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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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(MARK ONE)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2006

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
|- | -------------------------------------------------------------------------------

For the transition period from  to

Commission File Number 0-19946



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LINCARE HOLDINGS INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|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 is a large accelerated filer, an accelerated filer, or non-accelerated filer (as defined in Exchange Act
Rule 12b-2).

Large accelerated filer  x            Accelerated filer ̈Non-accelerated filer ̈

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 April 28, 2006
|Common Stock, $0.01 par value |  | 95,620,072                   



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##### Table of Contents

LINCARE HOLDINGS INC. AND SUBSIDIARIES

FORM 10-Q

For The Quarterly Period Ended March 31, 2006

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 unaudited condensed consolidated financial statements                        |  | 6   
|Item 2.           |  | Managements Discussion and Analysis of Results of Operations and Financial Condition |  | 13  
|Item 3.           |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 25  
|Item 4.           |  | Controls and Procedures                                                               |  | 25  
|                  |  |                                                                                      
|PART II.          |  | OTHER INFORMATION                                                                     |  |     
|Item 1.           |  | Legal Proceedings                                                                     |  | 26  
|Item 2.           |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 26  
|Item 3.           |  | Defaults Upon Senior Securities                                                       |  | 27  
|Item 4.           |  | Submission of Matters to a Vote of the Security Holders                               |  | 27  
|Item 5.           |  | Other Information                                                                     |  | 27  
|Item 6.           |  | Exhibits and Reports on Form 8-K                                                      |  | 27  
|SIGNATURE         |  | 28                                                                                   
|INDEX OF EXHIBITS |  | S-1                                                                                  



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##### Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements (Unaudited)

LINCARE HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



|                                                      |  |               |           |   |                  |   |           |  
|----------------------------------------------------- |  | ------------- | --------- | - | ---------------- | - | --------- | -
|                                                      |  | March 31,2006 |           |   | December 31,2005 |  
|ASSETS                                                |  |               |           |   |                  |   |           |  
|Current assets:                                       |  |               |           |   |                  |   |           |  
|Cash and cash equivalents                             |  | $             | 26,550    |   |                  | $ | 8,544     |  
|Short-term investments                                |  |               | 62,125    |   |                  |   | 38,425    |  
|Restricted cash                                       |  |               | 49        |   |                  |   | 49        |  
|Accounts receivable, net                              |  |               | 156,679   |   |                  |   | 144,130   |  
|Inventories                                           |  |               | 4,233     |   |                  |   | 4,613     |  
|Prepaid and other current assets                      |  |               | 3,049     |   |                  |   | 2,920     |  
|                                                      |  |               |           |   |                  |   |           |  
|Total current assets                                  |  |               | 252,685   |   |                  |   | 198,681   |  
|                                                      |  |               |           |   |                  |   |           |  
|Property and equipment                                |  |               | 743,751   |   |                  |   | 732,775   |  
|Accumulated depreciation                              |  |               | (433,765  | ) |                  |   | (422,639  | )
|                                                      |  |               |           |   |                  |   |           |  
|Net property and equipment                            |  |               | 309,986   |   |                  |   | 310,136   |  
|                                                      |  |               |           |   |                  |   |           |  
|Other assets:                                         |  |               |           |   |                  |   |           |  
|Goodwill                                              |  |               | 1,148,821 |   |                  |   | 1,148,292 |  
|Covenants not-to-compete, net                         |  |               | 1,485     |   |                  |   | 1,885     |  
|Other                                                 |  |               | 7,600     |   |                  |   | 7,879     |  
|                                                      |  |               |           |   |                  |   |           |  
|Total other assets                                    |  |               | 1,157,906 |   |                  |   | 1,158,056 |  
|                                                      |  |               |           |   |                  |   |           |  
|Total assets                                          |  | $             | 1,720,577 |   |                  | $ | 1,666,873 |  
|                                                      |  |               |           |   |                  |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY                  |  |               |           |   |                  |   |           |  
|Current liabilities:                                  |  |               |           |   |                  |   |           |  
|Current installments on long-term obligations         |  | $             | 10,124    |   |                  | $ | 13,705    |  
|Accounts payable                                      |  |               | 43,515    |   |                  |   | 40,957    |  
|Accrued expenses:                                     |  |               |           |   |                  |   |           |  
|Compensation and benefits                             |  |               | 18,949    |   |                  |   | 16,609    |  
|Liability insurance                                   |  |               | 11,934    |   |                  |   | 11,886    |  
|Other current liabilities                             |  |               | 6,714     |   |                  |   | 3,843     |  
|Income taxes payable                                  |  |               | 22,817    |   |                  |   | 6,811     |  
|                                                      |  |               |           |   |                  |   |           |  
|Total current liabilities                             |  |               | 114,053   |   |                  |   | 93,811    |  
|                                                      |  |               |           |   |                  |   |           |  
|Long-term obligations, excluding current installments |  |               | 275,415   |   |                  |   | 275,436   |  
|Deferred income taxes                                 |  |               | 169,032   |   |                  |   | 159,750   |  
|                                                      |  |               |           |   |                  |   |           |  
|Total liabilities                                     |  |               | 558,500   |   |                  |   | 528,997   |  
|                                                      |  |               |           |   |                  |   |           |  
|Stockholders equity:                                 |  |               |           |   |                  |   |           |  
|Common stock                                          |  |               | 1,278     |   |                  |   | 1,277     |  
|Additional paid-in capital                            |  |               | 358,566   |   |                  |   | 357,511   |  
|Unearned compensation                                 |  |               | 0         |   |                  |   | (3,322    | )
|Retained earnings                                     |  |               | 1,677,186 |   |                  |   | 1,629,300 |  
|Treasury stock                                        |  |               | (874,953  | ) |                  |   | (846,890  | )
|                                                      |  |               |           |   |                  |   |           |  
|Total stockholders equity                            |  |               | 1,162,077 |   |                  |   | 1,137,876 |  
|                                                      |  |               |           |   |                  |   |           |  
|Total liabilities and stockholders equity            |  | $             | 1,720,577 |   |                  | $ | 1,666,873 |  
|                                                      |  |               |           |   |                  |   |           |  

See accompanying notes to unaudited condensed consolidated financial statements.



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LINCARE HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)



|                                                                                  |  |                            |         |   |               |   |         |  
|--------------------------------------------------------------------------------- |  | -------------------------- | ------- | - | ------------- | - | ------- | -
|                                                                                  |  | For The Three Months Ended |        
|                                                                                  |  | March 31,2006              |         |   | March 31,2005 |  
|Net revenues                                                                      |  | $                          | 333,591 |   |               | $ | 305,177 |  
|                                                                                  |  |                            |         |   |               |   |         |  
|Costs and expenses:                                                               |  |                            |         |   |               |   |         |  
|Cost of goods and services                                                        |  |                            | 74,401  |   |               |   | 56,534  |  
|Operating expenses                                                                |  |                            | 79,107  |   |               |   | 70,004  |  
|Selling, general and administrative expenses                                      |  |                            | 70,493  |   |               |   | 61,560  |  
|Bad debt expense                                                                  |  |                            | 5,004   |   |               |   | 4,578   |  
|Depreciation expense                                                              |  |                            | 24,508  |   |               |   | 22,095  |  
|Amortization expense                                                              |  |                            | 419     |   |               |   | 427     |  
|                                                                                  |  |                            |         |   |               |   |         |  
|                                                                                  |  |                            | 253,932 |   |               |   | 215,198 |  
|                                                                                  |  |                            |         |   |               |   |         |  
|Operating income                                                                  |  |                            | 79,659  |   |               |   | 89,979  |  
|                                                                                  |  |                            |         |   |               |   |         |  
|Other income (expense):                                                           |  |                            |         |   |               |   |         |  
|Interest income                                                                   |  |                            | 557     |   |               |   | 1,009   |  
|Interest expense                                                                  |  |                            | (2,378  | ) |               |   | (3,425  | )
|Net gain on disposal of property and equipment                                    |  |                            | 13      |   |               |   | 8       |  
|                                                                                  |  |                            |         |   |               |   |         |  
|                                                                                  |  |                            | (1,808  | ) |               |   | (2,408  | )
|                                                                                  |  |                            |         |   |               |   |         |  
|Income before income taxes                                                        |  |                            | 77,851  |   |               |   | 87,571  |  
|Income tax expense                                                                |  |                            | 29,965  |   |               |   | 32,953  |  
|                                                                                  |  |                            |         |   |               |   |         |  
|Net income                                                                        |  | $                          | 47,886  |   |               | $ | 54,618  |  
|                                                                                  |  |                            |         |   |               |   |         |  
|Basic earnings per common share                                                   |  | $                          | 0.50    |   |               | $ | 0.54    |  
|                                                                                  |  |                            |         |   |               |   |         |  
|Diluted earnings per common share                                                 |  | $                          | 0.48    |   |               | $ | 0.51    |  
|                                                                                  |  |                            |         |   |               |   |         |  
|Weighted average number of common shares outstanding                              |  |                            | 95,791  |   |               |   | 100,984 |  
|                                                                                  |  |                            |         |   |               |   |         |  
|Weighted average number of common shares and common share equivalents outstanding |  |                            | 102,876 |   |               |   | 108,757 |  
|                                                                                  |  |                            |         |   |               |   |         |  

See accompanying notes to unaudited condensed consolidated financial statements.



