Core Insights - Acadia Healthcare Company, Inc. (ACHC) reported adjusted second-quarter earnings of 83 cents per share, exceeding the Zacks Consensus Estimate by 16.9%, although the earnings declined 8.8% year over year [1][10] - Total revenues increased by 9.2% year over year to $869.2 million, surpassing the consensus mark by 4% [1][10] Financial Performance - Same-facility revenues reached $851.2 million, a 9.5% increase year over year, exceeding the estimate of $827.8 million [3] - Patient days increased by 1.8%, while admissions grew by 1.4% year over year [3] - Revenue per patient day rose by 7.5% year over year [3] - Total adjusted EBITDA increased by 7.6% year over year to $201.8 million, higher than the estimate of $178.4 million [4][10] Expense Analysis - Total expenses rose by 18.8% year over year to $819.2 million, exceeding the estimate of $760.2 million, driven by higher salaries, wages, benefits, and operating expenses [5] Cash and Debt Position - As of June 30, 2025, cash and cash equivalents were $131.4 million, up from $76.3 million at the end of 2024 [6] - Long-term debt increased to $2.2 billion from $1.9 billion as of December 31, 2024 [7] - Total assets grew to $6.3 billion from $6 billion at the end of 2024 [6] Share Repurchase Activity - The company repurchased shares worth $3.2 million in the quarter, totaling $50.4 million year-to-date, with $250 million remaining in the share repurchase fund [8] 2025 Guidance - Revenues are projected to be between $3.3 billion and $3.35 billion, with adjusted EBITDA estimated to be in the range of $675 million to $700 million [11] - Adjusted earnings per share (EPS) are expected to be between $2.45 and $2.65 [11] - Operating cash flows are forecasted to be between $460 million and $485 million [12]

Financial Data and Key Metrics Changes - The company reported total revenue of $869.2 million for Q2 2025, representing a 9.2% increase year-over-year [5][19] - Adjusted EBITDA for the quarter was $201.8 million, reflecting a 7.5% increase compared to the same period last year, with an adjusted EBITDA margin of 23.2% [5][19] - Same facility revenue grew by 9.5% year-over-year, including a 7.5% increase in revenue per patient day and a 1.8% growth in patient days [19][20] Business Line Data and Key Metrics Changes - The company added 101 beds to existing facilities in Q2, totaling 191 beds added for 2025, and 479 beds added to date in 2025 [8][10] - Same facility patient days increased by 1.8%, with strong performance in specialty and comprehensive treatment centers (CTCs) [11][12] - The company experienced a slight decline in Medicaid volumes year-over-year in its acute care hospitals, while commercial and Medicare volumes increased by 98% respectively [12] Market Data and Key Metrics Changes - The company anticipates approximately $230 million in gross revenue from existing state Medicaid supplemental programs for the full year 2025, with potential reductions starting in fiscal 2028 [6][20] - The approval of the Tennessee supplemental payment program resulted in a favorable pre-tax benefit of $51.8 million for the quarter [20] Company Strategy and Development Direction - The company remains committed to delivering essential care to underserved populations and prioritizes partnerships with payers and state agencies [7] - The company is focusing on quality initiatives and technology investments to enhance patient safety and care coordination [12][15] - The company plans to pause some capital spending to unlock more free cash flow and reduce startup costs [35][36] Management's Comments on Operating Environment and Future Outlook - Management noted that the primary driver of lower-than-expected volumes was weaker Medicaid volumes in the acute care business, reflecting evolving utilization patterns among managed Medicaid plans [26][27] - The company expects adjusted EBITDA for the full year to be in the range of $675 million to $700 million, with startup losses projected to be approximately $60 million to $65 million [21][22] - Management expressed confidence in the long-term growth potential despite current challenges, emphasizing the importance of quality care and operational efficiency [15][34] Other Important Information - Heather Dixon, the Chief Financial Officer, will be stepping down, and Tim Sides will assume the role of Interim CFO [17][18] - The company is experiencing more favorable labor trends in 2025, supported by initiatives focused on recruitment and retention [16] Q&A Session Summary Question: Can you elaborate on the Medicaid volume issues? - Management indicated that weaker Medicaid volumes were primarily due to evolving utilization patterns among managed Medicaid plans, impacting admissions trends [26][27] Question: What is driving the increase in startup costs? - The increase in startup costs is due to an accelerated opening pace of new facilities, resulting in earlier-than-expected costs [28][29] Question: How does the company view free cash flow opportunities in 2026? - Management believes there is an opportunity to accelerate the path to becoming free cash flow positive by pausing some capital spending [34][35] Question: What is the impact of underperforming facilities on patient volumes? - Underperforming facilities had a negative impact of about 80 basis points on same facility patient volume growth in Q2, with management monitoring the situation closely [42][43] Question: How is the company addressing referral sources for underperforming facilities? - The company is actively engaging with referral sources to highlight the quality of care and investments made in technology and patient outcomes [95][96]

