Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced
financial results for the fourth quarter and year ended December
31, 2011. For the quarter, revenue was $77.0 million. Adjusted net
income from continuing operations for the quarter was $3.0 million,
or $0.13 per diluted share, which excludes pre-tax costs of $28.4
million, primarily related to the acquisition of PHC, Inc.
Including these pre-tax costs, there was a loss from continuing
operations for the quarter of $14.7 million, or $0.66 per diluted
share. A reconciliation of all GAAP and non-GAAP financial results
in this release is on pages 7 and 8.
For the year, revenue was $221.4 million. Adjusted net income
from continuing operations for 2011 was $11.7 million, or $0.52 per
diluted share, which excludes pre-tax costs of $57.7 million,
primarily related to acquisitions. Including these pre-tax costs,
there was a loss from continuing operations of $32.9 million, or
$1.75 per diluted share.
Joey Jacobs, Chairman and Chief Executive Officer of Acadia,
commented, “We are very pleased with Acadia’s operating and
financial performance for the fourth quarter and all of 2011.
Primarily due to the acquisitions of Youth & Family Centered
Services, Inc. in April and PHC in November, our fourth quarter
revenue was nearly five times greater than our revenue in the
fourth quarter of 2010. This growth reflected the increase in our
inpatient behavioral health care operations to 29 facilities and
approximately 2,000 beds at the end of 2011 from six facilities and
approximately 400 beds at the end of 2010. With the addition of the
three facilities acquired on March 1, Acadia now operates 32
behavioral facilities with more than 2,100 beds.
“We are well-positioned to produce significant profitable growth
for 2012. In addition to favorable industry growth dynamics, we
expect to drive organic revenue growth and margin expansion within
our existing facilities through the addition of beds, the
broadening of services, enhanced marketing programs and efficiency
improvement initiatives. As demonstrated through the completion
last week of our acquisition of three facilities with 166 acute
inpatient psychiatric beds, we also expect to take advantage of
continuing opportunities to pursue selective acquisitions in the
highly fragmented market for behavioral health care services. With
maintenance capital expenditures for 2012 expected at approximately
2% of revenues, we expect that strong free cash flow from
operations combined with availability of approximately $70 million
under our recently expanded revolving line of credit will support
our acquisition strategy.”
Acadia today established its guidance for 2012 earnings per
diluted share in a range of $0.65 to $0.67. In addition, Acadia’s
guidance for earnings per diluted share for the first quarter of
2012 is $0.10. The Company’s guidance does not include the impact
of any future acquisitions.
Acadia will hold a conference call to discuss its fourth quarter
and full year financial results at 9:00 a.m. Eastern Time on
Thursday, March 8, 2012. A live webcast of the conference call will
be available at www.acadiahealthcare.com in the “Investors” section
of the website or at www.earnings.com. The webcast of the
conference call will be available through March 22, 2012.
Acadia also announced that the previously announced time for its
presentation and live on-line web cast at the Barclays Capital 2012
Global Health Care Conference on Wednesday, March 14, 2012, has
been changed to start one hour earlier at 3:45 p.m. Eastern
Time/2:45 p.m. Central Time.
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) Acadia’s ability to complete acquisitions and successfully
integrate the operations of the acquired facilities; (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 the government and
third-party payors; (iv) 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 (v)
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 health care
services. Acadia operates a network of 32 behavioral health
facilities with over 2,100 licensed beds in 19 states. Acadia
provides psychiatric and chemical dependency services to its
patients in a variety of settings, including inpatient psychiatric
hospitals, residential treatment centers, outpatient clinics and
therapeutic school-based programs.
