x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 65-1309110 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
313 Congress Street, 6th Floor Boston, Massachusetts 02210 | (617) 790-4800 | |
(Address of principal executive offices, including zip code) | (Registrant’s telephone number, including area code) |
Large accelerated filer | o | Accelerated filer | x | |||
Non-accelerated filer | o (Do not check if smaller reporting company) | Smaller reporting company | o | |||
Emerging growth company | o |
Page | ||
Condensed Consolidated Balance Sheets as of December 31, 2018 and September 30, 2018 | ||
Condensed Consolidated Statements of Income for the three months ended December 31, 2018 and 2017 | ||
Condensed Consolidated Statements of Comprehensive Income for the three months ended December 31, 2018 and 2017 | ||
Condensed Consolidated Statements of Stockholders’ Equity for the three months ended December 31, 2018 and 2017 | ||
Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 2018 and 2017 | ||
Item 1. | Condensed Consolidated Financial Statements |
December 31, 2018 | September 30, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 6,805 | $ | 8,168 | |||
Restricted cash | 389 | 333 | |||||
Accounts receivable, net of allowances of $22,622 and $20,229 at December 31, 2018 and September 30, 2018 | 173,380 | 186,311 | |||||
Prepaid expenses and other current assets | 19,084 | 18,439 | |||||
Total current assets | 199,658 | 213,251 | |||||
Property and equipment, net | 196,011 | 196,992 | |||||
Intangible assets, net | 306,418 | 317,172 | |||||
Goodwill | 310,499 | 311,752 | |||||
Restricted cash | 50,000 | 50,000 | |||||
Other assets | 36,961 | 38,025 | |||||
Total assets | $ | 1,099,547 | $ | 1,127,192 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 24,683 | $ | 38,669 | |||
Accrued payroll and related costs | 66,587 | 82,820 | |||||
Other accrued liabilities | 44,982 | 43,864 | |||||
Obligations under capital lease, current | 806 | 781 | |||||
Current portion of long-term debt | 7,331 | 7,331 | |||||
Total current liabilities | 144,389 | 173,465 | |||||
Other long-term liabilities | 81,854 | 79,847 | |||||
Deferred tax liabilities, net | 2,881 | 8,122 | |||||
Obligations under capital lease, less current portion | 10,615 | 10,827 | |||||
Long-term debt, less current portion | 686,918 | 688,197 | |||||
Commitments and Contingencies (Note 13) | |||||||
Stockholders’ equity | |||||||
Common stock, $0.01 par value; 350,000,000 shares authorized; and 36,280,500 and 36,116,252 shares issued and outstanding at December 31, 2018 and September 30, 2018, respectively | 362 | 360 | |||||
Additional paid-in capital | 287,890 | 286,897 | |||||
Accumulated gain (loss) on derivatives, net of tax of $1,034 and $1,501 at December 31, 2018 and September 30, 2018, respectively | 2,710 | 3,936 | |||||
Accumulated deficit | (118,072 | ) | (124,459 | ) | |||
Total stockholders’ equity | 172,890 | 166,734 | |||||
Total liabilities and stockholders’ equity | $ | 1,099,547 | $ | 1,127,192 |
Three Months Ended December 31, | |||||||
2018 | 2017 | ||||||
Net revenue | $ | 406,631 | $ | 395,418 | |||
Cost of revenue | 322,352 | 316,257 | |||||
Operating expenses: | |||||||
General and administrative | 41,032 | 44,534 | |||||
Depreciation and amortization | 22,375 | 21,797 | |||||
Total operating expenses | 63,407 | 66,331 | |||||
Income from operations | 20,872 | 12,830 | |||||
Other income (expense): | |||||||
Other income (expense), net | (1,347 | ) | 446 | ||||
Interest expense | (10,166 | ) | (9,009 | ) | |||
Income before income taxes | 9,359 | 4,267 | |||||
Provision (benefit) for income taxes | 2,972 | (5,127 | ) | ||||
Net income | $ | 6,387 | $ | 9,394 | |||
Basic and diluted income per common share | $ | 0.18 | $ | 0.25 | |||
Weighted average number of common shares outstanding, basic | 36,162,345 | 37,472,018 | |||||
Weighted average number of common shares outstanding, diluted | 36,378,664 | 37,675,792 |
Three Months Ended December 31, | |||||||
2018 | 2017 | ||||||
Net income | $ | 6,387 | $ | 9,394 | |||
Other comprehensive income, net of tax: | |||||||
Gain (loss) on derivative instrument classified as cash flow hedge, net of tax of ($467) and $637 for the three months ended December 31, 2018 and 2017, respectively | (1,226 | ) | 1,601 | ||||
Comprehensive income | $ | 5,161 | $ | 10,995 |
Common Stock | Additional Paid-in Capital | Accumulated Gain (Loss) on Derivatives | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balance at September 30, 2018 | 36,116,252 | $ | 360 | $ | 286,897 | $ | 3,936 | $ | (124,459 | ) | $ | 166,734 | ||||||||||
Issuance of common stock under employee incentive plans, net of shares surrendered | 164,248 | 2 | (1,075 | ) | — | — | (1,073 | ) | ||||||||||||||
Stock-based compensation | — | — | 2,068 | — | — | 2,068 | ||||||||||||||||
Other comprehensive income, net of tax | — | — | — | (1,226 | ) | — | (1,226 | ) | ||||||||||||||
Net income | — | — | — | — | 6,387 | 6,387 | ||||||||||||||||
Balance at December 31, 2018 | 36,280,500 | $ | 362 | $ | 287,890 | $ | 2,710 | $ | (118,072 | ) | $ | 172,890 |
Common Stock | Additional Paid-in Capital | Accumulated Gain (Loss) on Derivatives | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balance at September 30, 2017 | 37,441,257 | $ | 374 | $ | 301,819 | $ | (91 | ) | $ | (139,185 | ) | $ | 162,917 | |||||||||
Cumulative effect adjustment on adoption of ASU 2016-09 | 219 | (160 | ) | 59 | ||||||||||||||||||
Issuance of common stock under employee incentive plans, net of shares surrendered | 105,380 | 1 | (1,065 | ) | — | — | (1,064 | ) | ||||||||||||||
Stock-based compensation | — | — | 1,651 | — | — | 1,651 | ||||||||||||||||
Other comprehensive income, net of tax | — | — | — | 1,601 | — | 1,601 | ||||||||||||||||
Net income | — | — | — | — | 9,394 | 9,394 | ||||||||||||||||
Balance at December 31, 2017 | 37,546,637 | $ | 375 | $ | 302,624 | $ | 1,510 | $ | (129,951 | ) | $ | 174,558 |
Three Months Ended December 31, | |||||||
2018 | 2017 | ||||||
Operating activities: | |||||||
Net income | $ | 6,387 | $ | 9,394 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Provision for accounts receivable allowances | 6,928 | 4,770 | |||||
Depreciation and amortization | 22,375 | 21,797 | |||||
Amortization original issue discount and financing costs | 553 | 544 | |||||
Stock-based compensation | 2,068 | 1,651 | |||||
Deferred income taxes | (3,520 | ) | (7,910 | ) | |||
Loss on disposal of assets | 211 | 94 | |||||
Gain from derivatives | — | (82 | ) | ||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | 6,003 | 2,100 | |||||
Other assets | (1,274 | ) | (14,664 | ) | |||
Accounts payable | (11,377 | ) | (150 | ) | |||
Accrued payroll and related costs | (16,233 | ) | (15,799 | ) | |||
Other accrued liabilities | 1,598 | 2,772 | |||||
Other long-term liabilities | 2,007 | 4,313 | |||||
Net cash provided by operating activities | 15,726 | 8,830 | |||||
Investing activities: | |||||||
Acquisition of businesses, net of cash acquired | — | (81,926 | ) | ||||
Purchases of property and equipment | (14,200 | ) | (11,187 | ) | |||
Proceeds from sale of assets | 740 | 1,733 | |||||
Net cash used in investing activities | (13,460 | ) | (91,380 | ) | |||
Financing activities: | |||||||
Proceeds from long term-debt, net of original issue discount | — | 74,452 | |||||
Repayments of long-term debt | (1,833 | ) | (1,833 | ) | |||
Proceeds from borrowings under senior revolver | 27,400 | 66,200 | |||||
Repayments of borrowings under senior revolver | (27,400 | ) | (61,200 | ) | |||
Repayments of capital lease obligations | (187 | ) | (146 | ) | |||
Cash paid for earn out obligations | (480 | ) | — | ||||
Payments of deferred financing costs | — | (258 | ) | ||||
Taxes paid related to net share settlements of equity awards | (1,073 | ) | (1,064 | ) | |||
Net cash provided by (used in) financing activities | (3,573 | ) | 76,151 | ||||
Net decrease in cash, cash equivalents, and restricted cash | (1,307 | ) | (6,399 | ) | |||
Cash, cash equivalents, and restricted cash at beginning of period | 58,501 | 57,624 | |||||
Cash, cash equivalents, and restricted cash at end of period | $ | 57,194 | $ | 51,225 | |||
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets | |||||||
Cash and cash equivalents | $ | 6,805 | $ | — | |||
Restricted cash, current | 389 | 1,225 | |||||
Restricted cash, noncurrent | 50,000 | 50,000 | |||||
Total cash, cash equivalents, and restricted cash | $ | 57,194 | $ | 51,225 |
Supplemental disclosure of cash flow information | |||||||
Cash paid for interest | $ | 9,524 | $ | 8,201 | |||
Cash paid for income taxes | $ | 3,578 | $ | 11,019 | |||
Supplemental disclosure of non-cash activities: | |||||||
Accrued property and equipment | $ | 1,056 | $ | 883 | |||
Fair value of contingent consideration related to acquisitions | $ | — | $ | 1,080 |
• | Each option for a share of Civitas common stock (a “stock option”) whether vested or unvested, will be cancelled and converted into and will become a right to receive an amount in cash, without interest, equal to (1) $17.75 (less the exercise price per share attributable to such stock option); multiplied by (2) the total number of shares of Civitas common stock issuable upon exercise in full of such stock option. On December 7, 2018, as part of its routine annual compensation review cycle, the Board of Directors, at the recommendation of the Compensation Committee, made customary annual equity awards to employees of stock options (the “Annual 2019 Option Awards”), time-based restricted stock units (the “Annual 2019 RSUs”) and performance-based restricted stock units (the “Annual 2019 PRSUs”). The consideration for stock options other than the Annual 2019 Option Awards will be payable on the closing date of the Merger (the “closing date”) and the consideration for the Annual 2019 Option Awards will vest and be payable at the same time as such stock option would have vested pursuant to its terms, subject to the holder’s continued service with Parent or an affiliate of Parent (including the Surviving Corporation or its subsidiary) through the applicable vesting dates. Stock Options with an exercise price per share greater than $17.75 will be cancelled without any cash payment. |
