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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-Q




x
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934






o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934





Commission file number 000-50348


NATIONSHEALTH, INC.


(Exact name of registrant as specified in its charter)


Delaware
    
    06-1688360(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)


13650 N.W.
8thStreet, Sunrise, Florida
    
    33325(Address of principal executive offices)
    
    (Zip Code)


(954) 903-5000


(Registrants telephone number, including area code)


N/A


(Former name, former address, and former fiscal year, if changed since last report)


x o


o x


o x




Class
    
    Outstanding at November 10, 2005Common stock, $0.0001 par value
    
    
    26,727,385










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##### Table of Contents



NATIONSHEALTH, INC.
 FORM 10-Q
 FOR THE QUARTER ENDED SEPTEMBER 30, 2005
 INDEX
 PagePART I.Item 1.
    
    Financial StatementsCondensed Consolidated Balance Sheets (unaudited)  as of September 30, 2005 and December 31, 2004
    
    
    1Condensed Consolidated Statements of Operations (unaudited)  for the Three and Nine Months Ended September 30, 2005 and 2004
    
    
    2Condensed Consolidated Statements of Cash Flows (unaudited)  for the Nine Months Ended September 30, 2005 and 2004
    
    
    3Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    30Item 4.
    
    Controls and Procedures
    
    
    30PART II.Item 6.
    
    Exhibits
    
    
    31Signatures
    
    
    
    
    32Amended and Restated Asset Purchase AgreementLimited Liability Company AgreementForm of Stock Option AgreementForm of Restricted Stock Unit AgreementForm of Restricted Stock AgreementForm of Stock Appreciation Right AgreementSublease AgreementSection 302 Certification of CEOSection 302 Certification of CFOSection 906 Certification of CEO and CFO




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 NATIONSHEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
 September 30, 2005
    
    
    December 31, 2004ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    15,107
    
    
    $
    2,904Restricted certificate of deposit
    
    
    
    
    
    
    100Accounts receivable, net of allowances of $17,995 and $10,985,
respectively
    
    
    7,140
    
    
    
    8,708Inventory
    
    
    2,058
    
    
    
    1,719Costs related to billings in process, net
    
    
    1,229
    
    
    
    1,437Other receivables
    
    
    1,532
    
    
    
    Investment held in trust
    
    
    
    
    
    
    2,000Prepaid expenses and other current assets
    
    
    1,335
    
    
    
    392Total current assets
    
    
    28,401
    
    
    
    17,260Property and equipment, net
    
    
    2,896
    
    
    
    1,770Investment in joint venture
    
    
    1,530
    
    
    
    Other assets, net
    
    
    1,525
    
    
    
    346Total assets
    
    $
    34,352
    
    
    $
    19,376LIABILITIES AND STOCKHOLDERS EQUITY / DEFICIENCYCurrent Liabilities:Accounts payable
    
    $
    3,044
    
    
    $
    4,595Accounts payable, related party
    
    
    4,942
    
    
    
    5,004Accrued expenses
    
    
    5,715
    
    
    
    7,195Deferred revenue, current portion
    
    
    725
    
    
    
    Line of credit
    
    
    3,943
    
    
    
    2,619Total current liabilities
    
    
    18,369
    
    
    
    19,413Long-Term Liabilities:Deferred revenue
    
    
    715
    
    
    
    Convertible notes, net
    
    
    4,926
    
    
    
    Other long-term liabilities
    
    
    215
    
    
    
    Total long-term liabilities
    
    
    5,856
    
    
    
    Commitments and contingenciesStockholders Equity (Deficiency):Common stock
    
    
    3
    
    
    
    3Additional paid-in capital
    
    
    44,361
    
    
    
    32,315Accumulated deficit
    
    
    (34,237
    )
    
    
    (32,355
    )Total stockholders equity (deficiency)
    
    
    10,127
    
    
    
    (37
    )Total liabilities and stockholders equity / deficiency
    
    $
    34,352
    
    
    $
    19,376
 The accompanying notes are an integral part of these condensed consolidated financial statements.
 1




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NATIONSHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenue:Net product sales
    
    $
    18,167
    
    
    $
    19,383
    
    
    $
    55,299
    
    
    $
    50,078Prescription card revenue
    
    
    2,316
    
    
    
    704
    
    
    
    6,327
    
    
    
    1,893Service revenue
    
    
    780
    
    
    
