Hanger, Inc. (NYSE: HNGR), a leading provider of orthotic and
prosthetic (O&P) patient care services and solutions, today
announced its financial results for the third quarter and nine
months ended September 30, 2021.
Financial Highlights
- Net revenue was $289.8 million for the three months ended
September 30, 2021, compared to $256.6 million for the same period
in 2020, reflecting growth of 12.9 percent.
- Net income was $21.1 million for the three months ended
September 30, 2021, compared to $6.8 million for the same period in
2020. Income from operations was $25.7 million for the quarter
compared to $13.1 million for the same period in 2020. Third
quarter 2020 GAAP income from operations and net income benefited
from approximately $16 million related to temporary labor and
operating cost reductions taken during that period in response to
the COVID-19 pandemic.
- Adjusted EBITDA was $37.2 million in the third quarter of 2021,
compared to $27.9 million for the same period in 2020, reflecting
growth of $9.3 million or 33.5 percent. Adjusted EBITDA results for
the third quarter of 2020 benefited in part, from the temporary
cost reductions discussed above.
- GAAP diluted earnings per share was $0.54 per share for the
third quarter of 2021, compared to $0.18 per share for the same
period in 2020. Adjusted diluted earnings per share was $0.39 for
the three months ended September 30, 2021, compared to $0.20 for
the same period in 2020.
- Hanger revised its annual financial outlook for net revenue and
Adjusted EBITDA primarily due to the continuing impact of the COVID
pandemic on patient volumes. The Company anticipates net revenue in
the range of $1.115 billion to $1.140 billion and Adjusted EBITDA
in a range between $124 million and $128 million.
Vinit Asar, President and Chief Executive Officer of Hanger,
Inc., stated, "Hanger's third quarter net revenue grew 12.9
percent, reflecting a continued recovery in our Patient Care
business complemented by acquisitions of independent O&P
clinics across the United States."
Mr. Asar added, "While we continue to demonstrate favorable
recovery from the peak COVID periods of 2020, and were operating at
99 percent of 2019 levels in the quarter, our third quarter revenue
levels were affected by the Delta variant and fell short of our
original expectations. Although we believe that market conditions
and Hanger's performance will continue to strengthen as COVID
subsides in 2022, we are adjusting our outlook for the remainder of
the current year to reflect the lingering impact of the pandemic on
our business."
Complete reconciliations of GAAP to non-GAAP financial measures
are provided in the tables located at the end of this earnings
release.
Segment Results for Three Months Ended September 30,
2021
Patient Care Segment
For the three months ended September 30, 2021, Patient Care net
revenue was $244.4 million, an increase of $31.7 million, or 14.9
percent, compared to the same period in 2020. For the three month
period, acquisitions of O&P clinics that were consummated in
2020 and 2021 contributed $9.7 million of incremental revenue.
Net same clinic revenue on a day-adjusted basis grew 10.7
percent during the third quarter of 2021 compared to the same
quarter in the prior year period. Patient Care results benefited
from the continued improvement in patient volumes from the
decreased levels of demand experienced due to the COVID pandemic
during 2020. In the third quarter of 2021, Hanger's Patient Care
net revenue on a same-clinic basis totaled approximately 99 percent
of the level experienced in the third quarter of 2019, which
reflected an improvement from the 96 percent level reported in the
second quarter of 2021.
Excluding the effect of acquisitions, net revenue from
prosthetics grew 10.5 percent and net revenue from orthotics grew
11.0 percent, each compared to the third quarter of 2020.
Prosthetics comprised 55 percent of Patient Care segment net
revenue for the quarter compared to 56 percent in the same period
of 2020.
Income from operations in the Patient Care segment was $41.3
million during the third quarter of 2021, an increase of $9.1
million compared to the $32.2 million reported in the prior
year.
Adjusted EBITDA for the segment was $47.2 million, which
reflected an $8.0 million increase compared to the third quarter of
2020. Adjusted EBITDA margin in the segment totaled 19.3 percent
compared to 18.4 percent during the third quarter of 2020. Segment
income from operations and Adjusted EBITDA in the prior year period
benefited from temporary labor and other cost reductions.
Products & Services Segment
For the three months ended September 30, 2021, Products &
Services net revenue totaled $45.5 million, reflecting growth of
3.4 percent compared with the same period in 2020. Revenue from the
distribution of O&P componentry totaled $34.7 million,
reflecting growth of $1.9 million, or 5.9 percent. Therapeutic
solutions revenue in the third quarter totaled $10.8 million, a
decline of $0.4 million, or 4.0 percent.
