Hanger, the Austin, Texas-based provider of orthotic and prosthetic services and products, posted weaker quarterly income as severe weather eroded sales in its patient-care division for the first three months of 2014.
Hanger reported that its sales were up 2.7% for the quarter ended March 31, from $229.4 million a year ago to $235.6 million in the current period. The growth, however, was largely the result of recent acquisitions. During 2013, Hanger completed the acquisition
of four patient-care companies with total annualized revenue approaching $10 million.
For the quarter ended March 31, Hanger reported operating income of $16 million, down 29.4% from the $22.7 million reported in the year-ago period. Management attributed the drop in income to weather-related closures of its clinics in parts of the eastern and central U.S. Hanger's patient-care segment experienced approximately 1,000 closed clinic days in the first three months of 2014, nearly five times more closures than in all of 2013.
“Like many companies, the harsh winter weather throughout the first quarter significantly impacted our sales and earnings,” Hanger President and CEO Vinit Asar said in a news release.
Costs associated with the delayed filing of the company's 10-K also cut into its bottom line. Hanger filed its annual report April 4 with the Securities and Exchange Commission for the year ended Dec. 31, 2013, missing the March deadline because of additional time needed to test new internal controls. During the previous year, PricewaterhouseCoopers, Hanger's independent auditor, assessed the company's internal control over financial reporting related to the valuation of its work-in-process inventory as materially weak.
Because of the challenging first quarter, management lowered its earnings guidance for the year from $2.10-$2.20 to $2.01-$2.11 per share. The company also revised its revenue forecast down from $1.11 billion-$1.13 billion to $1.10 billion-$1.12 billion, which still represents sales growth of 2% to 4%.
Management was scheduled to discuss the first-quarter results Tuesday morning. Hanger's shares were down nearly 2% in after-hours trading Monday on the New York Stock Exchange.Follow Rachel Landen on Twitter: @MHrlanden