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Hanger Reports First Quarter 2022 Financial Results

05/04/2022

Company Reports Strong Same Clinic Revenue Growth Trends; Reaffirms Guidance

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, 2022.

Financial Highlights

  • Net revenues were $261.3 million for the three months ended March 31, 2022, compared to $237.5 million for the same period in 2021, reflecting growth of 10.0 percent. Patient Care same clinic revenue growth per day was 6.9 percent during the period with continuing increases in work-in-process levels during the quarter.
  • Net loss was $8.0 million for the three months ended March 31, 2022, compared to $3.3 million for the same period in 2021. Loss from operations was $2.5 million for the quarter compared to income from operations of $2.0 million for the same period in 2021.
  • Adjusted EBITDA was $8.9 million in the first quarter of 2022, compared to $13.5 million for the same period in 2021, reflecting a decline of $4.6 million. Comparative earnings in the period were affected by a favorable $3.5 million disallowance and patient non-payment rate in the prior year period, as well as other items specific to the current year period.
  • GAAP loss per share was $0.21 for the first quarter of 2022, compared to $0.09 per share for the same period in 2021. Adjusted loss per share was $0.15 for the three months ended March 31, 2022, compared to $0.08 for the same period in 2021.
  • The Company reaffirmed its full year guidance for 2022.

Vinit Asar, President and Chief Executive Officer of Hanger, Inc., stated, "We are pleased with the strong rate of revenue growth achieved by our Patient Care business in the first quarter. We currently believe these positive growth trends will be sustainable as work-in-process levels have continued to increase during the quarter."

Mr. Asar continued, "While we encountered some operational difficulties and increased costs during the period, we believe these effects were for the most part temporary in nature and specific to our first quarter results. Based on this, we remain comfortable with and have reaffirmed our guidance for the year."

Segment Results for Three Months Ended March 31, 2022

Patient Care Segment

For the three months ended March 31, 2022, Patient Care net revenues were $219.8 million, an increase of $24.1 million, or 12.3 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 $11.2 million of incremental revenue.

Net same clinic revenue on a day-adjusted basis grew 6.9 percent during the first 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.

Excluding the effect of acquisitions, net revenue from prosthetics grew 7.7 percent and net revenue from orthotics grew 5.9 percent, each compared to the first quarter of 2021. Prosthetics comprised 52.1 percent of Patient Care segment net revenue for the quarter, compared to 51.7 percent in the same period of 2021. Income from operations in the Patient Care segment was $17.0 million during the first quarter of 2022, a decrease of $2.1 million compared to the $19.1 million reported in the prior year.

Payor disallowances and patient non-payment were 4.4 percent of gross charges during the first quarter of 2022 which compared to 2.9 percent during the first quarter of 2021, resulting in an approximate $3.5 million comparative decrease to revenue, income from operations and Adjusted EBITDA. During the quarter, the Patient Care segment's income from operations and Adjusted EBITDA incurred $1.2 million and $0.9 million, respectively, in increased costs associated with its fabrication facilities, in part due to increased reliance on higher cost third party fabrication services related to constraints encountered in its own operations due to the effects of the Omicron variant of COVID-19, the availability of staffing and delays in the opening of its new fabrication facility in Phoenix, Arizona. That facility was successfully opened prior to the end of the quarter. The segment also incurred $0.6 million in increased freight costs as compared with the first quarter of 2021.

Adjusted EBITDA for the segment was $23.1 million, which reflected a $1.9 million decrease compared to the first quarter of 2021. Adjusted EBITDA margin in the segment totaled 10.5 percent compared to 12.7 percent during the first quarter of 2021.

Products & Services Segment

For the three months ended March 31, 2022, Products & Services net revenues totaled $41.5 million, reflecting a decline of 0.8 percent compared with the same period in 2021. Revenue from the distribution of O&P componentry totaled $31.4 million, reflecting growth of $0.7 million, or 2.4 percent. Therapeutic solutions revenue in the first quarter totaled $10.1 million, a decline of $1.0 million, or 9.4 percent.

Income from operations for the Products & Services segment was $2.5 million in the first quarter of 2022 compared to $4.7 million in the same period of 2021. Adjusted EBITDA for the segment totaled $4.9 million for the first quarter of 2022, a $2.0 million decline compared with the same period of 2021. Adjusted EBITDA margin in the segment totaled 11.7 percent compared to 16.4 percent during the first quarter of 2021.

