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Lincare discusses its legal troubles

An SEC filing includes information about the company's troubles with the FBA, FDA and U.S. Attorney's Office.

By KRIS HUNDLEY
Published February 8, 2005

Reports of record sales last year for Lincare Holdings Inc. were spoiled Monday when the Clearwater company revealed a trio of regulatory troubles.

In its quarterly filing with the Securities and Exchange Commission, the home oxygen provider acknowledged that the FBI seized documents in January from the offices of Bane Medical Services, a Plant City company recently acquired by Lincare.

Lincare said the FBI warrants relate to Bane's operations prior to the acquisition. The Clearwater company also said it may have recourse against Bane officials should claims arise out of the government investigation. Lincare may also seek to reverse the transaction or seek damages for any harm suffered.

On a separate matter, Lincare disclosed that it received a warning letter in December from the U.S. Food and Drug Administration regarding complaints against its pharmacy in Southaven, Miss. The letter cited "serious violations" in the pharmacy's drug mixing operations which, the FDA said, "more closely resembles a drug manufacturing operation."

On Monday, Lincare said it had responded to the FDA and is working to resolve the issue. No details of its response were given.

Finally, Lincare provided its first update in five years on an ongoing investigation into its operations by the U.S. Attorney's Office for the Middle District of Florida. In June 2000, the company said officials were investigating the company's dealings with physicians and its delivery of services to patients. The company had provided no further details on the nature of the investigation.

On Monday, Lincare said it has cooperated with the investigation and provided documents to the U.S. Attorney's office periodically over the past five years. While Lincare said it recently had preliminary discussions with the government to resolve the investigation, it added, "We are unable to predict whether or when we will be able to reach a satisfactory resolution of this matter."

Lincare's disclosure of infractions and investigations was attached to the company's release about its financial results for 2004. The company had earnings of $273.4-million, or $2.60 a share, on sales of $1.27-billion last year. That compares to net income of $232.1-million, or $2.19, a share on revenues of $1.15-billion in 2003.

For the quarter ended Dec. 31, Lincare's net income was $72.7-million, or 68 cents, a share on sales of $324.2-million. That compares to earnings of $62-million, or 59 cents a share, on revenues of $302.8-million for the fourth quarter of 2003.

Lincare said sales rose 11 percent in 2004 despite cuts in Medicare reimbursement for its respiratory medications. Those cuts cost the company an estimated $54.2-million last year, Lincare executives said.

The company, which operates 804 locations in 47 states, acquired 26 companies last year with total revenue of $49-million. Lincare did not disclose revenues or price paid for Bane Medical Services, the company being investigated by the FBI.

--Kris Hundley can be reached at hundley@sptimes.com or 727892-2996.

[Last modified February 8, 2005, 00:21:16]