UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

                       For the period ended March 31, 2001

                                       OR

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934


                         Commission File Number: 1-14316


                           APRIA HEALTHCARE GROUP INC.
             (Exact name of registrant as specified in its charter)



         DELAWARE                                       33-0488566
(State or other jurisdiction of                      (I.R.S. Employer
 incorporation or organization)                   Identification Number)


  3560 HYLAND AVENUE, COSTA MESA, CA                      92626
(Address of principal executive offices)                (Zip Code)

       Registrant's telephone number, including area code: (714) 427-2000

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
                                            Yes  X     No
                                               -----     ------

There were 53,766,008  shares of common stock,  $.001 par value,  outstanding at
May 8, 2001.


                           APRIA HEALTHCARE GROUP INC.

                                    FORM 10-Q

                       FOR THE PERIOD ENDED MARCH 31, 2001



PART I.   FINANCIAL INFORMATION
-------------------------------

Item 1.        Condensed Consolidated Financial Statements (unaudited)
               Condensed Consolidated Balance Sheets
               Condensed Consolidated Income Statements
               Condensed Consolidated Statements of Cash Flows
               Notes to Condensed Consolidated Financial Statements

Item 2.        Management's Discussion and Analysis of
               Financial Condition and Results of Operations

Item 3.        Quantitative and Qualitative Disclosures About Market Risk


PART II.  OTHER INFORMATION
---------------------------

Item 1.        Legal Proceedings

Item 2.        Changes in Securities

Item 3.        Defaults Upon Senior Securities

Item 4.        Submission of Matters to a Vote of Security Holders

Item 5.        Other Information

Item 6.        Exhibits and Reports on Form 8-K


SIGNATURES
----------

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                           APRIA HEALTHCARE GROUP INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                           MARCH 31,   DECEMBER 31,
(dollars in thousands)                                                       2001         2000
--------------------------------------------------------------------------------------------------
                                                                          (unaudited)

                                     ASSETS
CURRENT ASSETS
                                                                                  
  Cash and cash equivalents ............................................   $  11,377    $  16,864
  Accounts receivable, less allowance for doubtful accounts of $36,716
    and $39,787 at March 31, 2001 and December 31, 2000, respectively...     155,216      145,518
  Inventories ..........................................................      21,855       22,404
  Deferred income taxes ................................................      33,400       33,067
  Prepaid expenses and other current assets ............................       8,332        8,617
                                                                           ---------    ---------
          TOTAL CURRENT ASSETS .........................................     230,180      226,470

PATIENT SERVICE EQUIPMENT, less accumulated depreciation of $318,606
  and $310,741 at March 31, 2001 and December 31, 2000, respectively ...     140,035      134,812
PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET ..............................      43,101       40,630
DEFERRED INCOME TAXES ..................................................      65,311       75,076
INTANGIBLE ASSETS, NET .................................................     161,356      137,928
OTHER ASSETS ...........................................................       1,643        1,687
                                                                           ---------    ---------
                                                                           $ 641,626    $ 616,603
                                                                           =========    =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable .....................................................   $  49,392    $  54,250
  Accrued payroll and related taxes and benefits .......................      31,093       28,449
  Accrued insurance ....................................................       9,511        9,980
  Income taxes payable .................................................      13,837       13,378
  Other accrued liabilities ............................................      27,892       24,555
  Current portion of long-term debt ....................................       8,956        1,999
                                                                           ---------    ---------
          TOTAL CURRENT LIABILITIES ....................................     140,681      132,611

LONG-TERM DEBT, net of current portion .................................     332,794      337,750

COMMITMENTS AND CONTINGENCIES (Note H)

STOCKHOLDERS' EQUITY
  Preferred stock, $.001 par value:  10,000,000 shares authorized;
    none issued ........................................................           -            -
  Common stock, $.001 par value:  150,000,000 shares authorized;
    53,602,825 and 53,153,890 shares issued at March 31, 2001 and
    December 31, 2000, respectively; 53,516,725 and 53,067,790
    outstanding at March 31, 2001 and December 31, 2000, respectively...          54           53
  Additional paid-in capital ...........................................     348,453      343,621
  Accumulated deficit ..................................................    (179,395)    (196,471)
  Treasury stock, at cost; 86,100 shares at March 31, 2001
    and December 31, 2000, respectively ................................        (961)        (961)
                                                                           ---------    ---------
                                                                             168,151      146,242
                                                                           ---------    ---------

                                                                           $ 641,626    $ 616,603
                                                                           =========    =========


See notes to condensed consolidated financial statements.



