Lincare's EPS Meets, Sales Top

Lincare Holdings (NasdaqGS:LNCR - News), a leading provider of oxygen and respiratory therapies, posted fourth-quarter fiscal 2011 earnings per share of 51 cents, matching the Zacks Consensus Estimate and exceeding the year-ago earnings of 48 cents. Profit fell 3.3% year over year to $44.6 million as higher costs more than offset a double-digit growth in the top line.

For the fiscal, earnings of $1.93 a share were also in line with the Zacks Consensus Estimate and above the year-ago earnings of $1.87. Profit fell 2.3% year over year to $177.3 million.

Revenues for the quarter spiked 16.6% year over year to $492.2 million, easily beating the Zacks Consensus Estimate of $484 million. Sales included an unfavorable impact of $4.9 million (or 1.2%) associated with Medicare payment changes, which partly offset the internal and acquisition growth of roughly 17.8%.

For the full year, revenues jumped 10.7% year over year to $1,848 million, also beating the Zacks Consensus Estimate of $1,839 million. Medicare payment reductions had a negative impact of $52.4 million (or 3.1%) on sales in 2011.

Operating income fell roughly 1.7% year over year to $83 million in the fourth quarter with operating margin clipping to 16.9% from 20% a year ago. Consolidated cost and expenses rose roughly 21% year over year to $409.1 million.

Lincare generated $314.7 million (down 13% year over year) in cash from operation during the fiscal and spent $130.6 million and $111 million as net capital expenditures and for business acquisitions, respectively. Cash and investments fell 73% year over year to roughly $55 million, while total long-term debt increased 32% year over year to $653.9 million. The company bought back roughly 10.2 million shares during the year for $250 million and paid $74.9 million of dividends.

Florida-based Lincare is a leading provider of oxygen and other respiratory therapy services to patients at home. The company offers services and equipment to more than 800,000 customers across the U.S. through 1,108 local centers.

Lincare remains committed to boosting sales through its leadership in respiratory therapy services and expansion of its product range. It is well placed to be a winner in the home oxygen space in the long run. However, the company derives a major portion of its revenue from government sources and is therefore vulnerable to reimbursement rate cuts.

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