Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2015 | Feb. 01, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2015 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | CIVI | |
Entity Registrant Name | CIVITAS SOLUTIONS, INC. | |
Entity Central Index Key | 1,608,638 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 37,104,028 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Dec. 31, 2015 | Sep. 30, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 34,194 | $ 41,690 |
Restricted cash | 804 | 749 |
Accounts receivable, net of allowances of $12,002 and $11,207 at December 31, 2015 and September 30, 2015 | 140,482 | 145,395 |
Deferred tax assets, net | 18,483 | 19,648 |
Prepaid expenses and other current assets | 21,568 | 14,049 |
Total current assets | 215,531 | 221,531 |
Property and equipment, net | 167,411 | 168,227 |
Intangible assets, net | 299,839 | 305,856 |
Goodwill | 275,278 | 274,520 |
Restricted cash | 50,000 | 50,000 |
Other assets | 44,142 | 43,050 |
Total assets | 1,052,201 | 1,063,184 |
Current liabilities: | ||
Accounts payable | 19,820 | 25,890 |
Accrued payroll and related costs | 68,259 | 82,012 |
Other accrued liabilities | 52,526 | 46,428 |
Obligations under capital lease, current | 509 | 497 |
Current portion of long-term debt | 6,554 | 6,554 |
Total current liabilities | 147,668 | 161,381 |
Other long-term liabilities | 76,101 | 79,170 |
Deferred tax liabilities, net | 57,551 | 58,223 |
Obligations under capital lease, less current portion | 5,429 | 5,561 |
Long-term debt, less current portion | $ 636,005 | $ 637,574 |
Commitments and Contingencies (Note 16) | ||
Stockholders’ equity | ||
Common stock, $.01 par value; 350,000,000 shares authorized; and 37,099,699 and 37,093,237 shares issued and outstanding at December 31, 2015 and September 30, 2015, respectively | $ 371 | $ 371 |
Additional paid-in capital | 289,748 | 277,311 |
Accumulated loss on derivatives, net of taxes of ($248) and ($1,157) as December 31, 2015 and September 30, 2015, respectively | (365) | (1,704) |
Accumulated deficit | (160,307) | (154,703) |
Total stockholders’ equity | 129,447 | 121,275 |
Total liabilities and stockholders’ equity | $ 1,052,201 | $ 1,063,184 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2015 | Sep. 30, 2015 |
Statement of Financial Position [Abstract] | ||
Allowances for accounts receivable | $ 12,002 | $ 11,207 |
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) | 37,099,699 | 37,093,237 |
Common stock, shares outstanding (shares) | 37,099,699 | 37,093,237 |
Accumulated loss on derivatives | $ (248) | $ (1,157) |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||
Net revenue | $ 345,747 | $ 334,590 |
Cost of revenue | 271,012 | 257,558 |
Operating expenses: | ||
General and administrative | 49,542 | 40,308 |
Depreciation and amortization | 17,987 | 17,210 |
Total operating expenses | 67,529 | 57,518 |
Income from operations | 7,206 | 19,514 |
Other income (expense): | ||
Management fee of related party | 0 | (162) |
Other income (expense), net | (815) | 140 |
Extinguishment of debt | 0 | (14,343) |
Interest expense | (8,573) | (10,905) |
Loss from continuing operations before income taxes | (2,182) | (5,756) |
Provision (benefit) for income taxes | 3,392 | (2,371) |
Loss from continuing operations | (5,574) | (3,385) |
Loss from discontinued operations, net of tax | (30) | (55) |
Net loss | $ (5,604) | $ (3,440) |
Loss per common share, basic and diluted | ||
Income (loss) from continuing operations (in dollars per share) | $ (0.15) | $ (0.09) |
Income (loss) from discontinued operations (in dollars per share) | 0 | 0 |
Net income (loss) (in dollars per share) | $ (0.15) | $ (0.09) |
Weighted average number of common shares outstanding, basic and diluted | 37,095,279 | 36,950,000 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (5,604) | $ (3,440) |
Other comprehensive income, net of tax: | ||
Change in unrealized loss on derivative instruments, net of tax for three months ended December 31, 2015 of $909 | 1,339 | 0 |
Comprehensive loss | $ (4,265) | $ (3,440) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parenthetical) $ in Thousands | 3 Months Ended |
Dec. 31, 2015USD ($) | |
Statement of Comprehensive Income [Abstract] | |
Tax effects of changes in unrealized gain on derivatives | $ 909 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - 3 months ended Dec. 31, 2015 - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit |
Beginning balance at Sep. 30, 2015 | $ 121,275 | $ 371 | $ 277,311 | $ (1,704) | $ (154,703) |
Common stock, shares outstanding, beginning balance (shares) at Sep. 30, 2015 | 37,093,237 | 37,093,237 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock under employee incentive plans, net of shares surrendered (shares) | 6,462 | ||||
Issuance of common stock under employee incentive plans, net of shares surrendered | $ (32) | $ 0 | (32) | ||
Stock-based compensation | 11,719 | 11,719 | |||
Excess tax benefits from stock-based compensation awards | 750 | 750 | |||
Other comprehensive income, net of tax | 1,339 | 1,339 | |||
Net loss | $ (5,604) | (5,604) | |||
Common stock, shares outstanding, ending balance (shares) at Dec. 31, 2015 | 37,099,699 | 37,099,699 | |||
Ending balance at Dec. 31, 2015 | $ 129,447 | $ 371 | $ 289,748 | $ (365) | $ (160,307) |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities: | ||
Net loss | $ (5,604) | $ (3,440) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Provision for accounts receivable allowances | 4,637 | 4,294 |
Depreciation and amortization | 18,004 | 17,276 |
Amortization and write-off of original issue discount and initial purchasers discount | 70 | 3,672 |
Amortization and write-off of financing costs | 391 | 1,522 |
Stock-based compensation | 11,719 | 1,160 |
Deferred income taxes | (416) | 650 |
Loss on disposal of assets | 71 | 65 |
Net change in fair value of contingent consideration | (3,156) | 0 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | 276 | (9,909) |
Other assets | (8,987) | (7,960) |
Accounts payable | (5,069) | (1,236) |
Accrued payroll and related costs | (13,753) | (8,881) |
Other accrued liabilities | 8,732 | (3,781) |
Other long-term liabilities | (298) | 911 |
Net cash provided by (used in) operating activities | 6,617 | (5,657) |
Investing activities: | ||
Acquisition of businesses, net of cash acquired | (4,156) | (12,518) |
Purchases of property and equipment | (9,122) | (8,886) |
Change in restricted cash | (55) | (477) |
Proceeds from sale of assets | 260 | 183 |
Net cash used in investing activities | (13,073) | (21,698) |
Financing activities: | ||
Repayments of long-term debt | (1,639) | (163,500) |
Proceeds from borrowings under senior revolver | 0 | 2,500 |
Repayments of borrowings under senior revolver | 0 | (2,500) |
Repayments of capital lease obligations | (120) | (109) |
Proceeds from issuance of common stock under employee equity incentive plans | 31 | 0 |
Excess tax benefits from stock-based compensation | 750 | 0 |
Taxes paid related to net share settlements of restricted stock unit awards | (62) | 0 |
Net cash used in financing activities | (1,040) | (163,609) |
Net decrease in cash and cash equivalents | (7,496) | (190,964) |
Cash and cash equivalents at beginning of period | 41,690 | 196,147 |
Cash and cash equivalents at end of period | 34,194 | 5,183 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 7,948 | 10,783 |
Cash paid for income taxes, net of refunds | 5,779 | 113 |
Supplemental disclosure of non-cash investing activities: | ||
Accrued property and equipment | $ 443 | $ 451 |
Business Overview
Business Overview | 3 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Overview | 1. Business Overview Civitas Solutions, Inc. ("Civitas") is the parent of a consolidated group of subsidiaries, (collectively, the "Company") that market their services under the MENTOR Network tradename. Prior to October 1, 2015, Civitas was a partially owned subsidiary of NMH Investment, LLC (“NMH Investment”), which was formed in connection with the acquisition of our business by affiliates of Vestar Capital Partners (“Vestar”) in 2006. The equity interests of NMH Investment were owned by Vestar and certain executive officers, directors and other members of management. On October 1, 2015, in connection with an underwritten secondary offering, NMH Investment distributed all of the 25,250,000 shares of common stock of Civitas it held to its existing members in accordance with their respective membership interests. 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. Civitas, through its wholly-owned subsidiaries, is the leading provider of home- and community-based health and human services to individuals 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, or at-risk youth (“ARY”) and elders in need of day health services to support their independence, or adult day health (“ADH”). Since the Company’s founding in 1980, the Company’s operations have grown to 35 states. The Company provides residential services to more than 11,600 clients and approximately 14,400 clients receive periodic services from the Company in non-residential settings. The Company designs customized service plans to meet the individual needs of its clients, 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 clients’ quality of life 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 its clients as well as the payors of these services, an attractive, cost-effective alternative to health and human services provided in large, institutional settings. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. 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, 2015 , 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, 2015 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. Our financial results are affected by the selection and application of accounting policies and methods. There were no material changes in the three months ended December 31, 2015 to the application of significant accounting policies as described in our audited financial statements for the year ended September 30, 2015 . |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Dec. 31, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | 3. Recent Accounting Pronouncements Revenue from Contracts with Customers— In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delayed the effective date of the new standard for the Company from October 1, 2017 to October 1, 2018. