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Acadia Healthcare Reports Growth of 58.6% in Fourth Quarter Adjusted EPS to $0.46 and 55.2% in Revenue to $294.9 Million, Including 12.2% Growth in Same Facility Revenue

Completes Acquisition of CRC Health Group

Establishes Guidance for 2015 Adjusted Earnings per Diluted Share in Range of $2.03 to $2.10

FRANKLIN, Tenn.--(BUSINESS WIRE)--Feb. 11, 2015-- Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced financial results for the fourth quarter and year ended December 31, 2014. For the quarter, revenue increased 55.2% to $294.9 million from $190.0 million for the fourth quarter of 2013. Income from continuing operations rose to $22.3 million, or $0.37 per diluted share, for the fourth quarter of 2014 from $12.4 million, or $0.25 per diluted share, for the fourth quarter of 2013. Adjusted income from continuing operations grew 87.6% to $27.2 million for the fourth quarter of 2014 from $14.5 million for the fourth quarter of 2013, while adjusted income from continuing operations per diluted share increased 58.6% to $0.46 from $0.29. The adjusted results exclude transaction-related expenses of $2.8 million and $3.3 million for the fourth quarter of 2014 and 2013, respectively. Weighted average shares outstanding increased 18.1% for the fourth quarter of 2014 from the fourth quarter of 2013, primarily due to the Company’s public equity offering in June 2014. A reconciliation of all GAAP and non-GAAP financial results in this release is on pages 8 and 9.

Revenue for 2014 increased 40.8% to $1.0 billion from $713.4 million for 2013. Income from continuing operations was $83.2 million, or $1.50 per diluted share, for 2014 compared with $43.3 million, or $0.86 per diluted share, for 2013. Adjusted income from continuing operations increased 58.7% to $85.0 million for 2014 from $53.6 million for 2013, while adjusted income from continuing operations per diluted share increased 43.9% to $1.54 from $1.07. The adjusted results exclude a gain on foreign currency derivatives of $15.3 million for 2014, debt extinguishment costs of $9.4 million for 2013 and transaction-related expenses of $13.7 million and $7.2 million for 2014 and 2013, respectively. Weighted average shares outstanding increased 10.1% for 2014 from 2013.

“Acadia’s strong operating results for the fourth quarter completed a year of substantial profitable growth for the Company,” said Joey Jacobs, Chairman and Chief Executive Officer of Acadia. “In addition to the growth momentum our operations demonstrated in 2014 - through which we achieved milestone annual revenues of more than $1 billion - we have made a great start to 2015 with the completion of the CRC acquisition. CRC, which produced revenues for 2014 of approximately $450 million and adjusted EBITDA of approximately $115 million, brings 35 inpatient facilities to Acadia with approximately 2,400 beds and 81 comprehensive treatment centers. We expect CRC to be meaningfully accretive to our financial results, while diversifying our services and payor mix.”

To fund the CRC acquisition, Acadia issued approximately 5,975,000 shares of its common stock to former CRC stockholders; issued $375 million of new 5.625% senior unsecured notes due 2023; borrowed $500 million under a new $500 million incremental term loan facility and $25 million under Acadia’s existing revolving credit facility, in each case under its Amended and Restated Senior Credit Facility; and used approximately $70 million of cash on hand.

Jacobs continued, “Our revenue growth for 2014 was primarily driven by the addition of approximately 1,800 beds to our operations through acquisition and organic growth. We completed five acquisitions during 2014, which brought 27 facilities and over 1,400 beds to Acadia. We also added 378 beds at existing facilities during the year. As a result, we completed the year with approximately 5,800 beds in 78 facilities in 24 states, the United Kingdom and Puerto Rico.

“The Company’s same facility performance for the fourth quarter and full year reflected the addition of beds to existing facilities, as well as our initiatives to build revenue and increase efficiency and productivity at our facilities. Same facility revenues expanded 12.2% for the fourth quarter, as we produced an 11.5% increase in patient days and a 0.7% increase in revenue per patient day. This significant growth generated further operating leverage, which was primarily accountable for the 160 basis point increase in our same facility EBITDA margin to 26.2% for the quarter. Same facility revenue grew 10.9% for full year 2014 and EBITDA margin increased 180 basis points to 26.1%. Acadia’s consolidated adjusted EBITDA for the fourth quarter increased 69.5% to $66.4 million, which was 22.5% of revenue, from $39.2 million, or 20.6% of revenue, for 2013.

