No Changes In Results Since February 7th
Pre-announcement
Hanger, Inc. (NYSE: HNGR), a leading provider of orthotic and
prosthetic ("O&P") patient care services and solutions, today
announced its final financial results for the fourth quarter and
year ended December 31, 2021.
Financial Highlights
- Net revenues were $312.4 million for the three months ended
December 31, 2021, compared to $277.3 million for the same period
in 2020, reflecting growth of 12.6 percent.
- Net income was $14.0 million for the three months ended
December 31, 2021, compared to $16.1 million for the same period in
2020. Income from operations was $24.9 million for the quarter
compared to $29.1 million for the same period in 2020, a decline of
14.6 percent.
- Adjusted EBITDA was $37.2 million in the fourth quarter of
2021, compared to $35.5 million for the same period in 2020,
reflecting an increase of $1.7 million, or 4.9 percent.
- GAAP diluted earnings per share was $0.36 per share for the
fourth quarter of 2021, compared to $0.41 per share for the same
period in 2020. Adjusted diluted earnings per share was $0.40 for
the three months ended December 31, 2021, compared to $0.36 for the
same period in 2020, an increase of 11.1 percent.
- Results were consistent with those included in the Company's
February 7, 2022 release of preliminary financial results for the
year-ended December 31, 2021.
Vinit Asar, President and Chief Executive Officer of Hanger,
Inc., stated, "While COVID-19 presented a challenge throughout
2021, I am pleased that we nevertheless achieved strong revenue and
Adjusted EBITDA growth during the year. This growth, coupled with
our expansion of the Company through key acquisitions of
independent O&P clinics during 2021, have positioned us well
for the coming year."
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 December 31,
2021
Patient Care Segment
For the three months ended December 31, 2021, Patient Care net
revenues were $266.5 million, an increase of $33.6 million, or 14.4
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 $16.4 million of incremental revenue.
Net same clinic revenue on a day-adjusted basis grew 5.8 percent
during the fourth 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. The
Patient Care net revenue on a same-clinic basis achieved 95.0
percent of the level experienced in the fourth quarter of 2019 due
to the effects of the Omicron variant of COVID-19 on clinic
operations and patient volumes late in the quarter.
Excluding the effect of acquisitions, net revenues from
prosthetics grew 7.1 percent and net revenues from orthotics grew
4.3 percent, each compared to the fourth quarter of 2020.
Prosthetics comprised 56.8 percent of Patient Care segment net
revenues for the quarter compared to 56.0 percent in the same
period of 2020.
Income from operations in the Patient Care segment was $44.0
million during the fourth quarter of 2021, a decrease of $0.8
million compared to the $44.8 million reported in the prior year.
Adjusted EBITDA for the segment was $50.8 million, which reflected
a $5.5 million increase compared to the fourth quarter of 2020.
Products & Services Segment
For the three months ended December 31, 2021, Products &
Services net revenues totaled $45.9 million, reflecting growth of
3.2 percent compared with the same period in 2020. Revenue from the
distribution of O&P componentry totaled $35.0 million,
reflecting growth of $1.9 million, or 5.8 percent. Therapeutic
solutions revenue in the fourth quarter totaled $10.8 million, a
decline of $0.5 million, or 4.4 percent.
Income from operations for the Products & Services segment
was $4.5 million in the fourth quarter of 2021 compared to $4.8
million in the same period of 2020, a decrease of 4.7 percent.
Adjusted EBITDA for the segment totaled $6.8 million for the fourth
quarter of 2021, a $0.7 million decline compared with the same
period of 2020. Adjusted EBITDA margin in the segment totaled 14.9
percent compared to 17.0 percent during the fourth quarter of
2020.
Corporate & Other
Expenses associated with corporate and other activities
increased by $3.2 million to $23.6 million for the quarter ended
December 31, 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 increased by $3.0 million to $20.4 million in the fourth
quarter of 2021. This increase related primarily to the resumption
of the implementation of a new financial and supply chain system
during 2021 as well as other increases in technology and personnel
costs.
Net Income; Interest Expense
Interest expense totaled $7.1 million for the three month period
ended December 31, 2021, a decrease of $0.5 million from the prior
year period.
For the three month period ended December 31, 2021, net income
was $14.0 million compared with $16.1 million for the same period
in 2020. GAAP diluted income per share was $0.36 compared to $0.41
per share in 2020. Adjusted diluted income per share was $0.40 for
the three months ended December 31, 2021, compared to $0.36 per
share for the same period in 2020.
