CORRECTING and REPLACING Acadia Healthcare Reports Third Quarter 2022 Results

Same Facility Revenue Increases 10.2%

FRANKLIN, Tenn., October 31, 2022--(BUSINESS WIRE)--There was an inadvertent error on the supplementary table titled "Reconciliation of Net Income Attributable to Acadia Healthcare Company, Inc. to Adjusted Income Attributable to Acadia Healthcare Company, Inc." on page 11 of the previous release, within the line item titled "Income tax effect of adjustments to income" and the resulting calculations of Adjusted income and Adjusted income per diluted share in the table. The table has been corrected and there were no other changes to the release.

The updated release reads:

ACADIA HEALTHCARE REPORTS THIRD QUARTER 2022 RESULTS

Same Facility Revenue Increases 10.2%

Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced financial results for the third quarter ended September 30, 2022.

Third Quarter Highlights

• Revenue totaled $666.7 million, an increase of 13.5% over the third quarter of 2021

• Same facility revenue increased 10.2% compared to the third quarter of 2021, including an increase in revenue per patient day of 6.9% and an increase in patient days of 3.1%

• Net income attributable to Acadia totaled $71.1 million, or $0.78 per diluted share, and adjusted income from continuing operations attributable to Acadia stockholders totaled $73.3 million, or $0.86 per diluted share, which included $0.06 of income from the Provider Relief Fund ("PRF") established under the Coronavirus Aid, Relief, and Economic Security ("CARES") Act

• Adjusted EBITDA totaled $162.8 million, which included $7.7 million of income from the PRF established under the CARES Act

• Opened a de novo children’s hospital in Chicago, a joint venture facility in Knoxville, and two new Comprehensive Treatment Centers ("CTCs")

Third Quarter Results

The Company reported revenue of $666.7 million for the third quarter of 2022, compared with $587.6 million for the third quarter of 2021. Adjusted EBITDA was $162.8 million for the third quarter of 2022, compared with $141.9 million for the same period last year. Excluding income from the PRF, Adjusted EBITDA was $155.1 million for the third quarter of 2022.

The Company recorded income from the PRF of $7.7 million in the third quarter of 2022. The Company will continue to review the remaining $14.2 million of American Rescue Plan ("ARP") Rural Payments held on its balance sheet as of September 30, 2022, for the potential recognition of additional income. Financial guidance for 2022 does not include the recognition of additional income in the fourth quarter of 2022 beyond the $16.2 million recorded in the nine months ended September 30, 2022.

Net income attributable to Acadia stockholders for the third quarter of 2022 was $71.1 million, or $0.78 per diluted share. Adjusted income from continuing operations attributable to Acadia stockholders was $0.86 per diluted share for the third quarter of 2022. Excluding income from the PRF, adjusted income from continuing operations was $0.80 per diluted share for the third quarter of 2022. 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 third quarter of 2022, Acadia’s same facility revenue increased 10.2% compared with the third quarter of 2021, including an increase in revenue per patient day of 6.9% and an increase in patient days of 3.1%.

Chris Hunter, Chief Executive Officer of Acadia Healthcare Company, remarked, "We continued to see robust demand for our behavioral healthcare services during the third quarter. We executed our strategy with favorable results across our key performance metrics including continued navigation through a tight labor market. We are fortunate to have an experienced and dedicated team of employees and clinicians across our operations who have worked tirelessly to meet the needs of those seeking treatment for mental health and substance use issues.

Strategic Investments for Long-Term Growth

"We have progressed on our key growth initiatives across all our service lines this year. We continue to make critical investments in our business to support sustained long-term growth through four distinct pathways. Facility expansions are our first and most efficient growth pathway as we can expand services in established markets with our existing infrastructure and experienced staff. We added 132 beds to our existing facilities during the third quarter, bringing our total number of bed additions to 210 for the first nine months of the year. We are on track to meet our goal of adding approximately 300 beds in 2022.

"For our second growth pathway, we continue to develop wholly owned de novo facilities that meet the critical demand for behavioral healthcare services in underserved markets. There are significant opportunities across the country to address this unmet need at the local community level. We opened a 60-bed children’s hospital in early July, as the first stage of our Montrose Behavioral Health Hospital operations in Chicago. In addition to the children’s hospital, we expect to begin operations at our 101-bed adult hospital and the outpatient facility in 2023 following the renovations of these facilities.

"We continue to identify opportunities to expand our network of CTCs to address the critical need for addiction treatment, specifically for patients dealing with opioid use disorder. During the third quarter, we opened new CTCs in Indiana and Florida. This brings our total to four CTCs opened this year, supporting our objective to open at least six new CTCs in 2022. As the opioid crisis has continued to escalate across the country, our CTC facilities and programs are playing a vital role in addressing this national epidemic.

