Navigation Links
Hanger Orthopedic Group, Inc. Reports an Increase of 42.3% in Earnings Per Share, to $0.37 on a 10.6% Sales Increase, for the Fourth Quarter 2009
Date:2/10/2010

BETHESDA, Md., Feb. 10 /PRNewswire-FirstCall/ -- Hanger Orthopedic Group, Inc. (NYSE: HGR) announced net sales of $205.1 million for the quarter ended December 31, 2009, an increase of $19.6 million, or 10.6%, from $185.5 million in the prior year.  Earnings per share for the fourth quarter of 2009 were $0.37 per diluted share compared to proforma earnings per diluted share of $0.26 for the same period in 2008, a 42.3% increase.

The $19.6 million, or 10.6%, sales increase for the quarter ended December 31, 2009 was primarily the result of a $10.8 million, or 6.6%, increase in same-center sales in our patient care centers, a $2.4 million, or 12.1%, increase in sales of the Company's distribution segment and a $6.4 million increase principally related to sales from acquired entities. The combination of increased sales and effective expense management caused income from operations to increase by $5.6 million, or 25.4%, to $27.5 million for the fourth quarter of 2009, compared to $21.9 million last year.

Net income increased $3.6 million, or 43.7%, to $11.9 million in the fourth quarter of 2009 compared to proforma net income of $8.3 million last year. The proforma results for the fourth quarter of 2008 exclude the impact of a non-cash mark-to-market pre-tax adjustment of $0.7 million related to interest rate swaps.  In addition to improved income from operations, net income benefited from lower variable interest cost in the fourth quarter of 2009.

Net sales for the year ended December 31, 2009 increased by $57.0 million, or 8.1%, to $760.1 million from $703.1 million last year.  The sales increase was principally the result of a $29.6 million, or 4.9%, increase in same-center sales in our patient care centers, a $7.3 million, or 9.1%, increase in sales of the Company's distribution segment and a $20.1 million increase principally related to sales from acquired entities.

The growth in sales combined with effective expense management caused  income from operations to increase by  $12.8 million, or 16.5%, to $90.5 million for the year end December 31, 2009.  Operating income as a percentage of sales improved 80 basis points to 11.9% in 2009 compared to 11.1% in the prior year.

Net income applicable to common stock for year ended December 31, 2009 increased by 32.7% to $36.1 million, or $1.13 per diluted share, compared to pro forma net income applicable to common stock of $27.2 million, or $0.86  per diluted share, in the prior year.  In addition to improved income from operations, net income benefited from lower variable interest costs during 2009. The pro forma results for the year ended December 31, 2008 assume that the one-time, in-kind preferred stock dividend described below occurred and the preferred stock was converted to common stock at the beginning of the period.  Net income applicable to common stock for year ended December 31, 2008 on a GAAP basis was $21.1 million, or $0.78 per diluted share.

Cash from operations for the year ended December 31, 2008 was $73.1 million, a $19.9 million, or 37.4% increase, compared to 2008. The improvement was primarily the result of improved operating results. The Company had total liquidity of $148.5 million, comprised of $84.6 million of cash and $63.9 million available under its revolving credit facility at December 31, 2009.  

"The year 2009 presented a challenging environment due to the uncertainty surrounding proposed changes to federal health care regulations and reimbursement and the impact of the ongoing recession.  In spite of these challenges, we delivered record sales, profits and cash flows," commented Thomas F. Kirk, President and Chief Executive Officer of Hanger Orthopedic Group.  Mr. Kirk added, "The combination of an 8.1% increase in revenue and a focused effort on expense management generated an 80 basis point improvement in our operating margin.   I am proud of our employees' efforts in 2009 and I am optimistic about our opportunities in 2010."

For 2010, the Company expects revenues to be between $815 million and $825 million an increase of 7.2 % to 8.5% compared to 2009.  The Company expects diluted EPS for 2010 to be in the range of $1.27 to $1.29, which would represent a 12.4% to 14.2% increase over 2009 diluted EPS.  We expect to improve operating margins by 20-40 basis points and to generate cash flow from operations of $60 to $70 million.   During 2010 the Company will be relocating its corporate headquarters from Bethesda, Maryland to Austin, Texas and the cost of this move will be reported as a separate component of income from operations.  The Company expects to incur severance and relocation cost of approximately $10.0 million to $12.0 million, as well as, lease exit cost of approximately $3.0 million to $5.0 million.  Once complete, the Company anticipates that the move will result in a reduction of operating expenses of approximately $2.5 million to $3.5 million annually.

