Acadia Healthcare Reports Second Quarter GAAP EPS of $0.57 and Adjusted EPS of $0.66 - Acadia Healthcare Co (NASDAQ:ACHC)

Acadia Healthcare Company, Inc. ACHC today announced financial results for the second quarter and six months ended June 30, 2017. Revenue for the quarter was $715.9 million, a decline of 5.4% from $756.5 million for the second quarter of 2016. Net income attributable to Acadia stockholders was $49.6 million, or $0.57 per diluted share, for the second quarter of 2017 compared with $56.4 million, or $0.65 per diluted share, for the second quarter of 2016. Adjusted income from continuing operations attributable to Acadia stockholders per diluted share was $0.66 for the second quarter of 2017 compared with $0.73 for the second quarter of 2016. Similar to the first quarter of 2017, the results for the second quarter were impacted by the decline in the exchange rate of the British Pound Sterling to the U.S. dollar compared with the second quarter of 2016, as well as by the full comparable quarter impact of the divestiture of 22 facilities in the U.K. in the fourth quarter of 2016 relating to the Priory acquisition on February 16, 2016. A reconciliation of all non-GAAP financial results in this release appears beginning on page 8.

For the first six months of 2017, revenue was $1.40 billion, a 1.6% increase from $1.37 billion for the first half of 2016. Net income attributable to Acadia stockholders for the first half of 2017 was $84.6 million, or $0.97 per diluted share, versus $82.1 million, or $0.97 per diluted share, for the comparable period in 2016. Adjusted income from continuing operations attributable to Acadia stockholders per diluted share was $1.12 for the first six months of 2017 compared with $1.28 for the first six months of 2016.

On a pro forma basis, adjusting results for the U.K. divestitures, the decline of the exchange rate, and discontinued operations, Acadia's revenue for the second quarter of 2017 increased 6.4% to $715.9 million compared with $672.9 million for the second quarter of 2016. Pro forma adjustments for the second quarter of 2016 included the negative impact from the U.K. divestitures of $43 million, $35 million for the decline in the exchange rate, and discontinued operations of $5 million. Acadia's pro forma adjusted earnings per diluted share for the second quarter of 2017 increased 10.0% to $0.66, compared with $0.60 for the second quarter of 2016. Pro forma adjustments for the second quarter of 2016 included the negative impacts from the U.K. divestitures of $0.08 and the decline of the exchange rate of $0.05.

Joey Jacobs, Chairman and Chief Executive Officer of Acadia, commented, "Our second quarter financial results were consistent with our expectations for the quarter and financial guidance for the year. We achieved improved same facility revenue performance, with growth of 6.5% for the quarter on an increase of 4.6% in patient days and 1.8% in revenue per patient day. We were especially pleased with our same facility revenue growth for our U.S. facilities, which increased 7.8% for the second quarter, on an increase of 6.0% in patient days and 1.7% in revenue per patient day, while U.K. same facility revenues increased 4.0%, on growth of 2.8% and 1.1% in patient days and revenue per patient day, respectively.

"Our growth in same facility revenue for the second quarter resulted, in part, from the addition of 625 new beds to existing facilities in the 12 months ended June 30, 2017. During the second quarter, 91 new beds were added to existing facilities, and we expect to add approximately 800 new beds to existing facilities and three de novo facilities in 2017."

For the second quarter of 2017, Acadia's total same facility EBITDA margin was 26.4% compared with 26.7% for the second quarter of 2016. Acadia's consolidated adjusted EBITDA was $162.2 million, or 22.7% of revenue, for the second quarter of 2017, compared with $172.2 million or 22.8% of revenue for the second quarter of 2016.

Acadia today adjusted its financial guidance for 2017 within the previously established ranges, as follows:

Revenue for 2017 in a range of $2.85 billion to $2.87 billion;
Adjusted EBITDA for 2017 in a range of $628 million to $635 million; and
Adjusted earnings per diluted share for 2017 in a range $2.42 to $2.47.

