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 second quarter and six
months ended June 30, 2022.
Financial Highlights
- Net revenues were $312.0 million for the three months ended
June 30, 2022, compared to $280.8 million for the same period in
2021, reflecting growth of 11.1 percent. Patient Care same clinic
revenue growth per day was 6.2 percent during the period.
- Net income was $10.1 million for the three months ended June
30, 2022, compared to $10.2 million for the same period in 2021.
Income from operations was $20.8 million for the quarter compared
to $20.1 million for the same period in 2021.
- Adjusted EBITDA was $35.5 million in the second quarter of
2022, compared to $31.0 million for the same period in 2021,
reflecting an increase of $4.5 million, or 14.5 percent.
- GAAP diluted earnings per share was $0.26 for the second
quarter of each of 2022 and 2021. Adjusted diluted earnings per
share was $0.35 for the three months ended June 30, 2022, compared
to $0.27 for the same period in 2021.
Segment Results for Three Months Ended June 30, 2022
Patient Care Segment
For the three months ended June 30, 2022, Patient Care net
revenues were $265.7 million, an increase of $28.9 million, or 12.2
percent, compared to the same period in 2021. For the three month
period, acquisitions of O&P clinics that were consummated in
2021 and 2022 contributed $13.7 million of incremental revenue.
Net same clinic revenue on a day-adjusted basis grew 6.2 percent
during the second quarter of 2022 compared to the same quarter in
the prior year period. Patient Care results benefited from the
continued improvement in patient volumes compared to the decreased
levels of demand experienced due to the COVID pandemic during the
same period in 2021.
During the second quarter, excluding the effect of acquisitions,
net revenue from prosthetics grew 8.9 percent and net revenue from
orthotics grew 3.0 percent, each compared to the prior year period.
Prosthetics comprised 55.1 percent of Patient Care segment net
revenue for the quarter, compared to 53.7 percent in the same
period of 2021. Income from operations in the Patient Care segment
was $40.5 million during the second quarter of 2022, an increase of
$0.9 million compared to the $39.6 million reported in the prior
year.
Payor disallowances and patient non-payment were 4.4 percent of
gross charges during the second quarter of 2022 which compared to
3.4 percent during the second quarter of 2021, resulting in an
approximate $2.8 million comparative decrease to revenue, income
from operations, and Adjusted EBITDA during the second quarter of
2022.
Adjusted EBITDA for the segment was $47.8 million, which
reflected a $2.9 million increase compared to the second quarter of
2021. Adjusted EBITDA margin in the segment totaled 18.0 percent
compared to 18.9 percent during the second quarter of 2021.
Products & Services Segment
For the three months ended June 30, 2022, Products &
Services net revenues totaled $46.4 million, reflecting an increase
of 5.3 percent compared with the same period in 2021. Revenue from
the distribution of O&P componentry totaled $36.0 million,
reflecting growth of $2.7 million, or 8.1 percent. Therapeutic
solutions revenue in the second quarter totaled $10.4 million, a
decline of $0.4 million, or 3.5 percent.
Income from operations for the Products & Services segment
was $4.5 million in the second quarter of 2022 compared to $3.4
million in the same period of 2021. Adjusted EBITDA for the segment
totaled $7.1 million for the second quarter of 2022, a $1.4 million
increase compared with the same period of 2021. Adjusted EBITDA
margin in the segment increased to 15.3 percent compared to 12.8
percent during the second quarter of 2021.
Corporate & Other
Expenses associated with corporate and other activities
increased by $1.3 million to $24.3 million for the quarter ended
June 30, 2022 compared to the same period in 2021. Excluding the
effects of equity-based compensation, severance expense,
depreciation and amortization, and acquisition-related expense, the
net cost of corporate and other activities decreased by $0.1
million to $19.4 million in the second quarter of 2022.
Net Income; Interest Expense
Interest expense totaled $7.5 million for the three month period
ended June 30, 2022, an increase of $0.4 million from the prior
year period on higher interest rates.
