Lincare Takes a Hit from Oxygen Cuts

CLEARWATER, Fla. — Medicare reimbursement cuts took a $275
million chunk out of Lincare Holdings’ net revenue in 2009, the
giant respiratory company reported earlier this month.

A 13 percent increase in volume growth and acquisitions was not
enough to cover the 15 percent reduction in reimbursement caused by
Medicare’s 36-month oxygen cap and 9.5 percent DME cut, both of
which took effect Jan. 1, 2009. At $1.55 billion in 2009, revenue
was down about 7 percent from the $1.665 billion recorded in 2008,
officials said. Net income for 2009 was $136.1 million, or $1.99 a
share. That compares to $227.3 million, or $3.04 a share, for
2008.

Fourth quarter results were consistent with the year. Net income
was $40.6 million (61 cents a share) compared to net income of
$55.6 million (76 cents a share) for the same quarter in 2008.
Revenue for the quarter ended Dec. 31 tallied $405.8 million, a 2
percent drop from 2008’s $415.1 million.

Lincare expects more of the same in 2010, projecting another $9
million hit to revenues and operating income, an effect of
Medicare’s reimbursement cuts — from $175.79 to $173.17
— for stationary oxygen equipment.

Lincare CEO John P. Byrnes said the company was pleased with its
financial performance in 2009. “Our company met the significant
challenges presented by an unprecedented reduction in Medicare
payment amounts for our services while continuing to focus on
meeting the needs of each of our customers … We remain
committed to our strategy to maintain our position as the market
leader in the provision of home-based respiratory therapy services
and to expand our reach into markets where we believe we can add
value and compete on the basis of efficiency and quality of
care.”

Earlier this year, Lincare acquired the HME, respiratory and
home infusion business of Atlanta-based Gentiva Health Care. (For
more, see All-Around
‘Good Fit’ on Lincare-Gentiva Deal, Feb. 4.)