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, 1999

                                       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 52,042,134  shares of common stock,  $.001 par value,  outstanding at
November 1, 1999.
<PAGE>

                           APRIA HEALTHCARE GROUP INC.

                                    FORM 10-Q

                     For the period ended September 30, 1999






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

Item 1.           Financial Statements (unaudited)

                  Consolidated Balance Sheets

                  Consolidated Statements of Operations

                  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>
                                                            September 30,   December 31,
                                                                1999            1998
                                                            ------------    ------------
                                                            (unaudited)
                                                                (dollars in thousands)
                       ASSETS

CURRENT ASSETS
  <S>                                                        <C>             <C>
  Cash and cash equivalents ..............................   $  36,594       $  75,475
  Accounts receivable, less allowance for doubtful
    accounts of $43,667 and $35,564 at September 30,
    1999 and December 31, 1998, respectively .............     144,005         132,028
  Inventories ............................................      17,682          16,617
  Prepaid expenses and other current assets ..............       7,716           4,917
                                                             ---------       ---------
          TOTAL CURRENT ASSETS ...........................     205,997         229,037

PATIENT SERVICE EQUIPMENT, less accumulated
  depreciation of $277,959 and $249,921 at September 30,
  1999 and December 31, 1998, respectively ...............     125,842         130,652
PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET ................      43,877          51,996
INTANGIBLE ASSETS, NET ...................................     105,108          84,365
OTHER ASSETS .............................................         466             548
                                                             ---------       ---------
                                                             $ 481,290       $ 496,598
                                                             =========       =========


           LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
  Accounts payable .......................................   $  44,873       $  42,614
  Accrued payroll and related taxes and benefits .........      27,164          25,455
  Accrued insurance ......................................      10,717          13,092
  Other accrued liabilities ..............................      52,578          58,508
  Current portion of long-term debt ......................      23,470          74,439
                                                             ---------       ---------
          TOTAL CURRENT LIABILITIES ......................     158,802         214,108

LONG-TERM DEBT ...........................................     399,157         414,147

COMMITMENTS AND CONTINGENCIES ............................           -               -

STOCKHOLDERS' DEFICIT Preferred stock, $.001 par
  value: 10,000,000 shares authorized; none issued .......           -               -
  Common stock, $.001 par value: 150,000,000 shares
    authorized; 52,041,294 and 51,785,263 shares
    issued and outstanding at September 30, 1999
    and December 31, 1998, respectively ..................          52              52
  Additional paid-in capital .............................     328,630         325,903
  Retained deficit .......................................    (405,351)       (457,612)
                                                             ---------       ---------
                                                               (76,669)       (131,657)
                                                             ---------       ---------
                                                             $ 481,290       $ 496,598
                                                             =========       =========
</TABLE>
                 See notes to consolidated financial statements.
<PAGE>
<TABLE>

                                            APRIA HEALTHCARE GROUP INC.

                                        CONSOLIDATED STATEMENTS OF OPERATIONS
                                                   (unaudited)
<CAPTION>

                                                           Three Months Ended           Nine Months Ended
                                                              September 30,               September 30,
                                                          ---------------------       ----------------------
                                                            1999         1998           1999          1998
                                                          --------     --------       --------      --------
                                                            (dollars in thousands, except per share data)

<S>                                                      <C>          <C>             <C>          <C>
Net revenues .....................................       $ 237,367    $ 219,367       $ 697,701    $ 710,532
Costs and expenses:
   Cost of net revenues:
      Product and supply costs ...................          45,383       74,251         136,265      192,068
      Patient service equipment depreciation .....          18,455       19,126          54,681       59,033
      Nursing services ...........................             500          605           1,588        2,238
      Other ......................................           2,268        3,014           6,890       10,312
                                                         ---------    ---------       ---------    ---------
                                                            66,606       96,996         199,424      263,651
   Selling, distribution and administrative ......         129,970      164,016         381,977      446,366
   Provision for doubtful accounts ...............           9,305       36,860          25,376       63,471
   Amortization of intangible assets .............           2,101        3,463           5,958       10,528
   Impairment of intangible assets ...............               -       76,223               -       76,223
   Impairment of long-lived assets and
     internally-developed software ...............               -       22,187               -       22,187
                                                         ---------    ---------       ---------    ---------
                                                           207,982      399,745         612,735      882,426
                                                         ---------    ---------       ---------    ---------
          OPERATING INCOME (LOSS) ................          29,385     (180,378)         84,966     (171,894)
Interest expense, net ............................          10,490       12,823          32,305       35,870
                                                         ---------    ---------       ---------    ---------
          INCOME (LOSS) BEFORE TAXES .............          18,895     (193,201)         52,661     (207,764)
Income taxes .....................................               -        1,500             400        2,500
                                                         ---------    ---------       ---------    ---------
          NET INCOME (LOSS) ......................       $  18,895    $(194,701)      $  52,261    $(210,264)
                                                         =========    =========       =========    =========




