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Respiratory Giants Take a Hit

Atlanta Apria Healthcare, Lincare Holdings and Rotech Healthcare said they were hit hard by CMS' 2005 reimbursement cuts. All three companies reported

Atlanta

Apria Healthcare, Lincare Holdings and Rotech Healthcare said
they were hit hard by CMS' 2005 reimbursement cuts. All three
companies reported net income drops for the year ended Dec. 31,
citing Medicare cuts for respiratory medications, DME and
oxygen.

Lake Forest, Calif.-based Apria, with approximately 500 branches
in 50 states, reported net income for 2005 at $66.9 million
compared to $114 million in 2004. Full-year revenues were $1.474
billion in 2005, compared to $1.451 billion in 2004.

Without the pricing reductions, revenue growth would have been
3.5 percent for the year, according to a statement issued by the
company.

For 2006, Apria's management estimates that revenue growth will
be in the 4 to 5 percent range.

Clearwater, Fla.-based Lincare, with 883 locations at the year's
end, said revenues for 2005 were $1.267 billion compared to $1.269
billion in 2004. Net income was $213.7 million, down 22 percent
from 2004's $273.4 million. The company estimates that its annual
revenues were reduced by $188.2 million as a result of the Medicare
cuts.

Rotech, headquartered in Orlando, Fla., with approximately 484
branches, reported net revenues of $533.2 million for 2005 versus
$535.3 million for 2004. The company said net earnings were $5.5
million for the year compared to $36 million for 2004.

Respiratory therapy equipment and services represented 87.8
percent and DME 11.2 percent of Rotech's total revenues for the
year, according to a company statement.



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