Hanger Inc (NYSE:HNGR) Q1 2019 Earnings Conference Call Transcript
May 09, 2019 • 08:30 am ET
Greetings, and welcome to the Hanger's First Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Seth Frank, Vice President of Treasury and Investor Relations. Thank you. You may begin.
Seth R. Frank
Thanks, and good morning. Welcome to Hanger's First Quarter 2019 Earnings Conference Call. With us today are Vinit Asar, Hanger's President and Chief Executive Officer and Thomas Kiraly, Executive Vice President and Chief Financial Officer. Some of the information discussed today will include forward-looking statements in the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause Hanger's actual results to materially differ from those we discuss today. Those risks include, among others, matters we have identified in the forward-looking statements portion of our latest earnings release and in our filings with the SEC. Hanger disclaims any obligation to update forward-looking information discussed on this call.
And with that, I would like to hand the call over to Vinit.
Vinit K. Asar
Thanks, Seth and good morning, everyone. Thank you for joining us today. During Q1, we achieved net revenues of $236.4 million, an increase of 1% from the prior year and flat on a same-clinic day adjusted basis. Adjusted EBITDA of $11.9 million reflected a decline of $4.3 million in the quarter. Revenue growth in the quarter was below our expectations. And we believe this relates primarily to the timing of our prosthetic deliveries in our Patient Care segment.
We remain positive in our view of the demand for our O&P services, the strength in our referral patterns and the overall industry fundamentals. As a result, we are reaffirming both our revenue and earnings guidance for 2019. When comparing Q1 to the year-ago quarter, there are three factors that impacted our results. First, revenue growth in our Patient segment -- Patient Care segment was lower than anticipated. Second, margins in Products & Services saw an expected decrease. And third, expenses in our Patient Care segment saw an expected increase. I will provide color on the first factor and Tom will elaborate on the other two.
Let me now walk you through how we view the Q1 dynamics on growth. First and foremost, we had a late start to the build of our prosthetic patient pipeline this year. January is by far, our slowest revenue month of the year. Annual health benefits for many of our patients generally reset on January 1, also resetting their annual deductibles. As a result, we typically don't see a lot of patient flow in our clinics until early February.
In a typical year's Q1 business cycle, we spent the month of February and March doing most of the prosthetic patient evaluations, followed by fabricating devices and then fitting the patients. This year, we did not see the prosthetic patient pipeline building until later in