Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE: November 15, 2010
CRC Health Corporation Reports Operating Results
For the Three Months and Nine Months Ended September 30, 2010
CUPERTINO, CA, November 15, 2010 – CRC Health Corporation (“CRC” or the “Company”), a leading provider of substance abuse treatment and adolescent youth services through its wholly owned consolidated subsidiaries, announced its results for the three months and nine months ended September 30, 2010.
The Company has two operating divisions: recovery division and healthy living division. The recovery division provides substance abuse and behavioral disorder treatment services through residential treatment facilities and outpatient treatment clinics. The healthy living division includes programs and treatment services for adolescent youth as well as treatment services for eating disorders, obesity, and weight management serving all age groups. Adolescent and youth treatment services include therapeutic boarding schools and educational outdoor programs for children and adolescents struggling with academic, emotional, and behavioral issues (Aspen programs).
The operations and enrollment of the Aspen programs within the Company’s healthy living division are highest in the summer months. Additionally, the Aspen programs have limited leading indicators regarding performance. As a result, the Company has more information in late summer and early fall around Aspen’s performance, which came in below the performance levels expected in July and August 2010. At the end of the third quarter of 2010, the Company reviewed actual results for graduation, admissions, and average length of stay in the Aspen programs relative to its prior forecast and fiscal year budget. In response to negative results in these areas, the Company further lowered its view of forecasted future cash flows for the Aspen programs within its healthy living division. This triggering event caused the Company to test the fixed assets, intangibles and goodwill within its healthy living division for impairment. For the three months ended September 30, 2010, the Company recognized a non-cash charge of $9.1 million and $2.5 million related to goodwill impairment and asset impairment, respectively.
Consolidated net revenue for the three months ended September 30, 2010 increased $6.1 million, or 5.4%, to $119.2 million compared to the same period of 2009. For the three months ended September 30, 2010, consolidated operating expenses decreased $9.3 million, or 7.9% to $108.4 million, or 9.1%, compared to the same period in 2009. This decrease in operating expenses was primarily due to lower goodwill and asset impairment charges during the three months September 30, 2010 compared to the same period of 2009. The three months ended September 30, 2010 adjusted pro forma earnings before interest, taxes, depreciation and amortization (“EBITDA”) decreased $0.7 million, or 2.1%, to $30.5 million compared to $31.1 million during the same period of 2009.
Consolidated net revenue for the nine months ended September 30, 2010 increased $13.1 million, or 4.0%, to $337.9 million compared to the same period of 2009. For the nine months ended September 30, 2010, consolidated operating expenses increased $52.7 million, of which $46.0 million is related to higher goodwill and asset impairment charges, to $355.6 million, or 17.4%, compared to the same period in 2009. The nine months ended September 30, 2010 adjusted pro forma earnings before interest, taxes, depreciation and amortization (“EBITDA”) increased $4.0 million, or 5.4%, to $79.4 million compared to $75.4 million during the same period of 2009.
Three Months Ended September 30, 2010 Financial Results:
The following table presents our operating income by division for the three months ended September 30, 2010 and 2009 (numbers in thousands, except for percentages).
