Hanger Orthopedic Group, Inc. Reports $0.26 Pro Forma EPS on 8.6% Sales Growth for the Fourth Quarter 2008
Provides 2009 Revenue and EPS Guidance
Pro forma net income applicable to common stock for the quarter was
The 8.6% sales growth was primarily the result of a
Income from operations in the fourth quarter of 2008 increased by
Interest expense for the fourth quarter of 2008 was
Net sales for the year ended
Income from operations increased by
Interest expense for the year ended
Cash flow from operations was
The Company had total liquidity of
For 2009, the Company expects revenues to be between
“The Hanger team had an outstanding year in 2008 and I am extremely pleased with our performance in the fourth quarter, since it marks the twelfth consecutive quarter of meeting or exceeding First Call consensus estimates,” commented
Hanger Orthopedic Group, Inc., headquartered in
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)
Three Months Year
Ended Ended
Income Statement: December 31, December 31,
-----------------
2008 2007 2008 2007
---- ---- ---- ----
Net sales $185,547 $170,790 $703,129 $637,350
Cost of goods sold
(exclusive of depreciation
and amortization) 88,507 76,496 343,421 307,952
Selling, general and
administrative 70,758 70,797 264,797 245,542
Depreciation and amortization 4,378 4,307 17,183 15,876
----- ----- ------ ------
Income from operations 21,904 19,190 77,728 67,980
Interest expense, net 8,241 9,204 32,549 36,987
Unrealized loss from
interest rate swap 738 - 738 -
--- --- --- ---
Income before taxes 12,925 9,986 44,441 30,993
Provision for income taxes 5,089 3,004 17,695 11,726
----- ----- ------ ------
Net income 7,836 6,982 26,746 19,267
Less preferred stock
dividends - Series A
Convertible Preferred Stock - 416 5,670 1,665
--- --- ----- -----
Net income applicable to
common stock $7,836 $6,566 $21,076 $17,602
====== ====== ======= =======
Basic Per Share Data:
---------------------
Net income $0.25 $0.29 $0.81 $0.78
===== ===== ===== =====
Shares used to compute basic
per common share amounts 30,817,549 22,704,389 25,930,096 22,475,513
========== ========== ========== ==========
Diluted Per Share Data:
-----------------------
Net income $0.24 $0.23 $0.78 $0.64
===== ===== ===== =====
Shares used to compute
diluted per common share
amounts 32,057,689 30,721,859 27,090,817 30,257,021
========== ========== ========== ==========
Three Months Twelve Months
Ended Ended
December December
Pro-forma: 31, 2008 31, 2008
----------
Net income applicable to
common stock 7,836 21,076
Preferred stock dividend -
Series A Convertible
Preferred Stock - 5,670
Loss from Interest Rate Swap
(net of $295 tax) (1) 443 443
--- ---
Pro-forma net income
applicable to common stock $8,279 $27,189
====== =======
Diluted Per Share Data:
Pro-forma net income per
diluted common share $0.26 $0.86
===== =====
Shares used to compute
diluted per common share
amounts 32,057,689 27,090,817
Effects of conversion of
convertible preferred
stock (2) - 4,567,956
--- ---------
Shares used to compute
diluted per common share
amounts, Pro-forma basis 32,057,689 31,658,773
========== ==========
(1) The loss from interest rate swap results from ineffectiveness that
occurred during the quarter and year ending December 31, 2008. The
Company fully intends to hold the swap until its maturity in May
2011, in which case the valuation reserve will over time reverse
and result in our recording an equal amount of income.
(2) Assumes Preferred Stock dividend acceleration event occurred January
1, 2008. The Company believes the presentation of the pro-forma
results, adjusted for the effects of the acceleration of the
Preferred Stock dividend at the beginning of the period, is more
reflective of the Company's current diluted operating results and
provides investors with additional useful information to measure the
Company's on-going performance.
Income Statement as a % of
Net Sales: Three Months Ended Year Ended
-------------------------- December 31, December 31,
2008 2007 2008 2007
---- ---- ---- ----
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold
(exclusive of depreciation
and amortization) 47.7% 44.8% 48.8% 48.3%
Selling, general and
administrative 38.1% 41.5% 37.7% 38.5%
Depreciation and amortization 2.4% 2.5% 2.4% 2.5%
--- --- --- ---
Income from operations 11.8% 11.2% 11.1% 10.7%
Interest expense, net 4.4% 5.4% 4.6% 5.8%
Unrealized loss from
interest rate swap 0.4% 0.0% 0.4% 0.0%
--- --- --- ---
Income before taxes 7.0% 5.8% 6.1% 4.9%
Provision for income taxes 2.7% 1.8% 2.5% 1.8%
--- --- --- ---
Net income 4.3% 4.0% 3.6% 3.1%
=== === === ===
Hanger Orthopedic Group, Inc.
(Dollars in thousands)
(Unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
Cash Flow Data: 2008 2007 2008 2007
--------------- ---- ---- ---- ----
Cash flow from operations $18,367 $21,438 $53,220 $51,687
Capital expenditures 7,317 6,720 19,330 20,129
Increase in cash 4,888 3,581 31,475 3,799
Balance Sheet Data: Dec. 31, 2008 Dec. 31, 2007
------------------- ------------- -------------
Cash $58,413 $26,938
Days Sales Outstanding (DSO's) 51 56
Working Capital $200,248 $165,794
Total Debt $422,324 $410,892
Shareholders' Equity $266,865 $190,538
Percentage of net sales
from: 2008 2007 2008 2007
----------------------- ---- ---- ---- ----
Patient-care services 89.2% 89.4% 88.2% 89.7%
Distribution 10.6% 10.6% 11.5% 10.3%
Payor mix:
Private pay and other 61.1% 61.1% 60.3% 59.7%
Medicare 27.8% 27.9% 28.3% 29.2%
Medicaid 6.0% 5.8% 6.1% 6.1%
VA 5.1% 5.2% 5.3% 5.0%
Statistical Data:
-----------------
December 31, December 31,
2008 2007
---- ----
Patient-care centers 668 636
Number of practitioners 1,070 1,060
Number of states (including D.C.) 46 46
SOURCE Hanger Orthopedic Group, Inc.