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Share Name | Share Symbol | Market | Type |
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Hanger Inc | NYSE:HNGR | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 18.72 | 0 | 01:00:00 |
Company anticipates growth in 2019 revenue and earnings, driven by the patient care segment
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 full-year ended December 31, 2018.
Financial Highlights for the Fourth Quarter of 2018
Vinit Asar, President and Chief Executive Officer of Hanger, Inc., stated, "The fourth quarter of 2018 capped off a successful year for Hanger. We delivered financial results consistent with our original guidance while investing in a comprehensive portfolio of initiatives that will enable Hanger to increase its long-term rate of growth. I am pleased with the progress to date in our Patient Care segment, as we grow the prosthetics business, refine our delivery strategy in certain orthotics categories, and improve our operational effectiveness. Within Products & Services, we saw strong performance within distribution, offset by expected declines in therapeutic solutions. In 2019, we anticipate the investments we have made will further differentiate Hanger's leadership in the O&P industry."
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 the Fourth Quarter of 2018
Patient Care Segment
For the three months ended December 31, 2018, Patient Care net revenue was $236.6 million, a decrease of $0.9 million, or 0.4 percent, compared to net revenue of $237.5 million reported during the same period in 2017. Net Patient Care growth was reduced by $1.1 million as a result of the impact of ASC 606.
Same clinic revenue growth was 0.3 percent on a day-adjusted basis for the three months ended December 31, 2018. This moderation in same clinic revenue growth was caused by two primary factors: comparison to a strong growth performance in the fourth quarter of 2017 when same clinic revenue per day growth totaled 2.1 percent; as well as a decline in certain lower-margin orthotic categories that the Company continues to de-emphasize.
Income from operations in the Patient Care segment was $42.2 million during the fourth quarter of 2018, which reflected a $2.0 million decrease, compared to $44.2 million reported in the prior year. Adjusted EBITDA for the segment was $48.5 million, which reflected a $2.2 million or 4.4 percent decrease compared to the prior year period. Comparative increases in material and personnel costs impacted income from operations and Adjusted EBITDA in the fourth quarter of 2018.
Products & Services Segment
For the three months ended December 31, 2018, Products & Services net revenue totaled $48.2 million, which was consistent with the $48.3 million reported in the same period of 2017. Within this segment, revenue from the distribution of O&P componentry to independent providers increased by $1.6 million, or 4.9 percent. This growth was offset by a $1.7 million decrease in revenue from therapeutic solutions as compared to the fourth quarter of 2017.
Income from operations for the Products & Services segment increased by $53.4 million to $5.4 million in the fourth quarter of 2018 compared to the same period in 2017, due primarily to impairment of intangible assets in the prior year. Adjusted EBITDA for the Products & Services segment was $8.4 million for the fourth quarter of 2018, which reflected a $1.1 million decrease compared to the same period of 2017. Earnings growth from increased O&P distribution revenue was offset by the decrease in earnings associated with the decline in therapeutic solutions revenue.
Corporate & Other
The loss from operations relating to corporate and other activities declined by $6.8 million to $24.8 million for the quarter ended December 31, 2018 compared to the same period in 2017. This decrease primarily related to a $3.5 million reduction in bonus expense and a $2.8 million reduction in professional accounting and legal fees as compared to the fourth quarter of the prior year. Excluding the effect of third party professional fees related to financial statement remediation, depreciation and amortization, and non-cash equity compensation expense, the net cost of Corporate and Other activities decreased year-over-year by $3.8 million, to $16.8 million.
Net Income; Interest Expense
For the three months ended December 31, 2018, net income was $4.5 million compared with a net loss of $84.4 million in the same period of 2017. The $88.9 million improvement in net income year-over-year was due primarily to the $54.7 million impairment of intangible assets incurred in the fourth quarter of 2017, as well as lower professional accounting and legal fees, depreciation and amortization expense, interest expense and taxes in the fourth quarter of 2018.
