Previews Third Quarter 2016 Financial
Results
Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced
the signing of a definitive agreement with BC Partners for the sale
of 21 existing behavioral health facilities and one de novo
behavioral health facility not yet opened, which are located in the
United Kingdom. Acadia will receive £320 million (approximately
$390 million) cash for the sale. The sale is subject to the
approval of the Competition and Markets Authority (“CMA”) in the
U.K. The facilities to be sold have approximately 1,000 total beds
and produce aggregate approximate annual revenue of $162 million
and adjusted EBITDA of $37 million, after overhead allocation and
assuming an exchange rate of $1.22 per British Pound Sterling.
Joey Jacobs, Chairman and Chief Executive Officer of Acadia,
remarked, “We are very pleased to announce the signing of a
definitive agreement with BC Partners. Upon approval by the CMA,
this sale will fulfill our previously announced undertakings to
address the CMA’s concerns about the impact of our acquisition of
Priory on competition for the provision of behavioral healthcare
services in certain markets. We currently expect the CMA to approve
the sale on or before November 18, 2016 and expect to complete the
sale transaction shortly thereafter.
“Though we expect the CMA to approve the sale, the CMA is
continuing its review process and could determine to reject the
proposed sale and proceed with a Phase 2 investigation. We cannot
integrate Priory’s business until the CMA completes its review
process, including any potential Phase 2 investigation.”
Acadia also today announced its preliminary summary financial
results for the third quarter ended September 30, 2016. These
results are based on information available to management as of the
date of this press release and are subject to revision upon
finalization of the Company’s quarterly accounting and financial
reporting procedures.
The Company expects revenue for the quarter to be approximately
$735 million compared with $479.7 million for the third quarter of
2015. Loss from continuing operations attributable to Acadia
stockholders is expected to be approximately $118 million, or $1.36
per diluted share, for the third quarter of 2016 compared with
income of $29.5 million, or $0.42 per diluted share, for the third
quarter last year. Our expected results include an anticipated loss
on the U.K. divestiture of approximately $175 million, which
includes an allocation of the goodwill related to our U.K.
operations to the facilities held for sale of $107 million,
estimated transaction-related expenses of $26 million, and a loss
on the sale of properties of $42 million. Adjusted income from
continuing operations attributable to Acadia stockholders is
expected to be approximately $50 million, or $0.58 per diluted
share, for the third quarter of 2016 compared with $43.9 million,
or $0.62 per diluted share, for the third quarter of 2015.
Consolidated adjusted EBITDA for the third quarter of 2016 is
expected to be approximately $156 million compared to $108.5
million for the third quarter last year.
Mr. Jacobs said, “Our adjusted EPS for the third quarter was
lower than expected due to certain challenges in both the U.K. and
the U.S. In the U.K., we believe that there was significant
disruption to our operations as a result of the July 14, 2016
announcement by the CMA that the Priory acquisition would be
referred for a Phase 2 investigation, unless we offered
undertakings to address the CMA’s competitive concerns. The process
of developing and implementing our proposed undertakings placed
substantial and immediate demands on the U.K. management team,
including many of the individual facility management teams, in
addition to being a significant distraction for our U.K. operations
in general because of the nature of the proposed undertakings. As
one indication of the pervasive impact we believe the event had on
our operations in the U.K., those operations produced same facility
revenue growth for the third quarter of 5.1%, compared with 6.3%
for the first half of 2016.
“Our U.S. operations were also affected by below-trend growth in
same facility revenue, which increased 6.5% for the third quarter
compared with 9.1% for the first half of 2016. While the growth
rate for the third quarter improved from 5.9% for the third quarter
last year, it is lower than we anticipated. In addition, our U.S.
results for the third quarter reflected the impact of a slower than
expected ramping of revenues from several de novo acute inpatient
facilities that we have opened in 2015 and 2016.”
