Hanger Orthopedic Group, Inc. Announces Fourth Quarter and Year-End Operating Results and Agreement With its Syndicate of Lender Banks

Apr 02, 2001, 01:00 ET from Hanger Orthopedic Group, Inc.

    BETHESDA, Md., April 2 /PRNewswire/ -- Hanger Orthopedic Group, Inc.
 (NYSE:   HGR) today announced results of its operations for the three and twelve
 month periods ended December 31, 2000.
     Revenues for the three months ended December 31, 2000 increased to $120.0
 million from $116.3 million in the prior year's fourth quarter.  The sales
 growth is primarily the result of increased revenues at facilities owned and
 operated by Hanger during the fourth quarters of both 1999 and 2000.  The net
 loss applicable to common stock for the fourth quarter of 2000 was $18.7
 million, or approximately $0.99 per diluted share on 18.9 million shares
 outstanding.  For the corresponding period of the prior year, Hanger had a net
 loss applicable to common stock of $1.5 million, or approximately $0.08 per
 diluted share, on 19.8 million weighted average shares outstanding.
     For the twelve-month period ending December 31, 2000, revenues reached a
 record $486.0 million compared to revenues of $346.8 million in 1999.  (The
 operating results of NovaCare have been included in the Company's results
 since the date of acquisition - July 1, 1999.  Had the acquisition occurred at
 January 1, 1999, pro-forma revenues for 1999 would have been approximately
 $482.5 million).  Hanger reported a net loss applicable to common stock for
 the year ended December 31, 2000, of $18.5 million, or $.98 per share diluted
 on 18.9 million shares outstanding, compared to net income applicable to
 common stock of $8.8 million, or $.44 per share diluted on 20.0 million shares
 outstanding in the prior year's comparable twelve-month period.
     The results of operations were impacted by increases in the provision for
 bad debts and the cost of materials arising from the continued integration of
 NovaCare O&P into Hanger's operations.  Hanger has retained the firm of Jay
 Alix and Associates to facilitate various performance improvement initiatives.
 Among the targeted plans are spending reductions improving the utilization and
 effectiveness of support services, improved materials purchasing and inventory
 management and the consolidation of distribution services.  In addition, the
 Company will seek to enhance revenues through revised marketing efforts and
 more efficient billing and collection procedures.
     The Company also announced today that it has reached an agreement with its
 syndicate of lender banks on an amendment to its credit agreement.  Under the
 terms of the amendment, the interest rates for the credit facility were
 increased by 50 basis points and certain of the financial covenants were eased
 with respect to 2001 and 2002.  Hanger is in compliance with all terms of the
 credit agreement, as modified.
     Chairman and CEO, Ivan R. Sabel stated, "This new amendment will provide
 us the flexibility to execute our recently announced performance improvement
 plans.  We have initiated these reengineering improvement efforts and I am
 confident in the ability of our employees to respond effectively to these
 challenges."
     Headquartered in Bethesda, Maryland, Hanger is a national public company
 specializing in patient-care services for orthotics and prosthetics ("O&P").
 The Company now provides O&P services in 620 patient-care centers located in
 45 states including the District of Columbia and is the largest distributor of
 O&P supplies and components in the country.  Hanger also is engaged in the
 manufacture and distribution of components and finished patient-care products
 to the O&P industry, and through its OPNET program, provides O&P services to
 over 1,100 managed care programs.
     Certain statements included in this press release are forward looking
 statements within the meaning of the Private Securities Litigation Reform Act
 of 1995.  Please refer to the Company's SEC filings for factors that could
 cause actual results to differ materially from the Company's expectations.
 