    
    
    
    
    780
    
    
    
    21,263
    
    
    
    20,087
    
    
    
    62,406
    
    
    
    51,971Cost of product sales
    
    
    8,037
    
    
    
    6,283
    
    
    
    23,448
    
    
    
    16,291Cost of services
    
    
    1,311
    
    
    
    
    
    
    
    1,311
    
    
    
    Gross Profit
    
    
    11,915
    
    
    
    13,804
    
    
    
    37,647
    
    
    
    35,680Operating Expenses:Patient acquisition and related
costs
    
    
    3,256
    
    
    
    4,245
    
    
    
    17,976
    
    
    
    16,626Patient service and fulfillment
    
    
    3,593
    
    
    
    3,148
    
    
    
    11,418
    
    
    
    9,558General and administrative
    
    
    5,576
    
    
    
    3,237
    
    
    
    15,193
    
    
    
    7,518Provision for doubtful accounts
    
    
    2,330
    
    
    
    3,533
    
    
    
    7,575
    
    
    
    9,128Depreciation and amortization
    
    
    224
    
    
    
    139
    
    
    
    653
    
    
    
    334Gain on sale of respiratory division
    
    
    (15,508
    )
    
    
    
    
    
    
    (15,508
    )
    
    
    (529
    )
    
    
    14,302
    
    
    
    37,307
    
    
    
    43,164Income (Loss) from Operations
    
    
    12,444
    
    
    
    (498
    )
    
    
    340
    
    
    
    (7,484
    )Other Income (Expense):Interest income
    
    
    35
    
    
    
    
    
    
    
    55
    
    
    
    2Interest expense
    
    
    (687
    )
    
    
    (390
    )
    
    
    (2,277
    )
    
    
    (712
    )(652
    )
    
    
    (390
    )
    
    
    (2,222
    )
    
    
    (710
    )Net Income (Loss)
    
    $
    11,792
    
    
    $
    (888
    )
    
    $
    (1,882
    )
    
    $
    (8,194
    )Earnings (Loss) per share:Basic
    
    $
    0.45
    
    
    $
    (0.03
    )
    
    $
    (0.07
    )
    
    $
    (0.31
    )Diluted
    
    $
    0.40
    
    
    $
    (0.03
    )
    
    $
    (0.07
    )
    
    $
    (0.31
    )Weighted average shares outstanding:Basic
    
    
    26,283
    
    
    
    26,150
    
    
    
    26,211
    
    
    
    26,150Diluted
    
    
    30,105
    
    
    
    26,150
    
    
    
    26,211
    
    
    
    26,150
 The accompanying notes are an integral part of these condensed consolidated financial statements.
 2




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NATIONSHEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 For the Nine MonthsEnded September 30,2005
    
    
    2004Cash Flows from Operating Activities:Net Loss
    
    $
    (1,882
    )
    
    $
    (8,194
    )Adjustments to reconcile net loss to net cash and
cash equivalents used in operating activities:Gain on sale of respiratory division
    
    
    (15,508
    )
    
    
    Provision for doubtful
accounts
    
    
    7,575
    
    
    
    9,128Depreciation and amortization
    
    
    653
    
    
    
    334Amortization of note discount
    
    
    537
    
    
    
    Amortization of deferred loan costs and other non-cash interest
charges
    
    
    471
    
    
    
    Stock-based compensation
    
    
    71
    
    
    
    Changes in operating assets and liabilities:(Increase) decrease in:Accounts receivable
    
    
    (6,007
    )
    
    
    (11,806
    )Inventory
    
    
    (742
    )
    
    
    (740
    )Costs related to billings in process
    
    
    208
    
    
    
    (668
    )Prepaid expenses and other assets
    
    
    (1,372
    )
    
    
    (483
    )Increase (decrease) in:Accounts payable and accrued expenses
    
    
    (3,331
    )
    
    
    2,103Accounts payable, related party
    
    
    (62
    )
    
    
    2,719Deferred revenue
    
    
    1,440
    
    
    
    Net cash and cash equivalents used in operating activities
    
    
    (17,949
    )
    
    
    (7,607
    )Cash Flows from Investing Activities:Proceeds from sale of respiratory division
    
    
    14,400
    
    
    
    Investment in joint venture
    
    
    (1,530
    )
    
    
    Release (purchase) of restricted certificate of deposit
    
    
    100
    
    
    
