Apria, Lincare Post Q2 Gains

LAKE FOREST, Calif., and CLEARWATER, Fla.–National providers
Apria Healthcare and Lincare Holdings announced increased
second-quarter profits in recent earnings reports.

Lake Forest, Calif.-based Apria reported its Q2 profit was up
12.8 percent on earnings of $20.8 million compared to $18.5 million
in the same period last year.

Revenues for the quarter were $394.0 million, a 4.8 percent
increase over $376.1 million in 2006.

Gross margins were 65.9 percent in the second quarter this year,
compared to 65.7 percent reported a year ago.

Days sales outstanding were 48 days at June 30, down from 52
days at the same time last year. According to the company, the
improvement is a direct result of increased cash collections
stemming from initiatives to optimize billing processes and to
increase patient copayments.

“Growth over the prior year, and sequentially with the first
quarter, is encouraging, and our sales force segmentation strategy
is gaining traction,” said CEO Lawrence Higby. He added that the
company’s “larger and more focused sales force will contribute to
accelerating revenue growth. Operationally, the initiatives we put
in place in 2006 and early 2007 in the areas of asset utilization
and revenue management continue to show improved results.”

During the quarter, Apria also reduced its $500 million
revolving credit line balance by $55 million. As of June 30, the
outstanding balance on the revolver was $155 million.

Management affirmed the company’s previous estimate of 2007
revenue growth in the 4 to 5 percent range.

Clearwater, Fla.-based Lincare said its revenues for the quarter
were $397.1 million, a 13.4 percent increase over revenues of
$350.1 million in 2006.

The company said the increase was comprised of approximately
10.4 percent internal growth and 4.5 percent growth from
acquisitions.

Net income for the quarter increased to $56 million from $51.9
million for the second quarter in 2006.

The company also reported revenues for the six months were
$775.5 million, a 13.4 percent increase over $683.7 million for the
comparable period last year. Income for the period was $109.9
million compared to $99.8 million for 2006. The increase was
comprised of 10.2 percent internal growth and 4.6 percent growth
from acquisitions, the company said.

During the first half of 2007, Lincare opened 21 new locations,
increasing its total number to 999. The company also added nine
operating centers.

“We are experiencing strong customer growth and expanding market
share in our core businesses and continue to expand by opening
denovo locations in new and contiguous geographic markets,” CEO
John Byrnes said in a statement. “Our financial position is strong
and we achieved significant operating cash flows in the first six
months of 2007.”

Lincare generated $170.1 million of cash from operating
activities and invested $65.5 million in net capital expenditures
during the year’s first half. Total debt was $481.6 million, and
cash and cash equivalents were $23.7 million at June 30.