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 June 30, 2000

                                       OR

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


                         Commission File Number: 1-14316

                           APRIA HEALTHCARE GROUP INC.

             (Exact name of registrant as specified in its charter)



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


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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                            Yes  X     No
                                               -----      ------

There were 52,326,815  shares of common stock,  $.001 par value,  outstanding at
August 8, 2000.
<PAGE>


                           APRIA HEALTHCARE GROUP INC.

                                    FORM 10-Q

                       FOR THE PERIOD ENDED JUNE 30, 2000

PART I.   FINANCIAL INFORMATION

Item 1.     Financial Statements (unaudited)

            Consolidated Balance Sheets

            Consolidated Income Statements

            Consolidated Statements of Cash Flows

            Notes to Consolidated Financial Statements

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

Item 3.     Quantitative and Qualitative Disclosures About Market Risk

PART II.  OTHER INFORMATION

Item 1.     Legal Proceedings
Item 2.     Changes in Securities
Item 3.     Defaults Upon Senior Securities
Item 4.     Submission of Matters to a Vote of Security Holders
Item 5.     Other Information
Item 6.     Exhibits and Reports on Form 8-K

SIGNATURES
<PAGE>
<TABLE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                           APRIA HEALTHCARE GROUP INC.

                           CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                                                                   JUNE 30,    DECEMBER 31,
(dollars in thousands)                                                               2000         1999
-----------------------------------------------------------------------------------------------------------
                                                                                 (unaudited)
                                 ASSETS

CURRENT ASSETS
<S>                                                                               <C>           <C>
  Cash and cash equivalents ..................................................    $  40,447     $  20,493
  Accounts receivable, less allowance for doubtful accounts of $50,879
    and $44,652 at June 30, 2000 and December 31, 1999, respectively .........      147,572       149,767
  Inventories ................................................................       20,633        18,505
  Deferred income taxes ......................................................       40,245        42,595
  Prepaid expenses and other current assets ..................................        6,232         7,665
                                                                                  ---------     ---------
          TOTAL CURRENT ASSETS ...............................................      255,129       239,025

PATIENT SERVICE EQUIPMENT, less accumulated depreciation of $296,916
  and $277,915 at June 30, 2000 and December 31, 1999, respectively ..........      125,659       126,486
PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET ....................................       38,459        41,503
DEFERRED INCOME TAXES ........................................................       80,328        95,974
INTANGIBLE ASSETS, NET .......................................................      130,032       125,641
OTHER ASSETS .................................................................          534           422
                                                                                  ---------     ---------
                                                                                  $ 630,141     $ 629,051
                                                                                  =========     =========

                     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable ...........................................................    $  43,786     $  47,202
  Accrued payroll and related taxes and benefits .............................       24,163        26,478
  Accrued insurance ..........................................................       10,963        10,866
  Other accrued liabilities ..................................................       41,131        51,307
  Current portion of long-term debt ..........................................       31,077        23,528
                                                                                  ---------     ---------
          TOTAL CURRENT LIABILITIES ..........................................      151,120       159,381

LONG-TERM DEBT ...............................................................      375,286       394,201

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
 Preferred stock, $.001 par value:
  10,000,000 shares authorized; none issued ..................................            -             -
 Common stock, $.001 par value: 150,000,000 shares authorized;
  52,379,331 and 52,054,974 shares issued at June 30, 2000 and
  December 31, 1999, respectively; 52,293,231 and 52,054,874 outstanding
  at June 30, 2000 and December 31, 1999, respectively .......................           52            52
  Additional paid-in capital .................................................      331,269       328,897
  Retained deficit ...........................................................     (226,625)     (253,477)
  Treasury stock, at cost; 86,100 shares at June 30, 2000 and 100 shares
    at December 31, 1999 .....................................................         (961)           (3)
                                                                                  ---------     ---------
                                                                                    103,735        75,469
                                                                                  ---------     ---------
                                                                                  $ 630,141     $ 629,051
                                                                                  =========     =========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>

                           APRIA HEALTHCARE GROUP INC.

