BOSTON--(BUSINESS WIRE)--Civitas Solutions, Inc. (“Civitas”) (NYSE: CIVI) today announced that it successfully completed the acquisition of Mentis Neuro Rehabilitation, LLC and its direct and indirect wholly owned subsidiaries (collectively, “Mentis”). Mentis is a leading provider of specialty rehabilitation services (SRS) to individuals recovering from acquired brain injuries in the state of Texas and has a growing presence in the state of Ohio.
Founded in 2009, Mentis provides a full continuum of long-term residential, inpatient transitional and outpatient day services, including physical, vocational and speech therapies, cognitive rehabilitation, neuro psychology, 24-hour nursing and supportive living services. With revenues of approximately $36 million for the 12-month period ending August 31, 2017 and a strong organic growth profile, Mentis has a diverse group of referral sources drawn to Mentis’ clinical expertise, ability to serve individuals with complex challenges, and proven clinical outcomes.
Approximately 77% of Mentis’ revenue is generated from commercial payors, with about 12% derived from state and local government agencies and the balance (~11%) from Workers’ Compensation. Mentis operates 6 facilities with a total of 121 beds, 111 of which are in the Texas markets of Austin, El Paso, Houston and San Antonio. Several expansion projects are underway, including new day programs in the Austin, TX and Cincinnati and Cleveland, OH markets. The Texas market in particular is attractive for SRS services as state law requires that insurance carriers provide coverage for cognitive rehabilitation.
“Last month, we closed out our fiscal 2017 with our largest acquisition since 2003,” said Bruce Nardella, president and CEO of Civitas Solutions. “I am pleased that we have started fiscal 2018 strong with the completion of an even larger deal.
“More important than its size, Mentis is a high-quality provider, with clinical expertise and superior outcomes that make it an ideal fit with our NeuroRestorative SRS operations in Texas and Ohio,” said Nardella. “Like NeuroRestorative, Mentis has demonstrated that its clinical model of care helps individuals served achieve reductions in disability levels and a higher quality of life. I am thrilled to welcome the Mentis team and the individuals they support to Civitas.”
In connection with the acquisition, a wholly-owned subsidiary of Civitas entered into Amendment No. 6 to its Credit Agreement. Amendment No. 6 provided for an additional $75 million term loan. The net proceeds of the additional term loan were used by Civitas to pay the purchase price for the acquisition of Mentis and to pay related fees and expenses, with any excess proceeds to be used for general corporate purposes. Taking the incurrence of this additional term loan into account, the Company’s net leverage as of June 30, 2017, pro forma for acquisitions completed, including Habilitative Services, LLC and Mentis, through the date hereof, was 3.75x.
This press release contains statements about future events, financial results, and expectations that constitute forward-looking statements, including statements about the expected benefits of the transaction, expected financial results of completed acquisitions, expansion projects and expected growth. Forward-looking statements are based on our beliefs, assumptions and expectations, taking into account the information currently available to us. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from our expectations, and you should not place undue reliance on such statements. Factors that could contribute to these differences include, but are not limited to, unanticipated transaction costs and our inability to successfully integrate the Mentis business with our business, and the other factors described in “Risk Factors” in Civitas Solutions, Inc.’s Form 10-K. We qualify any forward-looking statements entirely by these cautionary factors. We assume no obligation to update or revise any forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Civitas Solutions, Inc. is the leading national provider of home- and community-based health and human services to must-serve individuals with intellectual, developmental, physical or behavioral disabilities and other special needs. Since our founding in 1980, we have evolved from a single residential program to a diversified national network offering an array of quality services in 36 states.