Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2017 | Jan. 31, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2017 | |
Document Fiscal Year Focus | 2,018 | |
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 | 37,546,785 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Sep. 30, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 0 | $ 7,297 |
Restricted cash | 1,225 | 327 |
Accounts receivable, net of allowances of $16,661 and $15,997 at December 31, 2017 and September 30, 2017 | 170,699 | 172,850 |
Prepaid expenses and other current assets | 25,880 | 12,998 |
Total current assets | 197,804 | 193,472 |
Property and equipment, net | 184,826 | 183,338 |
Intangible assets, net | 346,307 | 313,075 |
Goodwill | 305,889 | 273,325 |
Restricted cash | 50,000 | 50,000 |
Other assets | 40,635 | 36,172 |
Total assets | 1,125,461 | 1,049,382 |
Current liabilities: | ||
Accounts payable | 35,604 | 35,275 |
Accrued payroll and related costs | 62,790 | 78,011 |
Other accrued liabilities | 46,129 | 42,284 |
Obligations under capital lease, current | 624 | 608 |
Current portion of long-term debt | 12,331 | 6,554 |
Total current liabilities | 157,478 | 162,732 |
Other long-term liabilities | 81,994 | 77,081 |
Deferred tax liabilities, net | 15,162 | 22,349 |
Obligations under capital lease, less current portion | 4,242 | 4,404 |
Long-term debt, less current portion | 692,027 | 619,899 |
Commitments and Contingencies (Note 12) | ||
Stockholders’ equity | ||
Common stock, $0.01 par value; 350,000,000 shares authorized; and 37,546,637 and 37,441,257 shares issued and outstanding at December 31, 2017 and September 30, 2017, respectively | 375 | 374 |
Additional paid-in capital | 302,624 | 301,819 |
Accumulated gain (loss) on derivatives, net of tax expense (benefit) of $575 and ($62) at December 31, 2017 and September 30, 2017, respectively | 1,510 | (91) |
Accumulated deficit | (129,951) | (139,185) |
Total stockholders’ equity | 174,558 | 162,917 |
Total liabilities and stockholders’ equity | $ 1,125,461 | $ 1,049,382 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Sep. 30, 2017 |
Statement of Financial Position [Abstract] | ||
Allowances for accounts receivable | $ 16,661 | $ 15,997 |
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) | 37,546,637 | 37,441,257 |
Common stock, shares outstanding (shares) | 37,546,637 | 37,441,257 |
Accumulated loss on derivatives, tax expense (benefit) | $ 575 | $ (62) |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Net revenue | $ 395,418 | $ 359,394 |
Cost of revenue | 316,257 | 283,976 |
Operating expenses: | ||
General and administrative | 44,534 | 41,792 |
Depreciation and amortization | 21,797 | 18,155 |
Total operating expenses | 66,331 | 59,947 |
Income from operations | 12,830 | 15,471 |
Other income (expense): | ||
Other income, net | 446 | 56 |
Interest expense | (9,009) | (8,485) |
Income before income taxes | 4,267 | 7,042 |
Provision (benefit) for income taxes | (5,127) | 2,863 |
Net income | $ 9,394 | $ 4,179 |
Basic and diluted income per common share (in dollars per share) | $ 0.25 | $ 0.11 |
Weighted average number of common shares outstanding, basic (in shares) | 37,472,018 | 37,231,067 |
Weighted average number of common shares outstanding, diluted (in shares) | 37,675,792 | 37,328,638 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 9,394 | $ 4,179 |
Other comprehensive income, net of tax: | ||
Gain on derivative instrument classified as cash flow hedge, net of tax expense of $637 and $2,255 for the three months ended December 31, 2017 and 2016, respectively | 1,601 | 3,321 |
Comprehensive income | $ 10,995 | $ 7,500 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Tax effects of changes in unrealized gain on derivatives | $ 637 | $ 2,255 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Income (Loss) on Derivatives | Accumulated Deficit |
Increase (Decrease) in Stockholders' Equity | |||||
Cumulative effect adjustment on adoption of ASU 2016-09 | $ 59 | $ 219 | $ (160) | ||
Beginning balance at Sep. 30, 2017 | $ 162,917 | $ 374 | 301,819 | $ (91) | (139,185) |
Beginning balance (shares) at Sep. 30, 2017 | 37,441,257 | 37,441,257 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock under employee incentive plans, net of shares surrendered | $ (1,064) | $ 1 | (1,065) | ||
Issuance of common stock under employee incentive plans, net of shares surrendered (shares) | 105,380 | ||||
Stock-based compensation | 1,651 | 1,651 | |||
Other comprehensive income, net of tax | 1,601 | 1,601 | |||
Net income | 9,394 | 9,394 | |||
Ending balance at Dec. 31, 2017 | $ 174,558 | $ 375 | $ 302,624 | $ 1,510 | $ (129,951) |
Ending balance (shares) at Dec. 31, 2017 | 37,546,637 | 37,546,637 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Operating activities: | ||
Net income | $ 9,394 | $ 4,179 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for accounts receivable allowances | 4,770 | 4,248 |
Depreciation and amortization | 21,797 | 18,155 |
Amortization original issue discount and financing costs | 544 | 457 |
Stock-based compensation | 1,651 | 2,079 |
Deferred income taxes | (7,910) | (4,920) |
Loss on disposal of assets | 94 | 102 |
Gain from derivatives | (82) | 0 |
Change in fair value of contingent consideration | 0 | 375 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | 2,100 | 1,398 |
Other assets | (14,664) | 5,045 |
Accounts payable | (150) | (4,165) |
Accrued payroll and related costs | (15,799) | (11,244) |
Other accrued liabilities | 2,772 | 2,078 |
Other long-term liabilities | 4,313 | (1,990) |
Net cash provided by operating activities | 8,830 | 15,797 |
Investing activities: | ||
Acquisition of businesses, net of cash acquired | (81,926) | 0 |
Purchases of property and equipment | (11,187) | (11,327) |
Change in restricted cash | (898) | (55) |
Proceeds from sale of assets | 1,733 | 811 |
Net cash used in investing activities | (92,278) | (10,571) |
Financing activities: | ||
Proceeds from long term-debt, net of original issue discount | 74,452 | 0 |
Repayments of long-term debt | (1,833) | (1,639) |
Proceeds from borrowings under senior revolver | 66,200 | 0 |
Repayments of borrowings under senior revolver | (61,200) | 0 |
Repayments of capital lease obligations | (146) | (132) |
Payments of deferred financing costs | (258) | 0 |
Taxes paid related to net share settlements of equity awards | (1,064) | (413) |
Net cash provided by (used in) financing activities | 76,151 | (2,184) |
Net (decrease) increase in cash and cash equivalents | (7,297) | 3,042 |
Cash and cash equivalents at beginning of period | 7,297 | 50,683 |
Cash and cash equivalents at end of period | 0 | 53,725 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 8,201 | 7,792 |
Cash paid for income taxes | 11,019 | 1,672 |
Supplemental disclosure of non-cash activities: | ||
Accrued property and equipment | 883 | 493 |
Fair value of contingent consideration related to acquisitions | $ 1,080 | $ 0 |
Business Overview
Business Overview | 3 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Overview | 1. Business Overview Civitas Solutions, Inc. ("Civitas"), through its wholly-owned subsidiaries (collectively, the "Company"), is the leading provider of home- and community-based health and human services to adults and children with intellectual and/or developmental disabilities, acquired brain injury and other catastrophic injuries and illnesses; and to youth with emotional, behavioral and/or medically complex challenges. Since the Company’s founding in 1980, the Company has evolved into a diversified national network providing an array of high-quality services and care in large, growing and highly-fragmented markets. The Company currently provides services to individuals with intellectual and/or developmental disabilities (“I/DD”), individuals with catastrophic injuries and illnesses, particularly acquired brain injury (“ABI”), youth with emotional, behavioral and/or medically complex challenges, or at-risk youth (“ARY”), and elders in need of day health services to support their independence, or adult day health (“ADH”). As of December 31, 2017 , the Company operated in 36 states, serving more than 12,300 individuals in residential settings and more than 19,000 individuals in non-residential settings. The Company designs customized service plans to meet the individual needs of those served by the Company, which it delivers in home- and community-based settings. Most of the Company’s service plans involve residential support, typically in small group homes, host home settings, or specialized community facilities, designed to improve the quality of life of the individuals served by the Company and to promote their independence and participation in community life. Other services offered include supported living, day and transitional programs, vocational services, case management, family-based and outpatient therapeutic services, post-acute treatment and neurorehabilitation, neurobehavioral rehabilitation and physical, occupational and speech therapies, among others. The Company’s customized service plans offer individuals as well as the payors of these services, an attractive, cost-effective alternative to health and human services provided in large, institutional settings. Civitas is the parent of a consolidated group of subsidiaries that market their services under The MENTOR Network tradename. 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 the 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. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2017 | |