Income from operations for the Products & Services segment
was $4.6 million in the third quarter of 2021 compared to $5.1
million in the same period of 2020. Adjusted EBITDA for the segment
totaled $6.8 million for the third quarter of 2021, a $1.3 million
decline compared with the same period of 2020. Adjusted EBITDA
margin in the segment totaled 15.0 percent compared to 18.6 percent
during the third quarter of 2020. Products & Services segment
income from operations, Adjusted EBITDA and margin were impacted by
the restoration of temporary labor and other cost reductions that
benefited results for the third quarter of 2020.
Corporate & Other
Expenses associated with corporate and other activities
decreased by $4.0 million to $20.2 million for the quarter ended
September 30, 2021 compared to the same period in 2020. Excluding
the effect of depreciation and amortization, and
acquisition-related expense, the net cost of corporate and other
activities decreased by $2.7 million to $16.8 million in the third
quarter of 2021.
Net Income; Interest Expense
Interest expense totaled $7.3 million for the three month period
ended September 30, 2021, a decrease of $0.7 million from the prior
year period.
For the three month period ended September 30, 2021, net income
was $21.1 million compared with $6.8 million for the same period in
2020. GAAP diluted income per share was $0.54 compared to $0.18 per
share in 2020. Adjusted diluted income per share was $0.39 for the
three months ended September 30, 2021, compared to $0.20 per share
for the same period in 2020.
Financial Highlights for the Nine Months Ended September 30,
2021
- For the period, net revenue was $808.1 million, compared to
$723.8 million in 2020, reflecting a net revenue increase of 11.6
percent. Acquisitions of O&P clinics consummated in 2020 and
2021 contributed $24.7 million of incremental revenue for the nine
month period.
- Patient Care net revenue totaled $676.8 million, reflecting
growth of $78.1 million, or 13.0 percent. Year-to-date same clinic
day-adjusted net revenue per day grew 10.2 percent. For the period,
Hanger's Patient Care segment net revenue on a day-adjusted
same-clinic basis totaled approximately 98 percent of the level
reported for the equivalent period in 2019.
- Net revenue from prosthetics, excluding acquisitions, grew 5.5
percent on a day-adjusted basis, while orthotics revenue grew by
16.3 percent, also on a net day-adjusted basis and excluding
acquisitions. For the year-to date, prosthetics constituted 54
percent of Patient Care segment net revenue.
- Products & Services segment net revenue totaled $131.3
million, an increase of $6.2 million, or 4.9 percent growth, driven
by an increase of $7.7 million in revenue from distribution
services and a $1.5 million decline in revenue from therapeutic
solutions.
- GAAP net income was $27.9 million compared to $22.1 million in
2020. Hanger's GAAP results for the first nine months of 2020
included a benefit of $20.6 million to other operating costs
related to the Company's receipt of CARES Act healthcare provider
grants as compared to $0.7 million in the 2021 period. These grants
were received under the Public Health and Social Services Emergency
Fund, also referred to as The Provider Relief Fund, established by
the CARES Act and are excluded from Adjusted EBITDA.
- Adjusted EBITDA totaled $81.7 million, an increase of $12.1
million as compared to the $69.7 million reported in 2020. The
increase in Adjusted EBITDA for the nine month period resulted from
improvement in net revenue partially offset by the restoration of
temporary cost reductions taken during the second and third
quarters of 2020.
- GAAP diluted earnings per share was $0.71, compared to $0.57
per share in 2020. Adjusted diluted earnings per share was $0.58
for the first nine months of 2021, compared to $0.27 for the same
period in 2020.
Net Cash Provided by Operating Activities; Liquidity
Cash flows provided by operating activities for the three months
ending September 30, 2021 were $12.5 million compared to cash flows
provided by operating activities of $13.9 million for the same
period in 2020. The Company's days sales outstanding were 42 days
as of September 30, 2021, which reflected a one day improvement as
compared to the same period in 2020.
On September 30, 2021, the Company had liquidity of $170.5
million, comprised of $75.6 million in cash and cash equivalents,
and $94.9 million in available borrowing capacity under its
revolving credit facility. This compares to total liquidity of
$171.1 million on June 30, 2021.
