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

                                    FORM 10-Q

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

                       For the period ended March 31, 2002

                                       OR

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


                         Commission File Number: 1-14316


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



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


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

       Registrant's telephone number, including area code: (949) 639-2000

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

There were 54,364,302  shares of common stock,  $.001 par value,  outstanding at
May 7, 2002.
<PAGE>
                           APRIA HEALTHCARE GROUP INC.

                                    FORM 10-Q

                       FOR THE PERIOD ENDED MARCH 31, 2002






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

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

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

Item 3.     Quantitative and Qualitative Disclosures About Market Risk


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>
                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
<TABLE>

                           APRIA HEALTHCARE GROUP INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                                                               MARCH 31,   DECEMBER 31,
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)                                        2002         2001
-------------------------------------------------------------------------------------------------------
                                                                             (unaudited)
                                          ASSETS
CURRENT ASSETS
<S>                                                                           <C>          <C>
  Cash and cash equivalents ...............................................   $   7,389    $   9,359
  Accounts receivable, less allowance for doubtful accounts of $33,266
    and $32,073 at March 31, 2002 and December 31, 2001, respectively .....     175,381      162,092
  Inventories, net ........................................................      25,249       25,084
  Deferred income taxes ...................................................      33,169       33,017
  Prepaid expenses and other current assets ...............................      10,279       10,271
                                                                              ---------    ---------
          TOTAL CURRENT ASSETS ............................................     251,467      239,823

PATIENT SERVICE EQUIPMENT, less accumulated depreciation of $349,596
  and $342,010 at March 31, 2002 and December 31, 2001, respectively ......     165,381      165,471
PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET .................................      49,055       47,312
DEFERRED INCOME TAXES .....................................................      28,590       37,838
GOODWILL, NET .............................................................     195,458      193,458
INTANGIBLE ASSETS, NET ....................................................       4,752        4,863
OTHER ASSETS ..............................................................       7,067        7,017
                                                                              ---------    ---------
                                                                              $ 701,770    $ 695,782
                                                                              =========    =========

                            LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable ........................................................   $  62,371    $  71,198
  Accrued payroll and related taxes and benefits ..........................      36,240       33,907
  Accrued insurance .......................................................      10,814       10,376
  Income taxes payable ....................................................      12,736        9,060
  Other accrued liabilities ...............................................      26,076       34,754
  Current portion of long-term debt .......................................      21,335       15,455
                                                                              ---------    ---------
          TOTAL CURRENT LIABILITIES .......................................     169,572      174,750

LONG-TERM DEBT, net of current portion ....................................     284,429      278,234

COMMITMENTS AND CONTINGENCIES (Note I)

STOCKHOLDERS' EQUITY
  Preferred stock, $.001 par value:  10,000,000 shares authorized;
    none issued ...........................................................           -            -
  Common stock, $.001 par value:  150,000,000 shares authorized;
    54,932,737 and 54,690,267 shares issued at March 31, 2002 and
    December 31, 2001, respectively; 53,846,837 and 54,604,167
    outstanding at March 31, 2002 and December 31, 2001, respectively .....          55           55
  Additional paid-in capital ..............................................     371,648      368,231
  Treasury stock, at cost; 1,085,900 and 86,100 shares at March 31, 2002
    and December 31, 2001, respectively ...................................     (22,631)        (961)
  Accumulated deficit .....................................................    (101,559)    (124,554)
  Accumulated other comprehensive income ..................................         256           27
                                                                              ---------    ---------
                                                                                247,769      242,798
                                                                              ---------    ---------

                                                                              $ 701,770    $ 695,782
                                                                              =========    =========


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

                           APRIA HEALTHCARE GROUP INC.

                    CONDENSED CONSOLIDATED INCOME STATEMENTS
                                   (unaudited)

<CAPTION>
                                                                            THREE MONTHS ENDED
                                                                                 MARCH 31,
                                                                          ----------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                               2002          2001
------------------------------------------------------------------------------------------------
<S>                                                                       <C>           <C>
Net revenues .........................................................    $301,345      $271,354
Costs and expenses:
   Cost of net revenues:
      Product and supply costs .......................................      55,162        51,927
      Patient service equipment depreciation .........................      23,417        20,964
      Nursing services ...............................................         271           354
      Other ..........................................................       3,269         3,033
                                                                          --------      --------
          TOTAL COST OF NET REVENUES .................................      82,119        76,278
   Selling, distribution and administrative ..........................     166,108       148,394
   Provision for doubtful accounts ...................................      11,511         8,150
   Amortization of goodwill and intangible assets ....................         671         2,836
                                                                          --------      --------
          TOTAL COSTS AND EXPENSES ...................................     260,409       235,658
                                                                          --------      --------
          OPERATING INCOME ...........................................      40,936        35,696
Interest expense, net ................................................       4,144         8,408
                                                                          --------      --------
          INCOME BEFORE TAXES ........................................      36,792        27,288
Income tax expense ...................................................      13,797        10,212
                                                                          --------      --------
          NET INCOME .................................................    $ 22,995      $ 17,076
                                                                          ========      ========


Basic net income per common share ....................................    $   0.42      $   0.32
                                                                          ========      ========
Diluted net income per common share ..................................    $   0.41      $   0.31
                                                                          ========      ========


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

                           APRIA HEALTHCARE GROUP INC.

