Acadia Healthcare Reports Second Quarter 2021 Results and Increases 2021 Guidance
Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced financial results for the second quarter ended June 30, 2021.
Second Quarter 2021 Results
The Company reported revenue of $582.2 million for the second quarter of 2021, compared with $491.5 million for the second quarter of 2020. Adjusted EBITDA increased 25.2% to $141.3 million for the second quarter of 2021, compared with $112.8 million for the same period last year. Net income attributable to Acadia stockholders for the second quarter of 2021 was $44.5 million, or $0.49 per diluted share, compared with net income of $41.1 million, or $0.46 per diluted share, for the second quarter of 2020. Adjusted income from continuing operations attributable to Acadia stockholders per diluted share was $0.71 for the second quarter of 2021. Adjustments to income include transaction-related expenses, debt extinguishment costs, loss on impairment and the income tax effect of adjustments to income. A reconciliation of all non-GAAP financial results in this press release begins on page 9. During the second quarter of 2020, the Company recognized $18.1 million in other income from the Provider Relief Fund (“PRF”) established by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.
For the second quarter of 2021, Acadia’s same facility revenue increased 18.0% compared with the second quarter of 2020, including an increase in patient days of 9.8% and an increase in revenue per patient day of 7.5%. In the second quarter of 2020, the Company experienced lower patient days due to the impact of the COVID-19 pandemic and related restrictions, which resulted in a year-over-year decline of 0.7% for the second quarter of 2020 compared to the prior year period. Adjusting prior year patient days for the estimated impact from the pandemic, patient days increased approximately 4.8% for the second quarter of 2021. Same facility adjusted EBITDA margin improved 180 basis points to 29.3%.
Debbie Osteen, Chief Executive Officer of Acadia, remarked, “We are pleased with the momentum in our business as Acadia delivered a strong financial and operating performance in the second quarter of 2021. These results reflect increased demand for our behavioral health services and our continued focus on driving efficiencies across our operations. We experienced favorable volume trends, demonstrating the strength of our proven operating model and successful execution of our growth strategy across our service lines, all of which provide exceptional patient care. Importantly, the growing acceptance surrounding mental health and substance abuse issues and the more favorable reimbursement environment for treatment have also been key drivers of demand. We commend the hard work of Acadia’s dedicated employees and clinicians who have continued to support more patients who need our help with high quality care in a safe and accessible manner.”
Strategic Investments in Long-Term Growth
“Our growth strategy is centered around four distinct pathways that will allow Acadia to reach more patients in both new and existing markets. We are pleased with the progress we have made this year on our strategy, as we have continued to make strategic investments designed to support long-term growth across our service lines. Facility expansions continue to be a key driver of our growth and the best return on investment. Accordingly, we added 86 beds to our operations in the second quarter, which included 72 incremental beds from the opening of a 260-bed state-of-the-art, replacement facility for Belmont Behavioral Hospital. This facility will help meet the growing demand for behavioral health services in the Philadelphia, Pennsylvania, market and surrounding communities. With the opening of the new facility, we recorded a non-cash property impairment of approximately $23.2 million for the existing facility. We expect to meet our goal of adding approximately 300 beds to existing facilities by the end of the year.
“Another important growth opportunity for Acadia is the development of wholly owned de novo facilities, especially in markets with a shortage of beds for behavioral health treatment. On May 24, 2021, we opened Glenwood Behavioral Health Hospital, an 80-bed hospital in Cincinnati, Ohio. This facility provides inpatient psychiatric treatment for those who are struggling with a mental health or a co-occurring substance use disorder.
“We also opened one comprehensive treatment center (CTC) in the second quarter of 2021. We continue to identify underserved markets for the treatment of patients with opioid use disorder and expect to open eight more CTCs this year.
“As health systems across the country look for ways to integrate behavioral health care and expand treatment options, Acadia has developed a favorable reputation as a preferred partner for many leading providers in attractive markets and establishing new joint venture partnerships remains an important pathway for growth. We recently announced a joint venture with Bronson Healthcare, one of Michigan’s leading, integrated healthcare systems, to build a new 96-bed facility in Battle Creek, Michigan. With this addition, we now have 13 joint venture partnerships in place with premier health systems to expand our treatment network and improve access to care in more communities around the country.
“We also have continued to identify acquisitions as another important opportunity to extend our market reach. Following regulatory approval, we expect to soon complete the acquisition of Vallejo Behavioral, a 61-bed psychiatric hospital in Vallejo, California, from Adventist Health at the end of the third quarter. We believe the fragmented behavioral healthcare industry offers additional prospects for acquisitions, and we are well positioned with the financial strength to capitalize on these opportunities.
