UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
March 30, 2011
Date of report (Date of earliest event reported)
CRC HEALTH CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 333-135172 | 73-1650429 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
20400 Stevens Creek Boulevard, Suite 600, Cupertino, California |
95014 | |
(Address of Principal Executive Offices) | (Zip code) |
(877) 272-8668
(Registrants Telephone Number, including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
INFORMATION TO BE INCLUDED IN REPORT
Item 2.02 Results of Operations and Financial Condition
On March 30, 2011, CRC Health Corporation (the Company) reported operating results for the three months and twelve months ended December 31, 2010. A copy of the Companys press release is furnished herewith as Exhibit 99.1.
The information included in Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section and shall not be deemed to be incorporated by reference into any of the Companys filings under the Securities Act of 1933, except as shall be expressly set forth by specific reference in any such filing.
Item 9.01 Financial Statements and Exhibits
(d) | Exhibits |
99.1 Press | Release dated March 30, 2011 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 30, 2011
CRC HEALTH CORPORATION | ||
By: | /s/ KEVIN HOGGE | |
Name: | Kevin Hogge | |
Title: | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE: March 30, 2011
CRC Health Corporation Reports Operating Results
For the Three Months and Twelve Months Ended December 31, 2010
CUPERTINO, CA, March 30, 2011 CRC Health Corporation (CRC or the Company), a leading provider of substance abuse treatment and adolescent youth services through its wholly owned consolidated subsidiaries, announced its results for the three months and twelve months ended December 31, 2010.
The Company has two operating divisions: recovery division and healthy living division. The recovery division provides substance abuse and behavioral disorder treatment services through residential treatment facilities and outpatient treatment clinics. The healthy living division includes programs and treatment services for adolescent youth as well as treatment services for eating disorders, obesity, and weight management serving all age groups. Adolescent and youth treatment services include therapeutic boarding schools and educational outdoor programs for children and adolescents struggling with academic, emotional, and behavioral issues.
Consolidated net revenue for the three months ended December 31, 2010 increased $2.7 million, or 2.6%, to $106.9 million compared to the same period in 2009. For the three months ended December 31, 2010, consolidated operating expenses decreased $3.6 million to $92.1 million, or 3.8%, compared to the same period in 2009. The three months ended December 31, 2010 adjusted pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) decreased $1.1 million, or 4.8%, to $22.4 million compared to $23.5 million during the same period in 2009.
Consolidated net revenue for the twelve months ended December 31, 2010 increased $16.0 million, or 3.7%, to $443.7 million compared to the same period in 2009. For the twelve months ended December 31, 2010, consolidated operating expenses increased $48.6 million to $445.5 million, or 12.2%, compared to the same period in 2009. The twelve months ended December 31, 2010 adjusted pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) increased $3.2 million, or 3.2%, to $102.3 million compared to $99.1 million during the same period in 2009.
Three Months Ended December 31, 2010 Financial Results:
The following table presents our operating income by division for the three months ended December 31, 2010 and 2009 (numbers in thousands, except for percentages).
