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, 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 52,559,629  shares of common stock,  $.001 par value,  outstanding at
November 8, 2000.


<PAGE>


                           APRIA HEALTHCARE GROUP INC.

                                    FORM 10-Q

                     For the period ended September 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
<CAPTION>
                                             APRIA HEALTHCARE GROUP INC.
                                             CONSOLIDATED BALANCE SHEETS
                                                                                  September 30,   December 31,
(dollars in thousands)                                                                2000           1999
--------------------------------------------------------------------------------------------------------------
                                                                                            (unaudited)
                                  ASSETS

CURRENT ASSETS
<S>                                                                                  <C>            <C>
  Cash and cash equivalents.....................................................     $ 65,373       $ 20,493
  Accounts receivable, less allowance for doubtful accounts of $49,188
    and $44,652 at September 30, 2000 and December 31, 1999, respectively.......      145,725        149,767
  Inventories...................................................................       18,351         18,505
  Deferred income taxes.........................................................       40,268         42,595
  Prepaid expenses and other current assets.....................................        6,012          7,665
                                                                                     --------       --------
          TOTAL CURRENT ASSETS..................................................      275,729        239,025

PATIENT SERVICE EQUIPMENT, less accumulated depreciation of $305,096
  and $277,915 at September 30, 2000 and December 31, 1999, respectively........      126,914        126,486
PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET.......................................       40,848         41,503
DEFERRED INCOME TAXES...........................................................       70,415         95,974
INTANGIBLE ASSETS, NET..........................................................      128,579        125,641
OTHER ASSETS....................................................................        1,771            422
                                                                                     --------       --------
                                                                                     $644,256       $629,051
                                                                                     ========       ========

                     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable..............................................................     $ 46,344        $ 47,202
  Accrued payroll and related taxes and benefits................................       32,373          26,478
  Accrued insurance.............................................................       10,259          10,866
  Other accrued liabilities.....................................................       47,983          51,307
  Current portion of long-term debt.............................................       36,635          23,528
                                                                                     --------        --------
          TOTAL CURRENT LIABILITIES.............................................      173,594         159,381

LONG-TERM DEBT..................................................................      351,727         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;  52,435,543 and 52,054,974 shares
    issued at September  30, 2000 and  December  31, 1999,  respectively;
    52,349,443  and 52,054,874 outstanding at September 30, 2000 and
    December 31, 1999, respectively.............................................           52              52
  Additional paid-in capital....................................................      331,663         328,897
  Retained deficit..............................................................     (211,819)       (253,477)
  Treasury stock, at cost; 86,100 shares at September 30, 2000
    and 100 shares at December 31, 1999.........................................         (961)             (3)
                                                                                     --------        --------
                                                                                      118,935          75,469
                                                                                     --------        --------
                                                                                     $644,256        $629,051
                                                                                     ========        ========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
                                             APRIA HEALTHCARE GROUP INC.
                                           CONSOLIDATED INCOME STATEMENTS
                                                   (unaudited)
<CAPTION>
                                                                           Three Months Ended              Nine Months Ended
                                                                              September 30,                  September 30,
                                                                          ---------------------         ----------------------
(dollars in thousands, except per share data)                               2000         1999             2000          1999
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>          <C>              <C>           <C>
Net revenues....................................................          $252,588     $237,367         $755,880      $697,701
Costs and expenses:
   Cost of net revenues:
      Product and supply costs..................................            45,230       45,493          141,643       136,595
      Patient service equipment depreciation....................            19,172       18,455           57,435        54,681
      Nursing services..........................................               467          500            1,337         1,588
      Other.....................................................             2,541        2,158            7,877         6,560
                                                                          --------     --------         --------      --------
                                                                            67,410       66,606          208,292       199,424
   Selling, distribution and administrative.....................           140,115      129,970          411,377       381,977
   Provision for doubtful accounts..............................             6,767        9,305           25,785        25,376
   Amortization of intangible assets............................             2,601        2,101            7,527         5,958
                                                                          --------     --------         --------      --------
                                                                           216,893      207,982          652,981       612,735
                                                                          --------     --------         --------      --------
          OPERATING INCOME......................................            35,695       29,385          102,899        84,966
Interest expense, net...........................................            10,167       10,490           31,075        32,305
                                                                          --------     --------         --------      --------
          INCOME BEFORE TAXES...................................            25,528       18,895           71,824        52,661
Income taxes....................................................            10,722            -           30,166           400
                                                                          --------     --------         --------      --------
          NET INCOME............................................          $ 14,806     $ 18,895         $ 41,658      $ 52,261
                                                                          ========     ========         ========      ========


