Hanger, Austin, Texas, filed Form 8-K on November 7, which indicates that the company’s audit committee of the board of directors has approved a plan to sell and/or otherwise dispose of two business units, Dosteon Solutions, headquartered in Bethesda, Maryland, and CARES (Critical And Rehabilitative Equipment Solutions), Austin. According to the filing, this action was taken as a result of Hanger’s strategic evaluation of these businesses. The Dosteon and CARES businesses will be reflected as discontinued operations in the company’s consolidated financial statements beginning in the fourth quarter (4Q) 2014. Further, Hanger has entered into a definitive agreement to sell the portion of its Dosteon business that is located in California, and expects that sale to close in 4Q 2014, subject to customary closing conditions. The company is also engaged in negotiations with a potential purchaser regarding substantial portions of the remaining Dosteon business and is seeking indications of interest for the CARES business. However, there can be no assurance that any of these activities will culminate in the sale of all or a portion of these businesses.
In connection with these actions, Hanger currently estimates that it will incur total pretax exit and disposal costs in the range of approximately $15.6 million to $30.4 million. The future cash impact is expected to range from about $300,000 of cash inflows to about $12.3 million of cash expenditures. The estimated pretax exit and disposal costs include employee separation and retention costs of about $2.1 million to $2.4 million; contract termination and other exit costs of about $4.4 million to $12.8 million; and noncash charges associated with the write-down of intangibles, fixed assets, and inventory of about $9.2 million to $15.2 million. According to the Form 8-K, the foregoing are estimates only and reflect a range of possibilities regarding the exit and/or disposal of the Dosteon and CARES businesses, including their potential sale or shutdown. Actual costs relating to these actions will not be known until the exit and disposal plan has been implemented fully.
