Monday, Lincare Holdings Inc. (LNCR), a health care service provider, reported a lower profit for the fourth quarter, hurt by a 2% decline in revenues mainly due to significant reductions in Medicare reimbursement for its primary product lines resulting from the implementation on January 1, 2009, of previously enacted legislation.
Clearwater, Florida-based Lincare's fourth quarter net income declined to $40.6 million or $0.61 per share from $55.6 million or $0.76 million in the comparable quarter last year.
On average, 14 analysts polled by Thomson Reuters expected the company to report a profit of $0.55 per share for the quarter. Analysts' estimate typically exclude one-time items.
Net revenues was $405.8 million, down 2% from $415.1 million in the prior year quarter. Revenues for the quarter included 13% internal and acquisition growth, offset by a 15% negative impact from Medicare reimbursement reductions that took effect in the year 2009.
Thirteen wall street analysts had a consensus revenue estimate of $404.29 million for the fourth quarter.
Results for the fourth quarter and full year was impacted by sharp reductions in Medicare reimbursement for its primary product lines that resulted from the implementation on January 1, 2009 of previously enacted legislation.The legislation included a total reduction of 11.8% comprising of lower Medicare payments of 9.5% for certain items of durable medical equipment, including oxygen, and an additional regulated price reductions of 2.3% for stationary oxygen equipment.
In addition, the results for the full year 2009 reflect lower reimbursement for certain respiratory medications covered by Medicare. It estimates that these changes reduced net revenues for the fourth quarter and fiscal 2009 by about $61.2 million and $274.7 million, respectively.
Cost of goods and services for the quarter increased to $113.4 million from $98.4 million a year ago. Depreciation and amortization expense decreased slightly to $28.7 million from $28.9 million in the prior year quarter.
Operating expenses decreased to $97.4 million from $101.2 million a year-ago, while selling, general and administrative expenses was $83.2 million compared to $83.1 million in the same quarter last year. Bad debt expenses declined slightly to $6.1 million from $6.2 million in the year-ago period.
For the fourth quarter, operating income plunged to $76.8 million from $97.1 million, while net interest expense increased to $8.7 million from $7.4 million in the previous year period.
Lincare generated $353.1 million of cash from operating activities and invested $110.0 million in net capital expenditures and $5.1 million in business acquisitions during the year. As of December 31, 2009, the company's total long-term obligations including current maturities was $484.9 million, cash and investments was $79.1 million and common shares outstanding were 65,352,099.
For the full year, the company reported net income of $136.1 million or $1.99 per share compared to $227.3 million or $3.04 per share last year. Net revenues decreased to $1.55 billion from $1.66 billion in the prior year.
Analysts expected earnings of $1.97 per share on revenue of $1.55 billion for the full year.
Looking forward, Lincare said net revenues and operating income in 2010 would be negatively impacted by about $9.0 million, resulting from lower monthly payment for stationary oxygen equipment furnished to Medicare beneficiaries by the centers for medicare and medicaid services of $173.17, a reduction of 1.5% from the $175.79 rate in 2009.
Analysts expect the company to generate revenue of $1.69 billion for the fiscal 2010.
LNCR closed Monday's regular trading at $38.18, up $0.45 or 1.19%, on a volume of 1.15 million shares on the Nasdaq. In after hours, the shares fell 0.38% or $0.14, trading at $38.035.
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