Acadia Healthcare Signs Definitive Agreement to Purchase Partnerships in Care for Approximately $660 million
June 03 2014 - 8:06AM
Business Wire
2nd Largest UK-Based
Independent Behavioral Health Provider Operates 23 Inpatient
Facilities with over 1,200 Beds
Transaction Expected to Be Accretive to 2014
Earnings by Approximately $0.17 to $0.20 per Diluted Share and
Provide Opportunities for Organic Growth and Acquisitions in the
UK
Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced
the signing of a definitive agreement to acquire Partnerships in
Care (PiC) for approximately $660 million in cash. PiC is the
second largest independent provider of inpatient behavioral
healthcare services in the United Kingdom, operating 23 inpatient
psychiatric facilities with over 1,200 beds. For 2013, PiC produced
revenue of approximately $285 million and adjusted EBITDA of
approximately $75 million. Acadia has received a commitment from
Bank of America Merrill Lynch regarding financing of the
transaction. It is expected that Acadia will seek a combination of
equity and long-term debt financing in lieu of a portion or all of
the drawings under the bridge loans available in the committed
financing, subject to market and other conditions. Acadia expects
to complete the transaction on July 1, 2014.
Joey Jacobs, Chairman and Chief Executive Officer of Acadia,
commented, “We believe our combination with PiC will be a great
transaction for both Acadia and PiC. As discussed in more detail
below, we believe the inpatient behavioral care market in the UK
represents a very meaningful and accretive growth opportunity. As a
high quality provider and well-established market leader, PiC will
provide Acadia with an outstanding market entrée. We expect to
support PiC’s strong management team in taking advantage of
additional growth opportunities in the UK through both our access
to capital and the expertise evident in the successful long-term
growth record of Acadia’s management team.”
Joy Chamberlain, Chief Executive Officer of PiC, added, “We are
very pleased to be joining with Acadia. We are confident that this
transaction provides PiC the exact opportunity we need to expand
and diversify our portfolio further to offer patients genuine
choice across the spectrum of behavioral healthcare. In addition we
have seen that Acadia shares our culture of compassionate care and
believes, as we do, that it is the foundation of our past and
future success.”
UK Behavioral Health Market Opportunity
- The independent behavioral health
market represents roughly 8% of the total behavioral health market,
or approximately $2 billion, and has grown at a 9.2% compound
annual rate since 2004.
- This growth has been supported by the
long-term decline in National Health Service (NHS) beds available
for inpatient behavioral health, due both to increasing budget
constraints and greater focus on quality. NHS beds for inpatient
behavioral health have declined from 82% of total beds in 2004 to
69% in 2012.
- While the largest four independent
inpatient behavioral health providers account for 58% of the
independent behavioral health market share, including PiC with a
16% share, the remaining independent behavioral health market is
highly fragmented.
Mr. Jacob’s concluded, “With a fragmented UK independent
behavioral health market supported by an expanding population,
higher rates of hospitalization and declining NHS bed availability,
we believe this transaction with a leading, well-performing company
like PiC positions the combined company to produce accretive
long-term growth. As with our U.S. facilities, we see meaningful
opportunities to produce organic growth in PiC’s existing
facilities through the addition of new beds and service line
expansions to meet areas of unmet need. We also expect to pursue
additional select acquisitions in the UK and to benefit from a
lower consolidated income tax rate as a result of this transaction.
Assuming the transaction is completed as planned on July 1st, we
expect the combined benefits of increased adjusted EBITDA and a
reduced income tax rate will produce earnings accretion of
approximately $0.17 to $0.20 per diluted share for the second half
of 2014 and $0.40 to $0.46 per diluted share for 2015. These
accretion expectations do not include the impact of any future
acquisitions beyond the purchase of PiC or any transaction-related
expenses.”
Investor Presentation
On June 3, 2014, representatives of the Company will be
participating in the Jefferies 2014 Global Healthcare Conference.
In connection with the conference, there will be an on-line web
cast of the Company’s presentation available at the Company’s web
site starting at 10:30 a.m. Eastern Time/9:30 a.m. Central Time on
Tuesday, June 3, 2014.
The live web cast of the Company’s presentation, and slides to
be discussed during the presentation, will be available on the
Company’s web site, www.acadiahealthcare.com, by clicking on the
“Investor Relations” link. Please go to the site at least 15
minutes prior to the web cast to download and install any necessary
software. A replay of the presentation will also be available on
the Company’s web site for two weeks.
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, including the
acquisition of PiC, 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.
Disclaimer
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy any security and shall not
constitute an offer, solicitation or sale in any jurisdiction in
which such offer, solicitation or sale would be unlawful.
About Acadia
Acadia is a provider of inpatient behavioral healthcare
services. Acadia operates a network of 52 behavioral healthcare
facilities with more than 4,300 licensed beds in 24 states and
Puerto Rico. 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.Brent Turner,
615-861-6000President
Acadia Healthcare (NASDAQ:ACHC)
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