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. The Company is evaluating the method of adoption and the potential impact that Topic 606 may have on our financial position, results of operations, cash flows, and liquidity. Imputation of Interest— In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The new standard requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU No. 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which clarified that debt issuance costs related to line-of-credit arrangements can be presented in the balance sheet as an asset and amortized over the term of the line-of-credit arrangement. The standard is to be applied retrospectively and is effective for fiscal years beginning after December 15, 2015, and interim periods within those years. As of December 31, 2015 and September 30, 2015, the Company had deferred financing costs of $7.1 million and $7.5 million , respectively, within Prepaid expenses and other current assets. Business Combinations — In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. The new standard requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined and sets forth new disclosure requirements related to the adjustments. The standard is to be applied prospectively and is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Although the impact of applying this standard to prior acquisitions would have been immaterial, the adoption could have a significant impact on the accounting for future business combinations. Income Taxes - In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The new standard requires that deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. The amendments in this update apply to all entities that present a classified statement of financial position. The standard is to be applied prospectively and is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. As of December 31, 2015 and September 30, 2015, the Company had current deferred tax assets, net of deferred tax liabilities, of $18.5 million and $19.6 million , respectively, within Deferred tax assets. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | 4. Long-Term Debt As of December 31, 2015 and September 30, 2015 , the Company’s long-term debt consisted of the following: (in thousands) December 31, September 30, Term loan principal; principal and interest is due in quarterly installments through January 31, 2021 $ 643,946 $ 645,585 Original issue discount on term loan, net of accumulated amortization (1,387 ) (1,457 ) 642,559 644,128 Less current portion 6,554 6,554 Long-term debt $ 636,005 $ 637,574 Senior Secured Credit Facilities NMHI's senior credit agreement (the “senior credit agreement”), as amended, governs a $655.0 million 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 $120.0 million senior secured revolving credit facility (the “senior revolver”). The term loan facility has a seven year maturity and the senior revolver has a five year maturity from the effective date, or January 31, 2014. 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, 2015 , NMHI had no loans under the senior revolver and $47.4 million of letters of credit issued under the institutional letter of credit facility and $2.9 million of letters of credit issued under the senior revolver. Borrowings under the senior secured credit facilities 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, plus 2.25% (provided that the ABR rate applicable to the term loan facility will not be less than 2.00% per annum); or (ii) the Eurodollar rate (provided that the Eurodollar rate applicable to the term loan facility will not be less than 1.00% 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, 2015. 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 of 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 5.50 to 1.00 . This consolidated first lien leverage ratio will step down to 5.00 to 1.00 commencing with the fiscal quarter ending March 31, 2017. The springing financial covenant was not in effect as of December 31, 2015 or September 30, 2015 as NMHI’s outstanding borrowings on the senior revolver did not exceed the threshold. Derivatives On January 20, 2015, NMHI entered into two new interest rate swap agreements in an aggregate notional amount of $375.0 million in order to reduce the variability of cash flows of our 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, representing the price that would be received to transfer the liability in an orderly transaction between market participants, was $0.6 million and $2.9 million as of December 31, 2015 and September 30, 2015 , respectively. The fair value was recorded in Other accrued liabilities and was determined based on pricing models and independent formulas using current assumptions. Hedge ineffectiveness, if any, associated with the swap will be reported by the Company in interest expense. There was no ineffectiveness associated with the swap during the quarter ended December 31, 2015, nor was any amount excluded from ineffectiveness testing for the period. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Dec. 31, 2015 | |
Share-based Compensation [Abstract] | |
Stock-Based Compensation | 5. Stock-Based Compensation Unit Plan NMH Investment maintained the Amended and Restated 2006 Unit Plan (the “Unit Plan”). Under the plan NMH Investment issued units of limited liability company interests pursuant to such plan, consisting of Class B Common Units, Class C Common Units, Class D Common Units, Class E Common Units, Class F Common Units, Class G Common Units and Class H Common Units. These units derive their value from the value of the Company. On October 1, 2015, in connection with a secondary offering, NMH Investment distributed all of the 25,250,000 shares of our common stock it held to its existing members in accordance with their respective membership interests and pursuant to the terms of the NMH Investment's Limited Liability Company Agreement and the management unitholders agreements (the “Distribution”). The Distribution triggered the vesting condition for the Class H Common Units and the acceleration of unvested Class F Common Units. As a result, the Company recorded compensation expense of $10.5 million related to these awards during the quarter ended December 31, 2015. The vesting of these awards impacted the allocation of the shares of Civitas that were distributed from NMH Investment, LLC to our private equity sponsor and management and not the number of shares outstanding. This expense is not deductible for tax purposes. During the three months ended December 31, 2015 and 2014, the Company recorded compensation expense of $10.5 million and $42.8 thousand , respectively, for awards issued under the Unit Plan. The expense is included in general and administrative expense in the consolidated statements of operations. As a result of the Distribution, the Unit Plan has concluded, and there will be no future issuances under this plan. 2014 Plan Civitas maintains a 2014 Omnibus Incentive Plan (“2014 Plan”). The 2014 Plan authorizes the issuance of stock-based awards, including incentive stock options (“ISOs”), non-qualified stock options (“NSOs”) and restricted stock units (“RSUs”) to purchase up to 5,546,797 shares authorized in the 2014 Plan. As of December 31, 2015, approximately 4.2 million shares were available for future grant of awards under the 2014 Plan. Stock option activity for the three months ended December 31, 2015 is presented below: (in thousands, except share and per share amounts) Number of Weighted- Weighted- Aggregate Outstanding at September 30, 2015 567,900 $ 16.98 Granted 87,925 26.03 Forfeited 8,055 17.00 Exercised 1,797 17.00 Expired — — Outstanding at December 31, 2015 645,973 $ 18.20 8.9 $ 6,841 Vested or expected to vest as of December 31, 2015 604,765 $ 18.21 8.9 $ 6,397 Exercisable at December 31, 2015 188,101 $ 16.97 8.7 $ 2,223 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, 2015 were valued using the following assumptions: 2015 Risk-free interest rate 1.92 % Expected term 6 years Expected volatility 35.92 % Expected dividend yield — % Restricted stock unit activity for the three months ended December 31, 2015 is presented below: Number of Restricted Stock Units Weighted Average Grant-Date Fair Value Non-vested units at September 30, 2015 385,935 $ 17.10 Granted 131,918 25.99 Forfeited 8,316 17.41 Vested 6,826 15.45 Non-vested units at December 31, 2015 502,711 $ 19.45 The Company recognizes the fair value of stock options and restricted stock units in net income over the requisite service period of the individual grantee, which generally equals the vesting period. The Company recorded $1.2 million of stock-based compensation expense for these awards during both the three months ended December 31, 2015 and 2014. Stock-based compensation expense is included in general and administrative expense in the consolidated statements of operations. |
Business Combinations
