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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

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: 001-35331

 

Acadia Healthcare Company, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

Delaware

 

45-2492228

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

6100 Tower Circle, Suite 1000

Franklin, Tennessee 37067

(Address, including zip code, of registrant’s principal executive offices)

(615861-6000

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, $.01 par value

 

ACHC

 

NASDAQ Global Select Market

           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.    Yes      No  

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).    Yes      No  

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.

 

Large accelerated filer

 

Accelerated filer

  Non-accelerated filer

 

Smaller reporting company

 

Emerging growth company 

 

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 May 4, 2022, there were 90,526,686 shares of the registrant’s common stock outstanding.

 

 

 


 

 

 

 

ACADIA HEALTHCARE COMPANY, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION

 

 

 

 

Item 1.

  

Financial Statements

1

 

 

 

 

  

Condensed Consolidated Balance Sheets (Unaudited)

1

 

 

 

 

  

Condensed Consolidated Statements of Income (Unaudited)

2

 

 

 

 

  

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

3

 

 

 

 

  

Condensed Consolidated Statements of Equity (Unaudited)

4

 

 

 

 

  

Condensed Consolidated Statements of Cash Flows (Unaudited)

5

 

 

 

 

  

Notes to Condensed Consolidated Financial Statements (Unaudited)

6

 

 

 

Item 2.

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

 

 

 

Item 3.

  

Quantitative and Qualitative Disclosures About Market Risk

32

 

 

 

Item 4.

  

Controls and Procedures

32

 

 

PART II – OTHER INFORMATION

 

 

 

 

Item 1.

  

Legal Proceedings

33

 

 

 

Item 1A.

  

Risk Factors

33

 

 

 

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

33

 

 

 

Item 6.

  

Exhibits

34

 

 

SIGNATURES

35

 

 

 


 

 

 

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

Acadia Healthcare Company, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

 

 

March 31,

2022

 

 

December 31,

2021

 

 

 

(In thousands, except share and per

share amounts)

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

140,367

 

 

$

133,813

 

Accounts receivable, net

 

 

299,022

 

 

 

281,332

 

Other current assets

 

 

90,710

 

 

 

79,886

 

Total current assets

 

 

530,099

 

 

 

495,031

 

Property and equipment, net

 

 

1,795,791

 

 

 

1,771,159

 

Goodwill

 

 

2,200,659

 

 

 

2,199,937

 

Intangible assets, net

 

 

70,319

 

 

 

70,145

 

Deferred tax assets

 

 

3,047

 

 

 

3,080

 

Operating lease right-of-use assets

 

 

139,264

 

 

 

133,761

 

Other assets

 

 

95,460

 

 

 

94,965

 

Total assets

 

$

4,834,639

 

 

$

4,768,078

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

21,250

 

 

$

18,594

 

Accounts payable

 

 

104,209

 

 

 

98,575

 

Accrued salaries and benefits

 

 

138,092

 

 

 

137,845

 

Current portion of operating lease liabilities

 

 

25,170

 

 

 

23,348

 

Other accrued liabilities

 

 

122,030

 

 

 

126,499

 

Total current liabilities

 

 

410,751

 

 

 

404,861

 

Long-term debt

 

 

1,463,848

 

 

 

1,478,626

 

Deferred tax liabilities

 

 

77,604

 

 

 

74,368

 

Operating lease liabilities

 

 

120,560

 

 

 

116,841

 

Other liabilities

 

 

117,062

 

 

 

110,505

 

Total liabilities

 

 

2,189,825

 

 

 

2,185,201

 

Redeemable noncontrolling interests

 

 

70,304

 

 

 

65,388

 

Equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value; 10,000,000 shares authorized, no shares issued

 

 

 

 

 

 

Common stock, $0.01 par value; 180,000,000 shares authorized; 89,661,341

   and 89,028,158 issued and outstanding at March 31, 2022 and

   December 31, 2021, respectively

 

 

897

 

 

 

890

 

Additional paid-in capital

 

 

2,632,527

 

 

 

2,636,350

 

Accumulated deficit

 

 

(58,914

)

 

 

(119,751

)

Total equity

 

 

2,574,510

 

 

 

2,517,489

 

Total liabilities and equity

 

$

4,834,639

 

 

$

4,768,078

 

 

See accompanying notes.

