UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
Date of Report (Date of Earliest Event Reported): November 7, 2019
Hanger, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
|
1-10670 |
|
84-0904275 |
10910 Domain Drive, Suite 300
Austin, Texas 78758
(Address of principal executive offices (zip code))
(512) 777-3800
(Registrants 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):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a - 12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13d-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock, par value $0.01 per share |
|
HNGR |
|
New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02. Results of Operations and Financial Condition.
On November 7, 2019, Hanger, Inc. (the Company) issued a press release regarding the filing of the Companys Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2019. A copy of the press release is furnished as Exhibit 99.1 to this report.
The information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is intended to be furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing. In addition, this report and the press release contain statements intended as forward-looking statements that are subject to the cautionary statements about forward-looking statements set forth in the press release.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibit:
EXHIBIT INDEX
Exhibit No. |
|
Description |
|
|
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99.1 |
|
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, INC. | |
|
| |
|
|
|
|
By: |
/s/ Thomas E. Hartman |
|
|
Thomas E. Hartman |
|
|
Senior Vice President and General Counsel |
|
|
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Dated: November 7, 2019 |
|
|
Hanger Reports Third Quarter 2019 Financial Results
AUSTIN, Texas, November 7, 2019 - 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, 2019.
Financial Highlights for the Third Quarter of 2019
· Net revenue was $279.6 million for the three months ended September 30, 2019, compared to $262.9 million for the same period in 2018, reflecting an increase of 6.3 percent. Within the Patient Care segment, net same clinic revenue on a day-adjusted basis grew by 2.1 percent.
· GAAP net income totaled $5.7 million for the three months ended September 30, 2019, compared to $4.4 million for the same period in 2018. GAAP income from operations was $17.4 million for the quarter compared to $15.9 million for the same period in 2018.
· Adjusted EBITDA was $32.6 million in the third quarter, compared to $31.1 million for the same period in 2018, reflecting an increase of $1.5 million or 4.8 percent. Growth in Adjusted EBITDA was driven by increased Patient Care segment revenue and contribution margin, which was partially offset by a decrease in contribution from the Products & Services segment, as well as an increase in Corporate & Other costs.
· GAAP diluted earnings per share was $0.15 for the third quarter of 2019, compared to $0.12 for the same period in 2018. Adjusted diluted earnings per share was $0.25 for the three months ended September 30, 2019, compared to $0.22 for the same period in 2018, which reflected an increase of 13.6 percent.
· The Company reaffirms its 2019 financial outlook (see 2019 Outlook within this release).
Vinit Asar, President and Chief Executive Officer of Hanger, Inc., stated, We are pleased with the solid revenue growth our Patient Care segment achieved in the third quarter. Our results reflected same clinic revenue growth of 2.1 percent which was driven by a 4.0 percent rate of growth in prosthetics. When coupled with the effect of acquisitions, this segment achieved a 7.9 percent overall rate of growth. With nine months of the year completed, we are continuing to execute within the mid-range of our financial outlook for 2019.
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 September 30, 2019
Patient Care Segment
For the three months ended September 30, 2019, Patient Care net revenue was $230.9 million, an increase of $16.9 million or 7.9 percent, compared to the same period in 2018. Total revenue growth for the segment includes $8.5 million of revenue from O&P clinics acquired in late 2018 and early 2019, net of consolidations and closures.
Net same clinic revenue on a day-adjusted basis grew by 2.1 percent during the quarter. Revenue from prosthetics, excluding acquisitions, increased 4.0 percent in the quarter on a day-adjusted basis. Net revenue from orthotics, excluding acquisitions, was consistent with the same period in 2018 on a day-adjusted basis as growth in orthotics was offset by a modest decline in shoes and inserts. Prosthetics comprised 55.0 percent of Patient Care segment net revenue during the third quarter of 2019 as compared with 54.0 percent during the same period in 2018.
Income from operations in the Patient Care segment was $36.1 million during the third quarter of 2019, reflecting growth of $3.6 million compared to the $32.5 million reported in the prior year. Adjusted EBITDA for the segment was $42.2 million, which reflected a $4.0 million or 10.4 percent increase compared to the prior year period. Adjusted EBITDA margin in the segment totaled 18.3 percent compared to 17.8 percent during the third quarter of 2018. Margin growth was driven by flow-through from the year-over-year increase in revenue, partially offset by higher materials costs and an increase in other expenses.
Products & Services Segment
For the three months ended September 30, 2019, Products & Services net revenue totaled $48.7 million, which was generally consistent with the same period in 2018. Revenue from the distribution of O&P componentry increased by $1.9 million, or 5.7 percent, and this growth was offset by a $2.1 million decrease in revenue from therapeutic solutions.
