Derivative Financial Instruments

6 Months Ended

Jun. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Cash Flow Hedges of Interest Rate Risk

In March 2018, we entered into interest rate swap agreements with notional values of $325.0 million at inception, which reduces $12.5 million annually until the swaps mature on March 6, 2024. As of June 30, 2022 and December 31, 2021, our swaps had a notional value outstanding of $275.0 million and $287.5 million, respectively.

Change in Net Loss on Cash Flow Hedges Included in Accumulated Other Comprehensive Loss

The following table presents the activity of cash flow hedges included in accumulated other comprehensive loss for the three months ended June 30, 2022 and 2021, respectively:


(in thousands)	Cash Flow Hedges
Balance as of March 31, 2022	$	(1,608)
Unrealized gain recognized in other comprehensive income before reclassifications, net of tax	1,481
Reclassification to interest expense, net of tax	1,385
Balance as of June 30, 2022	$	1,258

Balance as of March 31, 2021	$	(14,259)
Unrealized loss recognized in other comprehensive loss before reclassifications, net of tax	(712)
Reclassification to interest expense, net of tax	1,937
Balance as of June 30, 2021	$	(13,034)

The following table presents the activity of cash flow hedges included in accumulated other comprehensive loss for the six months ended June 30, 2022 and 2021, respectively:


(in thousands)	Cash Flow Hedges
Balance as of December 31, 2021	$	(8,504)
Unrealized gain recognized in other comprehensive income, net of tax	6,501
Reclassification to interest expense, net	3,261
Balance as of June 30, 2022	$	1,258

Balance as of December 31, 2020	$	(16,771)
Unrealized loss recognized in other comprehensive loss, net of tax	(183)
Reclassification to interest expense, net	3,920
Balance as of June 30, 2021	$	(13,034)

The following table presents the fair value of derivative assets and liabilities within the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021:


	As of June 30, 2022				As of December 31, 2021
(in thousands)	Assets		Liabilities		Assets		Liabilities
Derivatives designated as cash flow hedging instruments:
Other current assets	$	922	$	—	$	—	$	—
Other assets	751		—		—		—
Accrued expenses and other current liabilities	—		—		—		6,425
Other liabilities	—		—		—		4,664

HANGER, INC. 10-Q