Financial Highlights for the Full Year 2018
Liquidity
On December 31, 2018, the Company had total liquidity of $189.2 million, comprised of $95.1 million in cash and cash equivalents, and $94.1 million in available borrowing capacity under its revolving credit facility, compared to liquidity of $155.1 million on September 30, 2018. The increase in liquidity of $34.1 million from September 30, 2018 resulted primarily from positive net cash flow from operations and secondarily due to favorable working capital timing.
2019 Outlook
Hanger currently anticipates 2019 net revenue in a range between $1.075 billion and $1.105 billion, and Adjusted EBITDA in a range between $121 million and $126 million.
The Company anticipates that growth and margin expansion in its Patient Care segment will be partially offset by declines in its Products & Services segment due to decreases in therapeutic solutions revenue. The Company's revenue and Adjusted EBITDA outlook also includes approximately $28 million of incremental revenue acquired through three acquisitions completed in the fourth quarter of 2018 and first quarter of 2019. Due to integration and other related costs, these acquisitions are anticipated to provide only modest contributions to earnings growth in 2019.
Hanger expects 2019 to be consistent with prior years with regard to seasonality in its business, with sequentially lower revenue, earnings and cash flow in the first quarter of the year. In addition, Hanger's financial outlook for 2019 does not incorporate contributions from potential future acquisitions.
Adjusted EBITDA 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
Hanger’s management team will host a conference call tomorrow, Friday, March 15, at 8:30 a.m. Eastern time to discuss the Company’s fourth quarter and full year 2018 financial results and 2019 outlook.
To participate, dial 877-407-6184 or 201-389-0877 outside the U.S. and Canada, and use conference code number 13686646. A live webcast and replay of the call as well as accompanying supplemental information will be available at the Investor Relations section of the Company’s web site: investor.hanger.com.
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 investor.hanger.com.
About Hanger, Inc. – Built on the legacy of James Edward Hanger, the first amputee of the American Civil War, Hanger, Inc. (NYSE: HNGR) delivers orthotic and prosthetic (O&P) patient care, and distributes O&P products and rehabilitative solutions to the broader market. Hanger's Patient Care segment is the largest owner and operator of O&P patient care clinics with approximately 800 patient care locations nationwide. Through its Products & Services segment, Hanger distributes branded and private label O&P devices, products and components, and provides rehabilitative solutions. With over 150 years of clinical excellence and innovation, Hanger's vision is to lead the orthotic & prosthetic markets by providing superior patient care, outcomes, services and value. For more information on Hanger, visit www.hanger.com.
This press release contains certain “forward-looking statements” relating to the Company. All statements, other than statements of historical fact included herein, are “forward-looking statements.” These forward-looking statements are often identified by the use of forward-looking terminology such as “preliminary,” “intends,” “expects,” “plans,” “anticipates,” “believes,” “views” or similar expressions and involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks, and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. These uncertainties include, but are not limited to, the risk of our identified material weaknesses in our internal control over financial reporting adversely affecting our ability to report our financial condition and results of operations in a timely and accurate manner; any litigation relating to, the Company’s accounting practices, financial statements and other financial data, periodic reports or other corporate actions; changes in the demand for the Company’s O&P products and services; uncertainties relating to the results of operations or recently acquired O&P patient care clinics; the Company’s ability to enter into and derive benefits from managed-care contracts; the Company’s ability to successfully attract and retain qualified O&P clinicians; federal laws governing the health care industry; uncertainties inherent in investigations and legal proceedings; governmental policies affecting O&P operations; 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, 2018 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(dollars in thousands, except share and per share amounts)
