<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-Q
---------------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
COMMISSION FILE NUMBER 0-19946
LINCARE HOLDINGS INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 51-0331330
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
19337 US 19 NORTH, SUITE 500, 33764
CLEARWATER, FL (Zip Code)
(Address of principal executive offices)
</TABLE>
Registrant's telephone number, including area code: (813) 530-7700
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT OCTOBER 31, 1998
----- --------------------------------
<S> <C>
Common Stock, $0.01 par value............................... 58,205,932 shares
</TABLE>
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<PAGE> 2
LINCARE HOLDINGS INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements (unaudited)
Condensed consolidated balance sheets..................... 3
Condensed consolidated statements of operations........... 4
Condensed consolidated statements of cash flows........... 5
Notes to condensed consolidated financial statements...... 6
Item 2 Management's Discussion and Analysis of Results of
Operations and Financial Condition........................ 7
Item 3 Quantitative and Qualitative Disclosure Regarding Market
Risk...................................................... 10
PART II. OTHER INFORMATION
Item 1 Legal Proceedings........................................... 10
Item 2 Changes in Securities....................................... 10
Item 3 Defaults Upon Senior Securities............................. 10
Item 4 Submission of Matters to a Vote of the Security Holders..... 10
Item 5 Other Information........................................... 10
Item 6 Exhibits and Reports on Form 8-K............................ 11
SIGNATURE........................................................... 11
</TABLE>
2
<PAGE> 3
LINCARE HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 11,261 $ 4,078
Accounts and notes receivable............................. 82,214 68,383
Income tax receivable..................................... -- 2,530
Inventories............................................... 1,881 1,542
Prepaid expenses.......................................... 237 516
-------- --------
Total current assets.............................. 95,593 77,049
-------- --------
Property and equipment...................................... 236,788 181,438
Less: accumulated depreciation.............................. 98,232 73,148
-------- --------
Net property and equipment........................ 138,556 108,290
-------- --------
Other assets:
Goodwill.................................................. 313,740 245,600
Intangible assets......................................... 5,877 5,262
Covenants not to compete.................................. 2,042 2,869
Other..................................................... 881 1,318
-------- --------
Total other assets................................ 322,540 255,049
-------- --------
Total assets................................. $556,689 $440,388
======== ========
Current liabilities:
Current installments of long-term obligations............. $ 13,319 $ 8,580
Accounts payable.......................................... 18,843 14,390
Accrued expenses:
Compensation and benefits.............................. 13,805 8,781
Other.................................................. 5,877 3,192
Income taxes payable................................... 3,689 --
-------- --------
Total current liabilities......................... 55,533 34,943
-------- --------
Long-term obligations, excluding current installments....... 25,349 4,602
Deferred income taxes....................................... 6,837 6,861
Minority interest........................................... 868 915
Stockholders' equity:
Common stock.............................................. 582 574
Additional paid-in capital................................ 125,837 110,714
Retained earnings......................................... 343,414 281,779
Less: treasury stock...................................... 1,731 --
-------- --------
Total stockholders' equity........................ 468,102 393,067
-------- --------
Total liabilities and stockholders' equity... $556,689 $440,388
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
LINCARE HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
------------------------------- -------------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
-------------- -------------- -------------- --------------
(IN THOUSANDS EXCEPT SHARE AND (IN THOUSANDS EXCEPT SHARE AND
PER SHARE DATA) PER SHARE DATA)
<S> <C> <C> <C> <C>
Net revenues............................ $ 125,691 $ 114,772 $ 357,113 $ 324,486
------------ ------------ ------------ ------------
Costs and expenses:
Costs of goods and services........... 18,998 16,910 55,698 48,854
Operating expenses.................... 28,160 24,251 82,444 68,757
Selling, general and administrative
expenses........................... 27,568 23,105 79,686 65,454
Bad debt expense...................... 1,508 1,148 4,285 3,245
Depreciation expense.................. 8,845 7,280 25,420 20,215
Amortization expense.................. 3,328 3,580 9,279 10,643
------------ ------------ ------------ ------------
88,407 76,274 256,812 217,168
------------ ------------ ------------ ------------
Operating income.............. 37,284 38,498 100,301 107,318
------------ ------------ ------------ ------------
Other income (expense):
Interest income....................... 74 27 358 94
Interest expense...................... (504) (223) (720) (924)
Net loss on disposal of property and
equipment.......................... (10) (12) (44) (71)
------------ ------------ ------------ ------------
(440) (208) (406) (901)
------------ ------------ ------------ ------------
Income before income taxes.... 36,844 38,290 99,895 106,417
Income taxes............................ 14,111 14,742 38,260 40,971
------------ ------------ ------------ ------------
Net income.................... $ 22,733 $ 23,548 $ 61,635 $ 65,446
============ ============ ============ ============
Income per common share.................
