For decades, CVS seemed like the perfect business. It was convenient, sold a mix of products people wanted, and everyone was forced to go there (or to one of its rivals) when they needed to pick up a prescription.
Now, however, the company has been fighting a war on many fronts. Consumers can order much of what made the chain convenient for delivery, and various online services, including Amazon, now fill prescriptions.
“At the rear of the store, business at pharmacy counters is being squeezed by stingier drug reimbursement rates and pharmacist wages. In the aisles, sales of everything from greeting cards to cosmetics are feeling the effects of cut-price competition,” according to the Financial Times.
It’s an evolving situation that has caused CVS rival Rite Aid to shut down all its stores, while CVS and Walgreens have closed thousands of locations between them.
“The whole drugstore four-wall economic model is collapsing on itself, in my opinion,” said Josh Cummings, a portfolio manager at Janus Henderson Investors, told the Financial Times.
Now, another CVS division has struggled and will be sold by the company as part of a Chapter 11 bankruptcy.
CVS Omnicare winding down
CVS Omnicare, which serves nursing homes, assisted living centers, and long-term care and rehab facilities, filed for Chapter 11 bankruptcy in Sept. 2025, according to documents found on PacerMonitor.
Now, the company, which CVS has owned since 2015, has received court approval for its bankruptcy liquidation.
A bankruptcy judge in Texas has approved a wind-down bankruptcy plan by Omnicare after the CVS Health subsidiary sold its business operations for $250 million and reached a $440 million deal with the Justice Department to resolve an improper billing case.
“Judge Stacey G. C. Jernigan of the U.S. Bankruptcy Court for the Northern District of Texas approved Omnicare’s Chapter 11 bankruptcy, noting that it received ‘overwhelming acceptance’ from general unsecured creditors,” Seeking Alpha reported.
More Bankruptcy:
- Outdoors retailer closing 91 stores in Chapter 11 bankruptcy
- 97-year-old aerospace manufacturer files Chapter 11 bankruptcy
- 60-year-old dining chain franchisee files Chapter 11 bankruptcy
The long-term care pharmacy services provider filed for bankruptcy in September 2025, just months after getting hit with a $949 million judgment for fraudulently dispensing drugs without valid prescriptions to elderly and disabled patients and billing federal government healthcare programs for millions of false claims.
The government later resolved the $949 million judgment through a $440 million settlement that requires CVS to pay $130 million upfront and cover the remaining $310 million if Omnicare fails to do so by March 2028, according to Bloomberg Law.
Shutterstock
CVS Health solves a problem
The approved settlement will protect CVS Health from any future liability.
“U.S. District Judge Colleen McMahon in Manhattan imposed a $542-million penalty for filing 3,342,032 false claims between 2010 and 2018. McMahon also awarded $406.8 million of damages, representing three times the $135.6 million that a jury awarded on April 29,” Reuters reported.
U.S. Attorney for the Southern District of New York Jay Clayton, who brought the case against CVS Omnicare, celebrated his victory in a press release.
“False claims in the healthcare industry cost every American. Today, a unanimous jury found Omnicare, the country’s largest long-term care pharmacy, liable for fraudulently dispensing drugs without valid prescriptions to elderly and disabled people in assisted living facilities and other residential long-term care facilities,” he said.
He also took a shot at CVS Health.
The jury also found CVS Health Corporation, Omnicare’s parent, liable for causing Omnicare to submit false claims. I thank the women and men of our Civil Division for continuing to pursue those who seek to exploit the healthcare system,” he said.
Related: 80-year-old discount fashion chain closing 120 stores
CVS Health moves forward
As part of the deal, Omnicare agreed to release potential legal claims against its parent company.
Omnicare’s purchaser, GenieRx Holdings, is a joint partnership between private investment firm Milrose Capital LLC and healthcare investment and management firm Integro Asset Management LLC.
The sale is expected to close next month, Omnicare attorney Martha Wyrick of Haynes and Boone LLP said.
CVS Health has reported stronger-than-expected results in 2026, according to CEO David Joyner.
“We generated adjusted operating income of $5.2 billion and adjusted earnings per share of $2.58. These results reflect a clear and deliberate enterprise-wide focus on building trust by executing against our commitments to consumers, colleagues and shareholders. Building on this strong performance so far this year, we are raising our full year 2026 adjusted earnings per share guidance by $0.60 to a range of $7.90 to $8.10,” he said during the chain’s second-quarter earnings call.
The company has also upgraded its full-year forecast.
“We are also updating our full year expectation for cash flow from operations to at least $11.5 billion, a meaningful increase of $2 billion from our prior guidance. These expectations reflect the core principles of our guidance philosophy, credible targets, disciplined execution and clear opportunities for outperformance,” he added.
ALSO READ: 170-year-old whiskey brand’s saga adds forced Chapter 7 bankruptcy
