10-Q

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 June 30, 2011

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM             TO             

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 incorporation or organization)	(I.R.S. Employer Identification No.)

19387 US 19 North Clearwater, FL	33764
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:

(727) 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 by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

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 26, 2011
Common Stock, $0.01 par value	93,418,825

LINCARE HOLDINGS INC. AND SUBSIDIARIES

FORM 10-Q

For The Quarterly Period Ended June 30, 2011

INDEX

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)		3
	Condensed consolidated balance sheets		3
	Condensed consolidated statements of operations		4
	Condensed consolidated statements of cash flows		5
	Notes to condensed consolidated financial statements (unaudited)		6
Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Condition		18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		34
Item 4.	Controls and Procedures		34
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings		35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		36
Item 3.	Defaults Upon Senior Securities		36
Item 4.	Removed and Reserved		36
Item 5.	Other Information		36
Item 6.	Exhibits		36
SIGNATURE			37
INDEX OF EXHIBITS			S-1

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

LINCARE HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	June 30, 2011		December 31, 2010
ASSETS
Current assets:
Cash and cash equivalents	$	82,146	$	164,203
Short-term investments		40,000		40,000
Restricted cash		0		345
Accounts receivable, net		233,409		186,001
Income tax receivable		2,460		9,443
Inventories		15,388		13,276
Prepaid and other current assets		7,499		3,542
Deferred income taxes		24,842		26,488
Total current assets		405,744		443,298
Property and equipment, net		337,036		338,778
Goodwill		1,352,243		1,258,065
Other		16,145		7,690
Total assets	$	2,111,168	$	2,047,831
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term obligations	$	21,230	$	619
Accounts payable		56,728		64,078
Accrued expenses:
Compensation and benefits		31,815		39,500
Liability insurance		16,316		19,052
Other current liabilities		54,361		51,501
Total current liabilities		180,450		174,750
Long-term obligations, excluding current installments		511,564		494,271
Deferred income taxes and other taxes		404,305		381,061
Total liabilities		1,096,319		1,050,082
Commitments and contingencies:
Stockholders’ equity:
Common stock		948		963
Additional paid-in capital		696,342		681,988
Retained earnings		317,559		314,798
Total stockholders’ equity		1,014,849		997,749
Total liabilities and stockholders’ equity	$	2,111,168	$	2,047,831

See accompanying notes to condensed consolidated financial statements (unaudited).

3

LINCARE HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	For The Three Months Ended						For The Six Months Ended
	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
Net revenues	$	449,033		$	418,366		$	880,600		$	828,406
Costs and expenses:
Cost of goods and services		142,300			113,589			266,509			224,515
Operating expenses		102,189			99,673			204,096			198,200
Selling, general and administrative expenses		85,495			84,280			168,374			168,331
Bad debt expense		8,981			6,275			17,612			12,426
Depreciation and amortization expense		29,987			29,397			59,304			58,923
		368,952			333,214			715,895			662,395
Operating income		80,081			85,152			164,705			166,011
Other income (expense):
Interest income		200			142			403			235
Interest expense		(9,348	)		(9,016	)		(18,606	)		(17,950	)
		(9,148	)		(8,874	)		(18,203	)		(17,715	)
Income before income taxes		70,933			76,278			146,502			148,296
Income tax expense		28,168			29,863			57,360			58,245
Net income	$	42,765		$	46,415		$	89,142		$	90,051
Basic earnings per common share	$	0.46		$	0.48		$	0.96		$	0.94
Diluted earnings per common share	$	0.45		$	0.47		$	0.94		$	0.92
Dividends declared per common share	$	0.20		$	0.20		$	0.40		$	0.20
Weighted average number of common shares outstanding		92,096			96,080			92,535			95,896
Weighted average number of common shares and common share equivalents outstanding		94,989			98,677			95,291			98,165

See accompanying notes to condensed consolidated financial statements (unaudited).

4

LINCARE HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For The Six Months Ended
	June 30, 2011			June 30, 2010
Cash flows from operating activities:
Net income	$	89,142		$	90,051
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt expense		17,612			12,426
Depreciation and amortization expense		59,304			58,923
Net loss (gain) on disposal of property and equipment		25			(20	)
Amortization of debt issuance costs		884			884
Amortization of discount on bonds payable		9,744			9,086
Stock-based compensation expense		10,970			13,274
Deferred income taxes		24,822			13,561
Excess tax benefit from stock-based compensation		(240	)		(394	)
Change in assets and liabilities net of effects of acquired businesses:
Accounts receivable		(57,023	)		(56,767	)
Inventories		687			4,462
Prepaid and other assets		(3,972	)		298
Accounts payable		(3,454	)		1,412
Accrued expenses and other current liabilities		(21,616	)		(4,371	)
Income taxes payable		7,052			1,371
Long-term obligations		(2,161	)		(2,235	)
Net cash provided by operating activities		131,776			141,961
Cash flows from investing activities:
Proceeds from sale of property and equipment		125			37
Capital expenditures		(57,823	)		(54,947	)
Purchases of investments		(40,000	)		0
Sales and maturities of investments		40,000			24,950
Business acquisitions, net of cash acquired		(73,021	)		(11,327	)
Cash restricted for future payments		345			(5,345	)
Net cash used in investing activities		(130,374	)		(46,632	)
Cash flows from financing activities:
Payments of principal on debt		(619	)		(569	)
Payments of cash dividends		(38,186	)		0
Proceeds from exercise of stock options and issuance of common shares		5,104			25,817
Excess tax benefit from stock-based compensation		240			394
Payments to acquire treasury stock		(49,998	)		(49,961	)
Net cash used in financing activities		(83,459	)		(24,319	)
Net (decrease) increase in cash and cash equivalents		(82,057	)		71,010
Cash and cash equivalents, beginning of period		164,203			20,428
Cash and cash equivalents, end of period	$	82,146		$	91,438
Supplemental disclosure of cash flow information:
Cash paid for interest	$	7,563		$	7,563
Cash paid for income taxes	$	25,566		$	43,709

See accompanying notes to condensed consolidated financial statements (unaudited).

5

LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Summary of Significant Accounting Policies

Description of Business: Lincare Holdings Inc. and subsidiaries (“Lincare” or the “Company”) provides oxygen, respiratory therapy services, specialty pharmaceuticals, infusion therapy services and home medical equipment such as hospital beds, wheelchairs and other medical supplies to the home health care market. The Company’s customers are serviced from locations in 48 states. The Company’s equipment and supplies are readily available and the Company is not dependent on a single supplier or even a few suppliers.

Basis of Presentation: The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with generally accepted accounting principles accepted in the United States for interim financial information and with the instructions to Form 10-Q. They should be read in conjunction with the consolidated financial statements and related notes to the financial statements of Lincare Holdings Inc. and Subsidiaries on Form 10-K for the fiscal year ended December 31, 2010. 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 preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates. It is at least reasonably possible that a change in those estimates will occur in the near term.

Investments: The Company determines the appropriate classification of investments at the time of purchase based upon management’s intent with regard to such investments. Based upon the Company’s intentions and ability to hold certain assets until maturity, the Company classifies certain debt securities as held-to-maturity and measures them at amortized cost. The Company classifies certain other debt securities as available-for-sale and measures them at fair value with unrealized gains or losses recorded in other comprehensive income. Realized gains and losses from both categories of investments are included in net income and are determined on a specific identification basis. Interest income and dividend income, if any, for both categories of investments are included in net income.

Restricted Cash: Restricted cash was held in an interest-bearing escrow account for the purposes of complying with and performing certain contractual obligations in connection with the February 1, 2010 purchase of the respiratory therapy, home medical equipment and infusion therapy business of Gentiva Health Services, Inc.

Concentration of Credit Risk: The Company’s revenues are generated through locations in 48 states. The Company generally does not require collateral or other security in extending credit to customers; however, the Company routinely obtains assignment of (or is otherwise entitled to receive) benefits receivable under the health insurance programs, plans or policies of its customers. Included in the Company’s net revenues is reimbursement from government sources under Medicare, Medicaid and other federally and state funded programs, which represented approximately 61% and 60% of net revenues for the six months ended June 30, 2011 and 2010, respectively. The exclusion of the Company from participating in state and federally funded programs would have a material adverse effect on the Company’s business, financial condition, operating results and cash flows.

Self-Insurance Risk: The Company is subject to workers’ compensation, professional liability, auto liability and employee health benefit claims, which are primarily self-insured; however, the Company maintains certain stop-loss and other insurance coverage which it believes to be appropriate. Provisions for estimated settlements relating to these self-insured liabilities are provided in the period of the related claims on a case-by-case basis plus an amount for incurred but not reported claims. Differences between the amounts accrued and subsequent settlements are recorded in operations in the period of settlement.

6

LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Revenue Recognition and Accounts Receivable: The Company’s revenues are recognized on an accrual basis in the period in which services and related products are provided to customers and are recorded at net realizable amounts estimated to be paid by customers and third-party payors. The Company’s billing system contains payor-specific price tables that reflect the fee schedule amounts in effect or contractually agreed upon by various government and commercial payors for each item of equipment or supply provided to a customer. The Company has established an allowance to account for sales adjustments that result from differences between the payment amount received and the expected realizable amount. Actual adjustments that result from differences between the payment amount received and the expected realizable amount are recorded against the allowance for sales adjustments and are typically identified and ultimately recorded at the point of cash application or when otherwise determined pursuant to the Company’s collection procedures. The Company reports revenues in its financial statements net of such sales adjustments.

Certain items provided by the Company are reimbursed under rental arrangements that generally provide for fixed monthly payments established by fee schedules for as long as the patient is using the equipment and medical necessity continues (subject to capped rental arrangements which limit the rental payment periods in some instances and which may result in a transfer of title to the equipment at the end of the rental payment period). Once initial delivery of rental equipment is made to the patient, a monthly billing cycle is established based on the initial date of delivery. The Company recognizes rental arrangement revenues ratably over the monthly service period and defers revenue for the portion of the monthly bill that is unearned. No separate payment is earned from the initial equipment delivery and setup process. During the rental period, the Company is responsible for servicing the equipment and providing routine maintenance, if necessary.

The Company’s revenue recognition policy is consistent with the criteria set forth in Staff Accounting Bulletin 104, “Revenue Recognition” (“SAB 104”), for determining when revenue is realized or realizable and earned. The Company recognizes revenue in accordance with the requirements of SAB 104 that:

• persuasive evidence of an arrangement exists;

• delivery has occurred;

• the seller’s price to the buyer is fixed or determinable; and

• collectibility is reasonably assured.

Due to the nature of the industry and the reimbursement environment in which the Company operates, certain estimates are required to record net revenues and accounts receivable at their net realizable values at the time products and/or services are provided. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of many third-party billing arrangements and the uncertainty of reimbursement amounts for certain services from certain payors may result in adjustments to amounts originally recorded. Such sales adjustments are typically identified and recorded by the Company at the point of cash application, claim denial or account review. Included in accounts receivable are earned but unbilled accounts receivable from earned revenues. Unbilled accounts receivable represent charges for equipment and supplies delivered to customers for which invoices have not yet been generated by the Company’s billing system. Prior to the delivery of equipment and supplies to customers, the Company performs certain certification and approval procedures to ensure collection is reasonably assured. Once the items are delivered, unbilled accounts receivable are recorded at net amounts expected to be paid by customers and third-party payors. Billing delays, generally ranging from several days to several weeks, can occur due to delays in obtaining certain required payor-specific documentation from internal and external sources as well as interim transactions occurring between cycle billing dates established for each customer within the billing system, and business acquisitions awaiting assignment of new provider enrollment identification numbers. In the event that a third-party payor does not accept the claim, the customer is ultimately responsible for payment for the products or services. Accounts receivable are reported net of allowances for sales adjustments and uncollectible accounts. Sales adjustments are recorded against revenues and result from differences between the payment amount received and the expected realizable amount. Bad debt is recorded as an operating expense and consists of billed charges that are ultimately deemed uncollectible due to the customer’s or third-party payor’s inability to pay.

The Company performs analyses to evaluate the net realizable value of accounts receivable. Specifically, the Company considers historical realization data, accounts receivable aging trends, other operating trends and relevant business conditions. Because of continuing changes in the health care industry and third-party reimbursement, it is possible that the Company’s estimates could change, which could have a material impact on the Company’s results of operations and cash flows.

7

LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Net Revenues: The following table sets forth, for the periods indicated, a summary of the Company’s net revenues by product category:

	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2011		2010		2011		2010
	(In thousands)				(In thousands)
Respiratory and other chronic therapies	$	403,022	$	371,661	$	789,042	$	739,862
DME, infusion and enteral therapies		46,011		46,705		91,558		88,544
Total	$	449,033	$	418,366	$	880,600	$	828,406

Included in net revenues in the three and six months ended June 30, 2011 are rental items that comprise approximately 56.8% and 58.0%, respectively, of total revenues and sale items that comprise approximately 43.2% and 42.0%, respectively, of total revenues. Included in net revenues in the three and six months ended June 30, 2010 are rental items that comprise approximately 60.9% and 61.4%, respectively, of total revenues and sale items that comprise approximately 39.1% and 38.6%, respectively, of total revenues.

Sales and Certain Other Taxes: In its consolidated financial statements, the Company accounts for taxes imposed on revenue-producing transactions by government authorities on a net basis, and accordingly, excludes such taxes from net revenues. Such taxes include, but are not limited to, sales, use, privilege and excise taxes.

Cost of Goods and Services: Cost of goods and services includes the cost of medical equipment (excluding depreciation of $27.3 million and $53.6 million for the three and six-month periods in 2011 and $27.4 million and $53.7 million for the three and six-month periods in 2010, respectively), drugs and supplies sold to patients and certain operating costs related to the Company’s respiratory drug product line. These costs include an allocation of customer service, distribution and administrative costs relating to the respiratory drug product line of approximately $13.6 million and $27.5 million for the three and six-month periods ended June 30, 2011, respectively. For the three and six-month periods of 2010, such costs amounted to $13.3 million and $26.5 million, respectively. Included in cost of goods and services in the three and six-month periods ended June 30, 2011 are salary and related expenses of pharmacists and pharmacy technicians of approximately $3.9 million and $7.2 million, respectively. Such salary and related expenses for the three and six-month periods ended June 30, 2010, were $3.3 million and $6.4 million, respectively.

Operating Expenses: The Company manages 1,106 operating centers from which customers are provided equipment, supplies and services. An operating center averages approximately seven to eight employees and is typically comprised of a center manager, two customer service representatives (referred to as “CSR’s” – telephone intake, scheduling, documentation), two or three service representatives (referred to as “Service Reps” – delivery, maintenance and retrieval of equipment and delivery of disposables), a respiratory therapist (non-reimbursable clinical follow-up with the customer and communication to the prescribing physician) and a sales representative (marketing calls to local physicians and other referral sources).

8

LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The Company includes in operating expenses the costs incurred at the Company’s operating centers for certain service personnel (center manager, CSR’s and Service Reps), facilities (rent, utilities, communications, property taxes, etc.), vehicles (vehicle leases, gasoline, repair and maintenance), and general business supplies and miscellaneous expenses. Operating expenses for the interim periods of 2011 and 2010 within these major categories were as follows:

Operating Expenses (in thousands)

	For The Three  Months Ended June 30,				For The Six Months Ended June 30,
	2011		2010		2011		2010
Salary and related	$	66,965	$	65,108	$	132,776	$	128,066
Facilities		12,733		14,963		28,431		30,864
Vehicles		13,756		11,863		26,420		23,508
General supplies/miscellaneous		8,735		7,739		16,469		15,762
Total	$	102,189	$	99,673	$	204,096	$	198,200

Included in operating expenses during the three and six-month periods ended June 30, 2011 are salary and related expenses for Service Reps in the amount of $28.3 million and $55.9 million, respectively. Such salary and related expenses for the three and six-month periods ended June 30, 2010, were $27.5 million and $53.9 million, respectively.

Selling, General and Administrative Expenses: Selling, general and administrative expenses (“SG&A”) include costs related to sales and marketing activities, corporate overhead and other business support functions. Included in SG&A during the three and six-month periods ended June 30, 2011 are salary and related expenses of $62.9 million and $125.1 million, respectively. These salary and related expenses include the cost of the Company’s respiratory therapists for the three and six-month periods ended June 30, 2011, of $17.9 million and $34.5 million, respectively. Included in SG&A during the three and six-month periods ended June 30, 2010 are salary and related expenses of $64.9 million and $128.2 million, respectively. These salary and related expenses include the cost of the Company’s respiratory therapists for the three and six-month periods ended June 30, 2010, of $17.3 million and $33.6 million, respectively. The Company’s respiratory therapists generally provide non-reimbursable clinical follow-up with the customer and communication, as appropriate, to the prescribing physician with respect to the customer’s prescribed plan of care. The Company includes the salaries and related expenses of its respiratory therapist personnel (licensed respiratory therapists or, in some cases, registered nurses) in SG&A because it believes that these personnel enhance the Company’s business relative to its competitors who do not employ respiratory therapists.

Comprehensive Income: The Company’s comprehensive income is the same as reported net income for all periods presented.

Note 2. Fair Value of Assets and Liabilities

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. “the exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. A hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect a company’s judgment concerning the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows:

• Level 1 — Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

• Level 2 — Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

• Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

9

LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the Company’s degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases an asset or liability is classified in its entirety based on the lowest level of input that is significant to the measurement of fair value.

Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition has caused, and in the future may cause, the Company’s financial instruments to be reclassified from Level 1 to Level 2 or from Level 2 to Level 3. During the three and six-month periods ended June 30, 2011, the Company did not have any reclassifications in levels.

The Company estimated the fair value of acquisition-related contingent consideration arrangements by applying the income approach using a probability-weighted discounted cash flow model. This fair value measurement is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value.

Contingent consideration of $9.6 million was recognized in connection with a business acquisition in February 2011. At June 30, 2011, the amounts recognized for the contingent consideration arrangements, the range of outcomes, and the assumptions used to develop the estimates had not materially changed.

Contingent consideration of $9.3 million was recognized in connection with a business acquisition in June 2011. At June 30, 2011, the amounts recognized for the contingent consideration arrangements, the range of outcomes, and the assumptions used to develop the estimates had not materially changed.

The following table presents the valuation of the Company’s financial assets and liabilities as of June 30, 2011 and December 31, 2010, measured at fair value on a recurring basis (in thousands):

June 30, 2011	Level 1		Level 3		Fair Value
Assets
Money Market Funds (1)	$	50,014	$	0	$	50,014
Liabilities
Acquisition-related contingent consideration-short-term (2)	$	0	$	9,180	$	9,180
Acquisition-related contingent consideration-long-term (3)		0		9,710		9,710
Total acquisition-related contingent consideration	$	0	$	18,890	$	18,890
December 31, 2010
Assets
Money Market Funds (1)	$	101,600	$	0	$	101,600

(1) Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets.

(2) Included in current installments of long-term obligations in the accompanying condensed consolidated balance sheets.

(3) Included in long-term obligations, excluding current installments in the accompanying condensed consolidated balance sheets.

10

LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The following table presents the changes in the estimated fair values of the Company’s financial assets and liabilities that are measured using significant unobservable inputs (Level 3) for the six months ended June 30, 2011:

	(In thousands)
	Assets		Liabilities
Balance on December 31, 2010	$	0	$	0
Acquisition-related contingent consideration recorded in 2011		0		18,890
Balance on June 30, 2011	$	0	$	18,890

Fair Value of Financial Instruments

The estimated fair values of the Company’s financial instruments that are not measured at fair value on a recurring basis are as follows:

(In thousands)	June 30, 2011				December 31, 2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Short-term investments – held to maturity	$	40,000	$	40,000	$	40,000	$	40,000
Restricted cash		0		0		345		345
Liabilities:
2.75% Series A Debentures		260,747		308,172		255,727		302,672
2.75% Series B Debentures		238,771		323,297		234,047		305,422
Deferred acquisition obligations		12,050		12,050		619		619

Fair values were determined as follows:

• The carrying amounts of short-term investments, restricted cash and deferred acquisition obligations approximate fair value because of the short-term maturity of these instruments. The short-term investments are classified as held-to-maturity and are carried at amortized cost.

• The fair value of the Series A and Series B Debentures are estimated based on several standard market variables, including the Company’s stock price, yield to put/call through conversion and yield to maturity.

• The Company believes that the recorded values of all of its other financial instruments approximate their fair values because of their nature and respective relatively short maturity dates or durations.

• Deferred acquisition obligations exclude acquisition-related contingent consideration measured at fair value using Level 3 inputs.

Note 3. Investments

On April 15, 2011, the Company invested $20.0 million in a 185-day time deposit issued by Credit Agricole Corporate and Investment Bank maturing on October 17, 2011. The investment is classified as held-to-maturity and carried at amortized cost of $20.0 million in the accompanying balance sheet at June 30, 2011.

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LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

On January 14, 2011, the Company invested $20.0 million in a 181-day time deposit issued by Credit Agricole Corporate and Investment Bank maturing on July 14, 2011. The investment is classified as held-to-maturity and carried at amortized cost of $20.0 million in the accompanying balance sheet at June 30, 2011.

On October 15, 2010, the Company invested $20.0 million in a 182-day time deposit issued by Credit Agricole Corporate and Investment Bank that matured on April 15, 2011. The investment is classified as held-to-maturity and carried at amortized cost of $20.0 million in the accompanying balance sheet at December 31, 2010.

On August 10, 2010, the Company invested $20.0 million in a 157-day time deposit issued by Credit Agricole Corporate and Investment Bank that matured on January 14, 2011. The investment is classified as held-to-maturity and carried at amortized cost of $20.0 million in the accompanying balance sheet at December 31, 2010.

Note 4. Business Combinations

Lincare acquires the business and related assets of local and regional companies as an ongoing strategy to increase revenue within its respective markets. Lincare arrives at a negotiated purchase price taking into account such factors including, but not limited to, the acquired company’s historical and projected revenue growth, operating cash flow, product mix, payor mix, service reputation and geographical location.

During the six-month period ended June 30, 2011, the Company acquired all of the outstanding common stock of four companies and certain assets of two other companies. During the six-month period ended June 30, 2010, the Company acquired certain assets of four companies.

