Hanger Reports Fourth Quarter 2020 Results
Hanger, Inc. (NYSE: HNGR) reported Q4 2020 net revenue of $277.3 million, down 7.8% from $300.9 million in Q4 2019. Net income was $16.1 million, a decrease from $18.8 million the previous year. Patient Care segment revenue declined 10.6% due to COVID-19 impacts, while liquidity rose to $239.4 million. For the full year, net revenue was $1,001.2 million, down 8.8%, with GAAP diluted EPS of $0.99. Looking ahead, the company expects 2021 net revenue between $1.145 billion and $1.175 billion.
- Increased liquidity to $239.4 million, up $70.2 million from 2019.
- GAAP net income for the year was $38.2 million, improving from $27.5 million in 2019.
- Q4 2020 net revenue decreased by 7.8% year-over-year, reflecting ongoing COVID-19 impact.
- Patient Care net revenue declined by $74.1 million, or 8.2%, for the year.
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 fourth quarter and year ended December 31, 2020.
Financial Highlights for the Fourth Quarter of 2020
-
Net revenue was
$277.3 million for the three months ended December 31, 2020, compared to$300.9 million for the same period in 2019, reflecting a decrease of 7.8 percent. Net same clinic revenue on a day-adjusted basis declined by 10.6 percent compared to the same period in 2019, as patient volumes continued to be impacted by the COVID-19 pandemic.
-
Net income was
$16.1 million for the three months ended December 31, 2020, compared to$18.8 million for the same period in 2019. Income from operations was$29.1 million for the quarter compared to$26.9 million for the same period in 2019.
-
Adjusted EBITDA was
$35.5 million in the fourth quarter, compared to$42.4 million for the same period in 2019, reflecting a decline of$6.9 million .
-
GAAP diluted earnings per share was
$0.41 for the fourth quarter of 2020, compared to$0.49 for the same period in 2019. Adjusted diluted earnings per share was$0.36 for the three months ended December 31, 2020, compared to$0.45 for the same period in 2019.
-
On December 31, 2020, the Company had
$239.4 million in liquidity, reflecting an increase of$70.2 million as compared with December 31, 2019.
Vinit Asar, President and Chief Executive Officer of Hanger, Inc., stated, “Despite the nationwide resurgence of COVID-19 during the fourth quarter, we continued to safely provide essential care to our patients and experienced volumes consistent with those of the third quarter. We begin 2021 with a renewed sense of optimism and collective purpose to transform O&P through outcomes-based care and anticipate a return to growth as public health conditions improve.”
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 December 31, 2020
Patient Care Segment
For the three months ended December 31, 2020, Patient Care net revenue was
Net same clinic revenue declined by 10.6 percent during the fourth quarter of 2020 compared to the same quarter in the prior year period. This result was generally consistent with the 10.3 percent net same clinic revenue decline reported during the third quarter of 2020. Patient volumes continued to be adversely impacted by the COVID-19 pandemic but did not experience a further deterioration despite increases in the rate of infection within the general population during the fourth quarter of 2020.
Excluding the effect of acquisitions, net revenue from prosthetics declined 12.3 percent in the quarter and net revenue from orthotics declined 8.1 percent compared to the fourth quarter of 2019. Prosthetics comprised 56.0 percent of Patient Care segment net revenue during the fourth quarter of 2020 as compared with 57.3 percent during the same period in 2019.
The average decline in patient appointments for the quarter ended December 31, 2020 was 12 percent as compared with the same period in 2019. This reflected an improvement from the 16 percent decline in the third quarter of 2020 and was consistent with the levels seen in September 2020. As of December 31, 2020, the Company had temporarily closed eight patient care clinics and another 56 clinics were open for reduced hours or by appointment only.
Income from operations in the Patient Care segment was
Adjusted EBITDA for the segment was
Products & Services Segment
For the three months ended December 31, 2020, Products & Services net revenue totaled
Income from operations for the Products & Services segment increased by
Corporate & Other
GAAP expenses associated with corporate and other activities decreased by
Net Income; Interest Expense
Interest expense totaled
For the three month period ended December 31, 2020, net income was
Financial Highlights for the Year Ended December 31, 2020
Net revenue was
Patient Care net revenue declined
Throughout 2020, the Patient Care segment revenue was adversely impacted by a decline in patient volumes due to the impact of the COVID-19 pandemic. Patient appointment volumes for the full year were approximately 17 percent below those of 2019.
