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

                                    Form 10-Q

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

                       For the period ended June 30, 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 52,030,894  shares of common stock,  $.001 par value,  outstanding at
August 2, 1999.
<PAGE>

                           APRIA HEALTHCARE GROUP INC.

                                    FORM 10-Q

                       For the period ended June 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>
                                                              June 30,  December 31,
                                                                1999       1998
                                                            ----------- ------------
                                                            (unaudited)
                                                             (dollars in thousands)
                          ASSETS
CURRENT ASSETS
<S>                                                          <C>          <C>
  Cash and cash equivalents ..............................   $  22,020    $  75,475
  Accounts receivable, less allowance for doubtful
    accounts of $40,767 and $35,564 at June 30, 1999
    and December 31, 1998, respectively ..................     142,930      132,028
  Inventories ............................................      18,564       16,617
  Prepaid expenses and other current assets ..............       6,888        4,917
                                                             ---------    ---------
          TOTAL CURRENT ASSETS ...........................     190,402      229,037

PATIENT SERVICE EQUIPMENT, less accumulated
  depreciation of $268,850 and $249,921 at June 30,
  1999 and December 31, 1998, respectively ...............     131,078      130,652
PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET ................      46,466       51,996
INTANGIBLE ASSETS, NET ...................................     102,310       84,365
OTHER ASSETS .............................................         489          548
                                                             ---------    ---------
                                                             $ 470,745    $ 496,598
                                                             =========    =========

            LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
  Accounts payable .......................................   $  51,897    $  51,252
  Accrued payroll and related taxes and benefits .........      30,676       25,455
  Accrued insurance ......................................      10,986       13,092
  Other accrued liabilities ..............................      45,911       49,870
  Current portion of long-term debt ......................      22,636       74,439
                                                             ---------    ---------
          TOTAL CURRENT LIABILITIES ......................     162,106      214,108

LONG-TERM DEBT ...........................................     404,687      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; 51,978,368 and 51,785,263 shares
    issued and outstanding at June 30, 1999 and
    December 31, 1998, respectively ......................          52           52
  Additional paid-in capital .............................     328,146      325,903
  Retained deficit .......................................    (424,246)    (457,612)
                                                             ---------    ---------
                                                               (96,048)    (131,657)
                                                             ---------    ---------
                                                             $ 470,745    $ 496,598
                                                             =========    =========
</TABLE>
                   See notes to consolidated financial statements.

<PAGE>
<TABLE>
                           APRIA HEALTHCARE GROUP INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)
<CAPTION>

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

<S>                                              <C>         <C>          <C>         <C>
Net revenues .................................   $ 232,040   $ 240,627    $ 460,334   $ 491,165
Costs and expenses:
   Cost of net revenues:
      Product and supply costs ...............      45,557      56,674       90,882     117,817
      Patient service equipment depreciation..      18,480      19,852       36,226      39,907
      Nursing services .......................         537         897        1,088       1,632
      Other ..................................       2,175       3,374        4,622       7,299
                                                 ---------   ---------    ---------   ---------
                                                    66,749      80,797      132,818     166,655
   Selling, distribution and administrative...     127,558     140,404      252,007     282,350
   Provision for doubtful accounts ...........       7,442      12,816       16,071      26,611
   Amortization of intangible assets .........       1,984       3,501        3,857       7,065
                                                 ---------   ---------    ---------   ---------
                                                   203,733     237,518      404,753     482,681
                                                 ---------   ---------    ---------   ---------
          OPERATING INCOME ...................      28,307       3,109       55,581       8,484
Interest expense, net ........................      10,503      11,565       21,815      23,047
                                                 ---------   ---------    ---------   ---------
          INCOME (LOSS) BEFORE TAXES .........      17,804      (8,456)      33,766     (14,563)
Income taxes .................................           -         500          400       1,000
                                                 ---------   ---------    ---------   ---------
          NET INCOME (LOSS) ..................   $  17,804   $  (8,956)   $  33,366   $ (15,563)
                                                 =========   =========    =========   =========



Basic income (loss) per common share .........   $    0.34   $   (0.17)   $    0.64   $   (0.30)
                                                 =========   =========    =========   =========
Diluted income (loss) per common share .......   $    0.33   $   (0.17)   $    0.63   $   (0.30)
                                                 =========   =========    =========   =========
</TABLE>
                 See notes to consolidated financial statements.
<PAGE>
<TABLE>