For the three month period ended June 30, 2022, net income was
$10.1 million compared with $10.2 million for the same period in
2021. GAAP diluted income per share was $0.26 per share in 2022 and
2021, respectively. Adjusted diluted income per share was $0.35 for
the three months ended June 30, 2022, compared to $0.27 per share
for the same period in 2021.
Net Cash Used In Operating Activities; Liquidity
Cash flows provided by operating activities for the six months
ended June 30, 2022 were $30.9 million compared to cash flows used
in operating activities of $9.3 million for the same period in
2021. The Company's days sales outstanding were 44 days as of June
30, 2022.
During the quarter, the Company repaid $35.0 million in
principal on its Term Loan B indebtedness. As of June 30, 2022, the
Company had liquidity of $154.2 million, comprised of $24.4 million
in cash and cash equivalents, and $129.8 million in available
borrowing capacity under its revolving credit facility.
Transaction with Patient Square Capital
On July 21, 2022, the Company entered into an Agreement and Plan
of Merger (the “Merger Agreement”) with Hero Parent, Inc., a
Delaware corporation (“Parent”), and Hero Merger Sub, Inc., a
Delaware corporation and a wholly owned subsidiary of Parent
(“Merger Sub”). Parent and Merger Sub are indirect subsidiaries of
funds managed and advised by Patient Square Capital, a dedicated
health care investment firm. The Merger Agreement provides, among
other things and subject to the terms and conditions set forth
therein, that Merger Sub will be merged with and into the Company,
with the Company surviving as a wholly-owned subsidiary of Parent
(the “Merger”). At the Effective Time (as defined in the Merger
Agreement), by virtue of the Merger, each share of common stock of
the Company issued and outstanding immediately prior to the
Effective Time will be converted automatically into the right to
receive $18.75 per share in cash. After the Merger, Hanger’s common
stock will no longer be traded on the New York Stock Exchange and
will be deregistered under the Securities Exchange Act of 1934, as
amended.
In light of this pending transaction, the Company will not be
hosting an earnings call to discuss its results for the quarter and
will not be providing or updating previously issued financial
guidance.
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
investor.hanger.com.
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 approximately 875 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 2022, 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 inability to consummate the Merger within the
anticipated time period, or at all, due to any reason, including
the failure to obtain required regulatory approvals, satisfy the
other conditions to the consummation of the Merger or complete
necessary financing arrangements; the risk that the Merger disrupts
our current plans and operations or diverts management’s attention
from its ongoing business; the effects of the Merger on our
business, operating results, and ability to retain and hire key
personnel and maintain relationships with customers, suppliers and
others with whom we do business; the risk that our stock price may
decline significantly if the Merger is not consummated; the nature,
cost and outcome of any legal proceedings related to the Merger,
the inability to consummate the Merger within the anticipated time
period, or at all, due to any reason, including the failure to
obtain required regulatory approvals, satisfy the other conditions
to the consummation of the Merger or complete necessary financing
arrangements; the risk that the Merger disrupts our current plans
and operations or diverts management’s attention from its ongoing
business; the effects of the Merger on our business, operating
results, and ability to retain and hire key personnel and maintain
relationships with customers, suppliers and others with whom we do
business; the risk that our stock price may decline significantly
if the Merger is not consummated; the nature, cost and outcome of
any legal proceedings related to the Merger, 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; 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; 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; 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, 2021 and Quarterly Report on Form 10-Q for the three months
ended March 31, 2022, 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.