The acquisition date fair value of the total consideration transferred for the 2011 acquisitions was $101.2 million, which consisted of the following:

	(In thousands)
Cash consideration, net of cash acquired (1)	$	70,236
Contingent consideration		18,890
Deferred acquisition obligations		12,050
	$	101,176

(1) Does not include $2.8 million related to an acquisition closed in December 2010 and paid in January 2011.

The following table summarizes the fair values of the assets and liabilities assumed based on preliminary estimates that are subject to change in 2011 upon completion of the final valuation analyses:

	(In thousands)
Current assets, net of cash acquired	$	10,796
Property and equipment		249
Intangible assets		10,075
Goodwill		94,178
Assumption of liabilities		(14,080	)
Deferred revenue		(42	)
	$	101,176

The results of the 2011 acquisitions have been included in the Company’s financial statements from the acquisition date forward and were not significant for the first six months of 2011. Pro forma information for the comparable period of 2010 would not be materially different from amounts reported.

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LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 5. Accounts Receivable, Net

Accounts receivable, net at June 30, 2011 and December 31, 2010 consist of:

	June 30, 2011			December 31, 2010
	(In thousands)
Trade accounts receivable	$	285,989		$	234,404
Less allowance for sales adjustments and uncollectible accounts		(52,580	)		(48,403	)
Accounts receivable, net	$	233,409		$	186,001

Note 6. Property and Equipment, Net

Property and equipment, net at June 30, 2011 and December 31, 2010 consist of:

	June 30, 2011			December 31, 2010
	(In thousands)
Property and equipment at cost	$	1,209,549		$	1,168,236
Less accumulated depreciation		(872,513	)		(829,458	)
Property and equipment, net	$	337,036		$	338,778

Note 7. Other Current Liabilities

Other current liabilities at June 30, 2011 and December 31, 2010 consist of:

	June 30, 2011		December 31, 2010
	(In thousands)
Deferred revenue	$	40,141	$	39,256
Other current liabilities		14,220		12,245
Other current liabilities	$	54,361	$	51,501

Note 8. Long-Term Obligations

Long-term obligations at June 30, 2011 and December 31, 2010 consist of:

	June 30, 2011			December 31, 2010
	(In thousands)
Series A convertible debentures to mature in 2037, bearing fixed interest of 2.75%, with a put/call option in 2012	$	275,000		$	275,000
Unamortized discount		(14,253	)		(19,273	)
Series B convertible debentures to mature in 2037, bearing fixed interest of 2.75%, with a put/call option in 2014		275,000			275,000
Unamortized discount		(36,229	)		(40,953	)
Other long-term obligations		2,336			4,497
Unsecured acquisition obligations and contingent consideration, net of imputed interest, payable in various installments through 2014		30,940			619
Total long-term obligations		532,794			494,890
Less: current installments		21,230			619
Long-term obligations, excluding current installments	$	511,564		$	494,271

13

LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The Company’s revolving credit agreement with several lenders and Bank of America N.A., as agent, dated December 1, 2006, permits the Company to borrow amounts up to $390.0 million under a five-year revolving credit facility. The revolving credit facility contains a $60.0 million letter of credit sub-facility, which reduces the principal amount available under the facility by the amount of outstanding letters of credit on the sub-facility. As of June 30, 2011 and December 31, 2010, no borrowings were outstanding under the credit facility and $33.8 million and $31.6 million in standby letters of credit were issued as of those dates, respectively. The revolving credit agreement has a maturity date of December 1, 2011. The Company pays an annual administration agency fee along with a quarterly facility fee. The facility fee is based on the Company’s consolidated leverage ratio and ranges between 0.10% and 0.175% annually. The leverage ratio is calculated each quarter to determine the applicable interest rate on revolving loans, the letter of credit fee and the facility fee for the following quarter. The revolving credit agreement contains several financial and other negative and affirmative covenants customary in such agreements and is secured by a pledge of the stock of the wholly-owned subsidiaries of Lincare Holdings Inc. The financial covenants in the Company’s credit agreement include interest coverage and leverage ratios, as defined in the agreement. The Company’s credit agreement requires compliance with all covenants set forth in the agreement and the Company was in compliance with all covenants as of June 30, 2011 and December 31, 2010. The credit agreement defines the occurrence of certain specified events as events of default which, if not waived by or cured to the satisfaction of the requisite lenders, allow the lenders to take actions against the Company, including termination of commitments under the agreement, acceleration of any unpaid principal and accrued interest in respect of outstanding borrowings, payment of additional cash collateral to be held in escrow for the benefit of the lenders and enforcement of any and all rights and interests created and existing under the credit agreement. Under certain conditions, an event of default may result in an increase in the interest rate (the “Default Rate”) payable by the Company on loans outstanding under the credit facility. The Default Rate is equal to the interest rate (including any applicable percentage as set forth in the agreement) otherwise applicable to such loans plus 2% per annum. In the case of a bankruptcy event (as defined in the credit agreement), all commitments automatically terminate and all amounts outstanding under the credit facility become immediately due and payable.

On October 31, 2007, the Company completed the sale of $275.0 million principal amount of convertible senior debentures due 2037 – Series A (the “Series A Debentures”) and $275.0 million principal amount of convertible senior debentures due 2037 – Series B (the “Series B Debentures” and together with the Series A Debentures, the “Series Debentures”) in a private placement. The Series Debentures pay interest semi-annually at a rate of 2.75% per annum. The Series Debentures are unsecured and unsubordinated obligations and will be convertible under specified circumstances based upon a base conversion rate, which, under certain circumstances, will be increased pursuant to a formula that is subject to a maximum conversion rate. Upon conversion, holders of the Series Debentures will receive cash up to the principal amount, and any excess conversion value will be delivered in shares of the Company’s common stock or in a combination of cash and shares of common stock, at the Company’s option. The base conversion rate for the Debentures as of June 30, 2011 is 30.1118 shares of common stock per $1,000 principal amount of Series Debentures, equivalent to a base conversion price of approximately $33.21 per share. In addition, if at the time of conversion the applicable price of the Company’s common stock exceeds the base conversion price, holders of the Series A Debentures and Series B Debentures will receive an additional number of shares of common stock per $1,000 principal amount of the Debentures, as determined pursuant to a specified formula. The Company will have the right to redeem the Series A Debentures and the Series B Debentures at any time after November 1, 2012 and November 1, 2014, respectively. Holders of the Series Debentures will have the right to require the Company to repurchase for cash all or some of their Series Debentures upon the occurrence of certain fundamental change transactions or on November 1, 2012, 2017, 2022, 2027 and 2032 in the case of the Series A Debentures and November 1, 2014, 2017, 2022, 2027 and 2032 in the case of the Series B Debentures.

The Company has estimated the fair value of the liability components of the Series Debentures by calculating the present value of the cash flows of similar liabilities without associated equity components. In performing those calculations, the Company estimated that instruments similar to the Series A and B Debentures without a conversion feature as of the date of issuance would have had 7.0% and 7.4% rates of return (respectively) and expected lives of five and seven years (respectively). These estimated rates of return were based on the Company’s nonconvertible debt borrowing rate at the time of issuance and the expected lives were based on the holder’s put option features embedded in the notes. The initial proceeds from the instruments exceeded the estimated fair value of the liability components, and as a result, the Company reclassified $47.4 million and $67.2 million, respectively, of the carrying value of the Series A and B convertible debentures to equity as of the October 31, 2007 issuance date. These amounts represent the equity components of the proceeds from the debentures. The Company also recognized debt discounts equal to the equity components which will be accreted to interest expense over the respective five and seven year terms of the first put/call option dates specified in the indentures underlying the debentures. The accreted interest plus the cash interest payments based on the stated coupon rates results in interest cost being recognized in the income statement that reflect the interest rates on similar instruments without a conversion feature.

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LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The debt and equity components recognized for the Series A and Series B convertible debentures were as follows (in thousands):

	June 30, 2011						December 31, 2010
	Series A			Series B			Series A			Series B
Principal amount of convertible debentures	$	275,000		$	275,000		$	275,000		$	275,000
Unamortized discount		(14,253	)		(36,229	)		(19,273	)		(40,953	)
Net carrying amount		260,747			238,771			255,727			234,047
Additional paid-in capital		29,065			41,238			29,065			41,238

At June 30, 2011, the remaining period over which the discount on the liability components will be amortized is 16 months and 40 months for the Series A and Series B convertible debentures, respectively.

The amount of interest expense recognized for the three months ended June 30, 2011 and 2010 was as follows (in thousands):

	June 30, 2011				June 30, 2010
	Series A		Series B		Series A		Series B
Contractual coupon interest	$	1,890	$	1,890	$	1,891	$	1,891
Amortization of discount on convertible debentures		2,532		2,383		2,365		2,218
Interest expense	$	4,422	$	4,273	$	4,256	$	4,109

The amount of interest expense recognized for the six months ended June 30, 2011 and 2010 was as follows (in thousands):

	June 30, 2011				June 30, 2010
	Series A		Series B		Series A		Series B
Contractual coupon interest	$	3,781	$	3,781	$	3,781	$	3,781
Amortization of discount on convertible debentures		5,020		4,724		4,690		4,396
Interest expense	$	8,801	$	8,505	$	8,471	$	8,177

Note 9. Income Taxes

The Company conducts business nationally and, as a result, files a U.S. federal income tax return and returns in various state and local jurisdictions. In the normal course of business the Company is subject to examination by taxing authorities throughout the United States. With few exceptions, the Company is no longer subject to U.S. federal, and state and local income tax examinations for years before 2006 and 2005, respectively.

The Company does not expect that the total amount of unrecognized tax positions will significantly increase or decrease in the next twelve months. The Company continues to recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense.

The Internal Revenue Service has completed its examination of the Company’s U.S. income tax returns through 2009. The U.S. federal statute of limitations remains open for the years 2007 and forward. There are no material disputes for the open tax years. The years 2010 and 2011 are currently under examination.

15

LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 10. Earnings Per Common Share

Basic earnings per common share is computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share reflects the potential dilution of securities that could share in the Company’s earnings, including exercise of outstanding stock options and non-vested restricted stock. As discussed in Note 8, the conditions for conversion related to the Company’s Convertible Debentures have never been met. Accordingly, there was no impact on diluted earnings per share attributable to assumed conversion. When the exercise of stock options or the inclusion of awards would be anti-dilutive, they are excluded from the earnings per common share calculation. For the three and six months ended June 30, 2011 and 2010, there were no excluded shares underlying anti-dilutive stock options and awards.

A reconciliation of the numerators and the denominators of the basic and diluted earnings per common share computations is as follows:

	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2011		2010		2011		2010
	(In thousands, except per share data)
Numerator:
Income available to common stockholders and holders of dilutive securities	$	42,765	$	46,415	$	89,142	$	90,051
Denominator:
Weighted average shares		92,096		96,080		92,535		95,896
Effect of dilutive securities:
Incremental shares under stock compensation plans		2,893		2,597		2,756		2,269
Adjusted weighted average shares		94,989		98,677		95,291		98,165
Per share amount:
Basic	$	0.46	$	0.48	$	0.96	$	0.94
Diluted	$	0.45	$	0.47	$	0.94	$	0.92

Note 11. Stock-Based Compensation

For the three months ended June 30, 2011 and 2010, the Company recognized total stock-based compensation expenses of $5.5 million and $6.8 million, respectively, as well as related tax benefits of $1.3 million and $1.9 million, respectively. For the six months ended June 30, 2011 and 2010, the Company recognized total stock-based compensation expenses of $11.0 million and $13.3 million, respectively, as well as related tax benefits of $2.7 million and $3.6 million, respectively. All stock-based compensation expenses are recognized using a graded method approach and are either classified within operating expenses or selling, general and administrative expenses on the accompanying condensed consolidated statements of operations, with substantially all of the expense being in selling, general and administrative expenses.

16

LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Stock Options

Stock option activity for the six months ended June 30, 2011 is summarized below:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2010		6,912,014		$	24.51
Options granted in 2011		0			—
Exercised in 2011		(163,932	)	$	26.47
Cancelled/forfeited/expired in 2011		(3,100	)	$	26.89
Outstanding at June 30, 2011		6,744,982		$	24.46		2.94	$	32,436,018
Exercisable at June 30, 2011		5,848,982		$	25.09		2.40	$	24,470,578
Vested or expected to vest in the future as of June 30, 2011		6,743,459		$	24.46		2.94	$	32,422,477

Of the stock options outstanding at June 30, 2011, options for 5,848,982 shares were exercisable and options for 896,000 shares were unvested. Of the total stock options outstanding at June 30, 2011, 6,743,459 were vested or expected to vest in the future, net of expected cancellations and forfeitures of 1,523. The intrinsic value of options exercised during the six months ended June 30, 2011 and 2010 amounted to $0.7 million and $6.3 million, respectively.

As of June 30, 2011, the total remaining unrecognized compensation cost related to unvested stock options amounted to $1.3 million, which will be amortized over the weighted-average remaining requisite service period of 0.8 years.

Restricted Stock

The following table summarizes information about restricted stock activity for the six months ended June 30, 2011:

	Shares			Weighted- Average Grant Date Fair Value Per Share
Unvested at December 31, 2010		2,684,250		$	21.79
Granted		20,000		$	28.88
Vested		(179,225	)	$	26.33
Forfeited		(7,950	)	$	24.45
Unvested at June 30, 2011		2,517,075		$	21.51

As of June 30, 2011, the total remaining unrecognized compensation cost related to restricted stock amounted to $23.0 million, which will be amortized over the weighted-average remaining requisite service period of 1.5 years.

Note 12. Subsequent Event

On July 1, 2011, the Company announced that its Board of Directors had declared a quarterly cash dividend of $0.20 per share which was paid on July 29, 2011 to stockholders of record as of July 15, 2011. The total dividend paid was $19.0 million.

17

LINCARE HOLDINGS INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition

This “Management’s Discussion and Analysis of Results of Operations and Financial Condition” is intended to assist in understanding and assessing the trends and significant changes in our results of operations and financial condition. Historical results may not indicate future performance. As used in this “Management’s Discussion and Analysis of Results of Operations and Financial Condition,” the words “we,” “our,” “us,” “Lincare” and the “Company” refer to Lincare Holdings Inc. and its consolidated subsidiaries.

Medicare Reimbursement

As a provider of home oxygen and other respiratory therapy services to the home health care market, we participate in Medicare Part B, the Supplementary Medical Insurance Program, which was established by the Social Security Act of 1965. Providers of home oxygen and other respiratory therapy services have historically been heavily dependent on Medicare reimbursement due to the high proportion of elderly persons suffering from respiratory disease. Durable medical equipment (“DME”), including oxygen equipment, is traditionally reimbursed by Medicare based on fixed fee schedules.

Recent legislation, including the Patient Protection and Affordable Care Act (“PPACA”), the Medicare Improvements for Patients and Providers Act of 2008 (“MIPPA”), the Medicare, Medicaid and SCHIP Extension Act of 2007 (“SCHIP Extension Act”), the Deficit Reduction Act of 2005 (“DRA”) and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”), contain provisions that directly impact reimbursement for the primary respiratory and other DME products provided by Lincare. PPACA, as amended, is a comprehensive health care reform law that contains a large number of health-related provisions to take effect over the next several years, including various cost containment and program integrity changes that will apply to the home medical equipment industry. MIPPA delayed the implementation of a Medicare competitive bidding program for oxygen equipment and certain other DME items that was scheduled to begin on July 1, 2008 and instituted a 9.5% price reduction nationwide for these items as of January 1, 2009. The SCHIP Extension Act reduced Medicare reimbursement amounts for covered Part B drugs, including inhalation drugs that we provide, beginning April 1, 2008. DRA provisions negatively impacted reimbursement for oxygen equipment beginning in 2009 and negatively impacted reimbursement for DME items subject to capped rental payments beginning in 2007. MMA changed the pricing formulas used to establish payment rates for inhalation drug therapies resulting in significantly reduced reimbursement beginning in 2005, established a competitive acquisition program for DME, established a Recovery Audit Contractors (“RAC”) program, a demonstration project designed to test a new method for recovery of Medicare overpayments by utilizing private companies operating on a contingent fee basis to identify and recoup Medicare overpayments, and implemented quality standards and accreditation requirements for DME suppliers. These legislative provisions, as currently in effect and when fully implemented, have had and will continue to have a material adverse effect on our business, financial condition, operating results and cash flows.

PPACA was signed into law on March 23, 2010. Together with the Health Care and Education Reconciliation Act of 2010 (signed into law on March 30, 2010) which amended the statute, PPACA is a comprehensive health care law that is intended to expand access to health insurance, reform the health insurance market to provide additional consumer protections, and improve the health care delivery system to reduce costs and produce better outcomes through a combination of cost controls, subsidies and mandates. Among other things, PPACA:

(1) Introduces a productivity adjustment factor that will be applied to Medicare price updates (covered item updates) for 2011 and each subsequent year. Specifically, Medicare payment amounts would be updated each year by the percentage increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year, reduced by a productivity adjustment (as projected by the Secretary of Health and Human Services). The application of the productivity adjustment may result in the covered item update being negative for a year, and may result in payment rates being less than such payment rates for the preceding year. The covered item update for most Medicare items furnished in 2011, net of the productivity adjustment, has been established at negative 0.1%.

(2) Makes adjustments to the Medicare DME Competitive Acquisition Program (“competitive bidding”). PPACA expands the second round of DME competitive bidding from 70 markets under prior law to 91 markets. The additional competitive bidding areas will include the next 21 largest metropolitan statistical areas beyond the 79 markets previously identified under the program, for a total of 100 markets. PPACA also adds a requirement to competitively bid all areas or use competitive bid information to set prices in all areas by 2016, effectively expanding the program to all geographic markets.

18

(3) Makes important changes to key fraud and abuse statutes and increases funding for fraud and abuse enforcement. PPACA increases funding for program integrity initiatives, improves screening of providers and suppliers before and after granting Medicare billing privileges and establishes new and enhanced penalties and procedures to deter fraud and abuse. PPACA also specifically adds a requirement that physician orders for covered items of DME must be written by a physician and must document that a physician, a physician assistant, a nurse practitioner, or a clinical nurse specialist has had a face-to-face encounter (including through the use of telehealth) with the individual involved during the six-month period preceding such written order, or other reasonable timeframe as determined by the Secretary of Health and Human Services.

PPACA is a complex, sweeping health care reform law that will dramatically alter the structure of health insurance markets and the practice of medicine in the United States. Due to the complex nature of the legislation and the extended time period over which various provisions of the new law will be implemented (pursuant to yet unwritten regulations), we can not predict at this time what effects PPACA and related regulations will have on our business in the future.

The MIPPA legislation imposed a 9.5% reduction in Medicare payment rates for certain specified product categories, including oxygen, effective January 1, 2009. In addition to the 9.5% reduction, the Centers for Medicare and Medicaid Services (“CMS”), as required by statute, subjected the monthly payment amount for stationary oxygen equipment to additional cuts of 2.3%, thereby reducing the monthly payment rate from $199.28 in 2008 to $175.79 in 2009. The monthly payment amount was reduced by 1.5% in 2010, to $173.17. We estimate that this reduction negatively impacted our annual revenues in fiscal year 2010 by approximately $8.4 million when compared to the prior year period. The stationary oxygen payment rate for 2011 has been established by CMS at $173.31 per month, an increase of 0.1%.

The SCHIP Extension Act, which became law on December 29, 2007, required CMS to adjust the methodology used to determine Medicare payment amounts for inhalation drugs by using volume-weighted average selling prices (“ASP”) based on actual sales volumes rather than average sales prices. CMS publishes payment rates for inhalation drugs each calendar quarter, representing the unit reimbursement rates in effect for inhalation drugs dispensed within that quarter. These payment rates may be subject to volatility as a result of the underlying ASP data used to determine the rates in effect each quarter. The quarterly ASP data published by CMS for inhalation drugs provided in 2010 resulted in reductions in the Medicare payment rates for inhalation drugs that negatively impacted the Company’s annual net revenues by approximately $5.0 million in fiscal year 2010. If the ASP payment rates published by CMS for the third quarter of 2011 were to remain in effect for the remainder of 2011, and assuming no changes in the volume or mix of drugs that we currently dispense, we estimate that our annual net revenues would be negatively impacted by approximately $15.1 million in 2011 when compared with 2010. We can not determine whether quarterly updates in ASP pricing data will continue to result in ongoing reductions in payment rates for inhalation drugs, or what impact such payment reductions could have on our business in the future.

Additionally, for calendar year 2011, CMS proposes to use 103% of Average Manufacturer Price (“AMP”) rather than 106% of ASP for a drug when ASP exceeds AMP by 5% for either two straight quarters or three of the past four quarters. The proposed policy would also limit substitution of the price formula in a given quarter to only those drugs where ASP and AMP can be compared using the same set of national drug codes. The Office of Inspector General’s most recent published report on AMP and ASP comparisons did not include any inhalation drugs on the list of medications that met the 5% threshold. We can not determine at this time which, if any, inhalation drugs might meet the criteria established for substitution in a particular future quarter, nor the impact on payment rates for such drugs in the event that the AMP formula is utilized.

On February 1, 2006, Congress passed the DRA legislation which changed the reimbursement methodology for oxygen equipment from continuous monthly payment for as long as the equipment is in use by a Medicare beneficiary, which includes payment for oxygen contents, related disposable supplies and accessories and maintenance of equipment, to a capped rental arrangement whereby payment for oxygen equipment may not extend over a period of continuous use of longer than 36 months. Separate payments for oxygen contents continue to be made for the period of medical need beyond the 36^th month. Additionally, payment for routine maintenance and service of the oxygen equipment is made following each six-month period after the 36-month rental period ends. The oxygen provisions contained in DRA became effective on January 1, 2006. In the case of beneficiaries receiving oxygen equipment prior to the effective date, the 36-month period of continuous use began on January 1, 2006. Accordingly, the first month in which the new payment methodology impacted our net revenues was January 2009. We anticipate that the new oxygen payment rules will continue to negatively affect our net revenues on an ongoing basis, as each month additional customers reach the 36-month capped service period, resulting in up to two or more years without rental income from these customers. During the first six months of 2011, we estimate that our net revenues were reduced as a result of additional customers reaching the payment cap by approximately $10.5 million when compared to the prior year period.