                              - tables to follow -
 
                         Hanger Orthopedic Group, Inc.
                     (In Thousands, Except Per Share Data)
 
                             For the Three Months      For the Twelve Months
     Statement of Operations: Ended December 31,         Ended December 31,
 
                               2000         1999          2000          1999
     Net sales              $120,039       $116,342     $486,031     $346,826
     Cost of products
      and services sold       73,052         57,054      251,368      169,076
     Gross profit             46,987         59,288      234,663      177,750
     Selling, general and
      administrative          53,765         39,857      177,519      113,643
     Depreciation and
      amortization             2,608          2,294       11,178        6,538
     Amortization of
      excess cost over
     net assets acquired       3,325          3,059       12,150        7,520
     Integration and
      restructuring costs        971          2,424        2,364        6,340
     Income from
      operations             (13,682)        11,654       31,452       43,709
     Interest expense        (12,794)       (10,594)     (47,072)     (22,177)
     Other income
      (expense) net              269           (201)         127         (352)
     Income (loss) from
      operations before
     Income taxes            (26,207)           859      (15,493)      21,180
     Provision (benefit)
      for income taxes        (8,487)         1,318       (1,497)      10,194
     Net income (loss)      $(17,720)         $(459)    $(13,996)     $10,986
     Net income (loss)
      applicable to
     Common stock           $(18,697)       $(1,546)    $(18,534)      $8,831
 
     Diluted Per Share Data:
 
     Net income               $(0.99)        $(0.08)      $(0.98)       $0.44
     Weighted average
      number of common
      shares outstanding  18,910,002     19,800,002   18,910,002   20,005,282
 
 
                                                   December 31,   December 31,
     Balance Sheet Data:                               2000           1999
 
     Working Capital                                 $133,690       $118,428
     Total Debt                                       460,433        451,617
     Shareholders' Equity                             154,380        172,914
 
 
                                  For the Three Months   For the Twelve Months
     Statistical Data:             Ended December 31,      Ended December 31,
 
                                    2000        1999        2000        1999
 
     Patient-care centers             620        617          620        617
     Certified practitioners          888        962          888        962
     Number of states
      (including D.C.)                 45         42           45         42
     Payer Mix:
     Private pay and other          62.6%      60.7%        61.6%      59.0%
     Medicare/Medicaid/VA           37.4%      39.3%        38.4%      41.0%
     EBITDA margin                  -6.5%      14.6%        11.3%      16.7%
     Operating margin              -11.4%      10.0%         6.5%      12.6%
     Percentage of net
      sales from:
     Patient-care services          92.0%      92.2%        92.0%      88.6%
     Manufacturing                   1.9%       1.9%         2.0%       3.0%
     Distribution                    6.1%       5.9%         6.0%       8.4%
 
 

SOURCE Hanger Orthopedic Group, Inc.
    BETHESDA, Md., April 2 /PRNewswire/ -- Hanger Orthopedic Group, Inc.
 (NYSE:   HGR) today announced results of its operations for the three and twelve
 month periods ended December 31, 2000.
     Revenues for the three months ended December 31, 2000 increased to $120.0
 million from $116.3 million in the prior year's fourth quarter.  The sales
 growth is primarily the result of increased revenues at facilities owned and
 operated by Hanger during the fourth quarters of both 1999 and 2000.  The net
 loss applicable to common stock for the fourth quarter of 2000 was $18.7
 million, or approximately $0.99 per diluted share on 18.9 million shares
 outstanding.  For the corresponding period of the prior year, Hanger had a net
 loss applicable to common stock of $1.5 million, or approximately $0.08 per
 diluted share, on 19.8 million weighted average shares outstanding.
     For the twelve-month period ending December 31, 2000, revenues reached a
 record $486.0 million compared to revenues of $346.8 million in 1999.  (The
 operating results of NovaCare have been included in the Company's results
 since the date of acquisition - July 1, 1999.  Had the acquisition occurred at
 January 1, 1999, pro-forma revenues for 1999 would have been approximately
 $482.5 million).  Hanger reported a net loss applicable to common stock for
 the year ended December 31, 2000, of $18.5 million, or $.98 per share diluted
 on 18.9 million shares outstanding, compared to net income applicable to
 common stock of $8.8 million, or $.44 per share diluted on 20.0 million shares
 outstanding in the prior year's comparable twelve-month period.
     The results of operations were impacted by increases in the provision for
 bad debts and the cost of materials arising from the continued integration of
 NovaCare O&P into Hanger's operations.  Hanger has retained the firm of Jay
 Alix and Associates to facilitate various performance improvement initiatives.
 Among the targeted plans are spending reductions improving the utilization and
 effectiveness of support services, improved materials purchasing and inventory
 management and the consolidation of distribution services.  In addition, the
 Company will seek to enhance revenues through revised marketing efforts and
 more efficient billing and collection procedures.
     The Company also announced today that it has reached an agreement with its
 syndicate of lender banks on an amendment to its credit agreement.  Under the
 terms of the amendment, the interest rates for the credit facility were
 increased by 50 basis points and certain of the financial covenants were eased
 with respect to 2001 and 2002.  Hanger is in compliance with all terms of the
 credit agreement, as modified.
     Chairman and CEO, Ivan R. Sabel stated, "This new amendment will provide
 us the flexibility to execute our recently announced performance improvement
 plans.  We have initiated these reengineering improvement efforts and I am
 confident in the ability of our employees to respond effectively to these
 challenges."
     Headquartered in Bethesda, Maryland, Hanger is a national public company
 specializing in patient-care services for orthotics and prosthetics ("O&P").
 The Company now provides O&P services in 620 patient-care centers located in
 45 states including the District of Columbia and is the largest distributor of
 O&P supplies and components in the country.  Hanger also is engaged in the
 manufacture and distribution of components and finished patient-care products
 to the O&P industry, and through its OPNET program, provides O&P services to
 over 1,100 managed care programs.
     Certain statements included in this press release are forward looking
 statements within the meaning of the Private Securities Litigation Reform Act
 of 1995.  Please refer to the Company's SEC filings for factors that could
 cause actual results to differ materially from the Company's expectations.
 