                         CONSOLIDATED INCOME STATEMENTS
                                   (unaudited)
<CAPTION>
                                                    THREE MONTHS ENDED       SIX MONTHS ENDED
                                                          JUNE 30,               JUNE 30,
                                                    -------------------    --------------------
(dollars in thousands, except per share data)         2000       1999         2000       1999
-----------------------------------------------------------------------------------------------
<S>                                                 <C>        <C>          <C>        <C>
Net revenues ....................................   $252,570   $232,040     $503,292   $460,334
Costs and expenses:
   Cost of net revenues:
      Product and supply costs ..................     47,019     45,557       96,274     90,882
      Patient service equipment depreciation.....     19,410     18,480       38,263     36,226
      Nursing services ..........................        417        537          870      1,088
      Other .....................................      2,535      2,175        5,475      4,622
                                                    --------   --------     --------   --------
                                                      69,381     66,749      140,882    132,818
   Selling, distribution and administrative......    137,737    127,558      271,262    252,007
   Provision for doubtful accounts ..............      8,399      7,442       19,018     16,071
   Amortization of intangible assets ............      2,486      1,984        4,926      3,857
                                                    --------   --------     --------   --------
                                                     218,003    203,733      436,088    404,753
                                                    --------   --------     --------   --------
          OPERATING INCOME ......................     34,567     28,307       67,204     55,581
Interest expense, net ...........................     10,307     10,503       20,908     21,815
                                                    --------   --------     --------   --------
          INCOME BEFORE TAXES ...................     24,260     17,804       46,296     33,766
Income taxes ....................................     10,189          -       19,444        400
                                                    --------   --------     --------   --------
          NET INCOME ............................   $ 14,071   $ 17,804     $ 26,852   $ 33,366
                                                    ========   ========     ========   ========


Basic income per common share ...................   $   0.27   $   0.34     $   0.51   $   0.64
                                                    ========   ========     ========   ========

Diluted income per common share .................   $   0.26   $   0.33     $   0.50   $   0.63
                                                    ========   ========     ========   ========

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

                           APRIA HEALTHCARE GROUP INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
<CAPTION>
                                                                                      SIX MONTHS ENDED
                                                                                          JUNE 30,
                                                                                    --------------------
(dollars in thousands)                                                                2000       1999
--------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
<S>                                                                                 <C>         <C>
Net income ......................................................................   $ 26,852    $ 33,366
Items included in net income not requiring cash:
  Provision for doubtful accounts ...............................................     19,018      16,071
  Depreciation and amortization .................................................     52,242      49,766
  Amortization of deferred debt costs ...........................................      1,357       3,174
  Deferred income taxes and other ...............................................     17,939       2,298
Changes in operating assets and liabilities, net of effects of acquisitions:
  Increase in accounts receivable ...............................................    (17,591)    (25,263)
  Increase in inventories .......................................................     (2,128)     (3,522)
  Decrease (increase) in prepaids and other assets ..............................      1,321        (250)
  Decrease in accounts payable ..................................................     (3,416)     (2,276)
  (Decrease) increase in accrued payroll and related taxes and benefits .........     (2,314)      5,221
  Decrease in accrued expenses and other liabilities ............................     (8,941)     (5,215)
Net purchases of patient service equipment, net of effects of acquisitions.......    (37,060)    (34,003)
                                                                                    --------    --------

          NET CASH PROVIDED BY OPERATING ACTIVITIES .............................     47,279      39,367

INVESTING ACTIVITIES
  Purchases of property, equipment and improvements,
    net of effects of acquisitions ..............................................     (5,684)     (4,069)
  Proceeds from disposition of assets ...........................................        230         276
  Acquisitions and payments of contingent consideration .........................    (10,143)    (25,110)
                                                                                    --------    --------

          NET CASH USED IN INVESTING ACTIVITIES .................................    (15,597)    (28,903)

FINANCING ACTIVITIES
  Payments on term loan .........................................................    (10,000)    (60,938)
  Payments on other long-term debt ..............................................     (3,143)     (3,350)
  Capitalized debt costs, net ...................................................          -      (1,811)
  Purchases of treasury stock ...................................................       (958)          -
  Issuances of common stock .....................................................      2,373       2,180
                                                                                    --------    --------

          NET CASH USED IN FINANCING ACTIVITIES .................................    (11,728)    (63,919)
                                                                                    --------    --------

NET INCREASE (DECREASE) IN CASH .................................................     19,954     (53,455)
Cash and cash equivalents at beginning of period ................................     20,493      75,475
                                                                                    --------    --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ......................................   $ 40,447    $ 22,020
                                                                                    ========    ========
</TABLE>
See notes to consolidated financial statements.
<PAGE>



                           APRIA HEALTHCARE GROUP INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of Apria
Healthcare  Group Inc.  ("Apria" or "the  company")  and its  subsidiaries.  All
significant 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, 1999, included in the company's 1999 Form 10-K.

