Hanger, Inc.

Hanger Prosthetics and Orthotics / Hanger Orthopedic Group, Inc.

Hanger Prosthetics and Orthotics (NYSE: HGR) the largest provider of prosthetic and orthotic patient care services in the United States. The company serves 650,000 people each year at more than 640 patient care centers located in 45 states and the District of Columbia. Hanger Prosthetics and Orthotics operates under the corporate umbrella of Hanger Orthopedic Group, Inc., headquartered in Bethesda, Maryland. According to the company's 2007 annual report, the patient care market for prosthetic and orthotic services in the United States is estimated at $2.5 billion annually. Hanger Prosthetics and Orthotics represents about 25 percent of this market. Their nationwide staff numbers approximately 3,500, including more than 1,080 prosthetic and orthotic practitioners.

Hanger Prosthetics and Orthotics is divided into three broad categories: prosthetic services, orthotic services and speciality services.

Prosthetic limbs or prostheses (artificial limbs) are used by people who have experienced the surgical amputation of a limb; have lost a limb as the result of injury, trauma or illness; or were born with a partial or malformed limb. A prosthesis is a single artificial limb; prostheses is the plural of prosthesis, referring to more than one artificial limb. Prostheses are designed, fabricated and fitted by a prosthetist. Prosthetic services are divided into lower extremity and upper extremity. Lower extremity prosthetics include: toe(s), partial foot, symes, below knee, knee disarticulation, above knee, hip disarticulation, transpelvic (hemipelvectomy), and bilateral. Upper extremity prosthetics include: finger(s), partial hand, wrist disarticulation, below elbow, above elbow, shoulder disarticulation, and bilateral. Hanger Prosthetics & Orthotics

Orthotic services include the custom design, fabrication and fitting of braces and supports for people with specific musculoskeletal conditions caused by illness, injury or congenital disorder. An orthosis, brace or support is often used to increase a person's mobility, and to decrease rehabilitation time. Orthoses are also used to help prevent an existing problem, such as curvature of the spine, from worsening. Orthoses, braces and supports are designed, fabricated and/or fitted by an orthotist. Specific types of orthoses include: foot, ankle-foot, knee, knee-ankle-foot, hi-knee-ankle-foot, wrist, wrist-hand, elbow, shoulder-elbow-wrist, back support/body braces, humeral, neck brace or cranial.

Specialty services include: WalkAide assistive device for people with foot drop; cranial bands; post-mastectomy forms and products; speciality footwear for diabetics; and durable medical equipment.

History

James Edward Hanger, the first documented amputee of the American Civil War, founded the company in Virginia in 1861.

At 18 years of age, Hanger joined the Confederate cavalry at Philippi, Virginia, on June 2, 1861. One day later, during the Battle of Philippi, Hanger was struck by a ricocheting cannonball, requiring amputation of his leg above the knee. Hanger returned to his parent's home to recuperate wearing a prosthesis that was basically a wooden peg. His dissatisfaction with the fit and function of the limb replacement led Hanger to design and construct a new prosthesis from whittled barrel staves, rubber and wood, with hinges at the knee and foot. The device worked well, and the state legislature commissioned him to manufacture the “Hanger Limb” for other wounded soldiers.

Manufacturing operations for J.E. Hanger, Inc., were established in the cities of Staunton and Richmond. Hanger was awarded his first patent for an artificial limb, number 155, from the United States Patent Office on March 23, 1863. Over the years Hanger developed and patented additional products that helped veterans and other amputees regain mobility. In 1906, Hanger moved the company’s headquarters to Washington, DC. In 1915, he traveled to Europe to help World War I amputees and to learn from European prosthetists.

Hanger’s five sons were active in operating the growing family business. In 1915, they divided J.E. Hanger, Inc., into four separate companies, with each operating in a different region of the country. At the time of Hanger’s death in 1919, the companies had branches in Atlanta, St, Louis, Philadelphia, Pittsburgh, London and Paris.

Significant technological advances in the U.S. prosthetic industry were largely absent in the years leading up to World War II. The new wave of amputee veterans demanded better prosthetic options, and in 1946, the federal government began providing funds for research and development in prosthetics. J.E. Hanger, Inc., was able to introduce better prosthetic socket designs made from improved materials such as thermosetting resins.

The orthotic industry, which designed and fabricated braces and supports, sought to join forces with the prosthetics industry. In 1950, the American Orthotics and Prosthetics Association was formed, and with that came a new emphasis on the education and certification of clinical practitioners. By the mid 1950s, J.E.Hanger, Inc., had added orthotic services to its business, and had expanded to 50 offices in the U.S. and 25 in Europe.

