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Hanger Reports First Quarter 2021 Financial Results

05/05/2021

AUSTIN, Texas--(BUSINESS WIRE)-- 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 first quarter ended March 31, 2021.

Financial Highlights

  • Net revenue was $237.5 million for the three months ended March 31, 2021, compared to $233.7 million for the same period in 2020, reflecting growth of 1.6 percent.
  • Net loss was $3.3 million for the three months ended March 31, 2021, compared to $15.7 million for the same period in 2020. Income from operations was $2.0 million for the quarter compared to a loss of $9.2 million for the same period in 2020.
  • Adjusted EBITDA was $13.5 million in the first quarter of 2021, compared to $5.3 million for the same period in 2020, reflecting growth of $8.3 million.
  • GAAP loss per share was $0.09 per share for the first quarter of 2021, compared to a loss of $0.42 per share for the same period in 2020. Adjusted diluted loss per share was $0.08 for the three months ended March 31, 2021, compared to a loss per share of $0.28 for the same period in 2020.
  • On March 31, 2021, the Company had $165.1 million in liquidity, reflecting an increase of $33.3 million as compared with March 31, 2020.

Vinit Asar, President and Chief Executive Officer of Hanger, Inc., stated, "We are pleased with our first quarter performance which was a direct result of the solid efforts of our team nationwide. Hanger overcame the effects of the COVID surge as well as the weather impact that affected our clinical and distribution operations in the South. Adjusted EBITDA growth was ahead of our expectations due to favorable cost management this quarter, while cash flow benefited from solid collection trends in both of our business segments. We are pleased to have re-established growth and are hopeful that vaccination rates and COVID trends continue to enable a return to normal business conditions."

Complete reconciliations of GAAP to non-GAAP financial measures are provided in the tables located at the end of this press release.

Segment Results for Three Months Ended March 31, 2021

Patient Care Segment

For the three months ended March 31, 2021, Patient Care net revenue was $195.7 million, an increase of $5.5 million, or 2.9 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 $9.0 million of incremental revenue.

Net same clinic revenue on a day-adjusted basis grew by 1.4 percent during the first quarter of 2021 compared to the same quarter in the prior year period. Reported growth in the segment was achieved despite the adverse impact of severe winter weather conditions in key markets during February as well as the continuing impact of the COVID-19 pandemic. The segment also reflected significant improvements in collections and disallowed revenue rates compared to the first quarter of 2020.

Excluding the effect of acquisitions, as compared to the first quarter of 2020, net revenue from prosthetics grew 1.0 percent in the quarter and net revenue from orthotics grew 1.9 percent. Prosthetics comprised 52 percent of Patient Care segment net revenue during the first quarter of 2021 and 2020.

In the first quarter of 2021, patient appointment levels decreased by three percent as compared to the first quarter of 2020. This reflects improvement from the 12 percent appointment decline experienced in the fourth quarter of 2020 as compared to the prior year quarter. As of March 31, 2021, the Company had re-opened all patient care clinics that were temporarily closed during 2020 due to the COVID-19 pandemic.

Income from operations in the Patient Care segment was $19.1 million during the first quarter of 2021, an increase of $7.5 million compared to the $11.5 million reported in the prior year.

Adjusted EBITDA for the segment was $24.9 million, which reflected a $7.6 million or 44.0 percent increase. Adjusted EBITDA margin in the segment totaled 12.7 percent compared to 9.1 percent during the first quarter of 2020. Segment Adjusted EBITDA and margins benefited from lower disallowance rates and personnel costs during the quarter.

Products & Services Segment

For the three months ended March 31, 2021, Products & Services net revenue totaled $41.8 million, a decline of 4.1 percent compared with the same period in 2020. Revenue from the distribution of O&P componentry declined by $1.0 million, or 3.3 percent. This decrease primarily related to there being two fewer operating days in the quarter. Therapeutic solutions revenue declined $0.8 million, or 6.2 percent.

Income from operations for the Products & Services segment grew to $4.7 million in the first quarter of 2021 compared to $2.1 million in the same period of 2020. Adjusted EBITDA for the segment totaled $6.9 million for the first quarter of 2021, a $1.8 million improvement compared with the same period of 2020. Adjusted EBITDA margin in the segment totaled 16.4 percent compared to 11.6 percent during the first quarter of 2020.