• | Each time-based restricted stock unit (a “RSU”), whether vested or unvested, will be cancelled and will become a right to receive an amount in cash, without interest, equal to (1) $17.75 multiplied by (2) the total number of shares of Civitas common stock subject to such RSU. For each RSU, other than Annual 2019 RSUs, 50% of the consideration for such RSU will be payable on the closing date and the remaining 50% will generally vest and be payable in accordance with the terms of the RSU, subject to the holder’s continued service with Parent or an affiliate of Parent (including the Surviving Corporation or its subsidiary) through the applicable vesting dates (or, if earlier than the applicable vesting dates, the amounts will generally be paid in two equal installments on the first and second anniversaries of the closing date, subject to continued service). For each Annual 2019 RSU, the consideration for such RSU will, subject to the holder’s continued service with Parent or an affiliate of Parent (including the Surviving Corporation or its subsidiary) through the applicable vesting dates, vest and be payable in accordance with the terms of such RSU, with no less than 50% vesting and payable on the first anniversary of the closing date and any remaining unvested portion vesting and payable on the second anniversary of the closing date. |
• | Performance-based restricted stock units (“PRSUs”) granted prior to December 8, 2017 that are outstanding immediately prior to the effective time, whether vested or unvested, will be cancelled for no consideration, PRSUs granted on December 8, 2017 or March 9, 2018 outstanding immediately prior to the effective time, whether vested or unvested, will be cancelled and will become a right to receive an amount in cash, without interest, equal to (x) $17.75 multiplied by (y) the total number of shares of Civitas common stock subject to such PRSU, with any performance-based vesting conditions deemed achieved based on actual performance during the applicable performance period, which shall be shortened to end on the date immediately prior to the closing date, and which amount will be paid on the closing date, and Annual 2019 PRSUs outstanding immediately prior to the effective time, whether vested or unvested, will be cancelled and will become a right to receive an amount in cash, without interest, equal to (x) $17.75 multiplied by (y) the total number of shares of Civitas common stock subject to such PRSU, with any performance-based vesting conditions deemed achieved at target. The consideration in respect of Annual 2019 PRSUs will be subject to the same payment terms, conditions and schedule as for the Annual 2019 RSUs (as described in the immediately preceding paragraph). |
(in thousands) | December 31, 2018 | September 30, 2018 | |||||
Term loan principal; principal and interest are due in quarterly installments through January 31, 2021 | $ | 698,312 | $ | 700,145 | |||
Original issue discount on term loan, net of accumulated amortization | (909 | ) | (1,020 | ) | |||
Deferred financing costs, net of accumulated amortization | (3,154 | ) | (3,597 | ) | |||
694,249 | 695,528 | ||||||
Less current portion of the term loan | 7,331 | 7,331 | |||||
Long-term debt | $ | 686,918 | $ | 688,197 |
(in thousands, except share and per share amounts) | Number of Shares | Weighted- Average Exercise Price per Share | Weighted- Average Remaining Life (Years) | Aggregate Intrinsic Value (in thousands) | ||||||||
Outstanding at September 30, 2018 | 939,213 | $ | 18.67 | |||||||||
Granted | 177,832 | 13.65 | ||||||||||
Forfeited | 8,826 | 18.33 | ||||||||||
Outstanding at December 31, 2018 | 1,108,219 | $ | 17.87 | 7.5 | $ | 1,044 | ||||||
Exercisable at December 31, 2018 | 739,123 | $ | 18.85 | 6.7 | $ | 289 | ||||||
Vested or expected to vest as of December 31, 2018 | 1,108,219 | $ | 17.87 | 7.5 | $ | 1,044 |
2018 | ||
Risk-free interest rate | 2.78% | |
Expected term | 6 years | |
Expected volatility | 36.13% | |
Expected dividend yield | — | % |
Number of Restricted Stock Units | Weighted Average Grant-Date Fair Value | |||||
Non-vested units at September 30, 2018 | 835,899 | $ | 18.35 | |||
Granted | 465,504 | 13.65 | ||||
Forfeited | 29,190 | 18.86 | ||||
Vested | 243,044 | 19.69 | ||||
Non-vested units at December 31, 2018 | 1,029,169 | $ | 15.90 |
Number of Performance Based Restricted Stock Units | Weighted Average Grant-Date Fair Value | |||||
Non-vested units at September 30, 2018 | 135,339 | $ | 19.44 | |||
Granted | 62,500 | 13.65 | ||||
Forfeited | 46,663 | 19.79 | ||||
Non-vested units at December 31, 2018 | 151,176 | $ | 16.94 | |||
Units expected to vest as of December 31, 2018 | 110,291 | $ | 15.86 |
CSS | SRS | CFS | Corporate and Other | Total | |||||||||||||||
Balance as of September 30, 2018 | $ | 161,718 | $ | 117,445 | $ | 28,484 | $ | 4,105 | $ | 311,752 | |||||||||
Adjustments to prior acquisitions (1) | — | (1,253 | ) | — | — | (1,253 | ) | ||||||||||||
Balance as of December 31, 2018 | $ | 161,718 | $ | 116,192 | $ | 28,484 | $ | 4,105 | $ | 310,499 |
Description | Weighted Average Amortization Period | Gross Carrying Value | Accumulated Amortization | Intangible Assets, Net | ||||||||||
Agency contracts | 6 years | $ | 581,222 | $ | 336,637 | $ | 244,585 | |||||||
Non-compete/non-solicit agreements | 1 year | 7,453 | 6,154 | 1,299 | ||||||||||
Trade names | 1 year | 8,161 | 6,921 | 1,240 | ||||||||||
Trade names (indefinite life) | — | 42,400 | — | 42,400 | ||||||||||
Licenses and permits | 3 years | 62,279 | 45,385 | 16,894 | ||||||||||
$ | 701,515 | $ | 395,097 | $ | 306,418 |
Description | Weighted Average Amortization Period | Gross Carrying Value | Accumulated Amortization | Intangible Assets, Net | ||||||||||
Agency contracts | 6 years | $ | 581,222 | $ | 326,925 | $ | 254,297 | |||||||
Non-compete/non-solicit agreements | 1 year | 7,453 | 5,974 | 1,479 | ||||||||||
Trade names | 1 year | 8,161 | 6,771 | 1,390 | ||||||||||
Trade names (indefinite life) | — | 42,400 | — | 42,400 | ||||||||||
Licenses and permits | 3 years | 62,279 | 44,673 | 17,606 | ||||||||||
$ | 701,515 | $ | 384,343 | $ | 317,172 |
Year Ended September 30, | (in thousands) | ||
2019 | $ | 33,267 | |
2020 | 42,580 | ||
2021 | 39,165 | ||
2022 | 37,360 | ||
2023 | 33,019 | ||
Thereafter | 78,627 | ||
Total | $ | 264,018 |
(in thousands) | Total | Quoted Market Prices (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Assets | |||||||||||||||
Interest rate swap agreements (current) | $ | 3,338 | $ | — | $ | 3,338 | $ | — | |||||||
Interest rate swap agreements (long-term) | 736 | — | 736 | — | |||||||||||
Total | $ | 4,074 | $ | — | $ | 4,074 | $ | — | |||||||
Liabilities | |||||||||||||||
Contingent consideration | $ | 1,325 | $ | — | $ | — | $ | 1,325 |
(in thousands) | Total | Quoted Market Prices (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Assets | |||||||||||||||
Interest rate swap agreements (current) | $ | 3,447 | $ | — | $ | 3,447 | $ | — | |||||||
Interest rate swap agreements (long-term) | 2,320 | — | 2,320 | — | |||||||||||
Total | $ | 5,767 | $ | — | $ | 5,767 | $ | — | |||||||
Liabilities | |||||||||||||||
Contingent consideration | $ | 1,805 | $ | — | $ | — | $ | 1,805 |
(in thousands) | Three Months Ended December 31, 2018 | ||
Balance at September 30, 2018 | $ | 1,805 | |
Payments (1) | (480 | ) | |
Balance at December 31, 2018 | $ | 1,325 |
(in thousands) | Three Months Ended December 31, 2017 | ||
Balance at September 30, 2017 | $ | — | |
Acquisition date fair value of contingent consideration obligations recorded | 1,080 | ||
Balance at December 31, 2017 | $ | 1,080 |
For the three months ended December 31, | CSS | SRS | CFS | Corporate and Other | Consolidated | ||||||||||||||
2018 | |||||||||||||||||||
Net revenue | $ | 260,532 | $ | 89,103 | $ | 38,023 | $ | 18,973 | $ | 406,631 | |||||||||
EBITDA | 35,561 | 15,999 | 6,449 | (16,109 | ) | 41,900 | |||||||||||||
Total assets | 486,960 | 324,719 | 66,634 | 221,234 | 1,099,547 | ||||||||||||||
Depreciation and amortization | 10,599 | 7,356 | 1,391 | 3,029 | 22,375 | ||||||||||||||
Purchases of property and equipment | 6,780 | 2,924 | 488 | 4,008 | 14,200 | ||||||||||||||
2017 | |||||||||||||||||||
Net revenue | $ | 255,891 | $ | 85,989 | $ | 35,875 | $ | 17,663 | $ | 395,418 | |||||||||
EBITDA | 32,976 | 13,624 | 4,812 | (16,422 | ) | 34,990 | |||||||||||||
Depreciation and amortization | 10,125 | 6,753 | 1,414 | 3,505 | 21,797 | ||||||||||||||
Purchases of property and equipment | 7,032 | 2,141 | 299 | 1,715 | 11,187 |
For the three months ended December 31, | |||||||
2018 | 2017 | ||||||
EBITDA | $ | 41,900 | $ | 34,990 | |||
Less: | |||||||
Depreciation and amortization | 22,375 | 21,797 | |||||
Interest expense, net | 10,166 | 8,926 | |||||
Income before income taxes | $ | 9,359 | $ | 4,267 |
• | Negotiated Contracts - for these contracts, services are priced pursuant to a “plan of care” for the individual that encompasses habilitation and therapies. Such contracts are not subject to retroactive adjustment or cost reimbursement requirements. However, there may be instances where rates are adjusted based upon a change in circumstances with a particular individual or in situations where additional services are needed. Subsequent adjustments to rates, if any, are recognized when approved by the payor. For the three months ended December 31, 2018 and 2017 we recognized $136.2 million and $126.4 million, respectively, under these contracts. |
• | Fixed Fee Contracts - for these contracts, payors set a standard rate or set of rates for a particular service usually dependent on the acuity of the individual being served. These rates are the same for all agencies providing the service. For these contract types, there is generally no cost report required. For the three months ended December 31, 2018 and 2017 we recognized $231.1 million and $217.5 million, respectively, under these contracts. |
• | Retrospective Reimbursement Contracts - for these contracts, a provisional rate is set for the year pending the filing of an annual cost report that may further adjust that rate. Cost reimbursement rules differ by jurisdiction and program type. Revenue under these contracts is limited to the allowable costs under the contract. To the extent revenue exceeds the allowable costs it is deferred and reimbursed to the payor after the closeout of the contract. For the three months ended December 31, 2018 and 2017 we recognized $12.0 million and $26.6 million, respectively, under these contracts. |
• | Prospective Payment Contracts - these contracts are cost reported in the same way as retrospective contracts, except the cost report for the annual period is used to set the rates in a future period. For these contracts, changes in rates are recognized in revenue prospectively. For the three months ended December 31, 2018 and 2017 we recognized $27.3 million and $24.9 million, respectively, under these contracts. |
For the three months ended December 31, | CSS | SRS | CFS | Corporate and Other | Consolidated | ||||||||||||||
2018 | |||||||||||||||||||
State and local government | $ | 259,507 | $ | 45,768 | $ | 37,945 | $ | 18,880 | $ | 362,100 | |||||||||
Non-public | 83 | 38,859 | 78 | 7 | 39,027 | ||||||||||||||
