Apria Healthcare Group to Buy Hospice Service
Apria Healthcare Group Inc., one of the nation’s largest home health care companies, said Thursday it intends to purchase a private Miami-based hospice service for $212 million.
Apria officials said they have signed a letter of intent to merge with Vitas Healthcare Corp. in a stock deal that should close by mid-summer. Vitas, which posted 1995 revenue of $230 million, will become a wholly-owned subsidiary of Apria and will continue to operate under its own name. Apria will assume an unspecified amount of debt from Vitas as part of the transaction.
Jeremy M. Jones, Apria chairman and chief executive, said the acquisition is a logical extension of his firm’s business. Apria provides a variety of home health care services to chronically ill patients, many of whom ultimately need hospice care. Jones said America’s aging population and the Medicare funding crisis are driving the need for hospice services, which are cheaper than lengthy hospital stays for the terminally ill.
“One in seven Americans who died last year received hospice services,” Jones said. “With the number of hospice patients served growing at approximately 20% per year, we believe hospice services are a very good fit with Apria’s strategic goals.”
Apria was created last summer through the merger of Abbey Healthcare Group Inc. and Homedco Group Inc. The company posted 1995 revenues of $1.13 billion and a net loss $74.5 million following one-time restructuring charges.
Analyst Ann Logue of Volpe, Welty & Co. projects the company to return to profitability in 1996. She said Apria management “did a good job” of cutting expenses and consolidating facilities following last summer’s merger, and that the Vitas acquisition is a logical strategic move.
“Apria has been shopping for specialty businesses for some time,” Logue said. “This makes a lot of sense for them. . . . And they’ve shown that they can handle mergers.”
Founded in 1978, Vitas provides care for terminally ill adults and children in six states, including California.
Apria provides home health care services, including infusion, respiratory therapy and nursing care through 350 locations in 49 states. The company employs 8,500 nationwide, including 500 at its Costa Mesa headquarters.
