8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 26, 2006

POLYMEDICA CORPORATION

(Exact Name of Registrant as Specified in Charter)

Massachusetts	0-19842	04-3033368
(State or Other Jurisdiction of Incorporation	(Commission File Number)	(IRS Employer Identification No.)

11 State Street, Woburn, Massachusetts	01801
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (781) 933-2020

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Item 2.02. Results of Operations and Financial Condition

Item 9.01. Financial Statements and Exhibits

SIGNATURE

EXHIBIT INDEX

Ex-99.1 Press Release, dated January 26, 2006, of PolyMedica Corporation

Item 2.02.  Results of Operations and Financial Condition

      On January 26, 2006, PolyMedica Corporation (the “Company”) announced its financial results for the quarter ended December 31, 2005. 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.

Item 9.01. Financial Statements and Exhibits.

     (d)  Exhibits

Exhibit Number	Description
99.1	Press Release, dated January 26, 2006, of PolyMedica Corporation

SIGNATURE

      Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	POLYMEDICA CORPORATION
Date: January 26, 2006	By: /s/ Devin J. Anderson
	Devin J. Anderson
	General Counsel and Secretary

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release, dated January 26, 2006, of PolyMedica Corporation

EX-99.1

Investor Contact:

Keith W. Jones

Chief Financial Officer

(781) 933-2020

POLYMEDICA REPORTS RESULTS FOR FISCAL 2006 THIRD QUARTER

Company Provides Update on Medicare Part D Program

Third Quarter Highlights:

·   Revenues from continuing operations increased 37.6% from last year’s third quarter;

·   Earnings per share increased 21.2% to $0.40 from $0.33 in last year’s third quarter;

·   Diabetes patients increased to 862,000, representing growth of 27.8% from last year,

·   AgaMatrix/Liberty blood glucose monitoring system receives FDA clearance to commence marketing; Company to expand private label strategy; and

·   Preliminary results of Company’s Part D initiative are promising.

Woburn, Massachusetts (January 26, 2006) - PolyMedica Corporation (NASDAQ/NM:PLMD) announced today its financial results for the fiscal 2006 third quarter and nine months ended December 31, 2005.

For the fiscal quarter ended December 31, 2005, net revenues were $131.9 million, a 37.6% increase over $95.9 million for the same period in the prior fiscal year. Net income from continuing operations for the quarter was $9.6 million, or $0.40 per diluted share, compared with $9.2 million, or $0.33 per diluted share, for the prior year period.

For the nine months ended December 31, 2005, net revenues were $350.9 million, a 25.5% increase over $279.5 million for the same nine-month period of fiscal 2005. Net income from continuing operations for the nine months ended December 31, 2005, was $29.6 million, or $1.14 per diluted share, compared with net income of $25.1 million, or $0.90 per diluted share, for the prior year period, excluding a one-time settlement charge of $0.66 per diluted share.

Commenting on the Company’s quarterly results, President and Chief Executive Officer Patrick Ryan said, “The Company’s diabetes business continued to report strong growth this quarter, demonstrated by the 15.9% increase in diabetes revenue from last quarter. We accomplished this performance despite confusion in the marketplace caused by heavy Medicare Part D advertising.”

Mr. Ryan continued, “I am also pleased to report that the early returns related to our Medicare Part D strategy have exceeded our expectations. We are seeing higher average order size and the enrollment of new patients has been strong. While the results are still preliminary and ongoing, we believe that a positive trend is emerging in our pharmacy and we have been humbled by the trust our patients place in Liberty. Our success will not be without upfront cost and effort. The average call time has been almost eight times longer than historical rates and a significant number of our dual-eligible patients have yet to receive their Part D cards. To meet these challenges, we have completed the construction of an additional 500 seat call center, hired more than 200 employees, and shifted existing resources. Our decision to ramp up our investment in the pharmacy business, along with one-time charges related to the termination of due diligence activities on two acquisitions totaled approximately $1.5 million dollars for the quarter. Our philosophy is to invest based upon the long-term opportunity, and we anticipate that the next couple of quarters will require continued investment to enroll patients into this program.”

