-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HMsCSHkpxpQoHpMxM3BOP4FvI6lDUTv0KR8NKxyNV31E3PUEw5iiiM/srfRk5Roa aqUHkdJer3fw1JNp3EHfvQ== 0000950144-96-006350.txt : 19960927 0000950144-96-006350.hdr.sgml : 19960927 ACCESSION NUMBER: 0000950144-96-006350 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960808 DATE AS OF CHANGE: 19960925 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LINCARE HOLDINGS INC CENTRAL INDEX KEY: 0000882235 STANDARD INDUSTRIAL CLASSIFICATION: 8090 IRS NUMBER: 510331330 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19946 FILM NUMBER: 96630575 BUSINESS ADDRESS: STREET 1: 19337 US 19 N STE 500 CITY: CLEARWATER STATE: FL ZIP: 34624 BUSINESS PHONE: 8135307700 MAIL ADDRESS: STREET 1: 19337 US 19 NORTH STE 500 CITY: CLEARWATER STATE: FL ZIP: 34624 10-Q 1 LINCARE HOLDINGS, INC. FORM 10-Q 1 - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 10-Q --------------------- (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996 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) DELAWARE 51-0331330 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 19337 US 19 NORTH, SUITE 500, 34624 CLEARWATER, FL (Zip Code) (Address of principal executive offices)
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. /X/ Yes / / No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT JULY 31, 1996 - - --------------------------------------------- --------------------------------------------- COMMON STOCK, $0.01 PAR VALUE 27,991,596 SHARES
- - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- 2 LINCARE HOLDINGS INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996 INDEX
PAGE ---- 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 Financial Condition and Results of Operations..................................................................... 7 PART II. OTHER INFORMATION Item 1 Legal Proceedings.............................................................. 8 Item 2 Changes in Securities.......................................................... 8 Item 3 Defaults Upon Senior Securities................................................ 8 Item 4 Submission of Matters to a Vote of Security Holders............................ 8 Item 5 Other Information.............................................................. 8 Item 6 Exhibits and Reports on Form 8-K............................................... 8 SIGNATURES.............................................................................. 8
2 3 LINCARE HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31, 1996 1995 ------------ ------------ (UNAUDITED) (IN THOUSANDS) ASSETS Current assets: Cash and cash equivalents........................................... $ 1,328 $ 1,009 Accounts and notes receivable....................................... 44,835 36,610 Income tax receivables.............................................. -- 772 Inventories......................................................... 1,328 1,299 Prepaid expenses.................................................... 711 674 --------- -------- Total current assets........................................ 48,202 40,364 --------- -------- Property and equipment................................................ 131,640 121,786 Less accumulated depreciation......................................... 50,657 48,534 --------- -------- Net property, plant and equipment................................ 80,983 73,252 --------- -------- Other assets: Goodwill............................................................ 162,235 130,491 Intangible assets................................................... 9,368 9,510 Covenants not to compete............................................ 5,490 6,370 Other............................................................... 616 219 --------- -------- Total other assets.......................................... 177,709 146,590 --------- -------- Total assets................................................ $ 306,894 $260,206 ========= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current installments of long-term obligations....................... $ 9,639 $ 4,992 Accounts payable.................................................... 10,278 10,214 Accrued expenses: Compensation and benefits........................................ 7,658 7,028 Other............................................................ 2,097 1,620 Income taxes payable................................................ 362 -- --------- -------- Total current liabilities................................... 30,034 23,854 Revolving credit loan................................................. 10,267 5,000 Long-term obligations, excluding current installments................. 1,106 2,383 Deferred income taxes................................................. 5,429 6,707 Minority interest..................................................... 791 879 Stockholders' equity: Common stock........................................................ 280 277 Additional paid-in capital.......................................... 91,561 86,049 Retained earnings................................................... 167,426 135,057 --------- -------- Total stockholders' equity.................................. 259,267 221,383 --------- -------- Total liabilities and stockholders' equity.................. $ 306,894 $260,206 ========= ========