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) H1 2025 financials: assets $6.31B, liabilities $3.08B, revenue $1.64B, net income $38.5M (down due to legal costs), operating cash flow improved to $145.0M [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Summary (in thousands) | Balance Sheet Items | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $691,560 | $577,492 | | Property and equipment, net | $3,063,523 | $2,853,193 | | Goodwill | $2,276,232 | $2,264,851 | | **Total Assets** | **$6,308,359** | **$5,956,915** | | **Total Current Liabilities** | $523,712 | $577,919 | | Long-term debt | $2,247,027 | $1,880,093 | | **Total Liabilities** | **$3,084,830** | **$2,766,084** | | **Total Equity** | **$3,077,986** | **$3,073,715** | - Total assets increased by **$351.4 million**, primarily driven by growth in property and equipment. Total liabilities rose by **$318.7 million**, largely due to an increase in long-term debt[9](index=9&type=chunk) [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Income Statement Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $869,232 | $796,040 | $1,639,737 | $1,564,091 | | Total expenses | $819,229 | $689,580 | $1,576,266 | $1,358,787 | | **Net income attributable to Acadia** | $30,127 | $78,482 | $38,501 | $154,865 | | **Diluted EPS** | $0.33 | $0.85 | $0.42 | $1.68 | - Revenue increased **9.2%** in Q2 2025 and **4.8%** in H1 2025 year-over-year. However, net income and EPS declined significantly due to a sharp rise in 'Transaction, legal and other costs,' which surged to **$64.4 million** in Q2 2025 from **$6.1 million** in Q2 2024[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | $144,981 | $(150,137) | | Net cash used in investing activities | $(334,021) | $(340,098) | | Net cash provided by financing activities | $244,156 | $467,329 | | **Net increase (decrease) in cash** | $55,116 | $(22,906) | - Operating cash flow showed a significant improvement, becoming a source of cash of **$145.0 million** in H1 2025 compared to a use of **$150.1 million** in H1 2024. Investing activities were driven by **$342.4 million** in capital expenditures. Financing activities included new borrowings, debt repayments, and **$50.0 million** in common stock repurchases[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - As of June 30, 2025, the company operated **274** behavioral healthcare facilities with approximately **12,100** beds across **39** states and Puerto Rico[19](index=19&type=chunk) - In Q2 2025, the company recognized **$65.6 million** of revenue related to a state government program, of which **$34.4 million** related to services in 2024 and **$14.3 million** to Q1 2025[34](index=34&type=chunk) - The company is subject to multiple legal proceedings, including the Desert Hills Litigation, securities class actions, and government investigations by the DOJ and SEC into its acute care service line regarding admissions, length of stay, and billing practices[47](index=47&type=chunk)[52](index=52&type=chunk)[60](index=60&type=chunk) - On February 28, 2025, the company entered into a new credit agreement, securing a **$1.0 billion** revolving facility and a **$650.0 million** term loan facility, and used the proceeds to refinance its prior credit facility[64](index=64&type=chunk)[65](index=65&type=chunk) - A share repurchase program of up to **$300.0 million** was authorized in February 2025. During the six months ended June 30, 2025, the company repurchased **1.7 million** shares for **$50.4 million**[93](index=93&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2/H1 2025 revenue growth, but profitability was severely impacted by increased legal costs; capital actions and bed expansion continued Same Facility Operating Data (% Change YoY) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Revenue growth | 9.5% | 5.8% | | Patient days growth | 1.8% | 2.0% | | Admissions growth | 1.4% | 1.7% | | Revenue per patient day growth | 7.5% | 3.8% | - Revenue for Q2 2025 increased by **$73.2 million** (**9.2%**) YoY, which included a **$65.6 million** revenue recognition from a state government program based on timing of approval[116](index=116&type=chunk) Transaction, Legal and Other Costs (in thousands) | Cost Category | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Government investigations | $53,526 | $2,051 | $84,538 | $2,532 | | Termination and restructuring costs | $10,074 | $1,419 | $12,239 | $(1,981) | | **Total** | **$64,425** | **$6,091** | **$95,497** | **$8,938** | - The company's business strategy focuses on five growth