Apria Healthcare Names Turnaround Specialist New CEO

Apria Healthcare Group Inc. on Tuesday named turnaround specialist Philip L. Carter as chief executive of the wayward Costa Mesa home health care giant.

Carter, a 49-year-old Australian, engineered a turnaround at Dominguez-based Mac Frugal’s Bargains-Closeouts Inc., a 330-store close-out chain. The company was sold earlier this year to Wilmington, Del.-based Consolidated Stores Corp.

Carter was recruited to Apria by recently appointed Chairman Ralph V. Whitworth, a shareholder activist who represents Apria’s largest stockholder, Relational Investors of La Jolla.

Whitworth and Carter declined to be interviewed Tuesday. Carter, through a spokeswoman, said: “I plan to spend the next 90 days becoming fully immersed in the business in order to gain a thorough understanding of its operations and current initiatives.”

Analysts credit Carter--Mac Frugal’s chief executive from March 1993 until January of this year--with engineering a corporate restructuring that caused the once-troubled company’s stock to increase about 250% in value, to $40 a share.

“[Phil] leads by example. He works as hard or harder than he expects his people to and he learns every element of the business from the ground up,” said David Batchelder, Whitworth’s partner in Relational Investors, which has a 9.9% stake in Apria.

Batchelder, who served as Mac Frugal’s chairman during Carter’s tenure, said Relational Investors is taking a similar activist role at Apria. Batchelder and Whitworth have known each other since both worked for T. Boone Pickens, the oil industry raider of the 1980s.

People familiar with Carter’s career said they weren’t concerned about his lack of experience in health care. They attribute much of Apria’s problems to operational snafus in its internal financial systems--problems that Carter is skilled at fixing.

“Phil was instrumental in improving the informational systems at Mac Frugal’s,” says David Mann, a retail analyst at Johnson Rice in New Orleans. “While at Apria the information systems will be different, he clearly has an understanding of the importance of systems and I assume those will be some of the issues he’ll attack on Day One.”

Also on Tuesday, Apria’s board--at Whitworth’s urging--named Richard H. Koppes, an attorney with the law firm of Jones, Day, Reavis & Pogue, as a director.

Koppes, 51, is the former deputy executive officer and general counsel for the nation’s largest public pension fund, the California Public Employees Retirement System. A shareholder rights’ advocate, Koppes will head a new board committee at Apria charged with recommending improvements in its corporate governance.

In a statement, Whitworth said the appointments of Carter and Koppes “represent decisive steps in our continuing effort to restore Apria to operational health and realize its value for shareholders.”

Relational Investors--which controls $400 million in investments--usually avoids taking a board role in companies in which it has a stake. “We only get involved in the sort of the way we’re involved at Apria, when the company hasn’t been able to fix itself,” Batchelder said.

The company’s stock has fallen 51% the past 12 months. Apria shares advanced six cents Tuesday, to $9, in New York Stock Exchange trading.

Carter’s appointment ends the board’s search for a permanent CEO following the resignation of Jeremy M. Jones in January. Since Jones’ resignation, Apria president and chief operating officer, Lawrence M. Higby, 52, had assumed the CEO duties.

Higby will remain the company’s president and chief operating officer.