Individual | 942 | 4,476 | — | 86 | 5,504 | ||||||||||||||
Total | $ | 260,532 | $ | 89,103 | $ | 38,023 | $ | 18,973 | $ | 406,631 | |||||||||
2017 | |||||||||||||||||||
State and local government | $ | 254,784 | $ | 41,650 | $ | 35,809 | $ | 17,557 | $ | 349,800 | |||||||||
Non-public | 128 | 39,680 | 66 | 23 | 39,897 | ||||||||||||||
Individual | 979 | 4,659 | — | 83 | 5,721 | ||||||||||||||
Total | $ | 255,891 | $ | 85,989 | $ | 35,875 | $ | 17,663 | $ | 395,418 |
Three Months Ended December 31, | |||||||
(in thousands, except share and per share amounts) | 2018 | 2017 | |||||
Numerator | |||||||
Net income | $ | 6,387 | $ | 9,394 | |||
Denominator | |||||||
Weighted average shares outstanding, basic (1) | 36,162,345 | 37,472,018 | |||||
Weighted average common equivalent shares | 216,319 | 203,774 | |||||
Weighted average shares outstanding, diluted (1) | 36,378,664 | 37,675,792 | |||||
Net income per share, basic and diluted | $ | 0.18 | $ | 0.25 | |||
Equity instruments excluded from diluted net income per share calculation as the effect would have been anti-dilutive: | |||||||
Stock options | 947,683 | 519,872 | |||||
Performance and restricted stock units | 257,160 | 97,916 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
• | Gross Revenue: Revenues before adjusting for sales adjustments and state provider and gross receipts taxes. |
• | Average Residential Census: The average daily residential census over the respective period. |
• | Average Daily Rate: A mathematical calculation derived by dividing the gross residential revenue by the residential census and the resulting quotient by the number of days during the respective period. |
• | Non-Residential Billable Units: The hourly equivalent of non-residential services provided. |
• | Average Billable Unit Rate: Gross non-residential revenue divided by the billable units provided during the period. |
Three Months Ended December 31, | |||||||
2018 | 2017 | ||||||
Community Support Services | |||||||
Gross Revenues | $ | 264,009 | $ | 259,246 | |||
Average Residential Census | 8,982 | 8,768 | |||||
Average Daily Rate | $ | 250.60 | $ | 247.31 | |||
Non-Residential Billable Units | 2,985,398 | 3,135,751 | |||||
Average Non-Residential Billable Unit Rate | $ | 19.07 | $ | 19.05 | |||
Gross Revenue Growth % | 1.8 | % | |||||
Gross Revenue growth due to: | |||||||
Volume Growth | 0.8 | % | |||||
Average Rate Growth | 1.0 | % | |||||
Specialty Rehabilitation Services | |||||||
Gross Revenues | $ | 91,250 | $ | 87,638 | |||
Average Residential Census | 1,423 | 1,414 | |||||
Average Daily Rate | $ | 659.98 | $ | 643.30 | |||
Non-residential Billable Units | 62,222 | 50,721 | |||||
Average Non-Residential Billable Unit Rate | $ | 78.02 | $ | 78.20 | |||
Gross Revenue Growth % | 4.1 | % | |||||
Gross Revenue growth due to: | |||||||
Volume Growth | 1.6 | % | |||||
Average Rate Growth | 2.5 | % | |||||
Children & Family Services | |||||||
Gross Revenues | $ | 38,494 | $ | 36,267 | |||
Average Residential Census | 2,297 | 2,119 | |||||
Average Daily Rate | $ | 126.76 | $ | 128.44 | |||
Non-residential Billable Units | 137,209 | 135,387 | |||||
Average Non-Residential Billable Unit Rate | $ | 85.28 | $ | 82.96 | |||
Gross Revenue Growth % | 6.1 | % | |||||
Gross Revenue growth due to: | |||||||
Volume Growth | 6.2 | % | |||||
Average Rate Growth | (0.1 | )% | |||||
Adult Day Health | |||||||
Gross Revenues | $ | 19,222 | $ | 17,870 | |||
Non-residential Billable Units | 1,071,550 | 991,081 | |||||
Average Non-Residential Billable Unit Rate | $ | 17.94 | $ | 18.03 | |||
Gross Revenue Growth % | 7.6 | % | |||||
Gross Revenue growth due to: | |||||||
Volume Growth | 8.1 | % | |||||
Average Rate Growth | (0.5 | )% | |||||
Consolidated Results | |||||||
Gross Revenues | $ | 412,975 | $ | 401,021 | |||
Gross Revenue Growth % | 3.0 | % | |||||
Gross Revenue growth due to: | |||||||
Volume Growth | 1.8 | % | |||||
Average Rate Growth | 1.2 | % |
Three Months Ended December 31, | |||||
2018 | 2017 | ||||
Gross revenue | 100.0 | % | 100.0 | % | |
Sales adjustments | (1.5 | )% | (1.4 | )% | |
Net revenue | 98.5 | % | 98.6 | % | |
Cost of revenue | 78.1 | % | 78.9 | % | |
Operating expenses: | |||||
General and administrative | 9.9 | % | 11.1 | % | |
Depreciation and amortization | 5.4 | % | 5.4 | % | |
Total operating expense | 15.3 | % | 16.5 | % | |
Income from operations | 5.1 | % | 3.2 | % | |
Other income (expense): | |||||
Other income (expense), net | (0.3 | )% | 0.1 | % | |
Interest expense | (2.5 | )% | (2.2 | )% | |
Income before income taxes | 2.3 | % | 1.1 | % | |
Provision (benefit) for income taxes | 0.7 | % | (1.3 | )% | |
Net income | 1.6 | % | 2.4 | % |
Three Months Ended December 31, | Increase | ||||||||||
(in thousands) | 2018 | 2017 | (Decrease) | ||||||||
Gross Revenue | $ | 412,975 | $ | 401,021 | $ | 11,954 | |||||
Sales Adjustments | (6,344 | ) | (5,603 | ) | (741 | ) | |||||
Net Revenue | $ | 406,631 | $ | 395,418 | $ | 11,213 | |||||
Income from Operations | 20,872 | 12,830 | 8,042 | ||||||||
Operating Margin (as a % of gross revenue) | 5.1 | % | 3.2 | % |
Three Months Ended December 31, | ||||||||||||||||||||
2018 | 2017 | Change in % of gross revenue | ||||||||||||||||||
Amount | % of gross revenue | Amount | % of gross revenue | Increase (Decrease) | ||||||||||||||||
Revenue: | ||||||||||||||||||||
CSS gross revenue | $ | 264,009 | 100.0 | % | $ | 259,246 | 100.0 | % | $ | 4,763 | ||||||||||
Sales adjustments | (3,477 | ) | (1.3 | )% | (3,355 | ) | (1.3 | )% | (122 | ) | — | % | ||||||||
CSS net revenue | 260,532 | 98.7 | % | 255,891 | 98.7 | % | 4,641 | — | % | |||||||||||
Cost of revenue: | ||||||||||||||||||||
Direct labor costs | 171,219 | 64.9 | % | 167,859 | 64.7 | % | 3,360 | 0.2 | % | |||||||||||
Direct program costs | 10,696 | 4.1 | % | 11,153 | 4.3 | % | (457 | ) | (0.2 | )% | ||||||||||
Direct occupancy costs | 20,453 | 7.7 | % | 18,707 | 7.2 | % | 1,746 | 0.5 | % | |||||||||||
Other direct costs | 10,636 | 4.0 | % | 12,094 | 4.7 | % | (1,458 | ) | (0.7 | )% | ||||||||||
Total cost of revenue | 213,004 | 80.7 | % | 209,813 | 80.9 | % | 3,191 | (0.2 | )% | |||||||||||
General and administrative | 11,967 | 4.5 | % | 13,102 | 5.1 | % | (1,135 | ) | (0.6 | )% | ||||||||||
CSS EBITDA | 35,561 | 13.5 | % | 32,976 | 12.7 | % | 2,585 | 0.8 | % | |||||||||||
Depreciation and amortization | 10,599 | 4.0 | % | 10,124 | 3.9 | % | 475 | 0.1 | % | |||||||||||
Income from Operations | $ | 24,962 | 9.5 | % | $ | 22,852 | 8.8 | % | $ | 2,110 | 0.7 | % |
Three Months Ended December 31, | ||||||||||||||||||||
2018 | 2017 | Change in % of gross revenue | ||||||||||||||||||
Amount | % of gross revenue | Amount | % of gross revenue | Increase (Decrease) | ||||||||||||||||
Revenue: | ||||||||||||||||||||
SRS gross revenue | $ | 91,250 | 100.0 | % | $ | 87,638 | 100.0 | % | $ | 3,612 | ||||||||||
Sales adjustments | (2,147 | ) | (2.4 | )% | (1,649 | ) | (1.9 | )% | (498 | ) | (0.5 | )% | ||||||||
SRS net revenue | 89,103 | 97.6 | % | 85,989 | 98.1 | % | 3,114 | (0.5 | )% | |||||||||||
Cost of revenue: | ||||||||||||||||||||
Direct labor costs | 46,687 | 51.2 | % | 45,863 | 52.3 | % | 824 | (1.1 | )% | |||||||||||
Direct program costs | 5,797 | 6.4 | % | 5,824 | 6.6 | % | (27 | ) | (0.2 | )% | ||||||||||
Direct occupancy costs | 10,613 | 11.6 | % | 10,144 | 11.6 | % | 469 | — | % | |||||||||||
Other direct costs | 2,604 | 2.8 | % | 2,424 | 2.8 | % | 180 | — | % | |||||||||||
Total cost of revenue | 65,701 | 72.0 | % | 64,255 | 73.3 | % | 1,446 | (1.3 | )% | |||||||||||
General and administrative | 7,403 | 8.1 | % | 8,110 | 9.3 | % | (707 | ) | (1.2 | )% | ||||||||||
SRS EBITDA | 15,999 | 17.5 | % | 13,624 | 15.5 | % | 2,375 | 2.0 | % | |||||||||||
Depreciation and amortization | 7,356 | 8.1 | % | 6,753 | 7.7 | % | 603 | 0.4 | % | |||||||||||
Income from Operations | $ | 8,643 | 9.4 | % | $ | 6,871 | 7.8 | % | $ | 1,772 | 1.6 | % |
Three Months Ended December 31, | ||||||||||||||||||||
2018 | 2017 | Change in % of gross revenue | ||||||||||||||||||
Amount | % of gross revenue | Amount | % of gross revenue | Increase (Decrease) | ||||||||||||||||
Revenue: | ||||||||||||||||||||
CFS gross revenue | $ | 38,494 | 100.0 | % | $ | 36,267 | 100.0 | % | $ | 2,227 | ||||||||||
Sales adjustments | (471 | ) | (1.2 | )% | (392 | ) | (1.1 | )% | (79 | ) | (0.1 | )% | ||||||||
CFS net revenue | 38,023 | 98.8 | % | 35,875 | 98.9 | % | 2,148 | (0.1 | )% | |||||||||||
Cost of revenue | 28,648 | 74.4 | % | 28,090 | 77.5 | % | 558 | (3.1 | )% | |||||||||||
General and administrative | 2,926 | 7.6 | % | 2,973 | 8.2 | % | (47 | ) | (0.6 | )% | ||||||||||
CFS EBITDA | 6,449 | 16.8 | % | 4,812 | 13.2 | % | 1,637 | 3.6 | % | |||||||||||
Depreciation and amortization | 1,391 | 3.6 | % | 1,414 | 3.9 | % | (23 | ) | (0.3 | )% | ||||||||||
Income from Operations | $ | 5,058 | 13.2 | % | $ | 3,398 | 9.3 | % | $ | 1,660 | 3.9 | % |
Three Months Ended December 31, | |||||||||||
2018 | 2017 | ||||||||||
Amount | Amount | Increase (Decrease) | |||||||||
Revenue: | |||||||||||
Corporate and Other gross revenue | $ | 19,222 | $ | 17,870 | $ | 1,352 | |||||
Sales adjustments | (249 | ) | (207 | ) | (42 | ) | |||||
Corporate and Other net revenue | 18,973 | 17,663 | 1,310 | ||||||||
Cost of revenue | 14,999 | 14,100 | 899 | ||||||||
General and administrative | 18,736 | 20,348 | (1,612 | ) | |||||||
Depreciation and amortization | 3,029 | 3,505 | (476 | ) | |||||||
Loss from Operations | $ | (17,791 | ) | $ | (20,290 | ) | $ | 2,499 |
• | the potential failure to complete the proposed Merger; |
• | the incurrence of substantial transaction and merger-related costs in connection with the proposed Merger; |
• | reductions or changes in Medicaid or other funding or changes in budgetary priorities by federal, state and local governments; |
• | an increase in labor costs or labor-related liability; |
• | substantial claims, litigation and governmental proceedings; |
• | reductions in reimbursement rates, policies or payment practices by our payors; |
• | information technology failure, inadequacy, interruption or security failure; |
• | our ability to attract and retain experienced personnel; |
• | negative publicity or changes in public perception of our services; |
• | an increase in our self-insured retentions and changes in the insurance market for professional and general liability, workers’ compensation and automobile liability and our claims history and our ability to obtain coverage at reasonable rates; |
• | an increase in workers’ compensation related liability; |
• | the Patient Protection and Affordable Care Act materially reduced the flexibility we had in managing our healthcare cost and may make it harder for us to compete as an employer; |
• | our history of losses; |
• | changes in economic conditions; |
