Company Signs Definitive Agreement for
Acquisition of Specialty Provider
Acadia Healthcare Company, Inc. (“Acadia”) (NASDAQ: ACHC) today
announced financial results for the second quarter ended June 30,
2023.
Second Quarter and Recent Highlights
- Revenue totaled $731.3 million, an increase of 12.2% over the
second quarter of 2022
- Same facility revenue increased 11.4% compared with the second
quarter of 2022, including an increase in revenue per patient day
of 6.1% and an increase in patient days of 4.9%
- Net income attributable to Acadia totaled $72.3 million, or
$0.79 per diluted share, and adjusted income from continuing
operations attributable to Acadia totaled $84.7 million, or $0.92
per diluted share
- Adjusted EBITDA increased 10.9% to $174.5 million as compared
to $157.3 million for the second quarter of 2022, which excludes
$8.6 million of income from the Provider Relief Fund (“PRF”)
established under the Coronavirus Aid, Relief, and Economic
Security (“CARES”) Act
- Continued progress on the execution of the Company’s growth
strategy by adding 98 beds to existing facilities and opening two
additional comprehensive treatments centers (CTCs) during the
quarter
- Announced two new joint venture partnerships for future
hospitals, marking Acadia’s 19th and 20th partnerships with leading
healthcare systems across the country, and opened two new hospitals
with joint venture partners early in the third quarter
- Signed a definitive agreement in July to acquire a 76-bed
specialty provider of substance use disorder and primary mental
health treatment services based in the greater Salt Lake City,
Utah, area
A reconciliation of all non-GAAP financial results in this press
release begins on page 9.
Second Quarter Results
Chris Hunter, Chief Executive Officer of Acadia, remarked,
“Acadia delivered strong financial and operating results for the
second quarter of 2023, as we continued to see robust demand across
all business lines. We are pleased with the trajectory of our
business through the first half of the year and our ability to
effectively manage our operations and meet our key performance
objectives. Our labor costs were in line with our expectations. We
continue to see stability with sequential improvement in our labor
trends for the second quarter of 2023 that we expect will continue
to improve into the second half of the year.
“We made significant progress in executing our strategy through
our defined growth pathways, further extending our market reach to
more communities and adding service lines to new states. We
continue to identify opportunities to accelerate our growth across
each of our service lines and meet increased patient demand,
especially for higher acuity cases.
“Our results to date and continued momentum in our business led
us to increase our financial guidance for the full year. We are
proud of the important work we are doing and extremely grateful for
our dedicated employees who continue to provide safe, quality
patient care for those seeking treatment for mental health and
substance use issues.”
Strategic Investments for Long-Term Growth
Turning Point Centers Acquisition
In July, Acadia signed a definitive agreement to acquire Turning
Point Centers, a 76-bed specialty provider of substance use
disorder and primary mental health treatment services that supports
the Salt Lake City, Utah, metropolitan market. Turning Point
Centers provides a full continuum of treatment services, including
residential, partial hospitalization and intensive outpatient
services. The transaction is expected to close in 2023.
Hunter added, “Turning Point Centers is a strategic addition to
our facility portfolio, extending Acadia’s geographic footprint for
our specialty service line into a new state and enhancing our
continuum of care in Utah to include all service lines. We look
forward to working with the experienced management team and
clinical staff at Turning Point Centers.”
Growth Pathways Update
During the second quarter of 2023, the Company continued to make
progress in meeting its strategic growth objectives with the
following accomplishments across its defined five growth
pathways:
- Facility Expansions – Added 98 beds to current
facilities, bringing the total to 204 bed additions through the
first half of the year with the objective to add a total of 300
beds by the end of 2023.
- De Novo Facilities – Opened two de novo CTCs offering
medication-assisted treatments for patients dealing with opioid use
disorder, which is in line with the Company’s objective to add six
new CTCs in 2023. On track to open two de novo acute inpatient
hospitals by the end of the year – the renovated 101-bed adult
hospital and outpatient facility that are part of the Montrose
Behavioral Health Hospital in Chicago, Illinois, as well as an
80-bed inpatient hospital, Coachella Valley Behavioral Health, in
Indio, California.
