Hanger Orthopedic Group Inc. announced net sales of $178.3 million for the quarter ended March 31, an increase of $9.2 million, or 5.4%, from $169.1 million in the prior year.
The $9.2 million, or 5.4%, sales increase was primarily the result of a $5.4 million, or 3.6%, increase in same-center sales in the patient care segment, a 4.3%, increase in sales from the company’s distribution segment and a $2.9 million increase principally related to sales from acquired entities. Income from operations for the quarter was $14.2 million compared to $15.1 million in the prior year. Excluding the $2.1 million of costs related to the relocation of the corporate office, income from operations increased 7.5% to $16.3 million due to the growth in sales and continued expense management efforts. Proforma income from operations as a percentage of sales improved 20 basis points to 9.1% in 2010 compared to 8.9% in 2009.
“I am pleased that we opened 2010 with a positive fashion,” Thomas F. Kirk, president and chief executive officer of Hanger Orthopedic Group, said in a press release. “Our patient care segment performed well posting a 3.6% same store increase and we continue to see positive results from our other growth initiatives. The increased revenue combined with our expense management generated 7.5% increase in operating income.”
For 2010, the company expects full year revenues to be between $815 million and $825 million. As announced in February, the company is in the process of relocating its corporate headquarters from Bethesda, Md. to Austin, Texas and anticipates the move will be substantially completed by the end of the third quarter of 2010. The cost of this move is reported as a separate component of income from operations. In connection with the move the company reported $2.1 million of severance and relocation cost for the 3 months ended March 31. The company anticipates incurring approximately $8 million to $10 million of additional severance and relocation cost through the third quarter of 2010, as well as lease exit cost of approximately $3 million to $5 million. Once complete, the company anticipates that the move will result in a reduction of operating expenses of approximately $2.5 million to $3.5 million annually.