1


 

 

Acadia Healthcare Company, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

 

 

 

Three Months Ended

March 31,

 

 

 

2022

 

 

2021

 

 

 

(In thousands, except per share amounts)

 

Revenue

 

$

616,653

 

 

$

551,199

 

Salaries, wages and benefits (including equity-based compensation

     expense of $7,925 and $7,034, respectively)

 

 

335,762

 

 

 

304,333

 

Professional fees

 

 

36,911

 

 

 

31,617

 

Supplies

 

 

23,699

 

 

 

21,322

 

Rents and leases

 

 

11,249

 

 

 

9,412

 

Other operating expenses

 

 

81,425

 

 

 

72,010

 

Depreciation and amortization

 

 

28,926

 

 

 

24,894

 

Interest expense, net

 

 

15,787

 

 

 

29,027

 

Debt extinguishment costs

 

 

 

 

 

24,650

 

Transaction-related expenses

 

 

3,582

 

 

 

4,610

 

Total expenses

 

 

537,341

 

 

 

521,875

 

Income from continuing operations before income taxes

 

 

79,312

 

 

 

29,324

 

Provision for income taxes

 

 

17,402

 

 

 

6,204

 

Income from continuing operations

 

 

61,910

 

 

 

23,120

 

Loss from discontinued operations, net of taxes

 

 

 

 

 

(12,641

)

Net income

 

 

61,910

 

 

 

10,479

 

Net income attributable to noncontrolling interests

 

 

(1,073

)

 

 

(762

)

Net income attributable to Acadia Healthcare Company, Inc.

 

$

60,837

 

 

$

9,717

 

Basic earnings per share attributable to Acadia Healthcare

    Company, Inc. stockholders:

 

 

 

 

 

 

 

 

Income from continuing operations attributable to Acadia

    Healthcare Company, Inc.

 

$

0.68

 

 

$

0.25

 

Loss from discontinued operations

 

 

 

 

 

(0.14

)

Net income attributable to Acadia Healthcare Company, Inc.

 

$

0.68

 

 

$

0.11

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Acadia Healthcare

    Company, Inc. stockholders:

 

 

 

 

 

 

 

 

Income from continuing operations attributable to Acadia

    Healthcare Company, Inc.

 

$

0.67

 

 

$

0.25

 

Loss from discontinued operations

 

 

 

 

 

(0.14

)

Net income attributable to Acadia Healthcare Company, Inc.

 

$

0.67

 

 

$

0.11

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

89,258

 

 

 

88,242

 

Diluted

 

 

91,012

 

 

 

89,941

 

 

See accompanying notes.

2


 

 

Acadia Healthcare Company, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

 

 

 

Three Months Ended

March 31,

 

 

 

2022

 

 

2021

 

 

 

(In thousands)

 

Net income

 

$

61,910

 

 

$

10,479

 

Other comprehensive income:

 

 

 

 

 

 

 

 

Foreign currency translation loss

 

 

 

 

 

(4,260

)

Gain on derivative instruments, net of tax of $0.1 million

 

 

 

 

 

19

 

U.K. Sale

 

 

 

 

 

375,606

 

Other comprehensive income

 

 

 

 

 

371,365

 

Comprehensive income

 

 

61,910

 

 

 

381,844

 

Comprehensive income attributable to noncontrolling interests

 

 

(1,073

)

 

 

(762

)

Comprehensive income attributable to Acadia Healthcare

     Company, Inc.

 

$

60,837

 

 

$

381,082

 

 

See accompanying notes.

3


 

 

Acadia Healthcare Company, Inc.

