APR Apria Inc

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

Amendment No. 1

For the fiscal year ended December 31, 2021

OR

For The Transition Period From               To

Commission file number: 001-40053

Registrant’s telephone number, including area code: (800) 990-9799

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐ No ☒

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically; every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.0405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2021 (based on the closing price per share as reported on the Nasdaq Stock Market LLC on the last business day of the registrant’s most recently completed second fiscal quarter), was approximately $419.2 million.

As of March 22, 2022, there were 35,741,270 shares of the registrant’s common stock outstanding.

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DOCUMENTS INCORPORATED BY REFERENCE

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None.

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EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K/A (this “Amendment”) is being filed by Apria, Inc. (the "Company") to amend the Annual Report on Form 10-K for the year ended December 31, 2021 filed by the Company with the Securities and Exchange Commission (the "SEC") on March 1, 2022 (the “Original Report”) to include the information required to be disclosed by Part III, Items 10 through 14 of Form 10-K. This information was previously omitted from the Initial Form 10-K in reliance on General Instruction G(3) to Form 10-K. In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Part III, including Items 10 through 14 of the Initial Form 10-K, is hereby amended and restated in its entirety. Except for Items 10 through 14 of Part III, no other information included in the Original Report is changed by this amendment.

This Amendment consists solely of the preceding cover page, this explanatory note, the information required by Part III, Items 10, 11, 12, 13, and 14 of Form 10-K, a signature page and certifications required to be filed as exhibits. We are amending Part IV solely to add those certifications.

This Amendment does not amend, update or change any other item or disclosure in the Original Report or reflect events that occurred after the date of the Original Report. Therefore, this Amendment should be read in conjunction with the Original Report and the Company’s other filings made with the SEC subsequent to the filing of the Original Report.

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Robert P. Walker has served as our Executive Vice President, Managed Care since April 2013. Prior to his assuming this role, Mr. Walker served as our Vice President of Sales from 1998 through 2002 and was later Chief Sales Officer and President for the oncology laboratory division at Poplar Healthcare from 2010 to 2013. Mr. Walker served on the boards of Valet Living, LLC and Evident, LLC and was Chairman-elect of the Oklahoma State Alumni Association. He currently serves on the board of University FanCards LLC. Mr. Walker holds a B.S. in Marketing and Management from Oklahoma State University.

Michael-Bryant Hicks has served as our Executive Vice President, General Counsel and Corporate Secretary since March 2021. Prior to joining the Company, Mr. Hicks was the Executive Vice President, General Counsel and Corporate Secretary for Elanco Animal Health Incorporated from September 2018 to March 2021 and served as General Counsel of the Elanco Animal Health division of Lilly from May 2018 to September 2018.  Prior to Elanco, Mr. Hicks served in various legal roles, including General Counsel at Mallinckrodt plc, a specialty pharmaceutical company, from 2016 to 2018, Senior Vice President, General Counsel and Corporate Strategy at The Providence Service Corporation, a social services company, from 2014 to 2016 and as Assistant General Counsel at DaVita Inc., a health care company, from 2011 to 2013.  Mr. Hicks holds a B.A., Psychology, with distinction from the University of North Carolina at Chapel Hill, a J.D. from Yale Law School, and was also a Fulbright Scholar.

Angela Fyfe serves as our Executive Vice President, Enterprise Services, which includes customer service, field shared services, marketing and product management. Ms. Fyfe brings over 25 years of executive experience in diverse industries including healthcare, financial services, and retail, serving in a variety of leadership positions within operations, customer care, sales, marketing, and client services. Ms. Fyfe joined Apria in 2016 as the Vice President, Customer Care Center Customer Service Operations and prior to joining Apria, she was the Chief Operating Officer for LIFENEXUS, a healthcare technology company that filed for Chapter 7 bankruptcy protection in January 2016. Ms. Fyfe earned her B.A. in marketing at the University of Tulsa and her M.B.A. from the University of Phoenix.

Mark E. Litkovitz has served as our Executive Vice President, Chief Information Officer since January 2014. Prior to assuming this role, Mr. Litkovitz led multiple areas of our IT organization since April 2009. Mr. Litkovitz previously spent 24 years in IT services, primarily with Perot Systems. Mr. Litkovitz holds a B.S. in Computer Science from the University of Akron in Ohio.

Celina M. Scally has served as our Senior Vice President, Chief Human Resources Officer since 2013 and has been with the Company since 1990. In her current role, Ms. Scally is responsible for managing all aspects of the Company’s human resources department. Prior to assuming this role, Ms. Scally served the Company in progressively more responsible roles from roles in the field organization in both billing and customer service, to Director, Customer Service and Training & Development to Vice President, Organizational Effectiveness & Change Management. Ms. Scally holds a Bachelor of Science in Business from the University of Phoenix.

