Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 03, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 1-10670 | |
Entity Registrant Name | HANGER, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 84-0904275 | |
Entity Address, Address Line One | 10910 Domain Drive | |
Entity Address, Address Line Two | Suite 300 | |
Entity Address, City or Town | Austin | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78758 | |
City Area Code | 512 | |
Local Phone Number | 777-3800 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | HNGR | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 39,123,266 | |
Entity Central Index Key | 0000722723 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 24,380 | $ 61,692 |
Accounts receivable, net | 150,898 | 152,058 |
Inventories | 88,018 | 87,462 |
Income taxes receivable | 0 | 581 |
Other current assets | 19,614 | 16,536 |
Total current assets | 282,910 | 318,329 |
Non-current assets: | ||
Property, plant, and equipment, net | 81,015 | 82,434 |
Goodwill | 377,164 | 363,554 |
Other intangible assets, net | 25,147 | 25,892 |
Deferred income taxes | 43,069 | 45,494 |
Operating lease right-of-use assets | 139,009 | 144,491 |
Other assets | 18,552 | 17,945 |
Total assets | 966,866 | 998,139 |
Current liabilities: | ||
Current portion of long-term debt | 15,636 | 14,938 |
Accounts payable | 67,651 | 63,565 |
Accrued expenses and other current liabilities | 56,151 | 60,399 |
Accrued compensation related costs | 56,795 | 54,465 |
Current portion of operating lease liabilities | 34,326 | 33,438 |
Total current liabilities | 230,559 | 226,805 |
Long-term liabilities: | ||
Long-term debt, less current portion | 465,022 | 502,307 |
Operating lease liabilities | 117,230 | 124,016 |
Other liabilities | 28,847 | 34,840 |
Total liabilities | 841,658 | 887,968 |
Commitments and contingencies (Note P) | ||
Shareholders’ equity: | ||
Common stock, $0.01 par value; 60,000,000 shares authorized; 39,276,679 shares issued and 39,133,858 shares outstanding at 2022, and 38,891,438 shares issued and 38,748,617 shares outstanding at 2021 | 393 | 389 |
Additional paid-in capital | 376,717 | 373,644 |
Accumulated other comprehensive loss | (1,330) | (11,150) |
Accumulated deficit | (249,876) | (252,016) |
Treasury stock, at cost; 142,821 shares at both 2022 and 2021 | (696) | (696) |
Total shareholders’ equity | 125,208 | 110,171 |
Total liabilities and shareholders’ equity | $ 966,866 | $ 998,139 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock authorized (in shares) | 60,000,000 | 60,000,000 |
Common stock issued (in shares) | 39,276,679 | 38,891,438 |
Common stock outstanding (in shares) | 39,133,858 | 38,748,617 |
Treasury stock (in shares) | 142,821 | 142,821 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Statement [Abstract] | ||||
Net revenues | $ 312,033 | $ 280,819 | $ 573,320 | $ 518,289 |
Material costs | 98,433 | 89,271 | 184,025 | 164,441 |
Personnel costs | 110,275 | 97,549 | 211,950 | 187,429 |
Other operating costs | 38,970 | 32,788 | 75,138 | 64,286 |
General and administrative expenses | 35,444 | 33,110 | 67,886 | 64,013 |
Depreciation and amortization | 8,124 | 8,007 | 16,079 | 16,005 |
Income from operations | 20,787 | 20,094 | 18,242 | 22,115 |
Interest expense, net | 7,524 | 7,152 | 14,909 | 14,492 |
Non-service defined benefit plan expense | 160 | 167 | 320 | 334 |
Income before income taxes | 13,103 | 12,775 | 3,013 | 7,289 |
Provision for income taxes | 2,986 | 2,616 | 873 | 460 |
Net income | $ 10,117 | $ 10,159 | $ 2,140 | $ 6,829 |
Basic and diluted per common share data: | ||||
Basic income per share (in dollars per share) | $ 0.26 | $ 0.26 | $ 0.05 | $ 0.18 |
Weighted average shares used to compute basic income per share (in shares) | 39,089,865 | 38,647,042 | 38,946,937 | 38,458,733 |
Diluted income per share (in dollars per share) | $ 0.26 | $ 0.26 | $ 0.05 | $ 0.17 |
Weighted average shares used to compute diluted income per share (in shares) | 39,250,735 | 39,208,155 | 39,293,775 | 39,216,725 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 10,117 | $ 10,159 | $ 2,140 | $ 6,829 |
Other comprehensive income: | ||||
Unrealized gain on cash flow hedges, net of tax provision of $942, $388, $3,001, and $1,184, respectively | 2,866 | 1,225 | 9,762 | 3,737 |
Unrealized gain on defined benefit plan, net of tax provision of $15, $19, $63, and $38, respectively | 46 | 60 | 58 | 120 |
Total other comprehensive income | 2,912 | 1,285 | 9,820 | 3,857 |
Comprehensive income | $ 13,029 | $ 11,444 | $ 11,960 | $ 10,686 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Unrealized gain on cash flow hedges tax | $ 942 | $ 388 | $ 3,001 | $ 1,184 |
Unrealized gain on defined benefit plan tax | $ 15 | $ 19 | $ 63 | $ 38 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Treasury Stock |
Beginning balance at Dec. 31, 2020 | $ 50,977 | $ 383 | $ 365,503 | $ (20,215) | $ (293,998) | $ (696) |
Beginning balance (in shares) at Dec. 31, 2020 | 38,179,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | (3,330) | (3,330) | ||||
Share-based compensation expense | 3,179 | 3,179 | ||||
Issuance in connection with the exercise of stock options | 366 | 366 | ||||
Issuance in connection with the exercise of stock options (in shares) | 29,000 | |||||
Issuance of common stock upon vesting of restricted stock units | 0 | $ 4 | (4) | |||
Issuance of common stock upon vesting of restricted stock units (in shares) | 365,000 | |||||
Effect of shares withheld to cover taxes | (4,520) | (4,520) | ||||
Total other comprehensive income | 2,572 | 2,572 | ||||
Ending balance at Mar. 31, 2021 | 49,244 | $ 387 | 364,524 | (17,643) | (297,328) | (696) |
Ending balance (in shares) at Mar. 31, 2021 | 38,573,000 | |||||
Beginning balance at Dec. 31, 2020 | 50,977 | $ 383 | 365,503 | (20,215) | (293,998) | (696) |
Beginning balance (in shares) at Dec. 31, 2020 | 38,179,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 6,829 | |||||
Total other comprehensive income | 3,857 | |||||
Ending balance at Jun. 30, 2021 | 63,892 | $ 389 | 367,726 | (16,358) | (287,169) | (696) |
Ending balance (in shares) at Jun. 30, 2021 | 38,722,000 | |||||
Beginning balance at Mar. 31, 2021 | 49,244 | $ 387 | 364,524 | (17,643) | (297,328) | (696) |
Beginning balance (in shares) at Mar. 31, 2021 | 38,573,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 10,159 | 10,159 | ||||
Share-based compensation expense | 3,239 | 3,239 | ||||
Issuance in connection with the exercise of stock options | 5 | $ 1 | 4 | |||
Issuance in connection with the exercise of stock options (in shares) | 80,000 | |||||
Issuance of common stock upon vesting of restricted stock units | 0 | $ 1 | (1) | |||
Issuance of common stock upon vesting of restricted stock units (in shares) | 69,000 | |||||
Effect of shares withheld to cover taxes | (40) | (40) | ||||
Total other comprehensive income | 1,285 | 1,285 | ||||
Ending balance at Jun. 30, 2021 | 63,892 | $ 389 | 367,726 | (16,358) | (287,169) | (696) |
Ending balance (in shares) at Jun. 30, 2021 | 38,722,000 | |||||
Beginning balance at Dec. 31, 2021 | $ 110,171 | $ 389 | 373,644 | (11,150) | (252,016) | (696) |
Beginning balance (in shares) at Dec. 31, 2021 | 38,748,617 | 38,749,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | $ (7,977) | (7,977) | ||||
Share-based compensation expense | 2,903 | 2,903 | ||||
Issuance of common stock upon vesting of restricted stock units | 0 | $ 3 | (3) | |||
Issuance of common stock upon vesting of restricted stock units (in shares) | 324,000 | |||||
Effect of shares withheld to cover taxes | (3,452) | (3,452) | ||||
Total other comprehensive income | 6,908 | 6,908 | ||||
Ending balance at Mar. 31, 2022 | 108,553 | $ 392 | 373,092 | (4,242) | (259,993) | (696) |
Ending balance (in shares) at Mar. 31, 2022 | 39,073,000 | |||||
Beginning balance at Dec. 31, 2021 | $ 110,171 | $ 389 | 373,644 | (11,150) | (252,016) | (696) |
Beginning balance (in shares) at Dec. 31, 2021 | 38,748,617 | 38,749,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | $ 2,140 | |||||
Total other comprehensive income | 9,820 | |||||
Ending balance at Jun. 30, 2022 | $ 125,208 | $ 393 | 376,717 | (1,330) | (249,876) | (696) |
Ending balance (in shares) at Jun. 30, 2022 | 39,133,858 | 39,134,000 | ||||
Beginning balance at Mar. 31, 2022 | $ 108,553 | $ 392 | 373,092 | (4,242) | (259,993) | (696) |
Beginning balance (in shares) at Mar. 31, 2022 | 39,073,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 10,117 | 10,117 | ||||
Share-based compensation expense | 3,601 | 3,601 | ||||
Issuance in connection with the exercise of stock options | 51 | 51 | ||||
Issuance in connection with the exercise of stock options (in shares) | 9,000 | |||||
Issuance of common stock upon vesting of restricted stock units | 0 | $ 1 | (1) | |||
Issuance of common stock upon vesting of restricted stock units (in shares) | 52,000 | |||||
Effect of shares withheld to cover taxes | (26) | (26) | ||||
Total other comprehensive income | 2,912 | 2,912 | ||||
Ending balance at Jun. 30, 2022 | $ 125,208 | $ 393 | $ 376,717 | $ (1,330) | $ (249,876) | $ (696) |
Ending balance (in shares) at Jun. 30, 2022 | 39,133,858 | 39,134,000 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash flows provided by (used in) operating activities: | ||
Net income | $ 2,140 | $ 6,829 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 16,079 | 16,005 |
Benefit from doubtful accounts | (68) | (292) |
Share-based compensation expense | 6,504 | 6,418 |
Deferred income taxes | (734) | 232 |
Amortization of debt discounts and issuance costs | 1,044 | 948 |
Gain on sale and disposal of fixed assets | (863) | (718) |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable, net | 1,262 | 5,363 |
Inventories | 309 | (5,899) |
Other current assets and other assets | (2,197) | (6,202) |
Income taxes | 584 | 57 |
Accounts payable | 4,597 | (6,577) |
Accrued expenses and other current liabilities | 1,606 | (2,765) |
Accrued compensation related costs | 2,284 | (21,412) |
Other liabilities | (1,186) | (522) |
Operating lease liabilities, net of amortization of right-of-use assets | (416) | (780) |
Changes in operating assets and liabilities: | 6,843 | (38,737) |
Net cash provided by (used in) operating activities | 30,945 | (9,315) |
Cash flows used in investing activities: | ||
Purchase of property, plant, and equipment | (10,596) | (13,339) |
Acquisitions, net of cash acquired | (12,490) | (35,349) |
Purchase of therapeutic program equipment leased to third parties under operating leases | (1,358) | (870) |
Proceeds from sale of property, plant, and equipment | 1,392 | 1,332 |
Net cash used in investing activities | (23,052) | (48,226) |
Cash flows used in financing activities: | ||
Payment of employee taxes on share-based compensation | (3,478) | (4,560) |
Payment on Seller Notes | (5,000) | (2,265) |
Repayment of term loan | (36,263) | (2,525) |
Payments of financing lease obligations | (515) | (529) |
Payments under vendor financing arrangements | 0 | (1,375) |
Proceeds from the exercise of options | 51 | 371 |
Net cash used in financing activities | (45,205) | (10,883) |
Decrease in cash and cash equivalents | (37,312) | (68,424) |
Cash and cash equivalents at beginning of period | 61,692 | 144,602 |
Cash and cash equivalents at end of period | 24,380 | 76,178 |
Non-cash financing and investing activities: | ||
Purchase of property, plant, and equipment in accounts payable at period end | 2,732 | 3,349 |
Seller Notes and other non-cash consideration related to acquisitions | 4,002 | 10,057 |
Right-of-use assets obtained in exchange for finance lease obligations | $ 223 | $ 95 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2022 | |
Organization and Summary of Significant Accounting Policies | |