Basic income (loss) per common share .............       $    0.36    $   (3.76)      $    1.01    $   (4.07)
                                                         =========    =========       =========    =========

Diluted income (loss) per common share ...........       $    0.35    $   (3.76)      $    0.98    $   (4.07)
                                                         =========    =========       =========    =========
</TABLE>

                 See notes to consolidated financial statements.
<PAGE>
<TABLE>
                           APRIA HEALTHCARE GROUP INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
<CAPTION>
                                                            Nine Months Ended
                                                              September 30,
                                                         -----------------------
                                                            1999         1998
                                                          --------     --------
                                                          (dollars in thousands)
OPERATING ACTIVITIES
<S>                                                      <C>          <C>
Net income (loss) ....................................   $  52,261    $(210,264)
Items included in net income (loss) not requiring
 (providing) cash:
   Provision for doubtful accounts ...................      25,376       63,471
   Provision for revenue adjustments .................           -       14,642
   Provision for inventory and patient service
     equipment shortages/obsolescence ................       3,968       22,563
   Depreciation ......................................      69,133       81,291
   Amortization of intangible assets .................       5,958       10,528
   Amortization of deferred debt costs ...............       3,794        1,256
   Impairment of intangible assets ...................           -       76,223
   Impairment of long-lived assets and
     internally-developed software ...................           -       22,187
   (Gain) loss on disposition of assets ..............      (1,742)       3,628
Changes in operating assets and liabilities,
  net of effects of acquisitions:
   (Increase) decrease in accounts receivable ........     (35,152)      23,943
   (Increase) decrease in inventories ................      (4,054)         807
   (Increase) decrease in prepaids and other assets ..        (971)       7,088
   Decrease in accounts payable ......................      (1,360)      (3,136)
   (Decrease) increase in accrued payroll and
     other liabilities ...............................      (4,965)      12,849
Net purchases of patient service equipment, net
  of effects of acquisitions .........................     (48,647)     (26,931)
                                                         ---------    ---------
          NET CASH PROVIDED BY OPERATING ACTIVITIES ..      63,599      100,145

INVESTING ACTIVITIES
   Purchases of property, equipment and improvements,
     net of effects of acquisitions ..................      (6,191)     (12,005)
   Proceeds from disposition of assets ...............       1,007          200
   Acquisitions and payments of contingent
     consideration ...................................     (28,524)      (2,348)
                                                         ---------    ---------
          NET CASH USED IN INVESTING ACTIVITIES ......     (33,708)     (14,153)

FINANCING ACTIVITIES
   Payments on term loan .............................     (64,938)           -
   Payments on other long-term debt ..................      (4,666)      (6,803)
   Capitalized debt costs, net .......................      (1,811)      (1,467)
   Issuances of common stock .........................       2,643        1,647
                                                         ---------    ---------
          NET CASH USED IN FINANCING ACTIVITIES ......     (68,772)      (6,623)
                                                         ---------    ---------

NET (DECREASE) INCREASE IN CASH ......................     (38,881)      79,369
Cash and cash equivalents at beginning of period .....      75,475       16,317
                                                         ---------    ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ...........   $  36,594    $  95,686
                                                         =========    =========
</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.  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, 1998, included in Apria's 1998 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 period presentation.

Use  of  Accounting  Estimates:  The  preparation  of  financial  statements  in
conformity with generally accepted accounting  principles requires management to
make assumptions  that affect the amounts  reported in the financial  statements
and accompanying notes. Actual results could differ from those estimates. 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,  and
the changes recorded in subsequent  periods,  as additional  information becomes
available to management.


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.

Apria  establishes   allowances  for  revenue   adjustments  that  are  normally
identified and recorded at the point of cash application or upon account review.
Revenue  adjustments  result  from  differences  between  estimated  and  actual
reimbursement amounts, failure to obtain authorizations  acceptable to the payor
or other specified billing documentation, changes in coverage or payor and other
reasons  unrelated to credit risk.  The  allowance  for revenue  adjustments  is
deducted  directly from gross accounts  receivable.  Management also establishes
allowances 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  estimate  the  revenue  adjustment
allowance  and the  allowance for doubtful  accounts.  Specifically,  management
considers  historical   realization  data,  accounts  receivable  aging  trends,
operating  statistics  and  relevant  business  conditions.  Apria  periodically
refines its procedures for estimating the allowances for revenue adjustments and
doubtful accounts based on experience with the estimation process and changes in
circumstances.  Apria's policy is to reserve 100% of all  receivables  aged over
360 days.  This policy is in addition to reserves  provided on receivables  aged
less than 360 days and to  amounts  provided  for  specific  payors.  Because of
continuing changes in the healthcare industry and third-party reimbursement,  it
is reasonably possible that management's  estimates of net collectible  revenues
could  change in the near term,  which  could have a  favorable  or  unfavorable
impact on operations and cash flows.


