UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
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the Securities Exchange Act of 1934 (Amendment No. )
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Preliminary Proxy Statement |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under §240.14a-12 |
Hanger, Inc.
(Name
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Hanger Reports Second Quarter 2022 Financial Results
AUSTIN, Texas, August 8, 2022 -
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.
SOURCE Hanger, Inc.
Investor Relations Contact:
Asher Dewhurst
(443) 213-0503
HangerIR@westwicke.com
Table 1
Hanger, Inc.
Condensed Consolidated Statements of Operations
(Unaudited - in thousands, except share and per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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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)
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|
|
|
|
|
|
|
|
As of June 30, |
|
As of December 31, |
|
|
2022 |
|
2021 |
|
ASSETS |
|
|
|
|
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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.
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