Acadia Healthcare Reports Second Quarter 2023 Results and Raises 2023 Guidance
Acadia Healthcare Company, Inc. (“Acadia”) (NASDAQ: ACHC) today announced financial results for the second quarter ended June 30, 2023.
Second Quarter and Recent Highlights
Revenue totaled $731.3 million, an increase of 12.2% over the second quarter of 2022 Same facility revenue increased 11.4% compared with the second quarter of 2022, including an increase in revenue per patient day of 6.1% and an increase in patient days of 4.9% Net income attributable to Acadia totaled $72.3 million, or $0.79 per diluted share, and adjusted income from continuing operations attributable to Acadia totaled $84.7 million, or $0.92 per diluted share Adjusted EBITDA increased 10.9% to $174.5 million as compared to $157.3 million for the second quarter of 2022, which excludes $8.6 million of income from the Provider Relief Fund (“PRF”) established under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act Continued progress on the execution of the Company’s growth strategy by adding 98 beds to existing facilities and opening two additional comprehensive treatments centers (CTCs) during the quarter Announced two new joint venture partnerships for future hospitals, marking Acadia’s 19th and 20th partnerships with leading healthcare systems across the country, and opened two new hospitals with joint venture partners early in the third quarter Signed a definitive agreement in July to acquire a 76-bed specialty provider of substance use disorder and primary mental health treatment services based in the greater Salt Lake City, Utah, areaA reconciliation of all non-GAAP financial results in this press release begins on page 9.
Second Quarter Results
Chris Hunter, Chief Executive Officer of Acadia, remarked, “Acadia delivered strong financial and operating results for the second quarter of 2023, as we continued to see robust demand across all business lines. We are pleased with the trajectory of our business through the first half of the year and our ability to effectively manage our operations and meet our key performance objectives. Our labor costs were in line with our expectations. We continue to see stability with sequential improvement in our labor trends for the second quarter of 2023 that we expect will continue to improve into the second half of the year.
“We made significant progress in executing our strategy through our defined growth pathways, further extending our market reach to more communities and adding service lines to new states. We continue to identify opportunities to accelerate our growth across each of our service lines and meet increased patient demand, especially for higher acuity cases.
“Our results to date and continued momentum in our business led us to increase our financial guidance for the full year. We are proud of the important work we are doing and extremely grateful for our dedicated employees who continue to provide safe, quality patient care for those seeking treatment for mental health and substance use issues.”
Strategic Investments for Long-Term Growth
Turning Point Centers Acquisition
In July, Acadia signed a definitive agreement to acquire Turning Point Centers, a 76-bed specialty provider of substance use disorder and primary mental health treatment services that supports the Salt Lake City, Utah, metropolitan market. Turning Point Centers provides a full continuum of treatment services, including residential, partial hospitalization and intensive outpatient services. The transaction is expected to close in 2023.
Hunter added, “Turning Point Centers is a strategic addition to our facility portfolio, extending Acadia’s geographic footprint for our specialty service line into a new state and enhancing our continuum of care in Utah to include all service lines. We look forward to working with the experienced management team and clinical staff at Turning Point Centers.”
Growth Pathways Update
During the second quarter of 2023, the Company continued to make progress in meeting its strategic growth objectives with the following accomplishments across its defined five growth pathways:
Cash and Liquidity
Acadia has continued to maintain a strong financial position with sufficient capital to make strategic investments in its business. As of June 30, 2023, the Company had $112.2 million in cash and cash equivalents and $505 million available under its $600 million revolving credit facility with a net leverage ratio of approximately 2.0x.
Looking Ahead
Hunter concluded, “The United States is facing a mental health crisis – recent studies from the Kaiser Foundation, the Census Bureau and others highlight that the number of adults and adolescents struggling with anxiety, depression or substance use continues to climb. That is what drives our purpose of ensuring the broadest and most effective access to high quality behavioral healthcare. Given our scale and expertise, Acadia is uniquely positioned to help meet this critical demand. Looking ahead, we remain focused on accelerating growth by making strategic investments that will enhance our service offerings across the continuum of care and expand our market reach. Above all, we are committed to addressing one of our nation’s most pressing healthcare needs by providing safe, quality care in support of the patients, families and communities who are counting on us to improve the lives of all those we touch.”
