November 8, 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 third quarter and nine months ended September 30, 2021.
Financial Highlights
- Net revenue was $289.8 million for the three months ended September 30, 2021, compared to $256.6 million for the same period in 2020, reflecting growth of 12.9 percent.
- Net income was $21.1 million for the three months ended September 30, 2021, compared to $6.8 million for the same period in 2020. Income from operations was $25.7 million for the quarter compared to $13.1 million for the same period in 2020. Third quarter 2020 GAAP income from operations and net income benefited from approximately $16 million related to temporary labor and operating cost reductions taken during that period in response to the COVID-19 pandemic.
- Adjusted EBITDA was $37.2 million in the third quarter of 2021, compared to $27.9 million for the same period in 2020, reflecting growth of $9.3 million or 33.5 percent. Adjusted EBITDA results for the third quarter of 2020 benefited in part, from the temporary cost reductions discussed above.
- GAAP diluted earnings per share was $0.54 per share for the third quarter of 2021, compared to $0.18 per share for the same period in 2020. Adjusted diluted earnings per share was $0.39 for the three months ended September 30, 2021, compared to $0.20 for the same period in 2020.
- Hanger revised its annual financial outlook for net revenue and Adjusted EBITDA primarily due to the continuing impact of the COVID pandemic on patient volumes. The Company anticipates net revenue in the range of $1.115 billion to $1.140 billion and Adjusted EBITDA in a range between $124 million and $128 million.
Vinit Asar, President and Chief Executive Officer of Hanger, Inc., stated, “Hanger’s third quarter net revenue grew 12.9 percent, reflecting a continued recovery in our Patient Care business complemented by acquisitions of independent O&P clinics across the United States.”
Mr. Asar added, “While we continue to demonstrate favorable recovery from the peak COVID periods of 2020, and were operating at 99 percent of 2019 levels in the quarter, our third quarter revenue levels were affected by the Delta variant and fell short of our original expectations. Although we believe that market conditions and Hanger’s performance will continue to strengthen as COVID subsides in 2022, we are adjusting our outlook for the remainder of the current year to reflect the lingering impact of the pandemic on our business.”
Complete reconciliations of GAAP to non-GAAP financial measures are provided in the tables located at the end of this earnings release.
Segment Results for Three Months Ended September 30, 2021
Patient Care Segment
For the three months ended September 30, 2021, Patient Care net revenue was $244.4 million, an increase of $31.7 million, or 14.9 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 $9.7 million of incremental revenue.
Net same clinic revenue on a day-adjusted basis grew 10.7 percent during the third quarter of 2021 compared to the same quarter in the prior year period. Patient Care results benefited from the continued improvement in patient volumes from the decreased levels of demand experienced due to the COVID pandemic during 2020. In the third quarter of 2021, Hanger’s Patient Care net revenue on a same-clinic basis totaled approximately 99 percent of the level experienced in the third quarter of 2019, which reflected an improvement from the 96 percent level reported in the second quarter of 2021.
Excluding the effect of acquisitions, net revenue from prosthetics grew 10.5 percent and net revenue from orthotics grew 11.0 percent, each compared to the third quarter of 2020. Prosthetics comprised 55 percent of Patient Care segment net revenue for the quarter compared to 56 percent in the same period of 2020.
Income from operations in the Patient Care segment was $41.3 million during the third quarter of 2021, an increase of $9.1 million compared to the $32.2 million reported in the prior year.
Adjusted EBITDA for the segment was $47.2 million, which reflected an $8.0 million increase compared to the third quarter of 2020. Adjusted EBITDA margin in the segment totaled 19.3 percent compared to 18.4 percent during the third quarter of 2020. Segment income from operations and Adjusted EBITDA in the prior year period benefited from temporary labor and other cost reductions.
Products & Services Segment
For the three months ended September 30, 2021, Products & Services net revenue totaled $45.5 million, reflecting growth of 3.4 percent compared with the same period in 2020. Revenue from the distribution of O&P componentry totaled $34.7 million, reflecting growth of $1.9 million, or 5.9 percent. Therapeutic solutions revenue in the third quarter totaled $10.8 million, a decline of $0.4 million, or 4.0 percent.
Income from operations for the Products & Services segment was $4.6 million in the third quarter of 2021 compared to $5.1 million in the same period of 2020. Adjusted EBITDA for the segment totaled $6.8 million for the third quarter of 2021, a $1.3 million decline compared with the same period of 2020. Adjusted EBITDA margin in the segment totaled 15.0 percent compared to 18.6 percent during the third quarter of 2020. Products & Services segment income from operations, Adjusted EBITDA and margin were impacted by the restoration of temporary labor and other cost reductions that benefited results for the third quarter of 2020.
Corporate & Other
Expenses associated with corporate and other activities decreased by $4.0 million to $20.2 million for the quarter ended September 30, 2021 compared to the same period in 2020. Excluding the effect of depreciation and amortization, and acquisition-related expense, the net cost of corporate and other activities decreased by $2.7 million to $16.8 million in the third quarter of 2021.