Three Months Ended December 31, | ||||||||||||||||
2010 vs. 2009 | ||||||||||||||||
2010 | 2009 | $ Change | % Change | |||||||||||||
Net revenue |
||||||||||||||||
Recovery division |
$ | 82,003 | $ | 79,327 | $ | 2,676 | 3.4 | % | ||||||||
Healthy living division |
24,873 | 24,827 | 46 | 0.2 | % | |||||||||||
Corporate |
43 | 54 | (11 | ) | (20.4 | )% | ||||||||||
106,919 | 104,208 | 2,711 | 2.6 | % | ||||||||||||
Operating expenses |
||||||||||||||||
Recovery division |
56,379 | 53,935 | 2,444 | 4.5 | % | |||||||||||
Healthy living division(1) |
29,022 | 34,185 | (5,163 | ) | (15.1 | )% | ||||||||||
Corporate |
6,718 | 7,640 | (922 | ) | (12.1 | )% | ||||||||||
92,119 | 95,760 | (3,641 | ) | (3.8 | )% | |||||||||||
Operating income (loss) |
||||||||||||||||
Recovery division |
25,624 | 25,392 | 232 | 0.9 | % | |||||||||||
Healthy living division |
(4,149 | ) | (9,358 | ) | 5,209 | 55.7 | % | |||||||||
Corporate |
(6,675 | ) | (7,586 | ) | 911 | 12.0 | % | |||||||||
Operating income |
$ | 14,800 | $ | 8,448 | $ | 6,352 | 75.2 | % | ||||||||
(1) | Healthy living division operating expenses include $0.7 million asset impairment for the three months ended December 31, 2010 and $5.6 million goodwill impairment for the three months ended December 31, 2009. |
CRC Health Corporation Adjusted Pro forma EBITDA by Segment
and Adjusted Pro Forma Operating Margins for the Three Months
Ended December 31, 2010 and 2009 (in thousands):
Three Months Ended December 31, | ||||||||||||||||
2010 vs. 2009 | ||||||||||||||||
2010 | 2009 | $ Change | % Change | |||||||||||||
Net Revenue |
||||||||||||||||
Recovery division |
$ | 82,003 | $ | 79,327 | $ | 2,676 | 3.4 | % | ||||||||
Healthy living division |
24,873 | 24,827 | 46 | 0.2 | % | |||||||||||
Corporate |
43 | 54 | (11 | ) | (20.4 | )% | ||||||||||
106,919 | 104,208 | 2,711 | 2.6 | % | ||||||||||||
Adjusted Pro Forma Operating Expenses |
||||||||||||||||
Recovery division |
52,803 | 50,721 | 2,082 | 4.1 | % | |||||||||||
Healthy living division |
27,060 | 26,276 | 784 | 3.0 | % | |||||||||||
Corporate |
4,656 | 3,688 | 968 | 26.2 | % | |||||||||||
84,519 | 80,685 | 3,834 | 4.8 | % | ||||||||||||
Adjusted Pro Forma EBITDA |
||||||||||||||||
Recovery division |
29,200 | 28,606 | 594 | 2.1 | % | |||||||||||
Healthy living division |
(2,187 | ) | (1,449 | ) | (738 | ) | (50.9 | )% | ||||||||
Corporate |
(4,613 | ) | (3,634 | ) | (979 | ) | (26.9 | )% | ||||||||
$ | 22,400 | $ | 23,523 | $ | (1,123 | ) | (4.8 | )% | ||||||||
Adjusted Pro Forma Operating Margins |
||||||||||||||||
Recovery division |
35.6 | % | 36.1 | % | ||||||||||||
Healthy living division |
(8.8 | )% | (5.8 | )% | ||||||||||||
CRC Health Corporation |
21.0 | % | 22.6 | % |
Recovery Division:
Three Months Ended December 31, 2010 Compared to Three Months Ended December 31, 2009
| Net revenue increased $2.7 million, or 3.4%, to $82.0 million for the quarter from $79.3 million from the comparable prior-year quarter. Revenue increases were primarily driven by an increase of $1.2 million in residential facilities and an increase of $1.4 million within comprehensive treatment centers (CTCs). Same-facility net revenue increases were similar to total-facility net revenue increases for the quarter compared to the comparable prior-year quarter. |
| For the comparable quarters in 2010 and 2009, adjusted pro forma revenue was the same as revenue measured on the basis of Generally Accepted Accounting Principles of the United States (US GAAP). Thus, the above explanations related to changes in GAAP revenue also apply to adjusted pro forma revenue. |
| Adjusted pro forma EBITDA increased $0.6 million, or 2.1%, to $29.2 million for the quarter from $28.6 million from the comparable prior-year quarter. |