Organization and Summary of Significant Accounting Policies | Organization and Summary of Significant Accounting Policies Description of Business Hanger, Inc. (“we,” “our,” or “us”) is a leading national provider of products and services that assist in enhancing or restoring the physical capabilities of patients with disabilities or injuries. We provide orthotic and prosthetic (“O&P”) services, distribute O&P devices and components, manage O&P networks, and provide therapeutic solutions to patients and businesses in acute, post-acute, and clinic settings. We operate through two segments, Patient Care and Products & Services. Basis of Presentation The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, and, therefore, do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”), as previously filed with the Securities and Exchange Commission (the “SEC”). In our opinion, the information contained herein reflects all adjustments necessary for a fair statement of our results of operations, financial position, and cash flows. All such adjustments are of a normal, recurring nature. The results of operations for the interim periods are not necessarily indicative of those to be expected for the full year. A detailed description of our significant accounting policies and management judgments is contained in our 2021 Form 10-K. Reclassifications We have reclassified certain amounts in the prior year condensed consolidated financial statements to be consistent with the current year presentation. These relate to immaterial classifications within expense line items in the condensed consolidated statements of operations. Recent Developments Regarding COVID-19 We are subject to risks and uncertainties as a result of the outbreak of the novel coronavirus (“COVID-19”) pandemic (“COVID-19 pandemic”). The extent and duration of the impact of the COVID-19 pandemic on our operations and financial condition remain uncertain and difficult to predict. As a result of the COVID-19 pandemic, we believe that our patients are continuing to defer visits to our O&P clinics, as well as elective surgical procedures, both of which impact our business volumes through decreased patient encounters and physician referrals. While the emerging variants of the COVID-19 virus continue to contribute to employee absences and our use of temporary labor, we believe the overall adverse impact of the COVID-19 pandemic on our business volumes has diminished and stabilized over time. The United States government has responded with fiscal policy measures intended to support the healthcare industry and economy as a whole, including the passage of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) in March 2020. CARES Act The CARES Act established the Public Health and Social Services Emergency Fund, also referred to as the Cares Act Provider Relief Fund, which set aside $203.5 billion to be administered through grants and other mechanisms to hospitals, public entities, not-for-profit entities and Medicare- and Medicaid- enrolled suppliers and institutional providers. The purpose of these funds is to reimburse providers for lost revenue and health-care related expenses that are attributable to the COVID-19 pandemic. In April 2020, the U.S. Department of Health and Human Services (“HHS”) began making payments to healthcare providers from the $203.5 billion appropriation. These are grants, rather than loans, to healthcare providers, and will not need to be repaid. During the full year of 2021, we recognized a total benefit of $1.1 million in our consolidated statement of operations within Other operating costs in our Patient Care segment for the grant proceeds we received under the CARES Act (“Grants”) from HHS. We accounted for the proceeds from the Grants by analogy to International Accounting Standard (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance and its principles surrounding the recognition of grants related to income. We recognize income related to grants on a systematic and rational basis when it becomes probable that we have complied with the terms and conditions of the grant and in the period in which the corresponding costs or income related to the grant are recognized. We are using the Grants for their intended purpose, and are compliant to the reporting requirements set by the terms and conditions of the grant. Recent Accounting Pronouncements, Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This ASU, effective beginning on March 12, 2020, provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. We are currently evaluating the effects that the adoption of this guidance, and related clarifying standards, will have on our condensed consolidated financial statements and the related disclosures. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares outstanding during the period plus any potentially dilutive common shares, such as stock options, restricted stock units, and performance-based units calculated using the treasury stock method. Total anti-dilutive shares excluded from the diluted earnings per share computation were 213,957 and 100,387 for the three and six months ended June 30, 2022 and 2,721 and 1,302 for the three and six months ended June 30, 2021. Our Credit Agreement (as defined below) restricts the payment of dividends or other distributions to our shareholders by us or any of our subsidiaries. See Note K - “Debt and Other Obligations” within these condensed consolidated financial statements. The reconciliation of the numerators and denominators used to calculate basic and diluted net income per share are as follows: For the Three Months Ended For the Six Months Ended (in thousands except share and per share amounts) 2022 2021 2022 2021 Net income $ 10,117 $ 10,159 $ 2,140 $ 6,829 Weighted average shares outstanding - basic 39,089,865 38,647,042 38,946,937 38,458,733 Effect of potentially dilutive restricted stock units and options 160,870 561,113 346,838 757,992 Weighted average shares outstanding - diluted 39,250,735 39,208,155 39,293,775 39,216,725 Basic income per share $ 0.26 $ 0.26 $ 0.05 $ 0.18 Diluted income per share $ 0.26 $ 0.26 $ 0.05 $ 0.17 |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Patient Care Segment Revenue in our Patient Care segment is primarily derived from contracts with third party payors for the provision of O&P devices and is recognized upon the transfer of control of promised products or services to the patient at the time the patient receives the device. At, or subsequent to delivery, we issue an invoice to the third party payor, which primarily consists of commercial insurance companies, Medicare, Medicaid, the U.S. Department of Veterans Affairs (the “VA”), or private or patient pay (“Private Pay”) individuals. We recognize revenue for the amounts we expect to receive from payors based on expected contractual reimbursement rates, which are net of estimated contractual discounts and implicit price concessions. These revenue amounts are further revised as claims are adjudicated, which may result in additional disallowances. The following table disaggregates revenue from contracts with customers in our Patient Care segment for the three and six months ended June 30, 2022 and 2021: For the Three Months Ended For the Six Months Ended (in thousands) 2022 2021 2022 2021 Patient Care Segment Medicare $ 83,013 $ 74,248 $ 148,867 $ 131,583 Medicaid 49,334 43,688 88,606 77,736 Commercial insurance / managed care (excluding Medicare and Medicaid managed care) 88,801 79,769 166,144 149,432 VA 25,393 21,633 46,442 41,397 Private Pay 19,129 17,449 35,429 32,321 Total $ 265,670 $ 236,787 $ 485,488 $ 432,469 The impact to revenue related to prior period performance obligations was not material for the three and six months ended June 30, 2022 or 2021. Products & Services Segment Revenue in our Products & Services segment is derived from the distribution of O&P components and from therapeutic solutions which includes the leasing and sale of rehabilitation equipment and ancillary consumable supplies combined with equipment maintenance, education, and training. The following table disaggregates revenue from contracts with customers in our Products & Services segment for the three and six months ended June 30, 2022 and 2021: For the Three Months Ended For the Six Months Ended (in thousands) 2022 2021 2022 2021 Products & Services Segment Distribution services, net of intersegment revenue eliminations $ 35,978 $ 33,275 $ 67,368 $ 63,935 Therapeutic solutions 10,385 10,757 20,464 21,885 Total $ 46,363 $ 44,032 $ 87,832 $ 85,820 |
Accounts Receivable, Net
Accounts Receivable, Net | 6 Months Ended |
Jun. 30, 2022 | |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | |
Accounts Receivable, Net | Accounts Receivable, Net Accounts receivable, net represents outstanding amounts we expect to collect from the transfer of our products and services. Principally, these amounts are comprised of receivables from Medicare, Medicaid, and commercial insurance plans. Our accounts receivable represent amounts outstanding from our gross charges, net of contractual discounts, sales returns, and other implicit price concessions including estimates for payor disallowances and patient non-payments. We are exposed to credit losses primarily through our accounts receivable. These receivables are short in nature because their due date varies between due upon receipt of invoice and 90 days. We assess our receivables, divide them into similar risk pools, and monitor our ongoing credit exposure through active review of our aging buckets. Our activities include timely account reconciliations, dispute resolution, and payment confirmations. We also employ collection agencies and legal counsel to pursue recovery of defaulted receivables. Our expected loss methodology is developed using historical liquidation rates, current and future economic and market conditions, and a review of the current status of our patients and customers’ trade accounts receivable balances. We also group our receivables into similar risk pools to better measure the risks for each pool. After evaluating the risk for each pool, we have determined that additional credit loss risk is immaterial for the Patient Care segment. For the Products & Services segment, an allowance for doubtful accounts is recorded, which is deducted from gross accounts receivable to arrive at “Accounts receivable, net.” As of June 30, 2022, we have considered the current and future economic and market conditions resulting in a decrease to the allowance for doubtful accounts by approximately $0.1 million since December 31, 2021. Accounts receivable, net as of June 30, 2022 and December 31, 2021 is comprised of the following: As of June 30, 2022 As of December 31, 2021 (in thousands) Patient Care Products & Services Consolidated Patient Care Products & Services Consolidated Gross charges before estimates for implicit price concessions $ 167,017 $ 23,527 $ 190,544 $ 173,115 $ 21,459 $ 194,574 Less estimates for implicit price concessions: Payor disallowances (30,863) — (30,863) (33,007) — (33,007) Patient non-payments (6,835) — (6,835) (7,500) — (7,500) Accounts receivable, gross 129,319 23,527 152,846 132,608 21,459 154,067 Allowance for doubtful accounts — (1,948) (1,948) — (2,009) (2,009) Accounts receivable, net $ 129,319 $ 21,579 $ 150,898 $ 132,608 $ 19,450 $ 152,058 |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Our inventories are comprised of the following: As of June 30, As of December 31, (in thousands) 2022 2021 Raw materials $ 23,850 $ 22,759 Work in process 20,772 15,807 Finished goods 43,396 48,896 Total inventories $ 88,018 $ 87,462 |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions 2022 Acquisition Activity During 2022, we completed the following acquisitions of O&P clinics with the intention of expanding the geographic footprint of our patient care offerings through the acquisitions of these high quality O&P providers. None of the acquisitions were individually material to our financial position, results of operations, or cash flows. • In the first quarter of 2022, we completed the acquisition of all the outstanding equity interests of an O&P business for total consideration of $5.0 million, of which $4.0 million was cash consideration, net of cash acquired, and $1.0 million was issued in the form of notes to shareholders at fair value. • In the second quarter of 2022, we completed the acquisitions of all the outstanding equity interests of two O&P businesses for total consideration of $11.7 million, of which $8.5 million was cash consideration, net of cash acquired, and $3.2 million was issued in the form of notes to shareholders at fair value. We accounted for these transactions under the acquisition method of accounting and have reported the results of operations of each acquisition as of the respective dates of the acquisitions. We based the estimated fair values of intangible assets on an income approach utilizing the excess earnings method for customer relationships. The income approach utilizes management’s estimates of future operating results and cash flows using a weighted average cost of capital that reflects market participant assumptions. Other significant judgments used in the valuation of tangible assets acquired in the acquisitions include estimated selling price of inventory and estimated replacement cost for acquired property, plant, and equipment. For all other assets acquired and liabilities assumed, the fair value reflects the carrying value of the asset or liability due to their short maturity. We recorded the excess of the fair value of the consideration transferred in the acquisitions over the fair value of net assets acquired as goodwill. The goodwill reflects our expectations of favorable future growth opportunities, anticipated synergies through the scale of our O&P operations, and the assembled workforce. We expect that substantially all of the goodwill, which has been assigned to our Patient Care reporting unit, will not be deductible for federal income tax purposes. Acquisition-related costs associated with Hanger’s acquisition of O&P businesses are included in general and administrative expenses in our condensed consolidated statements of operations. Total acquisition-related costs incurred during the three and six months ended June 30, 2022 were $0.3 million and $0.6 million, respectively, which includes those costs for transactions that are in progress or were not completed during the respective period. Acquisition-related costs incurred for the acquisitions completed during the three and six months ended June 30, 2022 were $0.2 million and $0.3 million, respectively. We have not presented pro forma combined results for these acquisitions because the impact on previously reported statements of operations would not have been material individually or in the aggregate. Purchase Price Allocation We have performed a preliminary valuation analysis of the fair market value of the assets acquired and liabilities assumed in the acquisitions. The final purchase price allocations will be determined when we have completed and fully reviewed the detailed valuations which could differ materially from the preliminary allocations. The final allocations may include changes in allocations of acquired intangible assets as well as goodwill and other changes to assets and liabilities, including deferred taxes. The estimated useful lives of acquired intangible assets are also preliminary. The aggregate purchase price of these acquisitions was allocated on a preliminary basis as follows: (in thousands) Cash paid, net of cash acquired $ 12,490 Issuance of Seller Notes at fair value 4,195 Additional consideration 36 Aggregate purchase price 16,721 Accounts receivable 697 Inventories 865 Customer relationships (Weighted average useful life of 5.0 years) 2,270 Non-compete agreements (Weighted average useful life of 5.0 years) 243 Other assets and liabilities, net (418) Net assets acquired 3,657 Goodwill $ 13,064 Right-of-use assets and lease liabilities related to operating leases recognized in connection with the acquisitions completed for the six months ended June 30, 2022 were $0.7 million. During the third quarter of 2022 to date, we completed the acquisitions of two O&P businesses for a total purchase price of $8.1 million. Total consideration transferred for these acquisitions is comprised of $6.3 million in cash consideration and $1.8 million in the form of notes to shareholders at fair value. Due to the proximity in time of these transactions to the filing of this Form 10-Q, it is not practicable to provide a preliminary purchase price allocation of the fair value of the assets purchased and liabilities assumed in the acquisitions. Acquisition-related expenses related to these transactions were not material. 