Income from operations for the Products & Services segment decreased by $1.7 million to $5.1 million in the third quarter of 2019 compared to the same period in 2018. Adjusted EBITDA for the Products & Services segment was $8.1 million for the third quarter of 2019, which reflected a $1.6 million decrease compared with the same period of 2018. The decline in therapeutic solutions revenue as well as lower margins within O&P distribution impacted segment earnings in the quarter.
Corporate & Other
The loss from operations relating to corporate and other activities increased by $0.4 million to $23.8 million for the quarter ended September 30, 2019 compared to the same period in 2018. The increase in Corporate & Other expenses relates to costs associated with the initial planning and design for the implementation of new financial and supply chain systems.
Excluding the effect of depreciation and amortization, excess third party professional fees, non-cash equity compensation expense and certain acquisition-related expenses, the net cost of corporate and other activities increased by $0.9 million to $17.6 million in the third quarter of 2019.
Net Income; Interest Expense
Interest expense totaled $9.0 million in each of the three month periods ended September 30, 2019 and 2018.
For the three months ended September 30, 2019, net income was $5.7 million compared with $4.4 million the same period in 2018. For the three months ended September 30, 2019, GAAP diluted earnings per share was $0.15, compared to $0.12 per share in 2018. Adjusted diluted earnings per share was $0.25 for the three months ended September 30, 2019, compared to $0.22 per share for the same period in 2018.
Financial Highlights for the Nine Months Ended September 30, 2019
Net revenue was $797.2 million for the nine months ended September 30, 2019, compared to $763.9 million for the same period of 2018, reflecting net revenue growth of 4.4 percent. For the nine month period, acquisitions that occurred in late 2018 and early 2019 contributed $19.1 million to net revenue, net of consolidations and closures.
Patient Care net revenue grew $32.0 million, or 5.1 percent, for the year-to-date period to $652.7 million. Net same clinic revenue on a day-adjusted basis for the first nine months of 2019 totaled 1.8 percent. Revenue from prosthetics increased by 2.7 percent on a day-adjusted basis, while orthotics revenue increased by 0.7 percent also on a day-adjusted basis.
Products & Services segment net revenue grew $1.3 million, or 0.9 percent, driven by growth of $6.8 million in distribution services, offset by a $5.5 million decrease in revenue from therapeutic solutions.
GAAP net income was $8.8 million for the nine months ended September 30, 2019, compared to a $5.3 million net loss for the same period in 2018. Results for the year-to-date period ending September 30, 2018 included a $17.0 million pre-tax loss on the extinguishment of debt related to the Companys March
2018 refinancing, which was partially offset by a $3.7 million one-time gain related to favorable settlements.
Adjusted EBITDA of $81.9 million for the first nine months of 2019 compares with the $81.0 million reported in the prior year period.
For the nine months ended September 30, 2019, GAAP diluted earnings per share was $0.23, compared to a loss of $0.14 per share in 2018. Adjusted diluted earnings per share was $0.45 for the first nine months of 2019, compared to $0.38 per share for the same period in 2018.
Net Cash Provided by Operating Activities; Liquidity
Cash flows provided by operating activities for the three months ending September 30, 2019 were $23.5 million compared to $20.3 million for the same period in 2018.
On September 30, 2019, the Company had liquidity of $144.8 million, comprised of $49.9 million in cash and cash equivalents, and $94.8 million in available borrowing capacity under its revolving credit facility, compared to liquidity of $133.0 million on June 30, 2019.
2019 Outlook
Based on year-to-date results, the Company reaffirms its full-year 2019 net revenue and Adjusted EBITDA outlook of: Revenue in a range between $1.075 billion and $1.105 billion, and Adjusted EBITDA in a range between $121 million and $126 million. The Company plans to provide its financial outlook for 2020 when it reports its fourth quarter and full year 2019 results in March 2020.
This financial outlook for 2019 does not incorporate contributions from potential future acquisitions. Adjusted EBITDA 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 Companys management team will host a conference call tomorrow, Friday, November 8, at 8:30 a.m. Eastern time to discuss the Companys third quarter 2019 financial results and business outlook.
To participate, dial 866-270-1533 or 412-317-0797 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 Companys Investor Relations website: 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 Companys management to analyze the Companys business results that are being provided for informational and analytical context.
Accompanying supplemental information will be posted to the Investor Relations section of Hangers web site at www.hanger.com/investors.