Financial Highlights for the Year Ended December 31,
2021
- Net revenues were $1,120.5 million for the year ended December
31, 2021, compared to $1,001.2 million in 2020, reflecting an
increase of 11.9 percent. Acquisitions of O&P clinics
consummated in 2020 and 2021 contributed $41.1 million of
incremental revenue.
- Patient Care net revenues totaled $943.3 million, reflecting
growth of $111.7 million, or 13.4 percent for the year, while same
clinic day-adjusted net revenues per day grew 9.1 percent. Patient
Care segment net revenues on a day-adjusted same-clinic basis
totaled approximately 97 percent of the level reported for the
equivalent period in 2019.
- Net revenues from prosthetics, excluding acquisitions, grew 6.1
percent on a day-adjusted basis, while orthotics revenues grew 13.0
percent, also on a net day-adjusted basis and excluding
acquisitions. For the year, prosthetics constituted 54.8 percent of
Patient Care segment net revenues.
- Products & Services segment net revenues totaled $177.2
million, an increase of $7.6 million, or 4.5 percent growth, driven
by an increase of $9.6 million in revenue from distribution
services and a $2.0 million decline in revenue from therapeutic
solutions.
- GAAP net income was $42.0 million compared to $38.2 million in
2020. Hanger's GAAP results for the year ended 2020 included a
benefit of $24.0 million to other operating costs related to the
Company's receipt of CARES Act healthcare provider grants as
compared to $1.1 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 $118.9 million, an increase of $13.8
million as compared to the $105.1 million reported in 2020. The
increase in Adjusted EBITDA for the year resulted primarily from
improvement in net revenues partially offset by the restoration of
temporary cost reductions taken during the second and third
quarters of 2020.
- GAAP diluted earnings per share was $1.07, compared to $0.99
per share in 2020. Adjusted diluted earnings per share was $0.97
for the year ended 2021, compared to $0.63 for the same period in
2020.
Net Cash Provided by Operating Activities; Liquidity
Cash flows provided by operating activities for the three month
period ending December 31, 2021 were $35.6 million compared to cash
flows provided by operating activities of $30.3 million in the
fourth quarter of 2020. The Company's days sales outstanding were
43 days as of December 31, 2021, which reflected a one day increase
as compared to the same period in 2020.
On November 23, 2021, the Company amended its existing credit
agreement to, among other things, increase the aggregate amount of
the revolving loan commitment by $35 million to an aggregate of
$135 million, extend the scheduled maturity date of the revolving
loan facility to November 23, 2026, and decrease the applicable
margin on LIBOR and base rate revolving loan borrowings by 0.75
percent per annum.
On December 31, 2021, the Company had liquidity of $191.0
million, comprised of $61.7 million in cash and cash equivalents,
and $129.3 million in available borrowing capacity under its
revolving credit facility. This compares to total liquidity of
$170.5 million on September 30, 2021.
2022 Outlook
The Company's current outlook for 2022 remains unchanged since
the time of its release of preliminary financial information
regarding the fourth quarter and full year 2021 on February 7,
2022.
As previously disclosed, the Company anticipates 2022 net
revenue will be in a range between $1.190 billion and $1.220
billion, and Adjusted EBITDA in a range between $127 million and
$132 million. This reflects growth of approximately 7 percent in
revenue and 9 percent in Adjusted EBITDA over 2021 using the
mid-point of the guidance ranges. The Company’s revenue growth
includes an estimate of approximately 5 percent in same clinic
revenue growth on a day-adjusted basis related to its Patient Care
segment.
The Company’s outlook for 2022 includes approximately $35
million in revenue relating to the full year effect of acquisitions
consummated in 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.
Fourth Quarter and Full Year 2021 Conference and Webcast
Details
Hanger’s management team will host a conference call tomorrow,
Tuesday, March 1, 2022 at 8:30 a.m. Eastern time to discuss the
Company’s fourth quarter and full year 2021 financial results and
business outlook for 2022.
To participate in the Company’s live conference call, please
dial (844) 200-6205 or +1 (929) 526-1599 for international
participants and reference access code 124631. A live webcast,
replay of the call, and earnings release will be available on the
Company’s Investor Relations website at
https://investor.hanger.com/financial-reporting/quarterly-results.
