ACHC Acadia Healthcare Company Inc

Revenue Increases to $765.7 Million on 5.2% Growth in Same Facility Revenue

Updates 2018 Financial Guidance

Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced financial results for the second quarter and six months ended June 30, 2018. Revenue was $765.7 million for the quarter, up 7.0% from $715.9 million for the second quarter of 2017. Net income attributable to Acadia stockholders for the second quarter of 2018 was $58.8 million, or $0.67 per diluted share, compared with $49.6 million, or $0.57 per diluted share, for the second quarter of 2017. Adjusted income attributable to Acadia stockholders per diluted share (“adjusted EPS”) was $0.70 for the second quarter of 2018, a 6.1% increase from $0.66 for the second quarter of 2017, which excludes transaction-related expenses of $2.9 million and $9.1 million for the second quarter of 2018 and 2017, respectively, as well as debt extinguishment costs of $0.8 million for the second quarter last year. A reconciliation of all non-GAAP financial results in this release appears beginning on page 7.

Joey Jacobs, Chairman and Chief Executive Officer of Acadia, remarked, “We are pleased to report that growth in Acadia’s revenue and adjusted EPS met our expectations for the second quarter. Our revenue growth was primarily driven by the addition of nearly 900 beds during the 12 months ended June 30, 2018. We added 155 of these beds during the second quarter, including 67 beds to existing facilities in the U.S. and U.K. and an 88-bed de novo facility through our joint-venture with Erlanger Health System. For the full year 2018, we expect to add more than 800 beds to existing and new facilities.”

For the second quarter of 2018, Acadia’s total same facility revenue increased 5.2% compared with the second quarter of 2017, including a 1.7% increase in patient days and a 3.4% increase in revenue per patient day. Total same facility EBITDA margin declined 60 basis points to 25.7%. U.S. same facility revenue increased 5.0%, including a 1.9% increase in patient days and a 3.1% increase in revenue per patient day. U.S. same facility EBITDA margin declined 30 basis points to 28.1%. U.K. same facility revenue grew 5.6% for the second quarter of 2018 from the second quarter last year, including a 1.6% increase in patient days and a 3.9% increase in revenue per patient day. U.K. same facility EBITDA margin declined 110 basis points to 21.3%.

Acadia today updated its financial guidance for 2018 to reflect a lower exchange rate in the second half of the year as well as higher interest rates. The Company now assumes an exchange rate of $1.30 per British Pound Sterling and interest expense to be approximately $95 million for the second half of the year. The updated guidance is as follows:

• Revenue for 2018 in a range of $3.02 billion to $3.06 billion;
• Adjusted EBITDA for 2018 in a range of $632 million to $639 million; and
• Adjusted earnings per diluted share for 2018 in a range of $2.52 to $2.56.

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 (loss) 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 first quarter financial results at 9:00 a.m. Eastern Time on Tuesday, July 31, 2018. A live webcast of the conference call will be available at www.acadiahealthare.com in the “Investors” section of the website. The webcast of the conference call will be available through August 14, 2018.

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) 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, 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 joint venture, de novo and other 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 June 30, 2018, Acadia operated a network of 585 behavioral healthcare facilities with approximately 17,900 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 Operations (Unaudited)   Three Months Ended June 30, Six Months Ended June 30,   2018     2017     2018     2017   (In thousands, except per share amounts)   Revenue before provision for doubtful accounts $ 765,738 $ 725,643 $ 1,507,979 $ 1,414,984 Provision for doubtful accounts   -     (9,747 )   -     (19,894 ) Revenue 765,738 715,896 1,507,979 1,395,090  

Salaries, wages and benefits (including equity-based compensation expense of $7,129, $7,436, $14,048 and $14,832, respectively)

416,741 383,595 828,269 760,016 Professional fees 53,461 46,321 107,479 89,730 Supplies 30,133 28,639 59,497 56,348 Rents and leases 20,236 19,435 40,524 38,406 Other operating expenses 87,282 83,122 175,513 166,833 Depreciation and amortization 39,928 35,201 79,701 68,814 Interest expense, net 45,812 43,505 91,055 86,262 Debt extinguishment costs - 810 940 810 Transaction-related expenses   2,887     9,052     7,655     13,171   Total expenses   696,480     649,680     1,390,633     1,280,390   Income before income taxes 69,258 66,216 117,346 114,700 Provision for income taxes   10,368     16,578     7,582     30,289   Net income 58,890 49,638 109,764 84,411 Net (income) loss attributable to noncontrolling interests   (54 )   (8 )   (109 )   177   Net income attributable to Acadia Healthcare Company, Inc. $ 58,836   $ 49,630   $ 109,655   $ 84,588    

Earnings per share attributable to Acadia Healthcare Company, Inc. stockholders:

Basic $ 0.67   $ 0.57   $ 1.26   $ 0.97   Diluted $ 0.67   $ 0.57   $ 1.26   $ 0.97     Weighted-average shares outstanding: Basic 87,303 86,954 87,205 86,859 Diluted 87,467 87,080 87,351 86,997         Acadia Healthcare Company, Inc. Condensed Consolidated Balance Sheets (Unaudited)   June 30, December 31,   2018     2017   (In thousands)   ASSETS Current assets: Cash and cash equivalents $ 79,463 $ 67,290 Accounts receivable, net 329,256 296,925 Other current assets   80,503     107,335   Total current assets 489,222 471,550 Property and equipment, net 3,103,331 3,048,130 Goodwill 2,739,303 2,751,174 Intangible assets, net 91,566 87,348 Deferred tax assets 3,664 3,731 Derivative instrument assets 24,989 12,997 Other assets   51,072     49,572   Total assets $ 6,503,147   $ 6,424,502       LIABILITIES AND EQUITY Current liabilities: Current portion of long-term debt $ 33,264 $ 34,830 Accounts payable 130,228 102,299 Accrued salaries and benefits 102,840 99,047 Other accrued liabilities   127,786     141,213   Total current liabilities 394,118 377,389 Long-term debt 3,187,788 3,205,058 Deferred tax liabilities 78,340 80,333 Other liabilities   160,809     166,434   Total liabilities 3,821,055 3,829,214 Redeemable noncontrolling interests 28,791 22,417 Equity: Common stock 873 871 Additional paid-in capital 2,530,083 2,517,545 Accumulated other comprehensive loss (415,883 ) (374,118 ) Retained earnings   538,228     428,573   Total equity   2,653,301     2,572,871   Total liabilities and equity $ 6,503,147   $ 6,424,502             Acadia Healthcare Company, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited)   Six Months Ended June 30,   2018     2017   (In thousands) Operating activities: Net income $ 109,764 $ 84,411 Adjustments to reconcile net income to net cash provided by continuing operating activities: Depreciation and amortization 79,701 68,814 Amortization of debt issuance costs 5,124 4,845 Equity-based compensation expense 14,048 14,832 Deferred income taxes (3,978 ) 17,096 Debt extinguishment costs 940 810 Other 1,040 6,558 Change in operating assets and liabilities: Accounts receivable, net (26,104 ) (22,404 ) Other current assets 9,953 20,457 Other assets 2,761 1,809 Accounts payable and other accrued liabilities 21,066 (4,893 ) Accrued salaries and benefits 4,364 (9,157 ) Other liabilities   (793 )   5,257   Net cash provided by continuing operating activities 217,886 188,435 Net cash used in discontinued operating activities   (572 )   (829 ) Net cash provided by operating activities 217,314 187,606   Investing activities: Cash paid for capital expenditures (161,555 ) (117,521 ) Cash paid for real estate acquisitions (8,857 ) (22,850 ) Other   (3,337 )   (5,938 ) Net cash used in investing activities (173,749 ) (146,309 )   Financing activities: Principal payments on long-term debt (23,246 ) (17,275 ) Common stock withheld for minimum statutory taxes, net (2,134 ) (3,678 ) Other   (5,172 )   (2,270 ) Net cash used in financing activities (30,552 ) (23,223 )   Effect of exchange rate changes on cash   (840 )   4,297     Net increase in cash and cash equivalents 12,173 22,371 Cash and cash equivalents at beginning of the period   67,290     57,063   Cash and cash equivalents at end of the period $ 79,463   $ 79,434                   Acadia Healthcare Company, Inc. Operating Statistics (Unaudited, Revenue in thousands)   Three Months Ended June 30, Six Months Ended June 30,   2018   2017 % Change   2018   2017 % Change Same Facility Results (a,d) Revenue $ 730,681 $ 694,730 5.2% $ 1,440,285 $ 1,366,845 5.4% Patient Days 1,127,834 1,108,621 1.7% 2,226,128 2,185,539 1.9% Admissions 41,930 40,279 4.1% 82,900 80,534 2.9% Average Length of Stay (b) 26.9 27.5 -2.3% 26.9 27.1 -1.0% Revenue per Patient Day $ 648 $ 627 3.4% $ 647 $ 625 3.5% EBITDA margin 25.7% 26.3% -60 bps 25.0% 25.1% -10 bps   U.S. Same Facility Results (a) Revenue $ 474,266 $ 451,805 5.0% $ 932,989 $ 884,091 5.5% Patient Days 627,400 615,951 1.9% 1,236,700 1,213,215 1.9% Admissions 39,564 37,992 4.1% 78,109 75,900 2.9% Average Length of Stay (b) 15.9 16.2 -2.2% 15.8 16.0 -0.9% Revenue per Patient Day $ 756 $ 734 3.1% $ 754 $ 729 3.5% EBITDA margin 28.1% 28.4% -30 bps 27.2% 27.2% 0 bps   U.K. Same Facility Results (a,d) Revenue $ 256,415 $ 242,925 5.6% $ 507,296 $ 482,754 5.1% Patient Days 500,434 492,670 1.6% 989,428 972,324 1.8% Admissions 2,366 2,287 3.5% 4,791 4,634 3.4% Average Length of Stay (b) 211.5 215.4 -1.8% 206.5 209.8 -1.6% Revenue per Patient Day $ 512 $ 493 3.9% $ 513 $ 496 3.3% EBITDA margin 21.3% 22.4% -110 bps 20.8% 21.2% -40 bps     U.S. Facility Results (c) Revenue $ 481,470 $ 461,067 4.4% $ 943,875 $ 900,965 4.8% Patient Days 635,766 624,047 1.9% 1,248,655 1,224,499 2.0% Admissions 40,519 38,092 6.4% 79,451 76,063 4.5% Average Length of Stay (b) 15.7 16.4 -4.2% 15.7 16.1 -2.4% Revenue per Patient Day $ 757 $ 739 2.5% $ 756 $ 736 2.7% EBITDA margin 27.0% 27.9% -90 bps 26.2% 26.7% -50 bps   U.K. Facility Results (c,d) Revenue $ 284,268 $ 270,716 5.0% $ 564,104 $ 539,221 4.6% Patient Days 676,901 684,195 -1.1% 1,342,472 1,355,915 -1.0% Admissions 2,712 2,611 3.9% 5,474 5,313 3.0% Average Length of Stay (b) 249.6 262.0 -4.8% 245.2 255.2 -3.9% Revenue per Patient Day $ 420 $ 396 6.1% $ 420 $ 398 5.7% EBITDA margin 19.1% 20.4% -130 bps 18.7% 19.5% -80 bps   Total Facility Results (c,d) Revenue $ 765,738 $ 731,783 4.6% $ 1,507,979 $ 1,440,186 4.7% Patient Days 1,312,667 1,308,242 0.3% 2,591,127 2,580,414 0.4% Admissions 43,231 40,703 6.2% 84,925 81,376 4.4% Average Length of Stay (b) 30.4 32.1 -5.5% 30.5 31.7 -3.8% Revenue per Patient Day $ 583 $ 559 4.3% $ 582 $ 558 4.3% EBITDA margin 24.1% 25.1% -100 bps 23.4% 24.0% -60 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) Results for the periods presented exclude certain closed services. (d) Revenue and revenue per patient day for the three and six months ended June 30, 2017 is adjusted to reflect the foreign currency exchange rate for the comparable periods of 2018 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 six months ended June 30, 2017 is 1.36 and 1.38, respectively.         Acadia Healthcare Company, Inc. Reconciliation of Net Income Attributable to Acadia Healthcare Company, Inc. to Adjusted EBITDA (Unaudited)   Three Months Ended June 30, Six Months Ended June 30,   2018   2017   2018   2017   (in thousands)   Net income attributable to Acadia Healthcare Company, Inc. $ 58,836 $ 49,630 $ 109,655 $ 84,588 Net income (loss) attributable to noncontrolling interests 54 8 109 (177 ) Provision for income taxes 10,368 16,578 7,582 30,289 Interest expense, net 45,812 43,505 91,055 86,262 Depreciation and amortization   39,928   35,201   79,701   68,814   EBITDA 154,998 144,922 288,102 269,776   Adjustments: Equity-based compensation expense (a) 7,129 7,436 14,048 14,832 Transaction-related expenses (b) 2,887 9,052 7,655 13,171 Debt extinguishment costs (c)   -   810   940   810   Adjusted EBITDA $ 165,014 $ 162,220 $ 310,745 $ 298,589    

