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Acadia Healthcare Reports 27.9% Growth in First Quarter Adjusted EPS to $0.55 on Revenue of $616.8 Million

Produces Record Quarterly Same Facility EBITDA Margin of 27.1% on Same Facility Revenue Growth of 9.2%

Affirms Guidance for 2016 Adjusted Earnings per Diluted Share in Range of $2.81 to $2.86

FRANKLIN, Tenn.--(BUSINESS WIRE)--Apr. 28, 2016-- Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced financial results for the first quarter ended March 31, 2016. Revenue was $616.8 million for the first quarter, an increase of 68.6% from $365.8 million for the first quarter of 2015. Income from continuing operations attributable to Acadia stockholders was $25.7 million, or $0.31 per diluted share, for the first quarter of 2016 compared with $14.6 million, or $0.23 per diluted share, for the first quarter last year. Adjusted income from continuing operations attributable to Acadia stockholders was $45.8 million for the first quarter of 2016, up 69.1% from $27.1 million for the first quarter of 2015, and adjusted EPS increased 27.9% to $0.55 from $0.43. Weighted average diluted shares outstanding increased 32.6% for the first quarter of 2016 from the first quarter of 2015, primarily due to the issuance of common stock in February and May 2015, the net proceeds of which have primarily been used to fund acquisitions, and in January and February 2016 related to the acquisition of Priory Group. A reconciliation of all non-GAAP financial results in this release appears on pages 7 and 8.

“We are pleased to report that Acadia had a very successful first quarter of 2016,” said Joey Jacobs, Chairman and Chief Executive Officer of Acadia. “In addition to producing an increase in adjusted EPS of 27.9%, we completed the acquisition of Priory Group, the leading independent provider of behavioral health in the United Kingdom. We also added 330 new beds in the U.S. and the U.K. during the quarter. As a result of this substantial expansion of our inpatient facilities and licensed beds, as well as our continued strong financial performance during the quarter, we believe Acadia is well-positioned to produce further significant profitable growth in 2016 and beyond.”

The Company’s first quarter revenue growth was driven by the full-quarter inclusion of approximately 4,100 beds added through acquisition or to existing or de novo facilities during 2015. With the addition of Priory’s approximately 7,100 beds in 324 inpatient facilities, as well as the beds added during the first quarter, Acadia has increased its beds by approximately 9,000 over the trailing 12 months ended March 31, 2016.

Acadia’s consolidated same facility revenue rose 9.2% for the first quarter of 2016 compared with the same prior-year quarter, reflecting an 8.6% increase in patient days and a 0.5% increase in revenue per patient day. This increase was primarily driven by new beds added to facilities in the same facility base, as well as by continuing initiatives at each of these facilities to expand their revenue. With increased same-facility revenue leveraging the fixed cost operations of these facilities, and with ongoing productivity and efficiency efforts in individual facilities, consolidated same facility EBITDA margin expanded 80 basis points for the first quarter to a quarterly record of 27.1% from 26.3% for the first quarter last year. Acadia’s consolidated adjusted EBITDA for the first quarter increased 66.4% to $131.0 million, or 21.2% of revenue, compared with $78.7 million, or 21.5% of revenue, for the first quarter of 2015.

Mr. Jacobs added, “Our strong operating and financial results for the first quarter demonstrate highly effective execution of our acquisition and organic growth strategies. While the Priory acquisition gives us more new beds in a single transaction than we have acquired in a previous year, we expect to continue to evaluate additional, accretive transactions during 2016. We continue to have significant availability under our $300 million revolving credit facility, and we also expect to continue generating substantial operating cash flow, which for the first quarter of 2016 increased to $59.3 million from $18.1 million for the first quarter of 2015.”

Acadia today affirmed its guidance for 2016 adjusted earnings per diluted share in a range of $2.81 to $2.86, an increase of approximately 26% to 28% over 2015. The Company’s guidance assumes an exchange rate of $1.45 per British Pound Sterling and a tax rate of 23%. The Company’s guidance does not include the impact of any future acquisitions or transaction-related expenses.