                           APRIA HEALTHCARE GROUP INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

<CAPTION>
                                                                    Six Months Ended
                                                                        June 30,
                                                                  --------------------
                                                                    1999        1998
                                                                  --------    --------
                                                                 (dollars in thousands)
OPERATING ACTIVITIES
<S>                                                               <C>         <C>
Net income (loss) .............................................   $ 33,366    $(15,563)
Items included in net income (loss) not requiring
 (providing) cash:
   Provision for doubtful accounts ............................     16,071      26,611
   Provision for inventory and patient service
     equipment shortages/obsolescence .........................      2,341       5,091
   Depreciation ...............................................     45,909      54,728
   Amortization of intangible assets ..........................      3,857       7,065
   Amortization of deferred debt costs ........................      3,174         819
   Gain on disposition of assets ..............................       (107)       (118)
Changes in operating assets and liabilities, net
  of effects of acquisitions:
   (Increase) decrease in accounts receivable .................    (25,263)     18,314
   (Increase) decrease in inventories .........................     (3,522)        672
   (Increase) decrease in prepaids and other assets ...........       (186)      7,195
   Decrease in accounts payable ...............................     (2,975)     (4,510)
   Increase (decrease) in accrued payroll and
     other liabilities ........................................        705      (7,068)
Net purchases of patient service equipment, net
  of effects of acquisitions ..................................    (34,003)    (17,878)
                                                                  --------    --------
          NET CASH PROVIDED BY OPERATING ACTIVITIES ...........     39,367      75,358

INVESTING ACTIVITIES
   Purchases of property, equipment and improvements,
     net of effects of acquisitions ...........................     (4,069)    (10,727)
   Proceeds from disposition of assets ........................        276         149
   Acquisitions and payments of contingent
     consideration ............................................    (25,110)     (1,722)
                                                                  --------    --------
          NET CASH USED IN INVESTING ACTIVITIES ...............    (28,903)    (12,300)

FINANCING ACTIVITIES
   Payments on term loan ......................................    (60,938)          -
   Payments on other long-term debt ...........................     (3,350)     (4,807)
   Capitalized debt costs, net ................................     (1,811)     (1,442)
   Issuances of common stock ..................................      2,180       1,586
                                                                  --------    --------
          NET CASH USED IN FINANCING ACTIVITIES ...............    (63,919)     (4,663)
                                                                  --------    --------

NET (DECREASE) INCREASE IN CASH ...............................    (53,455)     58,395
Cash and cash equivalents at beginning of period ..............     75,475      16,317
                                                                  --------    --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ....................   $ 22,020    $ 74,712
                                                                  ========    ========
</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 year 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 the
company  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  which  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.  The company'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 accrued 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  six-month  period ended June 30, 1999  resulted in cash  payments of
$25,110,000.  Of  that  amount,   approximately  $21,800,000  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  for the third time in April of 1999.  The  agreement  was
amended to remove the requirement  that the company issue  $50,000,000 in senior
subordinated notes or senior  subordinated  convertible  debentures by April 23,
1999. In connection with this amendment, the company made a required $50,000,000
repayment  of the term  loan.  The  agreement  was also  amended  to remove  the
requirement  that the company  maintain  minimum  cash  balances of  $35,000,000
through the consummation of the debt offering.

NOTE F - EQUITY

The  change  in  stockholders'  equity,  other  than from net  income,  resulted
primarily  from the exercise of stock  options.  For the six-month  period ended
June  30,  1999,  proceeds  from  the  exercise  of stock  options  amounted  to
$2,180,000.

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 $380,000,000, expiring in varying amounts in the years 2003 through
2013.  Additionally,  the company 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, the company's net deferred
tax asset had been reduced to zero by a valuation  allowance.  In 1999, NOLs are
being realized to the extent of the company's taxable income.

