Acadia Healthcare Reports Second Quarter 2019 Revenue of $789.4 Million, EPS of $0.55 and Adjusted EPS of $0.61

U.S. Same Facility Revenue Grows 6.6%

Company Narrows 2019 Guidance

FRANKLIN, Tenn.--()--Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced financial results for the second quarter ended June 30, 2019.

The Company reported revenue of $789.4 million for the second quarter of 2019, a 3.1% increase compared with $765.7 million for the second quarter of 2018. Net income attributable to Acadia stockholders was $48.1 million, or $0.55 per diluted share, for the second quarter of 2019 compared with $58.8 million, or $0.67 per diluted share, for the second quarter of 2018. Results for the second quarter of 2019 include transaction-related expenses of $5.2 million and the income tax effect of adjustments to income of $0.4 million based on a tax rate of 17.2%. Adjusted income attributable to Acadia stockholders was $53.8 million, or $0.61 per diluted share, for the second quarter of 2019. Results for the second quarter of 2018 included transaction-related expenses of $2.9 million and the income tax effect of adjustments to income of $0.5 million based on a tax rate of 15.2%. Adjusted income attributable to Acadia stockholders for the second quarter of 2018 was $61.2 million, or $0.70 per diluted share.

A reconciliation of all non-GAAP financial results in this release appears beginning on page 8.

“We are pleased to report a solid financial and operating performance for the second quarter of 2019,” said Debbie Osteen, Chief Executive Officer of Acadia Healthcare Company. “These results were in line with expectations, reflecting consistent execution of our growth strategy. Our U.S. operations showed strong top-line growth and favorable trends in key operating metrics compared with the second quarter of 2018. For our U.K. operations, we delivered both sequential and year-over-year revenue growth for the second quarter of 2019. Across our operations, we are working hard to deliver on the operational efficiencies identified during our recent strategic review, while meeting our primary objective to deliver the highest quality of patient care.

“We have continued to focus on bed expansion opportunities and additional service offerings as the primary drivers of our growth. During the second quarter of 2019, we added 118 beds to Acadia’s operations. These expansions included the addition of 72 beds to existing facilities and 46 beds related to the acquisition of Bradford Recovery Center, a specialty treatment facility located in Millerton, Pennsylvania. For the full year 2019, we expect to add approximately 700 beds to existing and new facilities, exclusive of acquisitions,” added Osteen.

The Company’s total same facility revenue increased 5.7% for the second quarter of 2019 compared with the second quarter of 2018, including a 1.7% increase in patient days and a 3.9% increase in revenue per patient day. Total same facility EBITDA margin declined 110 basis points to 24.7%. U.S. same facility revenue rose 6.6%, on a 3.3% increase in patient days and a 3.2% increase in revenue per patient day. U.S. same facility EBITDA margin was consistent with the second quarter last year at 28.2%. For the U.K. operations, same facility revenue grew 3.9% for the second quarter of 2019 from the second quarter last year, reflecting a 4.1% increase in revenue per patient day offset by a 0.2% decrease in patient days. U.K. same facility EBITDA margin declined 360 basis points to 17.8%. Acadia’s consolidated adjusted EBITDA for the second quarter of 2019 was $158.9 million, compared with $165.0 million for the second quarter of 2018.

Acadia narrowed its previously established financial guidance for 2019, as follows:

  • Revenue for 2019 in a range of $3.15 billion to $3.175 billion;
  • Adjusted EBITDA for 2019 in a range of $610 million to $620 million; and
  • Adjusted earnings per diluted share for 2019 in a range of $2.15 to $2.23.

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 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 second quarter 2019 financial results at 9:00 a.m. Eastern Time on Wednesday, July 31, 2019. 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 August 15, 2019.

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) our ability to successfully implement the strategic initiatives that we adopted following our review of our business in early 2019; (ii) potential difficulties operating our business in light of political and economic instability in the U.K. and globally relating to Brexit; (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 ability to complete acquisitions and successfully integrate the operations of acquired facilities; (v) Acadia’s ability to add beds, expand services, enhance marketing programs and improve efficiencies at its facilities; (vi) potential reductions in payments received by Acadia from government and third-party payors; (vii) the occurrence of patient incidents and governmental investigations, which could adversely affect the price of our common stock and result in substantial fines and incremental regulatory burdens; (viii) 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 (ix) 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 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 leading provider of behavioral healthcare services. At June 30, 2019, Acadia operated a network of 595 behavioral healthcare facilities with approximately 18,200 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 Income
(Unaudited)
 

Three Months Ended June 30,

 

Six Months Ended June 30,

2019

 

2018

 

2019

 

2018

(In thousands, except per share amounts)