Condensed Consolidated Statements of Equity

(Unaudited)

(In thousands)

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Total

 

Balance at December 31, 2020

 

 

88,024

 

 

$

880

 

 

$

2,580,327

 

 

$

(371,365

)

 

$

(310,386

)

 

$

1,899,456

 

Common stock issued under stock incentive plans

 

 

705

 

 

 

7

 

 

 

12,733

 

 

 

 

 

 

 

 

 

12,740

 

Repurchase of shares for payroll tax withholding, net of

   proceeds from stock option exercises

 

 

 

 

 

 

 

 

(4,521

)

 

 

 

 

 

 

 

 

(4,521

)

Equity-based compensation expense

 

 

 

 

 

 

 

 

7,034

 

 

 

 

 

 

 

 

 

7,034

 

Other

 

 

 

 

 

 

 

 

2,208

 

 

 

 

 

 

 

 

 

2,208

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

371,365

 

 

 

 

 

 

371,365

 

Net income attributable to Acadia Healthcare

   Company, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,717

 

 

 

9,717

 

Balance at March 31, 2021

 

 

88,729

 

 

 

887

 

 

 

2,597,781

 

 

 

 

 

 

(300,669

)

 

 

2,297,999

 

Common stock issued under stock incentive plans

 

 

188

 

 

 

2

 

 

 

5,620

 

 

 

 

 

 

 

 

 

5,622

 

Repurchase of shares for payroll tax withholding, net of

   proceeds from stock option exercises

 

 

 

 

 

 

 

 

(580

)

 

 

 

 

 

 

 

 

(580

)

Equity-based compensation expense

 

 

 

 

 

 

 

 

9,031

 

 

 

 

 

 

 

 

 

9,031

 

Net income attributable to Acadia Healthcare

   Company, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

44,514

 

 

 

44,514

 

Balance at June 30, 2021

 

 

88,917

 

 

 

889

 

 

 

2,611,852

 

 

 

 

 

 

(256,155

)

 

 

2,356,586

 

Common stock issued under stock incentive plans

 

 

89

 

 

 

1

 

 

 

3,254

 

 

 

 

 

 

 

 

 

3,255

 

Repurchase of shares for payroll tax withholding, net of

   proceeds from stock option exercises

 

 

 

 

 

 

 

 

(444

)

 

 

 

 

 

 

 

 

(444

)

Equity-based compensation expense

 

 

 

 

 

 

 

 

8,923

 

 

 

 

 

 

 

 

 

8,923

 

Net income attributable to Acadia Healthcare

   Company, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

66,126

 

 

 

66,126

 

Balance at September 30, 2021

 

 

89,006

 

 

 

890

 

 

 

2,623,585

 

 

 

 

 

 

(190,029

)

 

 

2,434,446

 

Common stock issued under stock incentive plans

 

 

22

 

 

 

 

 

 

412

 

 

 

 

 

 

 

 

 

412

 

Repurchase of shares for payroll tax withholding, net of

   proceeds from stock option exercises

 

 

 

 

 

 

 

 

(189

)

 

 

 

 

 

 

 

 

(189

)

Equity-based compensation expense

 

 

 

 

 

 

 

 

12,542

 

 

 

 

 

 

 

 

 

12,542

 

Net income attributable to Acadia Healthcare

   Company, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

70,278

 

 

 

70,278

 

Balance at December 31, 2021

 

 

89,028

 

 

 

890

 

 

 

2,636,350

 

 

 

 

 

 

(119,751

)

 

 

2,517,489

 

Common stock issued under stock incentive plans

 

 

633

 

 

 

7

 

 

 

3,742

 

 

 

 

 

 

 

 

 

3,749

 

Repurchase of shares for payroll tax withholding, net of

   proceeds from stock option exercises

 

 

 

 

 

 

 

 

(15,490

)

 

 

 

 

 

 

 

 

(15,490

)

Equity-based compensation expense

 

 

 

 

 

 

 

 

7,925

 

 

 

 

 

 

 

 

 

7,925

 

Net income attributable to Acadia Healthcare

   Company, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

60,837

 

 

 

60,837

 

Balance at March 31, 2022

 

 

89,661

 

 

$

897

 

 

$

2,632,527

 

 

$

 

 

$

(58,914

)

 

$

2,574,510

 

 

See accompanying notes.

