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 September 30, 2002

                                       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)


 26220 ENTERPRISE COURT, LAKE FOREST, CA                  92630
 (Address of principal executive offices)               (Zip Code)

                  Registrant's telephone number: (949) 639-2000

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 54,882,530  shares of common stock,  $.001 par value,  outstanding at
November 7, 2002.
<PAGE>


                           APRIA HEALTHCARE GROUP INC.

                                    FORM 10-Q

                     FOR THE PERIOD ENDED SEPTEMBER 30, 2002






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

Item 1.       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

Item 4.       Controls and Procedures


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
----------


CERTIFICATIONS
--------------

Chief Executive Officer
Chief Financial Officer


EXHIBITS
--------
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
                           APRIA HEALTHCARE GROUP INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (unaudited)
<CAPTION>

                                                                                    SEPTEMBER 30,  DECEMBER 31,
(DOLLARS IN THOUSANDS)                                                                  2002          2001
---------------------------------------------------------------------------------------------------------------
                                     ASSETS

CURRENT ASSETS
<S>                                                                                  <C>           <C>
  Cash and cash equivalents ......................................................   $  12,732     $   9,359
  Accounts receivable, less allowance for doubtful accounts of $33,764
    and $32,073 at September 30, 2002 and December 31, 2001, respectively ........     176,656       162,092
  Inventories, net ...............................................................      22,823        25,084
  Deferred income taxes ..........................................................      28,476        33,017
  Prepaid expenses and other current assets ......................................      13,407        10,271
                                                                                     ---------     ---------
          TOTAL CURRENT ASSETS ...................................................     254,094       239,823

PATIENT SERVICE EQUIPMENT, less accumulated depreciation of $367,394
  and $342,010 at September 30, 2002 and December 31, 2001, respectively .........     181,304       165,471
PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET ........................................      54,002        47,312
DEFERRED INCOME TAXES ............................................................       2,198        37,838
GOODWILL .........................................................................     239,365       193,458
INTANGIBLE ASSETS, NET ...........................................................       6,489         4,863
OTHER ASSETS .....................................................................       7,027         7,017
                                                                                     ---------     ---------
                                                                                     $ 744,479     $ 695,782
                                                                                     =========     =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable ...............................................................   $  55,513     $  71,198
  Accrued payroll and related taxes and benefits .................................      41,361        33,907
  Accrued insurance ..............................................................      10,280        10,376
  Income taxes payable ...........................................................       3,638         9,060
  Other accrued liabilities ......................................................      36,857        34,754
  Current portion of long-term debt ..............................................      28,093        15,455
                                                                                     ---------     ---------
          TOTAL CURRENT LIABILITIES ..............................................     175,742       174,750

LONG-TERM DEBT, net of current portion ...........................................     257,468       278,234

COMMITMENTS AND CONTINGENCIES (Note I)

STOCKHOLDERS' EQUITY
  Preferred stock, $.001 par value: 10,000,000 shares authorized;
    none issued ..................................................................           -             -
  Common stock, $.001 par value: 150,000,000 shares authorized;
    56,296,149 and 54,690,267 shares issued at September 30, 2002 and
    December 31, 2001, respectively; 54,758,849 and 54,604,167
    outstanding at September 30, 2002 and December 31, 2001, respectively ........          56            55
  Additional paid-in capital .....................................................     392,928       368,231
  Treasury stock, at cost; 1,537,300 and 86,100 shares at September 30, 2002
    and December 31, 2001, respectively ..........................................     (32,485)         (961)
  Accumulated deficit ............................................................     (48,936)     (124,554)
  Accumulated other comprehensive (loss) income ..................................        (294)           27
                                                                                     ---------     ---------
                                                                                       311,269       242,798
                                                                                     ---------     ---------

                                                                                     $ 744,479     $ 695,782
                                                                                     =========     =========


See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>

                           APRIA HEALTHCARE GROUP INC.

                    CONDENSED CONSOLIDATED INCOME STATEMENTS
                                   (unaudited)

<CAPTION>
                                                                  THREE MONTHS ENDED             NINE MONTHS ENDED
                                                                     SEPTEMBER 30,                  SEPTEMBER 30,
                                                                 ---------------------         ---------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                       2002       2001               2002        2001
--------------------------------------------------------------------------------------------------------------------

<S>                                                              <C>         <C>               <C>         <C>
Net revenues .................................................   $ 312,046   $ 284,025         $ 923,816   $ 838,859
Costs and expenses:
   Cost of net revenues:
      Product and supply costs ...............................      56,004      50,300           167,917     152,002
      Patient service equipment depreciation .................      24,826      23,127            72,668      66,568
      Nursing services .......................................         221         270               720         930
      Other ..................................................       3,182       2,780             9,530       8,830
                                                                 ---------   ---------         ---------   ---------
          TOTAL COST OF NET REVENUES .........................      84,233      76,477           250,835     228,330

   Selling, distribution and administrative ..................     169,797     158,750           503,818     465,241
   Provision for doubtful accounts ...........................      11,476       9,873            34,534      29,092
   Amortization of goodwill and intangible assets ............         667       3,244             2,003       9,206
                                                                 ---------   ---------         ---------   ---------
          TOTAL COSTS AND EXPENSES ...........................     266,173     248,344           791,190     731,869
                                                                 ---------   ---------         ---------   ---------

          OPERATING INCOME ...................................      45,873      35,681           132,626     106,990
Interest expense, net ........................................       3,528       5,093            11,637      21,528
                                                                 ---------   ---------         ---------   ---------
          INCOME BEFORE TAXES AND
          EXTRAORDINARY CHARGE ...............................      42,345      30,588           120,989      85,462
Income tax expense ...........................................      15,880      11,455            45,371      32,006
                                                                 ---------   ---------         ---------   ---------
          INCOME BEFORE EXTRAORDINARY CHARGE .................      26,465      19,133            75,618      53,456
Extraordinary charge on debt refinancing, net of taxes .......           -       1,528                 -       1,528
                                                                 ---------   ---------         ---------   ---------
          NET INCOME .........................................   $  26,465   $  17,605         $  75,618   $  51,928
                                                                 =========   =========         =========   =========


Basic net income per common share:
   Income before extraordinary charge ........................   $    0.48   $    0.35         $    1.39   $    0.99
   Extraordinary charge on debt refinancing, net of taxes ....           -       (0.03)                -       (0.03)
                                                                 ---------   ---------         ---------   ---------
          Net income .........................................   $    0.48   $    0.32         $    1.39   $    0.96
                                                                 =========   =========         =========   =========

Diluted net income per common share:
   Income before extraordinary charge ........................   $    0.48   $    0.34         $    1.36   $    0.96
   Extraordinary charge on debt refinancing, net of taxes ....           -       (0.03)                -       (0.03)
                                                                 ---------   ---------         ---------   ---------
          Net income .........................................   $    0.48   $    0.31         $    1.36   $    0.93
                                                                 =========   =========         =========   =========



See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>

                           APRIA HEALTHCARE GROUP INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
<CAPTION>

                                                                                       NINE MONTHS ENDED
                                                                                          SEPTEMBER 30,
                                                                                     ----------------------
(DOLLARS IN THOUSANDS)                                                                  2002        2001
-----------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
<S>                                                                                  <C>          <C>
  Net income ...................................................................     $  75,618    $  51,928
  Items included in net income not requiring cash:
     Extraordinary charge on debt refinancing ..................................             -        2,442
     Provision for doubtful accounts ...........................................        34,534       29,092
     Depreciation and amortization .............................................        87,569       87,676
     Amortization of deferred debt issuance costs ..............................           967        1,552
     Deferred income taxes and other ...........................................        41,130       28,415
  Changes in operating assets and liabilities, exclusive of effects of
    acquisitions:
     Accounts receivable .......................................................       (49,407)     (44,773)
     Inventories, net ..........................................................         3,232          729
     Prepaid expenses and other assets .........................................        (3,694)      (5,173)
     Accounts payable, exclusive of outstanding checks .........................        (8,829)         594
     Accrued payroll and related taxes and benefits ............................         7,454        9,828
     Income taxes payable ......................................................         3,572        1,070
     Accrued expenses ..........................................................        (3,289)       3,281
                                                                                     ---------    ---------

          NET CASH PROVIDED BY OPERATING ACTIVITIES ............................       188,857      166,661

INVESTING ACTIVITIES
  Purchases of patient service equipment and property,
     equipment and improvements, exclusive of effects of acquisitions ..........       (88,857)     (99,775)
  Proceeds from disposition of assets ..........................................           239          235
  Cash paid for acquisitions, including payments of deferred consideration .....       (59,566)     (49,745)
                                                                                     ---------    ---------

          NET CASH USED IN INVESTING ACTIVITIES ................................      (148,184)    (149,285)

FINANCING ACTIVITIES
  Proceeds from revolving credit facilities ....................................       141,000       72,300
  Payments on revolving credit facilities ......................................      (146,100)     (56,300)
  Proceeds from term loans .....................................................             -      300,000
  Payments on term loans .......................................................        (6,812)    (140,000)
  Payment on redemption of senior subordinated notes ...........................             -     (200,000)
  Payments on other long-term debt .............................................        (2,239)      (1,653)
  Outstanding checks included in accounts payable ..............................        (6,856)        (561)
  Capitalized debt issuance costs .........................................          (666)      (5,597)
  Repurchases of common stock ..................................................       (31,524)           -
  Issuances of common stock ....................................................        15,897       15,123
                                                                                     ---------    ---------

          NET CASH USED IN FINANCING ACTIVITIES ................................       (37,300)     (16,688)
                                                                                     ---------    ---------

NET INCREASE IN CASH AND CASH EQUIVALENTS ......................................         3,373          688
Cash and cash equivalents at beginning of period ...............................         9,359       16,864
                                                                                     ---------    ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .....................................     $  12,732    $  17,552
                                                                                     =========    =========


See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>


                           APRIA HEALTHCARE GROUP INC.