19

DRA also changed the reimbursement methodology for items of DME in the capped rental payment category, including but not limited to such items as continuous positive airway pressure (“CPAP”) devices, certain respiratory assist devices, nebulizers, hospital beds and wheelchairs. For such items of DME, payment may not extend over a period of continuous use of longer than 13 months. On the first day that begins after the 13^th continuous month during which payment is made for the item, the supplier must transfer title of the item to the beneficiary. Additional payments for maintenance and service of the item are made for parts and labor not covered by a supplier’s or manufacturer’s warranty. The DME capped rental provisions contained in DRA first impacted our net revenues in February 2007.

In December 2003, MMA was signed into law. The MMA legislation directly impacted reimbursement for the primary respiratory and other DME products that we provide. Among other things, MMA:

(1) Established a competitive acquisition program for DME that was expected to commence in 2008, but was subsequently delayed by further legislation. MMA instructed CMS to establish and implement programs under which competitive acquisition areas would be established throughout the United States for purposes of awarding contracts for the furnishing of competitively priced items of DME, including oxygen equipment. The program was initially intended to be implemented in phases such that competition under the program would occur in nine of the largest metropolitan statistical areas (“MSAs”) in the first year and an additional 70 of the largest MSAs in a second, subsequent round of bidding.

For each competitive acquisition area, CMS is required to conduct a competition under which providers submit bids to supply certain covered items of DME. Successful bidders are expected to meet certain program quality standards in order to be awarded a contract and only successful bidders can supply the covered items to Medicare beneficiaries in the acquisition area (there are, however, regulations in place that allow non-contracted providers to continue to provide equipment and services to their existing customers at the new prices determined through the bidding process). The contracts are expected to be re-bid at least every three years. CMS is required to award contracts to multiple entities submitting bids in each area for an item or service, but has the authority to limit the number of contractors in a competitive acquisition area to the number it determines to be necessary to meet projected demand.

CMS concluded the bidding process for the first round of MSAs in September 2007. In March 2008, CMS completed the bid evaluation process and announced the payment amounts that would have taken effect in those markets beginning July 1, 2008. Contracts to provide products within the competitive bid areas were awarded to selected suppliers, including the Company, and took effect on July 1, 2008. On July 15, 2008, Congress enacted the MIPPA legislation which retroactively delayed the implementation of competitive bidding and reduced Medicare prices nationwide by 9.5% beginning in 2009 for the product categories, including oxygen, that were initially included in competitive bidding. As a result of the delay, CMS cancelled all contract awards retroactively to June 30, 2008.

In 2009, CMS reinstituted the bidding process in the nine largest MSA markets. Reimbursement rates from the re-bidding process were publicly released by CMS on June 30, 2010. CMS announced average savings of approximately 32% off the current payment rates in effect for the product categories included in competitive bidding. These payment rates are now in effect in the nine markets only, as of January 1, 2011. Lincare was offered contracts to provide oxygen equipment in just two of the nine markets, Charlotte and Miami, and we accepted and signed those contracts. The Company’s annual Medicare revenues from the product categories in the nine markets affected by competitive bidding were approximately $48.0 million at the time the program commenced. In June 2011, we completed acquisitions of companies that are contracted to provide home oxygen services in seven of nine competitive bidding markets and positive airway pressure therapy in eight of nine markets.

CMS will undertake a second round of competitive bidding in up to 91 additional markets, with contracts expected to be effective some time in mid-2013. It is not certain at this time whether CMS intends to implement competitive bidding in all 91 markets simultaneously, or whether the program will be phased in over several years. The Company estimates that its annual Medicare revenues from the product categories in the 91 additional markets to be included in the second round of competitive bidding are in excess of $250.0 million. This estimate may be revised by the Company once CMS publishes the final list of product categories and geographic zip codes included in the 91 additional markets. The PPACA legislation requires CMS to expand competitive bidding further to additional geographic markets (certain markets may be excluded at the discretion of CMS) or to use competitive bid pricing information to adjust the payment amounts otherwise in effect for areas that are not competitive acquisition areas by January 1, 2016.

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We will continue to monitor developments regarding the implementation of the competitive bidding program. While we can not predict the outcome of the competitive bidding program on our business when fully implemented nor the Medicare payment rates that will be in effect in future years for the items subjected to competitive bidding, it is likely that the program will materially adversely effect our financial position and operating results.

(2) Established a Recovery Audit Contractors (“RAC”) program to identify and recoup Medicare overpayments from providers. Started in 2005 as a demonstration project by CMS, the RAC program was designed to test a new method for recovery of Medicare overpayments by utilizing private companies operating on a contingent fee basis to identify and recoup Medicare overpayments from providers. Section 302 of the Tax Relief and Health Care Act of 2006 made the program permanent and requires the Department of Health and Human Services to expand the program to all states. The RAC contractors are empowered to audit claims submitted by health care providers and to withhold future payments, including in cases where the reimbursement rules are unclear or subject to differing interpretations. This activity, as well as the activity of intermediaries and others involved in government reimbursement, may include changes in long-standing interpretations of reimbursement rules, which could have a material adverse effect on our future financial position and operating results.

Federal and state budgetary and other cost-containment pressures will continue to impact the home respiratory care industry. We can not predict whether new federal and state budgetary proposals will be adopted or the effect, if any, such proposals would have on our business.

Government Regulation

The federal government and all states in which we currently operate regulate various aspects of our business. In particular, our operating centers are subject to federal laws that regulate the repackaging of drugs (including oxygen) and interstate motor-carrier transportation. Our operations also are subject to state laws governing, among other things, pharmacies, nursing services, distribution of medical equipment and certain types of home health activities. Certain of our employees are subject to state laws and regulations governing the ethics and professional practice of respiratory therapy, pharmacy and nursing.

As a health care provider, we are subject to extensive government regulation, including numerous laws directed at preventing fraud and abuse and laws regulating reimbursement under various government programs. The marketing, billing, documenting and other practices of health care companies are all subject to government scrutiny. To ensure compliance with Medicare, Medicaid and other regulations, regional health insurance carriers and state agencies often conduct audits and request customer records and other documents to support our claims submitted for payment of services rendered to customers. Similarly, government agencies periodically open investigations and obtain information from health care providers pursuant to the legal process. Violations of federal and state regulations can result in severe criminal, civil and administrative penalties and sanctions, including disqualification from Medicare and other reimbursement programs, which could have a material adverse effect on our business.

Numerous federal and state laws and regulations, including the Federal Health Insurance Portability And Accountability Act of 1996 (“HIPAA”) and the Health Information Technology For Economic And Clinical Health Act (“HITECH Act”), govern the collection, dissemination, security, use and confidentiality of patient-identifiable health information. As part of our provision of, and billing for, health care equipment and services, we are required to collect and maintain patient-identifiable health information. New health information standards, whether implemented pursuant to HIPAA, the HITECH Act, congressional action or otherwise, could have a significant effect on the manner in which we handle health care related data and communicate with payors, and the cost of complying with these standards could be significant. If we do not comply with existing or new laws and regulations related to patient health information, we could be subject to criminal or civil sanctions.

Health care is an area of rapid regulatory change. Changes in the laws and regulations and new interpretations of existing laws and regulations may affect permissible activities, the relative costs associated with doing business, and reimbursement amounts paid by federal, state and other third-party payors. We can not predict the future of federal, state and local regulation or legislation, including Medicare and Medicaid statutes and regulations, or possible changes in national health care policies. Future legislative and regulatory changes could have a material adverse effect on our business.

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Operating Results

The following table sets forth, for the periods indicated, a summary of the Company’s net revenues by product category:

	For The Three Months Ended June 30,				For The Six Months  Ended June 30,
	2011		2010		2011		2010
	(In thousands)				(In thousands)
Respiratory and other chronic therapies	$	403,022	$	371,661	$	789,042	$	739,862
DME, infusion and enteral therapies		46,011		46,705		91,558		88,544
Total	$	449,033	$	418,366	$	880,600	$	828,406

Net revenues for the three months ended June 30, 2011, increased by $30.7 million (or 7.3%), compared with the three months ended June 30, 2010 and for the six months ended June 30, 2011, increased by $52.2 million (or 6.3%) compared with the six months ended June 30, 2010. The Company estimates that the 7.3% increase in net revenues in the three-month period of 2011 was comprised of approximately 12.3% internal and acquisition growth offset by approximately 5.0% negative impact from $21.0 million of Medicare payment changes (see “Medicare Reimbursement” above). The Company estimates that the 6.3% increase in net revenues in the six-month period of 2011 was comprised of approximately 10.9% internal and acquisition growth offset by approximately 4.6% negative impact from $37.7 million of Medicare payment changes in 2011. The internal growth in net revenues is attributable to underlying demographic growth in the markets for our products and gains in customer counts resulting primarily from our sales and marketing efforts that emphasize high-quality equipment and customer service. Growth in net revenues from acquisitions is attributable to the effects of acquisitions of local and regional companies and is based on the estimated contribution to net revenues for the four quarters following such acquisitions.

The contribution of respiratory and other chronic therapy products to our net revenues was 89.8% and 89.6%, respectively, during the three and six months ended June 30, 2011 and during the three and six months ended June 30, 2010 was 88.8% and 89.3%, respectively. Our strategy is to focus on the provision of oxygen, respiratory and other chronic therapy services to patients in the home and to provide home medical equipment, infusion and enteral nutrition products and services where we believe such services will enhance our core respiratory business.

Cost of goods and services, as a percentage of net revenues, was 31.7% and 30.3%, respectively, for the three and six months ended June 30, 2011, compared with 27.2% and 27.1%, respectively, for the comparable prior year periods. Cost of goods and services for the three months ended June 30, 2011, increased $28.7 million, or 25.3%, when compared with the prior year period. Costs of goods and services for the six months ended June 30, 2011, increased $42.0 million, or 18.7%, when compared with the prior year period. The increase in cost of goods and services in 2011 is primarily attributable to the Company’s acquisition of a specialty pharmacy business with gross margins that are lower than other products and services provided by the Company and higher sale volumes of CPAP supplies and inhalation drugs.

Cost of goods and services for the three and six-month periods includes the cost of medical equipment (excluding depreciation of $27.3 million and $53.6 million in 2011 and $27.4 million and $53.7 million in 2010, respectively), drugs and supplies sold to patients and certain costs related to the Company’s respiratory drug product line. These costs include an allocation of customer service, distribution and administrative costs relating to the respiratory drug product line of approximately $13.6 million and $27.5 million for the three and six-month periods of 2011, respectively, and approximately $13.3 million and $26.5 million for the three and six-month periods of 2010, respectively. Included in cost of goods and services in the three and six months ended June 30, 2011 are salary and related expenses of pharmacists and pharmacy technicians of $3.9 million and $7.2 million, respectively. Such salary and related expenses for the three and six months ended June 30, 2010, were $3.3 million and $6.4 million, respectively.

Operating expenses, as a percentage of net revenues, were 22.8% and 23.2%, respectively, for the three and six months ended June 30, 2011, compared with 23.8% and 23.9%, respectively, for the comparable prior year periods. Operating expenses for the three and six months ended June 30, 2011, increased by $2.5 million, or 2.5%, and $5.9 million, or 3.0%, over the prior year periods. The Company has been successful in achieving productivity gains that have contributed to containment of the growth in wage expenses and in managing the growth of its employee health benefit costs. These positive developments were partially offset by increases in vehicle related expenses during the first six months of 2011, most significantly fuel costs.

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The Company manages 1,106 operating centers from which customers are provided equipment, supplies and services. An operating center averages approximately seven to eight employees and is typically comprised of a center manager, two customer service representatives (referred to as “CSR’s” – telephone intake, scheduling, documentation), two or three service representatives (referred to as “Service Reps” – delivery, maintenance and retrieval of equipment and delivery of disposables), a respiratory therapist (non-reimbursable clinical follow-up with the customer and communication to the prescribing physician) and a sales representative (marketing calls to local physicians and other referral sources).

The Company includes in operating expenses the costs incurred at the Company’s operating centers for certain service personnel (center manager, CSR’s and Service Reps), facilities (rent, utilities, communications, property taxes, etc.), vehicles (vehicle leases, gasoline, repair and maintenance), and general business supplies and miscellaneous expenses. Operating expenses for the interim periods of 2011 and 2010 within these major categories were as follows:

Operating Expenses (in thousands)

	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2011		2010		2011		2010
Salary and related	$	66,965	$	65,108	$	132,776	$	128,066
Facilities		12,733		14,963		28,431		30,864
Vehicles		13,756		11,863		26,420		23,508
General supplies/miscellaneous		8,735		7,739		16,469		15,762
Total	$	102,189	$	99,673	$	204,096	$	198,200

Included in operating expenses during the three and six months ended June 30, 2011 are salary and related expenses for Service Reps in the amount of $28.3 million and $55.9 million, respectively. Such salary and related expenses for the three and six months ended June 30, 2010 were $27.5 million and $53.9 million, respectively.

Selling, general and administrative (“SG&A”) expenses, as a percentage of net revenues, were 19.0% and 19.1%, respectively for the three and six months ended June 30, 2011, compared with 20.1% and 20.3% for the comparable prior year periods. SG&A expenses for the three months ended June 30, 2011 increased by $1.2 million, or 1.4% when compared to the prior year period. SG&A expenses for the six months ended June 30, 2011, remained essentially unchanged when compared to the prior year period.

SG&A expenses include costs related to sales and marketing activities, corporate overhead and other business support functions. Included in SG&A during the three and six months ended June 30, 2011 are salary and related expenses of $62.9 million and $125.1 million, respectively. These salary and related expenses include the cost of the Company’s respiratory therapists for the three and six months ended June 30, 2011, of $17.9 million and $34.5 million, respectively. Included in SG&A during the three and six months ended June 30, 2010 are salary and related expenses of $64.9 million and $128.2 million, respectively. These salary and related expenses include the cost of the Company’s respiratory therapists for the three and six months ended June 30, 2010, of $17.3 million and $33.6 million, respectively. The Company’s respiratory therapists generally provide non-reimbursable clinical follow-up with the customer and communication, as appropriate, to the prescribing physician with respect to the customer’s prescribed plan of care. The Company includes the salaries and related expenses of its respiratory therapist personnel (licensed respiratory therapists or, in some cases, registered nurses) in SG&A because it believes that these personnel enhance the Company’s business relative to its competitors who do not employ respiratory therapists.

Bad debt expense as a percentage of net revenues was 2.0% for the three and six months ended June 30, 2011, compared with 1.5% for the three and six months ended June 30, 2010. Bad debt expense for the three and six months ended June 30, 2011 increased by $2.7 million and $5.2 million, respectively, over the comparable prior year periods. Contributing to the increase in bad debt expense is the increase in the aging of our accounts receivable, particularly with respect to amounts due from customers for insurance copayments and deductibles.

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Included in depreciation and amortization expense in the three and six months ended June 30, 2011 is depreciation of medical equipment of $27.3 million and $53.6 million, respectively, and depreciation of other property and equipment of $2.3 million and $5.0 million, respectively. Included in depreciation and amortization expense in the three and six months ended June 30, 2010 is depreciation of medical equipment of $27.4 million and $53.7 million, respectively, and depreciation of other property and equipment of $1.9 million and $5.1 million, respectively.

Operating income for the three and six months ended June 30, 2011, was $80.1 million (17.8% of net revenues) and $164.7 million (18.7% of net revenues), respectively, compared with $85.2 million (20.4% of net revenues) and $166.0 million (20.0% of net revenues), respectively, for the comparable prior year periods. The decrease in operating income in 2011 is attributed primarily to the impact on net revenues in the three and six months ended June 30, 2011, of $21.0 million and $37.7 million of Medicare payment changes during the respective periods. These payment changes include reductions in average payment rates for respiratory medications, the impact of new Medicare payment rates in the nine markets affected by the competitive bidding program and the ongoing effect of Medicare oxygen customers reaching the 36-month rental payment cap.

Liquidity and Capital Resources

Our primary sources of liquidity have been internally generated funds from operations and proceeds from equity and debt transactions. We have used these funds to meet our capital requirements, which consist primarily of operating costs, capital expenditures, acquisitions, debt service and share repurchases. The Company also has access to borrowings under its credit facilities.

Net cash provided by operating activities decreased by 7.2% to $131.8 million for the six months ended June 30, 2011, compared with $142.0 million for the six months ended June 30, 2010. Net cash used in investing and financing activities was $213.8 million for the six months ended June 30, 2011. Investing and financing activities during the six-month period ended June 30, 2011 included our net investment in property and equipment of $57.7 million, $40.0 million of short-term investments, $38.2 million of dividends paid, $73.0 million of business acquisition expenditures, $50.0 million of repurchases of our common stock, proceeds of $40.0 million from the sale of investments, and proceeds of $5.1 million from the exercise of stock options and issuance of common shares.

As of June 30, 2011, our principal sources of liquidity consisted of approximately $82.1 million of cash and cash equivalents, $40.0 million of short-term investments and $356.2 million available under our revolving credit agreement. The revolving credit agreement, dated December 1, 2006, makes available to us up to $390.0 million over a five-year period, subject to certain terms and conditions set forth in the agreement. As of June 30, 2011, there were $33.8 million of standby letters of credit issued under the credit facility.

On July 1, 2011, the Company announced that its Board of Directors had declared a quarterly cash dividend of $0.20 per share which was paid on July 29, 2011, to stockholders of record as of July 15, 2011. The payment of future dividends is dependent on our future earnings and cash flow and is subject to the discretion of our Board of Directors.

On June 21, 2010, the Company announced that its Board of Directors had approved the initiation of a quarterly cash dividend payable at an annual rate of $0.80 per share of common stock outstanding.

On May 14, 2010, our Board of Directors declared a three-for-two stock split effected in the form of a 50% stock dividend on the Company’s common stock. The additional shares were distributed to stockholders on June 15, 2010.

Our Board of Directors has authorized a share repurchase plan whereby the Company may repurchase from time to time, on the open market or in privately negotiated transactions, shares of the Company’s common stock in amounts determined pursuant to a formula (the “share repurchase formula”) that takes into account both the ratio of the Company’s net debt to cash flow and its available cash resources and borrowing availability. During the six months ended June 30, 2011, the Company repurchased and retired 1,700,900 shares for $50.0 million pursuant to the repurchase plan. As of June 30, 2011, $378.4 million of the Company’s common stock was eligible for repurchase in accordance with the plan’s formula.

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On October 31, 2007, we completed the sale of $275.0 million principal amount of convertible senior debentures, due 2037 – Series A (the “Series A Debentures”) and $275.0 million principal amount of convertible senior debentures due 2037 – Series B (the “Series B Debentures” and together with the Series A Debentures, the “Series Debentures”) in a private placement. The Series Debentures pay interest semi-annually at a rate of 2.75% per annum. The Series Debentures are unsecured and unsubordinated obligations and are convertible under specified circumstances based upon a base conversion rate, which, under certain circumstances, will be increased pursuant to a formula that is subject to a maximum conversion rate. Upon conversion, holders of the Series Debentures will receive cash up to the principal amount, and any excess conversion value will be delivered in shares of our common stock or in a combination of cash and shares of common stock, at our option. The base conversion rate for the Debentures as of June 30, 2011 is 30.1118 shares of common stock per $1,000 principal amount of Series Debentures, equivalent to a base conversion price of approximately $33.21 per share. In addition, if at the time of conversion the applicable price of our common stock exceeds the base conversion price, holders of the Series Debentures will receive an additional number of shares of common stock per $1,000 principal amount as determined pursuant to a specified formula. We have the right to redeem the Series A Debentures and the Series B Debentures at any time after November 1, 2012 and November 1, 2014, respectively. Holders of the Series Debentures will have the right to require us to repurchase for cash all or some of their Series Debentures upon the occurrence of certain fundamental change transactions or on November 1, 2012, 2017, 2022, 2027 and 2032 in the case of the Series A Debentures and November 1, 2014, 2017, 2022, 2027 and 2032 in the case of the Series B Debentures.

Our future liquidity will continue to be dependent upon our operating cash flow and management of accounts receivable. We anticipate that funds generated from operations, together with our current cash on hand and funds available under our revolving credit facility, will be sufficient to finance our working capital requirements, fund anticipated acquisitions and capital expenditures, and meet our contractual obligations for at least the next 12 months.

Accounts Receivable: The Company maintains payor-specific price tables in its billing system that reflect the fee schedule amounts statutorily in effect or contractually agreed upon by various government and commercial payors for each item of equipment or supply provided to a customer. Due to the nature of the health care industry and the reimbursement environment in which Lincare operates, situations can occur where expected payment amounts are not established by fee schedules or contracted rates, and estimates are required to record revenues and accounts receivable at their net realizable values. Inherent in these estimates is the risk that revenues and accounts receivable will have to be revised or updated as additional information becomes available. Contractual adjustments to revenues and accounts receivable can result from price differences between allowed charges and amounts initially recognized as revenue due to incorrect price tables or subsequently negotiated payment rates. Actual adjustments that result from differences between the payment amount received and the expected realizable amount are recorded against the allowance for sales adjustments and are typically identified and ultimately recorded at the point of cash application or account review. We report revenues in our financial statements net of such sales adjustments. Accounts receivable are reported net of allowances for sales adjustments and uncollectible accounts. Bad debt is recorded as an operating expense and consists of billed charges that are ultimately deemed uncollectible due to the customer’s or third-party payor’s inability to pay.

The Company’s payor mix is highly concentrated among Medicare, Medicaid and other government third-party payors and contracted private insurance or commercial payors. Government payment rates are determined according to published fee schedules established pursuant to statute, law or other regulatory processes and commercial payment rates are based on contractual line item pricing as reflected in the respective contracts. Fee schedule updates have historically occurred on a prospective basis and have been made available to the Company in advance of the effective date of a change in reimbursement rates. The Company’s proprietary billing system has features that allow the Company to timely update payor price tables within the system as changes occur in order to accurately record revenues and accounts receivable at their expected realizable values. Additional systems and manual controls and processes are used by management to evaluate the accuracy of these recorded amounts. Based on the Company’s experience, it is unlikely that a change in estimate of unsettled amounts from third-party payors would have a material adverse impact on its financial position or results of operations.

