AUSTIN, Texas, Oct. 26, 2011 /PRNewswire/ -- Hanger Orthopedic Group, Inc. (NYSE: HGR) announced net sales of $235.3 million for the quarter ended September 30, 2011, an increase of $28.6 million, or 13.8%, from $206.7 million for the third quarter of 2010. Adjusted diluted earnings per share, which excludes the costs to relocate the Company’s corporate headquarters and the costs related to acquisitions, increased 24.3% to $0.46 for the third quarter from $0.37 for the third quarter of 2010. Diluted earnings per share were $0.45 for the third quarter of 2011 compared to $0.21 in the same period in 2010.
The $28.6 million increase in sales for the third quarter of 2011 was the result of a $15.7 million increase from the Therapeutic Solutions segment, principally from the acquisition of Accelerated Care Plus (“ACP”); a $7.2 million or 4.0% increase in same-center sales in the Patient Care Services segment; a $4.7 million increase due to acquisitions in the Patient Care Services segment; and a $1.0 million or 3.9% increase in sales in the Company’s Distribution segment. Income from operations for the quarter ended September 30, 2011 was $31.2 million compared to $18.3 million in the prior year. Excluding the headquarters relocation and acquisition costs, adjusted income from operations increased 18.0% for the three months ended September 30, 2011. Adjusted income from operations as a percentage of revenue increased 50 basis points to 13.5% for the third quarter of 2011, which was primarily attributable to the acquisition of ACP.
Net sales for the nine months ended September 30, 2011 increased by $79.6 million, or 13.5%, to $670.5 million from $590.9 million in the same period of 2010. The sales increase was driven by a $47.4 million increase in the Therapeutic Solutions Segment, resulting primarily from the acquisition of ACP; a $14.7 million or 2.9% increase in same-center sales in the Patient Care Services segment; a $13.5 million increase due to acquisitions in the Patient Care Services segment; and a $4.0 million or a 5.6% increase in sales in the Company’s Distribution segment. As a percentage of sales, adjusted income from operations increased by 60 basis points due to improved leverage in our core business and the acquisition of ACP. Diluted earnings per share were $1.08 for the nine months ended September 30, 2011, a 71.4% increase compared to $0.63 in the same period in 2010. Excluding the headquarters relocation costs and acquisition cost, adjusted diluted earnings per share increased $0.20 or 22.2%, to $1.10 for the nine months ended September 30, 2011 from $0.90 in the 2010 period.
The Company generated $35.2 million in cash flows from operations during the first nine months of 2011 compared to $37.4 million for the same period of the prior year. As of September 30, 2011, the Company had $128.0 million in total liquidity, which included $31.4 million of cash and $96.6 million, net of $3.4 million in letters of credit, available under its revolving credit facility. The Company’s leverage ratio, as defined in its credit facilities, improved to 3.12 at the end of the third quarter of 2011.
“We continue to deliver double digit growth in adjusted earnings though sales growth and cost containment. Our sales growth is primarily attributable to the acquisition of ACP and continued same center growth in our Patient Care Services segment,” commented Thomas F. Kirk, Chief Executive Officer of Hanger Orthopedic Group. Mr. Kirk added, “While we are pleased with our third quarter results, we experienced increased pressure on sales volumes and operating margin this quarter compared to the first half of the year, which we attribute to the cumulative weakness in the national economy, persistent high unemployment, uncertainty in the minds of our customers on the impact of health care reforms and state governments looking for ways to cover budget shortfalls. We remain optimistic about our ability to continue to produce profitable growth; however given the current environment we are lowering our fourth quarter EPS growth expectations to a range of 7% to 13%. With this revision, we now expect 17% to 19% growth in full year adjusted earnings per diluted share.”
The Company expects fourth quarter 2011 revenues between $243 million and $247 million and adjusted diluted EPS between $0.49 and $0.52 which results in full year revenues between $914 million and $918 million and adjusted diluted EPS of $1.59 to $1.62. The Company’s goal is to increase operating margins for the full year by 20 to 40 basis points in its core business. The Company anticipates generating cash flow from operations of $70 million to $75 million in 2011 and investing a total of $30 million to $35 million in new capital additions in 2011 to fund its core businesses, including the development of a comprehensive electronic practice management system during the year.
A conference call to discuss these results is scheduled to begin at 9:00 a.m., EST, on Thursday, October 27, 2011. Those wishing to participate should call 1-877-312-5846. In addition, a replay will be available until Friday, November 4, 2011, by dialing 1-855-859-2056 and referencing Conference ID # 14072339.
About Hanger Hanger Orthopedic Group, Inc., headquartered in Austin, Texas, is the world’s premier provider of services and products that enhance human physical capability. Hanger provides orthotic and prosthetic patient care services, distributes O&P devices and components and provides therapeutic solutions to the broader post-acute market. Hanger is the largest owner and operator of orthotic and prosthetic patient care centers, with in excess of 680 O&P patient care centers located in 45 states and the District of Columbia. Hanger, through its subsidiary Southern Prosthetic Supply, is also the largest distributor of branded and private label O&P devices and components in the United States. Hanger provides therapeutic solutions through its subsidiaries Innovative Neurotronics and Accelerated Care Plus. Innovative Neurotronics introduces emerging neuromuscular technologies developed through independent research in a collaborative effort with industry suppliers worldwide. Accelerated Care Plus is a developer of specialized rehabilitation technologies and the nation’s leading provider of evidence-based clinical programs for post-acute rehabilitation, serving more than 4,000 long-term care facilities and other sub-acute rehabilitation providers throughout the U.S. For more information on Hanger, visit www.hanger.com.