Acadia Healthcare Company,
Inc. Consolidated Statements of Operations
(Unaudited)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2011 2010 2011 2010 (in thousands,
except per share amounts) Revenue before provision for
doubtful accounts $ 78,580 $ 15,998 $ 224,599 $ 64,342 Provision
for doubtful accounts (1,562 ) (436 ) (3,226 )
(2,239 ) Revenue 77,018 15,562 221,373 62,103
Salaries, wages and benefits (including
equity-based compensation expense of $(2,523) and $17,320 for the
three months and year ended December 31, 2011, respectively)
45,811 9,681 156,561 38,661 Professional fees 3,934 523
9,044 1,675 Supplies 3,712 848 11,377 3,699 Rents and leases 2,077
327 5,802 1,288 Other operating expenses 7,518 1,889 20,472 6,870
Depreciation and amortization 1,174 249 4,288 976 Interest expense,
net 5,048 189 9,191 738 Sponsor management fees 212 15 1,347 120
Transaction-related expenses 30,952 815
41,547 918 Total expenses
100,438 14,536 259,629
54,945 Income (loss) from continuing operations before
income taxes (23,420 ) 1,026 (38,256 ) 7,158 Provision for income
taxes (8,765 ) 18 (5,383 ) 477
Income (loss) from continuing operations (14,655 ) 1,008
(32,873 ) 6,681 (Loss) income from discontinued operations, net of
income taxes (1,254 ) (484 ) (2,019 )
(471 ) Net income (loss) $ (15,909 ) $ 524 $ (34,892 ) $
6,210 Basic earnings per share: Income (loss) from
continuing operations $ (0.66 ) $ 0.06 $ (1.75 ) $ 0.38 (Loss)
income from discontinued operations $ (0.06 ) $ (0.03 ) $ (0.11 ) $
(0.03 ) Net income (loss) $ (0.72 ) $ 0.03 $ (1.86 ) $ 0.35
Diluted earnings per share: Income (loss) from
continuing operations $ (0.66 ) $ 0.06 $ (1.75 ) $ 0.38 (Loss)
income from discontinued operations $ (0.06 ) $ (0.03 ) $ (0.11 ) $
(0.03 ) Net income (loss) $ (0.72 ) $ 0.03 $ (1.86 ) $ 0.35
Shares outstanding: Basic 22,128 17,633 18,757 17,633
Diluted 22,128 17,633 18,757 17,633
Acadia Healthcare Company, Inc. Consolidated
Balance Sheets (Unaudited) December
31, 2011 2010
(In thousands, except share
and per share amounts)
ASSETS Current assets: Cash and cash equivalents $
61,118 $ 8,614
Accounts receivable, net of allowance for
doubtful accounts of $2,424 and $1,144, respectively
35,127 5,469 Deferred tax asset 6,239 573 Other current assets
10,121 2,268 Total current assets
112,605 16,924 Property and equipment: Land 14,115 3,254 Building
and improvements 53,514 15,606 Equipment 8,222 2,626 Construction
in progress 12,945 589 Less accumulated depreciation (5,824
) (3,323 ) Property and equipment, net 82,972 18,752
Goodwill 186,815 9,157 Intangible assets, net 8,232 544 Deferred
tax asset - long-term 6,006 - Other assets 16,366
18 Total assets $ 412,996 $ 45,395
LIABILITIES AND EQUITY Current liabilities:
Current portion of long-term debt $ 6,750 $ 9,984 Accounts payable
8,642 2,787 Accrued salaries and benefits 16,195 3,272 Other
accrued liabilities 9,081 2,016 Total
current liabilities 40,668 18,059 Long-term debt 270,709 - Deferred
tax liability - 384 Other liabilities 5,254
1,845 Total liabilities 316,631 20,288 Equity: Member’s
equity - 25,107 Common stock, $0.01 par value; 100,000,000 shares
authorized; 32,115,929 issued and outstanding as of December 31,
2011 321 - Additional paid-in capital 140,624 - Accumulated deficit
(44,580 ) - Total equity 96,365
25,107 Total liabilities and equity $ 412,996
$ 45,395
Acadia
Healthcare Company, Inc. Consolidated Statements of Cash
Flows (Unaudited) Year Ended
December 31, 2011 2010 2009 (In
thousands) Operating activities: Net (loss)
income $ (34,892 ) $ 6,210 $ 2,877
Adjustments to reconcile net (loss)
income to net cash provided by continuing operating
activities:
Depreciation and amortization 4,288 976 997 Provision for bad debts
3,226 2,239 2,424 Amortization of debt issuance costs 1,271 - -
Equity-based compensation expense 17,320 - - Deferred income tax
expense (6,442 ) (145 ) - Other (168 ) - - Loss (income) from
discontinued operations, net of taxes 2,019 471 (119 ) Change in
operating assets and liabilities, net of effect of acquisitions:
Accounts receivable (5,051 ) (2,174 ) (2,994 ) Other current assets
(1,635 ) 35 (1,215 ) Other assets (969 ) - - Accounts payable and
other accrued liabilities 3,346 541 2,066 Accrued salaries and
benefits (1,654 ) 187 1,369 Other liabilities 734
(250 ) 644 Net cash (used in) provided by
continuing operating activities (18,607 ) 8,090 6,049 Net cash
(used in) provided by discontinued operating activities
(2,059 ) 105 119 Net cash (used in)
provided by operating activities (20,666 ) 8,195 6,168
Investing activities:
Cash paid for acquisitions, net of cash acquired (206,379 ) -
(3,142 ) Cash paid for capital expenditures (9,558 ) (1,495 ) (334
) Cash paid for real estate acquisitions (8,706 ) - - Other
(689 ) - - Net cash used in continuing
investing activities (225,332 ) (1,495 ) (3,476 ) Net cash (used
in) provided by discontinued investing activities (238 )
(3 ) 65 Net cash used in investing activities
(225,570 ) (1,498 ) (3,411 )
Financing activities:
Borrowings on long-term debt 282,485 - - Principal payments on
long-term debt (5,063 ) (275 ) (813 ) Repayment of long-term debt
(9,984 ) - - Payment of debt issuance costs (12,111 ) - - Proceeds
from stock option exercises 38 - - Proceeds from issuance of common
stock 68,059 - - Payment of equity issuance costs (897 ) - - Cash
distribution paid to equity holders (74,441 ) - - Contribution from
Holdings 51,029 - 2,500 Distributions to equity holders (375
) (2,297 ) - Net cash provided by (used in)
financing activities 298,740 (2,572 )
1,687 Net increase in cash and cash equivalents
52,504 4,125 4,444 Cash and cash equivalents at beginning of the
period 8,614 4,489 45
Cash and cash equivalents at end of the period $ 61,118 $
8,614 $ 4,489
Supplemental Cash Flow
Information: Cash paid for interest $ 5,053 $ 587
$ 534 Cash paid for income taxes $ 2,564 $ 700
$ 30
Significant Non-Cash Transactions:
Issuance of common stock in connection with acquisition $ 44,025
$ - $ - Issuance of replacement share-based
awards in connection with acquisition $ 1,027 $ - $ -
Effect of acquisitions: Assets acquired,
excluding cash $ 278,895 $ - $ 3,142 Liabilities assumed (27,464 )
- - Issuance of common stock in connection with acquisition (44,025
) - - Issuance of replacement share-based awards in connection with
acquisition (1,027 ) - - Cash
paid for acquisitions, net of cash acquired $ 206,379 $ -
$ 3,142
Acadia
Healthcare Company, Inc. Operating Statistics
(Unaudited) (Revenue in thousands)
Three months ended December 31, 2011
2010 % Change Same Facility Results Revenue 17,801
15,562 14.4 % Admissions 1,770 1,713 3.3 % Patient
Days 27,893 22,865 22.0 % Average Length of Stay (a) 15.8
13.3 18.1 % Total Facility Results Revenue 77,018 15,562
394.9 % Admissions 4,545 1,713 165.3 % Patient Days
136,309 22,330 510.4 % Average Length of Stay (a) 30.0 13.0
130.1 %
Twelve months ended December 31,
2011 2010 % Change Same Facility Results
Revenue 69,723 62,094 12.3 % Admissions 7,342 7,504 -2.2 %
Patient Days 107,993 95,329 13.3 % Average Length of
Stay (a) 14.7 12.7 15.8 % Total Facility Results Revenue
221,373 62,094 256.5 % Admissions 12,221 7,504 62.9 %
Patient Days 396,035 95,329 315.4 % Average Length of Stay
(a) 32.4 12.7 155.1 %
(a) Average length of stay is defined as
patient days divided by admissions.