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, 2017 , 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, 2017 may not necessarily be indicative of results to be expected for any other interim period or for the full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Adoption of New Accounting Pronouncements The Company adopted the guidance in Accounting Standards Update ("ASU") No. 2016-09 Compensation - Stock Compensation - Improvements to Employee Share-Based Payments Accounting , on October 1, 2017. Under this standard, entities are permitted to make an accounting policy election to either estimate forfeitures on share-based payment awards, as previously required, or to recognize forfeitures as they occur. The Company has elected to recognize forfeitures as they occur and the impact of that change in accounting policy has been recorded as a $0.2 million cumulative effect adjustment to increase accumulated deficit as of October 1, 2017. Additionally, ASU No. 2016-09 requires that all income tax effects related to settlements of share-based payment awards be reported in earnings as an increase or decrease to income tax expense (benefit). Previously, income tax benefits at settlement of an award were reported as an increase (or decrease) to additional paid-in capital to the extent that those benefits were greater than (or less than) the income tax benefits reported in earnings during the award’s vesting period. The requirement to report those income tax effects in earnings has been applied on a prospective basis to settlements occurring on or after October 1, 2017, and the impact of applying the guidance was not material to the consolidated financial statements for the three months ended December 31, 2017. Application of the guidance may result in fluctuations in the Company’s effective tax rate depending on how many options are exercised, how many restricted stock units vest and the volatility of the Company’s stock price. ASU No. 2016-09 also requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award’s vesting period. The Company has elected to apply the changes in cash flow classification on a prospective basis. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Dec. 31, 2017 | |
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 Topic 606 (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 including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The FASB has subsequently issued amendments to ASU No. 2014-09 that have the same effective date and transition date. ASU 2014-09, as amended, is effective for the Company’s fiscal year beginning October 1, 2018, and, at that time, the Company expects to adopt the new standard under the modified retrospective approach for contracts with customers. Under the modified retrospective approach, the guidance is applied to the most current period presented, recognizing the cumulative effect of the adoption change as an adjustment to beginning retained earnings. In fiscal 2017, the Company established a formal program and cross-functional implementation team to identify, design and implement changes to its accounting systems and policies and internal controls to support recognition and disclosure under the new standard. This process included a review of the requirements under the new standard compared to the current accounting policies for each of the Company’s revenue streams. To date, the Company has not identified any material impact expected upon adoption, however the review is not yet complete. The full assessment of adoption including any potential impact to the results of operations, financial position and financial disclosures as well as the method of adoption will be finalized during fiscal 2018. Leases — In February 2016, the FASB issued ASU No. 2016-02— Leases (Topic 842) . The new standard requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The standard will be effective for the Company on October 1, 2019. The Company is still evaluating the method of adoption. The adoption of this standard is expected to have a material impact on the Company’s financial position. As of December 31, 2017 , the Company had gross operating lease commitments of approximately $371 million . Upon adoption, a substantial portion of these lease commitments will be recorded at their net present value as a right of use asset and a lease obligation. Stock Compensation — In May 2017, the FASB issued ASU No. 2017-09— Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting , which amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. The new standard will be effective for the Company on October 1, 2018. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. Statement of Cash Flows— In November 2016, the FASB issued ASU No. 2016-18— Statement of Cash Flows (Topic 230): Restricted Cash . The update requires that a statement of cash flows present the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new standard will be applied using a retrospective transition method to each period presented and will be effective for the Company on October 1, 2018. As of December 31, 2017 and September 30, 2017 , the Company had total restricted cash amounts of $51.2 million and $50.3 million , respectively. Business Combinations — In January 2017, the FASB issued ASU No. 2017-01— Business Combinations (Topic 805): Clarifying the Definition of a Business . The update provides guidance to determine when an integrated set of assets and activities is not a business. When substantially all of the fair value of the gross assets acquired, or disposed of, is concentrated in a single identifiable asset or a group of similar identifiable assets, then the acquisition, or disposition, is not a business. The amendments in this update should be applied prospectively on or after the effective date. No disclosures are required at transition. The new standard will be effective for the Company on October 1, 2018. Early application of the amendments in this update is permitted for transactions meeting certain criteria. This standard could reduce the number of acquisitions that are treated as business combinations in the future. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | 4. Long-Term Debt As of December 31, 2017 and September 30, 2017 , the Company’s long-term debt consisted of the following: (in thousands) December 31, September 30, Term loan principal; principal and interest are due in quarterly installments through January 31, 2021 $ 705,643 $ 632,476 Original issue discount on term loan, net of accumulated amortization (1,352 ) (901 ) Deferred financing costs, net of accumulated amortization (4,933 ) (5,122 ) Senior secured revolving credit facility 5,000 — 704,358 626,453 Less current portion 12,331 6,554 Long-term debt $ 692,027 $ 619,899 Senior Secured Credit Facilities NMHI's senior credit agreement (the “senior credit agreement”), as amended, governs a $730.0 million Tranche B term loan facility (the “term loan facility”), of which $50.0 million was deposited in a cash collateral account in support of the issuance of letters of credit under an institutional letter of credit facility (the “institutional letter of credit facility”), and a $160.0 million senior secured revolving credit facility (the “senior revolver”). The term loan facility matures on January 31, 2021, a portion of the commitments under the senior revolver matures on January 31, 2019 and a portion of the commitments under the senior revolver matures on January 31, 2021, as described below. 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. On October 24, 2017, NMHI entered into Amendment No. 6 to its senior credit agreement which provided for an incremental $75.0 million term loan. The net proceeds of the incremental term loan were used by the Company for the acquisition of Mentis Neuro Rehabilitation, LLC, with any excess proceeds to be used for general corporate purposes. On November 21, 2017, NMHI entered into Amendment No. 7 to its senior credit agreement which increased the aggregate revolving commitments from $120.0 million to $160.0 million and extended the maturity date for $90.0 million of the revolving commitments (the “Extended Revolving Commitments") to January 31, 2021. The terms of the remaining $70.0 million of the revolving commitments (the "Initial Revolving Commitments"), which mature on January 31, 2019, remain unchanged. All of the other terms of the Extended Revolving Commitments are identical to the Initial Revolving Commitments, except that the applicable margin for the Extended Revolving Commitments will decrease by 0.25% per annum when the Initial Revolving Commitments are terminated or expire. 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, 2017 , NMHI had $5.0 million outstanding under the senior revolver, $47.4 million of letters of credit issued under the institutional letter of credit facility and $2.9 million of standby letters of credit under the senior revolver. Borrowings under the term loan facility bear interest, at our option, at: (i) an alternate base rate ("ABR") equal to the greater of (a) the prime rate of Barclays Bank PLC, (b) the federal funds rate plus 1/2 of 1.0%, and (c) the Eurodollar rate for an interest period of one-month plus 100 basis points (provided that the ABR applicable to the term loan facility will not be less than 2.00% per annum), plus 2.00% ; or (ii) the Eurodollar rate (provided that the Eurodollar rate applicable to the term loan facility will not be less than 0.75% per annum), plus 3.00% . Borrowings under the revolving and swingline loans bear interest at our option at (i) an ABR equal to the greater of (a) the prime rate of Barclays Bank PLC, (b) the federal funds rate plus 1/2 of 1.0%, and (c) the Eurodollar rate for an interest period of one-month plus 100 basis points (provided that the ABR applicable to the term loan facility will not be less than 2.00% per annum), plus 2.25% ; or (ii) the Eurodollar rate (provided that the Eurodollar rate applicable to the term loan facility will not be less than 0.75% per annum), plus 3.25% . NMHI is also required to pay a commitment fee to the lenders under the senior revolver at an initial rate of 0.50% of the average daily unutilized commitments thereunder. NMHI must also pay customary letter of credit fees. The senior credit agreement requires NMHI to make mandatory prepayments, subject to certain exceptions, on a percentage of NMHI's annual Excess Cash Flow, as defined in the senior credit agreement. NMHI determines whether or not a mandatory prepayment is required at the end of each fiscal year. NMHI was not required to make a prepayment for the fiscal year ended September 30, 2017 . Covenants The senior credit agreement contains negative covenants, including, among other things, limitations on the Company’s ability to incur additional debt, create liens on