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LINCARE HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



|                                                                                  |  |                            |          |   |               |   |          |  
|--------------------------------------------------------------------------------- |  | -------------------------- | -------- | - | ------------- | - | -------- | -
|                                                                                  |  | For The Three Months Ended |         
|                                                                                  |  | March 31,2006              |          |   | March 31,2005 |  
|Cash flows from operating activities:                                             |  |                            |          |   |               |   |          |  
|Net income                                                                        |  | $                          | 47,886   |   |               | $ | 54,618   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                            |          |   |               |   |          |  
|Bad debt expense                                                                  |  |                            | 5,004    |   |               |   | 4,578    |  
|Depreciation expense                                                              |  |                            | 24,508   |   |               |   | 22,095   |  
|Net gain on disposal of property and equipment                                    |  |                            | (13      | ) |               |   | (8       | )
|Amortization expense                                                              |  |                            | 419      |   |               |   | 427      |  
|Amortization of debt issuance costs                                               |  |                            | 189      |   |               |   | 174      |  
|Stock-based compensation expense related to stock plans                           |  |                            | 4,318    |   |               |   | 800      |  
|Deferred income tax benefit                                                       |  |                            | 6,433    |   |               |   | 5,197    |  
|Excess tax benefit from share-based compensation                                  |  |                            | (172     | ) |               |   | 0        |  
|Minority interest in net earnings of subsidiary                                   |  |                            | 0        |   |               |   | 30       |  
|Change in assets and liabilities net of effects of acquired businesses:           |  |                            |          |   |               |   |          |  
|Increase in accounts receivable                                                   |  |                            | (17,411  | ) |               |   | (16,738  | )
|Decrease in inventories                                                           |  |                            | 381      |   |               |   | 94       |  
|Increase in prepaid and other assets                                              |  |                            | (38      | ) |               |   | (1,210   | )
|Increase in accounts payable                                                      |  |                            | 2,558    |   |               |   | 5,403    |  
|Increase in accrued expenses                                                      |  |                            | 5,256    |   |               |   | 4,889    |  
|Increase in income taxes payable                                                  |  |                            | 16,710   |   |               |   | 27,313   |  
|                                                                                  |  |                            |          |   |               |   |          |  
|Net cash provided by operating activities                                         |  |                            | 96,028   |   |               |   | 107,662  |  
|                                                                                  |  |                            |          |   |               |   |          |  
|Cash flows from investing activities:                                             |  |                            |          |   |               |   |          |  
|Proceeds from sale of property and equipment                                      |  |                            | 23       |   |               |   | 35       |  
|Capital expenditures                                                              |  |                            | (24,339  | ) |               |   | (23,652  | )
|Purchases of short-term investments                                               |  |                            | (228,650 | ) |               |   | (109,750 | )
|Sales and maturities of short-term investments                                    |  |                            | 204,950  |   |               |   | 185,969  |  
|Business acquisitions, net of cash acquired and purchase price adjustments        |  |                            | (564     | ) |               |   | (29,832  | )
|Cash restricted for future payments                                               |  |                            | 0        |   |               |   | (8       | )
|                                                                                  |  |                            |          |   |               |   |          |  
|Net cash (used in) provided by investing activities                               |  |                            | (48,580  | ) |               |   | 22,762   |  
|                                                                                  |  |                            |          |   |               |   |          |  
|Cash flows from financing activities:                                             |  |                            |          |   |               |   |          |  
|Proceeds from issuance of debt                                                    |  |                            | 0        |   |               |   | 37       |  
|Payments of principal on debt and deferred acquisition obligations                |  |                            | (3,756   | ) |               |   | (9,152   | )
|Payments of debt issuance costs                                                   |  |                            | 0        |   |               |   | (2       | )
|Proceeds from exercise of stock options and issuance of common shares             |  |                            | 2,205    |   |               |   | 12,601   |  
|Excess tax benefit from share-based compensation                                  |  |                            | 172      |   |               |   | 0        |  
|Payments to acquire treasury stock                                                |  |                            | (28,063  | ) |               |   | (66,765  | )
|                                                                                  |  |                            |          |   |               |   |          |  
|Net cash used in financing activities                                             |  |                            | (29,442  | ) |               |   | (63,281  | )
|                                                                                  |  |                            |          |   |               |   |          |  
|Net increase in cash and cash equivalents                                         |  |                            | 18,006   |   |               |   | 67,143   |  
|Cash and cash equivalents, beginning of period                                    |  |                            | 8,544    |   |               |   | 33,614   |  
|                                                                                  |  |                            |          |   |               |   |          |  
|Cash and cash equivalents, end of period                                          |  | $                          | 26,550   |   |               | $ | 100,757  |  
|                                                                                  |  |                            |          |   |               |   |          |  
|Supplemental disclosure of cash flow information:                                 |  |                            |          |   |               |   |          |  
|Cash paid for interest                                                            |  | $                          | 139      |   |               | $ | 2,239    |  
|                                                                                  |  |                            |          |   |               |   |          |  
|Cash paid for taxes                                                               |  | $                          | 6,820    |   |               | $ | 148      |  
|                                                                                  |  |                            |          |   |               |   |          |  

See accompanying notes to unaudited condensed consolidated financial statements.



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LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation
and Summary of Significant Accounting Policies

The accompanying condensed consolidated financial statements are unaudited and have been
prepared in accordance with generally accepted accounting principles 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 (the Company) on Form 10-K for the fiscal year ended December 31, 2005. 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.

Cash and Cash Equivalents: For purposes of the
condensed consolidated balance sheets and statements of cash flows, the Company considers all highly liquid investments with an original maturity of less than three months to be cash equivalents.

Short-term Investments: The Company classifies its investments in marketable securities with readily determinable fair values as investments
available-for-sale in accordance with Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities. Available-for-sale securities consist of debt and equity
securities not classified as trading securities or as securities to be held to maturity. The Company has classified all investments as available-for-sale. Unrealized holding gains and losses on available-for-sale securities are reported as a net
amount in accumulated other comprehensive gain or loss in stockholders equity until realized. Gains and losses on the sale of available-for-sale securities are determined using the specific identification method.

Concentration of Credit Risk: The Companys revenues are generated through locations in 47 states. The Company generally does not require
collateral or other security in extending credit to patients; 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 funded programs, which aggregated approximately 66% and 65% of net revenues for the three months ended March 31,
2006 and 2005, respectively.

Note 2. 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 three months ended March 31, 2006, the Company acquired certain assets of one company. This acquisition was accounted for as a purchase
of a business. The results of the acquired company are included in the accompanying condensed consolidated statements of operations since the date of acquisition.



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LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)

The aggregate cost of the acquisition described above was as follows:



|                                                       |  |                |    
|------------------------------------------------------ |  | -------------- | ---
|                                                       |  | (In thousands)
|Cash                                                   |  | $              | 564
|Deferred acquisition obligations                       |  |                | 150
|Assumption of liabilities                              |  |                | 4  
|                                                       |  |                |    
|                                                       |  | $              | 718
|                                                       |  |                |    
|The aggregate purchase price was allocated as follows: |  |                |    
|                                                       | 
|Current assets                                         |  | $              | 1  
|Property and equipment                                 |  |                | 30 
|Intangible assets                                      |  |                | 20 
|Goodwill                                               |  |                | 667
|                                                       |  |                |    
|                                                       |  | $              | 718
|                                                       |  |                |    

Unaudited pro forma supplemental information on the results of operations for the three months
ended March 31, 2006 and March 31, 2005, is provided below and reflects the acquisition as if it had been completed at the beginning of each period.



|                         |  |                                       |         |      |   |        
|------------------------ |  | ------------------------------------- | ------- | ---- | - | -------
|                         |  | For The Three Months EndedMarch 31,  
|                         |  | 2006                                  |         | 2005
|                         |  | (In thousands, except per share data)
|Net revenues             |  | $                                     | 333,710 |      | $ | 305,331
|                         |  |                                       |         |      |   |        
|Net income               |  | $                                     | 47,912  |      | $ | 54,652 
|                         |  |                                       |         |      |   |        
|Income per common share: |  |                                       |         |      |   |        
|Basic                    |  | $                                     | 0.50    |      | $ | 0.54   
|                         |  |                                       |         |      |   |        
|Diluted                  |  | $                                     | 0.48    |      | $ | 0.51   
|                         |  |                                       |         |      |   |        

The unaudited pro forma financial information is not necessarily indicative of either the results
of operations that would have occurred had the transactions been effected at the beginning of the respective preceding periods or of future results of operations of the combined companies.

Note 3. Income Per Common Share

Basic income
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 income per common share reflects the potential dilution of securities that could
share in the Companys earnings, including securities that may be issued on conversion of convertible debentures and exercise of outstanding stock options. When the exercise of stock options would be anti-dilutive, they are excluded from the
calculation. For the three months ended March 31, 2006 and 2005, the number of excluded shares underlying anti-dilutive stock options was 4,001 and 0, respectively.

