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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________ to ____________
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address, including zip code, of principal executive offices)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
☐ Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
At October 30, 2024, there were
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ACADIA HEALTHCARE COMPANY, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
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Item 1. |
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1 |
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1 |
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2 |
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3 |
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4 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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29 |
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Item 4. |
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Item 1. |
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30 |
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Item 1A. |
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30 |
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Item 2. |
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30 |
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Item 5 |
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31 |
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Item 6. |
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32 |
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Acadia Healthcare Company, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
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September 30, |
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December 31, |
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(In thousands, except share and per |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Goodwill |
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Intangible assets, net |
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Deferred tax assets |
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Operating lease right-of-use assets |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND EQUITY |
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Current liabilities: |
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Current portion of long-term debt |
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$ |
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$ |
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Accounts payable |
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Accrued salaries and benefits |
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Current portion of operating lease liabilities |
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Other accrued liabilities |
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Total current liabilities |
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Long-term debt |
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Deferred tax liabilities |
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Operating lease liabilities |
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Other liabilities |
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Total liabilities |
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Redeemable noncontrolling interests |
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Equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Total equity |
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Total liabilities and equity |
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$ |
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$ |
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See accompanying notes.
1
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Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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2024 |
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2023 |
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2024 |
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2023 |
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(In thousands, except per share amounts) |
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Revenue |
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$ |
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$ |
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$ |
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$ |
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Salaries, wages and benefits (including equity-based compensation |
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Professional fees |
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Supplies |
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Rents and leases |
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Other operating expenses |
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Income from provider relief fund |
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— |
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( |
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— |
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Depreciation and amortization |
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Interest expense, net |
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Legal settlements expense |
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— |
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— |
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Loss on impairment |
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— |
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Transaction, legal and other costs |
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Total expenses |
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Income (loss) before income taxes |
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Provision for (benefit from) income taxes |
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( |
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Net income (loss) |
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( |
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Net income attributable to noncontrolling interests |
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Net income (loss) attributable to Acadia Healthcare Company, Inc. |
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$ |
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$ |
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$ |
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$ |
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Earnings (loss) per share attributable to Acadia Healthcare |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average shares outstanding: |
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Basic |
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Diluted |
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See accompanying notes.
2
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Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Equity
(Unaudited)
(In thousands)
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Common Stock |
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Additional |
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Retained Earnings (Accumulated |
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Shares |
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Amount |
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Capital |
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Deficit) |
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Total |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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Common stock issued under stock incentive plans |
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— |
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Repurchase of shares for payroll tax withholding, net of |
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— |
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— |
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( |
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— |
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( |
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Equity-based compensation expense |
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— |
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— |
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— |
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Other |
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— |
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— |
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— |
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Net income attributable to Acadia Healthcare |
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— |
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— |
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— |
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Balance at March 31, 2023 |
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Common stock issued under stock incentive plans |
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— |
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Repurchase of shares for payroll tax withholding, net of |
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— |
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— |
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( |
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— |
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( |
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Equity-based compensation expense |
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— |
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— |
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— |
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Net income attributable to Acadia Healthcare |
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— |
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— |
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— |
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Balance at June 30, 2023 |
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Common stock issued under stock incentive plans |
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— |
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Repurchase of shares for payroll tax withholding, net of |
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— |
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— |
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( |
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— |
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( |
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Equity-based compensation expense |
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— |
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— |
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— |
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Other |
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— |
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— |
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Net loss attributable to Acadia Healthcare |
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— |
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— |
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— |
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( |
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( |
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Balance at September 30, 2023 |
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Common stock issued under stock incentive plans |
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— |
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Repurchase of shares for payroll tax withholding, net of |
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— |
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— |
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( |
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— |
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( |
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Equity-based compensation expense |
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— |
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— |
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— |
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Other |
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— |
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— |
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— |
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Net income attributable to Acadia Healthcare |
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— |
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— |
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— |
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Balance at December 31, 2023 |
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Common stock issued under stock incentive plans |
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— |
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Repurchase of shares for payroll tax withholding, net of |
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— |
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— |
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( |
) |
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— |
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( |
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Equity-based compensation expense |
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— |
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— |
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— |
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Net income attributable to Acadia Healthcare |
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— |
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— |
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— |
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Balance at March 31, 2024 |
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Common stock issued under stock incentive plans |
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— |
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Repurchase of shares for payroll tax withholding, net of |
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— |
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— |
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( |
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— |
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( |
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Equity-based compensation expense |
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— |
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— |
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— |
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Net income attributable to Acadia Healthcare |
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— |
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— |
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— |
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Balance at June 30, 2024 |
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Common stock issued under stock incentive plans |
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— |
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Repurchase of shares for payroll tax withholding, net of |
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— |
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— |
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( |
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— |
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( |
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Equity-based compensation expense |
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— |
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— |
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— |
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Other |
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— |
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— |
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— |
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Net income attributable to Acadia Healthcare |
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— |
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— |
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— |
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Balance at September 30, 2024 |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes.