assets, transfer or sell assets, pay dividends, redeem stock or make other distributions or investments, and engage in certain transactions with affiliates. The senior credit agreement contains a springing financial covenant. If, at the end of any fiscal quarter, the Company’s outstanding borrowings under the senior revolver exceeds 30% of the commitments thereunder, it is required to maintain at the end of each such fiscal quarter a consolidated first lien leverage ratio of not more than 5.50 to 1.00 . This consolidated first lien leverage ratio stepped down to 5.00 to 1.00 in the fiscal quarter ending March 31, 2017. The springing financial covenant was not in effect as of December 31, 2017 or September 30, 2017 as the Company’s usage of the senior revolver did not exceed the threshold for each quarter. Derivatives On January 20, 2015, NMHI entered into two interest rate swap agreements in an aggregate notional amount of $375.0 million in order to reduce the variability of cash flows of 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, which represents the price that would be received to transfer agreement in an orderly transaction between market participants, was an asset of $2.1 million and a liability of $0.2 million as of December 31, 2017 and September 30, 2017 , respectively. The fair value was recorded in Prepaid expenses and other current assets or Other accrued liabilities on the Company’s consolidated balance sheet, and was determined based on pricing models and independent formulas using current assumptions. Hedge ineffectiveness, if any, associated with the swap is recorded as income or expense in the period incurred. During the three months ended December 31, 2017 , the ineffective portion of gain resulting from changes in fair value was $0.1 million which was recorded in Other income, net. There was no hedge ineffectiveness recorded during the three months ended December 31, 2016. No amounts were excluded from ineffectiveness testing for the three months ended December 31, 2017 and 2016. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Dec. 31, 2017 | |
Share-based Compensation [Abstract] | |
Stock-Based Compensation | 5. Stock-Based Compensation 2014 Plan Civitas maintains a 2014 Omnibus Incentive Plan (“2014 Plan”). As of December 31, 2017 , the 2014 Plan authorized the issuance of up to 7,786,478 shares of common stock as stock-based awards, including incentive stock options (“ISOs”), non-qualified stock options (“NSOs”), restricted stock units (“RSUs”) and performance based restricted stock units (“PRSUs”). Stock Options Stock option activity for the three months ended December 31, 2017 is presented below: (in thousands, except share and per share amounts) Number of Weighted- Weighted- Aggregate Outstanding at September 30, 2017 877,781 $ 18.65 Granted 148,133 19.00 Exercised 17,608 17.00 Forfeited 27,484 18.52 Outstanding at December 31, 2017 980,822 $ 18.73 8.0 $ 105 Exercisable at December 31, 2017 584,425 $ 18.60 7.2 $ 67 Vested or expected to vest as of December 31, 2017 980,822 $ 18.73 8.0 $ 105 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, 2017 were valued using the following assumptions: 2017 Risk-free interest rate 2.22 % Expected term 6 years Expected volatility 33.56 % Expected dividend yield — % The Company recognizes the fair value of the stock option awards as stock-based compensation expense over the requisite service period of the individual grantee, which equals the vesting period. As of December 31, 2017 , there was $2.7 million of unrecognized compensation cost related to unvested stock options. This cost is expected to be recognized over a weighted-average period of 2.1 years. Restricted Stock Unit Awards (RSUs) Restricted stock unit activity for the three months ended December 31, 2017 is presented below: Number of Restricted Stock Units Weighted Average Grant-Date Fair Value Non-vested units at September 30, 2017 677,406 $ 19.20 Granted 330,374 19.00 Forfeited 31,367 18.78 Vested 159,811 19.99 Non-vested units at December 31, 2017 816,602 $ 18.98 The fair value of each restricted stock unit was determined based on the Company's closing stock price on the date of grant. The Company recognizes the fair value of the RSUs as stock-based compensation expense over the requisite service period of the individual grantee, which equals the vesting period. The total fair values of RSUs that vested during the three months ended December 31, 2017 and 2016 was $3.0 million and $1.2 million , respectively. As of December 31, 2017 , there was $13.7 million of unrecognized compensation expense related to unvested restricted stock unit awards. This cost is expected to be recognized over a weighted-average period of 2.3 years. Performance Based Restricted Stock Units (PRSUs) During the three months ended December 31, 2017 , the Company awarded 48,109 PRSUs. These PRSUs vest based upon the achievement of established performance targets over the three year performance period which ends September 30, 2020. The number of PRSUs that may vest varies between 0% - 200% based on the achievement of such goals. The PRSUs were valued at $19.00 per share based on the closing price of the Company’s common stock on the date of grant. To calculate compensation expense, the Company forecasts the likelihood of achieving the predefined performance targets and calculates the number of PRSUs expected to be earned. As of December 31, 2017 , the Company expects to recognize $1.5 million of stock-based compensation expense related to outstanding PRSUs based on the expected attainment levels. This cost is expected to be recognized over a weighted-average period of 2.4 years. A summary of PRSU activity for the three months ended December 31, 2017 is as follows: Number of Performance Based Restricted Stock Units Weighted Average Grant-Date Fair Value Non-vested units at September 30, 2017 84,505 $ 19.85 Granted 48,109 19.00 Forfeited — — Vested — — Non-vested units at December 31, 2017 132,614 $ 19.54 Units expected to vest as of December 31, 2017 93,733 $ 19.41 The Company recorded stock-based compensation expense for stock options, RSUs and PRSUs under the 2014 Plan of $1.7 million and $2.1 million during the three months ended December 31, 2017 and December 31, 2016 , respectively. Stock-based compensation expense is included in general and administrative expense in the consolidated statements of income. |
Business Combinations
Business Combinations | 3 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Business Combinations | 6. Business Combinations The operating results of the businesses acquired are included in the consolidated statements of income 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 2018 Acquisitions During the three months ended December 31, 2017 , the Company acquired the assets or equity interests of six companies for total consideration of $83.0 million , net of $0.8 million of cash acquired and including $1.1 million of contingent consideration. Mentis Neuro Rehabilitation, LLC. (“Mentis”). On October 25, 2017 , the Company acquired all of the outstanding membership interests of Mentis for $75.0 million , net of $0.8 million of cash acquired. Mentis is located in Texas and Ohio and provides specialty rehabilitation services to individuals recovering from acquired brain injuries. The Company acquired $38.4 million of identifiable intangible assets which included approximately $32.7 million of agency contracts with a weighted average useful life of 12 years, $4.1 million of licenses and permits with a weighted average useful life of 10 years, and $1.1 million in tradenames with a weighted average useful life of 5 years. The Company also acquired $5.7 million of other assets, net of liabilities, consisting primarily of accounts receivable and fixed assets. The estimated fair values of the intangible assets acquired at the date of acquisition were determined based on a preliminary valuation that has yet to be finalized. As a result of the acquisition, the Company recorded $30.9 million of goodwill in the SRS segment, which is not expected to be deductible for tax purposes. Unique Options, LLC (“Unique”) . On December 4, 2017 , the Company acquired the assets of Unique for $5.9 million . Unique is located in Michigan and provides vocational rehabilitation, training and similar services to individuals with acquired brain injuries and similar conditions. The Company acquired $4.3 million of identifiable intangible assets which included $4.0 million of agency contracts with a weighted average useful life of 11 years. The estimated fair values of the intangible assets acquired at the date of acquisition were determined based on a preliminary valuation that has yet to be finalized. As a result of this acquisition, the Company recorded $1.7 million of goodwill in the SRS segment, which is expected to be deductible for tax purposes. Other Acquisitions. During the three months ended December 31, 2017 , the Company acquired the assets of Powell Life Skills Inc. (“Powell”), Jac-Lin Manor, Inc. (“Jac-Lin”), Dungarvin Wisconsin, LLC (“Dungarvin”), and Resources for Human Development, Inc. (“RHD”). Total cash consideration for these companies was $2.1 million and total contingent consideration was $1.1 million . (in thousands) Identifiable Intangible Assets Other Assets, Net Total Identifiable Assets Goodwill Purchase Consideration Mentis $ 38,400 $ 5,670 $ 44,070 $ 30,899 $ 74,969 Unique 4,265 22 4,287 1,660 5,947 Other acquisitions 1,995 95 2,090 — 2,090 Total $ 44,660 $ 5,787 $ 50,447 $ 32,559 $ 83,006 The Company has not disclosed revenue or income from operations from these acquisitions for the three months ended December 31, 2017 because they are immaterial. Fiscal 2017 Pro Forma Results of Operations The following table reflects the unaudited pro forma results of operations for the three months ended December 31, 2017 and 2016 assuming that the acquisitions made during the three months ended December 31, 2017 had occurred on October 1, 2016. (in thousands) Three Months Ended 2017 2016 Net revenue $ 399,185 $ 372,721 Net income 9,649 4,998 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, 2016, or the results that may be achieved in future periods. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 7. Goodwill and Intangible Assets Goodwill The changes in goodwill for the three months ended December 31, 2017 are as follows (in thousands): I/DD SRS ARY Corporate and Other Total Balance as of September 30, 2017 $ 159,316 $ 85,525 $ 28,484 $ — $ 273,325 Goodwill acquired through acquisitions — 32,559 — — 32,559 Acquisition adjustments 5 — — — 5 Balance as of December 31, 2017 $ 159,321 $ 118,084 $ 28,484 $ — $ 305,889 Intangible Assets Intangible assets consist of the following as of December 31, 2017 (in thousands): Description Weighted Average Amortization Period Gross Carrying Value Accumulated Amortization Intangible Assets, Net Agency contracts 7 years $ 578,880 $ 299,983 $ 278,897 Non-compete/non-solicit agreements 1 year 7,728 5,455 2,273 Trade names 1 year 8,382 5,265 3,117 Trade names (indefinite life) — 42,400 — 42,400 Licenses and permits 4 years 62,543 42,923 19,620 $ 699,933 $ 353,626 $ 346,307 Intangible assets consist of the following as of September 30, 2017 (in thousands): Description Weighted Average Amortization Period Gross Carrying Value Accumulated Amortization Intangible Assets, Net Agency contracts 7 years $ 540,826 $ 290,687 $ 250,139 Non-compete/non-solicit agreements 1 year 7,196 5,228 1,968 Trade names 2 years 7,138 4,779 2,359 Trade names (indefinite life) — 42,400 — 42,400 Licenses and permits 3 years 58,443 42,234 16,209 $ 656,003 $ 342,928 $ 313,075 Amortization expense was $11.4 million and $9.0 million for the three months ended December 31, 2017 and 2016 , respectively. The estimated remaining amortization expense related to intangible assets with finite lives for the nine months remaining in fiscal 2018 and each of the four succeeding years and thereafter is as follows: Year Ended September 30, (in thousands) 2018 $ 33,744 2019 43,520 2020 42,424 2021 38,958 2022 37,175 Thereafter 108,086 Total $ 303,907 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 8. Fair Value Measurements The Company measures and reports its financial assets and liabilities on the basis of fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level hierarchy for disclosure has been established to show the extent and level of judgment used to estimate fair value measurements, as follows: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Significant other observable inputs (quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability). Level 3: Significant unobservable inputs for the asset or liability. These values are generally determined using pricing models which utilize management estimates of market participant assumptions. Valuation techniques for assets and liabilities measured using Level 3 inputs may include methodologies such as the market approach, the income approach or the cost approach, and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are only utilized to the extent that observable inputs are not available or cost-effective to obtain. A description of the valuation methodologies used for instruments measured at fair value as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. The following table sets forth the Company’s assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2017 . (in thousands) Total Quoted Market Prices (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Interest rate swap agreements $ 2,085 $ — $ 2,085 $ — Liabilities Contingent consideration $ 1,080 $ — $ — $ 1,080 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, 2017 . (in thousands) Total Quoted Market Prices (Level 1) Significant Significant Unobservable Inputs (Level 3) Liabilities Interest rate swap agreements $ 153 $ — $ 153 $ — 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 assets (under Prepaid expenses and other current assets) or 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. The following table presents a summary of changes in fair value of the Company’s Level 3 liabilities (acquisition related contingent consideration) measured on a recurring basis for the three months ended December 31, 2017. (in thousands) Three Months Ended December 31, 2017 Balance at September 30, 2017 $ — Acquisition date fair value of contingent consideration obligations recorded 1,080 Balance at December 31, 2017 $ 1,080 The following table presents a summary of changes in fair value of the Company’s Level 3 liabilities (acquisition related contingent consideration) measured on a recurring basis for the three months ended December 31, 2016. (in thousands) Three Months Ended Balance at September 30, 2016 $ 5,915 Fair value adjustment 375 Balance at December 31, 2016 $ 6,290 As of December 31, 2017 , the Company had $1.1 million of contingent consideration liabilities, which was reflected in Other accrued liabilities. As of September 30, 2017 , the Company had no contingent consideration liability. At December 31, 2017 and September 30, 2017 , 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, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Income Taxes The Company’s effective income tax rate for the interim periods is based on management’s estimate of the Company’s annual effective tax rate for the applicable year. It is also affected by discrete items that may occur in any given period. The rates differ from the federal statutory income tax rate primarily due to state income taxes and nondeductible permanent differences such as meals and nondeductible compensation. For the three months ended December 31, 2017 , the Company’s effective income tax rate was (120.2)% , as compared to an effective tax rate of 40.7% for the three months ended December 31, 2016 . The effective tax rate for the three months ended December 31. 2017 is primarily due to the revaluing of the deferred tax liabilities due to a lower corporate tax rate. On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted into law. The Act significantly revises corporate income tax law by, among other things, lowering the corporate income tax rates from 35% to 21%. Under GAAP, deferred taxes must be adjusted for enacted changes in tax laws or rates during the period in which new tax legislation is enacted. As of December 31, 2017, we have not completed our accounting for the tax effects of enactment of the Act; however, in certain cases, as described below, we have made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. These amounts may require further adjustments as a result of additional future guidance from the U.S. Department of the Treasury, changes in our assumptions, and the availability of further information and interpretations. For the items for which we were able to determine a reasonable estimate, we recognized a provisional tax benefit of $6.5 million which is included as a component of income tax expense for the three months ended December 31, 2017. We remeasured certain deferred tax assets and liabilities based on an estimate of the rates at which they are expected to reverse in the future. However, we are still analyzing certain aspects of the Act and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. Additionally, our estimates for when timing differences will reverse could differ from actual results at year end, impacting our provisional tax benefit. In addition, the purchase accounting for the Mentis acquisition (see footnote 6) is provisional and subject to further refinement as further analysis is necessary to finalize the tax basis of assets acquired and liabilities assumed. 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, 2014. The Company did not have a reserve for uncertain income tax positions at December 31, 2017 and September 30, 2017 . 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, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | 10. Segment Information The Company conducts its business through three reportable business segments: the Intellectual and Developmental Disabilities (“I/DD”) segment, the Post-Acute Specialty Rehabilitation Services (“SRS”) segment, and the At-Risk Youth (“ARY”) segment. The Company evaluates performance based on EBITDA. EBITDA for each segment is defined as income (loss) from continuing operations for the segment before income taxes, before depreciation and amortization, and interest income (expense). Activities classified as “Corporate and Other” in the table below relate to the results of the ADH operating segment and unallocated home office expenses and stock-compensation expense. Total assets included in the Corporate and Other segment include assets associated with our ADH operating segment and assets maintained by our corporate entity including cash, restricted cash, and other current and non-current assets. The following table is a financial summary by reportable segments for the periods indicated (in thousands): For the three months ended December 31, I/DD SRS ARY Corporate and Other Consolidated 2017 Net revenue $ 255,891 $ 85,989 $ 35,875 $ 17,663 $ 395,418 EBITDA 32,976 13,624 4,812 (16,422 ) 34,990 Total assets 496,010 339,647 77,121 212,683 1,125,461 Depreciation and amortization 10,125 6,753 1,414 3,505 21,797 Purchases of property and equipment 7,032 2,141 299 1,715 11,187 2016 Net revenue $ 238,248 $ 74,300 $ 35,757 $ 11,089 $ 359,394 EBITDA 33,342 12,566 5,333 (17,563 ) 33,678 Depreciation and amortization 9,146 5,747 1,421 1,841 18,155 Purchases of property and equipment 5,813 2,481 359 2,674 11,327 A reconciliation of EBITDA to income from continuing operations before income taxes on a consolidated basis is as follows (in thousands): For the three months ended December 31, 2017 2016 EBITDA $ 34,990 $ 33,678 Less: Depreciation and amortization 21,797 18,155 Interest expense, net 8,926 8,481 Income before income taxes $ 4,267 $ 7,042 Revenue derived from contracts with state and local governmental payors in the state of Minnesota, the Company’s largest state operation, which is included in the I/DD segment, accounted for approximately 16% and 15% of the Company’s net revenue for the three months ended December 31, 2017 and 2016 , respectively. California, the Company’s second largest state operation, accounted for approximately 10% of net revenue for the three months ended December 31, 2017 and 2016 . No other states accounted for 10% or more of our net revenue during the three months ended December 31, 2017 and 2016 . |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | 11. Net Income Per Share The following table sets forth the computation of basic and diluted earnings per share (“EPS”): Three Months Ended (in thousands, except share and per share amounts) 2017 2016 Numerator Net income $ 9,394 $ 4,179 Denominator Weighted average shares outstanding, basic 37,472,018 37,231,067 Weighted average common equivalent shares 203,774 97,571 Weighted average shares outstanding, diluted 37,675,792 37,328,638 Net income per share, basic and diluted $ 0.25 $ 0.11 Equity instruments excluded from diluted net income per share calculation as the effect would have been anti-dilutive: Stock options 519,872 771,316 Performance and Restricted stock units 97,916 4,237 |