• | our ability to comply with complicated billing and collection rules and regulations; |
• | our ability to maintain effective internal controls; |
• | our substantial amount of debt, our ability to meet our debt service obligations and our ability to incur additional debt; |
• | failure to comply with reimbursement procedures and collect accounts receivable; |
• | our ability to establish and maintain relationships with government agencies and advocacy groups; |
• | our ability to maintain our status as a licensed service provider in certain jurisdictions; |
• | our susceptibility to any reduction in budget appropriations for our services in Minnesota or any other adverse developments in that state; |
• | our ability to maintain, expand and renew existing services contracts and to obtain additional contracts or acquire new licenses; |
• | our ability to realize and anticipate benefits of future acquisitions and our ability to successfully integrate acquired businesses; |
• | failure of our information systems or failure to upgrade our information systems when required; |
• | government regulations, changes in government regulations and our ability to comply with such regulations; |
• | write-offs of goodwill or other intangible assets; |
• | increased competition in our industry; |
• | decrease in popularity of home- and community-based human services among our targeted populations of individuals and/or state and local governments; |
• | our ability to operate our business due to constraints imposed by covenants in our senior credit agreement; |
• | our inability to successfully expand into adjacent markets; |
• | our ability to manage and integrate key administrative functions; |
• | natural disasters or public health catastrophes; |
• | our classification as a “controlled company”; |
• | our stock price may be volatile and/or decline; |
• | our equity sponsor has the ability to control significant corporate activities; |
• | future sales of common stock may depress our stock price; and |
• | as a holding company we rely on dividends, disbursements and other transfers of funds from our subsidiaries to meet our financial obligations. |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Item 4. | Controls and Procedures. |
Item 1. | Legal Proceedings. |
Item 1A. | Risk Factors |
• | the inability to pursue alternative business opportunities or make appropriate changes to our business because of requirements in the Merger Agreement that we conduct our business in the ordinary course of business consistent with past practice and not engage in certain kinds of transactions prior to the completion of the Merger; |
Item 2. | Unregistered Sales of Equity Securities |
Total Number of Shares Purchased (1) | Weighted Average Price Paid per Share | |||||
10/01/2018 - 10/31/2018 | — | $ | — | |||
11/01/2018 - 11/30/2018 | — | $ | — | |||
12/01/2018 - 12/31/2018 | 78,800 | $ | 13.63 |
Item 3. | Defaults Upon Senior Securities. |
Item 4. | Mine Safety Disclosures. |
Item 5. | Other Information. |
Item 6. | Exhibits. |
CIVITAS SOLUTIONS, INC. | ||||||
February 4, 2019 | By: | /s/ Denis M. Holler | ||||
Denis M. Holler | ||||||
Its: | Chief Financial Officer and duly authorized officer |
Exhibit No. | Description | |||
Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on December 19, 2018 | ||||
Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on December 19, 2018 | ||||
Filed herewith | ||||
Filed herewith | ||||
Filed herewith | ||||
101.INS | XBRL Instance Document. | Filed herewith | ||
101.SCH | XBRL Taxonomy Extension Schema Document. | Filed herewith | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | Filed herewith | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | Filed herewith | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | Filed herewith | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | Filed herewith |
1. | I have reviewed this Quarterly Report on Form 10-Q of Civitas Solutions, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
February 4, 2019 | /s/ Bruce F. Nardella | |
Bruce F. Nardella President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Civitas Solutions, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
February 4, 2019 | /s/ Denis M. Holler | |
Denis M. Holler Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: February 4, 2019 | /s/ Bruce F. Nardella | |
Bruce F. Nardella President and Chief Executive Officer |
Date: February 4, 2019 | /s/ Denis M. Holler | |
Denis M. Holler Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Jan. 31, 2019 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | CIVITAS SOLUTIONS, INC. | |
Entity Central Index Key | 0001608638 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2018 | |
Document Fiscal Year Focus | 2019 | |
Trading Symbol | CIVI | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 36,307,002 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Sep. 30, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowances for accounts receivable | $ 22,622 | $ 20,229 |
Common stock, par value (dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 350,000,000 | 350,000,000 |
Common stock, shares issued (shares) | 36,280,500 | 36,116,252 |
Common stock, shares outstanding (shares) | 36,280,500 | 36,116,252 |
Accumulated loss on derivatives, tax expense (benefit) | $ 1,034 | $ 1,501 |
Condensed Consolidated Statements of Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Statement [Abstract] | ||
Net revenue | $ 406,631 | $ 395,418 |
Cost of revenue | 322,352 | 316,257 |
Operating expenses: | ||
General and administrative | 41,032 | 44,534 |
Depreciation and amortization | 22,375 | 21,797 |
Total operating expenses | 63,407 | 66,331 |
Income from operations | 20,872 | 12,830 |
Other income (expense): | ||
Other income (expense), net | (1,347) | 446 |
Interest expense | (10,166) | (9,009) |
Income before income taxes | 9,359 | 4,267 |
Provision (benefit) for income taxes | 2,972 | (5,127) |
Net income | $ 6,387 | $ 9,394 |
Basic and diluted income per common share (in dollars per share) | $ 0.18 | $ 0.25 |
Weighted average number of common shares outstanding, basic (in shares) | 36,162,345 | 37,472,018 |
Weighted average number of common shares outstanding, diluted (in shares) | 36,378,664 | 37,675,792 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 6,387 | $ 9,394 |
Other comprehensive income, net of tax: | ||
Gain (loss) on derivative instrument classified as cash flow hedge, net of tax of ($467) and $637 for the three months ended December 31, 2018 and 2017, respectively | (1,226) | 1,601 |
Comprehensive income | $ 5,161 | $ 10,995 |
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Tax effects of changes in unrealized gain on derivatives | $ (467) | $ 637 |
Business Overview |
3 Months Ended |
---|---|
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Overview | 1. Business Overview Civitas Solutions, Inc. ("Civitas"), through its wholly-owned subsidiaries (collectively, the "Company"), is the 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. Since the Company’s founding in 1980, the Company has evolved into a diversified national network providing an array of high-quality services and care in large, growing and highly-fragmented markets. The Company currently provides services to individuals with intellectual and/or developmental disabilities (“I/DD”), individuals with catastrophic injuries and illnesses, particularly acquired brain injury (“ABI”), youth with emotional, behavioral and/or medically complex challenges, and elders in need of day health services to support their independence. As of December 31, 2018, the Company operated in 36 states, serving approximately 12,700 individuals in residential settings and approximately 18,700 individuals in non-residential settings. The Company designs customized service plans to meet the individual needs of those served by the Company, which it delivers in home- and community-based settings. Most of the Company’s service plans involve residential support, typically in small group homes, host home settings, or specialized community facilities, designed to improve the quality of life of the individuals served by the Company and to promote their independence and participation in community life. Other services offered include supported living, day and transitional programs, vocational services, case management, family-based and outpatient therapeutic services, post-acute treatment and neurorehabilitation, neurobehavioral rehabilitation and physical, occupational and speech therapies, among others. The Company’s customized service plans offer individuals as well as the payors of these services, an attractive, cost-effective alternative to health and human services provided in large, institutional settings. Civitas is the parent of a consolidated group of subsidiaries that market their services under The MENTOR Network tradename. NMH Holdings, LLC (“NMHH”) is a wholly owned subsidiary of Civitas and National Mentor Holdings, Inc. (“NMHI”) is a wholly owned subsidiary of NMHH. The financial results of Civitas are primarily composed of the financial results of NMHI and its subsidiaries on a consolidated basis. We have four operating divisions, Community Support Services ("CSS"), Specialty Rehabilitation Services (“SRS”), Children & Family Services ("CFS") and Adult Day Health ("ADH"). Each operating division represents a reportable segment except ADH which is included within Corporate and Other because it does not meet the thresholds for separate reporting. As of October 1, 2018, Community Support Services and Children & Family Services are new names for the operating divisions formerly referred to as Intellectual and Developmental Disabilities ("I/DD") and At-Risk Youth ("ARY"), respectively. There were no changes to the composition of the operating divisions as a result of these name changes. |
Merger Agreement |
3 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | |||||||||||||
Business Combinations [Abstract] | |||||||||||||