Three Months Ended September 30, | ||||||||||||||||
2010 vs. 2009 | ||||||||||||||||
2010 | 2009 | $ Change | % Change | |||||||||||||
Net revenue | ||||||||||||||||
Recovery division | $ | 83,267 | $ | 78,531 | $ | 4,736 | 6.0 | % | ||||||||
Healthy living division | 35,880 | 34,493 | 1,387 | 4.0 | % | |||||||||||
Corporate | 52 | 60 | (8 | ) | (13.3 | )% | ||||||||||
119,199 | 113,084 | 6,115 | 5.4 | % | ||||||||||||
Operating expenses | ||||||||||||||||
Recovery division | 55,633 | 52,751 | 2,882 | 5.5 | % | |||||||||||
Healthy living division(1) | 44,645 | 57,746 | (13,101 | ) | (22.7 | )% | ||||||||||
Corporate | 8,164 | 7,236 | 928 | 12.8 | % | |||||||||||
108,442 | 117,733 | (9,291 | ) | (7.9 | )% | |||||||||||
Operating income (loss) | ||||||||||||||||
Recovery division | 27,634 | 25,780 | 1,854 | 7.2 | % | |||||||||||
Healthy living division | (8,765 | ) | (23,253 | ) | 14,488 | 62.3 | % | |||||||||
Corporate | (8,112 | ) | (7,176 | ) | (936 | ) | (13.0 | )% | ||||||||
Operating income (loss) | $ | 10,757 | $ | (4,649 | ) | $ | 15,406 | 331.4 | % | |||||||
(1) | Healthy living division operating expenses for the three months ended September 30, 2010 and 2009 include $2.5 million and $2.3 million, respectively, of asset impairment and $9.1 million and $24.9 million, respectively, of goodwill impairment. |
CRC Health Corporation Adjusted Pro forma EBITDA by Segment
and Adjusted Pro Forma Operating Margins for the Three Months
Ended September 30, 2010 and 2009 (in thousands):
Three Months Ended September 30, | ||||||||||||||||
2010 vs. 2009 | ||||||||||||||||
2010 | 2009 | $ Change | % Change | |||||||||||||
Net Revenue | ||||||||||||||||
Recovery division | $ | 83,267 | $ | 78,531 | $ | 4,736 | 6.0 | % | ||||||||
Healthy living division | 35,880 | 34,493 | 1,387 | 4.0 | % | |||||||||||
Corporate | 52 | 60 | (8 | ) | (13.3 | )% | ||||||||||
119,199 | 113,084 | 6,115 | 5.4 | % | ||||||||||||
Adjusted Pro Forma Operating Expenses | ||||||||||||||||
Recovery division | 52,399 | 49,592 | 2,807 | 5.7 | % | |||||||||||
Healthy living division | 31,695 | 28,270 | 3,425 | 12.1 | % | |||||||||||
Corporate | 4,634 | 4,097 | 537 | 13.1 | % | |||||||||||
88,728 | 81,959 | 6,769 | 8.3 | % | ||||||||||||
Adjusted Pro Forma EBITDA | ||||||||||||||||
Recovery division | 30,868 | 28,939 | 1,929 | 6.7 | % | |||||||||||
Healthy living division | 4,185 | 6,223 | (2,038 | ) | (32.7 | )% | ||||||||||
Corporate | (4,582 | ) | (4,037 | ) | (545 | ) | (13.5 | )% | ||||||||
$ | 30,471 | $ | 31,125 | $ | (654 | ) | (2.1 | )% | ||||||||
Adjusted Pro Forma Operating Margins | ||||||||||||||||
Recovery division | 37.1 | % | 36.9 | % | ||||||||||||
Healthy living division | 11.7 | % | 18.0 | % | ||||||||||||
CRC Health Corporation | 25.6 | % | 27.5 | % |
Recovery Division:
Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009
• | Net revenue increased $4.7 million, or 6.0%, to $83.3 million for the quarter from $78.5 million from the comparable prior-year quarter. Revenue increases were primarily driven by an increase of $2.9 million in residential facilities and an increase of $1.8 million within comprehensive treatment centers (“CTCs”). Same-facility net revenue increases were similar to total-facility net revenue increases for the quarter compared to the comparable prior-year quarter. |
• | For the comparable quarters in 2010 and 2009, adjusted pro forma revenue was the same as revenue measured on the basis of Generally Accepted Accounting Principles of the United States (US “GAAP”). Thus, the above explanations related to changes in GAAP revenue also apply to adjusted pro forma revenue. |
• | Adjusted pro forma EBITDA increased $1.9 million, or 6.7%, to $30.9 million for the quarter from $28.9 million from the comparable prior-year quarter. |
• | Recovery division operating expenses increased $2.9 million for the comparable quarters in 2010 and 2009 due primarily to increases in salaries and benefits and supplies, facilities and other operating costs. |
• | Recovery division same-facility operating expenses increased $2.5 million driven by an increase of $1.9 million in residential facilities and an increase of $0.6 million in CTCs. |
Healthy Living Division:
Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009
• | Net revenue increased $1.4 million, or 4.0%, to $35.9 million for the quarter from $34.5 million from the comparable prior-year quarter. The increase in revenue was driven by increases of $1.9 million and $0.6 million within weight management and outdoor programs, respectively, offset by a decrease of $1.0 million in residential facilities. Same-facility net revenue increases were similar to total facility net revenue decreases for the quarter compared to the comparable prior-year quarter. |
• | For the comparable quarters in 2010 and 2009, adjusted pro forma revenue was the same as revenue measured on a U.S. GAAP basis. Thus, the above explanations related to changes in GAAP revenue also apply to adjusted pro forma revenue. |
• | Adjusted pro forma EBITDA decreased $2.0 million to $4.2 million for the quarter from $6.2 million from the comparable prior-year quarter. |
• | Operating expenses for the healthy living division decreased $13.1 million, or 22.7%, primarily driven by lower non-cash goodwill and asset impairment charges. |
• | Healthy living division same-facility operating expenses increased $1.5 million primarily due to increases in supplies, facilities and other costs of $1.9 million and salaries and benefits of $1.1 million offset by decreases of $0.6 million and $0.9 million in depreciation and amortization and asset impairments, respectively. |
Corporate:
Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009
• | Corporate operating expenses increased $0.9 million or 12.8% for the comparable quarters in 2010 and 2009 reflecting increases in salaries and benefits and supplies, facilities and other operating costs. |
Nine Months Ended September 30, 2010 Financial Results:
The following table presents our operating income by division for the nine months ended September 30, 2010 and 2009 (numbers in thousands, except for percentages).
