorporation
described in this paragraph may not be altered, amended or repealed without
approval of two-thirds of the outstanding shares of each class entitled to vote
thereon as a class.

TRANSFER AGENT

Omnicare's transfer agent for its Common Stock is the Chemical Mellon
Shareholder Services, LLC, Ridgefield Park, New Jersey.

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<PAGE> 19

NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

The distribution of the Common Stock in Canada is being made only on a
private placement basis exempt from the requirement that the Company prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of Common Stock are effected. Accordingly, any resale of the Common
Stock in Canada must be made in accordance with applicable securities laws which
will vary depending on the relevant jurisdiction, and which may require resales
to be made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities regulatory
authority. Purchasers are advised to seek legal advise prior to any resale of
the Common Stock.

REPRESENTATIONS OF PURCHASERS

Each purchaser of Common Stock in Canada who receives a purchase
confirmation will be deemed to represent to the Company and the dealer from whom
such purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such Common Stock without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions."

RIGHTS OF ACTION AND ENFORCEMENT

The securities being offered are of a foreign issuer and Ontario purchasers
will not receive the contractual right of action prescribed by Section 32 of the
Regulation under the Securities Act (Ontario). As a result, Ontario purchasers
must rely on other remedies that may be available, including common law rights
of action for damages or rescission or rights of action under the civil
liability provisions of the U.S. federal securities laws.

All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Ontario purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

A purchaser of Common Stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
Common Stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from the Company. Only one
such report must be filed in respect of Common Stock acquired on the same date
and under the same prospectus exemption.

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<PAGE> 20

UNDERWRITING

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated March 21, 1996 (the "U.S. Underwriting Agreement"), the
underwriters named below (the "U.S. Underwriters"), for whom CS First Boston
Corporation, Montgomery Securities, William Blair & Company, L.L.C., PaineWebber
Incorporated and Smith Barney Inc. are acting as representatives (the
"Representatives"), have severally but not jointly agreed to purchase from the
Company the following respective numbers of U.S. Shares:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER U.S. SHARES
---------------------------------------------------------------- -----------
<S> <C>
CS First Boston Corporation..................................... 580,000
Montgomery Securities........................................... 580,000
William Blair & Company, L.L.C. ................................ 580,000
PaineWebber Incorporated........................................ 580,000
Smith Barney Inc. .............................................. 580,000
Alex. Brown & Sons Incorporated................................. 100,000
Cowen & Company................................................. 100,000
Glaser Capital Corporation...................................... 50,000
Hambrecht & Quist LLC........................................... 100,000
Lehman Brothers Inc. ........................................... 100,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.............. 100,000
Morgan Stanley & Co. Incorporated............................... 100,000
Pryor, McClendon, Counts & Co., Inc. ........................... 50,000
Robertson, Stephens & Company LLC............................... 100,000
Volpe, Welty & Company.......................................... 100,000
Wessels, Arnold & Henderson, L.L.C. ............................ 100,000
Wheat, First Securities, Inc. .................................. 100,000
---------
Total......................................................... 4,000,000
=========
</TABLE>

The U.S. Underwriting Agreement provides that the obligations of the U.S.
Underwriters are subject to certain conditions precedent and that the U.S.
Underwriters will be obligated to purchase all the U.S. Shares offered hereby if
any are purchased. The U.S. Underwriting Agreement provides that, in the event
of a default by a U.S. Underwriter, in certain circumstances the purchase
commitments of non-defaulting U.S. Underwriters may be increased or the U.S.
Underwriting Agreement may be terminated.

The Company has entered into a Subscription Agreement (the "Subscription
Agreement") with the Managers of the International Offering (the "Managers")
providing for the concurrent offer and sale of the International Shares outside
the United States and Canada. The closing of the U.S. Offering is a condition to
the closing of the International Offering and vice versa.

The Company has granted to the U.S. Underwriters and the Managers an
option, exercisable by CS First Boston Corporation, expiring at the close of
business on the 30th day after the date of this Prospectus, to purchase up to
750,000 additional shares at the public offering price less the underwriting
discounts and commissions, all as set forth on the cover page of this
Prospectus. The U.S. Underwriters and the Managers may exercise such option only
to cover over-allotments in the sale of the shares of Common Stock offered in
the Offerings. To the extent that this option to purchase is exercised, each
U.S. Underwriter and each Manager will become obligated, subject to certain
conditions, to purchase approximately the same percentage of additional shares
being sold to the U.S. Underwriters and the Managers as the number of U.S.
Shares set forth next to such U.S. Underwriter's name in the preceding table
bears to the total number of U.S. Shares in such table and as the number set
forth next to such Manager's name in the corresponding table in the prospectus
relating to the International Offering bears to the total number of
International Shares in such table.

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<PAGE> 21

The Company has been advised by the Representatives that the U.S.
Underwriters propose to offer the U.S. Shares in the United States and Canada to
the public initially at the public offering price set forth on the cover page of
this Prospectus and, through the Representatives, to certain dealers at such
price less a concession of $1.12 per share, and the U.S. Underwriters and such
dealers may allow a discount of $0.10 per share on sales to certain other
dealers. After the initial public offering, the public offering price and
concession and discount to dealers may be changed by the Representatives.