Acadia Healthcare Company,
Inc. Reconciliation of Net Loss to Adjusted EBITDA
(Unaudited)
Three Months Ended
December 31, 2011
Year Ended
December 31, 2011
(in thousands) Net loss $ (15,909 ) $ (34,892 ) Loss
from discontinued operations 1,254 2,019 Benefit from income taxes
(8,765 ) (5,383 ) Interest expense, net 5,048 9,191 Depreciation
and amortization 1,174 4,288 EBITDA
(17,198 ) (24,777 ) Adjustments: Equity-based compensation
expense (a) (2,523 ) 17,320 Transaction-related expenses (b) 30,952
41,547 Sponsor management fees (c) 212 1,347 Integration costs (d)
- 947 Pro forma effect of YFCS acquisition (e) - 6,069 Pro forma
effect of PHC acquisition (f) 672 6,658 Rent elimination (g) 61 607
Cost savings/synergies (h) 850 3,400 Rate increase on a PHC
contract (i) - 333 Anticipated operating income at Seven Hills (j)
- 225 Adjusted EBITDA $ 13,026 $
53,676
See footnotes below.
Acadia Healthcare Company,
Inc. Reconciliation of Adjusted Net Income from Continuing
Operations to Loss from Continuing Operations and Adjusted
Weighted-Average Shares Outstanding-Diluted to
Weighted-Average Shares Outstanding-Diluted
(Unaudited)
Three Months Ended
December 31, 2011
Year Ended
December 31, 2011
(in thousands, except
per share amounts)
Loss from continuing operations $ (14,655 ) $ (32,873 )
Benefit from income taxes (8,765 ) (5,383 ) Loss from
continuing operations before income taxes (23,420 ) (38,256 )
Adjustments to net loss from continuing operations:
Equity-based compensation expense (a) (2,523 ) 17,320
Transaction-related expenses (b) 30,952 41,547 Sponsor management
fees (c) 212 1,347 Integration costs (d) - 947 Pro forma effect of
YFCS acquisition (e) - 3,524 Pro forma effect of PHC acquisition
(f) 347 3,697 Rent elimination (g) 61 607 Cost savings/synergies
(h) 850 3,400 Rate increase on a PHC contract (i) - 333 Anticipated
operating income at Seven Hills (j) - 225 Pro forma effect of debt
issuances (k) (1,469 ) (15,260 ) Tax effect of adjustments to net
loss from continuing operations (l) (2,004 ) (7,772 )
Adjusted net income from continuing operations $ 3,006 $ 11,659
Weighted-average shares outstanding - diluted 22,128 18,757
Adjustments to weighted-average shares outstanding – diluted: Pro
forma effect of PHC acquisition (m) 1,648 4,084 Effect of equity
offering (n) (1,250 ) (315 ) Dilutive effect of securities (o)
51 13 Adjusted weighted-average shares
outstanding - diluted 22,577 22,539
Adjusted earnings per diluted share $ 0.13 $ 0.52
See footnotes below.
Footnotes
We have included certain financial measures in this press
release, including EBITDA, Adjusted EBITDA and Adjusted net income
from continuing operations, which are “non-GAAP financial measures”
as defined under the rules and regulations promulgated by the SEC.
We define EBITDA as net income (loss) adjusted for loss from
discontinued operations, net interest expense, income tax provision
(benefit) and depreciation and amortization. We define Adjusted
EBITDA as EBITDA adjusted for equity-based compensation expense,
transaction-related expenses, management fees, and integration and
closing costs. For the three-month and twelve-month periods ended
December 31, 2011, Adjusted EBITDA also includes adjustments
relating to the pro forma effect of acquisitions completed during
2011, a rate increase on one of PHC’s contracts, anticipated
operating income at the Seven Hills facility, the elimination of
rent expense associated with Detroit Behavioral Institute, Inc.,
and cost savings/synergies in connection with the PHC acquisition.
