Apria Healthcare Group, combining the resources of Abbey and Homedco, has become a powerhouse of the home-care market.
Stockholders of Costa Mesa, Calif.-based Abbey Healthcare Group and Fountain Valley, Calif.-based Homedco Group agreed last week to approve Home care
their planned $1.1 billion merger. The combined company controls about 30% of the home respiratory market.
Before the merger, no clear-cut leader had taken hold of the $2.5 billion home respiratory segment. A recent delay in the proceedings of the merger between Lincare Holdings and Coram Healthcare Corp. allowed Apria to step into this role uncontested. Apria also becomes the second-largest home-infusion company behind Coram.
As planned, each Homedco share will be converted for two shares of Apria, and each Abbey share will be converted into 1.4 Apria shares, in a tax-free pooling-of-interests transaction, the companies said.
Now Apria will have considerable pull in securing managed-care contracts on a national basis. "It has a broader reach than its competitors," said Ann Logue, an analyst with Volpe, Welty & Co., a San Francisco investment bank.
In addition, it was a logical move to expand and combine the two companies' home respiratory arms. Respiratory therapy serves the needs of patients who often use other home-care services, Logue said.
Apria's additional divisions will include home medical equipment, nursing services, women's health services and coordinated care. The company's projected annual revenues are $1.2 billion.
The new company expects to save $40 million to $50 million annually as a result of combined and overlapping operations. Much of those savings will come from closing about one-fourth of the merged company's 475 branches.
In the new company, Homedco's former chairman and chief executive officer, Jeremy Jones, will hold the same titles. Timothy Aitken, formerly chairman, CEO and president at Ab-bey, is now Apria's vice chairman and president.
The merged company will have its corporate office at Abbey's existing headquarters in Costa Mesa.