John G. Figueroa first became one of our directors in November 2012 when he joined us as Chairman of our Board of Directors and was reappointed to the Board when the Company was reorganized in 2014. Mr. Figueroa also served in the dual roles as Chief Executive Officer of the Company and of our home infusion therapy segment, Coram LLC, from November of 2012 until January 16, 2014, when the infusion therapy business was sold to CVS Caremark and the Company was reorganized. In addition to his current role as a director with the Company, Mr. Figueroa is the Chairman and CEO of CarepathRx, a company providing innovative pharmacy solutions to Hospital Health Systems centered on end-to-end service for all pharmacy needs including Specialty, Infusion, and continuous home solutions for all prescriptions. Previously, he was the Chief Executive Officer of Genoa Healthcare, the leading behavioral health specialty pharmacy in the United States, since July 2014. Prior to his appointment to these roles, Mr. Figueroa served as CEO and Board Member of Cincinnati, Ohio-based Omnicare, Inc., a Fortune 500 healthcare services company that provided pharmaceuticals and related services to long-term care facilities and specialized drugs for complex disease states. Before that, Mr. Figueroa served as President of McKesson Corporation's U.S. Pharmaceutical Group from 2006 to 2010, after holding progressively more responsible operations and sales positions in the company's Supply Solutions, Pharmaceutical and Health Systems groups from 1997 through early 2006. He spent the initial years of his career in various sales and operations roles for Baxter Healthcare Corporation's Hospitex and Medical Surgical divisions. Mr. Figueroa currently serves on the Board as Chairman of the Compensation Committee and Director on the Nominating and Governance Committee of Reliance Steel & Aluminum Co. Mr. Figueroa holds Bachelor's degrees in both English

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Literature and Political Science from the University of California at Los Angeles, where he was a distinguished military graduate. He also holds a Master's Degree in Business Administration from Pepperdine University,.

Michael Audet became one of our directors in June 2019. Mr. Audet is a Managing Director at Blackstone in Strategic Partners. Since initially joining Blackstone in 2010, Mr. Audet previously worked in Blackstone’s private equity business where he was involved in the execution of Blackstone’s investments in Paysafe, First Eagle Asset Management, Tradesmen International, Summit Materials, and Apria Healthcare. Mr. Audet received an AB in mathematics from Dartmouth College, where he graduated summa cum laude and was elected to Phi Beta Kappa, and a Masters of Business Administration with Distinction from Harvard Business School. He is also a Co-Chair of the New Wave Steering Committee for Film at Lincoln Center.

Susannah Gray became one of our directors in May 2021. Ms. Gray was the Executive Vice President and Chief Financial Officer of Royalty Pharma (the largest aggregator of pharmaceutical royalty interests worldwide) from January 2005 through November 2018, at which point she took on the additional responsibility of heading Strategy for the company. Prior to joining Royalty Pharma, Ms. Gray had a 14-year career in banking, working in various capacities within high-yield and structured finance departments of Chase Securities, Merrill Lynch, and CIBC World Markets. In addition to the Apria board, Ms. Gray currently serves on the board of directors of 4D Molecular Therapeutics, where she serves on the Audit Committee and chairs the Compensation Committee, Maravai Life Sciences where she chairs the Audit Committee, and Morphic Therapeutics, where she sits on the Audit Committee. She is also a board member of the private company, BioSplice Therapeutics. Ms. Gray sits the board of a number of nonprofit organizations, including Wesleyan University, Colby College Museum of Art, the Susan G. Komen Foundation, Street Squash, and the German Marshall Fund. Ms. Gray earned a B.A. with honors from Wesleyan University and an M.B.A. from Columbia University.

Teresa Kline became one of our directors in May 2021. Ms. Kline served as the Executive Vice President of Henry Ford Health System (HFHS) a health care provider, and the President and Chief Executive Officer of Health Alliance Plan, a health insurance company and subsidiary of HFHS from November 2016 through June 2019. From July 2014 to November 2016, Ms. Kline provided healthcare consulting services. Ms. Kline served as Senior Vice President and Chief Health Care Management Officer of Health Care Service Corporation (a health insurance company) from March 2010 to March 2014. . Since January 2022, Ms. Kline has also served as a member of the board of directors of Presbyterian Healthcare Services (a private non-profit integrated delivery system in New Mexico). Since November 2019, Ms. Kline has served as a member of the board of directors of Amedisys, a home health and hospice company. Since August 2017, Ms. Kline has served as a member of the board of directors of Intersect ENT, a medical device and specialty pharmaceutical company. Since August 2017, Ms. Kline has served on the board of directors of SaVida Health, an opioid use disorder treatment company Ms. Kline holds a B.A. from Kalamazoo College and an M.P.H. from the University of Michigan.