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

                                                                                  THREE MONTHS ENDED
                                                                                       MARCH 31,
                                                                                 --------------------
(DOLLARS IN THOUSANDS)                                                             2002        2001
-----------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
<S>                                                                              <C>         <C>
  Net income ...............................................................     $ 22,995    $ 17,076
  Items included in net income not requiring cash:
     Provision for doubtful accounts .......................................       11,511       8,150
     Depreciation and amortization .........................................       28,111      27,487
     Amortization of deferred debt issuance costs ..........................          325         617
     Deferred income taxes and other .......................................       10,101       9,412
  Changes  in  operating  assets  and  liabilities, exclusive  of
    effects  of acquisitions:
     Accounts receivable ...................................................      (24,999)    (17,848)
     Inventories, net ......................................................         (165)        661
     Prepaid expenses and other assets .....................................           71         373
     Accounts payable, exclusive of outstanding checks .....................       (5,315)     (1,494)
     Accrued payroll and related taxes and benefits ........................        2,333       2,644
     Income taxes payable ..................................................        3,676         459
     Accrued expenses ......................................................       (7,385)      1,007
                                                                                 --------    --------
          NET CASH PROVIDED BY OPERATING ACTIVITIES ........................       41,259      48,544

INVESTING ACTIVITIES
  Purchases of patient service equipment and property,
     equipment and improvements, exclusive of effects of acquisitions ......      (27,083)    (30,029)
  Proceeds from disposition of assets ......................................           94          41
  Cash paid for acquisitions, including payments of deferred consideration..       (3,320)    (25,299)
                                                                                 --------    --------
          NET CASH USED IN INVESTING ACTIVITIES ............................      (30,309)    (55,287)

FINANCING ACTIVITIES
  Proceeds from revolving credit facilities ................................       89,200      17,200
  Payments on revolving credit facilities ..................................      (78,100)    (17,200)
  Payments on term loans ...................................................         (438)          -
  Payments on other long-term debt .........................................         (660)       (214)
  Outstanding checks included in accounts payable ..........................       (3,512)     (3,363)
  Repurchases of common stock ..............................................      (21,670)          -
  Issuances of common stock ................................................        2,260       4,833
                                                                                 --------    --------
          NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES ..............      (12,920)      1,256
                                                                                 --------    --------
NET DECREASE IN CASH AND CASH EQUIVALENTS ..................................       (1,970)     (5,487)
Cash and cash equivalents at beginning of period ...........................        9,359      16,864
                                                                                 --------    --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .................................     $  7,389    $ 11,377
                                                                                 ========    ========


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


                           APRIA HEALTHCARE GROUP INC.

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - BASIS OF PRESENTATION

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

In the opinion of management,  all  adjustments,  consisting of normal recurring
accruals  necessary for a fair presentation of the results of operations for the
interim periods presented,  have been reflected herein. The unaudited results of
operations for interim periods are not necessarily  indicative of the results to
be  expected  for  the  entire  year.  For  further  information,  refer  to the
consolidated  financial  statements  and  footnotes  thereto  for the year ended
December 31, 2001, included in the company's 2001 Form 10-K.


NOTE B - RECLASSIFICATIONS, ACCOUNTING ESTIMATES AND RECENT ACCOUNTING
         PRONOUNCEMENTS

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

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

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

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


NOTE C - REVENUE RECOGNITION AND CONCENTRATION OF CREDIT RISK

Net  revenues  are  recognized  on the date  services  and related  products are
provided to patients and are recorded at amounts  expected to be received  under
reimbursement  arrangements with third-party payors, including private insurers,
prepaid health plans, Medicare and Medicaid.

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

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


NOTE D - BUSINESS COMBINATIONS

Apria periodically  makes  acquisitions of complementary  businesses in specific
geographic  markets.  The  transactions  are  accounted for as purchases and the
results of operations of the acquired companies are included in the accompanying
income  statements from the date of acquisition.  During the three-month  period
ended March 31, 2002, cash paid for acquisitions was $3,320,000,  which included
amounts deferred from prior years of $1,059,000.  At March 31, 2002, outstanding
deferred consideration totaled $2,763,000.

For the  acquisitions  that were completed  during the three-month  period ended
March 31, 2002, $2,260,000 was allocated to goodwill,  including amounts not yet
paid, $103,000 to intangible assets and $273,000 to patient service equipment.


NOTE E - GOODWILL AND INTANGIBLE ASSETS

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

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

In conjunction with the  transitional  impairment test and based on the criteria
established  in SFAS No.  141,  management  reviewed  the  useful  lives and the
amounts  previously  recorded  for  intangible  assets  and  determined  that no
adjustments were necessary.
<PAGE>
The following table sets forth the reconciliation of net income and earnings per
share as adjusted for the non-amortization provisions of SFAS No. 142:

<TABLE>
<CAPTION>
                                                                              THREE MONTHS ENDED
                                                                                   MARCH 31,
                                                                            ----------------------

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                                 2002          2001
--------------------------------------------------------------------------------------------------

<S>                                                                         <C>          <C>
Reported net income ..................................................      $ 22,995     $ 17,076
Add:  goodwill amortization, net of taxes ............................             -        1,384
                                                                            --------     --------
Adjusted net income ..................................................      $ 22,995     $ 18,460
                                                                            ========     ========