NOTE D - BUSINESS COMBINATIONS

Apria periodically  makes  acquisitions of complementary  businesses in specific
geographic  markets.  The  transactions  are  accounted for as purchases and the
results of operations of the acquired companies are included in the accompanying
statement of operations from the date of acquisition.  Acquisitions  that closed
during the nine-month  period ended September 30, 1999 resulted in cash payments
of  $28,399,000.  Of that amount,  approximately  $26,701,000  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 and restated in April and October of 1999.  The agreement was amended in
April  to  remove  the  requirement  that  Apria  issue  $50,000,000  in  senior
subordinated  convertible  debentures by April 23, 1999 and the requirement that
the  company  maintain   minimum  cash  balances  of  $35,000,000   through  the
consummation of the debt offering. In connection with this amendment, Apria made
a required $50,000,000 repayment of the term loan. The October amendment permits
acquisitions with an aggregate purchase price of up to $125,000,000  through the
maturity date of the  agreement.  This most recent  amendment  also provides the
company with the ability to  repurchase  up to  $50,000,000  of its common stock
through the credit agreement  maturity date,  subject to annual  limitations and
compliance with Apria's other debt instruments.

Under the indenture  governing Apria's  $200,000,000 9 1/2% senior  subordinated
notes,  Apria must satisfy a 3.0 to 1.0 fixed charge  coverage  ratio test, on a
pro  forma  basis,  in order to incur  most  types of  additional  indebtedness.
Effective  with the operating  results for the period ended  September 30, 1999,
Apria's fixed charge  coverage ratio exceeds the required  minimum for the first
time since March 1997.

At  September  30,  1999,  total  borrowings  under the  credit  agreement  were
$223,062,000,  outstanding  letters  of credit  totaled  $9,806,000  and  credit
available  under the  revolving  facility  was  $20,194,000.  On October 6, 1999
outstanding   letters  of  credit  were  reduced  to  $3,800,000.   Accordingly,
$26,200,000  is currently  available  for borrowing  under the revolving  credit
facility.


NOTE F - EQUITY

The  change in  stockholders'  deficit,  other  than from net  income,  resulted
primarily  from the exercise of stock options.  For the nine-month  period ended
September  30, 1999,  proceeds  from the exercise of stock  options  amounted to
$2,643,000.


NOTE G - INCOME TAXES

Current year income tax expense  includes  federal and state tax amounts payable
on a basis other than or in addition to taxable income.

At December 31, 1998, Apria's federal net operating loss carryforwards  ("NOLs")
approximated $344,000,000, expiring in varying amounts in the years 2003 through
2013.  Additionally,  Apria has various state operating loss carryforwards which
began to expire 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 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 NOLs may expire  unused.  At December 31,  1998,  Apria's net deferred tax
asset had been reduced to zero by a valuation allowance. In 1999, NOLs are being
realized to the extent of Apria's taxable income.
<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 outcome of which is not
determinable  at this time. 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  the  company's
consolidated  results of operations and financial  position.  Apria provides for
losses related to matters when such losses are  considered  probable and capable
of reasonable  estimation.  No provision for losses is made in respect of claims
which do not meet such requirements.


NOTE I - PER SHARE AMOUNTS
<TABLE>
The following  table sets forth the  computation  of basic and diluted per share
amounts:
<CAPTION>
                                                       Three Months Ended        Nine Months Ended
                                                         September 30,             September 30,
                                                     ----------------------    ---------------------
                                                        1999        1998          1999       1998
                                                      --------    --------      --------   --------
                                                          (in thousands, except per share data)
Numerator:
  <S>                                                <C>         <C>           <C>         <C>
  Net income (loss) ..............................   $  18,895   $(194,701)    $  52,261   $(210,264)
  Numerator for basic per share amounts - income
    (loss) available to common stockholders ......   $  18,895   $(194,701)    $  52,261   $(210,264)

  Numerator for diluted per share amounts - income
    (loss) available to common stockholders ......   $  18,895   $(194,701)    $  52,261   $(210,264)


Denominator:
  Denominator for basic per share
    amounts - weighted average shares ............      52,024      51,765        51,905      51,717

  Effect of dilutive securities:
    Employee stock options .......................       1,866           -         1,583           -
                                                     ---------   ---------     ---------   ---------
    Dilutive potential common shares .............       1,866           -         1,583           -
                                                     ---------   ---------     ---------   ---------
  Denominator for diluted per share amounts -
    adjusted weighted average shares .............      53,890      51,765        53,488      51,717
                                                     =========   =========     =========   =========