2021 Acquisition Activity During 2021, we completed the following acquisitions of O&P clinics with the intention of expanding the geographic footprint of our patient care offerings through the acquisition of these high quality O&P providers. None of the acquisitions were individually material to our financial position, results of operations, or cash flows. • In the first quarter of 2021, we completed the acquisitions of all the outstanding equity interests of three O&P businesses and the assets of one O&P business for total consideration of $24.2 million, of which $19.2 million was cash consideration, net of cash acquired, $4.0 million was issued in the form of notes to shareholders at fair value, and $1.0 million in additional consideration. • In the second quarter of 2021, we completed the acquisitions of all the outstanding equity interests of two O&P businesses for total consideration of $21.0 million, of which $16.0 million was cash consideration, net of cash acquired, $4.9 million was issued in the form of notes to shareholders at fair value, and $0.1 million in additional consideration. • In the third quarter of 2021, we completed the acquisitions of all the outstanding equity interests of three O&P businesses and the assets of one O&P business for total consideration of $6.2 million, of which $3.9 million was cash consideration, net of cash acquired, $1.5 million was issued in the form of notes to shareholders at fair value, and $0.8 million in additional consideration. • In the fourth quarter of 2021, we completed the acquisitions of all the outstanding equity interests of eight O&P businesses for total consideration of $53.1 million, of which $40.8 million was cash consideration, net of cash acquired, and $12.3 million was issued in the form of notes to shareholders at fair value. Acquisition-related costs are included in general and administrative expenses in our condensed consolidated statements of operations. Total acquisition-related costs incurred during the year ended December 31, 2021 were $2.1 million, which includes those costs for transactions that were in progress or were not completed during the respective period. Acquisition-related costs incurred for the acquisitions completed during the year ended December 31, 2021 were $1.6 million. The aggregate purchase price of these acquisitions was allocated on a preliminary basis as follows: (in thousands) Cash paid, net of cash acquired $ 79,927 Issuance of Seller Notes at fair value 22,706 Additional consideration, net 1,925 Aggregate purchase price 104,558 Accounts receivable 6,569 Inventories 4,683 Customer relationships (Weighted average useful life of 5.0 years) 11,745 Non-compete agreements (Weighted average useful life of 5.0 years) 558 Other assets and liabilities, net (5,121) Net assets acquired 18,434 Goodwill $ 86,124 Right-of-use assets and lease liabilities related to operating leases recognized in connection with acquisitions completed for the year ended December 31, 2021 were $8.9 million. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 6 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets We assess goodwill and indefinite-lived intangible assets for impairment annually as of October 1st, and between annual tests if an event occurs, or circumstances change, that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. The following table summarizes the activity in goodwill of the Patient Care operating segment for the period indicated: For the Three Months Ended June 30, 2022 (in thousands) Goodwill, Gross Accumulated Impairment Goodwill, Net As of December 31, 2021 $ 792,222 $ (428,668) $ 363,554 Additions from acquisitions 13,064 — 13,064 Measurement period adjustments (1) 546 — 546 As of June 30, 2022 $ 805,832 $ (428,668) $ 377,164 (1) Measurement period adjustments primarily relate to 2021 acquisitions of approximately $0.5 million and are primarily attributable to adjustments to the preliminary allocations of acquired assets. The balances related to intangible assets as of June 30, 2022 are as follows: As of June 30, 2022 (in thousands) Gross Carrying Amount Accumulated Amortization Accumulated Impairment Net Carrying Amount Customer lists $ 30,894 $ (12,799) $ — $ 18,095 Trade name 255 (214) — 41 Patents and other intangibles 9,818 (6,924) — 2,894 Definite-lived intangible assets 40,967 (19,937) — 21,030 Indefinite-lived trade name 9,070 — (4,953) 4,117 Total other intangible assets $ 50,037 $ (19,937) $ (4,953) $ 25,147 Amortization expense related to other intangible assets was approximately $1.7 million and $3.3 million for the three and six months ended June 30, 2022, respectively, and $1.2 million and $2.2 million for the three and six months ended June 30, 2021, respectively. |
Other Current Assets and Other
Other Current Assets and Other Assets | 6 Months Ended |
Jun. 30, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Current Assets and Other Assets | Other Current Assets and Other Assets Other current assets consist of the following: As of June 30, As of December 31, (in thousands) 2022 2021 Non-trade receivables $ 6,582 $ 7,725 Prepaid maintenance 5,658 4,553 Prepaid insurance 1,706 510 Other prepaid assets 5,668 3,748 Total other current assets $ 19,614 $ 16,536 Other assets consist of the following: As of June 30, As of December 31, (in thousands) 2022 2021 Implementation costs for cloud computing arrangements $ 6,213 $ 6,459 Cash surrender value of company-owned life insurance 3,945 4,471 Finance lease right-of-use assets 2,563 2,732 Deposits 2,240 2,178 Non-trade receivables 1,565 1,172 Other 2,026 933 Total other assets $ 18,552 $ 17,945 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities and Other Liabilities | 6 Months Ended |
Jun. 30, 2022 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities and Other Liabilities | Accrued Expenses and Other Current Liabilities and Other Liabilities Accrued expenses and other current liabilities consist of: As of June 30, As of December 31, (in thousands) 2022 2021 Patient prepayments, deposits, and refunds payable $ 29,236 $ 26,475 Insurance and self-insurance accruals 9,857 8,943 Accrued sales taxes and other taxes 8,272 7,803 Accrued professional fees 1,400 750 Accrued interest payable 774 707 Derivative liability — 6,425 Other current liabilities 6,612 9,296 Total $ 56,151 $ 60,399 Other liabilities consist of: As of June 30, As of December 31, (in thousands) 2022 2021 Supplemental executive retirement plan obligations $ 18,980 $ 20,779 Long-term insurance accruals 7,599 7,112 Derivative liability — 4,664 Other 2,268 2,285 Total $ 28,847 $ 34,840 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We recorded a provision for income taxes of $3.0 million and $0.9 million for the three and six months ended June 30, 2022, respectively. The effective tax rate was 22.8% and 29.0% for the three and six months ended June 30, 2022, respectively. We recorded a provision for income taxes of $2.6 million and $0.5 million for the three and six months ended June 30, 2021, respectively. The effective tax rate was 20.5% and 6.3% for the three and six months ended June 30, 2021, respectively. The increase in the effective tax rate for the three months ended June 30, 2022 compared with the three months ended June 30, 2021 is primarily attributable to a windfall from share-based compensation for the three months ended June 30, 2021 compared to a shortfall from share-based compensation for the three months ended June 30, 2022. Our effective tax rate for the three months ended June 30, 2022 is similar to the federal statutory tax rate of 21%, but the difference consists primarily of research and development credits offset by non-deductible expenses and shortfall from share-based compensation. Our effective tax rate for the three months ended June 30, 2021 differed from the federal statutory tax rate of 21% primarily due to research and development credits, non-deductible expenses, and windfall from share-based compensation. For the year ending December 31, 2022, we estimate a research and development tax credit of $2.7 million, net of tax reserves. We record the tax benefit, net of tax reserves, as a deferred tax asset. For the year ended December 31, 2021, we recognized research and development tax credits of $4.3 million, net of tax reserves. |
Debt and Other Obligations
Debt and Other Obligations | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt and Other Obligations | Debt and Other Obligations Debt consists of the following: As of June 30, As of December 31, (in thousands) 2022 2021 Debt: Term Loan B $ 449,800 $ 486,063 Seller Notes 28,885 29,812 Deferred payment obligation 4,000 4,000 Finance lease liabilities and other 3,112 3,344 Total debt before unamortized discount and debt issuance costs 485,797 523,219 Unamortized discount and debt issuance costs, net (5,139) (5,974) Total debt $ 480,658 $ 517,245 Current portion of long-term debt: Term Loan B $ 5,050 $ 5,050 Seller Notes 9,672 8,969 Finance lease liabilities and other 914 919 Total current portion of long-term debt 15,636 14,938 Long-term debt $ 465,022 $ 502,307 Credit Agreement and Term B Borrowings As of June 30, 2022, we have a Senior Credit Facility (the “Credit Agreement”) which provides for (i) a Term Loan B facility with $449.8 million outstanding which is due in quarterly principal installments with all remaining outstanding principal due at maturity in March 2025 and (ii) a revolving credit facility with an availability of $135.0 million which matures on November 23, 2026 (subject to a springing maturity if the term loans outstanding under the Credit Agreement are not repaid prior to the date that is 91 days prior to the stated maturity thereof). In June 2022, in addition to our normal quarterly principal payment of $1.3 million, we made an additional prepayment of $33.7 million, for total repayments of $35.0 million under the Credit Agreement. Availability under the revolving credit facility is reduced by outstanding letters of credit, which were $5.2 million as of June 30, 2022, resulting in approximately $129.8 million in available borrowing capacity. Our obligations under the Credit Agreement are currently guaranteed by our material domestic subsidiaries and will from time to time be guaranteed by, subject in each case to certain exceptions, any domestic subsidiaries that may become material in the future. Subject to certain exceptions, the Credit Agreement is secured by first-priority perfected liens and security interests in substantially all of our personal property and each subsidiary guarantor. Borrowings under the Credit Agreement bear interest at a variable rate equal to (i) LIBOR plus a specified margin, subject to a LIBOR interest rate floor of 0.00% per annum, or (ii) the base rate (which is the highest of (a) Bank of America, N.A.’s prime rate, (b) the federal funds rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR) plus a specified margin. For the three months ended June 30, 2022, the weighted average interest rate on outstanding borrowings under our Term Loan B facility was approximately 4.2%. We have entered into interest rate swap agreements to hedge certain of our interest rate exposures, as more fully disclosed in Note M - “Derivative Financial Instruments.” We must also pay (i) an unused commitment fee ranging from 0.375% to 0.500% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Credit Agreement, and (ii) a per annum fee equal to (a) for each performance standby letter of credit outstanding under the Credit Agreement with respect to nonfinancial contractual obligations, 50% of the applicable margin over LIBOR under the revolving credit facility in effect from time to time multiplied by the daily amount available to be drawn under such letter of credit, and (b) for each other letter of credit outstanding under the Credit Agreement, the applicable margin over LIBOR under the revolving credit facility in effect from time to time multiplied by the daily amount available to be drawn for such letter of credit. The Credit Agreement and its amendments contain various restrictions and covenants, including: (i) requirements that we maintain certain financial ratios at prescribed levels, (ii) a prohibition on payment of dividends and other distributions