Nine Months Ended September 30, | ||||||||||||||||
2010 vs. 2009 | ||||||||||||||||
2010 | 2009 | $ Change | % Change | |||||||||||||
Net revenue | ||||||||||||||||
Recovery division | $ | 246,387 | $ | 231,980 | $ | 14,407 | 6.2 | % | ||||||||
Healthy living division | 91,396 | 92,689 | (1,293 | ) | (1.4 | )% | ||||||||||
Corporate | 150 | 186 | (36 | ) | (19.4 | )% | ||||||||||
337,933 | 324,855 | 13,078 | 4.0 | % | ||||||||||||
Operating expenses | ||||||||||||||||
Recovery division | 163,827 | 159,939 | 3,888 | 2.4 | % | |||||||||||
Healthy living division(1) | 167,315 | 118,913 | 48,402 | 40.7 | % | |||||||||||
Corporate | 24,452 | 23,995 | 457 | 1.9 | % | |||||||||||
355,594 | 302,847 | 52,747 | 17.4 | % | ||||||||||||
Operating income (loss) | ||||||||||||||||
Recovery division | 82,560 | 72,041 | 10,519 | 14.6 | % | |||||||||||
Healthy living division | (75,919 | ) | (26,224 | ) | (49,695 | ) | (189.5 | )% | ||||||||
Corporate | (24,302 | ) | (23,809 | ) | (493 | ) | (2.1 | )% | ||||||||
Operating (loss) income | $ | (17,661 | ) | $ | 22,008 | $ | (39,669 | ) | (180.2 | )% | ||||||
(1) | Healthy living division operating expenses for the nine months ended September 30, 2010 and 2009 include $20.5 million and $2.3 million, respectively, of asset impairment and $52.7 million and $24.9 million, respectively, of goodwill impairment. |
CRC Health Corporation Adjusted Pro forma EBITDA by Segment
and Adjusted Pro Forma Operating Margins for the Nine Months
Ended September 30, 2010 and 2009 (in thousands):
Nine Months Ended September 30, | ||||||||||||||||
2010 | 2009 | 2010 vs. 2009 | ||||||||||||||
$ Change | % Change | |||||||||||||||
Net Revenue | ||||||||||||||||
Recovery division | $ | 246,387 | $ | 231,980 | $ | 14,407 | 6.2 | % | ||||||||
Healthy living division | 91,396 | 92,689 | (1,293 | ) | (1.4 | )% | ||||||||||
Corporate | 150 | 186 | (36 | ) | (19.4 | )% | ||||||||||
337,933 | 324,855 | 13,078 | 4.0 | % | ||||||||||||
Adjusted Pro Forma Operating Expenses | ||||||||||||||||
Recovery division | 155,377 | 151,134 | 4,243 | 2.8 | % | |||||||||||
Healthy living division | 88,776 | 83,599 | 5,177 | 6.2 | % | |||||||||||
Corporate | 14,376 | 14,757 | (381 | ) | (2.6 | )% | ||||||||||
258,529 | 249,490 | 9,039 | 3.6 | % | ||||||||||||
Adjusted Pro Forma EBITDA | ||||||||||||||||
Recovery division | 91,010 | 80,846 | 10,164 | 12.6 | % | |||||||||||
Healthy living division | 2,620 | 9,090 | (6,470 | ) | (71.2 | )% | ||||||||||
Corporate | (14,226 | ) | (14,571 | ) | 345 | 2.4 | % | |||||||||
$ | 79,404 | $ | 75,365 | $ | 4,039 | 5.4 | % | |||||||||
Adjusted Pro Forma Operating Margins | ||||||||||||||||
Recovery division | 36.9 | % | 34.9 | % | ||||||||||||
Healthy living division | 2.9 | % | 9.8 | % | ||||||||||||
CRC Health Corporation | 23.5 | % | 23.2 | % |
Recovery Division:
Nine months Ended September 30, 2010 Compared to Nine months Ended September 30, 2009
• | Net revenue increased $14.4 million, or 6.2%, to $246.4 million for the nine months ended September 30, 2010 from $232.0 million from the comparable prior-year period. Revenue increases were primarily driven by an increase of $9.5 million in residential facilities and an increase of $4.8 million within CTCs. Same-facility net revenue increases were similar to total-facility net revenue increases for the nine months ended September 30, 2010 compared to the comparable prior-year period. |
• | For the comparable periods in 2010 and 2009, adjusted pro forma revenue was the same as revenue measured on the basis of Generally Accepted Accounting Principles of the United States (US “GAAP”). Thus, the above explanations related to changes in GAAP revenue also apply to adjusted pro forma revenue. |
• | Adjusted pro forma EBITDA increased $10.2 million, or 12.6%, to $91.0 million for the nine months ended September 30, 2010 from $80.8 million of the comparable prior-year period. |