NOTE B - RECLASSIFICATIONS AND USE OF ACCOUNTING ESTIMATES

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

Use  of  Accounting  Estimates:  The  preparation  of  financial  statements  in
conformity with 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.

NOTE C - REVENUE RECOGNITION AND CONCENTRATION OF CREDIT RISK

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

Due to the nature of the industry  and the  reimbursement  environment  in which
Apria  operates,  certain  estimates  are  required to record net  revenues  and
accounts receivable at their net realizable values.  Inherent in these estimates
is the  risk  that  they  will  have to be  revised  or  updated  as  additional
information  becomes  available to management.  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 common and are  typically
identified and recorded at the point of cash  application,  claim denial or upon
account review.

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

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

The company is required to adopt Staff Accounting  Bulletin No. 101 ("SAB 101"),
"Revenue  Recognition in Financial  Statements",  in the fourth quarter of 2000.
SAB 101  provides  guidance  on the  proper  timing of  revenue  recognition  in
accordance  with  generally  accepted  accounting   principles.   Management  is
currently in the process of evaluating SAB 101.

NOTE D - BUSINESS COMBINATIONS

Apria periodically  makes  acquisitions of complementary  businesses in specific
geographic  markets.  The  transactions  are  accounted for as purchases and the
results of operations of the acquired companies are included in the accompanying
statement  of  operations  from the date of  acquisition.  During the  six-month
period ended June 30, 2000, cash paid for  acquisitions  and related  contingent
consideration was $10,143,000. For the acquisitions that closed during that same
period,  $8,346,000  was  allocated  to  intangible  assets.  Goodwill  is being
amortized  over 20 years and covenants not to compete are being  amortized  over
the life of the respective agreements.

NOTE E - LONG-TERM DEBT

Apria's  credit  agreement  with Bank of America  and a  syndicate  of banks was
amended for the fifth time in March 2000 to increase the  limitation  on capital
expenditures.

At June 30, 2000, total borrowings under the credit agreement were $209,062,000,
outstanding  letters of credit totaled $1,000,000 and credit available under the
revolving facility was $29,000,000.

NOTE F - EQUITY

The change in stockholders'  equity,  other than from net income,  resulted from
the  exercise of stock  options and  purchases  of treasury  stock.  For the six
months ended June 30, 2000, proceeds from the exercise of stock options amounted
to $2,373,000, and treasury stock purchases totaled $958,000.

NOTE G - INCOME TAXES

Income  taxes for the six months  ended June 30, 2000 have been  provided at the
effective tax rate expected to be applicable for the year.

At December 31, 1999 Apria's federal net operating loss  carryforwards  ("NOLs")
approximated  $225,000,000,  expiring in 2003 through  2013.  Additionally,  the
company has various  state NOLs which began  expiring in 1997. As a result of an
ownership  change in 1992,  which met  specified  criteria of Section 382 of the
Internal  Revenue  Code,  future use of a portion of the  federal and state NOLs
generated prior to 1992 are each limited to  approximately  $5,000,000 per year.
Because of the annual limitation,  approximately  $57,000,000 of each of Apria's
federal and state NOLs may expire unused.  The company  excludes the $57,000,000
of potentially expiring NOLs from its deferred tax assets.