About Hanger, Inc. Built on the legacy of James Edward Hanger, the first amputee of the American Civil War, Hanger, Inc. (NYSE: HNGR) delivers orthotic and prosthetic (O&P) patient care, and distributes O&P products and rehabilitative solutions. Hangers Patient Care segment is the largest owner and operator of O&P patient care clinics with approximately 800 patient care locations nationwide. Through its Products & Services segment, Hanger distributes O&P devices, products and components, and provides rehabilitative solutions. With over 150 years of clinical excellence and innovation, Hangers vision is to lead the orthotic & prosthetic markets by providing superior patient care, outcomes, services and value. For more information on Hanger, visit www.hanger.com.
This press release contains certain forward-looking statements relating to the Company. All statements, other than statements of historical fact included herein, are forward looking statements. These forward-looking statements are often identified by the use of forward-looking terminology such as preliminary, intends, expects, plans, anticipates, believes, views or similar expressions and involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks, and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. These uncertainties include, but are not limited to, the risk of its identified material weaknesses in the Companys internal control over financial reporting adversely affecting its ability to report its financial condition and results of operations in a timely and accurate manner; any litigation relating to the Companys accounting practices, financial statements and other financial data, periodic reports or other corporate actions; changes in the demand for the Companys O&P products and services; uncertainties relating to the results of operations or recently acquired O&P patient care clinics; the Companys ability to enter into and derive benefits from managed-care contracts; the Companys ability to successfully attract and retain qualified O&P clinicians; federal laws governing the health care
industry; uncertainties inherent in investigations and legal proceedings; governmental policies affecting O&P operations; 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, 2018 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.
SOURCE Hanger, Inc.
Investor Relations Contacts:
Thomas Kiraly, Executive Vice President and Chief Financial Officer, Hanger, Inc.
512-777-3600
tkiraly@hanger.com
Seth Frank, Vice President, Treasury and Investor Relations, Hanger, Inc.
512-777-3573
sfrank@hanger.com
###
Table 1
Hanger, Inc.
Condensed Consolidated Statements of Operations
(Unaudited - in thousands, except share and per share amounts)
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
| ||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
| ||||
Net revenues |
|
$ |
279,638 |
|
$ |
262,946 |
|
$ |
797,155 |
|
$ |
763,907 |
|
Material costs |
|
92,034 |
|
84,805 |
|
261,810 |
|
247,677 |
| ||||
Personnel costs |
|
94,594 |
|
90,853 |
|
272,795 |
|
266,515 |
| ||||
Other operating costs |
|
32,771 |
|
30,999 |
|
100,067 |
|
92,631 |
| ||||
General and administrative expenses |
|
29,834 |
|
28,308 |
|
87,474 |
|
80,467 |
| ||||
Professional accounting and legal fees |
|
3,629 |
|
3,107 |
|
9,576 |
|
12,189 |
| ||||
Depreciation and amortization |
|
9,373 |
|
8,950 |
|
26,906 |
|
27,552 |
| ||||
Income from operations |
|
17,403 |
|
15,924 |
|
38,527 |
|
36,876 |
| ||||
Interest expense, net |
|
8,954 |
|
8,939 |
|
25,973 |
|
28,519 |
| ||||
Loss on extinguishment of debt |
|
|
|
|
|
|
|
16,998 |
| ||||
Non-service defined benefit plan expense |
|
173 |
|
176 |
|
519 |
|
528 |
| ||||
Income (loss) before income taxes |
|
8,276 |
|
6,809 |
|
12,035 |
|
(9,169 |
) | ||||
Provision (benefit) for income taxes |
|
2,585 |
|
2,440 |
|
3,260 |
|
(3,848 |
) | ||||
Net income (loss) |
|
$ |
5,691 |
|
$ |
4,369 |
|
$ |
8,775 |
|
$ |
(5,321 |
) |
|
|
|
|
|
|
|
|
|
| ||||
Basic and Diluted Per Common Share Data: |
|
|
|
|
|
|
|
|
| ||||
Basic earnings (loss) per share |
|
$ |
0.15 |
|
$ |
0.12 |
|
$ |
0.24 |
|
$ |
(0.14 |
) |
Weighted average shares used to compute basic earnings per common share |
|
37,349,144 |
|
36,856,881 |
|
37,218,234 |
|
36,716,568 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Diluted earnings (loss) per share |
|
$ |
0.15 |
|
$ |
0.12 |
|
$ |
0.23 |
|
$ |
(0.14 |
) |
Weighted average shares used to compute diluted earnings per common share |
|
37,986,860 |
|
37,556,594 |
|
37,921,767 |
|
36,716,568 |
|
Table 2
Hanger, Inc.