A replay of the call will be available via webcast for on-demand
listening shortly after the completion of the call.
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 875 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 2022, 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, 2021 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.
Table 1
Hanger, Inc.
Consolidated Statements of
Operations
(in thousands, except share and
per share amounts)
For the Three Months Ended
December 31,
For the Years Ended
December 31,
2021
2020
2021
2020
Net revenues
$
312,372
$
277,340
$
1,120,488
$
1,001,150
Material costs
97,340
86,735
354,342
315,410
Personnel costs
111,197
98,457
397,574
351,191
Other operating costs (a)
36,473
25,803
135,630
100,010
General and administrative expenses
34,119
28,867
127,752
127,785
Depreciation and amortization
8,355
8,334
32,519
34,847
Income from operations
24,888
29,144
72,671
71,907
Interest expense, net
7,059
7,527
28,864
32,445
Non-service defined benefit plan
expense
166
158
667
632
Income before income taxes
17,663
21,459
43,140
38,830
Provision for income taxes
3,627
5,388
1,158
638
Net income
$
14,036
$
16,071
$
41,982
$
38,192
Basic and Diluted Per Common Share
Data:
Basic earnings per share
$
0.36
$
0.42
$
1.09
$
1.01
Weighted average shares used to compute
basic earnings per common share
38,744,681
38,157,402
38,599,300
37,948,796
Diluted earnings per share
$
0.36
$
0.41
$
1.07
$
0.99
Weighted average shares used to compute
diluted earnings per common share
39,141,708
38,911,299
39,225,616
38,598,330
(a) For the years ended December 31, 2021
and 2020, Hanger recognized approximately $1.1 million and $24.0
million respectively of income within other operating costs related
to grant proceeds received under the CARES Act.
Table 2
Hanger, Inc.
Consolidated Balance
Sheets
(in thousands)
As of December 31,
As of December 31,
2021
2020
ASSETS
Current assets:
Cash and cash equivalents
$
61,692
$
144,602
Accounts receivable, net
152,058
128,596
Inventories
87,462
76,429
Income taxes receivable
581
12,888
Other current assets
16,536
12,357
Total current assets
318,329
374,872
Non-current assets:
Property, plant, and equipment, net
82,434
84,873
Goodwill
363,554
277,223
Other intangible assets, net
25,892
18,431
Deferred income taxes
45,494
54,877
Operating lease right-of-use assets
144,491
124,741
Other assets
17,945
15,734
Total assets
$
998,139
$
950,751
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:
Current portion of long-term debt
$
14,938
$
10,085
Accounts payable
63,565
65,091
Accrued expenses and other current
liabilities
60,399
62,861
Accrued compensation related costs
54,465
72,541
Current portion of operating lease
liabilities
33,438
35,002
Total current liabilities
226,805
245,580
Long-term liabilities:
Long-term debt, less current portion
502,307
493,012
Operating lease liabilities
124,016
104,589
Other liabilities
34,840
56,593
Total liabilities
887,968
899,774
Shareholders’ equity:
Common stock
389
383
Additional paid-in capital
373,644
365,503
Accumulated other comprehensive loss
(11,150
)
(20,215
)
Accumulated deficit
(252,016
)
(293,998
)
Treasury stock, at cost
(696
)
(696
)
Total shareholders’ equity
110,171
50,977
Total liabilities and shareholders’
equity
$
998,139
$
950,751
Table 3
Hanger, Inc.