Corporate & Other

Expenses associated with corporate and other activities increased by $1.1 million to $21.7 million for the quarter ended March 31, 2021 compared to the same period in 2020. Excluding the effect of depreciation and amortization and non-cash equity-based compensation expense, the net cost of corporate and other activities increased by $1.2 million to $18.3 million in the first quarter of 2021.

Net Income; Interest Expense

Interest expense totaled $7.3 million for the three month period ended March 31, 2021, a decrease of $0.9 million from the prior year period.

For the three month period ended March 31, 2021, net loss was $3.3 million compared with $15.7 million for the same period in 2020. GAAP diluted loss per share was $0.09 compared to a loss of $0.42 per share in 2020. Adjusted diluted loss per share was $0.08 for the three months ended March 31, 2021, compared to a loss of $0.28 per share for the same period in 2020.

Net Cash Provided by Operating Activities; Liquidity

Cash flows used by operating activities for the three months ending March 31, 2021 were $42.3 million compared to cash flows used in operating activities of $22.0 million for the same period in 2020. The Company continued to achieve strong cash collections during the first quarter of 2021 as its days sales outstanding decreased by five days to 45 days as of March 31, 2021 from 50 days on March 31, 2020.

On March 31, 2021, the Company had liquidity of $165.1 million, comprised of $70.3 million in cash and cash equivalents, and $94.8 million in available borrowing capacity under its revolving credit facility. This compares to total liquidity of $131.8 million on March 31, 2020.

2021 Outlook

The Company re-affirmed its financial outlook for 2021 as originally provided on March 1, 2021. Hanger anticipates net revenue in a range between $1.145 billion and $1.175 billion, and Adjusted EBITDA in a range between $130 million and $135 million.

The Company's outlook for 2021 includes approximately $27 million in revenue relating to the full year contribution of acquisitions consummated in 2020 and through March 31, 2021.

The Company reiterated that the degree of additional impact, and timing of cessation of the effects of the COVID-19 pandemic on the Company's business remain uncertain. Hanger's outlook continues to assume significant continuing declines in the effects of the virus on public activities due to an increase in the rate of vaccination during the second quarter of 2021, and a full return to general pre-COVID business conditions by the end of June 2021.

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, Thursday, May 6, at 8:30 a.m. Eastern time to discuss the Company’s first quarter 2021 financial results and business outlook.

To participate, dial 844-750-4896 or 412-317-5292 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.

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 approximately 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; 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, 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 March 31,

 

 

2021

 

2020

Net revenues

 

$

237,470

 

 

$

233,739

 

Material costs

 

75,170

 

 

77,241

 

Personnel costs

 

89,880

 

 

89,185

 

Other operating costs

 

31,460

 

 

35,886

 

General and administrative expenses

 

30,941

 

 

31,769

 

Depreciation and amortization

 

7,998

 

 

8,831

 

Income (loss) from operations

 

2,021

 

 

(9,173

)

Interest expense, net

 

7,340

 

 

8,269

 

Non-service defined benefit plan expense

 

167

 

 

158

 

Loss before income taxes

 

(5,486

)

 

(17,600

)

Benefit for income taxes

 

(2,156

)

 

(1,852

)

Net loss

 

$

(3,330

)

 

$

(15,748

)

 

 

 

 

 

Basic and Diluted Per Common Share Data:

 

 

 

 

Basic and diluted loss per share

 

$

(0.09

)

 

$

(0.42

)

Weighted average shares used to compute basic and diluted earnings per common share

 

38,268,332

 

 

37,541,452

 

Table 2

Hanger, Inc.

