Respiratory Giants Feel the Pain

CLEARWATER and ORLANDO, Fla.–Following Apria Healthcare’s
recent announcement of decreased revenues for 2005–with net income
for the year at $66.9 million compared to $114 million in
2004–respiratory providers Lincare Holdings and Rotech Healthcare
also have reported year-end results they said were negatively
affected by reimbursement cuts to respiratory meds, DME and home
oxygen.

Clearwater, Fla.-based Lincare, which has 625,000 customers in
47 states, said revenues for the year ended Dec. 31 were $1.267
billion compared to $1.269 billion in 2004. Net income for the year
was $213.7 million, down 22 percent from $273.4 million the prior
year. According to a statement, the company estimates that annual
revenues were reduced by $188.2 million as a result of Medicare
price changes for respiratory medications and some DME that took
effect on Jan. 1, 2005, and for oxygen equipment that took effect
April 1.

Lincare CEO John Byrnes said the company continues to gain
market share in its core respiratory business and is controlling
costs and reinvesting capital to sustain growth. During the year,
Lincare acquired 15 companies with annual revenues of approximately
$68 million. The company also added 79 operating centers, with 45
derived from internal expansion and 34 from acquisitions, bringing
the total number of locations to 883 at the end of 2005.

And last week, Rotech, headquartered in Orlando, 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 its total
revenues for the year, according to a company statement.

Rotech provides equipment and services in 48 states with
approximately 485 branches, located principally in non-urban
markets.