Additional Information and Where to Find It
This communication relates to the proposed merger (the "Merger")
of Hanger and Merger Sub pursuant to the terms of the Agreement and
Plan of Merger, dated as of July 21, 2022, by and among Parent,
Merger Sub and Hanger (the "Merger Agreement"). Parent and Merger
Sub are indirect subsidiaries of funds managed and advised by
Patient Square Capital. A special meeting of the stockholders of
Hanger will be announced as promptly as practicable to seek
stockholder approval in connection with the proposed Merger. Hanger
has filed with the Securities and Exchange Commission ("SEC") a
preliminary proxy statement and other relevant documents in
connection with the proposed Merger. Stockholders of Hanger are
urged to read the definitive proxy statement and other relevant
materials filed with the SEC when they become available because
they will contain important information about Hanger, Parent,
Merger Sub and the Merger. Stockholders may obtain a free copy of
these materials (when they are available) and other documents filed
by Hanger with the SEC at the SEC's website at www.sec.gov, at
Hanger's website at http://corporate.hanger.com or by sending a
written request to our Corporate Secretary at our principal
executive offices at 10910 Domain Drive, Suite 300, Austin, Texas
78758.
Participants in the Solicitation
Hanger, its directors and certain of its executive officers and
employees may be deemed to be participants in soliciting proxies
from Hanger's stockholders in connection with the Merger.
Information regarding the persons who may, under the rules of the
SEC, be considered to be participants in the solicitation of
Hanger's stockholders in connection with the Merger and any direct
or indirect interests they have in the Merger will be set forth in
Hanger's definitive proxy statement for its special stockholder
meeting when it is filed with the SEC. Information relating to the
foregoing can also be found in Hanger's Annual Report on Form 10-K
for the year ended December 31, 2021 filed with the SEC on February
28, 2022 and Hanger's definitive proxy statement for its 2022
Annual Meeting of Stockholders (the "Annual Meeting Proxy
Statement") filed with the SEC on April 7, 2022. To the extent that
holdings of Hanger's securities have changed since the amounts set
forth in the Annual Meeting Proxy Statement, such changes have been
or will be reflected on Statements of Change in Ownership on Form 4
filed with the SEC.
Table 1
Hanger, Inc.
Condensed Consolidated
Statements of Operations
(Unaudited - in thousands, except
share and per share amounts)
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2022
2021
2022
2021
Net revenues
$
312,033
$
280,819
$
573,320
$
518,289
Material costs
98,433
89,271
184,025
164,441
Personnel costs
110,275
97,549
211,950
187,429
Other operating costs
38,970
32,788
75,138
64,286
General and administrative expenses
35,444
33,110
67,886
64,013
Depreciation and amortization
8,124
8,007
16,079
16,005
Income from operations
20,787
20,094
18,242
22,115
Interest expense, net
7,524
7,152
14,909
14,492
Non-service defined benefit plan
expense
160
167
320
334
Income before income taxes
13,103
12,775
3,013
7,289
Provision for income taxes
2,986
2,616
873
460
Net income
$
10,117
$
10,159
$
2,140
$
6,829
Basic and diluted per common share
data:
Basic earnings per share
$
0.26
$
0.26
$
0.05
$
0.18
Weighted average shares used to compute
basic income per share
39,089,865
38,647,042
38,946,937
38,458,733
Diluted earnings per share
$
0.26
$
0.26
$
0.05
$
0.17
Weighted average shares used to compute
diluted income per share
39,250,735
39,208,155
39,293,775
39,216,725
Table 2