         NOTES TO UNAUDITED 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, 2001, included in the company's 2001 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 period presentation.

Use  of  Accounting  Estimates:  The  preparation  of  financial  statements  in
conformity with accounting principles generally accepted in the United States of
America 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:  Effective  January 1, 2002,  Apria  adopted
Statement of Financial  Accounting  Standards  ("SFAS") No. 142,  "Goodwill  and
Other Intangible  Assets" in its entirety.  SFAS No. 142 addresses the financial
accounting and reporting for goodwill and other intangible assets. The statement
provides that goodwill or other intangible  assets with indefinite lives will no
longer be  amortized,  but  shall be tested  for  impairment  annually,  or more
frequently  if  circumstances  indicate  potential  impairment.  The  effect  of
adoption of SFAS No. 142 on the  consolidated  financial  statements is shown in
Note E - Goodwill and Intangible Assets.

Effective January 1, 2002, Apria was required to adopt SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets." This statement  supercedes
SFAS No.  121  "Accounting  for the  Impairment  of  Long-Lived  Assets  and for
Long-Lived  Assets to be Disposed Of" and amends other  guidance  related to the
accounting  and reporting of long-lived  assets.  SFAS No. 144 requires that one
accounting  model be used  for  long-lived  assets  to be  disposed  of by sale.
Discontinued  operations will be measured  similarly to other long-lived  assets
classified  as held for sale at the lower of its  carrying  amount or fair value
less cost to sell.  Future operating losses will no longer be recognized  before
they  occur.  SFAS No.  144  also  broadens  the  presentation  of  discontinued
operations  to include a component of an entity when  operations  and cash flows
can be clearly  distinguished,  and  establishes  criteria to  determine  when a
long-lived  asset is held for sale.  Adoption of this  statement  did not have a
material effect on Apria's consolidated financial statements.

In April 2002,  SFAS No. 145,  "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical  Corrections" was issued. SFAS
No. 145 updates and  clarifies  existing  accounting  pronouncements  related to
gains and losses from the extinguishment of debt and requires that certain lease
modifications   be   accounted   for  in  the  same  manner  as   sale-leaseback
transactions. Apria will be required to adopt the provisions of SFAS No. 145 for
its fiscal year  beginning  January 1, 2003.  Adoption of this  statement is not
expected  to have a  material  effect on the  company's  consolidated  financial
statements.

In July  2002,  SFAS No.  146,  "Accounting  for Costs  Associated  With Exit or
Disposal   Activities"  was  issued.  This  statement  addresses  the  financial
accounting and reporting for costs  associated with exit or disposal  activities
and requires that a liability for such costs be recognized when the liability is
incurred rather than at the date of an entity's commitment to an exit plan. SFAS
No. 146 also  establishes  that the liability should be measured and recorded at
fair value.  Apria will be required to adopt the  provisions of SFAS No. 146 for
exit and  disposal  activities  that are  initiated  after  December  31,  2002.
Adoption of this  statement  is not  expected  to have a material  effect on the
company's consolidated financial statements.


NOTE C - REVENUE RECOGNITION AND CONCENTRATION OF CREDIT RISK

Net  revenues  are  recognized  on the date  services  and related  products are
provided to patients and are recorded at amounts  expected to be received  under
reimbursement  arrangements with third-party payors, including private insurers,
prepaid health plans, Medicare and Medicaid.  Approximately 33% of the company's
revenues are reimbursed under arrangements with Medicare and Medicaid.  No other
third-party  payor group represents 10% or more of the company's  revenues.  The
majority of the  company's  revenues  are derived  from fees charged for patient
care  under  fee-for-service  arrangements.  Revenues  derived  from  capitation
arrangements represent less than 10% of total net revenues.

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.

Management  performs  various  analyses to evaluate the net realizable  value of
accounts receivable.  Specifically,  management considers historical realization
data,  accounts  receivable  aging trends,  other operating  trends and relevant
business  conditions.  Management also performs focused reviews of certain large
and/or  problematic  payors.  Because of  continuing  changes in the  healthcare
industry and third-party  reimbursement,  management's estimates may change from
time to time, which could have a material impact on operations and cash flows.

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.


NOTE D - BUSINESS COMBINATIONS

Apria periodically  makes  acquisitions of complementary  businesses in specific
geographic  markets.  The results of  operations  of the acquired  companies are
included in the  accompanying  consolidated  income  statements from the date of
acquisition.  During the nine-month  period ended  September 30, 2002, cash paid
for  acquisitions  was  $59,566,000,  which included amounts deferred from prior
years of $2,523,000.  At September 30, 2002,  outstanding deferred consideration
totaled  $8,103,000  and is  included  on the  balance  sheet in  other  accrued
liabilities.

For the 13 transactions  that were completed during the nine-month  period ended
September 30, 2002,  $46,844,000 was allocated to goodwill,  $3,172,000 to other
intangible assets and $12,529,000 to patient service equipment.  This allocation
is inclusive of amounts not yet paid.

The following supplemental unaudited pro forma information presents the combined
operating results of Apria and the businesses that were acquired by Apria during
the  nine-month  period ended  September  30, 2002, as if the  acquisitions  had
occurred at the beginning of the periods presented. The pro forma information is
based on the historical  financial statements of Apria and those of the acquired
businesses.  Amounts are not necessarily indicative of the results that may have
been  obtained  had the  combinations  been in  effect at the  beginning  of the
periods presented or that may be achieved in the future.

                                                           NINE MONTHS
                                                        ENDED SEPTEMBER 30,
                                                     -------------------------
    (IN THOUSANDS)                                      2002           2001
    --------------------------------------------------------------------------
    Net revenues..................................   $ 953,472      $ 887,387
    Income before extraordinary charge............   $  75,551      $  49,141
    Net income....................................   $  75,551      $  47,613

    Diluted income per common share:
     Income before extraordinary charge...........     $  1.36        $  0.88
     Extraordinary charge on debt refinancing,
       net of taxes...............................           -          (0.03)
                                                       -------        -------
          Net income..............................     $  1.36        $  0.85
                                                       =======        =======


NOTE E - GOODWILL AND INTANGIBLE ASSETS

In July  2001,  Apria  adopted  SFAS No.  141,  "Business  Combinations",  which
requires  that the  purchase  method of  accounting  be applied to all  business
combinations completed after June 30, 2001 and which also addresses the criteria
for initial recognition of intangible assets and goodwill.  Effective January 1,
2002, the company adopted SFAS No. 142, "Goodwill and Other Intangible  Assets",
in its entirety.  SFAS No. 142 addresses the financial  accounting and reporting
for goodwill and other intangible  assets.  The statement provides that goodwill
and other  intangible  assets with indefinite lives will no longer be amortized,
but shall be tested for impairment annually, or more frequently if circumstances
indicate  potential  impairment.  If  the  carrying  value  of  goodwill  or  an
intangible asset exceeds its fair value, an impairment loss shall be recognized.

In the year of adoption,  SFAS No. 142  requires  that a  transitional  goodwill
impairment  test be  performed  and  that  the  results  be  measured  as of the
beginning of the year.  The test is  conducted  at a "reporting  unit" level and
compares each reporting unit's fair value to its carrying value. The company has
determined  that its geographic  regions are reporting units under SFAS No. 142.
The  measurement  of fair value for each  region was based on an  evaluation  of
future discounted cash flows and was further tested using a multiple of earnings
approach.  The transitional  test,  which has been completed,  indicated that no
impairment exists and, accordingly, no loss was recognized.

In conjunction with the  transitional  impairment test and based on the criteria
established  in SFAS No.  141,  management  reviewed  the  useful  lives and the
amounts  previously  recorded  for  intangible  assets  and  determined  that no
adjustments were necessary.

The following table sets forth the reconciliation of net income and earnings per
share as adjusted for the non-amortization provisions of SFAS No. 142:
<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED          NINE MONTHS ENDED
                                                       SEPTEMBER 30,              SEPTEMBER 30,
                                                    -------------------        -------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)                 2002       2001            2002       2001
--------------------------------------------------------------------------------------------------

<S>                                                 <C>        <C>             <C>        <C>
Reported net income ..........................      $ 26,465   $ 17,605        $ 75,618   $ 51,928
Add:  goodwill amortization, net of taxes ....             -      1,626               -      4,566
                                                    --------   --------        --------   --------
Adjusted net income ..........................      $ 26,465   $ 19,231        $ 75,618   $ 56,494
                                                    ========   ========        ========   ========

BASIC INCOME PER COMMON SHARE:
     Reported net income .....................      $   0.48   $   0.32        $   1.39   $   0.96
     Goodwill amortization, net of taxes .....             -       0.03               -       0.09
                                                    --------   --------        --------   --------
     Adjusted net income .....................      $   0.48   $   0.35        $   1.39   $   1.05
                                                    ========   ========        ========   ========
DILUTED INCOME PER COMMON SHARE:
     Reported net income .....................      $   0.48   $   0.31        $   1.36   $   0.93
     Goodwill amortization, net of taxes .....             -       0.03               -       0.08
                                                    --------   --------        --------   --------
     Adjusted net income .....................      $   0.48   $   0.34        $   1.36   $   1.01
                                                    ========   ========        ========   ========
</TABLE>
For the nine months ended  September  30,  2002,  the net change in the carrying
amount of goodwill of $45,907,000 is the result of business combinations. All of
the goodwill recorded in conjunction with business combinations  completed after
June 30, 2001 is expected to be deductible for tax purposes.