• | Recovery division operating expenses increased $3.9 million for the comparable periods in 2010 and 2009 due primarily to an increases of $1.8 million, $0.9 million and $0.6 million in supplies, facilities and other costs, provision for doubtful accounts and salaries and benefits, respectively. |
• | Recovery division same-facility operating expenses increased $4.5 million for the nine months ended September 30, 2010 compared to the comparable prior-year period. Operating expense increases were primarily driven by an increase of $3.5 million in residential facilities and an increase of $1.0 million within CTCs. |
Healthy Living Division:
Nine months Ended September 30, 2010 Compared to Nine months Ended September 30, 2009
• | Net revenue decreased $1.3 million, or 1.4%, to $91.4 million for the nine months ended September 30, 2010 from $92.7 million of the comparable prior-year period. The decrease in revenue was driven by negative economic conditions including lack of availability of student loans, census reductions, and other factors. Same-facility net revenue decreases were similar to total facility net revenue decreases for the period compared to the comparable prior-year period. |
• | For the comparable periods in 2010 and 2009, adjusted pro forma revenue was the same as revenue measured on a U.S. GAAP basis. Thus, the above explanations related to changes in GAAP revenue also apply to adjusted pro forma revenue. |
• | Adjusted pro forma EBITDA decreased $6.5 million to $2.6 million for the nine months ended September 30, 2010 from $9.1 million from the comparable prior-year period. |
• | Healthy living division incurred an increase of $48.4 million in operating expense, or 40.7%, primarily driven by higher non-cash goodwill and asset impairment charges of $27.8 million and $18.2 million, respectively. |
• | Healthy living division same-facility operating expenses increased $18.9 million, or 23.4%, for the comparable periods in 2010 and 2009 primarily due to higher asset impairment charges of $15.6 million. The remaining increase was mainly due to increase in supplies, facilities and other costs of $3.1 million, and salary and benefits of $1.3 million, offset by decrease in depreciation and amortization of $1.1 million. |
Corporate:
Nine months Ended September 30, 2010 Compared to Nine months Ended September 30, 2009
• | Corporate operating expenses increased $0.5 million or 1.9% for the comparable periods in 2010 and 2009 primarily due to higher supplies, facilities and other operating costs. |
EBITDA and Adjusted pro forma EBITDA are supplemental non-GAAP financial measures that CRC believes provide useful information to both management and investors concerning its ability to comply with certain covenants in its borrowing arrangements that are tied to these measures and to meet its future debt obligations. CRC also believes that including the effect of these items allows management and investors to better compare CRC’s financial performance from period-to-period, and to better compare CRC’s financial performance with that of its competitors.
Adjusted pro forma EBITDA is defined as EBITDA (earnings before interest, taxes, depreciation and amortization) from continuing operations, further adjusted for the items listed below in the table entitled “Reconciliation of Net Income (Loss) Attributable to CRC Health Corporation to Adjusted Pro Forma EBITDA for the Three Months and Nine Months Ended September 30, 2010 and 2009.” Adjusted pro forma EBITDA takes into account all adjustments which are excluded from EBITDA for purposes of various covenants in the indenture governing CRC’s 10 3/4% senior subordinated notes due 2016 and its senior secured credit facility, as amended to date. Additionally, Adjusted pro forma EBITDA is calculated on a consolidated basis and does not give effect to discontinued operations presentation.