Outlook for the Remainder of 2021
The Company's outlook for 2021, originally provided on March 1,
2021, assumed a continued sequential improvement in the third and
fourth quarters of the orthotics and prosthetics business
environment related to the continued cessation of the effects of
COVID-19 on patient volumes. While Hanger's financial results for
the third quarter and the first nine-months of 2021 reflect
continued progress with regard to a return to more normal patient
volumes, results through the current period remain below
pre-pandemic levels.
As a result, the Company is adjusting its 2021 financial outlook
as originally provided on March 1, 2021. Hanger now anticipates net
revenue for the year in a range between $1.115 billion and $1.140
billion, and Adjusted EBITDA in a range between $124 million and
$128 million. This outlook compares with prior ranges of $1.145
billion and $1.175 billion for net revenue and $130 million and
$135 million for Adjusted EBITDA. The Company's revised outlook for
2021 includes approximately $42 million in revenue relating to the
full year contribution of acquisitions consummated in 2020 and
through September 30, 2021. The Company anticipates a return to
normalized growth in 2022, as the COVID-19 pandemic subsides and
market conditions improve.
Adjusted EBITDA in this outlook is provided on a non-GAAP basis
only because a reconciliation to the most comparable GAAP financial
measure, net income, is not available without unreasonable effort
due to the unpredictable nature of reconciling items that render
such a reconciliation not meaningful for investors.
Conference and Webcast Details
The Company’s management team will host a conference call
tomorrow, Tuesday, November 9, at 8:30 a.m. Eastern time to discuss
the Company’s third quarter 2021 financial results and business
outlook.
To participate, dial 844-200-6205 or 929-526-1599 outside the
U.S. and Canada, and ask to be joined into the Hanger, Inc. call. A
live webcast, replay of the call and earnings release, will be
available on the Company’s Investor Relations website:
www.investor.hanger.com/financial-reporting/quarterly-results/default.aspx.
Additional Notes
A reconciliation of GAAP and non-GAAP financial results is
included in the tables provided at the back of this press release.
The Company has provided certain supplemental key statistics
relating to its results for certain prior periods. These key
statistics are non-GAAP measures used by the Company’s management
to analyze the Company’s business results that are being provided
for informational and analytical context.
Accompanying supplemental information will be posted to the
Investor Relations section of Hanger’s web site at
www.hanger.com/investors.
About Hanger, Inc. – Headquartered in Austin, Texas,
Hanger, Inc. (NYSE: HNGR) provides comprehensive, outcomes-based
orthotic and prosthetic (O&P) services through its Patient Care
segment, with more than 800 Hanger Clinic locations nationwide.
Through its Products & Services segment, Hanger distributes
branded and private label O&P devices, products and components,
and provides rehabilitative solutions. Recognized by Forbes as one
of America’s Best Employers for 2021, and rooted in 160 years of
clinical excellence and innovation, Hanger is a purpose-driven
company with a vision to lead the O&P markets by providing
superior patient care, outcomes, services and value, aimed at
empowering human potential. For more information on Hanger, visit
investor.hanger.com.
This earnings release contains statements that are
forward-looking statements within the meaning of the federal
securities laws. Forward-looking statements include information
concerning our liquidity and our possible or assumed future results
of operations, including descriptions of our business strategies.
These statements often include words such as “believe,” “expect,”
“project,” “potential,” “anticipate,” “intend,” “plan,” “estimate,”
“seek,” “will,” “may,” “would,” “should,” “could,” “forecasts” or
similar words. These statements are based on certain assumptions
that we have made in light of our experience in the industry as
well as our perceptions of historical trends, current conditions,
expected future developments and other factors we believe are
appropriate in these circumstances. We believe these assumptions
are reasonable, but you should understand that these statements are
not guarantees of performance or results, and our actual results
could differ materially from those expressed in the forward-looking
statements due to a variety of important factors, both positive and
negative, that may be revised or supplemented in subsequent
releases or reports. These statements involve risks, estimates,
assumptions, and uncertainties that could cause actual results to
differ materially from those expressed in these statements and
elsewhere in this release. These uncertainties include, but are not
limited to, the financial and business impacts of COVID-19 on our
operations and the operations of our customers, suppliers,
governmental and private payers and others in the healthcare
industry and beyond; federal laws governing the health care
industry; governmental policies affecting O&P operations,
including with respect to reimbursement; failure to successfully
implement a new enterprise resource planning system or other
disruptions to information technology systems; the inability to
successfully execute our acquisition strategy, including
integration of recently acquired O&P clinics into our existing
business; changes in the demand for our O&P products and
services, including additional competition in the O&P services
market; disruptions to our supply chain; our ability to enter into
and derive benefits from managed-care contracts; our ability to
successfully attract and retain qualified O&P clinicians; labor
shortages and increased turnover in our employee base; contractual,
inflationary and other general cost increases, including with
regard to costs of labor, raw materials and freight; and other
risks and uncertainties generally affecting the health care
industry. For additional information and risk factors that could
affect the Company, see its Form 10-K for the year ended December
31, 2020 and Quarterly Report on Form 10-Q for the three months
ended March 31, 2021, June 30, 2021 and September 30, 2021, each as
filed with the Securities and Exchange Commission. The information
contained in this press release is made only as of the date hereof,
even if subsequently made available by the Company on its website
or otherwise.
