Officials from the Hanger Orthopedic Group Inc. announced record revenue of $162.3 million and net income of $5.4 million, or $0.18 per diluted share, for the quarter ended Sept. 30, 2007. The results for the quarter included a 7.1% increase in net sales, a 24.6% increase in net income, and a 20% increase in earnings per share compared with results for the third quarter of 2006.
Net sales for the third quarter increased by $10.8 million, or 7.1%, to $162.3 million from $151.5 million in the prior year’s comparable quarter. The sales growth was the result of a $6.9 million, or 5.1%, increase in same-center sales in the patient care business, a $1.6 million, or 10.9%, increase in sales of the company’s distribution segment, a $1.8 million increase related to acquired entities, and a $0.5 million increase in non-core activities. Gross profit for the third quarter of 2007 increased by $7.1 million, to $82.4 million, or 50.7% of net sales.
Income from operations of $18.6 million in the third quarter of 2007 was $1.5 million higher than the same period of the prior year, principally due to the increase in gross profit. Selling, general and administrative expenses increased by $5.3 million due principally to a $2.6 million increase in wages and variable compensation accruals, a $0.8 million increase in the investments in the company’s growth initiatives, $0.5 million from acquired entities, and a $2.1 million increase in general overhead, offset by a $0.7 million decrease in bad debt expense.
Net income for the third quarter of 2007 was $5.4 million. Earnings per share for the third quarter was $0.18 per diluted share, an increase of 20%.
Net sales for the first 9 months of 2007 increased by $21.8 million, or 4.9%, to $466.6 million from $444.8 million in the prior year. The sales growth was principally the result of a $16 million, or 4%, increase in same-center sales in the patient care business, a $2.5 million, or 5.8%, increase in sales of the company’s distribution segment, and a $1.8 million increase related to acquired entities. Gross profit for the first 9 months of 2007 increased by $12 million to $235.1 million, or 50.4% of net sales.
Income from operations increased by $4.8 million in the first 9 months of 2007 to $48.8 million from $44 million in the same period of the prior year due to the increased gross profit, offset by a $6.8 million increase in selling, general and administrative expenses. Net income for the 9 months was $12.3 million compared to the prior year’s net income of $9.1 million. Earnings per share was $0.41 per diluted share compared to the prior year’s earnings per share of $0.31 per diluted share, an increase of 32%.
“Our third quarter performance represents the seventh consecutive quarter in which we have met or exceeded First Call consensus estimates. The strong results are a reflection of our continued investment in infrastructure and growth initiatives which will enable us to deliver sustainable growth and to maintain and enhance the growth trends we have demonstrated thus far in 2007,” Ivan R. Sabel, chairman and chief executive officer of Hanger Orthopedic Group, said in a company press release.