BASIC INCOME PER COMMON SHARE:
     Reported net income .............................................      $   0.42     $   0.32
     Goodwill amortization, net of taxes .............................             -         0.03
                                                                            --------     --------
     Adjusted net income .............................................      $   0.42     $   0.35
                                                                            ========     ========

DILUTED INCOME PER COMMON SHARE:
Reported net income ..................................................      $   0.41     $   0.31
     Goodwill amortization, net of taxes .............................             -         0.02
                                                                            --------     --------
     Adjusted net income .............................................      $   0.41     $   0.33
                                                                            ========     ========
</TABLE>



Goodwill and intangible assets consist of the following:
<TABLE>
<CAPTION>
                                                                                      MARCH 31,    DECEMBER 31,
(DOLLARS IN THOUSANDS)                                                                  2002          2001
---------------------------------------------------------------------------------------------------------------

<S>                                                                                  <C>           <C>
Goodwill from business combinations completed on or before June 30, 2001 .........   $ 203,077     $ 203,077
Less accumulated amortization ....................................................     (48,490)      (48,490)
                                                                                     ---------     ---------
                                                                                     $ 154,587     $ 154,587

Goodwill from business combinations completed after June 30, 2001 ................      40,871        38,871
                                                                                     ---------     ---------
                                                                                     $ 195,458     $ 193,458
                                                                                     =========     =========

Intangible assets subject to amortization, comprised of covenants not to compete..      16,555        16,180
Less accumulated amortization ....................................................     (11,803)      (11,317)
                                                                                     ---------     ---------
                                                                                     $   4,752     $   4,863
                                                                                     =========     =========
</TABLE>
<PAGE>
For the three months ended March 31, 2002, the net change in the carrying amount
of goodwill of  $2,000,000  is the result of business  combinations.  All of the
goodwill recorded in conjunction with business combinations completed after June
30, 2001 is expected to be deductible for tax purposes.

Covenants not to compete relating to business combinations  completed after June
30,  2001  have a  weighted-average  life of five  years.  Amortization  expense
related to the  covenants  amounts to $671,000  for the three months ended March
31, 2002. The estimated  amortization expense for each of the fiscal years ended
December 31, is presented below:

                                                         FOR THE YEAR ENDED
    (DOLLARS IN THOUSANDS)                                  DECEMBER 31,
    -----------------------------------------------------------------------
    2002...........................................           $ 2,233
    2003...........................................           $ 1,498
    2004...........................................           $ 1,049
    2005...........................................           $   424
    2006...........................................           $   217
    2007...........................................           $     2


NOTE F - LONG-TERM DEBT

At  March  31,  2002,  borrowings  under  the  revolving  credit  facility  were
$18,900,000,  outstanding  letters  of  credit  totaled  $1,000,000  and  credit
available under the revolving facility was $80,100,000. At March 31, 2002, Apria
was in  compliance  with all of the financial  covenants  required by the credit
agreement.


NOTE G - EQUITY

For the three months ended March 31, 2002,  changes to stockholders'  equity are
comprised of the following amounts:

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

    Net income................................................         $22,995
    Proceeds from the exercise of stock options...............           2,260
    Tax benefit related to the exercise of stock options......           1,157
    Other comprehensive income, net of taxes..................             229
    Repurchased common shares held in treasury................         (21,670)
                                                                       -------
                                                                       $ 4,971

For the three months ended March 31, 2002, the difference between net income and
comprehensive  income is attributable  to unrealized  gains on two interest rate
swap agreements.  There was no difference  between net income and  comprehensive
income for the same period of the previous year.

In February  2002,  Apria  announced a plan to repurchase up to  $35,000,000  of
outstanding  common stock  during the first two  quarters of 2002.  Depending on
market conditions and other factors,  repurchases will be made from time to time
in open market  transactions.  The company repurchased 999,800 shares during the
quarter ended March 31, 2002.
<PAGE>

NOTE H - INCOME TAXES

Income  taxes  for the three  months  ended  March  31,  2002 and 2001 have been
provided at the effective tax rates expected to be applicable for the respective
year.

At December 31, 2001,  Apria had federal net  operating  loss  carryforwards  of
approximately $89,000,000, expiring in varying amounts in the years 2003 through
2018,  and various state  operating loss  carryforwards  that began to expire in
1997.   Additionally,   the  company  has  an  alternative  minimum  tax  credit
carryforward of approximately  $7,600,000. As a result of an ownership change in
1992 that met  specified  criteria of Section 382 of the Internal  Revenue Code,
future use of a portion of the federal and state  operating  loss  carryforwards
generated prior to 1992 are each limited to  approximately  $5,000,000 per year.
Because of the annual limitation,  approximately  $57,000,000 of each of Apria's
federal  and state  operating  loss  carryforwards  may expire  unused.  The net
operating loss  carryforward  amount in the related  deferred tax asset excludes
such amount.  In 2002, for federal tax purposes,  the company expects to utilize
its entire net operating loss carryforward amount not subject to limitation.