“For 2015, we will continue to evaluate potential acquisitions in our highly fragmented behavioral healthcare markets and add new beds in existing facilities in both the U.S. and the U.K. Subsequent to the closing of the CRC transaction, we remain well positioned to finance our growth strategies, with availability under our revolving credit facility of approximately $266 million.”

Acadia today established guidance for 2015 adjusted earnings per diluted share in a range of $2.03 to $2.10, an increase of approximately 32% to 36% over 2014. Additionally for the first quarter of 2015, the Company expects adjusted earnings per diluted share in a range of $0.40 to $0.41, an increase of approximately 43% to 46% over the first quarter of 2014. The Company’s guidance includes the impact of start-up costs at several de novo facilities coming on line in 2015. It also assumes an exchange rate of $1.52 per British Pound, which is approximately 7% lower than 2014, non-cash stock compensation expense of approximately $19 million and a tax rate of 32%. 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 and year-end financial results and the completed CRC transaction at 9:00 a.m. Eastern Time on Thursday, February 12, 2015. A live webcast of the conference call will be available at www.acadiahealthcare.com in the “Investor Relations” section of the website. The webcast of the conference call will be available through February 27, 2015.

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 the PiC and CRC 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 the 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 194 behavioral healthcare facilities with approximately 8,300 beds in 37 states, the United Kingdom and Puerto Rico. Acadia provides psychiatric and chemical dependency 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 December 31, Year Ended December 31,
2014 2013 2014 2013
(In thousands, except per share amounts)
 
Revenue before provision for doubtful accounts $ 301,000 $ 195,879 $ 1,030,784 $ 735,109
Provision for doubtful accounts   (6,099 )   (5,880 )   (26,183 )   (21,701 )
Revenue 294,901 189,999 1,004,601 713,408
 

Salaries, wages and benefits (including equity-based compensation expense of $3,083, $1,505, $10,058 and $5,249, respectively)

166,732 109,058 575,412 407,962
Professional fees 16,331 9,877 52,482 37,171
Supplies 13,700 9,552 48,422 37,569
Rents and leases 3,329 2,672 12,201 10,049
Other operating expenses 31,466 21,148 110,654 80,572
Depreciation and amortization 10,971 4,842 32,667 17,090
Interest expense, net 14,716 9,578 48,221 37,250
Debt extinguishment costs - - - 9,350
Gain on foreign currency derivatives - - (15,262 ) -
Transaction-related expenses   2,816     3,337     13,650     7,150  
Total expenses   260,061     170,064     878,447     644,163  
Income from continuing operations before income taxes 34,840 19,935 126,154 69,245
Provision for income taxes   12,539     7,536     42,922     25,975  
Income from continuing operations 22,301 12,399 83,232 43,270
Loss from discontinued operations, net of income taxes   (172 )   (119 )   (192 )   (691 )
Net income $ 22,129   $ 12,280   $ 83,040   $ 42,579  
 
Basic earnings per share:
Income from continuing operations $ 0.38 $ 0.25 $ 1.51 $ 0.87
Loss from discontinued operations   -     -     -     (0.02 )
Net income $ 0.38   $ 0.25   $ 1.51   $ 0.85  
 
Diluted earnings per share:
Income from continuing operations $ 0.37 $ 0.25 $ 1.50 $ 0.86
Loss from discontinued operations   -     (0.01 )   -     (0.01 )
Net income $ 0.37   $ 0.24   $ 1.50   $ 0.85  
 
Weighted-average shares outstanding:
Basic 59,197 50,053 55,063 50,004
Diluted 59,529 50,411 55,327 50,261
 
 
Acadia Healthcare Company, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
   
December 31,
2014 2013
(In thousands)
 
ASSETS
Current assets:
Cash and cash equivalents $ 94,040 $ 4,569

Accounts receivable, net of allowance for doubtful accounts of $22,449 and $18,345, respectively

118,378 95,885
Deferred tax assets 20,155 15,703
Other current assets   41,570     28,969
Total current assets 274,143 145,126
Property and equipment, net 1,069,700 370,109
Goodwill 802,986 661,549
Intangible assets, net 21,636 20,568
Deferred tax assets - noncurrent 13,141 -
Other assets   41,984     27,307
Total assets $ 2,223,590   $ 1,224,659
 