The Company's 2017 financial guidance assumes an exchange rate of $1.25 per British Pound Sterling and a tax rate of approximately 25%. The Company's guidance does not include the impact of any future acquisitions or transaction-related expenses. EBITDA is defined as net income adjusted for net (income) loss attributable to noncontrolling interests, income tax provision, net interest expense and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for equity-based compensation expense, debt extinguishment costs, gain on foreign currency derivatives and transaction-related expenses. Adjusted income is defined as net income adjusted for provision for income taxes, debt extinguishment costs, gain on foreign currency derivatives, transaction-related expenses and income tax provision reflecting tax effect of adjustments attributable to Acadia.

Acadia will hold a conference call to discuss its first quarter financial results at 9:00 a.m. Eastern Time on Friday, July 28, 2017. 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 August 11, 2017.

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) potential difficulties operating our business in light of political and economic instability in the U.K. and globally following the referendum in the U.K. on June 23, 2016, in which voters approved an exit from the European Union, or Brexit; (ii) the impact of fluctuations in foreign exchange rates, including the devaluation of the British Pound Sterling (GBP) relative to the U.S. Dollar (USD) following the Brexit vote; (iii) Acadia's ability to complete acquisitions and successfully integrate the operations of acquired facilities, including Priory facilities; (iv) Acadia's ability to add beds, expand services, enhance marketing programs and improve efficiencies at its facilities; (v) potential reductions in payments received by Acadia from government and third-party payors; (vi) the occurrence of patient incidents and governmental investigations, which could adversely affect the price of our common stock and result in incremental regulatory burdens; (vii) the risk that Acadia may not generate sufficient cash from operations to service its debt and meet its working capital and capital expenditure requirements; and (viii) 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 behavioral healthcare services. At June 30, 2017, Acadia operated a network of 576 behavioral healthcare facilities with approximately 17,300 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 Operations
(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
		2017			2016			2017			2016
	(In thousands, except per share amounts)

Revenue before provision for doubtful accounts	$	725,643		$	767,054		$	1,414,984		$	1,394,237
Provision for doubtful accounts		(9,747	)		(10,506	)		(19,894	)		(20,876	)
Revenue		715,896			756,548			1,395,090			1,373,361

Salaries, wages and benefits (including equity-based compensation expense of $7,436, $6,888, $14,832 and $13,844, respectively)		383,595			408,287			760,016			749,315
Professional fees		46,321			50,292			89,730			90,283
Supplies		28,639			31,209			56,348			57,894
Rents and leases		19,435			20,467			38,406			35,273
Other operating expenses		83,122			80,955			166,833			151,202
Depreciation and amortization		35,201			36,752			68,814			64,727
Interest expense, net		43,505			48,758			86,262			86,472
Debt extinguishment costs		810			-			810			-
Gain on foreign currency derivatives		-			(98	)		-			(508	)
Transaction-related expenses		9,052			6,074			13,171			32,372
Total expenses		649,680			682,696			1,280,390			1,267,030
Income before income taxes		66,216			73,852			114,700			106,331
Provision for income taxes		16,578			18,261			30,289			25,371
Net income		49,638			55,591			84,411			80,960
Net (income) loss attributable to noncontrolling interests		(8	)		854			177			1,173
Net income attributable to Acadia Healthcare Company, Inc.	$	49,630		$	56,445		$	84,588		$	82,133

Earnings per share attributable to Acadia Healthcare Company, Inc. stockholders:
Basic	$	0.57		$	0.65		$	0.97		$	0.97
Diluted	$	0.57		$	0.65		$	0.97		$	0.97

Weighted-average shares outstanding:
Basic		86,954			86,553			86,859			84,748
Diluted		87,080			86,876			86,997			85,052


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

	June 30, 2017			December 31, 2016
	(In thousands)

ASSETS
Current assets:
Cash and cash equivalents	$	79,434		$	57,063
Accounts receivable, net of allowance for doubtful accounts of $40,992 and $38,916, respectively		288,106			263,327
Other current assets		91,972			107,537
Total current assets		459,512			427,927
Property and equipment, net		2,866,086			2,703,695
Goodwill		2,710,333			2,681,188
Intangible assets, net		84,982			83,310
Deferred tax assets - noncurrent		3,719			3,780
Derivative instruments		43,753			73,509
Other assets		59,637			51,317
Total assets	$	6,228,022		$	6,024,726


LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	34,805		$	34,805
Accounts payable		81,399			80,034
Accrued salaries and benefits		97,819			105,068
Other accrued liabilities		132,944			122,958
Total current liabilities		346,967			342,865
Long-term debt		3,240,473			3,253,004
Deferred tax liabilities - noncurrent		74,467			78,520
Other liabilities		171,678			164,859
Total liabilities		3,833,585			3,839,248
Redeemable noncontrolling interests		17,577			17,754
Equity:
Common stock		870			867
Additional paid-in capital		2,508,064			2,496,288
Accumulated other comprehensive loss		(445,400	)		(549,570	)
Retained earnings		313,326			220,139
Total equity		2,376,860			2,167,724
Total liabilities and equity	$	6,228,022		$	6,024,726


Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

	Six Months Ended June 30,
		2017			2016
	(In thousands)
Operating activities:
Net income	$	84,411		$	80,960
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation and amortization		68,814			64,727
Amortization of debt issuance costs		4,845			4,956
Equity-based compensation expense		14,832			13,844
Deferred income tax expense		17,096			16,821
Debt extinguishment costs		810			-
Gain on foreign currency derivatives		-			(508	)
Other		6,558			704
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net		(22,404	)		(18,982	)
Other current assets		20,457			(7,256	)
Other assets		1,809			1,582
Accounts payable and other accrued liabilities		(4,893	)		29,101
Accrued salaries and benefits		(9,157	)		(3,846	)
Other liabilities		5,257			3,728
Net cash provided by continuing operating activities		188,435			185,831
Net cash used in discontinued operating activities		(829	)		(2,973	)
Net cash provided by operating activities		187,606			182,858

Investing activities:
Cash paid for acquisitions, net of cash acquired		-			(683,285	)
Cash paid for capital expenditures		(117,521	)		(177,718	)
Cash paid for real estate acquisitions		(22,850	)		(28,439	)
Settlement of foreign currency derivatives		-			508
Other		(5,938	)		(1,084	)
Net cash used in investing activities		(146,309	)		(890,018	)

Financing activities:
Borrowings on long-term debt		-			1,480,000
Borrowings on revolving credit facility		-			158,000
Principal payments on revolving credit facility		-			(166,000	)
Principal payments on long-term debt		(17,275	)		(29,869	)
Repayment of assumed debt		-			(1,348,389	)
Payment of debt issuance costs		-			(35,511	)
Issuance of common stock, net		-			685,097
Common stock withheld for minimum statutory taxes, net		(3,678	)		(7,365	)
Other		(2,270	)		(823	)
Net cash (used in) provided by financing activities		(23,223	)		735,140

Effect of exchange rate changes on cash		4,297			(8,479	)

Net increase in cash and cash equivalents		22,371			19,501
Cash and cash equivalents at beginning of the period		57,063			11,215
Cash and cash equivalents at end of the period	$	79,434		$	30,716
	$	-
Effect of acquisitions:
Assets acquired, excluding cash	$	-		$	2,504,223
Liabilities assumed		-			(1,604,056	)
Issuance of common stock in connection with acquisition		-			(216,882	)
Cash paid for acquisitions, net of cash acquired	$	-		$	683,285


Acadia Healthcare Company, Inc.
Operating Statistics
(Unaudited, Revenue in thousands)

		Three Months Ended June 30,								Six Months Ended June 30,
			2017			2016		% Change			2017			2016		% Change
Same Facility Results (a,d)
	Revenue	$	681,910		$	640,526		6.5	%	$	1,221,421		$	1,155,465		5.7	%
	Patient Days		1,109,738			1,061,324		4.6	%		1,949,331			1,866,681		4.4	%
	Admissions		39,610			37,305		6.2	%		76,985			71,676		7.4	%
	Average Length of Stay (b)		28.0			28.4		-1.5	%		25.3			26.0		-2.8	%
	Revenue per Patient Day	$	614		$	604		1.8	%	$	627		$	619		1.2	%
	EBITDA margin		26.4	%		26.7	%	-30 bps			26.0	%		26.3	%	-30 bps