In October 2004, the Emerging Issues Task Force (EITF) ratified the consensus on EITF Issue 04-8, The Effect of Contingently Convertible Instruments on Diluted Earnings per Share, that the
impact of contingently convertible debt should be included in diluted earnings per share computations regardless of whether the market price conversion condition has been met. This provision is effective for reporting periods ending after
December 15, 2004 with the requirement to restate all prior period earnings per share amounts to conform to the provisions of the final EITF.

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



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LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)

|                                                                                     |  |                                       |         |      |   |        
|------------------------------------------------------------------------------------ |  | ------------------------------------- | ------- | ---- | - | -------
|                                                                                     |  | For The Three Months EndedMarch 31,  
|                                                                                     |  | 2006                                  |         | 2005
|                                                                                     |  | (In thousands, except per share data)
|Numerator:                                                                           |  |                                       |         |      |   |        
|Basic  Income available to common stockholders                                      |  | $                                     | 47,886  |      | $ | 54,618 
|Adjustment for assumed dilution:                                                     |  |                                       |         |      |   |        
|Interest on convertible debt, net of tax                                             |  |                                       | 1,269   |      |   | 1,286  
|                                                                                     |  |                                       |         |      |   |        
|Diluted  Income available to common stockholders and holders of dilutive securities |  | $                                     | 49,155  |      | $ | 55,904 
|                                                                                     |  |                                       |         |      |   |        
|Denominator:                                                                         |  |                                       |         |      |   |        
|Weighted average shares                                                              |  |                                       | 95,791  |      |   | 100,984
|Effect of dilutive securities:                                                       |  |                                       |         |      |   |        
|Incremental shares under stock compensation plans                                    |  |                                       | 1,928   |      |   | 2,616  
|Incremental shares from assumed conversion of convertible debt                       |  |                                       | 5,157   |      |   | 5,157  
|                                                                                     |  |                                       |         |      |   |        
|Adjusted weighted average shares                                                     |  |                                       | 102,876 |      |   | 108,757
|                                                                                     |  |                                       |         |      |   |        
|Per share amount:                                                                    |  |                                       |         |      |   |        
|Basic                                                                                |  | $                                     | 0.50    |      | $ | 0.54   
|                                                                                     |  |                                       |         |      |   |        
|Diluted (1)                                                                          |  | $                                     | 0.48    |      | $ | 0.51   
|                                                                                     |  |                                       |         |      |   |        

---

|(1) | Figures reflect the application of the if converted method of accounting for the Companys outstanding convertible debentures in accordance with EITF No. 04-8,
effective for reporting periods ending after December 15, 2004.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 4. Stock Plans

The Company issues stock options and other stock-based awards to key employees and directors under stock-based compensation plans. The Company also
sponsors an employee stock purchase plan.

Through December 31, 2005, the Company historically accounted for stock-based compensation using
the intrinsic value method under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees(APB 25), and, accordingly, recognized no compensation expense related to stock options and employee stock
purchases. For grants of restricted stock, other than those awarded under long-term incentive agreements, the fair value of the shares at the date of grant was amortized to compensation expense over the awards vesting period. The Company has
historically reported pro forma results under the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS No. 123), as amended by Statement of Financial
Accounting Standards No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure.

Adoption of Statement of Financial Accounting
Standards No. 123R, Share Based Payment (SFAS No. 123R)

Effective January 1, 2006, the Company adopted SFAS No. 123R using the modified
prospective transition method. Under the modified prospective transition method, fair value accounting and recognition provisions of SFAS No. 123R are applied to share-based awards granted or modified subsequent to the date of adoption and prior
periods presented are not restated. In addition, for awards granted prior to the effective date, the unvested portion of the awards are recognized in periods subsequent to the effective date based on the grant date fair value determined for pro
forma disclosure purposes under SFAS No. 123.

Prior to adopting SFAS No. 123R, the Company presented all tax benefits resulting from the
exercise of stock options as operating cash flows in the statements of cash flows. SFAS No. 123R requires cash flows resulting from excess tax benefits to be classified as a part of cash flows from financing activities. Excess tax benefits are
realized tax benefits from tax deductions for exercised options in excess of the deferred tax asset attributable to stock compensation costs for



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LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)

such options. The total tax benefit of stock-based awards recognized in the first quarter of 2006 was $0.7 million. As a
result of adopting SFAS No. 123R, $0.2 million of excess tax benefits for the three months ended March 31, 2006 have been classified as a financing cash inflow and $0.5 million has been classified as an operating cash inflow.

In the first quarter of 2006 and 2005, the Company recognized total stock-based compensation costs of $4.3 million and $0.8 million, respectively, as
well as related tax benefits of $1.4 million and $0.2 million, respectively. All stock-based compensation costs are classified within selling, general and administrative expenses on the attached condensed consolidated statements of operations. As a
result of the adoption of SFAS No. 123R effective January 1, 2006, the Companys income before income taxes and net income for the three months ended March 31, 2006 are $3.5 million and $2.2 million lower, respectively, than if the Company had
continued to account for the share-based compensation programs under APB 25. Accordingly, the reported basic and diluted earnings per share for the three months ended March 31, 2006 are $0.02 lower than had the Company not adopted SFAS No. 123R
effective January 1, 2006.

Stock Options

The Company has seven outstanding stock option plans that provide for the grant of options and other stock-based awards to officers, employees and directors. To date, stock options have been granted with an exercise price equal to the fair
value of the stock at the date of grant. Stock options generally have ten year expiration terms and generally vest over one to five years depending on the particular grant.

The Company believes that the Black-Scholes valuation model provides a reasonable estimate of the fair value of the Companys stock options,
particularly in view of the absence of any market-based or performance-based vesting conditions attached to those stock options. The Black-Scholes option pricing model requires, among other things, an estimate of expected share price volatility. The
Company considered the use of both historical and implied volatility assumptions in calculating the fair value of stock options issued in 2005. In years prior to 2005, the Company had used only historical volatility in calculating the fair value of
its stock options. In estimating the fair value of stock options granted during 2005, the Company used implied volatility derived from its publicly-traded options as the volatility input in the option valuation model. In using implied volatility in
2005, the Company considered SFAS No. 123R and the guidance provided in Staff Accounting Bulletin No. 107, Share-Based Payment, and determined that using implied volatility provides the most reliable estimate of expected volatility. The
Company has not paid any cash dividends on its capital stock and does not anticipate it will pay cash dividends in the foreseeable future.

Following are the specific valuation assumptions, where applicable, used for each respective period:



|                                     |  |                                     |  |         |  | 
|------------------------------------ |  | ----------------------------------- |  | ------- |  | 
|                                     |  | For The Three MonthsEnded March 31,
|                                     |  | 2006                                |  | 2005   
|Expected dividend yield              |  | 0.0%                                |  | 0.0%   
|Risk-free interest rate              |  | 4.2%                                |  | 2.8%   
|Weighted-average expected volatility |  | 24.4%                               |  | 55.3%  
|Expected life                        |  | 5 years                             |  | 3 years

During the three months ended March 31, 2006 and March 31, 2005, the Company granted no new stock
options. For additional information about our share-based awards and for additional disclosures required under SFAS No. 123R, refer to Note 8 of the Notes to Consolidated Financial Statements in our Form 10-K as of and for the year ended December
31, 2005.



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LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)

Stock option activity for the three months ended March 31, 2006 is summarized below:



|                                 |  |                  |   |  |                              |       |                                                  |      |                          |   |           
|-------------------------------- |  | ---------------- | - |  | ---------------------------- | ----- | ------------------------------------------------ | ---- | ------------------------ | - | ----------
|                                 |  | Number ofOptions |   |  | WeightedAverageExercisePrice |       | Weighted AverageRemainingContractual Life(Years) |      | AggregateIntrinsic Value
|Outstanding at December 31, 2005 |  | 9,446,685        |   |  | $                            | 29.31 |                                                  |      |                          |   |           
|Options granted in 2006          |  | 0                |   |  |                              |      |                                                  |      |                          |   |           
|Exercised in 2006                |  | (62,838          | ) |  |                              | 25.64 |                                                  |      |                          |   |           
|Forfeited or expired in 2006     |  | (140,550         | ) |  |                              | 36.81 |                                                  |      |                          |   |           
|                                 |  |                  |   |  |                              |       |                                                  |      |                          |   |           
|Outstanding at March 31, 2006    |  | 9,243,297        |   |  | $                            | 29.22 |                                                  | 4.63 |                          | $ | 97,080,977
|                                 |  |                  |   |  |                              |       |                                                  |      |                          |   |           
|                                 |  |                  |   |  |                              |       |                                                  |      |                          |   |           
|Exercisable at March 31, 2006    |  | 6,187,402        |   |  | $                            | 24.47 |                                                  | 3.47 |                          | $ | 89,677,733
|                                 |  |                  |   |  |                              |       |                                                  |      |                          |   |           
|                                 |  |                  |   |  |                              |       |                                                  |      |                          |   |           

The intrinsic value of options exercised during the three months ended March 31, 2006 amounted to
$1.0 million.

