hngr-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number 1-10670

HANGER, INC.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)			84-0904275 (I.R.S. Employer Identification No.)
10910 Domain Drive, Suite 300, Austin, TX (Address of principal executive offices)			78758 (Zip Code)

Registrant’s telephone number, including area code: (512) 777-3800

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	HNGR	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of April 27, 2022, the registrant had 39,029,037 shares of its Common Stock outstanding.

TABLE OF CONTENTS


Hanger, Inc.
Part I Financial Information
	Item 1. Condensed Consolidated Financial Statements (unaudited)	1
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	21
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	37
	Item 4. Controls and Procedures	37
Part II Other Information
	Item 1. Legal Proceedings	38
	Item 1A. Risk Factors	38
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	38
	Item 3. Defaults Upon Senior Securities	38
	Item 4. Mine Safety Disclosures	38
	Item 5. Other Information	38
	Item 6. Exhibits	38
Exhibits Index		39
Signatures		40

PART 1. FINANCIAL INFORMATION

HANGER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except par value and share amounts)

(Unaudited)


	As of March 31,		As of December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	37,423	$	61,692
Accounts receivable, net	139,617		152,058
Inventories	83,288		87,462
Income taxes receivable	548		581
Other current assets	18,527		16,536
Total current assets	279,403		318,329
Non-current assets:
Property, plant, and equipment, net	80,906		82,434
Goodwill	367,914		363,554
Other intangible assets, net	25,032		25,892
Deferred income taxes	45,743		45,494
Operating lease right-of-use assets	141,820		144,491
Other assets	18,844		17,945
Total assets	$	959,662	$	998,139
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	13,535	$	14,938
Accounts payable	57,969		63,565
Accrued expenses and other current liabilities	58,391		60,399
Accrued compensation related costs	37,232		54,465
Current portion of operating lease liabilities	33,182		33,438
Total current liabilities	200,309		226,805
Long-term liabilities:
Long-term debt, less current portion	500,555		502,307
Operating lease liabilities	121,725		124,016
Other liabilities	28,520		34,840
Total liabilities	851,109		887,968
Commitments and contingencies (Note P)
Shareholders’ equity:
Common stock, $0.01 par value; 60,000,000 shares authorized; 39,204,040 shares issued and 39,061,219 shares outstanding at 2022, and 38,891,438 shares issued and 38,748,617 shares outstanding at 2021	392		389
Additional paid-in capital	373,092		373,644
Accumulated other comprehensive loss	(4,242)		(11,150)
Accumulated deficit	(259,993)		(252,016)
Treasury stock, at cost; 142,821 shares at both 2022 and 2021	(696)		(696)
Total shareholders’ equity	108,553		110,171
Total liabilities and shareholders’ equity	$	959,662	$	998,139

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

HANGER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except share and per share amounts)

(Unaudited)


	For the Three Months Ended March 31,
	2022		2021
Net revenues	$	261,287	$	237,470
Material costs	85,592		75,170
Personnel costs	101,675		89,880
Other operating costs	36,168		31,498
General and administrative expenses	32,442		30,903
Depreciation and amortization	7,955		7,998
(Loss) income from operations	(2,545)		2,021
Interest expense, net	7,385		7,340
Non-service defined benefit plan expense	160		167
Loss before income taxes	(10,090)		(5,486)
Benefit for income taxes	(2,113)		(2,156)
Net loss	$	(7,977)	$	(3,330)

Basic and diluted per common share data:
Basic and diluted loss per share	$	(0.21)	$	(0.09)
Weighted average shares used to compute basic and diluted loss per share	38,802,420		38,268,332

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

HANGER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(dollars in thousands)

(Unaudited)


	For the Three Months Ended March 31,
	2022		2021
Net loss	$	(7,977)	$	(3,330)

Other comprehensive income:
Unrealized gain on cash flow hedges, net of tax provision of $2,058 and $796, respectively	$	6,896	$	2,512
Unrealized gain on defined benefit plan, net of tax provision of $48 and $19, respectively	12		60
Total other comprehensive income	6,908		2,572
Comprehensive loss	$	(1,069)	$	(758)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

HANGER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(dollars and share amounts in thousands)

(Unaudited)


	Common Shares	Common Shares, Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Treasury Stock		Total
Balance, December 31, 2021	38,749	$	389	$	373,644	$	(11,150)	$	(252,016)	$	(696)	$	110,171
Net loss	—	—		—		—		(7,977)		—		(7,977)
Share-based compensation expense	—	—		2,903		—		—		—		2,903
Issuance of common stock upon vesting of restricted stock units	324	3		(3)		—		—		—		—
Effect of shares withheld to cover taxes	—	—		(3,452)		—		—		—		(3,452)
Total other comprehensive income	—	—		—		6,908		—		—		6,908
Balance, March 31, 2022	39,073	$	392	$	373,092	$	(4,242)	$	(259,993)	$	(696)	$

SEC Form 10-Q filed by Hanger Inc.