Acadia will hold a conference call to discuss its fourth quarter financial results at 9:00 a.m. Eastern Time on Friday, April 29, 2016. 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 May 14, 2016.

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) Acadia’s ability to complete acquisitions and successfully integrate the operations of acquired facilities, including Priory facilities; (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 third-party payors; (iv) the occurrence of patient incidents, which could adversely affect the price of our common stock and result in incremental regulatory burdens and governmental investigations; (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; and (vi) potential operating difficulties, 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 provider of inpatient behavioral healthcare services. Acadia operates a network of 587 behavioral healthcare facilities with approximately 17,400 beds in 39 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, residential treatment centers, outpatient clinics and therapeutic school-based programs.

       
Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
 
Three Months Ended March 31,
2016 2015
(In thousands, except per share amounts)
 
Revenue before provision for doubtful accounts $ 627,183 $ 374,158
Provision for doubtful accounts   (10,370 )   (8,375 )
Revenue 616,813 365,783
 

Salaries, wages and benefits (including equity-based compensation expense of $6,956 and $3,894, respectively)

341,028 205,871
Professional fees 39,991 22,427
Supplies 26,685 16,254
Rents and leases 14,806 5,886
Other operating expenses 70,247 40,527
Depreciation and amortization 27,975 13,104
Interest expense, net 37,714 22,146
Gain on foreign currency derivatives (410 ) (53 )
Transaction-related expenses   26,298     18,416  
Total expenses   584,334     344,578  
Income from continuing operations before income taxes 32,479 21,205
Provision for income taxes   7,110     6,613  
Income from continuing operations 25,369 14,592
Income from discontinued operations, net of income taxes   -     2  
Net income 25,369 14,594
Net loss attributable to noncontrolling interests   319     -  
Net income attributable to Acadia Healthcare Company, Inc. $ 25,688   $ 14,594  
 
Basic earnings attributable to Acadia Healthcare Company, Inc. stockholders:
Income from continuing operations $ 0.31 $ 0.23
Income from discontinued operations   -     -  
Net income $ 0.31   $ 0.23  
 
Diluted earnings attributable to Acadia Healthcare Company, Inc. stockholders:
Income from continuing operations $ 0.31 $ 0.23
Income from discontinued operations   -     -  
Net income $ 0.31   $ 0.23  
 
Weighted-average shares outstanding:
Basic 82,943 62,530
Diluted 83,420 62,894
 

       
Acadia Healthcare Company, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
 
March 31,

2016

December 31,

2015

(In thousands)
 
ASSETS
Current assets:
Cash and cash equivalents $ 36,582 $ 11,215

Accounts receivable, net of allowance for doubtful accounts of $32,565 and $29,332, respectively

276,880 216,626
Other current assets   79,803     66,895  
Total current assets 393,265 294,736
Property and equipment, net 3,337,765 1,709,053
Goodwill 2,771,365 2,128,215
Intangible assets, net 102,593 59,575
Deferred tax assets - noncurrent 41,753 49,114
Other assets   49,618     38,515  
Total assets $ 6,696,359   $ 4,279,208  
 
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 69,223 $ 45,360
Accounts payable 118,210 91,341
Accrued salaries and benefits 112,714 80,696
Other accrued liabilities   108,663     72,806  
Total current liabilities 408,810 290,203
Long-term debt 3,497,569 2,195,384
Deferred tax liabilities - noncurrent 94,882 23,936
Other liabilities   124,492     78,602  
Total liabilities 4,125,753 2,588,125
Redeemable noncontrolling interests 7,736 8,055
Equity:
Common stock 865 707
Additional paid-in capital 2,475,383 1,572,972
Accumulated other comprehensive loss (153,062 ) (104,647 )
Retained earnings   239,684     213,996  
Total equity   2,562,870     1,683,028  
Total liabilities and equity $ 6,696,359   $ 4,279,208  
 

 
Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
       
Three Months Ended March 31,
2016 2015
(In thousands)
 