and (iii) restrictions on our ability and certain of our subsidiaries to consolidate or merge, create liens, incur additional indebtedness, dispose of assets, or consummate acquisitions outside the healthcare industry. The Credit Agreement includes the following financial covenants applicable for so long as any revolving loans and/or revolving commitments remain outstanding under the Credit Agreement: (i) a maximum consolidated first lien net leverage ratio (“Net Leverage Ratio”) (defined as, with certain adjustments and exclusions, the ratio of consolidated first-lien indebtedness to consolidated net income before interest, taxes, depreciation, amortization, non-cash charges and certain other items (“EBITDA”) for the most recently ended period of four fiscal quarters for which financial statements are available) shall be up to (a) 5.00 to 1.00 for the fiscal quarters ending June 30, 2022, and September 30, 2022 and (b) 4.75 to 1.00 for the fiscal quarter ending December 31, 2022 and the last day of each fiscal quarter thereafter, (ii) permit, at our election and up to three times during the term of the Credit Agreement, the maximum allowable leverage ratio for covenant purposes to be temporarily increased by an additional 0.50 to 1.00 for four consecutive fiscal quarters in connection with certain material acquisitions, and (iii) a minimum interest coverage ratio (defined as, with certain adjustments, the ratio of our EBITDA to consolidated interest expense to the extent paid or payable in cash) of 2.75 to 1.00 as of the last day of any fiscal quarter. The Credit Agreement also contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then the lenders may declare any outstanding obligations under the Credit Agreement to be immediately due and payable; provided, however, that the occurrence of an event of default as a result of a breach of a financial covenant under the Credit Agreement does not constitute a default or event of default with respect to any term facility under the Credit Agreement unless and until the required revolving lenders shall have terminated their revolving commitments and declared all amounts outstanding under the revolving credit facility to be due and payable. In addition, if we or any subsidiary guarantor becomes the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency, or similar law, then any outstanding obligations under the Credit Agreement will automatically become immediately due and payable. Loans outstanding under the Credit Agreement will bear interest at a rate of 2.00% per annum in excess of the otherwise applicable rate (i) upon acceleration of such loans, (ii) while a payment event of default exists or (iii) upon the lenders’ request, during the continuance of any other event of default. We were in compliance with all covenants at June 30, 2022. Seller Notes and the Deferred Payment Obligation We typically issue subordinated promissory notes (“Seller Notes”) as a part of the consideration transferred when making acquisitions. The Seller Notes are unsecured and are presented net of unamortized discount of $0.8 million and $0.9 million as of June 30, 2022 and December 31, 2021, respectively. We measure these instruments at their estimated fair values as of the respective acquisition dates. The stated interest rates on these instruments range from 2.50% to 3.00%. Principal and interest are payable in quarterly or annual installments and mature through May 2027. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Financial Instruments The carrying value of our outstanding term loan as of June 30, 2022 (excluding unamortized discounts and debt issuance costs of $4.3 million) was $449.8 million compared to its fair value of $432.9 million. The carrying value of our outstanding term loan as of December 31, 2021 (excluding unamortized discounts and debt issuance costs of $5.1 million) was $486.1 million compared to its fair value of $484.8 million. Our estimates of fair value are based on a discounted cash flow model and an indicative quote using unobservable inputs, primarily, our risk-adjusted credit spread, which represents a Level 3 measurement. We have interest rate swap agreements designated as cash flow hedges which are measured at fair value based on inputs other than quoted market prices that are observable, which represents a Level 2 measurement. See Note K - “Debt and Other Obligations” and Note M - “Derivative Financial Instruments” for further information. |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments Cash Flow Hedges of Interest Rate Risk In March 2018, we entered into interest rate swap agreements with notional values of $325.0 million at inception, which reduces $12.5 million annually until the swaps mature on March 6, 2024. As of June 30, 2022 and December 31, 2021, our swaps had a notional value outstanding of $275.0 million and $287.5 million, respectively. Change in Net Loss on Cash Flow Hedges Included in Accumulated Other Comprehensive Loss The following table presents the activity of cash flow hedges included in accumulated other comprehensive loss for the three months ended June 30, 2022 and 2021, respectively: (in thousands) Cash Flow Hedges Balance as of March 31, 2022 $ (1,608) Unrealized gain recognized in other comprehensive income before reclassifications, net of tax 1,481 Reclassification to interest expense, net of tax 1,385 Balance as of June 30, 2022 $ 1,258 Balance as of March 31, 2021 $ (14,259) Unrealized loss recognized in other comprehensive loss before reclassifications, net of tax (712) Reclassification to interest expense, net of tax 1,937 Balance as of June 30, 2021 $ (13,034) The following table presents the activity of cash flow hedges included in accumulated other comprehensive loss for the six months ended June 30, 2022 and 2021, respectively: (in thousands) Cash Flow Hedges Balance as of December 31, 2021 $ (8,504) Unrealized gain recognized in other comprehensive income, net of tax 6,501 Reclassification to interest expense, net 3,261 Balance as of June 30, 2022 $ 1,258 Balance as of December 31, 2020 $ (16,771) Unrealized loss recognized in other comprehensive loss, net of tax (183) Reclassification to interest expense, net 3,920 Balance as of June 30, 2021 $ (13,034) The following table presents the fair value of derivative assets and liabilities within the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021: As of June 30, 2022 As of December 31, 2021 (in thousands) Assets Liabilities Assets Liabilities Derivatives designated as cash flow hedging instruments: Other current assets $ 922 $ — $ — $ — Other assets 751 — — — Accrued expenses and other current liabilities — — — 6,425 Other liabilities — — — 4,664 |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | Share-Based Compensation On May 19, 2022, the shareholders approved the Hanger, Inc. 2022 Omnibus Incentive Plan (the “2022 Plan”). The 2022 Plan authorizes the issuance of (a) up to 1,960,000 shares of Common Stock, plus (b) 402,974 shares available for issuance under the Hanger, Inc. 2019 Omnibus Incentive Plan (the “2019 Plan”). Upon approval of the 2022 Plan, the 2019 Plan was no longer available for future awards. As of June 30, 2022, there were 1,519,125 unvested restricted stock awards outstanding. This was comprised of 1,127,637 employee service-based awards with a weighted average grant date fair value of $20.64 per share and 391,488 employee performance-based awards with a weighted average grant date fair value of $20.58 per share. As of June 30, 2022, there were 253,908 outstanding options exercisable with a weighted average exercise price of $12.77 and average remaining contractual term of 4.9 years. We recognized approximately $3.6 million and $6.5 million of share-based compensation expense for the three and six months ended June 30, 2022, respectively, and a total of approximately $3.2 million and $6.4 million of share-based compensation expense for the three and six months ended June 30, 2021, respectively. Share-based compensation expense, net of forfeitures, relates to restricted stock units, performance-based restricted stock units, and stock options. |
Supplemental Executive Retireme
Supplemental Executive Retirement Plans | 6 Months Ended |
Jun. 30, 2022 | |
Retirement Benefits [Abstract] | |
Supplemental Executive Retirement Plans | Supplemental Executive Retirement Plans Defined Benefit Supplemental Executive Retirement Plan Effective January 2004, we implemented an unfunded noncontributory defined benefit plan (“DB SERP”) for certain senior executives. The DB SERP, which we administer, calls for fifteen annual payments upon retirement with the payment amount based on years of service and final average salary. Benefit costs and liability balances are calculated based on certain assumptions including benefits earned, discount rates, interest costs, mortality rates, and other factors. Actual results that differ from the assumptions are accumulated and amortized over future periods, affecting the recorded obligation and expense in future periods. We believe the assumptions used are appropriate; however, changes in assumptions or differences in actual experience may affect our benefit obligation and future expenses. The change in net benefit cost and obligation during the three and six months ended June 30, 2022 and 2021 is as follows: Change in Benefit Obligation: (in thousands) 2022 2021 Benefit obligation as of March 31 $ 16,273 $ 18,079 Service cost 116 123 Interest cost 100 88 Payments (12) (12) Benefit obligation as of June 30 $ 16,477 $ 18,278 Benefit obligation as of December 31, 2021 and 2020, respectively $ 17,935 $ 19,746 Service cost 232 246 Interest cost 199 175 Payments (1,889) (1,889) Benefit obligation as of June 30 $ 16,477 $ 18,278 Amounts Recognized in the Condensed Consolidated Balance Sheets: As of June 30, As of December 31, (in thousands) 2022 2021 Current accrued expenses and other current liabilities $ 1,913 $ 1,913 Non-current other liabilities 14,564 16,022 Total accrued liabilities $ 16,477 $ 17,935 Defined Contribution Supplemental Executive Retirement Plan In 2013, we established a defined contribution plan (“DC SERP”) that covers certain of our senior executives. Each participant is given a notional account to manage his or her annual distributions and allocate the funds among various investment options (e.g., mutual funds). These accounts are tracking accounts only for the purpose of calculating the participant’s benefit. The participant does not have ownership of the underlying mutual funds. When a participant initiates or changes the allocation of his or her notional account, we will generally make an allocation of our investments to match those chosen by the participant. While the allocation of our sub accounts is generally intended to mirror the participant’s account records (i.e., the distributions and gains or losses on those funds), the employee does not have legal ownership of any funds until payout upon retirement. The underlying investments are owned by the insurance company with which we own an insurance policy. As of June 30, 2022 and December 31, 2021, the estimated accumulated benefit obligation is $4.5 million and $4.8 million, of which $4.2 million and $4.1 million is funded and $0.3 million and $0.6 million is unfunded at June 30, 2022 and December 31, 2021, respectively. In connection with the DC SERP benefit obligation, we maintain a company-owned life insurance policy (“COLI”). The carrying value of the COLI is measured at its cash surrender value and is presented within “Other assets” in our condensed consolidated balance sheets. See Note H - “Other Current Assets and Other Assets” for additional information. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Guarantees and Indemnification In the ordinary course of our business, we may enter into service agreements with service providers in which we agree to indemnify or limit the service provider against certain losses and liabilities arising from the service provider’s performance of the agreement. We have reviewed our existing contracts containing indemnification or clauses of guarantees and do not believe that our liability under such agreements is material. Other Matters From time to time we are subject to legal proceedings and claims which arise in the ordinary course of our business, and are also subject to additional payments under business purchase agreements. In the opinion of management, the amount of ultimate liability, if any, with respect to these actions will not have a materially adverse effect on our consolidated financial position, liquidity or results of operations. We operate in a highly regulated industry and receive regulatory agency inquiries from time to time in the ordinary course of our business, including inquiries relating to our billing activities. No assurance can be given that any discrepancies identified during a regulatory review will not have a material adverse effect on our consolidated financial statements. |
Segment and Related Information
Segment and Related Information | 6 Months Ended |
Jun. 30, 2022 | |
Segment Reporting [Abstract] | |