“We believe Acadia has the right strategy in place to continue to expand our network and meet the needs of more patients. As we look ahead to the remainder of 2021 and beyond, we will continue to pursue our growth objectives through bed expansions, wholly owned de novo facilities, strategic joint ventures and acquisitions,” added Osteen.
Cash and Liquidity
Acadia’s balance sheet remains strong with ample liquidity and capital to invest in and grow its business. As of June 30, 2021, the Company had $185.5 million in cash and cash equivalents. The Company repaid approximately $41 million of debt during the second quarter of 2021, including $35 million on its senior secured revolving credit facility, reducing the outstanding balance to $125 million at June 30, 2021. As of June 30, 2021, the Company had $475 million available under its $600 million revolving credit facility, and its net leverage ratio was approximately 2.4x.
During the second quarter of 2021, the Company received approximately $24 million additional PRF distributions under the CARES Act. The Company is currently evaluating updated PRF reporting guidance to determine whether any of the funds will be recognized or returned. During the second quarter, the Company began repayment of amounts received pursuant to the Medicare Accelerated and Advanced Payment Program under the CARES Act. The Company repaid $7 million of the $45 million of advance payments received in 2020 under the Medicare Accelerated and Advanced Payment Program and will continue to repay the remaining balance on a monthly basis through June 2022. Additionally, the Company expects to repay half of the $39 million of 2020 payroll tax deferrals in the second half of 2021 and the remaining portion in 2022.
Financial Guidance
Acadia today increased the Company’s financial guidance for 2021 to reflect the strong operating and financial performance for the first six months of the year and its expectations for the remainder of the year, as follows:
Revenue in a range of $2.28 billion to $2.32 billion; Adjusted EBITDA in a range of $530 million to $550 million; Adjusted earnings per diluted share in a range of $2.50 to $2.70; and Operating cash flows in a range of $275 million to $310 million.The Company’s guidance does not include discontinued operations or the impact of any future acquisitions, divestitures or transaction-related expenses.
Looking Ahead
Osteen concluded, “We are encouraged by the favorable trends in our business and believe we are well positioned to capitalize on the expected growth in demand for behavioral health services. While the COVID-19 pandemic has brought many challenges, particularly for those people already dealing with mental health and substance abuse, we are encouraged by the heightened awareness of these issues and an increased push for access to treatment. As always, our primary mission is to meet this demand and support the patients and communities we serve. We will continue to focus on providing the highest quality of patient care, while extending our market reach and advancing our position as a leading pure-play behavioral healthcare provider.”
Conference Call
Acadia will hold a conference call to discuss its second quarter financial results at 9:00 a.m. Eastern Time on Tuesday, August 3, 2021. 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 September 2, 2021.
About Acadia
Acadia is a leading provider of behavioral healthcare services across the United States. As of June 30, 2021, Acadia operated a network of 229 behavioral healthcare facilities with approximately 10,100 beds in 40 states and Puerto Rico. With more than 20,000 employees serving approximately 70,000 patients daily, Acadia is the largest stand-alone behavioral health company in the U.S. Acadia provides behavioral healthcare services to its patients in a variety of settings, including inpatient psychiatric hospitals, specialty treatment facilities, residential treatment centers and outpatient clinics.
Forward-Looking Information
This press 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 press 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) the impact of the COVID-19 pandemic, including, without limitation, disruption to the U.S. economy and financial markets; reduced admissions and patient volumes; increased costs relating to labor, supply chain and other expenditures; and difficulty in collecting patient accounts receivable due to increases in the unemployment rate and the number of underinsured and uninsured patients; (ii) potential difficulties in successfully integrating the operations of acquired facilities or realizing the expected benefits and synergies of our acquisitions, joint ventures and de novo transactions; (iii) Acadia’s ability to add beds, expand services, enhance marketing programs and improve efficiencies at its facilities; (iv) potential reductions in payments received by Acadia from government and third-party payors; (v) the occurrence of patient incidents, governmental investigations, litigation and adverse regulatory actions, which could adversely affect the price of our common stock and result in substantial payments and incremental regulatory burdens; (vi) 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 (vii) potential operating difficulties, labor costs, client preferences, changes in competition and general economic or industry conditions that may prevent Acadia from realizing the expected benefits of its business strategies. These factors and others are more fully described in Acadia’s periodic reports and other filings with the SEC.