Operating activities:
Net income $ 25,369 $ 14,594

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

Depreciation and amortization 27,975 13,104
Amortization of debt issuance costs 2,147 1,468
Equity-based compensation expense 6,956 3,894
Deferred income tax expense 9,085 19,224
Income from discontinued operations, net of taxes - (2 )
Gain on foreign currency derivatives (410 ) (53 )
Other 882 378
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net (3,749 ) (6,957 )
Other current assets (8,075 ) (23,758 )
Other assets (2,402 ) (636 )
Accounts payable and other accrued liabilities 7,498 1,274
Accrued salaries and benefits (6,347 ) (5,022 )
Other liabilities   354     580  
Net cash provided by continuing operating activities 59,283 18,088
Net cash (used in) provided by discontinued operating activities   (619 )   134  
Net cash provided by operating activities 58,664 18,222
 
Investing activities:
Cash paid for acquisitions, net of cash acquired (580,096 ) (49,618 )
Cash paid for capital expenditures (90,089 ) (52,879 )
Cash paid for real estate acquisitions (14,799 ) (1,722 )
Settlement of foreign currency derivatives 745 -
Other   (1,208 )   (383 )
Net cash used in investing activities (685,447 ) (104,602 )
 
Financing activities:
Borrowings on long-term debt 1,480,000 875,000
Borrowings on revolving credit facility 58,000 93,000
Principal payments on revolving credit facility (166,000 ) -
Principal payments on long-term debt (13,669 ) (7,938 )
Repayment of assumed debt (1,348,389 ) (904,467 )
Payment of debt issuance costs (34,167 ) (22,191 )
Issuance of common stock, net 685,097 -
Common stock withheld for minimum statutory taxes, net (6,679 ) (5,110 )
Excess tax benefit from equity awards - 4,310
Other   (224 )   -  
Net cash provided by financing activities   653,969     32,604  
   
Effect of exchange rate changes on cash   (1,819 )   (2,232 )
 
Net increase (decrease) in cash and cash equivalents 25,367 (56,008 )
Cash and cash equivalents at beginning of the period   11,215     94,040  
Cash and cash equivalents at end of the period $ 36,582   $ 38,032  
 
Effect of acquisitions:
Assets acquired, excluding cash $ 2,372,358 $ 1,428,566
Liabilities assumed (1,575,380 ) (998,738 )
Issuance of common stock in connection with acquisition   (216,882 )   (380,210 )
Cash paid for acquisitions, net of cash acquired $ 580,096   $ 49,618  
 

 
Acadia Healthcare Company, Inc.
Operating Statistics
(Unaudited, Revenue in thousands)
           
Three Months Ended March 31,
2016 2015 % Change
Same Facility Results (a,c)
Revenue $ 391,412 $ 358,593 9.2%
Patient Days 573,701 528,248 8.6%
Admissions 28,615 25,693 11.4%
Average Length of Stay (b) 20.0 20.6 -2.5%
Revenue per Patient Day $ 682 $ 679 0.5%
EBITDA margin 27.1% 26.3% 80 bps
 
U.S. Same Facility Results (a)
Revenue $ 317,986 $ 289,298 9.9%
Patient Days 457,691 424,413 7.8%
Admissions 28,356 25,444 11.4%
Average Length of Stay (b) 16.1 16.7 -3.2%
Revenue per Patient Day $ 695 $ 682 1.9%
EBITDA margin 27.5% 26.4% 110 bps
 
U.K. Same Facility Results (c)
Revenue $ 73,426 $ 69,295 6.0%
Patient Days 116,010 103,835 11.7%
Admissions 259 249 4.0%
Average Length of Stay (b) 447.9 417.0 7.4%
Revenue per Patient Day $ 633 $ 667 -5.2%
EBITDA margin 25.3% 25.7% -40 bps
 
U.S. Facility Results
Revenue $ 408,264 $ 290,507 40.5%
Patient Days 561,323 424,413 32.3%
Admissions 34,465 25,444 35.5%
Average Length of Stay (b) 16.3 16.7 -2.4%
Revenue per Patient Day $ 727 $ 684 6.3%
EBITDA margin 26.2% 26.3% -10 bps
 
U.K. Facility Results (c)
Revenue $ 206,975 $ 69,295 198.7%
Patient Days 454,016 103,835 337.2%
Admissions 1,591 249 539.0%
Average Length of Stay (b) 285.4 417.0 -31.6%
Revenue per Patient Day $ 456 $ 667 -31.7%
EBITDA margin 21.7% 25.7% -400 bps
 