Basic................................. $ 0.39 $ 0.41 $ 1.06 $ 1.15
============ ============ ============ ============
Diluted............................... $ 0.38 $ 0.40 $ 1.04 $ 1.12
============ ============ ============ ============
Weighted average number of common shares
outstanding........................... 58,104,111 56,842,424 57,887,913 56,719,103
============ ============ ============ ============
Weighted average number of common shares
and common share equivalents
outstanding........................... 59,355,421 58,751,622 59,391,985 58,503,755
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
LINCARE HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
--------------------------------
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Cash from operations........................................ $113,255 $90,170
Investing activities:
Proceeds from sale of property and equipment.............. 93 113
Capital expenditures...................................... (52,590) (37,355)
Decrease (increase) in other assets....................... 437 (295)
Business acquisitions, net of cash acquired............... (71,674) (48,114)
-------- -------
(123,734) (85,651)
-------- -------
Financing activities:
Proceeds from long-term obligations....................... 48,000 68,154
Payment of long-term obligations.......................... (35,706) (74,285)
Decrease in minority interest............................. (253) (244)
Proceeds from issuance of common stock.................... 7,352 3,747
Payment to acquire treasury stock......................... (1,731) --
-------- -------
17,662 (2,628)
-------- -------
Increase in cash............................................ 7,183 1,891
Cash and cash equivalents, beginning of period.............. 4,078 1,541
-------- -------
Cash and cash equivalents, end of period.................... $ 11,261 $ 3,432
======== =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
LINCARE HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying condensed consolidated balance sheet as of September 30,
1998, the condensed consolidated statements of operations for the three months
ended September 30, 1998 and 1997 and for the nine months ended September 30,
1998 and 1997 and the condensed consolidated statements of cash flows for the
nine months ended September 30, 1998 and 1997 are unaudited. In the opinion of
management, all adjustments, consisting of normal recurring accruals, necessary
for a fair presentation of the results of operations for the interim periods
presented have been reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
entire year. The accompanying condensed consolidated balance sheet as of
December 31, 1997 is derived from the Lincare Holdings Inc. (the "Company")
audited balance sheet as of that date.
NOTE 2 -- BUSINESS COMBINATIONS
During the nine months ended September 30, 1998 the Company acquired, in
unrelated acquisitions, the stock of nine companies and certain assets of eight
companies. Each acquisition was accounted for as a purchase. The results of the
acquired companies are included in the accompanying consolidated statements of
operations since the respective dates of acquisition.
The aggregate cost of these acquisitions was as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Cash (including cash acquired of $546)...................... $71,674
Deferred acquisition obligations............................ 12,283
Assumption of liabilities................................... 494
-------
$84,451
=======
</TABLE>
The aggregate purchase price was allocated as follows:
<TABLE>
<S> <C>
Current assets.............................................. $ 4,498
Property and equipment...................................... 3,220
Intangible assets........................................... 3,539
Goodwill.................................................... 73,194
-------
$84,451
=======
</TABLE>
Unaudited pro forma supplemental information on the results of operations
for the nine months ended September 30, 1998 and September 30, 1997 are provided
below and reflect the acquisitions as if they had been combined at the beginning
of each respective period.
