Apria tries to 'unlock value' of respiratory, infusion units

LAKE FOREST, Calif. - Apria Healthcare last week announced that it plans to separate the apple from the orange by giving its two business units separate leadership.

Apria has named Daniel Starck CEO of its respiratory/HME operating unit, and Daniel Greenleaf CEO of its Coram Specialty Infusion Services operating unit. The move makes sense when you consider how different the two businesses are, say analysts.

"We've never seen any business that really found a lot of synergy between those two markets," said Rick Glass, president of Tarpon Springs, Fla.-based Steven Richards & Associates. "They tend to be very different from operating, marketing and payer standpoints."

Norman Payson will continue to serve as CEO and executive chairman of Apria Healthcare Group, the parent company of both operating units. He will also provide strategic oversight to Starck and Greenleaf, who he believes will "unlock the value of their respective organizations over the long term," according to a release.

Respiratory/HME and infusion are also very different from a valuation standpoint. So if Apria ever decides to divest itself of either unit, it would be in a better position to do so.

"There aren't too many people that would want to buy both and there's probably a higher value assigned to the infusion piece right now," said Bob Leonard, an analyst with The Braff Group in Pittsburgh.

Apria acquired Coram in late 2007 for $350 million. In the release, Payson highlighted the infusion unit's double-digit annual growth rate since 2008, when Greenleaf joined the company.

Respiratory/HME, on the other hand, has some pretty stiff headwinds coming down the road, the biggest of which being competitive bidding, say analysts. With about 540 locations nationwide, Apria stands to take quite a hit in reimbursement for that unit.

Apria was acquired by private equity giant The Blackstone Group in 2008. While it's far to soon to say what, if anything, Apria has planned for its now separated business units, four years is a long time to be under the wing of a private equity firm, analysts say.

"Those guys don't own anything forever," said Leonard.

Apria had no comment beyond what it stated in the release.