Total Facility Results (c)
Revenue $ 615,239 $ 359,802 71.0%
Patient Days 1,015,339 528,248 92.2%
Admissions 36,056 25,693 40.3%
Average Length of Stay (b) 28.2 20.6 37.0%
Revenue per Patient Day $ 606 $ 681 -11.0%
EBITDA margin 24.7% 26.2% -150 bps
 
(a) Same-facility results for the three months ended March 31, 2015 exclude five outpatient programs that have been closed.
(b) Average length of stay is defined as patient days divided by admissions.
(c) Revenue and revenue per patient day for the three months ended March 31, 2015 are adjusted to reflect the foreign currency exchange rate for the comparable period of 2016 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 months ended March 31, 2015 is 1.43.
 

 
Acadia Healthcare Company, Inc.
Reconciliation of Net Income Attributable to Acadia Healthcare Company, Inc. to Adjusted EBITDA
(Unaudited)
       
Three Months Ended March 31,
2016 2015
(in thousands)
 
Net income attributable to Acadia Healthcare Company, Inc. $ 25,688 $ 14,594
Income from discontinued operations, net of income taxes - (2 )
Net loss attributable to noncontrolling interests (319 ) -
Provision for income taxes 7,110 6,613
Interest expense, net 37,714 22,146
Depreciation and amortization   27,975     13,104  
EBITDA 98,168 56,455
 
Adjustments:
Equity-based compensation expense (a) 6,956 3,894
Gain on foreign currency derivatives (b) (410 ) (53 )
Transaction-related expenses (c)   26,298     18,416  
Adjusted EBITDA $ 131,012   $ 78,712  
 
See footnotes on page 9.
 

 
Acadia Healthcare Company, Inc.
Reconciliation of Adjusted Income from Continuing Operations Attributable to Acadia Healthcare Company, Inc. to
Net Income Attributable to Acadia Healthcare Company, Inc.
(Unaudited)
       
Three Months Ended March 31,
2016 2015
(in thousands, except per share amounts)
 
Net income attributable to Acadia Healthcare Company, Inc. $ 25,688 $ 14,594
Income from discontinued operations, net of income taxes - (2 )
Provision for income taxes   7,110     6,613  

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

32,798 21,205
 
Adjustments to income from continuing operations:
Gain on foreign currency derivatives (b) (410 ) (53 )
Transaction-related expenses (c) 26,298 18,416

Income tax provision reflecting tax effect of adjustments to income from continuing operations (d)

  (12,852 )   (12,464 )

Adjusted income from continuing operations attributable to Acadia Healthcare Company, Inc.

$ 45,834 $ 27,104
 
Weighted-average shares outstanding - diluted 83,420 62,894
 

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

$ 0.55   $ 0.43  
 
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 from continuing operations, 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 income from discontinued operations, net loss attributable to noncontrolling interests, net interest expense, income tax provision and depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted for equity-based compensation expense, gain on foreign currency derivatives and transaction-related expenses.
 
EBITDA, Adjusted EBITDA and Adjusted income from continuing operations 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 from continuing operations 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 from continuing operations may not be comparable to similarly titled measures of other companies. We have included information concerning EBITDA, Adjusted EBITDA and Adjusted income from continuing operations 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 from continuing operations when reporting their results. Our presentation of EBITDA, Adjusted EBITDA and Adjusted income from continuing operations should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.
 
(a) Represents the equity-based compensation expense of Acadia.
 
(b) Represents the change in fair value of foreign currency derivatives purchased by Acadia related to acquisitions in the U.K.
 
(c) Represents transaction-related expenses incurred by Acadia related to acquisitions.
 
(d) Represents the income tax provision adjusted to reflect the tax effect of the adjustments to income from continuing operations based on tax rates of 21.9% and 31.5% for the three months ended March 31, 2016 and 2015, respectively.

Source: Acadia Healthcare Company, Inc.

Acadia Healthcare Company, Inc.
Brent Turner, 615-861-6000
President