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1998 1997
---------- ----------
(IN THOUSANDS EXCEPT
PER SHARE DATA)
<S> <C> <C>
Net revenues................................................ $378,526 $335,393
======== ========
Net income.................................................. $ 65,342 $ 67,301
======== ========
Income per common share
Basic..................................................... $ 1.13 $ 1.19
======== ========
Diluted................................................... $ 1.10 $ 1.15
======== ========
</TABLE>
The unaudited pro forma financial information is not necessarily indicative
of either the results of operations that would have occurred had the
transactions been effected at the beginning of the respective preceding periods
or of future results of operations of the combined companies.
6
<PAGE> 7
LINCARE HOLDINGS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OPERATING RESULTS
The following table sets forth for the periods indicated a summary of the
Company's net revenues by source:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED
ENDED SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------------
1998 1997 1998 1997
-------- -------- ----------- -----------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Oxygen and other respiratory therapy.... $111,168 $102,285 $318,312 $290,506
Home medical equipment and other........ 14,523 12,487 38,801 33,980
-------- -------- -------- --------
Total......................... $125,691 $114,772 $357,113 $324,486
======== ======== ======== ========
</TABLE>
On August 5, 1997, the Balanced Budget Act of 1997 ("BBA") was signed into
law. This legislation, among other things, reduces Medicare expenditures by $115
billion over five years. The BBA reduces Medicare payment amounts for oxygen and
oxygen equipment furnished after January 1, 1998, to 75 percent of the fee
schedule amounts in effect during 1997. Payment amounts for oxygen and oxygen
equipment furnished after January 1, 1999, and each subsequent year are reduced
to 70 percent of the fee schedule amounts in effect during 1997.
The BBA freezes the Consumer Price Index (U.S. urban average) update for
covered items of durable medical equipment for each of the years 1998 through
2002 while limiting fees for parenteral and enteral nutrients, supplies and
equipment to 1995 reasonable charge levels over the same period. The BBA reduces
payment amounts for covered drugs and biologicals to 95 percent of the average
wholesale price of such covered items for each of the years 1998 through 2002.
The BBA authorizes the Department of Health and Human Services to conduct
up to five competitive bidding demonstration projects for the acquisition of
durable medical equipment and requires that one such project be established for
oxygen and oxygen equipment. Each demonstration project is to be operated over a
three-year period and is to be conducted in not more than three competitive
acquisition areas. The BBA also includes provisions designated to reduce health
care fraud and abuse including a surety bond requirement for durable medical
equipment providers.
On August 10, 1993, Congress passed the Omnibus Reconciliation Act of 1993
("OBRA 93"). The OBRA 93 legislation provided for a consumer price index update,
effective January 1, 1997, of approximately 2.8% on Medicare products and
services. There was no impact from OBRA 93 in 1998.
Net revenues for the three months ended September 30, 1998 increased by
$10,919,000 (or 9.5%) compared with the three months ended September 30, 1997,
and for the nine months ended September 30, 1998 increased 32,627,000 (or 10.1%)
compared with the nine months ended September 30, 1997. The price cuts
attributable to the BBA reduced the Company's revenues by approximately
$18,406,000 and $50,944,000 for the three and nine months ended September 30,
1998. (see table)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, PERCENTAGE ENDED SEPTEMBER 30, PERCENTAGE
--------------------- INCREASE ------------------- INCREASE
1998 1997 (DECREASE) 1998 1997 (DECREASE)
--------- --------- ---------- -------- -------- ----------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues -- before price cuts..... $144,097 $114,772 25.5 $408,057 $324,486 25.8
Effect of price cuts.............. (18,406) -- (16.0) (50,944) -- (15.7)
-------- -------- ----- -------- -------- -----
Actual revenues................... $125,691 $114,772 9.5 $357,113 $324,486 10.1
======== ======== ===== ======== ======== =====
</TABLE>
Excluding the effect on the Company's revenues from the Medicare price
reductions, internally generated growth increased revenues by approximately
$15,512,000 (or 13.5%) for the three months ended September 30, 1998 and
$48,305,000 (or 14.9%) for the nine months ended September 30, 1998.
