Home Health & Hospice Week

Apria Healthcare Group appears to be leading the pack of respiratory therapy companies reporting earnings in the past week with healthy increases in both revenues and income.

The Lake Forest, CA-based giant reported net income of $27.8 million for the quarter ended March 31, up 22 percent from the same period in 2002. Revenues grew 11 percent to $335.1 million for the quarter.

Surprisingly, the largest growth figure came in Apria's durable medical equipment products, with a 17.4 percent increase to $52 million in revenues. Apria CEO Larry Higby described the jump as an idiosyncratic "pop" after the business line's revenues had lagged the last few quarters. "I don't think you'll see DME leading the pack every quarter," Higby said in an April 23 conference call with investors and analysts.

Apria's infusion line revenues grew 9.3 percent to $58 million and its RT line revenues increased 10.3 percent to $224 million. "Our emphasis in on respiratory therapy, our acquisition emphasis is on respiratory therapy," Higby stressed.

Apria purchased seven acquisitions priced at $22.9 million in the quarter and is keeping its eye out for further acquisitions, Higby added.

Also declaring its emphasis on RT was Rotech Healthcare Inc. RT equipment and services represented 82.4 percent of the company's $152.6 million in revenues for the quarter, as opposed to 77.6 percent of revenues for the same period last year, said the Orlando, FL-based company that Integrated Health Services Inc. spun off out of bankruptcy last year.

While the company is focusing on its oxygen concentrator and nebulizer business, it also hopes to rebuild its DME rental line at the same time. DME revenues fell from 20 percent of overall revenues last year to 15.8 percent this quarter.

Rotech, which says its bankruptcy restructuring is "proceeding well," reported net earnings of $5.3 million for the quarter, up from a $133.3 million loss, chiefly related to bankruptcy reorganization items, for the same period in 2002.

Murraysville, PA-based Respironics touted its 20 percent year-over-year increase in revenues for its sleep therapy products. The company reported net income of $13.9 million on revenues of $161.9 million, up from an $11.3 million profit on $126.7 million in revenues in the year-ago quarter.

Gas and chemical behemoth Air Products seems to be dipping its toe in the RT waters. It purchased American Homecare Supply and "four small bolt-on acquisitions," in the past six months, CFO John Owings noted in an April 24 conference call with investors and analysts. The Lehigh Valley, PA-based company's net earnings dipped to $114 million on earnings of $1.6 billion for the quarter compared to $126 million for the same period in 2002.

Apria's Higby expressed puzzlement at the relatively restrained acquisition activity from Air Products and another major gas company, Praxair. "It's hard for me as a businessman to understand why they would want to operate a business under $200 million when their overall business is $6 billion," he said in the April 23 call. "If they're going to make an impact in terms of doing something with acquisitions in their businesses, clearly they have to do something bigger."

Most likely, the industrial gas companies are using the acquisitions as a learning experience and deciding whether to move ahead in the market, investment sources have speculated.