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Acadia Healthcare Reports Fourth Quarter 2021 Results

·18 min read

Company Provides Full Year and First Quarter 2022 Guidance

FRANKLIN, Tenn., February 28, 2022--(BUSINESS WIRE)--Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced financial results for the fourth quarter and year ended December 31, 2021.

Fourth Quarter Highlights

  • Revenue totaled $593.5 million

  • Same facility revenue increased 10.7% as compared to the fourth quarter of 2020, including an increase in revenue per patient day of 7.8% and patient days of 2.7%

  • Adjusted EBITDA totaled $156.1 million, which included $17.9 million of income from the Provider Relief Fund ("PRF") established under the Coronavirus Aid, Relief, and Economic Security ("CARES") Act

  • Net income attributable to Acadia Healthcare Company, Inc. totaled $70.3 million, or $0.77 per diluted share, and adjusted income from continuing operations attributable to Acadia stockholders totaled $73.6 million, or $0.81 per diluted share, which included $0.14 of income from the PRF established under the CARES Act

  • Cash flows from operating activities totaled $97.8 million

Fourth Quarter Results

The Company reported revenue of $593.5 million for the fourth quarter of 2021, compared with $541.3 million for the fourth quarter of 2020. Adjusted EBITDA was $156.1 million for the fourth quarter of 2021, compared with $157.9 million for the same period last year. The Company recorded income of $17.9 million and $32.8 million in the fourth quarters of 2021 and 2020, respectively, related to the PRF established under the CARES Act. Excluding these funds, Adjusted EBITDA was $138.2 million for the fourth quarter of 2021, compared with $125.1 million for the fourth quarter of 2020.

Net income attributable to Acadia stockholders for the fourth quarter of 2021 was $70.3 million, or $0.77 per diluted share, compared to net loss of $783.7 million, or $8.78 per diluted share, for the fourth quarter of 2020. The results for the fourth quarter of 2020 included a loss from discontinued operations of $842.2 million, net of income taxes, primarily related to the loss on sale of the U.K. business of $867.3 million. For the fourth quarter of 2021, adjusted income from continuing operations attributable to Acadia stockholders was $0.81 per diluted share. Excluding income from the PRF, adjusted income from continuing operations was $0.67 for the fourth quarter of 2021. Adjustments to income include transaction-related expenses and the income tax effect of adjustments to income. A reconciliation of all non-GAAP financial results in this press release begins on page 10.

For the fourth quarter of 2021, Acadia’s same facility revenue increased 10.7% compared with the fourth quarter of 2020, including an increase in revenue per patient day of 7.8% and an increase in patient days of 2.7%.

Debbie Osteen, Chief Executive Officer of Acadia Healthcare Company, remarked, "We are pleased with our financial and operating results for the fourth quarter of 2021, completing another year of strong growth for Acadia. These results reflect robust demand for our behavioral health services. While we faced challenges late in the fourth quarter of 2021 and early in the first quarter of 2022 related to the surge of the Omicron variant of COVID-19, we continued to see solid year-over-year volume growth and strong operating trends. Our facility and corporate leadership teams have continued to manage labor costs while navigating a tight labor market. We are fortunate to have an experienced and dedicated team of employees and clinicians across our operations who have continued to provide quality patient care for those seeking treatment for mental health and substance use issues. Our strong results reflect our ability to effectively manage our operations and execute our growth strategy despite a challenging environment.

Strategic Investments for Long-Term Growth

"We had a very active fourth quarter with respect to key strategic growth initiatives across our service lines. We announced three new joint venture partnerships, the acquisition of real estate to open new facilities in the Chicago, Illinois, market and the acquisition of CenterPointe Behavioral Health System located in Missouri. We also added 13 beds to our existing facilities, bringing our total to 295 bed additions to existing facilities in 2021.

"An important growth objective for Acadia is to identify underserved markets for behavioral health treatment and develop wholly owned de novo facilities that help fill this gap. In line with this strategy, during the fourth quarter, we completed the acquisition of the real estate for three currently non-operational facilities, including one adult hospital, one children’s hospital and an outpatient facility, all located on the north side of Chicago. Prior to reopening, Acadia will make infrastructure investments to improve the behavioral health facilities, which will operate as Montrose Behavioral Health Hospital. This is an exciting opportunity for Acadia to enter the greater Chicago area and address the significant need for behavioral health services for adults and children. The 60-bed children’s hospital and outpatient facility are expected to open in the summer of 2022 and the 101-bed adult hospital is slated to begin operations in 2023. In addition to the Chicago facilities, we also expect to open an additional de novo facility in Indio, California, in late 2022.