Financial Guidance
Acadia today increased its previously announced financial guidance for 2023 for the following:
2023 Guidance Range
Revenue
$2.86 to $2.90 billion
Adjusted EBITDA
$655 to $685 million
Adjusted earnings per diluted share
$3.25 to $3.50
Interest expense
$82 to $85 million
The Company affirmed the previously announced financial guidance for the following:
Tax rate
25% to 26%
Depreciation and amortization expense
$125 to $135 million
Stock compensation expense
$30 to $35 million
Operating cash flows
$450 to $500 million
Expansion capital expenditures
$350 to $400 million
Maintenance capital expenditures
$40 to $50 million
IT capital expenditures
$35 to $45 million
The Company’s guidance does not include the impact of any future acquisitions, divestitures, transaction-related expenses or recognition of additional income from the CARES Act.
Conference Call
Acadia will hold a conference call to discuss its second quarter financial results at 9:30 a.m. Eastern Time on Friday, July 28, 2023. 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 for 30 days.
About Acadia
Acadia is a leading provider of behavioral healthcare services across the United States. As of June 30, 2023, Acadia operated a network of 250 behavioral healthcare facilities with approximately 11,000 beds in 39 states and Puerto Rico. With approximately 23,000 employees serving more than 75,000 patients daily, Acadia is the largest stand-alone behavioral healthcare company in the U.S. 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) potential difficulties in successfully integrating the operations of acquired facilities or realizing the expected benefits and synergies of our facility expansions, acquisitions, joint ventures and de novo transactions; (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 government and commercial payors; (iv) the occurrence of patient incidents, governmental investigations, litigation (including without limitation the three pending lawsuits in New Mexico) and adverse regulatory actions, which could adversely affect the price of our common stock and result in substantial payments and incremental regulatory burdens; (v) the risk that Acadia may not generate sufficient cash from operations to service its debt and meet its working capital and capital expenditure requirements; (vi) potential disruptions to our information technology systems or a cybersecurity incident; and (vii) potential operating difficulties, including, without limitation, disruption to the U.S. economy and financial markets; reduced admissions and patient volumes; increased costs relating to labor, supply chain and other expenditures; changes in competition and client preferences; 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.
2023
2022
2023
2022
(In thousands, except per share amounts) Revenue$
731,337
$
651,719
$
1,435,604
$
1,268,372
Salaries, wages and benefits (including equity-based compensation expense of $7,348, $6,580, $14,977 and $14,505, respectively)
386,633
339,388
777,810
675,150
Professional fees
43,803
40,440
84,928
77,351
Supplies
26,144
25,022
52,165
48,721
Rents and leases
11,725
11,192
23,149
22,441
Other operating expenses
95,912
84,937
186,750
166,362
Income from provider relief fund
—
(8,550
)
—
(8,550
)
Depreciation and amortization
32,012
29,128
63,581
58,054
Interest expense, net
20,910
16,565
40,909
32,352
Loss on impairment
8,694
—
8,694
—
Transaction-related expenses
9,074
3,940
15,545
7,522
Total expenses
634,907
542,062
1,253,531
1,079,403
Income before Income taxes
96,430
109,657
182,073
188,969
Provision for income taxes
22,881
27,725
41,966
45,127
Net income
73,549
81,932
140,107
143,842
Net income attributable to noncontrolling interests
(1,250
)
(1,853
)
(1,793
)
(2,926
)
Net income attributable to Acadia Healthcare Company, Inc.$
72,299
$
80,079
$
138,314
$
140,916
Earnings per share attributable to Acadia Healthcare Company, Inc. stockholders: Basic
$
0.79
$
0.89
$
1.53
$
1.57
Diluted
$
0.79
$
0.88
$
1.51
$
1.54
Weighted-average shares outstanding: Basic
91,044
89,724
90,691
89,492
Diluted
91,546
91,473
91,640
91,504
2023
2022
(In thousands) ASSETS Current assets: Cash and cash equivalents$
112,173
$
97,649
Accounts receivable, net
345,836
322,439
Other current assets
120,748
86,037
Total current assets
578,757
506,125
Property and equipment, net
2,074,142
1,952,045
2,222,805
2,222,805
Intangible assets, net
71,607
76,041
Deferred tax assets
2,885
2,950
Operating lease right-of-use assets
127,515
135,238
Other assets
72,497
92,697
Total assets$
5,150,208
$
4,987,901
LIABILITIES AND EQUITY Current liabilities: Current portion of long-term debt$
23,906
$
21,250
Accounts payable
148,896
104,723
Accrued salaries and benefits
111,409
125,298
Current portion of operating lease liabilities
26,422
26,463
Other accrued liabilities
