Wall Street tags Lincare

Sunday, December 14, 2003

December 15, 2003

TAMPA – The Medicare Prescription Drug Act’s cuts to respiratory therapy and medication reimbursement has prompted the Tampa Tribune to identify Lincare as a company that “could become one of the casualties of the Medicare bill.”

The newspaper last Friday reported that documents filed with the Security and Exchange Commission show that 58% of Lincare’s $960.9 million in revenues last year came from Medicare.

After the probable cuts to DME became clear last month, Lincare’s stock has price slid from nearly $44 per share to about $32, wiping out more than $1 billion of the company’s value.

The main driver behind the devaluation is the new law’s impact on reimbursement for respiratory medications. While the Drug Act calls for a 10-20% reimbursement reduction next year, the 2005 cuts will run as deep as 50-60% as the reimbursement mechanism shifts from an AWP to an ASP (average sales price) model.