AUSTIN, Texas, Feb. 8, 2012 /PRNewswire/ -- Hanger Orthopedic Group, Inc. (NYSE: HGR) announced net sales of $248.1 million for the quarter ended December 31, 2011, an increase of $21.6 million, or 9.5%, from $226.5 million for the fourth quarter of 2010. Diluted earnings per share were $0.52 for the fourth quarter of 2011 compared to $0.02 in the same period in 2010. Adjusted diluted earnings per share, which excludes the costs to relocate the Company's corporate headquarters, costs related to acquisitions and costs related to the 2010 refinancing, increased by 3.8% to $0.54 for the fourth quarter of 2011 compared to $0.52 for the fourth quarter of 2010. Adjusted diluted earnings per share include $0.04 and $0.06 in one-time tax benefits for the quarter ended December 31, 2011 and 2010, respectively.
The $21.6 million increase in sales for the fourth quarter of 2011 was the result of a $10.0 million increase from the Therapeutic Solutions segment, principally from the acquisition of Accelerated Care Plus ("ACP"); a $6.3 million increase due to acquisitions in the Patient Care Services segment; a $4.4 million, or 2.2%, increase in same-center sales in the Patient Care Services segment; and a $0.9 million, or 3.9%, increase in sales in the Distribution segment. Income from operations for the quarter was $34.3 million compared to $25.7 million in 2010. Excluding the headquarters relocation and acquisition costs, adjusted income from operations increased 7.5%, or $2.4 million, to $35.2 million for the three months ended December 31, 2011. The increase in adjusted income from operations was principally a result of an increase of $1.4 million from the Therapeutic Solutions segment, primarily from the acquisition of ACP, and a $1.1 million increase in the Patient Care Services segment.
Net sales increased 12.4%, or $101.2 million, to $918.5 million for the year ended December 31, 2011 from $817.4 million for 2010. The sales increase was driven principally by a $57.4 million increase in the Therapeutic Solutions segment, resulting primarily from the acquisition of ACP; a $20.5 million increase due to acquisitions in the Patient Care Services segment; a $18.4 million, or 2.6%, increase in same-center sales in the Patient Care Services segment; and a $4.9 million, or 5.1%, increase in sales in the Distribution segment. As a percentage of sales, adjusted income from operations increased by 30 basis points from the prior year, with 20 basis points attributable to the acquisition of ACP and the remainder to the core business. Diluted earnings per share were $1.61 for 2011 compared to $0.65 in 2010. Excluding the headquarters relocation, acquisition costs, and costs related to the 2010 refinancing, adjusted diluted earnings per share increased $0.22, or 15.5%, to $1.64 for 2011 from $1.42 in 2010. Adjusted diluted earnings per share include one-time tax benefits of $0.05 and $0.06 in 2011 and 2010, respectively.
The Company generated $61.8 million in cash flows from operations during the year ended December 31, 2011 compared to $54.2 million for 2010 and invested $28.1 million in new capital additions. During 2011 the Company acquired eight companies comprised of 21 patient care services centers for an aggregate purchase price of approximately $24.9 million, including $14.1 million in cash and $10.8 million in unsecured notes and earn-outs to be paid over the next four years. These 21 acquired patient care centers are expected to generate approximately $28.0 million in annualized revenues. As of December 31, 2011, the Company had $139.5 million in total liquidity, which included $42.9 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 approximately 3.0 at December 31, 2011.
"We are pleased to achieve a 15.5% increase in adjusted earnings per share for 2011 in a challenging economic environment that included continued high unemployment, flat Medicare pricing as well as reductions in Medicaid reimbursement in our Patient Care Services segment and a reduction in Medicare reimbursement for skilled nursing facilities, which indirectly impacted our Therapeutic Services segment," commented Thomas F. Kirk, Chief Executive Officer of Hanger Orthopedic Group. "These challenges were primarily responsible for fourth quarter growth rates below those achieved for the full year. We expect some improvement in the operating environment for 2012, especially for our Patient Care Services segment. We also expect certain of these challenges to continue, and we have put action plans and teams in place to address these conditions." Mr. Kirk concluded, "We thank our employees for their dedicated performance in 2011 and look forward to continued growth in revenues and earnings for 2012."
The Company expects full year 2012 revenues between $970 million and $990 million resulting from a comparable store sales growth in our Patient Care Services and Distribution segments of 3% to 5%. We expect flat to slightly higher revenues in our Therapeutic Services segment for the year, with sales in the first half of the year down then trending up the second half as the rate of new contracts accelerates. The Company anticipates diluted earnings per share between $1.72 and $1.79 excluding approximately $2.8 million in one-time, pretax costs which are primarily training costs related to the implementation of Janus, the Company's new practice management and billing system. As in past years, the Company's goal is to increase operating margins by twenty to forty basis points. The Company anticipates generating cash flow from operations between $70 million and $80 million in 2012 and investing a total of $40 million to $50 million in capital additions. During 2012 the Company will continue its acquisition program with a goal of closing acquisitions that total approximately $20 million in annualized revenues.
A conference call to discuss these results is scheduled to begin at 9:00 a.m., EST, on Thursday, February 9, 2012. Those wishing to participate should call 1-877-312-5846. In addition, a replay will be available until Thursday, February 16, 2012, by dialing 1-855-859-2056 and referencing Conference ID # 42026980.
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 700 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.
