National Mentor Holdings, Inc. (the "Company") today announced its
financial results for the first quarter ended December 31, 2012.
First Quarter Results
Revenue for the quarter ended December 31, 2012 was $294.9 million, an
increase of $20.4 million, or 7.5%, over revenue for the quarter ended
December 31, 2011. Revenue increased $11.5 million from organic growth,
including growth related to new programs, and $8.9 million from
acquisitions that closed during and after the three months ended
December 31, 2011.
Income from operations for the quarter ended December 31, 2012 was $7.7
million, a decrease of $4.8 million, as compared to income from
operations for the quarter ended December 31, 2011. The operating margin
was 2.6% for the quarter ended December 31, 2012, a decrease from an
operating margin of 4.6% for the quarter ended December 31, 2011, for
the reasons discussed below with respect to net loss and adjusted EBITDA.
Net loss for the quarter ended December 31, 2012 was $8.4 million
compared to net loss of $5.1 million for the quarter ended December 31,
2011, despite the increase in revenue noted above. The increase in net
loss is due to the reasons discussed below with respect to adjusted
EBITDA, as well as an adjustment to our tail reserve for professional
and general liability claims which is required by accounting standards
for companies that have claims-made insurance.
Adjusted EBITDA(1) for the quarter ended December 31, 2012
was $26.6 million, a decrease of $1.2 million, or 4.2%, as compared to
adjusted EBITDA for the quarter ended December 31, 2011. Adjusted EBITDA
was negatively impacted by an increase in direct labor costs as the
Company added staff to support new programs started within the last 18
months, an increase in reserves for health claims, and an increase in
occupancy expense due to the new program starts.
The reported results are available on the Company's investor relations
web site at www.tmnfinancials.com.
The user name "mentor" and the password "results" are required in order
to access this site. In addition, National Mentor Holdings, Inc. will
hold a conference call Friday, February 15, 2013 at 11:00 a.m. EST to
discuss its financial results. The call will be broadcast live on the
web at www.tmnfinancials.com
and at www.fulldisclosure.com.
A rebroadcast of the call will be available on both web sites until 5:00
p.m. EST on Friday, February 22, 2013. Those wishing to participate in
the February 15 conference call by telephone are required to email their
name and affiliation to firstname.lastname@example.org
for dial-in information.
National Mentor Holdings, Inc., which markets its services under the
name The MENTOR Network, is a leading provider of home and
community-based health and human services to adults and children with
intellectual and/or developmental disabilities, acquired brain injury
and other catastrophic injuries and illnesses; and to youth with
emotional, behavioral and/or medically complex challenges. The MENTOR
Network's customized service plans offer its clients, as well as the
payors for these services, an attractive, cost-effective alternative to
health and human services provided in large, institutional settings. The
MENTOR Network provides services to clients in 34 states.
From time to time, the Company may make forward-looking statements in
its public disclosures. The forward-looking statements are based on
estimates and assumptions made by management of the Company and are
believed to be reasonable, although they are inherently uncertain and
difficult to predict. The forward-looking statements involve a number of
risks and uncertainties that could cause actual results to differ
materially from any such forward-looking statements, including the risks
and uncertainties disclosed under the captions "Forward-Looking
Statements" and "Risk Factors" in the Company's filings with the
Securities and Exchange Commission.
This press release includes presentations of adjusted EBITDA because it
is the primary measure used by management to assess financial
performance. Adjusted EBITDA represents net income (loss) before
interest expense and interest income, income taxes, depreciation and
amortization, and certain non-operating expenses. Reconciliations of net
income (loss) to adjusted EBITDA are presented within the tables below.
Adjusted EBITDA does not represent and should not be considered an
alternative to net income or cash flows from operations, as determined
by accounting principles generally accepted in the United States, or
GAAP. While adjusted EBITDA is frequently used as a measure of financial
performance and the ability to meet debt service requirements, it is not
necessarily comparable to other similarly titled captions of other
companies due to potential inconsistencies in the method of calculation.
(1) Adjusted EBITDA is a non-GAAP financial performance measure used by
management, which is net income (loss) before interest expense and
interest income, income taxes, depreciation and amortization, and
certain non-operating expenses.
Selected Financial Highlights
($ in thousands)
Additional financial data:
Program rent expense
New Start Losses (1)
(1) Represents operating losses from new programs started in the last 18
Reconciliation of Non-GAAP Financial Measures
($ in thousands)
Three Months Ended
(1) Represents an adjustment to our tail reserve for professional and
general liability claims which is required by ASC 450 for companies that
have claims-made insurance.(2) Represents costs incurred as part
of the restructuring of corporate and certain field functions.(3)
Represents non-cash stock-based compensation.(4) Represents costs
related to the October 2012 debt repricing transaction.(5)
Represents external acquisition expenses.(6) Represents impairment
charges associated with goodwill related to underperforming programs.(7)
Represents management fees incurred for payment to Vestar Capital
Partners V, L.P.(8) Represents net loss before interest expense
and interest income, income taxes, depreciation and amortization, and
certain non-operating expenses.
Selected Balance Sheet and Cash Flow Highlights
(1) Calculated as current assets minus current liabilities.(2)
Includes obligations under capital leases.(3) Net debt as defined
in the senior credit agreement (total debt, net of cash and cash
equivalents and LOC restricted cash of $50 million).
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