Apria sees bump in Q4, primes for growth in 2021

INDIANAPOLIS – Apria Healthcare reported that revenue for home respiratory therapy was up 8% in the fourth quarter of 2020, largely driven by an increase in demand for COVID-19 patients, company execs said on a recent earnings call. 

New oxygen setups increased 77% during the fourth quarter of 2020, compared to the same quarter in 2019.  

“The fourth quarter of 2020 was a record quarter for Apria,” said CFO Debra Morris. “While there was some slowdown in new patient setups for non-invasive vents, sleep and negative pressure wound therapy late in the quarter, following the post-holiday COVID surge, the quarter was nevertheless solid in all three of our core service lines and buoyed by strong cash collections.” 

Apria’s sleep business was up 4% in the fourth quarter, thanks in large part to resupplies and despite reduced demand for new patient setups due to the pandemic. Its negative pressure wound therapy business was also up 4%. 

The company has increased its guidance for 2021 to net revenue of $1.11 billion to $1.14 billion to account for CMS’s recent decision to remove the budget neutrality requirement for oxygen - a requirement that increased reimbursement rates for evolving technologies like portable oxygen concentrators by reducing rates for more traditional therapies. 

“The budget neutrality fix, coupled with the competitive bidding outcome around 2021, provides the industry with an increase in oxygen reimbursement rates from CMS and stable reimbursement rates for the other products that were formerly subject to the competitive bidding rate adjustments,” said CEO Dan Starck. 

Also looking at 2021, Apria expects to ramp up organic growth, as rentals pick back up, and inorganic growth, as the company cautiously dips its toe into the hot M&A market. Already this year, it has made one small tuck-in acquisition in southern California. 

“For us, it’s really about getting started and getting started on the right foot with a small deal to start in Q1 and pursue more as we go through the remainder of the year, really making sure that we get our muscle memory back, for lack of a better term, from doing acquisitions and doing integrations,” Starck said. “So, I think we’ll slowly build here.”