CLEARWATER, Fla., Feb. 13 - Lincare Holdings Inc. (Nasdaq: LNCR), a leading provider of oxygen and other respiratory therapy services delivered to patients in the home, today announced financial results for the fourth quarter and year ended December 31, 2005.
For the quarter ended December 31, 2005, revenues were $326.1 million, similar to revenues of $324.2 million for the fourth quarter of 2004. Net income for the quarter ended December 31, 2005, was $55.1 million, compared to net income of $72.7 million for the fourth quarter of 2004. Diluted earnings per share were $0.54 for the quarter ended December 31, 2005, compared with $0.68 diluted earnings per share for the comparable prior year period.
Revenues for the year ended December 31, 2005, were $1.267 billion, similar to revenues of $1.269 billion for the comparable period in 2004. Net income for the year ended December 31, 2005, was $213.7 million, compared to net income of $273.4 million for the prior year. Diluted earnings per share were $2.06 for the year ended December 31, 2005, compared with $2.60 diluted earnings per share for the comparable period last year.
The financial results for the quarter and year ended December 31, 2005 were negatively impacted by reductions in Medicare reimbursement for oxygen equipment that took effect on April 1, 2005, and for respiratory medications and certain items of durable medical equipment that took effect on January 1, 2005. The Company estimates that revenues in the fourth quarter and year ended December 31, 2005 were reduced by approximately $53.1 million and $188.2 million, respectively, as a result of these Medicare price changes. The Medicare price reductions offset the positive effect on revenues in the fourth quarter of 2005 over the comparable prior year period attributable to 12% internal growth and 5% acquisition growth, exclusive of the Medicare price reductions. For the year ended December 31, 2005, the Medicare price reductions offset the positive effect on revenues over the prior year attributable to 10% internal growth and 5% acquisition growth, exclusive of the Medicare price reductions.
During the fourth quarter of 2005, Lincare completed the acquisition of four companies with annual revenues of approximately $6.0 million. The acquired businesses were located in Louisiana, Missouri, Ohio and Texas. Lincare acquired 15 companies with annual revenues of approximately $68.0 million during the 2005 fiscal year.
Lincare added 12 new operating centers in the fourth quarter of 2005, all of which were derived from internal expansion. For the year ended December 31, 2005, Lincare added 79 new operating centers, with 45 derived from internal expansion and 34 derived from acquisitions. The total number of Lincare locations expanded to 883 at the end of 2005.
John P. Byrnes, Lincare's Chief Executive Officer, said, "We are pleased with Lincare's operating and financial performance in 2005. We continue to gain market share in our core respiratory business while controlling costs and reinvesting capital to sustain growth."
Mr. Byrnes added, "As the nation's leading provider of chronic respiratory disease management therapies in the home setting, we serve a growing population of chronically ill seniors that require our continuous support throughout the progression of their disease. As a home-based provider of cost-efficient health care services to our nation's seniors, we offer an attractive and preferred alternative that can avoid or delay higher-cost acute and facility-based care."
Lincare generated $369.7 million of cash from operating activities during 2005. Investments of cash during the year included $103.9 million in net capital expenditures and $93.3 million in business acquisition expenditures. The Company repurchased 2.4 million shares of its common stock during the fourth quarter for $101.1 million, bringing the total number of shares repurchased in 2005 to 7.8 million shares for $321.9 million. Long-term obligations were $275.4 million and cash and short-term investments were $47.0 million at December 31, 2005.
Lincare, headquartered in Clearwater, Florida, is one of the nation's largest providers of oxygen and other respiratory therapy services to patients in the home. The Company provides services and equipment to approximately 625,000 customers in 47 states.
Statements in this release concerning future results, performance or expectations are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. All forward-looking statements included in this document are based upon information available to Lincare as of the date hereof and Lincare assumes no obligation to update any such forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause Lincare's actual results, levels of activity, performance or achievements to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statements. In some cases, forward-looking statements that involve risks and uncertainties contain terminology such as "may," "will," "should," "could," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or variations of these terms or other comparable terminology.
Key factors that have an impact on Lincare's ability to attain any estimates contained in this release include potential reductions in reimbursement rates by government and other third-party payors, changes in reimbursement policies, the demand for Lincare's products and services, the availability of appropriate acquisition candidates and Lincare's ability to successfully complete and integrate acquisitions, efficient operations of Lincare's existing and future operating facilities, regulation and/or regulatory action affecting Lincare or its business, economic and competitive conditions, access to borrowed and/or equity capital on favorable terms and other risks described in the filings of Lincare with the Securities and Exchange Commission, including its annual report on Form 10-K.
In developing its forward-looking statements, Lincare has made certain assumptions relating to reimbursement rates and policies, internal growth and acquisitions and the outcome of various legal and regulatory proceedings. If the assumptions used by Lincare differ materially from what actually occurs, then actual results could vary significantly from the performance projected in the forward-looking statements. Lincare is under no duty to update any of the forward-looking statements after the date of this release.
LINCARE HOLDINGS INC.
Financial Summary
(In thousands, except share and per share data)
For the three months ended
December 31, December 31,
2005 2004
Net revenues $326,148 $324,241
Costs and expenses:
Costs of goods and services 63,767 47,335
Operating expenses 76,359 65,669
Selling, general and administrative
expenses 64,805 63,274
Bad debt expense 4,892 4,864
Depreciation expense 24,634 21,593
Amortization expense 417 396
Operating income 91,274 121,110
Interest and Other expense 2,132 2,521
Income before income taxes 89,142 118,589
Income taxes 34,047 45,881
Net income $55,095 $72,708
Basic earnings per common share $0.57 $0.72
Diluted earnings per common share $0.54 $0.68
Weighted average number of common
shares outstanding 96,861,438 100,456,939
Weighted average number of common
shares and common share equivalents
outstanding 103,938,408 108,220,874
For the twelve months ended
December 31, December 31,
2005 2004
Net revenues $1,266,627 $1,268,531
Costs and expenses:
Costs of goods and services 253,260 184,398
Operating expenses 295,420 264,447
Selling, general and administrative
expenses 251,839 257,019
Bad debt expense 18,999 19,028
Depreciation expense 93,260 86,615
Amortization expense 1,682 1,537
Operating income 352,167 455,487
Interest and Other expense 9,101 15,084
Income before income taxes 343,066 440,403
Income taxes 129,370 166,975
Net income $213,696 $273,428
Basic earnings per common share $2.16 $2.74
Diluted earnings per common share $2.06 $2.60
Weighted average number of common
shares outstanding 98,913,289 99,681,086
Weighted average number of common
shares and common share equivalents
outstanding 106,305,534 107,222,522
LINCARE HOLDINGS INC.
Selected Balance Sheet Data
(Unaudited)
(In thousands)
December 31, December 31,
2005 2004
Cash $46,969 $225,789
Accounts Receivable, Net 144,130 137,891
Current Assets 198,681 377,855
Total Assets 1,666,873 1,721,064
Current Liabilities 93,811 132,415
Long-Term Obligations, including
Current Maturities of Bank Debt 275,436 320,293
Stockholders' Equity 1,137,876 1,166,325