U.S. Same Facility Results (a)
	Revenue	$	452,729		$	420,063		7.8	%	$	871,581		$	817,202		6.7	%
	Patient Days		616,200			581,136		6.0	%		1,200,005			1,133,152		5.9	%
	Admissions		37,436			35,204		6.3	%		73,753			68,680		7.4	%
	Average Length of Stay (b)		16.5			16.5		-0.3	%		16.3			16.5		-1.4	%
	Revenue per Patient Day	$	735		$	723		1.7	%	$	726		$	721		0.7	%
	EBITDA margin		28.4	%		28.6	%	-20 bps			27.4	%		27.9	%	-50 bps

U.K. Same Facility Results (a,d)
	Revenue	$	229,181		$	220,463		4.0	%	$	349,840		$	338,263		3.4	%
	Patient Days		493,538			480,188		2.8	%		749,326			733,529		2.2	%
	Admissions		2,174			2,101		3.5	%		3,232			2,996		7.9	%
	Average Length of Stay (b)		227.0			228.6		-0.7	%		231.8			244.8		-5.3	%
	Revenue per Patient Day	$	464		$	459		1.1	%	$	467		$	461		1.2	%
	EBITDA margin		22.4	%		23.0	%	-60 bps			22.4	%		22.6	%	-20 bps



U.S. Facility Results (c)
	Revenue	$	461,414		$	425,507		8.4	%	$	901,637		$	829,548		8.7	%
	Patient Days		624,984			582,232		7.3	%		1,231,511			1,135,535		8.5	%
	Admissions		38,125			35,438		7.6	%		76,481			69,275		10.4	%
	Average Length of Stay (b)		16.4			16.4		-0.2	%		16.1			16.4		-1.8	%
	Revenue per Patient Day	$	738		$	731		1.0	%	$	732		$	731		0.2	%
	EBITDA margin		27.8	%		27.8	%	0 bps			26.7	%		27.2	%	-50 bps

U.K. Facility Results (c,d)
	Revenue	$	254,482		$	247,362		2.9	%	$	493,453		$	399,653		23.5	%
	Patient Days		684,195			685,256		-0.2	%		1,355,915			1,091,902		24.2	%
	Admissions		2,457			2,450		0.3	%		5,046			3,841		31.4	%
	Average Length of Stay (b)		278.5			279.7		-0.4	%		268.7			284.3		-5.5	%
	Revenue per Patient Day	$	372		$	361		3.0	%	$	364		$	366		-0.6	%
	EBITDA margin		20.5	%		21.2	%	-70 bps			19.5	%		20.8	%	-130 bps

Total Facility Results (c,d)
	Revenue	$	715,896		$	672,869		6.4	%	$	1,395,090		$	1,229,201		13.5	%
	Patient Days		1,309,179			1,267,488		3.3	%		2,587,426			2,227,437		16.2	%
	Admissions		40,582			37,888		7.1	%		81,527			73,116		11.5	%
	Average Length of Stay (b)		32.3			33.5		-3.6	%		31.7			30.5		4.2	%
	Revenue per Patient Day	$	547		$	531		3.0	%	$	539		$	552		-2.3	%
	EBITDA margin		25.2	%		25.4	%	-20 bps			24.1	%		25.1	%	-100 bps

(a) Same-facility results for the periods presented exclude the 22 divested facilities in the U.K. that were sold on November 30, 2016, the elderly care division of our U.K. operations and other closed services.
(b) Average length of stay is defined as patient days divided by admissions.
(c) Total Facility results for the periods presented exclude the 22 divested facilities in the U.K. that were sold on November 30, 2016 and other closed services.
(d) Revenue and revenue per patient day for the three and six months ended June 30, 2016 are adjusted to reflect the foreign currency exchange rate for the comparable period of 2017 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 and six months ended June 30, 2016 is 1.28 and 1.26, respectively.