    (100
    )Investment released from (placed in) trust
    
    
    2,000
    
    
    
    (2,000
    )Acquisition of property and equipment
    
    
    (1,517
    )
    
    
    (1,152
    )Net cash and cash equivalents provided by (used in) investing activities
    
    
    13,453
    
    
    
    (3,252
    )Cash Flows from Financing Activities:Proceeds from issuance of convertible notes
    
    
    15,000
    
    
    
    Proceeds from issuance of common stock
    
    
    1,500
    
    
    
    Net draws on lines of credit
    
    
    1,324
    
    
    
    1,906Payments for note issuance costs
    
    
    (907
    )
    
    
    Purchase of treasury stock
    
    
    (136
    )
    
    
    Principal payments under capital lease obligations
    
    
    (82
    )
    
    
    Proceeds from reverse merger
    
    
    
    
    
    
    20,270Payments for conversion of membership interest
    
    
    
    
    
    
    (3,000
    )Payments for merger costs, net
    
    
    
    
    
    
    (2,953
    )Principal payments on member notes
    
    
    
    
    
    
    (1,343
    )Net cash and cash equivalents provided by financing
activities
    
    
    16,699
    
    
    
    14,880Net Increase in Cash and Cash Equivalents
    
    
    12,203
    
    
    
    4,021Cash and Cash Equivalents, Beginning of period
    
    
    2,904
    
    
    
    1,412Cash and Cash Equivalents, End of period
    
    $
    15,107
    
    
    $
    5,433Non-cash Investing and Financing Activities:Equipment acquired under capital leases
    
    $
    262
    
    
    $
    Discount on convertible notes
    
    $
    10,611
    
    
    $
    
 The accompanying notes are an integral part of these condensed consolidated financial statements.
 3




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NATIONSHEALTH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. BASIS OF PRESENTATION
     2. MILLSTREAM MERGER
  4




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3. CIGNA AGREEMENT
   5




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4. US BIO JOINT VENTURE
     5. SALE OF RESPIRATORY DIVISION
  6




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6. REVENUE RECOGNITION
     7. COSTS RELATED TO BILLINGS IN PROCESS, NET
  7




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8. STOCK-BASED COMPENSATION
   Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income (loss), as reported
    
    $
    11,792
    
    
    $
    (888
    )
    
    $
    (1,882
    )
    
    $
    (8,194
    )Add: Stock-based employee
compensation expense included in
net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deduct: Total stock-based
compensation expense determined
under fair value based method for
all awards
    
    
    (309
    )
    
    
    
    
    
    
    (809
    )
    
    
    Pro forma
    
    $
    11,483
    
    
    $
    (888
    )
    
    $
    (2,691
    )
    
    $
    (8,194
    )Basic earnings (loss) per share:As reported
    
    $
    0.45
    
    
    $
    (0.03
    )
    
    $
    (0.07
    )
    
    $
    (0.31
    )Pro forma
    
    $
    0.44
    
    
    $
    (0.03
    )
    
    $
    (0.10
    )
    
    $
    (0.31
    )Diluted earnings (loss) per share:As reported
    
    $
    0.40
    
    
    $
    (0.03
    )
    
    $
    (0.07
    )
    
    $
    (0.31
    )Pro forma
    
    $
    0.39
    
    
    $
    (0.03
    )
    
    $
    (0.10
    )
    
    $
    (0.31
    )
 8




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Share-Based Payment
 1.
    
    A modified prospective method in which compensation cost is recognized beginning
with the effective date (a) based on the requirements of SFAS No. 123(R) for all
share-based payments granted after the effective date and (b) based on the requirements of
SFAS No. 123(R) for all awards granted to employees prior to the effective date of SFAS
No. 123(R) that remain unvested on the effective date.2.
    
