Hanger Orthopedic Group, Austin, Texas, announced net sales of $226.5 million for the quarter ended December 31, 2010, a 10.4 percent increase from the prior year. Fourth quarter adjusted diluted earnings per share (EPS) increased from $0.37 in 2009, to $0.52 in 2010, or 40.5 percent for the fourth quarter-this excludes the company’s corporate headquarters relocation costs, debt refinance costs, the loss incurred to terminate an interest rate swap, and the costs related to the acquisition of Accelerated Care Plus(ACP). Adjusted diluted EPS for the quarter included $0.06 in one-time tax benefits. Diluted EPS were $0.02 for the fourth quarter of 2010.
According to the company, the $21.4 million increase in sales for the fourth quarter of 2010 was primarily the result of an $11.2 million, or 6.2 percent increase in same-center sales in the patient care segment; a $1.9 million, or 8.7 percent increase in sales from the company’s distribution segment; $5.3 million in sales from the therapeutic- solutions segment; and a $3 million increase principally related to sales from acquired patient care entities.
Income from operations for the quarter ended December 31, 2010, decreased to $25.7 million compared to $27.5 million in the prior year. Excluding the $2.2 million of corporate headquarters relocation costs and the $4.9 million cost related to the acquisition of ACP, income from operations increased 19.3 percent to $32.8 million due to increased sales and expense management. Adjusted income from operations as a percentage of sales improved to 14.5 percent in 2010 compared to 13.4 percent in 2009.
Income from operations for 2010 was $81.4 million compared to $90.5 million in the prior year. After excluding the $16.4 million of costs related to the relocation of the corporate headquarters and $5.4 million in costs related to the acquisition of ACP, income from operations increased 14 percent to $103.2 million. As was the case for the quarter, the adjusted income from operations increased due to both the sales increase and expense management. Diluted EPS for 2010 were $0.65. Adjusted diluted EPS for 2010, which excludes the corporate headquarters relocation costs, debt refinance costs, the loss incurred to terminate an interest rate swap, and costs related to the acquisition of ACP, increased 25.8 percent to $1.42 from $1.13 in the prior year. Adjusted diluted EPS for 2010 included $0.06 in one-time tax benefits.
Net sales for the year ended December 31, 2010, increased by $57.3 million, or 7.5 percent, to $817.4 million from $760.1 million for the prior year. The sales increase was principally the result of a $30.4 million, or 4.6 percent increase in same-center sales in the patient care centers, a $7.5 million, or 8.5 percent increase in sales of the company’s distribution segment, $5.5 million in sales from the therapeutic solutions segment, and a $13.9 million increase principally related to sales from acquired patient care entities.
The company generated $70.1 million in cash flow from operations in 2010 compared to $73.1 million in the prior year, a $3.0 million decrease. The decrease was caused by $3.3 million in ACP acquisition costs and $9.3 million in move-related payments. After utilizing approximately $100 million of cash on hand to partially fund the ACP acquisition, the company ended the year with $36.3 million of cash and had total liquidity of $133.1 million, which includes $96.8 million available under its revolving credit facility.
“The quarter completes our fifth consecutive year in which we have met or exceeded street estimates,” commented Thomas F. Kirk, president and CEO of Hanger Orthopedic Group. “The credit for this accomplishment belongs to our employees and their drive to provide the best possible care to our patients and to excel at meeting our customers’ needs.” Kirk added, “With the addition of ACP and their dedicated employees we have acquired an exciting new strategic growth platform which, when viewed in conjunction with our existing operations, will expand our market potential.”
The company has substantially completed the relocation of its corporate headquarters from Bethesda, Maryland, to Austin, Texas, the cost of which is reported as a separate component of income from operations. The company anticipates incurring $1.5-$2.5 million of additional costs in the first half of 2011 as the final employee moves are completed. Savings from the move have been incorporated into guidance for 2011.
For 2011, the company expects full year revenues to be between $945 million and $955 million and diluted EPS in a range of $1.63 to $1.68. The company expects to generate cash flow from operations of $85-$95 million and plans to invest $40-$50 million in new capital additions to fund its core businesses, including ACP’s continued expansion and development of a comprehensive electronic practice management system.