NOTE I - COMMITMENTS AND CONTINGENCIES

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

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

Following a series of settlement discussions,  the parties reached in early 2002
a tentative  agreement to settle both the  consolidated  federal and state class
actions  described  above  for a total of $42  million.  Under  the terms of the
settlement,  Apria has paid $1 million and its insurance  carriers have paid $41
million  into a  settlement  escrow  account.  Apria has also  agreed to provide
various  indemnities to certain  current and former Apria officers and directors
who would be entitled to receive such indemnification  under applicable law. The
parties are in the process of putting into place the final  documentation of the
settlement.  Apria  cannot  provide any  assurances  that all of the  agreements
necessary  to  finalize  the  settlement  will be  obtained  or that  the  Court
ultimately  will approve the settlement as reasonable and fair to the settlement
class.  However, in the opinion of Apria's management,  the ultimate disposition
of these  class  actions  will not have a  material  adverse  effect on  Apria's
results of operations or financial condition.

Apria and its former  Chief  Executive  Officer are also  defendants  in a class
action lawsuit,  J.E.B. Capital Partners,  LP v. Apria Healthcare Group Inc. and
Philip L. Carter,  filed on August 27, 2001 in the U.S.  District  Court for the
Central  District of California,  Southern  Division (Case No.  SACV01-813 GLT).
Among other things,  the operative  complaint  alleges that the defendants  made
false and/or  misleading public statements by not announcing until July 16, 2001
the amount of potential  damages asserted by the U.S.  Attorney's  office in Los
Angeles and counsel for the plaintiffs in the qui tam actions referred to below.
Apria believes that it has meritorious defenses to the plaintiff's claims and it
intends to vigorously defend itself. In the opinion of Apria's  management,  the
ultimate  disposition  of this class  action  will not have a  material  adverse
effect on Apria's results of operations or financial condition.

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

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

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

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

If a judge,  jury or  administrative  agency were to determine that false claims
were  submitted to federal  healthcare  programs or that there were  significant
overpayments by the government, Apria could face civil and administrative claims
for refunds,  sanctions and penalties for amounts that would be highly  material
to its  business,  results of  operations  and  financial  condition,  including
exclusion of Apria from participation in federal healthcare programs.

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

NOTE J - PER SHARE AMOUNTS

The following  table sets forth the  computation  of basic and diluted per share
amounts:
<TABLE>
<CAPTION>
                                                                                                          THREE MONTHS ENDED
                                                                                                               MARCH 31,
                                                                                                       -----------------------
(in thousands, except per share data)                                                                     2002         2001
------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                                    <C>           <C>
NUMERATOR:
  Net income.....................................................................................      $  22,995     $  17,076
  Numerator for basic and diluted per share amounts - income available to common stockholders....      $  22,995     $  17,076


DENOMINATOR:
  Denominator for basic per share amounts - weighted average shares..............................         54,292        53,392

  Effect of dilutive securities:
     Employee stock options - dilutive potential common shares...................................          1,326         2,092
                                                                                                       ---------     ---------
  Denominator for diluted per share amounts - adjusted weighted average shares...................         55,618        55,484
                                                                                                       =========     =========

Basic net income per common share................................................................      $    0.42     $    0.32
                                                                                                       =========     =========

Diluted net income per common share..............................................................      $    0.41     $    0.31
                                                                                                       =========     =========

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

  Shares for which exercise price exceeds average market price of common stock...................          2,641         2,160

  Average exercise price per share that exceeds average market price of common stock.............      $   25.51    $   26.93
</TABLE>
<PAGE>

================================================================================
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES  LITIGATION  REFORM  ACT OF 1995:  Apria's  business  is subject to a
number of risks which are partly or entirely beyond the company's  control.  The
company  has  described  certain of those  risks in its Form 10-K for the fiscal
year  ended  December  31,  2001,  as filed  with the  Securities  and  Exchange
Commission on April 1, 2002. This report may be used for purposes of the Private
Securities  Litigation  Reform  Act of  1995  as a  readily  available  document
containing meaningful  cautionary statements  identifying important factors that
could cause  actual  results to differ  materially  from those  projected in any
forward-looking  statements the company may make from time to time.  Those risks
include:

     - the  ability  of  the  company  to  resolve  issues   pertaining  to  the
       collectibility of its accounts receivable;
     - the effectiveness of the company's operating systems and controls;
     - 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; and
     - the successful implementation of the company's acquisition strategy.

In addition,  the  terrorist  attacks of September 11, 2001 and the military and
security  activities which followed,  their impacts on the United States economy
and  government  spending  priorities,  and  the  effects  of any  further  such
developments  pose  risks  and  uncertainties  to  all  U.S.-based   businesses,
including Apria.  Among other things,  deficit spending by the government as the
result of adverse  developments  in the  economy  and costs of the  government's
response to the terrorist attacks could lead to the increased pressure to reduce
government  expenditures  for other  purposes,  including  governmentally-funded
programs such as Medicare.
================================================================================

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

     Apria operates in the home  healthcare  segment of the healthcare  industry
and provides services in the home respiratory therapy, home infusion therapy and
home medical equipment areas. In all three lines, Apria provides patients with a
variety of clinical  services and related  products and supplies,  most of which
are  prescribed  by a physician  as part of a care plan.  Apria  provides  these
services  to  patients  in  the  home   throughout  the  United  States  through
approximately 400 branch locations.

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

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

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

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


RESULTS OF OPERATIONS

     NET REVENUES. Net revenues were $301.3 million in the first quarter of 2002
compared to $271.4 million in the corresponding  period of 2001. The increase is
due to volume  increases,  new contracts with regional and national payors,  the
acquisition of  complementary  businesses and price increases in certain managed
care agreements.