"A third important pathway for growth for Acadia is forming strategic partnerships with leading health systems across the country. We are proud to work with a growing number of premier health systems to expand behavioral healthcare treatment options in their respective communities. By working together, we can leverage our behavioral health expertise and implement best practices to deliver high quality care and positive clinical outcomes for more patients. During the third quarter, we opened a new facility with our joint venture partner, Covenant Health, in Knoxville, Tennessee. We also broke ground on a new state-of-the-art behavioral health treatment and teaching hospital with our joint venture partner, Henry Ford Health, in the Detroit, Michigan metropolitan area. We expect to commence operations at Maple Heights Behavioral Health, our joint venture with Lutheran Health Network of Indiana during the fourth quarter. An important aspect of many of our joint venture partnerships is the academic focus and training of future clinicians. During the quarter, our Belmont Behavioral Health Hospital in Philadelphia entered into a formal affiliation agreement with Thomas Jefferson University’s Sidney Kimmel Medical College and Jefferson Health in Philadelphia, Pennsylvania, to further teaching and clinical care opportunities for students in behavioral healthcare.

"For our fourth pathway, we focus on identifying strategic acquisition opportunities that allow us to leverage our scale and expertise, make necessary investments for expansion and add service offerings to further enhance the continuum of care. We are fortunate to have a strong balance sheet that supports our ability to pursue acquisitions along with opportunities through our other important growth pathways," added Hunter.

Cash and Liquidity

Maintaining a strong financial position is a top priority for Acadia, providing the flexibility to pursue its growth initiatives and make strategic investments in its business. As of September 30, 2022, the Company had $93.4 million in cash and cash equivalents. The Company had $515 million available under its $600 million revolving credit facility and its net leverage ratio was approximately 2.1x as of September 30, 2022.

During the third quarter, the Company substantially completed its repayment of amounts received pursuant to the Medicare Accelerated and Advanced Payment Program under the CARES Act. Of the $45.2 million of advanced payments received in 2020, the Company repaid a total of $25.1 million in 2021 and made additional payments of $18.9 million through the first nine months of 2022. The Company will pay off the remaining balance of $1.2 million in the fourth quarter of 2022. In the third quarter of 2022, the Company repaid the remaining half of the approximately $39.3 million of 2020 payroll tax deferrals, which eliminated this liability.

Financial Guidance

Acadia today narrowed its previously announced financial guidance for 2022, as follows:

			2022 Guidance Range
	Revenue		$2.58 to $2.60 billion
	Adjusted EBITDA, including income from the PRF		$611 to $621 million
	Adjusted EBITDA, excluding income from the PRF		$595 to $605 million
	Adjusted earnings per diluted share, including
	income from the PRF		$3.13 to $3.23
	Adjusted earnings per diluted share, excluding
	income from the PRF		$3.00 to $3.10
	Interest expense		Approximately $70 million
	Tax rate		25% to 26%
	Depreciation and amortization expense		Approximately $120 million
	Stock compensation expense		Approximately $30 million
	Operating cash flows		$360 to $400 million
	Expansion capital expenditures		$210 to $230 million
	Maintenance capital expenditures		Approximately $60 million

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

Looking Ahead

Hunter added, "We look forward to hosting Acadia’s first Investor Day on Wednesday, December 7, 2022, in New York City. Our management team will provide an in-depth look at our diverse service lines and our strategic initiatives to advance our leadership position in the behavioral healthcare industry.

"We are excited about the opportunities ahead for Acadia, as we remain focused on our primary objective to extend our market reach through our four defined growth pathways. Demand for our services continues to grow, and we believe we are well positioned to maintain our strong growth trajectory and meet our development targets for the year. Without question, the critical need for behavioral health treatment has become a primary focus for health officials, medical professionals, and lawmakers across the country, with depression and anxiety issues further amplified by the strains of the COVID-19 pandemic. Recent data from the Centers for Disease Control and Prevention showed the U.S. suicide rate rose four percent in 2021 after two consecutive years of declines, highlighting the critical need for early assessment and intervention. As a leading provider of behavioral healthcare services, we play a vital role in addressing this need, and we believe we have the right strategy in place to make a positive difference. We are proud of the important work we are doing as we continue to pursue a strategic direction that delivers greater value for our patients, the communities we serve, and our stockholders."

