ACHC Acadia Healthcare Company Inc

U.S. Same Facility Revenue Grows 6.1%

Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced financial results for the first quarter ended March 31, 2019.

The Company reported revenue of $760.6 million for the first quarter of 2019, a 2.5% increase compared with $742.2 million for the first quarter of 2018. Net income attributable to Acadia stockholders was $29.5 million, or $0.34 per diluted share, for the first quarter of 2019 compared with $50.8 million, or $0.58 per diluted share, for the first quarter of 2018. Results for the first quarter of 2019 include transaction-related expenses of $4.3 million and the income tax effect of adjustments to income of $0.5 million based on a tax rate of 16.6%. Adjusted income attributable to Acadia stockholders was $34.3 million, or $0.39 per diluted share, for the first quarter of 2019. Results for the first quarter of 2018 included a tax benefit of $10.5 million due to the Tax Cuts and Jobs Act of 2017, transaction-related expenses of $4.8 million, debt extinguishment costs of $0.9 million, and the income tax effect of adjustments to income of $0.9 million based on a tax rate of 15.9%. Adjusted income attributable to Acadia stockholders for the first quarter of 2018 was $45.2 million, or $0.52 per diluted share.

A reconciliation of all non-GAAP financial results in this release appears beginning on page 8.

“We are pleased to report a solid start to 2019 with our first quarter financial and operating results in line with expectations,” said Debbie Osteen, Chief Executive Officer of Acadia Healthcare Company. “Our U.S. operations performed well with favorable trends in key operating metrics. The results from our U.K. operations showed consistent top line growth with revenue within our anticipated range. We remain focused on implementing our plans to improve the operating performance of our U.K. facilities.

“We continued to execute our growth strategy by expanding our service offerings and capacity with the addition of 260 beds during the first quarter. These expansions included the addition of 100 beds to existing facilities and 160 beds relating to two previously announced de novo facilities, Mount Carmel Behavioral Health, a joint venture, in Columbus, Ohio, and Rio Vista Behavioral Health in El Paso, Texas. On February 15, 2019, we completed two acquisitions – The Whittier Pavilion, a 71-bed inpatient psychiatric hospital located in Haverhill, Massachusetts, and Mission Treatment, a system of nine comprehensive treatment centers that provide medication-assisted treatment and counseling for people struggling with narcotics addiction in California, Nevada, Arizona and Oklahoma. Exclusive of acquisitions, we expect to add approximately 700 beds to existing and new facilities during 2019,” added Osteen.

The Company’s total same facility revenue increased 5.6% for the first quarter of 2019 compared with the first quarter of 2018, including a 2.8% increase in patient days and a 2.7% increase in revenue per patient day. Total same facility EBITDA margin declined 150 basis points to 22.7%. U.S. same facility revenue rose 6.1%, on a 4.3% increase in patient days and a 1.7% increase in revenue per patient day. U.S. same facility EBITDA margin was consistent with the first quarter last year at 26.1%. U.K. same facility revenue grew 4.7% for the first quarter of 2019 from the first quarter last year, including a 0.9% increase in patient days and a 3.7% increase in revenue per patient day. U.K. same facility EBITDA margin declined 430 basis points to 16.3%. Acadia’s consolidated adjusted EBITDA for the first quarter of 2019 was $136.0 million, compared with $145.7 million for the first quarter of 2018.

Osteen added, “As we noted on our fourth quarter 2018 conference call, Acadia’s senior management team and Board of Directors are conducting a strategic review of our entire operations, and we expect to provide an update of this review in late May.”

Acadia today affirmed its previously established financial guidance for 2019, as follows:

• Revenue for 2019 in a range of $3.15 billion to $3.2 billion;
• Adjusted EBITDA for 2019 in a range of $610 million to $630 million;
• Adjusted earnings per diluted share for 2019 in a range of $2.15 to $2.30; and
• An exchange rate of $1.30 per British Pound Sterling and a tax rate of approximately 16%.

The Company’s guidance does not include the impact of any future acquisitions or transaction-related expenses.