4


 

 

Acadia Healthcare Company, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Three Months Ended

March 31,

 

 

 

2022

 

 

2021

 

 

 

(In thousands)

 

Operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

61,910

 

 

$

10,479

 

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

    activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

28,926

 

 

 

24,894

 

Amortization of debt issuance costs

 

 

808

 

 

 

1,646

 

Equity-based compensation expense

 

 

7,925

 

 

 

7,034

 

Deferred income taxes

 

 

3,269

 

 

 

3,962

 

Loss from discontinued operations, net of taxes

 

 

 

 

 

12,641

 

Debt extinguishment costs

 

 

 

 

 

24,650

 

Other

 

 

(478

)

 

 

1,737

 

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

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(18,222

)

 

 

(2,490

)

Other current assets

 

 

(16,638

)

 

 

75

 

Other assets

 

 

(202

)

 

 

(3,570

)

Accounts payable and other accrued liabilities

 

 

10,501

 

 

 

(3,979

)

Accrued salaries and benefits

 

 

246

 

 

 

2,915

 

Other liabilities

 

 

6,298

 

 

 

(4,210

)

Government relief funds

 

 

(7,556

)

 

 

 

Net cash provided by continuing operating activities

 

 

76,787

 

 

 

75,784

 

Net cash provided by discontinued operating activities

 

 

 

 

 

253

 

Net cash provided by operating activities

 

 

76,787

 

 

 

76,037

 

Investing activities:

 

 

 

 

 

 

 

 

Cash paid for capital expenditures

 

 

(50,527

)

 

 

(58,682

)

Proceeds from U.K. Sale

 

 

 

 

 

1,511,020

 

Settlement of foreign currency derivatives

 

 

 

 

 

(84,795

)

Proceeds from sale of property and equipment

 

 

1,294

 

 

 

134

 

Other

 

 

(460

)

 

 

(74

)

Net cash (used in) provided by investing activities

 

 

(49,693

)

 

 

1,367,603

 

Financing activities:

 

 

 

 

 

 

 

 

Borrowings on long-term debt

 

 

 

 

 

425,000

 

Borrowings on revolving credit facility

 

 

 

 

 

430,000

 

Principal payments on revolving credit facility

 

 

(10,000

)

 

 

(270,000

)

Principal payments on long-term debt

 

 

(2,656

)

 

 

 

Repayment of long-term debt

 

 

 

 

 

(2,224,603

)

Payment of debt issuance costs

 

 

 

 

 

(9,935

)

Repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises

 

 

(11,741

)

 

 

8,219

 

Contributions from noncontrolling partners in joint ventures

 

 

4,290

 

 

 

1,000

 

Distributions to noncontrolling partners in joint ventures

 

 

(447

)

 

 

(377

)

Other

 

 

14

 

 

 

(6,793

)

Net cash used in financing activities

 

 

(20,540

)

 

 

(1,647,489

)

Effect of exchange rate changes on cash

 

 

 

 

 

4,067

 

Net increase (decrease) in cash and cash equivalents

 

 

6,554

 

 

 

(199,782

)

Cash and cash equivalents at beginning of the period

 

 

133,813

 

 

 

378,697

 

Cash and cash equivalents at end of the period

 

$

140,367

 

 

$

178,915

 

 

See accompanying notes.

5


 

 

Acadia Healthcare Company, Inc.

Notes to Condensed Consolidated Financial Statements

March 31, 2022

(Unaudited)

1.

Description of Business and Basis of Presentation

Description of Business

Acadia Healthcare Company, Inc. (the “Company”) develops and operates inpatient psychiatric facilities, residential treatment centers, group homes, substance abuse facilities and facilities providing outpatient behavioral healthcare services to serve the behavioral health and recovery needs of communities throughout the United States (“U.S.”) and Puerto Rico. At March 31, 2022, the Company operated 238 behavioral healthcare facilities with approximately 10,600 beds in 40 states and Puerto Rico.

On January 19, 2021, the Company completed the sale of its operations in the United Kingdom (“U.K.”) to RemedcoUK Limited, a company organized under the laws of England and Wales and owned by funds managed or advised by Waterland Private Equity Fund VII (the “U.K. Sale”). The U.K. Sale allowed the Company to reduce its indebtedness and focus on the Company’s U.S. operations. As a result of the U.K. Sale, the Company reported, for all periods presented, results of operations and cash flows of the U.K. operations as discontinued operations in the accompanying financial statements. See Note 9 – U.K. Sale.

Basis of Presentation

The business of the Company is conducted through limited liability companies, partnerships and C-corporations. The Company’s consolidated financial statements in