"We also continued to expand our network of comprehensive treatment centers (CTCs), which are designed to address the growing and critical need for medication-assisted treatment for patients dealing with opioid use disorder. During the fourth quarter we opened five new CTCs, bringing the total number to ten CTCs opened in 2021. With the growing recognition and acceptance of the critical need for quality addiction treatment, we plan to open an additional six to ten CTCs in 2022 to address this demand.

"As a leading provider of behavioral health services, we are especially proud to work with leading health systems and hospitals across the country who are looking for a strong partner to help expand behavioral health treatment options in their respective communities. We announced three new joint venture partnerships during the fourth quarter, expanding our market reach to 16 partnerships. Our latest partners include Fairview Health Services, one of Minnesota’s leading health systems, to build a new hospital with 144 beds in the Twin Cities area; SCL Health, a premier healthcare system in Colorado, for a new 144-bed facility in the Denver area; and Orlando Health, one of Central Florida’s premier health systems, to expand inpatient and outpatient programs and community outreach. In 2022, we expect to open new facilities with Covenant Health in Knoxville, Tennessee, and Lutheran Health Network in Ft. Wayne, Indiana. We will continue to seek partnerships with premier health systems who share our commitment to expand access to quality care and treatment.

"We also have continued to expand our operations in high growth markets through select acquisitions that meet the criteria of our disciplined capital allocation framework. On December 31, 2021, we completed the acquisition of CenterPointe Behavioral Health System, the largest dedicated behavioral healthcare provider in the state of Missouri for cash consideration of $139 million. The acquired assets consist of four inpatient hospitals with 260 acute care beds and 46 specialty beds for substance use and ten outpatient locations. This transaction is commensurate with our growth strategy, and we look forward to pursuing additional acquisition opportunities for Acadia in the year ahead," added Osteen.

Cash and Liquidity

Acadia’s balance sheet remains strong with ample liquidity and capital to support its growth strategy. As of December 31, 2021, the Company had $133.8 million in cash and cash equivalents. The Company funded the CenterPointe acquisition through a combination of cash on hand and borrowings of $70 million under the Company’s revolving credit facility. As of December 31, 2021, Acadia had $430 million available under its $600 million revolving credit facility, and its net leverage ratio was approximately 2.4x.

During the fourth quarter, the Company continued its repayment of amounts received pursuant to the Medicare Accelerated and Advanced Payment Program under the CARES Act. Of the $45 million of advanced payments received in 2020, the Company repaid $25 million in 2021, including payments of $8.2 million in the fourth quarter. The Company will continue to repay the remaining balance throughout 2022. The Company also repaid half of the approximately $39 million of 2020 payroll tax deferrals in September 2021 and will repay the remaining portion in the second half of 2022.

Financial Guidance

Acadia today established financial guidance for 2022, as follows:

2022 Guidance Range

Revenue

$2.55 to $2.60 billion

Adjusted EBITDA

$575 to $610 million

Adjusted earnings per diluted share

$2.85 to $3.15

Interest Expense

$65 to $70 million

Tax rate

25% to 26%

Depreciation and amortization expense

$120 to $130 million

Stock compensation expense

Approximately $30 million

Operating cash flows, including $39 million

of CARES Act repayments

$350 to $400 million

Expansion capital expenditures

$290 to $340 million

Maintenance capital expenditures

Approximately $50 million

Acadia also established financial guidance for the first quarter of 2022, as follows:

First Quarter 2022 Guidance Range

Revenue

$600 to $610 million

Adjusted EBITDA

$130 to $135 million

Adjusted earnings per diluted share

$0.62 to $0.66

The Company’s guidance does not include the impact of any future acquisitions, divestitures or transaction-related expenses.

Looking Ahead

Osteen added, "We are proud of our performance for 2021 as we continued to execute on the key pathways of our growth strategy with favorable results. We are even more proud of the critical role we play as the leading pure-play provider of behavioral healthcare services and our unwavering commitment to providing safe and quality patient care in Acadia’s facilities across our network. Our primary objective for 2022 is to continue to extend our market reach with a goal to add 300 beds to existing facilities and pursue additional opportunities for de novo facilities, joint venture partnerships and acquisitions. As we witness greater societal acceptance of treatment for mental health and addiction issues and more access to funding support, we see significant opportunities for continued growth for Acadia. Importantly, we have the financial strength to support a strategy that delivers greater value for our patients, the communities we serve, and our stakeholders."