Basic income per common share...................................          $   0.28     $   0.36         $   0.80      $   1.01
                                                                          ========     ========         ========      ========
Diluted income per common share.................................          $   0.28     $   0.35         $   0.77      $   0.98
                                                                          ========     ========         ========      ========

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


                                             APRIA HEALTHCARE GROUP INC.
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (unaudited)

                                                                                        Nine Months Ended
                                                                                          September 30,
                                                                                     ------------------------
(dollars in thousands)                                                                  2000          1999
-------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
<S>                                                                                  <C>            <C>
Net income......................................................................     $ 41,658       $ 52,261
Items included in net income not requiring cash:
  Provision for doubtful accounts...............................................       25,785         25,376
  Depreciation and amortization.................................................       78,091         75,091
  Amortization of deferred debt costs...........................................        2,025          3,794
  Deferred income taxes and other...............................................       27,037          2,311
Changes in operating assets and liabilities, net of effects of acquisitions:

  Increase in accounts receivable...............................................      (18,202)       (35,152)
  Decrease (increase) in inventories............................................          155         (4,054)
  Decrease (increase) in prepaids and other assets..............................          998         (1,056)
  Decrease in accounts payable..................................................         (858)        (1,701)
  Increase in accrued payroll and related taxes and benefits....................        5,895          1,584
  Decrease in accrued expenses and other liabilities............................       (3,594)        (6,208)
Net purchases of patient service equipment, net of effects of acquisitions......      (57,053)       (48,647)
                                                                                     --------       --------
          NET CASH PROVIDED BY OPERATING ACTIVITIES.............................      101,937         63,599

INVESTING ACTIVITIES
  Purchases of property, equipment and improvements,
    net of effects of acquisitions..............................................       (9,500)        (6,191)
  Proceeds from disposition of assets...........................................          482          1,007
  Acquisitions and payments of contingent consideration.........................      (15,400)       (28,524)
                                                                                     --------       --------
          NET CASH USED IN INVESTING ACTIVITIES.................................      (24,418)       (33,708)

FINANCING ACTIVITIES
  Payments on term loan.........................................................      (30,062)       (64,938)
  Payments on other long-term debt..............................................       (3,402)        (4,666)
  Capitalized debt costs, net...................................................         (983)        (1,811)
  Purchases of common stock.....................................................         (958)             -
  Issuances of common stock.....................................................        2,766          2,643
                                                                                     --------       --------
          NET CASH USED IN FINANCING ACTIVITIES.................................      (32,639)       (68,772)
                                                                                     --------       --------
NET INCREASE (DECREASE) IN CASH.................................................       44,880        (38,881)
Cash and cash equivalents at beginning of period................................       20,493         75,475
                                                                                     --------       --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD......................................     $ 65,373       $ 36,594
                                                                                     ========       ========

See notes to consolidated financial statements.
</TABLE>
<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 typically  identified and
recorded at the point of cash application, claim denial or account review.

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

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

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.  The adoption of SAB
101 will not have a material  effect on the  company's  consolidated  results of
operations or financial position.
<PAGE>
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
statements of operations  from the date of  acquisition.  During the  nine-month
period  ended  September  30,  2000,  cash  paid for  acquisitions  and  related
contingent  consideration  was  $15,400,000.  For the  acquisitions  that closed
during that same period, $9,493,000 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  and  sixth  times  in  March  and  September  of  2000,
respectively.   The  earlier  amendment  increased  the  limitation  on  capital
expenditures  while the most  recent  amendment  extended  the  maturity  of the
agreement to September 30, 2002.  The sixth  amendment also reduced the interest
rate on  borrowings  by  .75%,  increased  the  aggregate  amount  of  permitted
acquisitions to $200,000,000 annually and increased the revolving line of credit
to $50,000,000,  none of which has been drawn. In conjunction with the September
amendment, Apria also reduced the outstanding term loan by $20,062,000.