Consolidated Statements of
Cash Flows
(in thousands)
For the Years Ended
December 31,
2021
2020
Cash flows provided by operating
activities:
Net income
$
41,982
$
38,192
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation and amortization
32,519
34,847
(Benefit) provision for doubtful
accounts
(54
)
295
Share-based compensation expense
12,297
18,448
Deferred income taxes
5,613
17,432
Amortization of debt discounts and
issuance costs
1,932
2,085
Gain on sale and disposal of fixed
assets
(1,340
)
(3,134
)
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable, net
(17,315
)
34,378
Inventories
(6,350
)
(6,258
)
Other current assets and other assets
(5,736
)
(628
)
Income taxes receivable
12,307
(13,757
)
Accounts payable
(1,909
)
14,674
Accrued expenses and other current
liabilities
(6,351
)
217
Accrued compensation related costs
(18,420
)
11,349
Other liabilities
(11,079
)
4,778
Operating lease liabilities, net of
amortization of right-of-use assets
(1,886
)
2,649
Net cash provided by operating
activities
36,210
155,567
Cash flows used in investing
activities:
Acquisitions, net of cash acquired
(80,078
)
(21,801
)
Purchase of property, plant, and
equipment
(22,579
)
(24,500
)
Purchase of therapeutic program equipment
leased to third parties under operating leases
(2,280
)
(3,592
)
Proceeds from sale of property, plant and
equipment
2,451
3,890
Other investing activities, net
—
135
Net cash used in investing activities
(102,486
)
(45,868
)
Cash flows used in financing
activities:
Borrowings under revolving credit
agreement
—
79,000
Repayments under revolving credit
agreement
—
(79,000
)
Repayment of term loan
(5,050
)
(5,050
)
Payment of employee taxes on stock-based
compensation
(4,674
)
(7,356
)
Payment of Seller Notes and additional
consideration
(4,434
)
(25,415
)
Payments under vendor financing
arrangements
(1,375
)
(825
)
Payment of financing lease obligations
(1,052
)
(748
)
Payment of debt issuance costs
(573
)
(214
)
Proceeds from exercise of options
524
92
Net cash used in financing activities
(16,634
)
(39,516
)
(Decrease) increase in cash and cash
equivalents
(82,910
)
70,183
Cash and cash equivalents at beginning of
period
144,602
74,419
Cash and cash equivalents at end of
period
$
61,692
$
144,602
Table 4 Hanger, Inc. Segment Information:
Revenue, EBITDA and Adjusted EBITDA (in thousands)
EBITDA is defined as operating income before depreciation and
amortization. Adjusted EBITDA is defined as EBITDA before certain
charges, third-party professional fees in excess of normal amounts
incurred in connection with our financial statement remediation,
expenses associated with equity-based compensation, severance
expenses, certain expenses incurred in connection with our
acquisitions, proceeds received from grants under the Coronavirus
Aid, Relief and Economy Security Act ("CARES Act") 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 user’s
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
December 31,
For the Years Ended
December 31,
2021
2020
2021
2020
Net Revenue (a)
Patient Care
$
266,503
$
232,897
$
943,328
$
831,603
Products & Services
45,869
44,443
177,160
169,547
Net revenue
$
312,372
$
277,340
$
1,120,488
$
1,001,150
EBITDA (b)
Patient Care
$
49,117
$
49,606
$
163,599
$
166,089
Products & Services
6,531
7,056
25,075
27,898
Corporate & Other
(22,405
)
(19,184
)
(83,484
)
(87,233
)
EBITDA (Non-GAAP)
$
33,243
$
37,478
$
105,190
$
106,754
Adjusted EBITDA (b)
Patient Care
$
50,781
$
45,314
$
167,779
$
146,042
Products & Services
6,833
7,539
26,183
29,323
Corporate & Other
(20,395
)
(17,381
)
(75,027
)
(70,241
)
Adjusted EBITDA (Non-GAAP)
$
37,219
$
35,472
$
118,935
$
105,124
(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 and Earnings Per Share to Adjusted Net Income and Adjusted
Earnings Per Share (in thousands, except share and per share
amounts)
Earnings Per Share (or “EPS”) is defined as net income divided
by our basic or diluted common shares during the applicable period.
Adjusted EPS is defined as EPS adjusted for certain equity-based
compensation charges, third-party professional fees in excess of
normal amounts incurred in connection with our financial statement
remediation, severance expenses, certain expenses incurred in
connection with our acquisitions, proceeds received from grants
under the CARES Act, and certain other charges.