Business Combinations | 3 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Business Combinations | 6. Business Combinations The operating results of the businesses acquired are included in the consolidated statements of operations from the date of acquisition. The Company accounted for the acquisitions under the acquisition method and, as a result, the purchase price was allocated to the assets acquired and liabilities assumed based upon their respective fair values. The excess of the purchase price over the estimated fair value of net tangible assets was allocated to specifically identified intangible assets, with the residual being allocated to goodwill. Fiscal 2016 Acquisitions During the three months ended December 31, 2015 , the Company acquired the assets of two companies complementary to its business for a total fair value consideration of $4.2 million . Mother's Touch, LLC ("Mother's Touch") . On November 30, 2015 , the Company acquired the assets of Mother's Touch for $3.4 million . Mother's Touch is located in Indiana and provides residential and community-based services to individuals with developmental disabilities. The Company acquired $2.7 million of intangible assets which included $2.7 million of agency contracts with a weighted average useful life of 12 years , and $14 thousand for a non-compete/non-solicit agreement with a useful life of 5 years . In addition, the Company acquired total tangible assets of $9 thousand . The estimated fair values of the intangible assets acquired at the date of acquisition are determined based on a valuation that has yet to be finalized. The Company’s valuations are subject to adjustment as additional information is obtained; however these adjustments are not expected to be material. Based on the preliminary fair value estimate of the net assets acquired at the date of acquisition, the Company recorded $0.7 million of goodwill in the Human Services segment, which is expected to be deductible for tax purposes. Winways, LLC ("Winways") . On December 31, 2015 , the Company acquired the assets of Winways for $0.8 million . Winways is located in California and provides residential and day treatment services to individuals with traumatic brain injuries, neurological illnesses, injuries, similar conditions. The Company acquired $0.6 million of intangible assets which included $0.5 million of agency contracts with a weighted average useful life of 12 years , $75 thousand of licenses and permits with a weighted average useful life of 10 years , and $9 thousand for other intangible assets. In addition, the Company acquired total tangible assets of $29 thousand . As a result of this acquisition, the Company recorded $0.1 million of goodwill in the Post Acute Specialty-Rehabilitation Services segment, which is expected to be deductible for tax purposes. The following table summarizes the recognized amounts of identifiable assets acquired at the date of each acquisition: (in thousands) Identifiable Intangible Assets Property and Equipment Total Identifiable Net Assets Goodwill Mother's Touch $ 2,741 $ 9 $ 2,750 $ 650 Winways 619 29 648 108 Total $ 3,360 $ 38 $ 3,398 $ 758 The Company has not disclosed the operating results of these businesses during the three months ended December 31, 2015 because they are immaterial. 7. Pro Forma Results of Operations The following table reflects the unaudited pro forma results of operations for the three months ended December 31, 2015 and 2014 assuming that the acquisitions made during the first quarter of fiscal year 2016 had occurred on October 1, 2014. Three Months Ended December 31, (in thousands) 2015 2014 Net revenue $ 347,368 $ 336,211 Net loss (5,475 ) (3,311 ) The unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of the actual results that would have been achieved had the acquisitions occurred as of October 1, 2014 or the results that may be achieved in future periods. |
Proforma Results of Operations
Proforma Results of Operations | 3 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Proforma Results of Operations | 6. Business Combinations The operating results of the businesses acquired are included in the consolidated statements of operations from the date of acquisition. The Company accounted for the acquisitions under the acquisition method and, as a result, the purchase price was allocated to the assets acquired and liabilities assumed based upon their respective fair values. The excess of the purchase price over the estimated fair value of net tangible assets was allocated to specifically identified intangible assets, with the residual being allocated to goodwill. Fiscal 2016 Acquisitions During the three months ended December 31, 2015 , the Company acquired the assets of two companies complementary to its business for a total fair value consideration of $4.2 million . Mother's Touch, LLC ("Mother's Touch") . On November 30, 2015 , the Company acquired the assets of Mother's Touch for $3.4 million . Mother's Touch is located in Indiana and provides residential and community-based services to individuals with developmental disabilities. The Company acquired $2.7 million of intangible assets which included $2.7 million of agency contracts with a weighted average useful life of 12 years , and $14 thousand for a non-compete/non-solicit agreement with a useful life of 5 years . In addition, the Company acquired total tangible assets of $9 thousand . The estimated fair values of the intangible assets acquired at the date of acquisition are determined based on a valuation that has yet to be finalized. The Company’s valuations are subject to adjustment as additional information is obtained; however these adjustments are not expected to be material. Based on the preliminary fair value estimate of the net assets acquired at the date of acquisition, the Company recorded $0.7 million of goodwill in the Human Services segment, which is expected to be deductible for tax purposes. Winways, LLC ("Winways") . On December 31, 2015 , the Company acquired the assets of Winways for $0.8 million . Winways is located in California and provides residential and day treatment services to individuals with traumatic brain injuries, neurological illnesses, injuries, similar conditions. The Company acquired $0.6 million of intangible assets which included $0.5 million of agency contracts with a weighted average useful life of 12 years , $75 thousand of licenses and permits with a weighted average useful life of 10 years , and $9 thousand for other intangible assets. In addition, the Company acquired total tangible assets of $29 thousand . As a result of this acquisition, the Company recorded $0.1 million of goodwill in the Post Acute Specialty-Rehabilitation Services segment, which is expected to be deductible for tax purposes. The following table summarizes the recognized amounts of identifiable assets acquired at the date of each acquisition: (in thousands) Identifiable Intangible Assets Property and Equipment Total Identifiable Net Assets Goodwill Mother's Touch $ 2,741 $ 9 $ 2,750 $ 650 Winways 619 29 648 108 Total $ 3,360 $ 38 $ 3,398 $ 758 The Company has not disclosed the operating results of these businesses during the three months ended December 31, 2015 because they are immaterial. 7. Pro Forma Results of Operations The following table reflects the unaudited pro forma results of operations for the three months ended December 31, 2015 and 2014 assuming that the acquisitions made during the first quarter of fiscal year 2016 had occurred on October 1, 2014. Three Months Ended December 31, (in thousands) 2015 2014 Net revenue $ 347,368 $ 336,211 Net loss (5,475 ) (3,311 ) The unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of the actual results that would have been achieved had the acquisitions occurred as of October 1, 2014 or the results that may be achieved in future periods. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 8. Goodwill and Intangible Assets Goodwill The changes in goodwill for the three months ended December 31, 2015 are as follows (in thousands): Human Services Post -Acute Specialty Rehabilitation Services Total Balance as of September 30, 2015 $ 193,286 $ 81,234 $ 274,520 Goodwill acquired through acquisitions 650 108 758 Balance as of December 31, 2015 $ 193,936 $ 81,342 $ 275,278 Intangible Assets Intangible assets consist of the following as of December 31, 2015 (in thousands): Description Weighted Average Amortization Period Gross Carrying Value Accumulated Amortization Intangible Assets, Net Agency contracts 8 years $ 471,811 $ 232,941 $ 238,870 Non-compete/non-solicit 2 years 6,114 3,728 2,386 Relationship with contracted caregivers 1 year 7,521 7,103 418 Trade names 2 years 4,866 3,468 1,398 Trade names (indefinite life) — 45,800 — 45,800 Licenses and permits 2 years 48,470 37,530 10,940 Intellectual property — 452 425 27 $ 585,034 $ 285,195 $ 299,839 Intangible assets consist of the following as of September 30, 2015 (in thousands): Description Weighted Average Amortization Period Gross Carrying Value Accumulated Amortization Intangible Assets, Net Agency contracts 8 years $ 468,549 $ 225,383 $ 243,166 Non-compete/non-solicit 2 years 6,097 3,477 2,620 Relationship with contracted caregivers 1 year 7,521 6,915 606 Trade names 2 years 4,883 3,343 1,540 Trade names (indefinite life) — 45,800 — 45,800 Licenses and permits 2 years 48,395 36,314 12,081 Intellectual property 1 year 452 409 43 $ 581,697 $ 275,841 $ 305,856 Amortization expense was $9.4 million for the three months ended December 31, 2015 and December 31, 2014 . The estimated remaining amortization expense related to intangible assets with finite lives for the nine months remaining in fiscal 2016 and each of the four succeeding years and thereafter is as follows: (in thousands) 2016 $ 35,474 2017 32,760 2018 32,101 2019 31,763 2020 30,651 Thereafter 91,290 Total $ 254,039 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 9. Related Party Transactions Management Agreement On February 9, 2011, the Company entered into an amended and restated management agreement with Vestar Capital Partners V, L.P. (“Vestar”) relating to certain advisory and consulting services for an annual management fee. This agreement was terminated on September 22, 2014 in connection with the Company's initial public offering. The Company recorded no management fees and expenses for the three months ended December 31, 2015 as compared to $0.2 million for the three months ended December 31, 2014 . The $0.2 million of expense during the three months ended December 31, 2014 relates to reimbursable expenses that were incurred prior to the termination of the management agreement. There were no accrued liabilities relating to such fees and expenses at September 30, 2015 or December 31, 2015 . Lease Agreements The Company leases several offices, homes and other facilities from its employees, or from relatives of employees, primarily in the states of Minnesota, California and Wisconsin. These leases were entered into in the ordinary course of business and completed at an arm’s length. These leases have various expiration dates extending out as far as December 2020. Related party lease expense was $0.2 million for the three months ended December 31, 2015 and December 31, 2014 . |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 10. 