For the Three Months EndedDecember 31,
For the Years EndedDecember 31,
2018 2017 2018 2017 Net revenues $ 284,853 $ 285,736 $ 1,048,760 $ 1,040,769 Material costs 90,340 88,816 338,017 329,223 Personnel costs 97,574 95,239 364,089 361,090 Other operating costs 31,271 32,097 123,902 129,831 General and administrative expenses 29,085 33,373 109,552 109,342 Professional accounting and legal fees 4,726 7,224 16,915 36,239 Depreciation and amortization 8,903 9,665 36,455 39,259 Impairment of intangible assets 183 54,735 183 54,735 Income (loss) from operations 22,771 (35,413 ) 59,647 (18,950 ) Interest expense, net 9,046 14,491 37,566 57,688 Loss on extinguishment of debt — — 16,998 — Non-service defined benefit plan expense 176 184 703 736 Income (loss) before income taxes 13,549 (50,088 ) 4,380 (77,374 ) Provision for income taxes 9,086 34,325 5,238 27,297 Net income (loss) $ 4,463 $ (84,413 ) $ (858 ) $ (104,671 ) Basic and Diluted Per Common Share Data: Basic earnings (loss) per share $ 0.12 $ (2.32 ) $ (0.02 ) $ (2.89 ) Shares used to compute basic and diluted per common share amounts 36,906,938 36,410,488 36,764,551 36,270,920 Diluted earnings (loss) per share $ 0.12 $ (2.32 ) $ (0.02 ) $ (2.89 ) Weighted average shares outstanding - diluted 37,721,662 36,410,488 36,764,551 36,270,920 Table 2 Hanger, Inc. Consolidated Balance Sheets(dollars in thousands)
As of December 31, 2018 2017 ASSETS Current assets: Cash and cash equivalents $ 95,114 $ 1,508 Accounts receivable, net 143,986 146,346 Inventories 67,690 69,138 Income taxes receivable 379 13,079 Other current assets 18,731 20,888 Total current assets 325,900 250,959 Non-current assets: Property, plant, and equipment, net 89,489 93,615 Goodwill 198,742 196,343 Other intangible assets, net 15,478 21,940 Deferred income taxes 65,635 68,126 Other assets 7,766 9,440 Total assets $ 703,010 $ 640,423 TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities: Current portion of long-term debt $ 8,583 $ 4,336 Accounts payable 55,797 48,269 Accrued expenses and other current liabilities 51,783 66,308 Accrued compensation related costs 55,111 53,380 Total current liabilities 171,274 172,293 Long-term liabilities: Long-term debt, less current portion 502,090 445,928 Other liabilities 51,570 50,253 Total liabilities 724,934 668,474 Shareholders' deficit: Common stock, $0.01 par value; 60,000,000 shares authorized; 37,063,995 shares issued and 36,921,174 shares outstanding in 2018, and 36,515,232 shares issued and 36,372,411 shares outstanding in 2017 371 365 Additional paid-in capital 343,955 333,738 Accumulated other comprehensive loss (4,531 ) (1,686 ) Accumulated deficit (361,023 ) (359,772 ) Treasury stock, at cost; 142,821 shares at 2018 and 2017, respectively (696 ) (696 ) Total shareholders' deficit (21,924 ) (28,051 ) Total liabilities and shareholders' deficit $ 703,010 $ 640,423 Table 3 Hanger, Inc. Consolidated Statements of Cash Flows(dollars in thousands)
For the Twelve MonthsEnded December 31,