    A modified retrospective method which includes the requirements of the modified
prospective method described above, but also permits entities to restate based on the
amounts previously recognized under SFAS No. 123 for purposes of pro forma disclosures
either (a) all prior periods presented or (b) prior interim periods of the year of
adoption.
  9. LINE OF CREDIT
  9




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10. CONVERTIBLE NOTES
     10




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11




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11. STOCKHOLDERS EQUITY
   12. EARNINGS (LOSS) PER SHARE
  12




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Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands, except for per share information)Numerator:Numerator for basic earnings
(loss) per share  Net income (loss)
    
    $
    11,792
    
    
    $
    (888
    )
    
    $
    (1,882
    )
    
    $
    (8,194
    )Add: Interest expense on
convertible notes
    
    
    305
    
    
    
    
    
    
    
    
    
    
    
    Numerator for diluted earnings
(loss) per share
    
    $
    12,097
    
    
    $
    (888
    )
    
    $
    (1,882
    )
    
    $
    (8,194
    )Denominator:Denominator for basic earnings
(loss) per share  weighted
average shares outstanding
    
    
    26,283
    
    
    
    26,150
    
    
    
    26,211
    
    
    
    26,150Effect of dilutive securities:Convertible notes
    
    
    2,286
    
    
    
    
    
    
    
    
    
    
    
    Warrants
    
    
    1,523
    
    
    
    
    
    
    
    
    
    
    
    Employee stock options
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted earnings
(loss) per share
    
    
    30,105
    
    
    
    26,150
    
    
    
    26,211
    
    
    
    26,150Basic earnings (loss) per share
    
    $
    0.45
    
    
    $
    (0.03
    )
    
    $
    (0.07
    )
    
    $
    (0.31
    )Diluted earnings (loss) per share
    
    $
    0.40
    
    
    $
    (0.03
    )
    
    $
    (0.07
    )
    
    $
    (0.31
    )
 13. SUBSEQUENT EVENT
  13




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Important Factors That May Affect Future Operations and Results
   
    
    Expected future operations, revenue, gross margins and expenses;
    
    Credit facilities and projected cash needs;
    
    Sales opportunities, strategic relationships and marketing plans;
    
    Estimates of potential markets for our products and services, including
the anticipated drivers for future growth;
    
    Plans to provide services to CIGNA in offering its Medicare Part D
program;
    
    Assessment of the impact of future accounting pronouncements, including
SFAS 123(R); and
    
    Ability to comply with all applicable regulations and compliance-related
matters including, but not limited to, the Health Insurance Portability and
Accountability Act of 1996 (HIPAA) and the Sarbanes-Oxley Act of 2002.
   
    
    Our inability to successfully offer, with CIGNA, their Medicare Part D
prescription drug program;
    
    Our inability to comply with the terms of our agreement with CIGNA and
maintain exclusivity as CIGNAs sole provider of marketing, member enrollment and
service, distribution, billing and collections;
    
    Declining reimbursement levels for, or increases in the costs of, products
dispensed;
    
    Our history of operating losses and our expectation that we will incur
significant additional operating losses;
    
    An inability to raise the capital that we will need to sustain our operations;
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
    
    Our ability to attract new customers and retain existing customers;
    
    Identification of, and competition for, growth and expansion opportunities;
    
    Compliance with, or changes in, government regulation and legislation, or
interpretations thereof, including, but not limited to, the Sarbanes-Oxley Act of
2002, new business registrations, individual non-resident licensing requirements,
third party administrator regulations, pharmacy licensing requirements and healthcare
reform legislation, including HIPAA;
    
    An inability to establish and maintain successful collaborative
relationships could adversely affect our ability to generate revenue;
    
    Adverse developments in any investigation related to the pharmaceutical
industry;
    
    Competition and technological change that may make our products and
technologies less attractive or obsolete;
    
    An inability to obtain and maintain intellectual property protection for
our technologies;
    
    Adverse resolution of future lawsuits or investigations;
    
    Significant fluctuations in our revenue and operating results, which have
occurred in the past and which we expect to continue in the future;
    
    Any loss or inability to hire and retain qualified personnel;
    
    Our exposure to product liability in excess of our insurance coverage;
    
    Any failure to maintain an effective system of internal controls in the
future could adversely affect our ability to accurately report financial results or
prevent fraud;
    
    Compliance with changing regulation of corporate governance and public
disclosure may result in additional expenses;
    
    Our common stock may continue to have a volatile public trading price and
low trading volume;
    
    Anti-takeover provisions in our governing documents and under Delaware law
may make an acquisition of us more difficult; and
    
    Disaster recovery efforts in the event of a natural disaster may be
ineffective or inadequate and result in substantial financial losses.
  Business
  15




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CIGNA Agreement and Medicare Part D
   Sale of Respiratory Division
  Medical Product Sales
   16




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Retail Program
  Specialty and Oncology Pharmacy Business
   Prescription Discount Drug Card Services
  17