EBITDA is defined as net income adjusted for net income attributable to noncontrolling interests, provision for (benefit from) income taxes, net interest expense and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for equity-based compensation expense, transaction-related expenses and debt extinguishment costs. Adjusted income is defined as net income adjusted for transaction-related expenses, tax reform impact, debt extinguishment costs and income tax effect of adjustments to income.

Acadia will hold a conference call to discuss its first quarter 2019 financial results at 9:00 a.m. Eastern Time on Wednesday, May 1, 2019. 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 through May 15, 2019.

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) potential difficulties operating our business in light of political and economic instability in the U.K. and globally relating to Brexit; (ii) the impact of fluctuations in foreign exchange rates, including the devaluation of the British Pound Sterling (GBP) relative to the U.S. Dollar (USD); (iii) Acadia’s ability to complete acquisitions and successfully integrate the operations of acquired facilities; (iv) Acadia’s ability to add beds, expand services, enhance marketing programs and improve efficiencies at its facilities; (v) potential reductions in payments received by Acadia from government and third-party payors; (vi) the occurrence of patient incidents and governmental investigations, which could adversely affect the price of our common stock and result in substantial fines and incremental regulatory burdens; (vii) 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 (viii) potential operating difficulties, labor costs, 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 leading provider of behavioral healthcare services. At March 31, 2019, Acadia operated a network of 593 behavioral healthcare facilities with approximately 18,100 beds in 40 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, specialty treatment facilities, residential treatment centers and outpatient clinics.

  Acadia Healthcare Company, Inc. Condensed Consolidated Statements of Income (Unaudited)         Three Months Ended March 31, 2019 2018 (In thousands, except per share amounts)   Revenue $ 760,617 $ 742,241  

Salaries, wages and benefits (including equity-based compensation expense of $6,101 and $6,919, respectively)