In June 2008, the Company's common stock performance triggered an acceleration of preferred stock dividends as a result of the Company's average closing price of its common stock exceeding the Company's forced conversion price of the Series A Convertible Preferred Stock by 200% for a 20-trading day period.  This event accelerated the payment of these dividends due from the time of the event through May 26, 2011.  The accelerated dividends were paid in the form of increased stated value of preferred stock, in lieu of cash.  As a result, the Company recorded an in-kind dividend on its preferred stock of $5.3 million in the quarter ended June 30, 2008, which represented 0.7 million additional common shares on an as-converted basis.  

Hanger Orthopedic Group, Inc., headquartered in Bethesda, Maryland, is the world's premier provider of orthotic and prosthetic patient care services. Hanger is the market leader in the United States, owning and operating 677 patient care centers in 45 states and the District of Columbia, with over 3,700 employees including 1,127 practitioners as of December 31, 2009.  Hanger is organized into four units. The two key operating units are patient care, which consists of nationwide orthotic and prosthetic practice centers, and distribution, which consists of distribution centers managing the supply chain of orthotic and prosthetic componentry to Hanger and third party patient care centers. The third is Linkia, which is the first and only provider network management company for the orthotics and prosthetics industry. The fourth unit, Innovative Neurotronics, introduces emerging neuromuscular technologies developed through independent research in a collaborative effort with industry suppliers worldwide. For more information on Innovative Neurotronics, Inc. or the WalkAide®, visit http://www.ininc.us. For more information on Hanger, visit http://www.hanger.com.

This document contains forward-looking statements relating to the Company's results of operations.  The United States Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements.  Statements relating to future results of operations in this document reflect the current views of management.  However, various risks, uncertainties and contingencies could cause actual results or performance to differ materially from those expressed in, or implied by, these statements, including the Company's ability to enter into and derive benefits from managed care contracts, the demand for the Company's orthotic and prosthetic services and products and the other factors identified in the Company's periodic reports on Form 10-K and Form 10-Q filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934.  The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.

-tables to follow-

    
    
    
    
                           Hanger Orthopedic Group, Inc.                      
         (Dollars in thousands, except for share and per share amounts)     
                                   (Unaudited)                              
                                                                            
                                 Three Months Ended      Twelve Months Ended
                                     December 31,            December 31,   
    Income Statement:              2009        2008        2009        2008 
    -----------------              ----        ----        ----        ---- 
    Net sales                  $205,104    $185,547    $760,070    $703,129 
    Cost of goods sold -                                                    
     materials                   59,512      54,915     228,295     210,323 
    Personnel costs              67,799      62,639     264,581     248,234 
    Other operating expenses     46,269      41,711     160,355     149,661 
    Depreciation and                                                        
     amortization                 4,053       4,378      16,319      17,183 
                                  -----       -----      ------      ------ 
    Income from operations       27,471      21,904      90,520      77,728 
    Interest expense              7,799       8,241      30,693      32,549 
    Unrealized (loss)/gain                                                  
     from interest rate swap          -        (738)        167        (738)
                                   ----        ----        ----        ---- 
    Income before taxes          19,672      12,925      59,994      44,441 
    Provision for income                                                    
     taxes                        7,772       5,089      23,901      17,695 
                                  -----       -----      ------      ------ 
    Net income                   11,900       7,836      36,093      26,746 
      Less preferred stock                                                 
       dividend - Series A                                                    
       Convertible Preferred                                                  
       Stock                          -           -           -       5,670 
                                  -----       -----       -----       ----- 
    Net income applicable                                                   
     to common stock            $11,900      $7,836     $36,093     $21,076 
                                =======      ======     =======     ======= 
                                                                            
    Basic Per Common                                                        
     Share Data:                                                           
    ----------------                                                        
    Net income                    $0.37       $0.25       $1.15       $0.81 
                                  =====       =====       =====       ===== 
    Shares used to compute                                                  
     basic per common share                                   
     amounts                 31,746,875  30,817,549  31,383,895  25,930,096 
                             ==========  ==========  ==========  ========== 
                                                                            
    Diluted Per Common                                                      
     Share Data:                                                            
    ------------------                                                      
    Net income                    $0.37       $0.24       $1.13       $0.78 
                                  =====       =====       =====       ===== 
    Shares used to compute                                                  
     diluted per common
     share amounts           32,401,072  32,057,689  32,068,325  27,090,817 
                             ==========  ==========  ==========  ========== 
    
