Apria's fourth quarter revenues tumble
LAKE FOREST, Calif. - Apria's revenues over the second half of 2005 proved so disappointing that "no executive officer will receive a salary increase or bonus for 2005," CEO Larry Higby stated last week.
Revenues were $359.7 million in the fourth quarter of 2005 compared to revenues of $376.4 million for the fourth quarter in 2004, according to the company's fourth quarter results. Net income for the fourth quarter of 2005 was $19.5 million compared to $27.3 million for the same period last year. Full year revenues were $1.47 billion in 2005 compared to $1.45 billion in 2004. Net income for 2005 was $66.9 million vs. $114 million in 2004.
Apria's fourth quarter revenues were negatively impacted by Medicare reimbursement reductions that went into effect for respiratory medications and certain items of HME on Jan. 1, 2005, and for oxygen and oxygen equipment on April 8, 2005. Without the Medicare pricing reductions, revenue growth would have been 3.5% for the year; revenue for the fourth quarter would have declined by 3%. The revenue shortfall in the fourth quarter was primarily in HME, infusion therapy and respiratory drug product lines. Enteral nutrition revenue growth was strong.
Looking forward, Higby stated, changes made in the fourth quarter in sales management, sales force structure and sales incentives should make 2006 a stronger year. In addition, the rollout of Apria's electronic Sales Management System (SMS) should provide improved territory-level account targeting and accountability in 2006. The company will also benefit from a new CIGNA contract, which took effect Feb. 1, 2006.
Management estimates that full year 2006 revenue growth will be in the 4% to 5% range.