Apria, Lincare, Invacare Post Q1 Results

Apria Healthcare Group, Lake Forest, Calif.,
reported that for the first quarter ended March 31, revenue grew by
35.1 percent to $528 million from $390.8 million in the first
quarter of 2007. First quarter net income was $20.8 million, which
was flat compared to the first quarter of 2007.

As expected, due to the acquisition of infustion therapy giant
Coram last year, the company’s gross margin decreased in the first
quarter of 2008 to 61.1 percent compared to 65.6 percent reported
in the first quarter of 2007. Days sales outstanding (DSO) were 49
days at March 31, 2008, and March 31, 2007. The provision for
doubtful accounts as a percentage of revenues was 2.0 percent for
the first quarter compared to 2.5 percent in the corresponding
period last year.

Selling, distribution and administrative expenses were 50.9
percent of revenues, 1.9 percent lower compared to 52.8 percent in
the first quarter of last year.

“Home oxygen revenues grew four percent over last year, which is
in the range we expected. In addition, our oxygen patient census
reached a new record in the first quarter,” said Lawrence M. Higby,
CEO. “Growth in other respiratory products, including CPAP,
bi-level and high-tech ventilation therapies, was also positive.
Unfortunately, growth in these areas was offset by certain Medicare
payment reductions, which began last year, as well as lower growth
rates in low margin inhalation therapy drugs and home medical
equipment. In addition, positive growth rates were posted in our
specialty infusion services and enteral nutrition products. “

Lincare Holdings, Clearwater, Fla., said its Q1
revenues were $415.4 million, a 10 percent increase over revenues
of $378.5 million for the first quarter of 2007. The company
estimates the increase was comprised of approximately 11 percent
internal growth, partially offset by Medicare price reductions of
approximately 1 percent taking effect in 2008. Net income for the
quarter was $60.7 million compared to net income of $53.9 million
for the first quarter of 2007.

Lincare added 10 new operating centers in the first quarter
derived from internal development. The total number of Lincare
locations expanded to 1,029 at the end of the first quarter.

Lincare generated $126.4 million of cash from operating
activities during the quarter and invested $29.5 million in net
capital expenditures. The company repurchased 1,009,250 shares of
its common stock during the quarter for $35.2 million, and common
shares outstanding at March 31, 2008, were 73,206,626 shares. As of
March 31, 2008, total debt outstanding was $828.2 million, cash and
short-term investments were $104.2 million and long-term
investments were $98.1 million.

As a result of recent developments affecting Medicare
reimbursement for certain respiratory drugs, Lincare now estimates
that revenues in 2008 will be negatively impacted by approximately
$100 million compared with its previous guidance of $65 million to
$70 million of Medicare price reductions.

Invacare, Elyria, Ohio, reported net sales for
the quarter increased 11 percent to $416.3 million versus $374.9
million last year. Foreign currency translation increased net sales
by five percentage points and acquisitions increased net sales by
less than a percentage point. Organic net sales for the quarter
grew 5.8 percent over the same period last year driven primarily by
performance in North America/Home Medical Equipment and Europe.

In North America, net sales increased 8.7 percent to $175.8
million compared to $161.8 million in the same period last year,
driven primarily by sales increases in rehab, standard and
respiratory product lines. Excluding consumer power products, rehab
product line net sales increased 10.2 percent compared to the first
quarter last year, driven by volume increases in custom power and
custom manual wheelchairs as well as seating and positioning
products. Standard product line net sales increased 9.5 percent
compared to the first quarter of last year, driven by increased
volumes in manual wheelchairs, patient aids and beds, while pricing
was stable.

Respiratory product line net sales increased 2.8 percent, driven
by volume increases in oxygen concentrators and strong purchases by
national accounts. These benefits were partially offset by pricing
declines and 3 percent lower net sales of the company’s
HomeFill oxygen systems, which were in line with plan for the first
quarter.

“We are gratified by Invacare’s strong first quarter improvement
in adjusted earnings before income taxes. The company’s operating
results are on plan for the first quarter. Invacare’s net sales
performance in the quarter was better than expected in a number of
divisions, but particularly in the North America/HME segment which
benefited from strong volume increases in each of its primary
product lines–rehab, standard and respiratory,” said
Invacare Chairman and CEO A. Malachi Mixon III.

Commenting on anticipated results, Mixon said, “We remain
cautious regarding the impact of the potential reimbursement
changes in the U.S. market and continued pricing pressures.
However, with continued focus on cost reduction and reducing our
debt levels, 2008 should be a strong recovery year for
Invacare.”

Responding to some analysts’ reviews of its first-quarter
posting, Invacare reiterated that its quarterly results were on
plan and that the company “remains confident in its projected
range for adjusted earnings per share for the year with most of the
earnings attributable to the second half of the
year.”