Oct. 26, 2009 (PR Newswire) --
BETHESDA, Md., Oct. 26 /PRNewswire-FirstCall/ -- Hanger Orthopedic Group, Inc. (NYSE: HGR) announced net sales of $192.3 million for the quarter ended September 30, 2009, an increase of $13.6 million, or 7.6%, from $178.7 million in the prior year. Earnings per share for the third quarter of 2009 were $0.30 per diluted share compared to $0.23 per diluted share for the same period in 2008.
The $13.6 million, or 7.6%, sales increase for the quarter ended September 30, 2009 was primarily the result of a $6.7 million, or 4.3%, increase in same-center sales in our patient care centers, a $2.1 million, or 10.0%, increase in sales of the Company's distribution segment and a $4.8 million increase principally related to sales from acquired entities. The combination of increased sales and effective expense management resulted in income from operations increasing $3.5 million, or 17.4%, to $23.8 million for the third quarter of 2009, compared to last year.
Net income increased $2.3 million, or 31.4%, to $9.6 million in the third quarter of 2009 from $7.3 million last year. In addition to improved income from operations, net income benefited from lower variable interest cost in the third quarter of 2009.
Net sales for the nine months ended September 30, 2009 increased by $37.4 million, or 7.2%, to $555.0 million from $517.6 million last year. The sales increase was principally the result of a $19.2 million, or 4.3%, increase in same-center sales in our patient care centers, a $5.0 million, or 8.1%, increase in sales of the Company's distribution segment and a $13.2 million increase principally related to sales from acquired entities.
As was the case for the quarter, the growth in sales and expense management helped increase income from operations by $7.2 million, or 12.9%, to $63.0 million for the nine months ended September 30, 2009 compared to the same period last year. Operating income as a percentage of sales increased to 11.4% for the nine months ended September 30, 2009 compared to 10.8% in the same period of 2008.
Net income applicable to common stock for the nine months ended September 30, 2009 increased by 27.9% to $24.2 million, or $0.76 per diluted share, compared to pro forma net income applicable to common stock of $18.9 million, or $0.60 per diluted share, in the prior year. In addition to improved income from operations, net income benefited from lower variable interest costs during 2009. The pro forma results for the nine months ended September 30, 2008 assume that the one-time, in-kind preferred stock dividend described below occurred and the preferred stock was converted to common stock at the beginning of the period. Net income applicable to common stock for the nine months ended September 30, 2008 on a GAAP basis was $13.2 million, or $0.52 per diluted share.
Cash from operations for the three months ended September 30, 2009 was $25.4 million, a $3.1 million, or 13.9% increase, compared to 2008. The improvement was primarily the result of improved operating results and a $0.8 million decrease in working capital. Days sales outstanding were reduced by 3 days to a record low of 47 days as of September 30, 2009 from 50 days as of September 30, 2008.
As of September 30, 2009, $76.1 million, or 18.6%, of the Company's total debt of $409.7 million was subject to variable interest rates. The Company had total liquidity of $131.2 million, comprised of $78.4 million of cash and $52.8 million available under its revolving credit facility at September 30, 2009. On October 23, 2009, Barclays Bank replaced $10.0 million of the $17.8 million defaulted Lehman commitment under the revolving credit facility, which increases the current amount available under the credit facility to $62.8 million. The Company believes that it has sufficient liquidity to conduct its normal operations and fund its acquisition plans in 2009.
The Company is reaffirming its full year 2009 sales guidance of $750 to $760 million and increasing its 2009 diluted EPS guidance of $1.02 to $1.04 to $1.05 to $1.07.
"We are very pleased with our third quarter results, as they exceeded our expectations, represented solid operational execution and generated strong cash flow," commented Thomas F. Kirk, President and Chief Executive Officer of Hanger Orthopedic Group. Mr. Kirk added, "Patient care centers revenues grew at 6.6% and our efforts on expense management continue to be reflected in our results. Since the third quarter of last year, we have improved operating margins for the quarter by 100 basis points to 12.4%. We are also extremely pleased with the added commitment to our revolver and liquidity, because it reflects the confidence our lenders have in our consistent execution.
