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.”