Other Commitments and Contingen
Other Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Other Commitments and Contingencies | 12. 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 an individual served by the Company. The Company is also subject to claims by these individuals, its employees, its Mentors or community members against the Company for negligence, intentional misconduct or violation of applicable laws. Included in the Company’s recent claims are claims alleging personal injury, assault, abuse, wrongful death and other charges. Regulatory agencies may initiate administrative proceedings alleging that the Company’s programs, employees or agents violate statutes and regulations and seek to impose monetary penalties on the Company. The Company could be required to incur significant costs to respond to regulatory investigations or defend against civil lawsuits and, if the Company does not prevail, the Company could be required to pay substantial amounts of money in damages, settlement amounts or penalties arising from these legal proceedings. The Company is also subject to potential lawsuits under the False Claims Act and other federal and state whistleblower statutes designed to combat fraud and abuse in the health care industry. These lawsuits can involve significant monetary awards that may incentivize private plaintiffs to bring these suits. If the Company is found to have violated the False Claims Act, it could be excluded from participation in Medicaid and other federal healthcare programs which would have a material adverse effect on the business. The Patient Protection and Affordable Care Act provides a mandate for more vigorous and widespread enforcement activity to combat fraud and abuse in the health care industry. The Company is also subject to employee-related claims under state and federal law, including claims for wage and hour violations under the Fair Labor Standards Act or state wage and hour laws, and claims for discrimination, wrongful discharge or retaliation. The Company currently has three pending complaints in California state court that allege certain wage and hour violations of California labor laws and seek to be designated as class-action. One additional wage and hour complaint was settled and approved by the court on January 31, 2018. The Company’s policy is to accrue for all probable and estimable claims using information available at the time the financial statements are issued. Actual claims could settle in the future at materially different amounts due to the nature of litigation. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. Subsequent Events On February 7, 2018, the Board of Directors approved a stock repurchase program under which the Company is authorized to repurchase up to $25.0 million of the Company’s outstanding common stock from time to time in the open market, through negotiated transactions or otherwise (including, without limitation, the use of Rule 10b5-1 plans). The stock repurchase program will expire on August 12, 2018. The Company intends to conduct any open market stock repurchase activities in compliance with the safe harbor provisions of Rule 10b-18 of the Exchange Act. |
Significant Accounting Polici22
Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2017 | |
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, 2017 , 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, 2017 may not necessarily be indicative of results to be expected for any other interim period or for the full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Recent Accounting Pronouncements | Adoption of New Accounting Pronouncements The Company adopted the guidance in Accounting Standards Update ("ASU") No. 2016-09 Compensation - Stock Compensation - Improvements to Employee Share-Based Payments Accounting , on October 1, 2017. Under this standard, entities are permitted to make an accounting policy election to either estimate forfeitures on share-based payment awards, as previously required, or to recognize forfeitures as they occur. The Company has elected to recognize forfeitures as they occur and the impact of that change in accounting policy has been recorded as a $0.2 million cumulative effect adjustment to increase accumulated deficit as of October 1, 2017. Additionally, ASU No. 2016-09 requires that all income tax effects related to settlements of share-based payment awards be reported in earnings as an increase or decrease to income tax expense (benefit). Previously, income tax benefits at settlement of an award were reported as an increase (or decrease) to additional paid-in capital to the extent that those benefits were greater than (or less than) the income tax benefits reported in earnings during the award’s vesting period. The requirement to report those income tax effects in earnings has been applied on a prospective basis to settlements occurring on or after October 1, 2017, and the impact of applying the guidance was not material to the consolidated financial statements for the three months ended December 31, 2017. Application of the guidance may result in fluctuations in the Company’s effective tax rate depending on how many options are exercised, how many restricted stock units vest and the volatility of the Company’s stock price. ASU No. 2016-09 also requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award’s vesting period. The Company has elected to apply the changes in cash flow classification on a prospective basis. 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 Topic 606 (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 including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The FASB has subsequently issued amendments to ASU No. 2014-09 that have the same effective date and transition date. ASU 2014-09, as amended, is effective for the Company’s fiscal year beginning October 1, 2018, and, at that time, the Company expects to adopt the new standard under the modified retrospective approach for contracts with customers. Under the modified retrospective approach, the guidance is applied to the most current period presented, recognizing the cumulative effect of the adoption change as an adjustment to beginning retained earnings. In fiscal 2017, the Company established a formal program and cross-functional implementation team to identify, design and implement changes to its accounting systems and policies and internal controls to support recognition and disclosure under the new standard. This process included a review of the requirements under the new standard compared to the current accounting policies for each of the Company’s revenue streams. To date, the Company has not identified any material impact expected upon adoption, however the review is not yet complete. The full assessment of adoption including any potential impact to the results of operations, financial position and financial disclosures as well as the method of adoption will be finalized during fiscal 2018. Leases — In February 2016, the FASB issued ASU No. 2016-02— Leases (Topic 842) . The new standard requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The standard will be effective for the Company on October 1, 2019. The Company is still evaluating the method of adoption. The adoption of this standard is expected to have a material impact on the Company’s financial position. As of December 31, 2017 , the Company had gross operating lease commitments of approximately $371 million . Upon adoption, a substantial portion of these lease commitments will be recorded at their net present value as a right of use asset and a lease obligation. Stock Compensation — In May 2017, the FASB issued ASU No. 2017-09— Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting , which amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. The new standard will be effective for the Company on October 1, 2018. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. Statement of Cash Flows— In November 2016, the FASB issued ASU No. 2016-18— Statement of Cash Flows (Topic 230): Restricted Cash . The update requires that a statement of cash flows present the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new standard will be applied using a retrospective transition method to each period presented and will be effective for the Company on October 1, 2018. As of December 31, 2017 and September 30, 2017 , the Company had total restricted cash amounts of $51.2 million and $50.3 million , respectively. Business Combinations — In January 2017, the FASB issued ASU No. 2017-01— Business Combinations (Topic 805): Clarifying the Definition of a Business . The update provides guidance to determine when an integrated set of assets and activities is not a business. When substantially all of the fair value of the gross assets acquired, or disposed of, is concentrated in a single identifiable asset or a group of similar identifiable assets, then the acquisition, or disposition, is not a business. The amendments in this update should be applied prospectively on or after the effective date. No disclosures are required at transition. The new standard will be effective for the Company on October 1, 2018. Early application of the amendments in this update is permitted for transactions meeting certain criteria. This standard could reduce the number of acquisitions that are treated as business combinations in the future. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | As of December 31, 2017 and September 30, 2017 , the Company’s long-term debt consisted of the following: (in thousands) December 31, September 30, Term loan principal; principal and interest are due in quarterly installments through January 31, 2021 $ 705,643 $ 632,476 Original issue discount on term loan, net of accumulated amortization (1,352 ) (901 ) Deferred financing costs, net of accumulated amortization (4,933 ) (5,122 ) Senior secured revolving credit facility 5,000 — 704,358 626,453 Less current portion 12,331 6,554 Long-term debt $ 692,027 $ 619,899 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Share-based Compensation [Abstract] | |