Basic income (loss) per common share .............   $    0.36   $   (3.76)    $    1.01   $   (4.07)
                                                     =========   =========     =========   =========
Diluted income (loss) per common share ...........   $    0.35   $   (3.76)    $    0.98   $   (4.07)
                                                     =========   =========     =========   =========

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

    Exercise price exceeds average market
      price of common stock ......................       1,573       6,041         1,747       3,523
    Other ........................................           -          24             -          78
                                                     ---------   ---------     ---------   ---------
                                                         1,573       6,065         1,747       3,601
                                                     =========   =========     =========   =========

Average exercise price per share that exceeds
  average market price of common stock ...........   $   19.51   $   11.20     $   19.11   $   14.55
                                                     =========   =========     =========   =========
</TABLE>
Due to the net loss  reported for the three and nine months ended  September 30,
1998,  the impact of employee  stock  options in such  periods is  antidilutive.
There is no difference between basic and diluted per share amounts.
<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.  Apria has
described  certain  of those  risks in its Form 10-K for the  fiscal  year ended
December 31, 1998, as filed with the Securities and Exchange Commission on April
5,  1999.  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 risk factors that could
cause  actual  results  to  differ   materially  from  those  projected  in  any
forward-looking  statements  that Apria may make from time to time.  These risks
include  whether Apria will be able to resolve  issues  pertaining to management
stability and recruiting,  the  collectibility of its accounts  receivable,  the
cost of and the company's ability to implement its reorganization  plan, Apria's
ability to service  its debt,  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 Apria's  information  systems and controls,  including its ability to resolve
any remaining year 2000 compliance issues, the highly competitive market, recent
losses, and Apria's high leverage and restrictions on its borrowing capacity.


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

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

     NET  REVENUES:  Apria's net revenues  increased  to $237.4  million for the
third quarter of 1999, up from $219.4 million for the third quarter of 1998. For
the nine months ended  September  30, 1999,  net  revenues  were $697.7  million
compared to $710.5  million for the same period last year. Net revenues for both
of the 1998 periods were impacted by a charge of $14.6 million that was recorded
at September 30, 1998 to adjust management's  allowance for unidentified revenue
adjustments.

     The increase in net revenues in the third  quarter of 1999,  as compared to
the third  quarter of 1998,  is the result of overall  volume  increases  in the
company's traditional  respiratory therapy referral business, new contracts with
regional and national payors, the acquisition of small complementary  businesses
and, to a lesser extent, price increases in certain managed care agreements. The
increases in net revenues were  partially  offset by the net revenue  reductions
described below.

     The reduction in net revenues in the nine month period ended  September 30,
1999,  when  compared to the same period last year, is  attributable  to (1) the
third  quarter  1998 exit from the  infusion  therapy  service  line in  certain
geographic markets, (2) the 5% reduction in Medicare reimbursement rates in 1999
for home oxygen therapy,  and (3) the exit from  contractual  arrangements  that
were not meeting  minimum  profitability  standards.  The exit from the infusion
business in selected  markets reduced revenue for the three month and nine month
periods  ended  September  30,  1999 by  approximately  $11.9  million and $37.6
million,  respectively,  compared  to the  corresponding  periods  of 1998.  The
provisions  of the  Balanced  Budget  Act of 1997  mandated  a 5%  reduction  in
reimbursement  rates for home oxygen therapy,  effective  January 1, 1999, which
decreased third quarter and year-to-date  revenues by approximately $2.5 million
and  $7.5  million,  respectively.  Additionally,  starting  in  late  1997  and
continuing into 1998, Apria performed a comprehensive review of its managed care
contracts  and  renegotiated  or  terminated  those  not  meeting  profitability
standards.

     The table  below  sets  forth a summary of net  revenues  by service  line.
Revenues  from  respiratory  therapy  increased  as a percent of sales,  despite
Medicare reimbursement rate reductions,  due to a sales focus on the respiratory
business.  The  year-to-date  decrease in infusion  therapy  revenues is largely
explained by the exit of this business in selected areas as described above. The
infusion line was also impacted by the termination of low-margin contracts.  The
decrease in the HME/other line was primarily attributable to the contract review
process and, to a lesser  extent,  decreases  in the medical  supply and nursing
lines which Apria began exiting in late 1997.

