By Debra Sherman

CHICAGO (Reuters) - Omnicare Inc (OCR.N: Quote, Profile, Research), which sells pharmaceuticals to nursing homes, said on Thursday its quarterly net earnings fell on litigation costs and other items, but operating profit beat expectations, driving shares up as much as 13 percent.

First-quarter net earnings were $30 million, or 25 cents per share, compared with $43 million, or 35 cents per share, a year ago.

Excluding items, earnings were 47 cents per share, helped by improved gross profit margins.

On that basis, the average estimate on Wall Street was for a profit of 35 cents per share, according to Reuters Estimates.

Quarterly sales dipped to $1.56 billion from $1.57 billion.

"Given bearish sentiment in the stock following several quarters of weak results, we expect the (earnings-per-share) beat this quarter to be viewed positively," wrote JP Morgan analyst Lisa Gill in a research note.

Shares of Omnicare were up $2.20 to $23.24, or 10.5 percent, in midday New York Stock Exchange trading. They have traded in a range between $38.76 and $15.42 in the past 52 weeks.

UNITEDHEALTH IMPACT CONTINUES