Merger Agreement | 2. Merger Agreement On December 18, 2018, the Company announced that it entered into a definitive merger agreement to be acquired by funds advised by Centerbridge Partners, L.P. The Agreement and Plan of Merger (the “Merger Agreement”), dated as of December 18, 2018, is by and among Celtic Intermediate Corp., a Delaware corporation (“Parent”), Celtic Tier II Corp., a Delaware corporation (“Merger Sub”), and the Company, providing for the merger of Merger Sub with and into the Company (the “Merger”), with the Company (the “Surviving Corporation”) surviving the Merger as a wholly owned subsidiary of Parent. If the Merger is completed, each share of Civitas common stock issued and outstanding immediately prior to the effective time (other than (i) shares of Civitas common stock owned by the Company (excluding any shares of Civitas common stock owned by any subsidiary of the Company, which will remain outstanding), Parent or Merger Sub and (ii) shares as to which appraisal rights have been properly demanded and perfected in accordance with Section 262 of the General Corporation Law of the State of Delaware) will be automatically cancelled and converted into the right to receive $17.75 in cash, without interest and subject to any applicable withholding taxes. Pursuant to the Merger Agreement, Civitas equity awards outstanding immediately prior to the effective time of the Merger (the “effective time”) will generally be subject to the following treatment, unless otherwise agreed to by the parties:
The consummation of the Merger is subject to certain customary conditions, including, but not limited to (1) receipt of the vote in favor of the adoption of the Merger Agreement by a the holders of a majority of the outstanding shares of Civitas common stock entitled to vote on the Merger Agreement; (2) expiration of waiting periods (and any extensions thereof), if any, applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (3) the absence of a material adverse effect and (4) the absence of any law or order prohibiting, making illegal or enjoining the Merger. The Merger Agreement contains certain termination rights, including the right of Civitas to terminate the Merger Agreement to accept a superior proposal, subject to specified conditions and limitations, and the right of either party to terminate the Merger Agreement if the Merger is not consummated by May 17, 2019. Upon termination of the Merger Agreement by Civitas or Parent upon specified conditions, Civitas will be required to pay Parent a termination fee of $20 million, and upon termination of the Merger Agreement by Civitas or Parent under other specified conditions, Parent will be required to pay Civitas a termination fee of $40 million. In connection with entering into the Merger Agreement, Parent and certain affiliates of Vestar Capital Partners, which collectively owned approximately 54% of the outstanding shares of Civitas common stock as of December 17, 2018, entered into a Voting Agreement (the “Voting Agreement”), pursuant to which such stockholders committed to vote their Civitas common stock in favor of, and take certain other actions in furtherance of, the transactions contemplated by the Merger Agreement, including the Merger. The Voting Agreement will terminate upon the earliest to occur of (1) the effective time, (2) the termination of the Merger Agreement in accordance with its terms, (3) an agreement to terminate the Voting Agreement, or (4) a change of recommendation by the Board of Directors pursuant to the Merger Agreement. During the three months ended December 31, 2018, Civitas recognized approximately $1.2 million of costs in connection with the proposed Merger. These costs are included in General and administrative expense in the consolidated statement of income. |
Significant Accounting Policies |
3 Months Ended |
---|---|
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 3. Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited condensed consolidated financial statements herein should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018, which is on file with the SEC. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal and recurring adjustments, necessary to present fairly the financial statements in accordance with GAAP. Intercompany balances and transactions between the Company and its subsidiaries have been eliminated in consolidation. Operating results for the three months ended December 31, 2018 may not necessarily be indicative of results to be expected for any other interim period or for the full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Adoption of New Accounting Pronouncements Revenue from Contracts with Customers— In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers Topic, and has since issued several additional amendments thereto (collectively known as ASC 606). ASC 606 supersedes nearly all existing revenue recognition guidance under U.S. GAAP. On October 1, 2018 the Company adopted ASC 606 using the modified retrospective transition method. Under this method, the reported results for fiscal 2019 reflect the application of ASC 606, while the reported results for fiscal 2018 were prepared under the guidance of ASC 605, Revenue Recognition. The modified retrospective method requires the cumulative effect of applying the new guidance to all contracts with customers that were not completed as of October 1, 2018 to be recorded as an adjustment to retained earnings as of the adoption date. The Company did not record a cumulative effect adjustment to retained earnings as a result of the adoption of ASC 606 because the timing and measurement of revenue for the Company’s contracts with customers has no impact on retained earnings. See Note 11, Revenue Recognition for additional disclosures. Statement of Cash Flows— In November 2016, the FASB issued ASU No. 2016-18—Statement of Cash Flows (Topic 230): Restricted Cash, which requires that a statement of cash flows present the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted the new standard effective October 1, 2018, using the retrospective transition method to each period presented. The adoption of this new standard resulted in a decrease to Net cash used in investing activities of $0.9 million for the three months ended December 31, 2017. |
Recent Accounting Pronouncements |
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Dec. 31, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | 4. Recent Accounting Pronouncements Leases— In February 2016, the FASB issued ASU No. 2016-02—Leases (Topic 842). The new standard requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The standard will be effective for the Company on October 1, 2019. In July 2018, the FASB issued ASU No. 2018-11—Leases (Topic 842): Targeted Improvements (ASU 2018-11). Prior to ASU 2018-11, a modified retrospective transition was required for financing or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements. ASU 2018-11 allows entities an additional transition method to the existing requirements whereby an entity could adopt the provisions of ASU 2016-02 by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without adjustment to the financial statements for periods prior to adoption. The Company will elect this new transition method when it adopts ASU 2016-02 on October 1, 2019. The adoption of this standard is expected to have a material impact on the Company's financial position. As of December 31, 2018, the Company had gross operating lease commitments of approximately $351 million. Upon adoption, a substantial portion of these lease commitments will be recorded at their net present value as a right of use asset and a lease obligation. Fair Value Measurements— In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which is designed to improve the effectiveness of disclosures by removing, modifying and adding disclosures related to fair value measurements. The update is effective for the Company on October 1, 2020, with early adoption permitted. The Company is currently assessing the impact this update will have on its consolidated financial statements. Cloud Computing Arrangements— In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendments in this update are effective for the Company on October 1, 2020, with early adoption permitted. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is in the process of assessing the impact of the amendments in this update but does not expect it to have a material impact on the Company's consolidated financial statements. |
Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | 5. Long-Term Debt As of December 31, 2018 and September 30, 2018, the Company’s long-term debt consisted of the following:
Senior Secured Credit Facilities NMHI's senior credit agreement (the “senior credit agreement”), as amended, governs a $730.0 million Tranche B term loan facility (the “term loan facility”), of which $50.0 million was deposited in a cash collateral account in support of the issuance of letters of credit under an institutional letter of credit facility (the “institutional letter of credit facility”), and a $160.0 million senior secured revolving credit facility (the “senior revolver”). The term loan facility matures on January 31, 2021, $70.0 million of the commitments under the senior revolver matures on January 31, 2019 and $90.0 million of the commitments under the senior revolver matures on January 31, 2021. All of the obligations under the senior secured credit facilities are guaranteed by NMHH and the subsidiary guarantors named therein. The senior credit agreement provides that NMHI may make one or more offers to the lenders, and consummate transactions with individual lenders that accept the terms contained in such offers, to extend the maturity date of the lender’s term loans and/or revolving commitments, subject to certain conditions, and any extended term loans or revolving commitments will constitute a separate class of term loans or revolving commitments. The senior revolver includes borrowing capacity available for letters of credit and for borrowings on same-day notice, referred to as the “swingline loans.” Any issuance of letters of credit or borrowing on a swingline loan will reduce the amount available under the senior revolver. As of December 31, 2018, NMHI had $698.3 million of borrowings outstanding under the term loan facility, no borrowings outstanding under the senior revolver, $48.5 million of letters of credit issued under the institutional letter of credit facility and $1.0 million of standby letters of credit under the senior revolver. Borrowings under the term loan facility bear interest, at our option, at: (i) an alternate base rate ("ABR") equal to the greater of (a) the prime rate of Barclays Bank PLC, (b) the federal funds rate plus 1/2 of 1.0%, and (c) the Eurodollar rate for an interest period of one-month plus 100 basis points (provided that the ABR applicable to the term loan facility will not be less than 2.00% per annum), plus 2.00%; or (ii) the Eurodollar rate (provided that the Eurodollar rate applicable to the term loan facility will not be less than 0.75% per annum), plus 3.00%. Borrowings under the revolving and swingline loans bear interest at our option at (i) an ABR equal to the greater of (a) the prime rate of Barclays Bank PLC, (b) the federal funds rate plus 1/2 of 1.0%, and (c) the Eurodollar rate for an interest period of one-month plus 100 basis points (provided that the ABR applicable to