Hanger Orthopedic Group Inc. announced net sales of $143.9 million and net income applicable to common stock of $1.4 million, or $0.06 per share, for the quarter ended March 31, compared with a loss applicable to common stock of $0.7 million, or a loss of $0.03 per share in the same period of the previous year.
“We are pleased with our improved performance for the first quarter of 2007, as our patient care centers continue to execute by generating same center sales growth of more than 2.5% despite challenging weather conditions in the Northeast and Midwest. In addition to the solid results, an improved outlook from Standard & Poor’s Ratings Services and an upgrade from Moody’s Investors Service were recently announced, both of which are recognition of the progress we are making regarding our financial performance and will have a direct impact on lowering our cost of debt going forward,” said Ivan R. Sabel, chairman and chief executive officer of Hanger Orthopedic Group, in a company press release.
Net sales for the first quarter increased by $3.5 million, or 2.5%, to $143.9 million from $140.4 million in the prior year’s comparable quarter. The sales growth was primarily the result of a $3.3 million, or 2.6%, increase in same-center sales in patient care business. Gross profit for the first quarter of 2007 increased by $1.1 million to $71.3 million, or 49.6% of net sales, compared to $70.2 million, or 50.0% of net sales, in the first quarter of the prior year. The increase was due principally to the increase in sales and a $1.2 million decrease in labor, offset by a $3.5 million increase in the cost of materials as compared to the first quarter of 2006.
Income from operations was $12.4 million in the first quarter of 2007 compared with $10.9 million in the first quarter of 2006, a $1.5 million increase primarily due to the aforementioned increase in gross profit and a $0.5 million decrease in selling, general and administrative expenses. The decrease in selling, general and administrative expenses included a $1 million decrease in non labor-related expenses offset by a $0.5 million increase in the investments relating to the company’s growth initiatives.
Net income applicable to common stock for the first quarter of 2007 was $1.4 million, or $0.06 per share, compared to the prior year’s net loss applicable to common stock of $0.7 million, or a loss of $0.03 per share.
Cash flow from operations was $2.2 million in the first quarter of 2007, compared to the prior year’s cash used in operations of $12.8 million. According to the press release, this $15 million improvement was principally due to a change in the timing of the interest payments for our subordinated notes and the increase in net income.