- Joint Ventures – Announced two new joint venture
partnerships, which will expand Acadia’s acute service line into
two additional states. The partnership with SolutionHealth in New
Hampshire will serve the southeastern New Hampshire area, and the
partnership with Nebraska Methodist Health System in Iowa, will
serve the greater Omaha, Nebraska, and Council Bluffs, Iowa,
metropolitan area. Opened two new behavioral health hospitals with
joint venture partners, Bronson Healthcare in Michigan and
Geisinger in Pennsylvania, early in the third quarter. Acadia now
has 20 joint venture partnerships for 21 hospitals, with 11
hospitals already in operation and 10 additional hospitals expected
to open over the next few years.
- Acquisitions – Remained focused on identifying suitable
acquisitions that are incremental to the Company’s strategic plan
and fit its capital allocation framework, including the Turning
Point Centers announcement today.
- Extend Continuum of Care – Expanded treatment options by
adding 14 outpatient programs, including Partial Hospitalization
Programs (PHP), Intensive Outpatient Programs (IOP) or virtual
services, at select facilities to assist patients after they leave
inpatient and residential treatment.
Cash and Liquidity
Acadia has continued to maintain a strong financial position
with sufficient capital to make strategic investments in its
business. As of June 30, 2023, the Company had $112.2 million in
cash and cash equivalents and $505 million available under its $600
million revolving credit facility with a net leverage ratio of
approximately 2.0x.
Looking Ahead
Hunter concluded, “The United States is facing a mental health
crisis – recent studies from the Kaiser Foundation, the Census
Bureau and others highlight that the number of adults and
adolescents struggling with anxiety, depression or substance use
continues to climb. That is what drives our purpose of ensuring the
broadest and most effective access to high quality behavioral
healthcare. Given our scale and expertise, Acadia is uniquely
positioned to help meet this critical demand. Looking ahead, we
remain focused on accelerating growth by making strategic
investments that will enhance our service offerings across the
continuum of care and expand our market reach. Above all, we are
committed to addressing one of our nation’s most pressing
healthcare needs by providing safe, quality care in support of the
patients, families and communities who are counting on us to
improve the lives of all those we touch.”
Financial Guidance
Acadia today increased its previously announced financial
guidance for 2023 for the following:
2023
Guidance Range
Revenue
$2.86 to $2.90 billion
Adjusted EBITDA
$655 to $685 million
Adjusted earnings per diluted share
$3.25 to $3.50
Interest expense
$82 to $85 million
The Company affirmed the previously announced financial guidance
for the following:
Tax rate
25% to 26%
Depreciation and amortization expense
$125 to $135 million
Stock compensation expense
$30 to $35 million
Operating cash flows
$450 to $500 million
Expansion capital expenditures
$350 to $400 million
Maintenance capital expenditures
$40 to $50 million
IT capital expenditures
$35 to $45 million
The Company’s guidance does not include the impact of any future
acquisitions, divestitures, transaction-related expenses or
recognition of additional income from the CARES Act.
Conference Call
Acadia will hold a conference call to discuss its second quarter
financial results at 9:30 a.m. Eastern Time on Friday, July 28,
2023. A live webcast of the conference call will be available at
www.acadiahealthcare.com in the “Investors” section of the website.
The webcast of the conference call will be available for 30
days.
About Acadia
Acadia is a leading provider of behavioral healthcare services
across the United States. As of June 30, 2023, Acadia operated a
network of 250 behavioral healthcare facilities with approximately
11,000 beds in 39 states and Puerto Rico. With approximately 23,000
employees serving more than 75,000 patients daily, Acadia is the
largest stand-alone behavioral healthcare company in the U.S.
Acadia provides behavioral healthcare services to its patients in a
variety of settings, including inpatient psychiatric hospitals,
specialty treatment facilities, residential treatment centers and
outpatient clinics.
