Apria reports delayed earnings

Tuesday, September 30, 2008

LAKE FOREST, Calif.--The delay of Apria Healthcare’s second quarter earnings could have been related to its buyout deal by The Blackstone Group, say industry watchers.

“When they’ve got a big deal pending like that, it could be a matter of getting the new guys to review and approve everything,” said Bob Leonard, a managing director with The Braff Group, a Pittsburgh-based M&A firm.

In June, Apria announced that it had negotiated a $1.6 billion buyout offer from an affiliate of the private equity firm.

On Aug. 18, the company announced it would hold off on reporting its earnings for the period ended June 30, 2008. Then on Sept. 11, it reported a 35.5% increase in revenue, $531.2 million for the second quarter of 2008 compared to $391.9 million for the same period last year.

Apria’s biggest increase came from its home infusion therapy business, where revenue skyrocketed 184.3%, from $72.29 million in the second quarter of 2007 to $205.5 million for the same period in 2008. That growth was driven by Apria’s purchase of Coram in December. By contrast, its respiratory business generated revenues of $273.13 million for the second quarter of 2008 compared to $267.32 million for the same period in 2007, a 2.2% increase.

Analysts say an earnings delay is unusual but by no means unheard of.

“They are performing due diligence,” said one industry watcher. “Apria is trying to accommodate the investors as much as possible.”

Another possible reason for the extra handholding: The Blackstone deal is being financed with a lot of debt.

“All these debt investors are putting up the money,” said an insider. “They want to be comfortable with the accounting.”

Apria shareholders were expected to approve the deal in September.