Hanger Reports 7% Net Sales Growth and 8% Adjusted Diluted EPS Growth for 2013 - KCTV5

Hanger Reports 7% Net Sales Growth and 8% Adjusted Diluted EPS Growth for 2013

Information contained on this page is provided by an independent third-party content provider. WorldNow and this Station make no warranties or representations in connection therewith. If you have any questions or comments about this page please contact pressreleases@worldnow.com.

SOURCE Hanger, Inc.

AUSTIN, Texas, Feb. 12, 2014 /PRNewswire/ --

  • Reports 2013 Adjusted Diluted EPS of $1.95
  • Reports 2013 Diluted EPS of $1.80
  • Establishes 2014 Financial Guidance

Hanger, Inc. (NYSE: HGR) today announced net sales of $278.2 million for the quarter ended December 31, 2013, an increase of $8.6 million from net sales of $269.6 million for the fourth quarter of 2012.  Adjusted diluted earnings per share, which excludes non-recurring tax costs, costs related to acquisitions and costs related to implementation of the Company's new clinic management system (which the Company refers to as "Janus"), were $0.54 for the fourth quarter of 2013 and equal to the prior year fourth quarter adjusted diluted earnings per share.  Diluted earnings per share were $0.52 for the fourth quarter of 2013 compared to $0.58 for the same period of 2012.

The fourth quarter net sales increase of $8.6 million, or 3.2%, was the result of an $11.1 million, or 4.9%, increase in the Patient Care segment, and a $2.5 million decline in the Products & Services segment. The $11.1 million increase in Patient Care segment sales was comprised of a $2.8 million, or 1.3%, increase in same center sales, with the remaining $8.3 million increase driven by acquisitions. The reclassification of certain accounts receivable write-offs and reserves previously classified as bad debts and subsequently classified as a reduction in net sales, first reported in the third quarter of 2013, had an impact on the calculation of same center sales growth, which would have been 2.7% under the previous classification.  The $2.5 million decline in Products & Services segment sales was principally the result of the impact on the Company's distribution business of the acquisitions of independent O&P companies made by the Patient Care segment in 2012 and 2013, and a decline in demand for higher priced prosthetic devices (such as micro processor-controlled knees) from independent O&P practices due to pressure they are facing from Medicaid audits.

Income from operations for the quarter ended December 31, 2013 was $34.6 million, compared to $36.5 million in the prior year.  Adjusted income from operations for the fourth quarter, which excludes non-recurring tax costs, costs related to acquisitions and costs related to the implementation of Janus, was $35.3 million, compared to $37.4 million in the prior year.  Income from operations declined principally due to increased cost of materials and accounts receivable reserves related to operational issues experienced at a small non-clinic unit within the Company's Patient Care segment.  

Net sales for the year ended December 31, 2013 increased $72.0 million, or 7.4%, to $1,046.4 million from $974.4 million in the same period of 2012.  The sales increase was driven by an $18.8 million, or 2.4%, increase in same center sales in the Patient Care segment, a $51.1 million increase from acquired entities, as well as a $2.1 million, or 1.2%, increase in sales in the Products & Services segment.  As with the fourth quarter results, the impact of the reclassification announced in the third quarter of 2013 had an adverse impact on the calculation of same center sales growth for the year, which would have been 3.4% under the previous classification.  During 2013, the Company acquired O&P operations totaling approximately $20 million in annualized sales.  Diluted earnings per share were $1.80 for the full-year 2013 compared to $1.83 for the same period of 2012.  Adjusted diluted earnings per share, which excludes non-recurring tax benefits, costs related to acquisitions and the implementation of Janus, and debt issuance cost associated with the June 2013 refinancing of the Company's bank credit facilities, increased 8.3% to $1.95 for the full-year 2013 compared to adjusted diluted earnings per share of $1.80 for the full-year 2012.

The Company's cash flow from operations increased by $7.0 million to $88.3 million for the twelve months ended December 31, 2013 compared to an $81.3 million cash inflow for the same period in 2012.  As of December 31, 2013, the Company had $181.3 million in total liquidity, including $9.9 million of cash and $171.4 million available under its revolving credit facility, net of approximately $25.0 million of borrowings and $3.6 million in letters of credit.  The Company's leverage ratio, as defined in its credit facilities, was 2.5 times at year-end 2013.

"As we reflect on 2013, we view it as both successful and challenging," commented Vinit Asar, President and Chief Executive Officer. "We successfully grew adjusted diluted EPS by 8% while weathering sequestration, an increase in the number of Medicare audits that are affecting many health care providers and operational issues in one of our businesses.  Entering 2014 our core business remains healthy, and we are making a number of investments in our back-office which we believe will improve our future operations."  