John R. Murphy became one of our directors in August 2019. Mr. Murphy currently serves on the Board of Directors of O’Reilly Automotive, Inc., Alight Solutions LLC and Summit Materials, Inc. Previously, he served on the Board of Directors of DJO Global, Inc., Graham Packaging, Inc. and Accuride Corporation, Inc. He previously served as Interim Chief Financial Officer of Summit Materials, Inc. in 2013, Senior Vice President and Chief Financial Officer of Smurfit-Stone Container Corporation from 2009 to 2010, and Chief Financial Officer, then President and Chief Operating Officer, then President and Chief Executive Officer with Accuride Corporation, Inc. from 1998 to 2008. Mr. Murphy holds a Bachelor of Science in Accounting from Pennsylvania State University and a Master of Business Administration from the University of Colorado, and is a Certified Public Accountant.

Norman C. Payson, M.D. first became one of our directors in 2006 and served as our Executive Chairman of the Board of Directors and Chief Executive Officer from October 2008 until November 2012 when he retired as Executive Chairman and as Chief Executive Officer and became a Senior Advisor to us while remaining a member of our Board of Directors and he is a member of the Nominating and Governance Committee. He was Chief Executive Officer of Oxford Health Plans from 1998 through 2002. Dr. Payson co-founded Healthsource, Inc., a large health plan operating in 15 states, in 1985 and served as its Chief Executive Officer from 1985 through 1997. He currently serves as Lead Director of the Board of Directors of Access Clinical Partners, an integrated urgent care health network operating in ten states, and effective June 2021 Chairman of the Board of Implantable Provider Group, a device benefit management provider.

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He is also Chairman Emeritis of the Board of Directors of City of Hope, a not-for-profit tertiary cancer hospital and research center, and serves as a Board Member of its subsidiaries AccessHope and the Beckman Research Institute. Dr. Payson has been a member of the Board of Directors of Evolent Health Holdings Inc. from December 2013until June 2019 and a Consultant of Evolent Health Holdings Inc. from March 2014 to December 2020. He is also a board member of Progyny, a fertility benefits provider where he also serves on the Audit Committee and Nominating and Governance Committee, and also serves as a Director of Smile Brands, one of the nation’s leading Dental Support Organizations with over 350 locations across 15 states. Since January 2022 he also serves on the board of Executive Service Corps of Southern California, a not-for- profit philanthropy consulting organization. Dr. Payson is an Emeritus Board Member of Geisel School of Medicine at Dartmouth, and a member of the Mailman School of Public health at Columbia HPM National Advisory Board, and a member of the USC Schaeffer Center Advisory Board. From May 2017 to August 2019 Dr. Payson was a board member of The Center for Orthopedic and Research Excellence, Inc. Dr. Payson is on the board of Kiva Foundation, a private charitable foundation organized by Dr. Payson and his wife on June 15, 1998. He holds a BS from the Massachusetts Institute of Technology in Cambridge, Massachusetts and received his medical degree from Dartmouth Medical School

Devon Rinker became one of our directors in February 2021. Mr. Rinker is a Principal in Blackstone’s Private Equity Group. Since joining Blackstone in 2017, Mr. Rinker has been involved with Blackstone’s investments in International Data Group, Interior Logic Group, HealthMarkets, NCR, SERVPRO, and Exeter Finance. He currently serves as a Director of Interior Logic Group and previously served as a Director of HealthMarkets. Before joining Blackstone, Mr. Rinker was an Associate at KKR, where he evaluated and executed private equity investments in the technology, media and communications industries. Prior to that, he worked in investment banking at Evercore Partners. Mr. Rinker received a B.S. in Commerce from the University of Virginia, where he graduated with distinction and Beta Gamma Sigma, and an M.B.A. from Harvard Business School.

Neil P. Simpkins became one of our directors immediately after the completion of our acquisition by private investment funds affiliated with our Sponsor in October 2008. He is a Senior Managing Director of Blackstone’s Corporate Private Equity Group. Since joining Blackstone in 1998, Mr. Simpkins has led the acquisitions of TRW Automotive, Vanguard Health Systems, TeamHealth, Gates Industrial Corporation plc, Change Healthcare and Summit Materials. Before joining Blackstone, Mr. Simpkins was a Principal at Bain Capital. While at Bain Capital, Mr. Simpkins was involved in the execution of investments in the consumer products, industrial, healthcare and information industries. Prior to joining Bain Capital, Mr. Simpkins was a consultant at Bain & Company in the Asia Pacific region and in London. He currently serves as a director of Change Healthcare Inc., Gates Industrial Corporation plc and TeamHealth Holdings, Inc. Mr. Simpkins graduated with honors from Oxford University and received his MBA from Harvard Business School.