121,849
110,592
Total current liabilities
432,482
388,326
Long-term debt
1,372,362
1,364,541
Deferred tax liabilities
92,870
92,588
Operating lease liabilities
110,869
116,429
Other liabilities
130,026
125,033
Total liabilities
2,138,609
2,086,917
Redeemable noncontrolling interests
90,583
88,257
Equity: Common stock
911
899
Additional paid-in capital
2,628,403
2,658,440
Retained earnings
291,702
153,388
Total equity
2,921,016
2,812,727
Total liabilities and equity$
5,150,208
$
4,987,901
2023
2022
(In thousands) Operating activities: Net income$
140,107
$
143,842
Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization
63,581
58,054
Amortization of debt issuance costs
1,651
1,620
Equity-based compensation expense
14,977
14,505
Deferred income taxes
347
7,975
Loss on impairment
8,694
—
Other
1,086
396
Change in operating assets and liabilities, net of effect of acquisitions: Accounts receivable, net
(23,397
)
(19,763
)
Other current assets
(8,743
)
(18,106
)
Other assets
(322
)
2,550
Accounts payable and other accrued liabilities
21,518
25,518
Accrued salaries and benefits
(13,889
)
2,682
Other liabilities
2,568
7,928
Government relief funds
—
(1,212
)
Net cash provided by operating activities
208,178
225,989
Investing activities: Cash paid for capital expenditures
(157,359
)
(132,444
)
Proceeds from sale of property and equipment
621
1,674
Other
(940
)
(5,016
)
Net cash used in investing activities
(157,678
)
(135,786
)
Financing activities: Borrowings on revolving credit facility
40,000
—
Principal payments on revolving credit facility
(20,000
)
(85,000
)
Principal payments on long-term debt
(10,625
)
(7,969
)
Repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises
(45,904
)
(9,868
)
Contributions from noncontrolling partners in joint ventures
2,516
8,008
Distributions to noncontrolling partners in joint ventures
(1,983
)
(847
)
Other
20
28
Net cash used in financing activities
(35,976
)
(95,648
)
Net increase (decrease) in cash and cash equivalents
14,524
(5,445
)
Cash and cash equivalents at beginning of the period
97,649
133,813
Cash and cash equivalents at end of the period
$
112,173
$
128,368
2023
2022
% Change2023
2022
% Change Same Facility Results (1) Revenue$
721,288
$
647,626
11.4
%
$
1,416,228
$
1,260,893
12.3
%
Patient Days
763,813
727,857
4.9
%
1,510,471
1,428,950
5.7
%
Admissions
49,017
47,003
4.3
%
98,076
92,170
6.4
%
Average Length of Stay (2)
15.6
15.5
0.6
%
15.4
15.5
-0.7
%
Revenue per Patient Day$
944
$
890
6.1
%
$
938
$
882
6.3
%
Adjusted EBITDA margin (3)
29.7
%
30.0
%
-30 bps
28.7
%
28.4
%
30 bps
Adjusted EBITDA margin excluding income from provider relief fund
29.7
%
28.7
%
100 bps
28.7
%
27.7
%
100 bps
Facility Results Revenue$
731,337
$
651,719
12.2
%
$
1,435,604
$
1,268,372
13.2
%
Patient Days
771,955
734,777
5.1
%
1,526,813
1,441,103
5.9
%
Admissions
50,029
47,042
6.3
%
99,935
92,238
8.3
%
Average Length of Stay (2)
15.4
15.6
-1.2
%
15.3
15.6
-2.2
%
Revenue per Patient Day$
947
$
887
6.8
%
$
940
$
880
6.8
%
Adjusted EBITDA margin (3)
28.6
%
29.7
%
-110 bps
27.6
%
28.1
%
-50 bps
Adjusted EBITDA margin excluding income from provider relief fund
28.6
%
28.4
%
20 bps
27.6
%
27.4
%
20 bps
(1) Same facility results for the periods presented include facilities we have operated for more than one year and exclude certain closed services. (2) Average length of stay is defined as patient days divided by admissions. (3) For the three and six months ended June 30, 2022, includes income from provider relief fund of $8.6 million.2023
2022
2023
2022
(in thousands) Net income attributable to Acadia Healthcare Company, Inc.$
72,299
$
80,079
$
138,314
$
140,916
Net income attributable to noncontrolling interests
1,250
1,853
1,793
2,926
Provision for income taxes
22,881
27,725
41,966
45,127
Interest expense, net
20,910
16,565
40,909
32,352
Depreciation and amortization
32,012
29,128
63,581
58,054
EBITDA
149,352
155,350
286,563
279,375
Adjustments: Equity-based compensation expense (a)
7,348
6,580
14,977
14,505
Transaction-related expenses (b)
9,074
3,940
15,545
7,522
Loss on impairment (c)
8,694
—
8,694
—
Adjusted EBITDA
$
174,468
$
165,870
$
325,779
$
301,402
Adjusted EBITDA margin
23.9
%
25.5
%
22.7
%
23.8
%
Adjusted EBITDA excluding income from provider relief fund$
174,468
$
157,320
$
325,779
$
292,852
Adjusted EBITDA margin excluding income from provider relief fund
23.9
%
24.1
%
22.7
%
23.1
%
See footnotes on page 11.2023
2022
2023
2022
(in thousands, except per share amounts) Net income attributable to Acadia Healthcare Company, Inc.$
72,299
$
80,079
$
138,314
$
140,916
Adjustments to income: Transaction-related expenses (b)
9,074
3,940
15,545
7,522
Loss on impairment (c)
8,694
—
8,694
—
Provision for income taxes
22,881
27,725
41,966
45,127
Adjusted income before income taxes attributable to Acadia Healthcare Company, Inc.
