Lincare Holdings Inc.
) reported its second quarter 2012 adjusted earnings per share of
56 cents, beating the Zacks Consensus Estimate by a penny and
surpassing the year-ago earnings per share of 45 cents (up 24.4%).
In the quarter, profit increased 11.9% to $47.9 million, led by
Recently, the company announced its takeover by The Linde Group, a
German gases and engineering company. Per the agreement, Linde
agreed to buy all the outstanding shares of Lincare in cash for
$41.50 per share or $4.6 billion.
The acquisition, subject to certain regulatory conditions along
with shareholder approval, is expected to close by the third
quarter of 2012. After the acquisition, Lincare will be
incorporated into Linde as a fully-owned subsidiary.
Revenues rose 10.5% year over year to $496.2 million, but missed
the Zacks Consensus Estimate of $504 million. Year-over-year
revenue growth can be attributed to acquisition and internal growth
of roughly 11%, partially offset by a 0.5% negative impact of
Medicare payment cuts amounting to $2.1 million.
Gross margin dropped to 67.7% in the reported quarter from 68.3% a
year ago. Operating margin remained flat year over year at 17.8%.
Selling, general and administrative charges, as a percentage of
sales, were 18.1% compared with 19% in the prior-year quarter.
Lincare ended the quarter with cash and short-term investments of
$165.9 million, up 35.8% year over year. Total long-term debt
(including current installments) was $803.8 million, up 50.9% year
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 clients across
Canada and the U.S. through 1,058 local outlets.
Lincare successfully expanded its anti-coagulation monitoring
franchise in the last one year with a 130% increase in the number
of patients on service. It also plans to broaden its pulmonary
rehabilitation business. The company remains committed to boosting
sales through its leadership in respiratory therapy services and
expansion of its product range. According to the company's cost
saving strategy, the company consolidated 50 operating centers
during the first half of 2012 to enhance its operating efficiency.
However, the company derives a major portion of its revenue from
government sources and is therefore vulnerable to reimbursement
rate cuts. It competes with other players in the U.S. home health
care market such as
Gentiva Health Services Inc.
Rotech Healthcare Inc.
Lincare Holdings currently retains a Zacks #2 Rank, which
translates into a short-term Buy rating.
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