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PLMD Reports Results for Fiscal 2006 Third Quarter

Page 2

January 26, 2006

PolyMedica further strengthened its management team with the addition of two seasoned industry executives, David Kreiss and Gerhard Perschke. David Kreiss, who was Special Assistant to the Administrator of the Centers for Medicare & Medicaid Services and who led the development of the Chronic Care Improvement Program, will join PolyMedica as Chief of Government Affairs. Gerhard Perschke fills the role of Chief Information Officer and brings 13 years of CIO experience, including his recent accomplishments at Caremark, where he created an infrastructure to support its growth from a $2.8 billion to a $9.0 billion company.

In the second quarter, the Company completed the sale of its Women's Health Products Division and announced the Company's decision to sell the assets of the Liberty Respiratory segment. Therefore, the Company has reclassified the operating results, and applicable cash flows, assets and liabilities of these businesses into discontinued operations. All prior periods presented herein have been reclassified to conform to this presentation.

Conference Call and Replay

PolyMedica management will host a conference call and live webcast today, Thursday, January 26, at 11:00 a.m. Eastern time to discuss the Company’s financial results. The number to call for this interactive conference call is 1-800-670-3544. A 90-day online replay will be available beginning approximately one hour following the conclusion of the live broadcast. A link to these events can be found on the Company’s website at www.polymedica.com or at www.earnings.com.

About PolyMedica

PolyMedica Corporation is a leading provider of healthcare products and services to patients suffering from chronic diseases. With over 862,000 active patients, the Company is the nation's largest provider of blood glucose testing supplies and related services to people with diabetes. In addition, PolyMedica provides its patients with a full range of prescription medications through Liberty's mail-order pharmacy. By communicating with patients on a regular basis, providing the convenience of home delivery, and submitting claims for payment directly to Medicare and other insurers on behalf of their patients, PolyMedica provides a simple and reliable way for patients to obtain their supplies and medications and encourages compliance with their physicians' orders. More information about PolyMedica can be found on the Company’s Web site at www.polymedica.com.

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, 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, 2005, and Quarterly Reports on Form 10-Q for the periods ended September 30 and June 30, 2005. 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.

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PLMD Reports Results for Fiscal 2006 Third Quarter

Page 3

January 26, 2006

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,
        
        
 
2005
        
2004
        
2005
        
2004
        
        
Net revenues
        
$
        
131,931
        
$
        
95,864
        
$
        
350,886
        
$
        
279,516
        
        
Cost of sales
        
 
62,999
        
 
42,305
        
 
161,526
        
 
122,693
        
        
Gross margin
        
 
68,932
        
 
53,559
        
 
189,360
        
 
156,823
        
        
Selling, general and administrative expenses
        
 
52,328
        
 
39,254
        
 
140,650
        
 
117,872
        
        
Settlement charge
        
 
-
        
 
-
        
 
-
        
 
29,987
        
        
 
 
 
 
 
 
 


60;
 
        
Income from continuing operations
        
 
16,604
        
 
14,305
        
 
48,710
        
 
8,964
        
        
Other income and expense
        
 
(1,464)
        
 
349
        
 
(2,039)
        
 
818
        
        
Income from continuing operations
        
 
 
 
 
 
 
 
 
        
before income taxes
        
 
15,140
        
 
14,654
        
 
46,671
        
 
9,782
        
        
Income tax provision
        
 
5,526
        
 
5,412
        
 
17,042
        
 
3,106
        
        
Income from continuing operations, 
        
 
 
 
 
 
 
 
 
        
net of income taxes
        
 
9,614
        
 
9,242
        
 
29,629
        
 
6,676
        
        
 
 
 
 
 
 
 


60;
 
        
Income from discontinued operations,
        
 
 
 
 
 
 
 
 
        
net of income taxes
        
 
264
        
 
4,855
        
 
26,344
        
 
14,047
        
        
Net income
        
$
        
9,878
        
$
        
14,097
        
$
        
55,973
        
$
        
20,723
        
        
Income from continuing operations, net of income 
        
 
 
 
 
 
 
 
 
        
taxes, per weighted average share, diluted
        
$
        
0.40
        
$
        
0.33
        
$
        
1.14
        
$
        
0.24
        
        
 
 
 
 
 
 
 


60;
 
        
Income from discontinued operations, net of 
        
 
 
