Hanger Reports 2019 Results, 2020 Outlook
March 20, 2020
Hanger, Austin, Texas, announced its financial results for the fourth quarter (4Q) 2019, year-end 2019, and its 2020 financial outlook.
4Q financial highlights include:
· Net revenue was $300.9 million for the three months ended December 31, 2019, compared to $284.9 million for the same period in 2018, reflecting growth of 5.6 percent. Patient care segment net same-clinic revenue grew by 2.9 percent.
· Net income was $18.8 million for the three months ended December 31, 2019, compared to $4.5 million for the same period in 2018. 4Q 2019 net income benefited from a $7.1 million reduction of certain tax valuation allowances relating to state tax deferred assets.
· Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $42.4 million in 4Q, compared to $40 million for the same period in 2018, reflecting an increase of $2.3 million or 5.8 percent. Growth in Adjusted EBITDA was driven by a $16.4 million increase in Patient care segment revenue and a resulting $5.2 million increase in segment Adjusted EBITDA.
· Generally accepted accounting principles (GAAP) diluted earnings per share was $0.49 for 4Q 2019, compared to $0.12 for the same period in 2018. Adjusted diluted earnings per share was $0.45 for the three months ended December 31, 2019, compared to $0.40 for the same period in 2018, a 12.5 percent increase year-over-year.
Financial highlights for the year ended December 31, 2019 include:
· Net revenue was $1,098 million for the year ended December 31, 2019, compared to $1,048.8 million for the same period of 2018, reflecting net revenue growth of 4.7 percent. For the twelve-month period, acquisitions that occurred in late 2018 and early 2019 contributed $28.9 million to net revenue growth, inclusive of consolidations.
· Patient care net revenue grew $48.3 million, or 5.6 percent, for the year to $905.7 million. Net same-clinic revenue growth for 2019 was 2.1 percent. The number of clinic operating days was equivalent for both 2019 and 2018.
· For the full year of 2019, excluding the effect of acquisitions, revenue from prosthetics increased by 3.2 percent, while orthotics revenue increased by 0.9 percent.
· Products and services segment net revenue grew $1 million, or 0.5 percent, driven by growth of $7.4 million in distribution services, offset by a $6.4 million decrease in revenue from therapeutic solutions. The revenue decline in therapeutic solutions was within the range originally anticipated for 2019.
· Net income was $27.5 million for the year ended December 31, 2019, compared to a $0.9 million net loss for the same period in 2018. Results for the period ending December 31, 2018, included a $17 million pre-tax loss on the extinguishment of debt related to the company's March 2018 refinancing, which was partially offset by a $3.7 million one-time gain related to favorable settlements.
· Adjusted EBITDA of $124.2 million for 2019 compares with the $121.1 million reported in the prior year.
· For the year ended December 31, 2019, GAAP diluted earnings per share was $0.72, compared to a loss of $0.02 per share in 2018. Adjusted diluted earnings per share was $0.90 for 2019, compared to $0.78 per share for the same period in 2018.
Hanger's financial outlook for 2020 is as follows:
· The company currently anticipates 2020 net revenue in a range between $1.125 billion and $1.155 billion, and Adjusted EBITDA in a range between $129 million and $134 million.
· It is expected that revenue and earnings growth will primarily be driven by continued same-clinic growth and margin expansion in its patient care segment. Products and services segment revenue is anticipated to decline modestly due to the discontinuance of the distribution of some low-margin orthotics products to podiatrists.
· The outlook includes approximately $27 million in revenue relating to the full year of contribution of acquisitions previously completed in 2019 and acquisitions having signed definitive agreements as of March 5.