| Recovery division operating expenses increased $2.4 million for the comparable quarters in 2010 and 2009 due primarily to increases in supplies, facilities and other operating costs. |
| Recovery division same-facility operating expenses increased $0.8 million driven by an increase of $0.2 million in residential facilities and an increase of $0.6 million in CTCs. |
Healthy Living Division:
Three Months Ended December 31, 2010 Compared to Three Months Ended December 31, 2009
| Net revenue remains essentially flat at $24.8 million for the quarter from the comparable prior-year quarter. The slight increase in revenue was driven by increases $1.1 million within outdoor programs, offset by a decrease of $0.8 million and $0.3 million in residential facilities and weight management programs, respectively. Same-facility net revenue increased $0.4 million to $24.5 million during the quarter from $24.1 million in the comparable prior year quarter. This increase was due to higher revenues of $1.1 million within the outdoor programs, offset by decreases of $0.5 million and $0.2 million in the residential facilities and weight management programs, respectively. |
| For the comparable quarters in 2010 and 2009, adjusted pro forma revenue was the same as revenue measured on a U.S. GAAP basis. Thus, the above explanations related to changes in GAAP revenue also apply to adjusted pro forma revenue. |
| Adjusted pro forma EBITDA decreased $0.7 million to $(2.2) million for the quarter from $(1.4) million from the comparable prior-year quarter. |
| Healthy living division incurred a decrease of $5.2 million in operating expense, or 15.2%, primarily driven by a decrease of non-cash goodwill impairment charge of $5.6 million, offset by increases of $0.7 million in asset impairment. |
| Healthy living division same-facility operating expenses increased $0.9 million primarily due to asset impairment charges of $0.7 million. |
Corporate:
Three Months Ended December 31, 2010 Compared to Three Months Ended December 31, 2009
| Corporate operating expenses decreased $0.9 million or 12.1% for the comparable quarters in 2010 and 2009 primarily due to a decrease of $1.3 million stock-based compensation costs from 2009. |
Twelve Months Ended December 31, 2010 Financial Results:
The following table presents our operating income by division for the twelve months ended December 31, 2010 and 2009 (numbers in thousands, except for percentages).
Twelve Months Ended December 31, | ||||||||||||||||
2010 vs. 2009 | ||||||||||||||||
2010 | 2009 | $ Change | % Change | |||||||||||||
Net revenue |
||||||||||||||||
Recovery division |
$ | 327,243 | $ | 309,989 | $ | 17,254 | 5.6 | % | ||||||||
Healthy living division |
116,270 | 117,515 | (1,245 | ) | (1.1 | )% | ||||||||||
Corporate |
193 | 240 | (47 | ) | (19.6 | )% | ||||||||||
443,706 | 427,744 | 15,962 | 3.7 | % | ||||||||||||
Operating expenses |
||||||||||||||||
Recovery division |
218,025 | 212,208 | 5,817 | 2.7 | % | |||||||||||
Healthy living division(1) |
196,336 | 153,098 | 43,238 | 28.2 | % | |||||||||||
Corporate |
31,170 | 31,635 | (465 | ) | (1.5 | )% | ||||||||||
445,531 | 396,941 | 48,590 | 12.2 | % | ||||||||||||
Operating income (loss) |
||||||||||||||||
Recovery division |
109,218 | 97,781 | 11,437 | 11.7 | % | |||||||||||
Healthy living division |
(80,066 | ) | (35,583 | ) | (44,483 | ) | (125.0 | )% | ||||||||
Corporate |
(30,977 | ) | (31,395 | ) | 418 | 1.3 | % | |||||||||
Operating income |
$ | (1,825 | ) | $ | 30,803 | $ | (32,628 | ) | (105.9 | )% | ||||||
(1) | Healthy living division operating expenses include $21.2 million asset impairment and $52.7 million goodwill impairment for the twelve months ended December 31, 2010, and $2.3 million asset impairment and $30.5 million goodwill impairment for the twelve months ended December 31, 2009. |
CRC Health Corporation Adjusted Pro forma EBITDA by Segment