Condensed Consolidated Balance Sheets
(Unaudited - in thousands)
|
|
As of September 30, |
|
As of December 31, |
| ||
|
|
2019 |
|
2018 |
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
|
$ |
49,947 |
|
$ |
95,114 |
|
Accounts receivable, net |
|
145,378 |
|
143,986 |
| ||
Inventories |
|
75,693 |
|
67,690 |
| ||
Income taxes receivable |
|
|
|
379 |
| ||
Other current assets |
|
14,615 |
|
18,731 |
| ||
Total current assets |
|
285,633 |
|
325,900 |
| ||
Non-current assets: |
|
|
|
|
| ||
Property, plant and equipment, net |
|
84,490 |
|
89,489 |
| ||
Goodwill |
|
226,348 |
|
198,742 |
| ||
Other intangible assets, net |
|
17,985 |
|
15,478 |
| ||
Deferred income taxes |
|
68,581 |
|
65,635 |
| ||
Operating lease right-of-use assets |
|
109,838 |
|
|
| ||
Other assets |
|
8,537 |
|
7,766 |
| ||
Total assets |
|
$ |
801,412 |
|
$ |
703,010 |
|
|
|
|
|
|
| ||
TOTAL LIABILITIES AND SHAREHOLDERS DEFICIT |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Current portion of long-term debt |
|
$ |
8,619 |
|
$ |
8,583 |
|
Accounts payable |
|
53,831 |
|
55,797 |
| ||
Accrued expenses and other current liabilities |
|
55,908 |
|
51,783 |
| ||
Accrued compensation related costs |
|
39,633 |
|
55,111 |
| ||
Current portion of operating lease liabilities |
|
32,437 |
|
|
| ||
Total current liabilities |
|
190,428 |
|
171,274 |
| ||
|
|
|
|
|
| ||
Long-term liabilities: |
|
|
|
|
| ||
Long-term debt, less current portion |
|
488,620 |
|
502,090 |
| ||
Operating lease liabilities |
|
88,719 |
|
|
| ||
Other liabilities |
|
47,851 |
|
51,570 |
| ||
Total liabilities |
|
815,618 |
|
724,934 |
| ||
|
|
|
|
|
| ||
Shareholders deficit: |
|
|
|
|
| ||
Common stock |
|
375 |
|
371 |
| ||
Additional paid-in capital |
|
350,579 |
|
343,955 |
| ||
Accumulated other comprehensive loss |
|
(13,777 |
) |
(4,531 |
) | ||
Accumulated deficit |
|
(350,687 |
) |
(361,023 |
) | ||
Treasury stock, at cost |
|
(696 |
) |
(696 |
) | ||
Total shareholders deficit |
|
(14,206 |
) |
(21,924 |
) | ||
Total liabilities and shareholders deficit |
|
$ |
801,412 |
|
$ |
703,010 |
|
Table 3
Hanger, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited - in thousands)
|
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For the Nine Months Ended |
| ||||
|
|
2019 |
|
2018 |
| ||
Cash flows provided by operating activities: |
|
|
|
|
| ||
Net income (loss) |
|
$ |
8,775 |
|
$ |
(5,321 |
) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
|
26,906 |
|
27,552 |
| ||
Amortization of right-of-use assets |
|
27,657 |
|
|
| ||
Provision (benefit) for doubtful accounts |
|
284 |
|
(578 |
) | ||
Stock-based compensation expense |
|
10,089 |
|
9,573 |
| ||
Deferred income taxes |
|
(723 |
) |
(4,114 |
) | ||
Amortization of debt discounts and issuance costs |
|
1,202 |
|
2,453 |
| ||
Loss on extinguishment of debt |
|
|
|
16,998 |
| ||
Gain on sale and disposal of fixed assets |
|
(1,200 |
) |
(2,537 |
) | ||
Changes in operating assets and liabilities: |
|
|
|
|
| ||
Accounts receivable, net |
|
1,914 |
|
14,464 |
| ||
Inventories |
|
(6,310 |
) |
(3,463 |
) | ||
Other current assets and other assets |
|
(1,769 |
) |
1,770 |
| ||
Income taxes |
|
2,613 |
|
11,356 |
| ||
Accounts payable |
|
(1,751 |
) |
5,680 |
| ||
Accrued expenses and other current liabilities |
|
(2,144 |
) |
(13,061 |
) | ||
Accrued compensation related costs |
|
(15,583 |
) |
(20,650 |
) | ||
Other liabilities |
|
(1,736 |
) |
(2,963 |
) | ||
Operating lease liabilities |
|
(28,279 |
) |
|
| ||
Net cash provided by operating activities |
|
19,945 |
|
37,159 |
| ||
Cash flows used in investing activities |
|
|
|
|
| ||
Purchase of property, plant, and equipment |
|
(20,262 |
) |
(16,435 |
) | ||
Purchase of therapeutic program equipment leased to third parties under operating leases |
|
(5,165 |
) |
(6,390 |
) | ||
Acquisitions, net of cash acquired |
|
(31,585 |
) |
|
| ||
Purchase of company-owned life insurance investment |
|
|
|
(598 |
) | ||