Lynn Shapiro Snyder became one of our directors in August 2019. Ms. Snyder currently is a senior Member of Epstein Becker Green (“EBG”) in the Health Care and Life Sciences and Litigation practices in the firm’s Washington, DC office, and she is a Strategic Advisor with EBG Advisors, Inc. Ms. Snyder has over 40 years of experience at EBG, advising a wide variety of clients about federal, state, and international health law/policy/commercial issues, including Commercial Payor, Medicare, Medicaid, TRICARE, VA, compliance and managed care issues. Ms. Snyder is also Founder and President of the Women Business Leaders of the U.S. Health Care Industry Foundation (“The WBL Foundation”). Ms. Snyder currently is a board member of the following companies: The Trustmark Mutual Holding Company on the Audit and Compensation Committees, EBG as the Vice Chair of Finance Committee; and The WBL Foundation as the Chairperson of the Board. She is a graduate of Franklin & Marshall College and George Washington University National Law Center.

Mike S. Zafirovski became one of our directors in October 2011. Mr. Zafirovski is the founder and president of The Zaf Group LLC, which he established in November 2012. Since October 2011, Mr. Zafirovski has served as an Executive Advisor to The Blackstone Group Inc. and serves on the boards of certain Blackstone portfolio companies. Previously, he served as director, President and Chief Executive Officer of Nortel Networks Corporation from November 2005 to August 2009. Prior to that, Mr. Zafirovski was director, President and Chief Operating Officer of Motorola, Inc. (“Motorola”) from July 2002 to January 2005, and remained a consultant to and a director of Motorola until May 2005. He served as Executive Vice President and President of the Personal Communications Sector (mobile devices) of Motorola from June 2000 to July 2002. Prior to joining Motorola, Mr. Zafirovski spent nearly 25 years with

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General Electric Company, where he served in management positions, including 13 years as President and Chief Executive Officer of five businesses in the industrial and financial services arenas, his most recent being President and Chief Executive Officer of GE Lighting from July 1999 to May 2000. Mr. Zafirovski also serves on the board of Stericycle, Inc. and served on the board of the Boeing Company for 16 years until retiring in May 2020. Mr. Zafirovski holds a B.A. in Mathematics from Edinboro University in Pennsylvania.

There are no family relationships among any of our executive officers and directors.

Composition of the Board of Directors

Our business and affairs are managed under the direction of our board of directors. Our certificate of incorporation provides for a classified board of directors, with four directors in class I (Ms. Kline, Dr. Payson and Messrs. Simpkins and Starck) whose term will expire at our 2022 annual meeting of stockholders, four directors in class II (Ms. Gray and Messrs. Audet, Figueroa and Zafirovski) whose term will expire at our 2023 annual meeting of stockholders and three directors in class III (Messrs. Murphy and Rinker and Ms. Snyder) whose term will expire at our 2024 annual meeting of stockholders. In addition, we are party to a stockholders agreement with certain affiliates of Blackstone Inc. (our “Sponsor”). This agreement grants our Sponsor the right to designate nominees to our board of directors subject to the maintenance of certain ownership requirements in us. See “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence.”

Director Independence

Our board of directors has affirmatively determined that each of Messrs. Figueroa, Audet, Murphy, Rinker, Simpkins and Zafirovski, Dr. Payson and Mses. Gray, Kline and Snyder qualify as independent directors under the Nasdaq listing standards.

Background and Experience of Directors

When considering whether directors and nominees have the experience, qualifications, attributes or skills, taken as a whole, to enable our board of directors to satisfy its oversight responsibilities effectively in light of our business and structure, the board of directors focuses primarily on each person’s background and experience as reflected in the information discussed in each of the directors’ individual biographies set forth above. We believe that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business. In particular, the members of our board of directors considered the following important characteristics, among others:

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Board Committees

Our board of directors has established the following committees: an audit committee, a compensation committee, a compliance committee and a nominating and corporate governance committee. The composition and responsibilities of each committee are described below. Our board of directors may also establish from time to time any other committees that it deems necessary or desirable. Members serve on these committees until their resignation or until otherwise determined by our board.

Each of the standing committees of the board of directors discussed below operate under written charters. The charters for our audit committee, compensation committee and nominating and corporate governance committee are available on our website under https://ir.apria.com/corporate-governance/governance-overview. The information contained on, or accessible from, our website is not a part of this report by reference or otherwise.

Audit Committee

Our audit committee consists of Mr. Murphy, Ms. Gray and Ms. Kline, with Mr. Murphy serving as chair. Each member of the Audit Committee has sufficient knowledge in financial and auditing matters to serve on the Audit Committee. In addition, Mr. Murphy and Ms. Gray meet the Nasdaq listing standard of financial sophistication and are “audit committee financial experts” under the SEC rules. Our audit committee is responsible for, among other things:

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Each member of the Audit Committee has been affirmatively determined by our board of directors to qualify as an independent director under the Nasdaq listing standards and the independence standards of Rule 10A-3 of the Exchange Act.

