Apria ready for new ‘world,’ analysts say

Friday, December 6, 2013

LAKE FOREST, Calif. – Apria Healthcare has repositioned itself as a respiratory-focused company with the sale of its home infusion business, Coram, to CVS Caremark, analysts say.

“My guess is that they perceive themselves as pretty well-positioned for a world of lower reimbursements and fewer competitors,” said Rick Glass, president of Steven Richards & Associates. “They have scale and run an efficient business.”

The $2.1 billion deal, announced Nov. 27, allows Apria to reduce debt and focus on its core business lines of oxygen and CPAP, analysts say.

Apria accepted 371 contracts under Round 2 of competitive bidding and has also has accepted contracts in all nine CBAs in the Round 1 re-compete.

“The deal is going to enable them to deal directly with the challenges and opportunities of both competitive bidding and the Affordable Care Act,” said Jonathan Sadock, managing partner/CEO of Paragon Ventures. “Those two things have such an impact for Apria going forward.”

One impact already being felt: a decrease in revenues, which Apria officials have blamed squarely on competitive bidding rates.

For its part, adding Coram’s home infusion business allows CVS CareMark to push further into the specialty pharmacy space and go toe-to-toe with Walgreens, its biggest competitor, say analysts.

“There’s a lot in the drug pipeline in the infusion/specialty pharmacy space, so I think this is a higher-touch market that they view as necessary to be in,” said Reg Blackburn, managing director of special pharmacy and infusion services for The Braff Group.

Apria has operated Coram as a separate unit since 2012, when it named Daniel Starck CEO of the respiratory/HME business and Daniel Greenleaf CEO of Coram. Greenleaf has joined specialty infusion provider Home Solutions as president and CEO, according to local news reports.*

Apria, which is owned by private equity firm The Blackstone Group, acquired Denver-based Coram for $350 million in 2007. Today, Coram has more than 4,500 employees and serves more than 20,000 patients each month through 85 locations.

Attempts to reach Apria officials by press time were unsuccessful.