Products & Services segment net revenue declined
GAAP net income was
Adjusted EBITDA for 2020 was
For the year ended December 31, 2020, GAAP diluted earnings per share was
Net Cash Provided by Operating Activities; Liquidity
Cash flow provided by operating activities for the year ended December 31, 2020 was
On December 31, 2020, the Company had liquidity of
2021 Outlook
The Company currently believes that the degree of impact on, and timing of cessation of the effects of, the COVID-19 pandemic on the Company's business remain uncertain. Assuming significant continuing declines in the effects of the virus on public activities during the second quarter of 2021, and a full return to pre-COVID activities by the end of June 2021, the Company currently anticipates 2021 net revenue in a range between
The Company's outlook for 2021 includes approximately
Adjusted EBITDA in this outlook is provided on a non-GAAP basis only because a reconciliation to the most comparable GAAP financial measure, net income, is not available without unreasonable effort due to the unpredictable nature of reconciling items that render such a reconciliation not meaningful for investors.
Conference and Webcast Details
The Company’s management team will host a conference call tomorrow, Tuesday, March 2, at 8:30 a.m. Eastern time to discuss the Company’s fourth quarter and full year 2020 financial results and business outlook for 2021.
To participate, dial 844-750-4896 or 412-317-5292 outside the U.S. and Canada, and ask to be joined into the Hanger, Inc. call. A live webcast, replay of the call and earnings release, will be available on the Company’s Investor Relations website: www.investor.hanger.com/financial-reporting.
Additional Notes
A reconciliation of GAAP and non-GAAP financial results is included in the tables provided at the back of this press release. The Company has provided certain supplemental key statistics relating to its results for certain prior periods. These key statistics are non-GAAP measures used by the Company’s management to analyze the Company’s business results that are being provided for informational and analytical context.
Accompanying supplemental information will be posted to the Investor Relations section of Hanger’s web site at www.hanger.com/investors.
About Hanger, Inc. – Headquartered in Austin, Texas, Hanger, Inc. (NYSE: HNGR) provides comprehensive, outcomes-based orthotic and prosthetic (O&P) services through its Patient Care segment, with approximately 800 Hanger Clinic locations nationwide. Through its Products & Services segment, Hanger distributes branded and private label O&P devices, products and components, and provides rehabilitative solutions. Recognized by Forbes as one of America’s Best Employers for 2021, and rooted in 160 years of clinical excellence and innovation, Hanger is a purpose-driven company with a vision to lead the O&P markets by providing superior patient care, outcomes, services and value, aimed at empowering human potential. For more information on Hanger, visit investor.hanger.com and hangerclinic.com.
This earnings release contains statements that are forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include information concerning our liquidity and our possible or assumed future results of operations, including descriptions of our business strategies. These statements often include words such as "believe," "expect," "project," "potential," "anticipate," "intend," "plan," "estimate," "seek," "will," "may," "would," "should," "could," "forecasts" or similar words. These statements are based on certain assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate in these