Schedule of Stock Options Activity | Stock option activity for the three months ended December 31, 2017 is presented below: (in thousands, except share and per share amounts) Number of Weighted- Weighted- Aggregate Outstanding at September 30, 2017 877,781 $ 18.65 Granted 148,133 19.00 Exercised 17,608 17.00 Forfeited 27,484 18.52 Outstanding at December 31, 2017 980,822 $ 18.73 8.0 $ 105 Exercisable at December 31, 2017 584,425 $ 18.60 7.2 $ 67 Vested or expected to vest as of December 31, 2017 980,822 $ 18.73 8.0 $ 105 |
Schedule of Stock Options Valuation Assumptions | The Company utilizes the Black-Scholes valuation model for estimating the fair value of stock options. Options granted under the 2014 Plan during the three months ended December 31, 2017 were valued using the following assumptions: 2017 Risk-free interest rate 2.22 % Expected term 6 years Expected volatility 33.56 % Expected dividend yield — % |
Schedule of Restricted Stock Unit Awards Activity | Restricted stock unit activity for the three months ended December 31, 2017 is presented below: Number of Restricted Stock Units Weighted Average Grant-Date Fair Value Non-vested units at September 30, 2017 677,406 $ 19.20 Granted 330,374 19.00 Forfeited 31,367 18.78 Vested 159,811 19.99 Non-vested units at December 31, 2017 816,602 $ 18.98 |
Schedule of Performance Based Restricted Stock Units | A summary of PRSU activity for the three months ended December 31, 2017 is as follows: Number of Performance Based Restricted Stock Units Weighted Average Grant-Date Fair Value Non-vested units at September 30, 2017 84,505 $ 19.85 Granted 48,109 19.00 Forfeited — — Vested — — Non-vested units at December 31, 2017 132,614 $ 19.54 Units expected to vest as of December 31, 2017 93,733 $ 19.41 |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | (in thousands) Identifiable Intangible Assets Other Assets, Net Total Identifiable Assets Goodwill Purchase Consideration Mentis $ 38,400 $ 5,670 $ 44,070 $ 30,899 $ 74,969 Unique 4,265 22 4,287 1,660 5,947 Other acquisitions 1,995 95 2,090 — 2,090 Total $ 44,660 $ 5,787 $ 50,447 $ 32,559 $ 83,006 |
Business Acquisition, Pro Forma Information | The following table reflects the unaudited pro forma results of operations for the three months ended December 31, 2017 and 2016 assuming that the acquisitions made during the three months ended December 31, 2017 had occurred on October 1, 2016. (in thousands) Three Months Ended 2017 2016 Net revenue $ 399,185 $ 372,721 Net income 9,649 4,998 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Goodwill | The changes in goodwill for the three months ended December 31, 2017 are as follows (in thousands): I/DD SRS ARY Corporate and Other Total Balance as of September 30, 2017 $ 159,316 $ 85,525 $ 28,484 $ — $ 273,325 Goodwill acquired through acquisitions — 32,559 — — 32,559 Acquisition adjustments 5 — — — 5 Balance as of December 31, 2017 $ 159,321 $ 118,084 $ 28,484 $ — $ 305,889 |
Schedule of Finite-lived Intangible Assets | Intangible assets consist of the following as of December 31, 2017 (in thousands): Description Weighted Average Amortization Period Gross Carrying Value Accumulated Amortization Intangible Assets, Net Agency contracts 7 years $ 578,880 $ 299,983 $ 278,897 Non-compete/non-solicit agreements 1 year 7,728 5,455 2,273 Trade names 1 year 8,382 5,265 3,117 Trade names (indefinite life) — 42,400 — 42,400 Licenses and permits 4 years 62,543 42,923 19,620 $ 699,933 $ 353,626 $ 346,307 Intangible assets consist of the following as of September 30, 2017 (in thousands): Description Weighted Average Amortization Period Gross Carrying Value Accumulated Amortization Intangible Assets, Net Agency contracts 7 years $ 540,826 $ 290,687 $ 250,139 Non-compete/non-solicit agreements 1 year 7,196 5,228 1,968 Trade names 2 years 7,138 4,779 2,359 Trade names (indefinite life) — 42,400 — 42,400 Licenses and permits 3 years 58,443 42,234 16,209 $ 656,003 $ 342,928 $ 313,075 |
Schedule of Indefinite-Lived Intangible Assets | Intangible assets consist of the following as of December 31, 2017 (in thousands): Description Weighted Average Amortization Period Gross Carrying Value Accumulated Amortization Intangible Assets, Net Agency contracts 7 years $ 578,880 $ 299,983 $ 278,897 Non-compete/non-solicit agreements 1 year 7,728 5,455 2,273 Trade names 1 year 8,382 5,265 3,117 Trade names (indefinite life) — 42,400 — 42,400 Licenses and permits 4 years 62,543 42,923 19,620 $ 699,933 $ 353,626 $ 346,307 Intangible assets consist of the following as of September 30, 2017 (in thousands): Description Weighted Average Amortization Period Gross Carrying Value Accumulated Amortization Intangible Assets, Net Agency contracts 7 years $ 540,826 $ 290,687 $ 250,139 Non-compete/non-solicit agreements 1 year 7,196 5,228 1,968 Trade names 2 years 7,138 4,779 2,359 Trade names (indefinite life) — 42,400 — 42,400 Licenses and permits 3 years 58,443 42,234 16,209 $ 656,003 $ 342,928 $ 313,075 |
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 2018 and each of the four succeeding years and thereafter is as follows: Year Ended September 30, (in thousands) 2018 $ 33,744 2019 43,520 2020 42,424 2021 38,958 2022 37,175 Thereafter 108,086 Total $ 303,907 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
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, 2017 . (in thousands) Total Quoted Market Prices (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Interest rate swap agreements $ 2,085 $ — $ 2,085 $ — Liabilities Contingent consideration $ 1,080 $ — $ — $ 1,080 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, 2017 . (in thousands) Total Quoted Market Prices (Level 1) Significant Significant Unobservable Inputs (Level 3) Liabilities Interest rate swap agreements $ 153 $ — $ 153 $ — |
Summary of Changes in Fair Value of Company's Level 3 Liabilities Measured on Recurring Basis | The following table presents a summary of changes in fair value of the Company’s Level 3 liabilities (acquisition related contingent consideration) measured on a recurring basis for the three months ended December 31, 2017. (in thousands) Three Months Ended December 31, 2017 Balance at September 30, 2017 $ — Acquisition date fair value of contingent consideration obligations recorded 1,080 Balance at December 31, 2017 $ 1,080 The following table presents a summary of changes in fair value of the Company’s Level 3 liabilities (acquisition related contingent consideration) measured on a recurring basis for the three months ended December 31, 2016. (in thousands) Three Months Ended Balance at September 30, 2016 $ 5,915 Fair value adjustment 375 Balance at December 31, 2016 $ 6,290 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
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, I/DD SRS ARY Corporate and Other Consolidated 2017 Net revenue $ 255,891 $ 85,989 $ 35,875 $ 17,663 $ 395,418 EBITDA 32,976 13,624 4,812 (16,422 ) 34,990 Total assets 496,010 339,647 77,121 212,683 1,125,461 Depreciation and amortization 10,125 6,753 1,414 3,505 21,797 Purchases of property and equipment 7,032 2,141 299 1,715 11,187 2016 Net revenue $ 238,248 $ 74,300 $ 35,757 $ 11,089 $ 359,394 EBITDA 33,342 12,566 5,333 (17,563 ) 33,678 Depreciation and amortization 9,146 5,747 1,421 1,841 18,155 Purchases of property and equipment 5,813 2,481 359 2,674 11,327 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated | A reconciliation of EBITDA to income from continuing operations before income taxes on a consolidated basis is as follows (in thousands): For the three months ended December 31, 2017 2016 EBITDA $ 34,990 $ 33,678 Less: Depreciation and amortization 21,797 18,155 Interest expense, net 8,926 8,481 Income before income taxes $ 4,267 $ 7,042 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
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 (in thousands, except share and per share amounts) 2017 2016 Numerator Net income $ 9,394 $ 4,179 Denominator Weighted average shares outstanding, basic 37,472,018 37,231,067 Weighted average common equivalent shares 203,774 97,571 Weighted average shares outstanding, diluted 37,675,792 37,328,638 Net income per share, basic and diluted $ 0.25 $ 0.11 Equity instruments excluded from diluted net income per share calculation as the effect would have been anti-dilutive: Stock options 519,872 771,316 Performance and Restricted stock units 97,916 4,237 |
Business Overview (Details)
Business Overview (Details) | Oct. 01, 2015shares | Dec. 31, 2017stateclient |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Area of operations, number of states | state | 36 | |
Number of residential clients (more than) | 12,300 | |
Number of periodic clients (more than) | 19,000 | |
2016 Unit Plan | Secondary Offering | NMH Investment | Common Stock | ||
Product Information [Line Items] | ||
Shares sold by stockholders (in shares) | shares | 25,250,000 |
Significant Accounting Polici31
Significant Accounting Policies (Details) $ in Thousands | Sep. 30, 2017USD ($) |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative effect adjustment | $ (59) |
Accumulated Deficit | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative effect adjustment | 160 |
Accounting Standards Update 2016-09, Forfeiture Rate Component | Accumulated Deficit | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative effect adjustment | $ 200 |
Recent Accounting Pronounceme32