<TABLE>
<CAPTION>

                                                Nine Months Ended September 30,
                                            --------------------------------------
                                                   1999                 1998
                                            -----------------     ----------------
                                                $         %           $         %
                                            --------   ------     --------   ------
                                                      (dollars in thousands)
        <S>                                 <C>         <C>       <C>         <C>
        Respiratory therapy.............    $444,121    63.7%     $413,607    58.2%
        Infusion therapy................     131,728    18.9%      165,893    23.3%
        HME/other.......................     121,852    17.4%      131,032    18.5%
                                            --------   ------     --------   ------
             Total net revenues             $697,701   100.0%     $710,532   100.0%
                                            ========   ======     ========   ======
</TABLE>

     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,   and  the  changes  recorded  in  subsequent  periods,  as  additional
information  becomes  available to management.  Specifically,  the complexity of
many third-party billing  arrangements and uncertainty of reimbursement  amounts
for certain  services and/or from certain payors result in adjustments to billed
amounts.  Such  adjustments  are fairly common and are typically  identified and
recorded at the point of cash application,  claim denial or upon account review.
Examples of revenue  adjustments include subsequent changes to estimated revenue
amounts or denials for  services  not  covered  due to changes in the  patient's
coverage;  failure to obtain  written  confirmation  of  authorization  or other
necessary  documentation  subsequent to service  delivery;  and  differences  in
contract prices due to complex  contract terms or a biller's lack of familiarity
with a contract or payor.

     GROSS PROFIT: Gross margins for the third quarter and the nine months ended
September  30,  1999 were 71.9% and 71.4%,  respectively,  compared to 55.8% and
62.9% for the same  periods  last year.  The gross  margins for the 1998 periods
were  impacted by the $14.6  million  charge for revenue  adjustments  discussed
above (see Net Revenues) and the following  charges to cost of net revenues that
were recorded at September 30, 1998: $5.4 million to settle certain  procurement
contracts,  $3.5 million to provide for oxygen cylinder losses,  $2.8 million to
provide for losses and  obsolescence in inventory and patient service  equipment
and $3.5  million  related  to the exit of the  infusion  business  in  selected
markets. If the 1998 margins were adjusted to factor out these charges, the 1999
margins,  by comparison,  still show  improvement.  This  improvement is largely
attributable to the exit from low-profit  service lines and contracts and better
pricing negotiated for inventory, patient service equipment and related goods.

     SELLING,   DISTRIBUTION  AND  ADMINISTRATIVE:   Selling,  distribution  and
administrative expenses as a percentage of net revenues were 54.8% for the third
quarter and the nine months ended  September  30, 1999,  compared with 74.8% and
62.8% for the same periods last year. On a dollar basis,  selling,  distribution
and administrative expenses decreased by $34.0 million and $64.4 million between
the  comparable  three- and  nine-month  periods,  respectively.  Labor  expense
reductions are the primary component of the decrease. Early in 1998, Apria began
reducing its workforce in response to the 25% Medicare reimbursement  reductions
and has since continued to reduce  staffing  levels within the operating  units.
During the second half of 1998, Apria also effected significant labor reductions
at its corporate  headquarters and reduced staff in conjunction with the exit of
selected infusion therapy  businesses.  The 1999 periods reflect the full effect
of these  labor  reductions.  Also  contributing  to the  reduction  in selling,
distribution and  administrative  expenses are  depreciation  expense savings of
$2.7  million  and $7.8  million for the third  quarter  and nine  months  ended
September 30, 1999, respectively, as compared to the same periods last year. The
decrease is  attributable  to the  impairment of computer  hardware and software
recognized in the third quarter of 1998 and  reductions in capital  expenditures
that began in the latter half of 1998 and continued in 1999.

     Included in the 1998 periods were $11.5 million in charges  associated with
exiting the infusion business, branch closures and facility consolidations.

     PROVISION FOR DOUBTFUL ACCOUNTS:  The provision for doubtful accounts, as a
percentage  of net  revenues,  was 3.9% and 3.6% for the quarter and  nine-month
periods ended  September 30, 1999,  respectively,  as compared to 16.8% and 8.9%
for the same  periods in the prior year.  The 1998  periods  reflect  charges of
$12.1 million to increase the allowance for doubtful accounts due to a change in
management's  collection  policy and $9.1 to increase the allowance for doubtful
accounts on accounts  receivable  associated  with the  infusion  sale and other
business  closures.  In the absence of these 1998  charges,  the 1999  provision
rates, as percentages of net revenues,  show decreases when compared to the same
periods in 1998.  These decreases are largely due to an improvement in the aging
of accounts  receivable as demonstrated by a decrease in accounts aged in excess
of 180 days from 27.4% of total  accounts  receivable  at September  30, 1998 to
22.9% at September 30, 1999. Additionally, 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 55 days at
September 30, 1999, from 65 days at September 30, 1998.

     During  the  second  half  of  1998,   management   reviewed  the  historic
performance  and  collectibility  of  Apria's  accounts  receivable   portfolio.
Management  considered  the  continued  high  level of bad debt  write-offs  and
reviewed its existing policies and procedures for estimating the  collectibility
of its accounts  receivable.  As a result of this review,  management decided to
change the  collection  policy and  formally  shift the focus of the  collection
function to the more current  balances and assign the older  accounts to outside
collection  agencies.  Management  believes this  concentration  on more current
balances  will  limit  the  amount  of  receivables  that age  beyond  180 days.
Consequently,  the  accounts  that do age  beyond 180 days are likely to be more
difficult to collect.  Apria's policy is to reserve 100% of all receivables aged
over 360 days.  This policy is in addition to reserves  provided on  receivables
aged less than 360 days and to amounts provided for specific payors.

