Lincare Holdings Inc. (LNCR), a respiratory therapy and medical devices company, reported its first quarter fiscal 2012 adjusted earnings per share of 54 cents, beating the Zacks Consensus Estimate by a penny and surpassing the year-ago earnings per share of 49 cents. In the reported quarter, profit remained flat year over year at $46.4 million.

Revenue

Revenues rose 16% year over year to $500.9 million, narrowly missing the Zacks Consensus Estimate of $501 million. The year-over-year revenue growth can be attributed to acquisition and internal growth of roughly 17%, offset by a 1% negative impact of Medicare payment cuts amounting to $2.2 million.

Margins

Gross margin dropped to 67.4% in the reported quarter from 71.2% a year ago. Operating margin declined to 17.2% from 19.6% a year ago. Selling, general and administrative charges, as a percentage of sales, were 18.6%, down 0.6% from the prior-year quarter.

Balance Sheet and Other

Lincare ended the quarter with cash and investments of $69.1 million, down 60.2% year over year. Total long-term debt (including current installments) was $727 million, up 42.8% year over year.

The company produced $55.8 million in cash through operating activities in the quarter (down 31.4% year over year). It invested $31 million and $12.4 million for net capital expense and for business takeovers, respectively.

During the quarter, Lincare repurchased roughly 1.9 million shares under its authorization to repurchase stock worth $50 million.

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 1,091 local outfits.

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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