                           APRIA HEALTHCARE GROUP INC.

                    CONDENSED CONSOLIDATED INCOME STATEMENTS
                                   (unaudited)


                                                              THREE MONTHS ENDED
                                                                  MARCH 31,
                                                             -------------------
(dollars in thousands, except per share data)                  2001       2000
--------------------------------------------------------------------------------

                                                                  
Net revenues .............................................   $271,354   $250,722
Costs and expenses:
   Cost of net revenues:
      Product and supply costs ...........................     51,927     49,446
      Patient service equipment depreciation .............     20,964     18,853
      Nursing services ...................................        354        453
      Other ..............................................      3,033      2,749
                                                             --------   --------
                                                               76,278     71,501
   Selling, distribution and administrative ..............    148,394    133,525
   Provision for doubtful accounts .......................      8,150     10,619
   Amortization of intangible assets .....................      2,836      2,440
                                                             --------   --------
                                                              235,658    218,085
                                                             --------   --------
          OPERATING INCOME ...............................     35,696     32,637
Interest expense, net ....................................      8,408     10,601
                                                             --------   --------
          INCOME BEFORE TAXES ............................     27,288     22,036
Income tax expense .......................................     10,212      9,255
                                                             --------   --------
          NET INCOME .....................................   $ 17,076   $ 12,781
                                                             ========   ========


Basic net income per common share ........................   $   0.32   $   0.24
                                                             ========   ========
Diluted net income per common share ......................   $   0.31   $   0.24
                                                             ========   ========


See notes to condensed consolidated financial statements.



                           APRIA HEALTHCARE GROUP INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

                                                                                     THREE MONTHS ENDED
                                                                                          MARCH 31,
                                                                                    --------------------
(dollars in thousands)                                                                2001        2000
--------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
                                                                                          
  Net income ...................................................................    $ 17,076    $ 12,781
  Items included in net income not requiring cash:
     Provision for doubtful accounts ...........................................       8,150      10,619
     Depreciation and amortization .............................................      27,487      25,760
     Amortization of deferred debt costs .......................................         617         689
     Deferred income taxes and other ...........................................       9,412       8,418
  Changes in operating assets and liabilities, net of effects of acquisitions:
     Accounts receivable .......................................................     (17,848)    (12,997)
     Inventories ...............................................................         661      (3,697)
     Prepaid expenses and other assets .........................................         373        (306)
     Accounts payable ..........................................................      (4,857)        473
     Accrued payroll and related taxes and benefits ............................       2,644       1,493
     Accrued expenses ..........................................................       1,466      (3,069)
                                                                                    --------    --------

          NET CASH PROVIDED BY OPERATING ACTIVITIES ............................      45,181      40,164

INVESTING ACTIVITIES
  Purchases of patient service equipment and property,
     equipment and improvements, net of effects of acquisitions ................     (30,029)    (20,628)
  Proceeds from disposition of assets ..........................................          41          74
  Acquisitions and payments of contingent consideration ........................     (25,299)     (4,860)
                                                                                    --------    --------

          NET CASH USED IN INVESTING ACTIVITIES ................................     (55,287)    (25,414)

FINANCING ACTIVITIES
  Proceeds from revolving credit facility ......................................      17,200           -
  Payments on revolving credit facility ........................................     (17,200)          -
  Payments on term loan ........................................................           -      (5,000)
  Payments on other long-term debt .............................................        (214)     (2,691)
  Issuances of common stock ....................................................       4,833       1,513
                                                                                    --------    --------

          NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES ..................       4,619      (6,178)
                                                                                    --------    --------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ...........................      (5,487)      8,572
Cash and cash equivalents at beginning of period ...............................      16,864      20,493
                                                                                    --------    --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .....................................    $ 11,377    $ 29,065
                                                                                    ========    ========


See notes to condensed consolidated financial statements.


                           APRIA HEALTHCARE GROUP INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - BASIS OF PRESENTATION

The accompanying  unaudited condensed  consolidated financial statements include
the accounts of Apria Healthcare  Group Inc.  ("Apria" or "the company") and its
subsidiaries. Intercompany transactions and accounts have been eliminated.

In the opinion of management,  all  adjustments,  consisting of normal recurring
accruals  necessary for a fair presentation of the results of operations for the
interim periods presented,  have been reflected herein. The unaudited results of
operations for interim periods are not necessarily  indicative of the results to
be  expected  for  the  entire  year.  For  further  information,  refer  to the
consolidated  financial  statements  and  footnotes  thereto  for the year ended
December 31, 2000, included in the company's 2000 Form 10-K.