Table 1
Hanger, Inc.
Condensed Consolidated
Statements of Operations
(Unaudited - in thousands, except
share and per share amounts)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2021
2020
2021
2020
Net revenues
$
289,827
$
256,637
$
808,116
$
723,810
Material costs
92,561
81,462
257,002
228,675
Personnel costs
98,948
89,727
286,377
252,734
Other operating costs (a)
34,871
29,979
99,157
74,207
General and administrative expenses
29,620
33,591
93,633
98,918
Depreciation and amortization
8,159
8,803
24,164
26,513
Income from operations
25,668
13,075
47,783
42,763
Interest expense, net
7,313
8,013
21,805
24,918
Non-service defined benefit plan
expense
167
158
501
474
Income before income taxes
18,188
4,904
25,477
17,371
Benefit for income taxes
(2,929
)
(1,911
)
(2,469
)
(4,750
)
Net income
$
21,117
$
6,815
$
27,946
$
22,121
Basic and Diluted Per Common Share
Data:
Basic earnings per share
$
0.55
$
0.18
$
0.72
$
0.58
Weighted average shares used to compute
basic earnings per common share
38,730,468
38,133,598
38,550,307
37,878,753
Diluted income per share
$
0.54
$
0.18
$
0.71
$
0.57
Weighted average shares used to compute
diluted earnings per common share
39,240,974
38,637,536
39,238,370
38,491,965
(a) For the nine months ended September
30, 2020, Hanger recognized approximately $20.6 million of income
within other operating costs related to grant proceeds received
under the CARES Act.
Table 2
Hanger, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited - in thousands)
As of September 30,
As of December 31,
2021
2020
ASSETS
Current assets:
Cash and cash equivalents
$
75,587
$
144,602
Accounts receivable, net
136,112
128,596
Inventories
84,747
76,429
Income taxes receivable
8,135
12,888
Other current assets
16,896
12,357
Total current assets
321,477
374,872
Non-current assets:
Property, plant, and equipment, net
83,821
84,873
Goodwill
322,699
277,223
Other intangible assets, net
20,600
18,431
Deferred income taxes
51,445
54,877
Operating lease right-of-use assets
124,502
124,741
Other assets
18,184
15,734
Total assets
$
942,728
$
950,751
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt
$
11,700
$
10,085
Accounts payable
61,721
65,091
Accrued expenses and other current
liabilities
59,172
62,861
Accrued compensation related costs
41,793
72,541
Current portion of operating lease
liabilities
36,421
35,002
Total current liabilities
210,807
245,580
Long-term liabilities:
Long-term debt, less current portion
495,279
493,012
Operating lease liabilities
101,759
104,589
Other liabilities
45,361
56,593
Total liabilities
853,206
899,774
Shareholders’ equity:
Common stock
389
383
Additional paid-in capital
370,858
365,503
Accumulated other comprehensive loss
(14,977
)
(20,215
)
Accumulated deficit
(266,052
)
(293,998
)
Treasury stock, at cost
(696
)
(696
)
Total shareholders’ equity
89,522
50,977
Total liabilities and shareholders’
equity
$
942,728
$
950,751
Table 3
Hanger, Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited - in thousands)
For the Nine Months Ended
September 30,
2021
2020
Cash flows provided by operating
activities:
Net income
$
27,946
$
22,121
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
24,164
26,513
(Benefit) provision for doubtful
accounts
(194
)
629
Share-based compensation expense
9,407
15,565
Deferred income taxes
1,253
2,067
Amortization of debt discounts and
issuance costs
1,429
1,564
Gain on sale and disposal of fixed
assets
(1,004
)
(729
)
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable, net
(5,120
)
39,531
Inventories
(6,361
)
(3,834
)
Other current assets and other assets
(7,170
)
(3,115
)
Income taxes
4,753
(6,814
)
Accounts payable
(4,134
)
12,912
Accrued expenses and other current
liabilities
(7,670
)
6,914
Accrued compensation related costs
(30,902
)
2,339
Other liabilities
(4,579
)
8,016
Operating lease liabilities, net of
amortization of right-of-use assets