Restricted Stock

Under
the 2004 Stock Plan, certain key employees may be granted restricted stock at nominal cost to them. Restricted stock is measured at fair value on the date of the grant, based on the number of shares granted and the quoted price of the Companys
common stock. Such value is recognized as compensation expense ratably over the corresponding employees specified service period. Restricted stock vests upon the employees fulfillment of specified performance and service-based
conditions. On July 1, 2004, the Company granted 260,000 shares of restricted stock to certain key employees. These shares were issued at the fair value of the stock on the grant date. The restrictions lapse in three equal annual installments. Prior
to the adoption of SFAS No. 123R, unearned compensation for grants of restricted stock equivalent to the fair value of the shares at the date of grant was recorded as a separate component of stockholders equity and subsequently amortized to
compensation expense over the vesting period of the awards. During the three months ended March 31, 2006 and March 31, 2005, the Company recognized $0.8 million of stock-based compensation expense related to Restricted Stock in each of the two
quarters. All unamortized unearned compensation at January 1, 2006 was reclassified to additional paid-in capital.

A summary of the status
of nonvested restricted stock as of March 31, 2006 and changes during the period then ended, is presented below:



|                             |  |         |  |                                               |      
|---------------------------- |  | ------- |  | --------------------------------------------- | -----
|                             |  | Shares  |  | Weighted-Average GrantDate FairValue PerShare
|                             |  |         |  |                                               |      
|Nonvested at January 1, 2006 |  | 173,333 |  | $                                             | 31.72
|Granted                      |  | 0       |  |                                               | 0.00 
|Vested                       |  | 86,667  |  |                                               | 31.72
|Forfeited                    |  | 0       |  |                                               | 0.00 
|                             |  |         |  |                                               |      
|Nonvested at March 31, 2006  |  | 86,666  |  | $                                             | 31.72
|                             |  |         |  |                                               |      



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##### Table of Contents

LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)

Employee Stock Purchase Plan

The Companys Employee Stock Purchase Plan (Stock Purchase Plan) provides a means to encourage and assist employees in acquiring a stock ownership interest in Lincare. Payroll deductions are
accumulated during each quarter and applied toward the purchase of stock on the last trading day of each quarter. The Stock Purchase Plan defines purchase price per share as 85% of the lower of the fair value of a share of common stock on the last
trading day of the previous plan quarter, or the last trading day of the current plan quarter.

During the three months ended March 31,
2006, 11,686 shares of common stock were purchased under the employee stock purchase plan resulting in compensation cost of $0.1 million.

Total
Stock-Based Compensation

SFAS No. 123R requires the disclosure of pro-forma information for periods prior to the adoption. The
following table illustrates the effect on net income and earnings per share for the three months ended March 31, 2005 as if the Company had recognized compensation expense for all share-based payments to employees based on their fair values:



|                                                                                                                                      |  |                                     |        |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------- | ------ | -
|                                                                                                                                      |  | Three MonthsEnded March 31,2005     |       
|                                                                                                                                      |  | (In thousands,except per sharedata) |       
|Net income:                                                                                                                           |  |                                     |        |  
|As reported                                                                                                                           |  | $                                   | 54,618 |  
|Add: Stock-based employee compensation expense included in net income, net of related tax effects                                     |  |                                     | 499    |  
|Deduct: Total stock-based employee compensation expense determined under fair value method for all awards, net of related tax
effects |  |                                     | (2,343 | )
|                                                                                                                                      |  |                                     |        |  
|Pro forma                                                                                                                             |  | $                                   | 52,774 |  
|                                                                                                                                      |  |                                     |        |  
|Earnings per common share:                                                                                                            |  |                                     |        |  
|Basicas reported                                                                                                                     |  | $                                   | 0.54   |  
|                                                                                                                                      |  |                                     |        |  
|Dilutedas reported (1)                                                                                                               |  | $                                   | 0.51   |  
|                                                                                                                                      |  |                                     |        |  
|Basicpro forma                                                                                                                       |  | $                                   | 0.52   |  
|                                                                                                                                      |  |                                     |        |  
|Dilutedpro forma (1)                                                                                                                 |  | $                                   | 0.49   |  
|                                                                                                                                      |  |                                     |        |  

---

|(1) | Figures reflect the application of the if converted method of accounting for the Companys outstanding convertible debentures in accordance with EITF Issue No.
04-8, effective for reporting periods ending after December 15, 2004.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following weighted-average per share fair values
were determined for stock-based compensation grants or purchases occurring within the three months ended March 31, 2006 and 2005:



|                                          |  |                                       |      |      |   |     
|----------------------------------------- |  | ------------------------------------- | ---- | ---- | - | ----
|                                          |  | For The Three Months Ended March 31, 
|                                          |  | 2006                                  |      | 2005
|                                          |  | (In thousands, except per share data)
|Options granted                           |  | $                                     | 0    |      | $ | 0   
|                                          |  |                                       |      |      |   |     
|Restricted stock and stock awards granted |  | $                                     | 0    |      | $ | 0   
|                                          |  |                                       |      |      |   |     
|Employee stock purchases                  |  | $                                     | 8.88 |      | $ | 8.89
|                                          |  |                                       |      |      |   |     



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LINCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)

During the three months ended March 31, 2006 and 2005, the Company received cash of $2.2 million and $12.6
million, respectively, from exercises of stock options and recognized related tax benefits of $0.4 million and $9.2 million, respectively. During the three months ended March 31, 2006 and March 31, 2005, no cash was used to settle equity instruments
granted under share-based payment arrangements.

As of March 31, 2006, the total remaining unrecognized compensation cost related to
nonvested stock options and restricted stock amounted to $24.6 million and $2.5 million, respectively, which will be amortized over the weighted-average remaining requisite service period of 5 years and 11 months, respectively.

The Company issues new shares to satisfy share-based awards upon exercise. As of March 31, 2006, approximately 1.9 million shares are available for
issuance under the Companys shareholder-approved stock plans.

Note 5. Comprehensive Income

SFAS No. 130, Reporting Comprehensive Income, establishes standards for the reporting and display of comprehensive income and its components
in the Companys condensed consolidated financial statements. The objective of SFAS No. 130 is to report a measure (comprehensive income (loss)) of all changes in equity of an enterprise that result from transactions and other economic
events in a period other than transactions with owners.

The Company had no unrealized gains or losses on short-term investments
available-for-sale for the three months ended March 31, 2006 and March 31, 2005.

Note 6. Noncash Financing and Investing Activities

In the normal course of business, the Company obtains seller financing on business acquisitions and also makes adjustments to seller
financing from business acquisitions obtained in prior periods based on terms of the original purchase agreements. Terms of the financing are typically principal only. Seller financing incurred in the three months ended March 31, 2006 and 2005,
was $0.2 million and $14.9 million, respectively.

Note 7. New Accounting Standards

In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards
(SFAS) No. 123 (revised 2004) (SFAS No. 123R), Share-Based Payment, which replaces SFAS No. 123, Accounting for Share-Based Compensation, and supersedes APB Opinion No. 25 (APB
No. 25), Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash Flows. SFAS No. 123R requires all share-based payments to employees, including grants of employee stock
options, to be recognized in the financial statements based on their fair values. The pro forma disclosures previously permitted under SFAS No. 123 is no longer an alternative to financial statement recognition. SFAS No. 123R
also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. Under the regulations promulgated by the
Securities and Exchange Commission, the Company is applying SFAS No. 123R as of January 1, 2006. Under SFAS No. 123R, the Company must determine the appropriate fair value model to be used for valuing share-based payments,
the amortization method for compensation cost and the transition method to be used at date of adoption. The transition methods include modified prospective and modified retrospective adoption options. The modified prospective method requires
compensation cost to be recognized beginning January 1, 2006 based on the requirements of SFAS No. 123R for all share-based payments granted after December 31, 2005 and based on the requirements of SFAS No. 123 for all
awards granted to employees prior to January 1, 2006 that remain unvested on January 1, 2006. The modified retrospective method includes the requirements of the modified prospective method described above, but also permits companies to
restate, based on the amounts previously recognized under SFAS No. 123 for purposes of pro forma disclosures. The Company adopted SFAS No. 123R using the modified prospective method. Refer to Note 4 for a description of the
impact to the Companys financial position, results of operations and liquidity due to the adoption of SFAS 123R.



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LINCARE HOLDINGS INC. AND SUBSIDIARIES

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

Medicare Reimbursement

As a supplier 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.

On February 1, 2006, Congress passed the Deficit Reduction Act of 2005 (DRA). DRA contains provisions that will impact
reimbursement for oxygen equipment and DME in 2007 and beyond. DRA changes 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 and maintenance of equipment, to a capped rental arrangement whereby payment for oxygen equipment (including portable oxygen equipment) may not extend over a period of continuous use of longer than 36 months. On the first day
that begins after the 36thcontinuous month during which payment is made for the oxygen equipment, the supplier
would transfer title of the equipment to the beneficiary. Separate payments for oxygen contents would continue to be made for the period of medical need beyond the 36thmonth. Additional payments for maintenance and service of the oxygen equipment would be made if the Secretary of the Department of Health and Human Services
(the Secretary) determines that such payments are reasonable and necessary in an amount determined to be appropriate by the Secretary. 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 begins on January 1, 2006. We are unable to determine at this time the impact that the oxygen provisions contained in DRA will have on
our financial condition or results of operations.

