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 last month. 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. In early October, 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. “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.