The pro forma adjustments are based upon available information and certain assumptions that CRC believes are reasonable. Adjusted pro forma EBITDA is for informational purposes only and does not purport to represent what CRC’s result of operations or financial position would have been if the acquisitions had actually been completed at the beginning of such period, nor does such information purport to project the results of operations for any future period.
The presentation of these supplemental non-GAAP financial measures is not meant to be considered in isolation of, or as a substitute for net income (loss) or other financial results prepared in accordance with GAAP.
CRC HEALTH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, 2010 AND DECEMBER 31, 2009
(In thousands, except share amounts)
September 30, 2010 | December 31, 2009 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 4,359 | $ | 4,982 | ||||
Restricted cash | 715 | 420 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $5,624 in 2010 and $5,327 in 2009 | 34,497 | 31,558 | ||||||
Prepaid expenses | 5,909 | 7,489 | ||||||
Other current assets | 1,382 | 1,306 | ||||||
Income taxes receivable | — | 676 | ||||||
Deferred income taxes | 6,470 | 6,346 | ||||||
Current assets of discontinued operations | 3,189 | 1,720 | ||||||
Total current assets | 56,521 | 54,497 | ||||||
PROPERTY AND EQUIPMENT-Net | 123,103 | 125,215 | ||||||
GOODWILL | 521,304 | 573,594 | ||||||
INTANGIBLE ASSETS-Net | 315,743 | 335,409 | ||||||
OTHER ASSETS-Net | 20,080 | 19,619 | ||||||
TOTAL ASSETS | $ | 1,036,751 | $ | 1,108,334 | ||||
LIABILITIES AND EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 5,402 | $ | 3,011 | ||||
Accrued liabilities | 29,673 | 29,851 | ||||||
Income taxes payable | 6,293 | — | ||||||
Current portion of long-term debt | 1,471 | 8,814 | ||||||
Other current liabilities | 24,085 | 25,992 | ||||||
Current liabilities of discontinued operations | 2,180 | 2,114 | ||||||
Total current liabilities | 69,104 | 69,782 | ||||||
LONG-TERM DEBT-Less current portion | 604,498 | 622,262 | ||||||
OTHER LONG-TERM LIABILITIES | 8,087 | 8,735 | ||||||
LIABILITIES OF DISCONTINUED OPERATIONS | 4,504 | 1,679 | ||||||
DEFERRED INCOME TAXES | 105,143 | 117,334 | ||||||
Total liabilities | 791,336 | 819,792 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
CRC HEALTH CORPORATION STOCKHOLDER’S EQUITY: | ||||||||
Common stock, $0.001 par value-1,000 shares authorized; 1,000 shares issued and outstanding at September 30, 2010 and December 31, 2009 | — | — | ||||||
Additional paid-in capital | 457,990 | 454,880 | ||||||
Accumulated deficit | (209,432 | ) | (161,363 | ) | ||||
Accumulated other comprehensive loss | (3,143 | ) | (4,975 | ) | ||||
Total CRC Health Corporation stockholder’s equity | 245,415 | 288,542 | ||||||
NONCONTROLLING INTEREST | — | — | ||||||
Total equity | 245,415 | 288,542 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 1,036,751 | $ | 1,108,334 | ||||
CRC HEALTH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(In thousands)
Three Months Ended September 30, 2010 | Three Months Ended September 30, 2009 | Nine Months Ended September 30, 2010 | Nine Months Ended September 30, 2009 | |||||||||||||
NET REVENUE: | ||||||||||||||||
Net client service revenue | $ | 119,199 | $ | 113,084 | $ | 337,933 | $ | 324,855 | ||||||||
OPERATING EXPENSES: | ||||||||||||||||
Salaries and benefits | 54,804 | 51,676 | 162,541 | 161,416 | ||||||||||||
Supplies, facilities and other operating cost | 35,343 | 31,686 | 98,433 | 92,797 | ||||||||||||
Provision for doubtful accounts | 1,705 | 1,551 | 5,473 | 4,563 | ||||||||||||
Depreciation and amortization | 5,043 | 5,644 | 15,920 | 16,895 | ||||||||||||
Asset impairment | 2,495 | 2,257 | 20,504 | 2,257 | ||||||||||||