NOTE H - COMMITMENTS AND CONTINGENCIES

Apria is 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. In the opinion of  management,  any  liability  that
might be  incurred  by the  company  upon the  resolution  of these  claims  and
lawsuits will not, in the aggregate,  have a material  adverse effect on Apria's
consolidated  results of operations and financial  position.  Apria provides for
losses related to certain  matters when such losses are considered  probable and
capable  of  estimation.  No  provision  for losses is made in respect of claims
which do not meet such requirements.
<PAGE>
NOTE I - PER SHARE AMOUNTS

The following  table sets forth the  computation  of basic and diluted per share
amounts:
<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED        SIX MONTHS ENDED
                                                           JUNE 30,                 JUNE 30,
                                                      ------------------       ------------------
(in thousands, except per share data)                   2000      1999           2000      1999
-------------------------------------------------------------------------------------------------

NUMERATOR:
<S>                                                    <C>       <C>            <C>       <C>
  Net income .......................................   $14,071   $17,804        $26,852   $33,366
  Numerator for basic per share amounts - income
    available to common stockholders ...............   $14,071   $17,804        $26,852   $33,366

  Numerator for diluted per share amounts - income
    available to common stockholders ...............   $14,071   $17,804        $26,852   $33,366


DENOMINATOR:

  Denominator for basic per share
    amounts - weighted average shares ..............    52,326    51,896         52,258    51,846

  Effect of dilutive securities:
    Employee stock options .........................     1,335     2,013          1,546     1,440
                                                       -------   -------        -------   -------
    Dilutive potential common shares ...............     1,335     2,013          1,546     1,440
                                                       -------   -------        -------   -------
  Denominator for diluted per share amounts -
    adjusted weighted average shares ...............    53,661    53,909         53,804    53,286
                                                       =======   =======        =======   =======

BASIC INCOME PER COMMON SHARE ......................   $  0.27   $  0.34        $  0.51   $  0.64
                                                       =======   =======        =======   =======

DILUTED INCOME PER COMMON SHARE ....................   $  0.26   $  0.33        $  0.50   $  0.63
                                                       =======   =======        =======   =======

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

    Exercise price exceeds average market
      price of common stock ........................     2,659       877         2,608     1,261

Average exercise price per share that exceeds
  average market price of common stock .............   $ 18.34   $ 20.85        $ 18.42   $ 19.34
                                                       =======   =======        =======   =======
</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, some of which are beyond the company's control. The company has
described  certain  of those  risks in its Form 10-K for the  fiscal  year ended
December 31, 1999, as filed with the Securities and Exchange Commission on March
27,  2000.  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.  These  risks  include the
collectibility   of   Apria's   accounts   receivable,   the   ongoing   federal
investigations regarding Apria's billing practices, the effectiveness of Apria's
operating systems and controls,  healthcare reform and the effect of federal and
state healthcare regulations,  pricing pressures from large payors and continued
reductions  in  Medicare   reimbursement,   Apria's  ability  to  implement  its
acquisition strategy and the upcoming maturity of Apria's long-term debt.


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

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

     NET REVENUES AND GROSS  MARGIN.  Net  revenues  were $252.6  million in the
second quarter of 2000,  compared to $232.0 million for the same period in 1999.
For the six months  ended June 30,  2000,  net  revenues  were  $503.3  million,
representing  an increase  of 9.3%  year-to-year.  The  primary  reasons for the
increases are new contracts with regional and national  payors,  the acquisition
of  complementary  businesses  and  price  increases  in  certain  managed  care
agreements.

     The table below sets forth a summary of net revenues by service  line.  The
largest  increase is in the respiratory  service line, which is largely due to a
sales  focus  on this  higher-margin  line  and to the  impact  of  acquisitions
consummated  during 1999 and early 2000.  The  increase  between  periods in the
infusion therapy service line was due predominantly to volume increases.
<TABLE>
<CAPTION>
                                                       SIX MONTHS ENDED JUNE 30,
                                             ---------------------------------------------
                                                    2000                       1999
                                             ------------------         ------------------
(dollars in thousands)                            $         %                $         %
------------------------------------------------------------------------------------------
<S>                                           <C>         <C>            <C>         <C>
  Respiratory therapy.....................    $326,207    64.8%          $292,709    63.6%
  Infusion therapy........................      95,449    19.0%            86,836    18.9%
  HME/other...............................      81,636    16.2%            80,789    17.5%
                                              --------   ------          --------   ------
     Total net revenues                       $503,292   100.0%          $460,334   100.0%
                                              ========   ======          ========   ======
</TABLE>
     Gross  margins for the second  quarter  and six months  ended June 30, 2000
were 72.5% and  72.0%,  respectively,  compared  to 71.2% and 71.1% for the same
periods last year.  The majority of this  improvement  is due to the increase in
respiratory revenues as a percentage of total revenues.