NOTE B - RECLASSIFICATIONS, ACCOUNTING ESTIMATES AND RECENT ACCOUNTING
         PRONOUNCEMENTS

Reclassifications:  Certain amounts from prior periods have been reclassified to
conform to the current year presentation.

Use  of  Accounting  Estimates:  The  preparation  of  financial  statements  in
conformity with generally accepted accounting  principles requires management to
make assumptions  that affect the amounts  reported in the financial  statements
and accompanying notes. Actual results could differ from those estimates.

Recent  Accounting  Pronouncements:  During  the first  quarter  of 2001,  Apria
adopted  Statement  of  Financial   Accounting   Standards   ("SFAS")  No.  133,
"Accounting  for  Derivative  Instruments  and  Hedging  Activities",  which was
amended by SFAS No. 137,  "Accounting  for  Derivative  Instruments  and Hedging
Activities - Deferral of the Effective Date of SFAS No. 133" and further amended
by SFAS No. 138,  "Accounting  for Certain  Derivative  Instruments  and Certain
Hedging  Activities".  SFAS No.  133,  as amended,  establishes  accounting  and
reporting  standards  for hedging  activities  and for  derivative  instruments,
including  certain  derivative  instruments  embedded  in  other  contracts.  It
requires  that  an  entity   recognize  all  derivatives  as  either  assets  or
liabilities  in  the   statements  of  financial   position  and  measure  those
instruments  at fair  value.  Changes in the fair value of  derivatives  must be
recorded  each  period.  SFAS  No.  133  also  requires  formal   documentation,
designation at the time the hedge transaction is initiated and assessment of the
effectiveness of the transactions  that receive hedge  accounting.  At March 31,
2001,  Apria had no derivative  securities  that require fair value  measurement
under  SFAS  No.  133.  Accordingly,  adoption  of SFAS  No.  133 did not have a
material effect on the financial statements.


NOTE C - REVENUE RECOGNITION AND CONCENTRATION OF CREDIT RISK

Revenues are  recognized on the date services and related  products are provided
to  patients  and  are  recorded  at  amounts  estimated  to be  received  under
reimbursement  arrangements with third-party payors, including private insurers,
managed care organizations, Medicare and Medicaid.

Due to the nature of the industry  and the  reimbursement  environment  in which
Apria  operates,  certain  estimates  are  required to record net  revenues  and
accounts receivable at their net realizable values.  Inherent in these estimates
is the  risk  that  they  will  have to be  revised  or  updated  as  additional
information becomes available.  Specifically, the complexity of many third-party
billing  arrangements and the uncertainty of  reimbursement  amounts for certain
services from certain  payors may result in  adjustments  to amounts  originally
recorded. Such adjustments are typically identified and recorded at the point of
cash application, claim denial or account review.

Accounts  receivable  are reduced by an allowance  for doubtful  accounts  which
provides for those  accounts  from which payment is not expected to be received,
although services were provided and revenue was earned.

Management  performs  various  analyses to evaluate the net realizable  value of
accounts receivable.  Specifically,  management considers historical realization
data,  accounts  receivable  aging  trends,  operating  statistics  and relevant
business  conditions.  Also, focused reviews of certain large and/or problematic
payors are performed.  Because of continuing changes in the healthcare  industry
and third-party reimbursement,  it is possible that management's estimates could
change in the near  term,  which  could  have an impact on  operations  and cash
flows.


NOTE D - BUSINESS COMBINATIONS

Apria periodically  makes  acquisitions of complementary  businesses in specific
geographic  markets.  The  transactions  are  accounted for as purchases and the
results of operations of the acquired companies are included in the accompanying
income  statements from the date of acquisition.  During the three-month  period
ended  March 31,  2001,  cash paid for  acquisitions  was  $25,299,000.  For the
acquisitions  that closed during that same period,  $25,751,000 was allocated to
intangible  assets,  which  includes  amounts  not yet paid.  Goodwill  is being
amortized  over 20 years and covenants not to compete are being  amortized  over
the life of the respective agreements.


NOTE E - LONG-TERM DEBT

At  March  31,  2001,   total   borrowings   under  the  credit  agreement  were
$140,000,000,  outstanding  letters  of credit  totaled  $1,000,000  and  credit
available under the revolving facility was $49,000,000. At March 31, 2001, Apria
was in  compliance  with all of the financial  covenants  required by the credit
agreement.