Intangible assets consist of the following:
<TABLE>
<CAPTION>

(DOLLARS IN THOUSANDS)                                       SEPTEMBER 30, 2002                       DECEMBER 31, 2001
-----------------------------------------------------------------------------------------------------------------------------
                                       AVERAGE         GROSS                                  GROSS
                                       LIFE IN        CARRYING  ACCUMULATED   NET BOOK       CARRYING  ACCUMULATED   NET BOOK
                                        YEARS          AMOUNT   AMORTIZATION   VALUE          AMOUNT   AMORTIZATION   VALUE
                                        -----          ------   ------------   -----          ------   ------------   -----
Intangible assets subject to
 amortization:
<S>                                      <C>           <C>       <C>           <C>            <C>         <C>         <C>
   Covenants not to compete.......       4.5           $ 9,595   $ (4,320)     $ 5,275        $16,181     $(11,318)   $ 4,863
   Tradename......................       2.0             1,324       (110)       1,214              -            -          -
                                        ----           -------   --------      -------        -------     --------    -------
                                         3.9           $10,919   $ (4,430)     $ 6,489        $16,181     $(11,318)   $ 4,863
                                        ====           =======   ========      =======        =======     ========    =======


</TABLE>
<PAGE>
Amortization  expense  amounts to $2,003,000 for the nine months ended September
30,  2002.  Estimated  amortization  expense for each of the fiscal years ending
December 31, is presented below:

                                                 FOR THE YEAR ENDING
  (DOLLARS IN THOUSANDS)                             DECEMBER 31,
  ------------------------------------------------------------------
  2002...........................................     $ 2,693
  2003...........................................       2,566
  2004...........................................       1,869
  2005...........................................         731
  2006...........................................         488
  2007...........................................         145


NOTE F - LONG-TERM DEBT

Apria's  credit  agreement  with Bank of America and a syndicate  of lenders was
amended and restated effective June 7, 2002. The amendment extended the maturity
date,  reduced the  applicable  interest rate margins and modified the repayment
schedule for the company's $175,000,000 six-year term loan. The term loan, which
was amended to mature in seven years, had a balance of $173,250,000 at September
30, 2002. It is now repayable in 20 remaining consecutive quarterly installments
of  $437,500  each,  followed by three  consecutive  quarterly  installments  of
$41,125,000 each, and a final payment of $41,125,000 due on July 20, 2008.

Interest rates on outstanding balances under the credit agreement are determined
by adding a margin to the  Eurodollar  or base rate  existing  at each  interest
calculation date.  Applicable  margins for the seven-year term loan were lowered
and are currently  fixed at 2.0% for Eurodollar  loans and at 1.0% for base rate
loans.

At September  30, 2002,  borrowings  under the  revolving  credit  facility were
$2,700,000,  outstanding letters of credit totaled $5,155,000,  credit available
under the revolving  facility was $92,145,000,  and Apria was in compliance with
all of the financial covenants required by the credit agreement.

Apria  utilizes  interest  rate swap  agreements  to  moderate  its  exposure to
interest rate fluctuations on its underlying variable rate long-term debt. Apria
does not use derivative  financial  instruments for trading or other speculative
purposes.  At September 30, 2002,  Apria had two interest  rate swap  agreements
with a total notional amount of $100,000,000  that fix its LIBOR-based  variable
rate debt at 2.58% (before the applicable  margin).  The swap agreements,  which
terminate March 2003, are being accounted for as cash flow hedges under SFAS No.
133. Accordingly, the difference between the interest received and interest paid
is reflected as an  adjustment  to interest  expense.  For the nine months ended
September 30, 2002,  Apria paid a net  settlement  amount of $478,000.  The swap
agreements  are  recorded  as a liability  at their fair value of  $469,000  and
unrealized  losses of $321,000 on their fair value are reflected,  net of taxes,
in other  comprehensive  loss.  Apria's  exposure  to credit loss under the swap
agreements is limited to the interest  rate spread in the event of  counterparty
non-performance.


NOTE G - STOCKHOLDERS' EQUITY

For the nine months ended September 30, 2002,  changes to  stockholders'  equity
are comprised of the following amounts:

   (DOLLARS IN THOUSANDS)
   --------------------------------------------------------------------------

   Net income..................................................     $  75,618
   Proceeds from the exercise of stock options.................        15,897
   Tax benefit related to the exercise of stock options........         8,801
   Other comprehensive loss, net of taxes......................          (321)
   Repurchased common shares held in treasury..................       (31,524)
                                                                    ---------
                                                                    $  68,471
                                                                    =========

For the nine months  ended  September  30,  2002,  net income and  comprehensive
income differed by $321,000 which is  attributable  to unrealized  losses on two
interest rate swap  agreements.  There was no difference  between net income and
comprehensive income for the same period of the previous year.

Pursuant to its credit  agreement,  Apria can repurchase up to $35,000,000 worth
of  its  outstanding  common  stock  during  this  calendar  year.  The  company
repurchased 1,451,200 shares for $31,524,000, during the nine-month period ended
September  30, 2002.  Subsequently,  the company  purchased  145,800  shares for
$3,476,000, thereby reaching its maximum for the year.


NOTE H - INCOME TAXES

Income  taxes for the nine months  ended  September  30, 2002 and 2001 have been
provided at the effective tax rates expected to be applicable for the respective
year.

At December 31, 2001,  Apria had federal net  operating  loss  carryforwards  of
approximately $98,000,000, expiring in varying amounts in the years 2003 through
2018, and various state net operating loss carryforwards that began to expire in
1997.   Additionally,   the  company  has  an  alternative  minimum  tax  credit
carryforward of approximately  $7,600,000. As a result of an ownership change in
1992 that met  specified  criteria of Section 382 of the Internal  Revenue Code,
future use of a portion of the federal and state  operating  loss  carryforwards
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  operating  loss  carryforwards  may expire  unused.  The net
operating loss  carryforward  amount in the related  deferred tax asset excludes
such amount.  In 2002, for federal tax purposes,  the company expects to utilize
its entire net operating loss carryforward amount not subject to limitation.


NOTE I - COMMITMENTS AND CONTINGENCIES

Apria and certain of its  present  and former  officers  and/or  directors  were
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). The complaint alleged,
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.  Two similar  class actions were filed during July 1998 in the
Superior Court for the State of California for the County of Orange,  which were
consolidated  by a court order dated October 22, 1998 (Master Case No.  797060).
Following a series of settlement  discussions,  the parties reached an agreement
to settle both the federal and state class  actions for $42  million.  Under the
terms of the  settlement,  Apria has paid $1 million and its insurance  carriers
have paid $41  million.  Pursuant to the  settlement:  (1) the State Court class
actions  were  concluded  on  August  20,  2002 by entry of an Order  and  Final
Judgment;  and (2) the District  Court class action was  dismissed on August 21,
2002 by entry of an Order dismissing the action with prejudice.

On August 27,  2001,  a class  action  lawsuit was filed  against  Apria and its
former  Chief  Executive  Officer  in the U.S.  District  Court for the  Central
District of California,  Southern  Division (Case No.  SACV01-5160 PA), entitled
J.E.B. Capital Partners, LP v. Apria Healthcare Group Inc. and Philip L. Carter.
Among other things,  the complaint alleged that the defendants made false and/or
misleading public statements by not announcing until July 16, 2001 the amount of
potential  damages  asserted  by the U.S  Attorney's  office in Los  Angeles and
counsel  for the  plaintiffs  in the qui tam  actions  referred  to  below.  The
defendants'  motion to dismiss the  complaint was granted with leave to amend on
June 14, 2002. Plaintiff elected not to amend its complaint,  but filed a notice
of appeal on July 15, 2002.  The appeal was dismissed as  premature.  On October
10, 2002,  the District  Court entered a judgment in favor of the defendants and
dismissed the action with prejudice. On November 8, 2002, the plaintiff filed an
appeal  of the  Order  of  dismissal.  Apria  believes  that it has  meritorious
defenses to the plaintiff's  claims and it intends to vigorously  defend itself.
In the opinion of Apria's  management,  the ultimate  disposition  of this class
action will not have a material  adverse effect on Apria's results of operations
or financial condition.

As  previously   reported,   since  mid-1998  Apria  has  been  the  subject  of
investigations  conducted  by  several  U.S.  Attorneys'  offices  and the  U.S.
Department  of Health  and Human  Services.  These  investigations  concern  the
documentation supporting Apria's billing for services provided to 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 various document requests and subpoenas.  A criminal investigation
conducted by the U.S.  Attorney's  office in  Sacramento  was closed in mid-1999
with no charges being filed. Potential claims resulting from an investigation by
the U.S. Attorney's office in San Diego were settled in mid-2001 in exchange for
a payment by Apria of $95,000.