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, 2015 . (in thousands) Total Quoted Market Prices (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Liabilities Interest rate swap agreements $ (612 ) $ — $ (612 ) $ — Contingent consideration $ (5,919 ) $ — $ — $ (5,919 ) 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, 2015 . (in thousands) Total Quoted Market Prices (Level 1) Significant Significant Unobservable Inputs (Level 3) Liabilities Interest rate swap agreements $ (2,861 ) $ — $ (2,861 ) $ — Contingent consideration $ (9,075 ) $ — $ — $ (9,075 ) Interest rate-swap agreements. The Company’s interest rate-swap agreements are classified within Level 2 of the fair value hierarchy. The fair value of the swap agreements was recorded in current liabilities (under other accrued liabilities) in the Company’s 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. Contingent consideration. In connection with the acquisition of Mass Adult Day Health (“Adult Day Health”) in August 2014 and Cassell in January 2015, the Company recorded contingent consideration pertaining to the amounts potentially payable to the former owners upon the businesses achieving certain performance targets. The fair values of the Company's contingent consideration obligations are based on a probability-weighted approach derived from the overall likelihood of achieving certain performance targets. The resultant probability-weighted earn-out payments are discounted using a discount rate based upon the weighted-average cost of capital. The fair value measurement is based on significant inputs not observable in the market, which represent Level 3 inputs within the fair value hierarchy. The valuation of contingent consideration uses assumptions the Company believes would be made by a market participant. The Company assesses these estimates on an ongoing basis as additional data impacting the assumptions is obtained. Increases or decreases in the fair values of the contingent consideration obligations may result from changes in discount periods and rates, changes in the timing and amount of earn-out criteria and changes in probability assumptions with respect to the likelihood of achieving the various earn-out criteria. Changes in the fair value of contingent consideration related to updated assumptions and estimates are recognized in General and administrative expense within the consolidated statements of operations. The following table presents a summary of changes in fair value of the Company’s Level 3 liabilities measured on a recurring basis for the three months ended December 31, 2015 . (in thousands) Three Months Ended Balance at September 30, 2015 $ 9,075 Present value accretion (211 ) Cassell fair value adjustment (2,945 ) Balance at December 31, 2015 $ 5,919 As of December 31, 2015 and September 30, 2015, the Company had $5.9 million and $9.1 million of contingent consideration, respectively, of which approximately $4.6 million and $3.9 million , respectively, were reflected in Other accrued liabilities and $1.3 million and $5.2 million , respectively, were reflected in Other long-term liabilities. The $3.2 million adjustment during the three months ended December 31, 2015 relates to the Cassell acquisition and reflects the revised estimate from the date acquisition of expected operating performance during the earn out period which ends January 31, 2016. At December 31, 2015 and September 30, 2015 , the carrying values of cash, accounts receivable, accounts payable and variable rate debt approximated fair value. |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. 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, but are not consistent from year to year. For the three months ended December 31, 2015 , the Company’s effective income tax rate was (155.5)% , as compared to an effective tax rate of 41.2% for the three months ended December 31, 2014 , respectively. These rates differ from the federal statutory income tax rate primarily due to state income taxes, nondeductible permanent differences such as meals and nondeductible compensation, and net operating losses not benefited. The reason the statutory rate for fiscal 2015 differed from the effective tax rate for the three months ended December 31, 2015 is primarily due to $10.5 million of stock-based compensation related to certain awards under our former equity compensation plan that vested in October 2015. This expense is not deductible for tax purposes and was considered a discrete item. Therefore, the entire impact of the expense on income taxes was recorded during the three months ended December 31, 2015. 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, 2012. The Company did not have a reserve for uncertain income tax positions at December 31, 2015 and September 30, 2015 . 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
Segment Information | 3 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | 12. Segment Information The Company conducts its business through two reportable business segments: the Human Services Segment and the Post-Acute Specialty Rehabilitation Services (“SRS”) Segment. Through the Human Services Segment, the Company primarily provides home- and community-based human services to adults and children with intellectual and developmental disabilities (“I/DD”), and to youth with emotional, behavioral and/or medically complex challenges (“ARY”) and, beginning in fiscal 2014, to elders. The operations of the Human Services Segment have been organized by management into three operating segments based upon geography and clients served. Through the SRS Segment, the Company delivers services to individuals who have suffered acquired brain injury, spinal injuries and other catastrophic injuries and illnesses. The operations of the SRS Segment have been organized by management into two operating segments, NeuroRestorative and CareMeridian, based upon service type. The NeuroRestorative operating group provides behavioral therapies to brain injured clients in post-acute community settings and the CareMeridian operating group provides a higher level of medical support to traumatically injured clients . Each operating segment is aligned with the Company’s reporting structure and has a segment manager that is directly accountable for its operations and regularly reports results to the chief operating decision maker, which is the Company's Chief Executive Officer, for the purpose of evaluating these results and making decisions regarding resource allocations. The Company evaluates performance based on EBITDA. EBITDA for each segment is defined as income from continuing operations before depreciation and amortization, intangible impairments, interest income (expense), and income taxes directly attributable to the segment. Activities classified as “Corporate” in the table below relate primarily to unallocated home office expenses, management fees, and debt extinguishment costs. The favorable adjustment of $3.2 million to the Company's contingent consideration liabilities during the three months ended December 31, 2015, as further described in Note 10 Fair Value Measurements , is classified under "Corporate". The following table is a financial summary by reportable segments for the periods indicated (in thousands): For the three months ended December 31, Human Services Post-Acute Specialty Rehabilitation Services Corporate Consolidated 2015 Net revenue $ 277,710 $ 68,037 $ — $ 345,747 EBITDA 37,622 11,647 (25,115 ) 24,154 Total assets 603,773 251,874 196,554 1,052,201 Depreciation and amortization 11,428 5,892 667 17,987 Purchases of property and equipment 5,348 2,908 866 9,122 2014 Net revenue $ 271,969 $ 62,621 $ — $ 334,590 EBITDA (1) 42,564 11,768 (31,998 ) 22,334 Depreciation and amortization 11,387 5,239 584 17,210 Purchases of property and equipment 4,310 4,164 412 8,886 (1) The performance measures previously reported for the three months ended December 31, 2014 have been revised from Income (loss) from continuing operations before income taxes to EBITDA. A reconciliation of EBITDA to loss from continuing operations on a consolidated basis is as follows (in thousands): Three Months Ended December 31, 2015 2014 EBITDA $ 24,154 $ 22,334 Less: Depreciation and amortization $ 17,987 $ 17,210 Interest expense, net 8,349 10,880 Loss from continuing operations before income taxes $ (2,182 ) $ (5,756 ) For the three months ended December 31, 2015, Interest expense, net includes the reversal of $0.2 million of interest expense associated with acquisition related contingent consideration liabilities and $0.3 million of interest income included in Other income (expense) in the Statement of Operations. For the three months ended December 31, 2014, Interest expense, net includes $25 thousand of interest income included in Other income (expense) in the Statement of Operations. Revenue derived from contracts with state and local governmental payors in the state of Minnesota, the Company’s largest state, which is included in the Human Services segment, accounted for approximately 15% of the Company’s net revenue for the three months ended December 31, 2015 and 2014 . |
Disposition of Business
Disposition of Business | 3 Months Ended |