DRA also changes 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. The option for a supplier to retain ownership of the item after a 15-month rental period and receive semi-annual maintenance and service payments would be eliminated. On the first day that
begins after the 13thcontinuous month during which payment is made for the item, the supplier would transfer title
of the item to the beneficiary. Additional payments for maintenance and service of the item would be made if the Secretary determines that such payments are reasonable and necessary in an amount determined to be appropriate by the Secretary. The DME
capped rental provisions contained in DRA apply to items furnished for which the first rental month occurs on or after January 1, 2006. We can not predict at this time the impact that the DME provisions contained in DRA will have on our
financial condition or results of operations.

On December 8, 2003, the Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, (MMA), was signed into law. The legislation, among other things, provides expanded Medicare prescription drug coverage, modifies payments to Medicare providers and institutes administrative reforms intended to improve Medicare
program operations. MMA includes sweeping changes that impact a broad spectrum of health care industry participants, including physicians, pharmacies, manufacturers and pharmacy benefit managers, as well as other Medicare suppliers and providers
including Lincare.

MMA contains provisions that directly impact reimbursement for the primary respiratory and other DME products provided
by Lincare. Among other things, MMA:



|(1) | Significantly reduced reimbursement for inhalation drug therapies. Historically, prescription drug coverage under Medicare has been limited to drugs furnished incident to a
physicians services and certain self-administered drugs, including inhalation drug therapies. Prior to MMA, Medicare reimbursement for covered drugs, including the inhalation drugs that we provide, was limited to 95 percent of the published
average wholesale price (AWP) for the drug. MMA established new payment limits and procedures for drugs reimbursed under Medicare Part B. Beginning in 2005, inhalation drugs furnished to Medicare beneficiaries are reimbursed at 106
percent of the volume-weighted average selling price (ASP) of the drug, as determined from data provided each quarter by drug manufacturers under a specific formula described in MMA.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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In accordance with the provisions of MMA, on November 2, 2005, the Centers for Medicare and Medicaid
Services (CMS) issued rule CMS-1502-FC, establishing the dispensing fee amount for inhalation drugs for 2006. The final rule establishes a dispensing fee of $57.00 for the first 30-day period in which a Medicare beneficiary uses
inhalation drugs and a reduced fee of $33.00 for a 30-day supply of inhalation drugs for all other months. We estimate that the reduction in the dispensing fee to $33.00 will reduce net revenues by approximately $42.0 to $46.0 million in 2006.
Additionally, fluctuations in the payment rates for inhalation drugs established by CMS during each quarter of 2006 (based on available manufacturer ASP data) may result in further reductions in our net revenues in 2006.

We continue to evaluate the impact of the reduced Medicare payment rates on our business. We can not determine the outcome of any future rulemaking by CMS
nor the impact that such rulemaking might have on our ability to continue to provide inhalation drugs to Medicare beneficiaries. Further, we can not determine whether quarterly updates in ASP pricing data submitted by drug manufacturers and adopted
by CMS will result in further reductions in payment rates for inhalation drugs, and what impact such payment reductions could have on our financial position and results of operations in 2006 and beyond.



|(2) | Reduced payment amounts for five categories of DME, including oxygen, beginning in 2005 and froze payment amounts for other Medicare-covered DME items through 2007. MMA
contains provisions that reduced payment amounts, beginning in 2005, for oxygen equipment, standard wheelchairs (including standard power wheelchairs), nebulizers, diabetic supplies consisting of lancets and testing strips, hospital beds and air
mattresses to the median prices paid under the Federal Employee Health Plan (FEHP). Reductions in payment rates for 2005 established by CMS for the non-oxygen items subject to the FEHP provisions went into effect as of January 1,
2005. MMA also froze payment amounts for other Medicare-covered DME items through 2007.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On March 30, 2005, CMS released
the new Medicare fee schedule amounts for oxygen equipment. The new payment rates were made effective for claims for oxygen equipment furnished after January 1, 2005, that were received by Medicare on or after April 1, 2005. We estimate
that the new fee schedule resulted in a net price reduction of approximately 8.7% for oxygen equipment provided by the Company to Medicare beneficiaries beginning in the second fiscal quarter of 2005.



|(3) | Establishes a competitive acquisition program for DME beginning in 2007. MMA instructs the Secretary to establish and implement programs under which competitive acquisition
areas are established throughout the United States for contract award purposes for the furnishing of competitively priced items of DME, including oxygen equipment. The program will be implemented in phases such that competition under the program
occurs in 10 of the largest metropolitan statistical areas (MSAs) in 2007, 80 of the largest MSAs in 2009, and additional areas after 2009. Items selected for competitive acquisition may be phased in first among the highest cost and
highest volume items and services or those items and services that the Secretary determines have the largest savings potential. In carrying out such programs, the Secretary may exempt rural areas and areas with low-population density within urban
areas that are not competitive, unless there is a significant national market through mail order for a particular item or service.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For each competitive acquisition area, the Secretary will conduct a competition under which providers will submit bids to supply certain covered items of DME. Successful bidders will be 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. The applicable contract award prices are expected to be less than would be paid under current Medicare fee
schedules and contracts will be re-bid at least every three years. The Secretary will be required to award contracts to multiple entities submitting bids in each area for an item or service, but will have the authority to limit the number of
contractors in a competitive acquisition area to the number needed to meet projected demand. The Secretary may use competitive bid pricing information to adjust the payment amount otherwise in effect for an area that is not a competitive acquisition
area. We can not predict the effect of the competitive acquisition program or the Medicare payment rates that will be in effect in 2007 and beyond for the items ultimately subjected to competitive bidding.



|(4) | Implements quality standards and accreditation requirements for DME suppliers. MMA instructs the Secretary to establish and implement quality standards for
DME suppliers to be monitored by recognized independent accreditation organizations. Suppliers will be required to comply with these standards in order to receive payment for furnishing any covered item of DME to a Medicare beneficiary and to
receive or retain a supplier number used to submit claims for reimbursement. We can not predict the nature or extent of the final quality standards to be
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



14



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##### Table of Contents

| | implemented by CMS or the effect such standards would have on our ability to continue to provide products to Medicare beneficiaries.
| | ------------------------------------------------------------------------------------------------------------------------------------

On January 26, 2006, CMS announced a final rule revising the payment classification of certain respiratory assist
devices (RADs). RADs with a backup rate feature will be reclassified as capped rental DME items effective April 1, 2006, whereby payments to providers of such devices will cease after the 13thcontinuous month of rental. Prior to the rule, providers were paid a continuous monthly rental amount over the entire period of medical necessity.
The rule will apply to claims received on or after April 1, 2006. In cases where Medicare beneficiaries received the item prior to April 1, 2006, only the rental payments for months after the effective date will count toward the 13-month
cap. RADs with a backup rate feature accounted for approximately $4.2 million of our net revenues in the three months ended March 31, 2006.

On February 13, 2006, a final rule governing CMSs Inherent Reasonableness (IR) authority became effective. The IR rule establishes a process for adjusting payments for Medicare Part B services when existing payment
amounts are determined to be either grossly excessive or deficient. The rule describes the factors 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 does not
trigger payment adjustments for any items or services. Nevertheless, the IR rule puts in place a process that eventually could have a significant impact on Medicare payments for such Part B services as home oxygen, DME and Part B covered
prescription drugs. We can not predict whether CMS will exercise its IR authority with respect to reimbursement or payment of certain products and services that we provide to Medicare beneficiaries, or the effect such payment adjustments would have
on our financial position or operating results.

On March 24, 2006, the Durable Medical Equipment Program Safeguard Contractors
(DME PSCs) proposed certain revisions to Medicares Local Coverage Determination policy for nebulizers (the Nebulizer LCD) which include significant changes that would, if implemented, adversely effect reimbursement for
two commonly prescribed inhalation drugs, levalbuterol and DuoNeb, and eliminate Medicare coverage for certain other respiratory medications. Specifically, the Nebulizer LCD proposes, among other things, to reduce the payment amount for levalbuterol
to the allowance for albuterol and the payment amount for DuoNeb to the allowance for separate unit dose vials of albuterol and ipratropium. These changes would result in reimbursement reductions for levalbuterol and DuoNeb of approximately 95% and
73%, respectively. The DME PSCs are soliciting comments on the proposed changes from physicians, manufacturers, suppliers and other professionals involved in the treatment of Medicare beneficiaries with chronic lung disease. Written comments on the
proposal are due by May 8, 2006, and the DME PSCs are also holding public meetings to receive comments on the draft policy. We cannot determine whether the proposed Nebulizer LCD will be implemented in its current form and what impact the
policy might have on our financial position or operating results and our ability to provide these inhalation drugs to Medicare beneficiaries.

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 regulating interstate motor-carrier
transportation and covering the repackaging of oxygen. State laws also govern, among other things, pharmacies, nursing services, distribution of medical equipment and certain types of home health activities 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.

As a health care supplier, Lincare 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 and other regulations, regional
health insurance carriers often conduct audits and request customer records and other documents to support claims submitted for payment of services rendered to customers. Similarly, government agencies periodically open investigations and obtain
information from health care providers



15



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##### Table of Contents

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.

Numerous federal and state laws and regulations, including the
Health Insurance Portability and Accountability Act of 1996 (HIPAA), govern the collection, dissemination, use and confidentiality of patient-identifiable health information. As part of Lincares 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, 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. Future legislative and regulatory changes could have a material adverse impact on us.