Hanger, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited - in thousands)
As of June 30,
As of December 31,
2022
2021
ASSETS
Current assets:
Cash and cash equivalents
$
24,380
$
61,692
Accounts receivable, net
150,898
152,058
Inventories
88,018
87,462
Income taxes receivable
—
581
Other current assets
19,614
16,536
Total current assets
282,910
318,329
Non-current assets:
Property, plant, and equipment, net
81,015
82,434
Goodwill
377,164
363,554
Other intangible assets, net
25,147
25,892
Deferred income taxes
43,069
45,494
Operating lease right-of-use assets
139,009
144,491
Other assets
18,552
17,945
Total assets
$
966,866
$
998,139
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:
Current portion of long-term debt
$
15,636
$
14,938
Accounts payable
67,651
63,565
Accrued expenses and other current
liabilities
56,151
60,399
Accrued compensation related costs
56,795
54,465
Current portion of operating lease
liabilities
34,326
33,438
Total current liabilities
230,559
226,805
Long-term liabilities:
Long-term debt, less current portion
465,022
502,307
Operating lease liabilities
117,230
124,016
Other liabilities
28,847
34,840
Total liabilities
841,658
887,968
Shareholders’ equity:
Common stock
393
389
Additional paid-in capital
376,717
373,644
Accumulated other comprehensive loss
(1,330
)
(11,150
)
Accumulated deficit
(249,876
)
(252,016
)
Treasury stock, at cost
(696
)
(696
)
Total shareholders’ equity
125,208
110,171
Total liabilities and shareholders’
equity
$
966,866
$
998,139
Table 3
Hanger, Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited - in thousands)
For the Six Months Ended
June 30,
2022
2021
Cash flows provided by (used in)
operating activities:
Net income
$
2,140
$
6,829
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization
16,079
16,005
Benefit from doubtful accounts
(68
)
(292
)
Share-based compensation expense
6,504
6,418
Deferred income taxes
(734
)
232
Amortization of debt discounts and
issuance costs
1,044
948
Gain on sale and disposal of fixed
assets
(863
)
(718
)
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable, net
1,262
5,363
Inventories
309
(5,899
)
Other current assets and other assets
(2,197
)
(6,202
)
Income taxes
584
57
Accounts payable
4,597
(6,577
)
Accrued expenses and other current
liabilities
1,606
(2,765
)
Accrued compensation related costs
2,284
(21,412
)
Other liabilities
(1,186
)
(522
)
Operating lease liabilities, net of
amortization of right-of-use assets
(416
)
(780
)
Net cash provided by (used in) operating
activities
30,945
(9,315
)
Cash flows used in investing
activities:
Purchase of property, plant, and
equipment
(10,596
)
(13,339
)
Acquisitions, net of cash acquired
(12,490
)
(35,349
)
Purchase of therapeutic program equipment
leased to third parties under operating leases
(1,358
)
(870
)
Proceeds from sale of property, plant, and
equipment
1,392
1,332
Net cash used in investing activities
(23,052
)
(48,226
)
Cash flows used in financing
activities:
Payment of employee taxes on share-based
compensation
(3,478
)
(4,560
)
Payment on Seller Notes
(5,000
)
(2,265
)
Repayment of term loan
(36,263
)
(2,525
)
Payments of financing lease
obligations
(515
)
(529
)
Payments under vendor financing
arrangements
—
(1,375
)
Proceeds from the exercise of options
51
371
Net cash used in financing activities
(45,205
)
(10,883
)
Decrease in cash and cash equivalents
(37,312
)
(68,424
)
Cash and cash equivalents at beginning of
period
61,692
144,602
Cash and cash equivalents at end of
period
$
24,380
$
76,178
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 EBITDA before certain
charges, expenses associated with equity-based compensation,
severance expenses, certain expenses incurred in connection with