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

     The following table sets forth a summary of net revenues by service line:
<TABLE>
<CAPTION>
                                                                           THREE MONTHS ENDED MARCH 31,
                                                                   -----------------------------------------
                                                                          2002                    2001
                                                                   -----------------       -----------------
(DOLLARS IN THOUSANDS)                                                 $         %             $         %
------------------------------------------------------------------------------------------------------------

<S>                                                                <C>         <C>         <C>         <C>
     Respiratory therapy......................................     $203,232    67.4%       $178,330    65.7%
     Infusion therapy.........................................       53,783    17.9%         52,385    19.3%
     HME/other................................................       44,330    14.7%         40,639    15.0%
                                                                   --------   ------       --------   ------
          Total net revenues                                       $301,345   100.0%       $271,354   100.0%
                                                                   ========   ======       ========   ======
</TABLE>

     Home  Respiratory   Therapy.   Respiratory  therapy  revenues  are  derived
primarily from the provision of oxygen systems,  home  ventilators,  sleep apnea
equipment,  nebulizers,   respiratory  medications  and  related  services.  The
respiratory therapy service line increased by 14.0% in the first quarter of 2002
as compared to the first quarter of 2001.  Apria's focus on the  acquisition  of
respiratory therapy businesses contributed to this growth.

     Home  Infusion  Therapy.  The infusion  therapy  service line  involves the
administration  of a drug or  nutrient  directly  into  the  body  intravenously
through  a  needle  or  catheter.   Examples  include:   parenteral   nutrition,
anti-infectives, pain management, chemotherapy and other medications and related
services.  The  infusion  line also  includes  enteral  nutrition,  which is the
administration of nutrients directly into the  gastrointestinal  tract through a
feeding  tube.  Infusion  therapy  revenues  increased by 2.7% between the first
quarter periods  presented,  which  represents the effect of a 16.3% increase in
enteral  nutrition as offset by a 4.1% decrease in the remainder of the infusion
line. The increase in enteral  nutrition is  attributable  to a renewed focus on
this product  resulting from a program  (initiated in mid-2001) that centralized
the  enteral  intake and  distribution  functions  at the  regional  level.  The
offsetting  decrease  was largely due to the  cessation  of an infusion  product
offering  within a certain  large  contract.  The  structure of the contract was
yielding very low margins on that product.

     Home Medical  Equipment/Other.  Home medical  equipment/other  revenues are
derived from the provision of patient safety items,  ambulatory and patient room
equipment.  Home medical equipment/other  revenues increased by 9.1% between the
first  quarter  of 2002 and the first  quarter  of 2001.  The  increase  between
periods  reflects the  restoration  in 2001 of the full  Medicare cost of living
adjustment for certain durable medical equipment  products and services that had
been frozen since 1998 pursuant to the Balanced Budget Act of 1997.  Revenues in
the first  quarter of 2001 did not yet include this increase as the increase for
the first half of the year was effected through a transitional allowance applied
to amounts reimbursed during the second half of the year. The 2002 reimbursement
amounts  incorporate  the 2001  adjustments  as if they had been applied  evenly
throughout  the year.  Medicare  reimbursement  amounts  for 2002  include  only
minimal  cost of  living  increases.  Restoration  of the  full  cost of  living
adjustment was effective for 2001 only.

     Revenue Recognition and Certain Concentrations.  Revenues are recognized on
the date services and related products are provided to patients and are recorded
at amounts  estimated  to be  received  under  reimbursement  arrangements  with
third-party payors,  including private insurers,  prepaid health plans, Medicare
and  Medicaid.  Due  to  the  nature  of  the  industry  and  the  reimbursement
environment in which Apria  operates,  certain  estimates are required to record
net revenues and accounts receivable at their net realizable values. Inherent in
these  estimates  is the risk that they will have to be  revised  or  updated as
additional  information  becomes  available,  which  could have an impact on the
consolidated financial statements.

     Approximately  30% of Apria's  revenues are reimbursed  under  arrangements
with Medicare and Medicaid. No other third-party payor represents 10% or more of
the company's revenues.  The majority of the company's revenues are derived from
fees  charged  for patient  care under  fee-for-service  arrangements.  Revenues
derived from capitation arrangements  represented 9.3% of total net revenues for
the first quarter of 2002.

     Medicare  and  Medicaid  Reimbursement.  The  Balanced  Budget  Act of 1997
significantly  reduced the Medicare  reimbursement rates for home oxygen therapy
and included  other  provisions  that have impacted or may impact  reimbursement
rates  in the  future,  such as  potential  reimbursement  reductions  under  an
inherent  reasonableness  procedure and competitive  bidding.  Also currently at
issue is the  potential  adoption  of an  alternative  pricing  methodology  for
certain drugs and  biologicals.  These issues are discussed in detail in Apria's
2001 Form 10-K.

     GROSS  PROFIT.  Gross  margins were 72.7% in the first  quarter of 2002 and
71.9% in the first quarter of 2001. The increase reflects continued  improvement
from   management's   strategy  to  increase  the  proportion  of  higher-margin
respiratory revenues to total revenues. The gross margin improvement can also be
partially  attributed to more favorable  pricing  negotiated for certain patient
service equipment items and pharmaceuticals.