and Adjusted Pro Forma Operating Margins for the Twelve Months
Ended December 31, 2010 and 2009 (in thousands):
Twelve Months Ended December 31, | ||||||||||||||||
2010 | 2009 | 2010 vs. 2009 | ||||||||||||||
$ Change | % Change | |||||||||||||||
Net Revenue |
||||||||||||||||
Recovery division |
$ | 327,243 | $ | 309,989 | $ | 17,254 | 5.6 | % | ||||||||
Healthy living division |
116,270 | 117,515 | (1,245 | ) | (1.1 | )% | ||||||||||
Corporate |
193 | 240 | (47 | ) | (19.6 | )% | ||||||||||
443,706 | 427,744 | 15,962 | 3.7 | % | ||||||||||||
Adjusted Pro Forma Operating Expenses |
||||||||||||||||
Recovery division |
206,533 | 200,292 | 6,241 | 3.1 | % | |||||||||||
Healthy living division |
115,836 | 109,873 | 5,963 | 5.4 | % | |||||||||||
Corporate |
19,032 | 18,445 | 587 | 3.2 | % | |||||||||||
341,401 | 328,610 | 12,791 | 3.9 | % | ||||||||||||
Adjusted Pro Forma EBITDA |
||||||||||||||||
Recovery division |
120,710 | 109,697 | 11,013 | 10.0 | % | |||||||||||
Healthy living division |
434 | 7,642 | (7,208 | ) | (94.3 | )% | ||||||||||
Corporate |
(18,839 | ) | (18,205 | ) | (634 | ) | 3.5 | % | ||||||||
$ | 102,305 | $ | 99,134 | $ | 3,171 | 3.2 | % | |||||||||
Adjusted Pro Forma Operating Margins |
||||||||||||||||
Recovery division |
36.9 | % | 35.4 | % | ||||||||||||
Healthy living division |
0.4 | % | 6.5 | % | ||||||||||||
CRC Health Corporation |
23.1 | % | 23.2 | % |
Recovery Division:
Twelve months Ended December 31, 2010 Compared to Twelve months Ended December 31, 2009
| Net revenue increased $17.3 million, or 5.6%, to $327.2 million for the twelve months ended December 31, 2010 from $309.9 million from the comparable prior-year period. Revenue increases were primarily driven by an increase of $11.0 million in residential facilities and an increase of $6.2 million within CTCs. Same-facility net revenue increases were similar to total-facility net revenue increases for the twelve months ended December 31, 2010 compared to the comparable prior-year period. |
| For the comparable periods in 2010 and 2009, adjusted pro forma revenue was the same as revenue measured on the basis of Generally Accepted Accounting Principles of the United States (US GAAP). Thus, the above explanations related to changes in GAAP revenue also apply to adjusted pro forma revenue. |
| Adjusted pro forma EBITDA increased $11.0 million, or 10.0%, to $120.7 million for the twelve months ended December 31, 2010 from $109.7 million of the comparable prior-year period. |
| Recovery division operating expenses increased $5.8 million for the comparable periods in 2010 and 2009 due primarily to an increase of $3.0 million in salaries and benefits, an increase of $2.0 million in supplies, facilities and other costs, and $1.0 million increase in depreciation and amortization, offset by a decrease of $0.2 million in provision for doubtful accounts. |
| Recovery division same-facility operating expenses increased $4.9 million for the twelve months ended December 31, 2010 compared to the comparable prior-year period. Operating expense increases were primarily driven by an increase of $3.3 million in residential facilities and an increase of $1.6 million within CTCs. |
Healthy Living Division:
Twelve months Ended December 31, 2010 Compared to Twelve months Ended December 31, 2009
| Net revenue decreased $1.2 million, or 1.1%, to $116.3 million for the twelve months ended December 31, 2010 from $117.5 million of the comparable prior-year period. The decrease in revenue was driven by negative economic conditions including lack of availability of student loans, census reductions, and other factors. Same-facility net revenue increased $0.3 million to $114.4 million during 2010 from $114.1 million for the comparable prior-year. The increase was primarily due to higher revenues of $3.1 million and $0.9 million in weight management and outdoor programs, respectively offset by decreases of $3.7 million at residential facilities. |
