Company Provides Fourth Quarter 2020
Guidance
Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced
financial results for the quarter ended September 30, 2020, and
provided guidance for the fourth quarter of 2020.
The Company reported revenue of $833.3 million for the third
quarter of 2020, compared with $777.3 million for the third quarter
of 2019. Net income attributable to Acadia stockholders for the
third quarter of 2020 was $37.0 million, or $0.42 per diluted
share, compared to net income of $42.6 million, or $0.48 per
diluted share, for the same period in 2019.
Results for the third quarter of 2020 include a reversal of
$18.1 million in other income recorded in the second quarter of
2020 related to the Provider Relief Fund (“PRF”) established by the
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The
Company’s decision to reverse this income was based on additional
guidance issued by the U.S. Department of Health and Human Services
(“HHS”). The Company received $12.8 million of additional general
distributions from the PRF in the third quarter of 2020 and has
received cumulative total distributions of approximately $32.5
million, which are recorded in other accrued liabilities on the
Company’s balance sheet at September 30, 2020, pending the
Company’s final review of HHS guidance.
Debbie Osteen, Chief Executive Officer of Acadia, remarked, “We
are pleased with our financial and operating performance for the
third quarter, reflecting strong demand for our behavioral health
services. The ongoing challenges and uncertainties related to the
COVID-19 global pandemic have had a profound impact on everyone’s
lives, especially for the more vulnerable populations served by
Acadia. We commend the work of our dedicated employees across our
operations, who have worked hard to meet this demand and provide
quality care in a safe environment. Acadia is well positioned to
address the needs of those seeking treatment for mental health and
substance use issues. We expect demand for our services will
continue to increase as the mental and emotional toll caused by
economic and societal concerns persists and more individuals across
our markets look to Acadia for the highest quality of patient
care.”
Acadia’s consolidated adjusted EBITDA for the third quarter of
2020 was $159.4 million, compared to $146.6 million for the third
quarter of 2019. Excluding the reversal of the CARES Act income,
consolidated adjusted EBITDA was $177.5 million. Adjusted income
attributable to Acadia stockholders per diluted share was $0.68 for
the third quarter of 2020.
Adjusted results for the third quarter of 2020 exclude loss on
impairment of $20.2 million, transaction-related expenses of $8.5
million and the income tax effect of adjustments to income of
$(5.4) million. Adjusted results for the third quarter of 2019
exclude transaction-related expenses of $5.8 million and the income
tax effect of adjustments to income of $(2.4) million. A
reconciliation of all non-GAAP financial results in this press
release appears beginning on page 8.
U.S. same facility revenue increased 7.5% with a 4.2% increase
in patient days and a 3.1% increase in revenue per patient day,
compared to the third quarter last year. U.S. same facility EBITDA
margin increased 50 basis points to 25.7%.
For the U.K. operations, same facility revenue increased 2.7%
from the third quarter last year, reflecting a 2.8% increase in
revenue per patient day, offset by a 0.1% decrease in patient days.
Same facility patient days recovered to pre-COVID levels in the
beginning of the third quarter and continued to increase throughout
the quarter. U.K. same facility EBITDA margin increased 50 basis
points to 17.2%.
Osteen continued, “During the third quarter, we continued to
make meaningful improvement in almost every facet of our business.
Our financial results for the third quarter reflect the cost
management initiatives we have implemented in 2019 and 2020. We
remain focused on managing our operations efficiently, while
following strict protocol measures to ensure a safe environment for
our employees, patients and their families. At the same time, we
have continued to make the necessary investments in our facilities
to support further growth opportunities through additional service
offerings and bed expansions. During the quarter, we added 100 beds
to our U.S. operations, bringing our total to 206 new bed additions
in 2020. We announced the opening of our new 144-bed behavioral
health facility, Tower Behavioral Health, in Pennsylvania with our
joint venture partner, Tower Health. In the U.K., we continued to
drive operational improvements and make investments in the
retooling of beds.