Segment and Related Information | Segment and Related Information We have identified two operating segments and both performance evaluation and resource allocation decisions are determined based on each segment’s income from operations. The operating segments are described further below. Patient Care - This segment is primarily comprised of Hanger Clinic, which specializes in comprehensive, outcomes-based design, fabrication, and delivery of custom O&P devices. We also provide payor network contracting services to other O&P providers through this segment. The principal reimbursement sources for our services are: • Commercial private payors and other non-governmental organizations, which consist of individuals, rehabilitation providers, commercial insurance companies, health management organizations (“HMOs”), preferred provider organizations (“PPOs”), hospitals, vocational rehabilitation centers, workers’ compensation programs, third party administrators, and similar sources; • Medicare, a federally funded health insurance program providing health insurance coverage for persons aged 65 or older and certain persons with disabilities; • Medicaid, a health insurance program jointly funded by federal and state governments providing health insurance coverage for certain persons requiring financial assistance, regardless of age, which may supplement Medicare benefits for persons aged 65 or older requiring financial assistance; and • the VA. Products & Services - This segment is comprised of our distribution services and therapeutic solutions businesses. As a leading provider of O&P products in the United States, we engage in the distribution of a broad catalog of branded and private label O&P devices, products, and components to independent O&P providers nationwide. The other business in our Products & Services segment is our therapeutic solutions business, which develops specialized rehabilitation technologies and provides evidence-based clinical programs for post-acute rehabilitation to patients. Corporate & Other - This consists of corporate overhead and includes unallocated expense such as personnel costs, professional fees, and corporate offices expenses. The accounting policies of the segments are the same as those described in Note A - “Organization and Summary of Significant Accounting Policies” in our 2021 Form 10-K. Intersegment revenue primarily relates to sales of O&P components from the Products & Services segment to the Patient Care segment. The sales are priced at the cost of the related materials plus overhead. Summarized financial information concerning our reportable segments is shown in the following tables. Total assets for each of the segments has not materially changed from December 31, 2021. Patient Care Products & Services For the Three Months Ended For the Three Months Ended (in thousands) 2022 2021 2022 2021 Net revenues Third party $ 265,670 $ 236,787 $ 46,363 $ 44,032 Intersegments — — 63,433 54,900 Total net revenues 265,670 236,787 109,796 98,932 Material costs Third party suppliers 71,623 62,631 26,810 26,640 Intersegments 10,462 9,086 52,971 45,814 Total material costs 82,085 71,717 79,781 72,454 Personnel expenses 93,838 83,198 16,437 14,351 Other expenses 44,426 37,445 6,871 6,763 Depreciation & amortization 4,783 4,787 2,179 1,963 Segment income from operations $ 40,538 $ 39,640 $ 4,528 $ 3,401 Patient Care Products & Services For the Six Months Ended For the Six Months Ended (in thousands) 2022 2021 2022 2021 Net revenues Third party $ 485,488 $ 432,469 $ 87,832 $ 85,820 Intersegments — — 118,108 101,905 Total net revenues 485,488 432,469 205,940 187,725 Material costs Third party suppliers 131,541 114,290 52,484 50,151 Intersegments 21,520 17,349 96,588 84,556 Total material costs 153,061 131,639 149,072 134,707 Personnel expenses 180,247 158,952 31,703 28,477 Other expenses 85,122 73,586 13,928 12,566 Depreciation & amortization 9,527 9,602 4,202 3,898 Segment income from operations $ 57,531 $ 58,690 $ 7,035 $ 8,077 A reconciliation of the total of the reportable segments’ income from operations to consolidated net income is as follows: For the Three Months Ended For the Six Months Ended (in thousands) 2022 2021 2022 2021 Income from operations Patient Care $ 40,538 $ 39,640 $ 57,531 $ 58,690 Products & Services 4,528 3,401 7,035 8,077 Corporate & other (24,279) (22,947) (46,324) (44,652) Income from operations 20,787 20,094 18,242 22,115 Interest expense, net 7,524 7,152 14,909 14,492 Non-service defined benefit plan expense 160 167 320 334 Income before income taxes 13,103 12,775 3,013 7,289 Provision for income taxes 2,986 2,616 873 460 Net income $ 10,117 $ 10,159 $ 2,140 $ 6,829 A reconciliation of the reportable segments’ net revenues to consolidated net revenues is as follows: For the Three Months Ended For the Six Months Ended (in thousands) 2022 2021 2022 2021 Net revenues Patient Care $ 265,670 $ 236,787 $ 485,488 $ 432,469 Products & Services 109,796 98,932 205,940 187,725 Corporate & other — — — — Consolidating adjustments (63,433) (54,900) (118,108) (101,905) Consolidated net revenues $ 312,033 $ 280,819 $ 573,320 $ 518,289 A reconciliation of the reportable segments’ material costs to consolidated material costs is as follows: For the Three Months Ended For the Six Months Ended (in thousands) 2022 2021 2022 2021 Material costs Patient Care $ 82,085 $ 71,717 $ 153,061 $ 131,639 Products & Services 79,781 72,454 149,072 134,707 Corporate & other — — — — Consolidating adjustments (63,433) (54,900) (118,108) (101,905) Consolidated material costs $ 98,433 $ 89,271 $ 184,025 $ 164,441 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On July 21, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Hero Parent, Inc., a Delaware corporation (“Parent”), and Hero Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”). Parent and Merger Sub are indirect subsidiaries of funds managed and advised by Patient Square Capital, a dedicated health care investment firm. The Merger Agreement provides, among other things and subject to the terms and conditions set forth therein, that Merger Sub will be merged with and into the Company, with the Company surviving as a wholly-owned subsidiary of Parent (the “Merger”). At the Effective Time (as defined in the Merger Agreement), by virtue of the Merger, each share of common stock of the Company issued and outstanding immediately prior to the Effective will be converted automatically into the right to receive $18.75 per share in cash. After the Merger, Hanger ’s common stock will no longer be traded on the New York Stock Exchange. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Organization and Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, and, therefore, do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”), as previously filed with the Securities and Exchange Commission (the “SEC”). In our opinion, the information contained herein reflects all adjustments necessary for a fair statement of our results of operations, financial position, and cash flows. All such adjustments are of a normal, recurring nature. The results of operations for the interim periods are not necessarily indicative of those to be expected for the full year. A detailed description of our significant accounting policies and management judgments is contained in our 2021 Form 10-K. |
Reclassifications | Reclassifications We have reclassified certain amounts in the prior year condensed consolidated financial statements to be consistent with the current year presentation. These relate to immaterial classifications within expense line items in the condensed consolidated statements of operations. |
Recent Developments Regarding COVID-19 | Recent Developments Regarding COVID-19 We are subject to risks and uncertainties as a result of the outbreak of the novel coronavirus (“COVID-19”) pandemic (“COVID-19 pandemic”). The extent and duration of the impact of the COVID-19 pandemic on our operations and financial condition remain uncertain and difficult to predict. As a result of the COVID-19 pandemic, we believe that our patients are continuing to defer visits to our O&P clinics, as well as elective surgical procedures, both of which impact our business volumes through decreased patient encounters and physician referrals. While the emerging variants of the COVID-19 virus continue to contribute to employee absences and our use of temporary labor, we believe the overall adverse impact of the COVID-19 pandemic on our business volumes has diminished and stabilized over time. The United States government has responded with fiscal policy measures intended to support the healthcare industry and economy as a whole, including the passage of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) in March 2020. CARES Act The CARES Act established the Public Health and Social Services Emergency Fund, also referred to as the Cares Act Provider Relief Fund, which set aside $203.5 billion to be administered through grants and other mechanisms to hospitals, public entities, not-for-profit entities and Medicare- and Medicaid- enrolled suppliers and institutional providers. The purpose of these funds is to reimburse providers for lost revenue and health-care related expenses that are attributable to the COVID-19 pandemic. In April 2020, the U.S. Department of Health and Human Services (“HHS”) began making payments to healthcare providers from the $203.5 billion appropriation. These are grants, rather than loans, to healthcare providers, and will not need to be repaid. During the full year of 2021, we recognized a total benefit of $1.1 million in our consolidated statement of operations within Other operating costs in our Patient Care segment for the grant proceeds we received under the CARES Act (“Grants”) from HHS. We accounted for the proceeds from the Grants by analogy to International Accounting Standard (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance and its principles surrounding the recognition of grants related to income. We recognize income related to grants on a systematic and rational basis when it becomes probable that we have complied with the terms and conditions of the grant and in the period in which the corresponding costs or income related to the grant are recognized. We are using the Grants for their intended purpose, and are compliant to the reporting requirements set by the terms and conditions of the grant. |
Recent Accounting Pronouncements, Not Yet Adopted | Recent Accounting Pronouncements, Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This ASU, effective beginning on March 12, 2020, provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. We are currently evaluating the effects that the adoption of this guidance, and related clarifying standards, will have on our condensed consolidated financial statements and the related disclosures. |
Revenue from Contract with Customer | Revenue in our Patient Care segment is primarily derived from contracts with third party payors for the provision of O&P devices and is recognized upon the transfer of control of promised products or services to the patient at the time the patient receives the device. At, or subsequent to delivery, we issue an invoice to the third party payor, which primarily consists of commercial insurance companies, Medicare, Medicaid, the U.S. Department of Veterans Affairs (the “VA”), or private or patient pay (“Private Pay”) individuals. We recognize revenue for the amounts we expect to receive from payors based on expected contractual reimbursement rates, which are net of estimated contractual discounts and implicit price concessions. These revenue amounts are further revised as claims are adjudicated, which may result in additional disallowances. Revenue in our Products & Services segment is derived from the distribution of O&P components and from therapeutic solutions which includes the leasing and sale of rehabilitation equipment and ancillary consumable supplies combined with equipment maintenance, education, and training. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of numerators and denominators used to calculate basic and diluted net income per share | The reconciliation of the numerators and denominators used to calculate basic and diluted net income per share are as follows: For the Three Months Ended For the Six Months Ended (in thousands except share and per share amounts) 2022 2021 2022 2021 Net income $ 10,117 $ 10,159 $ 2,140 $ 6,829 Weighted average shares outstanding - basic 39,089,865 38,647,042 38,946,937 38,458,733 Effect of potentially dilutive restricted stock units and options 160,870 561,113 346,838 757,992 Weighted average shares outstanding - diluted 39,250,735 39,208,155 39,293,775 39,216,725 Basic income per share $ 0.26 $ 0.26 $ 0.05 $ 0.18 Diluted income per share $ 0.26 $ 0.26 $ 0.05 $ 0.17 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of disaggregates of revenue from contracts with customers | The following table disaggregates revenue from contracts with customers in our Patient Care segment for the three and six months ended June 30, 2022 and 2021: For the Three Months Ended For the Six Months Ended (in thousands) 2022 2021 2022 2021 Patient Care Segment Medicare $ 83,013 $ 74,248 $ 148,867 $ 131,583 Medicaid 49,334 43,688 88,606 77,736 Commercial insurance / managed care (excluding Medicare and Medicaid managed care) 88,801 79,769 166,144 149,432 VA 25,393 21,633 46,442 41,397 Private Pay 19,129 17,449 35,429 32,321 Total $ 265,670 $ 236,787 $ 485,488 $ 432,469 The following table disaggregates revenue from contracts with customers in our Products & Services segment for the three and six months ended June 30, 2022 and 2021: For the Three Months Ended For the Six Months Ended (in thousands) 2022 2021 2022 2021 Products & Services Segment Distribution services, net of intersegment revenue eliminations $ 35,978 $ 33,275 $ 67,368 $ 63,935 Therapeutic solutions 10,385 10,757 20,464 21,885 Total $ 46,363 $ 44,032 $ 87,832 $ 85,820 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | |
Schedule of accounts receivable, net | Accounts receivable, net as of June 30, 2022 and December 31, 2021 is comprised of the following: As of June 30, 2022 As of December 31, 2021 (in thousands) Patient Care Products & Services Consolidated Patient Care Products & Services Consolidated Gross charges before estimates for implicit price concessions $ 167,017 $ 23,527 $ 190,544 $ 173,115 $ 21,459 $ 194,574 Less estimates for implicit price concessions: Payor disallowances (30,863) — (30,863) (33,007) — (33,007) Patient non-payments (6,835) — (6,835) (7,500) — (7,500) Accounts receivable, gross 129,319 23,527 152,846 132,608 21,459 154,067 Allowance for doubtful accounts — (1,948) (1,948) — (2,009) (2,009) Accounts receivable, net $ 129,319 $ 21,579 $ 150,898 $ 132,608 $ 19,450 $ 152,058 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Our inventories are comprised of the following: As of June 30, As of December 31, (in thousands) 2022 2021 Raw materials $ 23,850 $ 22,759 Work in process 20,772 15,807 Finished goods 43,396 48,896 Total inventories $ 88,018 $ 87,462 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of aggregate purchase price of acquisitions allocated on a preliminary basis | The aggregate purchase price of these acquisitions was allocated on a preliminary basis as follows: (in thousands) Cash paid, net of cash acquired $ 12,490 Issuance of Seller Notes at fair value 4,195 Additional consideration 36 Aggregate purchase price 16,721 Accounts receivable 697 Inventories 865 Customer relationships (Weighted average useful life of 5.0 years) 2,270 Non-compete agreements (Weighted average useful life of 5.0 years) 243 Other assets and liabilities, net (418) Net assets acquired 3,657 Goodwill $ 13,064 The aggregate purchase price of these acquisitions was allocated on a preliminary basis as follows: (in thousands) Cash paid, net of cash acquired $ 79,927 Issuance of Seller Notes at fair value 22,706 Additional consideration, net 1,925 Aggregate purchase price 104,558 Accounts receivable 6,569 Inventories 4,683 Customer relationships (Weighted average useful life of 5.0 years) 11,745 Non-compete agreements (Weighted average useful life of 5.0 years) 558 Other assets and liabilities, net (5,121) Net assets acquired 18,434 Goodwill $ 86,124 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill allocated to the Company's reportable segments | The following table summarizes the activity in goodwill of the Patient Care operating segment for the period indicated: For the Three Months Ended June 30, 2022 (in thousands) Goodwill, Gross Accumulated Impairment Goodwill, Net As of December 31, 2021 $ 792,222 $ (428,668) $ 363,554 Additions from acquisitions 13,064 — 13,064 Measurement period adjustments (1) 546 — 546 As of June 30, 2022 $ 805,832 $ (428,668) $ 377,164 (1) Measurement period adjustments primarily relate to 2021 acquisitions of approximately $0.5 million and are primarily attributable to adjustments to the preliminary allocations of acquired assets. |
Schedule of balances related to indefinite-lived intangible assets | The balances related to intangible assets as of June 30, 2022 are as follows: As of June 30, 2022 (in thousands) Gross Carrying Amount Accumulated Amortization Accumulated Impairment Net Carrying Amount Customer lists $ 30,894 $ (12,799) $ — $ 18,095 Trade name 255 (214) — 41 Patents and other intangibles 9,818 (6,924) — 2,894 Definite-lived intangible assets 40,967 (19,937) — 21,030 Indefinite-lived trade name 9,070 — (4,953) 4,117 Total other intangible assets $ 50,037 $ (19,937) $ (4,953) $ 25,147 |
Other Current Assets and Othe_2
Other Current Assets and Other Assets (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of other current assets | Other current assets consist of the following: As of June 30, As of December 31, (in thousands) 2022 2021 Non-trade receivables $ 6,582 $ 7,725 Prepaid maintenance 5,658 4,553 Prepaid insurance 1,706 510 Other prepaid assets 5,668 3,748 Total other current assets $ 19,614 $ 16,536 |
Schedule of other assets | Other assets consist of the following: As of June 30, As of December 31, (in thousands) 2022 2021 Implementation costs for cloud computing arrangements $ 6,213 $ 6,459 Cash surrender value of company-owned life insurance 3,945 4,471 Finance lease right-of-use assets 2,563 2,732 Deposits 2,240 2,178 Non-trade receivables 1,565 1,172 Other 2,026 933 Total other assets $ 18,552 $ 17,945 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities and Other Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consist of: As of June 30, As of December 31, (in thousands) 2022 2021 Patient prepayments, deposits, and refunds payable $ 29,236 $ 26,475 Insurance and self-insurance accruals 9,857 8,943 Accrued sales taxes and other taxes 8,272 7,803 Accrued professional fees 1,400 750 Accrued interest payable 774 707 Derivative liability — 6,425 Other current liabilities 6,612 9,296 Total $ 56,151 $ 60,399 |
Schedule of other liabilities | Other liabilities consist of: As of June 30, As of December 31, (in thousands) 2022 2021 Supplemental executive retirement plan obligations $ 18,980 $ 20,779 Long-term insurance accruals 7,599 7,112 Derivative liability — 4,664 Other 2,268 2,285 Total $ 28,847 $ 34,840 |
Debt and Other Obligations (Tab
Debt and Other Obligations (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of debt | Debt consists of the following: As of June 30, As of December 31, (in thousands) 2022 2021 Debt: Term Loan B $ 449,800 $ 486,063 Seller Notes 28,885 29,812 Deferred payment obligation 4,000 4,000 Finance lease liabilities and other 3,112 3,344 Total debt before unamortized discount and debt issuance costs 485,797 523,219 Unamortized discount and debt issuance costs, net (5,139) (5,974) Total debt $ 480,658 $ 517,245 Current portion of long-term debt: Term Loan B $ 5,050 $ 5,050 Seller Notes 9,672 8,969 Finance lease liabilities and other 914 919 Total current portion of long-term debt 15,636 14,938 Long-term debt $ 465,022 $ 502,307 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of activity of cash flow hedges included in accumulated other comprehensive loss | The following table presents the activity of cash flow hedges included in accumulated other comprehensive loss for the three months ended June 30, 2022 and 2021, respectively: (in thousands) Cash Flow Hedges Balance as of March 31, 2022 $ (1,608) Unrealized gain recognized in other comprehensive income before reclassifications, net of tax 1,481 Reclassification to interest expense, net of tax 1,385 Balance as of June 30, 2022 $ 1,258 Balance as of March 31, 2021 $ (14,259) Unrealized loss recognized in other comprehensive loss before reclassifications, net of tax (712) Reclassification to interest expense, net of tax 1,937 Balance as of June 30, 2021 $ (13,034) The following table presents the activity of cash flow hedges included in accumulated other comprehensive loss for the six months ended June 30, 2022 and 2021, respectively: (in thousands) Cash Flow Hedges Balance as of December 31, 2021 $ (8,504) Unrealized gain recognized in other comprehensive income, net of tax 6,501 Reclassification to interest expense, net 3,261 Balance as of June 30, 2022 $ 1,258 Balance as of December 31, 2020 $ (16,771) Unrealized loss recognized in other comprehensive loss, net of tax (183) Reclassification to interest expense, net 3,920 Balance as of June 30, 2021 $ (13,034) |
Schedule of fair value of derivative assets and liabilities within the consolidated balance sheets | The following table presents the fair value of derivative assets and liabilities within the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021: As of June 30, 2022 As of December 31, 2021 (in thousands) Assets Liabilities Assets Liabilities Derivatives designated as cash flow hedging instruments: Other current assets $ 922 $ — $ — $ — Other assets 751 — — — Accrued expenses and other current liabilities — — — 6,425 Other liabilities — — — 4,664 |
Supplemental Executive Retire_2
Supplemental Executive Retirement Plans (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Retirement Benefits [Abstract] | |
Schedule of Change in Benefit Obligation | The change in net benefit cost and obligation during the three and six months ended June 30, 2022 and 2021 is as follows: Change in Benefit Obligation: (in thousands) 2022 2021 Benefit obligation as of March 31 $ 16,273 $ 18,079 Service cost 116 123 Interest cost 100 88 Payments (12) (12) Benefit obligation as of June 30 $ 16,477 $ 18,278 Benefit obligation as of December 31, 2021 and 2020, respectively $ 17,935 $ 19,746 Service cost 232 246 Interest cost 199 175 Payments (1,889) (1,889) Benefit obligation as of June 30 $ 16,477 $ 18,278 |
Schedule of Amounts Recognized in the Consolidated Balance Sheets | Amounts Recognized in the Condensed Consolidated Balance Sheets: As of June 30, As of December 31, (in thousands) 2022 2021 Current accrued expenses and other current liabilities $ 1,913 $ 1,913 Non-current other liabilities 14,564 16,022 Total accrued liabilities $ 16,477 $ 17,935 |
Segment and Related Informati_2
Segment and Related Information (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Segment Reporting [Abstract] | |
Summary of financial information concerning the Company's reporting segments | Summarized financial information concerning our reportable segments is shown in the following tables. Total assets for each of the segments has not materially changed from December 31, 2021. Patient Care Products & Services For the Three Months Ended For the Three Months Ended (in thousands) 2022 2021 2022 2021 Net revenues Third party $ 265,670 $ 236,787 $ 46,363 $ 44,032 Intersegments — — 63,433 54,900 Total net revenues 265,670 236,787 109,796 98,932 Material costs Third party suppliers 71,623 62,631 26,810 26,640 Intersegments 10,462 9,086 52,971 45,814 Total material costs 82,085 71,717 79,781 72,454 Personnel expenses 93,838 83,198 16,437 14,351 Other expenses 44,426 37,445 6,871 6,763 Depreciation & amortization 4,783 4,787 2,179 1,963 Segment income from operations $ 40,538 $ 39,640 $ 4,528 $ 3,401 Patient Care Products & Services For the Six Months Ended For the Six Months Ended (in thousands) 2022 2021 2022 2021 Net revenues Third party $ 485,488 $ 432,469 $ 87,832 $ 85,820 Intersegments — — 118,108 101,905 Total net revenues 485,488 432,469 205,940 187,725 Material costs Third party suppliers 131,541 114,290 52,484 50,151 Intersegments 21,520 17,349 96,588 84,556 Total material costs 153,061 131,639 149,072 134,707 Personnel expenses 180,247 158,952 31,703 28,477 Other expenses 85,122 73,586 13,928 12,566 Depreciation & amortization 9,527 9,602 4,202 3,898 Segment income from operations $ 57,531 $ 58,690 $ 7,035 $ 8,077 |
Schedule of reconciliation of reportable segments | A reconciliation of the total of the reportable segments’ income from operations to consolidated net income is as follows: For the Three Months Ended For the Six Months Ended (in thousands) 2022 2021 2022 2021 Income from operations Patient Care $ 40,538 $ 39,640 $ 57,531 $ 58,690 Products & Services 4,528 3,401 7,035 8,077 Corporate & other (24,279) (22,947) (46,324) (44,652) Income from operations 20,787 20,094 18,242 22,115 Interest expense, net 7,524 7,152 14,909 14,492 Non-service defined benefit plan expense 160 167 320 334 Income before income taxes 13,103 12,775 3,013 7,289 Provision for income taxes 2,986 2,616 873 460 Net income $ 10,117 $ 10,159 $ 2,140 $ 6,829 A reconciliation of the reportable segments’ net revenues to consolidated net revenues is as follows: For the Three Months Ended For the Six Months Ended (in thousands) 2022 2021 2022 2021 Net revenues Patient Care $ 265,670 $ 236,787 $ 485,488 $ 432,469 Products & Services 109,796 98,932 205,940 187,725 Corporate & other — — — — Consolidating adjustments (63,433) (54,900) (118,108) (101,905) Consolidated net revenues $ 312,033 $ 280,819 $ 573,320 $ 518,289 A reconciliation of the reportable segments’ material costs to consolidated material costs is as follows: For the Three Months Ended For the Six Months Ended (in thousands) 2022 2021 2022 2021 Material costs Patient Care $ 82,085 $ 71,717 $ 153,061 $ 131,639 Products & Services 79,781 72,454 149,072 134,707 Corporate & other — — — — Consolidating adjustments (63,433) (54,900) (118,108) (101,905) Consolidated material costs $ 98,433 $ 89,271 $ 184,025 $ 164,441 |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Details) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | |
Organization and Summary of Significant Accounting Policies | ||
Number of operating segments | segment | 2 | |
Proceeds received from grant | $ 1.1 | |
Deferred payroll taxes under CARES Act | $ 5.9 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Earnings Per Share [Abstract] | ||||
Total anti-dilutive shares (in shares) | 213,957 | 2,721 | 100,387 | 1,302 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of reconciliation of numerators and denominators used to calculate basic and diluted net income per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Earnings Per Share [Abstract] | ||||||
Net income | $ 10,117 | $ (7,977) | $ 10,159 | $ (3,330) | $ 2,140 | $ 6,829 |
Weighted average shares outstanding - basic (in shares) | 39,089,865 | 38,647,042 | 38,946,937 | 38,458,733 | ||
Effect of potentially dilutive restricted stock units and options (in shares) | 160,870 | 561,113 | 346,838 | 757,992 | ||
Weighted average shares outstanding - diluted (in shares) | 39,250,735 | 39,208,155 | 39,293,775 | 39,216,725 | ||
Basic income per share (in dollars per share) | $ 0.26 | $ 0.26 | $ 0.05 | $ 0.18 | ||
