Company Updates 2019 Guidance
Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced
financial results for the third quarter and nine months ended
September 30, 2019. Revenue was $777.3 million for the third
quarter, up 2.1% from $760.9 million for the third quarter of 2018.
Net income attributable to Acadia stockholders for the third
quarter of 2019 was $42.6 million, or $0.48 per diluted share,
compared with $46.2 million, or $0.53 per diluted share, for the
third quarter of 2018. Results for the third quarter of 2019
include transaction-related expenses of $5.8 million and the income
tax effect of adjustments to income of $2.4 million based on a tax
rate of 16.7%. Adjusted income attributable to Acadia stockholders
per diluted share (“adjusted EPS”) was $0.52 for the third quarter
of 2019. Results for the third quarter of 2018 included
transaction-related expenses of $2.4 million and the income tax
effect of adjustments to income of $0.4 million based on a tax rate
of 16.0%. A reconciliation of all non-GAAP financial results in
this release appears beginning on page 7.
For the third quarter of 2019, Acadia’s total same facility
revenue increased 4.6% compared with the third quarter of 2018,
including a 1.1% increase in patient days and a 3.5% increase in
revenue per patient day. Total same facility EBITDA margin
decreased 100 basis points to 22.9%. U.S. same facility revenue
increased 4.9%, including a 2.8% increase in patient days and a
2.0% increase in revenue per patient day. U.S. same facility EBITDA
margin decreased 140 basis points to 25.9%. For the U.K.
operations, same facility revenue was up 4.0% for the third quarter
of 2019 from the third quarter last year, reflecting a 5.1%
increase in revenue per patient day offset by a 1.1% decrease in
patient days. U.K. same facility EBITDA margin declined 30 basis
points to 16.7%. Acadia’s consolidated adjusted EBITDA for the
third quarter of 2019 was $146.6 million, compared with $148.9
million for the third quarter of 2018.
Debbie Osteen, Chief Executive Officer of Acadia Healthcare
Company, remarked, “During the third quarter of 2019, certain of
our U.S. facilities faced operational issues that negatively
affected U.S. EBITDA margin. We believe these operational issues
are temporary. Our U.K. facilities performed as expected, and we
were pleased to see continuing stability in our operating trends.
During the quarter, we continued to work through the initiatives
identified during our strategic review earlier this year to improve
operational efficiencies throughout our operations. At this time,
we expect to achieve our goal of $20 to $25 million in cost savings
by the end of 2020. Going forward, we will remain focused on these
objectives, while we continue to honor our commitment to deliver
the highest quality of patient care.
“During the third quarter, we added 82 beds to Acadia’s
operations, supporting our growth initiatives focused on both bed
expansion opportunities and additional service offerings. For the
first nine months of the year, we added 414 beds to existing and
new facilities, and we expect to add approximately 650 beds for
2019, exclusive of acquisitions,” added Osteen.
Acadia today updated its financial guidance for 2019, consistent
with the Company’s performance for the first nine months of 2019
and its expectations for the fourth quarter of the year, as
follows:
- Revenue for 2019 in a range of $3.10 billion to $3.125
billion;
- Adjusted EBITDA for 2019 in a range of $584 million to $589
million; and
- Adjusted earnings per diluted share for 2019 in a range of
$2.00 to $2.05.
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 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 third quarter
financial results at 9:00 a.m. Eastern Time on Wednesday, November
6, 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
November 20, 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 the U.K.’s departure from the European Union; (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) potential difficulties in successfully
integrating the operations of acquired facilities or realizing the
expected benefits and synergies of our acquisitions, joint ventures
and de novo transactions; (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, governmental investigations and adverse
regulatory actions, which could adversely affect the price of our
common stock and result in substantial payments 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 strategies. 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 behavioral healthcare services. At
September 30, 2019, Acadia operated a network of 589 behavioral
healthcare facilities with approximately 18,000 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 September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
(In thousands, except per
share amounts)
Revenue
$
777,251
$
760,916
$ 2,327,230
$ 2,268,895
Salaries, wages and benefits (including equity-based
compensation expense of $4,039, $5,225, $14,322 and $19,273,
respectively)
428,601
417,917
1,288,399
1,246,186
Professional fees
62,152
59,509
177,588
166,988
Supplies
30,790
29,461
91,661
88,958
Rents and leases
20,134
19,866
60,860
60,390
Other operating expenses
92,975
90,464
281,517
265,977
Depreciation and amortization
40,620
39,659
122,277
119,360
Interest expense, net
46,644
46,651
143,384
137,706
Debt extinguishment costs
-
-
-
940
Transaction-related expenses
5,775
2,353
15,308
10,008
Total expenses
727,691
705,880
2,180,994
2,096,513
Income before income taxes
49,560
55,036
146,236
172,382
Provision for income taxes
6,837
8,757
25,801
16,339
Net income
42,723
46,279
120,435
156,043
Net income attributable to noncontrolling interests
(157
)
(47
)
(258
)
(156
)
Net income attributable to Acadia Healthcare Company, Inc.