 
Revenue

$

789,362

 

$

765,738

 

$

1,549,979

 

$

1,507,979

 

 
Salaries, wages and benefits (including equity-based compensation expense of $4,182, $7,129, $10,283 and $14,048, respectively)

 

430,219

 

 

416,741

 

 

859,798

 

 

828,269

 

Professional fees

 

58,429

 

 

53,461

 

 

115,436

 

 

107,479

 

Supplies

 

30,914

 

 

30,133

 

 

60,871

 

 

59,497

 

Rents and leases

 

20,419

 

 

20,236

 

 

40,726

 

 

40,524

 

Other operating expenses

 

94,677

 

 

87,282

 

 

188,542

 

 

175,513

 

Depreciation and amortization

 

41,077

 

 

39,928

 

 

81,657

 

 

79,701

 

Interest expense, net

 

48,610

 

 

45,812

 

 

96,740

 

 

91,055

 

Debt extinguishment costs

 

-

 

 

-

 

 

-

 

 

940

 

Transaction-related expenses

 

5,212

 

 

2,887

 

 

9,533

 

 

7,655

 

Total expenses

 

729,557

 

 

696,480

 

 

1,453,303

 

 

1,390,633

 

Income before income taxes

 

59,805

 

 

69,258

 

 

96,676

 

 

117,346

 

Provision for income taxes

 

11,604

 

 

10,368

 

 

18,964

 

 

7,582

 

Net income

 

48,201

 

 

58,890

 

 

77,712

 

 

109,764

 

Net income attributable to noncontrolling interests

 

(61

)

 

(54

)

 

(101

)

 

(109

)

Net income attributable to Acadia Healthcare Company, Inc.

$

48,140

 

$

58,836

 

$

77,611

 

$

109,655

 

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

$

0.55

 

$

0.67

 

$

0.89

 

$

1.26

 

Diluted

$

0.55

 

$

0.67

 

$

0.88

 

$

1.26

 

 
Weighted-average shares outstanding:
Basic

 

87,618

 

 

87,303

 

 

87,562

 

 

87,205

 

Diluted

 

87,837

 

 

87,467

 

 

87,770

 

 

87,351

 

 
Acadia Healthcare Company, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
 

June 30,

 

December 31,

2019

 

2018

(In thousands)

 
ASSETS
Current assets:
Cash and cash equivalents

$

43,541

 

$

50,510

 

Accounts receivable, net

 

346,489

 

 

318,087

 

Other current assets

 

81,464

 

 

81,820

 

Total current assets

 

471,494

 

 

450,417

 

Property and equipment, net

 

3,164,076

 

 

3,107,766

 

Goodwill

 

2,435,025

 

 

2,396,412

 

Intangible assets, net

 

89,613

 

 

88,990

 

Deferred tax assets

 

3,404

 

 

3,468

 

Derivative instrument assets

 

72,965

 

 

60,524

 

Operating lease right-of-use assets

 

491,551

 

 

-

 

Other assets

 

62,290

 

 

64,927

 

Total assets

$

6,790,418

 

$

6,172,504

 

 
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt

$

38,895

 

$

34,112

 

Accounts payable

 

115,651

 

 

117,740

 

Accrued salaries and benefits

 

110,445

 

 

113,299

 

Current portion of operating lease liabilities

 

27,578

 

 

-

 

Other accrued liabilities

 

138,119

 

 

151,226

 

Total current liabilities

 

430,688

 

 

416,377

 

Long-term debt

 

3,206,868

 

 

3,159,375

 

Deferred tax liabilities

 

83,096

 

 

80,372

 

Operating lease liabilities

 

490,903

 

 

-

 

Other liabilities

 

124,310

 

 

154,267

 

Total liabilities

 

4,335,865

 

 

3,810,391

 

Redeemable noncontrolling interests

 

32,207

 

 

28,806

 

Equity:
Common stock

 

876

 

 

874

 

Additional paid-in capital

 

2,550,653

 

 

2,541,987

 

Accumulated other comprehensive loss

 

(459,617

)

 

(462,377

)

Retained earnings

 

330,434

 

 

252,823

 

Total equity

 

2,422,346

 

 

2,333,307

 

Total liabilities and equity

$

6,790,418

 

$

6,172,504

 

 
Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 

Six Months Ended June 30,

2019

 

2018

(In thousands)

Operating activities:
Net income

$

77,712

 

$

109,764

 

Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation and amortization

 

81,657

 

 

79,701

 

Amortization of debt issuance costs

 

5,887

 

 

5,124

 

Equity-based compensation expense

 

10,283

 

 

14,048

 

Deferred income taxes

 

(205

)

 

