When an apple a day doesn't keep the illness away, perhaps Apria Healthcare Group can help. With about 540 branches nationwide, Apria is one of the country's largest home health firms. The company provides supplemental oxygen, ventilators, nebulizers, and sleep monitoring equipment and medication to patients with emphysema, sleep apnea, and other respiratory conditions. Its infusion therapy nurses administer intravenous or injectable therapies -- including pain drugs, chemotherapy, and parenteral nutrition -- at home or in one of the company's outpatient infusion clinics. Apria also delivers home medical equipment such as walkers and hospital beds. The company is owned by the Blackstone Group.
Apria Healthcare Group operates through two business segments: home respiratory therapy & medical equipment (51% of sales); and home infusion therapy (49% of sales). Apria is the largest provider of home respiratory therapies in the US to the managed care market, serving some 1.6 million patients annually. Its home infusion therapy business services some 150,000 patients a year through 75 infusion pharmacy locations across the US and at home.
The company's Coram subsidiary provides infusion therapy services and operates the CoramRx specialty pharmacy business, which delivers specialty medications (typically intravenous or injectable drugs for chronic conditions) to patient homes and doctors' offices). Along with providing Apria with another outlet for offering its infusion services, Coram helps Apria diversify its payer mix by reducing its reliance on government payers such as Medicare and Medicaid because it operates primarily through managed care contracts. This type of arrangement decreases Apria's exposure to the government's planned reductions in reimbursement rates for some of its federal health care programs.
Apria Healthcare Group's 2011 revenue increased 11% vs. 2010, driven by a nearly 13% gain in revenue from its home infusion therapy business and acquisition of Praxair' homecare business in 2011. Revenue from home respiratory therapy increased 8% over the same period. Despite the double-digit revenue gain, the company was unprofitable again. Indeed, its net loss widened to more than $747 million in 2011 from a loss of $17.4 million in 2010. (Several large non-cash impairment charges, including a big writedown on the carrying value of its home respiratory therapy/home medical equipment unit due to lowered estimates of future cash flows, contributed to the net loss.)
Apria is saddled with about $1 billion in long-term debt as a result of its 2008 buyout by Blackstone Group.
Demand for Apria's services is growing along with the aging US population, preference for in-home care, and the development of new infused and injectionable drugs. Still, despite healthy growth rate projections for the home health care market, pricing pressures from Medicare and Medicaid put a squeeze on profits. By focusing its efforts primarily on the managed care population, Apria aims to limit its exposure to the high-regulated Medicare respiratory business.
In fact, the majority of Apria's third-party payer income is derived from private insurers and managed care contracts; it has managed care contracts with a large portion of the country's leading third party payers including Aetna, Humana, Kaiser Foundation Health Plan, and UnitedHealth. Apria intends to continue to expand its presence in the managed care market by actively signing preferred provider agreements with national managed care companies.
The company seeks to attract more patients -- thereby positioning itself as a leading US provider of home health services -- by offering a broad array of services and by regularly adding products to its portfolio. Apria is focused on building up its continuous positive airway pressure (CPAP) services and products, as well as its replenishment program and enteral nutrition and wound therapy services.
Mergers and Acquisitions
In March 2011 Apria acquired the home healthcare services division of Praxair, bolstering its respiratory care and enteral nutritional therapy operations by adding a network of some 80 branch locations that provide home respiratory services and durable medical equipment in nearly 30 states.
Blackstone Group owns more than 90% of the company's shares. (The private equity firm took Apria private in a $1.7 billion deal in 2008.) – less