NOTE F - EQUITY

The change in stockholders'  equity, other than from net income, is attributable
to the  exercise of stock  options.  For the three  months ended March 31, 2001,
proceeds from the exercise of stock options amounted to $4,833,000.


NOTE G - INCOME TAXES

Income  taxes  for the three  months  ended  March  31,  2001 and 2000 have been
provided at the effective tax rate expected to be applicable for the year.

At December 31, 2000, Apria's federal net operating loss carryforwards  ("NOLs")
approximated  $173,000,000,  which will begin expiring in varying amounts in the
years 2003 through 2013. Additionally,  the company has various state NOLs which
began expiring in 1997 and an  alternative  minimum tax credit  carryforward  of
approximately  $8,000,000. As a result of an ownership change in 1992, which met
specified  criteria of Section 382 of the Internal Revenue Code, future use of a
portion of the federal and state NOLs  generated  prior to 1992 are each limited
to  approximately  $5,000,000  per  year.  Because  of  the  annual  limitation,
approximately  $57,000,000 of each of Apria's  federal and state NOLs may expire
unused.  The company excludes the $57,000,000 of potentially  expiring NOLs from
its  deferred  tax assets.  In 2001,  for federal  tax  purposes, NOLs are being
utilized to the extent of the company's federal taxable income.


NOTE H - COMMITMENTS AND CONTINGENCIES

Apria and  certain of its  present  and former  officers  and/or  directors  are
defendants in a class action lawsuit,  In Re Apria  Healthcare  Group Securities
Litigation,  filed  in the U.S.  District  Court  for the  Central  District  of
California,  Southern  Division  (Case  No.  SACV98-217  GLT).  This  case  is a
consolidation  of three similar  class  actions filed in March and April,  1998.
Pursuant to a court order dated May 27,  1998,  the  plaintiffs  in the original
three class  actions  filed a  Consolidated  Amended  Class Action  Complaint on
August 6, 1998. The amended complaint purports to establish a class of plaintiff
shareholders who purchased Apria's common stock between May 22, 1995 and January
20,  1998.  No class has been  certified  at this time.  The  amended  complaint
alleges,  among other things,  that the defendants made false and/or  misleading
public  statements  regarding Apria and its financial  condition in violation of
federal  securities laws. The amended complaint seeks  compensatory and punitive
damages as well as other relief.

Two similar  class  actions were filed during  July,  1998 in Superior  Court of
California for the County of Orange:  Schall v. Apria  Healthcare Group Inc., et
al. (Case No. 797060) and Thompson v. Apria  Healthcare Group Inc., et al. (Case
No. 797580).  These two actions were consolidated by a court order dated October
22, 1998 (Master Case No.  797060).  On June 14, 1999,  the  plaintiffs  filed a
Consolidated  Amended Class Action  Complaint  asserting claims founded on state
law and on Sections 11 and 12(2) of the 1933 Securities Act.

Apria believes that it has meritorious defenses to the plaintiffs' claims and it
intends to vigorously  defend itself in both the federal and state cases. In the
opinion of Apria's management,  the ultimate  disposition of these class actions
will not have a material adverse effect on the company's  financial condition or
results of operations.

Since  mid-1998  Apria has received a number of subpoenas and document  requests
from U.S.  Attorneys'  offices and from the U.S.  Department of Health and Human
Services.  The  subpoenas  and requests  generally  ask for  documents,  such as
patient  files,   billing  records  and  other  documents  relating  to  billing
practices,  related to the company's patients whose healthcare costs are paid by
Medicare and other federal programs. Apria is cooperating with the government in
connection with these  investigations and is responding to the document requests
and  subpoenas.  In July 1999 the company  received  notification  that the U.S.
Attorney's office in Sacramento closed its criminal  investigation file relating
to eight subpoenas that had been issued by that office.

In February 2001 the company was informed by the U.S.  Attorney's  office in Los
Angeles  that the billing  investigation  being  conducted by that office is the
result  of qui tam  litigation  filed on behalf of the  government  against  the
company,  and that the government is investigating  certain  allegations for the
purpose  of  determining  whether  it will  intervene  in that  litigation.  The
complaints in the litigation are under seal, however, and the government has not
informed  the company of either the  identity  of the court or courts  where the
proceedings  are  pending,  the date or dates  instituted,  the  identity of the
plaintiffs, the factual bases alleged to underlie the proceedings, or the relief
sought.