(1,173
)
1,559
Net cash provided by operating
activities
645
125,238
Cash flows used in investing
activities:
Acquisitions, net of cash acquired
(39,253
)
(16,854
)
Purchase of property, plant, and
equipment
(17,201
)
(19,352
)
Purchase of therapeutic program equipment
leased to third parties under operating leases
(1,709
)
(3,194
)
Proceeds from sale of property, plant, and
equipment
1,812
1,578
Purchase of company-owned life insurance
investment
—
(250
)
Net cash used in investing activities
(56,351
)
(38,072
)
Cash flows used in financing
activities:
Borrowings under revolving credit
agreement
—
79,000
Repayment of borrowings under revolving
credit agreement
—
(79,000
)
Payment of employee taxes on share-based
compensation
(4,570
)
(6,841
)
Repayment of term loan
(3,788
)
(3,788
)
Payment on Seller Notes
(3,319
)
(2,200
)
Payments under vendor financing
arrangements
(1,375
)
(550
)
Payments of financing lease
obligations
(781
)
(521
)
Payment of debt issuance costs
—
(214
)
Proceeds from the exercise of options
524
39
Net cash used in financing activities
(13,309
)
(14,075
)
(Decrease) increase in cash and cash
equivalents
(69,015
)
73,091
Cash and cash equivalents at beginning of
period
144,602
74,419
Cash and cash equivalents at end of
period
$
75,587
$
147,510
Table 4 Hanger, Inc. Segment Information:
Revenue, EBITDA and Adjusted EBITDA (Unaudited - in
thousands)
EBITDA is defined as operating income before depreciation and
amortization. Adjusted EBITDA is defined as operating income before
certain charges, third-party professional fees in excess of normal
amounts incurred in connection with our financial statement
remediation, expenses associated with equity-based compensation,
severance expenses, certain expenses incurred in connection with
our acquisitions, proceeds received from grants under the
Coronavirus Aid, Relief and Economy Security Act ("CARES Act") and
certain other charges.
We use EBITDA and Adjusted EBITDA as measures to assess the
relative level of our indebtedness and our compliance with certain
debt covenants which are based on these measures. Additionally, we
utilize these measures to assess our operating and financial
performance. We believe that these measures enhance a user’s
understanding of normal operating income excluding certain charges,
depreciation and amortization.
Neither EBITDA or Adjusted EBITDA are measures of financial
performance computed in accordance with Generally Accepted
Accounting Principles (“GAAP”) and should not be considered in
isolation nor as a substitute for operating income, net income,
cash flows from operations, or other statement of operations or
cash flow data prepared in conformity with GAAP, or as a measure of
profitability or liquidity. In addition, the calculation of EBITDA
and Adjusted EBITDA is susceptible to varying interpretations and
calculations, and the amounts presented may not be comparable to
similarly titled measures of other companies. EBITDA and Adjusted
EBITDA may not be indicative of historical operating results, and
we do not intend these measures to be predictive of future results
of operations.
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2021
2020
2021
2020
Net Revenue (a)
Patient Care
$
244,356
$
212,664
$
676,825
$
598,706
Products & Services
45,471
43,973
131,291
125,104
Net revenue
$
289,827
$
256,637
$
808,116
$
723,810
EBITDA (b)
Patient Care
$
46,190
$
37,024
$
114,482
$
116,483
Products & Services
6,569
7,754
18,544
20,842
Corporate & Other
(18,932
)
(22,900
)
(61,079
)
(68,049
)
EBITDA (Non-GAAP)
$
33,827
$
21,878
$
71,947
$
69,276
Adjusted EBITDA (b)
Patient Care
$
47,205
$
39,209
$
116,998
$
100,728
Products & Services
6,833
8,157
19,350
21,784
Corporate & Other
(16,841
)
(19,505
)
(54,632
)
(52,860
)
Adjusted EBITDA (Non-GAAP)
$
37,197
$
27,861
$
81,716
$
69,652
(a) Excludes intersegment revenue.