pathways: facility expansions, joint ventures, de novo facilities, acquisitions, and continuum of care expansion. In H1 2025, the company added **479** beds and opened **eleven** comprehensive treatment centers (CTCs)[108](index=108&type=chunk) - Cash from operations was **$145.0 million** for H1 2025, a significant turnaround from a **$150.1 million** use of cash in H1 2024. Capital expenditures totaled **$342.4 million**, with **$291.2 million** dedicated to expansion projects[148](index=148&type=chunk)[149](index=149&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate risk from variable-rate debt; a 1% increase would decrease annual pretax income by $8.1 million - At June 30, 2025, the company's long-term debt consisted of **$1,460.9 million** of fixed-rate debt and **$806.5 million** of variable-rate debt[175](index=175&type=chunk) - A hypothetical **1%** increase in market interest rates would reduce the company's annual pretax income by an estimated **$8.1 million**[175](index=175&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during Q2 - The CEO and CFO concluded that the company's disclosure controls and procedures are effective[176](index=176&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[177](index=177&type=chunk) [PART II – OTHER INFORMATION](index=47&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates Note 9 details on significant legal matters, including Desert Hills Litigation, securities class actions, and government investigations - The report refers to Note 9 for details on legal proceedings, which cover the Desert Hills Litigation, securities litigation, derivative actions, and government investigations[180](index=180&type=chunk)[46](index=46&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - The company incorporates by reference the risk factors discussed in its Annual Report on Form 10-K for the year ended December 31, 2024, indicating no material changes[181](index=181&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q2 2025, the company repurchased 132,073 shares, with $250.0 million remaining available under the Share Repurchase Program as of June 30, 2025 Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 - April 30 | 107,192 | $30.20 | | May 1 - May 31 | 12,381 | $23.91 | | June 1 - June 30 | 12,500 | $21.47 | | **Total** | **132,073** | N/A | - Of the shares repurchased in Q2 2025, **103,939** were under the formal Share Repurchase Program, while **28,134** were withheld for tax payments related to employee stock awards[184](index=184&type=chunk) - As of June 30, 2025, **$250.0 million** remained authorized for purchase under the Share Repurchase Program, which has no termination date[184](index=184&type=chunk) [Other Information](index=47&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading plan during the second quarter of 2025[183](index=183&type=chunk) [Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and other corporate documents - Lists exhibits filed with the report, including CEO/CFO certifications (31.1, 31.2, 32) and Inline XBRL data (101, 104)[185](index=185&type=chunk)

[Q2 2025 Earnings Release](index=1&type=section&id=Q2_2025_Earnings_Release) Acadia Healthcare announced its Q2 2025 financial results, highlighting strong revenue growth, strategic expansion, and updated full-year guidance [Second Quarter 2025 Performance Highlights](index=1&type=section&id=Second_Quarter_2025_Performance_Highlights) Acadia Healthcare reported solid Q2 2025 results, with revenue up 9.2% and Adjusted EBITDA up 7.6%, boosted by a $51.8 million state program benefit despite increased startup losses Q2 2025 Financial Performance Overview | Metric | Q2 2025 | Change vs Q2 2024 | | :--- | :--- | :--- | | Revenue | $869.2 million | +9.2% | | Same Facility Revenue | - | +9.5% | | Revenue per Patient Day | - | +7.5% | | Patient Days | - | +1.8% | | Net Income (attributable to Acadia) | $30.1 million | - | | Diluted EPS | $0.33 | - | | Adjusted Income (attributable to Acadia) | $74.8 million | - | | Adjusted Diluted EPS | $0.83 | - | | Adjusted EBITDA | $201.8 million | +7.6% | | New Beds Added (in quarter) | 101 beds | - | - The company recognized a significant favorable pre-tax benefit of **$51.8 million** from a newly approved Tennessee state supplemental program, which included amounts related to fiscal year 2024 and Q1 2025[3](index=3&type=chunk) - Startup losses from newly constructed facilities increased to **$14.2 million** in Q2 2025, a substantial rise from **$4.6 million** in Q2 2024[4](index=4&type=chunk) - CEO Chris Hunter attributed the solid results to the execution of the company's growth strategy and continued strong demand for behavioral health services[3](index=3&type=chunk) [Strategic Growth and Financial Position](index=2&type=section&id=Strategic_Growth_and_Financial_Position) The company advanced its growth strategy by adding 479 beds year-to-date, expanding its network of comprehensive treatment centers (CTCs), and progressing with its joint venture hospital projects. Acadia maintains a strong financial position with over $828 million in available liquidity and