3
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Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
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Nine Months Ended |
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2024 |
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2023 |
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(In thousands) |
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Operating activities: |
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Net income (loss) |
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$ |
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$ |
( |
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Adjustments to reconcile net income (loss) to net cash provided by operating |
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Depreciation and amortization |
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Amortization of debt issuance costs |
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Equity-based compensation expense |
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Deferred income taxes |
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( |
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Legal settlements expense |
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— |
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Loss on impairment |
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Other |
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( |
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Change in operating assets and liabilities, net of effect of acquisitions: |
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Accounts receivable, net |
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( |
) |
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( |
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Other current assets |
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( |
) |
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( |
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Other assets |
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Accounts payable and other accrued liabilities |
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( |
) |
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Accrued salaries and benefits |
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( |
) |
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( |
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Other liabilities |
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Government relief funds |
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— |
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( |
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Net cash provided by operating activities |
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Investing activities: |
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Cash paid for acquisitions, net of cash acquired |
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( |
) |
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( |
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Cash paid for capital expenditures |
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( |
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( |
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Proceeds from sale of property and equipment |
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Other |
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( |
) |
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( |
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Net cash used in investing activities |
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( |
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( |
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Financing activities: |
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Borrowings on long-term debt |
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— |
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Borrowings on revolving credit facility |
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Principal payments on revolving credit facility |
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( |
) |
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( |
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Principal payments on long-term debt |
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( |
) |
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( |
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Payment of debt issuance costs |
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( |
) |
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— |
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Repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises |
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( |
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( |
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Contributions from noncontrolling partners in joint ventures |
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Distributions to noncontrolling partners in joint ventures |
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( |
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( |
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Other |
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Net cash provided by (used in) financing activities |
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( |
) |
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Net (decrease) increase in cash and cash equivalents |
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( |
) |
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Cash and cash equivalents at beginning of the period |
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Cash and cash equivalents at end of the period |
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$ |
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$ |
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Effect of acquisitions: |
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Assets acquired, excluding cash |
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$ |
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$ |
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Liabilities assumed |
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( |
) |
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( |
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Contingent consideration issued in connection with an acquisition |
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( |
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— |
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Redeemable noncontrolling interest resulting from acquisition |
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— |
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( |
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Cash paid for acquisitions, net of cash acquired |
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$ |
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$ |
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See accompanying notes.
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Acadia Healthcare Company, Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2024
(Unaudited)
Description of Business
Acadia Healthcare Company, Inc. (the “Company”) develops and operates acute inpatient psychiatric facilities, specialty treatment facilities, comprehensive treatment centers (“CTCs”), residential treatment centers and facilities providing outpatient behavioral healthcare services to serve the behavioral healthcare and recovery needs of communities throughout the United States (“U.S.”) and Puerto Rico. At September 30, 2024, the Company operated
Basis of Presentation
The business of the Company is conducted through limited liability companies, partnerships and C-corporations. The Company’s condensed consolidated financial statements include the accounts of the Company and all subsidiaries controlled by the Company through its direct or indirect ownership of majority interests and exclusive rights granted to the Company as the controlling member of an entity. All intercompany accounts and transactions have been eliminated in consolidation.
The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of the Company’s financial position and results of operations have been included. The Company’s fiscal year ends on December 31 and interim results are not necessarily indicative of results for a full year or any other interim period. The condensed consolidated balance sheet at December 31, 2023 has been derived from the audited financial statements as of that date. The information contained in these condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the fiscal year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2024. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Certain reclassifications have been made to the prior year to conform to the current year presentation.
In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-07 Segment Reporting (Topic 280) (“ASU 2023-07”) “Improvements to Reportable Segment Disclosures.” ASU 2023-07 is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This guidance is effective for fiscal years beginning after December 15, 2023, and the interim periods within the fiscal years beginning after December 15, 2024, with early adoption permitted and applied retrospectively. The Company is currently evaluating the impact of ASU 2023-07 on the Company's consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) (“ASU 2023-09”) “Improvements to Income Tax Disclosures.” ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of ASU 2023-09 on the Company’s consolidated financial statements.
Revenue is primarily derived from services rendered to patients for inpatient psychiatric and substance abuse care, outpatient psychiatric care and residential treatment. The services provided by the Company have no fixed duration and can be terminated by the patient or the facility at any time, and therefore, each treatment is its own stand-alone contract.
Services ordered by a healthcare provider in an episode of care are not separately identifiable and therefore have been combined into a single performance obligation for each contract. The Company recognizes revenue as its performance obligations are completed. The performance obligation is satisfied over time as the customer simultaneously receives and consumes the benefits of the healthcare services provided. For inpatient services, the Company recognizes revenue equally over the patient stay on a daily basis. For outpatient services, the Company recognizes revenue equally over the number of treatments provided in a single episode of care.