7
<PAGE> 8
Excluding the effect on the Company's revenues from the Medicare price
reductions, growth due to acquisitions increased revenues by approximately
$13,813,000 (or 12.0%) for the three months ended September 30, 1998 and
$35,266,000 (or 10.9%) for the nine months ended September 30, 1998.
The revenue price cuts attributed to the BBA affected the relationship of
costs and expenses expressed as a percentage of net revenues. (see table)
<TABLE>
<CAPTION>
EXPRESSED AS A PERCENTAGE OF NET REVENUES
---------------------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
--------------------------------------------- ---------------------------------------------
RESULTS RESULTS
EXCLUDING EXCLUDING
ACTUAL IMPACT OF BBA ACTUAL ACTUAL IMPACT OF BBA ACTUAL
RESULTS PRICE CUTS RESULTS RESULTS PRICE CUTS RESULTS
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1998 1997 1998 1998 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Costs of goods and
services............... 15.1% 13.2% 14.7% 15.6% 13.7% 15.1%
Operating expenses....... 22.4% 19.5% 21.1% 23.1% 20.2% 21.2%
Selling, general, and
administrative
expenses............... 21.9% 19.1% 20.1% 22.3% 19.5% 20.2%
</TABLE>
Costs of goods and services as a percentage of net revenues were 15.1% for
the three months ended September 30, 1998 compared with 14.7% for the three
months ended September 30, 1997. Costs of goods and services as a percentage of
net revenues were 15.6% for the nine months ended September 30, 1998 compared
with 15.1% for the nine months ended September 30, 1997. Absent the effect of
the BBA price cuts, costs of goods and services as a percentage of net revenues
were 13.2% for the three months ended September 30, 1998 and 13.7% for the nine
months ended September 30, 1998. This improvement is attributed primarily to the
maturity of the Company's respiratory pharmacy operations which commenced
operations in the fourth quarter of 1996 as well as increased revenues from
rental of capital equipment.
Operating expenses as a percentage of net revenues were 22.4% for the three
months ended September 30, 1998 as compared to 21.1% for the three months ended
September 30, 1997. Operating expenses as a percentage of net revenues were
23.1% for the nine months ended September 30, 1998 compared with 21.2% for the
nine months ended September 30, 1997. Adjusted to remove the effect of the BBA
price cuts, operating expenses as a percentage of net revenues were 19.5% for
the three months ended September 30, 1998 and 20.2% for the nine months ended
September 30, 1998. This improvement was primarily due to the Company's
successful integration of acquired businesses into its existing locations.
Selling, general and administrative expenses as a percentage of net
revenues were 21.9% for the three months ended September 30, 1998 compared with
20.1% for the three months ended September 30, 1997. Selling, general and
administrative expenses as a percentage of net revenues were 22.3% for the nine
months ended September 30, 1998 compared with 20.2% for the nine months ended
September 30, 1997. Expressed as a percentage of net revenues before the price
cuts attributed to the BBA, selling, general and administrative expenses were
19.1% for the three months ended September 30, 1998 and 19.5% for the nine
months ended September 30, 1998. The Company has been able to maintain a cost
structure that, with increases in net revenues, allows the Company to spread its
overhead across a larger base of revenue, resulting in improvements in operating
income.
Amortization expense for the three months ended September 30, 1998
decreased to $3,328,000 compared with $3,580,000 for the three month period
ending September 30, 1997. Amortization expense for the nine months ended
September 30, 1998 decreased to $9,279,000 compared with $10,643,000 for the
nine month period ended September 30, 1997. The decrease is attributable to the
impairment writedown of certain customer list intangible assets in the fourth
quarter of 1997.
