Apria intensifies focus on respiratory

INDIANAPOLIS – Apria Healthcare saw a healthy rebound in its oxygen and sleep business in the second quarter, and that’s where the company will focus future growth efforts, said CEO Dan Starck on a recent earnings call. 

“Our new patient starts on oxygen remained elevated above historical run rates and new sleep patient volumes ran above pre-pandemic levels, while ventilation and negative pressure wound therapy were at or near pre-pandemic levels,” said Starck, who was discussing the company’s second quarter 2021 earnings. “Our sleep resupply business continued at a strong performance and we began to see increasing levels in the other equipment categories, as we progress through Q2.” 

Home respiratory therapy revenue for the quarter ended June 30 was $237.5 million, while overall revenue was $286.3 million. For the six-month period ended June 30, respiratory revenue was nearly $466 million, while overall revenue was nearly $566 million. 

Recall could impact second half 

So far, Apria has not experienced any material impact from the recent Philips recall of certain respiratory devices, though it is likely to pose challenges in subsequent quarters, says Starck. 

“Thus far, despite the recall, we have not experienced significant amounts of patients stopping the therapy, either CPAP, BiPAP or ventilation, although that could increase over the duration of the recall,” he said. “The recall did not have a material adverse impact on our consolidated operating results for the six months ended June 30, 2021.” 

Execs expect the longer the recall continues, however, the more of an impact it will have on revenues in the second half of 2021, as more patients become aware of the recall and possibly stop therapy. An ongoing chip shortage will also impede production of new machines and, therefore, could impact new patient setups, they say. 

‘Supplemental growth’ 

Apria will supplement organic growth with acquisitions, including the recently announced acquisition of Airway Breathing Co., a provider of respiratory care services, sleep equipment and supplies, and DME based in Virginia that Starck described as a “nice-sized deal.” 

“Its revenues are a little bit north of $20 million a year,” he said. “And (they have) a very strong presence in that area. So, we feel very good about being able to support that team that's coming aboard and continue to grow both the Apria brand, as well as the ABC brands. From a broader M&A strategy, I think that deal is reflective of the types of deals that we want to do.”