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

     Possible  Medicare  Reimbursement  Reductions.  The  Secretary  of the U.S.
Department of Health and Human Services ("HHS") has recently  indicated that she
intends to recommend that the Medicare claims processors base their payments for
certain  drugs on pricing  schedules  other  than the  Average  Wholesale  Price
listing,   which   historically   has  been  the   industry's   basis  for  drug
reimbursement.  The  alternate  pricing the  Secretary  intends to propose would
reduce  reimbursement  levels on certain  drugs to more  closely  approximate  a
provider's  acquisition cost without an accompanying  service fee offset. If the
alternative  pricing  is  implemented  by all the  Medicare  claims  processors,
Apria's  management  estimates that the impact to revenues would be less than 5%
on an annual basis. The healthcare  industry has taken issue with HHS's approach
for several  reasons,  primarily  because it fails to consider the  accompanying
costs of delivering and  administering  these types of drugs.  Patient access to
these drug  therapies  may also be affected if providers  choose to  discontinue
providing these services.

     Despite  HHS's  intention to provide  instructions  to the Medicare  claims
processors in June 2000,  the company does not believe HHS has provided any such
information or made any further public  comments  regarding  alternate  pricing.
Additionally,  certain  members of Congress  have  requested  that HHS delay the
implementation  of the pricing  changes pending further study and an appropriate
comment period.

     SELLING,   DISTRIBUTION  AND  ADMINISTRATIVE.   Selling,  distribution  and
administrative  expense, as a percentage of net revenue, was 54.5% and 53.9% for
the second  quarter and six months  ended June 30,  2000,  respectively,  versus
55.0%  and  54.7%  for the  same  periods  in  1999.  This is  primarily  due to
management's  ability  to  maintain  fixed and  controllable  expense  levels as
revenues increase.

     PROVISION FOR DOUBTFUL  ACCOUNTS.  The provision for doubtful  accounts was
3.3% and 3.8% of net revenues for the three and six-month periods ended June 30,
2000, respectively,  compared to 3.2% and 3.5% for the same periods in 1999. The
increase in 2000 is largely  attributable to an increase in accounts  receivable
aged in excess of 180 days, which were 27.2% and 22.1% at June 30, 2000 and June
30, 1999, respectively, as a percentage of total accounts receivable.

     AMORTIZATION OF INTANGIBLE  ASSETS.  Amortization  expense was $2.5 million
and $4.9  million  for the second  quarter and six months  ended June 30,  2000,
respectively,  compared to $2.0  million and $3.9 million in the same periods of
1999.  The  increase is directly  attributable  to  intangible  assets that were
recorded in  conjunction  with  acquisitions  that were  consummated in 1999 and
2000.

     INTEREST EXPENSE. Interest expense was $10.3 million for the second quarter
ended June 30, 2000,  down from $10.5 million for the same period last year. For
the six months ended June 30, 2000,  interest expense was $20.9 million compared
to $21.8  million in the prior  year.  This  decrease  is  primarily  due to the
reduction in long term debt levels from 1999 to 2000 which was partially  offset
by an increase in interest rates and a decrease in year-to-date  interest income
due to lower cash investment balances.

     INCOME  TAXES.  Income taxes were $19.4 million for the first six months of
2000  versus  $400,000  for the same period last year.  At  December  31,  1999,
management  concluded  that it was more likely than not that Apria would realize
its net deferred tax assets.  As a result,  the company  released the  remaining
deferred tax valuation allowance during the fourth quarter of 1999. The increase
in income tax expense for the first six months of 2000, as compared to the first
six months of 1999, is primarily  attributable to Apria's partial release of its
deferred tax valuation allowance in 1999.

     At December  31, 1999  Apria's  federal  NOLs  approximated  $225  million,
expiring in the years 2003 through 2013.  Additionally,  Apria has various state
NOLs which began  expiring in 1997. As a result of an ownership  change in 1992,
which met specified criteria of Section 382 of the Internal Revenue Code, future
use of a portion of the federal and state NOLs generated  prior to 1992 are each
limited to approximately $5 million per year.  Because of the annual limitation,
approximately  $57 million of each of Apria's  federal and state NOLs may expire
unused.  Apria  excludes the $57 million of  potentially  expiring NOLs from its
deferred tax assets.

