Apria drops rehab

Sunday, July 6, 2008

LAKE FOREST, Calif. - Less than two weeks after it agreed to be acquired by a private equity firm, Apria Healthcare sold its high-end rehab business to Earth City, Mo.-based United Seating & Mobility.

On June 19, Apria announced that it had negotiated a $1.6 billion buyout offer from an affiliate of The Blackstone Group. On June 30, it completed the sale of its high-end rehab business to United Seating & Mobility, a rehab provider with 25 locations in 10 states, mostly in the Midwest.

The sale will allow Apria to focus on its core competencies: home respiratory therapy, home infusion therapy and more traditional home medical equipment, including standard wheelchairs, said Lisa Getson, the company's executive vice president of government relations, investor services and compliance.

"We've offered rehab for many years and offered quality service to our patients," she said. "But it's a niche business that requires a different level of management and capital investment. It didn't fit in with our core competencies. We felt it would be better served being part of a company that specializes in rehab."

Apria provides high-end rehab in 19 of its 550 branches. Many Apria employees at those branches will become United Seating & Mobility employees, Getson said. The others will work in other Apria roles or leave the company.

While Apria has made investments in its high-end rehab business in the past few years, "the timing was such that it was best to divest the business," Getson said.

As part of national competitive bidding, which kicked off July 1, CMS reduced reimbursement for standard wheelchairs by 21% on average and for complex wheelchairs by 15% on average. Apria is a contract provider for standard wheelchairs in Kansas City, Mo.; it's not a contract provider for complex wheelchairs.

Apria has made significant plays in the home infusion market in the past few years. In October, it acquired Coram for $350 million, adding 65,000 new customers to its home infusion business. In 2006, it hired sales reps to focus solely on growing that business.

Apria reported $528 million in revenues for the first quarter ended March 31, 2008, compared to $390.8 million in revenues for the same period last year.