Apria has  acknowledged  that there may be errors and  omissions  in  supporting
documentation  affecting  a  portion  of  its  billings.  If a  judge,  jury  or
administrative  agency were to determine that such errors and omissions resulted
in the submission of false claims to federal healthcare  programs or significant
overpayments by the government, Apria could face civil and administrative claims
for refunds,  sanctions and penalties for amounts that would be highly  material
to its  business,  results of  operations  and  financial  condition,  including
exclusion of Apria from  participation  in federal  healthcare  programs.  Apria
believes that the company would be in a position to assert numerous  meritorious
defenses in the event that the qui tam  litigation  proceeds or any other claims
are  asserted.  However,  no assurance can be provided as to the outcome of this
litigation  or whether any other claims will be asserted or as to the outcome of
any other  possible  proceedings  that may result  from any such  other  claims.
Management  cannot  estimate the range of possible loss of this  litigation  and
therefore has not recorded any related accruals.

Apria is also engaged in the defense of certain claims and lawsuits  arising out
of the ordinary  course and conduct of its  business,  the outcomes of which are
not  determinable  at this time.  Apria has  insurance  policies  covering  such
potential  losses  where such  coverage  is cost  effective.  In the  opinion of
management,  any  liability  that  might be  incurred  by the  company  upon the
resolution  of these  claims and  lawsuits  will not, in the  aggregate,  have a
material adverse effect on Apria's financial condition or results of operations.


NOTE I - PER SHARE AMOUNTS

The following  table sets forth the  computation  of basic and diluted per share
amounts:

                                                                                           THREE MONTHS ENDED
                                                                                                MARCH 31,
                                                                                           ------------------
(in thousands, except per share data)                                                         2001     2000
-------------------------------------------------------------------------------------------------------------

NUMERATOR:
                                                                                                
  Net income ............................................................................   $17,076   $12,781
  Numerator for basic per share amounts - income available to common stockholders .......    17,076    12,781

  Numerator for diluted per share amounts - income available to common stockholders .....    17,076    12,781


DENOMINATOR:
  Denominator for basic per share amounts - weighted average shares .....................   $53,392   $52,191

    Effect of dilutive securities:
      Employee stock options ............................................................     2,092     1,756
                                                                                            -------   -------
      Dilutive potential common shares ..................................................     2,092     1,756
                                                                                            -------   -------
  Denominator for diluted per share amounts - adjusted weighted average shares ..........    55,484    53,947
                                                                                            =======   =======

Basic net income per common share .......................................................   $  0.32   $  0.24
                                                                                            =======   =======
Diluted net income per common share .....................................................   $  0.31   $  0.24
                                                                                            =======   =======

Employee  stock  options  excluded  from the  computation  of diluted  per share
amounts:

    Exercise price exceeds average market price of common stock .........................     2,160     2,391

Average exercise price per share that exceeds average market price of common stock ......   $ 26.93   $ 18.67



CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES  LITIGATION  REFORM  ACT OF 1995:  Apria's  business  is subject to a
number of risks, some of which are beyond the company's control. The company has
described  certain  of those  risks in its Form 10-K for the  fiscal  year ended
December 31, 2000, as filed with the Securities and Exchange Commission on March
22,  2001.  This  report  may be used for  purposes  of the  Private  Securities
Litigation  Reform  Act of  1995  as a  readily  available  document  containing
meaningful cautionary statements  identifying important factors that could cause
actual results to differ materially from those projected in any  forward-looking
statements the company may make from time to time. Those risks include:  whether
the company will be able to resolve issues  pertaining to the  collectibility of
its accounts  receivable,  healthcare reform and the effect of federal and state
healthcare regulations, the ongoing government investigations regarding patients
covered by Medicare and other federal  programs,  pricing  pressures  from large
payors and changes in governmental  reimbursement  levels,  the effectiveness of
the company's operating systems and controls, and the successful  implementation
of the company's acquisition strategy.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS


RESULTS OF OPERATIONS
---------------------

     NET  REVENUES.  Net revenues  were $271.4  million in the first  quarter of
2001,  compared to $250.7 million for the first quarter of 2000. The increase in
net revenues is due to internal growth, new contracts with regional and national
payors,  the  acquisition of  complementary  businesses  and price  increases in
certain managed care contracts.