circumstances. We believe these assumptions are reasonable, but you should understand that these statements are not guarantees of performance or results, and our actual results could differ materially from those expressed in the forward-looking statements due to a variety of important factors, both positive and negative, that may be revised or supplemented in subsequent releases or reports. These statements involve risks, estimates, assumptions, and uncertainties that could cause actual results to differ materially from those expressed in these statements and elsewhere in this release. These uncertainties include, but are not limited to, the financial and business impacts of COVID-19 on our operations and the operations of our customers, suppliers, governmental and private payers and others in the healthcare industry and beyond; federal laws governing the health care industry; governmental policies affecting O&P operations, including with respect to reimbursement; failure to successfully implement a new enterprise resource planning system or other disruptions to information technology systems; the inability to successfully execute our acquisition strategy, including integration of recently acquired O&P clinics into our existing business; changes in the demand for our O&P products and services, including additional competition in the O&P services market; disruptions to our supply chain; our ability to enter into and derive benefits from managed-care contracts; our ability to successfully attract and retain qualified O&P clinicians; and other risks and uncertainties generally affecting the health care industry. For additional information and risk factors that could affect the Company, see its annual, quarterly and other reports filed with the Securities and Exchange Commission from time to time. 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
|
|
For the Years Ended
|
||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Net revenues |
|
$ |
277,340 |
|
|
$ |
300,891 |
|
|
$ |
1,001,150 |
|
|
$ |
1,098,046 |
|
Material costs |
|
86,735 |
|
|
95,961 |
|
|
315,410 |
|
|
357,771 |
|
||||
Personnel costs |
|
98,457 |
|
|
99,430 |
|
|
351,191 |
|
|
372,225 |
|
||||
Other operating costs (a) |
|
25,756 |
|
|
34,876 |
|
|
99,854 |
|
|
134,943 |
|
||||
General and administrative expenses |
|
27,146 |
|
|
30,591 |
|
|
118,764 |
|
|
118,065 |
|
||||
Professional accounting and legal fees |
|
1,768 |
|
|
4,113 |
|
|
9,177 |
|
|
13,689 |
|
||||
Depreciation and amortization |
|
8,334 |
|
|
9,019 |
|
|
34,847 |
|
|
35,925 |
|
||||
Income from operations |
|
29,144 |
|
|
26,901 |
|
|
71,907 |
|
|
65,428 |
|
||||
Interest expense, net |
|
7,527 |
|
|
8,285 |
|
|
32,445 |
|
|
34,258 |
|
||||
Non-service defined benefit plan expense |
|
158 |
|
|
172 |
|
|
632 |
|
|
691 |
|
||||
Income before income taxes |
|
21,459 |
|
|
18,444 |
|
|
38,830 |
|
|
30,479 |
|
||||
Provision (benefit) for income taxes |
|
5,388 |
|
|
(306 |
) |
|
638 |
|
|
2,954 |
|
||||
Net income |
|
$ |
16,071 |
|
|
$ |
18,750 |
|
|
$ |
38,192 |
|
|
$ |
27,525 |
|
|
|
|
|
|
|
|
|
|
||||||||
Basic and Diluted Per Common Share Data: |
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share |
|
$ |
0.42 |
|
|
$ |
0.50 |
|
|
$ |
1.01 |
|
|
$ |
0.74 |
|
Weighted average shares used to compute basic earnings per common share |
|
38,157,402 |
|
|
37,411,847 |
|
|
37,948,796 |
|
|
37,267,188 |
|
||||
Diluted earnings per share |
|
$ |
0.41 |
|
|
$ |
0.49 |
|
|
$ |
0.99 |
|
|
$ |
0.72 |
|
Weighted average shares used to compute diluted earnings per common share |
|
38,911,299 |
|
|
38,415,108 |
|
|
38,598,330 |
|
|
38,064,617 |
|
||||
(a) For the year ended December 31, 2020, Hanger recognized approximately |