     AMORTIZATION OF INTANGIBLE  ASSETS:  Amortization of intangible  assets was
$2.1  million and $6.0  million  for the third  quarter and first nine months of
1999,  respectively,  as compared to $3.5 million and $10.5 million for the same
periods in the prior  year.  The  decrease is the result of the  impairment  and
write-off of $76.2  million of  intangible  assets in the third  quarter of 1998
and, to a lesser extent, the expiration of certain  non-compete  covenants.  The
decrease was slightly  offset by  amortization  expense  recorded in conjunction
with a number of business acquisitions  consummated during the first nine months
of 1999.

     1998  IMPAIRMENT  OF  INTANGIBLE  ASSETS:  In the  third  quarter  of 1998,
management  conducted  an  evaluation  of the  carrying  value of the  company's
recorded  intangible  assets.  Management  considered  current  and  anticipated
industry conditions,  recent changes in its business strategies, and current and
anticipated  operating results.  The evaluation resulted in an impairment charge
of $76.2  million  that was  recorded in the third  quarter of 1998.  The charge
included a write-off of $4.8 million in intangible  assets  associated  with the
exit of the infusion business in certain areas.

     1998  IMPAIRMENT OF LONG-LIVED  ASSETS AND  INTERNALLY-DEVELOPED  SOFTWARE:
During  the  third  quarter  of  1998,   management  decided  to  terminate  the
implementation  of an enterprise  resource  planning (ERP) system.  Accordingly,
Apria wrote off related software and other  capitalized costs of $7.5 million at
September  30,  1998.  As part of the  decision to  terminate  the ERP  project,
management evaluated its current systems to determine their long-term viability.
Management  decided on a number of  enhancements  to the systems  that  rendered
certain  previously-developed  modules  obsolete.  Further,  pharmacy and branch
consolidations  and closures  effected in the third  quarter of 1998  rendered a
variety  of  computer  equipment  obsolete.  Due to its  age  and  technological
obsolescence,  it was  deemed  to have no  future  value.  As a result  of these
actions,  Apria recorded an impairment  charge of $11.8 million at September 30,
1998.  Apria also  recognized  additional  asset  impairments of $1.4 million in
conjunction  with the  exited  businesses  and  $1.4  million  related  to other
facility closures and consolidations.

     INTEREST EXPENSE:  Interest expense was $10.5 million and $32.3 million for
the three- and  nine-month  periods  ended  September  30,  1999,  respectively,
compared  to $12.8  million  and $35.9  million  for the same  periods  in 1998.
Although  there was a 16.5%  reduction  in the average  long-term  debt  balance
between the two periods,  Apria is now  incurring  interest on its bank loans at
higher  rates as a result of its  November  1998  amended  and  restated  credit
agreement

     INCOME TAXES:  Income taxes were $400,000 for the first nine months of 1999
versus $2.5 million for the same period last year. The recorded amounts for both
periods  include  federal  and state  taxes  payable on a basis other than or in
addition to taxable income. At December 31, 1998,  Apria's federal net operating
loss  carryforwards  ("NOLs")  approximated  $344  million,  expiring in varying
amounts in the years 2003 through  2013.  Additionally,  Apria has various state
operating  loss  carryforwards  which began to expire 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
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 NOLs may expire
unused. At December 31, 1998, Apria's net deferred tax asset had been reduced to
zero by a valuation allowance. In 1999, NOLs are being realized to the extent of
Apria's taxable income.


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

     OPERATING  CASH FLOW:  Cash  provided  by  operating  activities  was $63.6
million for the nine-month  period ended September 30, 1999,  compared to $100.1
million  for the same  period in 1998.  The higher net income in the 1999 period
was offset by an increase in accounts receivable, as compared to a decrease last
year, an increase in patient service equipment  purchases and an increase in the
amount of accrued payroll compared to the same period last year. Patient service
equipment  purchases  increased  during  the first  half of 1999,  primarily  to
support the growing respiratory therapy patient base.

     ACCOUNTS  RECEIVABLE:  Accounts  receivable,  before allowance for doubtful
accounts,  increased to $187.7 million at September 30, 1999 from $167.6 million
at  December  31,  1998.  The  increase  is largely  attributable  to a trend of
quarter-over-quarter  increases in net revenues that began in the fourth quarter
of 1998. Days sales  outstanding at September 30, 1999 increased  slightly to 55
days from 53 days at December 31, 1998.

