Hanger Orthopedic Group Inc. Reports Increase for the First Quarter 2010

Hanger Orthopedic Group Inc. announced net sales of $178.3 million for
the quarter that 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.

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“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.

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