Conference Call

Acadia will hold a conference call to discuss its third quarter financial results at 9:00 a.m. Eastern Time on November 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 September 30, 2022, Acadia operated a network of 242 behavioral healthcare facilities with approximately 10,800 beds in 39 states and Puerto Rico. With more than 22,500 employees serving approximately 70,000 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) the impact of the COVID-19 pandemic, including, without limitation, disruption to the U.S. economy and financial markets; reduced admissions and patient volumes; and increased costs relating to labor, supply chain and other expenditures; (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 facility expansions, 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 cybersecurity 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 September 30,								Nine Months Ended September 30,
			2022				2021				2022				2021
		(In thousands, except per share amounts)
Revenue		$	666,732			$	587,559			$	1,935,104			$	1,720,914
Salaries, wages and benefits (including equity-based compensation expense of $7,240, $8,923, $21,745 and $24,988, respectively)			352,582				309,118				1,027,732				922,684
Professional fees			40,367				35,602				117,718				101,915
Supplies			25,570				23,743				74,291				67,698
Rents and leases			11,339				9,658				33,780				28,690
Other operating expenses			88,993				76,502				255,355				222,263
Income from provider relief fund			(7,656	)			—				(16,206	)			—
Depreciation and amortization			29,573				27,805				87,627				78,349
Interest expense, net			18,003				15,706				50,355				61,420
Debt extinguishment costs			—				—				—				24,650
Loss on impairment			—				1,079				—				24,293
Transaction-related expenses			10,859				3,035				18,381				9,320
Total expenses			569,630				502,248				1,649,033				1,541,282
Income from continuing operations before income taxes			97,102				85,311				286,071				179,632
Provision for income taxes			24,056				17,411				69,183				42,948
Income from continuing operations			73,046				67,900				216,888				136,684
Loss from discontinued operations, net of taxes			—				—				—				(12,641	)
Net income			73,046				67,900				216,888				124,043
Net income attributable to noncontrolling interests			(1,947	)			(1,774	)			(4,873	)			(3,686	)
Net income attributable to Acadia Healthcare Company, Inc.		$	71,099			$	66,126			$	212,015			$	120,357
Basic earnings per share attributable to Acadia Healthcare Company, Inc. stockholders:
Income from continuing operations attributable to Acadia Healthcare Company, Inc.		$	0.79			$	0.74			$	2.37			$	1.50
Loss from discontinued operations			—				—				—			$	(0.14	)
Net income attributable to Acadia Healthcare Company, Inc.		$	0.79			$	0.74			$	2.37			$	1.36
Diluted earnings per share attributable to Acadia Healthcare Company, Inc. stockholders:
Income from continuing operations attributable to Acadia Healthcare Company, Inc.		$	0.78			$	0.73			$	2.31			$	1.47
Loss from discontinued operations			—				—				—			$	(0.14	)
Net income attributable to Acadia Healthcare Company, Inc.		$	0.78			$	0.73			$	2.31			$	1.33
Weighted-average shares outstanding:
Basic			89,833				88,962				89,607				88,684
Diluted			91,723				90,889				91,668				90,604

Acadia Healthcare Company, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
		September 30,			December 31,
		2022			2021
		(In thousands)
ASSETS
Current assets:
Cash and cash equivalents		$	93,419		$	133,813
Accounts receivable, net			315,999			281,332
Other current assets			112,238			79,886
Total current assets			521,656			495,031
Property and equipment, net			1,908,993			1,771,159
Goodwill			2,207,912			2,199,937
Intangible assets, net			75,920			70,145
Deferred tax assets			2,983			3,080
Operating lease right-of-use assets			135,627			133,761
Other assets			90,014			94,965
Total assets		$	4,943,105		$	4,768,078
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt		$	21,250		$	18,594
Accounts payable			116,045			98,575
Accrued salaries and benefits			109,654			137,845
Current portion of operating lease liabilities			25,770			23,348
Other accrued liabilities			128,294			126,499
Total current liabilities			401,013			404,861
Long-term debt			1,379,306			1,478,626
Deferred tax liabilities			94,446			74,368
Operating lease liabilities			117,473			116,841
Other liabilities			118,923			110,505
Total liabilities			2,111,161			2,185,201
Redeemable noncontrolling interests			88,236			65,388
Equity:
Common stock			899			890
Additional paid-in capital			2,650,545			2,636,350
Retained earnings (accumulated deficit)			92,264			(119,751	)
Total equity			2,743,708			2,517,489
Total liabilities and equity		$	4,943,105		$	4,768,078

Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
		Nine Months Ended September 30,
			2022				2021
		(In thousands)
Operating activities:
Net income		$	216,888			$	124,043
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation and amortization			87,627				78,349
Amortization of debt issuance costs			2,440				3,265
Equity-based compensation expense			21,745				24,988
Deferred income taxes			20,176				8,995
Loss from discontinued operations, net of taxes			—				12,641
Debt extinguishment costs			—				24,650
Loss on impairment			—				24,293
Other			2,422				881
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net			(35,538	)			(8,610	)
Other current assets			(28,692	)			(2,758	)
Other assets			3,373				(15,846	)
Accounts payable and other accrued liabilities			7,729				6,358
Accrued salaries and benefits			(8,831	)			18,820
Other liabilities			10,303				(11,633	)
Government relief funds			(32,617	)			(12,058	)
Net cash provided by continuing operating activities			267,025				276,378
Net cash provided by discontinued operating activities			—				253
Net cash provided by operating activities			267,025				276,631
Investing activities:
Cash paid for capital expenditures			(208,792	)			(156,624	)
Proceeds from U.K. Sale			—				1,511,020
Settlement of foreign currency derivatives			—				(84,795	)
Proceeds from sale of property and equipment			1,784				1,792
Cash paid for purchase of finance lease			—				(31,401	)
Other			(6,802	)		...