2018 2017 Cash flows from operating activities: Net loss $ (858 ) $ (104,671 ) Adjustments to reconcile net loss to net cash from operating activities: Depreciation and amortization 36,455 39,259 (Benefit) provision for doubtful accounts (733 ) 9,422 Impairment of intangible assets 183 54,735 Stock-based compensation expense 13,065 12,930 Deferred income taxes 3,452 26,248 Amortization of debt issuance costs 2,837 8,876 Loss on extinguishment of debt 16,998 — Gain on sale and disposal of fixed assets (2,713 ) (2,059 ) Changes in operating assets and liabilities: Accounts receivable, net 3,238 (12,585 ) Inventories 1,750 (913 ) Other current assets and other assets 4,459 661 Income taxes receivable 12,700 121 Accounts payable 6,511 (3,562 ) Accrued expenses and other current liabilities (16,550 ) (12,929 ) Accrued compensation related costs 1,713 16,843 Other liabilities (3,980 ) (2,271 ) Changes in operating assets and liabilities 9,841 (14,635 ) Net cash provided by operating activities - continuing operations 78,527 30,105 Cash flows from investing activities: Purchase of property, plant, and equipment (18,984 ) (16,355 ) Purchase of therapeutic program equipment leased to third parties under operating leases (9,835 ) (6,000 ) Acquisitions, net of cash acquired (1,978 ) — Proceeds from company-owned life insurance investment — 17,135 Purchase of company-owned life insurance investment (598 ) (555 ) Proceeds from sale of property, plant and equipment 4,237 4,909 Net cash used in investing activities - continuing operations (27,158 ) (866 ) Cash flows from financing activities: Borrowings under term loan, net of discount 501,467 420 Repayment of term loan (435,660 ) (28,545 ) Borrowings under revolving credit agreement 3,000 156,965 Repayments under revolving credit agreement (8,000 ) (151,965 ) Payment of employee taxes on stock-based compensation (2,906 ) (1,477 ) Payment on seller notes (2,599 ) (5,197 ) Payment of capital lease obligations (1,207 ) (1,210 ) Payment of debt issuance costs (6,757 ) (2,863 ) Payment of debt extinguishment costs (8,436 ) — Proceeds from exercise of options 64 — Net cash provided by (used in) financing activities - continuing operations 38,966 (33,872 ) Increase (decrease) in cash, cash equivalents and restricted cash 90,335 (4,633 ) Cash, cash equivalents and restricted cash, at beginning of period 4,779 9,412 Cash, cash equivalents and restricted cash, at end of period $ 95,114 $ 4,779 Reconciliation of Cash, Cash Equivalents, and Restricted Cash Cash and cash equivalents, at beginning of period $ 1,508 $ 7,157 Restricted cash, at beginning of period 3,271 2,255 Cash, cash equivalents, and restricted cash, at beginning of period $ 4,779 $ 9,412 Cash and cash equivalents, at end of period $ 95,114 $ 1,508 Restricted cash, at end of period — 3,271 Cash, cash equivalents, and restricted cash, at end of period $ 95,114 $ 4,779Table 4
Hanger, Inc.
Segment Information: Revenue, EBITDA and Adjusted EBITDA
(dollars in thousands)
EBITDA is defined as operating income before depreciation and amortization. Adjusted EBITDA is defined as operating income before certain charges, impairments of intangible assets, third-party professional fees in excess of normal amounts incurred in connection with our financial statement remediation, debt extinguishment costs, expenses associated with equity-based compensation, severance expenses, and certain third-party expenses incurred in connection with our acquisitions.
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 EndedDecember 31,
For the Twelve MonthsEnded December 31,
2018 2017 2018 2017 Net Revenue (a) Patient Care $ 236,637 $ 237,478 $ 857,382 $ 851,973 Products & Services 48,216 48,258 191,378 188,796 Net revenue $ 284,853 $ 285,736 $ 1,048,760 $ 1,040,769 EBITDA (b) Patient Care $ 46,756 $ 49,415 $ 145,918 $ 143,781 Products & Services 7,980 (45,593 ) 35,720 (17,513 ) Corporate & Other (23,062 ) (29,570 ) (85,536 ) (105,959 ) EBITDA (Non-GAAP) $ 31,674 $ (25,748 ) $ 96,102 $ 20,309 Adjusted EBITDA (b) Patient Care $ 48,457 $ 50,662 $ 150,881 $ 148,007 Products & Services 8,420 9,517 36,503 38,504 Corporate & Other (16,837 ) (20,597 ) (66,327 ) (66,172 ) Adjusted EBITDA (Non-GAAP) $ 40,040 $ 39,582 $ 121,057 $ 120,339 (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 (Loss) and Earnings (Loss) Per Share to
Adjusted Net Income and Adjusted Earnings Per Share
(dollars in thousands, except share and per share amounts)Earnings Per Share (or “EPS”) is defined as net income divided by our diluted common shares during the applicable period. Adjusted EPS is defined as EPS adjusted for impairments of intangible assets, third-party professional fees in excess of normal amounts incurred in connection with our financial statement remediation, debt extinguishment costs, severance expenses 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 EndedDecember 31,