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Accounts receivable balance concentrations by major payor category as of June 30, 2011 and December 31, 2010 were as follows:

Percentage of Accounts Receivable Outstanding:

	June 30, 2011			December 31, 2010
Medicare		36.9	%		34.1	%
Medicaid/Other Government		13.5	%		14.2	%
Private Insurance		37.0	%		38.2	%
Customer Pay		12.6	%		13.5	%
Total		100.0	%		100.0	%

Aged accounts receivable balances by major payor category as of June 30, 2011 and December 31, 2010 were as follows:

Percentage of Accounts Aged in Days:

	June 30, 2011
	0-60			61-120			Over 120
Medicare		69.6	%		13.8	%		16.6	%
Medicaid/Other Government		56.9	%		16.8	%		26.3	%
Private Insurance		56.7	%		15.6	%		27.7	%
Customer Pay		31.8	%		19.0	%		49.2	%
All Payors		58.3	%		15.6	%		26.1	%

Percentage of Accounts Aged in Days:

	December 31, 2010
	0-60			61-120			Over 120
Medicare		77.5	%		11.5	%		11.0	%
Medicaid/Other Government		59.8	%		17.0	%		23.2	%
Private Insurance		61.8	%		14.3	%		23.9	%
Customer Pay		33.7	%		19.7	%		46.6	%
All Payors		63.1	%		14.5	%		22.4	%

We operate 37 regional billing and collection offices (“RBCOs”) that are responsible for the billing and collection of accounts receivable. The RBCOs are aligned geographically to support the accounts receivable activity of the operating centers within their assigned territories. As of June 30, 2011, there were 1,387 full-time employees in the RBCOs. Accounts receivable collections are performed by designated collectors within each of the RBCOs. The collectors use various reporting tools available within our proprietary billing system to identify claims that have been denied or partially paid by the responsible party and claims that have not been processed by the third-party payor in a timely manner. Collections of accounts receivable are typically pursued using direct phone contact to determine the reason for non-payment and, if necessary, corrected claims are prepared for resubmission and further follow-up with the responsible party. In some cases, third-party payors have developed electronic inquiry methods that we can access to determine the status of individual claims. We have benefited from the increasing availability of electronic funds transfers from payors, which now account for approximately 76.6% of all payments received.

Our accounts receivable days sales outstanding (“DSO”) increased to 47 days at June 30, 2011 compared with 44 days at June 30, 2010 and our bad debt expense, as a percentage of net revenues, increased to 2.0% during 2011 compared with 1.5% during the prior year six month period. Contributing to the increase in our accounts receivable is a significant increase in the number of claims subject to prepayment audits, primarily by the Durable Medical Equipment Medicare Administrative Contractors (“DMEMAC’s). These audits are substantially delaying the collection of our Medicare accounts receivable as well as related secondary amounts due under supplemental insurance plans. Also contributing to the increase in accounts receivable and bad debt expense are copayments and deductibles due from customers who are finding it difficult to pay their out-of-pocket charges due to loss of insurance coverage or reductions in their investment or employment income.

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The ultimate collection of accounts receivable may not be known for several months. We record bad debt expense based on a percentage of revenue using historical Company-specific data. The percentage and amounts used to record bad debt expense and the allowance for doubtful accounts are supported by various methods and analyses including current and historical cash collections, bad debt write-offs, aged accounts receivable and consideration of any payor-specific concerns. The ultimate write-off of an accounts receivable occurs once collection procedures are determined to have been exhausted by the collector and after appropriate review of the specific account and approval by supervisory and/or management employees within the RBCOs. Management and RBCO supervisory and management employees also review accounts receivable write-off reports, correspondence from payors and individual account information to evaluate and correct processes that might have contributed to an unsuccessful collection effort.

We do not use an aging threshold for account receivable write-offs. However, the age of an account balance may provide an indication that collection procedures have been exhausted, and would be considered in the review and approval of an account balance write-off.

Future Minimum Obligations

In the normal course of business, we enter into obligations and commitments that require future contractual payments. The commitments primarily result from repayment obligations for borrowings under our revolving credit facility and Series Debentures as well as contractual lease payments for facility, vehicle, and equipment leases, deferred taxes and acquisition obligations.

New Accounting Standards

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS,” to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. The guidance expands the disclosure requirements around fair value measurements categorized in Level 3 of the fair value hierarchy and requires disclosure of the level in the fair value hierarchy of items that are not measured at fair value but whose fair value must be disclosed. It also clarifies and expands upon existing requirements for fair value measurements of financial assets and liabilities as well as instruments classified in shareholders’ equity. The guidance is effective for interim and annual financial periods beginning after December 15, 2011 with early adoption not permitted. We will adopt the new guidance effective January 1, 2012. The Company does not expect the adoption of this guidance to have a material impact on its financial condition, results of operations or cash flows.

In June 2011, the FASB issued Accounting Standards Update 2011-05, “Presentation of Comprehensive Income,” to eliminate the current option to present the components of other comprehensive income in the statement of changes in equity and to require presentation of net income and other comprehensive income (and their respective components) either in a single continuous statement or in two separate but consecutive statements. The amendments do not alter any current recognition or measurement requirements in respect of items of other comprehensive income. The guidance should be applied retrospectively and is effective for interim and annual periods beginning after December 15, 2011, with early adoption permitted. We will adopt the new guidance effective January 1, 2012. The Company does not expect the adoption of this guidance to have an impact on its financial condition, results of operations or cash flows.

Forward Looking Statements

Statements in this report concerning future results, performance or expectations are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. All forward-looking statements included in this document are based upon information available to us as of the date hereof and we assume no obligation to update any such forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statements. In some cases, forward-looking statements that involve risks and uncertainties contain terminology such as “may,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or variations of these terms or other comparable terminology.

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Key factors that have an impact on our ability to attain these estimates include potential reductions in reimbursement rates by government and other third-party payors, changes in reimbursement policies, the demand for our products and services, the availability of appropriate acquisition candidates and our ability to successfully complete and integrate acquisitions, efficient operations of our existing and future operating facilities, regulation and/or regulatory action affecting us or our business, economic and competitive conditions, access to borrowed and/or equity capital on favorable terms and other risks described below.

In developing our forward-looking statements, we have made certain assumptions relating to reimbursement rates and policies, internal growth and acquisitions and the outcome of various legal and regulatory proceedings. If the assumptions we use differ materially from what actually occurs, then actual results could vary significantly from the performance projected in the forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this report.

Certain Risk Factors Relating to the Company’s Business

We operate in a rapidly changing environment that involves a number of risks. The following discussion highlights some of these risks and others are discussed elsewhere in this report. These and other risks could materially and adversely affect our business, financial condition, operating results and cash flows.

A MAJORITY OF OUR CUSTOMERS HAVE PRIMARY HEALTH COVERAGE UNDER MEDICARE PART B, AND RECENTLY ENACTED AND FUTURE CHANGES IN THE REIMBURSEMENT RATES OR PAYMENT METHODOLOGIES UNDER THE MEDICARE PROGRAM COULD MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS.

As a provider of home oxygen and other respiratory therapy services for the home health care market, we have historically depended heavily on Medicare reimbursement as a result of the high proportion of elderly persons suffering from respiratory disease. Medicare Part B, the Supplementary Medical Insurance Program, provides coverage to eligible beneficiaries for DME, such as oxygen equipment, respiratory assistance devices, continuous positive airway pressure devices, nebulizers and associated inhalation medications, hospital beds and wheelchairs for the home setting. Approximately 63% of our customers have primary coverage under Medicare Part B. There are increasing pressures on Medicare to control health care costs and to reduce or limit reimbursement rates for home medical equipment and services. Medicare reimbursement is subject to statutory and regulatory changes, retroactive rate adjustments, administrative and executive orders and governmental funding restrictions, all of which could materially decrease payments to us for the services and equipment we provide.

Recent legislation, including the Patient Protection and Affordable Care Act (“PPACA”), the Medicare Improvements for Patients and Providers Act of 2008 (“MIPPA”), the Medicare, Medicaid and SCHIP Extension Act of 2007 (“SCHIP Extension Act”), the Deficit Reduction Act of 2005 (“DRA”) and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”), contain provisions that directly impact reimbursement for the primary respiratory and other DME products provided by Lincare. PPACA, as amended, is a comprehensive health care reform law that contains a large number of health-related provisions to take effect over the next several years, including various cost containment and program integrity changes that will apply to the home medical equipment industry. MIPPA delayed the implementation of a Medicare competitive bidding program for oxygen equipment and certain other DME items that was scheduled to begin on July 1, 2008 and instituted a 9.5% price reduction nationwide for these items as of January 1, 2009. The SCHIP Extension Act reduced Medicare reimbursement amounts for covered Part B drugs, including inhalation drugs that we provide, beginning April 1, 2008. DRA provisions negatively impacted reimbursement for oxygen equipment beginning in 2009 and negatively impacted reimbursement for DME items subject to capped rental payments beginning in 2007. MMA changed the pricing formulas used to establish payment rates for inhalation drug therapies resulting in significantly reduced reimbursement beginning in 2005, established a competitive acquisition program for DME, established a Recovery Audit Contractors (“RAC”) program, a demonstration project designed to test a new method for recovery of Medicare overpayments by utilizing private companies operating on a contingent fee basis to identify and recoup Medicare overpayments, and implemented quality standards and accreditation requirements for DME suppliers. These legislative provisions, as currently in effect and when fully implemented, have had and will continue to have a material adverse effect on our business, financial condition, operating results and cash flows. See “MEDICARE REIMBURSEMENT” for a full discussion of the PPACA, MIPPA, SCHIP Extension Act, DRA and MMA provisions.

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A SIGNIFICANT PERCENTAGE OF OUR BUSINESS IS DERIVED FROM THE SALE AND RENTAL OF MEDICARE-COVERED OXYGEN AND DME ITEMS, AND RECENT LEGISLATIVE ACTS IMPOSE SUBSTANTIAL CHANGES IN THE MEDICARE PAYMENT METHODOLOGIES AND REDUCTIONS IN THE MEDICARE PAYMENT AMOUNTS FOR THESE ITEMS.

DRA changed the reimbursement methodology for oxygen equipment from continuous monthly payment for as long as the equipment is in use by a Medicare beneficiary, which includes payment for oxygen contents, related disposable supplies and accessories and maintenance of equipment, to a capped rental arrangement whereby payment for oxygen equipment may not extend over a period of continuous use of longer than 36 months. Separate payments for oxygen contents continue to be made for the period of medical need beyond the 36^th month. Additionally, payment for routine maintenance and service of the oxygen equipment is made following each six-month period after the 36-month rental period ends. The oxygen provisions contained in DRA became effective on January 1, 2006. In the case of beneficiaries receiving oxygen equipment prior to the effective date, the 36-month period of continuous use began on January 1, 2006. Accordingly, the first month in which the new payment methodology impacted our net revenues was January 2009. We anticipate that the new oxygen payment rules will continue to negatively affect our net revenues on an ongoing basis, as each month additional customers reach the 36-month capped service period, resulting in up to two or more years without rental income from these customers. During the first six months of 2011, we estimate that our net revenues were reduced as a result of additional customers reaching the payment cap by approximately $10.5 million when compared to the prior year period.

DRA also changed the reimbursement methodology for items of DME in the capped rental payment category, including but not limited to such items as continuous positive airway pressure (“CPAP”) devices, certain respiratory assist devices, nebulizers, hospital beds and wheelchairs. For such items of DME, payment may not extend over a period of continuous use of longer than 13 months. On the first day that begins after the 13^th continuous month during which payment is made for the item, the supplier must transfer title of the item to the beneficiary. Additional payments for maintenance and service of the item are made for parts and labor not covered by a supplier’s or manufacturer’s warranty. The DME capped rental provisions contained in DRA first impacted our net revenues in February 2007.

On July 15, 2008, Congress enacted the MIPPA legislation which reduced Medicare payment rates nationwide for certain DME items, including oxygen equipment, by 9.5% beginning in 2009. In addition to the 9.5% reduction, CMS subjected the monthly payment amount for stationary oxygen equipment to additional cuts of 2.3% in 2009, thereby reducing the monthly payment rate from $199.28 in 2008 to $175.79 in 2009. The monthly payment amount was reduced by 1.5% in 2010, to $173.17. We estimate that this reduction negatively impacted our annual revenues in fiscal year 2010 by approximately $8.4 million when compared to the prior year period. The stationary oxygen payment rate for 2011 has been established by CMS at $173.31 per month, an increase of 0.1%.

A SIGNIFICANT PERCENTAGE OF OUR BUSINESS IS DERIVED FROM THE SALE OF MEDICARE-COVERED RESPIRATORY MEDICATIONS, AND RECENT LEGISLATION AND MEDICARE POLICY REVISIONS IMPOSED SIGNIFICANT REDUCTIONS IN MEDICARE REIMBURSEMENT FOR SUCH INHALATION DRUGS.

Recently enacted legislation negatively affected Medicare reimbursement amounts for covered Part B drugs, including inhalation drugs that we provide, beginning April 1, 2008 (See “MEDICARE REIMBURSEMENT”). The SCHIP Extension Act required CMS to adjust the average sales price (“ASP”) calculation methodology used to determine Medicare payment amounts for inhalation drugs by using volume-weighted ASPs based on actual sales volume rather than average sales price. CMS publishes payment rates for inhalation drugs each calendar quarter, representing the unit reimbursement rates in effect for inhalation drugs dispensed within that quarter. These payment rates may be subject to volatility as a result of the underlying ASP data used to determine the rates in effect each quarter. The quarterly ASP data published by CMS for inhalation drugs provided in 2010 resulted in reductions in the Medicare payment rates for inhalation drugs that negatively impacted the Company’s annual net revenues by approximately $5.0 million in fiscal year 2010. If the ASP payment rates published by CMS for the third quarter of 2011 were to remain in effect for the remainder of 2011, and assuming no changes in the volume or mix of drugs that we currently dispense, we estimate that our annual net revenues would be negatively impacted by approximately $15.1 million in 2011 when compared with 2010. We can not determine whether quarterly updates in ASP pricing data will continue to result in ongoing reductions in payment rates for inhalation drugs, or what impact such payment reductions could have on our business in the future.

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Additionally, for calendar year 2011, CMS proposes to use 103% of Average Manufacturer Price (AMP) rather than 106% of ASP for a drug when ASP exceeds AMP by 5% for either two straight quarters or three of the past four quarters. The proposed policy would also limit substitution of the price formula in a given quarter to only those drugs where ASP and AMP can be compared using the same set of national drug codes. The Office of Inspector General’s most recent published report on AMP and ASP comparisons did not include any inhalation drugs on the list of medications that met the 5% threshold. We can not determine at this time which, if any, inhalation drugs might meet the criteria established for substitution in a particular future quarter, nor the impact on payment rates for such drugs in the event that the AMP formula is utilized.

RECENT REGULATORY CHANGES SUBJECT THE MEDICARE REIMBURSEMENT RATES FOR OUR EQUIPMENT AND SERVICES TO ADDITIONAL REDUCTIONS AND TO POTENTIAL DISCRETIONARY ADJUSTMENT BY CMS, WHICH COULD REDUCE OUR REVENUES, NET INCOME AND CASH FLOWS.

In February 2006, a final rule governing CMS’ Inherent Reasonableness, or IR, authority became effective. The IR rule establishes a process for adjusting fee schedule amounts for Medicare Part B services when existing payment amounts are determined to be either grossly excessive or deficient. The rule describes the factors that CMS or its contractors will consider in making such determinations and the procedures that will be followed in establishing new payment amounts. To date, no payment adjustments have occurred or been proposed as a result of the IR rule.

The effectiveness of the IR rule itself did not trigger payment adjustments for any items or services. Nevertheless, the IR rule puts in place a process that could eventually have a significant impact on Medicare payments for our equipment and services. We can not predict whether or when CMS will exercise its IR authority with respect to payment for our equipment and services, or the effect that such payment adjustments would have on our financial position or operating results.

FUTURE IMPLEMENTATION OF A COMPETITIVE BIDDING PROCESS UNDER MEDICARE COULD REDUCE OUR REVENUES, NET INCOME AND CASH FLOWS.

CMS is required by law to establish and implement programs under which competitive acquisition areas will be established throughout the United States for purposes of awarding contracts for the furnishing of competitively priced items of DME, including oxygen equipment (See “MEDICARE REIMBURSEMENT”). The program was initially intended to be implemented in phases such that competition under the program would occur in nine of the largest MSAs in the first year, and an additional 70 of the largest MSAs in a second, subsequent round of bidding. The PPACA legislation expands the second round of DME competitive bidding from 70 markets under prior law to 91 markets. The additional competitive bidding areas will include the next 21 largest metropolitan statistical areas beyond the 79 markets previously identified under the program, for a total of 100 markets. PPACA also adds a requirement to competitively bid all areas or use competitive bid information to set prices in all areas by 2016, effectively expanding the program to all geographic markets.

For each competitive acquisition area, CMS is required to conduct a competition under which providers submit bids to supply certain covered items of DME. Successful bidders are expected to meet certain program quality standards in order to be awarded a contract and only successful bidders can supply the covered items to Medicare beneficiaries in the acquisition area (there are, however, regulations in place that allow non-contracted providers to continue to provide equipment and services to their existing customers at the new prices determined through the bidding process). The contracts are expected to be re-bid at least every three years. CMS is required to award contracts to multiple entities submitting bids in each area for an item or service, but has the authority to limit the number of contractors in a competitive acquisition area to the number it determines to be necessary to meet projected demand.

CMS concluded the bidding process for the first round of MSAs in September 2007. In March 2008, CMS completed the bid evaluation process and announced the payment amounts that would have taken effect in those markets beginning July 1, 2008. Contracts to provide products within the competitive bid areas were awarded to selected suppliers, including the Company, and took effect on July 1, 2008. On July 15, 2008, Congress enacted the MIPPA legislation which retroactively delayed the implementation of competitive bidding and reduced Medicare prices nationwide by 9.5% beginning in 2009 for the product categories, including oxygen, that were initially included in competitive bidding. As a result of the delay, CMS cancelled all contract awards retroactively to June 30, 2008.

In 2009, CMS reinstituted the bidding process in the nine largest MSA markets. Reimbursement rates from the re-bidding process were publicly released by CMS on June 30, 2010. CMS announced average savings of approximately 32% off the current payment rates in effect for the product categories included in competitive bidding. These payment rates are now in effect in the nine markets only, as of January 1, 2011. We were offered contracts to provide oxygen equipment in just two of the nine markets, Charlotte and Miami, and we accepted and signed those contracts. The Company’s annual Medicare revenues from the product categories in the nine markets affected by competitive bidding were approximately $48.0 million at the time the program commenced. In June 2011, we completed acquisitions of companies that are contracted to provide home oxygen services in seven of nine competitive bidding markets and positive airway pressure therapy in eight of nine markets.

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CMS will undertake a second round of competitive bidding in up to 91 additional markets, with contracts expected to be effective some time in mid-2013. It is not certain at this time whether CMS intends to implement competitive bidding in all 91 markets simultaneously, or whether the program will be phased in over several years. The Company estimates that its annual Medicare revenues from the product categories in the 91 additional markets to be included in the second round of competitive bidding are in excess of $250.0 million. This estimate may be revised by the Company once CMS publishes the final list of product categories and geographic zip codes included in the 91 additional markets. The PPACA legislation requires CMS to expand competitive bidding further to additional geographic markets (certain markets may be excluded at the discretion of CMS) or to use competitive bid pricing information to adjust the payment amounts otherwise in effect for areas that are not competitive acquisition areas by January 1, 2016.

We will continue to monitor developments regarding the implementation of the competitive bidding program. While we can not predict the outcome of the competitive bidding program on our business when fully implemented nor the Medicare payment rates that will be in effect in future years for the items subjected to competitive bidding it is likely that the program will materially adversely effect our future financial position and operating results.

FUTURE REDUCTIONS IN REIMBURSEMENT RATES UNDER MEDICAID COULD REDUCE OUR REVENUES, NET INCOME AND CASH FLOWS.

Due to budgetary shortfalls, many states are considering, or have enacted, cuts to their Medicaid programs, including funding for our equipment and services. These cuts have included, or may include, elimination or reduction of coverage for some or all of our equipment and services, amounts eligible for payment under co-insurance arrangements, or payment rates for covered items. Approximately 7% of our customers are eligible for primary Medicaid benefits, and State Medicaid programs fund approximately 12% of our payments from primary and secondary insurance benefits. Continued state budgetary pressures could lead to further reductions in funding for the reimbursement for our equipment and services which, in turn, could have a material adverse effect on our financial position and operating results.

FUTURE REDUCTIONS IN REIMBURSEMENT RATES FROM PRIVATE PAYORS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR FINANCIAL CONDITION AND OPERATING RESULTS.

Payors such as private insurance companies and employers are under pressure to increase profitability and reduce costs. In response, certain payors are limiting coverage or reducing reimbursement rates for the equipment and services we provide. Approximately 28% of our customers and approximately 33% of our primary and secondary payments are derived from private payors. Continued financial pressures on these entities could lead to further reimbursement reductions for our equipment and services that could have a material adverse effect on our financial condition and operating results.

WE DEPEND UPON REIMBURSEMENT FROM THIRD-PARTY PAYORS FOR A SIGNIFICANT MAJORITY OF OUR REVENUES, AND IF WE FAIL TO MANAGE THE COMPLEX AND LENGTHY REIMBURSEMENT PROCESS, OUR BUSINESS AND OPERATING RESULTS COULD SUFFER.

We derive a significant majority of our revenues from reimbursement by third-party payors. We accept assignment of insurance benefits from customers and, in most instances, invoice and collect payments directly from Medicare, Medicaid and private insurance carriers, as well as from customers under co-insurance provisions. Approximately 48% of our revenues are derived from Medicare, 33% from private insurance carriers, 12% from Medicaid and the balance directly from individual customers and commercial entities.