    
                                      Three Months Ended   Twelve Months Ended
                                       December 31, 2008    December 31, 2008 
    Pro-forma:                                     
    ----------                                                              
    Net income applicable                                                   
     to common stock                          7,836                  21,076 
    Preferred stock dividend - Series A                                     
     Convertible Preferred Stock                                      5,670 
    Loss from interest rate swap                                            
     (net of $295 tax) (1)                      443                     443 
                                                ---                     --- 
    Pro-forma net income applicable                                         
     to common stock                         $8,279                 $27,189 
                                             ======                 ======= 
                                                                            
    Diluted Per Share Data:                                                 
    -----------------------                                                 
    Pro-forma net income                                                    
     per diluted common share                 $0.26                   $0.86 
                                              =====                   ===== 
                                                                            
    Shares used to compute diluted                                          
     per common share amounts            32,057,689              27,090,817 
    Effects of conversion of convertible                                    
     preferred stock (2)                          -               4,567,956 
                                          ---------               --------- 
    Shares used to compute diluted                                          
     per common share amounts,                                               
     Pro-forma basis                     32,057,689              31,658,773 
                                         ==========              ========== 
                                                                            
    
    (1) The loss from interest rate swap results from ineffectiveness that 
        occurred during the quarter and year ending December 31, 2008. The 
        Company fully intends to hold the swap until its maturity in 
        May 2011, in which case the valuation reserve will over time reverse 
        and result in our recording an equal amount of income.  
    
    (2) Assumes Preferred Stock dividend acceleration event occurred 
        January 1, 2008.  The Company believes the presentation of the 
        pro-forma results, adjusted for the effects of the acceleration of 
        the Preferred Stock dividend at the beginning of the period, is more 
        reflective of the Company’s current diluted operating results and 
        provides investors with additional useful information to measure the 
        Company’s on-going performance. 
    
    
                                  Three Months Ended     Twelve Months Ended 
    Income Statement                 December 31,            December 31, 
     as a % of Net Sales:          2009        2008        2009        2008 
    ---------------------          ----        ----        ----        ---- 
    Net sales                     100.0%      100.0%      100.0%      100.0%
    Cost of goods sold -                                                    
     materials                     29.0%       29.6%       30.0%       29.9%
    Personnel costs                33.0%       33.7%       34.9%       35.3%
    Other operating expenses       22.6%       22.5%       21.1%       21.3%
    Depreciation and                                                        
     amortization                   2.0%        2.4%        2.1%        2.4%
                                    ---         ---         ---         --- 
    Income from operations         13.4%       11.8%       11.9%       11.1%
    Interest expense                3.8%        4.4%        4.0%        4.6%
    Unrealized gain (loss)                                                  
     from interest rate swap        0.0%       -0.4%        0.0%       -0.1%
                                    ---        ----         ---        ---- 
    Income before taxes             9.6%        7.0%        7.9%        6.4%
    Provision for income taxes      3.8%        2.7%        3.2%        2.5%
                                    ---         ---         ---         --- 
    Net income                      5.8%        4.3%        4.7%        3.9%
                                    ===         ===         ===         === 
    
    
    
                           Hanger Orthopedic Group, Inc.                     
          (Dollars in thousands, except for share and per share amounts)     
                                   (Unaudited)                               
                                                                             
                                      Three Months Ended  Twelve Months Ended
                                         December 31,          December 31,
    Cash Flow Data:                   2009           2008     2009     2008 
    ---------------                   ----           ----     ----     ---- 
    Cash flow from operations      $26,979        $18,367  $73,131  $53,220 
    Capital expenditures            $8,595         $7,317  $21,270  $19,330 
    Increase in cash                $6,176         $4,888  $26,145  $31,475 
                                                                             
    Balance Sheet Data:      Dec. 31, 2009  Dec. 31, 2008                   
    -------------------      -------------  -------------                   
    Cash and cash equivalents      $84,558        $58,413                   
    Days Sales Outstanding                                                   
     (DSO's)                            50             51                   
    Working Capital               $216,664       $200,248                   
    Total Debt                    $410,472       $422,324                   
    Shareholders' Equity          $315,893       $266,865                   
    
    
                                      Three Months Ended  Twelve Months Ended
                                         December 31,          December 31,   
    Percentage of net sales from:     2009           2008     2009     2008 
                                      ----           ----     ----     ---- 
      Patient-care services           89.0%          89.2%    88.2%    88.2%
      Distribution                    10.8%          10.6%    11.6%    11.5%
                                                                            