Apria has been  informed by the U.S.  Attorney's  office in Los Angeles that the
investigation  being  conducted  by that  office is the  result of civil qui tam
litigation  filed on behalf of the government  against Apria.  The complaints in
the  litigation  are under seal,  however,  and the  government has not informed
Apria of either the identities of the plaintiffs,  the court or courts where the
proceedings  are  pending,  the date or dates  instituted  or the factual  bases
alleged to underlie the proceedings. To date, the U.S. Attorney's office has not
informed Apria of any decision to intervene in the qui tam actions;  however, it
could reach a decision with respect to intervention at any time.

On July 12, 2001,  government  representatives and counsel for the plaintiffs in
the qui tam actions asserted that, by a process of  extrapolation  from a sample
of 300 patient files to all of Apria's billings to the federal government during
the  three-and-one-half  year  sample  period,  Apria  could  be  liable  to the
government  under the False Claims Act for more than $9 billion,  consisting  of
extrapolated  overpayment liability,  plus treble damages and penalties of up to
$10,000 for each allegedly false claim derived from the extrapolation.

Apria has  acknowledged  that there may be errors and  omissions  in  supporting
documentation  affecting a portion of its  billings.  However,  it considers the
assertions  and amounts  described in the preceding  paragraph to be unsupported
both legally and factually  and believes that most of the alleged  documentation
errors and  omissions  should not give rise to any  liability,  for  overpayment
refunds or otherwise.  Accordingly,  Apria believes that the claims asserted are
unwarranted  and  that  it is  in a  position  to  assert  numerous  meritorious
defenses. Nevertheless, Apria cannot provide any assurances as to the outcome of
these proceedings. Management cannot estimate the possible loss or range of loss
that may result  from these  proceedings  and  therefore  has not  recorded  any
related accruals.

If a judge,  jury or  administrative  agency were to determine that false claims
were  submitted to federal  healthcare  programs or that there were  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 the
exclusion of Apria from participation in federal healthcare programs.

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 Apria upon the resolution of
these claims and lawsuits will not, in the  aggregate,  have a material  adverse
effect on Apria's results of operations or financial condition.
<PAGE>
NOTE J - PER SHARE AMOUNTS

The following  table sets forth the  computation  of basic and diluted per share
amounts:
<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED      NINE MONTHS ENDED
                                                               SEPTEMBER 30,           SEPTEMBER 30,
                                                             ------------------      -----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)                         2002      2001          2002      2001
-------------------------------------------------------------------------------------------------------

NUMERATOR:
<S>                                                          <C>       <C>            <C>       <C>
  Net income .............................................   $26,465   $17,605        $75,618   $51,928
  Numerator for basic and diluted per share amounts -
    income available to common stockholders ..............   $26,465   $17,605        $75,618   $51,928

DENOMINATOR:
  Denominator for basic per share
    amounts - weighted average shares ....................    54,745    54,231         54,490    53,790

  Effect of dilutive securities:
    Employee stock options -
      dilutive potential common shares ...................       623     1,737            979     1,943
                                                             -------   -------        -------   -------

  Denominator for diluted per share amounts -
    adjusted weighted average shares .....................    55,368    55,968         55,469    55,733
                                                             =======   =======        =======   =======


Basic net income per common share ........................   $  0.48   $  0.32        $  1.39   $  0.96
                                                             =======   =======        =======   =======

Diluted net income per common share ......................   $  0.48   $  0.31        $  1.36   $  0.93
                                                             =======   =======        =======   =======


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

  Shares for which exercise price exceeds
    average market price of common stock .................     2,595     1,827          2,560     1,827

Average exercise price per share that exceeds
  average market price of common stock ...................   $ 25.29   $ 27.08        $ 25.32   $ 27.08
                                                             =======   =======        =======   =======

</TABLE>
<PAGE>
================================================================================
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 which are partly or entirely 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,  2001,  as filed  with the  Securities  and  Exchange
Commission on April 1, 2002. 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:
    - trends  and  developments   affecting  the   collectibility   of  accounts
      receivable;
    - the effectiveness of the company's operating systems and controls;
    - healthcare   reform  and  the  effect  of  federal  and  state  healthcare
      regulations;
    - government   legislative  and  budget   developments  which  could  affect
      reimbursement levels for products and services provided by Apria;
    - the  ongoing  government  investigations  regarding  patients  covered  by
      Medicare and other federal programs;
    - pricing pressures from large payors; and
    - the successful  implementation of the company's  acquisition  strategy and
      integration of acquired businesses.
In addition,  the  terrorist  attacks of September 11, 2001 and the military and
security  activities which followed,  their impacts on the United States economy
and  government  spending  priorities,  and  the  effects  of any  further  such
developments  pose  risks  and  uncertainties  to  all  U.S.-based   businesses,
including Apria.  Among other things,  deficit spending by the government as the
result of adverse  developments  in the  economy  and costs of the  government's
response to the terrorist attacks could lead to the increased pressure to reduce
government  expenditures  for other  purposes,  including  governmentally-funded
programs such as Medicare.
================================================================================

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

     Apria operates in the home  healthcare  segment of the healthcare  industry
and provides services in the home respiratory therapy, home infusion therapy and
home medical equipment areas. In all three lines, Apria provides patients with a
variety of clinical  services and related  products and supplies,  most of which
are  prescribed  by a physician  as part of a care plan.  Apria  provides  these
services  to  patients  in  the  home   throughout  the  United  States  through
approximately 405 branch locations.

     CRITICAL ACCOUNTING  POLICIES.  Apria's management considers the accounting
policies  that  govern  revenue  recognition  and the  determination  of the net
realizable  value of accounts  receivable to be the most critical in relation to
the  company's  consolidated   financial  statements.   These  policies  require
management's most complex and subjective  judgments.  Other accounting  policies
requiring  significant  judgment are those related to goodwill and income taxes.
These  policies are presented in detail in Apria's 2001 Form 10-K - Management's
Discussion and Analysis of Financial Condition and Results of Operations.

     SEGMENT  REPORTING.  Apria's branch locations are organized into geographic
regions. Each region consists of a number of branches and a regional office that
provides key support  services,  such as billing,  purchasing,  patient  service
equipment  maintenance,  repair and warehousing.  Management evaluates operating
results on a geographic  basis,  and therefore views each region as an operating
segment.  All  regions  provide  the  same  products  and  services,   including
respiratory  therapy,  infusion therapy and home medical equipment and supplies.
For  financial  reporting  purposes,  all the company's  operating  segments are
aggregated  into one  reportable  segment  in  accordance  with the  aggregation
criteria in paragraph 17 of Statement of Financial Accounting Standards ("SFAS")
No. 131, "Disclosures about Segments of an Enterprise and Related Information."

     RECENT ACCOUNTING PRONOUNCEMENTS.  Effective January 1, 2002, Apria adopted
SFAS No. 142, "Goodwill and Other Intangible Assets", in its entirety.  SFAS No.
142  addresses  the  financial  accounting  and reporting for goodwill and other
intangible  assets.  The statement  provides  that goodwill or other  intangible
assets with  indefinite  lives will no longer be amortized,  but shall be tested
for impairment annually, or more frequently if circumstances  indicate potential
impairment.  Upon adoption,  a  transitional  goodwill  impairment  test must be
performed. The test is conducted at the "reporting unit" level and compares each
reporting  unit's  fair value to its  carrying  value.  Apria's  management  has
determined  that its geographic  regions are reporting units under SFAS No. 142.
Apria's  transitional  goodwill  impairment test utilized a discounted cash flow
approach in  determining  fair value,  which was further tested by a multiple of
earnings  approach.  The  transitional  test has  been  completed;  no  goodwill
impairment is indicated at any of Apria's  reporting units. See "Amortization of
Goodwill and Intangible Assets."

     Effective  January 1, 2002 Apria adopted SFAS No. 144,  "Accounting for the
Impairment  or Disposal of  Long-Lived  Assets."  SFAS No. 144 requires that one
accounting  model be used  for  long-lived  assets  to be  disposed  of by sale.
Discontinued  operations will be measured  similarly to other long-lived  assets
classified  as held for sale at the lower of its  carrying  amount or fair value
less cost to sell.  Future operating losses will no longer be recognized  before
they  occur.  SFAS No.  144  also  broadens  the  presentation  of  discontinued
operations  to include a component of an entity when  operations  and cash flows
can be clearly  distinguished,  and  establishes  criteria to  determine  when a
long-lived  asset is held for sale.  Adoption of this  statement  did not have a
material effect on Apria's financial statements.

     In April 2002, SFAS No. 145,  "Rescission of FASB Statements No. 4, 44, and
64,  Amendment of FASB Statement No. 13, and Technical  Corrections" was issued.
SFAS No. 145 updates and clarifies existing accounting pronouncements related to
gains and losses from the extinguishment of debt and requires that certain lease
modifications   be   accounted   for  in  the  same  manner  as   sale-leaseback
transactions. Apria will be required to adopt the provisions of SFAS No. 145 for
its fiscal year  beginning  January 1, 2003.  Adoption of this  statement is not
expected  to have a  material  effect on the  company's  consolidated  financial
statements.

