Hanger Orthopedic Group, Bethesda, Maryland, has reported that for the quarter ended December 31, 2009, the company experienced an increase of 42.3 percent in earnings per share, to $0.37 on a 10.6 percent sales increase. Net sales were $205.1 million, an increase of $19.6 million or 10.6 percent, from $185.5 million in the prior year. According to the company, the increase was primarily the result of a 6.6 percent increase in same-center sales in its patient care centers, a 12.1 percent increase in sales of the company’s distribution segment and a $6.4 million increase principally related to sales from acquired entities. The combination of increased sales and effective expense management caused income from operations to increase by $5.6 million, or 25.4 percent, to $27.5 million for the fourth quarter of 2009, compared to $21.9 million last year.
Net income increased $3.6 million, or 43.7 percent, to $11.9 million compared to proforma net income of $8.3 million last year. Net sales increased by $57.0 million, or 8.1 percent, to $760.1 million from $703.1 million last year. The sales increase was principally the result of a $29.6 million, or 4.9 percent, increase in same-center sales in patient care centers, a $7.3 million, or 9.1 percent, increase in sales of the company’s distribution segment, and a $20.1 million increase principally related to sales from acquired entities.
“The year 2009 presented a challenging environment due to the uncertainty surrounding proposed changes to federal healthcare regulations and reimbursement and the impact of the ongoing recession,” commented Thomas F. Kirk, Hanger president and CEO. “In spite of these challenges, we delivered record sales, profits, and cash flows…. The combination of an 8.1 percent increase in revenue and a focused effort on expense management generated an 80 basis point improvement in our operating margin. I am proud of our employees’ efforts in 2009, and I am optimistic about our opportunities in 2010.”
For 2010, the company said it expects revenues to be between $815 million and $825 million, an increase of 7.2 percent to 8.5 percent compared to 2009. The company expects diluted EPS for 2010 to be in the range of $1.27 to $1.29, which would represent a 12.4 percent to 14.2 percent increase over 2009 diluted EPS. Margins are expected to increase by 20-40 basis points and to generate cash flow from operations of $60-70 million.
The cost of moving the company’s corporate headquarters from Bethesda, Maryland to Austin, Texas will be reported as a separate component of income from operations. Moving-related expenses include severance and relocation costs of approximately $10-12 million, as well as lease exit costs of approximately $3-5 million. Once complete, Hanger anticipates that the move will result in a reduction of operating expenses of approximately $2.5-3.5 million annually.
Hanger Orthopedic Group reported these financial results in a conference call on Thursday, February 11. A replay of the call will be accessible until February 25 by dialing 800.642.1687 and referencing Conference ID number 50352370.
