Apria takes down for sale sign

LAKE FOREST, Calif. - Apria Healthcare took itself off the market Oct. 25, the same day it reported disappointing financial results for the third quarter. It also announced plans to repurchase up to $250 million worth of outstanding stock--a sure sign that the provider has closed the door on all offers, according to industry sources. Apria's board of directors has decided to focus 100% on growing revenues and improving operations, instead of entertaining potential offers, according to a statement. "The board concluded that there was no proposal received which, in the board's opinion, appropriately reflected Apria's intrinsic value and prospects for future appreciation," the statement read. Despite a growth rate of only 1% for the third quarter, Apria believes a recent settlement involving Medicare billing documentation, new contracts with managed care customers and growing Medicare Advantage plans position the provider for "attractive opportunities for future appreciation," according to the statement. One of those new contracts is a three-year deal worth a reported $60 million with Cigna Healthcare (See story this page). Apria CEO Amin Khalifa told HME News this summer that "if the price isn't right, a deal won't be struck." (HME News, 07/2005). The word on the street, however, is that Apria may have set a sale price based on financials that didn't reflect the provider's current situation, said Balaji Gandhi, an analyst with Boston-based Pacific Growth Equities. "[Apria's] statement made it sound like they decided not to sell the company, but more likely, the truth is that a buyer couldn't rationalize the deal at the price that was on the table," he said. In addition to lackluster earnings, there's also the issue of "deteriorating organic growth," said one industry source.