Condensed Consolidated Balance Sheets

(Unaudited - in thousands)

 

 

 

As of March 31,

 

As of December 31,

 

 

2021

 

2020

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

70,316

 

 

$

144,602

 

Accounts receivable, net

 

118,162

 

 

128,596

 

Inventories

 

78,622

 

 

76,429

 

Income taxes receivable

 

12,863

 

 

12,888

 

Other current assets

 

15,489

 

 

12,357

 

Total current assets

 

295,452

 

 

374,872

 

Non-current assets:

 

 

 

 

Property, plant, and equipment, net

 

84,761

 

 

84,873

 

Goodwill

 

298,166

 

 

277,223

 

Other intangible assets, net

 

19,844

 

 

18,431

 

Deferred income taxes

 

55,482

 

 

54,877

 

Operating lease right-of-use assets

 

124,663

 

 

124,741

 

Other assets

 

16,204

 

 

15,734

 

Total assets

 

$

894,572

 

 

$

950,751

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

Current liabilities:

 

 

 

 

Current portion of long-term debt

 

$

11,064

 

 

$

10,085

 

Accounts payable

 

51,002

 

 

65,091

 

Accrued expenses and other current liabilities

 

62,491

 

 

62,861

 

Accrued compensation related costs

 

35,665

 

 

72,541

 

Current portion of operating lease liabilities

 

35,005

 

 

35,002

 

Total current liabilities

 

195,227

 

 

245,580

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

Long-term debt, less current portion

 

494,326

 

 

493,012

 

Operating lease liabilities

 

104,030

 

 

104,589

 

Other liabilities

 

51,745

 

 

56,593

 

Total liabilities

 

845,328

 

 

899,774

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

Common stock

 

387

 

 

383

 

Additional paid-in capital

 

364,524

 

 

365,503

 

Accumulated other comprehensive loss

 

(17,643

)

 

(20,215

)

Accumulated deficit

 

(297,328

)

 

(293,998

)

Treasury stock, at cost

 

(696

)

 

(696

)

Total shareholders’ equity

 

49,244

 

 

50,977

 

Total liabilities and shareholders’ equity

 

$

894,572

 

 

$

950,751

 

Table 3

Hanger, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited - in thousands)

 

 

 

For the Three Months Ended
March 31,

 

 

2021

 

2020

Cash flows used in operating activities:

 

 

 

 

Net loss

 

$

(3,330

)

 

$

(15,748

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

Depreciation and amortization

 

7,998

 

 

8,831

 

(Benefit) provision for doubtful accounts

 

(211

)

 

1,928

 

Share-based compensation expense

 

3,179

 

 

3,501

 

Deferred income taxes

 

(1,795

)

 

3,476

 

Amortization of debt discounts and issuance costs

 

472

 

 

409

 

Gain on sale and disposal of fixed assets

 

(524

)

 

(411

)

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

Accounts receivable, net

 

11,093

 

 

28,229

 

Inventories

 

(1,437

)

 

949

 

Other current assets and other assets

 

(3,492

)

 

(3,989

)

Income taxes

 

25

 

 

(5,303

)

Accounts payable

 

(14,055

)

 

(4,757

)

Accrued expenses and other current liabilities

 

(1,299

)

 

(385

)

Accrued compensation related costs

 

(36,936

)

 

(38,175

)

Other liabilities

 

(1,576

)

 

(1,153

)

Operating lease liabilities, net of amortization of right-of-use assets

 

(478

)

 

628

 

Net cash used in operating activities

 

(42,366

)

 

(21,970

)

Cash flows used in investing activities:

 

 

 

 

Acquisitions, net of cash acquired

 

(19,377

)

 

(26

)

Purchase of property, plant, and equipment

 

(6,541

)

 

(6,526

)

Purchase of therapeutic program equipment leased to third parties under operating leases

 

(395

)

 

(2,286

)

Proceeds from sale of property, plant, and equipment

 

796

 

 

595

 

Purchase of company-owned life insurance investment

 

 

 

(250

)

Net cash used in investing activities

 

(25,517

)

 

(8,493

)

Cash flows (used in) provided by financing activities:

 

 

 

 

Borrowings under revolving credit agreement

 

 

 

79,000

 

Payment of employee taxes on share-based compensation

 

(4,520

)

 

(4,146

)

Repayment of term loan

 

(1,263

)

 

(1,263

)

Payment on Seller Notes

 

(446

)

 

(1,446

)

Payments under vendor financing arrangements

 

(275

)

 

 

Payments of financing lease obligations

 

(265

)

 

(152

)

Proceeds from the exercise of options

 

366

 

 

 

Net cash (used in) provided by financing activities

 

(6,403

)

 

71,993

 

(Decrease) increase in cash and cash equivalents

 

(74,286

)