(b) EBITDA and Adjusted EBITDA are
"Non-GAAP" measures. Please refer to both Table 6 and Table 7 for a
reconciliation of these measures to GAAP net income.
Table 5 Hanger, Inc. Reconciliation of Net
Income and Earnings Per Share to Adjusted Net Income and Adjusted
Earnings Per Share (Unaudited - in thousands, except share and
per share amounts)
Earnings Per Share (or “EPS”) is defined as net income divided
by our basic or diluted common shares during the applicable period.
Adjusted EPS is defined as EPS adjusted for certain equity-based
compensation charges, third-party professional fees in excess of
normal amounts incurred in connection with our financial statement
remediation, severance expenses, certain expenses incurred in
connection with our acquisitions, proceeds received from grants
under the CARES Act, and certain other charges.
We utilize Adjusted EPS to assess our operating and financial
performance. We believe that this measure enhances a user’s
understanding of normal operating results excluding certain
charges.
Adjusted EPS is not a measure of financial performance computed
in accordance with GAAP and should not be considered in isolation
nor as a substitute for operating income, net income, cash flows
from operations, or other statement of operations or cash flow data
prepared in conformity with GAAP, or as a measure of profitability
or liquidity. In addition, the calculation of Adjusted EPS is
susceptible to varying interpretations and calculations, and the
amounts presented may not be comparable to similarly titled
measures of other companies. Adjusted EPS may not be indicative of
historical operating results, and we do not intend these measures
to be predictive of future results of operations.
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2021
2020
2021
2020
Net income - as reported (GAAP)
$
21,117
$
6,815
$
27,946
$
22,121
Adjustments:
Modification of equity awards (a)
—
—
—
5,869
Amortization expense
1,407
1,797
3,956
5,071
Third-party professional fees
—
—
—
1,639
Acquisition-related expenses
312
33
642
405
Hanger supply chain implementation
costs
96
376
363
806
Severance expenses
(27
)
3,015
27
3,015
Proceeds from grants under the CARES
Act
—
(43
)
(670
)
(20,576
)
Adjustments prior to tax effect
$
1,788
$
5,178
$
4,318
$
(3,771
)
Tax effect of specified adjustments
(b)
(7,723
)
(4,331
)
(9,620
)
(8,014
)
Adjustments after taxes
(5,935
)
847
(5,302
)
(11,785
)
Adjusted net income (Non-GAAP)
$
15,182
$
7,662
$
22,644
$
10,336
Basic earnings per share - as reported
(GAAP)
$
0.55
$
0.18
$
0.72
$
0.58
Effect of above listed specified
adjustments
(0.16
)
0.02
(0.13
)
(0.31
)
Adjusted basic earnings per share - as
reported (Non-GAAP)
$
0.39
$
0.20
$
0.59
$
0.27
Diluted earnings per share - as reported
(GAAP)
$
0.54
$
0.18
$
0.71
$
0.57
Effect of above listed specified
adjustments
(0.15
)
0.02
(0.13
)
(0.30
)
Adjusted diluted earnings per share - as
reported (Non-GAAP)
$
0.39
$
0.20
$
0.58
$
0.27
Shares used to compute basic earnings per
share
38,730,468
38,133,598
38,550,307
37,878,753
Shares used to compute diluted earnings
per share
39,240,974
38,637,536
39,238,370
38,491,965
(a) Modification of equity awards reflect
a non-recurring charge in the second quarter of 2020 for
incremental equity-based compensation expense under ASC 718, Stock
Compensation, related to the modification of certain equity awards
granted in 2017.
(b) “Tax effect of specified adjustments”
reflects the difference between the Company's effective provision
for taxes and the application of a combined federal and state
statutory tax rate of 24% for the 2021 and 2020 periods to the
Company's earnings from operations before taxes, after the
incorporation of the identified adjustments above.
