Apria Healthcare Group Inc.'s stock surged 32% Tuesday, one of the biggest percentage gains in U.S. markets, after the struggling provider of home health-care services posted a quarterly profit for the first time in more than a year.
Apria’s stock rose $2.63, to $10.94, on the New York Stock Exchange in trading of 1.8 million shares, nearly five times the daily average over the last three months.
The Costa Mesa-based company said it earned $2.3 million, or 4 cents a share, in the fourth quarter, compared with a loss of $238.2 million, or $4.62 a share, for the same quarter in 1997. The profit surpassed the 1 cent a share estimated by analysts in a First Call Corp. survey.
It was the first time the company recorded a quarterly profit since the third quarter in 1997.
Revenue dropped 16%, to $223.3 million, from $266.7 million. Apria attributed the decline to its ongoing move to shed unprofitable operations.
As a result of Apria’s improved performance, and because of improved capital markets, the company said it will not proceed with plans for a $50-million offering of convertible notes announced in November. Apria said in a statement that it will seek the $50 million through other means “on terms more favorable to the company.”
For the year, Apria lost $207.9 million, or $4.02 a share, compared with a loss of $272.6 million, or $5.30 a share, for 1997. Revenue declined 22%, to $933.8 million, from $1.2 billion.
In the third quarter, Apria took a $160-million charge in a move to clean up its financial books. The one-time charge stemmed from a corporate restructuring announced last summer.
In addition to pulling out of money-losing operations, the company has cut expenses. During the year, it also moved to expand its business of providing respiratory therapy to patients in their homes.
In January, Apria absorbed a 5% cut in the amount Medicare would reimburse for oxygen treatments. The loss of revenue was not expected to push the company back into the red, Apria said.
If current trends continue, the company said, its first-quarter profit should total at least 25 cents per share, much higher than the 4 cents a share estimated by analysts.
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Apria Looks Healthier
After four consecutive losing quarters, Apria Healthcare broke into the black in the fourth quarter last year. The improved financial results helped boost the company’s stock, which closed at $10.94. Sales and earnings, in millions, and closing stock prices:
Sales (in millions)
1998 4th qtr.: $223.3
1998 4th qtr.: $2.3
Oct. 2: $4.13
1999:Tuesday close $10.94
Source: Bloomberg News