Hanger Reports First Quarter 2021 Financial Results

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 first quarter ended March 31, 2021.

Financial Highlights

• Net revenue was $237.5 million for the three months ended March 31, 2021, compared to $233.7 million for the same period in 2020, reflecting growth of 1.6 percent.

• Net loss was $3.3 million for the three months ended March 31, 2021, compared to $15.7 million for the same period in 2020. Income from operations was $2.0 million for the quarter compared to a loss of $9.2 million for the same period in 2020.

• Adjusted EBITDA was $13.5 million in the first quarter of 2021, compared to $5.3 million for the same period in 2020, reflecting growth of $8.3 million.

• GAAP loss per share was $0.09 per share for the first quarter of 2021, compared to a loss of $0.42 per share for the same period in 2020. Adjusted diluted loss per share was $0.08 for the three months ended March 31, 2021, compared to a loss per share of $0.28 for the same period in 2020.

• On March 31, 2021, the Company had $165.1 million in liquidity, reflecting an increase of $33.3 million as compared with March 31, 2020.

Vinit Asar, President and Chief Executive Officer of Hanger, Inc., stated, "We are pleased with our first quarter performance which was a direct result of the solid efforts of our team nationwide. Hanger overcame the effects of the COVID surge as well as the weather impact that affected our clinical and distribution operations in the South. Adjusted EBITDA growth was ahead of our expectations due to favorable cost management this quarter, while cash flow benefited from solid collection trends in both of our business segments. We are pleased to have re-established growth and are hopeful that vaccination rates and COVID trends continue to enable a return to normal business conditions."

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 March 31, 2021

Patient Care Segment

For the three months ended March 31, 2021, Patient Care net revenue was $195.7 million, an increase of $5.5 million, or 2.9 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 $9.0 million of incremental revenue.

Net same clinic revenue on a day-adjusted basis grew by 1.4 percent during the first quarter of 2021 compared to the same quarter in the prior year period. Reported growth in the segment was achieved despite the adverse impact of severe winter weather conditions in key markets during February as well as the continuing impact of the COVID-19 pandemic. The segment also reflected significant improvements in collections and disallowed revenue rates compared to the first quarter of 2020.

Excluding the effect of acquisitions, as compared to the first quarter of 2020, net revenue from prosthetics grew 1.0 percent in the quarter and net revenue from orthotics grew 1.9 percent. Prosthetics comprised 52 percent of Patient Care segment net revenue during the first quarter of 2021 and 2020.

In the first quarter of 2021, patient appointment levels decreased by three percent as compared to the first quarter of 2020. This reflects improvement from the 12 percent appointment decline experienced in the fourth quarter of 2020 as compared to the prior year quarter. As of March 31, 2021, the Company had re-opened all patient care clinics that were temporarily closed during 2020 due to the COVID-19 pandemic.

Income from operations in the Patient Care segment was $19.1 million during the first quarter of 2021, an increase of $7.5 million compared to the $11.5 million reported in the prior year.

Adjusted EBITDA for the segment was $24.9 million, which reflected a $7.6 million or 44.0 percent increase. Adjusted EBITDA margin in the segment totaled 12.7 percent compared to 9.1 percent during the first quarter of 2020. Segment Adjusted EBITDA and margins benefited from lower disallowance rates and personnel costs during the quarter.

Products & Services Segment

For the three months ended March 31, 2021, Products & Services net revenue totaled $41.8 million, a decline of 4.1 percent compared with the same period in 2020. Revenue from the distribution of O&P componentry declined by $1.0 million, or 3.3 percent. This decrease primarily related to there being two fewer operating days in the quarter. Therapeutic solutions revenue declined $0.8 million, or 6.2 percent.

Income from operations for the Products & Services segment grew to $4.7 million in the first quarter of 2021 compared to $2.1 million in the same period of 2020. Adjusted EBITDA for the segment totaled $6.9 million for the first quarter of 2021, a $1.8 million improvement compared with the same period of 2020. Adjusted EBITDA margin in the segment totaled 16.4 percent compared to 11.6 percent during the first quarter of 2020.

Corporate & Other

Expenses associated with corporate and other activities increased by $1.1 million to $21.7 million for the quarter ended March 31, 2021 compared to the same period in 2020. Excluding the effect of depreciation and amortization and non-cash equity-based compensation expense, the net cost of corporate and other activities increased by $1.2 million to $18.3 million in the first quarter of 2021.

Net Income; Interest Expense

Interest expense totaled $7.3 million for the three month period ended March 31, 2021, a decrease of $0.9 million from the prior year period.

For the three month period ended March 31, 2021, net loss was $3.3 million compared with $15.7 million for the same period in 2020. GAAP diluted loss per share was $0.09 compared to a loss of $0.42 per share in 2020. Adjusted diluted loss per share was $0.08 for the three months ended March 31, 2021, compared to a loss of $0.28 p