Forward-Looking Information
This press release contains forward-looking statements.
Generally, words such as “may,” “will,” “should,” “could,”
“anticipate,” “expect,” “intend,” “estimate,” “plan,” “continue,”
and “believe” or the negative of or other variation on these and
other similar expressions identify forward-looking statements.
These forward-looking statements are made only as of the date of
this press release. We do not undertake to update or revise the
forward-looking statements, whether as a result of new information,
future events or otherwise. Forward-looking statements are based on
current expectations and involve risks and uncertainties and our
future results could differ significantly from those expressed or
implied by our forward-looking statements. Factors that may cause
actual results to differ materially include, without limitation,
(i) potential difficulties in successfully integrating the
operations of acquired facilities or realizing the expected
benefits and synergies of our facility expansions, acquisitions,
joint ventures and de novo transactions; (ii) Acadia’s ability to
add beds, expand services, enhance marketing programs and improve
efficiencies at its facilities; (iii) potential reductions in
payments received by Acadia from government and commercial payors;
(iv) the occurrence of patient incidents, governmental
investigations, litigation (including without limitation the three
pending lawsuits in New Mexico) and adverse regulatory actions,
which could adversely affect the price of our common stock and
result in substantial payments and incremental regulatory burdens;
(v) the risk that Acadia may not generate sufficient cash from
operations to service its debt and meet its working capital and
capital expenditure requirements; (vi) potential disruptions to our
information technology systems or a cybersecurity incident; and
(vii) potential operating difficulties, including, without
limitation, disruption to the U.S. economy and financial markets;
reduced admissions and patient volumes; increased costs relating to
labor, supply chain and other expenditures; changes in competition
and client preferences; and general economic or industry conditions
that may prevent Acadia from realizing the expected benefits of its
business strategies. These factors and others are more fully
described in Acadia’s periodic reports and other filings with the
SEC.
Acadia Healthcare Company, Inc. Condensed Consolidated
Statements of Operations (Unaudited) Three
Months Ended June 30, Six Months Ended June 30,
2023
2022
2023
2022
(In thousands, except per share amounts) Revenue
$
731,337
$
651,719
$
1,435,604
$
1,268,372
Salaries, wages and benefits (including equity-based
compensation expense of $7,348, $6,580, $14,977 and $14,505,
respectively)
386,633
339,388
777,810
675,150
Professional fees
43,803
40,440
84,928
77,351
Supplies
26,144
25,022
52,165
48,721
Rents and leases
11,725
11,192
23,149
22,441
Other operating expenses
95,912
84,937
186,750
166,362
Income from provider relief fund
—
(8,550
)
—
(8,550
)
Depreciation and amortization
32,012
29,128
63,581
58,054
Interest expense, net
20,910
16,565
40,909
32,352
Loss on impairment
8,694
—
8,694
—
Transaction-related expenses
9,074
3,940
15,545
7,522
Total expenses
634,907
542,062
1,253,531
1,079,403
Income before income taxes
96,430
109,657
182,073
188,969
Provision for income taxes
22,881
27,725
41,966
45,127
Net income
73,549
81,932
140,107
143,842
Net income attributable to noncontrolling interests
(1,250
)
(1,853
)
(1,793
)
(2,926
)
Net income attributable to Acadia Healthcare Company, Inc.