Proceeds from sale of property, plant and equipment |
|
2,181 |
|
3,583 |
| ||
Net cash used in investing activities |
|
(54,831 |
) |
(19,840 |
) | ||
Cash flows (used in) provided by financing activities |
|
|
|
|
| ||
Borrowings under term loan, net of discount |
|
|
|
501,467 |
| ||
Repayment of term loan |
|
(3,788 |
) |
(434,400 |
) | ||
Borrowings under revolving credit agreement |
|
|
|
3,000 |
| ||
Repayments under revolving credit agreement |
|
|
|
(8,000 |
) | ||
Payment of employee taxes on stock-based compensation |
|
(3,710 |
) |
(2,568 |
) | ||
Payment on seller notes |
|
(2,688 |
) |
(2,116 |
) | ||
Payment of financing lease obligations |
|
(344 |
) |
(942 |
) | ||
Payment of debt issuance costs |
|
|
|
(6,757 |
) | ||
Payment of debt extinguishment costs |
|
|
|
(8,436 |
) | ||
Proceeds from exercise of options |
|
249 |
|
|
| ||
Net cash (used in) provided by financing activities |
|
(10,281 |
) |
41,248 |
| ||
(Decrease) increase in cash, cash equivalents, and restricted cash |
|
(45,167 |
) |
58,567 |
| ||
Cash, cash equivalents, and restricted cash, at beginning of period |
|
95,114 |
|
4,779 |
| ||
Cash, cash equivalents, and restricted cash, at end of period |
|
$ |
49,947 |
|
$ |
63,346 |
|
|
|
|
|
|
| ||
Reconciliation of Cash, Cash Equivalents, and Restricted Cash: |
|
|
|
|
| ||
Cash and cash equivalents, at beginning of period |
|
$ |
95,114 |
|
$ |
1,508 |
|
Restricted cash, at beginning of period |
|
|
|
3,271 |
| ||
Cash, cash equivalents, and restricted cash, at beginning of period |
|
$ |
95,114 |
|
$ |
4,779 |
|
|
|
|
|
|
| ||
Cash and cash equivalents, at end of period |
|
$ |
49,947 |
|
$ |
61,035 |
|
Restricted cash, at end of period |
|
|
|
2,311 |
| ||
Cash, cash equivalents, and restricted cash, at end of period |
|
$ |
49,947 |
|
$ |
63,346 |
|
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 operating income before certain charges, impairments of intangible assets, third-party professional fees in excess of normal amounts incurred in connection with our financial statement remediation, debt extinguishment costs, expenses associated with equity-based compensation, severance expenses, certain expenses incurred in connection with our acquisitions, 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 users 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 |
|
For the Nine Months Ended |
| ||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net Revenue (a) |
|
|
|
|
|
|
|
|
| ||||
Patient Care |
|
$ |
230,931 |
|
$ |
214,080 |
|
$ |
652,700 |
|
$ |
620,745 |
|
Products & Services |
|
48,707 |
|
48,866 |
|
144,455 |
|
143,162 |
| ||||
Net revenue |
|
$ |
279,638 |
|
$ |
262,946 |
|
$ |
797,155 |
|
$ |
763,907 |
|
|
|
|
|
|
|
|
|
|
| ||||
EBITDA (b) |
|
|
|
|
|
|
|
|
| ||||
Patient Care |
|
$ |
41,073 |
|
$ |
37,153 |
|
$ |
107,658 |
|
$ |
99,162 |
|
Products & Services |
|
7,834 |
|
9,403 |
|
21,995 |
|
27,740 |
| ||||
Corporate & Other |
|
(22,131 |
) |
(21,682 |
) |
(64,220 |
) |
(62,474 |
) | ||||
EBITDA (Non-GAAP) |
|
$ |
26,776 |
|
$ |
24,874 |
|
$ |
65,433 |
|
$ |
64,428 |
|
|
|
|
|
|
|
|
|
|
| ||||
Adjusted EBITDA (b) |
|
|
|
|
|
|
|
|
| ||||
Patient Care |
|
$ |
42,160 |
|
$ |
38,176 |
|
$ |
110,929 |
|
$ |
102,424 |
|
Products & Services |
|
8,070 |
|
9,641 |
|
22,721 |
|
28,083 |
| ||||
Corporate & Other |
|
(17,594 |
) |
(16,680 |
) |
(51,761 |
) |
(49,491 |
) | ||||
Adjusted EBITDA (Non-GAAP) |
|
$ |
32,636 |
|
$ |
31,137 |
|
$ |
81,889 |
|
$ |
81,016 |
|
(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 (Loss) and Earnings (Loss) 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 diluted common shares during the applicable period. Adjusted EPS is defined as EPS adjusted for impairments of intangible assets, third-party professional fees in excess of normal amounts incurred in connection with our financial statement remediation, debt extinguishment costs, severance expenses, certain expenses incurred in connection with our acquisitions, and certain other charges.