Diluted income per share (in dollars per share) | $ 0.26 | $ 0.26 | $ 0.05 | $ 0.17 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenue Recognition | ||||
Net revenues | $ 312,033 | $ 280,819 | $ 573,320 | $ 518,289 |
Patient Care | ||||
Revenue Recognition | ||||
Net revenues | 265,670 | 236,787 | 485,488 | 432,469 |
Patient Care | Operating Segments | ||||
Revenue Recognition | ||||
Net revenues | 265,670 | 236,787 | 485,488 | 432,469 |
Patient Care | Medicare | Operating Segments | ||||
Revenue Recognition | ||||
Net revenues | 83,013 | 74,248 | 148,867 | 131,583 |
Patient Care | Medicaid | Operating Segments | ||||
Revenue Recognition | ||||
Net revenues | 49,334 | 43,688 | 88,606 | 77,736 |
Patient Care | Commercial insurance / managed care (excluding Medicare and Medicaid managed care) | Operating Segments | ||||
Revenue Recognition | ||||
Net revenues | 88,801 | 79,769 | 166,144 | 149,432 |
Patient Care | VA | Operating Segments | ||||
Revenue Recognition | ||||
Net revenues | 25,393 | 21,633 | 46,442 | 41,397 |
Patient Care | Private Pay | Operating Segments | ||||
Revenue Recognition | ||||
Net revenues | 19,129 | 17,449 | 35,429 | 32,321 |
Products & Services | ||||
Revenue Recognition | ||||
Net revenues | 109,796 | 98,932 | 205,940 | 187,725 |
Products & Services | Operating Segments | ||||
Revenue Recognition | ||||
Net revenues | 46,363 | 44,032 | 87,832 | 85,820 |
Products & Services | Distribution services, net of intersegment revenue eliminations | Operating Segments | ||||
Revenue Recognition | ||||
Net revenues | 35,978 | 33,275 | 67,368 | 63,935 |
Products & Services | Therapeutic solutions | Operating Segments | ||||
Revenue Recognition | ||||
Net revenues | $ 10,385 | $ 10,757 | $ 20,464 | $ 21,885 |
Accounts Receivable, Net - Narr
Accounts Receivable, Net - Narrative (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | |
Decrease in allowance for doubtful accounts | $ 0.1 |
Accounts Receivable, Net - Sche
Accounts Receivable, Net - Schedule of accounts receivable, net (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Accounts Receivable, net | ||
Gross charges before estimates for implicit price concessions | $ 190,544 | $ 194,574 |
Less estimates for implicit price concessions: | ||
Payor disallowances | (30,863) | (33,007) |
Patient non-payments | (6,835) | (7,500) |
Accounts receivable, gross | 152,846 | 154,067 |
Allowance for doubtful accounts | (1,948) | (2,009) |
Accounts receivable, net | 150,898 | 152,058 |
Patient Care | ||
Accounts Receivable, net | ||
Gross charges before estimates for implicit price concessions | 167,017 | 173,115 |
Less estimates for implicit price concessions: | ||
Payor disallowances | (30,863) | (33,007) |
Patient non-payments | (6,835) | (7,500) |
Accounts receivable, gross | 129,319 | 132,608 |
Allowance for doubtful accounts | 0 | 0 |
Accounts receivable, net | 129,319 | 132,608 |
Products & Services | ||
Accounts Receivable, net | ||
Gross charges before estimates for implicit price concessions | 23,527 | 21,459 |
Less estimates for implicit price concessions: | ||
Payor disallowances | 0 | 0 |
Patient non-payments | 0 | 0 |
Accounts receivable, gross | 23,527 | 21,459 |
Allowance for doubtful accounts | (1,948) | (2,009) |
Accounts receivable, net | $ 21,579 | $ 19,450 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Inventories | ||
Raw materials | $ 23,850 | $ 22,759 |
Work in process | 20,772 | 15,807 |
Finished goods | 43,396 | 48,896 |
Total inventories | $ 88,018 | $ 87,462 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2022 USD ($) business | Jun. 30, 2022 USD ($) business | Mar. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) business | Sep. 30, 2021 USD ($) business | Jun. 30, 2021 USD ($) business | Mar. 31, 2021 USD ($) business | Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Acquisitions | |||||||||
Acquisition-related costs | $ 200 | $ 300 | $ 2,100 | ||||||
General and Administrative Expense | |||||||||
Acquisitions | |||||||||
Acquisition-related costs | 300 | 600 | |||||||
2022 Acquisitions | |||||||||
Acquisitions | |||||||||
Aggregate purchase price | 11,700 | $ 5,000 | 16,721 | ||||||
Consideration paid in cash | 8,500 | 4,000 | |||||||
Issuance of Seller Notes at fair value | $ 3,200 | $ 1,000 | 4,195 | ||||||
Number of businesses acquired | business | 2 | ||||||||
Operating right-of-use assets | $ 700 | 700 | |||||||
Operating lease liabilities | $ 700 | $ 700 | |||||||
2022 Acquisitions | Subsequent Event | |||||||||
Acquisitions | |||||||||
Aggregate purchase price | $ 8,100 | ||||||||
Consideration paid in cash | $ 6,300 | ||||||||
Number of businesses acquired | business | 2 | ||||||||
Additional consideration, net | $ 1,800 | ||||||||
2021 Acquisitions | |||||||||
Acquisitions | |||||||||
Aggregate purchase price | $ 53,100 | $ 6,200 | $ 21,000 | $ 24,200 | 104,558 | ||||
Consideration paid in cash | 40,800 | 3,900 | 16,000 | 19,200 | |||||
Issuance of Seller Notes at fair value | $ 12,300 | $ 1,500 | $ 4,900 | $ 4,000 | 22,706 | ||||
Number of businesses acquired | business | 8 | 3 | 2 | 3 | |||||
Acquisition-related costs | 1,600 | ||||||||
Operating right-of-use assets | $ 8,900 | 8,900 | |||||||
Operating lease liabilities | $ 8,900 | 8,900 | |||||||
Additional consideration, net | $ 800 | $ 100 | $ 1,000 | $ 1,925 | |||||
Number of business' assets acquired | business | 1 | 1 |
Acquisitions - Schedule of aggr
Acquisitions - Schedule of aggregate purchase price of acquisitions allocated on a preliminary basis (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Acquisitions | |||||||||
Cash paid, net of cash acquired | $ 12,490 | $ 35,349 | |||||||
2022 Acquisitions | |||||||||
Acquisitions | |||||||||
Cash paid, net of cash acquired | 12,490 | ||||||||
Issuance of Seller Notes at fair value | $ 3,200 | $ 1,000 | 4,195 | ||||||
Additional consideration | 36 | ||||||||
Aggregate purchase price | 11,700 | $ 5,000 | 16,721 | ||||||
Accounts receivable | 697 | 697 | |||||||
Inventories | 865 | 865 | |||||||
Other assets and liabilities, net | (418) | (418) | |||||||
Net assets acquired | 3,657 | 3,657 | |||||||
Goodwill | 13,064 | ||||||||
2022 Acquisitions | Customer relationships | |||||||||
Acquisitions | |||||||||
Other intangible assets, net | 2,270 | $ 2,270 | |||||||
Weighted average useful life of intangible assets | 5 years | ||||||||
2022 Acquisitions | Non-compete agreements | |||||||||
Acquisitions | |||||||||
Other intangible assets, net | $ 243 | $ 243 | |||||||
Weighted average useful life of intangible assets | 5 years | ||||||||
2021 Acquisitions | |||||||||
Acquisitions | |||||||||
Cash paid, net of cash acquired | $ 79,927 | ||||||||
Issuance of Seller Notes at fair value | $ 12,300 | $ 1,500 | $ 4,900 | $ 4,000 | 22,706 | ||||
Additional consideration, net | 800 | 100 | 1,000 | 1,925 | |||||
Aggregate purchase price | 53,100 | $ 6,200 | $ 21,000 | $ 24,200 | 104,558 | ||||
Accounts receivable | 6,569 | 6,569 | |||||||
Inventories | 4,683 | 4,683 | |||||||
Other assets and liabilities, net | (5,121) | (5,121) | |||||||
Net assets acquired | 18,434 | 18,434 | |||||||
Goodwill | 86,124 | ||||||||
2021 Acquisitions | Customer relationships | |||||||||
Acquisitions | |||||||||
Other intangible assets, net | 11,745 | $ 11,745 | |||||||
Weighted average useful life of intangible assets | 5 years | ||||||||
2021 Acquisitions | Non-compete agreements | |||||||||
Acquisitions | |||||||||
Other intangible assets, net | $ 558 | $ 558 | |||||||
Weighted average useful life of intangible assets | 5 years |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Goodwill allocated | ||
Goodwill, Net as of beginning of the year | $ 363,554 | |
Goodwill, Net as of end of the year | 377,164 | $ 363,554 |
2021 Acquisitions | ||
Goodwill allocated | ||
Additions from acquisitions | 86,124 | |
Measurement period adjustments related to acquisitions | 500 | |
Patient Care | ||
Goodwill allocated | ||
Goodwill, Gross as of beginning of the period | 792,222 | |
Accumulated Impairment as of beginning of the period | (428,668) | |
Goodwill, Net as of beginning of the year | 363,554 | |
Additions from acquisitions | 13,064 | |
Measurement period adjustments | 546 | |
Goodwill, Gross as of end of the period | 805,832 | 792,222 |
Accumulated Impairment as of end of the period | (428,668) | (428,668) |
Goodwill, Net as of end of the year | $ 377,164 | $ 363,554 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Intangible Assets (Details) $ in Thousands | Jun. 30, 2022 USD ($) |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Definite-lived, Gross Carrying Amount | $ 40,967 |
Definite-lived, Accumulated Amortization | (19,937) |
Definite-lived, Net Carrying Amount | 21,030 |
Total other intangible assets, Gross Carrying Amount | 50,037 |
Total other intangible assets, Accumulated Amortization | (19,937) |
Accumulated Impairment | (4,953) |
Total other intangible assets, Net Carrying Amount | 25,147 |
Trade name | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Indefinite lived, Gross Carrying Amount | 9,070 |
Indefinite lived, Accumulated Impairment | (4,953) |
Indefinite lived, Net Carrying Amount | 4,117 |
Customer lists | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Definite-lived, Gross Carrying Amount | 30,894 |
Definite-lived, Accumulated Amortization | (12,799) |
Definite-lived, Net Carrying Amount | 18,095 |
Trade name | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Definite-lived, Gross Carrying Amount | 255 |
Definite-lived, Accumulated Amortization | (214) |
Definite-lived, Net Carrying Amount | 41 |
Patents and other intangibles | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Definite-lived, Gross Carrying Amount | 9,818 |
Definite-lived, Accumulated Amortization | (6,924) |
Definite-lived, Net Carrying Amount | $ 2,894 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 1.7 | $ 1.2 | $ 3.3 | $ 2.2 |
Other Current Assets and Othe_3
Other Current Assets and Other Assets - Other current assets (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Non-trade receivables | $ 6,582 | $ 7,725 |
Prepaid maintenance | 5,658 | 4,553 |
Prepaid insurance | 1,706 | 510 |
Other prepaid assets | 5,668 | 3,748 |
Total other current assets | $ 19,614 | $ 16,536 |
Other Current Assets and Othe_4
Other Current Assets and Other Assets - Other assets (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Implementation costs for cloud computing arrangements | $ 6,213 | $ 6,459 |
Cash surrender value of company-owned life insurance | 3,945 | 4,471 |
Finance lease right-of-use assets | 2,563 | 2,732 |
Deposits | 2,240 | 2,178 |
Non-trade receivables | 1,565 | 1,172 |
Other | 2,026 | 933 |
Total other assets | $ 18,552 | $ 17,945 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities and Other Liabilities - Accrued expenses and other current liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Patient prepayments, deposits, and refunds payable | $ 29,236 | $ 26,475 |
Insurance and self-insurance accruals | 9,857 | 8,943 |
Accrued sales taxes and other taxes | 8,272 | 7,803 |
Accrued professional fees | 1,400 | 750 |
Accrued interest payable | 774 | 707 |
Derivative liability | 0 | 6,425 |
Other current liabilities | 6,612 | 9,296 |
Total | $ 56,151 | $ 60,399 |
Accrued Expenses and Other Cu_4
Accrued Expenses and Other Current Liabilities and Other Liabilities - Other liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Supplemental executive retirement plan obligations | $ 18,980 | $ 20,779 |
Long-term insurance accruals | 7,599 | 7,112 |
Derivative liability | 0 | 4,664 |
Other | 2,268 | 2,285 |
Total | $ 28,847 | $ 34,840 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Contingency [Line Items] | ||||||
Provision for income taxes | $ 2,986 | $ 2,616 | $ 873 | $ 460 | ||
Effective tax rate (as a percent) | 22.80% | 20.50% | 29% | 6.30% | ||
Recognition of tax benefits, current year | $ 4,300 | |||||
Forecast | ||||||
Income Tax Contingency [Line Items] | ||||||
Recognition of tax benefits, current year | $ 2,700 |
Debt and Other Obligations (Det
Debt and Other Obligations (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Debt and Other Obligations | ||
Total debt before unamortized discount and debt issuance costs | $ 485,797 | $ 523,219 |
Unamortized discount and debt issuance costs, net | (5,139) | (5,974) |
Total debt | 480,658 | 517,245 |
Total current portion of long-term debt | 15,636 | 14,938 |
Long-term debt | 465,022 | 502,307 |
Term Loan B | ||
Debt and Other Obligations | ||
Total debt before unamortized discount and debt issuance costs | 449,800 | 486,063 |
Unamortized discount and debt issuance costs, net | (4,300) | (5,100) |
Total current portion of long-term debt | 5,050 | 5,050 |
Seller Notes | ||
Debt and Other Obligations | ||
Total debt before unamortized discount and debt issuance costs | 28,885 | 29,812 |
Total current portion of long-term debt | 9,672 | 8,969 |
Deferred payment obligation | ||
Debt and Other Obligations | ||
Total debt before unamortized discount and debt issuance costs | 4,000 | 4,000 |
Finance lease liabilities and other | ||
Debt and Other Obligations | ||
Total debt before unamortized discount and debt issuance costs | 3,112 | 3,344 |
Total current portion of long-term debt | $ 914 | $ 919 |
Debt and Other Obligations - Na
Debt and Other Obligations - Narrative (Details) | 1 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) qtr increase_in_ratio | Mar. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Debt and Other Obligations | ||||
Outstanding amount of debt | $ 485,797,000 | $ 485,797,000 | $ 523,219,000 | |
Term Loan B | ||||
Debt and Other Obligations | ||||