Dec. 31, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposition of Business | 13. Disposition of Business During fiscal 2015, the Company decided to discontinue ARY services in the states of Florida, Louisiana, Indiana, North Carolina and Texas. These operations are included in the Human Services Segment. On December 1, 2015, the Company completed the sale of our ARY operations in the state of North Carolina. As consideration, the buyer assumed our lease and service delivery obligations in exchange for the assets of the business, excluding working capital items, and a cash payment of $1.3 million to the buyer. Upon the completion of the sale, the Company recorded a loss of $1.3 million . The closures of the ARY operations in Florida and Louisiana were complete as of December 31, 2015 and the closures of our ARY operations in Indiana and Texas were completed in January 2016. During the three months ended December 31, 2015 the Company recorded cash charges of approximately $2.1 million , consisting of severance costs of $0.5 million and lease termination costs of $1.6 million . The Company assessed the disposal group under the guidance of ASU 2014−08, Discontinued Operations and Disclosures of Disposals of Components of an Entity and concluded that the closure of the disposal group does not represent a "strategic shift" and therefore has not been classified as discontinued operations for any of the periods presented. However, the Company has concluded that the disposal group was an individually significant disposal group. Pretax losses for this disposal group were $5.2 million and $1.5 million for the three months ended December 31, 2015 and 2014, respectively. Pretax losses for the three months ended December 31, 2015 included exit costs of $2.1 million disclosed above. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 3 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | 14. Net Income (Loss) Per Share Basic net income (loss) per common share is computed by dividing net income (loss) by the basic weighted average number of common shares outstanding during the period. Diluted net income per common share, if applicable, is computed by dividing net income by the diluted weighted average number of common shares and common equivalent shares outstanding during the period. The weighted average number of common equivalent shares outstanding has been determined in accordance with the treasury-stock method. Common equivalent shares consist of common stock issuable on the exercise of outstanding options and vesting of restricted stock units when dilutive. The following table sets forth the computation of basic and diluted earnings per share (“EPS”): Three Months Ended December 31, (in thousands, except share and per share amounts) 2015 2014 Numerator Net loss $ (5,604 ) $ (3,440 ) Denominator Weighted average shares outstanding, basic and diluted 37,095,279 36,950,000 Net loss per share, basic and diluted $ (0.15 ) $ (0.09 ) Equity instruments excluded from diluted net income (loss) per share calculation as the effect would have been anti-dilutive: Stock options 645,973 561,339 Restricted stock units 502,711 554,721 For each of the periods presented above the Company incurred a net loss, therefore; the potential dilutive stock options and restricted stock units have been excluded from the computation of diluted net loss per share as the effect would be anti-dilutive. |
Accruals for Self-Insurance
Accruals for Self-Insurance | 3 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Accruals for Self-Insurance | 15. Accruals for Self-Insurance The Company maintains insurance for professional and general liability, workers’ compensation liability, automobile liability and health insurance liabilities that includes self-insured retentions. The Company intends to maintain such coverage in the future and is of the opinion that its insurance coverage is adequate to cover potential losses on asserted claims. Employment practices liability is fully self-insured. The Company records expenses related to claims on an incurred basis, which includes estimates of fully developed losses for both reported and unreported claims. The accruals for the health, workers’ compensation, automobile, and professional and general liability programs are based on analyses performed by management and take into account reports by independent third parties. Accruals are periodically reevaluated and increased or decreased based on new information. For professional and general liability, f rom October 1, 2013 to September 30, 2015, the Company was self-insured for $4.0 million per claim and $28.0 million in the aggregate. Commencing October 1, 2015, the Company has been self-insured for $3.0 million per claim and $28.0 million in the aggregate. For workers’ compensation, the Company has a $350 thousand per claim retention with statutory limits. Automobile liability has a $100 thousand per claim retention, with additional insurance coverage above the retention. The Company purchases specific stop loss insurance as protection against extraordinary claims liability for health insurance claims. Stop loss insurance covers claims that exceed $300 thousand on a per member basis per year. The Company reports its self-insurance liabilities on a gross basis without giving effect to insurance recoveries. Anticipated insurance recoveries are presented in Prepaid expenses and other current assets and Other assets on the Company’s consolidated balance sheets. Self-insured liabilities are presented in accrued payroll and related costs, other accrued liabilities and other long-term liabilities on its consolidated balance sheets. |
Other Commitments and Contingen
Other Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Other Commitments and Contingencies | 16. Other 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 a client. The Company is also subject to claims by its clients, 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. 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 discrimination, wrongful discharge or retaliation; claims for wage and hour violations under the Fair Labor Standards Act or state wage and hour laws. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | 17. Subsequent Events On January 20, 2016, the Company made a $1.3 million payment for contingent consideration related to the acquisition of Mass Adult Day Health Alliance. On February 1, 2016, the Company acquired the assets of three companies within its Human Services business and one company within its Post-Acute Specialty Rehabilitation Services business for aggregate consideration of $16.3 million . The three companies in the Human Services business provide adult day health services. The Company has determined that the presentation of the pro forma results of operations for these acquisitions is impracticable due to the timing of the acquisition. |
Significant Accounting Polici26
Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2015 | |
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, 2015 , 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, 2015 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. Our financial results are affected by the selection and application of accounting policies and methods. There were no material changes in the three months ended December 31, 2015 to the application of significant accounting policies as described in our audited financial statements for the year ended September 30, 2015 . |
Recent Accounting Pronounceme27
Recent Accounting Pronouncements Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Dec. 31, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | 3. Recent Accounting Pronouncements Revenue from Contracts with Customers— In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delayed the effective date of the new standard for the Company from October 1, 2017 to October 1, 2018. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. The Company is evaluating the method of adoption and the potential impact that Topic 606 may have on our financial position, results of operations, cash flows, and liquidity. Imputation of Interest— In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The new standard requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU No. 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which clarified that debt issuance costs related to line-of-credit arrangements can be presented in the balance sheet as an asset and amortized over the term of the line-of-credit arrangement. The standard is to be applied retrospectively and is effective for fiscal years beginning after December 15, 2015, and interim periods within those years. As of December 31, 2015 and September 30, 2015, the Company had deferred financing costs of $7.1 million and $7.5 million , respectively, within Prepaid expenses and other current assets. Business Combinations — In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. The new standard requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined and sets forth new disclosure requirements related to the adjustments. The standard is to be applied prospectively and is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Although the impact of applying this standard to prior acquisitions would have been immaterial, the adoption could have a significant impact on the accounting for future business combinations. Income Taxes - In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The new standard requires that deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. The amendments in this update apply to all entities that present a classified statement of financial position. The standard is to be applied prospectively and is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. As of December 31, 2015 and September 30, 2015, the Company had current deferred tax assets, net of deferred tax liabilities, of $18.5 million and $19.6 million , respectively, within Deferred tax assets. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | As of December 31, 2015 and September 30, 2015 , the Company’s long-term debt consisted of the following: (in thousands) December 31, September 30, Term loan principal; principal and interest is due in quarterly installments through January 31, 2021 $ 643,946 $ 645,585 Original issue discount on term loan, net of accumulated amortization (1,387 ) (1,457 ) 642,559 644,128 Less current portion 6,554 6,554 Long-term debt $ 636,005 $ 637,574 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Share-based Compensation [Abstract] | |