We utilize Adjusted EPS to assess our operating and financial
performance. We believe that this measure enhances a user’s
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
December 31,
For the Years Ended
December 31,
2021
2020
2021
2020
Net income - as reported (GAAP)
$
14,036
$
16,071
$
41,982
$
38,192
Adjustments:
Modification of equity awards (a)
—
—
—
5,869
Amortization expense
1,655
1,620
5,611
6,691
Third-party professional fees
—
—
—
1,639
Acquisition-related expenses
304
83
946
488
Hanger supply chain implementation
costs
33
195
396
1,001
Severance expenses
484
209
511
3,224
Proceeds from grants under the CARES
Act
(479
)
(3,450
)
(1,149
)
(24,026
)
Gain on sale of property
—
(1,925
)
—
(1,925
)
Loss on cancellation of education
event
744
—
744
—
Adjustments prior to tax effect
$
2,741
$
(3,268
)
$
7,059
$
(7,039
)
Tax effect of specified adjustments
(b)
(1,270
)
1,022
(10,890
)
(6,992
)
Adjustments after taxes
1,471
(2,246
)
(3,831
)
(14,031
)
Adjusted net income (Non-GAAP)
$
15,507
$
13,825
$
38,151
$
24,161
Basic earnings per share - as reported
(GAAP)
$
0.36
$
0.42
$
1.09
$
1.01
Effect of above listed specified
adjustments
0.04
(0.06
)
(0.10
)
(0.37
)
Adjusted basic earnings per share - as
reported (Non-GAAP)
$
0.40
$
0.36
$
0.99
$
0.64
Diluted earnings per share - as reported
(GAAP)
$
0.36
$
0.41
$
1.07
$
0.99
Effect of above listed specified
adjustments
0.04
(0.05
)
(0.10
)
(0.36
)
Adjusted diluted earnings per share - as
reported (Non-GAAP)
$
0.40
$
0.36
$
0.97
$
0.63
Shares used to compute basic earnings per
share
38,744,681
38,157,402
38,599,300
37,948,796
Shares used to compute diluted earnings
per share
39,141,708
38,911,299
39,225,616
38,598,330
(a) Modification of equity awards reflect
a non-recurring charge in the second quarter of 2020 for
incremental equity-based compensation expense under ASC 718, Stock
Compensation, related to the modification of certain equity awards
granted in 2017.
(b) “Tax effect of specified adjustments”
reflects the difference between the Company's effective provision
for taxes and the application of a combined federal and state
statutory tax rate of 24% for the 2021 and 2020 periods to the
Company's earnings from operations before taxes, after the
incorporation of the identified adjustments above.
Table 6 Hanger, Inc. Reconciliation of Net
Income to EBITDA and Adjusted EBITDA (in thousands)
EBITDA is defined as operating income before depreciation and
amortization. Adjusted EBITDA is defined as EBITDA before certain
charges, third-party professional fees in excess of normal amounts
incurred in connection with our financial statement remediation,
expenses associated with equity-based compensation, severance
expenses, certain expenses incurred in connection with our
acquisitions, proceeds received from grants under the CARES Act 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 user’s
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
December 31,
For the Years Ended
December 31,
2021
2020
2021
2020
Net income - as reported (GAAP)
$
14,036
$
16,071
$
41,982
$
38,192
Adjustments to calculate EBITDA:
Depreciation and amortization
8,355
8,334
32,519
34,847
Interest expense, net
7,059
7,527
28,864
32,445
Non-service defined benefit plan
expense
166
158
667
632
Provision for income taxes
3,627
5,388
1,158
638
Adjustments - net income to EBITDA
19,207
21,407
63,208
68,562
EBITDA (Non-GAAP)
33,243
37,478
105,190
106,754
Further adjustments to calculate Adjusted
EBITDA:
Third-party professional fees
—
—
—
1,639
Equity-based compensation (a)
2,890
2,882
12,297
17,969
Acquisition-related expenses
304
83
946
488
Hanger supply chain implementation
costs
33
195
396
1,001
Severance expenses
484
209
511
3,224
Proceeds from grants under the CARES
Act
(479
)
(3,450
)
(1,149
)
(24,026
)
Gain on sale of property
—
(1,925
)
—
(1,925
)
Loss on cancellation of education
event
744
—
744
—
Further adjustments - EBITDA to Adjusted
EBITDA
3,976
(2,006
)
13,745
(1,630
)
Adjusted EBITDA (Non-GAAP)
$
37,219
$
35,472
$
118,935
$
105,124
(a) Equity-based compensation expense
includes an incremental charge in the second quarter of 2020 under
ASC 718, Stock Compensation of approximately $5.9 million related
to the modification of certain equity awards granted in 2017.