Table 2 Hanger, Inc. Consolidated Balance Sheets (in thousands) |
||||||||
|
|
As of December 31, |
||||||
|
|
2020 |
|
2019 |
||||
ASSETS |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
144,602 |
|
|
$ |
74,419 |
|
Accounts receivable, net |
|
128,596 |
|
|
159,359 |
|
||
Inventories |
|
76,429 |
|
|
68,204 |
|
||
Income taxes receivable |
|
12,888 |
|
|
— |
|
||
Other current assets |
|
12,357 |
|
|
13,673 |
|
||
Total current assets |
|
374,872 |
|
|
315,655 |
|
||
Non-current assets: |
|
|
|
|
||||
Property, plant, and equipment, net |
|
84,873 |
|
|
84,057 |
|
||
Goodwill |
|
277,223 |
|
|
232,244 |
|
||
Other intangible assets, net |
|
18,431 |
|
|
17,952 |
|
||
Deferred income taxes |
|
54,877 |
|
|
70,481 |
|
||
Operating lease right-of-use assets |
|
124,741 |
|
|
110,559 |
|
||
Other assets |
|
15,734 |
|
|
11,305 |
|
||
Total assets |
|
$ |
950,751 |
|
|
$ |
842,253 |
|
|
|
|
|
|
||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
||||||
Current liabilities: |
|
|
|
|
||||
Current portion of long-term debt |
|
$ |
10,085 |
|
|
$ |
8,752 |
|
Accounts payable |
|
65,091 |
|
|
48,477 |
|
||
Accrued expenses and other current liabilities |
|
62,861 |
|
|
55,825 |
|
||
Accrued compensation related costs |
|
72,541 |
|
|
61,010 |
|
||
Current portion of operating lease liabilities |
|
35,002 |
|
|
34,342 |
|
||
Total current liabilities |
|
245,580 |
|
|
208,406 |
|
||
Long-term liabilities: |
|
|
|
|
||||
Long-term debt, less current portion |
|
493,012 |
|
|
490,121 |
|
||
Operating lease liabilities |
|
104,589 |
|
|
88,418 |
|
||
Other liabilities |
|
56,593 |
|
|
45,804 |
|
||
Total liabilities |
|
899,774 |
|
|
832,749 |
|
||
|
|
|
|
|
||||
Shareholder’s equity: |
|
|
|
|
||||
Common stock |
|
383 |
|
|
376 |
|
||
Additional paid-in capital |
|
365,503 |
|
|
354,326 |
|
||
Accumulated other comprehensive loss |
|
(20,215 |
) |
|
(12,551 |
) |
||
Accumulated deficit |
|
(293,998 |
) |
|
(331,951 |
) |
||
Treasury stock, at cost |
|
(696 |
) |
|
(696 |
) |
||
Total shareholder’s equity |
|
50,977 |
|
|
9,504 |
|
||
Total liabilities and shareholders’ equity |
|
$ |
950,751 |
|
|
$ |
842,253 |
|
Table 3 Hanger, Inc. Consolidated Statements of Cash Flows (in thousands) |
||||||||
|
|
For the Years Ended
|
||||||
|
|
2020 |
|
2019 |
||||
Cash flows provided by operating activities: |
|
|
|
|
||||
Net income (loss) |
|
$ |
38,192 |
|
|
$ |
27,525 |
|
Adjustments to reconcile net income (loss) to net cash from operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
34,847 |
|
|
35,925 |
|
||
Provision for doubtful accounts |
|
295 |
|
|
1,131 |
|
||
Share-based compensation expense |
|
18,448 |
|
|
13,414 |
|
||
Deferred income taxes |
|
17,432 |
|
|
(3,226 |
) |
||
Amortization of debt discounts and issuance costs |
|
2,085 |
|
|
1,623 |
|
||
Gain on sale and disposal of fixed assets |
|
(3,134 |
) |
|
(1,614 |
) |
||
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|
||||
Accounts receivable, net |
|
34,378 |
|
|
(12,329 |
) |
||
Inventories |
|
(6,258 |
) |
|
1,568 |
|
||
Other current assets and other assets |
|
(628 |
) |
|
(2,611 |
) |
||
Income taxes receivable |
|
(13,757 |
) |
|
1,248 |
|
||
Accounts payable |
|
14,674 |
|
|
(6,725 |
) |
||
Accrued expenses and other current liabilities |
|
217 |
|
|
(1,242 |
) |
||
Accrued compensation related costs |
|
11,349 |
|
|
5,780 |
|
||
Other liabilities |
|
4,778 |
|
|
(1,883 |
) |
||
Operating lease liabilities, net of amortization of right-of-use assets |
|
2,649 |
|
|
262 |
|
||
Net cash provided by operating activities |
|
155,567 |
|
|
58,846 |
|
||
Cash flows used in investing activities: |
|
|
|
|
