Swot Analysis Lindcare

2991 Words12 Pages
I. Introduction of the company: Lincare Holdings Inc is one of the nation’s largest providers of oxygen and other respiratory services. The majority of their patients suffer from chronic obstructive pulmonary disease (COPD) such as chronic bronchitis, emphysema or asthma. Lincare serves approximately 750, 000 patients in 48 states through 1056 centers. According to Lincare’s annual report, they estimate the home respiratory market to be approximately $6.0 billion in annual sales. Growth is driven by the increase in the number of persons afflicted with COPD, demographic factors that contribute to an increase in the proportion of the U.S. population over the age of 65, and the continued trend toward treatment of patients in the home as a…show more content…
Over a five year period, starting in 2005, Lincare has reduced their ratio from 40.6 to 39.6. Gentiva Health Services remained nearly the same with a ratio of 57.1 in 2000 down to 56.9 in 2009. From an efficiency standpoint, Lincare is converting their receivables into cash faster than its competitor. In addition, Lincare has outperformed their cash conversion rate from 2008 to 2009. Lincare’s conversion rate went from 14 days to 17.5 days which means Lincare’s cash flow generation improves year after…show more content…
According to Lincare’s annual report, the significant decline is due to the decrease in Medicare and Medicaid reimbursement. They delayed the implementation of the Medicare competitive bidding program for oxygen equipment and certain other DME items that was scheduled to begin on July 2008 to January 2011 and instead 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 they 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. This as well, will continue to lower Lincare’s profits. Lincare’s operating margin additionally declined from 24 percent to 16.6 percent. The 9.5% reimbursement cut on certain durable medical equipment, as well as the 36 month payment cap, and competitive bidding from CMS are negatively affecting the profits of the company. Lincare operating margins have declined from 28.8 in 2005 to 16.6 in 2009 (morningstar.com). Lincare’s Return on Equity has taken a steep decline over the past 5 years going from 21.83% in 2005 down to 14.54% in 2009. Lincare also saw a sharp decline with

More about Swot Analysis Lindcare

Open Document