| For the comparable periods in 2010 and 2009, adjusted pro forma revenue was the same as revenue measured on a U.S. GAAP basis. Thus, the above explanations related to changes in GAAP revenue also apply to adjusted pro forma revenue. |
| Adjusted pro forma EBITDA decreased $7.2 million to $0.4 million for the twelve months ended December 31, 2010 from $7.6 million from the comparable prior-year period. |
| Healthy living division incurred an increase of $43.2 million in operating expense, or 28.2%, primarily driven by an increase in non-cash goodwill and asset impairment charges of $41.1 million, and an increase of $4.3 million in supplies, facilities and other operating costs, offset by a decrease of $2.6 million in depreciation and amortization. |
| Healthy living division same-facility operating expenses increased $19.9 million, or 18.9%, for the comparable periods in 2010 and 2009 primarily due to higher asset impairment charges of $16.2 million, an increase of $4.2 million in supplies, facilities and other operating costs, and an increase of $1.5 million in salaries and benefits, offset by a decrease of $1.7 million in depreciation and amortization and a decrease of $0.4 million in provision for doubtful accounts. |
Corporate:
Twelve months Ended December 31, 2010 Compared to Twelve months Ended December 31, 2009
| Corporate operating expenses decreased $0.5 million or 1.5% for the comparable periods in 2010 and 2009, primarily driven by a decrease of $1.9 million in salaries and benefits, offset by an increase of $1.2 million in supplies, facilities and other operating costs and an increase of $0.3 million in depreciation and amortization expenses from 2009. |
EBITDA and Adjusted pro forma EBITDA are supplemental non-GAAP financial measures that CRC believes provide useful information to both management and investors concerning its ability to comply with certain covenants in its borrowing arrangements that are tied to these measures and to meet its future debt obligations. CRC also believes that including the effect of these items allows management and investors to better compare CRCs financial performance from period-to-period, and to better compare CRCs financial performance with that of its competitors.
Adjusted pro forma EBITDA is defined as EBITDA (earnings before interest, taxes, depreciation and amortization) from continuing operations, further adjusted for the items listed below in the table entitled Reconciliation of Net Income (Loss) Attributable to CRC Health Corporation to Adjusted Pro Forma EBITDA for the Three Months and Twelve Months Ended December 31, 2010 and 2009. Adjusted pro forma EBITDA takes into account all adjustments which are excluded from EBITDA for purposes of various covenants in the indenture governing CRCs 10 3/4% senior subordinated notes due 2016 and its senior secured credit facility, as amended to date. Additionally, Adjusted pro forma EBITDA is calculated on a consolidated basis and does not give effect to discontinued operations presentation.
The pro forma adjustments are based upon available information and certain assumptions that CRC believes are reasonable. Adjusted pro forma EBITDA is for informational purposes only and does not purport to represent what CRCs result of operations or financial position would have been if the acquisitions had actually been completed at the beginning of such period, nor does such information purport to project the results of operations for any future period.
The presentation of these supplemental non-GAAP financial measures is not meant to be considered in isolation of, or as a substitute for net income (loss) or other financial results prepared in accordance with GAAP.
