Hanger Orthopedic’s (HGR) acquisition spree continues as it has reportedly bought three companies with consolidated revenues of $14 million. The acquired companies are Dynamic Orthotics and Prosthetics of Texas, Nebraska Orthotic and Prosthetic Services, and Spectrum Prosthetics and Orthotics of Iowa. However, Hanger has not divulged the acquisition prices.
 
Hanger continues to explore acquisitions to expand its geographic presence. The company’s acquisitions are based on location, quality of practitioners and product/ service mix. Hanger clinched three acquisitions in October 2009, which strengthened its foothold in New York, Wyoming and Pennsylvania. The company has funded these acquisitions from internally generated cash flows.
     
Hanger is a premier provider of orthotic and prosthetic patient care services, operating through 678 patient care centers in the U.S. The company operates four business units: patient care, distribution, Linkia and Innovative Neurotronics. Hanger competes with Orthofix International (OFIX), Conmed Corp. (CNMD), Exactech Inc. (EXAC) and Owens & Minor Inc. (OMI) in the orthotic and prosthetic market.
 
As the market leader, Hanger has economies of scale unmatched by its competitors. To further drive awareness and market share, the company’s field force is providing extensive education to physicians. Moreover, to build relationships, Hanger aims at becoming a one-stop shop by offering a comprehensive, total care package to patients. 
 
The acquisitions reinforce Hanger’s leadership position in the orthotic and prosthetic market and bolster its top line. Moreover, it enables the company to add patient care centers to its existing markets in Texas, Nebraska and Iowa.
 
However, Hanger’s back-to-back acquisitions could lead to substantial integration risk. The company needs to fully synchronize its acquired operations so that they do not turn out to be a waste of resources.
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