 
 
 
 
 
 
        
income taxes, per weighted average share, diluted
        
$
        
0.01
        
$
        
0.17
        
$
        
1.02
        
$
        
0.50
        
        
Net income per weighted average share, diluted
        
$
        
0.41
        
$
        
0.50
        
$
        
2.16
        
$
        
0.74
        
        
Weighted average shares, diluted
        
 
24,270
        
 
28,162
        
 
25,922
        
 
27,841
        
        
Supplemental information on segment net revenues:
        
 
 
 
 
 
 
 
 
        
Liberty Diabetes
        
$
        
110,481
        
$
        
78,656
        
$
        
288,997
        
$
        
233,687
        
        
Pharmaceuticals
        
 
21,450
        
 
17,208
        
 
61,889
        
 
45,829
        
        
Total net revenues
        
$
        
131,931
        
$
        
95,864
        
$
        
350,886
        
$
        
279,516
        
        
 
 
 
 
 
 
 


60;
 
        
Supplemental summarized information on cash flows:
        
 
 
 
 
 
 
 
 
        
Cash flows (used for) from operating activities
        
$
        
(17,721)
        
$
        
(34,547)
        
$
        
12,235
        
$
        
2,621
        
        
Cash flows used for investing activities
        
 
(25,911)
        
 
(5,028)
        
 
(46,021)
        
 
(14,653)
        
        
Cash flows (used for) from financing activities
        
 
(10,619)
        
 
1,841
        
 
(32,389)
        
 
2,977
        
        
Net change in cash and cash equivalents
        
 
(54,251)
        
 
(37,734)
        
 
(66,175)
        
 
(9,055)
        
        
Beginning cash and cash equivalents
        
 
60,322
        
 
97,908
        
 
72,246
        
 
69,229
        
        
Ending cash and cash equivalents
        
$
        
6,071
        
$
        
60,174
        
$
        
6,071
        
$
        
60,174
        
        

        
        
      

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PLMD Reports Results for Fiscal 2006 Third Quarter

Page 4

January 26, 2006

POLYMEDICA CORPORATION
Consolidated Balance Sheets
(In thousands)
	Dec. 31,		March 31,
	2005		2005
ASSETS
Current assets:
Cash and cash equivalents	$	6,071	$	72,246
Marketable securities		-		6,804
Accounts receivable, net		92,685		62,054
Inventories		40,019		25,730
Deferred income taxes		14,477		14,477
Income tax receivable		-		1,085
Prepaid expenses and other current assets		10,162		7,327
Current assets of discontinued operations		1,399		6,651
Total current assets		164,813		196,374
Property, plant and equipment, net		62,387		59,984
Goodwill		69,367		10,498
Intangible assets, net		29,305		14,954
Direct response advertising, net		87,431		78,499
Other assets		7,148		438
Long-term assets of discontinued operations		-		8,316
Total assets	$	420,451	$	369,063
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	61,473	$	29,119
Current portion, capital lease obligations		602		559
Current liabilities of discontinued operations		632		3,588
Total current liabilities		62,707		33,266
Long-term credit facility		167,500		-
Capital lease, note payable and other obligations		3,375		3,113
Deferred income taxes		31,659		31,659
Total liabilities		265,241		68,038
Total shareholders’ equity		155,210		301,025
Total liabilities and shareholders’ equity	$	420,451	$	369,063

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PLMD Reports Results for Fiscal 2006 Third Quarter

Page 5

January 26, 2006

POLYMEDICA CORPORATION
Consolidated Statement of Income – Reconciliation of Non-GAAP Financial Measures
(In thousands, except per share amounts)
	Nine Months Ended
	December 31, 2004
	Reported				Adjusted
	GAAP		Settlement		Non-GAAP
	Totals		Charge		Totals
Income from continuing operations before income taxes	$	9,782	$	29,987	$	39,769
Income tax provision		3,106		11,567		14,673
Income from continuing operations, net of income taxes	$	6,676	$	18,420	$	25,096
Income from continuing operations, net of income taxes,
per weighted average share, diluted	$	0.24	$	0.66	$	0.90
The Company believes that referring to these non-GAAP totals facilitates a better understanding of its year-to-date operating results.

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