For the Twelve Months EndedDecember 31,
2018 2017 2018 2017 Net income (loss) - as reported (GAAP) $ 4,463 $ (84,413 ) $ (858 ) $ (104,671 ) Adjustments: Impairment of intangible assets 183 54,735 183 54,735 Amortization expense 1,443 2,308 6,707 9,527 Third-party professional fees 3,591 6,358 12,461 32,301 Loss on extinguishment of debt — — 16,998 — Acquisition-related expenses 510 — 510 — Disaster recovery / unclaimed property settlement — — (3,729 ) — Severance expenses 591 — 957 64 Adjustments prior to tax effect $ 6,318 $ 63,401 $ 34,087 $ 96,627 Tax effect of specified adjustments (a) 4,317 29,266 (3,994 ) 19,981 Adjustments after taxes 10,635 92,667 30,093 116,608 Adjusted net income (Non-GAAP) $ 15,098 $ 8,254 $ 29,235 $ 11,937 Basic earnings (loss) per share - as reported (GAAP) $ 0.12 $ (2.32 ) $ (0.02 ) $ (2.89 ) Effect of above listed specified adjustments 0.29 2.55 0.82 3.22 Adjusted basic earnings per share - as reported (Non-GAAP) $ 0.41 $ 0.23 $ 0.80 $ 0.33 Diluted earnings (loss) per share - as reported (GAAP) $ 0.12 $ (2.32 ) $ (0.02 ) $ (2.89 ) Effect of above listed specified adjustments 0.28 2.54 0.80 3.22 Adjusted diluted earnings per share - as reported (Non-GAAP) $ 0.40 $ 0.22 $ 0.78 $ 0.33 Shares used to compute basic earnings (loss) per share 36,906,938 36,410,488 36,764,551 36,270,920 Shares used to compute diluted earnings (loss) per share 37,721,662 36,764,901 37,473,860 36,566,638(a) "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% and 38% respectively for the 2018 and 2017 periods to the Company's earnings from operations before taxes, after the incorporation of the identified above adjustments.
Table 6 Hanger, Inc. Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA (dollars in thousands)EBITDA is defined as operating income before depreciation and amortization. Adjusted EBITDA is defined as operating income before certain charges, impairments of intangible assets, third-party professional fees in excess of normal amounts incurred in connection with our financial statement remediation, debt extinguishment costs, expenses associated with equity-based compensation, severance expenses, and certain third-party expenses incurred in connection with our acquisitions.
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 EndedDecember 31,
For the Twelve Months EndedDecember 31,
2018 2017 2018 2017 Net income (loss) - as reported (GAAP) $ 4,463 $ (84,413 ) $ (858 ) $ (104,671 ) Adjustments to calculate EBITDA: Depreciation and amortization 8,903 9,665 36,455 39,259 Interest expense, net 9,046 14,491 37,566 57,688 Loss on extinguishment of debt — — 16,998 — Non-service defined benefit plan expense 176 184 703 736 Provision for income taxes 9,086 34,325 5,238 27,297 Adjustments - net income (loss) to EBITDA 27,211 58,665 96,960 124,980 EBITDA (Non-GAAP) 31,674 (25,748 ) 96,102 20,309 Further adjustments to calculate Adjusted EBITDA: Impairment of intangible assets 183 54,735 183 54,735 Third-party professional fees 3,591 6,358 12,461 32,301 Equity-based compensation 3,491 4,237 13,065 12,930 Transaction costs 510 — 510 — Disaster recovery / unclaimed property settlement — — (2,221 ) — Severance expenses 591 — 957 64 Further adjustments - EBITDA to Adjusted EBITDA 8,366 65,330 24,955 100,030 Adjusted EBITDA (Non-GAAP) $ 40,040 $ 39,582 $ 121,057 $ 120,339 Table 7 Hanger, Inc. Segment Reconciliation of Income (Loss) From Operations to EBITDA and Adjusted EBITDA (dollars in thousands)EBITDA is defined as operating income before depreciation and amortization. Adjusted EBITDA is defined as operating income before certain charges, impairments of intangible assets, third-party professional fees in excess of normal amounts incurred in connection with our financial statement remediation, debt extinguishment costs, expenses associated with equity-based compensation, severance expenses, and certain third-party expenses incurred in connection with our acquisitions.