Recent Accounting Pronouncements (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Sep. 30, 2017 |
Accounting Changes and Error Corrections [Abstract] | ||
Operating lease commitments | $ 371 | |
Restricted cash | $ 51.2 | $ 50.3 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Sep. 30, 2017 |
Debt Disclosure [Abstract] | ||
Term loan principal; principal and interest are due in quarterly installments through January 31, 2021 | $ 705,643 | $ 632,476 |
Original issue discount on term loan, net of accumulated amortization | (1,352) | (901) |
Deferred financing costs, net of accumulated amortization | (4,933) | (5,122) |
Senior secured revolving credit facility | 5,000 | 0 |
Long-term debt, current and non-current | 704,358 | 626,453 |
Less current portion | 12,331 | 6,554 |
Long-term debt | $ 692,027 | $ 619,899 |
Long-Term Debt - Senior Secured
Long-Term Debt - Senior Secured Credit Facilities - Additional Information (Details) - USD ($) | Nov. 21, 2017 | Dec. 31, 2017 | Oct. 24, 2017 | Sep. 30, 2017 | Jan. 31, 2014 |
Debt Instrument [Line Items] | |||||
Senior secured revolving credit facility | $ 5,000,000 | $ 0 | |||
Letter of Credit | |||||
Debt Instrument [Line Items] | |||||
Deposit in cash collateral | $ 50,000,000 | ||||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Amount of term loan facility | 730,000,000 | ||||
Term Loan | Alternate Base Rate | Minimum | |||||
Debt Instrument [Line Items] | |||||
Variable rate floor | 2.00% | ||||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Deposit in cash collateral | $ 160,000,000 | ||||
NMH Investment | |||||
Debt Instrument [Line Items] | |||||
Line of credit borrowing capacity | $ 47,400,000 | ||||
NMH Investment | Alternate Base Rate | Interest Rate Swap One | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 1.00% | ||||
NMH Investment | Alternate Base Rate | Revolving and Swingline Loans | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 1.00% | ||||
NMH Investment | Eurodollar | Interest Rate Swap One | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 2.00% | ||||
NMH Investment | Eurodollar | Revolving and Swingline Loans | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 2.25% | ||||
NMH Investment | Term Loan | |||||
Debt Instrument [Line Items] | |||||
Amount of term loan facility | $ 75,000,000 | ||||
NMH Investment | Term Loan | Federal Funds | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 0.50% | ||||
NMH Investment | Term Loan | Eurodollar | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 3.00% | ||||
Variable rate floor | 0.75% | ||||
NMH Investment | Term Loan | Eurodollar | Revolving and Swingline Loans | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 3.25% | ||||
NMH Investment | Term Loan | Eurodollar | Minimum | |||||
Debt Instrument [Line Items] | |||||
Variable rate floor | 0.75% | ||||
NMH Investment | Senior Revolver | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, commitment fee | 0.50% | ||||
NMH Investment | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Amount of term loan facility | $ 160,000,000 | $ 120,000,000 | |||
Basis points for interest rate | 0.25% | ||||
NMH Investment | Line of Credit | Senior Credit Agreement, Maturing January 31, 2021 | |||||
Debt Instrument [Line Items] | |||||
Amount of term loan facility | $ 90,000,000 | ||||
NMH Investment | Line of Credit | Senior Credit Agreement, Maturing January 31, 2019 | |||||
Debt Instrument [Line Items] | |||||
Amount of term loan facility | $ 70,000,000 | ||||
NMH Investment | Line of Credit | Federal Funds | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 0.50% | ||||
NMH Investment | Letter of Credit | Line of Credit | Senior Revolver | |||||
Debt Instrument [Line Items] | |||||
Amount of term loan facility | $ 2,930,066 |
Long-Term Debt - Covenants - Ad
Long-Term Debt - Covenants - Additional Information (Details) - NMH Investment | 3 Months Ended | |
Dec. 31, 2017 | Mar. 31, 2017 | |
Debt Instrument [Line Items] | ||
Percentage of revolving commitments | 30.00% | |
Consolidated first lien leverage ratio, maximum | 5.50 | 5 |
Long-Term Debt - Derivatives -
Long-Term Debt - Derivatives - Additional Information (Details) | 3 Months Ended | |||
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2017USD ($) | Jan. 20, 2015USD ($)swap | |
Debt Instrument [Line Items] | ||||
Ineffectiveness associated with swap | $ 84,000 | $ 0 | ||
Amount excluded from ineffectiveness testing | 0 | $ 0 | ||
NMH Investment | Interest Rate Swap | ||||
Debt Instrument [Line Items] | ||||
Number of interest rate swap agreements | swap | 2 | |||
Interest rate swap in a notional amount | $ 375,000,000 | |||
Payments on fixed rate | 1.795% | |||
Derivative asset | $ 2,100,000 | |||
Derivative liability | $ 200,000 | |||
Minimum | NMH Investment | Interest Rate Swap | ||||
Debt Instrument [Line Items] | ||||
Minimum interest received from counter party | 1.00% |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized (in shares) | 7,786,478 | |
Share-based compensation expense | $ 1,651 | $ 2,079 |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation cost | $ 2,700 | |
Unrecognized compensation cost, period for recognition | 2 years 1 month 4 days | |
Performance and Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Fair value of awards vested during period | $ 3,000 | $ 1,200 |
PRSUs awarded (in shares) | 330,374 | |
Unrecognized compensation cost | $ 13,700 | |
Unrecognized compensation cost, period for recognition | 2 years 3 months 20 days | |
Granted (dollars per share) | $ 19 | |
Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
PRSUs awarded (in shares) | 48,109 | |
Unrecognized compensation cost | $ 1,500 | |
Unrecognized compensation cost, period for recognition | 2 years 4 months 25 days | |
Service period | 3 years | |
Performance Restricted Stock Units (PRSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
PRSUs awarded (in shares) | 48,109 | |
Granted (dollars per share) | $ 19 | |
Minimum | Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock options vesting percentage | 0.00% | |
Maximum | Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock options vesting percentage | 200.00% |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Dec. 31, 2017USD ($)$ / sharesshares | |
Number of Shares | |
Outstanding at period start (shares) | shares | 877,781 |
Granted (shares) | shares | 148,133 |
Exercised (shares) | shares | 17,608 |
Forfeited (shares) | shares | 27,484 |
Outstanding at period end (shares) | shares | 980,822 |
Exercisable at period end (shares) | shares | 584,425 |
Vested or expected to vest (shares) | shares | 980,822 |
Weighted- Average Exercise Price per Share | |
Outstanding at period start (dollars per share) | $ / shares | $ 18.65 |
Granted (dollars per share) | $ / shares | 19 |
Exercised (dollars per share) | $ / shares | 17 |
Forfeited (dollars per share) | $ / shares | 18.52 |
Outstanding at period end (dollars per share) | $ / shares | 18.73 |
Exercisable at end of year (dollars per share) | $ / shares | 18.60 |
Vested or expected to vest (dollars per share) | $ / shares | $ 18.73 |
Outstanding weighted-average remaining life | 8 years 1 day |
Exercisable weighted-average remaining life | 7 years 2 months |
Vested or expected to vest weighed-average remaining life | 8 years 1 day |
Outstanding at period end, aggregate intrinsic value | $ | $ 105 |
Exercisable at period end, aggregate intrinsic value | $ | 67 |
Vested or expected to vest at period end, aggregate intrinsic value | $ | $ 105 |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions in Calculating the Fair Value (Details) - Stock options | 3 Months Ended |
Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 2.22% |
Expected term | 6 years |
Expected volatility | 33.56% |
Expected dividend yield | 0.00% |
Stock-Based Compensation - Nonv
Stock-Based Compensation - Nonvested Restricted Stock Awards (Details) - Performance and Restricted stock units | 3 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Number of Restricted Stock Units | |
Non-vested beginning balance (shares) | shares | 677,406 |
Granted (shares) | shares | 330,374 |
Forfeited (shares) | shares | 31,367 |
Vested (shares) | shares | 159,811 |
Non-vested ending balance (shares) | shares | 816,602 |
Weighted Average Grant-Date Fair Value | |
Non-vested beginning balance (dollars per share) | $ / shares | $ 19.20 |
Granted (dollars per share) | $ / shares | 19 |
Forfeited (dollars per share) | $ / shares | 18.78 |
Vested (dollars per share) | $ / shares | 19.99 |
Non-vested ending balance (dollars per share) | $ / shares | $ 18.98 |
Stock-Based Compensation - Perf
Stock-Based Compensation - Performance Based Restricted Stock Awards (Details) - Performance Restricted Stock Units (PRSUs) | 3 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Number of Restricted Stock Units | |
Non-vested beginning balance (shares) | shares | 84,505 |
Granted (shares) | shares | 48,109 |
Forfeited (shares) | shares | 0 |
Vested (shares) | shares | 0 |
Non-vested ending balance (shares) | shares | 132,614 |
Units expected to vest (shares) | shares | 93,733 |
Weighted Average Grant-Date Fair Value | |
Non-vested beginning balance (dollars per share) | $ / shares | $ 19.85 |
Granted (dollars per share) | $ / shares | 19 |
Forfeited (dollars per share) | $ / shares | 0 |
Vested (dollars per share) | $ / shares | 0 |
Non-vested ending balance (dollars per share) | $ / shares | 19.54 |
Units expected to vest, Weighted Average Grant-Date Fair Value (dollars per share) | $ / shares | $ 19.41 |
Business Combinations - Narrati
Business Combinations - Narrative (Details) | Dec. 04, 2017USD ($) | Oct. 25, 2017USD ($) | Dec. 31, 2017USD ($)company | Sep. 30, 2017USD ($) |
Business Acquisition [Line Items] | ||||
Number of companies | company | 6 | |||
Payment to acquire assets | $ 83,006,000 | |||
Cash acquired from acquisition | 800,000 | |||
Assets acquired | 44,660,000 | |||
Goodwill | 305,889,000 | $ 273,325,000 | ||
Contingent consideration liability | 1,100,000 | $ 0 | ||
Mentis | ||||
Business Acquisition [Line Items] | ||||
Payment to acquire assets | $ 75,000,000 | 74,969,000 | ||
Cash acquired from acquisition | 800,000 | |||
Assets acquired | 38,400,000 | 38,400,000 | ||