     PROVISION FOR DOUBTFUL  ACCOUNTS.  The provision for doubtful  accounts was
$11.5  million or 3.8% of net revenues in the first  quarter of 2002 compared to
$8.2 million or 3.0% in the first  quarter of 2001.  The  provision for doubtful
accounts  results  from  management's  estimate of the net  realizable  value of
accounts receivable after considering actual write-offs of specific receivables.
The increase in the provision can be attributed to accounts receivable increases
primarily  in the 31 to 90 day age  range.  Accounts  aged in excess of 180 days
decreased  between the  periods in both  dollars  and as a  percentage  of total
accounts  receivable.  At March  31,  2002  total  accounts  receivable,  before
allowance for doubtful accounts, increased by $16.7 million since March 31, 2001
and by $14.5  million  since  December  31, 2001.  The growth since  year-end is
partially  due to two large  acquisitions  that  were  completed  in the  fourth
quarter of 2001.  Such  acquisitions  require the  integration  of a significant
number of patients into Apria's information systems and document files which can
delay the billing and  collection  process.  Also  contributing  to the accounts
receivable growth are the following factors that are typical with the start of a
new calendar year:  (1) patient payor and/or  benefit  changes that can slow the
billing and collection process as the new payor information is obtained; and (2)
patient deductible requirements that can also slow the collection process. These
new-year  factors  were also present in the first  quarter of 2001,  however the
magnitude was greater in 2002 due to revenue growth and the recent acquisitions.
See "Accounts Receivable - Evaluation of Net Realizable Value."

     SELLING,   DISTRIBUTION  AND  ADMINISTRATIVE.   Selling,  distribution  and
administrative  expenses are comprised of expenses incurred in direct support of
operations and those associated with administrative functions. Expenses incurred
by the operating  locations include salaries and other expenses in the following
functional  areas:  selling,  distribution,   clinical,  intake,  reimbursement,
warehousing and repair. Many of these operating costs are directly variable with
revenue  growth  patterns.  Certain  expenses,  such as facility  lease and fuel
costs,  are  also  very  sensitive  to  market-driven  price  fluctuations.  The
administrative  expenses  include  overhead  costs  incurred  by  the  operating
locations and corporate support functions. These expenses do not vary as closely
with  revenue  growth  as do the  operating  costs.  Selling,  distribution  and
administrative expenses, expressed as percentages of net revenues, were 55.1% in
the first quarter of 2002,  compared to 54.7% in the  corresponding  period last
year.  The first quarter of 2002  includes $2.7 million in contract  termination
costs related to the  departure of the former Chief  Executive  Officer.  Absent
this one-time charge, the margin improved slightly between the subject periods.

     AMORTIZATION  OF GOODWILL AND INTANGIBLE  ASSETS.  Amortization of goodwill
and intangible assets was $671,000 in the first quarter of 2002 and $2.8 million
in the  first  quarter  of  2001.  Upon  adoption  of  SFAS  No.  142,  goodwill
amortization  ceased.  Amortization  of goodwill  was $2.2 million for the first
quarter of 2001.  The effect of adding  this  amount back as though SFAS No. 142
were  adopted at the  beginning  of the prior year would have been  increases of
$1.3 million and $0.02 to net income and income per common share,  respectively.
See "Recent Accounting Pronouncements" and "Business Combinations."

     INTEREST EXPENSE. Interest expense was $4.1 million in the first quarter of
2002,  compared to $8.4 million in the first  quarter of 2001.  The  significant
decrease between the periods is due to a number of factors.  From March 31, 2001
to March 31, 2002, long-term debt decreased by $36 million.  Also, the July 2001
refinancing  replaced  the  9  1/2%  senior  subordinated  notes  with  debt  at
significantly  more favorable  interest rates and resulted in lower rates on the
bank loans. In connection with the refinancing,  deferred debt issuance costs on
the 9 1/2% notes and former  bank debt were  written  off;  the  issuance  costs
incurred  upon  refinancing  resulted in a lower monthly  amortization  expense.
Finally, the dramatic decreases in market-driven  interest rates over the course
of 2001  contributed to the overall decrease in Apria's  interest  expense.  See
"Long-Term Debt."

     INCOME TAXES. Income taxes for the three months ended March 31, 2002 and in
the corresponding  period of 2001, have been provided at the effective tax rates
expected to be applicable for the respective year.

     At December 31, 2001, Apria had federal net operating loss carryforwards of
approximately $89 million, expiring in varying amounts in the years 2003 through
2018 and various  state  operating  loss  carryforwards  that began to expire in
1997.   Additionally,   the  company  has  an  alternative  minimum  tax  credit
carryforward of approximately  $7.6 million.  As a result of an ownership change
in 1992 that met specified criteria of Section 382 of the Internal Revenue Code,
future use of a portion of the federal and state  operating  loss  carryforwards
generated prior to 1992 are each limited to  approximately  $5 million per year.
Because of the annual  limitation,  approximately $57 million of each of Apria's
federal  and state  operating  loss  carryforwards  may expire  unused.  The net
operating loss  carryforward  amount in the related  deferred tax asset excludes
such amount.  In 2002, for federal tax purposes,  the company expects to utilize
its entire net operating loss carryforward not subject to limitation.