“As previously announced, we recently relaunched the formal
process regarding the potential sale of our U.K. business. Our
objective continues to be maximizing value for our stockholders. As
we continue to work with our financial and legal advisors, we will
update the market on the sales process when and as we determine it
is appropriate,” added Osteen.
Cash and Liquidity
Acadia’s balance sheet remains strong with ample liquidity and
capital to invest in and grow its business. As of September 30,
2020, the Company had $339 million in cash and cash equivalents.
The Company also has full availability under its $500 million
revolving credit facility.
Financial Guidance
Acadia today established its financial guidance for the fourth
quarter of 2020, as follows:
- Revenue in a range of $810 million to $835 million;
- Adjusted EBITDA in a range of $160 million to $165 million;
and
- Adjusted earnings per diluted share in a range of $0.68 to
$0.72.
The Company’s guidance does not include the impact of any future
acquisitions or transaction-related expenses.
“We are optimistic about the opportunities ahead for Acadia, as
we focus on our primary objective to support our patients with safe
and quality care. Our performance reflects solid execution of our
growth strategy amidst a challenging environment. We will continue
to pursue our strategy to further enhance our position as a leading
provider of behavioral healthcare services,” concluded Osteen.
Acadia will hold a conference call to discuss its third quarter
financial results at 9:00 a.m. Eastern Time on Friday, October 30,
2020. 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 13, 2020.
About Acadia
Acadia is a leading provider of behavioral healthcare services.
As of September 30, 2020, Acadia operated a network of 582
behavioral healthcare facilities with approximately 18,300 beds in
40 states, the United Kingdom and Puerto Rico. 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) the impact of the COVID-19 pandemic, including, without
limitation, disruption to the U.S. and U.K. economies and financial
markets; reduced admissions and patient volumes; increased costs
relating to labor, supply chain and other expenditures; and
difficulty in collecting patient accounts receivable due to
increases in the unemployment rate and the number of underinsured
and uninsured patients; (ii) 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; (iii) the impact of fluctuations in foreign exchange rates,
including the devaluation of the British Pound Sterling (GBP)
relative to the U.S. Dollar (USD); (iv) Acadia’s efforts to sell
its U.K. operations may not result in any definitive transaction or
enhance stockholder value; (v) 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; (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, 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; (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,
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 Annual
Report on Form 10-K for the year ended December 31, 2019, and
subsequent periodic reports and other filings with the SEC.
Acadia Healthcare Company, Inc. Condensed Consolidated
Statements of Operations (Unaudited) Three
Months Ended September 30, Nine Months Ended September
30,
2020
2019
2020
2019
(In thousands, except per share amounts) Revenue
$
833,304
$
777,251
2,366,425
$
2,327,230
Salaries, wages and benefits (including equity-based
compensation expense of $5,471, $4,039, $16,258 and $14,322,
respectively)
450,459
428,601
1,318,378
1,288,399
Professional fees
61,359
62,152
183,273
177,588
Supplies
31,207
30,790
93,302
91,661
Rents and leases
21,182
20,134
62,833
60,860
Other operating expenses
97,093
92,975
288,222
281,517
Other income
18,070
-
-
-
Depreciation and amortization
42,912
40,620
126,037
122,277
Interest expense, net
37,553
46,644
119,064
143,384
Debt extinguishment costs
-
-
3,271
-
Loss on impairment
20,239
-
20,239
-
Transaction-related expenses
8,503
5,775
17,293
15,308
Total expenses
788,577
727,691
2,231,912
2,180,994
Income before income taxes
44,727
49,560
134,513
146,236
Provision for income taxes
7,166
6,837
21,171
25,801
Net income
37,561
42,723
113,342
120,435
Net income attributable to noncontrolling interests
(563
)
(157
)
(1,802
)
(258
)
Net income attributable to Acadia Healthcare Company, Inc.
