APRIA HEALTHCARE GROUP INC - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - APRIA HEALTHCARE GROUP INC	d394876d8k.htm

Exhibit 99.1

LOGO


FOR IMMEDIATE RELEASE				INVESTOR CONTACT:

				Chris A. Karkenny
				Executive Vice President, Chief Financial Officer
				949-639-2000

Apria Healthcare Group Inc. Announces Second Quarter 2012

Financial Results

LAKE FOREST, California – August 13, 2012 – Apria Healthcare Group Inc. (“Apria” or the “Company”), a quality, cost-efficient provider of home healthcare products and services in the United States, today announced its financial results for the quarter ended June 30, 2012.

2012 Second Quarter Highlights

Net revenues in the three months ended June 30, 2012 were $607.7 million, compared to $576.3 million in the three months ended June 30, 2011, an increase of $31.4 million or 5.4%. Revenue for the three months ended June 30, 2012 increased primarily due to increased volume in the home infusion therapy segment and the home respiratory and home medical equipment segment.

Adjusted EBITDA before projected cost savings and synergies¹ for the three months ended June 30, 2012 was $62.4 million.

Net loss for the three months ended June 30, 2012 was $12.7 million.

EBITDA for the three months ended June 30, 2012 was $50.2 million.

2012 First Six Months Highlights

Net revenues in the six months ended June 30, 2012 were $1,203.4 million, compared to $1,113.1 million in the six months ended June 30, 2011, an increase of $90.3 million or 8.1%. Revenue for the six months ended June 30, 2012 increased primarily due to increased volume in the home infusion therapy segment and the home respiratory therapy and home medical equipment segment, as well as the acquisition of Praxair assets in March 2011.

Adjusted EBITDA before projected cost savings and synergies¹ for the six months ended June 30, 2012 was $121.1 million.

Net loss for the six months ended June 30, 2012 was $32.3 million.

EBITDA for the six months ended June 30, 2012 was $93.7 million.

This press release includes several metrics, including EBITDA, Adjusted EBITDA and Adjusted EBITDA before projected cost savings and synergies that are not calculated in accordance with Generally Accepted Accounting Principles (“GAAP”). See “Definition of Terms and Reconciliation of Non-GAAP Financial Measures” section at the end of this press release for the definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDA before projected cost savings and synergies and their reconciliation to net income (loss).

Certain Credit Statistics

Our net leverage ratio, defined as the ratio of net debt to Adjusted EBITDA, was 3.9x at June 30, 2012.

Conference Call

As previously announced, Apria will hold a conference call to discuss its second quarter 2012 results on August 13, 2012 at 1:00 p.m. (Eastern Daylight Time). The conference call can be accessed live over the phone by dialing 866-900-5939 or, for international callers, 706-758-0130 or through the Investor Relations page of the Company’s website at www.apria.com. The passcode for the live call is Apria.

A replay of the conference call will be available one hour after the call and can be accessed by dialing 855-859-2056 or, for international callers, 404-537-3406 or through the Investor Relations page of the Company’s website. The passcode for the replay is 15226723. The replay will be available until August 24, 2012.

A financial results presentation will be made available immediately prior to the call on the Investor Relations page of the Company’s website at www.apria.com.

Forward Looking Statements

Statements contained herein that are not historical facts and that reflect the current view of Apria’s management about future events and financial performance are hereby identified as “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Some of these statements can be identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “could,” “should,” “may,” “plan,” “project,” “predict” and similar expressions. The Company cautions that such “forward looking statements,” including without limitation, those relating to the Company’s future business prospects, revenue, working capital, professional liability expense, liquidity, capital needs, interest costs and income, wherever they occur in this or in other statements attributable to the Company, are necessarily estimates reflecting the judgment of the Company’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the “forward looking statements.” Factors that could cause our actual results to differ materially from those expressed or implied in such forward looking statements include but are not limited to current or future government regulation of the healthcare industry, exposure to professional liability lawsuits and governmental agency investigations, the adequacy of insurance coverage and insurance reserves, as well as those factors detailed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition” in the Company’s filings with the Securities and Exchange Commission. The Company’s “forward looking statements” speak only as of the date hereof and the Company disclaims any intent or obligation to update “forward looking statements” herein to reflect changed assumptions, the occurrence of unanticipated events, or changes to future operating results over time.

About Apria Healthcare Group Inc.

Apria provides home respiratory therapy, home infusion therapy and home medical equipment services through approximately 540 locations in the United States. With $2.3 billion in annual revenues, it is one of the nation’s leading home healthcare companies. For more information, visit www.apria.com or www.coramhc.com.