At  September  30,  2000,  total  borrowings  under the  credit  agreement  were
$189,000,000,  outstanding  letters  of credit  totaled  $1,000,000  and  credit
available  under the revolving  facility was  $49,000,000.  On October 20, 2000,
Apria further  reduced the  outstanding  term loan to  $159,000,000  by making a
voluntary prepayment of $30,000,000.

NOTE F - EQUITY

The change in stockholders'  equity, other than from net income, is attributable
to the exercise of stock options and purchases of the company's  common stock on
the open market. For the nine months ended September 30, 2000, proceeds from the
exercise of stock options  amounted to $2,766,000  and stock  purchases  totaled
$958,000.

In  March  2000,   the  Financial   Accounting   Standards   Board  issued  FASB
Interpretation  No. 44,  "Accounting  for Certain  Transactions  Involving Stock
Compensation  - an  interpretation  of APB Opinion  No. 25" ("FIN  44").  FIN 44
provides  clarification  for issues that have arisen in applying APB Opinion No.
25,  Accounting for Stock Issued to Employees,  including:  the definition of an
employee  for  purposes  of  applying  APB  Opinion  No.  25; the  criteria  for
determining  whether a plan qualifies as a noncompensatory  plan; the accounting
consequences  of various  modifications  to the terms of previously  fixed stock
options or awards;  and the  accounting  for an exchange  of stock  compensation
awards in a business  combination.  FIN 44 became  effective  July 1, 2000,  but
certain  conclusions  in FIN 44 cover  specific  events that occur after  either
December  15, 1998 or January 12,  2000.  Apria  adopted FIN 44 during the third
quarter  of 2000.  The  adoption  of FIN 44 did not have a  material  effect  on
Apria's consolidated results of operations or financial position.

NOTE G - INCOME TAXES

Income taxes for the nine months ended  September 30, 2000 have been provided at
the effective tax rate that is expected to be applicable for the year.

At December 31, 1999 Apria's federal net operating loss  carryforwards  ("NOLs")
approximated  $239,000,000,  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 is limited to  approximately  $5,000,000 each per year.
Because of the annual limitation,  approximately  $57,000,000 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.
<PAGE>
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.

NOTE I - 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)                                2000        1999              2000        1999
---------------------------------------------------------------------------------------------------------------------
Numerator:
<S>                                                                <C>         <C>               <C>         <C>
  Net income....................................................   $ 14,806    $ 18,895          $ 41,658    $ 52,261
  Numerator for basic per share amounts - income
    available to common stockholders............................   $ 14,806    $ 18,895          $ 41,658    $ 52,261

  Numerator for diluted per share amounts - income
    available to common stockholders............................   $ 14,806    $ 18,895          $ 41,658    $ 52,261


Denominator:
  Denominator for basic per share
    amounts - weighted average shares...........................     52,324      52,024            52,280      51,905

  Effect of dilutive securities:
    Employee stock options......................................      1,380       1,866             1,491       1,583
                                                                   --------    --------          --------    --------
    Dilutive potential common shares............................      1,380       1,866             1,491       1,583
                                                                   --------    --------          --------    --------
  Denominator for diluted per share amounts -
    adjusted weighted average shares............................     53,704      53,890            53,771      53,488
                                                                   ========    ========          ========    ========

Basic income per common share...................................   $   0.28    $   0.36          $   0.80    $   1.01
                                                                   ========    ========          ========    ========
Diluted income per common share.................................   $   0.28    $   0.35          $   0.77    $   0.98
                                                                   ========    ========          ========    ========
Employee  stock  options  excluded  from the
  computation  of diluted  per share amounts:

    Exercise price exceeds average market
      price of common stock.....................................      2,650       1,573             2,607       1,747

Average exercise price per share that exceeds
  average market price of common stock..........................   $  18.31    $  19.51          $  18.37    $  19.11
                                                                   ========    ========          ========    ========
</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. Those risks include:  whether
the company will be able to resolve issues  pertaining to the  collectibility of
its accounts  receivable,  healthcare reform and the effect of federal and state
healthcare regulations, the ongoing government investigations regarding patients
covered by Medicare and other federal  programs,  pricing  pressures  from large
payors and changes in governmental  reimbursement  levels,  the effectiveness of
the company's operating systems and controls, and the successful  implementation
of the company's acquisition strategy.


