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Apria Is Looking A Tad Peaked

Inside Wall Street


Soon after Apria Healthcare Group (AHG) started trading on the Big Board in July, 1995--a result of the merger between Homedco Group and Abbey Healthcare Group--its stock hit 41. Since then, it has gone downhill, despite the Dow's climb: Apria slid to 16 3/4 on Oct. 23, 1996. A week later, Apria, No.1 in comprehensive home-care services, posted disappointing third-quarter results.

The stock has since edged up to 20, partly because of rumors that the drop has prompted a managed-care outfit and a hospital-management company to look at Apria as a takeover target.

Some shareholders are dismayed by the drop. One investor says the unrest "could provoke another company to make a move on Apria." He laments that management hasn't coped with the problems stemming from the Homedco-Abbey merger. Part of the poor third-quarter results stemmed from expenses related to converting computer systems since the merger.

Moreover, they note, management is facing opposition on a proposed $212 million acquisition of Vitas Healthcare, a major hospice company, which is expected to dilute Apria's earnings by 5% to 10%. On Nov. 6, Apria announced it was discussing "alternatives" to its agreement to acquire Vitas.

Analysts have reduced their 1996 and 1997 estimates, and some have downgraded the stock. "Apria is still getting the kinks out of its business," notes Ann Logue of the San Francisco investment firm Volpe, Welty. "With the consolidation in the industry in full swing, many companies are out there looking for companies to acquire--and looking at what's happening at Apria."BY GENE G. MARCIAL

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