Apria to Begin Cutback by Selling Off Unit
In the first move by new management to trim Apria Healthcare Group Inc.’s operations to a manageable core, the troubled Costa Mesa company said Tuesday it is selling off the California unit that provides intravenous therapy to patients in the home.
The buyer is Crescent Healthcare Inc., a privately held Cerritos company with ambitions of going public next year. The Apria unit, expected to post revenue of $48 million, is more than three times Crescent’s size, said Crescent Chairman and owner Sohail Masood.
In a statement, Philip L. Carter, a turnaround specialist hired as Apria’s chief executive last spring, said Apria is narrowing its home health services for California patients to such things as respiratory therapy and medical equipment. He didn’t return calls seeking further comment.
Financial terms weren’t disclosed. The deal is expected to close Friday.
Steve Resnick, an ML Stern & Co. analyst who follows Apria for bondholders, said he “wasn’t thrilled” with the sale but trusts that Carter knows what he’s doing.
Resnick said Apria aims to beef up the business of supplying oxygen and related respiratory services, which brought in 51% of its total revenue of $1.2 billion last year.
At the same time, however, he noted that Apria, in selling its intravenous-therapy business in California, is shedding what appears to be a profitable unit. He added that the company also intends to reduce its intravenous-therapy business in Texas and Louisiana.
In New York Stock Exchange trading Tuesday, Apria stock closed at $3.88 a share, off 6 cents.
At Crescent, Masood predicted the acquisition would give his company the geographical breadth to serve patients in large health plans.
The purchase will enable Crescent to expand its network of service offices--now in Cerritos, San Diego, Sacramento and San Jose--to include Riverside, Santa Rosa, Union City, Fresno, Modesto and San Luis Obispo--all in California--as well as Carson City, Nev. Apria offices being
sold in Sacramento and San Diego will be consolidated with Crescent offices, he said.
Masood said he expects to hire most of the 250 employees from the Apria unit, which would more than double Crescent’s payroll.
The acquisition should boost Crescent’s revenue to $70 million next year, Masood said.