Conference Call

Acadia will hold a conference call to discuss its fourth quarter financial results at 9:00 a.m. Eastern Time on Tuesday, March 1, 2022. 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 December 31, 2021, Acadia operated a network of 238 behavioral healthcare facilities with approximately 10,500 beds in 40 states and Puerto Rico. With more than 22,500 employees serving approximately 70,000 patients daily, Acadia is the largest stand-alone behavioral health 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) the impact of the COVID-19 pandemic, 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; and difficulty in collecting patient accounts receivable due to increases in the unemployment rate and the number of underinsured and uninsured patients; (ii) the impact of vaccine and other pandemic-related mandates imposed by local, state and federal authorities; (iii) potential difficulties in successfully integrating the operations of acquired facilities or realizing the expected benefits and synergies of our acquisitions, joint ventures and de novo transactions; (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, litigation 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; (viii) potential disruptions to our information technology systems or a cyber security incident; 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 strategies. These factors and others are more fully described in Acadia’s periodic reports and other filings with the SEC.

Acadia Healthcare Company, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

Three Months Ended December 31,

Year Ended December 31,

2021

2020

2021

2020

(In thousands, except per share amounts)

Revenue

$

593,480

$

541,276

$

2,314,394

$

2,089,929

Salaries, wages and benefits (including equity-based compensation expense of
$12,542, $6,246, $37,530 and $22,504, respectively)

321,120

301,658

1,243,804

1,154,522

Professional fees

34,824

29,480

136,739

120,489

Supplies

23,004

22,213

90,702

87,241

Rents and leases

9,829

9,387

38,519

37,362

Other operating expenses

79,076

59,732

301,339

262,272

Income from provider relief fund

(17,900

)

(32,819

)

(17,900

)

(32,819

)

Depreciation and amortization

28,368

24,958

106,717

95,256

Interest expense, net

15,573

39,707

76,993

158,105

Debt extinguishment costs

-

3,962

24,650

7,233

Loss on impairment

-

4,751

24,293

4,751

Transaction-related expenses

3,458

2,162

12,778

11,720

Total expenses

497,352

465,191

2,038,634

1,906,132

Income from continuing operations before income taxes

96,128

76,085

275,760

183,797

Provision for income taxes

24,609

16,432

67,557

40,606

Income from continuing operations

71,519

59,653

208,203

143,191

Loss from discontinued operations, net of taxes

-

(842,194

)

(12,641

)

(812,390

)

Net income (loss)

71,519

(782,541

)

195,562

(669,199

)

Net income attributable to noncontrolling interests

(1,241

)

(1,131

)

(4,927

)

(2,933

)

Net income (loss) attributable to Acadia Healthcare Company, Inc.

$

70,278

$

(783,672

)

$

190,635

$

(672,132

)

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

Income from continuing operations attributable to Acadia Healthcare
Company, Inc.

$

0.79

$

0.67

$

2.29

$

1.60

Loss from discontinued operations

$

-

$

(9.58

)

$

(0.14

)

$

(9.25

)

Net income (loss) attributable to Acadia Healthcare Company, Inc.

$

0.79

$

(8.91

)

$

2.15

$

(7.65

)

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

Income from continuing operations attributable to Acadia Healthcare
Company, Inc.

$

0.77

$

0.66

$

2.24

$

1.58

Loss from discontinued operations

$

-

$

(9.44

)

$

(0.14

)

$

(9.17

)

Net income (loss) attributable to Acadia Healthcare Company, Inc.

$

0.77

$

(8.78

)

$

2.10

$

(7.59

)

Weighted-average shares outstanding:

Basic

89,020

87,952

88,769

87,875

Diluted

91,038

89,233

90,793

88,595

Acadia Healthcare Company, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

December 31,

2021

2020

(In thousands)

ASSETS

Current assets:

Cash and cash equivalents

$

133,813

$

378,697

Accounts receivable, net

281,332

273,551

Other current assets

79,886

61,332

Current assets held for sale

-

1,809,815

Total current assets

495,031

2,523,395

Property and equipment, net

1,771,159

1,622,896

Goodwill

2,199,937

2,105,264

Intangible assets, net

70,145

68,535

Deferred tax assets

3,080

3,209

Operating lease right-of-use assets

133,761

96,937

Other assets

94,965

79,126

Total assets

$

4,768,078

$

6,499,362

LIABILITIES AND EQUITY

Current liabilities:

