Apria Decides Not to Sell

LAKE FOREST, Calif.– Apria Healthcare Group is no longer for
sale.

Instead of looking for a buyer, the giant provider–which has
500 branches in 50 states–will “focus 100 percent on revenue
growth and operating improvements,” company officials announced
Tuesday. The company also said it will repurchase up to $250
million of its outstanding common stock.

While there were extensive discussions with possible investors
after its June decision to sell, according to the announcement, the
company’s board of directors ultimately decided none of the
proposals represented Apria’s “intrinsic value and prospects for
future appreciation.”

Apria’s third-quarter revenues increased just 1 percent over
revenues for the third quarter of 2004, according to quarterly
financial results released with the announcement. Revenues were
$367.6 million for the quarter ended Sept. 30 versus $364.6 million
for the same period last year. Net income of $19.3 million for the
quarter compared to $29.8 million for the same period in 2004.

Reimbursement cuts that went into effect this year for HME,
oxygen and respiratory medications negatively affected the 2005
figures, Apria said. Earlier this month, the company dropped its
revenue expectations estimate for 2005 to 2 to 3 percent, but
currently estimates revenue growth for 2006 at 5 percent.

Apria said several contract wins and expansions will help
accelerate its organic growth. The company recently signed a new
three-year contract with Cigna HealthCare, effective February 2006,
and renewed an existing five-year contract with Kaiser Permanente.
In addition, a national contract with Aetna has been expanded.

“With these new contracts in hand and our recent success in
gaining Medicare oxygen business, we believe we have the basis for
solid organic growth in 2006,” company CEO Lawrence Higby said in a
statement. “We also expect to benefit from expanded Medicare
Advantage business as new beneficiaries become eligible for
Medicare.”

During the third quarter, Apria acquired five small businesses
totaling $4.1 million. For the year, the company completed 19
acquisitions for $99.5 million.

“The company has a strong future ahead of it,” Higby said.
“Throughout the summer, we have remained focused on implementing
various initiatives related to logistics, revenue management,
centralized Medicare billing and centralized pharmacy
management–all of which have made good progress. Given our third
quarter revenues, we will redouble our focus on revenue growth
while continuing to pursue the operating initiatives which should
further enhance long-term shareholder value.”