Outstanding amount of debt | 449,800,000 | 449,800,000 | 486,063,000 | |
Seller Notes | ||||
Debt and Other Obligations | ||||
Outstanding amount of debt | 28,885,000 | 28,885,000 | 29,812,000 | |
Unamortized discount | $ 800,000 | $ 800,000 | 900,000 | |
Seller Notes | Minimum | ||||
Debt and Other Obligations | ||||
Stated interest rates (as a percent) | 2.50% | 2.50% | ||
Seller Notes | Maximum | ||||
Debt and Other Obligations | ||||
Stated interest rates (as a percent) | 3% | 3% | ||
Deferred payment obligation | ||||
Debt and Other Obligations | ||||
Outstanding amount of debt | $ 4,000,000 | $ 4,000,000 | 4,000,000 | |
Unamortized discount | $ 400,000 | $ 400,000 | $ 400,000 | |
Stated interest rates (as a percent) | 3% | 3% | ||
Annual installment payment period | 3 years | |||
Credit Agreement | Loans Payable | ||||
Debt and Other Obligations | ||||
Weighted average interest rate | 4.20% | 4.20% | ||
Revolving Credit Facility | Credit Agreement | ||||
Debt and Other Obligations | ||||
Outstanding amount of debt | $ 129,800,000 | |||
Maximum borrowing capacity | $ 135,000,000 | $ 135,000,000 | ||
Principal payment | 1,300,000 | |||
Periodic payment | 33,700,000 | |||
Total repayments | 35,000,000 | |||
Letters of credit outstanding amount | $ 5,200,000 | $ 5,200,000 | ||
Increase in margin (as a percent) | 50% | |||
Number of increases in maximum leverage ratio | increase_in_ratio | 3 | |||
Increase (decrease) in maximum allowable leverage ratio | 50% | |||
Number of consecutive fiscal quarters | qtr | 4 | |||
Interest rate in excess of applicable rate upon acceleration and default (as a percent) | 2% | |||
Revolving Credit Facility | Credit Agreement | Fiscal Quarters Ended June 30, 2022 and September 30, 2022 [Member] | ||||
Debt and Other Obligations | ||||
Consolidated leverage ratio | 500% | |||
Revolving Credit Facility | Credit Agreement | Fiscal Quarters Ended December 31, 2022 | ||||
Debt and Other Obligations | ||||
Consolidated leverage ratio | 475% | |||
Revolving Credit Facility | Credit Agreement | Last day of any fiscal quarter | ||||
Debt and Other Obligations | ||||
Consolidated leverage ratio | 275% | |||
Revolving Credit Facility | Credit Agreement | London Interbank Offered Rate (LIBOR) | ||||
Debt and Other Obligations | ||||
Interest rate margin (as a percent) | 1% | |||
Revolving Credit Facility | Credit Agreement | Fed Funds Effective Rate Overnight Index Swap Rate | ||||
Debt and Other Obligations | ||||
Interest rate margin (as a percent) | 0.50% | |||
Revolving Credit Facility | Credit Agreement | Minimum | ||||
Debt and Other Obligations | ||||
Unused commitment fee (as a percent) | 0.375% | |||
Revolving Credit Facility | Credit Agreement | Minimum | London Interbank Offered Rate (LIBOR) | ||||
Debt and Other Obligations | ||||
Interest rate margin (as a percent) | 0% | |||
Revolving Credit Facility | Credit Agreement | Maximum | ||||
Debt and Other Obligations | ||||
Unused commitment fee (as a percent) | 0.50% |
Debt and Other Obligations - Se
Debt and Other Obligations - Seller notes and the deferred payment obligation (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | |
Seller Notes | ||
Debt and Other Obligations | ||
Unamortized discount | $ 0.8 | $ 0.9 |
Seller Notes | Minimum | ||
Debt and Other Obligations | ||
Stated interest rates (as a percent) | 2.50% | |
Seller Notes | Maximum | ||
Debt and Other Obligations | ||
Stated interest rates (as a percent) | 3% | |
Deferred payment obligation | ||
Debt and Other Obligations | ||
Unamortized discount | $ 0.4 | $ 0.4 |
Stated interest rates (as a percent) | 3% | |
Annual installment payment period | 3 years |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
FAIR VALUE MEASUREMENTS | ||
Unamortized discount and debt issuance costs, net | $ 5,139 | $ 5,974 |
Total debt before unamortized discount and debt issuance costs | 485,797 | 523,219 |
Term Loan B | ||
FAIR VALUE MEASUREMENTS | ||
Unamortized discount and debt issuance costs, net | 4,300 | 5,100 |
Total debt before unamortized discount and debt issuance costs | 449,800 | 486,063 |
Term Loan B | Fair Value, Recurring | Fair Value, Inputs, Level 3 | Estimate of Fair Value Measurement | ||
FAIR VALUE MEASUREMENTS | ||
Debt | 432,900 | 484,800 |
Seller Notes | ||
FAIR VALUE MEASUREMENTS | ||
Total debt before unamortized discount and debt issuance costs | 28,885 | 29,812 |
Seller Notes | Fair Value, Inputs, Level 3 | Reported Value Measurement | ||
FAIR VALUE MEASUREMENTS | ||
Unamortized discount and debt issuance costs, net | 800 | 900 |
Outstanding amount | $ 32,100 | $ 32,900 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Cash flow hedge (Details) - Interest Rate Swap - Cash Flow Hedging - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Mar. 31, 2018 |
DERIVATIVE FINANCIAL INSTRUMENTS | |||
Notional amount of derivative instrument | $ 275 | $ 287.5 | $ 325 |
Annual reduction in notional amount of derivative | $ 12.5 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Changes in net loss on cash flow hedges included in accumulated other comprehensive income (loss) (Details) - Interest Rate Swap - Cash Flow Hedging - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Changes in Net Gain or Loss on Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) | ||||
Balance at the beginning of the period | $ (1,608) | $ (14,259) | $ (8,504) | $ (16,771) |
Unrealized gain (loss) recognized in other comprehensive income (loss), net of tax | 1,481 | (712) | 6,501 | (183) |
Reclassification to interest expense, net of tax | 1,385 | 1,937 | 3,261 | 3,920 |
Balance at the end of the period | $ 1,258 | $ (13,034) | $ 1,258 | $ (13,034) |
Derivative Financial Instrume_5
Derivative Financial Instruments - Fair value of derivative assets and liabilities (Details) - Cash Flow Hedging - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Other current assets | ||
Derivatives designated as cash flow hedging instruments: | ||
Assets | $ 922 | $ 0 |
Liabilities | 0 | 0 |
Other assets | ||
Derivatives designated as cash flow hedging instruments: | ||
Assets | 751 | 0 |
Liabilities | 0 | 0 |
Accrued expenses and other current liabilities | ||
Derivatives designated as cash flow hedging instruments: | ||
Assets | 0 | 0 |
Liabilities | 0 | 6,425 |
Other liabilities | ||
Derivatives designated as cash flow hedging instruments: | ||
Assets | 0 | 0 |
Liabilities | $ 0 | $ 4,664 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | May 19, 2022 | |
Share Based Compensation | |||||
Options outstanding and exercisable (in share) | 253,908 | 253,908 | |||
Weighted average exercise price of options exercisable (in dollars per share) | $ 12.77 | $ 12.77 | |||
Average remaining contractual term of options exercisable | 4 years 10 months 24 days | ||||
Stock-based compensation expense | $ 3.6 | $ 3.2 | $ 6.5 | $ 6.4 | |
2022 Omnibus Incentive Plan | |||||
Share Based Compensation | |||||
Shares of common stock authorized for issuance under the share-based compensation plan (in shares) | 1,960,000 | ||||
2019 Omnibus Incentive Plan | |||||
Share Based Compensation | |||||
Available for issuance (in shares) | 402,974 | ||||
Restricted Stock | |||||
Share Based Compensation | |||||
Shares outstanding (in shares) | 1,519,125 | 1,519,125 | |||
Employee Service Based Awards | |||||
Share Based Compensation | |||||
Shares outstanding (in shares) | 1,127,637 | 1,127,637 | |||
Weighted average grant date fair value (in dollars per share) | $ 20.64 | $ 20.64 | |||
Performance-Based Stock Awards | |||||
Share Based Compensation | |||||
Shares outstanding (in shares) | 391,488 | 391,488 | |||
Weighted average grant date fair value (in dollars per share) | $ 20.58 | $ 20.58 |
Supplemental Executive Retire_3
Supplemental Executive Retirement Plans - Plan details and change in benefit obligation (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) payment | Jun. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Retirement Benefits [Abstract] | |||||
Number of annual payments | payment | 15 | ||||
Change in Benefit Obligation | |||||
Benefit obligation at the beginning of the period | $ 16,273 | $ 18,079 | $ 17,935 | $ 19,746 | |
Service cost | 116 | 123 | 232 | 246 | |
Interest cost | 100 | 88 | 199 | 175 | |
Payments | (12) | (12) | (1,889) | (1,889) | |
Benefit obligation at the end of the period | 16,477 | $ 18,278 | 16,477 | $ 18,278 | |
Amounts Recognized in the Condensed Consolidated Balance Sheets: | |||||
Current accrued expenses and other current liabilities | 1,913 | 1,913 | $ 1,913 | ||
Non-current other liabilities | 14,564 | 14,564 | 16,022 | ||
Total accrued liabilities | $ 16,477 | $ 16,477 | $ 17,935 |
Supplemental Executive Retire_4
Supplemental Executive Retirement Plans - DC SERP (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Retirement Benefits [Abstract] | ||
Estimated accumulated benefit obligation | $ 4.5 | $ 4.8 |
Funded estimated accumulated benefit obligation | 4.2 | 4.1 |
Unfunded estimated accumulated benefit obligation | $ 0.3 | $ 0.6 |
Segment and Related Informati_3
Segment and Related Information - Narrative (Details) | 6 Months Ended |
Jun. 30, 2022 segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segment and Related Informati_4
Segment and Related Information - Financial information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Net revenue | ||||
Net revenues | $ 312,033 | $ 280,819 | $ 573,320 | $ 518,289 |
Material costs | 98,433 | 89,271 | 184,025 | 164,441 |
Personnel expenses | 110,275 | 97,549 | 211,950 | 187,429 |
Depreciation & amortization | 8,124 | 8,007 | 16,079 | 16,005 |
Income from operations | 20,787 | 20,094 | 18,242 | 22,115 |
Patient Care | ||||
Net revenue | ||||
Net revenues | 265,670 | 236,787 | 485,488 | 432,469 |
Material costs | 82,085 | 71,717 | 153,061 | 131,639 |
Personnel expenses | 93,838 | 83,198 | 180,247 | 158,952 |
Other expenses | 44,426 | 37,445 | 85,122 | 73,586 |
Depreciation & amortization | 4,783 | 4,787 | 9,527 | 9,602 |
Income from operations | 40,538 | 39,640 | 57,531 | 58,690 |
Patient Care | Operating Segments | ||||
Net revenue | ||||
Net revenues | 265,670 | 236,787 | 485,488 | 432,469 |
Material costs | 71,623 | 62,631 | 131,541 | 114,290 |
Income from operations | 40,538 | 39,640 | 57,531 | 58,690 |
Patient Care | Intersegment Eliminations | ||||
Net revenue | ||||
Net revenues | 0 | 0 | 0 | 0 |
Material costs | 10,462 | 9,086 | 21,520 | 17,349 |
Products & Services | ||||
Net revenue | ||||
Net revenues | 109,796 | 98,932 | 205,940 | 187,725 |
Material costs | 79,781 | 72,454 | 149,072 | 134,707 |
Personnel expenses | 16,437 | 14,351 | 31,703 | 28,477 |
Other expenses | 6,871 | 6,763 | 13,928 | 12,566 |
Depreciation & amortization | 2,179 | 1,963 | 4,202 | 3,898 |
Income from operations | 4,528 | 3,401 | 7,035 | 8,077 |
Products & Services | Operating Segments | ||||
Net revenue | ||||
Net revenues | 46,363 | 44,032 | 87,832 | 85,820 |
Material costs | 26,810 | 26,640 | 52,484 | 50,151 |
Income from operations | 4,528 | 3,401 | 7,035 | 8,077 |
Products & Services | Intersegment Eliminations | ||||
Net revenue | ||||
Net revenues | 63,433 | 54,900 | 118,108 | 101,905 |
Material costs | $ 52,971 | $ 45,814 | $ 96,588 | $ 84,556 |
Segment and Related Informati_5
Segment and Related Information - Reconciliation of the reportable segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Segment and Related Information | ||||||
Income from operations | $ 20,787 | $ 20,094 | $ 18,242 | $ 22,115 | ||
Interest expense, net | 7,524 | 7,152 | 14,909 | 14,492 | ||
Non-service defined benefit plan expense | 160 | 167 | 320 | 334 | ||
Income before income taxes | 13,103 | 12,775 | 3,013 | 7,289 | ||
Provision for income taxes | 2,986 | 2,616 | 873 | 460 | ||
Net income | 10,117 | $ (7,977) | 10,159 | $ (3,330) | 2,140 | 6,829 |
Consolidated net revenues | 312,033 | 280,819 | 573,320 | 518,289 | ||
Consolidated material costs | 98,433 | 89,271 | 184,025 | 164,441 | ||
Corporate & other | ||||||
Segment and Related Information | ||||||
Income from operations | (24,279) | (22,947) | (46,324) | (44,652) | ||
Consolidated net revenues | 0 | 0 | 0 | 0 | ||
Consolidating adjustments | ||||||
Segment and Related Information | ||||||
Consolidated net revenues | (63,433) | (54,900) | (118,108) | (101,905) | ||
Patient Care | ||||||
Segment and Related Information | ||||||
Income from operations | 40,538 | 39,640 | 57,531 | 58,690 | ||
Consolidated net revenues | 265,670 | 236,787 | 485,488 | 432,469 | ||
Consolidated material costs | 82,085 | 71,717 | 153,061 | 131,639 | ||
Patient Care | Operating Segments | ||||||
Segment and Related Information | ||||||
Income from operations | 40,538 | 39,640 | 57,531 | 58,690 | ||
Consolidated net revenues | 265,670 | 236,787 | 485,488 | 432,469 | ||
Consolidated material costs | 71,623 | 62,631 | 131,541 | 114,290 | ||
Products & Services | ||||||
Segment and Related Information | ||||||
Income from operations | 4,528 | 3,401 | 7,035 | 8,077 | ||
Consolidated net revenues | 109,796 | 98,932 | 205,940 | 187,725 | ||
Consolidated material costs | 79,781 | 72,454 | 149,072 | 134,707 | ||
Products & Services | Operating Segments | ||||||
Segment and Related Information | ||||||
Income from operations | 4,528 | 3,401 | 7,035 | 8,077 | ||
Consolidated net revenues | 46,363 | 44,032 | 87,832 | 85,820 | ||
Consolidated material costs | $ 26,810 | $ 26,640 | $ 52,484 | $ 50,151 |
Subsequent Events (Details)
Subsequent Events (Details) | Jul. 21, 2022 $ / shares |
Subsequent Event | Merger Agreement | |
Subsequent Events | |
Business acquisition, share price (in dollars per share) | $ 18.75 |