Current portion of long-term debt

$

18,594

$

153,478

Accounts payable

98,575

87,815

Accrued salaries and benefits

137,845

124,912

Current portion of operating lease liabilities

23,348

18,916

Other accrued liabilities

126,499

178,453

Derivative instrument liabilities

-

84,584

Current liabilities held for sale

-

660,027

Total current liabilities

404,861

1,308,185

Long-term debt

1,478,626

2,968,948

Deferred tax liabilities

74,368

50,017

Operating lease liabilities

116,841

84,029

Other liabilities

110,505

133,412

Total liabilities

2,185,201

4,544,591

Redeemable noncontrolling interests

65,388

55,315

Equity:

Common stock

890

880

Additional paid-in capital

2,636,350

2,580,327

Accumulated other comprehensive loss

-

(371,365

)

Accumulated deficit

(119,751

)

(310,386

)

Total equity

2,517,489

1,899,456

Total liabilities and equity

$

4,768,078

$

6,499,362

Acadia Healthcare Company, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Year Ended December 31,

2021

2020

(In thousands)

Operating activities:

Net income (loss)

$

195,562

$

(669,199

)

Adjustments to reconcile net income (loss) to net cash provided by continuing operating activities:

Depreciation and amortization

106,717

95,256

Amortization of debt issuance costs

4,071

12,636

Equity-based compensation expense

37,530

22,504

Deferred income taxes

11,772

53,108

Loss from discontinued operations, net of taxes

12,641

812,390

Debt extinguishment costs

24,650

7,233

Loss on impairment

24,293

4,751

Other

491

1,041

Change in operating assets and liabilities, net of effect of acquisitions:

Accounts receivable, net

2,448

15,340

Other current assets

1,968

9,675

Other assets

(10,770

)

1,519

Accounts payable and other accrued liabilities

6,164

41,910

Accrued salaries and benefits

9,755

(10,001

)

Other liabilities

(14,940

)

18,082

Government relief funds

(38,128

)

86,599

Net cash provided by continuing operating activities

374,224

502,844

Net cash provided by discontinued operating activities

253

155,963

Net cash provided by operating activities

374,477

658,807

Investing activities:

Cash paid for acquisitions, net of cash acquired

(139,015

)

-

Cash paid for capital expenditures

(244,811

)

(224,964

)

Proceeds from U.K. Sale

1,511,020

-

Settlement of foreign currency derivatives

(84,795

)

-

Proceeds from sale of property and equipment

3,493

92

Cash paid for purchase of finance lease

(31,401

)

-

Other

3,142

(13,365

)

Net cash provided by (used in) continuing investing activities

1,017,633

(238,237

)

Net cash used in discontinued investing activities

-

(43,602

)

Net cash provided by (used in) investing activities

1,017,633

(281,839

)

Financing activities:

Borrowings on long-term debt

425,000

925,000

Borrowings on revolving credit facility

500,000

100,000

Principal payments on revolving credit facility

(330,000

)

(100,000

)

Principal payments on long-term debt

(7,969

)

(41,291

)

Repayment of long-term debt

(2,227,935

)

(909,785

)

Payment of debt issuance costs

(7,964

)

(18,295

)

Common stock withheld for minimum statutory taxes, net

16,295

184

Distributions to noncontrolling interests

(1,588

)

(916

)

Other

(6,900

)

(3,146

)

Net cash used in continuing financing activities

(1,641,061

)

(48,249

)

Net cash used in discontinued financing activities

-

(3,250

)

Net cash used in financing activities

(1,641,061

)

(51,499

)

Effect of exchange rate changes on cash

4,067

4,087

Net (decrease) increase in cash and cash equivalents, including cash classified within
current assets held for sale

(244,884

)

329,556

Less: cash classified within current assets held for sale

-

(75,051

)

Net (decrease) increase in cash and cash equivalents

(244,884

)

254,505

Cash and cash equivalents at beginning of the period

378,697

124,192

Cash and cash equivalents at end of the period

$

133,813

$

378,697

Effect of acquisitions:

Assets acquired, excluding cash

$

176,365

$

20,200

Liabilities assumed

(37,350

)

(53

)

Redeemable noncontrolling interest resulting from an acquisition

-

(20,147

)

Cash paid for acquisitions, net of cash acquired

$

139,015

$

-

Acadia Healthcare Company, Inc.

Operating Statistics

(Unaudited, Revenue in thousands)

Three Months Ended December 31,

Year Ended December 31,

2021

2020

% Change

2021

2020

% Change

U.S. Same Facility Results (1)

Revenue

$

591,635

$

534,533

10.7

%

$

2,300,024

$

2,074,456

10.9

%

Patient Days

...

666,906

2.7

%

2,760,181

2,646,173

4.3

%

Admissions

42,414

42,574

-0.4

%

177,791

171,808