||||
Purchase of property, plant, and equipment |
|
(24,500 |
) |
|
(26,433 |
) |
||
Purchase of therapeutic program equipment leased to third parties under operating leases |
|
(3,592 |
) |
|
(6,672 |
) |
||
Acquisitions, net of cash acquired |
|
(21,801 |
) |
|
(36,585 |
) |
||
Proceeds from sale of property, plant and equipment |
|
3,890 |
|
|
2,598 |
|
||
Other investing activities, net |
|
135 |
|
|
(66 |
) |
||
Net cash used in investing activities |
|
(45,868 |
) |
|
(67,158 |
) |
||
Cash flows (used in) provided by financing activities: |
|
|
|
|
||||
Repayment of term loan |
|
(5,050 |
) |
|
(5,050 |
) |
||
Borrowings under revolving credit agreement |
|
79,000 |
|
|
— |
|
||
Repayments under revolving credit agreement |
|
(79,000 |
) |
|
— |
|
||
Payment of employee taxes on stock-based compensation |
|
(7,356 |
) |
|
(4,137 |
) |
||
Payment of seller notes and additional consideration |
|
(25,415 |
) |
|
(3,821 |
) |
||
Payments under vendor financing arrangements |
|
(825 |
) |
|
— |
|
||
Payment of financing lease obligations |
|
(748 |
) |
|
(474 |
) |
||
Payment of debt issuance costs |
|
(214 |
) |
|
— |
|
||
Proceeds from exercise of options |
|
92 |
|
|
1,099 |
|
||
Net cash used in financing activities |
|
(39,516 |
) |
|
(12,383 |
) |
||
Increase (decrease) in cash, cash equivalents and restricted cash |
|
70,183 |
|
|
(20,695 |
) |
||
Cash, cash equivalents, and restricted cash, at beginning of period |
|
74,419 |
|
|
95,114 |
|
||
Cash, cash equivalents, and restricted cash, at end of period |
|
$ |
144,602 |
|
|
$ |
74,419 |
|
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 operating income 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
|
|
For the Years Ended
|
||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net Revenue (a) |
|
|
|
|
|
|
|
|
||||||||
Patient Care |
|
$ |
232,897 |
|
|
$ |
252,991 |
|
|
$ |
831,603 |
|
|
$ |
905,691 |
|
Products & Services |
|
44,443 |
|
|
47,900 |
|
|
169,547 |
|
|
192,355 |
|
||||
Net revenue |
|
$ |
277,340 |
|
|
$ |
300,891 |
|
|
$ |
1,001,150 |
|
|
$ |
1,098,046 |
|
|
|
|
|
|
|
|
|
|
||||||||
EBITDA (b) |
|
|
|
|
|
|
|
|
||||||||
Patient Care |
|
$ |
49,606 |
|
|
$ |
52,459 |
|
|
$ |
166,089 |
|
|
$ |
160,117 |
|
Products & Services |
|
7,056 |
|
|
6,620 |
|
|
27,898 |
|
|
28,615 |
|
||||
Corporate & Other |
|
(19,184 |
) |
|
(23,159 |
) |
|
(87,233 |
) |
|
(87,379 |
) |
||||
EBITDA (Non-GAAP) |
|
$ |
37,478 |
|
|
$ |
35,920 |
|
|
$ |
106,754 |
|
|
$ |
101,353 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA (b) |
|
|
|
|
|
|
|
|
||||||||
Patient Care |
|
$ |
45,314 |
|
|
$ |
53,623 |
|
|
$ |
146,042 |
|
|
$ |
164,552 |
|
Products & Services |
|
7,539 |
|
|
6,502 |
|
|
29,323 |
|
|
29,223 |
|
||||
Corporate & Other |
|
(17,381 |
) |
|
(17,771 |
) |
|
(70,241 |
) |
|
(69,532 |
) |
||||
Adjusted EBITDA (Non-GAAP) |
|
$ |
35,472 |
|
|
$ |
42,354 |
|
|
$ |
105,124 |
|
|
$ |
124,243 |
|
|
|
|
|
|
|
|
|
|
||||||||
(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
|
|
For the Years Ended
|
||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income - as reported (GAAP) |
|
$ |
16,071 |
|
|
$ |
18,750 |
|
|
$ |
38,192 |
|
|
$ |
27,525 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjustments: |
|
|
|
|
|
|
|
|
||||||||
Modification of equity awards (a) |
|
— |
|
|
— |
|
|
5,869 |
|
|
— |
|
||||
Amortization expense |
|
1,620 |
|
|
1,368 |
|
|
6,691 |
|
|
5,285 |
|
||||
Third-party professional fees |
|
— |
|
|
3,018 |
|
|
1,639 |
|
|
8,548 |
|
||||
Acquisition-related expenses |
|
83 |
|
|
91 |
|
|
488 |
|
|
939 |
|
||||
Hanger supply chain implementation costs |
|
195 |
|
|
— |
|
|
1,001 |
|
|
— |
|
||||
Severance expenses |