Table 7 Hanger, Inc. Segment Reconciliation
of Income (Loss) From Operations to EBITDA and Adjusted EBITDA
(in thousands)
EBITDA is defined as operating income before depreciation and
amortization. Adjusted EBITDA is defined as EBITDA before certain
charges, third-party professional fees in excess of normal amounts
incurred in connection with our financial statement remediation,
expenses associated with equity-based compensation, severance
expenses, certain expenses incurred in connection with our
acquisitions, proceeds received from grants under the CARES Act 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 user’s
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
December 31,
For the Years Ended
December 31,
2021
2020
2021
2020
Patient
Care
Income from operations - as reported
(GAAP)
$
43,967
$
44,803
$
143,977
$
147,197
Depreciation & amortization
5,150
4,803
19,622
18,892
EBITDA (Non-GAAP)
49,117
49,606
163,599
166,089
Further adjustments to calculate Adjusted
EBITDA:
Equity-based compensation
925
874
3,721
4,055
Hanger supply chain implementation
costs
43
167
406
767
Severance expenses
431
42
458
1,082
Proceeds from grants under the CARES
Act
(479
)
(3,450
)
(1,149
)
(24,026
)
Gain on sale of property
—
(1,925
)
—
(1,925
)
Loss on cancellation of education
event
744
—
744
—
Further adjustments - EBITDA to Adjusted
EBITDA
1,664
(4,292
)
4,180
(20,047
)
Adjusted EBITDA (Non-GAAP)
50,781
45,314
167,779
146,042
Products &
Services
Income from operations - as reported
(GAAP)
4,543
4,766
17,215
17,725
Depreciation & amortization
1,988
2,290
7,860
10,173
EBITDA (Non-GAAP)
6,531
7,056
25,075
27,898
Further adjustments to calculate Adjusted
EBITDA:
Equity-based compensation
259
246
1,065
936
Hanger supply chain implementation
costs
(10
)
28
(10
)
234
Severance expenses
53
209
53
255
Further adjustments - EBITDA to Adjusted
EBITDA
302
483
1,108
1,425
Adjusted EBITDA (Non-GAAP)
6,833
7,539
26,183
29,323
Corporate &
Other
Loss from operations - as reported
(GAAP)
(23,622
)
(20,425
)
(88,521
)
(93,015
)
Depreciation & amortization
1,217
1,241
5,037
5,782
EBITDA (Non-GAAP)
(22,405
)
(19,184
)
(83,484
)
(87,233
)
Further adjustments to calculate Adjusted
EBITDA:
Third-party professional fees
—
—
—
1,639
Equity-based compensation (a)
1,706
1,762
7,511
12,978
Acquisition related expenses
304
83
946
488
Severance expenses
—
(42
)
—
1,887
Further adjustments - EBITDA to Adjusted
EBITDA
2,010
1,803
8,457
16,992
Adjusted EBITDA (Non-GAAP)
(20,395
)
(17,381
)
(75,027
)
(70,241
)
Total Adjusted EBITDA (Non-GAAP)
$
37,219
$
35,472
$
118,935
$
105,124
(a) Equity-based compensation expense
includes an incremental charge in the second quarter of 2020 under
ASC 718, Stock Compensation of approximately $5.9 million related
to the modification of certain equity awards granted in 2017.
Table 8
Hanger, Inc.
Indebtedness
(in thousands)
As of December 31,
As of December 31,
2021
2020
Debt:
Term Loan B
$
486,063
$
491,113
Seller Notes
29,812
11,510
Deferred payment obligation
4,000
4,000
Finance lease liabilities and other
3,344
3,869
Total debt before unamortized discount and
debt issuance costs
523,219
510,492
Unamortized discount and debt issuance
costs, net
(5,974
)
(7,395
)
Total debt
$
517,245
$
503,097
Current portion of long-term debt:
Term Loan B
$
5,050
$
5,050
Seller Notes
8,969
4,060
Finance lease liabilities and other
919
975
Total current portion of long-term
debt
14,938
10,085
Long-term debt
$
502,307
$
493,012
Net indebtedness:
Total debt before unamortized discount and
debt issuance costs
$
523,219
$
510,492
Cash and cash equivalents
(61,692
)
(144,602
)
Net indebtedness
$
461,527
$
365,890
Table 9
Hanger, Inc.
Key Operating Metrics
As of and For the Three
Months Ended December 31,
For the Years Ended
December 31,
2021
2020
2021
2020
Same clinic revenue:
Growth (decline) rate on net revenue
7.6
%
(10.6
)%
8.7
%
(10.7
)%
Growth (decline) rate day adjusted (a)
5.8
%
(10.6
)%
9.1
%
(11.0
)%
Clinical locations:
Patient care clinics
760
704
Satellite clinics
115
112
Total clinical locations
875
816
(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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220228005631/en/
Investor Relations Contact: Kevin Ellich (443) 450-4186
HangerIR@westwicke.com
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