Our financial condition and results of operations may be affected by the reimbursement process, which in the health care industry is complex and can involve lengthy delays between the time that services are rendered and the time that the reimbursement amounts are settled. Depending on the payor, we may be required to obtain certain payor-specific documentation from physicians and other health care providers before submitting claims for reimbursement. Certain payors have filing deadlines and they will not pay claims submitted after such time. We are also subject to extensive pre-payment and post-payment audits by governmental and private payors that could result in material refunds of monies received or denials of claims submitted for payment under such third-party payor programs and contracts. We can not ensure that we will be able to continue to effectively manage the reimbursement process and collect payments for our equipment and services promptly.

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WE ARE SUBJECT TO EXTENSIVE FEDERAL AND STATE REGULATION, AND IF WE FAIL TO COMPLY WITH APPLICABLE REGULATIONS, WE COULD SUFFER SEVERE CRIMINAL OR CIVIL SANCTIONS OR BE REQUIRED TO MAKE SIGNIFICANT CHANGES TO OUR OPERATIONS THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS.

The federal government and all states in which we currently operate regulate various aspects of our business. In particular, our operating centers are subject to federal laws that regulate the repackaging of drugs (including oxygen) and interstate motor-carrier transportation. Our operations also are subject to state laws governing, among other things, pharmacies, nursing services, distribution of medical equipment and certain types of home health activities. Certain of our employees are subject to state laws and regulations governing the ethics and professional practices of respiratory therapy, pharmacy and nursing.

As a health care provider, we are subject to extensive government regulation, including numerous laws directed at preventing fraud and abuse and laws regulating reimbursement under various government programs. The marketing, billing, documenting and other practices of health care companies are all subject to government scrutiny. To ensure compliance with Medicare, Medicaid and other regulations, regional health insurance carriers and state agencies often conduct audits and request customer records and other documents to support our claims submitted for payment of services rendered to customers. Similarly, government agencies periodically open investigations and obtain information from health care providers pursuant to the legal process. Violations of federal and state regulations can result in severe criminal, civil and administrative penalties and sanctions, including disqualification from Medicare and other reimbursement programs, which could have a material adverse effect on our business.

Health care is an area of rapid regulatory change. Changes in the laws and regulations and new interpretations of existing laws and regulations may affect permissible activities, the relative costs associated with doing business, and reimbursement amounts paid by federal, state and other third-party payors. We can not predict the future of federal, state and local regulation or legislation, including Medicare and Medicaid statutes and regulations, or possible changes in national health care policies. Future legislation and regulatory changes could have a material adverse effect on our business.

WE ARE SUBJECT TO BURDENSOME AND COMPLEX BILLING AND RECORD-KEEPING REQUIREMENTS IN ORDER TO SUBSTANTIATE OUR CLAIMS FOR PAYMENT UNDER FEDERAL, STATE AND COMMERCIAL HEALTH CARE REIMBURSEMENT PROGRAMS, AND OUR FAILURE TO COMPLY WITH EXISTING REQUIREMENTS, OR CHANGES IN THOSE REQUIREMENTS OR INTERPRETATIONS THEREOF, COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND RESULTS OF OPERATIONS.

We are subject to many stringent and frequently changing laws and regulations, and interpretations thereof, at both the federal and state levels, requiring compliance with burdensome and complex billing and record-keeping requirements in order to substantiate our claims for payment under federal, state and commercial health care reimbursement programs. On an ongoing basis, we have implemented policies and procedures designed to meet the various documentation requirements of government payors as they have been interpreted and applied. Examples of such documentation requirements are contained in the Durable Medical Equipment Medicare Administrative Contractor (“DMEMAC”) Supplier Manuals which provide that clinical information from the “patient’s medical record” is required to justify the medical necessity for the provision of DME. Auditors working on behalf of the DMEMACs have recently taken the position, among other things, that the “patient’s medical record” refers not to documentation maintained by the DME supplier but instead to documentation maintained by the patient’s physician, health care facility, or other clinician, and that clinical information created by the DME supplier’s personnel and confirmed by the patient’s physician is not sufficient to establish medical necessity. Other government auditors have recently taken the same or a similar position. It may be difficult, and sometimes impossible, for us to obtain such documentation from other health care providers. If these or other burdensome positions continue to be adopted by auditors, DMEMACs, other contractors or CMS in administering the Medicare program, we have the right to challenge these positions as being contrary to law. If these interpretations of the documentation requirements are ultimately upheld, however, it could result in our making significant refunds and other payments to Medicare and our future revenues from Medicare would likely be substantially reduced. We have also experienced a significant increase in pre-payment audits of our claims by the DMEMAC’s, which has caused substantial delays in the collection of our Medicare accounts receivable as well as related amounts due under supplemental insurance plans. We cannot currently predict the adverse impact, if any, that these new, more burdensome interpretations of the Medicare documentation requirements might have on our financial position or operating results, but such impact could be material.

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Furthermore, the Tax Relief and Health Care Act of 2006 made permanent and expanded a Recovery Audit Contractor (“RAC”) program that was initiated as a demonstration project by CMS in 2005, designed to test a new method for recovery of Medicare overpayments by utilizing private companies operating on a contingent fee basis to identify and recoup Medicare overpayments from providers. The RAC contractors are empowered to audit claims submitted by health care providers and to withhold future payments, including in cases where the reimbursement rules are unclear or subject to differing interpretations. This activity, as well as the activity of intermediaries and others involved in government reimbursement, may include changes in long-standing interpretations of reimbursement rules, which could have a material adverse effect on our future financial position and operating results.

COMPLIANCE WITH REGULATIONS UNDER THE FEDERAL HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996 (HIPAA), THE HEALTH INFORMATION TECHNOLOGY FOR ECONOMIC AND CLINICAL HEALTH ACT (HITECH ACT) AND RELATED RULES, RELATING TO THE TRANSMISSION, SECURITY AND PRIVACY OF HEALTH INFORMATION COULD IMPOSE ADDITIONAL SIGNIFICANT COSTS ON OUR OPERATIONS.

Numerous federal and state laws and regulations, including HIPAA and the HITECH Act, govern the collection, dissemination, security, use and confidentiality of patient-identifiable health information. HIPAA and the HITECH Act require us to comply with standards for the use and disclosure of health information within our company and with third parties. HIPAA and the HITECH Act also include standards for common health care electronic transactions and code sets, such as claims information, plan eligibility, payment information and the use of electronic signatures, and privacy and electronic security of individually identifiable health information. HIPAA requires health care providers, including us, in addition to health plans and clearinghouses, to develop and maintain policies and procedures with respect to protected health information that is used or disclosed. The HITECH Act expands the notification requirement for breaches of patient-identifiable health information, restricts certain disclosures and sales of patient-identifiable health information and provides a tiered system for civil monetary penalties for HIPAA violations.

If we do not comply with existing or new laws and regulations related to patient health information, we could be subject to criminal or civil sanctions. New health information standards, whether implemented pursuant to HIPAA, the HITECH Act, congressional action or otherwise, could have a significant effect on the manner in which we handle health care related data and communicate with payors, and the cost of complying with these standards could be significant.

WE MAY UNDERTAKE ACQUISITIONS THAT COULD SUBJECT US TO UNANTICIPATED LIABILITIES AND THAT COULD FAIL TO ACHIEVE EXPECTED BENEFITS.

Our strategy is to increase our market share through internal growth and strategic acquisitions. Consideration for the acquisitions has generally consisted of cash, unsecured non-interest bearing obligations and the assumption of certain liabilities.

The implementation of an acquisition strategy entails certain risks, including inaccurate assessment of disclosed liabilities, the existence of undisclosed liabilities, regulatory compliance issues associated with the acquired business, entry into markets in which we may have limited or no experience, diversion of management’s attention and human resources from our underlying business, difficulties in integrating the operations of an acquired business or in realizing anticipated efficiencies and cost savings, failure to retain key management or operating personnel of the acquired business, and an increase in indebtedness and a limitation in the ability to access additional capital on favorable terms. The successful integration of an acquired business may be dependent on the size of the acquired business, condition of the customer billing records, and complexity of system conversions and execution of the integration plan by local management. If we do not successfully integrate the acquired business, the acquisition could fail to achieve its expected revenue contribution or there could be delays in the billing and collection of claims for services rendered to customers, which may have a material adverse effect on our financial position and operating results.

WE FACE INTENSE NATIONAL, REGIONAL AND LOCAL COMPETITION AND IF WE ARE UNABLE TO COMPETE SUCCESSFULLY, WE WILL LOSE REVENUES AND OUR BUSINESS WILL SUFFER.

The home respiratory market is a fragmented and highly competitive industry. We compete against other national providers and, by our estimate, more than 2,000 local and regional providers. Home respiratory companies compete primarily on the basis of service rather than price since reimbursement levels are established by Medicare and Medicaid or by the individual determinations of private health plans.

Our ability to compete successfully and to increase our referrals of new customers is highly dependent upon our reputation within each local health care market for providing responsive, professional and high-quality service and achieving strong customer satisfaction. Given the relatively low barriers to entry in the home respiratory market, we expect that the industry will become increasingly competitive in the future. Increased competition in the future could limit our ability to attract and retain key operating personnel and achieve continued growth in our core business.

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INCREASES IN OUR COSTS COULD ERODE OUR PROFIT MARGINS AND SUBSTANTIALLY REDUCE OUR NET INCOME AND CASH FLOWS.

Cost containment in the health care industry, fueled, in part, by federal and state government budgetary shortfalls, is likely to result in constant or decreasing reimbursement amounts for our equipment and services. As a result, we must control our operating cost levels, particularly labor and related costs, which account for a significant component of our operating costs and expenditures. We compete with other health care providers to attract and retain qualified or skilled personnel. We also compete with various industries for administrative and service employees. Since reimbursement rates are established by fee schedules mandated by Medicare, Medicaid and private payors, we are not able to offset the effects of general inflation in labor and related cost components, if any, through increases in prices for our equipment and services. Consequently, such cost increases could erode our profit margins and reduce our net income.

IF THE COVERAGE LIMITS ON OUR INSURANCE POLICIES ARE INADEQUATE TO COVER OUR LIABILITIES OR OUR INSURANCE COSTS CONTINUE TO INCREASE, THEN OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS WOULD LIKELY DECLINE.

Participants in the health care industry, including the Company, are subject to substantial claims and litigation in the ordinary course, often involving large claims and significant defense costs. As a result of the liability risks inherent in our lines of business we maintain liability insurance intended to cover such claims. Our insurance policies are subject to annual renewal. The coverage limits of our insurance policies may not be adequate, and we may not be able to obtain liability insurance in the future on acceptable terms or at all. In addition, our insurance premiums could be subject to increases in the future, which increases may be material. If the coverage limits are inadequate to cover our liabilities or our insurance costs continue to increase, then our financial condition and results of operations would likely decline.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There were no material changes to the information provided in Item 7A in our Annual Report on Form 10-K regarding our market risk.

Our revolving credit facility is subject to changing LIBOR-based interest rates. At June 30, 2011, we had no outstanding borrowings under the credit facility.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

The Company has conducted an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

(b) Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) during the fiscal quarter ended June 30, 2011, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

As a health care provider, the Company is subject to extensive government regulation, including numerous laws directed at preventing fraud and abuse and laws regulating reimbursement under various government programs. The marketing, billing, documenting and other practices of health care companies are all subject to government scrutiny. To ensure compliance with Medicare, Medicaid and other regulations, regional carriers and state agencies often conduct audits and request patient records and other documents to support claims submitted by the Company for payment of services rendered to customers. Similarly, government agencies periodically open investigations and request information pursuant to legal process from the Company.

Our operating centers are also subject to federal and/or state laws regulating, among other things, interstate motor-carrier transportation, repackaging of oxygen, distribution of medical equipment, certain types of home health activities, pharmacy operations, nursing services and respiratory services and apply to those locations involved in such activities. Certain of our employees are subject to state laws and regulations governing the ethics and professional practice of respiratory therapy, pharmacy and nursing. From time to time, the Company receives inquiries and complaints from various government agencies related to its operations or personnel.

It has been the Company’s policy to cooperate with all inquiries, investigations and requests for information from government agencies and to vigorously defend any administrative complaints. The Company can provide no assurances as to the duration or outcome of these investigations, inquiries and/or complaints.

Private litigants may also make claims against health care providers for violations of health care laws in actions known as qui tam suits. In these cases, the government has the opportunity to intervene in, and take control of, the litigation. From time to time we are named as a defendant in such qui tam proceedings. We vigorously defend these suits. The government has declined to intervene for purposes other than dismissal in all unsealed qui tam actions of which we are aware.

Violations of federal and state regulations can result in severe criminal, civil and administrative penalties and sanctions, including disqualification from Medicare and other reimbursement programs.

The Company is subject to a five-year corporate integrity agreement with the Office of Inspector General that began in May 2006. Violations of the corporate integrity agreement can result in severe criminal, civil and administrative penalties and sanctions, including disqualification from Medicare and other reimbursement programs.

We are also involved in certain other claims and legal actions arising in the ordinary course of our business. The ultimate disposition of all such matters is not currently expected to have a material adverse impact on our financial position, results of operations or liquidity.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended June 30, 2011, the Company did not repurchase any shares of its common stock.

Our Board of Directors has authorized a share repurchase plan whereby the Company may repurchase shares of the Company’s common stock in amounts determined pursuant to a formula that takes into account both the ratio of the Company’s net debt to cash flow and its available cash resources and borrowing availability. As of June 30, 2011, $378.4 million of common stock was eligible for repurchase in accordance with the plan’s formula.

Item 3. Defaults Upon Senior Securities – Not Applicable

Item 4. Removed and Reserved

Item 5. Other Information – Not Applicable

Item 6. Exhibits

(a) Exhibits included or incorporated herein: See Exhibit Index.

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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

August 4, 2011

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INDEX OF EXHIBITS

Exhibit Number	Exhibit
3.10 (A)	Amended and Restated Certificate of Incorporation of Lincare Holdings Inc.
3.11 (A)	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Lincare Holdings Inc.
3.20 (B)	Amended and Restated By-Laws of Lincare Holdings Inc.
4.10 (C)	Lincare Holdings Inc. Indenture dated as of June 11, 2003
4.20 (C)	Lincare Holdings Inc. Registration Rights Agreement dated as of June 11, 2003
4.30 (D)	Lincare Holdings Inc. Series A Indenture dated as of October 31, 2007
4.40 (D)	Lincare Holdings Inc. Series B Indenture dated as of October 31, 2007
4.50 (D)	Lincare Holdings Inc. Registration Rights Agreement dated as of October 31, 2007
4.60 (D)	First Amendment to Credit Agreement with Bank of America, N.A. as Agent and Calyon, New York Branch as Syndication Agent dated as of October 31, 2007
4.70 (E)	Credit Agreement with Bank of America, N.A. as Agent and Calyon, New York Branch as Syndication Agent dated December 1, 2006
31.1	Certification Pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by John P. Byrnes, Chief Executive Officer
31.2	Certification Pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by Paul G. Gabos, Chief Financial Officer
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by John P. Byrnes, Chief Executive Officer
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Paul G. Gabos, Chief Financial Officer
101.INS *	XBRL Instance Document
101.SCH *	XBRL Taxonomy Extension Schema Document
101.CAL *	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF *	XBRL Definition Linkbase Document
101.LAB *	XBRL Taxonomy Extension Label Linkbase Document
101.PRE *	XBRL Taxonomy Extension Presentation Linkbase Document
A	Incorporated by reference to the Registrant’s Form 10-Q dated August 12, 1998.
B	Incorporated by reference to the Registrant’s Form 8-K dated December 21, 2010.
C	Incorporated by reference to the Registrant’s Form 8-K dated June 12, 2003.
D	Incorporated by reference to the Registrant’s Form 8-K dated November 6, 2007.
E	Incorporated by reference to the Registrant’s Form 10-K dated February 25, 2010.
*	Furnished herewith

S-1

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, John P. Byrnes, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Lincare Holdings Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent financial quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2011	By:	/S/ JOHN P. BYRNES
		John P. Byrnes Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Paul G. Gabos, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Lincare Holdings Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent financial quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2011	By:	/S/ PAUL G. GABOS
		Paul G. Gabos Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Lincare Holdings Inc. (the “Company”) for the quarter ended June 30, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John P. Byrnes, Chief Executive Officer of the Company, certify to the best of my knowledge and belief, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/S/ JOHN P. BYRNES
	John P. Byrnes Chief Executive Officer

August 4, 2011

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Lincare Holdings Inc. (the “Company”) for the quarter ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Paul G. Gabos, Chief Financial Officer of the Company, certify to the best of my knowledge and belief, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/S/ PAUL G. GABOS
	Paul G. Gabos Chief Financial Officer

August 4, 2011

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Subsequent Event (Details) (USD $) In Millions, except Per Share data	1 Months Ended
	Jul. 29, 2011	Jul. 01, 2011
Subsequent Event
Cash dividend per share		$ 0.20
Total dividend paid in subsequent period	$ 19.0

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Condensed Consolidated Statements Of Operations (USD $) In Thousands, except Per Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Condensed Consolidated Statements Of Operations
Net revenues	$ 449,033	$ 418,366	$ 880,600	$ 828,406
Costs and expenses:
Cost of goods and services	142,300	113,589	266,509	224,515
Operating expenses	102,189	99,673	204,096	198,200
Selling, general and administrative expenses	85,495	84,280	168,374	168,331
Bad debt expense	8,981	6,275	17,612	12,426
Depreciation and amortization expense	29,987	29,397	59,304	58,923
Total costs and expenses	368,952	333,214	715,895	662,395
Operating income	80,081	85,152	164,705	166,011
Other income (expense):
Interest income	200	142	403	235
Interest expense	(9,348)	(9,016)	(18,606)	(17,950)
Total nonoperating income (expense)	(9,148)	(8,874)	(18,203)	(17,715)
Income before income taxes	70,933	76,278	146,502	148,296
Income tax expense	28,168	29,863	57,360	58,245
Net income	$ 42,765	$ 46,415	$ 89,142	$ 90,051
Basic earnings per common share	$ 0.46	$ 0.48	$ 0.96	$ 0.94
Diluted earnings per common share	$ 0.45	$ 0.47	$ 0.94	$ 0.92
Dividends declared per common share	$ 0.20	$ 0.20	$ 0.40	$ 0.20
Weighted average number of common shares outstanding	92,096	96,080	92,535	95,896
Weighted average number of common shares and common share equivalents outstanding	94,989	98,677	95,291	98,165

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Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Cash flows from operating activities:
Net income	$ 89,142	$ 90,051
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt expense	17,612	12,426
Depreciation and amortization expense	59,304	58,923
Net loss (gain) on disposal of property and equipment	25	(20)
Amortization of debt issuance costs	884	884
Amortization of discount on bonds payable	9,744	9,086
Stock-based compensation expense	10,970	13,274
Deferred income taxes	24,822	13,561
Excess tax benefit from stock-based compensation	(240)	(394)
Change in assets and liabilities net of effects of acquired businesses:
Accounts receivable	(57,023)	(56,767)
Inventories	687	4,462
Prepaid and other assets	(3,972)	298
Accounts payable	(3,454)	1,412
Accrued expenses and other current liabilities	(21,616)	(4,371)
Income taxes payable	7,052	1,371
Long-term obligations	(2,161)	(2,235)
Net cash provided by operating activities	131,776	141,961
Cash flows from investing activities:
Proceeds from sale of property and equipment	125	37
Capital expenditures	(57,823)	(54,947)
Purchases of investments	(40,000)	0
Sales and maturities of investments	40,000	24,950
Business acquisitions, net of cash acquired	(73,021)	(11,327)
Cash restricted for future payments	345	(5,345)
Net cash used in investing activities	(130,374)	(46,632)
Cash flows from financing activities:
Payments of principal on debt	(619)	(569)
Payments of cash dividends	(38,186)	0
Proceeds from exercise of stock options and issuance of common shares	5,104	25,817
Excess tax benefit from stock-based compensation	240	394
Payments to acquire treasury stock	(49,998)	(49,961)
Net cash used in financing activities	(83,459)	(24,319)
Net (decrease) increase in cash and cash equivalents	(82,057)	71,010
Cash and cash equivalents, beginning of period	164,203	20,428
Cash and cash equivalents, end of period	82,146	91,438
Supplemental disclosure of cash flow information:
Cash paid for interest	7,563	7,563
Cash paid for income taxes	$ 25,566	$ 43,709

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Other Current Liabilities (Tables)

6 Months Ended

Jun. 30, 2011

Other Current Liabilities

Other Current Liabilities

	June 30, 2011		December 31, 2010
	(In thousands)
Deferred revenue	$	40,141	$	39,256
Other current liabilities		14,220		12,245
Other current liabilities	$	54,361	$	51,501

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Document And Entity Information	6 Months Ended
	Jun. 30, 2011	Jul. 26, 2011
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Trading Symbol	lncr
Entity Registrant Name	LINCARE HOLDINGS INC
Entity Central Index Key	0000882235
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		93,418,825

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Stock-Based Compensation (Stock Option Activity) (Details) (USD $)	6 Months Ended
	Jun. 30, 2011	Dec. 31, 2010
Stock-Based Compensation
Outstanding, number of options	6,744,982	6,912,014
Granted, number of options	0
Exercised, number of options	(163,932)
Cancelled/forfeited/expired, number of options	(3,100)
Exercisable, number of options	5,848,982
Vested or expected to vest in the future, number of options	6,743,459
Outstanding, weighted average exercise price	$ 24.46	$ 24.51
Exercised, weighted average exercise price	$ 26.47
Cancelled/forfeited/expired, weighted average exercise price	$ 26.89
Exercisable, weighted average exercise price	$ 25.09
Vested or expected to vest in the future, weighted average exercise price	$ 24.46
Exercisable, weighted average remaining contractual life, years	2.40
Outstanding, weighted average remaining contractual life, years	2.94
Vested or expected to vest in the future, weighted average remaining contractual life, years	2.94
Outstanding, aggregate intrinsic value	$ 32,436,018
Exercisable, aggregate intrinsic value	24,470,578
Vested or expected to vest in the future, aggregate intrinsic value	$ 32,422,477