|
209 |
|
|
— |
|
|
3,224 |
|
|
(11 |
) |
||||
Proceeds from grants under the CARES Act |
|
(3,450 |
) |
|
— |
|
|
(24,026 |
) |
|
— |
|
||||
Gain on sale of property |
|
(1,925 |
) |
|
— |
|
|
(1,925 |
) |
|
— |
|
||||
Adjustments prior to tax effect |
|
$ |
(3,268 |
) |
|
$ |
4,477 |
|
|
$ |
(7,039 |
) |
|
$ |
14,761 |
|
Tax effect of specified adjustments (b) |
|
1,022 |
|
|
(5,807 |
) |
|
(6,992 |
) |
|
(7,904 |
) |
||||
Adjustments after taxes |
|
(2,246 |
) |
|
(1,330 |
) |
|
(14,031 |
) |
|
6,857 |
|
||||
Adjusted net income (Non-GAAP) |
|
$ |
13,825 |
|
|
$ |
17,420 |
|
|
$ |
24,161 |
|
|
$ |
34,382 |
|
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share - as reported (GAAP) |
|
$ |
0.42 |
|
|
$ |
0.50 |
|
|
$ |
1.01 |
|
|
$ |
0.74 |
|
Effect of above listed specified adjustments |
|
(0.06 |
) |
|
(0.03 |
) |
|
(0.37 |
) |
|
0.18 |
|
||||
Adjusted basic earnings per share - as reported (Non-GAAP) |
|
$ |
0.36 |
|
|
$ |
0.47 |
|
|
$ |
0.64 |
|
|
$ |
0.92 |
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share - as reported (GAAP) |
|
$ |
0.41 |
|
|
$ |
0.49 |
|
|
$ |
0.99 |
|
|
$ |
0.72 |
|
Effect of above listed specified adjustments |
|
(0.05 |
) |
|
(0.04 |
) |
|
(0.36 |
) |
|
0.18 |
|
||||
Adjusted diluted earnings per share - as reported (Non-GAAP) |
|
$ |
0.36 |
|
|
$ |
0.45 |
|
|
$ |
0.63 |
|
|
$ |
0.90 |
|
|
|
|
|
|
|
|
|
|
||||||||
Shares used to compute basic earnings per share |
|
38,157,402 |
|
|
37,411,847 |
|
|
37,948,796 |
|
|
37,267,188 |
|
||||
Shares used to compute diluted earnings per share |
|
38,911,299 |
|
|
38,415,108 |
|
|
38,598,330 |
|
|
38,064,617 |
|
||||
(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 |
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 operating income 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
|
|
For the Years Ended
|
||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income - as reported (GAAP) |
|
$ |
16,071 |
|
|
$ |
18,750 |
|
|
$ |
38,192 |
|
|
$ |
27,525 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjustments to calculate EBITDA: |
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
8,334 |
|
|
9,019 |
|
|
34,847 |
|
|
35,925 |
|
||||
Interest expense, net |
|
7,527 |
|
|
8,285 |
|
|
32,445 |
|
|
34,258 |
|
||||
Non-service defined benefit plan expense |
|
158 |
|
|
172 |
|
|
632 |
|
|
691 |
|
||||
Provision (benefit) for income taxes |
|
5,388 |
|
|
(306 |
) |
|
638 |
|
|
2,954 |
|
||||
Adjustments - net income to EBITDA |
|
21,407 |
|
|
17,170 |
|
|
68,562 |
|
|
73,828 |
|
||||
EBITDA (Non-GAAP) |
|
37,478 |
|
|
35,920 |
|
|
106,754 |
|
|
101,353 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Further adjustments to calculate Adjusted EBITDA: |
|
|
|
|
|
|
|
|
||||||||
Third-party professional fees |
|
— |
|
|
3,018 |
|
|
1,639 |
|
|
8,548 |
|
||||
Equity-based compensation (a) |
|
2,882 |
|
|
3,325 |
|
|
17,969 |
|
|
13,414 |
|
||||
Acquisition-related expenses |
|
83 |
|
|
91 |
|
|
488 |
|
|
939 |
|
||||
Hanger supply chain implementation costs |
|
195 |
|
|
— |
|
|
1,001 |
|
|
— |
|
||||
Severance expenses |
|
209 |
|
|
— |
|
|
3,224 |
|
|
(11 |
) |
||||
Proceeds from grants under the CARES Act |
|
(3,450 |
) |
|
— |
|
|
(24,026 |
) |
|
— |
|
||||
Gain on sale of property |
|
(1,925 |
) |
|
— |
|
|
(1,925 |
) |
|
— |
|
||||
Further adjustments - EBITDA to Adjusted EBITDA |
|
(2,006 |
) |
|
6,434 |
|
|
(1,630 |
) |
|
22,890 |
|
||||
Adjusted EBITDA (Non-GAAP) |
|
$ |
35,472 |
|
|
$ |
42,354 |
|
|
$ |
105,124 |
|
|
$ |
124,243 |
|
(a) Equity-based compensation expense includes an incremental charge in the second quarter of 2020 under ASC 718, Stock Compensation of approximately |
Table 7
Hanger, Inc.