Other assets | 5,700,000 | |||
Unique | ||||
Business Acquisition [Line Items] | ||||
Payment to acquire assets | $ 5,900,000 | 5,947,000 | ||
Assets acquired | 4,300,000 | 4,265,000 | ||
Other acquisitions | ||||
Business Acquisition [Line Items] | ||||
Payment to acquire assets | 2,090,000 | |||
Assets acquired | 1,995,000 | |||
Cash consideration | 2,100,000 | |||
Contingent consideration liability | $ 1,100,000 | |||
Agency contracts | Mentis | ||||
Business Acquisition [Line Items] | ||||
Assets acquired | $ 32,700,000 | |||
Useful life | 12 years | |||
Agency contracts | Unique | ||||
Business Acquisition [Line Items] | ||||
Assets acquired | $ 4,000,000 | |||
Useful life | 11 years | |||
Licenses and permits | Mentis | ||||
Business Acquisition [Line Items] | ||||
Assets acquired | $ 4,100,000 | |||
Useful life | 10 years | |||
Trade names | Mentis | ||||
Business Acquisition [Line Items] | ||||
Assets acquired | $ 1,100,000 | |||
Useful life | 5 years | |||
SRS | Mentis | ||||
Business Acquisition [Line Items] | ||||
Goodwill | $ 30,900,000 | |||
SRS | Unique | ||||
Business Acquisition [Line Items] | ||||
Goodwill | $ 1,700,000 |
Business Combinations - Schedul
Business Combinations - Schedule of Business Acquisitions (Details) - USD ($) $ in Thousands | Dec. 04, 2017 | Oct. 25, 2017 | Dec. 31, 2017 |
Business Acquisition [Line Items] | |||
Identifiable Intangible Assets | $ 44,660 | ||
Other Assets, Net | 5,787 | ||
Total Identifiable Assets | 50,447 | ||
Goodwill | 32,559 | ||
Purchase Consideration | 83,006 | ||
Mentis | |||
Business Acquisition [Line Items] | |||
Identifiable Intangible Assets | $ 38,400 | 38,400 | |
Other Assets, Net | 5,670 | ||
Total Identifiable Assets | 44,070 | ||
Goodwill | 30,899 | ||
Purchase Consideration | $ 75,000 | 74,969 | |
Unique | |||
Business Acquisition [Line Items] | |||
Identifiable Intangible Assets | $ 4,300 | 4,265 | |
Other Assets, Net | 22 | ||
Total Identifiable Assets | 4,287 | ||
Goodwill | 1,660 | ||
Purchase Consideration | $ 5,900 | 5,947 | |
Other acquisitions | |||
Business Acquisition [Line Items] | |||
Identifiable Intangible Assets | 1,995 | ||
Other Assets, Net | 95 | ||
Total Identifiable Assets | 2,090 | ||
Goodwill | 0 | ||
Purchase Consideration | $ 2,090 |
Business Combinations - Pro For
Business Combinations - Pro Forma Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Business Combinations [Abstract] | ||
Net revenue | $ 399,185 | $ 372,721 |
Net income | $ 9,649 | $ 4,998 |
Goodwill and Intangible Asset45
Goodwill and Intangible Assets - Schedule of Changes in Goodwill (Details) $ in Thousands | 3 Months Ended |
Dec. 31, 2017USD ($) | |
Goodwill [Roll Forward] | |
Balance as of September 30, 2017 | $ 273,325 |
Goodwill acquired through acquisitions | 32,559 |
Acquisition adjustments | 5 |
Balance as of December 31, 2017 | 305,889 |
Operating Segments | I/DD | |
Goodwill [Roll Forward] | |
Balance as of September 30, 2017 | 159,316 |
Goodwill acquired through acquisitions | 0 |
Acquisition adjustments | 5 |
Balance as of December 31, 2017 | 159,321 |
Operating Segments | SRS | |
Goodwill [Roll Forward] | |
Balance as of September 30, 2017 | 85,525 |
Goodwill acquired through acquisitions | 32,559 |
Acquisition adjustments | 0 |
Balance as of December 31, 2017 | 118,084 |
Operating Segments | ARY | |
Goodwill [Roll Forward] | |
Balance as of September 30, 2017 | 28,484 |
Goodwill acquired through acquisitions | 0 |
Acquisition adjustments | 0 |
Balance as of December 31, 2017 | 28,484 |
Corporate and Other | |
Goodwill [Roll Forward] | |
Balance as of September 30, 2017 | 0 |
Goodwill acquired through acquisitions | 0 |
Acquisition adjustments | 0 |
Balance as of December 31, 2017 | $ 0 |
Goodwill and Intangible Asset46
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | $ 699,933 | $ 656,003 |
Accumulated Amortization | 353,626 | 342,928 |
Intangible Assets, Net | 346,307 | 313,075 |
Trade names (indefinite life) | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets, Net | $ 42,400 | $ 42,400 |
Agency contracts | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period | 7 years | 7 years |
Gross Carrying Value | $ 578,880 | $ 540,826 |
Accumulated Amortization | 299,983 | 290,687 |
Intangible Assets, Net | $ 278,897 | $ 250,139 |
Non-compete/non-solicit agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period | 1 year | 1 year |
Gross Carrying Value | $ 7,728 | $ 7,196 |
Accumulated Amortization | 5,455 | 5,228 |
Intangible Assets, Net | $ 2,273 | $ 1,968 |
Trade names (indefinite life) | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period | 1 year | 2 years |
Gross Carrying Value | $ 8,382 | $ 7,138 |
Accumulated Amortization | 5,265 | 4,779 |
Intangible Assets, Net | $ 3,117 | $ 2,359 |
Licenses and permits | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period | 4 years | 3 years |
Gross Carrying Value | $ 62,543 | $ 58,443 |
Accumulated Amortization | 42,923 | 42,234 |
Intangible Assets, Net | $ 19,620 | $ 16,209 |
Goodwill and Intangible Asset47
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 11.4 | $ 9 |
Goodwill and Intangible Asset48
Goodwill and Intangible Assets - Amortization Expense (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,018 | $ 33,744 |
2,019 | 43,520 |
2,020 | 42,424 |
2,021 | 38,958 |
2,022 | 37,175 |
Thereafter | 108,086 |
Total | $ 303,907 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Sep. 30, 2017 |
Interest rate swap agreements | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | $ 2,085 | |
Liabilities | $ 153 | |
Interest rate swap agreements | Quoted Market Prices (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 0 | |
Liabilities | 0 | |
Interest rate swap agreements | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 2,085 | |
Liabilities | 153 | |
Interest rate swap agreements | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 0 | |
Liabilities | $ 0 | |
Contingent consideration | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 1,080 | |
Contingent consideration | Quoted Market Prices (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 0 | |
Contingent consideration | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 0 | |
Contingent consideration | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | $ 1,080 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at beginning of period | $ 0 | $ 5,915 |
Acquisition date fair value of contingent consideration obligations recorded | 1,080 | 375 |
Balance at end of period | $ 1,080 | $ 6,290 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 |
Fair Value Disclosures [Abstract] | ||
Contingent consideration liability | $ 1,100,000 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |||
Effective income tax rate | (120.20%) | 40.70% | |
Reserve for uncertain tax positions | $ 0 | $ 0 | |
Provisional tax benefit | $ 6,500,000 |
Segment Information - Narrative
Segment Information - Narrative (Details) - segment | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments | 3 | |
SRS | Minnesota | Geographic Concentration Risk | Sales Revenue, Segment | ||
Segment Reporting Information [Line Items] | ||
Percent of revenue | 16.00% | 15.00% |
SRS | CALIFORNIA | Geographic Concentration Risk | Sales Revenue, Segment | ||
Segment Reporting Information [Line Items] | ||
Percent of revenue | 10.00% | 10.00% |
Segment Information - Performan
Segment Information - Performance of Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | |
Segment Reporting Information [Line Items] | |||
Net revenue | $ 395,418 | $ 359,394 | |
EBITDA | 34,990 | 33,678 | |
Total assets | 1,125,461 | $ 1,049,382 | |
Depreciation and amortization | 21,797 | 18,155 | |
Purchases of property and equipment | 11,187 | 11,327 | |
Operating Segments | I/DD | |||
Segment Reporting Information [Line Items] | |||
Net revenue | 255,891 | 238,248 | |
EBITDA | 32,976 | 33,342 | |
Total assets | 496,010 | ||
Depreciation and amortization | 10,125 | 9,146 | |
Purchases of property and equipment | 7,032 | 5,813 | |
Operating Segments | SRS | |||
Segment Reporting Information [Line Items] | |||
Net revenue | 85,989 | 74,300 | |
EBITDA | 13,624 | 12,566 | |
Total assets | 339,647 | ||
Depreciation and amortization | 6,753 | 5,747 | |
Purchases of property and equipment | 2,141 | 2,481 | |
Operating Segments | ARY | |||
Segment Reporting Information [Line Items] | |||
Net revenue | 35,875 | 35,757 | |
EBITDA | 4,812 | 5,333 | |
Total assets | 77,121 | ||
Depreciation and amortization | 1,414 | 1,421 | |
Purchases of property and equipment | 299 | 359 | |
Corporate and Other | |||
Segment Reporting Information [Line Items] | |||
Net revenue | 17,663 | 11,089 | |
EBITDA | (16,422) | (17,563) | |
Total assets | 212,683 | ||
Depreciation and amortization | 3,505 | 1,841 | |
Purchases of property and equipment | $ 1,715 | $ 2,674 |
Segment Information - Reconcili
Segment Information - Reconciliation of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting [Abstract] | ||
EBITDA | $ 34,990 | $ 33,678 |
Depreciation and amortization | 21,797 | 18,155 |
Interest expense, net | 8,926 | 8,481 |
Income before income taxes | $ 4,267 | $ 7,042 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Numerator | ||
Net income | $ 9,394 | $ 4,179 |
Denominator | ||
Weighted average shares outstanding, basic (in shares) | 37,472,018 | 37,231,067 |
Weighted average common equivalent shares (in shares) | 203,774 | 97,571 |
Weighted average shares outstanding, diluted (in shares) | 37,675,792 | 37,328,638 |
Net income per share, basic and diluted (in dollars per share) | $ 0.25 | $ 0.11 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Equity instruments excluded from diluted net income per share calculation as the effect would have been anti-dilutive (in shares) | 519,872 | 771,316 |
Performance and Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Equity instruments excluded from diluted net income per share calculation as the effect would have been anti-dilutive (in shares) | 97,916 | 4,237 |
Other Commitments and Conting57
Other Commitments and Contingencies (Details) | Dec. 31, 2017complaint |
Commitments and Contingencies Disclosure [Abstract] | |
Pending complaints | 3 |