Corporate & Other

Expenses associated with corporate and other activities increased by $0.3 million to $22.0 million for the quarter ended March 31, 2022 compared to the same period in 2021. Excluding the effect of depreciation and amortization, and acquisition-related expense, the net cost of corporate and other activities increased by $0.7 million to $19.0 million in the first quarter of 2022.

Net Income; Interest Expense

Interest expense totaled $7.4 million for the three month period ended March 31, 2022, which is unchanged from the prior year period.

For the three month period ended March 31, 2022, net loss was $8.0 million compared with $3.3 million for the same period in 2021. GAAP diluted loss per share was $0.21 compared to $0.09 per share in 2021. Adjusted diluted loss per share was $0.15 for the three months ended March 31, 2022, compared to $0.08 per share for the same period in 2021.

Net Cash Used In Operating Activities; Liquidity

Cash flows used in operating activities for the three months ended March 31, 2022 were $8.3 million compared to cash flows used in operating activities of $42.4 million for the same period in 2021. The Company's days sales outstanding were 48 days as of March 31, 2022, which reflected a three-day increase as compared to the same period in 2021.

On March 31, 2022, the Company had liquidity of $167.2 million, comprised of $37.4 million in cash and cash equivalents, and $129.8 million in available borrowing capacity under its revolving credit facility. This compares to total liquidity of $165.1 million on March 31, 2021.

2022 Outlook

Due in part to favorable same clinic growth trends, the previous incorporation of disallowance trends similar to those experienced in the first quarter and the anticipated temporary nature of certain other costs incurred in the quarter, the Company's outlook for 2022 remains unchanged since its initial announcement on February 7, 2022.

As previously disclosed, the Company anticipates 2022 net revenue will be in a range between $1.190 billion and $1.220 billion, and Adjusted EBITDA in a range between $127 million and $132 million. The Company’s outlook for 2022 includes approximately $35 million in revenue relating to the full year effect of acquisitions consummated in 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

Hanger’s management team will host a conference call tomorrow, Thursday, May 5, 2022 at 8:30 a.m. Eastern time to discuss the Company’s first quarter 2022 financial results and business outlook.

To participate in the Company’s live conference call, please dial (844) 200-6205 or +1 (929) 526-1599 for international participants and reference access code 335781. A live webcast, replay of the call, and earnings release will be available on the Company’s Investor Relations website at https://investor.hanger.com/financial-reporting/quarterly-results. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call.

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 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.

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,

 

 

 

2022

 

 

 

2021

 

Net revenues

 

$

261,287

 

 

$

237,470

 

Material costs

 

 

85,592

 

 

 

75,170

 

Personnel costs

 

 

101,675

 

 

 

89,880

 

Other operating costs

 

 

36,168

 

 

 

31,498

 

General and administrative expenses

 

 

32,442

 

 

 

30,903

 

Depreciation and amortization

 

 

7,955

 

 

 

7,998

 

(Loss) income from operations

 

 

(2,545

)

 

 

2,021

 

Interest expense, net

 

 

7,385

 

 

 

7,340

 

Non-service defined benefit plan expense

 

 

160

 

 

 

167

 

Loss before income taxes

 

 

(10,090

)

 

 

(5,486

)

Benefit for income taxes

 

 

(2,113

)

 

 

(2,156

)

Net loss

 

$

(7,977

)

 

$

(3,330

)

 

 

 

 

 

Basic and diluted per common share data:

 

 

 

 

Basic and diluted loss per share

 

$

(0.21

)

 

$

(0.09

)

Weighted average shares used to compute basic and diluted loss per share

 

 

38,802,420

 

 

 

38,268,332

 

Table 2
Hanger, Inc.
Condensed Consolidated Balance Sheets
(Unaudited - in thousands)

 

 

As of March 31,

 

As of December 31,

 

 

 

2022

 

 

 

2021

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

37,423

 

 

$

61,692

 

Accounts receivable, net

 

 

139,617

 

 

 

152,058

 

Inventories

 

 

83,288

 

 

 

87,462

 

Income taxes receivable

 

 

548

 

 

 

581

 

Other current assets

 

 

18,527

 

 

 

16,536

 

Total current assets

 

 

279,403

 

 

 

318,329

 

Non-current assets:

 

 

 

 

