Civitas Solutions, which provides non-institutional care services for individuals with developmental disabilities, announced terms for its IPO on Wednesday. The Boston, MA-based company plans to raise $252 million by offering 11.7 million shares at a price range of $20 to $23. At the midpoint of the proposed range, Civitas Solutions would command a fully diluted market value of $805 million.
Civitas operates The Mentor Network, a national organization in the highly fragmented health and human services industry. The company was bought by management and private equity firm Vestar Capital Partners in March 2006 from Madison Dearborn Partners for an estimated $800 million. Another Vestar-backed care provider network, 21st Century Oncology Holdings (ICC), postponed its IPO in May.
Civitas serves over 12,500 at-home clients and nearly 16,000 community-based clients across 36 states. The company receives 90% of its revenue from contracts with state and local governments, with a significant portion paid from Medicaid. It has made 36 acquisitions and deployed over $125 million of capital since 2009. Civitas focuses on three types of individuals with special needs and disabilities - those with intellectual and/or developmental disabilities; victims of acquired brain injuries; and emotional, behavioral and medically challenged at-risk youth.
Revenue increased 5% to $939 million for the nine months ended June 30, 2014, primarily because of organic growth and new programs (3%) as well as acquisitions (2%). Its adjusted EBITDA grew 16% to $96 million (10% margin) due to lower general and administrative costs. Civitas will use IPO proceeds to pay down debt to about $600 million, or 4.6x LTM adjusted EBITDA.
Civitas Solutions, which was founded in 1980 and booked $1.2 billion in sales for the 12 months ended June 30, 2014, plans to list on the NYSE under the symbol CIVI. Barclays, BofA Merrill Lynch and UBS Investment Bank are the joint bookrunners on the deal. It is expected to price during the week of September 15, 2014.