 

41,530

 

Cash and cash equivalents at beginning of period

 

144,602

 

 

74,419

 

Cash and cash equivalents at end of period

 

$

70,316

 

 

$

115,949

 

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 March 31,

 

 

2021

 

2020

 

 

 

 

 

Net Revenue (a)

 

 

 

 

Patient Care

 

$

195,682

 

 

$

190,183

 

Products & Services

 

41,788

 

 

43,556

 

Net revenue

 

$

237,470

 

 

$

233,739

 

 

 

 

 

 

EBITDA (b)

 

 

 

 

Patient Care

 

$

23,865

 

 

$

16,013

 

Products & Services

 

6,611

 

 

4,832

 

Corporate & Other

 

(20,457

)

 

(21,187

)

EBITDA (Non-GAAP)

 

$

10,019

 

 

$

(342

)

 

 

 

 

 

Adjusted EBITDA (b)

 

 

 

 

Patient Care

 

$

24,948

 

 

$

17,326

 

Products & Services

 

6,870

 

 

5,037

 

Corporate & Other

 

(18,274

)

 

(17,098

)

Adjusted EBITDA (Non-GAAP)

 

$

13,544

 

 

$

5,265

 

 

 

 

 

 

(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 Loss and Loss Per Share to
Adjusted Net Loss and Adjusted Loss 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 March 31,

 

 

2021

 

2020

 

 

 

 

 

Net loss - as reported (GAAP)

 

$

(3,330

)

 

$

(15,748

)

 

 

 

 

 

Adjustments:

 

 

 

 

Amortization expense

 

1,234

 

 

1,491

 

Third-party professional fees

 

 

 

1,638

 

Acquisition-related expenses

 

160

 

 

333

 

Hanger supply chain implementation costs

 

132

 

 

135

 

Severance expenses

 

54

 

 

 

Adjustments prior to tax effect

 

$

1,580

 

 

$

3,597

 

Tax effect of specified adjustments (a)

 

(1,219

)

 

1,509

 

Adjustments after taxes

 

361

 

 

5,106

 

Adjusted net loss (Non-GAAP)

 

$

(2,969

)

 

$

(10,642

)

 

 

 

 

 

Basic and diluted loss per share - as reported (GAAP)

 

$

(0.09

)

 

$

(0.42

)

Effect of above listed specified adjustments

 

0.01

 

 

0.14

 

Adjusted basic and diluted loss per share - as reported (Non-GAAP)

 

$

(0.08

)

 

$

(0.28

)

 

 

 

 

 

Shares used to compute basic and diluted loss per share

 

38,268,332

 

 

37,541,452

 

 

(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 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 Loss 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 March 31,

 

 

2021

 

2020

 

 

 

 

 

Net loss - as reported (GAAP)

 

$

(3,330

)

 

$

(15,748

)

 

 

 

 

 

Adjustments to calculate EBITDA:

 

 

 

 

Depreciation and amortization

 

7,998

 

 

8,831

 

Interest expense, net

 

7,340

 

 

8,269

 

Non-service defined benefit plan expense

 

167

 

 

158

 

Benefit for income taxes

 

(2,156

)

 

(1,852

)

Adjustments - net income to EBITDA

 

13,349

 

 

15,406

 

EBITDA (Non-GAAP)

 

10,019

 

 

(342

)

 

 

 

 

 

Further adjustments to calculate Adjusted EBITDA:

 

 

 

 

Third-party professional fees

 

 

 

1,638

 

Equity-based compensation

 

3,179

 

 

3,501

 

Acquisition-related expenses

 

160

 

 

333

 

Hanger supply chain implementation costs

 

132

 

 

135

 

Severance expenses

 

54

 

 

 

Further adjustments - EBITDA to Adjusted EBITDA

 

3,525

 

 

5,607

 

Adjusted EBITDA (Non-GAAP)

 

$

13,544

 

 

$

5,265

 

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 March 31,

 

 

2021

 

2020

Patient Care

 

 

 

 

Income from operations - as reported (GAAP)

 

$

19,050

 

 

$

11,537

 

Depreciation & amortization

 

4,815

 

 

4,476

 

EBITDA (Non-GAAP)

 

23,865

 

 

16,013

 

