POLYMEDICA CORPORATION

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

On February 5, 2004, PolyMedica Corporation announced its financial results for the quarter ended December 31, 2003. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

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 hereunto duly authorized.

EX-99.1 3 b49410pcexv99w1.htm EX-99.1 PRESS RELEASE DATED FEBRUARY 5, 2004 EX-99.1 PRESS RELEASE DATED FEBRUARY 5, 2004

POLYMEDICA ANNOUNCES RESULTS FOR FISCAL 2004 THIRD QUARTER
ENDED DECEMBER 31, 2003

WOBURN, MA – February 5, 2004 — PolyMedica Corporation (NNM: PLMD) today announced its financial results for the fiscal 2004 third quarter ended December 31, 2003.

Net Revenues
Net revenues for the fiscal 2004 third quarter were $106.5 million, compared to $89.9 million for the fiscal 2003 third quarter.

Earnings
Net income for the fiscal 2004 third quarter was $2.2 million, or $0.08 per diluted share, compared to $10.4 million, or $0.41 per diluted share (on a split-adjusted basis) for the fiscal 2003 third quarter. As previously announced, these results include a one-time, non-cash impairment charge of $14.4 million, or $0.34 per diluted share, to write down the carrying cost of the Company’s Respiratory direct response advertising asset to net realizable value. These results also include a $3.1 million charge, or $0.07 per diluted share, recorded as a reduction to revenues, to establish additional reserves for estimated overpayments by Medicare.

Cash Flow
Cash flow from operations was $14.9 million for the fiscal 2004 third quarter, compared to $7.8 million for the fiscal 2003 third quarter, and the Company’s balance of cash and marketable securities increased from $43.0 million to $57.0 million during the fiscal 2004 third quarter.

Commenting on the financial results for the quarter, Chairman and Chief Executive Officer Samuel L. Shanaman, said, “We had another excellent quarter, setting new records for operational performance, and our balance sheet continues to get stronger.”

As part of the internal review that PolyMedica is conducting in parallel with the Department of Justice investigation, the Company identified a category of Medicare claims where the documentation for the claim supported a portion, but not the full quantity, of the products shipped and billed. The Company engaged an independent consulting firm to perform a statistical analysis of all Medicare claims filed by the Company over a six-year period in order to develop an estimate of overpayments by Medicare related to this category of claims. The Company recently received the preliminary results of that analysis which indicate an aggregate overpayment of approximately $5.7 million, which required an additional $3.1 million to be added to existing reserves in the December quarter as described above.

That analysis also identified certain other claims that largely occurred during 1999 and 2000 where the Company’s documentation was consistent with the full quantity shipped and billed, but was not strictly in accordance with Medicare rules. PolyMedica is asserting the adequacy of its documentation for these claims to the government investigators. Accordingly, the Company has not recorded any reserves for this category of claims, as to which the analysis indicates that the amount potentially at issue is approximately $12 million, and anticipates that the issue will be addressed in the context of the overall resolution of the

investigation. While the government’s investigation could identify other issues, PolyMedica is not aware of any information that would result in payments to the government by the Company which in the aggregate would substantially impair the Company’s ability to carry out its current business plan.

Commenting on these developments, Shanaman said, “Our engagement of an independent consulting firm to analyze a situation which we ourselves had identified, and our sharing that analysis with the government, are powerful demonstrations of our commitment to cooperate with the government’s investigation and to run our business in full compliance with the requirements of Medicare. We are hopeful that these steps will help facilitate a reasonably prompt and satisfactory resolution of the investigation.”

The Company continues to expect to report net revenues of $108 — $112 million and diluted earnings per share of $0.42 — $0.46 for the fiscal 2004 fourth quarter ending March 31, 2004.

PolyMedica management will host a conference call and live Webcast today, Thursday, February 5, at 4:30 p.m., EST, to discuss the Company’s fiscal third quarter. To listen to the conference call over the Internet, go to www.polymedica.com or www.fulldisclosure.com. Go to either Web site at least 15 minutes early to register and download and install any necessary audio software. For those unable to participate, a rebroadcast will be made available at www.polymedica.com and www.fulldisclosure.com for 90 days after the call. It will be available shortly after the call.

PolyMedica is a rapidly growing national medical products company. The Company is best known through its Liberty brand name and innovative direct-to-consumer television advertising to seniors with diabetes. Building on its technology-based operating platform and compliance management focus, PolyMedica continues to expand its product offerings to individuals with chronic diseases.

This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, but are not limited to, rules and regulations promulgated under the Act, unanticipated changes in Medicare reimbursement, outcomes of government reviews, inquiries and investigations and related litigation, continued compliance with government regulations, fluctuations in customer demand, management of rapid growth, competition from other healthcare product vendors, timing and acceptance of new product introductions, general economic conditions, geopolitical events and regulatory changes, as well as other especially relevant risks detailed in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the period ended March 31, 2003 and its Quarterly Reports on Form 10-Q for the periods ended June 30, 2003 and September 30, 2003. The information set forth herein should be read in light of such risks. The Company assumes no obligation to update the information contained in this press release.

