Hanger Orthopedic Group (Hanger), Austin, Texas, announced net sales of $200.4 million for the quarter ended March 31, 2011, an increase of $22.1 million, or 12.4 percent, from the first quarter of 2010. Adjusted diluted earnings per share (EPS), which excludes the company’s corporate headquarters relocation costs, were $0.19 for the first quarter of 2011, an 18.8 percent increase compared to $0.16 for the same period in 2010. The company incurred relocation costs of $400,000 and $2.1 million for the quarters that ended March 31, 2011 and 2010, respectively. Including the relocation costs, diluted EPS were $0.18 and $0.12 for the quarters that ended March 31, 2011 and 2010.
According to a company press release, the $22.1 million increase in sales for the first quarter of 2011 resulted primarily from a $15.9 million increase from the therapeutic-solutions segment- principally from the acquisition of Accelerated Care Plus (ACP)-a $1.6 million, or 7.5 percent, increase from the company’s distribution segment, a $300,000, or 0.2 percent, increase in same-center sales in the patient care centers, and a $4.3 million increase due to acquisitions in the patient care segment.
Income from operations for the quarter ended March 31, 2011, was $18.4 million compared to $14.2 million in the prior year. Excluding relocation costs, adjusted income from operations increased 15.3 percent to $18.8 million for the three months ended March 31, 2011, from $16.3 million in the first quarter of 2010.
Net cash used in operations improved $600,000 in the first quarter of 2011 compared to 2010. During the first quarter of 2011, the company paid out approximately $4.8 million more in incentive compensation as compared to the same period in the prior year. As of March 31, 2011, the company had $106.3 million in total liquidity, which included $19.7 million of cash and $86.6 million available under a revolving credit facility. The $86.6 million available from the revolving credit facility is net of letters of credit of $3.4 million and borrowings of $10 million.
“This quarter our patient care centers were challenged with an extended period of bad weather affecting many parts of the country,” Thomas F. Kirk, President and CEO of Hanger Orthopedic Group, stated in a company press release. “Our team rose to the occasion by controlling expenses, which allowed us to meet our EPS target and to deliver double-digit earnings growth for the quarter. We are comfortable with the prospects for growth in our patient care business for the remainder of 2011. The assimilation of ACP into the Hanger family is progressing as planned. As a result, we remain optimistic about the balance of the year.”
Hanger reports it has substantially completed the relocation of its corporate headquarters from Bethesda, Maryland to Austin, Texas. The cost of the move is reported as a separate component of income from operations. The company anticipates incurring $1 to $2 million of additional costs in 2011 as the final employee moves are completed.
For 2011, Hanger continues to expect full year revenues of between $945 million and $955 million and has increased the expected range of adjusted diluted EPS to $1.66-$1.71, from $1.63-$1.68, due to the expected impact of the amendment to its credit agreement. 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, ACP’s continued expansion, and the development of a comprehensive electronic practice management system.