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

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

     NET REVENUES AND GROSS  MARGIN.  Net  revenues  were $252.6  million in the
third quarter of 2000, compared to $237.4 million for the third quarter of 1999.
For the nine months ended  September 30, 2000, net revenues were $755.9 million,
representing an increase of 8.3% year-to-year. The increases in net revenues are
due to volume increases from traditional  referral  sources,  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  therapy service line,  which is largely
due  to a  sales  focus  on  this  higher-margin  line  and  to  the  impact  of
acquisitions  consummated  during  the fourth  quarter of 1999 and in 2000.  The
increase   between  periods  in  the  infusion   therapy  service  line  is  due
predominantly to volume increases.

                                            Nine Months Ended September 30,
                                       ----------------------------------------
                                               2000                  1999
                                       -----------------      -----------------
(dollars in thousands)                     $         %            $         %
-------------------------------------------------------------------------------
   Respiratory therapy..........       $488,601    64.6%      $444,121    63.7%
   Infusion therapy.............        144,981    19.2%       131,728    18.9%
   HME/other....................        122,298    16.2%       121,852    17.4%
                                       --------   ------      --------   ------
      Total net revenues               $755,880   100.0%      $697,701   100.0%
                                       ========   ======      ========   ======

     Gross  margins for the third  quarter and nine months ended  September  30,
2000 were 73.3% and  72.4%,  respectively,  compared  to 71.9% and 71.4% for the
corresponding  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 typically identified and recorded at the point of
cash application, claim denial or account review.

     Medicare  Reimbursement Update.  Earlier in 2000, the Secretary of the U.S.
Department of Health and Human  Services  ("HHS")  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 methodology 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 component.  If the alternative pricing
is  implemented  by all the Medicare  carriers  that  process  claims for drugs,
including  infusion and  respiratory  therapy  medications,  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 drug  therapies.  Patient  access  to these  drug
therapies may also be jeopardized if providers  choose to discontinue  providing
these services.

     Legislation  currently  being  considered by Congress  would delay the drug
pricing changes until such time that the General Accounting Office could conduct
a  thorough  study  (including  consultation  with  the  homecare  industry)  to
recommend  alternative  payment  methodologies.  Also  included  in  the  set of
Medicare proposals being considered by Congress is full restoration, in 2001, of
the Cost of Living  Adjustment  ("COLA") which would increase the Consumer Price
Index-based  reimbursement increases for durable medical equipment providers. It
is uncertain  whether either of these  proposals will pass in their current form
or at all.

     SELLING,   DISTRIBUTION  AND  ADMINISTRATIVE.   Selling,  distribution  and
administrative  expense, as a percentage of net revenue, was 55.5% and 54.4% for
the third quarter and nine months ended September 30, 2000, respectively, versus
54.8% for both of the  corresponding  periods in 1999.  Management  continues to
monitor and optimize  its fixed and  controllable  expense  structure to support
increasing business levels.

     PROVISION FOR DOUBTFUL  ACCOUNTS.  The provision for doubtful  accounts was
2.7% and  3.4% of net  revenues  for the  three  and  nine-month  periods  ended
September   30,  2000,   respectively,   compared  to  3.9%  and  3.6%  for  the
corresponding  periods in 1999. The decrease between the three-month  periods is
largely attributable to an improvement in 2000 cash collections.

     AMORTIZATION OF INTANGIBLE  ASSETS.  Amortization  expense was $2.6 million
and $7.5 million for the third quarter and nine months ended September 30, 2000,
respectively,  compared to $2.1  million and $6.0  million in the  corresponding
periods of 1999. The increase is directly attributable to intangible assets that
were recorded in  conjunction  with  acquisitions  that were  consummated in the
fourth quarter of 1999 and in 2000.

     INTEREST EXPENSE.  Interest expense was $10.2 million for the third quarter
ended September 30, 2000, down from $10.5 million for the third quarter of 1999.
For the nine months ended September 30, 2000, interest expense was $31.1 million
compared to $32.3 million in the prior year.  The decreases are primarily due to
the  reduction in long-term  debt levels from 1999 to 2000  partially  offset by
increases in interest rates.