                                            THREE MONTHS ENDED MARCH 31,
                                     -----------------------------------------
                                            2001                   2000
                                     ------------------     ------------------
(dollars in thousands)                   $         %            $         %
------------------------------------------------------------------------------

Respiratory therapy ............     $178,330    65.7%      $163,263    65.1%
Infusion therapy ...............       52,385    19.3%        46,751    18.6%
HME/other ......................       40,639    15.0%        40,708    16.3%
                                     --------   -----       --------   -----
     Total net revenues ........     $271,354   100.0%      $250,722   100.0%
                                     ========   =====       ========   =====

     Use of Estimates in Recording  Net Revenues.  Substantially  all of Apria's
revenues are reimbursed by third party payors, including Medicare,  Medicaid and
managed  care  organizations.  Due  to  the  nature  of  the  industry  and  the
reimbursement  environment  in  which  Apria  operates,  certain  estimates  are
required in recording net revenues. Inherent in these estimates is the risk that
they will have to be  revised  or  updated  as  additional  information  becomes
available.

     Medicare  Reimbursement  Update. The Medicare,  Medicaid and SCHIP Benefits
Improvement  and Protection Act of 2000 provides  reinstatement  of the Consumer
Price  Index-based  reimbursement  increase in 2001 for certain  durable medical
equipment  products and  services.  The increase  will be in effect July 1, 2001
through  December 31, 2001 and will include a  transitional  allowance that will
effectively compress a full year's Consumer Price Index update into six months.

     GROSS  MARGIN.  Gross  margins  for the first  quarter  of 2001 were  71.9%
compared  to  71.5%  for the same  period  last  year.  The  improvement  can be
partially  attributed to better  utilization  of inventory  and patient  service
equipment and the increase in the share of higher-margin respiratory revenues to
total net revenues.

     SELLING,   DISTRIBUTION  AND  ADMINISTRATIVE.   Selling,  distribution  and
administrative  expense, as a percentage of net revenue, was 54.7% for the first
quarter of 2001 versus 53.3% for the corresponding  period in 2000. Expenses for
the first quarter of 2001 reflect staffing and compensation  increases  effected
during 2000, most notably in the functional areas of reimbursement and delivery.
The investments made in the reimbursement  area have contributed to improvements
in cash collections and reductions in the provision for doubtful  accounts.  The
additions in the delivery area were in support of business growth.

     PROVISION FOR DOUBTFUL  ACCOUNTS.  The provision for doubtful  accounts was
3.0% of net revenues for the first three months of 2001 compared to 4.2% for the
corresponding  period  in  2000.  The  decrease  is  due to a  reduction  in the
percentage of older  accounts to total  accounts  receivable  and a reduction in
collection periods. See "Liquidity and Capital Resources - Accounts Receivable".

     AMORTIZATION OF INTANGIBLE  ASSETS.  Amortization  expense was $2.8 million
for the first  quarter of 2001  compared  to $2.4  million in the  corresponding
period of 2000. The increase is directly  attributable to intangible assets that
were  recorded in  conjunction  with  acquisitions  consummated  after the first
quarter of 2000.

     INTEREST  EXPENSE.  Interest expense was $8.4 million for the first quarter
of 2001,  down from $10.6 million for the first quarter of 2000. The decrease is
due to the reduction in long-term  debt and a decrease in interest rates between
the periods.

     INCOME  TAXES.  Income  taxes for the three months ended March 31, 2001 and
2000 have been provided at the effective tax rate expected to be applicable  for
the year.

     At December 31, 2000,  Apria's  federal net  operating  loss  carryforwards
("NOLs") approximated $173 million, which will begin expiring in varying amounts
in the years 2003 through 2013. Additionally, the company has various state NOLs
which began expiring in 1997 and an alternative  minimum tax credit carryforward
of approximately  $8 million.  As a result of an ownership change in 1992, which
met specified  criteria of Section 382 of the Internal Revenue Code,  future use
of a portion  of the  federal  and state NOLs  generated  prior to 1992 are each
limited to approximately $5 million per year.  Because of the annual limitation,
approximately  $57 million of each of Apria's  federal and state NOLs may expire
unused.  Apria  excludes the $57 million of  potentially  expiring NOLs from its
deferred tax assets. In 2001, for federal tax purposes,  NOLs are being utilized
to the extent of the company's federal taxable income.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

     CASH FLOW.  Operating  cash flow was $45.2  million in the first quarter of
2001  compared  with $40.2  million for the  corresponding  period in 2000.  The
primary  reason for the  improvement  is the increase in net income.  The larger
increase in  accounts  receivable  in the first  quarter of 2001 versus the same
period in 2000 was offset by changes in other operating  assets and liabilities.
Cash used in investing  activities  was $55.3  million and $25.4  million in the
first  quarters  of 2001  and  2000,  respectively.  The  variance  is due to an
increase in business  acquisitions  and increases in patient  service  equipment
purchases to support revenue growth.

