MMA sinks Apria profits

Sunday, July 24, 2005

LAKE FOREST, Calif. -- Apria Healthcare's profits fell by 21% in the second quarter as the company felt the brunt of reimbursement cuts imposed by the Medicare Modernization Act.

In the second quarter last year, Apria dropped $29.1 million to the bottom line. This year, reimbursement hits to oxygen and respiratory medications cut earnings to $22.8 million.

Revenues for the quarter jumped by 4% over last year to $375 million. In addition to the Medicare pricing pressures, Apria's revenues were also adversely impacted by the decision to not renew a contract with Gentiva Carecentrix.

"We are pleased with our second quarter results," said Lawrence M. Higby, Apria's CEO. "We increased pretax earnings over the first quarter despite the fact that the Medicare reimbursement reduction for oxygen went into effect at the beginning of the second quarter. An improved gross margin and lower bad debt expense due to rebounding cash collections helped offset the effect of the reimbursement cuts."

During the second quarter, Apria closed seven acquisitions totaling $67.3 million, including the 18 U.S. locations of Air Liquide Health Care.