722723--2/27/2009--HANGER_ORTHOPEDIC_GROUP

related topics

{regulation, government, change}

{personnel, key, retain}

{tax, income, asset}

{financial, litigation, operation}

{competitive, industry, competition}

{cost, regulation, environmental}

We are highly leveraged and have significant fixed operating costs; therefore our profitability and ability to service our debt could be negatively impacted by an inability to generate sales growth. Changes in government reimbursement levels could adversely affect our net sales, cash flows and profitability. Changes in payor reimbursements could negatively affect our net sales volume. We depend on the continued employment of our orthotists and prosthetists who work at our patient-care centers and their relationships with physicians and patients. Our ability to provide O P services at our patient-care centers would be impaired and our net sales reduced if we were unable to maintain these relationships. If the non-competition agreements we have with our key executive officers and key practitioners were found by a court to be unenforceable, we could experience increased competition resulting in a decrease in our net sales. We face periodic reviews, audits and investigations under our contracts with federal and state government agencies, and these audits could have adverse findings that may negatively impact our business. We are subject to numerous federal, state and local governmental regulations, noncompliance with which could result in significant penalties that could have a material adverse effect on our business. If the results of the current investigations over the billing allegations at the West Hempstead patient-care center are not resolved in our favor or if such allegations are expanded to other patient-care centers and are not resolved in our favor, our operations may be negatively impacted and we may be subject to significant fines. Funds associated with certain of our auction rate securities are not currently accessible and our auction rate securities have experienced other than temporary decline in value, which could adversely affect our income.

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722723--2/27/2009--HANGER_ORTHOPEDIC_GROUP_INC