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 the  company  upon the  resolution  of these  claims  and
lawsuits will not, in the aggregate,  have a material  adverse effect on Apria's
consolidated  results of operations and financial  position.  Apria provides for
probable  losses related to certain  matters  arising in each period and revises
estimates for certain matters arising in previous periods.  Management is unable
to estimate the range of possible loss for all other claims and lawsuits.
<PAGE>
NOTE I - PER SHARE AMOUNTS
<TABLE>
The following  table sets forth the  computation  of basic and diluted per share
amounts:
<CAPTION>

                                                       Three Months Ended      Six Months Ended
                                                            June 30,                June 30,
                                                      --------------------   --------------------
                                                        1999        1998      1999         1998
                                                      --------    --------   --------    --------
                                                         (in thousands, except per share data)

Numerator:
<S>                                                    <C>        <C>         <C>        <C>
  Net income (loss) ................................   $ 17,804   $ (8,956)   $ 33,366   $(15,563)
  Numerator for basic per share amounts - income
   (loss) available to common stockholders .........   $ 17,804   $ (8,956)   $ 33,366   $(15,563)

  Numerator for diluted per share amounts - income
   (loss) available to common stockholders .........   $ 17,804   $ (8,956)   $ 33,366   $(15,563)


Denominator:
  Denominator for basic per share
    amounts - weighted average shares ..............     51,896     51,731      51,846     51,693

  Effect of dilutive securities:
    Employee stock options .........................      2,013          -       1,440          -
                                                       --------   --------    --------   --------
    Dilutive potential common shares ...............      2,013          -       1,440          -
                                                       --------   --------    --------   --------
  Denominator for diluted per share amounts -
    adjusted weighted average shares ...............     53,909     51,731      53,286     51,693
                                                       ========   ========    ========   ========

Basic income (loss) per common share ...............   $   0.34   $  (0.17)   $   0.64   $  (0.30)
                                                       ========   ========    ========   ========
Diluted income (loss) per common share .............   $   0.33   $  (0.17)   $   0.63   $  (0.30)
                                                       ========   ========    ========   ========

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

    Exercise price exceeds average market
      price of common stock ........................        877      3,786       1,261      2,933
    Other ..........................................          -         57           -        106
                                                       --------   --------    --------   --------
                                                            877      3,843       1,261      3,039
                                                       ========   ========    ========   ========

Average exercise price per share that exceeds
  average market price of common stock .............   $  20.85   $  14.72    $  19.34   $  16.37
                                                       ========   ========    ========   ========
</TABLE>

Due to the net loss  reported  for the three and six months ended June 30, 1998,
the impact of employee  stock  options 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.  The company
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 the company 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 had net revenues of $232 million for the second quarter
of 1999,  compared to $240.6 million for the second quarter of 1998. For the six
months ended June 30, 1999, net revenues were $460.3 million  compared to $491.2
million for the same period last year.  The decline in revenues is  attributable
to (1) the  recent  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 variances  between the
second quarter and six-month periods ended June 30, 1999 and the same periods of
1998 attributable to the exit from the infusion business in selected markets are
approximately $12.9 million and $25.6 million,  respectively.  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  second
quarter and year-to-date  revenues by approximately $2.5 million and $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.  An
unfavorable  consequence of the infusion therapy exit and the termination of the
low-margin  managed  care  contracts  was the  unquantifiable  loss  of  related
business that Apria would have preferred to retain.

     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  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.
<PAGE>
<TABLE>
<CAPTION>

                                                 Six Months Ended June 30,
                                     -------------------------------------------------
                                            1999                           1998
                                     -------------------           -------------------
                                         $           %                 $           %
                                     --------     ------           --------     ------
                                                   (dollars in thousands)

<S>                                  <C>           <C>             <C>           <C>
     Respiratory therapy........     $292,709      63.6%           $284,213      57.9%
     Infusion therapy...........       86,836      18.9%            114,313      23.2%
     HME/other..................       80,789      17.5%             92,639      18.9%
                                     --------     ------           --------     ------
          Total net revenues         $460,334     100.0%           $491,165     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 second quarter and the six months ended
June 30,  1999 were 71.2% and 71.1%,  respectively,  compared to 66.4% and 66.1%
for the same periods last year. The  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.  Improvements  in
gross  margin  are  slightly  offset  by  increased  patient  service  equipment
depreciation  resulting  from  an  increase  in  purchases  necessitated  by the
implementation  of a  new  utilization  model  and  a  recently-signed  national
contract.

     Gross  margins  for the six  months  ended  June 30,  1999 for  respiratory
therapy, infusion therapy and home medical equipment/other were 78.4%, 60.0% and
57.0%, respectively.