CRC HEALTH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2010 AND DECEMBER 31, 2009
(In thousands, except share amounts)
December 31, 2010 |
December 31, 2009 |
|||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 7,111 | $ | 4,982 | ||||
Restricted cash |
546 | 420 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $5,044 in 2010 and $5,327 in 2009 |
32,706 | 31,558 | ||||||
Prepaid expenses |
8,623 | 7,489 | ||||||
Other current assets |
1,921 | 1,306 | ||||||
Income taxes receivable |
259 | 676 | ||||||
Deferred income taxes |
6,547 | 6,346 | ||||||
Current assets of discontinued operations |
1,635 | 1,720 | ||||||
Total current assets |
59,348 | 54,497 | ||||||
PROPERTY AND EQUIPMENT-Net |
125,626 | 125,215 | ||||||
GOODWILL |
521,807 | 573,594 | ||||||
INTANGIBLE ASSETS-Net |
314,032 | 335,409 | ||||||
OTHER ASSETS-Net |
19,411 | 19,619 | ||||||
TOTAL ASSETS |
$ | 1,040,224 | $ | 1,108,334 | ||||
LIABILITIES AND EQUITY |
||||||||
CURRENT LIABILITIES: |
||||||||
Accounts payable |
$ | 4,957 | $ | 3,011 | ||||
Accrued liabilities |
30,292 | 29,851 | ||||||
Current portion of long-term debt |
11,111 | 8,814 | ||||||
Other current liabilities |
18,305 | 25,992 | ||||||
Current liabilities of discontinued operations |
3,619 | 2,114 | ||||||
Total current liabilities |
68,284 | 69,782 | ||||||
LONG-TERM DEBT-Less current portion |
598,915 | 622,262 | ||||||
OTHER LONG-TERM LIABILITIES |
8,786 | 8,735 | ||||||
LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS |
3,142 | 1,679 | ||||||
DEFERRED INCOME TAXES |
105,256 | 117,334 | ||||||
Total liabilities |
784,383 | 819,792 | ||||||
COMMITMENTS AND CONTINGENCIES |
||||||||
CRC HEALTH CORPORATION STOCKHOLDERS EQUITY: |
||||||||
Common stock, $0.001 par value-1,000 shares authorized; 1,000 shares issued and outstanding at December 31, 2010 and December 31, 2009 |
| | ||||||
Additional paid-in capital |
462,970 | 454,880 | ||||||
Accumulated deficit |
(205,023 | ) | (161,363 | ) | ||||
Accumulated other comprehensive loss |
(2,106 | ) | (4,975 | ) | ||||
Total CRC Health Corporation stockholders equity |
255,841 | 288,542 | ||||||
Total equity |
255,841 | 288,542 | ||||||
TOTAL LIABILITIES AND EQUITY |
$ | 1,040,224 | $ | 1,108,334 | ||||
CRC HEALTH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS AND TWELVE MONTHS ENDED DECEMBER 31, 2010 AND 2009
(In thousands)
Three Months Ended December 31, 2010 |
Three Months Ended December 31, 2009 |
Twelve Months Ended December 31, 2010 |
Twelve Months Ended December 31, 2009 |
|||||||||||||
NET REVENUE: |
||||||||||||||||
Net client service revenue |
$ | 106,919 | $ | 104,208 | $ | 443,706 | $ | 427,744 | ||||||||
OPERATING EXPENSES: |
||||||||||||||||
Salaries and benefits |
51,210 | 50,510 | 213,127 | 211,237 | ||||||||||||
Supplies, facilities and other operating costs |
32,854 | 30,462 | 129,846 | 122,333 | ||||||||||||
Provision for doubtful accounts |
1,802 | 3,252 | 7,175 | 7,772 | ||||||||||||
Depreciation and amortization |
5,593 | 5,958 | 21,496 | 22,845 | ||||||||||||
Asset impairment |
660 | | 21,164 | 2,257 | ||||||||||||
Goodwill impairment |
| 5,578 | 52,723 | 30,497 | ||||||||||||
Total operating expenses |
92,119 | 95,760 | 445,531 | 396,941 | ||||||||||||
OPERATING INCOME (LOSS) |
14,800 | 8,448 | (1,825 | ) | 30,803 | |||||||||||
INTEREST EXPENSE |
(10,529 | ) | (8,821 | ) | (42,780 | ) | (44,158 | ) | ||||||||
OTHER EXPENSE |
| | (88 | ) | (82 | ) | ||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
4,271 | (373 | ) | (44,693 | ) | (13,437 | ) | |||||||||