The public offering price, the aggregate underwriting discounts and
commissions per share and per share concession and discount to dealers for the
U.S. Offering and the concurrent International Offering will be identical.
Pursuant to an Agreement Between the U.S. Underwriters and Managers (the
"Intersyndicate Agreement") relating to the Offerings, changes in the public
offering price, concession and discount to dealers will be made only upon the
mutual agreement of CS First Boston Corporation, as representative of the U.S.
Underwriters, and CS First Boston Limited ("CSFBL"), on behalf of the Managers.

Pursuant to the Intersyndicate Agreement, each of the U.S. Underwriters has
agreed that, as part of the distribution of the U.S. Shares and subject to
certain exceptions, it has not offered or sold, and will not offer or sell,
directly or indirectly, any shares of Common Stock or distribute any prospectus
relating to the Common Stock to any person outside the United States or Canada
or to any other dealer who does not so agree. Each of the Managers has agreed or
will agree that, as part of the distribution of the International Shares and
subject to certain exceptions, it has not offered or sold, and will not offer or
sell, directly or indirectly, any shares of Common Stock or distribute any
prospectus relating to the Common Stock in the United States or Canada or to any
other dealer who does not so agree. The foregoing limitations do not apply to
stabilization transactions or to transactions between the U.S. Underwriters and
the Managers pursuant to the Intersyndicate Agreement. As used herein, "United
States" means the United States of America (including the States and the
District of Columbia), its territories, possessions and other areas subject to
its jurisdictions, "Canada" means Canada, its provinces, territories,
possessions and other areas subject to its jurisdiction, and an offer or sale
shall be in the United States or Canada if it is made to (i) any individual
resident in the United States or Canada or (ii) any corporation, partnership,
pension, profit-sharing or other trust or other entity (including any such
entity acting as an investment adviser with discretionary authority) whose
office most directly involved with the purchase is located in the United States
or Canada.

Pursuant to the Intersyndicate Agreement, sales may be made between the
U.S. Underwriters and the Managers of such number of shares of Common Stock as
may be mutually agreed. The price of any shares so sold will be the public
offering price, less such amount as may be mutually agreed upon by CS First
Boston Corporation, as representative of the U.S. Underwriters, and CSFBL, on
behalf of the Managers, but not exceeding the selling concession applicable to
such shares. To the extent there are sales between the U.S. Underwriters and the
Managers pursuant to the Intersyndicate Agreement, the number of shares of
Common Stock initially available for sale by the U.S. Underwriters or by the
Managers may be more or less than the amount appearing on the cover page of this
Prospectus. Neither the U.S. Underwriters nor the Managers are obligated to
purchase from the other any unsold shares of Common Stock.

This Prospectus may be used by underwriters and dealers in connection with
sales of International Shares to persons located in the United States, to the
extent such sales are permitted by the contractual limitations on sales
described above.

The Company has agreed to indemnify the U.S. Underwriters and the Managers
against certain liabilities, including civil liabilities under the Securities
Act, or to contribute to payments that the U.S. Underwriters and the Managers
may be required to make in respect thereof.

21
<PAGE> 22

EXPERTS

The audited consolidated financial statements incorporated in this
Prospectus by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, as amended, and the Current Report on Form
8-K filed February 26, 1996, which includes the audited financial statements of
the Company for the three year period ended December 31, 1995, have been so
incorporated in reliance on the reports of Price Waterhouse LLP and BDO Seidman,
LLP, independent accountants, whose reports are incorporated by reference
herein, to the extent and for the periods appearing therein. Such financial
statements have been so incorporated in reliance on the reports of such
independent accountants given on the authority of such firms as experts in
auditing and accounting.

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock and certain
other legal matters in connection with the Offerings will be passed upon by
Thompson Hine & Flory P.L.L., Cincinnati, Ohio, counsel to the Company. Certain
matters relating to health care regulation will be passed upon by Reed, Smith,
Shaw & McClay, Washington, D.C., special health care counsel to the Company.
Cravath, Swaine & Moore, New York, New York, will pass on certain legal matters
for the U.S. Underwriters and the Managers. Cravath, Swaine & Moore has from
time to time represented, and may continue to represent, Omnicare in connection
with certain legal matters.

22
<PAGE> 23

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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY U.S. UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE SUCH DATE.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Prospectus Summary.................... 3
Risk Factors.......................... 5
Use of Proceeds....................... 6
Price Range of Common Stock and
Dividends........................... 7
Capitalization........................ 8
Selected Consolidated Financial
Data................................ 9
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 10
Business.............................. 13
Description of Capital Stock.......... 18
Notice to Canadian Residents.......... 19
Underwriting.......................... 20
Experts............................... 22
Legal Matters......................... 22
</TABLE>

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LOGO

5,000,000 Shares

Common Stock
($1 par value)
PROSPECTUS
CS First Boston
Montgomery Securities
William Blair & Company
PaineWebber Incorporated
Smith Barney Inc.
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