Hanger Reports 4Q and Full Year 2018 Results, 2019 Outlook

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Hanger, Austin, Texas, announced its financial results for the fourth quarter (4Q) and full year ended December 31, 2018.

Highlights for the fourth quarter (4Q) 2018 include:

·        Net revenue was $284.9 million for 4Q 2018, compared to $285.7 million for the same period in 2017, reflecting a net revenue decline of 0.3 percent.

·        Net income totaled $4.5 million for 4Q 2018, compared to a net loss of $84.4 million for the same period in 2017. 4Q 2017 results were impacted by a $57.5 million charge for impairment of intangible assets as well as a $35 million reduction in deferred tax assets resulting from the passage of the Tax Cuts and Jobs Act.

·        Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $40 million in the 4Q 2018, compared to $39.6 million in 4Q 2017, an increase of $0.4 million, or 1.2 percent.

·        Diluted earnings per share was $0.12 for 4Q 2018, compared to a loss of $2.32 per share in 4Q 2017.

·        Adjusted diluted earnings per share was $0.40 for the 4Q 2018, compared to earnings of $0.22 per share for the same period in 2017, due primarily to higher income from operations and lower interest expense in 2018.

·        Net cash provided by operating activities was $41.4 million for 4Q 2018, compared to $31.1 million for the same period in 2017.

Financial highlights for the full year 2018 include:

·        Net revenue of $1,048.8 million for the twelve months ended December 31, 2018, compared to $1,040.8 million for the same period in 2017, reflecting net revenue growth of 0.8 percent year-over-year.

·        For the full year 2018, patient care segment net revenue totaled $857.4 million, an increase of $5.4 million or 0.6 percent, compared to 2017. Revenue from prosthetics increased by 3.3 percent, while revenues from orthotics, shoes, and inserts declined by 1.3 percent, primarily due to the company's de-emphasis of lower margin off-the-shelf orthotics and shoes.

·        Products and services segment net revenue totaled $191.4 million, an increase of $2.6 million or 1.4 percent, compared to 2017. Strong growth in distribution of O&P componentry was partially offset by declines in therapeutic solutions revenue.

·        Net loss totaled $0.9 million for the full year 2018, compared to a net loss of $104.7 million for the same period in 2017.

·        Adjusted EBITDA was $121.1 million in 2018 compared to $120.3 million in 2017.

·        Diluted loss per share was $0.02 for 2018, compared to a loss of $2.89 per share in 2017.

·        Adjusted diluted earnings per share was $0.78 for the full year 2018, compared to $0.33 per share for the same period in 2017, due primarily to higher income from operations and lower interest expense during 2018.

·        Net cash provided by operating activities was $78.5 million for the year ended full year 2018, compared to $30.1 million for the same period in 2017, primarily driven by reduced professional third-party expenses and cash generated from working capital as well as lower interest expense.

The 2019 outlook includes:

·        Net revenue in a range between $1.075 billion and $1.105 billion,

·        Adjusted EBITDA in a range between $121 million and $126 million.

·        Hanger anticipates that growth and margin expansion in its patient care segment will be partially offset by declines in its products and services segment due to decreases in therapeutic solutions revenue.

·        The revenue and adjusted EBITDA outlook includes approximately $28 million of incremental revenue acquired through three acquisitions completed in 4Q 2018 and the first quarter of 2019. The company said that due to integration and other related costs, these acquisitions are anticipated to provide only modest contributions to earnings growth in 2019.