     In July 2002, SFAS No. 146,  "Accounting for Costs  Associated With Exit or
Disposal   Activities"  was  issued.  This  statement  addresses  the  financial
accounting and reporting for costs  associated with exit or disposal  activities
and requires that a liability for such costs be recognized when the liability is
incurred rather than at the date of an entity's commitment to an exit plan. SFAS
No. 146 also  establishes  that the liability should be measured and recorded at
fair value.  Apria will be required to adopt the  provisions of SFAS No. 146 for
exit and  disposal  activities  that are  initiated  after  December  31,  2002.
Adoption of this  statement  is not  expected  to have a material  effect on the
company's consolidated financial statements.


RESULTS OF OPERATIONS

     NET REVENUES.  Net revenues were $312.0  million and $923.8  million in the
third  quarter and first nine months of 2002,  respectively,  compared to $284.0
million  and  $838.9  million  for  the  corresponding  periods  in  2001.  This
represents  increases  of 9.9% and 10.1% for the three and nine  month  periods,
respectively. The growth is due to volume increases, new contracts with regional
and national  payors,  the  acquisition  of  complementary  businesses and price
increases in certain managed care agreements.

     Apria's acquisition  strategy generally results in the rapid integration of
acquired businesses into existing operating locations.  This limits management's
ability  to  separately  track the amount of revenue  generated  by an  acquired
business.  Estimating  the  revenue  contribution  from  acquisitions  therefore
requires  certain  assumptions.   Based  on  its  analyses,  Apria's  management
estimates  that  approximately  one-third of the revenue growth between the nine
month periods presented was derived from acquisitions.

     The following table sets forth a summary of net revenues by service line:
<TABLE>
<CAPTION>
                                       THREE MONTHS ENDED SEPTEMBER 30,             NINE MONTHS ENDED SEPTEMBER 30,
                                    -------------------------------------        -------------------------------------
                                           2002                2001                    2002                  2001
                                     ----------------    ----------------        ----------------    -----------------
(DOLLARS IN THOUSANDS)                   $        %          $        %              $       %            $        %
----------------------------------------------------------------------------------------------------------------------
<S>                                  <C>        <C>      <C>        <C>          <C>        <C>       <C>        <C>
  Respiratory therapy.........       $205,319   65.8%    $186,069   65.5%        $613,814   66.4%     $549,480   65.5%
  Infusion therapy............         58,785   18.8%      54,570   19.2%         170,204   18.5%      161,829   19.2%
  HME/other...................         47,942   15.4%      43,386   15.3%         139,798   15.1%      127,550   15.3%
                                     --------  ------    --------  ------        --------  ------     --------  ------
       Total net revenues            $312,046  100.0%    $284,025  100.0%        $923,816  100.0%     $838,859  100.0%
                                     ========  ======    ========  ======        ========  ======     ========  ======
</TABLE>

     Home  Respiratory   Therapy.   Respiratory  therapy  revenues  are  derived
primarily from the provision of oxygen systems,  home  ventilators,  sleep apnea
equipment,  nebulizers,   respiratory  medications  and  related  services.  The
respiratory  therapy  service  line  increased  by 10.3%  and 11.7% in the third
quarter  and first nine  months of 2002,  respectively,  as compared to the same
periods in 2001.  Apria's  focus on  acquiring  respiratory  therapy  businesses
contributed to this growth.

     Home  Infusion  Therapy.  The infusion  therapy  service line  involves the
administration  of a drug or  nutrient  directly  into  the  body  intravenously
through  a  needle  or  catheter.   Examples  include:   parenteral   nutrition,
anti-infectives, pain management, chemotherapy and other medications and related
services.  The  infusion  line also  includes  enteral  nutrition,  which is the
administration of nutrients directly into the  gastrointestinal  tract through a
feeding tube.  Infusion therapy revenues increased by 7.7% and 5.2% in the third
quarter  and first  nine  months of 2002,  respectively,  when  compared  to the
corresponding periods in 2001. The nine month 2002 period reflects the effect of
a 12.8% increase in enteral  nutrition  attributable  to a renewed focus on this
product  offering,  that  resulted  from a program  initiated  in mid-2001  that
centralized the enteral intake and distribution functions at the regional level.

     Home Medical  Equipment/Other.  Home medical  equipment/other  revenues are
derived from the provision of patient safety items,  ambulatory and patient room
equipment.  Home medical equipment/other revenues increased by 10.5% and 9.6% in
the third  quarter and first nine months of 2002,  respectively,  as compared to
the same periods in 2001. The increase  between  periods is partially due to the
fact that the full Medicare cost of living adjustment (COLA) for certain durable
medical equipment  products and services was restored in 2001. The COLA had been
frozen since 1998 pursuant to the Balanced Budget Act of 1997. Substantially all
of this  adjustment  was provided  through a transitional  allowance  applied to
amounts  reimbursed  during the second half of the year. The 2002  reimbursement
amounts  incorporate  the 2001  adjustments  as if they had been applied  evenly
throughout  the year.  Medicare  reimbursement  amounts  for 2002  include  only
minimal increases which are significantly below the cost of living increase.

     Revenue Recognition and Certain Concentrations.  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,  prepaid health plans, 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,  which  could have an impact on the
consolidated financial statements.

     Approximately  33% of Apria's  revenues are reimbursed  under  arrangements
with Medicare and Medicaid. No other third-party payor represents 10% or more of
the company's revenues.  The majority of the company's revenues are derived from
fees  charged  for patient  care under  fee-for-service  arrangements.  Revenues
derived  from  capitation  arrangements  represent  less  than 10% of total  net
revenues for all periods presented.

     Medicare  and  Medicaid  Reimbursement.  The  Balanced  Budget  Act of 1997
significantly  reduced the Medicare  reimbursement rates for home oxygen therapy
and included  other  provisions  that have impacted or may impact  reimbursement
rates  in the  future,  such as  potential  reimbursement  reductions  under  an
inherent  reasonableness  procedure and competitive  bidding.  Also currently at
issue is the  potential  adoption  of an  alternative  pricing  methodology  for
certain drugs and biologicals.

     In June  2002,  the  U.S.  House of  Representatives  passed  the  Medicare
Modernization  and  Prescription  Drug Act of  2002.  The  bill  provides  for a
nationwide  competitive  bidding  program  for an  as-yet-undertermined  list of
durable  medical  equipment  ("DME")  items covered by Medicare Part B. A Senate
bill  providing for a version of  competitive  bidding  different  than what was
introduced  in the House was  proposed by Senators  Baucus and  Grassley but not
introduced  for  Senate  consideration  prior to recess  for the  November  2002
elections.  It is unclear  whether  competitive  bidding for DME or other issues
that may have an impact on Apria will be passed by the  Senate in a "lame  duck"
session scheduled to convene November 22, 2002.

     GROSS  PROFIT.  Gross  margins for the third  quarter of 2002 and the first
nine  months of 2002 were 73.0% and 72.8%,  respectively,  compared to 73.1% and
72.8% for the corresponding periods in the prior year. These margins reflect the
general  period-to-period  consistency of product costs and reimbursement levels
of products and services.

     PROVISION FOR DOUBTFUL  ACCOUNTS.  The provision for doubtful  accounts was
3.7% of net revenues  for both the third  quarter of 2002 and for the first nine
months of 2002  compared  to 3.5% for both  corresponding  periods in 2001.  The
provision for doubtful  accounts results from  management's  estimate of the net
realizable value of accounts  receivable after considering  actual write-offs of
specific  receivables.  The increase in the  provision  between the years can be
largely attributed to the impact of acquisitions;  specifically two large fourth
quarter  acquisitions  and those  acquisitions  effected  to date in 2002.  Such
acquisitions  result in the  integration  of a  significant  amount  of  patient
information into Apria's  information systems and document files which can delay
the billing and collection process.

     SELLING, DISTRIBUTION AND ADMINISTRATIVE. Selling, distribution and
administrative  expenses are comprised of expenses incurred in direct support of
operations and those associated with administrative functions. Expenses incurred
by the operating  locations include salaries and other expenses in the following
functional  areas:  selling,  distribution,   clinical,  intake,  reimbursement,
warehousing and repair. Many of these operating costs are directly variable with
revenue  growth  patterns.  Certain  expenses,  such as facility  lease and fuel
costs,  are  also  very  sensitive  to  market-driven  price  fluctuations.  The
administrative  expenses  include  overhead  costs  incurred  by  the  operating
locations and corporate support functions. These expenses do not vary as closely
with  revenue  growth  as do the  operating  costs.  Selling,  distribution  and
administrative  expenses,  expressed as percentages of net revenues,  were 54.4%
and 54.5% for the third  quarter  and first nine  months of 2002,  respectively,
versus 55.9% and 55.5% for the corresponding periods in 2001. In 2002, the first
quarter  included  $2.6  million in contract  termination  costs  related to the
departure of the former Chief Executive  Officer and the second quarter included
approximately  $2.2  million  in merit  compensation  increases.  Despite  these
additional  expenses,  management  was able to leverage  its  expense  structure
against the revenue growth.