Acadia Healthcare Company, Inc.
Reconciliation of Net Income Attributable to Acadia Healthcare Company, Inc. to Adjusted EBITDA
(Unaudited)

	Three Months Ended June 30,					Six Months Ended June 30,
		2017		2016			2017			2016
	(in thousands)

Net income attributable to Acadia Healthcare Company, Inc.	$	49,630	$	56,445		$	84,588		$	82,133
Net income (loss) attributable to noncontrolling interests		8		(854	)		(177	)		(1,173	)
Provision for income taxes		16,578		18,261			30,289			25,371
Interest expense, net		43,505		48,758			86,262			86,472
Depreciation and amortization		35,201		36,752			68,814			64,727
EBITDA		144,922		159,362			269,776			257,530

Adjustments:
Equity-based compensation expense (a)		7,436		6,888			14,832			13,844
Debt extinguishment costs (b)		810		-			810			-
Gain on foreign currency derivatives (c)		-		(98	)		-			(508	)
Transaction-related expenses (d)		9,052		6,074			13,171			32,372
Adjusted EBITDA	$	162,220	$	172,226		$	298,589		$	303,238

See footnotes on page 10.


Acadia Healthcare Company, Inc.
Reconciliation of Adjusted Income Attributable to Acadia Healthcare Company, Inc. to
Net Income Attributable to Acadia Healthcare Company, Inc.
(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
		2017			2016			2017			2016
	(in thousands, except per share amounts)

Net income attributable to Acadia Healthcare Company, Inc.	$	49,630		$	56,445		$	84,588		$	82,133
Provision for income taxes		16,578			18,261			30,289			25,371
Income attributable to Acadia Healthcare Company, Inc. before income taxes		66,208			74,706			114,877			107,504

Adjustments to income:
Debt extinguishment costs (b)		810			-			810			-
Gain on foreign currency derivatives (c)		-			(98	)		-			(508	)
Transaction-related expenses (d)		9,052			6,074			13,171			32,372
Income tax provision reflecting tax effect of adjustments to income (e)		(18,846	)		(17,530	)		(31,758	)		(30,382	)
Adjusted income attributable to Acadia Healthcare Company, Inc.	$	57,224		$	63,152		$	97,100		$	108,986

Weighted-average shares outstanding - diluted		87,080			86,876			86,997			85,052

Adjusted income attributable to Acadia Healthcare Company, Inc. per diluted share	$	0.66		$	0.73		$	1.12		$	1.28

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, 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 net (income) loss attributable to noncontrolling interests, income tax provision, net interest expense 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. We define Adjusted income as net income adjusted for provision for income taxes, debt extinguishment costs, gain on foreign currency derivatives, transaction-related expenses and income tax provision reflecting tax effect of adjustments attributable to Acadia.

EBITDA, Adjusted EBITDA, and Adjusted income 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 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 may not be comparable to similarly titled measures of other companies. We have included information concerning EBITDA, Adjusted EBITDA, and Adjusted income 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 when reporting their results. Our presentation of EBITDA, Adjusted EBITDA, and Adjusted income should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

The Company is not able to provide a reconciliation of projected Adjusted EBITDA and adjusted earnings per diluted share, where provided, to expected results due to the unknown effect, timing and potential significance of transaction-related expenses and the tax effect of such expenses.

(a) Represents the equity-based compensation expense of Acadia.

(b) For the three and six months ended June 30, 2017, represents debt extinguishment costs recorded in connection with the Third Repricing Amendment to the Amended and Restated Credit Agreement, including the discount and write-off of deferred financing costs.

(c) Represents the change in fair value of foreign currency derivatives purchased by Acadia related to (i) acquisitions in the U.K. and (ii) transfers of cash between the U.S. and U.K. under the Company's cash management and foreign currency risk management programs.

(d) Represents transaction-related expenses incurred by Acadia related to acquisitions and integration efforts.

(e) Represents the income tax provision adjusted to reflect the tax effect of the adjustments to income based on tax rates of 24.8% and 21.7% for the three months ended June 30, 2017 and 2016, respectively, and 24.6% and 21.8% for the six months ended June 30, 2017 and 2016, respectively. The adjusted income tax provision for the six months ended June 30, 2017 excludes the impact of adopting ASU 2016-09 "Improvements to Employee Share-Based Payment Accounting" of approximately $1.7 million.

View source version on businesswire.com: http://www.businesswire.com/news/home/20170727006220/en/

Market News and Data brought to you by Benzinga APIs