The majority of this revenue decrease was attributable to Medicare reimbursement reductions affecting oxygen and other product lines effective January 1, 2009 which reduced revenue by approximately $6.2 million in the first quarter of 2009. A change in inhalation drug product mix resulting from Medicare reimbursement reductions which began April 1, 2008 reduced revenue by an additional $3.0 million in the current quarter. Also contributing to the revenue decrease was the Company’s reduced emphasis on less profitable product lines such as non-respiratory durable medical equipment and infusion therapy. These revenue decreases were partially offset by growth in oxygen and sleep therapy, the Company’s core product lines.
Operating expenses declined in the first quarter of 2009 compared to the first quarter of 2008 by approximately $2.6 million, or 7.7%. The decrease in operating expenses for the first quarter was primarily the result of improved operating efficiencies. Areas of focus have included centralization of branch functions, consolidation of branches, improved routing and delivery systems, and more effective utilization of leased space.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) is a non-GAAP financial measurement that is calculated as net income excluding interest, taxes, depreciation and amortization. EBITDA was $6.5 million, or 11.2% of net revenue, for the first quarter of 2009 compared to $14.0 million, or 20.3% of net revenue, for the same period of 2008.
Medicare reimbursement cuts effective January 1, 2009 reduced EBITDA and net income by approximately $6.2 million in the first quarter of 2009. In addition, a change in inhalation drug product mix reduced EBITDA and net income by approximately $3.0 million in the current quarter compared to the same period last year. These reductions were partially offset by improved operating efficiencies and growth in the Company’s core product lines