The Company expects 2014 revenues of between $1.110 and $1.130 billion, resulting from 3% to 5% same center sales growth in its Patient Care Segment, and a slight decline in Products & Services Segment sales.  The decline in Products & Services Segment sales reflects the carry-over impact of a large one-time sale during 2013, continued acquisition of its O&P distribution customers by the Patient Care Segment, and increasing pressure on independent O&P customers resulting from continuing Medicare audits.  The Company anticipates adjusted diluted earnings per share to rise 8% to 13% to between $2.10 and $2.20, excluding approximately $0.05 for training and implementation costs of Janus.  The earnings growth includes an $11 million, or $0.19 per diluted share, investment the company is making in its back-office operations, including centralization of its billing and processing activities and improvements in its finance, accounting and information technology functions.  Operational improvements and costs savings related to these investments are expected to be realized beginning in late 2014.  Despite these significant investments, the Company anticipates maintaining its adjusted operating margins at a level similar to the prior year and generating cash flow from operations of between $90 and $100 million.  The Company also plans to invest between $40 and $50 million in capital additions during the year.  In the month of January 2014, the Company acquired O&P practices with annualized sales of approximately $20 million. In view of this level of acquisitions in January, the Company's goal in 2014 is to acquire a total of $35 to $45 million of O&P annualized revenue.

A conference call to discuss the Company's 2013 results and 2014 guidance is scheduled to begin at 9:00 a.m., ET, on Thursday, February 13, 2014. Those wishing to participate should call 1-877-662-6095. A replay will be available until Friday, February 21, 2014, by dialing 1-855-859-2056 and referencing Conference ID # 36619714.

About Hanger, Inc. – Built on the legacy of James Edward Hanger, the first amputee of the American Civil War, Hanger, Inc. (NYSE: HGR) delivers orthotic and prosthetic (O&P) patient care, and distributes O&P products and rehabilitative solutions to the broader market.  Hanger's Patient Care segment is the largest owner and operator of O&P patient care clinics with in excess of 740 locations nationwide.  Through its Products & Services segment, Hanger distributes branded and private label O&P devices, products and components, and provides rehabilitative solutions.  Steeped in over 150 years of clinical excellence and innovation, Hanger's vision is to be the partner of choice for products and services that enhance human physical capability.  For more information on Hanger, visit www.hanger.com and follow us at www.Facebook.com/HangerNews, www.Twitter.com/HangerNews, and www.YouTube.com/HangerNews.  

This document contains forward-looking statements relating to the Company's results of operations.  The United States Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements.  Statements relating to future results of operations in this document reflect the current views of management.  However, various risks, uncertainties and contingencies could cause actual results or performance to differ materially from those expressed in, or implied by, these statements, including the Company's ability to enter into and derive benefits from managed care contracts, the demand for the Company's orthotic and prosthetic services and products, the impact of reviews, audits and investigations conducted from time to time by governmental agencies, and the other factors identified in Item 1A, "Risk Factors" in the Company's periodic reports on Form 10-K and Form 10-Q filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934.  The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.

 

 

Hanger, Inc.

(in thousands, except for share and per share amounts)

(Unaudited)










Three Months Ended


Twelve Month Ended


December 31,


December 31,

Income Statement:

2013


2012


2013


2012

Net sales

$                  278,237


$              269,636


$               1,046,438


$              974,429

Material costs

92,461


83,487


319,046


296,193

Personnel costs

91,840


86,605


369,738


335,328

Other operating expenses

49,870


53,822


186,304


178,918

Depreciation and amortization

9,468


9,220


37,486


34,652

Income from operations

34,598


36,502


133,864


129,338

Interest expense

4,973


7,956


26,475


31,169

Extinguishment of debt

-


-


6,645


-

Income before taxes

29,625


28,546


100,744


98,169

Provision for income taxes

11,269


8,220


37,160


34,477

Net income

$                    18,356


$                20,326


$                    63,584


$                63,692









Basic Per Common  Share Data:








Net income

$                        0.53


$                    0.59


$                        1.83


$                    1.86

Shares used to compute basic per share amounts

34,922,599


34,453,084


34,818,214


34,282,591









Diluted Per Common Share Data:








Net income 

$                        0.52


$                    0.58


$                        1.80


$                    1.83

Shares used to compute diluted per share amounts

35,463,539


34,945,547


35,394,721


34,832,830









Reconciliation of GAAP financial measures to Non-GAAP financial measures:
