The 1960s and 70s held relatively few technological improvements, but the 1980s marked the beginning of a period of advanced technological development that continues to the present day. In 1986, Sequel Corporation, a Colorado-based communications company, sold off its cellular phone business and began investing in the orthotics and prosthetics industry. In 1989, Sequel bought J. E. Hanger, Inc., of Washington, DC. At the time of purchase, J. E. Hanger, Inc., was an $8 million business with offices in 11 cities and eight states. Soon after, Sequel changed the name of the company to the Hanger Orthopedic Group. Ivan Sabel, president and chief operating officer, was focused on centralizing the design and manufacturing of teh companies prosthetic and orthotic devices and distributing them nationally.

In 1996, Hanger Orthopedic Group bought J. E. Hanger, Inc., of Georgia. This acquisition doubled the size of the company, which now had 175 patient care centers, six distribution sites, four manufacturing plants and 1,000 employees in 30 states. Hanger continued purchasing small companies and by 1998, was operating 256 patient care centers. In 1999, Hanger Orthopedic Group bought its biggest competitor and the industry leader, the orthotics and prosthetics division of NovaCare. This added an additional 369 patient care centers to the Hanger network. In 1999, Fortune Magazine ranked Hanger Orthopedic Group as 79th on its list of One Hundred Fastest-Growing Companies.

Following the NovaCare acquisition, Hanger Orthopedic Group continued to expand its corporate holdings with related specialty businesses. In 2009, Hanger Orthopedic Group is comprised of four wholly-owned subsidiaries that serve different segments of the orthotics and prosthetics industry. In addition to Hanger Prosthetics and Orthotics, holdings include Southern Prosthetic Supply, Innovative Neurotronics and Linkia.

Southern Prosthetic Supply (SPS) is the largest distributor of orthotic and prosthetic materials in the world. SPS customers are orthotic and prosthetic professionals in the United States. SPS has four distribution centers and more than 270,000 products offerings.

Innovative Neurotronics, Inc., specializes in the development and commercialization of emerging neuromuscular technologies. Neuromuscular refers to the use of electrical stimulation to improve the functionality of an impaired extremity. Research and development on these technologies has been conducted at major research centers, universities or in collaboration with industry suppliers worldwide.

Linkia is a network management company that works exclusively with the orthotics and prosthetics industry. Linkia provides the interface between payers and providers, focusing on the administrative tasks and business functions associated with orthotic and prosthetic care.

Management Team

Ivan R. Sabel, CPO, Chairman of the Board Hanger Orthopedic Group, Inc.

Thomas F. Kirk, Ph.D., President and Chief Executive Officer Hanger Orthopedic Group, Inc

Richmond L. Taylor, President and Chief Operating Officer Hanger Prosthetics & Orthotics Inc.

Jeffrey L. Martin, President Innovative Neurotronics, Inc. (Neuromuscular Devices)

Rebecca Hast, President Linkia, LLC (Network Management)

Ronald N. May, President and Chief Operating Officer Southern Prosthetic Supply, Inc. (Distribution)

George E. McHenry, Executive Vice President, Chief Financial Officer and Secretary, Hanger Orthopedic Group, Inc.

Marion Mullauer, Vice President and Chief Information Officer, Hanger Orthopedic Group, Inc.

Brian A. Wheeler, Vice President, Human Resources Hanger Orthopedic Group, Inc.

Thomas C. Hofmeister,
Vice President of Finance and Chief Accounting Officer
 Hanger Orthopedic Group, Inc.

Business Philosophy

Although Hanger is a large, national corporation, their patient care centers operate as independent, local facilities in towns and cities across the United States. Local clinics allow many patients the convenience of remaining close to home during their treatment. Clinical experts are available to consult on any case at any office. The company also has an internal research and development team.

Hanger has several patented technologies including:

• The Hanger ComfortFlex™ Socket System for upper and lower extremity prosthetic users. This system features a socket that is anatomically contoured to the bone, muscle, vascular and nerve structures of the residual limb. It is made from flexible, lightweight urethane and silicone materials.

• Insignia™ is a handheld laser scanner that connects to a laptop computer. A clinician scans the effected limb to capture precise, three-dimensional images that are used to fabricate a prosthetic socket or an orthotic support and/or brace.

• V-Hold™ Suspension for below/above knee prosthetic patients. This is a type of prosthetic socket that helps maintain the volume of the residual limb throughout the day. A microprocessor vacuum pump reduces perspiration between the liner and the skin.

• WalkAide™ is a medical device that can improve the walking ability of people suffering from foot drop. (Foot drop can be caused by multiple sclerosis (MS), incomplete spinal cord injuries, traumatic brain injuries, cerebral palsy, stroke, and other neurological involvements.) WalkAide uses electronic sensor technology to analyze the movement of the leg and foot. The device sends electrical signals to the peroneal nerve, activating the muscles to raise the foot at the appropriate time during the step cycle, creating a natural walking pattern.