Property, plant, and equipment, net

 

 

80,906

 

 

 

82,434

 

Goodwill

 

 

367,914

 

 

 

363,554

 

Other intangible assets, net

 

 

25,032

 

 

 

25,892

 

Deferred income taxes

 

 

45,743

 

 

 

45,494

 

Operating lease right-of-use assets

 

 

141,820

 

 

 

144,491

 

Other assets

 

 

18,844

 

 

 

17,945

 

Total assets

 

$

959,662

 

 

$

998,139

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

Current liabilities:

 

 

 

 

Current portion of long-term debt

 

$

13,535

 

 

$

14,938

 

Accounts payable

 

 

57,969

 

 

 

63,565

 

Accrued expenses and other current liabilities

 

 

58,391

 

 

 

60,399

 

Accrued compensation related costs

 

 

37,232

 

 

 

54,465

 

Current portion of operating lease liabilities

 

 

33,182

 

 

 

33,438

 

Total current liabilities

 

 

200,309

 

 

 

226,805

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

Long-term debt, less current portion

 

 

500,555

 

 

 

502,307

 

Operating lease liabilities

 

 

121,725

 

 

 

124,016

 

Other liabilities

 

 

28,520

 

 

 

34,840

 

Total liabilities

 

 

851,109

 

 

 

887,968

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

Common stock

 

 

392

 

 

 

389

 

Additional paid-in capital

 

 

373,092

 

 

 

373,644

 

Accumulated other comprehensive loss

 

 

(4,242

)

 

 

(11,150

)

Accumulated deficit

 

 

(259,993

)

 

 

(252,016

)

Treasury stock, at cost

 

 

(696

)

 

 

(696

)

Total shareholders’ equity

 

 

108,553

 

 

 

110,171

 

Total liabilities and shareholders’ equity

 

$

959,662

 

 

$

998,139

 

Table 3
Hanger, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited - in thousands)

 

 

For the Three Months Ended
March 31,

 

 

 

2022

 

 

 

2021

 

Cash flows used in operating activities:

 

 

 

 

Net loss

 

$

(7,977

)

 

$

(3,330

)

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

 

 

 

 

Depreciation and amortization

 

 

7,955

 

 

 

7,998

 

Benefit from doubtful accounts

 

 

(170

)

 

 

(211

)

Share-based compensation expense

 

 

2,903

 

 

 

3,179

 

Deferred income taxes

 

 

(2,466

)

 

 

(1,795

)

Amortization of debt discounts and issuance costs

 

 

518

 

 

 

472

 

Gain on sale and disposal of fixed assets

 

 

(228

)

 

 

(524

)

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

Accounts receivable, net

 

 

12,845

 

 

 

11,093

 

Inventories

 

 

4,259

 

 

 

(1,437

)

Other current assets and other assets

 

 

(2,540

)

 

 

(3,492

)

Income taxes

 

 

33

 

 

 

25

 

Accounts payable

 

 

(6,038

)

 

 

(14,055

)

Accrued expenses and other current liabilities

 

 

1,328

 

 

 

(1,299

)

Accrued compensation related costs

 

 

(17,245

)

 

 

(36,936

)

Other liabilities

 

 

(1,598

)

 

 

(1,576

)

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

 

 

123

 

 

 

(478

)

Net cash used in operating activities

 

 

(8,298

)

 

 

(42,366

)

Cash flows used in investing activities:

 

 

 

 

Acquisitions, net of cash acquired

 

 

(4,001

)

 

 

(19,377

)

Purchase of property, plant, and equipment

 

 

(4,003

)

 

 

(6,541

)

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

 

 

(450

)

 

 

(395

)

Proceeds from sale of property, plant, and equipment

 

 

551

 

 

 

796

 

Net cash used in investing activities

 

 

(7,903

)

 

 

(25,517

)

Cash flows used in financing activities:

 

 

 

 

Payment of employee taxes on share-based compensation

 

 

(3,452

)

 

 

(4,520

)

Repayment of term loan

 

 

(1,263

)

 

 

(1,263

)

Payment on Seller Notes

 

 

(3,087

)

 

 

(446

)

Payments of financing lease obligations

 

 

(266

)

 

 

(265

)

Payments under vendor financing arrangements

 

 

 

 

 

(275

)

Proceeds from the exercise of options

 

 

 

 

 

366

 

