Apria Reports Q2 Profit Drop

LAKE FOREST, Calif.–Citing Medicare reimbursement cuts for
oxygen, respiratory giant Apria Healthcare announced a drop in net
profits for the 2005 second quarter, ended June 30, to $22.8
million, down from $29.1 million for the same period last year.
Revenues for the quarter were $374.9 million, a 4.3 percent
increase over revenues of $359.6 million in the second quarter of
2004.

“We are pleased with our second quarter results,” according to
company CEO Lawrence Higby. “We increased pretax earnings over the
first quarter despite the fact that the Medicare reimbursement
reduction for oxygen went into effect at the beginning of the
second quarter. An improved gross margin and lower bad debt expense
due to rebounding cash collections helped offset the effect of the
reimbursement cuts.”

The company said it expects revenue growth between 5 and 6
percent for the year because of lower Medicare reimbursements and
related product pricing changes.

Apria–which announced it was up for sale last month–made seven
acquisitions worth $67.3 million during the second quarter, most
notably Paris-based Air Liquide’s $20 million U.S. home care
operation, with 18 locations mostly in the northern half of Florida
(see HomeCare
Monday, July 11).

According to a statement accompanying the earnings results,
Apria is under investigation by the U.S. Attorney’s office in Los
Angeles and the U.S. Department of Health and Human Services
“concerning a liability that may result from incomplete or
inaccurate documentation supporting a portion of the company’s
Medicare billings” from mid-1995 through 1998. The company and
government representatives are “having discussions seeking to
narrow their differences with respect to information developed in
the course of the investigation. The outcome of these discussions
cannot be predicted.”