                              - tables to follow -
 
                         Hanger Orthopedic Group, Inc.
                     (In Thousands, Except Per Share Data)
 
                             For the Three Months      For the Twelve Months
     Statement of Operations: Ended December 31,         Ended December 31,
 
                               2000         1999          2000          1999
     Net sales              $120,039       $116,342     $486,031     $346,826
     Cost of products
      and services sold       73,052         57,054      251,368      169,076
     Gross profit             46,987         59,288      234,663      177,750
     Selling, general and
      administrative          53,765         39,857      177,519      113,643
     Depreciation and
      amortization             2,608          2,294       11,178        6,538
     Amortization of
      excess cost over
     net assets acquired       3,325          3,059       12,150        7,520
     Integration and
      restructuring costs        971          2,424        2,364        6,340
     Income from
      operations             (13,682)        11,654       31,452       43,709
     Interest expense        (12,794)       (10,594)     (47,072)     (22,177)
     Other income
      (expense) net              269           (201)         127         (352)
     Income (loss) from
      operations before
     Income taxes            (26,207)           859      (15,493)      21,180
     Provision (benefit)
      for income taxes        (8,487)         1,318       (1,497)      10,194
     Net income (loss)      $(17,720)         $(459)    $(13,996)     $10,986
     Net income (loss)
      applicable to
     Common stock           $(18,697)       $(1,546)    $(18,534)      $8,831
 
     Diluted Per Share Data:
 
     Net income               $(0.99)        $(0.08)      $(0.98)       $0.44
     Weighted average
      number of common
      shares outstanding  18,910,002     19,800,002   18,910,002   20,005,282
 
 
                                                   December 31,   December 31,
     Balance Sheet Data:                               2000           1999
 
     Working Capital                                 $133,690       $118,428
     Total Debt                                       460,433        451,617
     Shareholders' Equity                             154,380        172,914
 
 
                                  For the Three Months   For the Twelve Months
     Statistical Data:             Ended December 31,      Ended December 31,
 
                                    2000        1999        2000        1999
 
     Patient-care centers             620        617          620        617
     Certified practitioners          888        962          888        962
     Number of states
      (including D.C.)                 45         42           45         42
     Payer Mix:
     Private pay and other          62.6%      60.7%        61.6%      59.0%
     Medicare/Medicaid/VA           37.4%      39.3%        38.4%      41.0%
     EBITDA margin                  -6.5%      14.6%        11.3%      16.7%
     Operating margin              -11.4%      10.0%         6.5%      12.6%
     Percentage of net
      sales from:
     Patient-care services          92.0%      92.2%        92.0%      88.6%
     Manufacturing                   1.9%       1.9%         2.0%       3.0%
     Distribution                    6.1%       5.9%         6.0%       8.4%
 
 SOURCE  Hanger Orthopedic Group, Inc.