Further adjustments to calculate Adjusted EBITDA:

 

 

 

 

Equity-based compensation

 

897

 

 

1,178

 

Hanger supply chain implementation costs

 

132

 

 

135

 

Severance expenses

 

54

 

 

 

Further adjustments - EBITDA to Adjusted EBITDA

 

1,083

 

 

1,313

 

Adjusted EBITDA (Non-GAAP)

 

24,948

 

 

17,326

 

 

 

 

 

 

Products & Services

 

 

 

 

Income from operations - as reported (GAAP)

 

4,676

 

 

2,080

 

Depreciation & amortization

 

1,935

 

 

2,752

 

EBITDA (Non-GAAP)

 

6,611

 

 

4,832

 

Further adjustments to calculate Adjusted EBITDA:

 

 

 

 

Equity-based compensation

 

259

 

 

205

 

Further adjustments - EBITDA to Adjusted EBITDA

 

259

 

 

205

 

Adjusted EBITDA (Non-GAAP)

 

6,870

 

 

5,037

 

 

 

 

 

 

Corporate & Other

 

 

 

 

Loss from operations - as reported (GAAP)

 

(21,705

)

 

(22,790

)

Depreciation & amortization

 

1,248

 

 

1,603

 

EBITDA (Non-GAAP)

 

(20,457

)

 

(21,187

)

Further adjustments to calculate Adjusted EBITDA:

 

 

 

 

Third-party professional fees

 

 

 

1,638

 

Equity-based compensation

 

2,023

 

 

2,118

 

Acquisition related expenses

 

160

 

 

333

 

Further adjustments - EBITDA to Adjusted EBITDA

 

2,183

 

 

4,089

 

Adjusted EBITDA (Non-GAAP)

 

(18,274

)

 

(17,098

)

Total Adjusted EBITDA (Non-GAAP)

 

$

13,544

 

 

$

5,265

 

Table 8

Hanger, Inc.

Indebtedness

(Unaudited - in thousands)

 

 

 

As of March 31,

 

As of December 31,

 

 

2021

 

2020

Debt:

 

 

 

 

Term Loan B

 

$

489,850

 

 

$

491,113

 

Seller Notes

 

14,876

 

 

11,510

 

Deferred payment obligation

 

4,000

 

 

4,000

 

Finance lease liabilities and other

 

3,712

 

 

3,869

 

Total debt before unamortized discount and debt issuance costs

 

512,438

 

 

510,492

 

Unamortized discount and debt issuance costs, net

 

(7,048

)

 

(7,395

)

Total debt

 

$

505,390

 

 

$

503,097

 

 

 

 

 

 

Current portion of long-term debt:

 

 

 

 

Term Loan B

 

$

5,050

 

 

$

5,050

 

Seller Notes

 

5,043

 

 

4,060

 

Finance lease liabilities and other

 

971

 

 

975

 

Total current portion of long-term debt

 

11,064

 

 

10,085

 

Long-term debt

 

$

494,326

 

 

$

493,012

 

 

 

 

 

 

Net indebtedness:

 

 

 

 

Total debt before unamortized discount and debt issuance costs

 

$

512,438

 

 

$

510,492

 

Cash and cash equivalents

 

(70,316

)

 

(144,602

)

Net indebtedness

 

$

442,122

 

 

$

365,890

 

Table 9

Hanger, Inc.

Key Operating Metrics

 

 

 

As of and For the Three Months Ended March 31,

 

 

2021

 

2020

 

 

 

 

 

Same clinic revenue:

 

 

 

 

Decline rate on net revenue

 

(1.8)%

 

(1.7)%

Growth (decline) rate day adjusted (a)

 

1.4%

 

(3.2)%

 

 

 

 

 

Clinical locations:

 

 

 

 

Patient care clinics

 

718

 

694

Satellite clinics

 

107

 

110

Total clinical locations

 

825

 

804

 

(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.

 

Investor Relations Contacts:
Thomas Kiraly, Executive Vice President and Chief Financial Officer, Hanger, Inc.
512-777-3600
tkiraly@hanger.com

Seth Frank, Vice President, Treasury and Investor Relations, Hanger, Inc.
512-777-3573
sfrank@hanger.com

Source: Hanger, Inc.

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