We define adjusted net income from continuing operations as net
income (loss) from continuing operations before income taxes
adjusted for equity-based compensation expense, transaction-related
expenses, management fees, integration and closing costs, the pro
forma effect of acquisitions completed during 2011, a rate increase
on one of PHC’s contracts, anticipated operating income at the
Seven Hills facility, the elimination of rent expense associated
with Detroit Behavioral Institute, Inc., cost savings/synergies in
connection with the PHC acquisition, the pro forma effect on
interest expense of debt incurred during 2011 and the aggregate tax
effect of these adjustments. See above for reconciliations of net
income (loss) to Adjusted EBITDA and loss from continuing
operations to adjusted net income from continuing operations. We
may not achieve all of the expected benefits from synergies, cost
savings and recent improvements to our revenue base.
EBITDA, Adjusted EBITDA and Adjusted net income from continuing
operations 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 net income from continuing operations
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 net income from continuing operations may not be
comparable to similarly titled measures of other companies and are
not measures of performance calculated in accordance with GAAP. We
have included information concerning EBITDA, Adjusted EBITDA and
Adjusted net income from continuing operations 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 net income from continuing operations when reporting
their results. Our presentation of EBITDA, Adjusted EBITDA and
Adjusted net income from continuing operations 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
primarily related to the fair value of equity incentive units held
by management. Equity-based compensation expense was reduced during
the fourth quarter of 2011 based on the fair value of the equity
and cash distributed to the unitholders in exchange for such equity
incentive units on November 1, 2011.
(b) Represents transaction-related expenses incurred by Acadia
related to the acquisitions of Youth and Family Centered Services,
Inc. (“YFCS”) in April 2011 and PHC, Inc. (“PHC”) in November
2011.
(c) Represents the management fees paid by Acadia to its equity
sponsor prior to the termination of the professional services
agreement between Acadia and its equity sponsor on November 1,
2011.
(d) Represents costs incurred by Acadia related to the closing
of the YFCS corporate office, including the costs of temporarily
retaining certain employees for a transitional period following the
acquisition date.
(e) Represents the EBITDA and income from continuing operations
of YFCS for the period prior to Acadia’s acquisition of YFCS on
April 1, 2011.
(f) Represents the EBITDA and income from continuing operations
of PHC for the period prior to Acadia’s acquisition of PHC on
November 1, 2011.
(g) Represents rent payments relating to Detroit Behavioral
Institute (d/b/a Capstone Academy) for periods prior to November
2011 during which rent expense was incurred. The property was
purchased by the Company and rent expense is no longer incurred
effective November 1, 2011.
(h) Acadia expects to realize annual cost savings of
approximately $3.4 million beginning in fiscal year 2012 as a
result of the PHC acquisition and the elimination of certain
redundant positions, professional services and other expenses, as
well as the efficiencies of integrating corporate functions within
a larger company framework.
(i) Represents the increased revenue that would have resulted
from an increased rate on one of PHC’s contracts that became
effective in March 2011, assuming such increased rate had been
effective throughout the period presented. The increased rate was
estimated by multiplying the historical plan enrollment by the
newly-contracted rate, which resulted in an approximate $167,000
increase in EBITDA for each month prior to March 2011 in which the
rate was not effective.
(j) The Seven Hills facility was opened in the fourth quarter of
2008 and became certified by the Center for Medicare and Medicaid
Services in July 2010. The adjustment represents the estimated
additional operating income that would have been generated by this
facility if it had operated at expected levels for the respective
periods.
(k) Represents incremental interest expense relating to the
issuance of $150 million of 12.875% Senior Notes due 2018 on
November 1, 2011 and the senior secured term loans and revolving
line of credit entered into on April 1, 2011.
(l) Represents the aggregate tax effect of the adjustments to
the net loss from continuing operations described above based on a
tax rate of 40%.
(m) Represents the pro forma effect of the 4,891,667 shares of
common stock issued to PHC stockholders on November 1, 2011 to
reflect these shares as if they were outstanding for the entirety
of the respective periods.
(n) Removes the effect of the 9,583,332 shares of common stock
issued on December 20, 2011 because the proceeds from such issuance
were not used until the completion of the acquisition of three
inpatient behavioral health care facilities from Haven Behavioral
Healthcare Holdings, LLC on March 1, 2012.
(o) Represents the dilutive effect of stock options, warrants
and restricted stock, which were anti-dilutive because of the loss
from continuing operations for the respective periods but are
dilutive upon consideration of the adjustments described above.
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