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 June 30, Six Months Ended June 30,   2018     2017     2018     2017   (in thousands, except per share amounts)   Net income attributable to Acadia Healthcare Company, Inc. $ 58,836 $ 49,630 $ 109,655 $ 84,588   Adjustments to income: Transaction-related expenses (b) 2,887 9,052 7,655 13,171 Tax reform impact (d) - - (10,472 ) - Debt extinguishment costs (c) - 810 940 810 Income tax effect of adjustments to income (e)   (554 )   (2,268 )   (1,415 )   (1,469 ) Adjusted income attributable to Acadia Healthcare Company, Inc. $ 61,169   $ 57,224   $ 106,363   $ 97,100     Weighted-average shares outstanding - diluted 87,467 87,080 87,351 86,997  

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

$ 0.70   $ 0.66   $ 1.22   $ 1.12     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 (loss) 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 related to acquisitions and integration efforts.   (c) Represents debt extinguishment costs recorded in connection with the Amended and Restated Credit Agreement, including the discount and write-off of deferred financing costs.   (d) Represents tax benefit related to a change in the Company’s provisional amounts recorded at December 31, 2017 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 15.2% and 24.8% for the three months ended June 30, 2018 and 2017, respectively, and 15.5% and 24.6% for the six months ended June 30, 2018 and 2017, respectively.

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Acadia Healthcare Company, Inc.Gretchen Hommrich, 615-861-6000Director, Investor Relations