Goodwill impairment | 9,052 | 24,919 | 52,723 | 24,919 | ||||||||||||
Total operating expenses | 108,442 | 117,733 | 355,594 | 302,847 | ||||||||||||
OPERATING INCOME (LOSS) | 10,757 | (4,649 | ) | (17,661 | ) | 22,008 | ||||||||||
INTEREST EXPENSE | (10,735 | ) | (11,519 | ) | (32,251 | ) | (35,338 | ) | ||||||||
OTHER EXPENSE | — | — | (88 | ) | (82 | ) | ||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 22 | (16,168 | ) | (50,000 | ) | (13,412 | ) | |||||||||
INCOME TAX EXPENSE (BENEFIT) | 1,931 | 1,280 | (5,005 | ) | 1,527 | |||||||||||
LOSS FROM CONTINUING OPERATIONS, NET OF TAX | (1,909 | ) | (17,448 | ) | (44,995 | ) | (14,939 | ) | ||||||||
LOSS FROM DISCONTINUED OPERATIONS (net of tax benefit of ($1,551) and ($715) in the three months ended September 30, 2010 and 2009, and ($1,865) and ($1,554) in the nine months ended September 30, 2010 and 2009, respectively) | (2,567 | ) | (1,273 | ) | (3,074 | ) | (2,764 | ) | ||||||||
NET LOSS | (4,476 | ) | (18,721 | ) | (48,069 | ) | (17,703 | ) | ||||||||
LESS: NET INCOME ATTRIBUTABLE TO THE NONCONTROLLING INTEREST | — | 148 | — | 29 | ||||||||||||
NET LOSS ATTRIBUTABLE TO CRC HEALTH CORPORATION | $ | (4,476 | ) | $ | (18,869 | ) | $ | (48,069 | ) | $ | (17,732 | ) | ||||
AMOUNTS ATTRIBUTABLE TO CRC HEALTH CORPORATION: | ||||||||||||||||
LOSS FROM CONTINUING OPERATIONS, NET OF TAX | $ | (1,909 | ) | $ | (17,596 | ) | $ | (44,995 | ) | $ | (14,972 | ) | ||||
DISCONTINUED OPERATIONS, NET OF TAX | (2,567 | ) | (1,273 | ) | (3,074 | ) | (2,760 | ) | ||||||||
NET LOSS ATTRIBUTABLE TO CRC HEALTH CORPORATION | $ | (4,476 | ) | $ | (18,869 | ) | $ | (48,069 | ) | $ | (17,732 | ) | ||||
Reconciliation of Net Income (Loss) Attributable to CRC Health Corporation to
Adjusted Pro Forma EBITDA for the Three Months and Nine Months
Ended September 30, 2010 and 2009 (in thousands):
Three Months Ended September 30, 2010 | Three Months Ended September 30, 2009 | Nine Months Ended September 30, 2010 | Nine Months Ended September 30, 2009 | |||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO CRC HEALTH CORPORATION: | ||||||||||||||||
Net (loss) income attributable to CRC Health Corporation | $ | (4,476 | ) | $ | (18,869 | ) | $ | (48,069 | ) | $ | (17,732 | ) | ||||
Depreciation and amortization | 5,045 | 5,720 | 15,929 | 17,148 | ||||||||||||
Income tax (benefit) expense | 380 | 565 | (6,870 | ) | (26 | ) | ||||||||||
Interest expense | 10,736 | 11,521 | 32,256 | 35,344 | ||||||||||||
EBITDA | 11,685 | (1,063 | ) | (6,754 | ) | 34,734 | ||||||||||
ADJUSTMENTS TO EBITDA: | ||||||||||||||||
Discontinued operations | 396 | 733 | 1,113 | 1,282 | ||||||||||||
Asset impairment | 2,494 | 3,143 | 20,504 | 4,559 | ||||||||||||
Goodwill impairment | 9,052 | 24,919 | 52,723 | 24,919 | ||||||||||||
Non-impairment restructuring activities and other non-recurring compensation | 6,160 | 562 | 6,440 | 2,714 | ||||||||||||
Stock-based compensation expense | (678 | ) | 1,376 | 2,178 | 4,164 | |||||||||||
Foreign exchange translation | 13 | 28 | 13 | 21 | ||||||||||||
Loss on fixed asset disposal | 56 | 429 | 42 | 600 | ||||||||||||
Management fees | 1,240 | 806 | 2,881 | 2,044 | ||||||||||||
Debt costs | 65 | — | 205 | — | ||||||||||||
Worker’s compensation adjustment | (12 | ) | — | (28 | ) | — | ||||||||||
Transaction expenses | — | — | — | 117 | ||||||||||||
Write-off of cancelled acquisitions | — | — | — | 62 | ||||||||||||
Noncontrolling interest | — | 148 | — | 29 | ||||||||||||
Franchise taxes | — | 44 | (1 | ) | 35 | |||||||||||
Other non-recurring costs | — | — | 88 | 85 | ||||||||||||
Total pro forma adjustments to EBITDA | 18,786 | 32,188 | 86,158 | 40,631 | ||||||||||||
ADJUSTED PRO FORMA EBITDA | $ | 30,471 | $ | 31,125 | $ | 79,404 | $ | 75,365 | ||||||||