Segment Reconciliation of Income From Operations to EBITDA and Adjusted EBITDA
(in thousands)
EBITDA is defined as operating income before depreciation and amortization. Adjusted EBITDA is defined as operating income 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
|
|
For the Years Ended
|
||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Patient Care |
|
|
|
|
|
|
|
|
||||||||
Income from operations - as reported (GAAP) |
|
$ |
44,803 |
|
|
$ |
47,915 |
|
|
$ |
147,197 |
|
|
$ |
141,576 |
|
Depreciation & amortization |
|
4,803 |
|
|
4,544 |
|
|
18,892 |
|
|
18,541 |
|
||||
EBITDA (Non-GAAP) |
|
49,606 |
|
|
52,459 |
|
|
166,089 |
|
|
160,117 |
|
||||
Further adjustments to calculate Adjusted EBITDA: |
|
|
|
|
|
|
|
|
||||||||
Equity-based compensation |
|
874 |
|
|
1,164 |
|
|
4,055 |
|
|
4,446 |
|
||||
Hanger supply chain implementation costs |
|
167 |
|
|
— |
|
|
767 |
|
|
— |
|
||||
Severance expenses |
|
42 |
|
|
— |
|
|
1,082 |
|
|
(11 |
) |
||||
Proceeds from grants under the CARES Act |
|
(3,450 |
) |
|
— |
|
|
(24,026 |
) |
|
— |
|
||||
Gain on sale of property |
|
(1,925 |
) |
|
— |
|
|
(1,925 |
) |
|
— |
|
||||
Further adjustments - EBITDA to Adjusted EBITDA |
|
(4,292 |
) |
|
1,164 |
|
|
(20,047 |
) |
|
4,435 |
|
||||
Adjusted EBITDA (Non-GAAP) |
|
45,314 |
|
|
53,623 |
|
|
146,042 |
|
|
164,552 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Products & Services |
|
|
|
|
|
|
|
|
||||||||
Income from operations - as reported (GAAP) |
|
4,766 |
|
|
3,832 |
|
|
17,725 |
|
|
17,965 |
|
||||
Depreciation & amortization |
|
2,290 |
|
|
2,788 |
|
|
10,173 |
|
|
10,650 |
|
||||
EBITDA (Non-GAAP) |
|
7,056 |
|
|
6,620 |
|
|
27,898 |
|
|
28,615 |
|
||||
Further adjustments to calculate Adjusted EBITDA: |
|
|
|
|
|
|
|
|
||||||||
Equity-based compensation |
|
246 |
|
|
(118 |
) |
|
936 |
|
|
608 |
|
||||
Hanger supply chain implementation costs |
|
28 |
|
|
— |
|
|
234 |
|
|
— |
|
||||
Severance expenses |
|
209 |
|
|
— |
|
|
255 |
|
|
— |
|
||||
Further adjustments - EBITDA to Adjusted EBITDA |
|
483 |
|
|
(118 |
) |
|
1,425 |
|
|
608 |
|
||||
Adjusted EBITDA (Non-GAAP) |
|
7,539 |
|
|
6,502 |
|
|
29,323 |
|
|
29,223 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Corporate & Other |
|
|
|
|
|
|
|
|
||||||||
Loss from operations - as reported (GAAP) |
|
(20,425 |
) |
|
(24,846 |
) |
|
(93,015 |
) |
|
(94,113 |
) |
||||
Depreciation & amortization |
|
1,241 |
|
|
1,687 |
|
|
5,782 |
|
|
6,734 |
|
||||
EBITDA (Non-GAAP) |
|
(19,184 |
) |
|
(23,159 |
) |
|
(87,233 |
) |
|
(87,379 |
) |
||||
Further adjustments to calculate Adjusted EBITDA: |
|
|
|
|
|
|
|
|
||||||||
Third-party professional fees |