     AMORTIZATION OF GOODWILL AND INTANGIBLE ASSETS.  Amortization of intangible
assets for the third  quarter and the nine months ended  September 30, 2002 were
$667,000  and $2.0  million,  respectively,  compared  to $3.2  million and $9.2
million for the same periods last year (which included  goodwill  amortization).
Upon adoption of SFAS No. 142 on January 1, 2002, goodwill  amortization ceased.
Amortization of goodwill was $2.6 million for the third quarter and $7.3 million
for the first nine  months of 2001.  The effect of adding  this  amount  back as
though SFAS No. 142 were  adopted at the  beginning of the prior year would have
resulted in net income  increases of $1.6 million and $4.6 million and increases
in diluted  income per common share of $0.03 and $0.08 for the third quarter and
first nine months of 2001, respectively. See "Recent Accounting Pronouncements",
"Business  Combinations"  and  Note C to the  Condensed  Consolidated  Financial
Statements.

     INTEREST  EXPENSE.  Interest expense was $3.5 million for the third quarter
of 2002,  down from $5.1  million  in the third  quarter  of 2001.  For the nine
months ended September 30, 2002 interest  expense was $11.6 million  compared to
$21.5 million in the same period in 2001. The significant  decrease  between the
periods is due to several  factors.  From  September  30, 2001 to September  30,
2002,  long-term  debt  decreased by $34.1  million.  The July 2001  refinancing
replaced the 9 1/2% senior  subordinated  notes with debt at significantly  more
favorable  interest  rates and  resulted in lower  rates on the bank  loans.  In
connection  with the  refinancing,  deferred debt  issuance  costs on the 9 1/2%
notes and former bank debt were written off; the issuance  costs  incurred  upon
refinancing  resulted in a lower monthly  amortization  expense.  Also, the June
2002 credit agreement  amendment included a reduction in the applicable interest
rate  margin  for  the  $175  million  term  loan.  Finally,  the  decreases  in
market-driven  interest rates over the course of 2001 contributed to the overall
decrease in Apria's interest expense. See "Long-Term Debt."

     INCOME TAXES. Income taxes for the nine months ended September 30, 2002 and
in the  corresponding  period of 2001,  have been  provided at the effective tax
rates expected to be applicable for the respective year.

     At December 31, 2001, Apria had federal net operating loss carryforwards of
approximately $98 million, expiring in varying amounts in the years 2003 through
2018 and various state net operating loss  carryforwards that began to expire in
1997.   Additionally,   the  company  has  an  alternative  minimum  tax  credit
carryforward of approximately  $7.6 million.  As a result of an ownership change
in 1992 that met specified criteria of Section 382 of the Internal Revenue Code,
future use of a portion of the federal and state  operating  loss  carryforwards
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  operating  loss  carryforwards  may expire  unused.  The net
operating loss  carryforward  amount in the related  deferred tax asset excludes
such amount.  In 2002, for federal tax purposes,  the company expects to utilize
its entire net operating loss carryforward not subject to limitation.


LIQUIDITY AND CAPITAL RESOURCES

     Apria's  principal source of liquidity is its operating cash flow, which is
supplemented by a $100 million  revolving  credit  facility.  Apria's ability to
generate  operating cash flows in excess of its operating  needs has afforded it
the ability,  among other things,  to pursue its  acquisition  strategy and fund
patient  service  equipment  expenditures  to support  revenue  growth.  Apria's
management  believes that its operating cash flow and revolving credit line will
continue to be sufficient to fund its operations and growth strategies. However,
sustaining  the current cash flow levels is dependent on many  factors,  some of
which are not within Apria's control,  such as government  reimbursement  levels
and the financial health of its payors.

     CASH FLOW. Cash provided by operating  activities was $188.9 million in the
first nine  months of 2002  compared  with $166.7  million in the  corresponding
period in 2001.  The increase  between  periods in net income  (before items not
requiring cash) was partially offset by the increase in accounts  receivable and
increases in payments against accounts payable and other expense accruals.

     Cash used in investing activities decreased to $148.2 million for the first
nine months of 2002 compared to $149.3 million during the same period last year.
The  reduction  in patient  service and other  equipment  purchases  between the
periods was largely offset by the increase in acquisition activity.

     Cash used in financing  activities  was $37.3 million during the first nine
months of 2002 compared to $16.7 million  during the same period last year.  The
difference is mainly due to the  repurchase of the company's  stock in 2002. The
activity in 2002 and 2001 in the  revolving  credit  facility and term loan line
items  reflects  the June  2002  credit  agreement  amendment  and the July 2001
refinancing, respectively. See "Long-term Debt" and "Treasury Stock."

     CONTRACTUAL CASH OBLIGATIONS.  The following table summarizes  Apria's long
term cash payment  obligations to which the company is contractually  bound (the
years presented below represent  twelve-month  rolling periods ending  September
30):
<TABLE>
<CAPTION>
        (DOLLARS IN MILLIONS)                         YEAR 1    YEAR 2    YEAR 3    YEAR 4    YEAR 5    YEARS 6+    TOTALS
        ------------------------------------------------------------------------------------------------------------------

<S>                                                    <C>       <C>       <C>       <C>       <C>         <C>       <C>
        Term loans..............................       $ 26      $ 26      $ 29      $ 32      $  1        $165      $279
        Capitalized lease obligations...........          2         3         2         -         -           -         7
        Operating leases........................         53        44        35        28        16          23       199
        Deferred acquisition payments...........          8         -         -         -         -           -         8
                                                       ----      ----      ----      ----      ----        ----      ----
            Total contratual cash obligations...        $89       $73       $66       $60       $17        $188      $493
                                                       ====      ====      ====      ====      ====        ====      ====
</TABLE>

     ACCOUNTS  RECEIVABLE.  Accounts  receivable  before  allowance for doubtful
accounts  increased to $210.4  million at September 30, 2002 from $194.2 million
at December 31, 2001, which is attributable to the 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 at September 30, 2002,  and 50 at December 31, 2001.  Accounts
aged in excess of 180 days  decreased to 19.4% at September  30, 2002 from 19.8%
at December 31, 2001. See "Provision for Doubtful Accounts."

     Evaluation of Net Realizable Value. Management performs various analyses to
evaluate  accounts  receivable  balances to ensure that recorded amounts reflect
estimated net realizable value.  Management applies specified percentages to the
accounts  receivable  aging to  estimate  the  amount  that will  ultimately  be
uncollectible and therefore should be reserved. The percentages are increased as
the  accounts  age;  accounts  aged in excess of 360 days are  reserved at 100%.
Management establishes and monitors these percentages through extensive analyses
of  historical   realization  data,  accounts  receivable  aging  trends,  other
operating trends, the extent of contracted  business and business  combinations.
Also  considered are relevant  business  conditions,  such as  governmental  and
managed care payor claims processing procedures and system changes. If indicated
by such analyses,  management may periodically adjust the uncollectible estimate
and corresponding percentages.  Further, focused reviews of certain large and/or
problematic  payors are  performed  to  determine  if  additional  reserves  are
necessary.

     Unbilled  Receivables.  Included  in  accounts  receivable  are  earned but
unbilled  receivables  of $27.2  million and $26.9 million at September 30, 2002
and December 31, 2001,  respectively.  Delays,  ranging from a day up to several
weeks,  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 net realizable  value. The increase is
partially  due  to  acquisitions   made  in  late  2001  and  during  2002.  The
time-consuming  processes of converting  patient files onto Apria's  systems and
obtaining provider numbers from government payors routinely delay billing of the
newly acquired business.

     INVENTORIES AND PATIENT SERVICE EQUIPMENT. Inventories consist primarily of
pharmaceuticals and disposable articles used in conjunction with patient service
equipment.  Patient service  equipment  consists of respiratory and home medical
equipment that is provided to in-home patients for the course of their care plan
and  subsequently  returned  to Apria for  reuse.  Continued  revenue  growth is
directly  dependent on Apria's ability to fund its inventory and patient service
equipment requirements.

     LONG-TERM  DEBT.  Apria's  credit  agreement  with  Bank of  America  and a
syndicate  of lenders was  amended  and  restated  effective  June 7, 2002.  The
amendment  extended the maturity  date,  reduced the  applicable  interest  rate
margins and  modified the  repayment  schedule  for the  company's  $175 million
six-year term loan.  The term loan,  which was amended to mature in seven years,
had a balance of $173.3 million at September 30, 2002. It is now repayable in 20
remaining consecutive quarterly installments of $437,500 each, followed by three
consecutive quarterly installments of $41.1 million each, and a final payment of
$41.1 million due on July 20, 2008.

     Interest  rates on  outstanding  balances  under the credit  agreement  are
determined  by adding a margin to the  Eurodollar  or base rate existing at each
interest calculation date.  Applicable margins for the seven-year term loan were
lowered to 2.0% for Eurodollar loans and 1.0% for base rate loans.

     On September 30, 2002,  total  borrowings  under the credit  agreement were
$279.0  million.  Outstanding  letters of credit totaled $5.2 million and credit
available under the revolving facility was $92.1 million. At September 30, 2002,
the company was in compliance  with all of the financial  covenants  required by
the credit agreement.

     Hedging  Activities.  Apria is exposed to interest rate fluctuations on its
underlying  variable rate long-term debt.  Apria's policy for managing  interest
rate  risk is to  evaluate  and  monitor  all  available  relevant  information,
including but not limited to, the structure of its  interest-bearing  assets and
liabilities,  historical  interest  rate  trends  and  interest  rate  forecasts
published  by major  financial  institutions.  The tools  Apria may  utilize  to
moderate its exposure to  fluctuations  in the  relevant  interest  rate indices
include,  but are not  limited  to: (1)  strategic  determination  of  repricing
periods and related principal amounts, and (2) derivative financial  instruments
such as  interest  rate swap  agreements,  caps or  collars.  Apria does not use
derivative financial instruments for trading or other speculative purposes.