Schedule of Share-based Compensation, Stock Options, Activity | Stock option activity for the three months ended December 31, 2015 is presented below: (in thousands, except share and per share amounts) Number of Weighted- Weighted- Aggregate Outstanding at September 30, 2015 567,900 $ 16.98 Granted 87,925 26.03 Forfeited 8,055 17.00 Exercised 1,797 17.00 Expired — — Outstanding at December 31, 2015 645,973 $ 18.20 8.9 $ 6,841 Vested or expected to vest as of December 31, 2015 604,765 $ 18.21 8.9 $ 6,397 Exercisable at December 31, 2015 188,101 $ 16.97 8.7 $ 2,223 |
Schedule of Share-based Payment Award, 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, 2015 were valued using the following assumptions: 2015 Risk-free interest rate 1.92 % Expected term 6 years Expected volatility 35.92 % Expected dividend yield — % |
Schedule of Nonvested Restricted Stock Units Activity | Restricted stock unit activity for the three months ended December 31, 2015 is presented below: Number of Restricted Stock Units Weighted Average Grant-Date Fair Value Non-vested units at September 30, 2015 385,935 $ 17.10 Granted 131,918 25.99 Forfeited 8,316 17.41 Vested 6,826 15.45 Non-vested units at December 31, 2015 502,711 $ 19.45 |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Fiscal 2016 Acquisitions | |
Business Acquisition [Line Items] | |
Schedule of Recognized Amounts of Identifiable Assets Acquired and Assumed | The following table summarizes the recognized amounts of identifiable assets acquired at the date of each acquisition: (in thousands) Identifiable Intangible Assets Property and Equipment Total Identifiable Net Assets Goodwill Mother's Touch $ 2,741 $ 9 $ 2,750 $ 650 Winways 619 29 648 108 Total $ 3,360 $ 38 $ 3,398 $ 758 |
Proforma Results of Operations
Proforma Results of Operations (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Business Acquisition, Pro Forma Information | The following table reflects the unaudited pro forma results of operations for the three months ended December 31, 2015 and 2014 assuming that the acquisitions made during the first quarter of fiscal year 2016 had occurred on October 1, 2014. Three Months Ended December 31, (in thousands) 2015 2014 Net revenue $ 347,368 $ 336,211 Net loss (5,475 ) (3,311 ) |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Goodwill | The changes in goodwill for the three months ended December 31, 2015 are as follows (in thousands): Human Services Post -Acute Specialty Rehabilitation Services Total Balance as of September 30, 2015 $ 193,286 $ 81,234 $ 274,520 Goodwill acquired through acquisitions 650 108 758 Balance as of December 31, 2015 $ 193,936 $ 81,342 $ 275,278 |
Schedule of Intangible Assets | Intangible assets consist of the following as of December 31, 2015 (in thousands): Description Weighted Average Amortization Period Gross Carrying Value Accumulated Amortization Intangible Assets, Net Agency contracts 8 years $ 471,811 $ 232,941 $ 238,870 Non-compete/non-solicit 2 years 6,114 3,728 2,386 Relationship with contracted caregivers 1 year 7,521 7,103 418 Trade names 2 years 4,866 3,468 1,398 Trade names (indefinite life) — 45,800 — 45,800 Licenses and permits 2 years 48,470 37,530 10,940 Intellectual property — 452 425 27 $ 585,034 $ 285,195 $ 299,839 Intangible assets consist of the following as of September 30, 2015 (in thousands): Description Weighted Average Amortization Period Gross Carrying Value Accumulated Amortization Intangible Assets, Net Agency contracts 8 years $ 468,549 $ 225,383 $ 243,166 Non-compete/non-solicit 2 years 6,097 3,477 2,620 Relationship with contracted caregivers 1 year 7,521 6,915 606 Trade names 2 years 4,883 3,343 1,540 Trade names (indefinite life) — 45,800 — 45,800 Licenses and permits 2 years 48,395 36,314 12,081 Intellectual property 1 year 452 409 43 $ 581,697 $ 275,841 $ 305,856 |
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 2016 and each of the four succeeding years and thereafter is as follows: (in thousands) 2016 $ 35,474 2017 32,760 2018 32,101 2019 31,763 2020 30,651 Thereafter 91,290 Total $ 254,039 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
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, 2015 . (in thousands) Total Quoted Market Prices (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Liabilities Interest rate swap agreements $ (612 ) $ — $ (612 ) $ — Contingent consideration $ (5,919 ) $ — $ — $ (5,919 ) 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, 2015 . (in thousands) Total Quoted Market Prices (Level 1) Significant Significant Unobservable Inputs (Level 3) Liabilities Interest rate swap agreements $ (2,861 ) $ — $ (2,861 ) $ — Contingent consideration $ (9,075 ) $ — $ — $ (9,075 ) |
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 measured on a recurring basis for the three months ended December 31, 2015 . (in thousands) Three Months Ended Balance at September 30, 2015 $ 9,075 Present value accretion (211 ) Cassell fair value adjustment (2,945 ) Balance at December 31, 2015 $ 5,919 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Performance of Operating Segments | The following table is a financial summary by reportable segments for the periods indicated (in thousands): For the three months ended December 31, Human Services Post-Acute Specialty Rehabilitation Services Corporate Consolidated 2015 Net revenue $ 277,710 $ 68,037 $ — $ 345,747 EBITDA 37,622 11,647 (25,115 ) 24,154 Total assets 603,773 251,874 196,554 1,052,201 Depreciation and amortization 11,428 5,892 667 17,987 Purchases of property and equipment 5,348 2,908 866 9,122 2014 Net revenue $ 271,969 $ 62,621 $ — $ 334,590 EBITDA (1) 42,564 11,768 (31,998 ) 22,334 Depreciation and amortization 11,387 5,239 584 17,210 Purchases of property and equipment 4,310 4,164 412 8,886 (1) The performance measures previously reported for the three months ended December 31, 2014 have been revised from Income (loss) from continuing operations before income taxes to EBITDA. |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated | A reconciliation of EBITDA to loss from continuing operations on a consolidated basis is as follows (in thousands): Three Months Ended December 31, 2015 2014 EBITDA $ 24,154 $ 22,334 Less: Depreciation and amortization $ 17,987 $ 17,210 Interest expense, net 8,349 10,880 Loss from continuing operations before income taxes $ (2,182 ) $ (5,756 ) |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
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”): Three Months Ended December 31, (in thousands, except share and per share amounts) 2015 2014 Numerator Net loss $ (5,604 ) $ (3,440 ) Denominator Weighted average shares outstanding, basic and diluted 37,095,279 36,950,000 Net loss per share, basic and diluted $ (0.15 ) $ (0.09 ) Equity instruments excluded from diluted net income (loss) per share calculation as the effect would have been anti-dilutive: Stock options 645,973 561,339 Restricted stock units 502,711 554,721 |
Business Overview - Additional
Business Overview - Additional Information (Detail) | Oct. 01, 2015shares | Dec. 31, 2015stateclient |
Product Information [Line Items] | ||
Area of operations, number of states | state | 35 | |
Minimum | ||
Product Information [Line Items] | ||
Number of residential clients (more than) | 11,600 | |
Number of periodic clients (more than) | 14,400 | |
Two Thousand And Six Unit Plan | Secondary Offering | NMH Investment | Common Stock | ||
Product Information [Line Items] | ||
Shares sold by stockholders | shares | 25,250,000 |
Recent Accounting Pronounceme37
Recent Accounting Pronouncements - Additional Information (Detail) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Deferred tax assets, net | $ 18,483,000 | $ 19,648,000 |
Deferred tax liabilities, net, current | 0 | |
Adjustments for New Accounting Pronouncement [Member] | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Deferred tax assets, net | 18,500,000 | 19,600,000 |
Adjustments for New Accounting Pronouncement [Member] | Prepaid Expenses and Other Current Assets | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Deferred finance costs, net | $ 7,100,000 | |
Adjustments for New Accounting Pronouncement [Member] | Other Current Assets | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Deferred finance costs, net | $ 7,500,000 |
Long-Term Debt (Detail)
Long-Term Debt (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Dec. 31, 2015 | Sep. 30, 2015 | |
Debt Instrument [Line Items] | ||
Long-term debt current and non current | $ 642,559 | $ 644,128 |
Less current portion | 6,554 | 6,554 |
Long-term debt | 636,005 | 637,574 |
Term Loan Principal And Interest Due In Quarterly Installment [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 643,946 | $ 645,585 |
Debt instrument, maturity date | Jan. 31, 2021 | Jan. 31, 2021 |
Original Issue | ||
Debt Instrument [Line Items] | ||
Discount on long-term debt | $ (1,387) | $ (1,457) |
Long-Term Debt - Senior Secured
Long-Term Debt - Senior Secured Credit Facilities - Additional Information (Detail) - USD ($) | Jan. 31, 2014 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
Basis points for interest rate | 1.00% | |
Debt instrument, basis spread on variable rate (percent) | 0.50% | |
National Mentor Holdings, Inc | Standby Letters of Credit Senior Revolver | ||
Debt Instrument [Line Items] | ||
Deposit in cash collateral | $ 120,000,000 | |
NMH Investment | ||
Debt Instrument [Line Items] | ||
Letters of credit issued | $ 47,400,000 | |
Line of credit facility, commitment fee (percent) | 0.50% | |
Term Loan | ||
Debt Instrument [Line Items] | ||
Debt instrument maturity term | 7 years | |
Term Loan | National Mentor Holdings, Inc | ||
Debt Instrument [Line Items] | ||
Amount of term loan facility | $ 655,000,000 | |
