8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

CURRENT REPORT

FORM 8-K

Pursuant to Section 13 or 15(d) of the Securities Exchange Act

Date of Report (Date of Earliest Event Reported): July 30, 2007

Hanger Orthopedic Group, Inc.
(Exact name of registrant as specified in its charter)

Delaware	1-10670	84-0904275
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		Identification No.)

Two Bethesda Metro Center, Suite 1200
Bethesda, Maryland 20814
(Address of principal executive offices (zip code))

301-986-0701
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

[   ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[   ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a — 12)

[   ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[   ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13d-4(c))

Item 2.02 Results of Operations and Financial Condition

        On July 30, 2007, the Registrant issued a press release announcing its financial results for the quarter ended June 30, 2007. A copy of the Registrant’s press release is attached hereto as Exhibit 99 to this Current Report.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

99 Press Release Issued by the Registrant on July 30, 2007

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

HANGER ORTHOPEDIC GROUP, INC.

By: /s/ Hai V. Tran
Hai V. Tran
Vice President and Treasurer

Dated: August 2, 2007

EX-99

Contacts:	Ivan R. Sabel	(301) 986-0701
	George E. McHenry	(301) 986-0701
	Hai V. Tran	(301) 986-0701

News Release

HANGER ORTHOPEDIC GROUP, INC. ANNOUNCES
NET INCOME APPLICABLE TO COMMON STOCK OF $0.17 PER DILUTED SHARE
FOR THE QUARTER ENDED JUNE 30, 2007, COMPARED TO A NET LOSS APPLICABLE
TO COMMON STOCK OF $0.42 PER DILUTED SHARE IN THE PRIOR YEAR

        BETHESDA, MARYLAND, July 30, 2007 – Hanger Orthopedic Group, Inc. (NYSE:HGR) announces net sales of $160.4 million and net income applicable to common stock of $4.7 million, or $0.17 per diluted share, for the quarter ended June 30, 2007, compared to a loss applicable to common stock of $9.3 million, or a loss of $0.42 per diluted share in the same period of the prior year.

Net sales for the quarter ended June 30, 2007 increased by $7.5 million, or 4.9%, to $160.4 million from $152.9 million in the prior year’s comparable quarter. The sales growth was primarily the result of a $5.8 million, or 4.2%, increase in same-center sales in our patient care business, and a $1.1 million, or 7.5%, increase in sales of the Company’s distribution segment. Gross profit for the second quarter of 2007 increased by $3.9 million to $81.4 million, or 50.8% of net sales, compared to $77.5 million, or 50.7% of net sales, in the second quarter of the prior year. The increase in gross profit was due principally to the increase in sales.

Income from operations was $17.8 million in the second quarter of 2007, compared to $16.0 million in the second quarter of 2006, a $1.8 million, or 11.4%, increase primarily due to the aforementioned increase in gross profit, offset by a $2.0 million increase in selling, general and administrative expenses. The increase in selling, general and administrative expenses included a $1.1 million increase in labor expenses to support the growth in revenues and for merit increases, and a $0.5 million increase in the investments relating to the Company’s growth initiatives.

Net income applicable to common stock for the second quarter of 2007 was $4.7 million, or $0.17 per diluted share, compared to the prior year’s net loss applicable to common stock of $9.3 million, or a loss of $0.42 per diluted share.

Net sales for the six months ended June 30, 2007 increased by $10.9 million, or 3.7%, to $304.2 million from $293.3 million in the prior year. The sales growth was principally the result of a $9.1 million, or 3.5%, increase in same-center sales in our patient care business, and a $0.8 million, or 3.0%, increase in sales of the Company’s distribution segment. Gross profit for the first six months of 2007, increased by $5.0 million to $152.7 million, or 50.2% of net sales, compared to $147.7 million, or 50.4% of net sales, in the first six months of the prior year principally due to the sales increase.

Income from operations increased by $3.3 million in the first six months of 2007 to $30.2 million from $26.9 million in the same period of the prior year due to an increase in gross profit offset by an increase in selling, general and administrative expenses. Selling, general and administrative expenses increased by $1.5 million primarily due to a $1.3 million increase in labor costs and a $1.0 million increase in investments in our growth initiatives, offset by a $0.7 million decrease in non-labor expenses.

Net income applicable to common stock for the first six months of 2007 was $6.0 million, or $0.23 per diluted share, compared to a loss of $10.0 million, or a loss of $0.46 per diluted share, in the prior year.

Cash flow from operations was $17.9 million in the second quarter of 2007, compared to the prior year’s cash flow from operations of $5.7 million. This $12.2 million improvement was principally due to the premium paid on the extinguishment of debt in the second quarter of 2006 and the increase in net income in the second quarter of 2007. For the first six months of 2007, cash flow from operations was $20.1 million compared to the prior year’s cash used in operations of $7.1 million, a $27.2 million improvement. The increase was due primarily to the increased earnings, improved working capital and the $11.4 million premium paid for extinguishment of debt, as part of our refinancing in 2006.

Commenting on the results, Ivan R. Sabel, Chairman and Chief Executive Officer of Hanger Orthopedic Group, remarked, “We steadily improved our performance during the second quarter of 2007, as our patient care centers generated same center sales growth of over 4.0%. In addition to our sound financial performance, we also increased the pace of our acquisition program with the acquisition of Paris O&P, a multi-site provider of orthotic and prosthetic services; and the July 2^nd acquisition of SureFit, a leading manufacturer and distributor of diabetic footwear in the podiatric market. We were also proud to announce the signing of a commercialization agreement with Teijin Limited to make the WalkAide® System available in Japan. Our strong performance, combined with the milestones I just mentioned, demonstrate progress on both our organic and strategic growth initiatives.”