We utilize Adjusted EPS to assess our operating and financial performance. We believe that this measure enhances a users 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 |
|
For the Nine Months Ended |
| ||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) - as reported (GAAP) |
|
$ |
5,691 |
|
$ |
4,369 |
|
$ |
8,775 |
|
$ |
(5,321 |
) |
|
|
|
|
|
|
|
|
|
| ||||
Adjustments: |
|
|
|
|
|
|
|
|
| ||||
Amortization expense |
|
1,561 |
|
1,497 |
|
3,917 |
|
5,264 |
| ||||
Third-party professional fees |
|
2,136 |
|
2,230 |
|
5,530 |
|
8,870 |
| ||||
Loss on extinguishment of debt |
|
|
|
|
|
|
|
16,998 |
| ||||
Acquisition-related expenses |
|
350 |
|
|
|
848 |
|
|
| ||||
Disaster recovery / unclaimed property settlement |
|
|
|
|
|
|
|
(3,729 |
) | ||||
Severance expenses |
|
|
|
366 |
|
(11 |
) |
366 |
| ||||
Adjustments prior to tax effect |
|
$ |
4,047 |
|
$ |
4,093 |
|
$ |
10,284 |
|
$ |
27,769 |
|
|
|
|
|
|
|
|
|
|
| ||||
Tax effect of specified adjustments (a) |
|
(373 |
) |
(176 |
) |
(2,097 |
) |
(8,312 |
) | ||||
Adjustments after taxes |
|
3,674 |
|
3,917 |
|
8,187 |
|
19,457 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Adjusted net income (Non-GAAP) |
|
$ |
9,365 |
|
$ |
8,286 |
|
$ |
16,962 |
|
$ |
14,136 |
|
|
|
|
|
|
|
|
|
|
| ||||
Basic earnings (loss) per share - as reported (GAAP) |
|
$ |
0.15 |
|
$ |
0.12 |
|
$ |
0.24 |
|
$ |
(0.14 |
) |
Effect of above listed specified adjustments |
|
0.10 |
|
0.10 |
|
0.22 |
|
0.53 |
| ||||
Adjusted basic earnings per share - as reported (Non-GAAP) |
|
$ |
0.25 |
|
$ |
0.22 |
|
$ |
0.46 |
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
|
| ||||
Diluted earnings (loss) per share - as reported (GAAP) |
|
$ |
0.15 |
|
$ |
0.12 |
|
$ |
0.23 |
|
$ |
(0.14 |
) |
Effect of above listed specified adjustments |
|
0.10 |
|
0.10 |
|
0.22 |
|
0.52 |
| ||||
Adjusted diluted earnings per share - as reported (Non-GAAP) |
|
$ |
0.25 |
|
$ |
0.22 |
|
$ |
0.45 |
|
$ |
0.38 |
|
|
|
|
|
|
|
|
|
|
| ||||
Shares used to compute basic earnings (loss) per share |
|
37,349,144 |
|
36,856,881 |
|
37,218,234 |
|
36,716,568 |
| ||||
Shares used to compute diluted earnings (loss) per share |
|
37,986,860 |
|
37,556,594 |
|
37,921,767 |
|
37,397,012 |
|
(a) Tax effect of specified adjustments reflects the difference between the Companys effective provision for taxes and the application of a combined federal and state statutory tax rate of 24% for the 2019 and 2018 periods to the Companys earnings from operations before taxes, after the incorporation of the identified above adjustments.
Table 6
Hanger, Inc.