     ACCOUNTS  RECEIVABLE.  Accounts  receivable  before  allowance for doubtful
accounts was $191.9 million at March 31, 2001 and $185.3 million at December 31,
2000.  The  increase  is  due  to  continued  quarter-over-quarter  net  revenue
increases.  Days sales outstanding (calculated as of each period-end by dividing
accounts receivable, less allowance for doubtful accounts, by the 90-day rolling
average of net  revenues)  were 51 days at both March 31, 2001 and  December 31,
2000.  Accounts  aged in excess of 180 days as a  percentage  of total  accounts
receivable decreased to 21.6% at March 31, 2001 from 23.8% at December 31, 2000.

     Evaluation of Net Realizable Value. Management performs various analyses to
evaluate  the  net  realizable  value  of  accounts  receivable.   Specifically,
management  considers  historical  realization data,  accounts  receivable aging
trends,  operating  statistics and relevant business  conditions.  Also, focused
reviews of certain large and/or  problematic  payors are  performed.  Because of
continuing changes in the healthcare industry and third-party reimbursement,  it
is possible that  management's  estimates  could change in the near term,  which
could have an impact on operations and cash flows.

     Unbilled  Receivables.  Included  in  accounts  receivable  are  earned but
unbilled  receivables  of $23.2  million and $17.9 million at March 31, 2001 and
December 31, 2000, respectively.  Delays between the date of service and billing
can  occur  due  to  delays  in  obtaining   certain   required   payor-specific
documentation   from  internal  and  external   sources.   Earned  but  unbilled
receivables are aged from date of service and are considered in Apria's analysis
of historical performance and collectibility.

     LONG-TERM  DEBT.  At March 31,  2001,  total  borrowings  under the  credit
agreement  were $140.0  million  (none of which was advanced  from the revolving
credit facility),  outstanding letters of credit totaled $1.0 million and credit
available  under the revolving  facility was $49.0  million.  At March 31, 2001,
Apria had $120.4 million of its acquisition  allotment (as defined by the credit
agreement) remaining.

     BUSINESS   COMBINATIONS.   Apria   periodically   makes   acquisitions   of
complementary  businesses in specific geographic  markets.  The transactions are
accounted  for as  purchases  and the  results  of  operations  of the  acquired
companies are included in the  accompanying  income  statements from the date of
acquisition.  During the three-month  period ended March 31, 2001, cash paid for
acquisitions was $25.3 million.  For acquisitions that closed during the period,
approximately  $25.8 million was allocated to intangible assets,  which includes
amounts not yet paid.  Goodwill is being  amortized  over 20 years and covenants
not to compete are being amortized over the life of the respective agreements.

     OTHER.  Apria's  management  believes  that  cash  provided  by  operations
together  with cash invested in its money market  account and amounts  available
under its existing  credit  facility  will be  sufficient to finance its current
operations for at least the next year.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Apria does not currently  utilize  derivative  financial  instruments  that
expose the company to  significant  market  risk.  However,  Apria is subject to
interest rate changes on its variable  rate term loan under the  company's  bank
credit  agreement  that may affect the fair value of that debt and cash flow and
earnings.  Based on the term debt  outstanding at March 31, 2001 and the current
market  perception,  a 100 basis point change in the  applicable  interest rates
would  increase or  decrease  Apria's  annual  cash flow and pretax  earnings by
approximately $1.4 million.


                           PART II - OTHER INFORMATION
                           ---------------------------


ITEM 1.    LEGAL PROCEEDINGS

           Apria and certain of its present and former officers and/or directors
           are  defendants  in a class action  lawsuit,  In Re Apria  Healthcare
           Group Securities Litigation, filed in the U.S. District Court for the
           Central   District  of  California,   Southern   Division  (Case  No.
           SACV98-217  GLT). This case is a consolidation of three similar class
           actions  filed in March and April,  1998.  Pursuant  to a court order
           dated May 27,  1998,  the  plaintiffs  in the  original  three  class
           actions filed a Consolidated Amended Class Action Complaint on August
           6, 1998.  The  amended  complaint  purports  to  establish a class of
           plaintiff shareholders who purchased Apria's common stock between May
           22, 1995 and January 20,  1998.  No class has been  certified at this
           time. The amended  complaint  alleges,  among other things,  that the
           defendants made false and/or misleading  public statements  regarding
           Apria and its financial  condition in violation of federal securities
           laws. The amended  complaint seeks  compensatory and punitive damages
           as well as other relief.