Compensation Committee

Our compensation committee consists of Mr. Figueroa, Mr. Rinker and Mr. Simpkins, with Mr. Simpkins serving as chair. The compensation committee is responsible for, among other things:

Our Board of Directors has determined that each member of the Compensation Committee is “independent” as defined under the Nasdaq listing standards.

Compliance Committee

Our compliance committee consists of Mr. Rinker, Ms. Snyder and Mr. Zafirovski, with Ms. Snyder serving as chair. The compliance committee is responsible for, among other things, assisting the board of directors in the review and oversight of matters related to compliance with federal health care program requirements and overseeing monitoring of internal and external audits and investigations.

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Nominating and Corporate Governance Committee

Our nominating and corporate governance committee consists of Mr. Murphy, Dr. Payson and Mr. Simpkins, with Mr. Simpkins serving as chair. The nominating and corporate governance committee is responsible for, among other things:

Our Board of Directors has determined that each member of the Nominating and Corporate Governance Committee is “independent” as defined under the Nasdaq listing standards.

Compensation Committee Interlocks and Insider Participation

None of our executive officers serves as a member of the board of directors or compensation committee (or other committee performing equivalent functions) of any entity that has one or more executive officers serving on our board of directors or compensation committee.

Code of Ethics

We have a Code of Conduct that applies to all of our officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions, which is posted on our website. Our Code of Conduct is a “code of ethics,” as defined in Item 406(b) of Regulation S-K. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our Code of Conduct on our website. The information contained on, or accessible from, our website is not part of this report by reference or otherwise.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires our directors and certain officers, as well as persons who beneficially own more than 10% of the outstanding shares of our common stock, to file reports regarding their initial stock ownership and subsequent changes to their ownership with the SEC. Except as previously reported and based solely on our review of copies of such reports, written representations and other information otherwise available to us, we believe that, during 2021, no director, executive officer, chief accounting officer or beneficial owner of more than 10% of our common stock failed to timely file a report required pursuant to Section 16(a) of the Exchange Act, except that, due to administrative error, two Form 4s were filed late on behalf of Debra Morris to report the grant and vesting of certain cash-settled restricted stock units and one Form 4 was filed one day late on behalf of John Figueroa to report a sale of shares pursuant to a Rule 10b5-1 trading plan.

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As a result of the analysis, we have developed a market-competitive director compensation program for our non-employee, non-Sponsor affiliated directors. The program provides eligible directors with an annual compensation package consisting of $90,000 as an annual cash retainer (payable quarterly in arrears) and $150,000 in value of restricted stock units (payable annually). All of our directors are reimbursed for their reasonable out-of-pocket expenses related to their service as directors. On June 10, 2021, each of our non-employee, non-Sponsor directors was granted 5,059 RSUs for their service in 2021, which RSUs will vest on the earlier of (i) June 10, 2022 and (ii) the first regularly scheduled annual meeting of the stockholders of the Company following the grant date.

As part of this program, the independent chairperson of the Board will receive an additional $100,000 in cash or restricted stock units (at the election of the director). The respective chairpersons of the Audit Committee, Compliance Committee, Compensation Committee, and Nominating & Corporate Governance Committee (unless such chairperson is also the chairperson of the Board) will receive an additional $22,000, $20,000, $15,000, and $12,000, respectively. Members of the Audit Committee, Compliance Committee, Compensation Committee, and Nominating & Corporate Governance Committee (excluding the committee chairperson) receive an annual cash retainer of $11,000, $10,000, $7,500 and $6,000, respectively.

Executive Compensation

Compensation Discussion and Analysis

Introduction. Our executive compensation plan is designed to attract and retain individuals qualified to manage and lead our Company and to also motivate them to contribute to the achievement of our financial goals and ultimately create and grow our equity value.

Our named executive officers for 2021 were:

Executive Compensation Objectives and Philosophy. Our primary executive compensation objectives are to:

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To achieve our objectives, we have delivered executive compensation through a combination of the following components:

We provide competitive base salaries and other benefits, including severance benefits, to attract and retain senior management talent. We have also used annual cash incentive compensation and long-term cash and equity incentives to ensure a performance-based delivery of pay that aligns as closely as possible the rewards of our named executive officers with the long-term interests of our equity-owners while enhancing executive retention.

Compensation Determination Process

Role of Board and Management. Prior to our IPO, executive compensation and related decisions have been made by the Board of Directors of our subsidiary, Apria Healthcare Group. In connection with our IPO, our Board of Directors established a compensation committee that assumed responsibility for establishing, maintaining and administering our compensation and benefit policies. Except where the context requires otherwise, the terms “Board,” “Board of Directors” and “compensation committee” as used in this “Executive Compensation” section refer to the Board of Directors or compensation committee, as applicable, of Apria, Inc.