2021
2020
2021
2020
(In thousands, except per share amounts) Revenue$
582,156
$
491,475
$
1,133,355
$
1,000,692
Salaries, wages and benefits (including equity-based compensation expense of $9,031, $5,808, $16,065 and $10,787, respectively)
309,233
275,258
613,566
562,245
Professional fees
34,696
30,586
66,313
61,637
Supplies
22,633
21,059
43,955
43,255
Rents and leases
9,620
9,493
19,032
18,610
Other operating expenses
73,751
66,171
145,761
134,327
Other income
-
(18,070
)
-
(18,070
)
Depreciation and amortization
25,650
23,331
50,544
46,166
Interest expense, net
16,687
38,518
45,714
81,083
Debt extinguishment costs
-
3,271
24,650
3,271
Loss on impairment
23,214
-
23,214
-
Transaction-related expenses
1,675
5,008
6,285
6,534
Total expenses
517,159
454,625
1,039,034
939,058
Income from continuing operations before income taxes
64,997
36,850
94,321
61,634
Provision for income taxes
19,333
9,177
25,537
14,983
Income from continuing operations
45,664
27,673
68,784
46,651
Income (loss) from discontinued operations, net of taxes
-
14,041
(12,641
)
29,130
Net income
45,664
41,714
56,143
75,781
Net income attributable to noncontrolling interests
(1,150
)
(635
)
(1,912
)
(1,239
)
Net income attributable to Acadia Healthcare Company, Inc.$
44,514
$
41,079
$
54,231
$
74,542
Basic earnings per share attributable to Acadia Healthcare Company, Inc. stockholders: Income from continuing operations attributable to Acadia Healthcare Company, Inc.
$
0.50
$
0.31
$
0.76
$
0.52
Income (loss) from discontinued operations
$
-
$
0.16
$
(0.15
)
$
0.33
Net income attributable to Acadia Healthcare Company, Inc.
$
0.50
$
0.47
$
0.61
$
0.85
Diluted earnings per share attributable to Acadia Healthcare Company, Inc. stockholders: Income from continuing operations attributable to Acadia Healthcare Company, Inc.
$
0.49
$
0.31
$
0.74
$
0.51
Income (loss) from discontinued operations
$
-
$
0.15
$
(0.14
)
$
0.33
Net income attributable to Acadia Healthcare Company, Inc.
$
0.49
$
0.46
$
0.60
$
0.84
Weighted-average shares outstanding: Basic
88,842
87,872
88,543
87,818
Diluted
90,590
88,608
90,381
88,228
2021
2020
(In thousands) ASSETS Current assets: Cash and cash equivalents$
185,546
$
378,697
Accounts receivable, net
286,522
273,551
Other current assets
103,558
61,332
Current assets held for sale
-
1,809,815
Total current assets
575,626
2,523,395
Property and equipment, net
1,651,274
1,622,896
Goodwill
2,103,503
2,105,264
Intangible assets, net
68,463
68,535
Deferred tax assets
3,145
3,209
Operating lease right-of-use assets
101,691
96,937
Other assets
60,299
79,126
Total assets
$
4,564,001
$
6,499,362
LIABILITIES AND EQUITY Current liabilities: Current portion of long-term debt
$
13,281
$
153,478
Accounts payable
87,223
87,815
Accrued salaries and benefits
133,590
124,912
Current portion of operating lease liabilities
19,254
18,916
Other accrued liabilities
171,867
178,453
Derivative instrument liabilities
-
84,584
Current liabilities held for sale
-
660,027
Total current liabilities
425,215
1,308,185
Long-term debt
1,443,192
2,968,948
Deferred tax liabilities
73,144
50,017
Operating lease liabilities
89,107
84,029
Other liabilities
118,363
133,412
Total liabilities
2,149,021
4,544,591
Redeemable noncontrolling interests
58,394
55,315
Equity: Common stock
889
880
Additional paid-in capital
2,611,852
2,580,327
Accumulated other comprehensive loss
-
(371,365
)
Accumulated deficit
(256,155
)
(310,386
)
Total equity
2,356,586
1,899,456
Total liabilities and equity
$
4,564,001
$
6,499,362
2021
2020
(In thousands) Operating activities: Net income$
56,143
$
75,781
Adjustments to reconcile net income to net cash provided by continuing operating activities: Depreciation and amortization
50,544
46,166
Amortization of debt issuance costs
2,463
6,382
Equity-based compensation expense
16,065
10,787
Deferred income taxes
8,457
22,136
Loss (income) from discontinued operations, net of taxes
12,641
(29,130
)
Debt extinguishment costs
24,650
3,271
Loss on impairment
23,214
-
Other
828
(955
)
Change in operating assets and liabilities: Accounts receivable, net