8
<PAGE> 9
Operating income for the three and nine months ended September 30, 1998
decreased to $37,284,000 and $100,301,000, respectively, compared with
$38,498,000 and $107,318,000 for the three and nine months ended September 30,
1997. These decreases are due to the impact of the revenue price cuts
attributable to the BBA.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided from operating activities was $113,255,000 for the nine
months ended September 30, 1998 compared with $90,170,000 for the nine months
ended September 30, 1997. The increase in cash from operating activities is
primarily attributed to improved management of working capital and the income
tax effect of stock options exercised. Accounts receivable increased $7,974,000
for the nine months ended September 30, 1998 compared with an increase of
$9,658,000 for the nine months ended September 30, 1997. Accounts payable
increased $4,453,000 for the nine months ended September 30, 1998 compared with
a decrease of $3,137,000 for the nine months ended September 30, 1997.
Net cash used in investing and financing activities was $106,072,000 for
the nine months ended September 30, 1998 compared with $88,279,000 for the nine
months ended September 30, 1997. Activity during the nine-month period included
the Company's investment of $71,674,000 in business acquisitions, investment in
capital equipment of $52,590,000, proceeds of $48,000,000 from long-term
obligations, payments of $35,706,000 related to long-term obligations, and
proceeds from common stock issued of $7,352,000 related to the exercise of
employee stock options.
YEAR 2000 REMEDIATION
Certain risks may exist with respect to potential malfunctions of computer
hardware and software and embedded microprocessors due to the upcoming change in
the century (the "Year 2000 problem"). Malfunctions may arise due to the design
of microchips and microprocessors and computer systems that are programmed to
use two rather than four digits to define the applicable year. The Company is
involved in an extensive, ongoing program to identify and remediate potential
issues arising from the Year 2000 problem.
The Company uses a proprietary and internally developed management
information system (MIS) which serves as the platform for the operating and
financial activities of the Company. The MIS system processes billings to and
collections from third party payors for services provided by the Company and
supports all of the Company's accounting, finance and general ledger functions.
The system provides management with information used to measure and evaluate
performance levels throughout the Company including revenues and profitability,
accounts receivable and collections, equipment controls and utilization,
customer activity and manpower trends. The Company has completed, in all
material respects, the conversion of its mission-critical MIS software thereby
mitigating the risk of Year 2000 problems. The costs associated with this
conversion were immaterial and fully expensed in the current and prior fiscal
years.
The Company is assessing its use of ancillary, third party computer
software used to electronically submit medical claims to certain payors. In the
event that the use of this software is impacted by the Year 2000 problem, the
Company's contingency plan includes the submission of paper claims to such
payors. The Company does not believe that this will have a material effect on
the Company's ability to receive payment for services rendered.
Certain medical devices and equipment provided by the Company to its
customers may contain embedded technology such as microprocessors that could be
affected by the Year 2000 problem. The Company has identified those categories
of devices and equipment that may be sensitive to the change in century, and has
developed a plan to determine the Year 2000 status of specific items. In the
event that the Company identifies specific devices and equipment that are not
Year 2000 compliant, or the Company is unable to determine the status of such
items, the Company will remove such items from service and replace them with
therapeutically comparable, Year 2000 compliant equipment from alternate
vendors. The Company does not believe that the scope and cost of exchanging
non-compliant devices and equipment will have a material impact on the Company's
financial position.
9
<PAGE> 10
The Company is highly dependent upon certain government and private payors
for payment of claims for services and equipment provided by the Company. The
Company is in the process of determining the Year 2000 compliance of computer
systems used by third party payors to process claims for medical services and
equipment submitted by the Company for payment. The Company cannot be assured of
the timely remediation of third party claims processing and payment systems. The
failure by a significant third party payor to correct Year 2000 problems, to the
extent that such issues delay or prevent timely or appropriate payment of
claims, could have a material impact on the Company's cash flow from operations.
