Blackstone to buy OC firm

Who says the private equity world is in retreat? The Blackstone Group has agreed to pick up OC-based home health care provider Apria Healthcare for $1.6-billion (that includes debt). It will be financed by Blackstone and a bank consortium made up of Bank of America, Wachovia and Barclays Capital. The $21-a-share offer is a handsome 33 percent premium over Wednesday’s close. The company can shop around the bid to other interested parties until July 24. Apria is the product of OC companies Homedco Group and Abbey Healthcare, and it provides home healthcare for folks who need regular infusions or respiratory therapy such as oxygen systems. That would seem to be a great business, but Wall Street is concerned about payouts from Medicare. From the LAT's Money & Co.:

In the first quarter of this year the company’s revenue jumped 35% to $528 million, boosted by an acquisition. But net income was $20.8 million, flat with the same quarter in 2007. Growth in the company’s home-respiratory business "was offset by certain Medicare payment reductions, which began last year, as well as lower growth rates in low-margin inhalation therapy drugs and home medical equipment," [CEO Lawrence] Higby said in the company’s first-quarter report. Apria warned in May that Medicare reimbursement shortfalls for certain respiratory drugs would clip revenue this year by $12 million more than the company had previously estimated.