the term loan facility will not be less than 2.00% per annum), plus 2.25%; or (ii) the Eurodollar rate (provided that the Eurodollar rate applicable to the term loan facility will not be less than 0.75% per annum), plus 3.25%. NMHI is also required to pay a commitment fee to the lenders under the senior revolver at an initial rate of 0.50% of the average daily unutilized commitments thereunder. NMHI must also pay customary letter of credit fees. The senior credit agreement requires NMHI to make mandatory prepayments, subject to certain exceptions, on a percentage of NMHI's annual Excess Cash Flow, as defined in the senior credit agreement. NMHI determines whether or not a mandatory prepayment is required at the end of each fiscal year. NMHI was not required to make a prepayment for the fiscal year ended September 30, 2018. Covenants The senior credit agreement contains negative covenants, including, among other things, limitations on the Company’s ability to incur additional debt, create liens on assets, transfer or sell assets, pay dividends, redeem stock or make other distributions or investments, and engage in certain transactions with affiliates. The senior credit agreement contains a springing financial covenant. If, at the end of any fiscal quarter, the Company’s outstanding borrowings under the senior revolver exceeds 30% of the commitments thereunder, it is required to maintain at the end of each such fiscal quarter a consolidated first lien leverage ratio of not more than 5.00 to 1.00. The springing financial covenant was not in effect as of December 31, 2018 or September 30, 2018 as the Company’s usage of the senior revolver did not exceed the threshold for that quarter. Derivatives On January 20, 2015, NMHI entered into two interest rate swap agreements in an aggregate notional amount of $375.0 million in order to reduce the variability of cash flows of the Company’s variable rate debt. NMHI entered into these interest rate swaps to hedge the risk of changes in the floating rate of interest on borrowings under the term loan. Under the terms of the swaps, NMHI will receive from the counterparty a quarterly payment based on a rate equal to the greater of 3-month LIBOR or 1.00% per annum, and NMHI will make payments to the counterparty based on a fixed rate of 1.795% per annum, in each case on the notional amount of $375.0 million, settled on a net payment basis. The swap agreements expire on March 31, 2020. The fair value of the swap agreements, which represents the price that would be received to transfer the agreement in an orderly transaction between market participants, was an asset of $4.1 million and $5.8 million as of December 31, 2018 and September 30, 2018, respectively. Based on the timing of the associated cash flows, the fair value was split between current and long-term classification on the Company’s consolidated balance sheet in Prepaid expenses and other current assets and Other assets as of December 31, 2018 and September 30, 2018. The fair value was determined based on pricing models and independent formulas using current assumptions. Hedge ineffectiveness, if any, associated with the swap is recorded as interest expense in the period incurred. There was no hedge ineffectiveness recorded during the three months ended December 31, 2018. During the three months ended December 31, 2017, the ineffective portion of gains resulting from changes in fair value was $0.1 million which was recorded in Other income (expense), net. No amounts were excluded from ineffectiveness testing for the three months ended December 31, 2018 and 2017. |
Stock-Based Compensation |
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Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | 6. Stock-Based Compensation Stock Options Stock option activity for the three months ended December 31, 2018 is presented below:
The Company utilizes the Black-Scholes valuation model for estimating the fair value of stock options. Options granted under the 2014 Plan during the three months ended December 31, 2018 were valued using the following assumptions:
The Company recognizes the fair value of the stock option awards as stock-based compensation expense over the requisite service period of the individual grantee, which equals the vesting period. There were no stock options exercised during the three months ended December 31, 2018. As of December 31, 2018, there was $2.1 million of unrecognized compensation cost related to unvested stock options. This cost is expected to be recognized over a weighted-average period of 2.1 years. Restricted Stock Unit Awards (RSUs) Restricted stock unit activity for the three months ended December 31, 2018 is presented below:
The fair value of each restricted stock unit was determined based on the Company's closing stock price on the date of grant. The Company recognizes the fair value of the RSUs as stock-based compensation expense over the requisite service period of the individual grantee, which equals the vesting period. The total fair values of RSUs that vested during the three months ended December 31, 2018 was $3.3 million. As of December 31, 2018, there was $13.6 million of unrecognized compensation expense related to unvested restricted stock unit awards. This cost is expected to be recognized over a weighted-average period of 2.3 years. Performance Based Restricted Stock Units (PRSUs) During the three months ended December 31, 2018, the Company awarded 62,500 PRSUs. These PRSUs vest based upon the achievement of established performance targets over the three year performance period which ends September 30, 2021. The number of PRSUs that may vest varies between 0%- 200% based on the achievement of such goals. The PRSUs were valued at $13.65 per share based on the closing price of the Company’s common stock on the date of grant. To calculate compensation expense, the Company forecasts the likelihood of achieving the predefined performance targets and calculates the number of PRSUs expected to be earned. As of December 31, 2018, the Company expects to recognize $1.4 million of stock-based compensation expense related to outstanding PRSUs based on the expected attainment levels. This cost is expected to be recognized over a weighted-average period of 2.3 years. The PRSUs that were granted in fiscal 2016 failed to achieve the minimum threshold of the predetermined performance condition based on the three-year performance period ended on September 30, 2018. As a result, no shares were issued for these awards. A summary of PRSU activity for the three months ended December 31, 2018 is as follows:
Stock-based Compensation Expense The Company recorded stock-based compensation expense for stock options, RSUs and PRSUs under the 2014 Plan of $2.1 million and $1.7 million during the three months ended December 31, 2018 and 2017, respectively. Stock-based compensation expense is included in general and administrative expense in the consolidated statements of income. For a discussion of the treatment of the stock options, RSUs and PRSUs in the proposed Merger, see Note 2, Merger Agreement. |
Goodwill and Intangible Assets |
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Goodwill and Intangible Assets | 7. Goodwill and Intangible Assets Goodwill The changes in goodwill for the three months ended December 31, 2018 are as follows (in thousands):
(1) Adjustments are the result of finalizing the valuation of intangible assets associated with the acquisition of Mentis Neuro Rehabilitation, LLC (“Mentis”) that was completed during fiscal 2018. Intangible Assets Intangible assets consist of the following as of December 31, 2018 (in thousands):
Intangible assets consist of the following as of September 30, 2018 (in thousands):
Amortization expense was $10.8 million and $11.4 million for the three months ended December 31, 2018 and 2017, respectively. The estimated remaining amortization expense related to intangible assets with finite lives for the nine months remaining in fiscal 2019 and each of the four succeeding years and thereafter is as follows:
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Fair Value Measurements |
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Fair Value Measurements | 8. Fair Value Measurements The Company measures and reports its financial assets and liabilities on the basis of fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level hierarchy for disclosure has been established to show the extent and level of judgment used to estimate fair value measurements, as follows: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Significant other observable inputs (quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability). Level 3: Significant unobservable inputs for the asset or liability. These values are generally determined using pricing models which utilize management estimates of market participant assumptions. Valuation techniques for assets and liabilities measured using Level 3 inputs may include methodologies such as the market approach, the income approach or the cost approach, and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are only utilized to the extent that observable inputs are not available or cost-effective to obtain. A description of the valuation methodologies used for instruments measured at fair value as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. The following table sets forth the Company’s assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2018.
The following table sets forth the Company’s assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2018.
Interest rate-swap agreements. The Company’s interest rate-swap agreements are classified within Level 2 of the fair value hierarchy. Based on the timing of the associated cash flows, the fair value of the swap agreements was recorded in Prepaid expenses and other current assets or Other assets in the Company’s condensed consolidated balance sheets. The fair value of these agreements was determined based on pricing models and independent formulas using current assumptions that included swap terms, interest rates and forward LIBOR curves and the Company’s credit risk. The following table presents a summary of changes in fair value of the Company’s Level 3 liabilities (acquisition related contingent consideration) measured on a recurring basis for the three months ended December 31, 2018.
(1) The Company settled the contingent consideration obligation associated with the Jac-Lin Manor, Inc acquisition during the three months ended December 31, 2018. The following table presents a summary of changes in fair value of the Company’s Level 3 liabilities (acquisition related contingent consideration) measured on a recurring basis for the three months ended December 31, 2017.