The Company is monitoring the Year 2000 progress of Medicare Part B carriers,
and other government agencies and private payors with which the Company does
significant business, to determine the potential impact to the Company. The
Company is also in the process of determining the contingency plans of these
payors to release payments to providers such as the Company in the event of
claims processing system failures. Such plans may include cash advances to
providers based on historical payment trends or processing claims on paper
rather than in an electronic format.
QUANTITATIVE AND QUALITATIVE DISCLOSURE REGARDING MARKET RISK
The Company has no derivative securities as of September 30, 1998. The
Company is exposed to changes in interest rates as a result of its bank credit
facility which is based on the London Interbank Offered Rate.
A 10% increase in interest rates related to the Company's bank credit
facility would not have a material effect on the Company's earnings over the
next fiscal year.
FORWARD LOOKING STATEMENTS
Statements contained in this Form 10-Q that are not based on historical
facts are forward looking statements, subject to uncertainties and risks,
including, but not limited to, the constantly changing healthcare environment,
potential reductions in reimbursement by government and third party payors for
the Company's products and services, the demand for the Company's products and
services, economic and competitive conditions, the availability of appropriate
acquisition candidates and the successful completion of acquisitions, access to
borrowed and/or equity capital on favorable terms, and other risks detailed in
the Company's Securities and Exchange Commission filings.
PART II. OTHER INFORMATION
Item 1 Legal Proceedings
The Company has received subpoenas from the U.S. Attorney's Office in
Sacramento, California requesting various documents including (i) documents
relating to the provision of home oxygen therapy to beneficiaries of certain
federally funded healthcare programs during 1995 and 1996 by five Lincare
locations in California and Oregon; (ii) documents concerning certain marketing
programs and practices for oxygen and other therapies, and certain policies and
procedures, in place at five Lincare locations in California and Oregon from
1995 to present; and (iii) certain information regarding compliance with the
billing and documentation requirements of various federally funded health care
programs by ten Lincare locations in California and Oregon from 1995 to present.
The federal government has not served the Company with a complaint nor has
it disclosed the basis for its inquiries to the Company. The Company is
cooperating with the government's request for information. Due to its
preliminary nature, the duration or outcome of this matter cannot be predicted
with any degree of certainty.
Items 2-5 Not applicable.
10
<PAGE> 11
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C> <C>
27.0 -- Financial Data Schedule (for SEC Use Only)
</TABLE>
(b) The Company did not file a Current Report on Form 8-K during the nine
months ended September 30, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Lincare Holdings Inc.
--------------------------------------
Registrant
/s/ PAUL G. GABOS
--------------------------------------
Paul G. Gabos
Secretary, Chief Financial Officer
and Principal Accounting Officer
November 13, 1998
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LINCARE HOLDINGS INC. FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 11,261
<SECURITIES> 0
<RECEIVABLES> 92,043
<ALLOWANCES> 9,829
<INVENTORY> 1,881
<CURRENT-ASSETS> 95,593
<PP&E> 236,788
<DEPRECIATION> 98,232
<TOTAL-ASSETS> 556,689
<CURRENT-LIABILITIES> 55,533
<BONDS> 0
0
0
<COMMON> 582
<OTHER-SE> 467,520
<TOTAL-LIABILITY-AND-EQUITY> 566,689
<SALES> 357,113
<TOTAL-REVENUES> 357,113
<CGS> 55,698
<TOTAL-COSTS> 55,698
<OTHER-EXPENSES> 201,114
<LOSS-PROVISION> 4,285
<INTEREST-EXPENSE> 720
<INCOME-PRETAX> 99,895
<INCOME-TAX> 38,260
<INCOME-CONTINUING> 61,635
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,635
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.04
</TABLE>