Net Income; Interest Expense
Interest expense totaled $7.3 million for the three month period ended September 30, 2021, a decrease of $0.7 million from the prior year period.
For the three month period ended September 30, 2021, net income was $21.1 million compared with $6.8 million for the same period in 2020. GAAP diluted income per share was $0.54 compared to $0.18 per share in 2020. Adjusted diluted income per share was $0.39 for the three months ended September 30, 2021, compared to $0.20 per share for the same period in 2020.
Financial Highlights for the Nine Months Ended September 30, 2021
- For the period, net revenue was $808.1 million, compared to $723.8 million in 2020, reflecting a net revenue increase of 11.6 percent. Acquisitions of O&P clinics consummated in 2020 and 2021 contributed $24.7 million of incremental revenue for the nine month period.
- Patient Care net revenue totaled $676.8 million, reflecting growth of $78.1 million, or 13.0 percent. Year-to-date same clinic day-adjusted net revenue per day grew 10.2 percent. For the period, Hanger’s Patient Care segment net revenue on a day-adjusted same-clinic basis totaled approximately 98 percent of the level reported for the equivalent period in 2019.
- Net revenue from prosthetics, excluding acquisitions, grew 5.5 percent on a day-adjusted basis, while orthotics revenue grew by 16.3 percent, also on a net day-adjusted basis and excluding acquisitions. For the year-to date, prosthetics constituted 54 percent of Patient Care segment net revenue.
- Products & Services segment net revenue totaled $131.3 million, an increase of $6.2 million, or 4.9 percent growth, driven by an increase of $7.7 million in revenue from distribution services and a $1.5 million decline in revenue from therapeutic solutions.
- GAAP net income was $27.9 million compared to $22.1 million in 2020. Hanger’s GAAP results for the first nine months of 2020 included a benefit of $20.6 million to other operating costs related to the Company’s receipt of CARES Act healthcare provider grants as compared to $0.7 million in the 2021 period. These grants were received under the Public Health and Social Services Emergency Fund, also referred to as The Provider Relief Fund, established by the CARES Act and are excluded from Adjusted EBITDA.
- Adjusted EBITDA totaled $81.7 million, an increase of $12.1 million as compared to the $69.7 million reported in 2020. The increase in Adjusted EBITDA for the nine month period resulted from improvement in net revenue partially offset by the restoration of temporary cost reductions taken during the second and third quarters of 2020.
- GAAP diluted earnings per share was $0.71, compared to $0.57 per share in 2020. Adjusted diluted earnings per share was $0.58 for the first nine months of 2021, compared to $0.27 for the same period in 2020.
Net Cash Provided by Operating Activities; Liquidity
Cash flows provided by operating activities for the three months ending September 30, 2021 were $12.5 million compared to cash flows provided by operating activities of $13.9 million for the same period in 2020. The Company’s days sales outstanding were 42 days as of September 30, 2021, which reflected a one day improvement as compared to the same period in 2020.
On September 30, 2021, the Company had liquidity of $170.5 million, comprised of $75.6 million in cash and cash equivalents, and $94.9 million in available borrowing capacity under its revolving credit facility. This compares to total liquidity of $171.1 million on June 30, 2021.
Outlook for the Remainder of 2021
The Company’s outlook for 2021, originally provided on March 1, 2021, assumed a continued sequential improvement in the third and fourth quarters of the orthotics and prosthetics business environment related to the continued cessation of the effects of COVID-19 on patient volumes. While Hanger’s financial results for the third quarter and the first nine-months of 2021 reflect continued progress with regard to a return to more normal patient volumes, results through the current period remain below pre-pandemic levels.
As a result, the Company is adjusting its 2021 financial outlook as originally provided on March 1, 2021. Hanger now anticipates net revenue for the year in a range between $1.115 billion and $1.140 billion, and Adjusted EBITDA in a range between $124 million and $128 million. This outlook compares with prior ranges of $1.145 billion and $1.175 billion for net revenue and $130 million and $135 million for Adjusted EBITDA. The Company’s revised outlook for 2021 includes approximately $42 million in revenue relating to the full year contribution of acquisitions consummated in 2020 and through September 30, 2021. The Company anticipates a return to normalized growth in 2022, as the COVID-19 pandemic subsides and market conditions improve.
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, Tuesday, November 9, at 8:30 a.m. Eastern time to discuss the Company’s third quarter 2021 financial results and business outlook.
To participate, dial 844-200-6205 or 929-526-1599 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/quarterly-results/default.aspx.
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 more than 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; 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; 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, June 30, 2021 and September 30, 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.
*For full detailed report, please download the PDF on the top of the page.
Contact:
Annie Myers
External Relations Manager
(210) 440-7380 or [email protected]