$
72,299
$
80,079
$
138,314
$
140,916
Earnings per share attributable to Acadia Healthcare
Company, Inc. stockholders: Basic
$
0.79
$
0.89
$
1.53
$
1.57
Diluted
$
0.79
$
0.88
$
1.51
$
1.54
Weighted-average shares outstanding: Basic
91,044
89,724
90,691
89,492
Diluted
91,546
91,473
91,640
91,504
Acadia Healthcare Company, Inc. Condensed Consolidated
Balance Sheets (Unaudited) June 30,
December 31,
2023
2022
(In thousands) ASSETS Current assets: Cash and
cash equivalents
$
112,173
$
97,649
Accounts receivable, net
345,836
322,439
Other current assets
120,748
86,037
Total current assets
578,757
506,125
Property and equipment, net
2,074,142
1,952,045
Goodwill
2,222,805
2,222,805
Intangible assets, net
71,607
76,041
Deferred tax assets
2,885
2,950
Operating lease right-of-use assets
127,515
135,238
Other assets
72,497
92,697
Total assets
$
5,150,208
$
4,987,901
LIABILITIES AND EQUITY Current liabilities:
Current portion of long-term debt
$
23,906
$
21,250
Accounts payable
148,896
104,723
Accrued salaries and benefits
111,409
125,298
Current portion of operating lease liabilities
26,422
26,463
Other accrued liabilities
121,849
110,592
Total current liabilities
432,482
388,326
Long-term debt
1,372,362
1,364,541
Deferred tax liabilities
92,870
92,588
Operating lease liabilities
110,869
116,429
Other liabilities
130,026
125,033
Total liabilities
2,138,609
2,086,917
Redeemable noncontrolling interests
90,583
88,257
Equity: Common stock
911
899
Additional paid-in capital
2,628,403
2,658,440
Retained earnings
291,702
153,388
Total equity
2,921,016
2,812,727
Total liabilities and equity
$
5,150,208
$
4,987,901
Acadia Healthcare Company, Inc. Condensed Consolidated
Statements of Cash Flows (Unaudited) Six
Months Ended June 30,
2023
2022
(In thousands) Operating activities: Net income
$
140,107
$
143,842
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
63,581
58,054
Amortization of debt issuance costs
1,651
1,620
Equity-based compensation expense
14,977
14,505
Deferred income taxes
347
7,975
Loss on impairment
8,694
—
Other
1,086
396
Change in operating assets and liabilities, net of effect of
acquisitions: Accounts receivable, net
(23,397
)
(19,763
)
Other current assets
(8,743
)
(18,106
)
Other assets
(322
)
2,550
Accounts payable and other accrued liabilities
21,518
25,518
Accrued salaries and benefits
(13,889
)
2,682
Other liabilities
2,568
7,928
Government relief funds
—
(1,212
)
Net cash provided by operating activities
208,178
225,989
Investing activities: Cash paid for capital
expenditures
(157,359
)
(132,444
)
Proceeds from sale of property and equipment
621
1,674
Other
(940
)
(5,016
)
Net cash used in investing activities
(157,678
)
(135,786
)
Financing activities: Borrowings on revolving credit
facility
40,000
—
Principal payments on revolving credit facility
(20,000
)
(85,000
)
Principal payments on long-term debt
(10,625
)
(7,969
)
Repurchase of shares for payroll tax withholding, net of proceeds
from stock option exercises
(45,904
)
(9,868
)
Contributions from noncontrolling partners in joint ventures
2,516
8,008
Distributions to noncontrolling partners in joint ventures
(1,983
)
(847
)
Other
20
28
Net cash used in financing activities
(35,976
)
(95,648
)
Net increase (decrease) in cash and cash equivalents
14,524
(5,445
)
Cash and cash equivalents at beginning of the period
97,649
133,813
Cash and cash equivalents at end of the period
$
112,173
$
128,368
Acadia Healthcare Company, Inc. Operating Statistics
(Unaudited, Revenue in thousands) Three Months
Ended June 30, Six Months Ended June 30,
2023
2022
% Change
2023
2022
% Change Same Facility Results (1) Revenue
$
721,288
$
647,626
11.4
%
$
1,416,228
$
1,260,893
12.3
%
Patient Days
763,813
727,857
4.9
%
1,510,471
1,428,950
5.7
%
Admissions
49,017