     During  the last  three  fiscal  years,  results  of  operations  have been
adversely impacted by high levels of accounts receivable  write-offs.  Initially
caused  by  the   disruptive   effects   of  system   conversions   and   branch
consolidations,  the high level of accounts  receivable  write-offs were largely
due to billing  problems  such as untimely  billing,  improper  and/or  untimely
preparation of, and deficiencies in, reimbursement documentation,  problems with
the billing systems and the high  concentration of managed care payors from whom
it has been difficult to collect.

     Also during the last three  years,  management  has  instituted a number of
measures in response to these problems.  During 1998, management reorganized its
field operations to create a separate "revenue  management"  organization  which
encompasses the functions of order-taking, patient qualification,  documentation
coordination,  timely  filing  and  prompt  follow-up.  The  revenue  management
organization  reports directly to corporate  headquarters and specifically to an
Executive  Vice  President.  The new  organization  structure  was  intended  to
facilitate improved  communications and accountability.  In conjunction with the
reorganization,  processes and procedures  were reviewed to identify  additional
opportunities  for  improvement.  As a result,  personnel were placed in quality
assurance  positions  to help  ensure  that  products  and  services  were  more
accurately and timely billed and  responsibilities  were  consolidated  to allow
specifically  qualified  personnel  to  support,  direct  and train the  revenue
management staff. Task forces were formed to visit the billing centers to ensure
compliance  with  policies and standard  procedures.  Software  enhancements  to
simplify the  order-intake  process were introduced and the billing and accounts
receivable modules are being modified to improve their  functionality.  Although
management has been proactive in addressing the issues leading to the high level
of accounts receivable write-offs recognized in recent periods,  there can be no
assurance that the  collectibility of Apria's recorded accounts  receivable will
continue to improve in the near future.

     Included in accounts  receivable  are earned but  unbilled  receivables  of
$22.1  million and $25.3  million at  September  30, 1999 and December 31, 1998,
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  with  Bank of  America  and a
syndicate  of banks was amended and  restated in April and October of 1999.  The
April amendment  removed the  requirement  that the company issue $50 million in
senior subordinated notes or senior subordinated convertible debentures by April
23, 1999. In connection with this  amendment,  Apria made a required $50 million
repayment of the term loan. The April  amendment also eliminated the requirement
that  Apria  maintain   minimum  cash  balances  of  $35  million   through  the
consummation of the debt offering.  The October amendment  permits  acquisitions
with an aggregate purchase price of up to $125 million through the maturity date
of the  agreement.  This  amendment  also  provides  Apria  with the  ability to
repurchase  up to $50 million of its common stock  through the credit  agreement
maturity date,  subject to annual  limitations and compliance with Apria's other
debt instruments.

     Under  the  indenture   governing   Apria's  $200  million  9  1/2%  senior
subordinated  notes, Apria must satisfy a 3.0 to 1.0 fixed charge coverage ratio
test,  on a pro  forma  basis,  in  order  to incur  most  types  of  additional
indebtedness.  Effective  with  the  operating  results  for  the  period  ended
September  30, 1999,  Apria's fixed charge  coverage  ratio exceeds the required
minimum for the first time since March 1997.

     At September 30, 1999,  total  borrowings  under the credit  agreement were
$223.1 million,  outstanding letters of credit  totaled  $9.8 million and credit
available under the  revolving  facility  was $20.1 million.  On October 6, 1999
outstanding letters of credit were reduced to $3.8 million.  Accordingly,  $26.2
million  is  currently  available  for  borrowing  under  the  revolving  credit
facility.

     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.  Acquisitions  that closed during the  nine-month  period ended
September 30, 1999 resulted in cash payments of approximately  $28.4 million. Of
that amount,  approximately  $26.7 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.

     YEAR 2000 COMPLIANCE:  As the year 2000 approaches,  an issue impacting all
companies has emerged regarding how existing  application  software programs and
operating  systems can  accommodate  this date value.  In brief,  many  existing
application programs in the marketplace were designed to accommodate a two-digit
date position which represents the year (e.g.,  "95" is stored on the system and
represents the year 1995). Consequently, the year 1999 could be the maximum date
value that systems would be able to accurately process.

     Internal  operating  systems.  Beginning  in late 1997,  Apria  conducted a
comprehensive review of its operating and field information  systems,  including
an assessment of the nature and potential  extent of the impact of the year 2000
issue.  As a result,  Apria began the  modification  process of its  software in
order  for its  computer  systems  to  function  properly  in the year  2000 and
thereafter. Apria utilized internal resources to reprogram and test the software
for the necessary year 2000  modifications.  Apria's  systems also underwent two
external  assessments  of the year 2000 issue and  received a "low" risk rating.
The  modification  and testing were  completed on schedule  and  management  now
considers its operating and field information  systems year  2000-compliant.  To
further ensure a smooth  transition into the year 2000,  management has formed a
special  team to address any  related  problems  that may arise and will,  among
other measures, suspend software updates between November 1999 and January 2000.