Over the course of the year, Mr. Starck participates in discussions and deliberations with our compensation committee regarding the determinations of annual cash incentive awards for our executives other than for himself. Specifically, he makes recommendations to our compensation committee regarding the performance targets to be used under our annual executive bonus plan and the amounts of annual cash incentive awards and any discretionary bonus amounts to be made to our senior executives. Mr. Starck also makes recommendations to our compensation committee regarding base salary adjustments for other executives based on their annual review of each executive’s performance. Our compensation committee considers these recommendations and may exercise discretion in modifying them.

Role of the Independent Compensation Consultant. In February 2021, the compensation committee retained Aon to support the oversight and management of our executive compensation program. Aon has performed a variety of work, including but not limited to: assisting in the development of a market-based director compensation program, conducting a review of the competitiveness of our executive compensation program, evaluating a post-IPO long-term equity incentive award program and developing stock ownership guidelines.

Peer Group. Our peer group for 2021 was established by our compensation committee with input from Aon and reflects a group of companies with similar or adjacent business models and who source talent from the same labor pools as the Company.

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The compensation committee has used the peer group as a reference point when reviewing the competitiveness of our executive compensation program, making executive compensation decisions, and assisting with the design and operation of our annual incentive plan and long-term incentive awards.

Employment Agreements. For retention purposes, we entered into an employment agreement with Mr. Starck. A full description of the material terms of Mr. Starck’s employment agreement is presented below in the narrative section following the “Grants of Plan-Based Awards in 2021” table.

Compensation Elements.

The following is a discussion and analysis of each component of our executive compensation program.

Base Salary. Base salary compensates executives for performing requirements of their positions and provides executives with a level of cash income predictability and stability with respect to a portion of their total compensation. Base salaries may be adjusted annually and, in certain circumstances, adjusted mid-year to deal with competitive pressures or changes in job responsibilities.

As noted above, in May 2021, with the assistance of the Aon, we conducted a review of the competitiveness of our executive compensation program. With Aon’s assistance, we compared total direct compensation (i.e., sum of base salary, short-term incentive cash compensation and the value of long-term incentives) against both our peer group data and market data provided by Aon and used it as a reference point to provide a framework for fiscal 2021 executive compensation decisions. In order to meet our goal of generally setting total target direct compensation for our executive officers at the peer group median, we determined it was appropriate to increase the base salaries for Mr. Starck and Ms. Morris, effective May 31, 2021, as follows: Mr. Starck (from $594,500 to $650,000) and Ms. Morris (from $425,000 to $475,000). Base salaries for our other named executive officers were unchanged in fiscal 2021 and are reflected in the “Summary Compensation Table” below.

Bonuses.

2021 Annual Cash Incentive Compensation. Annual cash incentive awards are available to our named executive officers under our annual executive bonus plan in order to motivate our executive officers to achieve short-term performance goals and tie a portion of their cash compensation to performance.

Executive Bonus Plan. Under our Executive Bonus Plan for 2021 (the “2021 Bonus Plan”), each named executive officer who participated in the 2021 Bonus Plan was eligible to earn a cash incentive award based on achievement of performance targets for 2021. These performance targets were determined by our compensation committee early in the year, after taking into consideration Mr. Starck’s recommendations and our budget for the year. The potential amount of the cash incentive award was based on a percentage of the executive officer’s base salary during 2021. With respect to Mr. Starck, the compensation committee, in consultation with Aon, determined to increase his target bonus opportunity under the 2021 Bonus Plan from 100% of base salary to 120% of base salary.

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The following table illustrates the 2021 potential target and maximum cash incentive awards expressed as a percentage of their base salaries for our named executive officers who were eligible to receive a 2021 bonus under the 2021 Bonus Plan:

In 2021, the cash incentive award opportunities were based on a net revenue target which accounted for 30% of the total award opportunity, an adjusted EBITDA target which accounted for 25% of the total award opportunity, an adjusted EBITDA less Patient Equipment Capex target which accounted for 25% of the total award opportunity and an independent business objective target, which accounted for 20% of the total award opportunity. The compensation committee has reserved the ability to adjust the actual fiscal year results to exclude the effects of extraordinary, unusual or infrequently occurring events. For purposes of the 2021 plan, adjusted EBITDA and adjusted EBITDA less Patient Equipment Capex are defined in the section entitled “Non-GAAP financial information” in the Original Report. Under our 2021 Bonus Plan, no cash incentive award was to be made with respect to any performance metric unless 100% of the target was met. Actual results excluded the impacts of acquisitions and the effects of other extraordinary, unusual or infrequently occurring events.