     Apria has two interest rate swap agreements with a total notional amount of
$100 million that fix its  LIBOR-based  variable  rate debt at 2.58% (before the
applicable  margin).  The swap  agreements  terminate  March 2003. The swaps are
being  accounted  for as cash flow hedges under SFAS No. 133.  Accordingly,  the
difference  between the interest  received and interest  paid is reflected as an
adjustment to interest expense.  For the first nine months of 2002, Apria paid a
net settlement  amount of $478,000.  At September 30, 2002, the swap  agreements
are reflected in the  accompanying  consolidated  balance sheet in other accrued
liabilities at their fair value of $469,000. Unrealized losses on the fair value
of the swap agreements are reflected, net of taxes, in other comprehensive loss.

     Apria does not anticipate losses due to counterparty nonperformance, as its
counterparty  to  the  swap  agreements  is  a  nationally-recognized  financial
institution with a strong credit rating.

     TREASURY STOCK. Apria's credit agreement limits common stock repurchases to
$35 million in any fiscal  year and $100  million in the  aggregate.  During the
first  nine  months  of  2002,  Apria  repurchased  1.5  million  shares  of its
outstanding common stock for $31.5 million.  Subsequently, the company purchased
additional  shares for $3.5 million  thereby  reaching its maximum for the year.
All repurchased common shares are being held in treasury.

     BUSINESS  COMBINATIONS.  Pursuant to one of its primary growth  strategies,
Apria  periodically  acquires  complementary  businesses in specific  geographic
markets. The results of operations of the acquired companies are included in the
accompanying  consolidated  income  statements  from the  dates of  acquisition.
Effective  with the  adoption  of SFAS No.  142,  goodwill  is no  longer  being
amortized.  Covenants  not to compete are being  amortized  over the life of the
respective agreements.

     The aggregate  consideration  for acquisitions that closed during the first
nine months of 2002 was $64.7 million.  Allocation of this amount includes $46.8
million to goodwill,  $3.2  million to  intangible  assets and $12.5  million to
patient service  equipment.  During the first nine months of 2001, the aggregate
consideration  for acquisitions was $51.7 million.  Cash paid for  acquisitions,
which  includes  amounts  deferred from prior year  acquisitions,  totaled $59.6
million  and  $49.7  million  in  the  first  nine  months  of  2002  and  2001,
respectively.

     The  success of Apria's  acquisition  strategy  is  directly  dependent  on
Apria's ability to maintain and/or  generate  sufficient  liquidity to fund such
purchases  and on the  company's  ability to integrate  the acquired  operations
successfully.

     FEDERAL  INVESTIGATIONS.  As previously reported,  since mid-1998 Apria has
been the subject of investigations  conducted by several U.S. Attorneys' offices
and the U.S.  Department  of Health  and Human  Services.  These  investigations
concern the  documentation  supporting  Apria's billing for services provided to
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  various  document  requests  and  subpoenas.  A criminal
investigation  conducted by the U.S.  Attorney's office in Sacramento was closed
in mid-1999  with no charges being filed.  Potential  claims  resulting  from an
investigation  by the U.S.  Attorney's  office  in San  Diego  were  settled  in
mid-2001 in exchange for a payment by Apria of $95,000.

     Apria has been informed by the U.S.  Attorney's  office in Los Angeles that
the investigation  being conducted by that office is the result of civil qui tam
litigation  filed on behalf of the government  against Apria.  The complaints in
the  litigation  are under seal,  however,  and the  government has not informed
Apria of either the identities of the plaintiffs,  the court or courts where the
proceedings  are  pending,  the date or dates  instituted  or the factual  bases
alleged to underlie the proceedings. To date, the U.S. Attorney's office has not
informed Apria of any decision to intervene in the qui tam actions;  however, it
could reach a decision with respect to intervention at any time.

     On July 12, 2001, government representatives and counsel for the plaintiffs
in the qui tam  actions  asserted  that,  by a process of  extrapolation  from a
sample of 300 patient files to all of Apria's billings to the federal government
during the  three-and-one-half  year sample period, Apria could be liable to the
government  under the False Claims Act for more than $9 billion,  consisting  of
extrapolated  overpayment liability,  plus treble damages and penalties of up to
$10,000 for each allegedly false claim derived from the extrapolation.

     Apria has acknowledged that there may be errors and omissions in supporting
documentation  affecting a portion of its  billings.  However,  it considers the
assertions  and amounts  described in the preceding  paragraph to be unsupported
both legally and factually  and believes that most of the alleged  documentation
errors and  omissions  should not give rise to any  liability,  for  overpayment
refunds or otherwise.  Accordingly,  Apria believes that the claims asserted are
unwarranted  and  that  it is  in a  position  to  assert  numerous  meritorious
defenses. Nevertheless, Apria cannot provide any assurances as to the outcome of
these proceedings. Management cannot estimate the possible loss or range of loss
that may result  from these  proceedings  and  therefore  has not  recorded  any
related accruals.

     If a judge,  jury or  administrative  agency were to  determine  that false
claims  were  submitted  to  federal  healthcare  programs  or that  there  were
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  the  exclusion  of Apria  from  participation  in federal
healthcare programs.
<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Apria is exposed to interest rate  fluctuations on its underlying  variable
rate long-term  debt.  Apria utilizes  interest rate swap agreements to moderate
such exposure.  Apria does not use derivative financial  instruments for trading
or other speculative purposes.

     At September 30, 2002, Apria's term loan borrowings totaled $276.3 million.
The bank  credit  agreement  governing  the term loans  provides  interest  rate
options based on the following indices: Federal Funds Rate, Prime Rate or LIBOR.
All such  interest  rate options are subject to the  application  of an interest
margin as specified in the bank credit agreement.  At September 30, 2002, all of
Apria's  outstanding  term debt was tied to LIBOR.  Apria has two interest  rate
swap  agreements  with a total  notional  amount  of $100  million  that fix its
LIBOR-based  debt at 2.58% (before  application  of the interest  margin).  Both
agreements expire March 2003.

     Based on the term  debt  outstanding  and the swap  agreements  in place at
September 30, 2002, a 100 basis point change in LIBOR would increase or decrease
Apria's annual cash flow and pretax earnings by approximately $1.8 million.


ITEM 4.  CONTROLS AND PROCEDURES

     (a) Evaluation of disclosure  controls and  procedures.  Within the 90 days
prior to the date of this report,  the company carried out an evaluation,  under
the  supervision  and  with  the  participation  of  the  company's  management,
including the company's Chief Executive Officer and Chief Financial Officer,  of
the  effectiveness  of the  design and  operation  of the  company's  disclosure
controls and procedures. Based upon that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the company's disclosure controls and
procedures  are  effective  in  timely  alerting  them to  material  information
relating  to the  company  that is  required  to be  included  in the  company's
periodic Securities and Exchange Commission filings.

     (b) Changes in internal controls.  No significant  changes to the company's
internal  controls,  or in other factors that could  significantly  affect these
controls  subsequent to the date of their evaluation,  have been made during the
periods covered by this report.
<PAGE>

                           PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

     Apria and certain of its present and former officers and/or  directors were
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). The complaint alleged,
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.  Two similar  class actions were filed during July 1998 in the
Superior Court for the State of California for the County of Orange,  which were
consolidated  by a court order dated October 22, 1998 (Master Case No.  797060).
Following a series of settlement  discussions,  the parties reached an agreement
to settle both the federal and state class  actions for $42  million.  Under the
terms of the  settlement,  Apria has paid $1 million and its insurance  carriers
have paid $41  million.  Pursuant to the  settlement:  (1) the State Court class
actions  were  concluded  on  August  20,  2002 by entry of an Order  and  Final
Judgment;  and (2) the District  Court class action was  dismissed on August 21,
2002 by entry of an Order dismissing the action with prejudice.

     On August 27, 2001, a class action  lawsuit was filed against Apria and its
former  Chief  Executive  Officer  in the U.S.  District  Court for the  Central
District of California,  Southern  Division (Case No.  SACV01-5160 PA), entitled
J.E.B. Capital Partners, LP v. Apria Healthcare Group Inc. and Philip L. Carter.
Among other things,  the complaint alleged that the defendants made false and/or
misleading public statements by not announcing until July 16, 2001 the amount of
potential  damages  asserted  by the U.S  Attorney's  office in Los  Angeles and
counsel  for the  plaintiffs  in the qui tam  actions  referred  to  below.  The
defendants'  motion to dismiss the  complaint was granted with leave to amend on
June 14, 2002. Plaintiff elected not to amend its complaint,  but filed a notice
of appeal on July 15, 2002.  The appeal was dismissed as  premature.  On October
10, 2002,  the District  Court entered a judgment in favor of the defendants and
dismissed the action with prejudice. On November 8, 2002, the plaintiff filed an
appeal  of the  Order  of  dismissal.  Apria  believes  that it has  meritorious
defenses to the plaintiff's  claims and it intends to vigorously  defend itself.
In the opinion of Apria's  management,  the ultimate  disposition  of this class
action will not have a material  adverse effect on Apria's results of operations
or financial condition.