$
36,998
$
42,566
$
111,540
$
120,177
Earnings per share attributable to Acadia Healthcare
Company, Inc. stockholders: Basic
$
0.42
$
0.49
$
1.27
$
1.37
Diluted
$
0.42
$
0.48
$
1.26
$
1.37
Weighted-average shares outstanding: Basic
87,911
87,649
87,849
87,591
Diluted
88,856
87,859
88,449
87,805
Acadia Healthcare Company, Inc. Condensed
Consolidated Balance Sheets (Unaudited)
September 30, December 31,
2020
2019
(In thousands) ASSETS Current assets: Cash and
cash equivalents
$
338,702
$
124,192
Accounts receivable, net
333,231
339,775
Other current assets
84,477
78,244
Total current assets
756,410
542,211
Property and equipment, net
3,253,720
3,224,034
Goodwill
2,460,722
2,449,131
Intangible assets, net
90,023
90,357
Deferred tax assets
3,242
3,339
Operating lease right-of-use assets
464,596
501,837
Other assets
76,432
68,233
Total assets
$
7,105,145
$
6,879,142
LIABILITIES AND EQUITY Current liabilities:
Current portion of long-term debt
$
50,858
$
43,679
Accounts payable
130,395
127,045
Accrued salaries and benefits
138,476
122,552
Current portion of operating lease liabilities
30,433
29,140
Other accrued liabilities
251,177
141,160
Total current liabilities
601,339
463,576
Long-term debt
3,067,243
3,105,420
Deferred tax liabilities
104,351
71,860
Operating lease liabilities
477,355
502,252
Derivative instrument liabilities
39,859
68,915
Other liabilities
153,812
128,587
Total liabilities
4,443,959
4,340,610
Redeemable noncontrolling interests
54,547
33,151
Equity: Common stock
879
877
Additional paid-in capital
2,572,587
2,557,642
Accumulated other comprehensive loss
(440,113
)
(414,884
)
Retained earnings
473,286
361,746
Total equity
2,606,639
2,505,381
Total liabilities and equity
$
7,105,145
$
6,879,142
Acadia Healthcare Company, Inc. Condensed
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30,
2020
2019
(In thousands) Operating activities: Net income
$
113,342
$
120,435
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
126,037
122,277
Amortization of debt issuance costs
9,696
8,926
Equity-based compensation expense
16,258
14,322
Deferred income taxes
41,803
5,150
Debt extinguishment costs
3,271
-
Loss on impairment
20,239
-
Other
810
4,444
Change in operating assets and liabilities: Accounts receivable,
net
5,392
(32,956
)
Other current assets
(3,809
)
(3,912
)
Other assets
316
530
Accounts payable and other accrued liabilities
90,752
(35,610
)
Accrued salaries and benefits
16,477
4,813
Other liabilities
31,656
5,110
Net cash provided by operating activities
472,240
213,529
Investing activities: Cash paid for acquisitions, net
of cash acquired
-
(44,900
)
Cash paid for capital expenditures
(195,834
)
(202,722
)
Cash paid for real estate acquisitions
(5,595
)
(6,976
)
Proceeds from sale of property and equipment
2,509
13,470
Settlement of foreign currency derivatives
-
105,008
Other
(10,734
)
(1,072
)
Net cash used in investing activities
(209,654
)
(137,192
)
Financing activities: Borrowings on long-term debt
450,000
-
Borrowings on revolving credit facility
100,000
76,573
Principal payments on revolving credit facility
(100,000
)
(76,573
)
Principal payments on long-term debt
(31,863
)
(24,738
)
Repayment of long-term debt
(450,000
)
-
Payment of debt issuance costs
(11,220
)
-
Common stock withheld for minimum statutory taxes, net
(1,311
)
(1,498
