National Mentor Holdings, Inc. (the "Company") today announced its
financial results for the first quarter ended December 31, 2013.
First Quarter Results
Revenue for the quarter ended December 31, 2013 was $307.5 million, an
increase of $13.8 million, or 4.7%, over revenue for the quarter ended
December 31, 2012. Revenue increased $10.9 million from organic growth,
including growth related to new programs, and $2.9 million from
acquisitions that closed during and after the three months ended
December 31, 2012.
Income from operations for the quarter ended December 31, 2013 was $13.1
million, an increase of $5.3 million as compared to income from
operations for the quarter ended December 31, 2012. Net loss for the
quarter ended December 31, 2013 was $4.7 million compared to a net loss
of $8.4 million for the quarter ended December 31, 2012.
Pro Forma Adjusted EBITDA1 for the quarter ended December 31,
2013 was $31.8 million, an increase of $2.2 million, or 7.4%, as
compared to Pro Forma Adjusted EBITDA for the quarter ended December 31,
2012. Pro Forma Adjusted EBITDA increased due to organic growth and
acquisitions closed since December 31, 2012 as well as expense
leveraging and cost containment efforts. The growth in Pro Forma
Adjusted EBITDA was partially offset by the increase in health insurance
and occupancy expense. Adjusted EBITDA margin1 increased to
10.3% for the quarter ended December 31, 2013 from 10.1% for the quarter
ended December 31, 2012.
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 14, 2014 at 11:00 a.m. ET 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. ET on Friday, February 21, 2014. Those wishing to participate
in the February 14 conference call by telephone are required to email
their name and affiliation to email@example.com
for dial-in information.
About the Company
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 36 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.
1 Pro Forma Adjusted EBITDA and Adjusted EBITDA Margin are
non-GAAP financial measures. See "Non-GAAP Financial Measures" below.
Non-GAAP Financial Measures
This earnings release includes a presentation of Pro Forma Adjusted
EBITDA, which is a non-GAAP financial measure. Pro Forma Adjusted EBITDA
is defined as net income (loss) before interest expense and interest
income, income taxes, depreciation and amortization, exclusive of
discontinued operations, further adjusted to add back certain non-cash
charges, fees under the management agreement with the Company's equity
sponsor, proceeds of business insurance, transaction bonuses, certain
expenses incurred under indemnification or refunding provisions for
acquisitions, severance costs and relocation costs and deductions
attributable to minority interests, non-cash compensation expense,
income tax credits to the extent not netted, non-cash income and
interest income and gains on interest rate hedges, unusual or
non-recurring income or gains, unusual or non-recurring losses,
operating losses from new starts, business optimization expenses,
further adjusted for EBITDA of acquired businesses on a pro forma basis
and EBITDA of sold businesses. Pro Forma Adjusted EBITDA is similar to
the definition of "Consolidated EBITDA" in the Company's senior credit
agreement, except that (i) it does not include an adjustment for the
difference between the cash basis and accrual basis of professional and
general liability, or PL/GL, charges and (ii) the adjustment for
operating losses from new starts is not capped at $8.0 million.
This earnings release also includes a presentation of Adjusted EBITDA
Margin, which is a non-GAAP financial measure. Adjusted EBITDA Margin is
defined as (i) Pro Forma Adjusted EBITDA, less the pro forma portion of
EBITDA relating to acquired businesses, divided by (ii) consolidated
revenue, less revenue related to unprofitable new starts. These
adjustments are made to better reflect the performance of the Company's
core business and acquired companies, excluding new starts that are
Pro Forma Adjusted EBITDA and Adjusted EBITDA Margin are presented
because they are important measures used by management to assess
financial performance, and management believes they provide a more
transparent view of the Company's operating performance and operating
trends. The Company's business strategy has been to pursue growth
primarily through acquisitions and new program starts and, more
recently, to improve margin. As part of this strategy, in recent periods
the Company's spending on new starts has increased substantially. As a
result, the Company believes its presentation of Pro Forma Adjusted
EBITDA and Adjusted EBITDA Margin provides additional information
investors can use to assess the Company's progress on its goals. The
Company also believes these measures are useful to investors in
assessing financial performance because these non-GAAP financial
measures are similar to the metrics used by investors and other
interested parties when comparing companies in the Company's industry
that have different capital structures, debt levels and/or tax rates.
Furthermore, Pro Forma Adjusted EBITDA closely correlates to the EBITDA
measure used in the Company's senior credit agreement. Reconciliations
of net income (loss) to Pro Forma Adjusted EBITDA and Adjusted EBITDA
Margin data are presented within the tables below.
Pro Forma Adjusted EBITDA and Adjusted EBITDA Margin do not represent
and should not be considered alternatives to net income or cash flows
from operations, as determined by accounting principles generally
accepted in the United States, or GAAP. While Pro Forma Adjusted EBITDA
and Adjusted EBITDA Margin are frequently used as measures of financial
performance and the ability to meet debt service requirements, they are
not necessarily comparable to other similarly titled captions of other
companies due to potential inconsistencies in the methods of
calculation. Pro Forma Adjusted EBITDA and Adjusted EBITDA Margin should
be reviewed in conjunction with the Company's financial statements filed
with the SEC.
Selected Financial Highlights
($ in thousands)
Reconciliation of Non-GAAP Financial Measures
(1) Pro Forma Adjusted EBITDA for the three months ended December 31,
2012 is presented in accordance with the new basis of presentation
beginning with the earnings release for the quarter ended March 31,
2013. The following table sets forth a reconciliation of Adjusted EBITDA
as previously reported in our earnings release for the three months
ended December 31, 2012 to Pro Forma Adjusted EBITDA as presented in
this earnings release.
(2) Represents management fees incurred for payment to Vestar Capital
Partners V, L.P.
(3) 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.
(4) Represents costs incurred as part of the restructuring of corporate
and certain field functions.
(5) Represents costs related to the October 2012 debt repricing,
external acquisition expenses, franchise taxes and transaction costs
(6) Represents impairment charges associated with goodwill related to
(7) Represents non-cash stock-based compensation expense.
(8) Represents losses from any programs started within 18 months of the
end of the period that have operating losses during the period.
(9) Represents pro forma pre-closing EBITDA with respect to any
acquisitions made during the period, based on actual EBITDA reported by
the acquired entity or business during the most recent three month
period available at the time of acquisition, after giving effect to
identified adjustments as a result of the combination, pro rated for the
portion of that three month period that falls within the three months
ended December 31, 2013 and 2012, as applicable, prior to the closing of
(10) Represents revenue from new programs started within 18 months of
the end of the period that have operating losses during the period.
(11) During fiscal 2013, the Company sold its Mentor Rhode Island
business and closed certain Human Services operations in the state of
Virginia. Results presented in the table for the three months ended
December 31, 2012 reflect the classification of these businesses as
Selected Balance Sheet and Cash Flow Highlights
Other Financial Data:
(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).
[ Back To NFVZone's Homepage ]