Operating Results

The following table sets forth for
the periods indicated a summary of the Companys net revenues by source:



|                                     |  |                                     |         |      |   |        
|------------------------------------ |  | ----------------------------------- | ------- | ---- | - | -------
|                                     |  | For The Three Months EndedMarch 31,
|                                     |  | 2006                                |         | 2005
|                                     |  | (In thousands)                     
|Oxygen and other respiratory therapy |  | $                                   | 305,363 |      | $ | 275,715
|Home medical equipment and other     |  |                                     | 28,228  |      |   | 29,462 
|                                     |  |                                     |         |      |   |        
|Total                                |  | $                                   | 333,591 |      | $ | 305,177
|                                     |  |                                     |         |      |   |        

Net revenues for the three months ended March 31, 2006, increased by $28.4 million, an
increase of 9.3% compared with the three months ended March 31, 2005. The 9.3% increase in net revenues was comprised of 14.9% internal growth and 3.4% acquisition growth offset by a 9.0% revenue reduction from reduced Medicare payment rates
for respiratory medications and related dispensing fees that took effect on January 1, 2006 and reduced Medicare payment rates for oxygen equipment that took effect April 1, 2005 (see Medicare Reimbursement). Net revenues for
the three months ended March 31, 2006 were negatively impacted by $27.4 million (or 9.0%) as a result of the Medicare reimbursement reductions, comprised of $8.7 million from a reduction in the dispensing fee, $2.0 million from reduced
ASP-based respiratory drug prices and $16.7 million from lower oxygen pricing. The internal growth in net revenues, excluding price reductions, 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. During the first three months of 2006, we completed the acquisition of one company with aggregate annual revenues of approximately
$0.6 million.

The contribution of oxygen and other respiratory therapy products to our net revenues was 91.5% and 90.3%, respectively,
during the three months ended March 31, 2006 and 2005. Our strategy is to focus on the provision of oxygen and other respiratory therapy services to patients in the home and to provide home medical equipment and other services where we
believe such services will enhance our core respiratory business.

Cost of goods and services as a percentage of net revenues increased to
22.3% for the three months ended March 31, 2006, compared with 18.5% for the comparable prior year period. The relationships of costs to net revenues during the periods were impacted by the Medicare price reductions discussed above (see also
Medicare Reimbursement). The increase in costs of goods and services in 2006 is attributable primarily to increased drug shipment volumes and an increase in drug purchasing costs due to a product mix shift to higher cost branded products
in our inhalation drug



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business over the past year. We also experienced significant growth in our sleep therapy product lines during the first three months of 2006, which generally
carry a lower gross margin than other products we provide.

Operating expenses as a percentage of net revenues for the three months ended
March 31, 2006, increased to 23.7% compared with 22.9% for the comparable prior year period. The relationships of expenses to net revenues during the period were impacted by the Medicare price reductions discussed above (see also Medicare
Reimbursement). Operating expenses in the first quarter of 2006 increased by $9.1 million, or 13.0%, compared with the prior year period. The increase in operating expenses compares favorably to the increase in net revenues from internal
growth (14.9%) and acquisitions (3.4%) before considering the effect of the Medicare price reductions. Gains in productivity at our operating centers and modest growth in office rent expense helped to offset more significant vehicle
related cost increases attributable to higher fuel prices and vehicle lease expense.

Selling, general and administrative
(SG&A) expenses as a percentage of net revenues were 21.1% for the three months ended March 31, 2006, compared with 20.2% for the comparable prior year period. The relationships of expenses to net revenues during the period were
impacted by the Medicare price reductions discussed above (see also Medicare Reimbursement). SG&A expenses in the first quarter of 2006 increased by $8.9 million, or 14.5%, compared with the prior year period. SG&A expenses in
2006 were impacted by the adoption of SFAS No. 123R (see Notes 4 and 7 to the condensed consolidated financial statements) effective January 1, 2006, and accordingly, we recognized $4.3 million of share-based compensation expense during
the period. Contributing to the increase in SG&A expenses in 2006 were higher payroll costs included in selling expenses and higher legal expenses incurred during the quarter partially offset by cost controls at our field overhead and billing
office locations.

Operating income for the three months ended March 31, 2006, was $79.7 million (23.9% of net revenues) compared with
$90.0 million (29.5% of net revenues) for the comparable three months of the prior year. The decrease in operating income is attributable primarily to reduced Medicare payment rates for respiratory medications and related dispensing fees that took
effect on January 1, 2006 and the reduction of Medicare reimbursement rates for oxygen equipment that took effect on April 1, 2005, implementation of SFAS 123(R) effective January 1, 2006, and increased costs of purchased inhalation
drugs partially offset by income generated from customer volume growth and gains in labor productivity. We estimate that the reductions in Medicare reimbursement rates reduced net revenues and operating income by approximately $27.4 million in the
three month period ended March 31, 2006.

Liquidity and Capital Resources

Our primary sources of liquidity have been internally generated funds from operations, borrowings under credit facilities and proceeds from equity
and debt transactions. We have used these funds to meet our capital requirements, which consist primarily of operational needs, capital expenditures, acquisitions, debt service and share repurchases.

Net cash provided by operating activities decreased by 10.8% to $96.0 million for the three months ended March 31, 2006, compared with $107.7
million for the three months ended March 31, 2005. The decrease in net cash from operating activities was due primarily to a decrease in net income attributable to the reductions in Medicare reimbursement for respiratory medications and
related dispensing fees that took effect on January 1, 2006 and the reduction in Medicare reimbursements for oxygen equipment that took effect on April 1, 2005.

Net cash used in investing and financing activities was $78.0 million for the three months ended March 31, 2006. Activity during the three-month period ended March 31, 2006 included our investment of $0.6
million in business acquisitions, net investment in capital equipment of $24.3 million, payments of principal on debt of $3.8 million and repurchases of our common stock of $28.1 million.

As of March 31, 2006, our principal sources of liquidity consisted of $138.6 million of working capital and up to $200.0 million available under our
revolving bank credit facility.

On October 24, 2005, the Board of Directors authorized a plan to repurchase up to $100.0 million of
the Companys common stock. As of March 31, 2006, we had repurchased all amounts authorized under this plan, including 683,748 shares repurchased for $28.1 million in the quarter ended March 31, 2006. Total common stock held in
treasury (at cost) was $875.0 million at March 31, 2006. On February 14, 2006, the Board authorized a new share repurchase plan whereby the Company may repurchase from time to time, on the open market or in privately negotiated
transactions, shares of the



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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.

In June 2003, we completed the sale of $275.0 million aggregate principal
amount of 3.0% Convertible Senior Debentures due 2033 (the Debentures) in a private placement. The Debentures are convertible into shares of our common stock based on a conversion rate of 18.7515 shares for each $1,000 principal amount
of Debentures. The conversion rate is equivalent to a conversion price of approximately $53.33 per share of common stock. The Debentures are convertible into common stock in any calendar quarter if, among other circumstances, the last reported sale
price of our common stock for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of our previous calendar quarter is greater than or equal to $64.00 (120% of the applicable conversion price per
share of our common stock) on such last trading day. Interest on the Debentures is payable at the rate of 3.0% per annum on June 15 and December 15 of each year. The Debentures are senior unsecured obligations and will mature on
June 15, 2033.

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.

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 bank credit facility and Debentures, as well as contractual lease payments for facility, vehicle, and equipment leases and deferred acquisition obligations. The following table presents,
in aggregate, scheduled payments under our contractual obligations (in thousands):



|                          |  |                         |        |      |   |        |  |      |         |      |   |            |  |       |       |  |   |   |  |   |        
|------------------------- |  | ----------------------- | ------ | ---- | - | ------ |  | ---- | ------- | ---- | - | ---------- |  | ----- | ----- |  | - | - |  | - | -------
|                          |  | Fiscal Years            |        |      |   |       
|                          |  | (remaining9 months2006) |        | 2007 |   | 2008   |  | 2009 |         | 2010 |   | Thereafter |  | Total
|Short-term debt           |  | $                       | 9,637  |      | $ | 150    |  | $    | 0       |      | $ | 0          |  | $     | 0     |  | $ | 0 |  | $ | 9,787  
|Long-term debt (1)        |  |                         | 0      |      |   | 0      |  |      | 275,000 |      |   | 0          |  |       | 0     |  |   | 0 |  |   | 275,000
|Capital lease commitments |  |                         | 316    |      |   | 436    |  |      | 0       |      |   | 0          |  |       | 0     |  |   | 0 |  |   | 752    
|Interest expense          |  |                         | 8,608  |      |   | 8,370  |  |      | 4,125   |      |   | 0          |  |       | 0     |  |   | 0 |  |   | 21,103 
|Operating leases          |  |                         | 25,392 |      |   | 25,560 |  |      | 15,400  |      |   | 6,607      |  |       | 1,611 |  |   | 0 |  |   | 74,570 
|Employment agreements     |  |                         | 1,366  |      |   | 1,821  |  |      | 1,821   |      |   | 1,821      |  |       | 0     |  |   | 0 |  |   | 6,829  
|                          |  |                         |        |      |   |        |  |      |         |      |   |            |  |       |       |  |   |   |  |   |        
|Total                     |  | $                       | 45,319 |      | $ | 36,337 |  | $    | 296,346 |      | $ | 8,428      |  | $     | 1,611 |  | $ | 0 |  | $ | 388,041
|                          |  |                         |        |      |   |        |  |      |         |      |   |            |  |       |       |  |   |   |  |   |        