47,003
4.3
%
98,076
92,170
6.4
%
Average Length of Stay (2)
15.6
15.5
0.6
%
15.4
15.5
-0.7
%
Revenue per Patient Day
$
944
$
890
6.1
%
$
938
$
882
6.3
%
Adjusted EBITDA margin (3)
29.7
%
30.0
%
-30 bps
28.7
%
28.4
%
30 bps
Adjusted EBITDA margin excluding income from provider relief fund
29.7
%
28.7
%
100 bps
28.7
%
27.7
%
100 bps
Facility Results Revenue
$
731,337
$
651,719
12.2
%
$
1,435,604
$
1,268,372
13.2
%
Patient Days
771,955
734,777
5.1
%
1,526,813
1,441,103
5.9
%
Admissions
50,029
47,042
6.3
%
99,935
92,238
8.3
%
Average Length of Stay (2)
15.4
15.6
-1.2
%
15.3
15.6
-2.2
%
Revenue per Patient Day
$
947
$
887
6.8
%
$
940
$
880
6.8
%
Adjusted EBITDA margin (3)
28.6
%
29.7
%
-110 bps
27.6
%
28.1
%
-50 bps
Adjusted EBITDA margin excluding income from provider relief fund
28.6
%
28.4
%
20 bps
27.6
%
27.4
%
20 bps
(1) Same facility results for the periods presented include
facilities we have operated for more than one year and exclude
certain closed services. (2) Average length of stay is defined as
patient days divided by admissions. (3) For the three and six
months ended June 30, 2022, includes income from provider relief
fund of $8.6 million.
Acadia Healthcare Company, Inc.
Reconciliation of Net Income Attributable to Acadia Healthcare
Company, Inc. to Adjusted EBITDA (Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2023
2022
2023
2022
(in thousands) Net income attributable to Acadia
Healthcare Company, Inc.
$
72,299
$
80,079
$
138,314
$
140,916
Net income attributable to noncontrolling interests
1,250
1,853
1,793
2,926
Provision for income taxes
22,881
27,725
41,966
45,127
Interest expense, net
20,910
16,565
40,909
32,352
Depreciation and amortization
32,012
29,128
63,581
58,054
EBITDA
149,352
155,350
286,563
279,375
Adjustments: Equity-based compensation expense (a)
7,348
6,580
14,977
14,505
Transaction-related expenses (b)
9,074
3,940
15,545
7,522
Loss on impairment (c)
8,694
—
8,694
—
Adjusted EBITDA
$
174,468
$
165,870
$
325,779
$
301,402
Adjusted EBITDA margin
23.9
%
25.5
%
22.7
%
23.8
%
Adjusted EBITDA excluding income from provider relief
fund
$
174,468
$
157,320
$
325,779
$
292,852
Adjusted EBITDA margin excluding income from provider relief
fund
23.9
%
24.1
%
22.7
%
23.1
%
See footnotes on page 11.
Acadia Healthcare Company,
Inc. Reconciliation of Net Income Attributable to Acadia
Healthcare Company, Inc. to Adjusted Income Attributable to
Acadia Healthcare Company, Inc. (Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2023
2022
2023
2022
(in thousands, except per share amounts) Net income
attributable to Acadia Healthcare Company, Inc.
$
72,299
$
80,079
$
138,314
$
140,916
Adjustments to income: Transaction-related expenses (b)
9,074
3,940
15,545
7,522
Loss on impairment (c)
8,694
—
8,694
—
Provision for income taxes
22,881
27,725
41,966
45,127
Adjusted income before income taxes attributable to Acadia
Healthcare Company, Inc.
112,948
111,744
204,519
193,565
Income tax effect of adjustments to income (d)
28,271
28,895
51,191
49,514
Adjusted income attributable to Acadia Healthcare Company, Inc.
84,677
82,849
153,328
144,051
Income from provider relief fund, net of taxes
—
(6,230
)
—
(6,230
)
Adjusted income attributable to Acadia Healthcare Company, Inc.
excluding income from provider relief fund
$
84,677
$
76,619
$
153,328
$
137,821
Weighted-average shares outstanding - diluted
91,546
91,473
91,640
91,504
Adjusted income attributable to Acadia Healthcare Company,
Inc. per diluted share
$
0.92
$
0.91
$
1.67
$
1.57
Income from provider relief fund, net of taxes, per diluted share
—
(0.07
)
—
(0.07
)
Adjusted income attributable to Acadia Healthcare Company, Inc.,
excluding income from provider relief fund, per diluted share
$
0.92
$
0.84
$
1.67
$
1.50
See footnotes on page 11.