112,948
111,744
204,519
193,565
Income tax effect of adjustments to Income (d)
28,271
28,895
51,191
49,514
Adjusted income attributable to Acadia Healthcare Company, Inc.
84,677
82,849
153,328
144,051
Income from provider relief fund, net of taxes
—
(6,230
)
—
(6,230
)
Adjusted income attributable to Acadia Healthcare Company, Inc. excluding income from provider relief fund$
84,677
$
76,619
$
153,328
$
137,821
Weighted-average shares outstanding - diluted
91,546
91,473
91,640
91,504
Adjusted income attributable to Acadia Healthcare Company, Inc. per diluted share
$
0.92
$
0.91
$
1.67
$
1.57
Income from provider relief fund, net of taxes, per diluted share
—
(0.07
)
—
(0.07
)
Adjusted income attributable to Acadia Healthcare Company, Inc., excluding income from provider relief fund, per diluted share$
0.92
$
0.84
$
1.67
$
1.50
See footnotes on page 11.
Acadia Healthcare Company, Inc.
Footnotes
We have included certain financial measures in this press release, including those listed below, which are “non-GAAP financial measures” as defined under the rules and regulations promulgated by the SEC. These non-GAAP financial measures include, and are defined, as follows:
• EBITDA: net income attributable to Acadia Healthcare Company, Inc. adjusted for net income attributable to noncontrolling interests, provision for income taxes, net interest expense and depreciation and amortization.
• Adjusted EBITDA: EBITDA adjusted for equity-based compensation expense, loss on impairment and transaction-related expenses.
• Adjusted EBITDA excluding income from provider relief fund: Adjusted EBITDA adjusted for income from provider relief fund.
• Adjusted EBITDA margin: Adjusted EBITDA divided by revenue.
• Adjusted EBITDA margin excluding income from provider relief fund: Adjusted EBITDA excluding income from provider relief fund divided by revenue.
• Adjusted income before income taxes attributable to Acadia Healthcare Company, Inc.: net income attributable to Acadia Healthcare Company, Inc. adjusted for transaction-related expenses, loss on impairment and provision for income taxes.
• Adjusted income attributable to Acadia Healthcare Company, Inc.: Adjusted income before income taxes attributable to Acadia Healthcare Company, Inc. adjusted for the income tax effect of adjustments to income.
• Adjusted income attributable to Acadia Healthcare Company, Inc. excluding income from provider relief fund: Adjusted income attributable to Acadia Healthcare Company, Inc. adjusted for income from provider relief fund.
The non-GAAP financial measures presented herein 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”). The non-GAAP financial measures presented herein 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 these non-GAAP financial measures may not be comparable to similarly titled measures of other companies. We have included information concerning the non-GAAP financial measures 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 similar non-GAAP financial measures when reporting their results. Because the non-GAAP financial measures are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations, the non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures of other companies. Our presentation of these non-GAAP financial measures 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 termination, restructuring, management transition, acquisition and other similar costs.
(c) During the second quarter of 2023, we recorded non-cash impairment charges totaling $8.7 million related to the closure of certain facilities.
(d) Represents the income tax effect of adjustments to income based on tax rates of 25.0% and 25.9% for the three months ended June 30, 2023 and 2022, respectively, and 25.0% and 25.6% for the six months ended June 30, 2023 and 2022, respectively.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230727228293/en/