$
42,566
$
46,232
$
120,177
$
155,887
Earnings per share attributable to Acadia Healthcare
Company, Inc. stockholders: Basic
$
0.49
$
0.53
$
1.37
$
1.79
Diluted
$
0.48
$
0.53
$
1.37
$
1.78
Weighted-average shares outstanding:
Basic
87,649
87,344
87,591
87,233
Diluted
87,859
87,537
87,805
87,386
Acadia Healthcare Company,
Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
September 30,
December 31,
2019
2018
(In thousands)
ASSETS Current assets:
Cash and cash equivalents
$
92,900
$
50,510
Accounts receivable, net
350,225
318,087
Other current assets
93,788
81,820
Total current assets
536,913
450,417
Property and equipment, net
3,131,419
3,107,766
Goodwill
2,424,241
2,396,412
Intangible assets, net
89,028
88,990
Deferred tax assets
3,371
3,468
Derivative instrument assets
-
60,524
Operating lease right-of-use assets
479,881
-
Other assets
63,272
64,927
Total assets
$ 6,728,125
$ 6,172,504
LIABILITIES AND
EQUITY Current liabilities:
Current portion of long-term debt
$
41,287
$
34,112
Accounts payable
131,472
117,740
Accrued salaries and benefits
117,683
113,299
Current portion of operating lease liabilities
28,010
-
Other accrued liabilities
139,754
151,226
Total current liabilities
458,206
416,377
Long-term debt
3,133,635
3,159,375
Deferred tax liabilities
63,154
80,372
Operating lease liabilities
478,894
-
Derivative instrument liabilities
15,896
-
Other liabilities
125,285
154,267
Total liabilities
4,275,070
3,810,391
Redeemable noncontrolling interests
32,364
28,806
Equity: Common stock
877
874
Additional paid-in capital
2,554,808
2,541,987
Accumulated other comprehensive loss
(507,994
)
(462,377
)
Retained earnings
373,000
252,823
Total equity
2,420,691
2,333,307
Total liabilities and equity
$ 6,728,125
$ 6,172,504
Acadia Healthcare Company,
Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Nine Months Ended September
30,
2019
2018
(In thousands)
Operating activities: Net income
$
120,435
$
156,043
Adjustments to reconcile net income to net cash provided by
continuing operating activities: Depreciation and
amortization
122,277
119,360
Amortization of debt issuance costs
8,926
7,763
Equity-based compensation expense
14,322
19,273
Deferred income taxes
5,150
(1,738
)
Debt extinguishment costs
-
940
Other
4,444
3,025
Change in operating assets and liabilities: Accounts
receivable, net
(32,956
)
(43,252
)
Other current assets
(3,912
)
3,021
Other assets
530
3,868
Accounts payable and other accrued liabilities
(35,610
)
9,230
Accrued salaries and benefits
4,813
11,049
Other liabilities
5,110
149
Net cash provided by continuing operating activities
213,529
288,731
Net cash used in discontinued operating activities
-
(2,548
)
Net cash provided by operating activities
213,529
286,183
Investing activities: Cash paid for
acquisitions, net of cash acquired
(44,900
)
-
Cash paid for capital expenditures
(202,722
)
(249,989
)
Cash paid for real estate acquisitions
(6,976
)
(9,391
)
Settlement of foreign currency derivatives
105,008
-
Other
12,398
(3,114
)
Net cash used in investing activities
(137,192
)
(262,494
)
Financing activities: Borrowings on revolving
credit facility
76,573
-
Principal payments on revolving credit facility
(76,573
)
-
Principal payments on long-term debt
(24,738
)
(31,492
)
Common stock withheld for minimum statutory taxes, net
(1,498
)
(2,272
)
Other
(5,923
)
(6,973
)
Net cash used in financing activities
(32,159
)
(40,737
)
Effect of exchange rate changes on cash
(1,788
)
(1,314
)
Net increase (decrease) in cash and cash
equivalents
42,390
(18,362
)
Cash and cash equivalents at beginning of the period
50,510
67,290
Cash and cash equivalents at end of the period
$
92,900
$
48,928
Effect of acquisitions: Assets
acquired, excluding cash
$
48,594
$
-
Liabilities assumed
(3,694
)
-
Cash paid for acquisitions, net of cash acquired
$
44,900
$
-
Acadia Healthcare Company,
Inc.