(12,972
)
11,015
Other current assets
(32,056
)
(9,029
)
Other assets
7,276
1,949
Accounts payable and other accrued liabilities
11,306
40,034
Accrued salaries and benefits
8,823
(1,455
)
Other liabilities
(11,121
)
26,322
Net cash provided by continuing operating activities
166,261
203,274
Net cash provided by discontinued operating activities
253
61,668
Net cash provided by operating activities
166,514
264,942
Investing activities: Cash paid for capital expenditures
(112,953
)
(114,251
)
Proceeds from U.K. Sale
1,511,020
-
Settlement of foreign currency derivatives
(84,795
)
-
Proceeds from sale of property and equipment
899
43
Other
4,953
(4,847
)
Net cash provided by (used in) continuing investing activities
1,319,124
(119,055
)
Net cash used in discontinued investing activities
-
(20,874
)
Net cash provided by (used in) investing activities
1,319,124
(139,929
)
Financing activities: Borrowings on long-term debt
425,000
450,000
Borrowings on revolving credit facility
430,000
100,000
Principal payments on revolving credit facility
(305,000
)
(100,000
)
Principal payments on long-term debt
(2,656
)
(21,242
)
Repayment of long-term debt
(2,227,935
)
(450,000
)
Payment of debt issuance costs
(7,964
)
(10,595
)
Common stock withheld for minimum statutory taxes, net
13,261
(1,377
)
Distributions to noncontrolling interests
(633
)
(451
)
Other
(6,929
)
(854
)
Net cash used in continuing financing activities
(1,682,856
)
(34,519
)
Net cash used in discontinued financing activities
-
(1,490
)
Net cash used in financing activities
(1,682,856
)
(36,009
)
Effect of exchange rate changes on cash
4,067
(1,257
)
Net (decrease) increase in cash and cash equivalents, including cash classified within current assets held for sale
(193,151
)
87,747
Less: cash classified within current assets held for sale
-
(44,268
)
Net (decrease) increase in cash and cash equivalents
(193,151
)
43,479
Cash and cash equivalents at beginning of the period
378,697
124,192
Cash and cash equivalents at end of the period
$
185,546
$
167,671
2021
2020
% Change
2021
2020
% Change
U.S. Same Facility Results (1) Revenue$
576,170
$
488,259
18.0
%
$
1,121,969
$
996,521
12.6
%
Patient Days
706,128
643,010
9.8
%
1,375,853
1,294,941
6.2
%
Admissions
46,494
41,009
13.4
%
90,307
84,453
6.9
%
Average Length of Stay (2)
15.2
15.7
-3.1
%
15.2
15.3
-0.6
%
Revenue per Patient Day$
816
$
759
7.5
%
$
815
$
770
6.0
%
Adjusted EBITDA margin
29.3
%
27.5
%
180 bps
27.9
%
25.6
%
230 bps U.S. Facility Results Revenue$
582,156
$
491,475
18.5
%
$
1,133,355
$
1,000,692
13.3
%
Patient Days
712,634
648,518
9.9
%
1,387,125
1,306,520
6.2
%
Admissions
46,974
41,158
14.1
%
91,138
84,761
7.5
%
Average Length of Stay (2)
15.2
15.8
-3.7
%
15.2
15.4
-1.3
%
Revenue per Patient Day$
817
$
758
7.8
%
$
817
$
766
6.7
%
Adjusted EBITDA margin
28.5
%
27.4
%
110 bps
27.3
%
25.5
%
180 bps (1) Same facility results for the periods presented include facilities we have operated for more than one year and exclude certain closed services. (2) Average length of stay is defined as patient days divided by admissions.
2021
2020
2021
2020
(in thousands) Net income attributable to Acadia Healthcare Company, Inc.
$
44,514
$
41,079
$
54,231
$
74,542
Net income attributable to noncontrolling interests
1,150
635
1,912
1,239
(Income) loss from discontinued operations, net of taxes
-
(14,041
)
12,641
(29,130
)
Provision for income taxes
19,333
9,177
25,537
14,983
Interest expense, net
16,687
38,518
45,714
81,083
Depreciation and amortization
25,650
23,331
50,544
46,166
EBITDA
107,334
98,699
190,579
188,883
Adjustments: Equity-based compensation expense (a)
9,031
5,808
16,065
10,787
Transaction-related expenses (b)
1,675
5,008
6,285
6,534
Debt extinguishment costs (c)
-
3,271
24,650
3,271
Loss on impairment (d)
23,214
-
23,214
-
Adjusted EBITDA
$
141,254
$
112,786
$
260,793
$
209,475
Adjusted EBITDA margin
24.3
%
22.9
%
23.0
%
20.9
%
See footnotes on page 12.June 30, 2021 Six Months Ended
June 30, 2021 (in thousands, except per share amounts) Net income attributable to Acadia Healthcare Company, Inc.