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
(Unaudited - in thousands)
EBITDA is defined as operating income before depreciation and amortization. Adjusted EBITDA is defined as operating income before certain charges, impairments of intangible assets, third-party professional fees in excess of normal amounts incurred in connection with our financial statement remediation, debt extinguishment costs, expenses associated with equity-based compensation, severance expenses, certain expenses incurred in connection with our acquisitions, 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 users 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 |
|
For the Nine Months Ended |
| ||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) - as reported (GAAP) |
|
$ |
5,691 |
|
$ |
4,369 |
|
$ |
8,775 |
|
$ |
(5,321 |
) |
|
|
|
|
|
|
|
|
|
| ||||
Adjustments to calculate EBITDA: |
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization |
|
9,373 |
|
8,950 |
|
26,906 |
|
27,552 |
| ||||
Interest expense, net |
|
8,954 |
|
8,939 |
|
25,973 |
|
28,519 |
| ||||
Loss on extinguishment of debt |
|
|
|
|
|
|
|
16,998 |
| ||||
Non-service defined benefit plan expense |
|
173 |
|
176 |
|
519 |
|
528 |
| ||||
Provision (benefit) for income taxes |
|
2,585 |
|
2,440 |
|
3,260 |
|
(3,848 |
) | ||||
Adjustments - net income (loss) to EBITDA |
|
21,085 |
|
20,505 |
|
56,658 |
|
69,749 |
| ||||
EBITDA (Non-GAAP) |
|
26,776 |
|
24,874 |
|
65,433 |
|
64,428 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Further adjustments to calculate Adjusted EBITDA: |
|
|
|
|
|
|
|
|
| ||||
Third-party professional fees |
|
2,136 |
|
2,230 |
|
5,530 |
|
8,870 |
| ||||
Equity-based compensation |
|
3,374 |
|
3,667 |
|
10,089 |
|
9,573 |
| ||||
Acquisition-related expenses |
|
350 |
|
|
|
848 |
|
|
| ||||
Disaster recovery / unclaimed property settlement |
|
|
|
|
|
|
|
(2,221 |
) | ||||
Severance expenses |
|
|
|
366 |
|
(11 |
) |
366 |
| ||||
Further adjustments - EBITDA to Adjusted EBITDA |
|
5,860 |
|
6,263 |
|
16,456 |
|
16,588 |
| ||||
Adjusted EBITDA (Non-GAAP) |
|
$ |
32,636 |
|
$ |
31,137 |
|
$ |
81,889 |
|
$ |
81,016 |
|
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 operating income before certain charges, impairments of intangible assets, third-party professional fees in excess of normal amounts incurred in connection with our financial statement remediation, debt extinguishment costs, expenses associated with equity-based compensation, severance expenses, certain expenses incurred in connection with our acquisitions, 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 users 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 |
|
For the Nine Months Ended |
| ||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
| ||||
Patient Care |
|
|
|
|
|
|
|
|
| ||||
Income from operations - as reported (GAAP) |
|
$ |
36,130 |
|
$ |
32,502 |
|
$ |
93,661 |
|
$ |
84,615 |
|
Depreciation & amortization |
|
4,943 |
|
4,651 |
|
13,997 |
|
14,547 |
| ||||
EBITDA (Non-GAAP) |
|
41,073 |
|
37,153 |
|
107,658 |
|
99,162 |
| ||||
Further adjustments to calculate Adjusted EBITDA: |
|
|
|
|
|
|
|
|
| ||||
Equity-based compensation |
|
1,087 |
|
1,023 |
|
3,282 |
|
3,262 |
| ||||
Severance expenses |
|
|
|
|
|
(11 |
) |
|
| ||||
Further adjustments - EBITDA to Adjusted EBITDA |
|
1,087 |
|
1,023 |
|
3,271 |
|
3,262 |
| ||||
Adjusted EBITDA (Non-GAAP) |
|
42,160 |
|
38,176 |
|
110,929 |
|
102,424 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Products & Services |
|
|