429,579 411,528 Professional fees 57,007 54,018 Supplies 29,957 29,364 Rents and leases 20,307 20,288 Other operating expenses 93,865 88,231 Depreciation and amortization 40,580 39,773 Interest expense, net 48,130 45,243 Debt extinguishment costs - 940 Transaction-related expenses   4,321     4,768   Total expenses   723,746     694,153   Income before income taxes 36,871 48,088 Provision for (benefit from) income taxes   7,360     (2,786 ) Net income 29,511 50,874 Net income attributable to noncontrolling interests   (40 )   (55 ) Net income attributable to Acadia Healthcare Company, Inc. $ 29,471   $ 50,819     Earnings per share attributable to Acadia Healthcare Company, Inc. stockholders: Basic $ 0.34   $ 0.58   Diluted $ 0.34   $ 0.58     Weighted-average shares outstanding: Basic 87,505 87,121 Diluted 87,694 87,294     Acadia Healthcare Company, Inc. Condensed Consolidated Balance Sheets (Unaudited)         March 31, December 31, 2019 2018 (In thousands)   ASSETS Current assets: Cash and cash equivalents $ 43,684 $ 50,510 Accounts receivable, net 331,851 318,087 Other current assets   76,979     81,820   Total current assets 452,514 450,417 Property and equipment, net 3,173,052 3,107,766 Goodwill 2,441,999 2,396,412 Intangible assets, net 89,796 88,990 Deferred tax assets 3,436 3,468 Derivative instrument assets 46,304 60,524 Operating lease right-of-use assets 506,787 - Other assets   71,629     64,927   Total assets $ 6,785,517   $ 6,172,504       LIABILITIES AND EQUITY Current liabilities: Current portion of long-term debt $ 36,503 $ 34,112 Accounts payable 116,666 117,740 Accrued salaries and benefits 108,546 113,299 Current portion of operating lease liabilities 27,984 - Other accrued liabilities   134,972     151,226   Total current liabilities 424,671 416,377 Long-term debt 3,221,709 3,159,375 Deferred tax liabilities 76,922 80,372 Operating lease liabilities 504,753 - Other liabilities   122,188     154,267   Total liabilities 4,350,243 3,810,391 Redeemable noncontrolling interests 31,931 28,806 Equity: Common stock 876 874 Additional paid-in capital 2,546,759 2,541,987 Accumulated other comprehensive loss (426,586 ) (462,377 ) Retained earnings   282,294     252,823   Total equity   2,403,343     2,333,307   Total liabilities and equity $ 6,785,517   $ 6,172,504       Acadia Healthcare Company, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited)         Three Months Ended March 31, 2019 2018 (In thousands) Operating activities: Net income $ 29,511 $ 50,874 Adjustments to reconcile net income to net cash provided by continuing operating activities: Depreciation and amortization 40,580 39,773 Amortization of debt issuance costs 2,888 2,525 Equity-based compensation expense 6,101 6,919 Deferred income taxes (666 ) 1,897 Debt extinguishment costs - 940 Other 2,187 1,043 Change in operating assets and liabilities: Accounts receivable, net (11,980 ) (18,793 ) Other current assets (5,875 ) (13,216 ) Other assets 295 (1,268 ) Accounts payable and other accrued liabilities (15,701 ) (3,368 ) Accrued salaries and benefits (5,849 ) 4,802 Other liabilities   2,182     509   Net cash provided by continuing operating activities 43,673 72,637 Net cash used in discontinued operating activities   -     (287 ) Net cash provided by operating activities 43,673 72,350   Investing activities: Cash paid for acquisitions, net of cash acquired (40,400 ) - Cash paid for capital expenditures (69,248 ) (70,327 ) Cash paid for real estate acquisitions (1,066 ) (4,293 ) Other   613     (4,066 ) Net cash used in investing activities (110,101 ) (78,686 )   Financing activities: Borrowings on revolving credit facility 71,573 - Principal payments on long-term debt (8,246 ) - Common stock withheld for minimum statutory taxes, net (1,327 ) (2,030 ) Other   (3,497 )   (2,704 ) Net cash provided by (used in) financing activities 58,503 (4,734 )   Effect of exchange rate changes on cash   1,099     1,588     Net decrease in cash and cash equivalents (6,826 ) (9,482 ) Cash and cash equivalents at beginning of the period   50,510     67,290   Cash and cash equivalents at end of the period $ 43,684   $ 57,808     Effect of acquisitions: Assets acquired, excluding cash $ 44,028 $ - Liabilities assumed   (3,628 )   -   Cash paid for acquisitions, net of cash acquired $ 40,400   $ -       Acadia Healthcare Company, Inc. Operating Statistics (Unaudited, Revenue in thousands)             Three Months Ended March 31, 2019 2018 % Change Same Facility Results (a,c) Revenue $ 723,807 $ 685,226 5.6% Patient Days 1,123,008 1,092,369 2.8% Admissions 43,727 41,141 6.3% Average Length of Stay (b) 25.7 26.6 -3.3% Revenue per Patient Day $ 645 $ 627 2.7% EBITDA margin 22.7 % 24.2 % -150 bps   U.S. Same Facility Results (a) Revenue $ 475,018 $ 447,584 6.1% Patient Days 625,554 599,510 4.3% Admissions 41,343 38,705 6.8% Average Length of Stay (b) 15.1 15.5 -2.3% Revenue per Patient Day $ 759 $ 747 1.7% EBITDA margin 26.1 % 26.1 % 0 bps   U.K. Same Facility Results (a,c) Revenue $ 248,789 $ 237,642 4.7% Patient Days 497,454 492,859 0.9% Admissions 2,384 2,436 -2.1% Average Length of Stay (b) 208.7 202.3 3.1% Revenue per Patient Day $ 500 $ 482 3.7% EBITDA margin 16.3 % 20.6 % -430 bps     U.S. Facility Results Revenue $ 487,960 $ 462,405 5.5% Patient Days 640,324 612,889 4.5% Admissions 42,252 38,932 8.5% Average Length of Stay (b) 15.2 15.7 -3.7% Revenue per Patient Day $ 762 $ 754 1.0% EBITDA margin 24.4 % 25.3 % -90 bps   U.K. Facility Results (c) Revenue $ 272,657 $ 261,891 4.1% Patient Days 664,393 665,571 -0.2% Admissions 2,758 2,762 -0.1% Average Length of Stay (b) 240.9 241.0 0.0% Revenue per Patient Day $ 410 $ 393 4.3% EBITDA margin 14.7 % 18.3 % -360 bps   Total Facility Results (c) Revenue $ 760,617 $ 724,296 5.0% Patient Days 1,304,717 1,278,460 2.1% Admissions 45,010 41,694 8.0% Average Length of Stay (b) 29.0 30.7 -5.5% Revenue per Patient Day $ 583 $ 567 2.9% EBITDA margin 20.9 % 22.8 % -190 bps   (a) Results for the periods presented exclude the elderly care division of our U.K. operations and certain closed services. (b) Average length of stay is defined as patient days divided by admissions. (c) Revenue and revenue per patient day for the three months ended March 31, 2018 is adjusted to reflect the foreign currency exchange rate for the comparable period of 2019 in order to eliminate the effect of changes in the exchange rate. The exchange rate used in the adjusted revenue and revenue per patient day amounts for the three months ended March 31, 2018 is 1.30.     Acadia Healthcare Company, Inc. Reconciliation of Net Income Attributable to Acadia Healthcare Company, Inc. to Adjusted EBITDA (Unaudited)         Three Months Ended March 31, 2019 2018 (in thousands)   Net income attributable to Acadia Healthcare Company, Inc. $ 29,471 $ 50,819 Net income attributable to noncontrolling interests 40 55 Provision for (benefit from) income taxes 7,360 (2,786 ) Interest expense, net 48,130 45,243 Depreciation and amortization   40,580     39,773   EBITDA 125,581 133,104   Adjustments: Equity-based compensation expense (a) 6,101 6,919 Transaction-related expenses (b) 4,321 4,768 Debt extinguishment costs (c)   -     940   Adjusted EBITDA $ 136,003   $ 145,731     See footnotes on page 10.     Acadia Healthcare Company, Inc. Reconciliation of Adjusted Income Attributable to Acadia Healthcare Company, Inc. to Net Income Attributable to Acadia Healthcare Company, Inc. (Unaudited)         Three Months Ended March 31, 2019 2018 (in thousands, except per share amounts)   Net income attributable to Acadia Healthcare Company, Inc. $ 29,471 $ 50,819   Adjustments to income: Transaction-related expenses (b) 4,321 4,768 Tax reform impact (d) - (10,472 ) Debt extinguishment costs (c) - 940 Income tax effect of adjustments to income (e)   549   (861 ) Adjusted income attributable to Acadia Healthcare Company, Inc. $ 34,341 $ 45,194     Weighted-average shares outstanding - diluted 87,694 87,294  

