May 5, 2021
AUSTIN, Texas–(BUSINESS WIRE)– Hanger, Inc. (NYSE: HNGR), a leading provider of orthotic and prosthetic (O&P) patient care services and solutions, today announced its financial results for the first quarter ended March 31, 2021.
Financial Highlights
- Net revenue was $237.5 million for the three months ended March 31, 2021, compared to $233.7 million for the same period in 2020, reflecting growth of 1.6 percent.
- Net loss was $3.3 million for the three months ended March 31, 2021, compared to $15.7 million for the same period in 2020. Income from operations was $2.0 million for the quarter compared to a loss of $9.2 million for the same period in 2020.
- Adjusted EBITDA was $13.5 million in the first quarter of 2021, compared to $5.3 million for the same period in 2020, reflecting growth of $8.3 million.
- GAAP loss per share was $0.09 per share for the first quarter of 2021, compared to a loss of $0.42 per share for the same period in 2020. Adjusted diluted loss per share was $0.08 for the three months ended March 31, 2021, compared to a loss per share of $0.28 for the same period in 2020.
- On March 31, 2021, the Company had $165.1 million in liquidity, reflecting an increase of $33.3 million as compared with March 31, 2020.
Vinit Asar, President and Chief Executive Officer of Hanger, Inc., stated, “We are pleased with our first quarter performance which was a direct result of the solid efforts of our team nationwide. Hanger overcame the effects of the COVID surge as well as the weather impact that affected our clinical and distribution operations in the South. Adjusted EBITDA growth was ahead of our expectations due to favorable cost management this quarter, while cash flow benefited from solid collection trends in both of our business segments. We are pleased to have re-established growth and are hopeful that vaccination rates and COVID trends continue to enable a return to normal business conditions.”
Complete reconciliations of GAAP to non-GAAP financial measures are provided in the tables located at the end of this press release.
Segment Results for Three Months Ended March 31, 2021
Patient Care Segment
For the three months ended March 31, 2021, Patient Care net revenue was $195.7 million, an increase of $5.5 million, or 2.9 percent, compared to the same period in 2020. For the three month period, acquisitions of O&P clinics that were consummated in 2020 and 2021 contributed $9.0 million of incremental revenue.
Net same clinic revenue on a day-adjusted basis grew by 1.4 percent during the first quarter of 2021 compared to the same quarter in the prior year period. Reported growth in the segment was achieved despite the adverse impact of severe winter weather conditions in key markets during February as well as the continuing impact of the COVID-19 pandemic. The segment also reflected significant improvements in collections and disallowed revenue rates compared to the first quarter of 2020.
Excluding the effect of acquisitions, as compared to the first quarter of 2020, net revenue from prosthetics grew 1.0 percent in the quarter and net revenue from orthotics grew 1.9 percent. Prosthetics comprised 52 percent of Patient Care segment net revenue during the first quarter of 2021 and 2020.
In the first quarter of 2021, patient appointment levels decreased by three percent as compared to the first quarter of 2020. This reflects improvement from the 12 percent appointment decline experienced in the fourth quarter of 2020 as compared to the prior year quarter. As of March 31, 2021, the Company had re-opened all patient care clinics that were temporarily closed during 2020 due to the COVID-19 pandemic.
Income from operations in the Patient Care segment was $19.1 million during the first quarter of 2021, an increase of $7.5 million compared to the $11.5 million reported in the prior year.
Adjusted EBITDA for the segment was $24.9 million, which reflected a $7.6 million or 44.0 percent increase. Adjusted EBITDA margin in the segment totaled 12.7 percent compared to 9.1 percent during the first quarter of 2020. Segment Adjusted EBITDA and margins benefited from lower disallowance rates and personnel costs during the quarter.
Products & Services Segment
For the three months ended March 31, 2021, Products & Services net revenue totaled $41.8 million, a decline of 4.1 percent compared with the same period in 2020. Revenue from the distribution of O&P componentry declined by $1.0 million, or 3.3 percent. This decrease primarily related to there being two fewer operating days in the quarter. Therapeutic solutions revenue declined $0.8 million, or 6.2 percent.
Income from operations for the Products & Services segment grew to $4.7 million in the first quarter of 2021 compared to $2.1 million in the same period of 2020. Adjusted EBITDA for the segment totaled $6.9 million for the first quarter of 2021, a $1.8 million improvement compared with the same period of 2020. Adjusted EBITDA margin in the segment totaled 16.4 percent compared to 11.6 percent during the first quarter of 2020.
Corporate & Other
Expenses associated with corporate and other activities increased by $1.1 million to $21.7 million for the quarter ended March 31, 2021 compared to the same period in 2020. Excluding the effect of depreciation and amortization and non-cash equity-based compensation expense, the net cost of corporate and other activities increased by $1.2 million to $18.3 million in the first quarter of 2021.
Net Income; Interest Expense
Interest expense totaled $7.3 million for the three month period ended March 31, 2021, a decrease of $0.9 million from the prior year period.
For the three month period ended March 31, 2021, net loss was $3.3 million compared with $15.7 million for the same period in 2020. GAAP diluted loss per share was $0.09 compared to a loss of $0.42 per share in 2020. Adjusted diluted loss per share was $0.08 for the three months ended March 31, 2021, compared to a loss of $0.28 per share for the same period in 2020.