)
Distributions to noncontrolling interests
(653
)
-
Other
(3,517
)
(5,923
)
Net cash used in financing activities
(48,564
)
(32,159
)
Effect of exchange rate changes on cash
488
(1,788
)
Net increase in cash and cash equivalents
214,510
42,390
Cash and cash equivalents at beginning of the period
124,192
50,510
Cash and cash equivalents at end of the period
$
338,702
$
92,900
Effect of acquisitions: Assets acquired, excluding
cash
$
20,300
$
48,594
Liabilities assumed
(53
)
(3,694
)
Redeemable noncontrolling interest resulting from an acquisition
(20,247
)
-
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,
2020
2019
% Change
2020
2019
% Change Same Facility Results (a,c) Revenue
$
808,708
$
763,619
5.9
%
$
2,286,165
$
2,243,145
1.9
%
Patient Days
1,187,848
1,160,582
2.3
%
3,455,645
3,442,064
0.4
%
Admissions
47,256
46,930
0.7
%
134,872
136,828
-1.4
%
Average Length of Stay (b)
25.1
24.7
1.6
%
25.6
25.2
1.9
%
Revenue per Patient Day
$
681
$
658
3.5
%
$
662
$
652
1.5
%
EBITDA margin
22.9
%
22.3
%
60 bps
22.4
%
22.8
%
-40 bps
U.S. Same Facility Results (a) Revenue
$
546,357
$
508,150
7.5
%
$
1,538,309
$
1,497,584
2.7
%
Patient Days
685,472
657,556
4.2
%
1,980,304
1,938,588
2.2
%
Admissions
44,724
44,522
0.5
%
128,352
129,747
-1.1
%
Average Length of Stay (b)
15.3
14.8
3.8
%
15.4
14.9
3.3
%
Revenue per Patient Day
$
797
$
773
3.1
%
$
777
$
773
0.6
%
EBITDA margin
25.7
%
25.2
%
50 bps
25.8
%
25.7
%
10 bps
U.K. Same Facility Results (a,c) Revenue
$
262,351
$
255,469
2.7
%
$
747,856
$
745,561
0.3
%
Patient Days
502,376
503,026
-0.1
%
1,475,341
1,503,476
-1.9
%
Admissions
2,532
2,408
5.1
%
6,520
7,081
-7.9
%
Average Length of Stay (b)
198.4
208.9
-5.0
%
226.3
212.3
6.6
%
Revenue per Patient Day
$
522
$
508
2.8
%
$
507
$
496
2.2
%
EBITDA margin
17.2
%
16.7
%
50 bps
15.5
%
16.9
%
-140 bps
U.S. Facility Results Revenue
$
547,961
$
509,383
7.6
%
$
1,548,653
$
1,507,156
2.8
%
Patient Days
689,402
663,969
3.8
%
1,995,922
1,960,749
1.8
%
Admissions
44,877
44,693
0.4
%
129,638
130,098
-0.4
%
Average Length of Stay (b)
15.4
14.9
3.4
%
15.4
15.1
2.2
%
Revenue per Patient Day
$
795
$
767
3.6
%
$
776
$
769
0.9
%
EBITDA margin
25.3
%
24.9
%
40 bps
25.4
%
25.3
%
10 bps
U.K. Facility Results (c) Revenue
$
285,343
$
280,579
1.7
%
$
817,772
$
818,465
-0.1
%
Patient Days
649,522
673,473
-3.6
%
1,939,840
2,009,006
-3.4
%
Admissions
2,828
2,749
2.9
%
7,494
8,160
-8.2
%
Average Length of Stay (b)
229.7
245.0
-6.3
%
258.9
246.2
5.1
%
Revenue per Patient Day
$
439
$
417
5.4
%
$
422
$
407
3.5
%
EBITDA margin
15.2
%
15.2
%
0 bps
13.6
%
15.4
%
-180 bps
Total Facility Results (c) Revenue
$
833,304
$
789,962
5.5
%
$
2,366,425
$
2,325,621
1.8
%
Patient Days
1,338,924
1,337,442
0.1
%
3,935,762
3,969,755
-0.9
%
Admissions
47,705
47,442
0.6
%
137,132
138,258
-0.8
%
Average Length of Stay (b)
28.1
28.2
-0.4
%
28.7
28.7
0.0
%
Revenue per Patient Day
$
622
$
591
5.4
%
$
601
$
586
2.6
%
EBITDA margin
21.8
%
21.5
%
30 bps
21.3
%
21.8
%
-50 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, 2019 is adjusted to reflect the
foreign currency exchange rate for the comparable periods of 2020
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, 2019 is 1.29 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,
2020
2019
2020
2019
(in thousands) Net income attributable to Acadia
Healthcare Company, Inc.