Net cash used in financing activities

 

 

(8,068

)

 

 

(6,403

)

Decrease in cash and cash equivalents

 

 

(24,269

)

 

 

(74,286

)

Cash and cash equivalents at beginning of period

 

 

61,692

 

 

 

144,602

 

Cash and cash equivalents at end of period

 

$

37,423

 

 

$

70,316

 

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, 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,

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

Net Revenue (a)

 

 

 

 

Patient Care

 

$

219,818

 

 

$

195,682

 

Products & Services

 

 

41,469

 

 

 

41,788

 

Net revenue

 

$

261,287

 

 

$

237,470

 

 

 

 

 

 

EBITDA (b)

 

 

 

 

Patient Care

 

$

21,737

 

 

$

23,865

 

Products & Services

 

 

4,530

 

 

 

6,611

 

Corporate & Other

 

 

(20,857

)

 

 

(20,457

)

EBITDA (Non-GAAP)

 

$

5,410

 

 

$

10,019

 

 

 

 

 

 

Adjusted EBITDA (b)

 

 

 

 

Patient Care

 

$

23,059

 

 

$

24,948

 

Products & Services

 

 

4,855

 

 

 

6,870

 

Corporate & Other

 

 

(18,996

)

 

 

(18,274

)

Adjusted EBITDA (Non-GAAP)

 

$

8,918

 

 

$

13,544

 

 

 

 

 

 

(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,

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

Net loss - as reported (GAAP)

 

$

(7,977

)

 

$

(3,330

)

 

 

 

 

 

Adjustments:

 

 

 

 

Amortization expense

 

 

1,791

 

 

 

1,234

 

Acquisition-related expenses

 

 

85

 

 

 

160

 

Hanger supply chain implementation costs

 

 

386

 

 

 

132

 

Severance expenses

 

 

134

 

 

 

54

 

Adjustments prior to tax effect

 

$

2,396

 

 

$

1,580

 

 

 

 

 

 

Tax effect of specified adjustments (a)

 

 

(266

)

 

 

(1,219

)

Adjustments after taxes

 

 

2,130

 

 

 

361

 

 

 

 

 

 

Adjusted net loss (Non-GAAP)

 

$

(5,847

)

 

$

(2,969

)

 

 

 

 

 

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

 

$

(0.21

)

 

$

(0.09

)

Effect of above listed specified adjustments

 

 

0.06

 

 

 

0.01

 

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

 

$

(0.15

)

 

$

(0.08

)

 

 

 

 

 

Shares used to compute basic and diluted loss per share

 

 

38,802,420

 

 

 

38,268,332

 

(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 Loss 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, 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,

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

Net loss - as reported (GAAP)

 

$

(7,977

)

 

$

(3,330

)

 

 

 

 

 

Adjustments to calculate EBITDA:

 

 

 

 

Depreciation and amortization

 

 

7,955

 

 

 

7,998

 

Interest expense, net

 

 

7,385

 

 

 

7,340

 

Non-service defined benefit plan expense

 

 

160

 

 

 

167

 

Benefit for income taxes

 

 

(2,113

)

 

 

(2,156

)

Adjustments - net loss to EBITDA

 

 

13,387

 

 

 

13,349

 

EBITDA (Non-GAAP)

 

 

5,410

 

 

 

10,019

 

 

 

 

 

 

Further adjustments to calculate Adjusted EBITDA:

 

 

 

 

Equity-based compensation

 

 

2,903

 

 

 

3,179

 

Acquisition-related expenses

 

 

85

 

 

 

160

 

Hanger supply chain implementation costs

 

 

386

 

 

 

132

 

Severance expenses

 

 

134

 

 

 

54

 

Further adjustments - EBITDA to Adjusted EBITDA

 

 

3,508

 

 

 

3,525

 

Adjusted EBITDA (Non-GAAP)

 

$

8,918

 

 

$

13,544

 

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 EBITDA 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,

 

 

 

2022

 

 

 

2021

 

Patient Care

 

 

 

 

Income from operations - as reported (GAAP)

 

$

16,993

 

 

$

19,050

 

Depreciation & amortization

 

 

4,744

 

 

 

4,815

 

EBITDA (Non-GAAP)

 

 

21,737

 

 

 

23,865

 

Further adjustments to calculate Adjusted EBITDA:

 

 

 

 