Table 6 Hanger, Inc. Reconciliation of Net
Income to EBITDA and Adjusted EBITDA (Unaudited - in
thousands)
EBITDA is defined as operating income before depreciation and
amortization. Adjusted EBITDA is defined as operating income before
certain charges, third-party professional fees in excess of normal
amounts incurred in connection with our financial statement
remediation, expenses associated with equity-based compensation,
severance expenses, certain expenses incurred in connection with
our acquisitions, proceeds received from grants under the CARES Act
and certain other charges.
We use EBITDA and Adjusted EBITDA as measures to assess the
relative level of our indebtedness and our compliance with certain
debt covenants which are based on these measures. Additionally, we
utilize these measures to assess our operating and financial
performance. We believe that these measures enhance a user’s
understanding of normal operating income excluding certain charges,
depreciation and amortization.
Neither EBITDA or Adjusted EBITDA are measures of financial
performance computed in accordance with Generally Accepted
Accounting Principles (“GAAP”) and should not be considered in
isolation nor as a substitute for operating income, net income,
cash flows from operations, or other statement of operations or
cash flow data prepared in conformity with GAAP, or as a measure of
profitability or liquidity. In addition, the calculation of EBITDA
and Adjusted EBITDA is susceptible to varying interpretations and
calculations, and the amounts presented may not be comparable to
similarly titled measures of other companies. EBITDA and Adjusted
EBITDA may not be indicative of historical operating results, and
we do not intend these measures to be predictive of future results
of operations.
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2021
2020
2021
2020
Net income - as reported (GAAP)
$
21,117
$
6,815
$
27,946
$
22,121
Adjustments to calculate EBITDA:
Depreciation and amortization
8,159
8,803
24,164
26,513
Interest expense, net
7,313
8,013
21,805
24,918
Non-service defined benefit plan
expense
167
158
501
474
Benefit for income taxes
(2,929
)
(1,911
)
(2,469
)
(4,750
)
Adjustments - net income to EBITDA
12,710
15,063
44,001
47,155
EBITDA (Non-GAAP)
33,827
21,878
71,947
69,276
Further adjustments to calculate Adjusted
EBITDA:
Third-party professional fees
—
—
—
1,639
Equity-based compensation (a)
2,989
2,602
9,407
15,087
Acquisition-related expenses
312
33
642
405
Hanger supply chain implementation
costs
96
376
363
806
Severance expenses
(27
)
3,015
27
3,015
Proceeds from grants under the CARES
Act
—
(43
)
(670
)
(20,576
)
Further adjustments - EBITDA to Adjusted
EBITDA
3,370
5,983
9,769
376
Adjusted EBITDA (Non-GAAP)
$
37,197
$
27,861
$
81,716
$
69,652
(a) Equity-based compensation expense
includes an incremental charge in the second quarter of 2020 under
ASC 718, Stock Compensation of approximately $5.9 million related
to the modification of certain equity awards granted in 2017.
Table 7 Hanger, Inc. Segment Reconciliation
of Income (Loss) From Operations to EBITDA and Adjusted EBITDA
(Unaudited - in thousands)
EBITDA is defined as operating income before depreciation and
amortization. Adjusted EBITDA is defined as operating income before
certain charges, third-party professional fees in excess of normal
amounts incurred in connection with our financial statement
remediation, expenses associated with equity-based compensation,
severance expenses, certain expenses incurred in connection with
our acquisitions, proceeds received from grants under the CARES Act
and certain other charges.
We use EBITDA and Adjusted EBITDA as measures to assess the
relative level of our indebtedness and our compliance with certain
debt covenants which are based on these measures. Additionally, we
utilize these measures to assess our operating and financial
performance. We believe that these measures enhance a user’s
understanding of normal operating income excluding certain charges,
depreciation and amortization.
Neither EBITDA or Adjusted EBITDA are measures of financial
performance computed in accordance with Generally Accepted
Accounting Principles (“GAAP”) and should not be considered in
isolation nor as a substitute for operating income, net income,
cash flows from operations, or other statement of operations or
cash flow data prepared in conformity with GAAP, or as a measure of
profitability or liquidity. In addition, the calculation of EBITDA
and Adjusted EBITDA is susceptible to varying interpretations and
calculations, and the amounts presented may not be comparable to
similarly titled measures of other companies. EBITDA and Adjusted
EBITDA may not be indicative of historical operating results, and
we do not intend these measures to be predictive of future results
of operations.