our acquisition strategy, including the pending Merger Agreement,
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
June 30,
For the Six Months Ended
June 30,
2022
2021
2022
2021
Net Revenue (a)
Patient Care
$
265,670
$
236,787
$
485,488
$
432,469
Products & Services
46,363
44,032
87,832
85,820
Net revenue
$
312,033
$
280,819
$
573,320
$
518,289
EBITDA (b)
Patient Care
$
45,321
$
44,427
$
67,058
$
68,292
Products & Services
6,707
5,364
11,237
11,975
Corporate & Other
(23,117
)
(21,690
)
(43,974
)
(42,147
)
EBITDA (Non-GAAP)
$
28,911
$
28,101
$
34,321
$
38,120
Adjusted EBITDA (b)
Patient Care
$
47,791
$
44,845
$
70,850
$
69,793
Products & Services
7,095
5,647
11,950
12,517
Corporate & Other
(19,430
)
(19,517
)
(38,426
)
(37,791
)
Adjusted EBITDA (Non-GAAP)
$
35,456
$
30,975
$
44,374
$
44,519
(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, severance expenses, certain expenses incurred
in connection with our acquisition strategy, including the pending
Merger Agreement, 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
June 30,
For the Six Months Ended
June 30,
2022
2021
2022
2021
Net income - as reported (GAAP)
$
10,117
$
10,159
$
2,140
$
6,829
Adjustments:
Amortization expense
1,853
1,315
3,644
2,549
Acquisition-related expenses
535
170
620
330
Hanger supply chain implementation
costs
153
135
539
267
Severance expenses
1,312
—
1,446
54
Proceeds from grants under the CARES
Act
—
(670
)
—
(670
)
California wage and hour settlement
1,288
—
1,288
—
Adjustments prior to tax effect
$
5,141
$
950
$
7,537
$
2,530
Tax effect of specified adjustments
(a)
(1,393
)
(678
)
(1,659
)
(1,897
)
Adjustments after taxes
3,748
272
5,878
633
Adjusted net income (Non-GAAP)
$
13,865
$
10,431
$
8,018
$
7,462
Basic earnings per share - as reported
(GAAP)
$
0.26
$
0.26
$
0.05
$
0.18
Effect of above listed specified
adjustments
0.09
0.01
0.16
0.01
Adjusted basic earnings per share - as
reported (Non-GAAP)
$
0.35
$
0.27
$
0.21
$
0.19
Diluted earnings per share - as reported
(GAAP)
$
0.26
$
0.26
$
0.05
$
0.17
Effect of above listed specified
adjustments
0.09
0.01
0.15
0.02
Adjusted diluted earnings per share - as
reported (Non-GAAP)
$
0.35
$
0.27
$
0.20
$
0.19
Shares used to compute basic earnings per
share
39,089,865
38,647,042
38,946,937
38,458,733
Shares used to compute diluted earnings
per share
39,250,735
39,208,155
39,293,775
39,216,725
(a) “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 2022 and 2021 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 EBITDA before certain
charges, expenses associated with equity-based compensation,
severance expenses, certain expenses incurred in connection with
our acquisition strategy, including the pending Merger Agreement,
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
June 30,
For the Six Months Ended
June 30,
2022
2021
2022
2021
Net income - as reported (GAAP)
$
10,117
$
10,159
$
2,140
$
6,829
Adjustments to calculate EBITDA:
Depreciation and amortization
8,124
8,007
16,079
16,005
Interest expense, net
7,524
7,152
14,909
14,492
Non-service defined benefit plan
expense
160
167
320
334
Provision for income taxes
2,986
2,616
873
460
Adjustments - net income to EBITDA
18,794
17,942
32,181
31,291
EBITDA (Non-GAAP)
28,911
28,101
34,321
38,120
Further adjustments to calculate Adjusted
EBITDA:
Equity-based compensation
3,257
3,239
6,160
6,418
Acquisition-related expenses
535
170
620
330
Hanger supply chain implementation
costs
153
135
539
267
Severance expenses
1,312
—
1,446
54
Proceeds from grants under the CARES
Act
—
(670
)
—
(670
)
California wage and hour settlement
1,288
—
1,288
—
Further adjustments - EBITDA to Adjusted
EBITDA
6,545
2,874
10,053
6,399