     As  previously  reported,  since  mid-1998  Apria has been the  subject  of
investigations  conducted  by  several  U.S.  Attorneys'  offices  and the  U.S.
Department  of Health  and Human  Services.  These  investigations  concern  the
documentation supporting Apria's billing for services provided to 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 various document requests and subpoenas.  A criminal investigation
conducted by the U.S.  Attorney's  office in  Sacramento  was closed in mid-1999
with no charges being filed. Potential claims resulting from an investigation by
the U.S. Attorney's office in San Diego were settled in mid-2001 in exchange for
a payment by Apria of $95,000.

     Apria has been informed by the U.S.  Attorney's  office in Los Angeles that
the investigation  being conducted by that office is the result of civil qui tam
litigation  filed on behalf of the government  against Apria.  The complaints in
the  litigation  are under seal,  however,  and the  government has not informed
Apria of either the identities of the plaintiffs,  the court or courts where the
proceedings  are  pending,  the date or dates  instituted  or the factual  bases
alleged to underlie the proceedings. To date, the U.S. Attorney's office has not
informed Apria of any decision to intervene in the qui tam actions;  however, it
could reach a decision with respect to intervention at any time.

     On July 12, 2001, government representatives and counsel for the plaintiffs
in the qui tam  actions  asserted  that,  by a process of  extrapolation  from a
sample of 300 patient files to all of Apria's billings to the federal government
during the  three-and-one-half  year sample period, Apria could be liable to the
government  under the False Claims Act for more than $9 billion,  consisting  of
extrapolated  overpayment liability,  plus treble damages and penalties of up to
$10,000 for each allegedly false claim derived from the extrapolation.

     Apria has acknowledged that there may be errors and omissions in supporting
documentation  affecting a portion of its  billings.  However,  it considers the
assertions  and amounts  described in the preceding  paragraph to be unsupported
both legally and factually  and believes that most of the alleged  documentation
errors and  omissions  should not give rise to any  liability,  for  overpayment
refunds or otherwise.  Accordingly,  Apria believes that the claims asserted are
unwarranted  and  that  it is  in a  position  to  assert  numerous  meritorious
defenses. Nevertheless, Apria cannot provide any assurances as to the outcome of
these proceedings. Management cannot estimate the possible loss or range of loss
that may result  from these  proceedings  and  therefore  has not  recorded  any
related accruals.

     If a judge,  jury or  administrative  agency were to  determine  that false
claims  were  submitted  to  federal  healthcare  programs  or that  there  were
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  the  exclusion  of Apria  from  participation  in federal
healthcare programs.

     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 Apria upon the resolution of
these claims and lawsuits will not, in the  aggregate,  have a material  adverse
effect on Apria's results of operations or financial condition.

ITEM 2.  Not applicable

ITEM 3.  Not applicable

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         (a) Annual Meeting of Stockholders of the company on July 18, 2002.

         (b) Directors reelected at the Annual Meeting for a term of one year:

             David H. Batchelder
             David L. Goldsmith
             Lawrence M. Higby
             Richard H. Koppes
             Philip R. Lochner, Jr.
             Beverly Benedict Thomas
             Ralph V. Whitworth

         (c) Matters Voted Upon at Annual Meeting:

             Election of Directors
             ---------------------
             As  of  July  18,  2002,  the  company's  Board  of  Directors
             consisted  of seven  members  who will  serve  for one year or
             until the election and qualification of their successors.  The
             results of the stockholder voting were as follows:

                                                     FOR            WITHHOLD
                                                  ----------        --------
             David H. Batchelder                  50,598,611        822,462
             David L. Goldsmith                   50,615,489        805,584
             Lawrence M. Higby                    51,058,494        362,579
             Richard H. Koppes                    51,056,490        364,583
             Philip R. Lochner, Jr.               50,573,489        847,584
             Beverly Benedict Thomas              51,058,494        362,579
             Ralph V. Whitworth                   51,056,612        364,461

ITEM 5.  OTHER INFORMATION

     Apria's bylaws were amended,  effective  September 3, 2002, to increase the
number of directors from seven to eight.  Vicente Anido,  Jr. was elected to the
open director position effective with the amendment of the bylaws. He will serve
on the Board of Directors until the next annual meeting of stockholders or until
his successor is elected and qualified.
<PAGE>
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits:

             Exhibit
             Number     Reference
             -------    ---------
               3.1      Amended and Restated Bylaws of registrant, as amended on
                        September 3, 2002.

              10.1      Amended  and  Restated  Employment  Agreement  effective
                        February 12,  2002,  between  registrant and Lawrence M.
                        Higby.

         (b) Reports on Form 8-K:

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

                                   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


November 14, 2002                   /s/ JAMES E. BAKER
                                    ------------------------------------
                                    James E. Baker
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)

<PAGE>
CERTIFICATION - CHIEF EXECUTIVE OFFICER


I, Lawrence M. Higby, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Apria Healthcare Group
    Inc.;

2.  Based on my  knowledge,  this  quarterly  report does not contain any untrue
    statement of a material fact or omit to state a material  fact  necessary to
    make the  statements  made, in light of the  circumstances  under which such
    statements  were made, not misleading  with respect to the period covered by
    this quarterly report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
    information  included  in  this  quarterly  report,  fairly  present  in all
    material  respects the financial  condition,  results of operations and cash
    flows of the  registrant  as of,  and for,  the  periods  presented  in this
    quarterly report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
    establishing and maintaining  disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

    a)  designed such disclosure controls and procedures to ensure that material
        information  relating  to the  registrant,  including  its  consolidated
        subsidiaries,  is made  known to us by  others  within  those  entities,
        particularly  during the period in which this quarterly  report is being
        prepared;

    b)  evaluated the effectiveness of the registrant's  disclosure controls and
        procedures  as of a date within 90 days prior to the filing date of this
        quarterly report (the "Evaluation Date"); and

    c)  presented  in  this   quarterly   report  our   conclusions   about  the
        effectiveness  of the disclosure  controls and  procedures  based on our
        evaluation as of the Evaluation Date;

5.  The registrant's other certifying officer and I have disclosed, based on our
    most recent evaluation, to the registrant's auditors and the audit committee
    of registrant's board of directors:

    a)  all  significant  deficiencies  in the design or  operation  of internal
        controls  which  could  adversely  affect  the  registrant's  ability to
        record, process, summarize and report financial data and have identified
        for the  registrant's  auditors  any  material  weaknesses  in  internal
        controls; and

    b)  any fraud,  whether or not material,  that involves  management or other
        employees  who  have a  significant  role in the  registrant's  internal
        controls; and

6.  The  registrant's  other  certifying  officer and I have  indicated  in this
    quarterly report whether or not there were  significant  changes in internal
    controls  or in other  factors  that  could  significantly  affect  internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective  actions  with regard to  significant  deficiencies  and material
    weaknesses.

Date:  November 14, 2002



                                  /s/ LAWRENCE M. HIGBY
                                  ---------------------------------------
                                  Lawrence M. Higby
                                  Chief Executive Officer
<PAGE>
CERTIFICATION - CHIEF FINANCIAL OFFICER


I, James E. Baker, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Apria Healthcare Group
    Inc.;

2.  Based on my  knowledge,  this  quarterly  report does not contain any untrue
    statement of a material fact or omit to state a material  fact  necessary to
    make the  statements  made, in light of the  circumstances  under which such
    statements  were made, not misleading  with respect to the period covered by
    this quarterly report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
    information  included  in  this  quarterly  report,  fairly  present  in all
    material  respects the financial  condition,  results of operations and cash
    flows of the  registrant  as of,  and for,  the  periods  presented  in this
    quarterly report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
    establishing and maintaining  disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

    a)  designed such disclosure controls and procedures to ensure that material
        information  relating  to the  registrant,  including  its  consolidated
        subsidiaries,  is made  known to us by  others  within  those  entities,
        particularly  during the period in which this quarterly  report is being
        prepared;

    b)  evaluated the effectiveness of the registrant's  disclosure controls and
        procedures  as of a date within 90 days prior to the filing date of this
        quarterly report (the "Evaluation Date"); and

    c)  presented  in  this   quarterly   report  our   conclusions   about  the
        effectiveness  of the disclosure  controls and  procedures  based on our
        evaluation as of the Evaluation Date;

5.  The registrant's other certifying officer and I have disclosed, based on our
    most recent evaluation, to the registrant's auditors and the audit committee
    of registrant's board of directors:

    a)  all  significant  deficiencies  in the design or  operation  of internal
        controls  which  could  adversely  affect  the  registrant's  ability to
        record, process, summarize and report financial data and have identified
        for the  registrant's  auditors  any  material  weaknesses  in  internal
        controls; and

    b)  any fraud,  whether or not material,  that involves  management or other
        employees  who  have a  significant  role in the  registrant's  internal
        controls; and

6.  The  registrant's  other  certifying  officer and I have  indicated  in this
    quarterly report whether or not there were  significant  changes in internal
    controls  or in other  factors  that  could  significantly  affect  internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective  actions  with regard to  significant  deficiencies  and material
    weaknesses.

Date:  November 14, 2002



                                  /s/ JAMES E. BAKER
                                  ---------------------------------------
                                  James E. Baker
                                  Chief Financial Officer