     INCOME TAXES.  Income taxes were $30.2 million for the first nine months of
2000 versus  $400,000 for the first nine months 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 nine  months of 2000,  as  compared to the
first nine 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  $239  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 is
limited  to  approximately  $5  million  each per year.  Because  of the  annual
limitation,  approximately  $57  million 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  $101.9  million  for the
nine-month period ended September 30, 2000,  compared with $63.4 million for the
corresponding  period  in 1999.  The  primary  reasons  for the  improvement  in
operating cash flow were the increase in net income,  before items not requiring
cash, plus a smaller increase in accounts  receivable for the nine-month  period
of 2000 as compared to the  corresponding  period of 1999. To a lesser extent, a
decrease in inventories and an increase in accrued payroll and related taxes and
benefits  (due  to  the  number  of  payroll  days  accrued  at  the  respective
period-ends) also contributed to the increase in operating cash flow.  Purchases
of patient service  equipment  increased during the nine-month period to support
the growth in the respiratory therapy service line.

     ACCOUNTS  RECEIVABLE.  Collection  of  accounts  receivable  remains one of
Apria's primary  focuses.  Accounts  receivable,  before  allowance for doubtful
accounts,  increased by only  $500,000  from  December 31, 1999 to September 30,
2000.  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 52 days at September 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 28.2% at September 30, 2000 compared to
24.1% at December 31, 1999.

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

     Unbilled  Receivables.  Included  in  accounts  receivable  are  earned but
unbilled  receivables  of $23.3  million and $23.0 million at September 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 sixth time in
September 2000. This latest  amendment  extends the maturity of the agreement to
September 30, 2002,  reduces the interest rate on borrowings under the agreement
by 0.75%,  increases the aggregate amount of permitted  acquisitions from $125.0
million to $200.0  million and increases the revolving line of credit from $30.0
million to $50.0 million.  In conjunction  with the September  amendment,  Apria
also reduced the outstanding term loan by $20 million.  In March 2000, the fifth
amendment  to the  credit  agreement  was  effected  to  increase  the amount of
permitted capital expenditures.

     At September 30, 2000,  total  borrowings  under the credit  agreement were
$189.0 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 $49.0  million.  On October 20, 2000,  Apria further
reduced  the  outstanding  term loan to  $159.0  million  by making a  voluntary
prepayment of $30.0 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  statements  of operations  from the
date of acquisition. During the nine-month period ended September 30, 2000, cash
paid for acquisitions and related  contingent  consideration  was $15.4 million.
For acquisitions that closed during the same period,  approximately $9.5 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 does not currently  utilize  derivative  financial  instruments  that
expose the company to  significant  market  risk.  However,  Apria is subject to
interest rate changes on its variable  rate term loan under the  company's  bank
credit  agreement  that may affect the fair value of that debt and cash flow and
earnings.  Based on the term debt  outstanding  at  September  30,  2000 and the
current market perception,  a 75 basis point increase in the applicable interest
rates would decrease Apria's annual cash flow and earnings by approximately $1.6
million.  Consideration of scheduled  repayments and the $30 million  prepayment
made in October  2000  would  reduce the  annual  impact to  approximately  $1.1
million over the next twelve months.
<PAGE>


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

ITEMS 1-3.   NOT APPLICABLE

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

             (a) Annual Meeting of Stockholders of the company on July 19, 2000.

             (b) Directors re-elected at the Annual  Meeting  for  a term of one
                 year:

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

             (c) Matters Voted Upon at Annual Meeting:

                 Election of Directors
                 ---------------------

                 The company's   Board  of  Directors  consists 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            49,228,115         392,946
                 Philip L. Carter               49,228,113         392,948
                 David L. Goldsmith             49,228,015         393,046
                 Richard H. Koppes              49,228,254         392,807
                 Philip R. Lochner, Jr.         49,228,654         392,407
                 Beverly Benedict Thomas        49,228,654         392,407
                 Ralph V. Whitworth             49,228,115         392,946

ITEM 5.      NOT APPLICABLE

ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

             (a) Exhibits:

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

                 10.1      Sixth  Amendment  to  Amended  and  Restated   Credit
                           Agreement dated September 22, 2000, among  Registrant
                           and  certain  of  its  subsidiaries,  Bank of America
                           National  Trust and  Savings  Association  and  other
                           financial institutions party to the Credit Agreement.

                 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


November 14, 2000                   /s/  JOHN C. MANEY
                                    ---------------------------
                                    John C. Maney
                                    Executive Vice President and
                                    Chief Financial Officer
                                    (Principal Financial Officer)