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2011

Stock-Based Compensation

Summary Of Stock Option Activity

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2010		6,912,014		$	24.51
Options granted in 2011		0			—
Exercised in 2011		(163,932	)	$	26.47
Cancelled/forfeited/expired in 2011		(3,100	)	$	26.89
Outstanding at June 30, 2011		6,744,982		$	24.46		2.94	$	32,436,018
Exercisable at June 30, 2011		5,848,982		$	25.09		2.40	$	24,470,578
Vested or expected to vest in the future as of June 30, 2011		6,743,459		$	24.46		2.94	$	32,422,477

Summary Of Restricted Stock Activity

	Shares			Weighted- Average Grant Date Fair Value Per Share
Unvested at December 31, 2010		2,684,250		$	21.79
Granted		20,000		$	28.88
Vested		(179,225	)	$	26.33
Forfeited		(7,950	)	$	24.45
Unvested at June 30, 2011		2,517,075		$	21.51

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Stock-Based Compensation (Narrative) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Stock-based compensation expense	$ 5,500,000	$ 6,800,000	$ 10,970,000	$ 13,274,000
Stock-based compensation expense, related tax benefits	1,300,000	1,900,000	2,700,000	3,600,000
Options exercisable	5,848,982		5,848,982
Options vested or expected to vest	6,743,459		6,743,459
Stock Options [Member]
Options exercisable	5,848,982		5,848,982
Options unvested			896,000
Options vested or expected to vest	6,743,459		6,743,459
Expected cancellations and forfeitures			1,523
Intrinsic value of options exercised			700,000	6,300,000
Remaining unrecognized compensation cost related to restricted stock	1,300,000		1,300,000
Weighted-average remaining requisite service period, years			0.80
Restricted Stock [Member]
Remaining unrecognized compensation cost related to restricted stock	$ 23,000,000		$ 23,000,000
Weighted-average remaining requisite service period, years			1.50

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Long-Term Obligations

6 Months Ended

Jun. 30, 2011

Long-Term Obligations

Long-Term Obligations

Note 8. Long-Term Obligations

Long-term obligations at June 30, 2011 and December 31, 2010 consist of:

	June 30, 2011			December 31, 2010
	(In thousands)
Series A convertible debentures to mature in 2037, bearing fixed interest of 2.75%, with a put/call option in 2012	$	275,000		$	275,000
Unamortized discount		(14,253	)		(19,273	)
Series B convertible debentures to mature in 2037, bearing fixed interest of 2.75%, with a put/call option in 2014		275,000			275,000
Unamortized discount		(36,229	)		(40,953	)
Other long-term obligations		2,336			4,497
Unsecured acquisition obligations and contingent consideration, net of imputed interest, payable in various installments through 2014		30,940			619
Total long-term obligations		532,794			494,890
Less: current installments		21,230			619
Long-term obligations, excluding current installments	$	511,564		$	494,271

The Company's revolving credit agreement with several lenders and Bank of America N.A., as agent, dated December 1, 2006, permits the Company to borrow amounts up to $390.0 million under a five-year revolving credit facility. The revolving credit facility contains a $60.0 million letter of credit sub-facility, which reduces the principal amount available under the facility by the amount of outstanding letters of credit on the sub-facility. As of June 30, 2011 and December 31, 2010, no borrowings were outstanding under the credit facility and $33.8 million and $31.6 million in standby letters of credit were issued as of those dates, respectively. The revolving credit agreement has a maturity date of December 1, 2011. The Company pays an annual administration agency fee along with a quarterly facility fee. The facility fee is based on the Company's consolidated leverage ratio and ranges between 0.10% and 0.175% annually. The leverage ratio is calculated each quarter to determine the applicable interest rate on revolving loans, the letter of credit fee and the facility fee for the following quarter. The revolving credit agreement contains several financial and other negative and affirmative covenants customary in such agreements and is secured by a pledge of the stock of the wholly-owned subsidiaries of Lincare Holdings Inc. The financial covenants in the Company's credit agreement include interest coverage and leverage ratios, as defined in the agreement. The Company's credit agreement requires compliance with all covenants set forth in the agreement and the Company was in compliance with all covenants as of June 30, 2011 and December 31, 2010. The credit agreement defines the occurrence of certain specified events as events of default which, if not waived by or cured to the satisfaction of the requisite lenders, allow the lenders to take actions against the Company, including termination of commitments under the agreement, acceleration of any unpaid principal and accrued interest in respect of outstanding borrowings, payment of additional cash collateral to be held in escrow for the benefit of the lenders and enforcement of any and all rights and interests created and existing under the credit agreement. Under certain conditions, an event of default may result in an increase in the interest rate (the "Default Rate") payable by the Company on loans outstanding under the credit facility. The Default Rate is equal to the interest rate (including any applicable percentage as set forth in the agreement) otherwise applicable to such loans plus 2% per annum. In the case of a bankruptcy event (as defined in the credit agreement), all commitments automatically terminate and all amounts outstanding under the credit facility become immediately due and payable.

On October 31, 2007, the Company completed the sale of $275.0 million principal amount of convertible senior debentures due 2037 – Series A (the "Series A Debentures") and $275.0 million principal amount of convertible senior debentures due 2037 – Series B (the "Series B Debentures" and together with the Series A Debentures, the "Series Debentures") in a private placement. The Series Debentures pay interest semi-annually at a rate of 2.75% per annum. The Series Debentures are unsecured and unsubordinated obligations and will be convertible under specified circumstances based upon a base conversion rate, which, under certain circumstances, will be increased pursuant to a formula that is subject to a maximum conversion rate. Upon conversion, holders of the Series Debentures will receive cash up to the principal amount, and any excess conversion value will be delivered in shares of the Company's common stock or in a combination of cash and shares of common stock, at the Company's option. The base conversion rate for the Debentures as of June 30, 2011 is 30.1118 shares of common stock per $1,000 principal amount of Series Debentures, equivalent to a base conversion price of approximately $33.21 per share. In addition, if at the time of conversion the applicable price of the Company's common stock exceeds the base conversion price, holders of the Series A Debentures and Series B Debentures will receive an additional number of shares of common stock per $1,000 principal amount of the Debentures, as determined pursuant to a specified formula. The Company will have the right to redeem the Series A Debentures and the Series B Debentures at any time after November 1, 2012 and November 1, 2014, respectively. Holders of the Series Debentures will have the right to require the Company to repurchase for cash all or some of their Series Debentures upon the occurrence of certain fundamental change transactions or on November 1, 2012, 2017, 2022, 2027 and 2032 in the case of the Series A Debentures and November 1, 2014, 2017, 2022, 2027 and 2032 in the case of the Series B Debentures.

The Company has estimated the fair value of the liability components of the Series Debentures by calculating the present value of the cash flows of similar liabilities without associated equity components. In performing those calculations, the Company estimated that instruments similar to the Series A and B Debentures without a conversion feature as of the date of issuance would have had 7.0% and 7.4% rates of return (respectively) and expected lives of five and seven years (respectively). These estimated rates of return were based on the Company's nonconvertible debt borrowing rate at the time of issuance and the expected lives were based on the holder's put option features embedded in the notes. The initial proceeds from the instruments exceeded the estimated fair value of the liability components, and as a result, the Company reclassified $47.4 million and $67.2 million, respectively, of the carrying value of the Series A and B convertible debentures to equity as of the October 31, 2007 issuance date. These amounts represent the equity components of the proceeds from the debentures. The Company also recognized debt discounts equal to the equity components which will be accreted to interest expense over the respective five and seven year terms of the first put/call option dates specified in the indentures underlying the debentures. The accreted interest plus the cash interest payments based on the stated coupon rates results in interest cost being recognized in the income statement that reflect the interest rates on similar instruments without a conversion feature.

The debt and equity components recognized for the Series A and Series B convertible debentures were as follows (in thousands):

	June 30, 2011						December 31, 2010
	Series A			Series B			Series A			Series B
Principal amount of convertible debentures	$	275,000		$	275,000		$	275,000		$	275,000
Unamortized discount		(14,253	)		(36,229	)		(19,273	)		(40,953	)
Net carrying amount		260,747			238,771			255,727			234,047
Additional paid-in capital		29,065			41,238			29,065			41,238

At June 30, 2011, the remaining period over which the discount on the liability components will be amortized is 16 months and 40 months for the Series A and Series B convertible debentures, respectively.

The amount of interest expense recognized for the three months ended June 30, 2011 and 2010 was as follows (in thousands):

	June 30, 2011				June 30, 2010
	Series A		Series B		Series A		Series B
Contractual coupon interest	$	1,890	$	1,890	$	1,891	$	1,891
Amortization of discount on convertible debentures		2,532		2,383		2,365		2,218
Interest expense	$	4,422	$	4,273	$	4,256	$	4,109

The amount of interest expense recognized for the six months ended June 30, 2011 and 2010 was as follows (in thousands):

	June 30, 2011				June 30, 2010
	Series A		Series B		Series A		Series B
Contractual coupon interest	$	3,781	$	3,781	$	3,781	$	3,781
Amortization of discount on convertible debentures		5,020		4,724		4,690		4,396
Interest expense	$	8,801	$	8,505	$	8,471	$	8,177

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Summary Of Significant Accounting Policies (Narrative) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Summary Of Significant Accounting Policies
Number of states with service locations			48
Approximate percentage of revenue as reimbursements from government sources			61.00%	60.00%
Rentals as a percentage of total sales, approximate	56.80%	60.90%	58.00%	61.40%
Sale items as a percentage of total sales, approximate	43.20%	39.10%	42.00%	38.60%
Cost of goods and services, depreciation	$ 27,300,000	$ 27,400,000	$ 53,600,000	$ 53,700,000
Costs of goods and services, allocation of related costs	13,600,000	13,300,000	27,500,000	26,500,000
Salary and related expenses for pharmacists and pharmacy technicians	3,900,000	3,300,000	7,200,000	6,400,000
Number of operating centers			1,106
Salary and related expenses for service reps	28,300,000	27,500,000	55,900,000	53,900,000
Other salary and related costs, selling, general, and administrative	62,900,000	64,900,000	125,100,000	128,200,000
Salary and related expenses for respiratory therapists	$ 17,900,000	$ 17,300,000	$ 34,500,000	$ 33,600,000

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Long-Term Obligations (Debt And Equity Components) (Details) (USD $)	Jun. 30, 2011	Dec. 31, 2010
2.75% Series A [Member]
Principal amount of convertible debentures	$ 275,000,000	$ 275,000,000
Unamortized discount	(14,253,000)	(19,273,000)
Net carrying amount	260,747,000	255,727,000
Additional paid-in capital	29,065,000	29,065,000
Remaining period that discount will be amortized, months	16
2.75% Series B [Member]
Principal amount of convertible debentures	275,000,000	275,000,000
Unamortized discount	(36,229,000)	(40,953,000)
Net carrying amount	238,771,000	234,047,000
Additional paid-in capital	$ 41,238,000	$ 41,238,000
Remaining period that discount will be amortized, months	40

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Accounts Receivable, Net (Schedule Of Accounts Receivable, Net) (Details) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Accounts Receivable, Net
Trade accounts receivable	$ 285,989	$ 234,404
Less allowance for sales adjustments and uncollectible accounts	(52,580)	(48,403)
Accounts receivable, net	$ 233,409	$ 186,001

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Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2011

Earnings Per Common Share

Computation Of Basic And Diluted Earnings Per Share

	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2011		2010		2011		2010
	(In thousands, except per share data)
Numerator:
Income available to common stockholders and holders of dilutive securities	$	42,765	$	46,415	$	89,142	$	90,051
Denominator:
Weighted average shares		92,096		96,080		92,535		95,896
Effect of dilutive securities:
Incremental shares under stock compensation plans		2,893		2,597		2,756		2,269
Adjusted weighted average shares		94,989		98,677		95,291		98,165
Per share amount:
Basic	$	0.46	$	0.48	$	0.96	$	0.94
Diluted	$	0.45	$	0.47	$	0.94	$	0.92

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Summary Of Significant Accounting Policies (Policy)

6 Months Ended

Jun. 30, 2011

Summary Of Significant Accounting Policies

Description Of Business

Description of Business: Lincare Holdings Inc. and subsidiaries ("Lincare" or the "Company") provides oxygen, respiratory therapy services, specialty pharmaceuticals, infusion therapy services and home medical equipment such as hospital beds, wheelchairs and other medical supplies to the home health care market. The Company's customers are serviced from locations in 48 states. The Company's equipment and supplies are readily available and the Company is not dependent on a single supplier or even a few suppliers.

Basis Of Presentation

Basis of Presentation: The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with generally accepted accounting principles accepted in the United States for interim financial information and with the instructions to Form 10-Q. They should be read in conjunction with the consolidated financial statements and related notes to the financial statements of Lincare Holdings Inc. and Subsidiaries on Form 10-K for the fiscal year ended December 31, 2010. 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 preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates. It is at least reasonably possible that a change in those estimates will occur in the near term.

Investments: The Company determines the appropriate classification of investments at the time of purchase based upon management's intent with regard to such investments. Based upon the Company's intentions and ability to hold certain assets until maturity, the Company classifies certain debt securities as held-to-maturity and measures them at amortized cost. The Company classifies certain other debt securities as available-for-sale and measures them at fair value with unrealized gains or losses recorded in other comprehensive income. Realized gains and losses from both categories of investments are included in net income and are determined on a specific identification basis. Interest income and dividend income, if any, for both categories of investments are included in net income.

Investments

Investments: The Company determines the appropriate classification of investments at the time of purchase based upon management's intent with regard to such investments. Based upon the Company's intentions and ability to hold certain assets until maturity, the Company classifies certain debt securities as held-to-maturity and measures them at amortized cost. The Company classifies certain other debt securities as available-for-sale and measures them at fair value with unrealized gains or losses recorded in other comprehensive income. Realized gains and losses from both categories of investments are included in net income and are determined on a specific identification basis. Interest income and dividend income, if any, for both categories of investments are included in net income.

Restricted Cash

Restricted Cash: Restricted cash was held in an interest-bearing escrow account for the purposes of complying with and performing certain contractual obligations in connection with the February 1, 2010 purchase of the respiratory therapy, home medical equipment and infusion therapy business of Gentiva Health Services, Inc.

Concentration Of Credit Risk

Concentration of Credit Risk: The Company's revenues are generated through locations in 48 states. The Company generally does not require collateral or other security in extending credit to customers; however, the Company routinely obtains assignment of (or is otherwise entitled to receive) benefits receivable under the health insurance programs, plans or policies of its customers. Included in the Company's net revenues is reimbursement from government sources under Medicare, Medicaid and other federally and state funded programs, which represented approximately 61% and 60% of net revenues for the six months ended June 30, 2011 and 2010, respectively. The exclusion of the Company from participating in state and federally funded programs would have a material adverse effect on the Company's business, financial condition, operating results and cash flows.

Self-Insurance Risk

Self-Insurance Risk: The Company is subject to workers' compensation, professional liability, auto liability and employee health benefit claims, which are primarily self-insured; however, the Company maintains certain stop-loss and other insurance coverage which it believes to be appropriate. Provisions for estimated settlements relating to these self-insured liabilities are provided in the period of the related claims on a case-by-case basis plus an amount for incurred but not reported claims. Differences between the amounts accrued and subsequent settlements are recorded in operations in the period of settlement.

Revenue Recognition And Accounts Receivable

Revenue Recognition and Accounts Receivable: The Company's revenues are recognized on an accrual basis in the period in which services and related products are provided to customers and are recorded at net realizable amounts estimated to be paid by customers and third-party payors. The Company's billing system contains payor-specific price tables that reflect the fee schedule amounts in effect or contractually agreed upon by various government and commercial payors for each item of equipment or supply provided to a customer. The Company has established an allowance to account for sales adjustments that result from differences between the payment amount received and the expected realizable amount. Actual adjustments that result from differences between the payment amount received and the expected realizable amount are recorded against the allowance for sales adjustments and are typically identified and ultimately recorded at the point of cash application or when otherwise determined pursuant to the Company's collection procedures. The Company reports revenues in its financial statements net of such sales adjustments.

Certain items provided by the Company are reimbursed under rental arrangements that generally provide for fixed monthly payments established by fee schedules for as long as the patient is using the equipment and medical necessity continues (subject to capped rental arrangements which limit the rental payment periods in some instances and which may result in a transfer of title to the equipment at the end of the rental payment period). Once initial delivery of rental equipment is made to the patient, a monthly billing cycle is established based on the initial date of delivery. The Company recognizes rental arrangement revenues ratably over the monthly service period and defers revenue for the portion of the monthly bill that is unearned. No separate payment is earned from the initial equipment delivery and setup process. During the rental period, the Company is responsible for servicing the equipment and providing routine maintenance, if necessary.

The Company's revenue recognition policy is consistent with the criteria set forth in Staff Accounting Bulletin 104, "Revenue Recognition" ("SAB 104"), for determining when revenue is realized or realizable and earned. The Company recognizes revenue in accordance with the requirements of SAB 104 that:

• persuasive evidence of an arrangement exists;

• delivery has occurred;

• the seller's price to the buyer is fixed or determinable; and

• collectibility is reasonably assured.

Due to the nature of the industry and the reimbursement environment in which the Company operates, certain estimates are required to record net revenues and accounts receivable at their net realizable values at the time products and/or services are provided. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of many third-party billing arrangements and the uncertainty of reimbursement amounts for certain services from certain payors may result in adjustments to amounts originally recorded. Such sales adjustments are typically identified and recorded by the Company at the point of cash application, claim denial or account review. Included in accounts receivable are earned but unbilled accounts receivable from earned revenues. Unbilled accounts receivable represent charges for equipment and supplies delivered to customers for which invoices have not yet been generated by the Company's billing system. Prior to the delivery of equipment and supplies to customers, the Company performs certain certification and approval procedures to ensure collection is reasonably assured. Once the items are delivered, unbilled accounts receivable are recorded at net amounts expected to be paid by customers and third-party payors. Billing delays, generally ranging from several days to several weeks, can occur due to delays in obtaining certain required payor-specific documentation from internal and external sources as well as interim transactions occurring between cycle billing dates established for each customer within the billing system, and business acquisitions awaiting assignment of new provider enrollment identification numbers. In the event that a third-party payor does not accept the claim, the customer is ultimately responsible for payment for the products or services. Accounts receivable are reported net of allowances for sales adjustments and uncollectible accounts. Sales adjustments are recorded against revenues and result from differences between the payment amount received and the expected realizable amount. Bad debt is recorded as an operating expense and consists of billed charges that are ultimately deemed uncollectible due to the customer's or third-party payor's inability to pay.

The Company performs analyses to evaluate the net realizable value of accounts receivable. Specifically, the Company considers historical realization data, accounts receivable aging trends, other operating trends and relevant business conditions. Because of continuing changes in the health care industry and third-party reimbursement, it is possible that the Company's estimates could change, which could have a material impact on the Company's results of operations and cash flows.

Net Revenues

Net Revenues: The following table sets forth, for the periods indicated, a summary of the Company's net revenues by product category:

	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2011		2010		2011		2010
	(In thousands)				(In thousands)
Respiratory and other chronic therapies	$	403,022	$	371,661	$	789,042	$	739,862
DME, infusion and enteral therapies		46,011		46,705		91,558		88,544
Total	$	449,033	$	418,366	$	880,600	$	828,406

Included in net revenues in the three and six months ended June 30, 2011 are rental items that comprise approximately 56.8% and 58.0%, respectively, of total revenues and sale items that comprise approximately 43.2% and 42.0%, respectively, of total revenues. Included in net revenues in the three and six months ended June 30, 2010 are rental items that comprise approximately 60.9% and 61.4%, respectively, of total revenues and sale items that comprise approximately 39.1% and 38.6%, respectively, of total revenues.

Sales And Certain Other Taxes

Sales and Certain Other Taxes: In its consolidated financial statements, the Company accounts for taxes imposed on revenue-producing transactions by government authorities on a net basis, and accordingly, excludes such taxes from net revenues. Such taxes include, but are not limited to, sales, use, privilege and excise taxes.

Cost Of Goods And Services

Cost of Goods and Services: Cost of goods and services includes the cost of medical equipment (excluding depreciation of $27.3 million and $53.6 million for the three and six-month periods in 2011 and $27.4 million and $53.7 million for the three and six-month periods in 2010, respectively), drugs and supplies sold to patients and certain operating costs related to the Company's respiratory drug product line. These costs include an allocation of customer service, distribution and administrative costs relating to the respiratory drug product line of approximately $13.6 million and $27.5 million for the three and six-month periods ended June 30, 2011, respectively. For the three and six-month periods of 2010, such costs amounted to $13.3 million and $26.5 million, respectively. Included in cost of goods and services in the three and six-month periods ended June 30, 2011 are salary and related expenses of pharmacists and pharmacy technicians of approximately $3.9 million and $7.2 million, respectively. Such salary and related expenses for the three and six-month periods ended June 30, 2010, were $3.3 million and $6.4 million, respectively.

Operating Expenses

Operating Expenses: The Company manages 1,106 operating centers from which customers are provided equipment, supplies and services. An operating center averages approximately seven to eight employees and is typically comprised of a center manager, two customer service representatives (referred to as "CSR's" – telephone intake, scheduling, documentation), two or three service representatives (referred to as "Service Reps" – delivery, maintenance and retrieval of equipment and delivery of disposables), a respiratory therapist (non-reimbursable clinical follow-up with the customer and communication to the prescribing physician) and a sales representative (marketing calls to local physicians and other referral sources).

The Company includes in operating expenses the costs incurred at the Company's operating centers for certain service personnel (center manager, CSR's and Service Reps), facilities (rent, utilities, communications, property taxes, etc.), vehicles (vehicle leases, gasoline, repair and maintenance), and general business supplies and miscellaneous expenses. Operating expenses for the interim periods of 2011 and 2010 within these major categories were as follows:

Operating Expenses (in thousands)

	For The Three  Months Ended June 30,				For The Six Months Ended June 30,
	2011		2010		2011		2010
Salary and related	$	66,965	$	65,108	$	132,776	$	128,066
Facilities		12,733		14,963		28,431		30,864
Vehicles		13,756		11,863		26,420		23,508
General supplies/miscellaneous		8,735		7,739		16,469		15,762
Total	$	102,189	$	99,673	$	204,096	$	198,200

Included in operating expenses during the three and six-month periods ended June 30, 2011 are salary and related expenses for Service Reps in the amount of $28.3 million and $55.9 million, respectively. Such salary and related expenses for the three and six-month periods ended June 30, 2010, were $27.5 million and $53.9 million, respectively.