|
— |
|
|
3,018 |
|
|
1,639 |
|
|
8,548 |
|
||||
Equity-based compensation (a) |
|
1,762 |
|
|
2,279 |
|
|
12,978 |
|
|
8,360 |
|
||||
Acquisition-related expenses |
|
83 |
|
|
91 |
|
|
488 |
|
|
939 |
|
||||
Severance expenses |
|
(42 |
) |
|
— |
|
|
1,887 |
|
|
— |
|
||||
Further adjustments - EBITDA to Adjusted EBITDA |
|
1,803 |
|
|
5,388 |
|
|
16,992 |
|
|
17,847 |
|
||||
Adjusted EBITDA (Non-GAAP) |
|
(17,381 |
) |
|
(17,771 |
) |
|
(70,241 |
) |
|
(69,532 |
) |
||||
Total Adjusted EBITDA (Non-GAAP) |
|
$ |
35,472 |
|
|
$ |
42,354 |
|
|
$ |
105,124 |
|
|
$ |
124,243 |
|
(a) Equity-based compensation expense includes an incremental charge in the second quarter of 2020 under ASC 718, Stock Compensation of approximately |
Table 8 Hanger, Inc. Indebtedness (in thousands) |
||||||||
|
|
As of December 31, |
||||||
|
|
2020 |
|
2019 |
||||
Debt: |
|
|
|
|
||||
Term Loan B |
|
$ |
491,113 |
|
|
$ |
496,163 |
|
Seller notes |
|
11,510 |
|
|
9,005 |
|
||
Deferred payment obligation |
|
4,000 |
|
|
— |
|
||
Finance lease liabilities and other |
|
3,869 |
|
|
2,033 |
|
||
Total debt before unamortized discount and debt issuance costs |
|
510,492 |
|
|
507,201 |
|
||
Unamortized discount and debt issuance costs, net |
|
(7,395 |
) |
|
(8,328 |
) |
||
Total debt |
|
$ |
503,097 |
|
|
$ |
498,873 |
|
|
|
|
|
|
||||
Current portion of long-term debt: |
|
|
|
|
||||
Term Loan B |
|
$ |
5,050 |
|
|
$ |
5,050 |
|
Seller notes |
|
4,060 |
|
|
3,175 |
|
||
Finance lease liabilities and other |
|
975 |
|
|
527 |
|
||
Total current portion of long-term debt |
|
10,085 |
|
|
8,752 |
|
||
Long-term debt |
|
$ |
493,012 |
|
|
$ |
490,121 |
|
|
|
|
|
|
||||
Net indebtedness: |
|
|
|
|
||||
Total debt before unamortized discount and debt issuance costs |
|
510,492 |
|
|
507,201 |
|
||
Cash and cash equivalents |
|
(144,602 |
) |
|
(74,419 |
) |
||
Net indebtedness |
|
$ |
365,890 |
|
|
$ |
432,782 |
|
Table 9 Hanger, Inc. Key Operating Metrics |
||||||||
|
|
As of and For the Three
|
|
For the Years Ended
|
||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Same clinic revenue: |
|
|
|
|
|
|
|
|
Decline (growth) rate on net revenue |
|
(10.6)% |
|
|
|
(10.7)% |
|
|
Growth rate day adjusted (a) |
|
(10.6)% |
|
|
|
(11.0)% |
|
|
|
|
|
|
|
|
|
|
|
Clinical locations: |
|
|
|
|
|
|
|
|
Patient care clinics |
|
704 |
|
701 |
|
|
|
|
Satellite clinics |
|
112 |
|
111 |
|
|
|
|
Total clinical locations |
|
816 |
|
812 |
|
|
|
|
(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/20210301005293/en/
FAQ
What were Hanger's Q4 2020 financial results?
What impacted Hanger's revenue in 2020?
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