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 26,965 $ 15,195
Accounts payable 48,696 36,026
Accrued salaries and benefits 59,317 37,721
Other accrued liabilities   30,956     25,748
Total current liabilities 165,934 114,690
Long-term debt 1,069,305 601,941
Deferred tax liabilities - noncurrent 63,880 7,971
Other liabilities   43,506     19,347
Total liabilities 1,342,625 743,949
Equity:
Common stock 592 501
Additional paid-in capital 847,301 461,807
Accumulated other comprehensive loss (68,370 ) -
Retained earnings   101,442     18,402
Total equity   880,965     480,710
Total liabilities and equity $ 2,223,590   $ 1,224,659
 
 
Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
   
Year Ended December 31,
2014 2013
(In thousands)
 
Operating activities:
Net income $ 83,040 $ 42,579
 
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation and amortization 32,667 17,090
Amortization of debt issuance costs 3,198 2,264
Equity-based compensation expense 10,058 5,249
Deferred income tax expense 7,215 10,083
Loss from discontinued operations, net of taxes 192 691
Debt extinguishment costs - 9,350
Gain on foreign currency derivatives (15,262 ) -
Other 488 21
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net (15,110 ) (21,242 )
Other current assets (2,011 ) (3,652 )
Other assets (6,513 ) (2,239 )
Accounts payable and other accrued liabilities 2,793 (848 )
Accrued salaries and benefits 11,980 2,803
Other liabilities   2,749     3,181  
Net cash provided by continuing operating activities 115,484 65,330
Net cash (used in) provided by discontinued operating activities   (198 )   232  
Net cash provided by operating activities 115,286 65,562
 
Investing activities:
Cash paid for acquisitions, net of cash acquired (738,702 ) (164,019 )
Cash paid for capital expenditures (113,244 ) (68,941 )
Cash paid for real estate acquisitions (23,177 ) (8,092 )
Settlement of foreign currency derivatives 15,262 -
Other   (913 )   (1,926 )
Net cash used in investing activities (860,774 ) (242,978 )
 
Financing activities:
Borrowings on long-term debt 542,500 150,000
Borrowings on revolving credit facility 230,500 61,500
Principal payments on revolving credit facility (284,000 ) (8,000 )
Principal payments on long-term debt (7,695 ) (7,680 )
Repayment of long-term debt - (52,500 )
Payment of debt issuance costs (12,993 ) (4,307 )
Payment of premium on note redemption - (6,759 )
Issuance of common stock, net 374,431 (205 )
Common stock withheld for minimum statutory taxes, net (4,099 ) (1,242 )
Excess tax benefit from equity awards 4,617 1,779
Cash paid for contingent consideration (5,000 ) -
Other   (289 )   -  
Net cash provided by financing activities   837,972     132,586  
   
Effect of exchange rate changes on cash   (3,013 )   -  
 
Net increase (decrease) in cash and cash equivalents 89,471 (44,830 )
Cash and cash equivalents at beginning of the period   4,569     49,399  
Cash and cash equivalents at end of the period $ 94,040   $ 4,569  

 

 

 

 

Effect of acquisitions:
Assets acquired, excluding cash $ 819,518 $ 192,928
Liabilities assumed (78,849 ) (17,725 )
Deposits paid for acquisitions - 500
Prior year deposits paid for acquisitions (500 ) (11,684 )
Contingent consideration issued in connection with acquisition   (1,467 )   -  
Cash paid for acquisitions, net of cash acquired $ 738,702   $ 164,019  
 
 
Acadia Healthcare Company, Inc.
Operating Statistics
(Unaudited)
(Revenue in thousands)
             
Three Months Ended December 31, Year Ended December 31,
2014 2013 % Change 2014 2013 % Change
Same Facility Results
Revenue $ 212,439 $ 189,327 12.2% $ 788,173 $ 710,695 10.9%
Patient Days 317,361 284,753 11.5% 1,183,386 1,073,136 10.3%
Admissions 18,785 15,698 19.7% 67,116 57,568 16.6%
Average Length of Stay (a) 16.9 18.1 -6.9% 17.6 18.6 -5.4%
 
Revenue per Patient Day $ 669 $ 665 0.7% $ 666 $ 662 0.6%
EBITDA margin 26.2% 24.6% 160 bps 26.1% 24.3% 180 bps
 
