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Hanger Orthopedic Group Inc. Q2 2010 Earnings Call Transcript

Now I will turn the call back over to Tom.

Tom Kirk

Thanks Tom. Overall the second quarter contained several noteworthy points. Let me touch on a few of them. We grew consolidated sales of over second quarter of last year by 6.4% and I am happy to say that revenue growth occurred in all portions of our business. The sales performance combined with cost management yielded $0.37 earning per share, that’s excluding the cost associated with our relocation. This equates to a 15.2% growth over last year’s second quarter. I’d also like to add that our relocation is tracking on plan schedule wise and within budget. This performance makes the 18th consecutive quarter where we’ve meet or exceeded first call estimates.

Now I’ll turn it over to George, who will review our financial results and balance sheet changes in detail.

George McHenry

Thank you Tom and good morning everyone. Q2 was an excellent quarter for Hanger, the important takeaways are as follow. As Tom mentioned we meet Street estimates for 18th consecutive quarter. Our pro forma EPS of $0.37 represented 19.4% growth over the prior year. We increased operating leverage excluding relocation expense by 80 basis points through a combination of healthy sales growth and judicious controlled spending.

We experienced growth in all lines of our business. Overall sales growth accelerated from Q1 to 6.4% from 5.4% in the previous quarter. Our comp sales and patient care accelerated to a 4% increase which was an improvement over the 3.6% growth that they had in Q1 and our distribution segment reported a healthy 10.4% increase. Our comp rate of 30.5% is comparable to the prior year, but slightly higher than the rate we expect for the full year. We attribute this change to mix and expect that the rate will decline somewhat in the second half.

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