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

     OPERATING  CASH  FLOW.  Operating  cash  flow  was  $47.3  million  for the
six-month  period ended June 30, 2000,  compared with $39.4 million for the same
period in 1999.  The  increase  is largely  attributable  to an  increase in net
income after adding back items not  providing or requiring  cash.  Improved cash
collections also had a positive impact on operating cash flow period-to-period.

     ACCOUNTS  RECEIVABLE.  Accounts  receivable,  before allowance for doubtful
accounts,  increased to $198.5  million at June 30, 2000 from $194.4  million at
December 31, 1999. The increase is primarily attributable to revenue growth.

     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)  decreased to 53 days at June 30, 2000 from 56 days at
December 31, 1999.  Accounts aged in excess of 180 days as a percentage of total
accounts  receivable  increased  to 27.2% at June 30, 2000  compared to 24.1% at
December 31, 1999.

     Collection  of its  accounts  receivable  remains  one of  Apria's  primary
focuses. Two factors impacting the collectibility of accounts receivable are (1)
continued high turnover among accounts  receivable  personnel in many of Apria's
locations and (2) the inability to collect  contractually-due  receivables  from
certain large managed care payors on a timely basis, or at all.

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

     Unbilled  Receivables.  Included  in  accounts  receivable  are  earned but
unbilled  receivables  of $21.6  million and $23.0  million at June 30, 2000 and
December 31, 1999,  respectively.  Delays in billings can occur, from a few days
to several  weeks or more,  from the date of service due to delays in  obtaining
certain  required  payor-specific   documentation  from  internal  and  external
sources.  Such documentation  would include internal records of proof-of-service
and written  authorizations  from physicians and other referral sources.  Earned
but unbilled  receivables  are aged from date of service and are  considered  in
Apria's analysis of historical performance and collectibility.

     LONG-TERM DEBT.  Apria's credit agreement was amended for the fifth time in
March 2000. This latest amendment  increases the amount of capital  expenditures
permitted by the credit agreement.

     At June 30, 2000,  total  borrowings under the credit agreement were $209.1
million  (none of which  were  advanced  from the  revolving  credit  facility),
outstanding  letters of credit totaled $1.0 million and credit  available  under
the revolving facility was $29.0 million.

     BUSINESS   COMBINATIONS.   Apria   periodically   makes   acquisitions   of
complementary  businesses in specific geographic  markets.  The transactions are
accounted  for as  purchases  and the  results  of  operations  of the  acquired
companies are included in the accompanying statement of operations from the date
of acquisition.  During the six-month  period ended June 30, 2000, cash paid for
acquisitions  and  related  contingent  consideration  was  $10.1  million.  For
acquisitions that closed during the same period,  approximately $8.4 million was
allocated to intangible  assets.  Goodwill is being  amortized over 20 years and
covenants  not to compete are being  amortized  over the life of the  respective
agreements.

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

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Apria currently utilizes no material derivative financial  instruments that
expose the company to  significant  market  risk.  However,  Apria is subject to
interest rate changes on its variable  rate term loan under the  company's  bank
credit  agreement  that may affect the fair value of that debt and cash flow and
earnings.  Based on the term debt  outstanding  at June 30, 2000 and the current
market  perception,  a 50 basis point increase in the applicable  interest rates
would  decrease  Apria's  annual cash flow and  earnings by  approximately  $1.1
million.  Conversely, a 50 basis point decrease in the applicable interest rates
would increase annual cash flow and earnings by $1.1 million.
<PAGE>

                           PART II - OTHER INFORMATION

ITEMS 1-5.    NOT APPLICABLE

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

              (a) Exhibits:

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

                  10.1      Description of Two-Year Incentive Plan for Executive
                            Officers.

                  27.1      Financial Data Schedule.

              (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

August 11, 2000             /s/  JOHN C. MANEY
                            ----------------------------------------------------
                            John C. Maney
                            Executive Vice President and Chief Financial Officer
                            (Principal Financial Officer)