---

|(1) | Amounts represent the Debentures due 2033. The Debentures are redeemable by us on or after June 15, 2008 and may be put to us for repurchase on June 15, 2008, 2010, 2013,
or 2018.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

New Accounting Standards

In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004) (SFAS No. 123R),
Share-Based Payment, which replaces SFAS No. 123, Accounting for Share-Based Compensation, and supersedes APB Opinion No. 25 (APB No. 25), Accounting for Stock Issued to Employees, and amends
SFAS No. 95, Statement of Cash Flows. SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.
The pro forma disclosures previously permitted under SFAS No. 123 are no longer an alternative to financial statement recognition. SFAS No. 123R also requires the benefits of tax deductions in excess of recognized compensation
cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. Under the regulations promulgated by the Securities and Exchange Commission, we are applying SFAS No. 123R as of
January 1, 2006. Under SFAS No. 123R, we must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at date of
adoption. The transition methods include modified prospective and modified retrospective adoption options. The modified prospective method requires compensation cost to be recognized beginning January 1, 2006 based on the requirements of
SFAS No. 123R for all share-based payments granted after December 31, 2005 and based on the requirements of SFAS No. 123 for all awards granted to employees prior to January 1, 2006 that remain unvested on



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January 1, 2006. The modified retrospective method includes the requirements of the modified prospective method described above, but also permits
companies to restate, based on the amounts previously recognized under SFAS No. 123 for purposes of pro forma disclosures. We adopted SFAS No. 123R using the modified prospective method. Refer to Note 4 for a description of the
impact to the Companys financial position, results of operations and liquidity due to the adoption of SFAS 123R.

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.

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 respiratory medications, hospital beds and wheelchairs for the home setting. Approximately 78 percent 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 DRA and MMA, contain provisions that directly impact reimbursement for the primary respiratory and other DME products provided by Lincare. DRA contains provisions that will negatively impact reimbursement for oxygen equipment beginning in
2009 and DME items subject to capped rental payments beginning in 2007. MMA significantly reduced reimbursement for inhalation drug therapies beginning in 2005, reduced payment



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amounts for five categories of DME, including oxygen, beginning in 2005, freezes payment amounts for other covered DME items through 2007, establishes a
competitive acquisition program for DME beginning in 2007, and implements quality standards and accreditation requirements for DME suppliers. The DRA and MMA provisions, when fully implemented, could materially and adversely affect our business,
financial condition, operating results and cash flows. See MEDICARE REIMBURSEMENT for a full discussion of the DRA and MMA provisions.

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 changes 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 and maintenance of equipment, to a capped rental arrangement whereby payment for oxygen equipment (including portable oxygen equipment) may not extend over
a period of continuous use of longer than 36 months. On the first day that begins after the 36thcontinuous month
during which payment is made for the oxygen equipment, the supplier would transfer title of the equipment to the beneficiary. Separate payments for oxygen contents would continue to be made for the period of medical need beyond the 36thmonth. Additional payments for maintenance and service of the oxygen equipment would be made if the Secretary of the
Department of Health and Human Services (the Secretary) determines that such payments are reasonable and necessary in an amount determined to be appropriate by the Secretary. 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 begins on January 1, 2006. We are unable to determine at this time the impact that the oxygen
provisions contained in DRA will have on our financial condition or results of operations.

DRA also changes 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. The option for a supplier to retain ownership of the item after a 15-month rental period and receive semi-annual maintenance and service payments would be
eliminated. On the first day that begins after the 13thcontinuous month during which payment is made for the item,
the supplier would transfer title of the item to the beneficiary. Additional payments for maintenance and service of the item would be made if the Secretary determines that such payments are reasonable and necessary in an amount determined to be
appropriate by the Secretary. The DME capped rental provisions contained in DRA apply to items furnished for which the first rental month occurs on or after January 1, 2006. We can not predict at this time the impact that the DME provisions
contained in DRA will have on our financial condition or results of operations.

MMA contains provisions that reduced payment amounts,
beginning in 2005, for oxygen equipment, standard wheelchairs (including standard power wheelchairs), nebulizers, diabetic supplies consisting of lancets and testing strips, hospital beds and air mattresses to the median prices paid under the
Federal Employee Health Plan (FEHP) (See MEDICARE REIMBURSEMENT). MMA also freezes payment amounts for other covered DME items through 2007.

On March 30, 2005, CMS released the new Medicare fee schedule amounts for oxygen equipment. The new payment rates were made effective for claims for oxygen equipment furnished after January 1, 2005, that
were received by Medicare on or after April 1, 2005. We estimate that the new fee schedule resulted in a net price reduction of 8.7% for oxygen equipment provided by the Company to Medicare beneficiaries beginning in the second fiscal quarter
of 2005. We estimate that these changes reduced net revenues in the first quarter of 2006 by approximately $16.7 million.

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

Historically, prescription drug coverage under Medicare has been limited to drugs furnished incident to a physicians services and certain
self-administered drugs, including inhalation drug therapies. Prior to MMA, Medicare reimbursement for covered Part B drugs, including inhalation drugs that we provide, was limited to 95 percent of the published average wholesale price
(AWP) for the drug. MMA established new payment limits and procedures for drugs reimbursed under Medicare Part B (See MEDICARE REIMBURSEMENT). Beginning in 2005, inhalation drugs furnished to Medicare beneficiaries are
reimbursed at 106 percent of the volume-weighted average selling price (ASP)



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of the drug, as determined from data provided each quarter by drug manufacturers under a specific formula described in MMA.

On November 2, 2005, CMS issued rule CMS-1502-FC, establishing the dispensing fee amount for inhalation drugs for 2006. The final rule establishes a
dispensing fee of $57.00 for the first 30-day period in which a Medicare beneficiary uses inhalation drugs and a reduced fee of $33.00 for a 30-day supply of inhalation drugs for all other months. We estimate that the reduction in the dispensing fee
to $33.00 will reduce net revenues by approximately $42.0 to $46.0 million in 2006. Additionally, fluctuations in the payment rates for inhalation drugs established by CMS during each quarter of 2006 (based on available manufacturer ASP data) may
result in further reductions in our net revenues in 2006.

On March 24, 2006, the Durable Medical Equipment Program Safeguard
Contractors (DME PSCs) proposed certain revisions to Medicares Local Coverage Determination policy for nebulizers (the Nebulizer LCD) which include significant changes that would, if implemented, adversely effect reimbursement for
two commonly prescribed inhalation drugs, levalbuterol and DuoNeb, and eliminate Medicare coverage for certain other respiratory medications. Specifically, the Nebulizer LCD proposes, among other things, to reduce the payment amount for levalbuterol
to the allowance for albuterol and the payment amount for DuoNeb to the allowance for separate unit dose vials of albuterol and ipratropium. These changes would result in reimbursement reductions for levalbuterol and DuoNeb of approximately 95% and
73%, respectively. The DME PSCs are soliciting comments on the proposed changes from physicians, manufacturers, suppliers and other professional involved in the treatment of Medicare beneficiaries with chronic lung disease. Written comments on the
proposal are due by May 8, 2006, and the DME PSCs are also holding public meetings to receive comments on the draft policy. We cannot determine whether the proposed Nebulizer LCD will be implemented in its current form and what impact the
policy might have on our financial position or operating results and our ability to provide these inhalation drugs to Medicare beneficiaries.

We continue to evaluate the impact of the reduced Medicare payment rates on our business. We can not determine the outcome of any future rulemaking by CMS nor the impact that such rulemaking might have on our ability to continue to provide
inhalation drugs to Medicare beneficiaries. Further, we can not determine whether quarterly updates in ASP pricing data submitted by drug manufacturers and adopted by CMS will continue to result in further reductions in payment rates for inhalation
drugs, and what impact such payment reductions could have on Lincare in 2006 and beyond. Such payment adjustments could have a material adverse effect on our financial position and operating results.

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.

On January 26, 2006, CMS announced a final rule revising the
payment classification of certain respiratory assist devices (RADs). RADs with a backup rate feature will be reclassified as capped rental DME items effective April 1, 2006, whereby payments to providers of such devices will cease
after the 13thcontinuous month of rental. Prior to the rule, providers were paid a continuous monthly rental amount
over the entire period of medical necessity. The rule will apply to claims received on or after April 1, 2006. In cases where Medicare beneficiaries received the item prior to April 1, 2006, only the rental payments for months after the
effective date will count toward the 13-month cap. RADs with a backup rate feature accounted for approximately $4.2 million of our net revenues in the three months ended March 31, 2006.

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 does 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 our equipment and services. Such payment adjustments, if
implemented, could reduce our revenues, net income and cash flows.

RECENT LEGISLATION ESTABLISHING A COMPETITIVE BIDDING PROCESS UNDER MEDICARE COULD
REDUCE OUR REVENUES, NET INCOME AND CASH FLOWS.