Apria Healthcare Group Inc.

Condensed Consolidated Balance Sheets


	June 30, 2012			December 31, 2011
	(unaudited)
	(in thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	24,239		$	29,096
Accounts receivable, less allowance for doubtful accounts of $54,154 and $53,934 at June 30, 2012 and December 31, 2011, respectively		363,350			337,212
Inventories		69,424			57,683
Deferred income taxes		—			168
Deferred expenses		3,551			3,681
Prepaid expenses and other current assets		14,716			23,927

TOTAL CURRENT ASSETS		475,280			451,767
PATIENT SERVICE EQUIPMENT, less accumulated depreciation of $178,579 and $176,526 at June 30, 2012 and December 31, 2011, respectively		181,442			166,769
PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET		80,294			83,768
GOODWILL		258,725			258,725
INTANGIBLE ASSETS, NET		484,343			485,366
DEFERRED DEBT ISSUANCE COSTS, NET		37,611			44,636
OTHER ASSETS		12,820			11,513

TOTAL ASSETS	$	1,530,515		$	1,502,544

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable	$	138,475		$	135,572
Accrued payroll and related taxes and benefits		61,390			69,217
Deferred income taxes		1,082			—
Other accrued liabilities		69,362			66,694
Deferred revenue		28,589			28,649
Current portion of long-term debt		69,277			10,301

TOTAL CURRENT LIABILITIES		368,175			310,433
LONG-TERM DEBT, net of current portion		1,017,606			1,017,755
DEFERRED INCOME TAXES		199,251			200,225
INCOME TAXES PAYABLE AND OTHER NON-CURRENT LIABILITIES		51,692			49,480

TOTAL LIABILITIES		1,636,724			1,577,893
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ DEFICIT
Common stock, $0.01 par value: 1,000 shares authorized; 100 shares issued at June 30, 2012 and December 31, 2011		—			—
Additional paid-in capital		692,353			690,870
Accumulated deficit		(798,562	)		(766,219	)

TOTAL STOCKHOLDERS’ DEFICIT		(106,209	)		(75,349	)

	$	1,530,515		$	1,502,544

Apria Healthcare Group Inc.

Condensed Consolidated Statements of Operations


	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(in thousands)
Net revenues:
Fee for service arrangements	$	561,447		$	534,229		$	1,113,063		$	1,029,913
Capitation		46,225			42,119			90,322			83,178

TOTAL NET REVENUES		607,672			576,348			1,203,385			1,113,091

Costs and expenses:
Cost of net revenues:
Product and supply costs		214,136			190,882			421,548			368,322
Patient service equipment depreciation		20,386			24,077			41,082			45,882
Home respiratory therapy services		7,018			6,130			14,307			12,103
Nursing services		10,709			10,596			21,932			20,527
Other		3,948			3,747			8,994			6,474

TOTAL COST OF NET REVENUES		256,197			235,432			507,863			453,308
Provision for doubtful accounts		20,790			16,578			32,648			36,842
Selling, distribution and administrative		308,837			303,070			626,259			599,698
Amortization of intangible assets		483			1,121			1,144			2,198

TOTAL COSTS AND EXPENSES		586,307			556,201			1,167,914			1,092,046

OPERATING INCOME		21,365			20,147			35,471			21,045
Interest expense		33,878			33,026			67,395			65,930
Interest income and other		(69	)		(39	)		(771	)		(290	)

LOSS BEFORE TAXES		(12,444	)		(12,840	)		(31,153	)		(44,595	)
Income tax (benefit) expense		292			(3,403	)		1,190			(14,134	)

NET LOSS	$	(12,736	)	$	(9,437	)	$	(32,343	)	$	(30,461	)

Apria Healthcare Group Inc.

Condensed Consolidated Statements of Cash Flows


	Six Months Ended June 30,
	2012			2011
	(in thousands)
OPERATING ACTIVITIES
Net loss	$	(32,343	)	$	(30,461	)
Items included in net loss not requiring cash:
Provision for doubtful accounts		32,648			36,842
Depreciation		57,082			63,625
Amortization of intangible assets		1,144			2,198
Amortization of deferred debt issuance costs		7,025			5,928
Deferred income taxes		275			(15,903	)
Profit interest compensation		1,565			1,583
Loss on disposition of assets and other		10,810			8,202
Changes in operating assets and liabilities, exclusive of effects of acquisitions:
Accounts receivable		(58,787	)		(83,027	)
Inventories		(11,740	)		8,324
Prepaid expenses and other assets		7,903			(3,134	)
Accounts payable, exclusive of book-cash overdraft		8,772			19,692
Accrued payroll and related taxes and benefits		(7,826	)		(1,621	)
Income taxes payable		429			396
Deferred revenue, net of related expenses		70			2,895
Accrued expenses		4,450			3,067