The payout percentages are increased on a linear basis from 100% to the named executive officer’s applicable maximum bonus opportunity percentage for net revenue achievement between $1,134.3 million and $1,235.4 million, adjusted EBITDA achievement between $217.0 million and $257.9 million, adjusted EBITDA less Patient Equipment Capex achievement between $122.3 million and $145.3 million and the independent business objective (“IBO”) based on individual performance relative to the established objectives for each member of the plan.

Actual results, payout percentages and the resulting achievement factors for the 2021 Bonus Plan were certified by the compensation committee, as follows, based on the performance goals and funding scales described above. The weighted achievement factor for each of the performance metrics was determined by multiplying the weight attributed to each performance metric by the applicable payout percentage for each metric.

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Notwithstanding the establishment of the performance goals and the formula for determining the cash incentive award payment amounts as described above, our compensation committee had the ability to exercise positive or negative discretion and award a greater or lesser amount to a named executive officer than the amount determined by the above formula if, in the exercise of its business judgment, our compensation committee determined that a greater or lesser amount was warranted under the circumstances. Our compensation committee did exercise this discretion with respect to the 2021 Bonus Plan and granted Mr. Hicks a discretionary bonus in the amount of $46,731.

Actual annual cash incentive awards under the 2021 Bonus Plan were calculated by multiplying each named executive officer’s target bonus opportunity by the combined weighted achievement of the performance metrics described above. The following table summarizes the 2021 annual cash incentive awards earned based on actual performance, as compared to the target opportunity for each named executive officer:

Other Cash Bonuses. From time to time, we may award sign-on and discretionary bonuses. Sign-on bonuses are used only when necessary to attract highly skilled officers to the Company. Generally, they are used to incentivize candidates to leave their current employers or may be used to offset the loss of unvested compensation they may forfeit as a result of leaving their current employers.

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Long-Term Cash Incentive Compensation.

2019 LTIP. In December 2019, our Board of Directors approved the Amended and Restated Apria Healthcare Group, Inc. Long-Term Incentive Plan (2019 – 2021 With Successive Annual Extension Options) (which was assumed by the Company in connection with our IPO and renamed the Second Amended and Restated Apria, Inc. Long-Term Incentive Plan (2019-2021 With Successive Annual Extension Options), the “2019 LTIP”) and awarded long-term cash incentive awards to our named executive officers under the 2019 LTIP for the performance period beginning January 1, 2019 and ending December 31, 2021. The purpose of the 2019 LTIP is to incentivize free cash flow improvement and the transformational changes needed to position the Company properly for the future.

The 2019 LTIP award opportunities are based on the achievement of specified cumulative free cash flow targets during the applicable performance periods. Based on achievement of the cumulative performance goals a participant can earn between 50% of their target award amount for threshold achievement and 200% of their target award amount for maximum achievement.

Following our IPO, pursuant to the terms of the 2019 LTIP, the 2019 LTIP awards will be settled in shares of our common stock issued pursuant to our Omnibus Incentive Plan (as described below), with the number of shares determined by dividing the actual amount of each executive’s award by $22.11, the volume-weighted average price of a share of our common stock over the 20 trading days following our IPO, beginning on the first trading date of our common stock on Nasdaq. Based on the Company’s cumulative free cash flow achievement through December 31, 2021, the 2019 LTIP Awards vested at 200% of the target amount. The shares in respect of the 2019 LTIP awards were delivered in March 2022, in all cases subject to the applicable participant remaining employed on the applicable payment date.

In June 2020, our Board of Directors awarded additional long-term cash incentive awards to our named executive officers under the 2019 LTIP for the performance period beginning January 1, 2020 and ending December 31, 2022. Mr. Starck was awarded an award with a target value of $200,000 and Ms. Morris was awarded an award with a target value of $100,000. Messrs. Walker and Litkovitz were each awarded an award with a target value of $75,000.

Omnibus Incentive Plan. In connection with our IPO, our Board of Directors adopted, and our stockholders approved, our Omnibus Incentive Plan, which has allowed us to implement a new market-based long-term incentive program to align our executive compensation package with similarly situated public companies, as described further below.

2021 Long-Term Equity Incentive Awards. In May 2021, with the assistance of Aon, we approved a new long-term equity incentive program. After reviewing the market data provided by Aon, we determined to provide our named executive officers with equal mix of time-based restricted stock units (“RSUs”) and performance stock units (“PSUs”). 