Net Cash Provided by Operating Activities; Liquidity
Cash flows used by operating activities for the three months ending March 31, 2021 were $42.3 million compared to cash flows used in operating activities of $22.0 million for the same period in 2020. The Company continued to achieve strong cash collections during the first quarter of 2021 as its days sales outstanding decreased by five days to 45 days as of March 31, 2021 from 50 days on March 31, 2020.
On March 31, 2021, the Company had liquidity of $165.1 million, comprised of $70.3 million in cash and cash equivalents, and $94.8 million in available borrowing capacity under its revolving credit facility. This compares to total liquidity of $131.8 million on March 31, 2020.
2021 Outlook
The Company re-affirmed its financial outlook for 2021 as originally provided on March 1, 2021. Hanger anticipates net revenue in a range between $1.145 billion and $1.175 billion, and Adjusted EBITDA in a range between $130 million and $135 million.
The Company’s outlook for 2021 includes approximately $27 million in revenue relating to the full year contribution of acquisitions consummated in 2020 and through March 31, 2021.
The Company reiterated that the degree of additional impact, and timing of cessation of the effects of the COVID-19 pandemic on the Company’s business remain uncertain. Hanger’s outlook continues to assume significant continuing declines in the effects of the virus on public activities due to an increase in the rate of vaccination during the second quarter of 2021, and a full return to general pre-COVID business conditions by the end of June 2021.
Adjusted EBITDA in this outlook is provided on a non-GAAP basis only because a reconciliation to the most comparable GAAP financial measure, net income, is not available without unreasonable effort due to the unpredictable nature of reconciling items that render such a reconciliation not meaningful for investors.
Conference and Webcast Details
The Company’s management team will host a conference call tomorrow, Thursday, May 6, at 8:30 a.m. Eastern time to discuss the Company’s first quarter 2021 financial results and business outlook.
To participate, dial 844-750-4896 or 412-317-5292 outside the U.S. and Canada, and ask to be joined into the Hanger, Inc. call. A live webcast, replay of the call and earnings release, will be available on the Company’s Investor Relations website: www.investor.hanger.com/financial-reporting.
Additional Notes
A reconciliation of GAAP and non-GAAP financial results is included in the tables provided at the back of this press release. The Company has provided certain supplemental key statistics relating to its results for certain prior periods. These key statistics are non-GAAP measures used by the Company’s management to analyze the Company’s business results that are being provided for informational and analytical context.
Accompanying supplemental information will be posted to the Investor Relations section of Hanger’s web site at www.hanger.com/investors.
About Hanger, Inc. – Headquartered in Austin, Texas, Hanger, Inc. (NYSE: HNGR) provides comprehensive, outcomes-based orthotic and prosthetic (O&P) services through its Patient Care segment, with approximately 800 Hanger Clinic locations nationwide. Through its Products & Services segment, Hanger distributes branded and private label O&P devices, products and components, and provides rehabilitative solutions. Recognized by Forbes as one of America’s Best Employers for 2021, and rooted in 160 years of clinical excellence and innovation, Hanger is a purpose-driven company with a vision to lead the O&P markets by providing superior patient care, outcomes, services and value, aimed at empowering human potential. For more information on Hanger, visit investor.hanger.com.
This earnings release contains statements that are forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include information concerning our liquidity and our possible or assumed future results of operations, including descriptions of our business strategies. These statements often include words such as “believe,” “expect,” “project,” “potential,” “anticipate,” “intend,” “plan,” “estimate,” “seek,” “will,” “may,” “would,” “should,” “could,” “forecasts” or similar words. These statements are based on certain assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate in these circumstances. We believe these assumptions are reasonable, but you should understand that these statements are not guarantees of performance or results, and our actual results could differ materially from those expressed in the forward-looking statements due to a variety of important factors, both positive and negative, that may be revised or supplemented in subsequent releases or reports. These statements involve risks, estimates, assumptions, and uncertainties that could cause actual results to differ materially from those expressed in these statements and elsewhere in this release. These uncertainties include, but are not limited to, the financial and business impacts of COVID-19 on our operations and the operations of our customers, suppliers, governmental and private payers and others in the healthcare industry and beyond; federal laws governing the health care industry; governmental policies affecting O&P operations, including with respect to reimbursement; failure to successfully implement a new enterprise resource planning system or other disruptions to information technology systems; the inability to successfully execute our acquisition strategy, including integration of recently acquired O&P clinics into our existing business; changes in the demand for our O&P products and services, including additional competition in the O&P services market; disruptions to our supply chain; our ability to enter into and derive benefits from managed-care contracts; our ability to successfully attract and retain qualified O&P clinicians; and other risks and uncertainties generally affecting the health care industry. For additional information and risk factors that could affect the Company, see its Form 10-K for the year ended December 31, 2020 and Quarterly Report on Form 10-Q for the three months ended March 31, 2021, each as filed with the Securities and Exchange Commission. The information contained in this press release is made only as of the date hereof, even if subsequently made available by the Company on its website or otherwise.
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Contact:
Annie Myers
External Relations Manager
(210) 440-7380 or [email protected]