INCOME TAX (BENEFIT) EXPENSE |
(560 | ) | 2,477 | (5,119 | ) | 4,128 | ||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS, NET OF TAX |
4,831 | (2,850 | ) | (39,574 | ) | (17,565 | ) | |||||||||
LOSS FROM DISCONTINUED OPERATIONS (net of tax benefit of ($266) and ($3,396) in the three months ended December 31, 2010 and 2009, and ($2,576) and ($5,073) in the twelve months ended December 31, 2010 and 2009, respectively) |
(422 | ) | (6,108 | ) | (4,086 | ) | (9,096 | ) | ||||||||
NET INCOME (LOSS) |
4,409 | (8,958 | ) | (43,660 | ) | (26,661 | ) | |||||||||
LESS: NET LOSS ATTRIBUTABLE TO THE NONCONTROLLING INTEREST |
| (91 | ) | | (62 | ) | ||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO CRC HEALTH CORPORATION |
$ | 4,409 | $ | (8,867 | ) | $ | (43,660 | ) | $ | (26,599 | ) | |||||
AMOUNTS ATTRIBUTABLE TO CRC HEALTH CORPORATION: |
||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS, NET OF TAX |
$ | 4,831 | $ | (2,759 | ) | $ | (39,574 | ) | $ | (17,508 | ) | |||||
DISCONTINUED OPERATIONS, NET OF TAX |
(422 | ) | (6,108 | ) | (4,086 | ) | (9,091 | ) | ||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO CRC HEALTH CORPORATION |
$ | 4,409 | $ | (8,867 | ) | $ | (43,660 | ) | $ | (26,599 | ) | |||||
Reconciliation of Net Income (Loss) Attributable to CRC Health Corporation to
Adjusted Pro Forma EBITDA for the Three Months and Twelve Months
Ended December 31, 2010 and 2009 (in thousands):
Three Months Ended December 31, 2010 |
Three Months Ended December 31, 2009 |
Twelve Months Ended December 31, 2010 |
Twelve Months Ended December 31, 2009 |
|||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO CRC HEALTH CORPORATION: |
||||||||||||||||
Net income (loss) attributable to CRC Health Corporation |
$ | 4,409 | $ | (8,867 | ) | $ | (43,660 | ) | $ | (26,599 | ) | |||||
Depreciation and amortization |
5,598 | 5,993 | 21,527 | 23,141 | ||||||||||||
Income tax benefit |
(826 | ) | (919 | ) | (7,695 | ) | (945 | ) | ||||||||
Interest expense |
10,530 | 8,822 | 42,786 | 44,166 | ||||||||||||
EBITDA |
19,711 | 5,029 | 12,958 | 39,763 | ||||||||||||
ADJUSTMENTS TO EBITDA: |
||||||||||||||||
Discontinued operations |
455 | 983 | 2,069 | 2,510 | ||||||||||||
Asset impairment |
660 | 6,940 | 21,164 | 11,500 | ||||||||||||
Goodwill impairment |
| 5,578 | 52,723 | 30,497 | ||||||||||||
Non-impairment restructuring activities |
439 | 1,105 | 6,881 | 3,819 | ||||||||||||
Stock-based compensation expense |
100 | 1,377 | 2,277 | 5,541 | ||||||||||||
Foreign exchange translation |
3 | (29 | ) | 16 | (8 | ) | ||||||||||
Loss on fixed asset disposal |
115 | 706 | 157 | 1,307 | ||||||||||||
Management fees |
1,031 | 1,009 | 3,912 | 3,052 | ||||||||||||
Debt costs |
65 | | 270 | | ||||||||||||
Workers compensation adjustment |
(15 | ) | 402 | (44 | ) | 402 | ||||||||||
Non-cash insurance adjustment |
| 494 | | 494 | ||||||||||||
Transaction expenses |
| (33 | ) | | 84 | |||||||||||
Write-off of cancelled acquisitions |
| | | 62 | ||||||||||||
Noncontrolling interest |
| (91 | ) | | (62 | ) | ||||||||||
Franchise taxes |
(164 | ) | 44 | (166 | ) | 79 | ||||||||||
Other non-recurring costs |
| 9 | 88 | 94 | ||||||||||||
Total pro forma adjustments to EBITDA |
2,689 | 18,494 | 89,347 | 59,371 | ||||||||||||
ADJUSTED PRO FORMA EBITDA |
$ | 22,400 | $ | 23,523 | $ | 102,305 | $ | 99,134 | ||||||||
CRC Health Corporation | Twelve Months Ended December 31, | |||||||
Selected Statistics |
2010 | 2009 | ||||||
Recovery Division: |
||||||||
Residential facilities: |
||||||||
Number of facilities - end of period |
50 | 46 | ||||||