Adjusted EBITDA (Non-GAAP)
$
35,456
$
30,975
$
44,374
$
44,519
Table 7 Hanger, Inc. Segment
Reconciliation of Income 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 EBITDA before certain
charges, expenses associated with equity-based compensation,
severance expenses, certain expenses incurred in connection with
our acquisition strategy, including the pending Merger Agreement,
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
June 30,
For the Six Months Ended
June 30,
2022
2021
2022
2021
Patient Care
Income from operations - as reported
(GAAP)
$
40,538
$
39,640
$
57,531
$
58,690
Depreciation & amortization
4,783
4,787
9,527
9,602
EBITDA (Non-GAAP)
45,321
44,427
67,058
68,292
Further adjustments to calculate Adjusted
EBITDA:
Equity-based compensation
1,023
953
1,854
1,850
Hanger supply chain implementation
costs
159
135
629
267
Severance expenses
—
—
21
54
Proceeds from grants under the CARES
Act
—
(670
)
—
(670
)
California wage and hour settlement
1,288
—
1,288
—
Further adjustments - EBITDA to Adjusted
EBITDA
2,470
418
3,792
1,501
Adjusted EBITDA (Non-GAAP)
47,791
44,845
70,850
69,793
Products & Services
Income from operations - as reported
(GAAP)
4,528
3,401
7,035
8,077
Depreciation & amortization
2,179
1,963
4,202
3,898
EBITDA (Non-GAAP)
6,707
5,364
11,237
11,975
Further adjustments to calculate Adjusted
EBITDA:
Equity-based compensation
327
283
623
542
Hanger supply chain implementation
costs
(6
)
—
(90
)
—
Severance expenses
67
—
180
—
Further adjustments - EBITDA to Adjusted
EBITDA
388
283
713
542
Adjusted EBITDA (Non-GAAP)
7,095
5,647
11,950
12,517
Corporate & Other
Loss from operations - as reported
(GAAP)
(24,279
)
(22,947
)
(46,324
)
(44,652
)
Depreciation & amortization
1,162
1,257
2,350
2,505
EBITDA (Non-GAAP)
(23,117
)
(21,690
)
(43,974
)
(42,147
)
Further adjustments to calculate Adjusted
EBITDA:
Equity-based compensation
1,907
2,003
3,683
4,026
Acquisition related expenses
535
170
620
330
Severance expenses
1,245
—
1,245
—
Further adjustments - EBITDA to Adjusted
EBITDA
3,687
2,173
5,548
4,356
Adjusted EBITDA (Non-GAAP)
(19,430
)
(19,517
)
(38,426
)
(37,791
)
Total Adjusted EBITDA (Non-GAAP)
$
35,456
$
30,975
$
44,374
$
44,519
Table 8
Hanger, Inc.
Indebtedness
(Unaudited - in thousands)
As of June 30,
As of December 31,
2022
2021
Debt:
Term Loan B
$
449,800
$
486,063
Seller Notes
28,885
29,812
Deferred payment obligation
4,000
4,000
Finance lease liabilities and other
3,112
3,344
Total debt before unamortized discount and
debt issuance costs
485,797
523,219
Unamortized discount and debt issuance
costs, net
(5,139
)
(5,974
)
Total debt
$
480,658
$
517,245
Current portion of long-term debt:
Term Loan B
$
5,050
$
5,050
Seller Notes
9,672
8,969
Finance lease liabilities and other
914
919
Total current portion of long-term
debt
15,636
14,938
Long-term debt
$
465,022
$
502,307
Net indebtedness:
Total debt before unamortized discount and
debt issuance costs
$
485,797
$
523,219
Cash and cash equivalents
(24,380
)
(61,692
)
Net indebtedness
$
461,417
$
461,527
Table 9
Hanger, Inc.
Key Operating Metrics
As of and For the Three Months
Ended June 30,
For the Six Months Ended
June 30,
2022
2021
2022
2021
Same clinic revenue (a):
Growth rate prior to disallowances and
PNP
6.9
%
18.5
%
7.4
%
8.7
%
Growth rate on net revenue
6.2
%
18.2
%
6.5
%
9.9
%
Clinical locations:
Patient care clinics
761
723
Satellite clinics
117
112
Total clinical locations
878
835
(a) Same Clinic Revenue is computed on a
per day basis. This 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/20220808005586/en/
Investor Relations Contact: Asher Dewhurst (443) 213-0503
HangerIR@westwicke.com
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