$
36,998
$
42,566
$
111,540
$
120,177
Net income attributable to noncontrolling interests
563
157
1,802
258
Provision for income taxes
7,166
6,837
21,171
25,801
Interest expense, net
37,553
46,644
119,064
143,384
Depreciation and amortization
42,912
40,620
126,037
122,277
EBITDA
125,192
136,824
379,614
411,897
Adjustments: Equity-based compensation expense (a)
5,471
4,039
16,258
14,322
Transaction-related expenses (b)
8,503
5,775
17,293
15,308
Debt extinguishment costs (c)
-
-
3,271
-
Loss on impairment (d)
20,239
-
20,239
-
Adjusted EBITDA
$
159,405
$
146,638
$
436,675
$
441,527
Adjusted EBITDA margin
19.1
%
18.9
%
18.5
%
19.0
%
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 September 30, Nine Months Ended
September 30,
2020
2019
2020
2019
(in thousands, except per share amounts) Net income
attributable to Acadia Healthcare Company, Inc.
$
36,998
$
42,566
$
111,540
$
120,177
Adjustments to income: Transaction-related expenses (b)
8,503
5,775
17,293
15,308
Debt extinguishment costs (c)
-
-
3,271
-
Loss on impairment (d)
20,239
-
20,239
-
Income tax effect of adjustments to income (e)
(5,396
)
(2,371
)
(7,201
)
(1,384
)
Adjusted income attributable to Acadia Healthcare Company, Inc.
$
60,344
$
45,970
$
145,142
$
134,101
Weighted-average shares outstanding - diluted
88,856
87,859
88,449
87,805
Adjusted income attributable to Acadia Healthcare Company,
Inc. per diluted share
$
0.68
$
0.52
$
1.64
$
1.53
See footnotes on page 10.
Acadia Healthcare
Company, Inc. Footnotes We have included certain
financial measures in this press release, including EBITDA,
Adjusted EBITDA, Adjusted EBITDA margin 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,
debt extinguishment costs and loss on impairment. We define
Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. We
define Adjusted income as net income adjusted for
transaction-related expenses, debt extinguishment costs, loss on
impairment and income tax effect of adjustments to income.
EBITDA, Adjusted EBITDA, Adjusted EBITDA margin 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,
Adjusted EBITDA margin 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, Adjusted EBITDA margin and
Adjusted income may not be comparable to similarly titled measures
of other companies. We have included information concerning EBITDA,
Adjusted EBITDA, Adjusted EBITDA margin 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, Adjusted EBITDA margin and Adjusted income
when reporting their results. Our presentation of EBITDA, Adjusted
EBITDA, Adjusted EBITDA margin and Adjusted income should not be
construed as an inference that our future results will be
unaffected by unusual or nonrecurring items. (a) Represents
the equity-based compensation expense of Acadia. (b)
Represents transaction-related expenses incurred by Acadia
primarily related to termination, restructuring, U.K. sale,
strategic review, management transition and other similar costs.
(c) Represents debt extinguishment costs recorded in
connection with the repayment of the 6.125% and 5.125% Senior Notes
in June 2020. (d) For the three and nine months ended
September 30, 2020, represents a non-cash lease impairment charge
of $16.4 million and a non-cash long-lived asset impairment charge
of $3.8 million related to the decision to close certain U.K.
elderly care facilities. (e) Represents the income tax
effect of adjustments to income based on tax rates of 17.2% and
16.7% for the three months ended September 30, 2020 and 2019,
respectively, and 16.4% and 16.9% for the nine months ended
September 30, 2020 and 2019, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201029006134/en/
Gretchen Hommrich Director, Investor Relations (615)
861-6000
Acadia Healthcare (NASDAQ:ACHC)
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