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 EndedDecember 31,
For the Twelve Months EndedDecember 31,
2018 2017 2018 2017Patient Care
Income from operations - as reported (GAAP) $ 42,190 $ 44,175 $ 126,805 $ 122,418 Depreciation & amortization 4,566 5,240 19,113 21,363 EBITDA (Non-GAAP) 46,756 49,415 145,918 143,781 Further adjustments to calculate Adjusted EBITDA: Equity-based compensation 1,110 1,247 4,372 4,138 Severance expenses 591 — 591 88 Further adjustments - EBITDA to Adjusted EBITDA 1,701 1,247 4,963 4,226 Adjusted EBITDA (Non-GAAP) 48,457 50,662 150,881 148,007Products & Services
Income (loss) from operations - as reported (GAAP) 5,352 (48,065 ) 25,523 (27,676 ) Depreciation & amortization 2,628 2,472 10,197 10,163 EBITDA (Non-GAAP) 7,980 (45,593 ) 35,720 (17,513 ) Further adjustments to calculate Adjusted EBITDA: Impairment of intangible assets 183 54,735 183 54,735 Equity-based compensation 257 375 600 1,306 Severance expenses — — — (24 ) Further adjustments - EBITDA to Adjusted EBITDA 440 55,110 783 56,017 Adjusted EBITDA (Non-GAAP) 8,420 9,517 36,503 38,504Corporate & Other
Loss from operations - as reported (GAAP) (24,771 ) (31,523 ) (92,681 ) (113,692 ) Depreciation & amortization 1,709 1,953 7,145 7,733 EBITDA (Non-GAAP) (23,062 ) (29,570 ) (85,536 ) (105,959 ) Further adjustments to calculate Adjusted EBITDA: Third-party professional fees 3,591 6,358 12,461 32,301 Equity-based compensation 2,124 2,615 8,093 7,486 Acquisition-related expenses 510 — 510 — Disaster recovery / unclaimed property settlement — — (2,221 ) — Severance expenses — — 366 — Further adjustments - EBITDA to Adjusted EBITDA 6,225 8,973 19,209 39,787 Adjusted EBITDA (Non-GAAP) (16,837 ) (20,597 ) (66,327 ) (66,172 ) Total Adjusted EBITDA (Non-GAAP) $ 40,040 $ 39,582 $ 121,057 $ 120,339 Table 8 Hanger, Inc. Indebtedness(dollars in thousands)
As of December 31, 2018 2017 Revolving credit facility $ — $ 5,000 Term B loan, due 2025 501,213 — Term B loan, due 2019 — 280,000 Seller notes 4,506 5,912 Term loan, due June 2018 — 151,875 Financing leases and other 14,361 18,169 Total debt before unamortized discount and debt issuance costs 520,080 460,956 Unamortized discount and debt issuance costs, net (9,407 ) (10,692 ) Total debt $ 510,673 $ 450,264 Reported as: Current portion of long-term debt $ 8,583 $ 4,336 Long-term debt 502,090 445,928 Total debt $ 510,673 $ 450,264 Net indebtedness: Total debt before unamortized discount and debt issuance costs $ 520,080 $ 460,956 Cash and cash equivalents (95,114 ) (1,508 ) Net indebtedness $ 424,966 $ 459,448 Table 9 Hanger, Inc. Key Operating MetricsFor the Three Months EndedDecember 31,
As of and For theTwelve Months EndedDecember 31,
2018 2017 2018 2017 Same clinic revenue: Growth rate on net revenue 0.3 % 3.7 % 1.3 % 1.8 % Growth rate day adjusted (a) 0.3 % 3.7 % 0.9 % 2.2 % Clinical locations: Patient care clinics 676 682 Satellite clinics 104 112 Total clinical locations 780 794 (a) Same Clinic Revenue per Day - Same Clinic Revenue per Day normalizes sales 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/20190314005543/en/
Thomas Kiraly, Executive Vice President and Chief Financial Officer, Hanger, Inc.512-777-3600tkiraly@hanger.com
Seth Frank, Vice President, Treasury and Investor Relations, Hanger, Inc.512-777-3573sfrank@hanger.com
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