$
44,514
$
54,231
Loss from discontinued operations, net of taxes
-
12,641
Adjustments to income: Transaction-related expenses (b)
1,675
6,285
Debt extinguishment costs (c)
-
24,650
Loss on impairment (d)
23,214
23,214
Provision for income taxes
19,333
25,537
Adjusted income from continuing operations before income taxes attributable to Acadia Healthcare Company, Inc.
88,736
146,558
Income tax effect of adjustments to income (e)
24,583
40,201
Adjusted income from continuing operations attributable to Acadia Healthcare Company, Inc.
$
64,153
$
106,357
Weighted-average shares outstanding - diluted
90,590
90,381
Adjusted income from continuing operations attributable to Acadia Healthcare Company, Inc. per diluted share
$
0.71
$
1.18
Three Months Ended
June 30, 2020 Six Months Ended
June 30, 2020 (in thousands, except per share amounts) Net income attributable to Acadia Healthcare Company, Inc.
$
41,079
$
74,542
Income from discontinued operations, net of taxes
(14,041
)
(29,130
)
Adjustments to income: Transaction-related expenses (b)
5,008
6,534
Debt extinguishment costs (c)
3,271
3,271
Provision for income taxes
9,177
14,983
Adjusted income from continuing operations before income taxes attributable to Acadia Healthcare Company, Inc.
44,494
70,200
Adjusted income from discontinued operations before income taxes
13,313
30,408
Adjusted income before income taxes attributable to Acadia Healthcare Company, Inc.
57,807
100,608
Income tax effect of adjustments to income (d)
9,677
15,810
Adjusted income attributable to Acadia Healthcare Company, Inc.
$
48,130
$
84,798
Weighted-average shares outstanding - diluted
88,608
88,228
Adjusted income attributable to Acadia Healthcare Company, Inc. per diluted share (3)
$
0.54
$
0.96
(3) For the three and six months ended June 30, 2020, Adjusted income attributable to Acadia Healthcare Company, Inc. per diluted share includes Adjusted income from discontinued operations before income taxes and is not directly comparable to Adjusted income from continuing operations attributable to Acadia Healthcare Company, Inc. per diluted share for the three and six months ended June 30, 2021. Interest expense, which has been significantly reduced following debt repayments in the first quarter of 2021, is recorded in income from continuing operations and not allocated to discontinued operations because such allocation would not be meaningful. Therefore, 2020 reflects consolidated results inclusive of discontinued operations, and 2021 reflects only continuing operations. See footnotes on page 12.
Statements of Discontinued Operations
Three Months Ended June 30, Six Months Ended June 30,
2021
2020
2021
2020
(in thousands)
Revenue
$
-
$
258,836
$
62,520
$
532,429
Salaries, wages and benefits
-
152,345
35,937
305,674
Professional fees
-
28,028
6,815
60,277
Supplies
-
9,065
2,217
18,840
Rents and leases
-
11,334
2,509
23,041
Other operating expenses
-
26,429
6,682
56,802
Depreciation and amortization
-
18,114
-
36,959
Interest expense, net
-
208
10
428
Loss on sale
-
-
14,254
-
Transaction-related expenses
-
233
6,265
2,256
Total expenses
-
245,756
74,689
504,277
Income (loss) from discontinued operations before income taxes
-
13,080
(12,169
)
28,152
(Benefit from) provision for income taxes
-
(961
)
472
(978
)
Income (loss) from discontinued operations, net of taxes
-
14,041
(12,641
)
29,130
Reconciliation of Income (Loss) from Discontinued Operations to
Adjusted Income from Discontinued Operations before Income Taxes
Three Months Ended June 30, Six Months Ended June 30,
2021
2020
2021
2020
(in thousands)
Income (loss) from discontinued operations, net of taxes
$
-
$
14,041
$
(12,641
)
$
29,130
Adjustments to income:
Transaction-related expenses (b)
-
233
6,265
2,256
Loss on sale (f)
-
-
14,254
-
Provision for (benefit from) income taxes
-
(961
)
472
(978
)
Adjusted income from discontinued operations before income taxes$
-
$
13,313
$
8,350
$
30,408
See footnotes on page 12.
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