U.S. Facility Results
Revenue $ 219,800 $ 189,327 16.1% $ 850,625 $ 710,695 19.7%
Patient Days 323,199 284,753 13.5% 1,262,445 1,073,136 17.6%
Admissions 19,368 15,698 23.4% 76,143 57,568 32.3%
Average Length of Stay (a) 16.7 18.1 -8.0% 16.6 18.6 -11.1%
 
Revenue per Patient Day $ 680 $ 665 2.3% $ 674 $ 662 1.7%
EBITDA margin 25.2% 24.6% 60 bps 24.6% 24.3% 30 bps
 
U.K. Facility Results
Revenue $ 75,101 $ 151,127
Patient Days 101,902 197,277
Admissions 271 590
Average Length of Stay (a) 376.0 334.4
 
Revenue per Patient Day $ 737 $ 766
EBITDA margin 26.1% 26.4%
 
Total Facility Results
Revenue $ 294,901 $ 189,327 55.8% $ 1,001,752 $ 710,695 41.0%
Patient Days 425,101 284,753 49.3% 1,459,722 1,073,136 36.0%
Admissions 19,639 15,698 25.1% 76,733 57,568 33.3%
Average Length of Stay (a) 21.6 18.1 19.3% 19.0 18.6 2.1%
 
Revenue per Patient Day $ 694 $ 665 4.3% $ 686 $ 662 3.6%
EBITDA margin 25.4% 24.6% 80 bps 24.9% 24.3% 60 bps
 
(a) Average length of stay is defined as patient days divided by admissions.
 
 
Acadia Healthcare Company, Inc.
Reconciliation of Net Income to Adjusted EBITDA
(Unaudited)
         
Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
(in thousands)
 
Net income $ 22,129 $ 12,280 $ 83,040 $ 42,579
Loss from discontinued operations 172 119 192 691
Provision for income taxes 12,539 7,536 42,922 25,975
Interest expense, net 14,716 9,578 48,221 37,250
Depreciation and amortization   10,971   4,842   32,667     17,090
EBITDA 60,527 34,355 207,042 123,585
 
Adjustments:
Equity-based compensation expense (a) 3,083 1,505 10,058 5,249
Debt extinguishment costs (b) - - - 9,350
Gain on foreign currency derivatives (c) - - (15,262 ) -
Transaction-related expenses (d)   2,816   3,337   13,650     7,150
Adjusted EBITDA $ 66,426 $ 39,197 $ 215,488   $ 145,334
 
See footnotes on page 10.
 
 
Acadia Healthcare Company, Inc.
Reconciliation of Adjusted Income from Continuing Operations to Income from
Continuing Operations
(Unaudited)
         
Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
(in thousands, except per share amounts)
 
Income from continuing operations $ 22,301 $ 12,399 $ 83,232 $ 43,270
Provision for income taxes   12,539     7,536     42,922     25,975  
Income from continuing operations before income taxes 34,840 19,935 126,154 69,245
 
Adjustments to income from continuing operations:
Debt extinguishment costs (b) - - - 9,350
Gain on foreign currency derivatives (c) - - (15,262 ) -
Transaction-related expenses (d) 2,816 3,337 13,650 7,150

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

  (10,506 )   (8,797 )   (39,522 )   (32,172 )
Adjusted income from continuing operations $ 27,150 $ 14,475 $ 85,020 $ 53,573
 
Weighted-average shares outstanding - diluted 59,529 50,411 55,327 50,261
 
Adjusted income from continuing operations per diluted share $ 0.46   $ 0.29   $ 1.54   $ 1.07  
 
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 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 loss from discontinued operations, net interest expense, income tax provision and depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted for equity-based compensation expense, debt extinguishment costs, 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 debt extinguishment costs related to the repayment of $52.5 million of the Company's 12.875% Senior Notes due 2018 on March 12, 2013, including a prepayment premium of $6.8 million and the write-off of $2.6 million of deferred financing costs.
 
(c) Represents the change in fair value of foreign currency derivatives purchased by Acadia related to its acquisition of Partnerships in Care on July 1, 2014.
 
(d) Represents transaction-related expenses incurred by Acadia related to acquisitions.
 
(e) Represents the income tax provision adjusted to reflect the tax effect of the adjustments to income from continuing operations based on tax rates of 27.9% for the three months ended December 31, 2014 and 31.7% for the year ended December 31, 2014.

Source: Acadia Healthcare Company, Inc.

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