LIQUIDITY AND CAPITAL RESOURCES

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

     CASH FLOW.  Cash provided by operating  activities was $41.3 million in the
first  quarter  of 2002 and $48.5  million  in the first  quarter  of 2001.  The
increase  between  periods in net income  (before items not requiring  cash) was
offset by the increase in accounts  receivable and increases in payments against
accounts payable and other expense accruals.

     Cash used in  investing  activities  was $30.3  million in the first  three
months of 2002, compared to $55.3 million in the corresponding period last year.
The  decrease  in cash  used  is  directly  attributable  to the  difference  in
acquisition activity between the periods.

     Cash used in financing activities was $12.9 million in the first quarter of
2002 versus $1.3 million  provided by financing  activities in the first quarter
of 2001. The difference is mainly due to the stock  repurchases  effected in the
2002 period and the net increase in the  revolving  credit line.  See  "Treasury
Stock."

     CONTRACTUAL CASH OBLIGATIONS.  The following table summarizes  Apria's long
term cash payment  obligations to which the company is contractually  bound (the
years presented below  represent  twelve-month  rolling periods from the date of
this report):
<TABLE>
<CAPTION>
    (DOLLARS IN MILLIONS)                          YEAR 1    YEAR 2    YEAR 3    YEAR 4    YEAR 5    YEAR 6+    TOTALS
    ------------------------------------------------------------------------------------------------------------------
<S>                                                <C>       <C>       <C>       <C>       <C>         <C>       <C>
    Term loans..............................       $ 19      $ 26      $ 28      $ 29      $ 98       $ 83       $283
    Revolving loans.........................          -         -         -         -        19          -         19
    Capitalized lease obligations...........          2         1         1         -         -          -          4
    Operating leases........................         52        43        34        27        17         21        194
    Deferred acquisition payments...........          3         -         -         -         -          -          3
                                                   ----      ----      ----      ----      ----       ----       ----
                                                   $ 76      $ 70      $ 63      $ 56      $134       $104       $503
                                                   ====      ====      ====      ====      ====       ====       ====
      Total contractual cash obligations.
</TABLE>

     ACCOUNTS  RECEIVABLE.  Accounts  receivable  before  allowance for doubtful
accounts  increased by $14.5 million during the first quarter of 2002,  which is
attributable to the revenue  increase,  fourth quarter  acquisitions and certain
factors inherent in the start of a new year. Days sales outstanding  (calculated
as of each  period end by  dividing  accounts  receivable,  less  allowance  for
doubtful  accounts,  by the 90-day  rolling  average of net revenues) were 52 at
March 31, 2002, compared to 50 at December 31, 2001. See "Provision for Doubtful
Accounts."

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

     Unbilled  Receivables.  Included  in  accounts  receivable  are  earned but
unbilled  receivables  of $30.4  million and $26.9 million at March 31, 2002 and
December 31, 2001, respectively. Delays, ranging from a day up to several weeks,
between the date of service  and  billing  can occur due to delays in  obtaining
certain  required  payor-specific   documentation  from  internal  and  external
sources.  Earned but unbilled  receivables are aged from date of service and are
considered in Apria's analysis of net realizable  value. The increase during the
first quarter of 2002 is largely due to acquisitions  effected late in 2001. The
time-consuming  processes of converting  patient files onto Apria's  systems and
obtaining provider numbers from government payors routinely delay billing of the
newly acquired business.

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

     LONG-TERM  DEBT.  Apria has a $400 million senior secured credit  agreement
with a syndicate of lenders led by Bank of America,  N.A.  The credit  agreement
consists of a $100 million five-year  revolving credit facility,  a $125 million
five-year term loan and a $175 million six-year term loan. The $125 million term
loan is repayable in 20 consecutive quarterly installments of $5.5 million to $7
million  each.  The  $175  million  term  loan is  repayable  in 20  consecutive
quarterly installments of $437,500 each, followed by three consecutive quarterly
installments  of $41.6 million each, and a final payment of $41.5 million due on
July 20, 2007. In December 2001, the company made a voluntary  prepayment of $11
million,   which  was  applied  against  future  scheduled  quarterly  payments,
effectively  eliminating  any payment  requirements  on the five-year  term loan
until September 2002.

     On March 31, 2002,  total borrowings under the credit agreement were $301.5
million,  which  included  $18.9 million in  borrowings on the revolving  credit
facility.  Outstanding  letters  of  credit  totaled  $1.0  million  and  credit
available under the revolving facility was $80.1 million. At March 31, 2002, the
company was in compliance  with all of the financial  covenants  required by the
credit agreement.

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

     Apria has two interest rate swap agreements with a total notional amount of
$100 million that fix its  LIBOR-based  variable  rate debt at 2.58% (before the
applicable  margin).  The swap  agreements  terminate  March 2003. The swaps are
being  accounted  for as cash flow hedges under SFAS No. 133.  Accordingly,  the
difference  between the interest  received and interest  paid is reflected as an
adjustment to interest expense.  For the first quarter of 2002, Apria paid a net
settlement  amount of  $153,000.  At March 31,  2002,  the swap  agreements  are
reflected in the accompanying  balance sheet in other assets at their fair value
of  $410,000.  Unrealized  gains on the fair  value of the swap  agreements  are
reflected, net of taxes, in other comprehensive income.

