Hanger assigned expected B+(EXP) rating as Numotion acquisition reshapes leverage profile

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Hanger assigned B+(EXP) rating

Highlights

Hanger received an expected B+(EXP) rating from Fitch, contingent on completing the Numotion acquisition and maintaining a pro forma capital structure as reviewed.
Fitch projects combined pro forma revenue to exceed $3 billion with $3.1 billion organic revenue by 2027 and mid-single-digit growth thereafter, serving over 1.5 million patients annually.
EBITDA leverage is expected at mid-6x closing but should improve to mid-5x within 12 to 18 months post-close, with EBITDA margins expanding 200 basis points to over 14% by 2029.

Rating assumptions and transaction structure

As reported by Fitch Ratings, the expected rating is contingent on completion of Hanger's acquisition of Numotion and on a pro forma capital structure that matches draft information reviewed by the agency. Fitch also assigned a BB-(EXP) rating and RR3 Recovery Rating to existing and proposed first-lien secured instruments.

Fitch says the B+(EXP) Issuer Default Rating reflects the combined company's leading positions in specialized orthotics and prosthetics, and complex rehabilitation technology, along with recurring patient needs, stable reimbursement dynamics and limited integration risk. The agency views the combination favorably because it creates a stronger business profile than either company has on a standalone basis, helped by diversification across products, services and patient populations.

The combined company is expected to generate more than $3 billion in pro forma revenue and serve more than 1.5 million patients annually through about 925 O&P clinics and more than 200 CRT and mobility locations in the U.S. and Canada. Fitch expects full-year impact from the combination starting in calendar 2027, with organic revenue of $3.1 billion that year and mid-single-digit annual growth thereafter.

Closing leverage is expected to be weak for the rating, with EBITDA leverage in the mid-6x range and EBITDA interest coverage in the low-2x range. Fitch expects leverage to improve to the mid-5x range within 12 to 18 months of closing, while interest coverage rises to around 2.5x by year-end 2028, supported by EBITDA expansion, free cash flow generation and a balance between tuck-in acquisitions and debt repayment.

Cash flow outlook and healthcare market support

Fitch expects the transaction to create growth opportunities through procurement efficiencies, consolidation of overlapping shared-service functions and broader referral and payer relationships across the complementary O&P and CRT markets. The agency forecasts EBITDA margin expansion of about 200 basis points to above 14% by calendar 2029, with about half of that improvement driven by technology investments, AI-enabled workflow changes and revenue-cycle optimization, and the rest from identified cost synergies.

Free cash flow is forecast at about $40 million in calendar 2027 and more than $100 million by calendar 2029. Fitch says cash generation remains modest relative to the scale and capital needs of the combined business, and warns that higher-than-expected integration costs could delay the expected improvement.

The rating case is also supported by industry features that limit some external pressures. Products for people with disabilities generally receive duty-free treatment under the Nairobi Protocol, reducing tariff exposure, while the customized nature of O&P and CRT products largely exempts the company from Medicare competitive bidding programs.

Medicare reimbursement accounts for about 37% of pro forma revenue and benefits from inflation-linked updates, according to Fitch. The agency also notes that commercial reimbursement increases have historically been negotiated, while demand remains supported by an aging population, disease prevalence and replacement cycles of roughly five years.

In our earlier article on CEO views of AI agents, we explained that many large U.S. companies are already seeing measurable efficiency and growth benefits, even if only a small share consider the technology transformational so far. We also noted that adoption is being accompanied by continued spending on AI infrastructure, plus hiring and retraining efforts as firms redesign workflows around human–AI collaboration.

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