Senior Revolver | NMH Investment | ||
Debt Instrument [Line Items] | ||
Letters of credit outstanding, amount | $ 0 | |
Letter of Credit | ||
Debt Instrument [Line Items] | ||
Deposit in cash collateral | $ 50,000,000 | |
Senior Secured Credit Facilities | ||
Debt Instrument [Line Items] | ||
Debt instrument maturity term | 5 years | |
Senior Revolver | Line of Credit | NMH Investment | Letter of Credit | ||
Debt Instrument [Line Items] | ||
Amount of term loan facility | $ 2,900,000 | |
Interest Rate Swap One | NMH Investment | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate (percent) | 2.25% | |
Stated interest rate, minimum (not less than) (percent) | 2.00% | |
Eurodollar | NMH Investment | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate (percent) | 3.25% | |
Stated interest rate, minimum (not less than) (percent) | 1.00% |
Long-Term Debt - Senior Notes a
Long-Term Debt - Senior Notes and Covenants - Additional Information (Detail) - NMH Investment | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||
Percentage of revolving commitments | 30.00% | |
Consolidated first lien leverage ratio, maximum | 5.50 | |
Scenario, Forecast | ||
Debt Instrument [Line Items] | ||
Consolidated first lien leverage ratio, maximum | 5 |
Long-Term Debt - Derivatives -
Long-Term Debt - Derivatives - Additional Information (Detail) - Interest Rate Swap $ in Millions | 3 Months Ended | ||
Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jan. 20, 2015USD ($)Swap | |
National Mentor Holdings, Inc | |||
Debt Instrument [Line Items] | |||
Quarterly payments received from counterparty | Equal to the greater of 3-month LIBOR or 1.00% per annum | ||
NMH Investment | |||
Debt Instrument [Line Items] | |||
Number of interest rate swap agreements | Swap | 2 | ||
Interest rate swap in a notional amount | $ 375 | ||
Minimum interest received from counter party (percent) | 1.00% | ||
Payments on fixed rate (percent) | 1.795% | ||
Other Accrued Liabilities | NMH Investment | |||
Debt Instrument [Line Items] | |||
Derivative Liability | $ 0.6 | $ 2.9 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - USD ($) | Oct. 01, 2015 | Dec. 31, 2015 | Dec. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 1,200,000 | $ 1,200,000 | |
Number of shares authorized | 5,546,797 | ||
Shares available for grant | 4,200,000 | ||
Two Thousand And Six Unit Plan | Performance Shares | Class F Common Units and Class H Common Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 10,500,000 | ||
Two Thousand And Six Unit Plan | Stock Compensation Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 10,500,000 | $ 42,800 | |
Two Thousand And Six Unit Plan | NMH Investment | Common Stock | Secondary Offering | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares sold by stockholders | 25,250,000 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock Option Activity (Detail) $ / shares in Units, $ in Thousands | 3 Months Ended |
Dec. 31, 2015USD ($)$ / sharesshares | |
Number of Shares | |
Outstanding at beginning of year (shares) | shares | 567,900 |
Granted (shares) | shares | 87,925 |
Forfeited (shares) | shares | 8,055 |
Exercised (shares) | shares | 1,797 |
Expired (shares) | shares | 0 |
Outstanding at end of year (shares) | shares | 645,973 |
Vested or expected to vest (shares) | shares | 604,765 |
Exercisable at end of year (shares) | shares | 188,101 |
Weighted-Average Exercise Price per Share | |
Outstanding at beginning of year (dollars per share) | $ / shares | $ 16.98 |
Granted (dollars per share) | $ / shares | 26.03 |
Forfeited (dollars per share) | $ / shares | 17 |
Exercised (dollars per share) | $ / shares | 17 |
Expired (dollars per share) | $ / shares | 0 |
Outstanding at end of year (dollars per share) | $ / shares | 18.20 |
Vested or expected to vest (dollars per share) | $ / shares | 18.21 |
Exercisable at end of year (dollars per share) | $ / shares | $ 16.97 |
Outstanding weighted-average remaining life (years) | 8 years 10 months 24 days |
Vested or expected to vest weighed-average remaining life (years) | 8 years 10 months 24 days |
Exercisable weighted-average remaining life (years) | 8 years 8 months 24 days |
Outstanding at end of year, aggregate intrinsic value | $ | $ 6,841 |
Vested or expected to vest at end of year, aggregate intrinsic value | $ | 6,397 |
Exercisable at end of year, aggregate intrinsic value | $ | $ 2,223 |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions in Calculating the Fair Value of Options Granted (Detail) - Stock options | 3 Months Ended |
Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate (percent) | 1.92% |
Expected term (years) | 6 years |
Expected volatility (years) | 35.92% |
Expected dividend yield (years) | 0.00% |
Stock-Based Compensation - Su45
Stock-Based Compensation - Summary of Nonvested Restricted Stock Awards (Detail) - Restricted stock units | 3 Months Ended |
Dec. 31, 2015$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Non-vested shares beginning balance (shares) | shares | 385,935 |
Granted (shares) | shares | 131,918 |
Forfeited (shares) | shares | 8,316 |
Vested (shares) | shares | 6,826 |
Non-vested shares ending balance (shares) | shares | 502,711 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Non-vested balance at beginning balance of the year (dollars per share) | $ / shares | $ 17.10 |
Granted (dollars per share) | $ / shares | 25.99 |
Forfeited (dollars per share) | $ / shares | 17.41 |
Vested (dollars per share) | $ / shares | 15.45 |
Non-vested balance at ending balance of the year (dollars per share) | $ / shares | $ 19.45 |
Business Combinations - Additio
Business Combinations - Additional Information (Detail) $ in Thousands | Dec. 31, 2015USD ($) | Nov. 30, 2015USD ($) | Dec. 31, 2015USD ($)Company |
Business Acquisition [Line Items] | |||
Number of companies acquired | Company | 2 | ||
Aggregate consideration for the acquisition | $ 4,200 | ||
Recognized identifiable intangible assets acquired | $ 3,360 | 3,360 | |
Property and equipment | 38 | 38 | |
Goodwill | $ 758 | 758 | |
Mother's Touch, LLC | |||
Business Acquisition [Line Items] | |||
Business acquisition date | Nov. 30, 2015 | ||
Cost of acquisition | $ 3,400 | ||
Recognized identifiable intangible assets acquired | 2,741 | ||
Property and equipment | 9 | ||
Goodwill | 650 | ||
Mother's Touch, LLC | Human Services | |||
Business Acquisition [Line Items] | |||
Goodwill | 700 | ||
Mother's Touch, LLC | Agency contracts | |||
Business Acquisition [Line Items] | |||
Recognized identifiable intangible assets acquired | $ 2,700 | ||
Weighted average useful life of intangible assets (years) | 12 years | ||
Mother's Touch, LLC | Non-compete/non-solicit | |||
Business Acquisition [Line Items] | |||
Recognized identifiable intangible assets acquired | $ 14 | ||
Weighted average useful life of intangible assets (years) | 5 years | ||
Winways, LLC | |||
Business Acquisition [Line Items] | |||
Business acquisition date | Dec. 31, 2015 | ||
Cost of acquisition | $ 800 | ||
Recognized identifiable intangible assets acquired | 619 | 619 | |
Property and equipment | 29 | 29 | |
Goodwill | 108 | 108 | |
Winways, LLC | Post -Acute Specialty Rehabilitation Services | |||
Business Acquisition [Line Items] | |||
Goodwill | 100 | 100 | |
Winways, LLC | Agency contracts | |||
Business Acquisition [Line Items] | |||
Recognized identifiable intangible assets acquired | $ 500 | 500 | |
Weighted average useful life of intangible assets (years) | 12 years | ||
Winways, LLC | Licenses and permits | |||
Business Acquisition [Line Items] | |||
Recognized identifiable intangible assets acquired | $ 75 | 75 | |
Weighted average useful life of intangible assets (years) | 10 years | ||
Winways, LLC | Other intangible assets | |||
Business Acquisition [Line Items] | |||
Recognized identifiable intangible assets acquired | $ 9 | $ 9 |
Business Combinations - Schedul
Business Combinations - Schedule of Recognized Amounts of Identifiable Assets Acquired and Assumed (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Nov. 30, 2015 |
Business Acquisition [Line Items] | ||
Identifiable intangible assets | $ 3,360 | |
Property and equipment | 38 | |
Total identifiable net assets | 3,398 | |
Goodwill | 758 | |
Mother's Touch, LLC | ||
Business Acquisition [Line Items] | ||
Identifiable intangible assets | $ 2,741 | |
Property and equipment | 9 | |
Total identifiable net assets | 2,750 | |
Goodwill | 650 | |
Winways, LLC | ||
Business Acquisition [Line Items] | ||
Identifiable intangible assets | 619 | |
Property and equipment | 29 | |
Total identifiable net assets | 648 | |
Goodwill | 108 | |
Human Services | Mother's Touch, LLC | ||
Business Acquisition [Line Items] | ||
Goodwill | 700 | |
Post -Acute Specialty Rehabilitation Services | Winways, LLC | ||
Business Acquisition [Line Items] | ||
Goodwill | 100 | |
Agency contracts | Mother's Touch, LLC | ||
Business Acquisition [Line Items] | ||
Identifiable intangible assets | $ 2,700 | |
Agency contracts | Winways, LLC | ||
Business Acquisition [Line Items] | ||
Identifiable intangible assets | $ 500 |
Proforma Results of Operation48
Proforma Results of Operations - Schedule of Proforma Results of Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Business Combinations [Abstract] | ||
Net revenue | $ 347,368 | $ 336,211 |
Net loss | $ (5,475) | $ (3,311) |
Goodwill and Intangible Asset49
Goodwill and Intangible Assets - Schedule of Changes in Goodwill (Detail) $ in Thousands | 3 Months Ended |
Dec. 31, 2015USD ($) | |
Goodwill [Line Items] | |
Beginning Balance | $ 274,520 |
Goodwill acquired through acquisitions | 758 |
Ending Balance | 275,278 |
Human Services | |
Goodwill [Line Items] | |
Beginning Balance | 193,286 |
Goodwill acquired through acquisitions | 650 |
Ending Balance | 193,936 |
Post -Acute Specialty Rehabilitation Services | |
Goodwill [Line Items] | |
Beginning Balance | 81,234 |
Goodwill acquired through acquisitions | 108 |
Ending Balance | $ 81,342 |
Goodwill and Intangible Asset50