    Payor mix:                                                              
      Commercial and other            60.5%          61.1%    59.5%    60.3%
      Medicare                        28.1%          27.8%    29.1%    28.3%
      Medicaid                         6.2%           6.0%     6.2%     6.1%
      VA                               5.2%           5.1%     5.2%     5.3%
    
    
    Statistical Data:                              
    -----------------                                     Twelve Months Ended
                                                               December 31,
                                                              2009     2008 
                                                              ----     ---- 
    Patient-care centers                                       677      668 
    Number of practitioners                                  1,127    1,070 
    Number of states (including D.C.)                           46       46 
    
    
    

SOURCE Hanger Orthopedic Group, Inc.

RELATED LINKS
http://www.hanger.com

'/>"/>

SOURCE Hanger Orthopedic Group, Inc.
Copyright©2010 PR Newswire.
All rights reserved


Related medicine technology :

1. Hanger Orthopedic Group, Inc. Announces 2009 Year-End Earnings Release Conference Call
2. Hanger Orthopedic Group Increases Q4 2009 Sales and EPS Guidance
3. Hanger Orthopedic Group, Inc. Announces Three Acquisitions Totaling $10.7 Million of Annual Net Revenue
4. Medstrat Partners with Major Orthopedic Company
5. Wound Management Technologies, Inc. Targets Multi-Billion Dollar Biomaterials Market; Releases Update on Resorbable Orthopedics
6. Reportlinker Adds Top Ten Worlds Leading Orthopedics Companies
7. Ascension Orthopedics Hires Key Senior Executives
8. Reportlinker Adds Orthopedic Prosthetics - A World Market Review
9. Reportlinker Adds U.S. Market for Small Bone & Joint Orthopedic Devices 2009
10. Reportlinker Adds European Markets for Orthopedic Biomaterials 2009 (15 Countries)
11. Pioneer(R) Surgical Technology, Inc. and Bonovo(R) Orthopedics, Inc. Establish Foothold in Fastest Growing Spine Market in the World
Post Your Comments:
*Name:
*Comment:
*Email:
(Date:2/11/2016)... -- Walgreens has committed to provide drug disposal kiosks ... D.C. as part of a program to combat ... advocacy organization As You Sow. Conrad MacKerron , ... on to unneeded drugs because they lack easily accessible collection ... --> Conrad MacKerron , Senior Vice President at As ...
(Date:2/11/2016)... Ga. , Feb. 11, 2016  MiMedx Group, ... company utilizing human amniotic membrane and other birth tissues, ... platforms to develop and market advanced products and therapies, ... Capital Markets, 2016 Global Healthcare Conference in ... Chairman and CEO, Michael J. Senken , Chief ...
(Date:2/11/2016)... de 2016  A Proliant Biologicals anuncia, com ... bovina (BSA -- Bovine Serum Albumin ) ... Norte da Nova Zelândia, em Feilding. ... da Proliant nos EUA, localizada em ... dos equipamentos foram feitos de forma a reproduzir ...
Breaking Medicine Technology:
(Date:2/11/2016)... ... , ... The president released a FY 2017 budget request on Tuesday that ... the cost burden to military beneficiaries. , MOAA’s president, retired Air Force Lt. ... including limited quantifiable benefit fixes mixed with numerous beneficiary fee hikes. , “We were ...
(Date:2/11/2016)... ... February 11, 2016 , ... Hall Integrative Health and Chiropractic, ... their simultaneous grand openings in March. All seven practices are set to start ... is reversing diabetes possible? According to this 2011 CNN article it is possible: ...
(Date:2/11/2016)... , ... February 11, 2016 , ... ... dermatology and women’s health, is pleased to announce the promotions of Allison Kelly ... sales team, Steve Catone to executive vice president of North American capital sales, ...
(Date:2/11/2016)... ... 2016 , ... Atlantic Information Services, Inc. (AIS) is pleased ... Study for Plans and Purchasers.” Executives from Intel Corp. and Providence Health & ... health benefits program Connected Care, will discuss the challenges they faced (and how ...
(Date:2/11/2016)... ... February 11, 2016 , ... The Commission for Case ... Board of Commissioners. Individuals interested in volunteer board service are encouraged to apply. ... practice settings and across allied health to contribute to its mission and vision. ...
Breaking Medicine News(10 mins):