Adjusted income attributable to Acadia Healthcare Company, Inc. per diluted share

$ 0.39 $ 0.52     See footnotes on page 10.     Acadia Healthcare Company, Inc. Footnotes   We have included certain financial measures in this press release, including EBITDA, Adjusted EBITDA, and Adjusted income, which are “non-GAAP financial measures” as defined under the rules and regulations promulgated by the SEC. We define EBITDA as net income adjusted for net income attributable to noncontrolling interests, provision for (benefit from) income taxes, net interest expense and depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted for equity-based compensation expense, transaction-related expenses and debt extinguishment costs. We define Adjusted income as net income adjusted for transaction-related expenses, tax reform impact, debt extinguishment costs, and income tax effect of adjustments to income.   EBITDA, Adjusted EBITDA, and Adjusted income 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”). EBITDA, Adjusted EBITDA, and Adjusted income 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 EBITDA, Adjusted EBITDA, and Adjusted income may not be comparable to similarly titled measures of other companies. We have included information concerning EBITDA, Adjusted EBITDA, and Adjusted income 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 when reporting their results. Our presentation of EBITDA, Adjusted EBITDA, and Adjusted income 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 acquisitions, termination, restructuring and closing costs.

  (c) Represents debt extinguishment costs recorded in connection with the repricing amendments to the Amended and Restated Credit Agreement in March 2018.   (d) Represents tax benefit related to the enactment of the Tax Cuts and Jobs Act.   (e) Represents the income tax effect of adjustments to income based on tax rates of 16.6% and 15.9% for the three months ended March 31, 2019 and 2018, respectively.  

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Gretchen HommrichDirector, Investor Relations(615) 861-6000