PolyMedica Corporation
Consolidated Statements of Operations
(In thousands, except per share amounts)


			Three Months Ended					Nine Months Ended

			Dec. 31,			Dec. 31,		Dec. 31,		Dec. 31,
			2003			2002		2003		2002

Net revenues			$	106,463		$	89,917	$	310,622	$	259,530
Cost of sales				40,399			31,695		114,428		91,760

Gross margin				66,064			58,222		196,194		167,770
Selling, general and administrative expenses				62,539			41,000		155,610		120,005

Income from operations				3,525			17,222		40,584		47,765
Other income and expense				(40	)		118		197		68

Income before income taxes				3,485			17,340		40,781		47,833
Income tax provision				1,317			6,937		15,415		18,463

Income before cumulative effect of accounting change				2,168			10,403		25,366		29,370
Cumulative effect of accounting change, net of taxes of $9,187 (A)				—			—		—		(14,615	)

Net income			$	2,168		$	10,403	$	25,366	$	14,755

Diluted earnings per share:
	Income before cumulative effect of accounting change		$	0.08		$	0.41	$	0.98	$	1.17
		Net income	$	0.08		$	0.41	$	0.98	$	0.59
Weighted average shares, diluted				26,636			25,160		25,930		25,065

(A) Accounting change refers to the April 1, 2002 adoption of SFAS No. 142, “Goodwill and Other Intangible Assets”.


Supplemental information on segment net revenues:
Liberty Diabetes	$	68,891		$	60,119		$	207,184		$	179,595
Liberty Respiratory		20,349			19,765			60,284			54,954
Pharmaceuticals		17,223			10,033			43,154			24,981

Total net revenues	$	106,463		$	89,917		$	310,622		$	259,530

Supplemental summarized information on cash flows:
Cash flows from operating activities	$	14,927		$	7,791		$	38,890		$	20,397
Cash flows from investing activities *		(4,288	)		(3,635	)		(20,846	)		(15,712	)
Cash flows from financing activities		3,655			926			4,665			(653	)

Net change in cash and cash equivalents		14,294			5,082			22,709			4,032
Beginning cash and cash equivalents		35,577			26,834			27,162			27,884

Ending cash and cash equivalents	$	49,871		$	31,916		$	49,871		$	31,916

•

Includes the net maturity / (net purchase) of $290,000 and $ (5.6) million of marketable securities in the three and nine months ended December 31, 2003, respectively.


				December 31,		March 31,
				2003		2003

ASSETS
Current assets:
	Cash and cash equivalents			$	49,871	$	27,162
	Marketable securities				7,091		1,442
	Accounts receivable, net				50,439		61,168
	Inventories				20,207		18,850
		Deferred income taxes			13,960		13,960
	Prepaid expenses and other current assets				3,995		3,438

			Total current assets		145,563		126,020
Property, plant and equipment, net					62,302		53,304
Goodwill					5,946		5,946
Intangible assets, net					301		108
Direct response advertising, net					59,421		64,061
Other assets					1,374		1,530

			Total assets	$	274,907	$	250,969

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable and accrued expenses			$	27,581	$	29,579
	Current portion, capital lease obligations and note payable				274		2,310

			Total current liabilities		27,855		31,889
Long-term capital lease and other obligations					1,800		1,877
Deferred income taxes					15,653		20,528

			Total liabilities		45,308		54,294
			Total shareholders’ equity		229,599		196,675

			Total liabilities and shareholders’ equity	$	274,907	$	250,969

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Massachusetts	0-19842	04-3033368

(State or other juris- diction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)


	Item 12. Results of Operations and Financial Condition.
	Item 7. Financial Statements, Pro Forma Financial Information And Exhibits.
SIGNATURE
EXHIBIT INDEX
EX-99.1 PRESS RELEASE DATED FEBRUARY 5, 2004


Date: February 5, 2004	POLYMEDICA CORPORATION

	By:	/s/ Fred H. Croninger, III

		Fred H. Croninger, III Chief Financial Officer


Exhibit No.		Description

99.1		Press Release, dated February 5, 2004.


Investors:		Media:
Fred (“Skip”) Croninger		Denise DesChenes / Jim Barron
PolyMedica Corporation		Citigate Sard Verbinnen
(781) 933-2020		(212) 687-8080

Table of Contents

Table of Contents

Table of Contents

Table of Contents


11 State Street, Woburn, Massachusetts 10801

(Address of principal executive offices)(Zip Code)


Not Applicable

(Former name or former address, if changed since last report)