Available beds - end of period |
2,054 | 1,923 | ||||||
Patient days |
577,170 | 551,899 | ||||||
Net revenue per patient day |
$ | 360.92 | $ | 357.48 | ||||
CTCs: |
||||||||
Number of clinics - end of period |
54 | 54 | ||||||
Patient days |
9,628,338 | 9,427,599 | ||||||
Net revenue per patient day |
$ | 12.35 | $ | 11.95 | ||||
Healthy Living Division: |
||||||||
Residential facilities: |
||||||||
Number of facilities - end of period |
17 | 17 | ||||||
Patient days |
244,633 | 262,713 | ||||||
Net revenue per patient day |
$ | 250.46 | $ | 252.82 | ||||
Outdoor programs: |
||||||||
Number of facilities - end of period |
7 | 7 | ||||||
Patient days |
60,012 | 56,427 | ||||||
Net revenue per patient day |
$ | 440.23 | $ | 453.14 | ||||
Weight management programs: |
||||||||
Number of facilities - end of period |
18 | 18 | ||||||
Patient days |
99,705 | 85,314 | ||||||
Net revenue per patient day |
$ | 286.41 | $ | 298.81 |
Conference Call
CRC Health Corporation will host a conference call, open to all interested parties, on Friday, April 1, 2011 beginning at 5:00 PM Eastern Time (2:00 PM Pacific Time). The number to call within the United States is (800) 378-6592. Participants outside the United States should call (719) 785-1766. The conference ID is 1678396.
A replay of the conference call will be available starting at 8:00 PM Eastern Time on Friday, April 1, 2011 until 8:00 PM Eastern Time Friday, April 8, 2011. The replay number for callers within the United States is (888) 203-1112 or (719) 457-0820 from outside the United States and the conference ID for all callers is 1678396.
Forward-Looking Statements
This press release includes or may include forward-looking statements. All statements included herein, other than statements of historical fact, may constitute forward-looking statements. Although CRC believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, among others, the following factors: changes in government reimbursement for CRCs services; CRCs substantial indebtedness; changes in applicable regulations or a government investigation or assertion that CRC has violated applicable regulations; attempts by local residents to force our closure or relocation; the potentially difficult, unsuccessful or costly integration of recently acquired operations and future acquisitions; the potentially difficult, unsuccessful or costly opening and operating of new treatment facilities; the possibility that commercial payors for CRCs services may undertake future cost containment initiatives; the limited number of national suppliers of methadone used in CRCs outpatient treatment clinics; the failure to maintain established relationships or cultivate new relationships with patient referral sources; shortages in qualified healthcare workers; natural disasters such as hurricanes, earthquakes and floods; competition that limits CRCs ability to grow; the potentially costly implementation of new information systems to comply with federal and state initiatives relating to patient privacy, security of medical information and electronic transactions; the potentially costly implementation of accounting and other management systems and resources in response to financial reporting and other requirements; the loss of key members of CRCs management; claims asserted against CRC or lack of adequate available insurance; and certain restrictive covenants in CRCs debt documents.
Contact:
CRC Health Corporation
Kevin Hogge, 877-272-8668
Chief Financial Officer
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