As of December 31, 2018 and September 30, 2018, the Company had $1.3 million and $1.8 million of contingent consideration liabilities, respectively, which were reflected in Other accrued liabilities or Other long-term liabilities. At December 31, 2018 and September 30, 2018, the carrying values of cash, accounts receivable, accounts payable and variable rate debt approximated fair value. |
Income Taxes |
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Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Income Taxes The Company’s effective income tax rate for the interim periods is based on management’s estimate of the Company’s annual effective tax rate for the applicable year. It is also affected by discrete items that may occur in any given period. The rates differ from the federal statutory income tax rate primarily due to state income taxes and nondeductible permanent differences such as meals and nondeductible compensation. For the three months ended December 31, 2018, the Company had a provision for income taxes of $3.0 million, or a 31.8% effective income tax rate compared to a benefit from income taxes of $5.1 million, or a (120.2)% effective income tax rate for the three months ended December 31, 2017. The benefit from income taxes for the three months ended December 31, 2017 was primarily due to revaluing of the Company’s deferred tax liabilities as a result of the lower corporate tax rate established by the Tax Cuts and Jobs Act (the “Tax Act”) enacted in the first quarter of fiscal 2018. The Company files a federal consolidated return and files various state income tax returns and, generally, is no longer subject to income tax examinations by the taxing authorities for years prior to September 30, 2015. The Company did not have a reserve for uncertain income tax positions at December 31, 2018 and September 30, 2018. The Company does not expect any significant changes to unrecognized tax benefits within the next twelve months. The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits as charges to income tax expense. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | 10. Segment Information The Company conducts its business through three reportable business segments: the CSS segment, the SRS segment, and the CFS segment. The Company evaluates performance based on EBITDA. EBITDA for each segment is defined as income (loss) from continuing operations for the segment before income taxes, depreciation and amortization, and interest income (expense). Activities classified as “Corporate and Other” in the table below relate to the results of the ADH operating segment and unallocated home office expenses and stock-compensation expense. Total assets included in the Corporate and Other segment include assets associated with our ADH operating segment and assets maintained by our corporate entity including cash, restricted cash, and other current and non-current assets. The following table is a financial summary by reportable segments for the periods indicated (in thousands):
A reconciliation of EBITDA to income before income taxes on a consolidated basis is as follows (in thousands):
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Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | 11. Revenue Recognition On October 1, 2018, the Company adopted Accounting Standard Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”) and all of the related amendments (the “New Revenue Standard”). The New Revenue Standard requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The Company adopted the standard using the modified retrospective approach and did not record a cumulative catch-up adjustment as the timing and measurement of revenue for the Company’s customers is similar to its prior revenue recognition model. The Company’s accounting policies under the New Revenue Standard were applied prospectively to the 2019 fiscal period and are described below. The Company’s net revenue is generated from providing services directly to the individuals we support under contracts with state and local government agencies and non-public payors including commercial insurers and private consumers. Generally, these contracts establish the terms of the customer relationship and set the broad range of terms for services to be performed at a stated rate. However, the contracts do not give rise to rights and obligations until the Company is engaged to provide services by the state or local government agency or the individual being served. When the services are authorized, it creates a performance obligation to provide services over a defined period of time that can range from one day to multiple months. The types of service offerings vary by individual, however; these offerings are not distinct within the context of the contract because the intent is to coordinate the comprehensive care required for an individual. The Company satisfies its performance obligations over time, given that individuals simultaneously receive and consume the benefits provided by the Company as the services are performed. As the Company has the right to consideration from customers commensurate with the value of the services provided to customers from the performance over a given invoice period, the Company has elected to use the practical expedient for measuring progress toward the satisfaction of performance obligations and recognizes service revenue in the amount to which the Company has the right to invoice. Further, the Company has elected to apply the practical expedients to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and for (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed. Types of Contracts The Company provides services under four types of contractual arrangements with its payors:
The Company has elected to apply the practical expedient and recognize incremental costs of obtaining a contract with amortization periods of one year or less as expense when incurred. These costs are infrequent and have historically been immaterial. The transaction price under these contracts is based on gross charges for services, reduced by allowances for estimated sales adjustments and state provider taxes or gross receipts taxes levied on services the Company provides. Sales adjustments are estimated based on an analysis of historical sales adjustments and recent developments in payment trends. Subsequent changes to the estimate of the transaction price are recorded as adjustments to net revenue in the period of change. In addition, all four contract types are subject to review by the third-party payors and may be subject to retroactive adjustment if in performing our services we have not adhered to the terms of the contract, or did not document our services as specified by the payor. Therefore, amounts due from third-party payors, primarily state and local government agencies and commercial health insurers, include variable consideration for retroactive revenue adjustments due to settlements of audits and reviews. We make estimates for these revenue adjustments based on our historical experience and success rates in the claim appeals and adjudication process. As of December 31, 2018 and 2017, liabilities to payors were $6.0 million and $8.2 million, respectively. Revenue Mix For the three months ended December 31, 2018 and 2017 the Company’s revenue by payor type was as follows:
Revenue derived from contracts with state and local governmental payors in the state of Minnesota, the Company’s largest state operation, which is included in the CSS segment, accounted for approximately 15% of the Company’s net revenue for the three months ended December 31, 2018, and 16% of the Company’s net revenue for the three months ended December 31, 2017. Contracts with state and local governmental payors in California, the Company’s second largest state operation, which is included in the CSS and SRS segments, accounted for approximately 10% of net revenue for the three months ended December 31, 2018 and 2017. No other states accounted for 10% or more of our net revenue during the three months ended December 31, 2018 and 2017. |
Net Income Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Share | 12. Net Income Per Share The following table sets forth the computation of basic and diluted earnings per share (“EPS”):
(1) The decrease in basic and diluted weighted average shares outstanding as compared to the three months ended December 31, 2017 is primarily due to the repurchase of 1,470,785 shares by the Company under the stock repurchase plan that was announced on February 8, 2018. The stock repurchase program expired on August 12, 2018, and the Company does not have authorization to repurchase any additional common stock under the program. |
Commitments and Contingencies |
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Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 13. Commitments and Contingencies The Company is in the health and human services business and, therefore, has been and continues to be subject to numerous claims alleging that the Company, its employees or its independently contracted host-home caregivers (“Mentors”) failed to provide proper care for an individual served by the Company. The Company is also subject to claims by these individuals, its employees, its Mentors or community members against the Company for negligence, intentional misconduct or violation of applicable laws. Included in the Company’s recent claims are claims alleging personal injury, assault, abuse, wrongful death and other charges. Regulatory agencies may initiate administrative proceedings alleging that the Company’s programs, employees or agents violate statutes and regulations and seek to impose monetary penalties on the Company. The Company could be required to incur significant costs to respond to regulatory investigations or defend against civil lawsuits and, if the Company does not prevail, the Company could be required to pay substantial amounts of money in damages, settlement amounts or penalties arising from these legal proceedings. The Company is also subject to potential lawsuits under the False Claims Act and other federal and state whistleblower statutes designed to combat fraud and abuse in the health care industry. These lawsuits can involve significant monetary awards that may incentivize private plaintiffs to bring these suits. If the Company is found to have violated the False Claims Act, it could be excluded from participation in Medicaid and other federal healthcare programs which would have a material adverse effect on the business. The Patient Protection and Affordable Care Act provides a mandate for more vigorous and widespread enforcement activity to combat fraud and abuse in the health care industry. The Company is also subject to employee-related claims under state and federal law, including claims for wage and hour violations under the Fair Labor Standards Act or state wage and hour laws, and claims for discrimination, wrongful discharge or retaliation. The Company currently has two pending complaints in California state court that allege certain wage and hour violations of California labor laws and seek to be designated as class-actions. The Company’s policy is to accrue for all probable and estimable claims using information available at the time the financial statements are issued. Actual claims could settle in the future at materially different amounts due to the nature of litigation. |
Significant Accounting Policies (Policies) |
3 Months Ended |
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Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited condensed consolidated financial statements herein should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018, which is on file with the SEC. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal and recurring adjustments, necessary to present fairly the financial statements in accordance with GAAP. Intercompany balances and transactions between the Company and its subsidiaries have been eliminated in consolidation. Operating results for the three months ended December 31, 2018 may not necessarily be indicative of results to be expected for any other interim period or for the full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Recent Accounting Pronouncements | Adoption of New Accounting Pronouncements Revenue from Contracts with Customers— In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers Topic, and has since issued several additional amendments thereto (collectively known as ASC 606). ASC 606 supersedes nearly all existing revenue recognition guidance under U.S. GAAP. On October 1, 2018 the Company adopted ASC 606 using the modified retrospective transition method. Under this method, the reported results for fiscal 2019 reflect the application of ASC 606, while the reported results for fiscal 2018 were prepared under the guidance of ASC 605, Revenue Recognition. The modified retrospective method requires the cumulative effect of applying the new guidance to all contracts with customers that were not completed as of October 1, 2018 to be recorded as an adjustment to retained earnings as of the adoption date. The Company did not record a cumulative effect adjustment to retained earnings as a result of the adoption of ASC 606 because the timing and measurement of revenue for the Company’s contracts with customers has no impact on retained earnings. See Note 11, Revenue Recognition for additional disclosures. Statement of Cash Flows— In November 2016, the FASB issued ASU No. 2016-18—Statement of Cash Flows (Topic 230): Restricted Cash, which requires that a statement of cash flows present the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted the new standard effective October 1, 2018, using the retrospective transition method to each period presented. The adoption of this new standard resulted in a decrease to Net cash used in investing activities of $0.9 million for the three months ended December 31, 2017. 4. Recent Accounting Pronouncements Leases— In February 2016, the FASB issued ASU No. 2016-02—Leases (Topic 842). The new standard requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The standard will be effective for the Company on October 1, 2019. In July 2018, the FASB issued ASU No. 2018-11—Leases (Topic 842): Targeted Improvements (ASU 2018-11). Prior to ASU 2018-11, a modified retrospective transition was required for financing or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements. ASU 2018-11 allows entities an additional transition method to the existing requirements whereby an entity could adopt the provisions of ASU 2016-02 by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without adjustment to the financial statements for periods prior to adoption. The Company will elect this new transition method when it adopts ASU 2016-02 on October 1, 2019. The adoption of this standard is expected to have a material impact on the Company's financial position. As of December 31, 2018, the Company had gross operating lease commitments of approximately $351 million. Upon adoption, a substantial portion of these lease commitments will be recorded at their net present value as a right of use asset and a lease obligation. Fair Value Measurements— In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which is designed to improve the effectiveness of disclosures by removing, modifying and adding disclosures related to fair value measurements. The update is effective for the Company on October 1, 2020, with early adoption permitted. The Company is currently assessing the impact this update will have on its consolidated financial statements. Cloud Computing Arrangements— In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendments in this update are effective for the Company on October 1, 2020, with early adoption permitted. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is in the process of assessing the impact of the amendments in this update but does not expect it to have a material impact on the Company's consolidated financial statements. |
Long-Term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | As of December 31, 2018 and September 30, 2018, the Company’s long-term debt consisted of the following:
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Stock-Based Compensation (Tables) |
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Schedule of Stock Options Activity | Stock option activity for the three months ended December 31, 2018 is presented below:
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Schedule of Stock Options Valuation Assumptions | The Company utilizes the Black-Scholes valuation model for estimating the fair value of stock options. Options granted under the 2014 Plan during the three months ended December 31, 2018 were valued using the following assumptions:
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Schedule of Restricted Stock Unit Awards Activity | Restricted stock unit activity for the three months ended December 31, 2018 is presented below:
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Schedule of Performance Based Restricted Stock Units | A summary of PRSU activity for the three months ended December 31, 2018 is as follows:
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Goodwill and Intangible Assets (Tables) |
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Schedule of Changes in Goodwill | The changes in goodwill for the three months ended December 31, 2018 are as follows (in thousands):
(1) Adjustments are the result of finalizing the valuation of intangible assets associated with the acquisition of Mentis Neuro Rehabilitation, LLC (“Mentis”) that was completed during fiscal 2018. |
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Schedule of Finite-lived Intangible Assets | Intangible assets consist of the following as of December 31, 2018 (in thousands):
Intangible assets consist of the following as of September 30, 2018 (in thousands):
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Schedule of Indefinite-Lived Intangible Assets | Intangible assets consist of the following as of December 31, 2018 (in thousands):
Intangible assets consist of the following as of September 30, 2018 (in thousands):
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Schedule of Amortization Expense Related to Intangible Assets | The estimated remaining amortization expense related to intangible assets with finite lives for the nine months remaining in fiscal 2019 and each of the four succeeding years and thereafter is as follows:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Assets and Liabilities on a Recurring Basis | The following table sets forth the Company’s assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2018.