|
|
|
|
|
|
| ||||
Income from operations - as reported (GAAP) |
|
5,111 |
|
6,839 |
|
14,133 |
|
20,171 |
| ||||
Depreciation & amortization |
|
2,723 |
|
2,564 |
|
7,862 |
|
7,569 |
| ||||
EBITDA (Non-GAAP) |
|
7,834 |
|
9,403 |
|
21,995 |
|
27,740 |
| ||||
Further adjustments to calculate Adjusted EBITDA: |
|
|
|
|
|
|
|
|
| ||||
Equity-based compensation |
|
236 |
|
238 |
|
726 |
|
343 |
| ||||
Severance expenses |
|
|
|
|
|
|
|
|
| ||||
Further adjustments - EBITDA to Adjusted EBITDA |
|
236 |
|
238 |
|
726 |
|
343 |
| ||||
Adjusted EBITDA (Non-GAAP) |
|
8,070 |
|
9,641 |
|
22,721 |
|
28,083 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Corporate & Other |
|
|
|
|
|
|
|
|
| ||||
Loss from operations - as reported (GAAP) |
|
(23,838 |
) |
(23,417 |
) |
(69,267 |
) |
(67,910 |
) | ||||
Depreciation & amortization |
|
1,707 |
|
1,735 |
|
5,047 |
|
5,436 |
| ||||
EBITDA (Non-GAAP) |
|
(22,131 |
) |
(21,682 |
) |
(64,220 |
) |
(62,474 |
) | ||||
Further adjustments to calculate Adjusted EBITDA: |
|
|
|
|
|
|
|
|
| ||||
Third-party professional fees |
|
2,136 |
|
2,230 |
|
5,530 |
|
8,870 |
| ||||
Equity-based compensation |
|
2,051 |
|
2,406 |
|
6,081 |
|
5,968 |
| ||||
Acquisition related expenses |
|
350 |
|
|
|
848 |
|
|
| ||||
Disaster recovery / unclaimed property settlement |
|
|
|
|
|
|
|
(2,221 |
) | ||||
Severance expenses |
|
|
|
366 |
|
|
|
366 |
| ||||
Further adjustments - EBITDA to Adjusted EBITDA |
|
4,537 |
|
5,002 |
|
12,459 |
|
12,983 |
| ||||
Adjusted EBITDA (Non-GAAP) |
|
(17,594 |
) |
(16,680 |
) |
(51,761 |
) |
(49,491 |
) | ||||
Total Adjusted EBITDA (Non-GAAP) |
|
$ |
32,636 |
|
$ |
31,137 |
|
$ |
81,889 |
|
$ |
81,016 |
|
Table 8
Hanger, Inc.
Indebtedness
(Unaudited - in thousands)
|
|
As of September 30, |
|
As of December 31, |
| ||
|
|
2019 |
|
2018 |
| ||
Debt: |
|
|
|
|
| ||
Term Loan B |
|
$ |
497,425 |
|
$ |
501,213 |
|
Seller notes |
|
7,138 |
|
4,506 |
| ||
Financing leases and other |
|
1,192 |
|
14,361 |
| ||
Total debt before unamortized discount and debt issuance costs |
|
505,755 |
|
520,080 |
| ||
Unamortized discount and debt issuance costs, net |
|
(8,516 |
) |
(9,407 |
) | ||
Total debt |
|
$ |
497,239 |
|
$ |
510,673 |
|
|
|
|
|
|
| ||
Current portion of long-term debt: |
|
|
|
|
| ||
Term Loan B |
|
$ |
5,050 |
|
$ |
5,050 |
|
Seller notes |
|
3,152 |
|
2,513 |
| ||
Financing leases and other |
|
417 |
|
1,020 |
| ||
Total current portion of long-term debt |
|
8,619 |
|
8,583 |
| ||
Long-term debt: |
|
$ |
488,620 |
|
$ |
502,090 |
|
|
|
|
|
|
| ||
Net indebtedness: |
|
|
|
|
| ||
Total debt before unamortized discount and debt issuance costs |
|
505,755 |
|
520,080 |
| ||
Cash and cash equivalents |
|
(49,947 |
) |
(95,114 |
) | ||
Net indebtedness |
|
$ |
455,808 |
|
$ |
424,966 |
|
Table 9
Hanger, Inc.
Key Operating Metrics
|
|
As of and For the |
|
As of and For the |
| ||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
Same clinic revenue: |
|
|
|
|
|
|
|
|
|
Growth rate on net revenue |
|
3.7 |
% |
2.1 |
% |
1.8 |
% |
1.7 |
% |
Growth rate day adjusted (a) |
|
2.1 |
% |
0.5 |
% |
1.8 |
% |
1.1 |
% |
|
|
|
|
|
|
|
|
|
|
Clinical locations: |
|
|
|
|
|
|
|
|
|
Patient care clinics |
|
695 |
|
677 |
|
|
|
|
|
Satellite clinics |
|
106 |
|
109 |
|
|
|
|
|
Total clinical locations |
|
801 |
|
786 |
|
|
|
|
|
(a) Same Clinic Revenue per Day - Same Clinic Revenue per Day normalizes revenue for the number of days a clinic was open in each comparable period. These measures are both non-GAAP and unaudited.