Apria, Rotech report earnings, discuss performance

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Tuesday, August 9, 2011

LAKE FOREST, Calif. – Apria Healthcare reported net revenues of $576.3 million for the three months ended June 30, 2011, compared to $518.2 million for the same period last year. It reported a net loss of $9.4 million this year vs. a net income of $3.4 million last year.

Apria reported net revenues of $1.1 billion for the six months ended June 30, 2011, compared to $1 billion for the same period last year. It reported a net loss of $30.5 million this year vs. a net income of $2.6 million last year.

Apria’s growth was due to an increase in its home infusion therapy segment revenue and its acquisition of Praxair’s assets. That was partially offset by the non-renewal, termination of or changes to certain payer contracts, among other factors.

In an accompanying 10-Q filed with the Securities and Exchange Commission (SEC), Apria shared the following details on its performance:

“To date, we have made significant progress across a number of identified initiatives targeting expected annual savings of approximately $179 million, of which we realized approximately $166 million through June 30, 2011.”

In the three months ended June 30, 2011, about 24% and 6% of Apria’s net revenues were reimbursed by Medicare and Medicaid, respectively. In the six months ended June 30, 2011, about 23% and 7% of its revenues were reimbursed by the two programs. Managed care represents the remaining 70% of revenues.

On July 11, Apria announced that James Gallas, its executive vice president and chief administrative officer, would cease to oversee revenue management, information technology and certain related functions. Management of those functions will be assumed by other members of senior management. Gallas will assume a special projects role until Feb. 28, 2012.

Apria expects Round 1 of competitive bidding to impact net revenues in the fiscal year ending Dec. 31, 2011, by about $8 million. Assuming Round 2 includes the same product categories, bidding rules and markets planned by CMS, it estimates $110 million of net revenues for the fiscal year would be subject to competitive bidding.

On its chances of succeeding under competitive bidding, Apria stated: “We believe that our geographic overage, clinical marketing programs and purchasing strength provide competitive advantages to maintain and enhance market share under Medicare competitive bidding. However, there is no guarantee that we will be selected as a winning contract supplier in any future phases of the program and be awarded competitive bidding contracts by CMS or that we will garner additional market share."

Rotech treads water

‘We believe volume increases will more than offset reductions in reimbursement’

ORLANDO, Fla. – Rotech Healthcare reported net revenues of $122.4 million for the three months ended June 30, 2011, compared to $124.3 million for the same period last year. It reported a net loss of $2 million this year vs. a net income of $3.4 million last year.

Rotech reported net revenues of $243.9 million for the six months ended June 30, 2011, compared to $247.7 million for the same period last year. It reported a net loss of $4.9 million this year vs. $3.3 million last year.

“In comparing second quarter of 2011 with that of 2010, we are pleased to report continued improvement,” stated President and CEO Philip Carter in a release. “This was in spite of a $5.7 million decline in Medicare reimbursements.”

In its 10-Q, Rotech stated:

“During 2010, we substantially completed development of a new order intake system that will streamline our order intake processes and eliminate many of our current, paper-based processes. We have to date completed implementation of this system in approximately 10% of our operating locations and we expect full implementation by the end of 2011.”

On June 28, 2011, Rotech submitted its application for relisting its common stock on the NASDAQ Global Market.

Rotech relied on Medicare, Medicaid and other federally funded programs for 56.9% and 57% of its revenues for the three months and six months ended June 30, 2011, respectively. That’s compared to 58.4% and 58.1% for the same periods last year.

“The application of the new competitive bid rates in the Round 1 Rebid CBAs reduced our net revenue by approximately $0.9 million and $2 million for the three and six months ended June 30, 2011, respectively. We have experienced volume increases in the CBAs where we were awarded contracts, which we attribute to an increase in market share, during the three and six months ended June 30, 2011, and we believe that these volume increases will more than offset the reductions in reimbursement over time.”

 

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