CRC Health Corporation Selected Statistics | Nine Months Ended September 30, | |||||||
2010 | 2009 | |||||||
Recovery Division: | ||||||||
Residential facilities: | ||||||||
Number of facilities - end of period | 46 | 44 | ||||||
Available beds - end of period | 2,035 | 1,904 | ||||||
Patient days | 434,344 | 416,355 | ||||||
Net revenue per patient day | $ | 363.07 | $ | 355.71 | ||||
CTCs: | ||||||||
Number of clinics - end of period | 54 | 54 | ||||||
Patient days | 7,195,258 | 7,041,552 | ||||||
Net revenue per patient day | $ | 12.33 | $ | 11.91 | ||||
Healthy Living Division: | ||||||||
Residential facilities: | ||||||||
Number of facilities - end of period | 17 | 17 | ||||||
Patient days | 188,431 | 201,403 | ||||||
Net revenue per patient day | $ | 249.55 | $ | 255.17 | ||||
Outdoor programs: | ||||||||
Number of facilities - end of period | 7 | 8 | ||||||
Patient days | 47,269 | 45,446 | ||||||
Net revenue per patient day | $ | 436.82 | $ | 459.25 | ||||
Weight management programs: | ||||||||
Number of facilities - end of period | 17 | 18 | ||||||
Patient days | 84,190 | 70,901 | ||||||
Net revenue per patient day | $ | 281.45 | $ | 287.67 |
Conference Call
CRC Health Corporation will host a conference call, open to all interested parties, on Friday, November 19, 2010 beginning at 12:00 PM Eastern Time (9:00 AM Pacific Time). The number to call within the United States is (800) 218-2154. Participants outside the United States should call (913) 312-0856. The conference ID is 3642499.
A replay of the conference call will be available starting at 3:00 PM Eastern Time on Friday, November 19, 2010 until 3:00 PM Eastern Time on Friday, November 26, 2010. The replay number for callers within the United States is (888) 203-1112 or (719) 457-0820 from outside the United States and the conference ID for all callers is 3642499.
Forward-Looking Statements
This press release includes or may include “forward-looking statements.” All statements included herein, other than statements of historical fact, may constitute forward-looking statements. Although CRC believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, among others, the following factors: changes in government reimbursement for CRC’s services; CRC’s substantial indebtedness; changes in applicable regulations or a government investigation or assertion that CRC has violated applicable regulations; attempts by local residents to force our closure or relocation; the potentially difficult, unsuccessful or costly integration of recently acquired operations and future acquisitions; the potentially difficult, unsuccessful or costly opening and operating of new treatment facilities; the possibility that commercial payors for CRC’s services may undertake future cost containment initiatives; the limited number of national suppliers of methadone used in CRC’s outpatient treatment clinics; the failure to maintain established relationships or cultivate new relationships with patient referral sources; shortages in qualified healthcare workers; natural disasters such as hurricanes, earthquakes and floods; competition that limits CRC’s ability to grow; the potentially costly implementation of new information systems to comply with federal and state initiatives relating to patient privacy, security of medical information and electronic transactions; the potentially costly implementation of accounting and other management systems and resources in response to financial reporting and other requirements; the loss of key members of CRC’s management; claims asserted against CRC or lack of adequate available insurance; and certain restrictive covenants in CRC’s debt documents.
Contact:
CRC Health Corporation
Kevin Hogge, 877-272-8668
Chief Financial Officer