The following table sets forth the Company’s assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2018.
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Summary of Changes in Fair Value of Company's Level 3 Liabilities Measured on Recurring Basis | The following table presents a summary of changes in fair value of the Company’s Level 3 liabilities (acquisition related contingent consideration) measured on a recurring basis for the three months ended December 31, 2018.
(1) The Company settled the contingent consideration obligation associated with the Jac-Lin Manor, Inc acquisition during the three months ended December 31, 2018. The following table presents a summary of changes in fair value of the Company’s Level 3 liabilities (acquisition related contingent consideration) measured on a recurring basis for the three months ended December 31, 2017.
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance of Operating Segments | The following table is a financial summary by reportable segments for the periods indicated (in thousands):
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Reconciliation of Operating Profit (Loss) from Segments to Consolidated | A reconciliation of EBITDA to income before income taxes on a consolidated basis is as follows (in thousands):
|
Revenue Recognition (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | For the three months ended December 31, 2018 and 2017 the Company’s revenue by payor type was as follows:
|
Net Income Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share (“EPS”):
(1) The decrease in basic and diluted weighted average shares outstanding as compared to the three months ended December 31, 2017 is primarily due to the repurchase of 1,470,785 shares by the Company under the stock repurchase plan that was announced on February 8, 2018. The stock repurchase program expired on August 12, 2018, and the Company does not have authorization to repurchase any additional common stock under the program. |
Business Overview (Details) |
Dec. 31, 2018
state
client
|
---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Area of operations, number of states | state | 36 |
Number of residential clients | 12,700 |
Number of periodic clients | 18,700 |
Merger Agreement (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 17, 2018 |
|
Business Acquisition [Line Items] | ||
Percentage of stock units payable upon merger closing date | 50.00% | |
Percentage of stock units payable in accordance with the vesting terms | 50.00% | |
Potential merge termination fee | $ 20.0 | |
Celtic Intermediate Corp. | ||
Business Acquisition [Line Items] | ||
Merger acquisition share price conversion (in dollars per share) | $ 17.75 | |
Celtic Intermediate Corp. | General and Administrative Expense | ||
Business Acquisition [Line Items] | ||
Merger transaction related costs | $ 1.2 | |
Celtic Intermediate Corp. | ||
Business Acquisition [Line Items] | ||
Potential merge termination fee | $ 40.0 | |
Celtic Intermediate and Affiliates of Vestar Capital Partners | ||
Business Acquisition [Line Items] | ||
Ownership percentage | 54.00% |
Significant Accounting Policies (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash used in investing activities | $ (13,460) | $ (91,380) |
Accounting Standards Update 2016-18 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash used in investing activities | $ (900) |
Recent Accounting Pronouncements (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Accounting Changes and Error Corrections [Abstract] | |
Operating lease commitments | $ 351 |
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Sep. 30, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Term loan principal; principal and interest are due in quarterly installments through January 31, 2021 | $ 698,312 | $ 700,145 |
Original issue discount on term loan, net of accumulated amortization | (909) | (1,020) |
Deferred financing costs, net of accumulated amortization | (3,154) | (3,597) |
Long-term debt, current and non-current | 694,249 | 695,528 |
Less current portion of the term loan | 7,331 | 7,331 |
Long-term debt | 686,918 | 688,197 |
Term Loan | ||
Debt Instrument [Line Items] | ||
Less current portion of the term loan | $ 7,331 | $ 7,331 |
Long-Term Debt - Covenants (Details) - NMH Investment |
3 Months Ended |
---|---|
Dec. 31, 2018 | |
Debt Instrument [Line Items] | |
Percentage of revolving commitments | 30.00% |
Consolidated first lien leverage ratio, maximum | 5.0 |
Stock-Based Compensation - Assumptions in Calculating the Fair Value (Details) - Stock options |
3 Months Ended |
---|---|
Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 2.78% |
Expected term | 6 years |
Expected volatility | 36.13% |
Expected dividend yield | 0.00% |
Long-Term Debt - Derivatives (Details) |
3 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Sep. 30, 2018
USD ($)
|
Jan. 20, 2015
USD ($)
swap
|
|
Debt Instrument [Line Items] | ||||
Ineffectiveness associated with swap | $ 0 | $ 100,000 | ||
Amount excluded from ineffectiveness testing | 0 | $ 0 | ||
NMH Investment | Interest Rate Swap | ||||
Debt Instrument [Line Items] | ||||
Number of interest rate swap agreements | swap | 2 | |||
Interest rate swap in a notional amount | $ 375,000,000 | |||
Payments on fixed rate | 1.795% | |||
Derivative asset | $ 4,100,000 | |||
Derivative liability | $ 5,800,000 | |||
Minimum | NMH Investment | Interest Rate Swap | ||||
Debt Instrument [Line Items] | ||||
Minimum interest received from counter party | 1.00% |
Stock-Based Compensation - Nonvested Restricted Stock Awards (Details) - Performance and Restricted stock units |
3 Months Ended |
---|---|
Dec. 31, 2018
$ / shares
shares
| |
Number of Restricted Stock Units | |
Non-vested beginning balance (shares) | shares | 835,899 |
Granted (shares) | shares | 465,504 |
Forfeited (shares) | shares | 29,190 |
Vested (shares) | shares | 243,044 |
Non-vested ending balance (shares) | shares | 1,029,169 |
Weighted Average Grant-Date Fair Value | |
Non-vested beginning balance (dollars per share) | $ / shares | $ 18.35 |
Granted (dollars per share) | $ / shares | 13.65 |
Forfeited (dollars per share) | $ / shares | 18.86 |
Vested (dollars per share) | $ / shares | 19.69 |
Non-vested ending balance (dollars per share) | $ / shares | $ 15.90 |
Stock-Based Compensation - Performance Based Restricted Stock Awards (Details) - Performance Restricted Stock Units (PRSUs) |
3 Months Ended |
---|---|
Dec. 31, 2018
$ / shares
shares
| |
Number of Restricted Stock Units | |
Non-vested beginning balance (shares) | shares | 135,339 |
Granted (shares) | shares | 62,500 |
Forfeited (shares) | shares | 46,663 |
Non-vested ending balance (shares) | shares | 151,176 |
Units expected to vest (shares) | shares | 110,291 |
Weighted Average Grant-Date Fair Value | |
Non-vested beginning balance (dollars per share) | $ / shares | $ 19.44 |
Granted (dollars per share) | $ / shares | 13.65 |
Forfeited (dollars per share) | $ / shares | 19.79 |
Non-vested ending balance (dollars per share) | $ / shares | 16.94 |
Units expected to vest, Weighted Average Grant-Date Fair Value (dollars per share) | $ / shares | $ 15.86 |
Goodwill and Intangible Assets - Schedule of Changes in Goodwill (Details) $ in Thousands |
3 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Balance as of September 30, 2018 | $ 311,752 |
Adjustments to prior acquisitions | (1,253) |
Balance as of December 31, 2018 | 310,499 |
Operating Segments | CSS | |
Goodwill [Roll Forward] | |
Balance as of September 30, 2018 | 161,718 |
Adjustments to prior acquisitions | 0 |
Balance as of December 31, 2018 | 161,718 |
Operating Segments | SRS | |
Goodwill [Roll Forward] | |
Balance as of September 30, 2018 | 117,445 |
Adjustments to prior acquisitions | (1,253) |
Balance as of December 31, 2018 | 116,192 |
Operating Segments | CFS | |
Goodwill [Roll Forward] | |
Balance as of September 30, 2018 | 28,484 |
Adjustments to prior acquisitions | 0 |
Balance as of December 31, 2018 | 28,484 |
Corporate and Other | |
Goodwill [Roll Forward] | |
Balance as of September 30, 2018 | 4,105 |
Adjustments to prior acquisitions | 0 |
Balance as of December 31, 2018 | $ 4,105 |
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 10.8 | $ 11.4 |
Goodwill and Intangible Assets - Amortization Expense (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2019 | $ 33,267 |
2020 | 42,580 |
2021 | 39,165 |
2022 | 37,360 |
2023 | 33,019 |
Thereafter | 78,627 |
Total | $ 264,018 |
Fair Value Measurements - Level 3 Liabilities (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at beginning of period | $ 1,805 | $ 0 |
Payment | (480) | |
Acquisition date fair value of contingent consideration obligations recorded | 1,080 | |
Balance at end of period | $ 1,325 | $ 1,080 |
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Sep. 30, 2018 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Contingent consideration liability | $ 1.3 | $ 1.8 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Provision (benefit) for income taxes | $ 2,972 | $ (5,127) |
Effective income tax rate | 31.80% | (120.20%) |
Segment Information - Narrative (Details) |
3 Months Ended |
---|---|
Dec. 31, 2018
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Segment Information - Reconciliation of Income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Segment Reporting [Abstract] | ||
EBITDA | $ 41,900 | $ 34,990 |
Depreciation and amortization | 22,375 | 21,797 |
Interest expense, net | 10,166 | 8,926 |
Income before income taxes | $ 9,359 | $ 4,267 |
Revenue Recognition - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 406,631 | $ 395,418 |
Contract with customer, liability | $ 6,000 | $ 8,200 |
SRS | Sales Revenue, Segment | Geographic Concentration Risk | MINNESOTA | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk, percentage | 15.00% | 16.00% |
SRS | Sales Revenue, Segment | Geographic Concentration Risk | CALIFORNIA | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk, percentage | 10.00% | |
Negotiated Contracts | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 136,200 | $ 126,400 |
Fixed-price Contract | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 231,100 | 217,500 |
Retrospective Reimbursement Contracts | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 12,000 | 26,600 |
Prospective Payment Contract | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 27,300 | $ 24,900 |
Commitments and Contingencies (Details) |
Dec. 31, 2018
complaint
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Pending complaints | 2 |
Label | Element | Value |
---|---|---|
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | $ 1,225,000 |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | 389,000 |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | 50,000,000 |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | $ 50,000,000 |
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