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NationsHealth Discount Prescription Drug Card
  Medicare-Approved Prescription Drug Card
   Patient Management
  18




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
    
    Direct-to-consumer marketing
    
    Enrollment and service of individual patients
    
    Fulfillment, reorder and electronic medical records management
    
    Inventory management and distribution systems
    
    Contracting with manufacturers
    
    Regulatory and Medicare compliance, audit and claims settlement
    
    Medicare and private insurer billing and accounts receivable management
 Background
   19




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Merger Accounting Treatment
  Critical Accounting Policies
  Recent Developments
 Medicare Modernization Act
  20




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Results of Operations
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004$
    
    
    %
    
    
    $
    
    
    %
    
    
    $
    
    
    %
    
    
    $
    
    
    %Revenue:Net product sales
    
    $
    18,167
    
    
    
    85.4
    %
    
    $
    19,383
    
    
    
    96.5
    %
    
    $
    55,299
    
    
    
    88.6
    %
    
    $
    50,078
    
    
    
    96.4
    %Prescription card revenue
    
    
    2,316
    
    
    
    10.9
    
    
    
    704
    
    
    
    3.5
    
    
    
    6,327
    
    
    
    10.1
    
    
    
    1,893
    
    
    
    3.6Service revenue
    
    
    780
    
    
    
    3.7
    
    
    
    
    
    
    
    0.0
    
    
    
    780
    
    
    
    1.2
    
    
    
    
    
    
    
    0.021,263
    
    
    
    100.0
    
    
    
    20,087
    
    
    
    100.0
    
    
    
    62,406
    
    
    
    100.0
    
    
    
    51,971
    
    
    
    100.0Cost of product sales
    
    
    8,037
    
    
    
    37.8
    
    
    
    6,283
    
    
    
    31.3
    
    
    
    23,448
    
    
    
    37.6
    
    
    
    16,291
    
    
    
    31.3Cost of services
    
    
    1,311
    
    
    
    6.2
    
    
    
    
    
    
    
    0.0
    
    
    
    1,311
    
    
    
    2.1
    
    
    
    
    
    
    
    0.0Gross Profit
    
    
    11,915
    
    
    
    56.0
    
    
    
    13,804
    
    
    
    68.7
    
    
    
    37,647
    
    
    
    60.3
    
    
    
    35,680
    
    
    
    68.7Operating Expenses:Patient acquisition and related costs
    
    
    3,256
    
    
    
    15.3
    
    
    
    4,245
    
    
    
    21.1
    
    
    
    17,976
    
    
    
    28.8
    
    
    
    16,626
    
    
    
    32.0Patient service and fulfillment
    
    
    3,593
    
    
    
    16.9
    
    
    
    3,148
    
    
    
    15.7
    
    
    
    11,418
    
    
    
    18.3
    
    
    
    9,558
    
    
    
    18.4General and administrative
    
    
    5,576
    
    
    
    26.2
    
    
    
    3,237
    
    
    
    16.1
    
    
    
    15,193
    
    
    
    24.3
    
    
    
    7,518
    
    
    
    14.5Provision for doubtful accounts
    
    
    2,330
    
    
    
    11.0
    
    
    
    3,533
    
    
    
    17.6
    
    
    
    7,575
    
    
    
    12.1
    
    
    
    9,128
    
    
    
    17.6Depreciation and amortization
    
    
    224
    
    
    
    1.1
    
    
    
    139
    
    
    
    0.7
    
    
    
    653
    
    
    
    1.0
    
    
    
    334
    
    
    
    0.6Gain on sale of respiratory
division
    
    
    (15,508
    )
    
    
    (72.9
    )
    
    
    
    
    
    
    0.0
    
    
    
    (15,508
    )
    
    
    (24.9
    )
    
    
    
    
    
    
    0.0(529
    )
    
    
    (2.5
    )
    
    
    14,302
    
    
    
    71.2
    
    
    
    37,307
    
    
    
    59.8
    
    
    
    43,164
    
    
    
    83.1Income (Loss) from Operations
    
    
    12,444
    
    
    
    58.5
    
    
    
    (498
    )
    
    
    (2.5
    )
    
    
    340
    
    
    
    0.5
    
    
    
    (7,484
    )
    
    
    (14.4
    )Other expense, net
    
    
    (652
    )
    
    
    (3.1
    )
    
    
    (390
    )
    
