Apria acquires $9m Midwest HME

Tuesday, April 30, 2002

CHAMPAIGN, ILL. — In early April, Apria acquired Pulmocare Medical, a 10-location $9 million medical equipment company and NAMES's 1996 HME Provider of the Year.

Terms of the deal were not disclosed, but it comes after two of the 22-year-old company's most challenging years, a sobering stretch of time that saw Pulmocare lose money after almost 19 years of growth, said Pulmocare President Steve Carmichael.

"We were all convinced that this was a good thing to do, an opportunity to take the chips off the table and go on to the next thing," Carmichael said. "We cover a 250-mile long and 100-mile wide strip of geography. Apria surrounded our territory but really hadn't been able to effectively penetrate it. That was one of the keys that really made both companies look at each other."

By Carmichael's own admission, when BBA 97's reimbursement cuts hit, Pulmocare continued its plan for growth and acquisition while also revamping its management information system (MIS). As a result, Pulmocare ran into cash flow problems.

"We had almost 19 years of growth, and made a respectable profit," Carmichael said. "But you have two years where you don't make that level of profit one year and you have a loss in the second, you learn a whole other way of managing your business."

Since running into a "brick wall," Pulmocare has retooled itself and is again hitting its numbers, Carmichael said. The company has built accountability by more closely tracking — on a weekly basis — indicators such as its active concentrator count, rehab work in progress, completed sleep studies, IV and unit dose referrals and net patient services. The company also freed up cash by selling physical locations and leasing them back.

Part of Pulmocare's retooling, included looking at the company as an investment, rather than a lifetime commitment, Carmichael said.

Additionally, Provena Health System, which owned a portion of the HME, stated last year that it wanted to get back to its core competency, inpatient care, and began looking for opportunities to spin off ancillary businesses like Pulmocare. HME