     Apria has not  developed  a formal  contingency  plan in the event that the
modifications  to its internal  operating  systems prove to be inadequate.  Such
inadequacies could result in system failure or miscalculations. This would cause
disruptions to normal  business  processes  including,  among other things,  the
temporary  inability to process  transactions and generate  billings.  If such a
disruption  continued for an extended  period,  it could have a material adverse
effect on the results of operations, cash flow and financial condition of Apria.

     Apria is currently in the process of assessing and addressing any potential
issues with its ancillary software packages that perform less-critical functions
and  any  other   electronic   mechanisms   that   could   have   date-sensitive
microprocessors.

     External  risks.  Apria  depends on  electronic  interfaces  with  numerous
business  partners to conduct many of its day-to-day  functions.  Such functions
include payments to and from suppliers and payors, the transfer of funds between
Apria's  banks,  and  electronic  billing  and supply  ordering.  Apria has been
working closely with its more critical  business partners to obtain assurance of
their year  2000-readiness.  The Company has  successfully  completed live tests
with  the  four  Medicare  carriers  responsible  for  processing  approximately
one-fourth of Apria's total  reimbursements.  As a contingency,  in the event of
failure on the part of an external agent,  the exchange of data and payments can
continue via paper documents and more traditional  methods.  Further,  Apria has
revised  contracts  with certain of its managed care payors to include  remedies
should the payors fail to  reimburse  the company on a timely basis due to their
own year 2000 problems.

     Another area of potential risk is with certain  patient  service  equipment
items that have  microprocessors  with date functionality that could malfunction
in  the  year  2000.  Although  Apria  has  found  that  the  majority  of  such
microprocessors   include  duration  time  clocks  and  not  date  time  clocks,
management  has  initiated  formal  communications  with its suppliers to obtain
assurance that the equipment they supply is year 2000-compliant.  To date, Apria
has received year 2000-compliance  certification  letters from substantially all
of its primary vendors and  approximately  85% of the entire set of vendors from
which it requested such assurance.

     If Apria is  unable  to  resolve  all its year 2000  issues  with  external
agents, it may have a material adverse effect on the company's business, results
of operations or financial condition.

     Costs.  Apria  does not  believe  the  costs of its year  2000  remediation
efforts  are  material.  To date,  such costs have been  expensed  as  incurred.
Management's  expectations  about year 2000-related costs yet to be incurred are
subject to various  uncertainties  that could  cause the actual  costs to differ
materially from those expectations.  Such uncertainties  include the adequacy of
the modifications made to Apria's operating and field information  systems,  the
success of the  company in  identifying  and  resolving  any  problems  with its
ancillary  systems  or  electronic  mechanisms  and the year  2000-readiness  of
Apria's business partners.

     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  September  30,  1999 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 $1.2
million.  Conversely, a 50 basis point decrease in the applicable interest rates
would increase annual cash flow and earnings by $1.2 million.


                           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 21, 1999.

            (b) Directors  re-elected  at  the Annnual 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:

                Approval of  an  Amendment  to  the  Restated  Certificate  of
                Incorporation
                ----------------------------------------------------------------
                The  Board  of Director's  adopted,  subject to approval by  the
                stockholders,  an  amendment  to  Apria's  Restated  Certificate
                of Incorporation to  eliminate the  classified  structure of the
                company's  Board and to provide for the annual election  of  all
                Directors.   The  results of Stockholder voting were as follows:

                For                   35,678,792
                Against                  299,782
                Abstain                   20,977
                Broker Non-Votes      11,041,346

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

                Subsequent  to  the approval  of  the proposed  amendment to the
                Restated  Certificate  of  Incorporation,  the  company's  Board
                consists of seven  members  who will serve for one year or until
                the election and qualification of their successors.  The results
                of  Stockholder  voting were as follows:

                                                   FOR            WITHHOLD
                                                ----------        --------
                David H. Batchelder             46,496,658         544,239
                Philip L. Carter                46,498,645         542,252
                David L. Goldsmith              46,585,904         454,993
                Richard H. Koppes               46,516,520         524,377
                Philip R. Lochner, Jr.          46,515,942         524,955
                Beverly Benedict Thomas         46,514,242         526,655
                Ralph V. Whitworth              46,496,149         544,748

ITEM 5.     NOT APPLICABLE
<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 October 29, 1999.

                  4.1         Fourth  Amendment to  Amended and Restated  Credit
                              Agreement dated October 22, 1999, among Registrant
                              and certain of its subsidiaries,  Bank of  America
                              National Association  and other financial institu-
                              tions 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 12, 1999          /s/  JOHN C. MANEY
                           -----------------------------------------------------
                           John C. Maney
                           Executive Vice President and Chief Financial Officer
                           (Principal Financial Officer)