NET CASH PROVIDED BY OPERATING ACTIVITIES		21,477			18,606

INVESTING ACTIVITIES
Purchases of patient service equipment and property, equipment and improvements, exclusive of effects of acquisitions		(85,113	)		(76,415	)
Proceeds from disposition of assets		155			153
Cash paid for acquisitions		(121	)		(22,538	)

NET CASH USED IN INVESTING ACTIVITIES		(85,079	)		(98,800	)

FINANCING ACTIVITIES
Proceeds from ABL Facility		209,000			—
Payments on ABL Facility		(150,000	)		—
Payments on other long-term debt		(173	)		(799	)
Cash paid on profit interest units		(82	)		(1,000	)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		58,745			(1,799	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(4,857	)		(81,993	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		29,096			109,137

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	24,239		$	27,144

Apria Healthcare Group Inc.

2^nd Quarter 2012 Financial Summary


	Three Months Ended June 30,						$ Variance Fav/(Unfav)			% Variance Fav/(Unfav)
($ in millions)	2012			2011			$ Variance Fav/(Unfav)			% Variance Fav/(Unfav)
Net Revenue	$	607.7		$	576.3		$	31.4			5.4	%
Gross Profit		351.5			340.9			10.6			3.1	%
% Margin		57.8	%		59.2	%
Provision for Doubtful Accounts		20.8			16.6			(4.2	)		(25.3	)%
% of Net Revenue		3.4	%		2.9	%
Selling, Distribution and Administrative		308.8			303.1			(5.7	)		(1.9	)%
% of Net Revenue		50.8	%		52.6	%
Net Loss		(12.7	)		(9.4	)		(3.3	)		(35.1	)%
EBITDA		50.2			53.8			(3.6	)		(6.7	)%
Adjusted EBITDA Before Projected Cost Savings and Synergies		62.4			70.1			(7.7	)		(11.0	)%
% of Net Revenue		10.3	%		12.2	%

	Six Months Ended June 30,						$ Variance Fav/(Unfav)			% Variance Fav/(Unfav)
($ in millions)	2012			2011			$ Variance Fav/(Unfav)			% Variance Fav/(Unfav)
Net Revenue	$	1,203.4		$	1,113.1		$	90.3			8.1	%
Gross Profit		695.5			659.8			35.7			5.4	%
% Margin		57.8	%		59.3	%
Provision for Doubtful Accounts		32.6			36.8			4.2			11.4	%
% of Net Revenue		2.7	%		3.3	%
Selling, Distribution and Administrative		626.3			599.7			(26.6	)		(4.4	)%
% of Net Revenue		52.0	%		53.9	%
Net Loss		(32.3	)		(30.5	)		(1.8	)		(5.9	)%
EBITDA		93.7			86.7			7.0			8.1	%
Adjusted EBITDA Before Projected Cost Savings and Synergies		121.1			122.2			(1.1	)		(0.9	)%
% of Net Revenue		10.1	%		11.0	%

Segment Revenue Performance


($ in millions)	Three Months Ended June 30,				$ Variance Fav/(Unfav)		% Variance Fav/(Unfav)
	2012		2011		$ Variance Fav/(Unfav)		% Variance Fav/(Unfav)
Home Respiratory Therapy and Home Medical Equipment	$	301.5	$	292.6	$	8.9		3.0	%
Home Infusion Therapy		306.2		283.7		22.5		7.9	%

Total Net Revenue	$	607.7	$	576.3	$	31.4		5.4	%


($ in millions)	Six Months Ended June 30,				$ Variance Fav/(Unfav)		% Variance Fav/(Unfav)
	2012		2011		$ Variance Fav/(Unfav)		% Variance Fav/(Unfav)
Home Respiratory Therapy and Home Medical Equipment	$	603.4	$	568.7	$	34.7		6.1	%
Home Infusion Therapy		600.0		544.4		55.6		10.2	%

Total Net Revenue	$	1,203.4	$	1,113.1	$	90.3		8.1	%

Cash and Cash Equivalents, Capitalization & Certain Credit Statistics

The following table indicates the cash and cash equivalents, capitalization and certain credit statistics as of June 30, 2012:


($ in millions)	June 30, 2012
Cash and Cash Equivalents	$	24.2
Debt
Asset Based Revolving Credit Facility		69.0
Series A-1 Notes		700.0
Series A-2 Notes		317.5
Capital Leases & Other		0.4

Total Debt	$	1,086.9
Shareholders’ Deficit		(106.2	)

Total Capitalization	$	980.7

Net Leverage Ratio Calculations
Net Debt¹	$	1,062.7
Adjusted EBITDA²	$	275.4
Net Leverage Ratio³		3.9x

¹	Net debt is defined as total debt less cash and cash equivalents. This amount does not reflect outstanding letters of credit.