Acadia expects to issue its third quarter earnings release after
the market closes on Tuesday, November 1, 2016 and to hold its
conference call the following morning. Based on its preliminary
financial results, the Company expects to adjust its financial
guidance for 2016 and provide additional detail on its results of
operations for the quarter in that news release and conference
call.
Non-GAAP Financial Measures
We have included certain financial measures in this press
release, including Adjusted income from continuing operations and
Adjusted EBITDA, which are “non-GAAP financial measures” as defined
under the rules and regulations promulgated by the SEC. We define
Adjusted income from continuing operations as net income adjusted
for income from discontinued operations, provision for income
taxes, debt extinguishment costs, loss on divestiture,
transaction-related expenses, (gain) loss on foreign currency
derivative and income tax provision reflecting tax effect of
adjustments attributable to Acadia. We define Adjusted EBITDA as
net income adjusted for income from discontinued operations, net
loss attributable to noncontrolling interests, income tax
provision, net interest expense, depreciation and amortization,
equity-based compensation expense, debt extinguishment costs, loss
on divestiture, (gain) loss on foreign currency derivatives and
transaction-related expenses.
Adjusted income from continuing operations and Adjusted EBITDA
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”). Adjusted income from
continuing operations and Adjusted EBITDA 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 Adjusted income from continuing operations and
Adjusted EBITDA may not be comparable to similarly titled measures
of other companies. We have included information concerning
Adjusted income from continuing operations and Adjusted EBITDA 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
EBITDA, Adjusted EBITDA and Adjusted income from continuing
operations when reporting their results. Our presentation of
EBITDA, Adjusted EBITDA and Adjusted income from continuing
operations should not be construed as an inference that our future
results will be unaffected by unusual or nonrecurring items. A
reconciliation of Adjusted income from continuing operations and
Adjusted EBITDA to net income attributable to Acadia Healthcare
Company, Inc. will be provided as part of the Company’s reporting
of its full third quarter financial results.
Risk Factors
This news 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
news 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) the CMA’s acceptance of our undertakings to address its
concerns relating to the Priory transaction and approval of the
sale to BC Partners; (ii) our ability to divest facilities and
fulfill our undertakings to the CMA on acceptable terms and within
expected timeframes; (iii) potential difficulties operating our
business in light of political and economic instability in the U.K.
and globally following the referendum in the U.K. on June 23, 2016,
in which voters approved an exit from the European Union, or
Brexit; (iv) the impact of fluctuations in foreign exchange rates,
including the recent devaluation of the GBP relative to the USD
following the Brexit vote; (v) Acadia’s ability to complete
acquisitions and successfully integrate the operations of acquired
facilities, including Priory facilities; (vi) Acadia’s ability to
add beds, expand services, enhance marketing programs and improve
efficiencies at its facilities; (vii) potential reductions in
payments received by Acadia from government and third-party payors;
(viii) the occurrence of patient incidents, which could adversely
affect the price of our common stock and result in incremental
regulatory burdens and governmental investigations; (ix) the risk
that Acadia may not generate sufficient cash from operations to
service its debt and meet its working capital and capital
expenditure requirements; and (x) potential operating difficulties,
client preferences, changes in competition and general economic or
industry conditions that may prevent Acadia from realizing the
expected benefits of its business strategy. These factors and
others are more fully described in Acadia’s periodic reports and
other filings with the SEC.
About Acadia
Acadia is a provider of inpatient behavioral healthcare
services. Acadia operates a network of 591 behavioral healthcare
facilities with approximately 17,800 beds in 39 states, the United
Kingdom and Puerto Rico. Acadia provides behavioral health and
addiction services to its patients in a variety of settings,
including inpatient psychiatric hospitals, residential treatment
centers, outpatient clinics and therapeutic school-based
programs.
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version on businesswire.com: http://www.businesswire.com/news/home/20161018006678/en/
Acadia Healthcare Company, Inc.Brent Turner,
615-861-6000President
Acadia Healthcare (NASDAQ:ACHC)
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