See accompanying notes to condensed consolidated financial statements. 3 4 LINCARE HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED ------------------------- ------------------------- JUNE 30, JUNE 30, JUNE 30, JUNE 30, 1996 1995 1996 1995 ----------- ----------- ----------- ----------- (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) Net revenues................................ $ 84,970 $ 67,400 $ 164,742 $ 128,623 ----------- ----------- ----------- ----------- Costs and expenses: Costs of goods and services............... 13,060 9,968 25,318 19,080 Operating expenses........................ 17,988 14,623 35,306 27,830 Selling, general and administrative expense................................ 17,331 14,197 33,675 26,861 Bad debt expense.......................... 841 534 1,639 1,023 Depreciation expense...................... 4,980 4,095 9,765 8,040 Amortization expense...................... 3,189 2,848 6,320 5,239 ----------- ----------- ----------- ----------- 57,389 46,265 112,023 88,073 ----------- ----------- ----------- ----------- Operating income....................... 27,581 21,135 52,719 40,550 ----------- ----------- ----------- ----------- Other income (expense): Interest income........................... 55 81 87 215 Interest expense.......................... (79) (275) (164) (385) Net gain (loss) on disposal of property and equipment.......................... (5) 7 (11) 14 ------------ ------------ ------------ ------------ (29) (187) (88) (156) ----------- ----------- ----------- ----------- Income before income taxes............. 27,552 20,948 52,631 40,394 Income taxes................................ 10,607 8,170 20,262 15,754 ----------- ----------- ----------- ----------- Net income............................. $ 16,945 $ 12,778 $ 32,369 $ 24,640 =========== =========== =========== =========== Net income per common share................. $ .59 $ 0.45 $ 1.13 $ 0.86 =========== =========== =========== =========== Weighted average number of common shares and common share equivalents outstanding...... 28,867,381 28,619,482 28,742,439 28,571,566 =========== =========== =========== ===========
See accompanying notes to condensed consolidated financial statements. 4 5 LINCARE HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED --------------------- JUNE 30, JUNE 30, 1996 1995 -------- -------- (IN THOUSANDS) Cash from operations................................................... $ 47,724 $ 34,096 Investing activities: Proceeds from sale of property and equipment......................... 185 488 Capital expenditures................................................. (15,722) (14,511) (Increase) decrease in other assets.................................. (396) 48 Business acquisitions, net of cash acquired.......................... (36,226) (50,532) -------- -------- (52,159) (64,507) -------- -------- Financing activities: Proceeds from revolving line of credit............................... 15,000 32,000 Payment on revolving line of credit.................................. (9,000) (13,000) Proceeds from long-term obligations.................................. -- 506 Payment of long-term obligations..................................... (3,319) (5,504) Decrease in minority interest........................................ (226) (118) Proceeds from issuance of common stock............................... 2,299 1,419 -------- -------- 4,754 15,302 -------- -------- Increase (decrease) in cash............................................ 319 (15,109) Cash and cash equivalents, beginning of period......................... 1,009 16,023 -------- -------- Cash and cash equivalents, end of period............................... $ 1,328 $ 914 ======== ========
See accompanying notes to condensed consolidated financial statements. 5 6 LINCARE HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 -- BASIS OF PRESENTATION The accompanying condensed consolidated balance sheet as of June 30, 1996 and condensed statements of operations for the three months ended June 30, 1996 and 1995, and for the six months ended June 30, 1996 and 1995 and statement of cash flows for the six months ended June 30, 1996 and 1995 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, 1995 is derived from the Company's audited balance sheet as of that date. NOTE 2 -- BUSINESS COMBINATIONS During the six months ended June 30, 1996 the Company acquired, in unrelated acquisitions, the stock of six companies and certain assets of six 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 date of acquisition. The aggregate cost of these acquisitions was as follows:
(IN THOUSANDS) Cash...................................................... $ 36,226 Deferred acquisition obligations.......................... 5,655 Assumption of liabilities................................. 132 -------- $ 42,013 ========
The aggregate purchase price was allocated as follows: Current assets............................................ $ 3,257 Property and equipment.................................... 1,971 Intangible assets......................................... 3,422 Goodwill.................................................. 33,363 -------- $ 42,013 ========
Unaudited pro forma supplemental information on the results of operations for the six months ended June 30, 1996 and 1995 are provided below and reflect the 12 acquisitions as if they had been combined at the beginning of each respective period.