     SELLING,   DISTRIBUTION  AND  ADMINISTRATIVE:   Selling,  distribution  and
administrative expenses as a percentage of net revenues were 55.0% and 54.7% for
the second quarter and first half of 1999, respectively, compared with 58.4% and
57.5% for the same periods last year. On a dollar basis,  selling,  distribution
and administrative expenses decreased by $12.8 million and $30.3 million between
the  comparable  three-  and  six-month  periods,  respectively.  Labor  expense
reductions  are the primary  component  of the  decrease.  Early in 1998,  Apria
reduced its workforce in response to the 25% Medicare  reimbursement  reductions
and the  financial  results did not yet  reflect the full  savings of that labor
reduction  effort.  Since then,  Apria has continued to reduce staffing  levels,
particularly in the functional area of  reimbursement,  an area that experienced
significant  staffing  increases  during the period of  billing  and  collection
difficulties arising from the 1995 Abbey/Homedco  merger. 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.

     Depreciation  expense  decreased  by $2.6  million and $5.1 million for the
second  quarter  and six months  ended June 30,  1999,  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 in the latter half of 1998 and early 1999.

     PROVISION FOR DOUBTFUL ACCOUNTS:  The provision for doubtful accounts, as a
percentage  of net  revenues,  was 3.2% and 3.5% for the quarter  and  six-month
periods ended June 30, 1999, respectively,  as compared to 5.3% and 5.4% for the
same periods in the prior year. On a dollar basis, the provision  decreased $5.4
million and $10.5 million over the three- and  six-month  periods ended June 30,
1999. The decrease in the provision rate is 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 30.9% of total  accounts  receivable at June 30, 1998 to
22.1% at June 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
June 30, 1999, from 79 days at June 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  shifted the focus of the collection
function to the more current  balances and is  assigning  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. The company'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 accrued for specific payors.

     AMORTIZATION OF INTANGIBLE ASSETS: Amortization of intangible assets was $2
million and $3.9  million  for the second  quarter and first six months of 1999,
respectively,  as compared to $3.5 million and $7.1 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 half of 1999.

     INTEREST EXPENSE:  Interest expense was $10.5 million and $21.8 million for
the three- and six-month periods ended June 30, 1999, respectively,  compared to
$11.6 million and $23 million for the same periods in 1998. Although there was a
21%  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 six months of 1999
versus $1 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  $380  million,  expiring in varying
amounts in the years 2003 through  2013.  Additionally,  the company 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,  the  company's  net deferred tax asset had been
reduced to zero by a valuation  allowance.  In 1999,  NOLs are being realized to
the extent of the company's taxable income.


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

     OPERATING  CASH FLOW:  Cash  provided  by  operating  activities  was $39.4
million for the six-month period ended June 30, 1999,  compared to $75.4 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 number of
payroll days accrued  compared to the same period last year.  During early 1998,
receivables  were  being  reduced  by cash  received  on  Medicare  billings  at
reimbursement  rates existing  prior to the 25%  reimbursement  reduction  while
being  increased  by billings  that  reflect the  reduced  reimbursement  rates.
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 $183.7  million at June 30, 1999 from $167.6  million at
December 31, 1998. The increase is largely attributable to a trend of increasing
net revenues which began in the third quarter of 1998. Consequently,  days sales
outstanding  at June 30, 1999 has 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
$22.9  million  and  $25.3  million  at June 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 for the third time in April of 1999.
The agreement was amended to remove 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,  the company
made a required $50 million  repayment of the term loan.  The agreement was also
amended  to remove  the  requirement  that the  company  maintain  minimum  cash
balances of $35 million through the consummation of the debt offering.

     At June 30, 1999,  total  borrowings under the credit agreement were $227.1
million,  outstanding letters of credit totaled $10 million and credit available
under the revolving  facility was $20 million (subject to a temporary  borrowing
restriction  under the  indenture  governing  Apria's $200 million 9 1/2% senior
subordinated notes).