²	For the twelve months ended June 30, 2012.

³	Net leverage ratio is defined as the ratio of net debt to Adjusted EBITDA. The net leverage ratio calculated using Adjusted EBITDA before projected cost savings and synergies is 4.0x.

Definition of Terms and Reconciliation of Non-GAAP Financial Measures

This press release includes several metrics which are not calculated in accordance with GAAP, including EBITDA, Adjusted EBITDA, Adjusted EBITDA before projected cost savings and synergies and Free Cash Flow. EBITDA, Adjusted EBITDA, Adjusted EBITDA before projected cost savings and synergies and Free Cash Flow are not recognized terms under GAAP and do not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, these measures are not intended to be measures of Free Cash Flow available for management’s discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Our presentation of EBITDA, Adjusted EBITDA, Adjusted EBITDA before projected cost savings and synergies and Free Cash Flow may not be comparable to other similarly titled measures of other companies. We believe that such measures provide useful information about our financial condition and covenant compliance under the indenture governing our Series A-1 Notes and Series A-2 Notes and in our ABL Facility to investors and we compensate for the limitations of using non-GAAP financial measures by presenting them together with GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.

EBITDA is defined as net income (loss) before interest expense, net, income tax expense and depreciation and amortization.

Adjusted EBITDA is defined as net income (loss) before interest expense, net, income tax expense and depreciation and amortization, further adjusted to exclude certain non-cash items, costs incurred related to initiatives, other adjustment items and projected cost savings and synergies permitted in calculating covenant compliance under the indenture governing our Series A-1 Notes and Series A-2 Notes and the credit agreement governing our ABL Facility.

Adjusted EBITDA before projected cost savings and synergies is defined as Adjusted EBITDA less the projected cost savings and synergies that we expect to realize in connection with cost savings, restructuring and other similar initiatives.

Free Cash Flow is defined as cash provided by operating activities less purchases of patient service equipment and property, equipment and improvements, exclusive of effects of acquisitions.

The following tables provide reconciliation of EBITDA, Adjusted EBITDA, Adjusted EBITDA before projected cost savings and synergies and Free Cash Flow for the periods presented to the respective most closely comparable financial measures calculated in accordance with GAAP.

Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA before projected cost savings and synergies


	Three Months Ended June 30,						Six Months Ended June 30,						LTM June 30,
(in millions)	2012			2011			2012			2011			2012
Net Loss	$	(12.7	)	$	(9.4	)	$	(32.3	)	$	(30.5	)	$	(749.2	)
Interest expense, net		33.8			33.0			66.6			65.5			133.1
Income tax (benefit) expense		0.3			(3.4	)		1.2			(14.1	)		40.0
Depreciation and amortization		28.8			33.6			58.2			65.8			126.0

EBITDA		50.2			53.8			93.7			86.7			(450.1	)
Non-cash impairment of goodwill, intangible and long-lived assets		—			—			—			—			657.9
Non-cash items		6.0			5.3			12.4			9.8			24.8
Costs incurred related to Initiatives and non-recurring items		4.4			9.2			11.5			22.2			28.6
Other adjustments		1.8			1.8			3.5			3.5			7.0

Adjusted EBITDA Before Projected Cost Savings and Synergies	$	62.4		$	70.1		$	121.1		$	122.2			268.2

Projected cost savings and synergies														7.2

Adjusted EBITDA													$	275.4

Reconciliation of Free Cash Flow


(in millions)	Three Months Ended June 30, 2012			Six Months Ended June 30, 2012
Net Loss	$	(12.7	)	$	(32.3	)
Non-cash items		59.4			110.5
Change in operating assets and liabilities		(54.6	)		(56.7	)

Net cash provided by operating activities		(7.9	)		21.5
Less: Purchases of patient service equipment and property, equipment and improvements		(40.3	)		(85.1	)

Free Cash Flow	$	(48.2	)	$	(63.6	)

APRIA HEALTHCARE GROUP INC - FORM 8-K - EX-99.1 - PRESS RELEASE - August 13, 2012

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