Operating Statistics
(Unaudited, Revenue in
thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
% Change
2019
2018
% Change
Same Facility Results (a,c) Revenue
$
741,976
$
709,474
4.6%
$ 2,214,660
$ 2,103,372
5.3%
Patient Days
1,151,793
1,139,501
1.1%
3,414,315
3,351,815
1.9%
Admissions
45,655
43,763
4.3%
133,143
127,463
4.5%
Average Length of Stay (b)
25.2
26.0
-3.1%
25.6
26.3
-2.5%
Revenue per Patient Day
$
644
$
623
3.5%
$
649
$
628
3.4%
EBITDA margin
22.9%
23.9%
-100 bps
23.4%
24.7%
-130 bps U.S. Same Facility Results (a) Revenue
$
498,076
$
474,912
4.9%
$ 1,467,618
$ 1,386,457
5.9%
Patient Days
648,767
631,115
2.8%
1,910,839
1,846,748
3.5%
Admissions
43,247
41,318
4.7%
126,062
120,209
4.9%
Average Length of Stay (b)
15.0
15.3
-1.8%
15.2
15.4
-1.3%
Revenue per Patient Day
$
768
$
752
2.0%
$
768
$
751
2.3%
EBITDA margin
25.9%
27.3%
-140 bps
26.7%
27.2%
-50 bps U.K. Same Facility Results (a,c) Revenue
$
243,900
$
234,562
4.0%
$
747,042
$
716,915
4.2%
Patient Days
503,026
508,386
-1.1%
1,503,476
1,505,067
-0.1%
Admissions
2,408
2,445
-1.5%
7,081
7,254
-2.4%
Average Length of Stay (b)
208.9
207.9
0.5%
212.3
207.5
2.3%
Revenue per Patient Day
$
485
$
461
5.1%
$
497
$
476
4.3%
EBITDA margin
16.7%
17.0%
-30 bps
17.0%
19.7%
-270 bps U.S. Facility Results Revenue
$
509,383
$
488,626
4.2%
$ 1,507,156
$ 1,432,501
5.2%
Patient Days
663,969
650,395
2.1%
1,960,749
1,899,050
3.2%
Admissions
44,693
41,614
7.4%
130,098
121,065
7.5%
Average Length of Stay (b)
14.9
15.6
-4.9%
15.1
15.7
-3.9%
Revenue per Patient Day
$
767
$
751
2.1%
$
769
$
754
1.9%
EBITDA margin
24.9%
26.3%
-140 bps
25.3%
26.2%
-90 bps U.K. Facility Results (c) Revenue
$
267,868
$
257,650
4.0%
$
820,074
$
788,103
4.1%
Patient Days
673,473
681,917
-1.2%
2,009,006
2,024,389
-0.8%
Admissions
2,749
2,752
-0.1%
8,160
8,226
-0.8%
Average Length of Stay (b)
245.0
247.8
-1.1%
246.2
246.1
0.0%
Revenue per Patient Day
$
398
$
378
5.3%
$
408
$
389
4.9%
EBITDA margin
15.2%
15.0%
20 bps
15.4%
17.5%
-210 bps Total Facility Results (c) Revenue
$
777,251
$
746,276
4.2%
$ 2,327,230
$ 2,220,604
4.8%
Patient Days
1,337,442
1,332,312
0.4%
3,969,755
3,923,439
1.2%
Admissions
47,442
44,366
6.9%
138,258
129,291
6.9%
Average Length of Stay (b)
28.2
30.0
-6.1%
28.7
30.3
-5.4%
Revenue per Patient Day
$
581
$
560
3.8%
$
586
$
566
3.6%
EBITDA margin
21.6%
22.4%
-80 bps
21.8%
23.1%
-130 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 and nine months ended September 30, 2018 is adjusted to
reflect the foreign currency exchange rate for the comparable
periods 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 and nine months ended
September 30, 2018 is 1.23 and 1.27, respectively.
Acadia Healthcare Company,
Inc.
Reconciliation of Net Income
Attributable to Acadia Healthcare Company, Inc. to Adjusted
EBITDA
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
(in thousands)
Net income attributable to Acadia Healthcare Company, Inc.
$
42,566
$
46,232
$
120,177
$
155,887
Net income attributable to noncontrolling interests
157
47
258
156
Provision for income taxes
6,837
8,757
25,801
16,339
Interest expense, net
46,644
46,651
143,384
137,706
Depreciation and amortization
40,620
39,659
122,277
119,360
EBITDA
136,824
141,346
411,897
429,448
Adjustments: Equity-based compensation expense (a)
4,039
5,225
14,322
19,273
Transaction-related expenses (b)
5,775
2,353
15,308
10,008
Debt extinguishment costs (c)
-
-
-
940
Adjusted EBITDA
$
146,638
$
148,924
$
441,527
$
459,669
See footnotes on page 9.
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 September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
(in thousands, except per share amounts) Net income
attributable to Acadia Healthcare Company, Inc.
$
42,566
$
46,232
$
120,177
$
155,887
Adjustments to income: Transaction-related expenses
(b)
5,775
2,353
15,308
10,008
Tax reform impact (d)
-
-
-
(10,472
)
Debt extinguishment costs (c)
-
-
-
940
Income tax effect of adjustments to income (e)
(2,371
)
(406
)
(1,384
)
(1,821
)
Adjusted income attributable to Acadia Healthcare Company, Inc.
$
45,970
$
48,179
$
134,101
$
154,542
Weighted-average shares outstanding - diluted
87,859
87,537
87,805
87,386
Adjusted income attributable to Acadia Healthcare Company,
Inc. per diluted share
$
0.52
$
0.55
$
1.53
$
1.77
See footnotes on page 9.
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 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 and integration efforts. (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 16.7% and
16.0% for the three months ended September 30, 2019 and 2018,
respectively, and 16.9% and 15.6% for the nine months ended
September 30, 2019 and 2018, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191105006137/en/
Gretchen Hommrich Director, Investor Relations (615)
861-6000
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