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Recent legislation (See MEDICARE REIMBURSEMENT) instructs the Secretary to establish and
implement programs under which competitive acquisition areas are established throughout the United States for contract award purposes for the furnishing of competitively priced items of DME, including oxygen equipment. The program would be
implemented in phases such that competition under the program occurs in 10 of the largest MSAs in 2007, 80 of the largest MSAs in 2009, and additional areas after 2009. Items selected for competitive acquisition may be phased in first among the
highest cost and highest volume items and services or those items and services that the Secretary determines have the largest savings potential. In carrying out such programs, the Secretary may exempt rural areas and areas with low-population
density within urban areas that are not competitive, unless there is a significant national market through mail order for a particular item or service.

For each competitive acquisition area, the Secretary would conduct a competition under which providers would submit bids to supply certain covered items of DME. Successful bidders would be expected to meet certain
program quality standards in order to be awarded a contract and only successful bidders could supply the covered items to Medicare beneficiaries in the acquisition area. The applicable contract award prices are expected to be less than would be paid
under current Medicare fee schedules, and contracts would be re-bid at least every three years. The Secretary will be required to award contracts to multiple entities submitting bids in each area for an item or service, but would have the authority
to limit the number of contractors in a competitive acquisition area to the number needed to meet projected demand. The Secretary may use competitive bid pricing information to adjust the payment amount otherwise in effect for an area that is not a
competitive acquisition area. We can not predict the outcome of the competitive acquisition program or the Medicare payment rates that will be in effect in 2007 and beyond for the items subject to competitive bidding. Competitive bidding, when
implemented, could have a material adverse effect on our 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 5% of our customers are eligible for primary Medicaid benefits, and State Medicaid programs fund approximately 10% 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 15% of our customers and approximately 27% 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 56% of our revenues are derived from Medicare, 27% from private insurance carriers, 10% 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 can not assure you that we will be



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able to continue to effectively manage the reimbursement process and collect payments for our equipment and services promptly.

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 operate regulate many 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
supplier, 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 and other regulations, regional carriers often conduct audits and request customer records and other documents to support our claims for payment.
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 law and new interpretations of existing laws may affect permissible activities, the 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.

COMPLIANCE WITH REGULATIONS UNDER THE FEDERAL HEALTH
INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996 AND RELATED RULES, OR HIPAA, RELATING TO THE TRANSMISSION AND PRIVACY OF HEALTH INFORMATION COULD IMPOSE ADDITIONAL SIGNIFICANT COSTS ON OUR OPERATIONS.

Numerous federal and state laws and regulations, including HIPAA, govern the collection, dissemination, use and confidentiality of patient-identifiable
health information. HIPAA requires us to comply with standards for the use and disclosure of health information within our company and with third parties. HIPAA also includes 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. Each set of HIPAA regulations 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.

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 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, 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



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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 are 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.

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 lower-wage 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.



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Item 3.Quantitative and Qualitative Disclosures About Market Risk

We are exposed to
changes in interest rates as a result of our revolving bank credit facility which is based on the London Interbank Offered Rate. A 10% increase in interest rates related to our revolving bank credit facility would not alone have a material adverse
effect on our earnings over the next fiscal year or on the fair value of our revolving bank credit facility.

The fair value of our debt
securities is subject to change as a result of changes in interest rates. We estimate potential changes in the fair value of interest rate sensitive financial instruments based on a hypothetical decrease (or increase) in interest rates. Our use
of this methodology to quantify the market risk of such instruments should not be construed as an endorsement of its accuracy or the accuracy of the related assumptions. The quantitative information about market risk is necessarily limited because
it does not take into account anticipated operating and financial transactions.

The following table sets forth the estimated fair value of
our long-term obligations and our estimate of the impact from a 10% decrease in interest rates on the fair value of our long-term obligations and the associated change in annual interest expense. We had no derivative securities as of March 31,
2006.

Market Risk Sensitive Instruments  Interest Rate Sensitivity (assuming 10% Decrease in Interest Rates):



|                               |  |            |         |                |   |            |  |                                |         |  |   |      
|------------------------------ |  | ---------- | ------- | -------------- | - | ---------- |  | ------------------------------ | ------- |  | - | -----
|(dollars in thousands)         |  | FaceAmount |         | CarryingAmount |   | Fair Value |  | Estimated Change in Fair Value
|As of March 31, 2006:          |  |            |         |                |   |            |  |                                |         |  |   |      
|Convertible debt               |  | $          | 275,000 |                | $ | 275,000    |  | $                              | 269,500 |  | $ | 2,007
|Deferred obligations           |  |            | 9,787   |                |   | 9,787      |  |                                | 9,787   |  |   | 0    
|Capital lease obligations      |  |            | 752     |                |   | 752        |  |                                | 752     |  |   | 0    
|Revolving bank credit facility |  |            | 0       |                |   | 0          |  |                                | 0       |  |   | 0    
|                               |  |            |         |               
|As of December 31, 2005:       |  |            |         |                |   |            |  |                                |         |  |   |      
|Convertible debt               |  | $          | 275,000 |                | $ | 275,000    |  | $                              | 276,375 |  | $ | 1,786
|Deferred obligations           |  |            | 13,357  |                |   | 13,357     |  |                                | 13,357  |  |   | 0    
|Capital lease obligations      |  |            | 784     |                |   | 784        |  |                                | 784     |  |   | 0    
|Revolving bank credit facility |  |            | 0       |                |   | 0          |  |                                | 0       |  |   | 0    

Item 4.Controls and Procedures

The Company has conducted an evaluation of its
disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report (the Evaluation Date). Based on its
evaluation, the Companys principal executive officer and principal financial officer have concluded that the Companys disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company is
recorded, processed, summarized and reported within the required time periods.

No change in the Companys internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d  15(f) under the Securities and Exchange Act of 1934, as amended) occurred during the fiscal quarter ended March 31, 2006, 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 and other regulations, regional carriers often conduct audits and request patient records and other documents to support claims submitted by Lincare for payment of services rendered
to customers. Similarly, government agencies periodically open investigations and obtain information from health care providers pursuant to 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.

From time to time, the Company receives inquiries from various government agencies requesting customer records and other documents. It has been the
Companys policy to cooperate with all such requests for information. There are several pending government inquiries, but the government has not instituted any proceedings or served us with any complaints as a result of these inquiries.
However, the Company can provide no assurances as to the duration or outcome of these inquiries.

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. We are a defendant in certain qui
tam proceedings. The government has declined to intervene in all unsealed qui tam actions of which we are aware and we are vigorously defending these suits.

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.

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

During the three months ended March 31, 2006, the Company repurchased approximately 0.7 million shares of its common stock in the open market at a cost of approximately $28.1 million under a previously announced
repurchase program approved by its Board of Directors.



|                                      |  |                                |  |                             |       |                                                               |         |                                                                                    |   |           
|------------------------------------- |  | ------------------------------ |  | --------------------------- | ----- | ------------------------------------------------------------- | ------- | ---------------------------------------------------------------------------------- | - | ----------
|ISSUER PURCHASES OF EQUITY
SECURITIES
|Period                                |  | Total Numberof SharesPurchased |  | Average PricePaid Per Share |       | Total Numberof SharesPurchased asPart of theRepurchaseProgram |         | ApproximateDollar Value ofShares that MayYet BePurchasedUnder
theRepurchaseProgram
|January 1, 2006 to January 31, 2006   |  | 0                              |  |                             |      |                                                               | 0       |                                                                                    | $ | 28,090,000
|February 1, 2006 to February 28, 2006 |  | 683,748                        |  | $                           | 41.04 |                                                               | 683,748 |                                                                                    | $ | 27,000    
|March 1, 2006 to March 31, 2006       |  | 0                              |  |                             |      |                                                               | 0       |                                                                                    | $ | 27,000    
|                                      |  |                                |  |                             |       |                                                               |         |                                                                                    |   |           
|Total                                 |  | 683,748                        |  | $                           | 41.04 |                                                               | 683,748 |                                                                                    |   |           
|                                      |  |                                |  |                             |       |                                                               |         |                                                                                    |   |           

No further purchases are anticipated under the approved repurchase program dated October 24,
2005. On February 14, 2006, the Board authorized a new 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 March 31, 2006, $169.7 million of common stock was eligible for repurchase in accordance with the formula.



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Item 3.Defaults Upon Senior Securities- Not Applicable

Item 4.Submission of Matters to a Vote of the Security Holders- Not Applicable

Item 5.Other Information- Not Applicable

Item 6.Exhibits and Reports on Form 8-K



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

| | (b) | Filed January 5, 2006: Announcement of the passing of Frank T. Cary, Director.
| | --- | ------------------------------------------------------------------------------

| | (c) | Furnished February 14, 2006: Announcement of the financial results for the year ended December 31, 2005.
| | --- | --------------------------------------------------------------------------------------------------------



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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. GABOSPaul G. Gabos Secretary, Chief Financial Officer and Principal Accounting Officer


May 10, 2006



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INDEX OF EXHIBITS



|              |  |                                                                                                                                                                                                                              
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | 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                                                                                                                                                
|              | 
|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                                                   



|  |  |                                                                               
|- |  | ------------------------------------------------------------------------------
|A |  | Incorporated by reference to the Registrants Form 10-Q dated August 12, 1998.
|  | 
|B |  | Incorporated by reference to the Registrants Form 10-Q dated August 13, 2002.
|  | 
|C |  | Incorporated by reference to the Registrants Form 8-K dated June 12, 2003.   



S-1