FOR THE SIX MONTHS ENDED ----------------------- JUNE 30, JUNE 30, 1996 1995 -------- -------- (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) Net revenues......................................................... $173,865 $142,585 ======== ======== Net income........................................................... $ 34,062 $ 27,300 ======== ======== Net income per common share.......................................... $ 1.18 $ .95 ======== ========
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 7 LINCARE HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS The following table sets forth for the periods indicated a summary of the Company's net revenues by source:
FOR THE FOR THE THREE MONTHS ENDED SIX MONTHS ENDED --------------------- --------------------- JUNE 30, JUNE 30, JUNE 30, JUNE 30, 1996 1995 1996 1995 -------- -------- -------- -------- (IN THOUSANDS) Oxygen and other respiratory therapy...... $ 77,861 $ 61,472 $151,055 $117,352 Home medical equipment and other.......... 7,109 5,928 13,687 11,271 -------- -------- -------- -------- Total........................... $ 84,970 $ 67,400 $164,742 $128,623 ======== ======== ======== ========
Net revenues for the three months ended June 30, 1996 increased by $17,570,000 (or 26.1%) compared with the three months ended June 30, 1995, and for the six months ended June 30, 1996 increased $36,119,000 (or 28.1%) compared with the six months ended June 30, 1995. Approximately $9,062,000 of the net revenue increase for the three months ended June 30, 1996 and $18,822,000 for the six months ended June 30, 1996 is attributable to acquisitions, while $8,508,000 for the three months ended June 30, 1996 and $17,297,000 for the six months ended June 30, 1996 reflects internal growth. 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, 1996, of approximately 3.0% on Medicare products and services. No additional impact from OBRA 93 is expected for 1996. Cost of goods and services as a percentage of net revenues was 15.4% for the three months ended June 30, 1996 compared with 14.8% for the three months ended June 30, 1995. Cost of goods and services as a percentage of net revenues for the six months ended June 30, 1996 was 15.4% compared with 14.8% for the six months ended June 30, 1995. The cost of sales increase as a percentage of revenues is attributable to the increased home medical equipment product mix of some of the acquisitions made in the last twelve months. Operating expenses as a percentage of net revenues was 21.2% for the three months ended June 30, 1996 compared with 21.7% for the three months ended June 30, 1995. Operating expenses as a percentage of net revenues for the six months ended June 30, 1996 was 21.4% compared with 21.6% for the six months ended June 30, 1995. 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 decreased to 20.4% for the three months ended June 30, 1996 compared with 21.1% for the three months ended June 30, 1995, and 20.4% for the six months ended June 30, 1996 compared with 20.9% for the six months ended June 30, 1995. The improvement is attributable to the Company's continued ability to leverage its infrastructure, with selling, general and administrative expenses increasing by 22.1% and 25.4% while revenues grew by 26.1% and 28.1%, respectively, for the three months ended June 30, 1996 and for the six months ended June 30, 1996. Amortization expense for the three months ended June 30, 1996 increased to $3,189,000 compared with $2,848,000 for the three month period ending June 30, 1995. Amortization expense increased to $6,320,000 for the six months ended June 30, 1996 compared with $5,239,000 for the six months ended June 30, 1995. This increase is attributable to the amortization of intangible assets acquired during 1995 and the first six months of 1996. 7 8 Operating income for the three months ended June 30, 1996, and six months ended June 30, 1996 increased to $27,581,000 and $52,719,000, respectively, compared with $21,135,000 and $40,550,000 for the three months ended June 30, 1995, and for the six months ended June 30, 1995 respectively. The increases in operating income are attributable to the continued internal and acquisition revenue growth and efforts to control costs. LIQUIDITY AND CAPITAL RESOURCES Cash from operations was $47,724,000 for the six months ended June 30, 1996 compared with $34,096,000 for the six months ended June 30, 1995. Cash used in investing and financing activities was $47,405,000 for the six months ended June 30, 1996 compared with $49,205,000 for the six months ended June 30, 1995. Activity in the six months ended June 30, 1996 included the Company's investment of $36,226,000 in business acquisitions, investment in capital equipment of $15,722,000, the borrowing of $15,000,000 from its revolving line of credit, payments of $9,000,000 on the revolving line of credit and payments of $3,319,000 related to deferred acquisition obligations. 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 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 ITEMS 1-5 Not applicable ITEM 6 Exhibits and Reports on Form 8-K (a) Exhibits:
SEQUENTIALLY EXHIBIT NUMBERED NUMBER EXHIBIT PAGE - - ------ ----------------------------------------------------------------- ------------ 27.0 Financial Data Schedule (for SEC use only).......................
(b) The Company did not file a current report on Form 8-K during the three months ended June 30, 1996. SIGNATURES 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 August 8, 1996 /s/ JAMES M. EMANUEL ----------------------------- James M. Emanuel Secretary, Chief Financial Officer and Principal Accounting Officer 8 EX-27 2 FINANCIAL DATA SCHEDULE (FOR SEC USE ONLY)
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF LINCARE HOLDINGS FOR THE SIX MONTHS ENDED DECEMBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 1,328 0 49,996 5,161 1,328 48,202 131,640 50,657 306,894 30,034 0 0 0 280 258,987 306,894 164,742 164,742 25,318 25,318 86,705 1,639 164 52,631 20,262 52,631 0 0 0 32,369 1.13 1.13
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