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Typically, patients and third-party payors are billed within several days of the service being performed or the patient being discharged, and payments are due based on contract terms.
As the Company’s performance obligations relate to contracts with a duration of one year or less, the Company elected the optional exemption in Accounting Standards Codification (“ASC”) 606-10-50-14(a). Therefore, the Company is not required to disclose the transaction price for the remaining performance obligations at the end of the reporting period or when the Company expects to recognize the revenue. The Company has minimal unsatisfied performance obligations at the end of the reporting period as its patients typically are under no obligation to remain admitted in the Company’s facilities.
The Company disaggregates revenue from contracts with customers by service type and by payor.
The Company’s facilities and services provided by the facilities can generally be classified into the following categories: acute inpatient psychiatric facilities; specialty treatment facilities; CTCs; and residential treatment centers.
Acute inpatient psychiatric facilities. Acute inpatient psychiatric facilities provide a high level of care in order to stabilize patients that are either a threat to themselves or to others. The acute setting provides 24-hour observation, daily intervention and monitoring by psychiatrists.
Specialty treatment facilities. Specialty treatment facilities include residential recovery facilities and eating disorder facilities. The Company provides a comprehensive continuum of care for adults with addictive disorders and co-occurring mental disorders. Inpatient, including detoxification and rehabilitation, partial hospitalization and outpatient treatment programs give patients access to the least restrictive level of care.
Comprehensive treatment centers. CTCs specialize in providing medication-assisted treatment in an outpatient setting to
individuals addicted to opioids such as opioid analgesics (prescription pain medications).
Residential treatment centers. Residential treatment centers treat patients with behavioral disorders in a non-hospital setting. The facilities balance therapy activities with social, academic and other activities.
The table below presents total revenue attributed to each category (in thousands):
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Three Months Ended |
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Nine Months Ended |
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2024 |
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2023 |
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2024 |
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2023 |
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Acute inpatient psychiatric facilities |
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$ |
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$ |
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$ |
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$ |
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Specialty treatment facilities |
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Comprehensive treatment centers |
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Residential treatment centers |
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Revenue |
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$ |
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$ |
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$ |
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$ |
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The Company receives payments from the following sources for services rendered in its facilities: (i) state governments under their respective Medicaid and other programs; (ii) commercial insurers; (iii) the federal government under the Medicare program administered by the Centers for Medicare and Medicaid Services (“CMS”) and other programs; and (iv) individual patients and clients.
The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients and implicit price concessions. Contractual adjustments and discounts are based on contractual agreements, discount policies and historical experience. Implicit price concessions are based on historical collection experience. Most of the Company’s facilities have contracts containing variable consideration. However, it is unlikely a significant reversal of revenue will occur when the uncertainty is resolved, and therefore, the Company has included the variable consideration in the estimated transaction price. Subsequent changes resulting from a patient’s ability to pay are recorded as bad debt expense, which is included as a component of other operating expenses in the condensed consolidated statements of operations. Bad debt expense for the three and nine months ended September 30, 2024 and 2023 was not significant.
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The following table presents the Company’s revenue by payor type and as a percentage of revenue (in thousands):
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Nine Months Ended |
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2024 |
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2023 |
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2024 |
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2023 |
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Amount |
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Amount |
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Amount |
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Amount |
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Commercial |
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$ |
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$ |
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$ |
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$ |
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Medicare |
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% |
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% |
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Medicaid |
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% |
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Self-Pay |
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Other |
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Revenue |
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$ |
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$ |
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% |
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$ |
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4. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2024 and 2023 (in thousands, except per share amounts):
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Three Months Ended |
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Nine Months Ended |
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2024 |
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2023 |
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2024 |
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2023 |
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Numerator: |
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Net income (loss) attributable to Acadia Healthcare Company, Inc. |
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$ |
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$ |
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Denominator: |
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Weighted average shares outstanding for basic earnings per share |
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Effects of dilutive instruments |
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Shares used in computing diluted earnings per common share |
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Earnings (loss) per share attributable to Acadia Healthcare |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Approximately
The Company’s acquisition strategy is to acquire and develop behavioral healthcare facilities and improve operating results within its facilities and its other behavioral healthcare operations.
On February 22, 2024, the Company acquired substantially all of the assets of Turning Point Centers (“Turning Point”), a 76-bed specialty provider of substance use disorder and primary mental health treatment services that supports the Salt Lake City, Utah, metropolitan market. Turning Point provides a full continuum of treatment services, including residential, partial hospitalization and intensive outpatient services.
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Goodwill
The changes in goodwill during 2023 and 2024 are as follows (in thousands):
Balance at January 1, 2023 |
$ |
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Increase from acquisitions |
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Increase from contributions of redeemable noncontrolling interests |
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