National Mentor Holdings third-quarter revenue increases 6.1% to $259.7 million

National Mentor Holdings, Inc. (the "Company") today announced its financial results for the third quarter ended June 30, 2010.

Third Quarter Results

Revenue for the quarter ended June 30, 2010 was $259.7 million, an increase of $15.0 million, or 6.1%, over revenue for the quarter ended June 30, 2009. Revenue increased $14.9 million related to acquisitions that closed during the period from April 1, 2009 to June 30, 2010 and $2.0 million related to organic growth, including growth related to new programs. Revenue growth was partially offset by a reduction in revenue of $1.9 million from businesses we divested during the same period, rate reductions in certain states, including Minnesota, Arizona and Indiana, and the imposition of service limitations by the state of Indiana.

Income from operations for the quarter ended June 30, 2010 was $12.2 million, a decrease of $0.8 million as compared to income from operations for the quarter ended June 30, 2009. The operating margin was 4.7% for the quarter ended June 30, 2010, a decrease from 5.3% for the quarter ended June 30, 2009.

Net loss for the quarter ended June 30, 2010 was $0.7 million compared to net loss of $0.5 million for the quarter ended June 30, 2009.

Adjusted EBITDA for the quarter ended June 30, 2010 was $28.4 million, a decrease of $2.1 million, or 6.8%, as compared to Adjusted EBITDA for the quarter ended June 30, 2009. Adjusted EBITDA was negatively impacted by rate reductions in certain states, including Minnesota, Arizona and Indiana, and the imposition of service limitations by the state of Indiana. The decrease in Adjusted EBITDA was also due to an increase in workers' compensation costs and health insurance costs, as well as an increased investment in growth initiatives.

Year-to-Date Results

Revenue for the nine months ended June 30, 2010 was $761.1 million, an increase of $39.4 million, or 5.5%, over revenue for the nine months ended June 30, 2009. Revenue increased $37.4 million related to acquisitions that closed during the period from October 1, 2008 to June 30, 2010 and $8.6 million related to organic growth, including growth related to new programs. Revenue growth was partially offset by a reduction in revenue of $6.6 million from businesses we divested during the same period, rate reductions in certain states, including Minnesota, Arizona and Indiana, and the imposition of service limitations by the state of Indiana.

Income from operations for the nine months ended June 30, 2010 was $34.2 million, a decrease of $0.3 million as compared to income from operations for the nine months ended June 30, 2009. The operating margin was 4.5% for the nine months ended June 30, 2010, a decrease from 4.8% for the nine months ended June 30, 2009.

Net loss for the nine months ended June 30, 2010 was $5.4 million compared to net loss of $4.0 million for the nine months ended June 30, 2009.

Adjusted EBITDA for the nine months ended June 30, 2010 was $80.2 million, an increase of $2.1 million, or 2.7%, as compared to Adjusted EBITDA for the nine months ended June 30, 2009. The increase in Adjusted EBITDA was the result of the increase in revenue noted above, as well as our on-going cost containment efforts. Partially offsetting this increase, Adjusted EBITDA was negatively impacted by rate reductions in certain states, including Minnesota, Arizona and Indiana, and the imposition of service limitations by the state of Indiana. Adjusted EBITDA was also negatively impacted by an increase in workers' compensation costs and health insurance costs, as well as an increased investment in growth initiatives.

The reported results are available on the Company's investor relations web site at www.tmnfinancials.com. The user name "mentor" and the password "results" are required in order to access this site.