        Hanger Orthopedic Group, Inc., headquartered in Bethesda, Maryland, is the world’s premier provider of orthotic and prosthetic patient care services. Hanger is the market leader in the United States, owning and operating 621 patient care centers in 45 states and the District of Columbia, with 3,502 employees including 1,029 practitioners (as of 6/30/07). Hanger is organized into four units. The two key operating units are patient care which consists of nationwide orthotic and prosthetic practice centers and distribution which consists of distribution centers managing the supply chain of orthotic and prosthetic componentry to Hanger and third party patient care centers. The third is Linkia which is the first and only provider network management company for the orthotics and prosthetics industry. The fourth unit, Innovative Neurotronics, introduces emerging neuromuscular technologies developed through independent research in a collaborative effort with industry suppliers worldwide. For more information on Innovative Neurotronics, Inc. or the WalkAide, visit http://www.ininc.us. For more information on Hanger, visit http://www.hanger.com.

_________________

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 and the other factors identified 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.

_________________

-tables to follow-

Hanger Orthopedic Group, Inc.
(Dollars in thousands, except share and per share amounts)
(unaudited)

Income Statement:	Three Months Ended June 30,					Six Months Ended June 30,
	2007		2006			2007		2006
Net sales	$	160,366	$	152,855		$	304,217	$	293,300
Cost of goods sold (exclusive of depreciation and amortization)		78,945		75,346			151,494		145,561
Selling, general and administrative		59,714		57,751			114,872		113,378
Depreciation and amortization		3,878		3,759			7,626		7,447
Income from operations		17,829		15,999			30,225		26,914
Interest expense		9,125		9,914			18,465		19,414
Extinguishment of debt		--		16,415			--		16,415
Income (loss) before taxes		8,704		(10,330	)		11,760		(8,915	)
Provision (Benefit) for income taxes		3,612		(4,606	)		4,884		(4,020	)
Net income		5,092		(5,724	)		6,876		(4,895	)
Less preferred stock dividend and accretion-7% Redeemable
Preferred Stock		--		1,186			--		2,751
Less preferred stock dividends declared and accretion-Series A
Convertible Preferred Stock		416		167			833		167
Less beneficial conversion feature accretion-Series A
Convertible Preferred Stock		--		2,224			--		2,224
Net income (loss) applicable to common stock	$	4,676	$	(9,301	)	$	6,043	$	(10,037	)
Basic Per Common Share Data:
Net income (loss)	$	0.21	$	(0.42	)	$	0.27	$	(0.46	)
Shares used to compute basic per common share amounts		22,399,292		21,946,319			22,295,606		21,891,694
Diluted Per Common Share Data:
Net income (loss)	$	0.17	$	(0.42	)	$	0.23	$	(0.46	)
Shares used to compute diluted per common share amounts		30,049,735		21,946,319			29,908,304		21,891,694
Cash Flow Data:
Cash flow provided by (used in) operations	$	17,950	$	5,697		$	20,106	$	(7,074	)
Capital expenditures	$	4,969	$	2,560		$	9,094	$	5,177
Increase in cash	$	10,632	$	6,519		$	6,947	$	4,770

Balance Sheet Data:	June 30, 2007		December 31, 2006		June 30, 2006		December 31, 2005
Working Capital	$	165,422	$	157,208	$	150,372	$	135,551
Total Debt	$	409,184	$	410,624	$	422,727	$	378,431
Shareholders’ Equity	$	175,879	$	167,677	$	156,927	$	165,242

Income Statement as a % of Net Sales:	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of goods sold (exclusive of depreciation and amortization)		49.2	%		49.3	%		49.8	%		49.6	%
Selling, general and administrative		37.2	%		37.8	%		37.8	%		38.8	%
Depreciation and amortization		2.4	%		2.5	%		2.5	%		2.5	%
Income from operations		11.2	%		10.4	%		9.9	%		9.1	%
Interest expense, net		5.7	%		6.5	%		6.1	%		6.6	%
Extinguishment of debt		0.0	%		10.7	%		0.0	%		5.6	%
Income before taxes		5.5	%		-6.8%			3.8	%		-3.1%
Provision (Benefit) for income taxes		2.3	%		-3.1%			1.6	%		-1.4%
Net income		3.2	%		-3.7%			2.2	%		-1.7%

Hanger Orthopedic Group, Inc.

Statistical Data:	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
Patient-care centers		621			621			621			621
Number of practitioners		1,029			1,012			1,029			1,012
Number of states (including D.C.)		46			46			46			46
Payor mix:
Private pay and other		58.9	%		58.6	%		59.3	%		58.5	%
Medicare		30.1	%		30.8	%		29.7	%		30.8	%
Medicaid		6.0	%		6.3	%		6.2	%		6.4	%
VA		5.0	%		4.3	%		4.8	%		4.3	%
Percentage of net sales from:
Patient-care services		90.0	%		90.6	%		90.4	%		90.5	%
Distribution		9.7	%		9.4	%		9.4	%		9.5	%