Acadia Healthcare Company,
Inc.
Footnotes
We have included certain
financial measures in this press release, including those listed
below, which are “non-GAAP financial measures” as defined under the
rules and regulations promulgated by the SEC. These non-GAAP
financial measures include, and are defined, as follows:
• EBITDA: net income attributable to Acadia
Healthcare Company, Inc. adjusted for net income attributable to
noncontrolling interests, provision for income taxes, net interest
expense and depreciation and amortization.
• Adjusted
EBITDA: EBITDA adjusted for equity-based compensation
expense, loss on impairment and transaction-related expenses.
• Adjusted
EBITDA excluding income from provider relief fund: Adjusted
EBITDA adjusted for income from provider relief fund.
• Adjusted
EBITDA margin: Adjusted EBITDA divided by revenue.
• Adjusted
EBITDA margin excluding income from provider relief fund:
Adjusted EBITDA excluding income from provider relief fund divided
by revenue.
• Adjusted
income before income taxes attributable to Acadia Healthcare
Company, Inc.: net income attributable to Acadia Healthcare
Company, Inc. adjusted for transaction-related expenses, loss on
impairment and provision for income taxes.
• Adjusted
income attributable to Acadia Healthcare Company, Inc.:
Adjusted income before income taxes attributable to Acadia
Healthcare Company, Inc. adjusted for the income tax effect of
adjustments to income.
• Adjusted
income attributable to Acadia Healthcare Company, Inc. excluding
income from provider relief fund: Adjusted income
attributable to Acadia Healthcare Company, Inc. adjusted for income
from provider relief fund.
The non-GAAP financial measures
presented herein are supplemental measures of our performance and
are not required by, or presented in accordance with, generally
accepted accounting principles in the United States (“GAAP”). The
non-GAAP financial measures presented herein are not measures of
our financial performance under GAAP and should not be considered
as alternatives to net income or any other performance measures
derived in accordance with GAAP or as an alternative to cash flow
from operating activities as measures of our liquidity. Our
measurements of these non-GAAP financial measures may not be
comparable to similarly titled measures of other companies. We have
included information concerning the non-GAAP financial measures in
this press release because we believe that such information is used
by certain investors as measures of a company’s historical
performance. We believe these measures are frequently used by
securities analysts, investors and other interested parties in the
evaluation of issuers of equity securities, many of which present
similar non-GAAP financial measures when reporting their results.
Because the non-GAAP financial measures are not measurements
determined in accordance with GAAP and are thus susceptible to
varying calculations, the non-GAAP financial measures, as
presented, may not be comparable to other similarly titled measures
of other companies. Our presentation of these non-GAAP financial
measures should not be construed as an inference that our future
results will be unaffected by unusual or nonrecurring items.
The Company is not able to
provide a reconciliation of projected Adjusted EBITDA and adjusted
earnings per diluted share, where provided, to expected results due
to the unknown effect, timing and potential significance of
transaction-related expenses and the tax effect of such
expenses.
(a) Represents the equity-based
compensation expense of Acadia.
(b) Represents
transaction-related expenses incurred by Acadia primarily related
to termination, restructuring, management transition, acquisition
and other similar costs.
(c) During the second quarter of
2023, we recorded non-cash impairment charges totaling $8.7 million
related to the closure of certain facilities.
(d) Represents the income tax
effect of adjustments to income based on tax rates of 25.0% and
25.9% for the three months ended June 30, 2023 and 2022,
respectively, and 25.0% and 25.6% for the six months ended June 30,
2023 and 2022, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230727228293/en/
Gretchen Hommrich Vice President, Investor Relations (615)
861-6000
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