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

     TREASURY STOCK.  In February 2002,  Apria announced a plan to repurchase up
to $35 million of  outstanding  common  stock  during the first two  quarters of
2002. Depending on market conditions and other considerations,  repurchases will
be made from time to time in open market transactions.  During the first quarter
of 2002,  Apria  repurchased  999,800 shares for $21.7 million.  All repurchased
common shares are being held in treasury. Apria's credit agreement limits common
stock  repurchases  to $35  million in any fiscal  year and $100  million in the
aggregate over the term of the agreement.

     BUSINESS  COMBINATIONS.  Pursuant to one of its primary growth  strategies,
Apria  periodically  acquires  complementary  businesses in specific  geographic
markets.  These  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 dates of acquisition. Effective with the adoption of SFAS
No. 142,  goodwill is no longer being  amortized.  Covenants  not to compete are
being amortized over the life of the respective agreements.

     The aggregate  consideration  for acquisitions that closed during the first
quarter  of 2002 was $2.7  million.  Allocation  of this  amount  includes  $2.3
million to  goodwill,  $103,000  to  intangible  assets and  $273,000 to patient
service equipment. During the first quarter of 2001, the aggregate consideration
for acquisitions was $26.7 million.  Cash paid for acquisitions,  which includes
amounts  deferred from prior year  acquisitions,  totaled $3.3 million and $25.3
million in the first quarters of 2002 and 2001, respectively.

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

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

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

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

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

     If a judge,  jury or  administrative  agency were to  determine  that false
claims  were  submitted  to  federal  healthcare  programs  or that  there  were
significant  overpayments  by  the  government,   Apria  could  face  civil  and
administrative  claims for refunds,  sanctions  and  penalties  for amounts that
would be highly  material to its business,  results of operations  and financial
condition,  including  the  exclusion  of Apria  from  participation  in federal
healthcare programs.


ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

     At March 31, 2002, Apria's term loan borrowings  totaled $283 million.  The
bank credit  agreement  governing the term loans provides  interest rate options
based on the following  indices:  Federal Funds Rate,  Prime Rate or LIBOR.  All
such interest rate options are subject to the  application of an interest margin
as specified  in the bank credit  agreement.  At March 31, 2002,  all of Apria's
outstanding  term  debt was tied to  LIBOR.  Apria  has two  interest  rate swap
agreements with a total notional amount of $100 million that fix its LIBOR-based
debt at 2.58%  (before  application  of the interest  margin).  Both  agreements
expire March 2003.

     Based on the term  debt  outstanding  and the swap  agreements  in place at
March 31,  2002,  a 100 basis point  change in LIBOR would  increase or decrease
Apria's annual cash flow and pretax earnings by approximately $1.8 million.
<PAGE>




                           PART II - OTHER INFORMATION


ITEM 1.      LEGAL PROCEEDINGS

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


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

             Following a series of settlement  discussions,  the parties reached
             in early 2002 a tentative agreement to settle both the consolidated
             federal and state class actions  described above for a total of $42
             million.  Under  the  terms of the  settlement,  Apria  has paid $1
             million and its  insurance  carriers  have paid $41 million  into a
             settlement escrow account. Apria has also agreed to provide various
             indemnities  to certain  current  and  former  Apria  officers  and
             directors  who would be  entitled to receive  such  indemnification
             under  applicable  law.  The  parties are in the process of putting
             into place the final documentation of the settlement.  Apria cannot
             provide any  assurances  that all of the  agreements  necessary  to
             finalize  the  settlement  will  be  obtained  or  that  the  Court
             ultimately  will approve the  settlement as reasonable  and fair to
             the  settlement   class.   However,   in  the  opinion  of  Apria's
             management,  the ultimate  disposition  of these class actions will
             not have a material adverse effect on Apria's results of operations
             or financial condition.

             Apria and its former Chief Executive Officer are also defendants in
             a class  action  lawsuit,  J.E.B.  Capital  Partners,  LP v.  Apria
             Healthcare  Group Inc.  and Philip L.  Carter,  filed on August 27,
             2001 in the  U.S.  District  Court  for  the  Central  District  of
             California,  Southern  Division (Case No.  SACV01-813  GLT).  Among
             other things,  the operative  complaint alleges that the defendants
             made false and/or  misleading  public  statements by not announcing
             until July 16, 2001 the amount of potential damages asserted by the
             U.S Attorney's office in Los Angeles and counsel for the plaintiffs
             in the qui tam actions  referred to below.  Apria  believes that it
             has meritorious  defenses to the plaintiff's  claims and it intends
             to vigorously defend itself. In the opinion of Apria's  management,
             the  ultimate  disposition  of this  class  action  will not have a
             material  adverse  effect  on  Apria's  results  of  operations  or
             financial condition.

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

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

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

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

             If a judge,  jury or  administrative  agency were to determine that
             false claims were submitted to federal healthcare  programs or that
             there were significant overpayments by the government,  Apria could
             face civil and  administrative  claims for refunds,  sanctions  and
             penalties  for  amounts  that  would  be  highly  material  to  its
             business, results of operations and financial condition,  including
             the  exclusion of Apria from  participation  in federal  healthcare
             programs.

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


ITEMS 2-5.   NOT APPLICABLE

ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

             (a)  Exhibits:

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

                  10.1      Employment Agreement effective April 4, 2002 between
                            Registrant and Lawrence A. Mastrovich.

             (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



May 15, 2002                        /s/  JAMES E. BAKER
                                    -------------------------------------------
                                    James E. Baker
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)