Selling, General And Administrative Expenses

Selling, General and Administrative Expenses: Selling, general and administrative expenses ("SG&A") include costs related to sales and marketing activities, corporate overhead and other business support functions. Included in SG&A during the three and six-month periods ended June 30, 2011 are salary and related expenses of $62.9 million and $125.1 million, respectively. These salary and related expenses include the cost of the Company's respiratory therapists for the three and six-month periods ended June 30, 2011, of $17.9 million and $34.5 million, respectively. Included in SG&A during the three and six-month periods ended June 30, 2010 are salary and related expenses of $64.9 million and $128.2 million, respectively. These salary and related expenses include the cost of the Company's respiratory therapists for the three and six-month periods ended June 30, 2010, of $17.3 million and $33.6 million, respectively. The Company's respiratory therapists generally provide non-reimbursable clinical follow-up with the customer and communication, as appropriate, to the prescribing physician with respect to the customer's prescribed plan of care. The Company includes the salaries and related expenses of its respiratory therapist personnel (licensed respiratory therapists or, in some cases, registered nurses) in SG&A because it believes that these personnel enhance the Company's business relative to its competitors who do not employ respiratory therapists.

Comprehensive Income

Comprehensive Income: The Company's comprehensive income is the same as reported net income for all periods presented.

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Business Combinations

6 Months Ended

Jun. 30, 2011

Business Combinations

Business Combinations

Note 4. Business Combinations

Lincare acquires the business and related assets of local and regional companies as an ongoing strategy to increase revenue within its respective markets. Lincare arrives at a negotiated purchase price taking into account such factors including, but not limited to, the acquired company's historical and projected revenue growth, operating cash flow, product mix, payor mix, service reputation and geographical location.

During the six-month period ended June 30, 2011, the Company acquired all of the outstanding common stock of four companies and certain assets of two other companies. During the six-month period ended June 30, 2010, the Company acquired certain assets of four companies.

The acquisition date fair value of the total consideration transferred for the 2011 acquisitions was $101.2 million, which consisted of the following:

	(In thousands)
Cash consideration, net of cash acquired (1)	$	70,236
Contingent consideration		18,890
Deferred acquisition obligations		12,050
	$	101,176

(1) Does not include $2.8 million related to an acquisition closed in December 2010 and paid in January 2011.

The following table summarizes the fair values of the assets and liabilities assumed based on preliminary estimates that are subject to change in 2011 upon completion of the final valuation analyses:

	(In thousands)
Current assets, net of cash acquired	$	10,796
Property and equipment		249
Intangible assets		10,075
Goodwill		94,178
Assumption of liabilities		(14,080	)
Deferred revenue		(42	)
	$	101,176

The results of the 2011 acquisitions have been included in the Company's financial statements from the acquisition date forward and were not significant for the first six months of 2011. Pro forma information for the comparable period of 2010 would not be materially different from amounts reported.

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Business Combinations (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Business Combinations
Assets acquired, number of companies	2	4
Outstanding common stock acquired, number of companies	4
Total consideration transferred	$ 101,176

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Earnings Per Common Share

6 Months Ended

Jun. 30, 2011

Earnings Per Common Share

Earnings Per Common Share

Note 10. Earnings Per Common Share

Basic earnings per common share is computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share reflects the potential dilution of securities that could share in the Company's earnings, including exercise of outstanding stock options and non-vested restricted stock. As discussed in Note 8, the conditions for conversion related to the Company's Convertible Debentures have never been met. Accordingly, there was no impact on diluted earnings per share attributable to assumed conversion. When the exercise of stock options or the inclusion of awards would be anti-dilutive, they are excluded from the earnings per common share calculation. For the three and six months ended June 30, 2011 and 2010, there were no excluded shares underlying anti-dilutive stock options and awards.

A reconciliation of the numerators and the denominators of the basic and diluted earnings per common share computations is as follows:

	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2011		2010		2011		2010
	(In thousands, except per share data)
Numerator:
Income available to common stockholders and holders of dilutive securities	$	42,765	$	46,415	$	89,142	$	90,051
Denominator:
Weighted average shares		92,096		96,080		92,535		95,896
Effect of dilutive securities:
Incremental shares under stock compensation plans		2,893		2,597		2,756		2,269
Adjusted weighted average shares		94,989		98,677		95,291		98,165
Per share amount:
Basic	$	0.46	$	0.48	$	0.96	$	0.94
Diluted	$	0.45	$	0.47	$	0.94	$	0.92

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Fair Value Of Assets And Liabilities (Tables)

6 Months Ended

Jun. 30, 2011

Fair Value Of Assets And Liabilities

Valuation Of Assets And Liabilities Measured At Fair Value On Recurring Basis

June 30, 2011	Level 1		Level 3		Fair Value
Assets
Money Market Funds (1)	$	50,014	$	0	$	50,014
Liabilities
Acquisition-related contingent consideration-short-term (2)	$	0	$	9,180	$	9,180
Acquisition-related contingent consideration-long-term (3)		0		9,710		9,710
Total acquisition-related contingent consideration	$	0	$	18,890	$	18,890
December 31, 2010
Assets
Money Market Funds (1)	$	101,600	$	0	$	101,600

(1) Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets.

(2) Included in current installments of long-term obligations in the accompanying condensed consolidated balance sheets.

(3) Included in long-term obligations, excluding current installments in the accompanying condensed consolidated balance sheets.

Changes In Estimated Fair Values Of Assets And Liabilities Measured Using Significant Unobservable Inputs

	(In thousands)
	Assets		Liabilities
Balance on December 31, 2010	$	0	$	0
Acquisition-related contingent consideration recorded in 2011		0		18,890
Balance on June 30, 2011	$	0	$	18,890

Estimated Fair Value Of Assets And Liabilities Not Measured On Recurring Basis

(In thousands)	June 30, 2011				December 31, 2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Short-term investments – held to maturity	$	40,000	$	40,000	$	40,000	$	40,000
Restricted cash		0		0		345		345
Liabilities:
2.75% Series A Debentures		260,747		308,172		255,727		302,672
2.75% Series B Debentures		238,771		323,297		234,047		305,422
Deferred acquisition obligations		12,050		12,050		619		619

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2011

Stock-Based Compensation

Stock-Based Compensation

Note 11. Stock-Based Compensation

For the three months ended June 30, 2011 and 2010, the Company recognized total stock-based compensation expenses of $5.5 million and $6.8 million, respectively, as well as related tax benefits of $1.3 million and $1.9 million, respectively. For the six months ended June 30, 2011 and 2010, the Company recognized total stock-based compensation expenses of $11.0 million and $13.3 million, respectively, as well as related tax benefits of $2.7 million and $3.6 million, respectively. All stock-based compensation expenses are recognized using a graded method approach and are either classified within operating expenses or selling, general and administrative expenses on the accompanying condensed consolidated statements of operations, with substantially all of the expense being in selling, general and administrative expenses.

Stock Options

Stock option activity for the six months ended June 30, 2011 is summarized below:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2010		6,912,014		$	24.51
Options granted in 2011		0			—
Exercised in 2011		(163,932	)	$	26.47
Cancelled/forfeited/expired in 2011		(3,100	)	$	26.89
Outstanding at June 30, 2011		6,744,982		$	24.46		2.94	$	32,436,018
Exercisable at June 30, 2011		5,848,982		$	25.09		2.40	$	24,470,578
Vested or expected to vest in the future as of June 30, 2011		6,743,459		$	24.46		2.94	$	32,422,477

Of the stock options outstanding at June 30, 2011, options for 5,848,982 shares were exercisable and options for 896,000 shares were unvested. Of the total stock options outstanding at June 30, 2011, 6,743,459 were vested or expected to vest in the future, net of expected cancellations and forfeitures of 1,523. The intrinsic value of options exercised during the six months ended June 30, 2011 and 2010 amounted to $0.7 million and $6.3 million, respectively.

As of June 30, 2011, the total remaining unrecognized compensation cost related to unvested stock options amounted to $1.3 million, which will be amortized over the weighted-average remaining requisite service period of 0.8 years.

Restricted Stock

The following table summarizes information about restricted stock activity for the six months ended June 30, 2011:

	Shares			Weighted- Average Grant Date Fair Value Per Share
Unvested at December 31, 2010		2,684,250		$	21.79
Granted		20,000		$	28.88
Vested		(179,225	)	$	26.33
Forfeited		(7,950	)	$	24.45
Unvested at June 30, 2011		2,517,075		$	21.51

As of June 30, 2011, the total remaining unrecognized compensation cost related to restricted stock amounted to $23.0 million, which will be amortized over the weighted-average remaining requisite service period of 1.5 years.

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Fair Value Of Assets And Liabilities (Changes In Estimated Fair Values Of Assets And Liabilities Measured Using Significant Unobservable Inputs) (Details) (Level 3 [Member], USD $) In Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2011	Dec. 31, 2010
Level 3 [Member]
Beginning Balance, assets	$ 0
Beginning balance, liabilities	18,890	0
Acquisition-related contingent consideration recorded in 2011, assets	0
Acquisition-related contingent consideration recorded in 2011, liabilities	18,890
Ending balance, assets	0	0
Ending balance, liabilities	$ 18,890	$ 0

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Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes

Income Taxes

Note 9. Income Taxes

The Company conducts business nationally and, as a result, files a U.S. federal income tax return and returns in various state and local jurisdictions. In the normal course of business the Company is subject to examination by taxing authorities throughout the United States. With few exceptions, the Company is no longer subject to U.S. federal, and state and local income tax examinations for years before 2006 and 2005, respectively.

The Company does not expect that the total amount of unrecognized tax positions will significantly increase or decrease in the next twelve months. The Company continues to recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense.

The Internal Revenue Service has completed its examination of the Company's U.S. income tax returns through 2009. The U.S. federal statute of limitations remains open for the years 2007 and forward. There are no material disputes for the open tax years. The years 2010 and 2011 are currently under examination.

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Fair Value Of Assets And Liabilities

6 Months Ended

Jun. 30, 2011

Fair Value Of Assets And Liabilities

Fair Value Of Assets And Liabilities

Note 2. Fair Value of Assets and Liabilities

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. "the exit price") in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. A hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect a company's judgment concerning the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows:

• Level 1 — Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

• Level 2 — Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

• Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the Company's degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases an asset or liability is classified in its entirety based on the lowest level of input that is significant to the measurement of fair value.

Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company's own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition has caused, and in the future may cause, the Company's financial instruments to be reclassified from Level 1 to Level 2 or from Level 2 to Level 3. During the three and six-month periods ended June 30, 2011, the Company did not have any reclassifications in levels.

The Company estimated the fair value of acquisition-related contingent consideration arrangements by applying the income approach using a probability-weighted discounted cash flow model. This fair value measurement is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect the Company's own assumptions in measuring fair value.

Contingent consideration of $9.6 million was recognized in connection with a business acquisition in February 2011. At June 30, 2011, the amounts recognized for the contingent consideration arrangements, the range of outcomes, and the assumptions used to develop the estimates had not materially changed.

Contingent consideration of $9.3 million was recognized in connection with a business acquisition in June 2011. At June 30, 2011, the amounts recognized for the contingent consideration arrangements, the range of outcomes, and the assumptions used to develop the estimates had not materially changed.

The following table presents the valuation of the Company's financial assets and liabilities as of June 30, 2011 and December 31, 2010, measured at fair value on a recurring basis (in thousands):

June 30, 2011	Level 1		Level 3		Fair Value
Assets
Money Market Funds (1)	$	50,014	$	0	$	50,014
Liabilities
Acquisition-related contingent consideration-short-term (2)	$	0	$	9,180	$	9,180
Acquisition-related contingent consideration-long-term (3)		0		9,710		9,710
Total acquisition-related contingent consideration	$	0	$	18,890	$	18,890
December 31, 2010
Assets
Money Market Funds (1)	$	101,600	$	0	$	101,600

(1) Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets.

(2) Included in current installments of long-term obligations in the accompanying condensed consolidated balance sheets.

(3) Included in long-term obligations, excluding current installments in the accompanying condensed consolidated balance sheets.

The following table presents the changes in the estimated fair values of the Company's financial assets and liabilities that are measured using significant unobservable inputs (Level 3) for the six months ended June 30, 2011:

	(In thousands)
	Assets		Liabilities
Balance on December 31, 2010	$	0	$	0
Acquisition-related contingent consideration recorded in 2011		0		18,890
Balance on June 30, 2011	$	0	$	18,890

Fair Value of Financial Instruments

The estimated fair values of the Company's financial instruments that are not measured at fair value on a recurring basis are as follows:

(In thousands)	June 30, 2011				December 31, 2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Short-term investments – held to maturity	$	40,000	$	40,000	$	40,000	$	40,000
Restricted cash		0		0		345		345
Liabilities:
2.75% Series A Debentures		260,747		308,172		255,727		302,672
2.75% Series B Debentures		238,771		323,297		234,047		305,422
Deferred acquisition obligations		12,050		12,050		619		619

Fair values were determined as follows:

• The carrying amounts of short-term investments, restricted cash and deferred acquisition obligations approximate fair value because of the short-term maturity of these instruments. The short-term investments are classified as held-to-maturity and are carried at amortized cost.

• The fair value of the Series A and Series B Debentures are estimated based on several standard market variables, including the Company's stock price, yield to put/call through conversion and yield to maturity.

• The Company believes that the recorded values of all of its other financial instruments approximate their fair values because of their nature and respective relatively short maturity dates or durations.

• Deferred acquisition obligations exclude acquisition-related contingent consideration measured at fair value using Level 3 inputs.

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Accounts Receivable, Net

6 Months Ended

Jun. 30, 2011

Accounts Receivable, Net

Accounts Receivable, Net

Note 5. Accounts Receivable, Net

Accounts receivable, net at June 30, 2011 and December 31, 2010 consist of:

	June 30, 2011			December 31, 2010
	(In thousands)
Trade accounts receivable	$	285,989		$	234,404
Less allowance for sales adjustments and uncollectible accounts		(52,580	)		(48,403	)
Accounts receivable, net	$	233,409		$	186,001

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Other Current Liabilities (Details) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Other Current Liabilities
Deferred revenue	$ 40,141	$ 39,256
Other current liabilities	14,220	12,245
Other current liabilities	$ 54,361	$ 51,501

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Fair Value Of Assets And Liabilities (Fair Value Of Assets And Liabilities Measured On Recurring Basis) (Details) (USD $) In Thousands	Jun. 30, 2011		Dec. 31, 2010
Contingent consideration	$ 18,890
Short-term [Member]
Contingent consideration	9,180	[1]
Short-term [Member] | Level 1 [Member]
Contingent consideration	0	[1]
Short-term [Member] | Level 3 [Member]
Contingent consideration	9,180	[1]
Long-term [Member]
Contingent consideration	9,710	[2]
Long-term [Member] | Level 1 [Member]
Contingent consideration	0	[2]
Long-term [Member] | Level 3 [Member]
Contingent consideration	9,710	[2]
Money Market Funds [Member]
Financial assets at fair value	50,014	[3]	101,600	[3]
Money Market Funds [Member] | Level 1 [Member]
Financial assets at fair value	50,014	[3]	101,600	[3]
Money Market Funds [Member] | Level 3 [Member]
Financial assets at fair value	0	[3]	0	[3]
Level 1 [Member]
Contingent consideration	0
Level 3 [Member]
Contingent consideration	$ 18,890

[1] Included in current installments of long-term obligations in the accompanying condensed consolidated balance sheets.

[2] Included in long-term obligations, excluding current installments in the accompanying condensed consolidated balance sheets.

[3] Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets.

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Property And Equipment, Net

6 Months Ended

Jun. 30, 2011

Property And Equipment, Net

Property And Equipment, Net

Note 6. Property and Equipment, Net

Property and equipment, net at June 30, 2011 and December 31, 2010 consist of:

	June 30, 2011			December 31, 2010
	(In thousands)
Property and equipment at cost	$	1,209,549		$	1,168,236
Less accumulated depreciation		(872,513	)		(829,458	)
Property and equipment, net	$	337,036		$	338,778

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Long-Term Obligations (Long-term Obligations) (Details) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Other long-term obligations	$ 2,336,000	$ 4,497,000
Unsecured acquisition obligations and contingent consideration, net of imputed interest, payable in various installments through 2014	30,940,000	619,000
Total long-term obligations	532,794,000	494,890,000
Less: current installments	21,230,000	619,000
Long-term obligations, excluding current installments	511,564,000	494,271,000
Convertible debt, fixed interest rate	2.75%
Option 2012 [Member]
Convertible debentures to mature in 2037, bearing fixed interest of 2.75%, with a put/call option	275,000,000	275,000,000
Unamortized discount	(14,253,000)	(19,273,000)
Convertible debt, fixed interest rate	2.75%	2.75%
Option 2014 [Member]
Convertible debentures to mature in 2037, bearing fixed interest of 2.75%, with a put/call option	275,000,000	275,000,000
Unamortized discount	$ (36,229,000)	$ (40,953,000)
Convertible debt, fixed interest rate	2.75%	2.75%

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Summary Of Significant Accounting Policies (Summary Of Net Revenues By Product Category) (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Summary Of Significant Accounting Policies
Respiratory and other chronic therapies	$ 403,022	$ 371,661	$ 789,042	$ 739,862
DME, infusion and enteral therapies	46,011	46,705	91,558	88,544
Total net revenues	$ 449,033	$ 418,366	$ 880,600	$ 828,406

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Fair Value Of Assets And Liabilities (Estimated Fair Value Of Assets And Liabilities Not Measured On Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2011	Dec. 31, 2010
Restricted cash	$ 0	$ 345
Convertible debt, fixed interest rate	2.75%
Carrying Value [Member]
Short-term investments - held to maturity	40,000	40,000
Restricted cash	0	345
Deferred acquisition obligations	12,050	619
Carrying Value [Member] | 2.75% Series A [Member]
Debentures	260,747	255,727
Carrying Value [Member] | 2.75% Series B [Member]
Debentures	238,771	234,047
Fair Value [Member]
Short-term investments - held to maturity	40,000	40,000
Restricted cash	0	345
Deferred acquisition obligations	12,050	619
Fair Value [Member] | 2.75% Series A [Member]
Debentures	308,172	302,672
Fair Value [Member] | 2.75% Series B [Member]
Debentures	$ 323,297	$ 305,422
2.75% Series A [Member]
Convertible debt, fixed interest rate	2.75%	2.75%
2.75% Series B [Member]
Convertible debt, fixed interest rate	2.75%	2.75%

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Long-Term Obligations (Narrative) (Details) (USD $)	6 Months Ended
	Jun. 30, 2011	Dec. 31, 2010	Oct. 31, 2007
Revolving credit agreements, maximum borrowing capacity	$ 390,000,000
Line of credit facility, initiation date	December 1, 2006
Line of credit facility, years	5
Line of credit facility, sub-facility	60,000,000
Standby letters of credit issued	33,800,000	31,600,000
Line of credit facility, expiration date	December 1, 2011
Line of credit facility, amount outstanding	0	0
Debt instrument, frequency of fee	quarterly
Line of credit facility fee, minimum range, percentage	0.10%
Line of credit facility fee, maximum range, percentage	0.175%
Default rate in addition to interest rate	2.00%
Convertible senior debentures, issuance date	October 31, 2007
Convertible debt, interest rate	2.75%
Debentures principal amount for conversion calculation	1,000
Base conversion rate	30.1118
Base conversion price, per share	33.21
Option 2012 [Member]
Convertible debt	275,000,000	275,000,000
Convertible debt, interest rate	2.75%	2.75%
Option 2014 [Member]
Convertible debt	275,000,000	275,000,000
Convertible debt, interest rate	2.75%	2.75%
2.75% Series A [Member]
Convertible debt	275,000,000	275,000,000
Convertible debt, right to redeem, earliest date	November 1, 2012
Debt instrument, rate of return without conversion feature	7.00%
Debt instrument, expected useful life, years	5
Convertible debt, fair value excess proceeds			47,400,000
2.75% Series B [Member]
Convertible debt	275,000,000	275,000,000
Convertible debt, right to redeem, earliest date	November 1, 2014
Debt instrument, rate of return without conversion feature	7.40%
Debt instrument, expected useful life, years	7
Convertible debt, fair value excess proceeds			$ 67,200,000

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Fair Value Of Assets And Liabilities (Narrative) (Details) (USD $) In Millions	Jun. 30, 2011	Feb. 28, 2011
Fair Value Of Assets And Liabilities
Contingent consideration	$ 9.3	$ 9.6

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Summary Of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2011

Summary Of Significant Accounting Policies

Summary Of Net Revenues By Product Category

	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2011		2010		2011		2010
	(In thousands)				(In thousands)
Respiratory and other chronic therapies	$	403,022	$	371,661	$	789,042	$	739,862
DME, infusion and enteral therapies		46,011		46,705		91,558		88,544
Total	$	449,033	$	418,366	$	880,600	$	828,406

Schedule Of Operating Expenses By Category

	For The Three  Months Ended June 30,				For The Six Months Ended June 30,
	2011		2010		2011		2010
Salary and related	$	66,965	$	65,108	$	132,776	$	128,066
Facilities		12,733		14,963		28,431		30,864
Vehicles		13,756		11,863		26,420		23,508
General supplies/miscellaneous		8,735		7,739		16,469		15,762
Total	$	102,189	$	99,673	$	204,096	$	198,200

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Other Current Liabilities

6 Months Ended

Jun. 30, 2011

Other Current Liabilities

Other Current Liabilities

Note 7. Other Current Liabilities

Other current liabilities at June 30, 2011 and December 31, 2010 consist of:

	June 30, 2011		December 31, 2010
	(In thousands)
Deferred revenue	$	40,141	$	39,256
Other current liabilities		14,220		12,245
Other current liabilities	$	54,361	$	51,501

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Accounts Receivable, Net (Tables)

6 Months Ended

Jun. 30, 2011

Accounts Receivable, Net

Schedule Of Accounts Receivable, Net

	June 30, 2011			December 31, 2010
	(In thousands)
Trade accounts receivable	$	285,989		$	234,404
Less allowance for sales adjustments and uncollectible accounts		(52,580	)		(48,403	)
Accounts receivable, net	$	233,409		$	186,001

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Property And Equipment, Net (Schedule Of Property And Equipment, Net) (Details) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Property And Equipment, Net
Property and equipment at cost	$ 1,209,549	$ 1,168,236
Less accumulated depreciation	(872,513)	(829,458)
Property and equipment, net	$ 337,036	$ 338,778

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Summary Of Significant Accounting Policies (Schedule Of Operating Expenses By Category) (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Summary Of Significant Accounting Policies
Salary and related	$ 66,965	$ 65,108	$ 132,776	$ 128,066
Facilities	12,733	14,963	28,431	30,864
Vehicles	13,756	11,863	26,420	23,508
General supplies/miscellaneous	8,735	7,739	16,469	15,762
Operating expenses	$ 102,189	$ 99,673	$ 204,096	$ 198,200

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Summary Of Significant Accounting Policies

6 Months Ended

Jun. 30, 2011

Summary Of Significant Accounting Policies

Summary Of Significant Accounting Policies

Note 1. Summary of Significant Accounting Policies

Description of Business: Lincare Holdings Inc. and subsidiaries ("Lincare" or the "Company") provides oxygen, respiratory therapy services, specialty pharmaceuticals, infusion therapy services and home medical equipment such as hospital beds, wheelchairs and other medical supplies to the home health care market. The Company's customers are serviced from locations in 48 states. The Company's equipment and supplies are readily available and the Company is not dependent on a single supplier or even a few suppliers.