The time-based restricted stock units will vest in equal annual installments on the first three anniversaries of the grant date, subject to the executive’s continued employment through the applicable vesting date. The performance stock units will generally vest upon completion of the three-year performance period, subject to the executive’s continued employment through the applicable vesting date, if the applicable performance goals, based on Adjusted EBITDA less Patient Equipment Capex, are attained. The table below summarizes the RSU awards granted to our named executive officers in 2021:

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The target PSU dollar values were converted into a number of PSUs based on the average of the high and the low share price of the Company’s common stock on the Nasdaq on the grant date. The PSUs provide that the award will vest if the Company achieves specified Adjusted EBITDA less Patient Equipment Capex performance goals over a three-year performance period ending December 31, 2023. Following the three-year performance period, the compensation committee will determine the achievement levels under the performance measure and the number of performance shares earned. The Company believes that the goals are challenging and will require significant performance to achieve. The total number of PSUs that may vest based is based on the percentages shown in the table below. For actual performance between the specified threshold, target, above target and maximum levels, the resulting payout percentage will be adjusted on a linear basis.

If the executive’s employment terminates for any reason, all unvested RSUs will be forfeited. With respect to PSUs: (i) if the executive undergoes a termination by the Company without “Cause” (as defined in the Omnibus Incentive Plan) or by reason of the executive’s Retirement (as defined in the PSU Award Agreement), in each case, prior to a change in control, then, subject to the executive’s compliance during the performance period with any applicable restrictive covenants, a portion of the PSUs will remain outstanding and eligible to vest based on target performance at the end of the performance period, pro-rated based on the number of completed quarters the executive was employed during the performance period; (ii) if the executive undergoes a termination by the Company by reason of the executive’s death or disability, in each case, prior to a change in control, then a portion of the PSUs will remain outstanding and eligible to vest based on actual performance at the end of the performance period, pro-rated based on the number of completed days the executive was employed during the performance period; and (iii) in the event that a change in control prior to the last day of the performance period, then, subject to the executive’s continued employment as of the date of the change in control, then, subject to the executive’s continued employment or service, as applicable, with the Company through the end of the performance period, the PSUs shall be converted into time-based vesting shares of RSUs (the “Converted PSUs”) based on the greater of (a) the target PSUs granted to the executive and (b) the Company’s achievement of the performance condition measured as of immediately prior to such change in control. In the event of a change in control, if (i) the Converted PSUs would not otherwise be continued, converted, assumed or replaced by the Company or a successor entity thereto in connection with such change in control or (ii) the executive undergoes a termination by the Company or successor without “Cause,” or by reason of the executive’s retirement, death or disability, in each case, within 18 months following such change in control but prior to the performance period end date, the Converted PSUs shall vest as of the date of such change in control or termination, as applicable, and be settled as soon as reasonably practicable (and, in any event, within two and one-half months).

Broad-based Employee Benefits. We provide to all of our employees, including our named executive officers, broad-based benefits that are intended to attract and retain employees while providing them with retirement and health and welfare security. Broad-based employee benefits include:

Under our 401(k) savings plan, we match a portion of the funds set aside by the employee. The maximum match available under the 401(k) savings plan is 25% of the first 8% of the employee’s eligible contributions per pay period. For participants who became an employee before January 1, 2007, all matching contributions by us vest 20% after one year of service, 40% after two years of service and are fully vested after three years of service. For participants who

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became an employee on or after January 1, 2007, all matching contributions by us become fully vested after three years of service. In addition, we may make non-elective contributions under the 401(k) savings plan, subject to statutory limitations imposed by Internal Revenue Code of 1986, as amended (the “Code”).

At no cost to the employee, we also provide $50,000 in basic life and accident insurance coverage insurance. The employee may also select supplemental life and accident insurance, for a premium to be paid by the employee.

Supplemental Executive Benefits. We provide a nonqualified deferred compensation plan, which is also intended to attract and retain executives. The nonqualified deferred compensation plan is intended to promote retention by providing to participants a long-term savings opportunity on a tax-efficient basis. Under the nonqualified deferred compensation plan, participants may defer certain portions of their salary, annual bonus and annual 401(k) savings plan refund offset amount, as more fully explained in the narrative following the Nonqualified Deferred Compensation for 2021 Table below. In 2021, the Company matched 100% of participant contributions to the nonqualified deferred compensation plan up to 4% of the participant’s salary.

Severance Arrangements and Non-Competition Agreements. Our Board of Directors believes that severance arrangements are necessary to attract and retain the talent necessary for our long-term success. Our Board of Directors views our severance arrangements as recruitment and retention devices that help secure the continued employment and dedication of our named executive officers, including when we are considering strategic alternatives.

Each of our named executive officers has a severance arrangement with us, either as part of their employment agreement or as a separate severance agreement. Under the terms of these severance arrangements, each of the named executive officers is entitled to severance benefits if he or she is terminated by us without cause or by him or her as a result of constructive termination or for good reason, as applicable. See “—Potential Payments Upon Termination or Change-in-Control—Severance Arrangements” below for descriptions of these arrangements.

Compensation Committee Report

The compensation committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on its review and discussion with management, the compensation committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Submitted by the compensation committee of our Board of Directors:

Neil P. Simpkins, Chair

John G. Figueroa

Devon Rinker

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