Goodwill and Intangible Assets - Schedule of Intangible Assets (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Dec. 31, 2015 | Sep. 30, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | $ 585,034 | $ 581,697 |
Accumulated Amortization | 285,195 | 275,841 |
Intangible Assets, Net | $ 299,839 | $ 305,856 |
Agency contracts | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period (years) | 8 years | 8 years |
Gross Carrying Value | $ 471,811 | $ 468,549 |
Accumulated Amortization | 232,941 | 225,383 |
Intangible Assets, Net | $ 238,870 | $ 243,166 |
Non-compete/non-solicit | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period (years) | 2 years | 2 years |
Gross Carrying Value | $ 6,114 | $ 6,097 |
Accumulated Amortization | 3,728 | 3,477 |
Intangible Assets, Net | $ 2,386 | $ 2,620 |
Relationship with contracted caregivers | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period (years) | 1 year | 1 year |
Gross Carrying Value | $ 7,521 | $ 7,521 |
Accumulated Amortization | 7,103 | 6,915 |
Intangible Assets, Net | $ 418 | $ 606 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period (years) | 2 years | 2 years |
Gross Carrying Value | $ 4,866 | $ 4,883 |
Accumulated Amortization | 3,468 | 3,343 |
Intangible Assets, Net | $ 1,398 | $ 1,540 |
Licenses and permits | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period (years) | 2 years | 2 years |
Gross Carrying Value | $ 48,470 | $ 48,395 |
Accumulated Amortization | 37,530 | 36,314 |
Intangible Assets, Net | 10,940 | $ 12,081 |
Intellectual property | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period (years) | 1 year | |
Gross Carrying Value | 452 | $ 452 |
Accumulated Amortization | 425 | 409 |
Intangible Assets, Net | 27 | 43 |
Trade names (indefinite life) | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 45,800 | 45,800 |
Intangible Assets, Net | $ 45,800 | $ 45,800 |
Goodwill and Intangible Asset51
Goodwill and Intangible Assets - Schedule of Amortization Expense Related to Intangible Assets (Detail) $ in Thousands | Dec. 31, 2015USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,016 | $ 35,474 |
2,017 | 32,760 |
2,018 | 32,101 |
2,019 | 31,763 |
2,020 | 30,651 |
Thereafter | 91,290 |
Total | $ 254,039 |
Goodwill and Intangible Asset52
Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | $ 9,400 | $ 9,400 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Related Party Transaction [Line Items] | ||
Management fees and expenses | $ 0 | $ 162,000 |
Related party lease expense | 200,000 | |
Vestar | ||
Related Party Transaction [Line Items] | ||
Management fees and expenses | 0 | 200,000 |
Accrued liability related to management agreement | $ 0 | 0 |
Related party lease expense | $ 200,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Assets and Liabilities on a Recurring Basis (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Sep. 30, 2015 |
Contingent Consideration | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, recurring | $ (5,919) | $ (9,075) |
Fair Value, Inputs, Level 2 | Contingent Consideration | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, recurring | 0 | 0 |
Fair Value, Inputs, Level 3 | Contingent Consideration | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, recurring | (5,919) | (9,075) |
Interest Rate Swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, recurring | (612) | (2,861) |
Interest Rate Swap | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, recurring | 0 | 0 |
Interest Rate Swap | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, recurring | $ (612) | $ (2,861) |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Changes in Fair Value of Company's Level 3 Liabilities Measured on Recurring Basis (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Cassell fair value adjustment | $ 3,156 | $ 0 |
Fair Value, Inputs, Level 3 | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Fair value of liabilities beginning balance | 9,075 | |
Fair value of liabilities ending balance | 5,919 | |
Contingent Consideration | Fair Value, Inputs, Level 3 | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Present value accretion | (211) | |
Cassell fair value adjustment | $ (2,945) |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration liability | $ 5,919 | $ 9,075 | |
Cassell fair value adjustment | (3,156) | $ 0 | |
Other Accrued Liabilities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair value of liabilities | 4,600 | 3,900 | |
Other Long-Term Liabilities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair value of liabilities | 1,300 | $ 5,200 | |
Cassell And Associates | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cassell fair value adjustment | $ 3,200 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |||
Effective income tax rate | (155.50%) | 41.20% | |
Nondeductible expense, share-based compensation cost, amount | $ 10,500 | ||
Reserve for uncertain income tax positions | $ 0 | $ 0 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015USD ($)business_unitsegment | Dec. 31, 2014USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments | segment | 2 | |
Cassell fair value adjustment | $ (3,156) | $ 0 |
Human Services | ||
Segment Reporting Information [Line Items] | ||
Number of business units | business_unit | 3 | |
Human Services | Minnesota | Geographic Concentration Risk | Sales Revenue, Segment | ||
Segment Reporting Information [Line Items] | ||
Percent of revenue | 15.00% | 15.00% |
Post -Acute Specialty Rehabilitation Services | ||
Segment Reporting Information [Line Items] | ||
Number of business units | business_unit | 2 | |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Cassell fair value adjustment | $ 3,200 | |
Other Nonoperating Income (Expense) | ||
Segment Reporting Information [Line Items] | ||
Interest expense, contingent consideration | 200 | |
Interest income, other | $ 300 | $ 0 |
Segment Information - Performan
Segment Information - Performance of Operating Segments (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | |||
Net revenue | $ 345,747 | $ 334,590 | |
EBITDA | 24,154 | 22,334 | |
Total assets | 1,052,201 | $ 1,063,184 | |
Depreciation and amortization | 17,987 | 17,210 | |
Purchases of property and equipment | 9,122 | 8,886 | |
Operating Segments | Human Services | |||
Segment Reporting Information [Line Items] | |||
Net revenue | 277,710 | 271,969 | |
EBITDA | 37,622 | 42,564 | |
Total assets | 603,773 | ||
Depreciation and amortization | 11,428 | 11,387 | |
Purchases of property and equipment | 5,348 | 4,310 | |
Operating Segments | Post -Acute Specialty Rehabilitation Services | |||
Segment Reporting Information [Line Items] | |||
Net revenue | 68,037 | 62,621 | |
EBITDA | 11,647 | 11,768 | |
Total assets | 251,874 | ||
Depreciation and amortization | 5,892 | 5,239 | |
Purchases of property and equipment | 2,908 | 4,164 | |
Corporate | |||
Segment Reporting Information [Line Items] | |||
Net revenue | 0 | 0 | |
EBITDA | (25,115) | (31,998) | |
Total assets | 196,554 | ||
Depreciation and amortization | 667 | 584 | |
Purchases of property and equipment | $ 866 | $ 412 |
Segment Information - Reconcili
Segment Information - Reconciliation of Operating Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting [Abstract] | ||
EBITDA | $ 24,154 | $ 22,334 |
Depreciation and amortization | 17,987 | 17,210 |
Interest expense, net | 8,349 | 10,880 |
Loss from continuing operations before income taxes | $ (2,182) | $ (5,756) |
Disposition of Business - Addit
Disposition of Business - Additional Information (Detail) - Disposal Group, Disposed of by Sale, Not Discontinued Operations - Human Services - USD ($) $ in Millions | Dec. 01, 2015 | Dec. 31, 2015 | Dec. 31, 2014 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Payment from divestiture of business | $ 1.3 | ||
Loss on disposition of business | $ (1.3) | ||
Closure costs | $ 2.1 | ||
Severance costs | 0.5 | ||
Lease termination costs | 1.6 | ||
Discontinued operation, loss on disposal before income taxes | $ 5.2 | $ 1.5 |
Net Income (Loss) Per Share - S
Net Income (Loss) Per Share - Schedule of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Numerator | ||
Net loss | $ (5,604) | $ (3,440) |
Denominator (shares) | ||
Weighted average shares outstanding, basic and diluted | 37,095,279 | 36,950,000 |
Net income (loss) per share, basic and diluted (in dollars per share) | $ (0.15) | $ (0.09) |
Stock options | ||
Denominator (shares) | ||
Anti-dilutive securities excluded from the computation of diluted EPS (shares) | 645,973 | 561,339 |
Restricted stock units | ||
Denominator (shares) | ||
Anti-dilutive securities excluded from the computation of diluted EPS (shares) | 502,711 | 554,721 |
Accruals for Self-Insurance - A
Accruals for Self-Insurance - Additional Information (Detail) - USD ($) | Oct. 01, 2015 | Dec. 31, 2015 | Sep. 30, 2015 |
Payables and Accruals [Abstract] | |||
Insured amount for professional and general liability, per claim | $ 3,000,000 | $ 4,000,000 | |
Aggregate self-insurance for professional and general liability | $ 28,000,000 | $ 28,000,000 | |
Claim retention with statutory limit, workers' compensation | $ 350,000 | ||
Claim retention with statutory limit, automobile liability | 100,000 | ||
Stop loss insurance coverage against extraordinary claims | $ 300,000 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) $ in Millions | Feb. 01, 2016USD ($)business | Jan. 20, 2016USD ($) | Dec. 31, 2015USD ($)Company |
Subsequent Event [Line Items] | |||
Number of companies acquired | Company | 2 | ||
Aggregate consideration for the acquisition | $ 4.2 | ||
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Aggregate consideration for the acquisition | $ 16.3 | ||
Massachusetts Adult Day Health Alliance | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Earn out payment | $ 1.3 | ||
Human Services | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Number of companies acquired | business | 3 | ||
Post -Acute Specialty Rehabilitation Services | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Number of companies acquired | business | 1 |