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CALIFORNIA / News and Insight on Business in the
Golden State

Apria Chairman and 2 Other Executives Resign

January 20, 1998|JAMES S. GRANELLI | TIMES STAFF WRITER

In a major management shake-up Monday, Apria Healthcare Group Inc.'s chairman and two other executives resigned as the home health-care company said it will have bigger-than-expected losses.

The departure of Jeremy M. Jones, 56, as chairman and chief executive could also signal that efforts to sell the Costa Mesa company are dead and that new managers will try instead to revive what is one of the nation's largest home health-care firms.

Orange County developer George L. Argyros was named chairman. Argyros, 60, an outside director, is Apria's largest individual shareholder.

He said that the company will start searching for a new chief executive and that its president, Lawrence M. Higby, 52, is one of the candidates. Higby was named interim chief executive.

Also departing are Lawrence H. Smallen, 48, the chief financial officer, and Jerome J. Lyden, 41, senior vice president of sales.

Industry sources said that cutbacks in Medicare next year--a big source of revenue for Apria and a host of health-care companies--and low hikes in premiums will probably make many managed-care firms less attractive as investments.

"It's clear that Apria as a company is not going away," said Sheryl R. Skolnick, an analyst at BancAmerica Robertson Stephens brokerage in New York. "But . . . the company is at least a year away from turning the corner."

Argyros said the company will wind up talks by the end of the month with New York investment banker Goldman, Sachs & Co., which it hired last spring to find a merger partner or other financial help.

At least two potential buyers--smaller Coram Healthcare Corp. in Denver and a group put together by former Apria executive Timothy M. Aitken--are still talking with Goldman Sachs, Argyros said. Apria's board said two weeks ago that a $918-million deal with Aitken's group wouldn't be in the company's best interests.

Apria said that its red ink for the fourth quarter will be much greater than anticipated, pushing its 1997 loss to at least $113.8 million, or $2.20 a share, or as high as $126.8 million, or $2.40 a share.

Argyros and Higby, who joined Apria three months ago, said earnings for 1998 will be "significantly below" Wall Street estimates of 81 to 89 cents a share.

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