(3,978

)

Debt extinguishment costs

 

-

 

 

940

 

Other

 

2,395

 

 

1,040

 

Change in operating assets and liabilities:
Accounts receivable, net

 

(27,669

)

 

(26,104

)

Other current assets

 

(10,591

)

 

9,953

 

Other assets

 

661

 

 

2,761

 

Accounts payable and other accrued liabilities

 

(11,060

)

 

21,066

 

Accrued salaries and benefits

 

(3,232

)

 

4,364

 

Other liabilities

 

2,848

 

 

(793

)

Net cash provided by continuing operating activities

 

128,686

 

 

217,886

 

Net cash used in discontinued operating activities

 

-

 

 

(572

)

Net cash provided by operating activities

 

128,686

 

 

217,314

 

 
Investing activities:
Cash paid for acquisitions, net of cash acquired

 

(44,900

)

 

-

 

Cash paid for capital expenditures

 

(139,128

)

 

(161,555

)

Cash paid for real estate acquisitions

 

(4,448

)

 

(8,857

)

Other

 

10,494

 

 

(3,337

)

Net cash used in investing activities

 

(177,982

)

 

(173,749

)

 
Financing activities:
Borrowings on revolving credit facility

 

76,573

 

 

-

 

Principal payments on revolving credit facility

 

(11,573

)

 

-

 

Principal payments on long-term debt

 

(16,492

)

 

(23,246

)

Common stock withheld for minimum statutory taxes, net

 

(1,615

)

 

(2,134

)

Other

 

(4,345

)

 

(5,172

)

Net cash provided by (used in) financing activities

 

42,548

 

 

(30,552

)

 
Effect of exchange rate changes on cash

 

(221

)

 

(840

)

 
Net (decrease) increase in cash and cash equivalents

 

(6,969

)

 

12,173

 

Cash and cash equivalents at beginning of the period

 

50,510

 

 

67,290

 

Cash and cash equivalents at end of the period

$

43,541

 

$

79,463

 

 
Effect of acquisitions:
Assets acquired, excluding cash

$

48,555

 

$

-

 

Liabilities assumed

 

(3,655

)

 

-

 

Cash paid for acquisitions, net of cash acquired

$

44,900

 

$

-

 

 

Acadia Healthcare Company, Inc.

Operating Statistics

(Unaudited, Revenue in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2019

 

2018

 

% Change

 

2019

 

2018

 

% Change

Same Facility Results (a,c)
Revenue

$

748,877

$

708,672

5.7%

$

1,472,684

$

1,393,898

5.7%

Patient Days

 

1,139,514

 

1,119,945

1.7%

 

2,262,522

 

2,212,314

2.3%

Admissions

 

43,761

 

42,559

2.8%

 

87,488

 

83,700

4.5%

Average Length of Stay (b)

 

26.0

 

26.3

-1.0%

 

25.9

 

26.4

-2.2%

Revenue per Patient Day

$

657

$

633

3.9%

$

651

$

630

3.3%

EBITDA margin

 

24.7%

 

25.8%

-110 bps

 

23.7%

 

25.0%

-130 bps
 
U.S. Same Facility Results (a)
Revenue

$

494,524

$

463,961

6.6%

$

969,542

$

911,545

6.4%

Patient Days

 

636,518

 

616,123

3.3%

 

1,262,072

 

1,215,633

3.8%

Admissions

 

41,472

 

40,186

3.2%

 

82,815

 

78,891

5.0%

Average Length of Stay (b)

 

15.3

 

15.3

0.1%

 

15.2

 

15.4

-1.1%

Revenue per Patient Day

$

777

$

753

3.2%

$

768

$

750

2.4%

EBITDA margin

 

28.2%

 

28.2%

0 bps

 

27.2%

 

27.2%

0 bps
 
U.K. Same Facility Results (a,c)
Revenue

$

254,353

$

244,711

3.9%

$

503,142

$

482,353

4.3%

Patient Days

 

502,996

 

503,822

-0.2%

 

1,000,450

 

996,681

0.4%

Admissions

 

2,289

 

2,373

-3.5%

 

4,673

 

4,809

-2.8%

Average Length of Stay (b)

 

219.7

 

212.3

3.5%

 

214.1

 

207.3

3.3%

Revenue per Patient Day

$

506

$

486

4.1%

$

503

$

484

3.9%

EBITDA margin

 

17.8%

 

21.4%

-360 bps

 

17.1%

 

21.0%

-390 bps
 
 
U.S. Facility Results
Revenue

$

509,813

$

481,470

5.9%

$

997,773

$

943,875

5.7%

Patient Days

 

656,456

 

635,766

3.3%

 