     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 six-month period ended June
30, 1999  resulted in cash  payments of  approximately  $25.1  million.  Of that
amount, approximately $21.8 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.  Of the  four  Medicare  carriers  responsible  for
processing  approximately  one-fourth of Apria's total reimbursements,  two have
successfully  completed live tests with the company and testing on the remaining
two is in the planning stage.  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  77% 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 will be sufficient to
finance its current operations for at least the next year or until the borrowing
restriction described above is eliminated.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Apria currently utilizes no material derivative financial  instruments that
expose the company to  significant  market  risk.  However,  Apria is subject to
interest rate changes on its variable  rate term loan under the  company's  bank
credit  agreement  that may affect the fair value of that debt and cash flow and
earnings.  Based on the term debt  outstanding  at June 30, 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.
<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.  Pursuant  to a court
          order dated May 27, 1998,  the  plaintiffs in the original three class
          actions filed a Consolidated  Amended Class Action Complaint on August
          6, 1998.  The  amended  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 amended  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 amended 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.

               Apria   believes  that  it  has   meritorious   defenses  to  the
          plaintiffs' claims, and it intends to vigorously defend itself in both
          the federal and state cases. In the opinion of Apria's management, the
          ultimate  disposition  of these class actions will not have a material
          adverse  effect on the  company's  results of  operations or financial
          condition.

               Apria has  received a number of subpoenas  and document  requests
          from U.S.  Attorneys'  offices and from the U.S.  Department of Health
          and Human  Services.  The  subpoenas  and requests  generally  ask for
          documents,  including  patient files,  billing  records and agreements
          with  customers,  related to the company's  patients whose  healthcare
          costs are paid by  Medicare  and other  federal  programs.  On July 8,
          1999, Apria announced that the company had received  notification that
          the U. S.  Attorney's  office in  Sacramento  has closed its  criminal
          investigation file relating to eight subpoenas that had been issued by
          that office.  Apria is continuing to cooperate  with the  government's
          document  requests and has substantially  completed  responding to the
          subpoenas issued by the U.S. Attorneys' offices.

               Apria has acknowledged  that there may be errors and omissions in
          supporting  documentation  affecting a portion of its billings. If the
          U. S.  Department  of Justice  were to  conclude  that such errors and
          omissions  constituted criminal  violations,  or were to conclude that
          such errors and omissions  resulted in the  submission of false claims
          to federal  healthcare  programs,  Apria could face  criminal  charges
          and/or  civil  claims,  administrative  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.  Such  amounts  could
          include  claims for treble  damages and penalties of up to $10,000 per
          false claim submitted by Apria to a federal healthcare  program. It is
          Apria's  position  that  the  assertion  of  criminal  charges  or the
          assertion of any such claims would be unwarranted. If any such charges
          or claims were asserted, Apria believes that it would be in a position
          to assert numerous defenses.  However, no assurance can be provided as
          to the outcome of any such possible proceedings.

               Presently,  Apria is unaware of what  claims or  proceedings,  if
          any,  the  government  may be  contemplating  with  respect  to  these
          investigations.

               Apria  was named as a  defendant  in a qui tam  lawsuit  filed in
          January 1998 in the U.S.  District Court for the Northern  District of
          Georgia, Atlanta Division, Corsello v. Lincare, Inc., et al. (Case No.
          1:98-CV-O204-ODE).  Apria was never served with the Complaint. On July
          14,  1999,  the  plaintiff  filed an Amended  Complaint  that does not
          include Apria among the defendants.

               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 the company'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
               -------  ---------

               3.1      Certificate of Amendment of Certificate of Incorporation
                        of Apria Healthcare Group Inc.

               4.1      Amendment No.2 to the Rights Agreement dated as of April
                        20, 1999, by and between Apria Healthcare Group Inc. and
                        Norwest Bank  Minnesota, N.A.  Incorporated by reference
                        to the Registrant's Form 8-A/A, filed on April 21, 1999.

               4.2      Amendment  No.3  to the Rights Agreement dated as of May
                        17, 1999, by and between Apria Healthcare Group Inc. and
                        Norwest Bank Minnesota,  N.A.  Incorporated by reference
                        to the Registrant's  Form 8-A/A, filed  on May 19, 1999.

               27.1     Financial Data Schedule

               (b)      Reports on Form 8-K:

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

<PAGE>



                                   SIGNATURES




Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                            APRIA HEALTHCARE GROUP INC.
                            ---------------------------
                                    Registrant



August 12, 1999             /s/  JOHN C. MANEY
                            ----------------------------------------------------
                            John C. Maney
                            Executive Vice President and Chief Financial Officer
                            (Principal Financial Officer)