Basis of Presentation: The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with generally accepted accounting principles accepted in the United States for interim financial information and with the instructions to Form 10-Q. They should be read in conjunction with the consolidated financial statements and related notes to the financial statements of Lincare Holdings Inc. and Subsidiaries on Form 10-K for the fiscal year ended December 31, 2010. 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 preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates. It is at least reasonably possible that a change in those estimates will occur in the near term.

Investments: The Company determines the appropriate classification of investments at the time of purchase based upon management's intent with regard to such investments. Based upon the Company's intentions and ability to hold certain assets until maturity, the Company classifies certain debt securities as held-to-maturity and measures them at amortized cost. The Company classifies certain other debt securities as available-for-sale and measures them at fair value with unrealized gains or losses recorded in other comprehensive income. Realized gains and losses from both categories of investments are included in net income and are determined on a specific identification basis. Interest income and dividend income, if any, for both categories of investments are included in net income.

Restricted Cash: Restricted cash was held in an interest-bearing escrow account for the purposes of complying with and performing certain contractual obligations in connection with the February 1, 2010 purchase of the respiratory therapy, home medical equipment and infusion therapy business of Gentiva Health Services, Inc.

Concentration of Credit Risk: The Company's revenues are generated through locations in 48 states. The Company generally does not require collateral or other security in extending credit to customers; however, the Company routinely obtains assignment of (or is otherwise entitled to receive) benefits receivable under the health insurance programs, plans or policies of its customers. Included in the Company's net revenues is reimbursement from government sources under Medicare, Medicaid and other federally and state funded programs, which represented approximately 61% and 60% of net revenues for the six months ended June 30, 2011 and 2010, respectively. The exclusion of the Company from participating in state and federally funded programs would have a material adverse effect on the Company's business, financial condition, operating results and cash flows.

Self-Insurance Risk: The Company is subject to workers' compensation, professional liability, auto liability and employee health benefit claims, which are primarily self-insured; however, the Company maintains certain stop-loss and other insurance coverage which it believes to be appropriate. Provisions for estimated settlements relating to these self-insured liabilities are provided in the period of the related claims on a case-by-case basis plus an amount for incurred but not reported claims. Differences between the amounts accrued and subsequent settlements are recorded in operations in the period of settlement.

Revenue Recognition and Accounts Receivable: The Company's revenues are recognized on an accrual basis in the period in which services and related products are provided to customers and are recorded at net realizable amounts estimated to be paid by customers and third-party payors. The Company's billing system contains payor-specific price tables that reflect the fee schedule amounts in effect or contractually agreed upon by various government and commercial payors for each item of equipment or supply provided to a customer. The Company has established an allowance to account for sales adjustments that result from differences between the payment amount received and the expected realizable amount. Actual adjustments that result from differences between the payment amount received and the expected realizable amount are recorded against the allowance for sales adjustments and are typically identified and ultimately recorded at the point of cash application or when otherwise determined pursuant to the Company's collection procedures. The Company reports revenues in its financial statements net of such sales adjustments.

Certain items provided by the Company are reimbursed under rental arrangements that generally provide for fixed monthly payments established by fee schedules for as long as the patient is using the equipment and medical necessity continues (subject to capped rental arrangements which limit the rental payment periods in some instances and which may result in a transfer of title to the equipment at the end of the rental payment period). Once initial delivery of rental equipment is made to the patient, a monthly billing cycle is established based on the initial date of delivery. The Company recognizes rental arrangement revenues ratably over the monthly service period and defers revenue for the portion of the monthly bill that is unearned. No separate payment is earned from the initial equipment delivery and setup process. During the rental period, the Company is responsible for servicing the equipment and providing routine maintenance, if necessary.

The Company's revenue recognition policy is consistent with the criteria set forth in Staff Accounting Bulletin 104, "Revenue Recognition" ("SAB 104"), for determining when revenue is realized or realizable and earned. The Company recognizes revenue in accordance with the requirements of SAB 104 that:

• persuasive evidence of an arrangement exists;

• delivery has occurred;

• the seller's price to the buyer is fixed or determinable; and

• collectibility is reasonably assured.

Due to the nature of the industry and the reimbursement environment in which the Company operates, certain estimates are required to record net revenues and accounts receivable at their net realizable values at the time products and/or services are provided. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of many third-party billing arrangements and the uncertainty of reimbursement amounts for certain services from certain payors may result in adjustments to amounts originally recorded. Such sales adjustments are typically identified and recorded by the Company at the point of cash application, claim denial or account review. Included in accounts receivable are earned but unbilled accounts receivable from earned revenues. Unbilled accounts receivable represent charges for equipment and supplies delivered to customers for which invoices have not yet been generated by the Company's billing system. Prior to the delivery of equipment and supplies to customers, the Company performs certain certification and approval procedures to ensure collection is reasonably assured. Once the items are delivered, unbilled accounts receivable are recorded at net amounts expected to be paid by customers and third-party payors. Billing delays, generally ranging from several days to several weeks, can occur due to delays in obtaining certain required payor-specific documentation from internal and external sources as well as interim transactions occurring between cycle billing dates established for each customer within the billing system, and business acquisitions awaiting assignment of new provider enrollment identification numbers. In the event that a third-party payor does not accept the claim, the customer is ultimately responsible for payment for the products or services. Accounts receivable are reported net of allowances for sales adjustments and uncollectible accounts. Sales adjustments are recorded against revenues and result from differences between the payment amount received and the expected realizable amount. Bad debt is recorded as an operating expense and consists of billed charges that are ultimately deemed uncollectible due to the customer's or third-party payor's inability to pay.

The Company performs analyses to evaluate the net realizable value of accounts receivable. Specifically, the Company considers historical realization data, accounts receivable aging trends, other operating trends and relevant business conditions. Because of continuing changes in the health care industry and third-party reimbursement, it is possible that the Company's estimates could change, which could have a material impact on the Company's results of operations and cash flows.

Net Revenues: The following table sets forth, for the periods indicated, a summary of the Company's net revenues by product category:

	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2011		2010		2011		2010
	(In thousands)				(In thousands)
Respiratory and other chronic therapies	$	403,022	$	371,661	$	789,042	$	739,862
DME, infusion and enteral therapies		46,011		46,705		91,558		88,544
Total	$	449,033	$	418,366	$	880,600	$	828,406

Included in net revenues in the three and six months ended June 30, 2011 are rental items that comprise approximately 56.8% and 58.0%, respectively, of total revenues and sale items that comprise approximately 43.2% and 42.0%, respectively, of total revenues. Included in net revenues in the three and six months ended June 30, 2010 are rental items that comprise approximately 60.9% and 61.4%, respectively, of total revenues and sale items that comprise approximately 39.1% and 38.6%, respectively, of total revenues.

Sales and Certain Other Taxes: In its consolidated financial statements, the Company accounts for taxes imposed on revenue-producing transactions by government authorities on a net basis, and accordingly, excludes such taxes from net revenues. Such taxes include, but are not limited to, sales, use, privilege and excise taxes.

Cost of Goods and Services: Cost of goods and services includes the cost of medical equipment (excluding depreciation of $27.3 million and $53.6 million for the three and six-month periods in 2011 and $27.4 million and $53.7 million for the three and six-month periods in 2010, respectively), drugs and supplies sold to patients and certain operating costs related to the Company's respiratory drug product line. These costs include an allocation of customer service, distribution and administrative costs relating to the respiratory drug product line of approximately $13.6 million and $27.5 million for the three and six-month periods ended June 30, 2011, respectively. For the three and six-month periods of 2010, such costs amounted to $13.3 million and $26.5 million, respectively. Included in cost of goods and services in the three and six-month periods ended June 30, 2011 are salary and related expenses of pharmacists and pharmacy technicians of approximately $3.9 million and $7.2 million, respectively. Such salary and related expenses for the three and six-month periods ended June 30, 2010, were $3.3 million and $6.4 million, respectively.

Operating Expenses: The Company manages 1,106 operating centers from which customers are provided equipment, supplies and services. An operating center averages approximately seven to eight employees and is typically comprised of a center manager, two customer service representatives (referred to as "CSR's" – telephone intake, scheduling, documentation), two or three service representatives (referred to as "Service Reps" – delivery, maintenance and retrieval of equipment and delivery of disposables), a respiratory therapist (non-reimbursable clinical follow-up with the customer and communication to the prescribing physician) and a sales representative (marketing calls to local physicians and other referral sources).

The Company includes in operating expenses the costs incurred at the Company's operating centers for certain service personnel (center manager, CSR's and Service Reps), facilities (rent, utilities, communications, property taxes, etc.), vehicles (vehicle leases, gasoline, repair and maintenance), and general business supplies and miscellaneous expenses. Operating expenses for the interim periods of 2011 and 2010 within these major categories were as follows:

Operating Expenses (in thousands)

	For The Three  Months Ended June 30,				For The Six Months Ended June 30,
	2011		2010		2011		2010
Salary and related	$	66,965	$	65,108	$	132,776	$	128,066
Facilities		12,733		14,963		28,431		30,864
Vehicles		13,756		11,863		26,420		23,508
General supplies/miscellaneous		8,735		7,739		16,469		15,762
Total	$	102,189	$	99,673	$	204,096	$	198,200

Included in operating expenses during the three and six-month periods ended June 30, 2011 are salary and related expenses for Service Reps in the amount of $28.3 million and $55.9 million, respectively. Such salary and related expenses for the three and six-month periods ended June 30, 2010, were $27.5 million and $53.9 million, respectively.

Selling, General and Administrative Expenses: Selling, general and administrative expenses ("SG&A") include costs related to sales and marketing activities, corporate overhead and other business support functions. Included in SG&A during the three and six-month periods ended June 30, 2011 are salary and related expenses of $62.9 million and $125.1 million, respectively. These salary and related expenses include the cost of the Company's respiratory therapists for the three and six-month periods ended June 30, 2011, of $17.9 million and $34.5 million, respectively. Included in SG&A during the three and six-month periods ended June 30, 2010 are salary and related expenses of $64.9 million and $128.2 million, respectively. These salary and related expenses include the cost of the Company's respiratory therapists for the three and six-month periods ended June 30, 2010, of $17.3 million and $33.6 million, respectively. The Company's respiratory therapists generally provide non-reimbursable clinical follow-up with the customer and communication, as appropriate, to the prescribing physician with respect to the customer's prescribed plan of care. The Company includes the salaries and related expenses of its respiratory therapist personnel (licensed respiratory therapists or, in some cases, registered nurses) in SG&A because it believes that these personnel enhance the Company's business relative to its competitors who do not employ respiratory therapists.

Comprehensive Income: The Company's comprehensive income is the same as reported net income for all periods presented.

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Property And Equipment, Net (Tables)

6 Months Ended

Jun. 30, 2011

Property And Equipment, Net

Schedule Of Property And Equipment, Net

	June 30, 2011			December 31, 2010
	(In thousands)
Property and equipment at cost	$	1,209,549		$	1,168,236
Less accumulated depreciation		(872,513	)		(829,458	)
Property and equipment, net	$	337,036		$	338,778

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Long-Term Obligations (Interest Expense Recognized) (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Amortization of discount on convertible debentures			$ 9,744	$ 9,086
2.75% Series A [Member]
Contractual coupon interest	1,890	1,891	3,781	3,781
Amortization of discount on convertible debentures	2,532	2,365	5,020	4,690
Interest expense	4,422	4,256	8,801	8,471
2.75% Series B [Member]
Contractual coupon interest	1,890	1,891	3,781	3,781
Amortization of discount on convertible debentures	2,383	2,218	4,724	4,396
Interest expense	$ 4,273	$ 4,109	$ 8,505	$ 8,177

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Long-Term Obligations (Tables)

3 Months Ended

6 Months Ended

Jun. 30, 2011

Jun. 30, 2011

Long-Term Obligations

Schedule Of Long-Term Obligations

	June 30, 2011			December 31, 2010
	(In thousands)
Series A convertible debentures to mature in 2037, bearing fixed interest of 2.75%, with a put/call option in 2012	$	275,000		$	275,000
Unamortized discount		(14,253	)		(19,273	)
Series B convertible debentures to mature in 2037, bearing fixed interest of 2.75%, with a put/call option in 2014		275,000			275,000
Unamortized discount		(36,229	)		(40,953	)
Other long-term obligations		2,336			4,497
Unsecured acquisition obligations and contingent consideration, net of imputed interest, payable in various installments through 2014		30,940			619
Total long-term obligations		532,794			494,890
Less: current installments		21,230			619
Long-term obligations, excluding current installments	$	511,564		$	494,271

Debt And Equity Components For Convertible Debentures

	June 30, 2011						December 31, 2010
	Series A			Series B			Series A			Series B
Principal amount of convertible debentures	$	275,000		$	275,000		$	275,000		$	275,000
Unamortized discount		(14,253	)		(36,229	)		(19,273	)		(40,953	)
Net carrying amount		260,747			238,771			255,727			234,047
Additional paid-in capital		29,065			41,238			29,065			41,238

Interest Expense

	June 30, 2011				June 30, 2010
	Series A		Series B		Series A		Series B
Contractual coupon interest	$	1,890	$	1,890	$	1,891	$	1,891
Amortization of discount on convertible debentures		2,532		2,383		2,365		2,218
Interest expense	$	4,422	$	4,273	$	4,256	$	4,109

	June 30, 2011				June 30, 2010
	Series A		Series B		Series A		Series B
Contractual coupon interest	$	3,781	$	3,781	$	3,781	$	3,781
Amortization of discount on convertible debentures		5,020		4,724		4,690		4,396
Interest expense	$	8,801	$	8,505	$	8,471	$	8,177

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Investments

6 Months Ended

Jun. 30, 2011

Investments

Investments

Note 3. Investments

On April 15, 2011, the Company invested $20.0 million in a 185-day time deposit issued by Credit Agricole Corporate and Investment Bank maturing on October 17, 2011. The investment is classified as held-to-maturity and carried at amortized cost of $20.0 million in the accompanying balance sheet at June 30, 2011.

On January 14, 2011, the Company invested $20.0 million in a 181-day time deposit issued by Credit Agricole Corporate and Investment Bank maturing on July 14, 2011. The investment is classified as held-to-maturity and carried at amortized cost of $20.0 million in the accompanying balance sheet at June 30, 2011.

On October 15, 2010, the Company invested $20.0 million in a 182-day time deposit issued by Credit Agricole Corporate and Investment Bank that matured on April 15, 2011. The investment is classified as held-to-maturity and carried at amortized cost of $20.0 million in the accompanying balance sheet at December 31, 2010.

On August 10, 2010, the Company invested $20.0 million in a 157-day time deposit issued by Credit Agricole Corporate and Investment Bank that matured on January 14, 2011. The investment is classified as held-to-maturity and carried at amortized cost of $20.0 million in the accompanying balance sheet at December 31, 2010.

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Subsequent Event

6 Months Ended

Jun. 30, 2011

Subsequent Event

Subsequent Event

Note 12. Subsequent Event

On July 1, 2011, the Company announced that its Board of Directors had declared a quarterly cash dividend of $0.20 per share which was paid on July 29, 2011 to stockholders of record as of July 15, 2011. The total dividend paid was $19.0 million.

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Investments (Details) (USD $) In Thousands	6 Months Ended		0 Months Ended		0 Months Ended	6 Months Ended	0 Months Ended	12 Months Ended	0 Months Ended	12 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Apr. 15, 2011 Held-To-Maturity Investment Maturing On October 17, 2011 [Member]	Jun. 30, 2011 Held-To-Maturity Investment Maturing On October 17, 2011 [Member]	Jan. 14, 2011 Held-to-Maturity Investment Maturing on July 14, 2011 [Member]	Jun. 30, 2011 Held-to-Maturity Investment Maturing on July 14, 2011 [Member]	Oct. 15, 2010 Held-to-Maturity Investment Maturing on April 15, 2011 [Member]	Dec. 31, 2010 Held-to-Maturity Investment Maturing on April 15, 2011 [Member]	Aug. 10, 2010 Held-to-Maturity Investment Maturing on January 14, 2011 [Member]	Dec. 31, 2010 Held-to-Maturity Investment Maturing on January 14, 2011 [Member]
Payments to acquire time deposit	$ 40,000	$ 0	$ 20,000		$ 20,000		$ 20,000		$ 20,000
Investments held-to-maturity				$ 20,000		$ 20,000		$ 20,000		$ 20,000
Maturity of time deposit, days			185			181		182		157

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Business Combinations (Tables)

6 Months Ended

Jun. 30, 2011

Business Combinations

Acquisition Date Fair Value Of Total Consideration Transferred

	(In thousands)
Cash consideration, net of cash acquired (1)	$	70,236
Contingent consideration		18,890
Deferred acquisition obligations		12,050
	$	101,176

(1) Does not include $2.8 million related to an acquisition closed in December 2010 and paid in January 2011.

Summary Of Estimated Fair Values Of Assets And Liabilities Assumed At Acquisition Date

	(In thousands)
Current assets, net of cash acquired	$	10,796
Property and equipment		249
Intangible assets		10,075
Goodwill		94,178
Assumption of liabilities		(14,080	)
Deferred revenue		(42	)
	$	101,176

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Condensed Consolidated Balance Sheets (USD $) In Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 82,146	$ 164,203
Short-term investments	40,000	40,000
Restricted cash	0	345
Accounts receivable, net	233,409	186,001
Income tax receivable	2,460	9,443
Inventories	15,388	13,276
Prepaid and other current assets	7,499	3,542
Deferred income taxes	24,842	26,488
Total current assets	405,744	443,298
Property and equipment, net	337,036	338,778
Goodwill	1,352,243	1,258,065
Other	16,145	7,690
Total assets	2,111,168	2,047,831
Current liabilities:
Current installments of long-term obligations	21,230	619
Accounts payable	56,728	64,078
Accrued expenses:
Compensation and benefits	31,815	39,500
Liability insurance	16,316	19,052
Other current liabilities	54,361	51,501
Total current liabilities	180,450	174,750
Long-term obligations, excluding current installments	511,564	494,271
Deferred income taxes and other taxes	404,305	381,061
Total liabilities	1,096,319	1,050,082
Commitments and contingencies:
Stockholders' equity:
Common stock	948	963
Additional paid-in capital	696,342	681,988
Retained earnings	317,559	314,798
Total stockholders' equity	1,014,849	997,749
Total liabilities and stockholders' equity	$ 2,111,168	$ 2,047,831

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Business Combinations (Acquisition Date Fair Value Of Total Consideration Transferred) (Details) (USD $) In Thousands	Jun. 30, 2011		Jan. 31, 2011
Business Combinations
Cash consideration, net of cash acquired	$ 70,236	[1]	$ 2,800
Contingent consideration	18,890
Deferred acquisition obligations	12,050
Total consideration transferred	$ 101,176

[1] Does not include $2.8 million related to an acquisition closed in December 2010 and paid in January 2011.

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Stock-Based Compensation (Summary Of Restricted Stock Activity) (Details) (USD $)	6 Months Ended
	Jun. 30, 2011	Dec. 31, 2010
Stock-Based Compensation
Unvested, shares	2,517,075	2,684,250
Granted, shares	20,000
Vested, shares	(179,225)
Forfeited, shares	(7,950)
Unvested, weighted-average grant date fair value per share	$ 21.51	$ 21.79
Granted, weighted-average grant date fair value per share	$ 28.88
Vested, weighted-average grant date fair value per share	$ 26.33
Forfeited, weighted-average grant date fair value per share	$ 24.45

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Earnings Per Common Share (Narrative) (Details) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Earnings Per Common Share
Number of excluded shares underlying anti-dilutive stock options and awards	0	0	0	0

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Earnings Per Common Share (Computation Of Basic And Diluted Earnings Per Share) (Details) (USD $) In Thousands, except Per Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Earnings Per Common Share
Income available to common stockholders and holders of dilutive securities	$ 42,765	$ 46,415	$ 89,142	$ 90,051
Weighted average shares	92,096	96,080	92,535	95,896
Incremental shares under stock compensation plans	2,893	2,597	2,756	2,269
Adjusted weighted average shares	94,989	98,677	95,291	98,165
Per share amount, basic	$ 0.46	$ 0.48	$ 0.96	$ 0.94
Per share amount, diluted	$ 0.45	$ 0.47	$ 0.94	$ 0.92

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Business Combinations (Summary Of Estimated Fair Values Of Assets And Liabilities Assumed At Acquisition Date) (Details) (USD $) In Thousands	Jun. 30, 2011
Business Combinations
Current assets, net of cash acquired	$ 10,796
Property and equipment	249
Intangible assets	10,075
Goodwill	94,178
Assumption of liabilities	(14,080)
Deferred revenue	(42)
Total consideration transferred	$ 101,176