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2021
2020
2021
2020
Patient
Care
Income from operations - as reported
(GAAP)
$
41,320
$
32,238
$
100,010
$
102,394
Depreciation & amortization
4,870
4,786
14,472
14,089
EBITDA (Non-GAAP)
46,190
37,024
114,482
116,483
Further adjustments to calculate Adjusted
EBITDA:
Equity-based compensation
946
925
2,796
3,181
Hanger supply chain implementation
costs
96
263
363
600
Severance expenses
(27
)
1,040
27
1,040
Proceeds from grants under the CARES
Act
—
(43
)
(670
)
(20,576
)
Further adjustments - EBITDA to Adjusted
EBITDA
1,015
2,185
2,516
(15,755
)
Adjusted EBITDA (Non-GAAP)
47,205
39,209
116,998
100,728
Products &
Services
Income from operations - as reported
(GAAP)
4,595
5,121
12,672
12,959
Depreciation & amortization
1,974
2,633
5,872
7,883
EBITDA (Non-GAAP)
6,569
7,754
18,544
20,842
Further adjustments to calculate Adjusted
EBITDA:
Equity-based compensation
264
244
806
690
Hanger supply chain implementation
costs
—
113
—
206
Severance expenses
—
46
—
46
Further adjustments - EBITDA to Adjusted
EBITDA
264
403
806
942
Adjusted EBITDA (Non-GAAP)
6,833
8,157
19,350
21,784
Corporate &
Other
Loss from operations - as reported
(GAAP)
(20,247
)
(24,284
)
(64,899
)
(72,590
)
Depreciation & amortization
1,315
1,384
3,820
4,541
EBITDA (Non-GAAP)
(18,932
)
(22,900
)
(61,079
)
(68,049
)
Further adjustments to calculate Adjusted
EBITDA:
Third-party professional fees
—
—
—
1,639
Equity-based compensation (a)
1,779
1,433
5,805
11,216
Acquisition related expenses
312
33
642
405
Severance expenses
—
1,929
—
1,929
Further adjustments - EBITDA to Adjusted
EBITDA
2,091
3,395
6,447
15,189
Adjusted EBITDA (Non-GAAP)
(16,841
)
(19,505
)
(54,632
)
(52,860
)
Total Adjusted EBITDA (Non-GAAP)
$
37,197
$
27,861
$
81,716
$
69,652
(a) Equity-based compensation expense
includes an incremental charge in the second quarter of 2020 under
ASC 718, Stock Compensation of approximately $5.9 million related
to the modification of certain equity awards granted in 2017.
Table 8
Hanger, Inc.
Indebtedness
(Unaudited - in thousands)
As of September 30,
As of December 31,
2021
2020
Debt:
Term Loan B
$
487,325
$
491,113
Seller Notes
18,626
11,510
Deferred payment obligation
4,000
4,000
Finance lease liabilities and other
3,229
3,869
Total debt before unamortized discount and
debt issuance costs
513,180
510,492
Unamortized discount and debt issuance
costs, net
(6,201
)
(7,395
)
Total debt
$
506,979
$
503,097
Current portion of long-term debt:
Term Loan B
$
5,050
$
5,050
Seller Notes
5,770
4,060
Finance lease liabilities and other
880
975
Total current portion of long-term
debt
11,700
10,085
Long-term debt
$
495,279
$
493,012
Net indebtedness:
Total debt before unamortized discount and
debt issuance costs
$
513,180
$
510,492
Cash and cash equivalents
(75,587
)
(144,602
)
Net indebtedness
$
437,593
$
365,890
Table 9
Hanger, Inc.
Key Operating Metrics
As of and For the Three Months
Ended September 30,
For the Nine Months Ended
September 30,
2021
2020
2021
2020
Same clinic revenue:
Growth (decline) rate on net revenue
10.7
%
(10.3
)%
9.1
%
(10.7
)%
Growth (decline) rate day adjusted (a)
10.7
%
(10.3
)%
10.2
%
(11.2
)%
Clinical locations:
Patient care clinics
725
704
Satellite clinics
111
110
Total clinical locations
836
814
(a) Same Clinic Revenue per Day - Same
Clinic Revenue per Day normalizes revenue for the number of days a
clinic was open in each comparable period. These measures are both
non-GAAP and unaudited.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211108005887/en/
Investor Relations Contact: Kevin Ellich (443) 450-4186
HangerIR@westwicke.com
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