Income from operations

$                    34,598


$                36,502


$                  133,864


$              129,338

Acquisition expenses

398


480


919


1,171

Janus expenses

303


438


1,394


533

Adjusted Income from operations

$                    35,299


$                37,420


$                  136,177


$              131,042









Net income 

$                    18,356


$                20,326


$                    63,584


$                63,692

Acquisition expenses

398


480


919


1,171

Janus expenses

303


438


1,394


533

Extinguishment of debt

-


-


6,645


-

Tax effect of adjustments

(259)


(344)


(3,315)


(638)

Non-recurring tax expense (benefits)

234


(2,080)


(183)


(2,080)

Adjusted net income 

$                    19,032


$                18,820


$                    69,044


$                62,678









Adjusted net income per diluted share

$                        0.54


$                    0.54


$                        1.95


$                    1.80


















Three Months Ended


Twelve Month Ended


December 31,


December 31,

Income Statement as a % of Net Sales:

2013


2012


2013


2012

Net sales

100.0%


100.0%


100.0%


100.0%

Material costs

33.2%


31.0%


30.5%


30.4%

Personnel costs

33.0%


32.1%


35.3%


34.4%

Other operating expenses

18.0%


20.0%


17.7%


18.3%

Depreciation and amortization

3.4%


3.4%


3.6%


3.6%

Income from operations

12.4%


13.5%


12.9%


13.3%

Interest expense

1.8%


2.9%


2.6%


3.2%

Extinguishment of debt

0.0%


0.0%


0.7%


0.0%

Income before taxes

10.6%


10.6%


9.6%


10.1%

Provision for income taxes

4.0%


3.1%


3.5%


3.6%

Net income 

6.6%


7.5%


6.1%


6.5%









Adjusted income from operations

12.7%


13.9%


13.0%


13.4%

Adjusted net income

6.8%


7.0%


6.6%


6.4%









Note:  Financial data reflects the revised classification


 

 

Hanger, Inc.

( in thousands, except for statistical data)

(Unaudited)










Three Months Ended


Twelve Month Ended


December 31, 


December 31, 

Cash Flow Data:

2013


2012


2013


2012

Cash flow provided by operations 

$                      19,729


$                      22,312


$                      88,255


$                      81,319

Capital expenditures

$                      10,976


$                        8,286


$                      38,446


$                      33,163

Increase/(decrease) in cash and cash equivalents

$                        2,644


$                    (36,409)


$                     (9,351)


$                   (23,685)

















Balance Sheet Data:





December 31, 2013


December 31, 2012

Cash and cash equivalents





$                        9,860


$                     19,211

Days Sales Outstanding (DSO's) *





65


60

Working Capital 





$                    270,003


$                   251,465

Total Debt





$                    468,259


$                   520,646

Shareholders' Equity





$                    580,220


$                   503,094









*excludes acquired accounts receivable balances









Three Months Ended


Twelve Months Ended


December 31, 


December 31, 


2013


2012


2013


2012

Revenue Mix:








Patient Care

85.5%


84.1%


83.4%


82.4%

Products and Services

14.5%


15.9%


16.6%


17.6%

















Patient Care Payor Mix:








Commercial and other

62.0%


60.4%


60.0%


59.6%

Medicare

27.4%


28.0%


28.5%


28.6%

Medicaid

4.6%


5.6%


5.2%


5.7%

VA

6.0%


6.0%


6.3%


6.1%









Note: Financial data reflects the revised classification.







 

Management relies on the non-GAAP items as the primary measures to review and assess operating performance and management teams. The Company believes it is useful to investors to provide disclosures of its operating results on the same basis as that used by management.  Management and investors also review the non-GAAP items to evaluate the Company's overall performance and to compare its current operating results with corresponding periods and with other companies in the health care industry. You should not consider the non-GAAP items in isolation or as a substitute for net income, operating cash flows or other cash flow statement data determined in accordance with accounting principles generally accepted in the United States. Because the non-GAAP items are not measures of financial performance under accounting principles generally accepted in the United States and are susceptible to varying calculations, they may not be comparable to similarly titled measures of other companies.  Adjusted net income, Adjusted income from operations, and Adjusted net income per diluted share are the non-GAAP financial measures.

©2012 PR Newswire. All Rights Reserved.

Powered by WorldNow
KCTV 5 News

Online Public File:
KCTV  KSMO

Powered by WorldNow CNN
All content © 2014, KCTV; Kansas City, MO. (A Meredith Corporation Station) and WorldNow. All Rights Reserved.
For more information on this site, please read our Privacy Policy and Terms of Service.