Equity-based compensation

 

 

831

 

 

 

897

 

Hanger supply chain implementation costs

 

 

470

 

 

 

132

 

Severance expenses

 

 

21

 

 

 

54

 

Further adjustments - EBITDA to Adjusted EBITDA

 

 

1,322

 

 

 

1,083

 

Adjusted EBITDA (Non-GAAP)

 

 

23,059

 

 

 

24,948

 

 

 

 

 

 

Products & Services

 

 

 

 

Income from operations - as reported (GAAP)

 

 

2,507

 

 

 

4,676

 

Depreciation & amortization

 

 

2,023

 

 

 

1,935

 

EBITDA (Non-GAAP)

 

 

4,530

 

 

 

6,611

 

Further adjustments to calculate Adjusted EBITDA:

 

 

 

 

Equity-based compensation

 

 

296

 

 

 

259

 

Hanger supply chain implementation costs

 

 

(84

)

 

 

 

Severance expenses

 

 

113

 

 

 

 

Further adjustments - EBITDA to Adjusted EBITDA

 

 

325

 

 

 

259

 

Adjusted EBITDA (Non-GAAP)

 

 

4,855

 

 

 

6,870

 

 

 

 

 

 

Corporate & Other

 

 

 

 

Loss from operations - as reported (GAAP)

 

 

(22,045

)

 

 

(21,705

)

Depreciation & amortization

 

 

1,188

 

 

 

1,248

 

EBITDA (Non-GAAP)

 

 

(20,857

)

 

 

(20,457

)

Further adjustments to calculate Adjusted EBITDA:

 

 

 

 

Equity-based compensation

 

 

1,776

 

 

 

2,023

 

Acquisition related expenses

 

 

85

 

 

 

160

 

Further adjustments - EBITDA to Adjusted EBITDA

 

 

1,861

 

 

 

2,183

 

Adjusted EBITDA (Non-GAAP)

 

 

(18,996

)

 

 

(18,274

)

Total Adjusted EBITDA (Non-GAAP)

 

$

8,918

 

 

$

13,544

 

Table 8
Hanger, Inc.
Indebtedness
(Unaudited - in thousands)

 

 

As of March 31,

 

As of December 31,

 

 

 

2022

 

 

 

2021

 

Debt:

 

 

 

 

Term Loan B

 

$

484,800

 

 

$

486,063

 

Seller Notes

 

 

27,725

 

 

 

29,812

 

Deferred payment obligation

 

 

4,000

 

 

 

4,000

 

Finance lease liabilities and other

 

 

3,097

 

 

 

3,344

 

Total debt before unamortized discount and debt issuance costs

 

 

519,622

 

 

 

523,219

 

Unamortized discount and debt issuance costs, net

 

 

(5,532

)

 

 

(5,974

)

Total debt

 

$

514,090

 

 

$

517,245

 

 

 

 

 

 

Current portion of long-term debt:

 

 

 

 

Term Loan B

 

$

5,050

 

 

$

5,050

 

Seller Notes

 

 

7,595

 

 

 

8,969

 

Finance lease liabilities and other

 

 

890

 

 

 

919

 

Total current portion of long-term debt

 

 

13,535

 

 

 

14,938

 

Long-term debt

 

$

500,555

 

 

$

502,307

 

 

 

 

 

 

Net indebtedness:

 

 

 

 

Total debt before unamortized discount and debt issuance costs

 

$

519,622

 

 

$

523,219

 

Cash and cash equivalents

 

 

(37,423

)

 

 

(61,692

)

Net indebtedness

 

$

482,199

 

 

$

461,527

 

Table 9
Hanger, Inc.
Key Operating Metrics

 

 

As of and For the Three Months Ended March 31,

 

 

2022

 

2021

 

 

 

 

 

Same clinic revenue (a):

 

 

 

 

Growth (decline) rate prior to disallowances and PNP

 

7.9

%

 

(1.1

)%

Growth rate on net revenue

 

6.9

%

 

1.4

%

 

 

 

 

 

Clinical locations:

 

 

 

 

Patient care clinics

 

757

 

 

718

 

Satellite clinics

 

118

 

 

107

 

Total clinical locations

 

875

 

 

825

 

(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.

Investor Relations Contact:
Asher Dewhurst
(443) 213-0503
HangerIR@westwicke.com

Source: Hanger, Inc.
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