Few have as much at stake in the possible sale of Apria Healthcare Group Inc. as Larry Higby.
Higby, Apria’s chief executive, is the home healthcare provider’s largest individual shareholder. He held some 1.1 million shares of Apria as of March.
The stake includes 960,452 shares related to options and restricted stock purchase rights that are exercisable.
Higby’s stake had a market value of $39 million as of last week, before the cost of exercising options.
Boston-based mutual fund manager Massachusetts Financial Services Co. is Apria’s largest shareholder at 4.1 million shares, an 8.5% stake.
Lake Forest-based Apria, which provides breathing treatments, drugs and equipment to patients in their homes, said earlier this month that it had retained Morgan Stanley & Co. to consider potential offers.
A sale would offer more than just a payoff for Higby. It stands to cap years of restructuring by him and others at Apria.
When Higby joined Apria in 1997 as president and chief operating officer, the company was in turnaround mode under then-chief executive Philip Carter.
Apria was created 10 years ago from the combination of Homedco Group Inc. and Abbey Healthcare Group Inc., two Orange County home health companies.
Early on, the marriage was uneasy, marked by board fights, system glitches and piles of uncollected payments.
Analysts credit Higby and Carter with righting Apria’s operations by centralizing billing and boosting revenue collection, issues that nearly sent Apria over the edge into insolvency prior to Carter’s arrival.
Apria has grown by landing contracts with health insurers and what Higby has called “Apriatization”,the practice of acquiring and integrating smaller home healthcare providers.
“We don’t look (at acquisitions) as the primary source of our growth,” Higby said in an earlier interview. “The primary source of our growth comes from growth inside the business, with all of the organizations that we serve.”
Apria’s been roughed up a bit lately from Medicare reimbursement cuts and a decision not to renew a contract with Gentiva CareCentrix Inc. of Melville, N.Y., which steers managed care patients to home health providers.
Apria, which has 475 branches nationwide, could fetch $2 billion or more. The company, which had 2004 sales of $1.45 billion, had a market value of $1.75 billion late last week.
“Apria has been approached from time to time, either by the investment community who may have ideas about possible financial structures or by others,” said Lisa Getson, the company’s executive vice president, government relations, investor services and compliance.
Apria expects to conclude its process with Morgan Stanley by the end of summer, Getson said.
Potential buyers could be private equity firms as well as public companies.
This isn’t the first time that Apria and a sale have been mentioned in the same breath.
Last summer, company officials talked with several investment firms, including Blackstone Group LP, Warburg Pincus LLC and Madison Dearborn Partners LLC, about possibly going private.
Arthur Henderson, an analyst who follows Apria for New York-based Jefferies & Co., said in published reports that Apria is undervalued because of its managed care business, which he said brings in lower profits than Medicare.
A buyer could look to take Apria public again after some restructuring, Henderson said.