1,296,780

 

1,248,655

3.9%

Admissions

 

43,153

 

40,519

6.5%

 

85,405

 

79,451

7.5%

Average Length of Stay (b)

 

15.2

 

15.7

-3.0%

 

15.2

 

15.7

-3.4%

Revenue per Patient Day

$

777

$

757

2.5%

$

769

$

756

1.8%

EBITDA margin

 

26.6%

 

27.0%

-40 bps

 

25.5%

 

26.2%

-70 bps
 
U.K. Facility Results (c)
Revenue

$

279,549

$

268,562

4.1%

$

552,206

$

530,453

4.1%

Patient Days

 

671,140

 

676,901

-0.9%

 

1,335,533

 

1,342,472

-0.5%

Admissions

 

2,653

 

2,712

-2.2%

 

5,411

 

5,474

-1.2%

Average Length of Stay (b)

 

253.0

 

249.6

1.4%

 

246.8

 

245.2

0.6%

Revenue per Patient Day

$

417

$

397

5.0%

$

413

$

395

4.6%

EBITDA margin

 

16.4%

 

19.1%

-270 bps

 

15.6%

 

18.7%

-310 bps
 
Total Facility Results (c)
Revenue

$

789,362

$

750,032

5.2%

$

1,549,979

$

1,474,328

5.1%

Patient Days

 

1,327,596

 

1,312,667

1.1%

 

2,632,313

 

2,591,127

1.6%

Admissions

 

45,806

 

43,231

6.0%

 

90,816

 

84,925

6.9%

Average Length of Stay (b)

 

29.0

 

30.4

-4.5%

 

29.0

 

30.5

-5.0%

Revenue per Patient Day

$

595

$

571

4.1%

$

589

$

569

3.5%

EBITDA margin

 

23.0%

 

24.2%

-120 bps

 

22.0%

 

23.5%

-150 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 six months ended June 30, 2018 is adjusted to reflect the foreign currency exchange rate for the comparable periods of 2019 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 both the three and six months ended June 30, 2018 is 1.29.
 

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,

 

 

2019

 

2018

 

2019

 

2018

 

 

(in thousands)

Net income attributable to Acadia Healthcare Company, Inc.

$

48,140

$

58,836

$

77,611

$

109,655

Net income attributable to noncontrolling interests

 

61

 

54

 

101

 

109

Provision for income taxes

 

11,604

 

10,368

 

18,964

 

7,582

Interest expense, net

 

48,610

 

45,812

 

96,740

 

91,055

Depreciation and amortization

 

41,077

 

39,928

 

81,657

 

79,701

EBITDA

 

149,492

 

154,998

 

275,073

 

288,102

Adjustments:
Equity-based compensation expense (a)

 

4,182

 

7,129

 

10,283

 

14,048

Transaction-related expenses (b)

 

5,212

 

2,887

 

9,533

 

7,655

Debt extinguishment costs (c)

 

-

 

-

 

-

 

940

Adjusted EBITDA

$

158,886

$

165,014

$

294,889

$

310,745

 
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 June 30,

 

Six Months Ended June 30,

 

 

2019

 

2018

 

2019

 

2018

 

 

(in thousands, except per share amounts)

Net income attributable to Acadia Healthcare Company, Inc.

$

48,140

$

58,836

 

$

77,611

$

109,655

 

Adjustments to income:
Transaction-related expenses (b)

 

5,212

 

2,887

 

 

9,533

 

7,655

 

Tax reform impact (d)

 

-

 

-

 

 

-

 

(10,472

)

Debt extinguishment costs (c)

 

-

 

-

 

 

-

 

940

 

Income tax effect of adjustments to income (e)

 

438

 

(554

)

 

987

 

(1,415

)

Adjusted income attributable to Acadia Healthcare Company, Inc.

$

53,790

$

61,169

 

$

88,131

$

106,363

 

Weighted-average shares outstanding - diluted

 

87,837

 

87,467

 

 

87,770

 

87,351

 

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

$

0.61

$

0.70

 

$

1.00

$

1.22

 

 
See footnotes on page 10.
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 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 primarily related to acquisitions and integration efforts.
 
(c) Represents debt extinguishment costs recorded in connection with the repricing amendments to the Amended and Restated Credit Agreement in March 2018.
 
(d) Represents tax benefit 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 17.2% and 15.2% for the three months ended June 30, 2019 and 2018, respectively, and 16.9% and 15.5% for the six months ended June 30, 2019 and 2018, respectively.

 

Contacts

Gretchen Hommrich
Director, Investor Relations
(615) 861-6000

Contacts

Gretchen Hommrich
Director, Investor Relations
(615) 861-6000