    
    (1.9
    )
    
    
    (2,222
    )
    
    
    (3.5
    )
    
    
    (710
    )
    
    
    (1.4
    )Net Income (Loss)
    
    $
    11,792
    
    
    
    55.6
    %
    
    $
    (888
    )
    
    
    (4.4
    %)
    
    $
    (1,882
    )
    
    
    (3.0
    %)
    
    $
    (8,194
    )
    
    
    (15.8
    %)
 Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004
 Revenue.
  22




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Cost of Sales .
 Cost of Services .
  Patient Acquisition and Related Costs.
 23




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##### Table of Contents



Patient Service and Fulfillment Expenses .
 General and Administrative Expenses .
 Provision for Doubtful Accounts.
 Gain on Sale of Respiratory Division.
 Depreciation and Amortization .
 Other Expense.
 24




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##### Table of Contents



Income Taxes.
 Net Income (Loss).
 Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004
 Revenue.
    Cost of Sales .
 Cost of Services .
 25




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##### Table of Contents



Patient Acquisition and Related Costs.
 Patient Service and Fulfillment Expenses .
 General and Administrative Expenses .
 Provision for Doubtful Accounts.
 26




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##### Table of Contents



Gain on Sale of Respiratory Division.
 Depreciation and Amortization .
 Other Expense.
 Income Taxes.
 Net Loss.
 LIQUIDITY AND CAPITAL RESOURCES
    27




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##### Table of Contents



28




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##### Table of Contents



29




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##### Table of Contents



Off-Balance-Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
    30




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##### Table of Contents



PART IIOTHER INFORMATION
 
 Item 6. Exhibits
   31




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##### Table of Contents



SIGNATURES
  NATIONSHEALTH, INCDate: November 14, 2005
    By:
    /s/ Glenn M. ParkerName:
    Glenn M. ParkerTitle:
    Chief Executive
Officer (Principal
Executive Officer)Date: November 14, 2005
    By:
    /s/ Timothy FairbanksName:
    Timothy FairbanksTitle:
    Chief Financial
Officer (Principal
Financial and
Accounting Officer) 32




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##### Table of Contents



NATIONSHEALTH, INC.
EXHIBIT INDEX
 ExhibitNo.
    
    Description2.1
    
    
    Amended and Restated Asset Purchase Agreement, dated
September 3, 2005, by and between Lincare Inc., Med 4
Home Inc., United States Pharmaceutical Group, LLC and
the Company. Certain schedules referenced in the Amended
and Restated Asset Purchase Agreement have been omitted
in accordance with Item 601(b)(2) of Regulation S-K. A
copy of any omitted schedule will be furnished
supplementally to the Securities and Exchange Commission
upon request.10.1*
    
    
    Limited Liability Company Agreement of NationsHealth
Specialty RX, LLC, dated August 3, 2005, by and between
US Bioservices Corporation and the Company.10.2
    
    
    Stock Purchase Agreement, dated August 18, 2005, by and
between NationsHealth, Inc. and US Bioservices
Corporation. Filed as Exhibit 10.1 to the Companys
Current Report on Form 8-K (File No. 000-50348) filed on
August 24, 2005 and incorporated herein by reference.10.3
    
    
    Registration Rights Agreement, dated August 18, 2005, by
and between NationsHealth, Inc. and US Bioservices
Corporation. Filed as Exhibit 10.2 to the Companys
Current Report on Form 8-K (File No. 000-50348) filed on
August 24, 2005 and incorporated herein by reference.10.4
    
    
    Form of Stock Option Agreement under the NationsHealth,
Inc. 2005 Long-Term Incentive Plan.10.5
    
    
    Form of Restricted Stock Unit Agreement under the
NationsHealth, Inc. 2005 Long-Term Incentive Plan.10.6
    
    
    Form of Restricted Stock Agreement under the
NationsHealth, Inc. 2005 Long-Term Incentive Plan.10.7
    
    
    Form of Stock Appreciation Right Agreement under the
NationsHealth, Inc. 2005 Long-Term Incentive Plan.10.8
    
    
    Sublease Agreement with Asset Management Outsourcing,
Inc. dated August3, 2005 for the property located at
7067C West Broward Boulevard Plantation, Florida 33317.31.1
    
    
    Certification of Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Chief Executive Officer and Chief
Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 *
    
    Portions of this Exhibit have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934.
 33