Apria commits to home infusion

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Friday, April 6, 2012

LAKE FOREST, Calif. - Home infusion continues to be a bright spot for Apria Healthcare, while respiratory and home medical equipment struggles.

The provider in April reported net revenues of $603.4 million for the fourth quarter of 2011 compared to $527.7 million for the same period in 2010, an increase of 14.3%. The company credited its success to an increase in home infusion revenues and its acquisition of Praxair's assets.

"On the home infusion side, we are seeing continued growth," said Chris Karkenny, executive vice president and CFO during a March 30 earnings call. "We have very strong clinical programs and, without nationwide coverage, that really gives portability for patients that have to travel. That sets us apart."

In March, Apria announced that it plans to separate its home infusion and its respiratory/HME business units.

Apria reported a net loss of $712.2 million for the fourth quarter of 2011, largely due to non-cash impairment charges. Those charges include a goodwill impairment of $509.9 million; a trade name impairment of $60 million; capitated relationships intangible asset impairment of $30.4 million; patient service equipment impairment of $45.5 million; property, equipment and improvements impairment of $12.1 million; tax benefit relating to the goodwill, intangible and long-lived assets impairment of $166.9 million; and valuation allowance against net deferred tax assets of $220.5 million. All of the charges relate to the respiratory/HME business unit, except for the trade name impairment, which relates to both business units.

The provider reported selling, distribution and administrative (SDNA) costs of $317.9 million for the fourth quarter of 2011 vs. $279.2 million for the same period in 2010, an increase of 13.9%. For the full year, SDNA costs increased 14.8%. Almost half of that increase in expenses can be attributed to Apria's acquisition of Praxair and its initiative to bring certain billing functions back onshore, said Karkenny. The rest comes from beefing up staffing and increased business expenses.

"We've invested in the infusion business with additional folks to help with growth," he said during the call. "Delivery has increased, given the volume increases, and there were some increases in delivery expenses."

Apria reported net revenues of $2.3 billion for 2011 compared to $2.08 billion for 2010, an increase of 10.6%. It reported a net loss of $747.3 million for the year, largely due to the stated impairment charges.

Karkenny stated that Apria plans to continue focusing on key areas, including managed care contracts, working closely with vendors and finding operational effectiveness and efficiencies. Karkenny also said the company's negative pressure wound therapy is a "very fast growing business."

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