Apria Cuts ’05 Profit Forecast; Shares Slide
Apria Healthcare Group Inc., one of the country’s largest providers of home medical supplies, on Friday cut its earnings outlook for the year.
The company’s stock price tumbled 17%.
Apria, based in Lake Forest, predicted per-share earnings of $1.68 to $1.72 for the year. Analysts polled by Thomson Financial before the announcement had on average expected earnings to be $1.90.
The company said it expected that revenue growth for 2005 would be 2% to 3%. That is down from its previous forecast of 5% to 6%.
Apria’s shares fell $5.46 to $26.10, the lowest since late 2003.
Also, the company said growth in revenue in the third quarter slowed to less than 1% compared with last year. It will release complete results Oct. 25.
Apria issued a statement citing slowed sales in several areas of its business, particularly through hospital contracts, for the revised forecast.
The company’s chief financial officer, Amin Khalifa, said those contracts -- which give hospitals a share of revenue when they refer patients to the company for home care products -- had begun to unwind.
This is because, he said, “reimbursements from Medicare have dropped this year for home medical equipment in important classifications -- like beds, wheelchairs and oxygen.”
Apria gets most of its business from patients who are discharged from hospitals, Khalifa said, rather than those referred by physicians.
Analyst Balaji Gandhi of Pacific Growth Equities in San Francisco said the revenue slowdown did not appear to be an industrywide problem.
“I spent time today after the announcement checking with many of the smaller players in the business,” Gandhi said. “They continue to grow and do well.”
Also Friday, Apria said it had made a payment of $17.6 million to the federal government in accordance with a settlement over Medicare billing issues.
That settlement caused the company in August to restate its second-quarter earnings, lowering profit to $3 million from $22.8 million on sales of $374.9 million.
Last year the company posted a profit of $114 million on sales of $1.45 billion.
In June, Apria announced that it was for sale. Khalifa on Friday declined to comment on any discussions with possible buyers.