           Two similar  class  actions were filed during July,  1998 in Superior
           Court of  California  for the  County  of  Orange:  Schall  v.  Apria
           Healthcare Group Inc., et al. (Case No. 797060) and Thompson v. Apria
           Healthcare  Group Inc., et al. (Case No.  797580).  These two actions
           were  consolidated  by a court order dated  October 22, 1998  (Master
           Case  No.  797060).   On  June  14,  1999,  the  plaintiffs  filed  a
           Consolidated  Amended Class Action Complaint asserting claims founded
           on state law and on Sections 11 and 12(2) of the 1933 Securities Act.

           Apria believes that it has  meritorious  defenses to the  plaintiffs'
           claims and it intends to vigorously defend itself in both the federal
           and state cases. In the opinion of Apria's  management,  the ultimate
           disposition  of these class actions will not have a material  adverse
           effect on the company's financial condition or results of operations.

           Since  mid-1998 Apria has received a number of subpoenas and document
           requests from U.S. Attorneys' offices and from the U.S. Department of
           Health and Human Services.  The subpoenas and requests  generally ask
           for  documents,  such as patient  files,  billing  records  and other
           documents  relating to billing  practices,  related to the  company's
           patients  whose  healthcare  costs  are paid by  Medicare  and  other
           federal  programs.  Apria  is  cooperating  with  the  government  in
           connection  with  these  investigations  and  is  responding  to  the
           document  requests and subpoenas.  In July 1999 the company  received
           notification that the U.S. Attorney's office in Sacramento closed its
           criminal investigation file relating to eight subpoenas that had been
           issued by that office.

           In  February  2001 the company  was  informed by the U.S.  Attorney's
           office in Los Angeles that the billing  investigation being conducted
           by that office is the result of qui tam litigation filed on behalf of
           the  government  against  the  company,  and that the  government  is
           investigating  certain  allegations  for the  purpose of  determining
           whether it will intervene in that  litigation.  The complaints in the
           litigation  are  under  seal,  however,  and the  government  has not
           informed  the  company of either the  identity of the court or courts
           where the proceedings are pending, the date or dates instituted,  the
           identity of the plaintiffs, the factual bases alleged to underlie the
           proceedings, or the relief sought.

           Apria has  acknowledged  that  there may be errors and  omissions  in
           supporting  documentation  affecting a portion of its billings.  If a
           judge,  jury or  administrative  agency were to  determine  that such
           errors and  omissions  resulted in the  submission of false claims to
           federal  healthcare  programs  or  significant  overpayments  by  the
           government,  Apria  could  face civil and  administrative  claims for
           refunds,  sanctions  and  penalties  for amounts that would be highly
           material  to  its  business,  results  of  operations  and  financial
           condition, including exclusion of Apria from participation in federal
           healthcare  programs.  Apria  believes that the company would be in a
           position to assert  numerous  meritorious  defenses in the event that
           the qui tam  litigation  proceeds or any other  claims are  asserted.
           However,  no  assurance  can be  provided  as to the  outcome of this
           litigation  or whether any other claims will be asserted or as to the
           outcome of any other  possible  proceedings  that may result from any
           such other claims.

           Apria is also  engaged in the defense of certain  claims and lawsuits
           arising out of the ordinary  course and conduct of its business,  the
           outcomes  of which  are not  determinable  at this  time.  Apria  has
           insurance policies covering such potential losses where such coverage
           is cost effective.  In the opinion of management,  any liability that
           might be incurred by the company upon the  resolution of these claims
           and  lawsuits  will not, in the  aggregate,  have a material  adverse
           effect on Apria's financial condition or results of operations.

ITEMS 2-5. NOT APPLICABLE

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a)   Exhibits:

                 Exhibit
                 Number     Reference
                 ------     ---------

                 10.1       Amendment No. 1  to  the  1998   Nonqualified  Stock
                            Incentive Plan, dated January 31, 2001. Incorporated
                            by reference to Annual  Report on  Form 10-K for the
                            year ended December 31, 2000.

           (b)   Reports on Form 8-K:

                 No reports on Form 8-K were filed during the  quarter for which
                 this report is filed.


                                   SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                            APRIA HEALTHCARE GROUP INC.
                            ---------------------------
                                   Registrant




May 15, 2001                /s/  JOHN C. MANEY
                            ----------------------------------------------------
                            John C. Maney
                            Executive Vice President and Chief Financial Officer
                            (Principal Financial and Accounting Officer)