continued its share repurchase program - The company added **101 beds** to existing facilities in Q2, bringing the year-to-date total additions to **479 beds** across new and existing facilities[6](index=6&type=chunk) - **Four new comprehensive treatment centers (CTCs)** were added, expanding the network to **174 CTCs** across **33 states**[7](index=7&type=chunk) - Acadia has **21 joint venture partnerships** for **22 hospitals**, with **13 operational** and **9 more expected to open**, including three later in 2025[7](index=7&type=chunk) - As of June 30, 2025, the company had **$131.4 million** in cash and **$828.3 million** available under its revolving credit facility[8](index=8&type=chunk) - The company repurchased **103,939 shares** for **$3.2 million** in Q2, bringing the year-to-date total to **1,706,625 shares** for **$50.4 million**[8](index=8&type=chunk) [Updated 2025 Financial Guidance](index=2&type=section&id=Updated_2025_Financial_Guidance) Acadia updated its full-year 2025 financial guidance. Key assumptions include an increase in expected startup losses to $60-$65 million due to accelerated construction and a net benefit of $30-$40 million from Medicaid supplemental payments, including the new Tennessee program Updated 2025 Financial Guidance | Metric | 2025 Guidance Range | | :--- | :--- | | Revenue | $3.3 to $3.35 billion | | Adjusted EBITDA | $675 to $700 million | | Adjusted EPS | $2.45 to $2.65 | | Operating Cash Flows | $460 to $485 million | | Expansion Capital Expenditures | $495 to $535 million | | Total Bed Additions | 950 to 1,000 beds | - Guidance assumptions include a **$10 million** increase in expected startup losses for the full year, now ranging from **$60 to $65 million**, due to construction running ahead of schedule[9](index=9&type=chunk) - The company anticipates a net increase in Medicaid supplemental payments of **$30 to $40 million** for the full year, which includes a recurring benefit of **$10 to $11 million** per quarter in the second half from the new Tennessee program[9](index=9&type=chunk) [Management Transition](index=3&type=section&id=Management_Transition) The company announced that Chief Financial Officer Heather Dixon will be stepping down on August 15, 2025. Tim Sides, the current Senior Vice President of Operations Finance, will serve as interim CFO while a search for a permanent replacement is conducted - CFO Heather Dixon is stepping down effective **August 15, 2025**, to pursue a role as President and COO at another company[11](index=11&type=chunk) - Tim Sides, Senior Vice President, Operations Finance, will assume the role of interim Chief Financial Officer[11](index=11&type=chunk)[13](index=13&type=chunk) [Financial Statements](index=5&type=section&id=Financial_Statements) This section presents Acadia Healthcare's condensed consolidated financial statements, including income statements, balance sheets, and cash flow statements for the reported periods [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed_Consolidated_Statements_of_Income) For Q2 2025, revenue grew 9.2% to $869.2 million, but net income attributable to Acadia fell sharply to $30.1 million from $78.5 million in Q2 2024. The decline was primarily driven by a significant increase in 'Transaction, legal and other costs' to $64.4 million Condensed Consolidated Statements of Income (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $869,232 | $796,040 | | Total Expenses | $819,229 | $689,580 | | Income before income taxes | $50,003 | $106,460 | | Net income attributable to Acadia | $30,127 | $78,482 | | Diluted EPS | $0.33 | $0.85 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed_Consolidated_Balance_Sheets) As of June 30, 2025, total assets increased to $6.31 billion from $5.96 billion at year-end 2024, mainly due to growth in property and equipment. Total liabilities rose to $3.08 billion, driven by an increase in long-term debt Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $691,560 | $577,492 | | Property and equipment, net | $3,063,523 | $2,853,193 | | Total assets | $6,308,359 | $5,956,915 | | Total current liabilities | $523,712 | $577,919 | | Long-term debt | $2,247,027 | $1,880,093 | | Total liabilities | $3,084,830 | $2,766,084 | | Total equity | $3,077,986 | $3,073,715 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed_Consolidated_Balance_Sheets) For the first six months of 2025, net cash provided by operating activities was $145.0 million, a significant turnaround from a $150.1 million use of cash in the prior-year period. Net cash used in investing activities was $334.0 million, primarily for capital expenditures. Financing activities provided $244.2 million in cash Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $144,981 | $(150,137) | | Net cash used in investing activities | $(334,021) | $(340,098) | | Net cash provided by financing activities | $244,156 | $467,329 | | Net increase (decrease) in cash | $55,116 | $(22,906) | [Operating Statistics](index=9&type=section&id=Operating_Statistics) In Q2 2025, same-facility revenue grew 9.5%, driven by a 7.5% increase in revenue per patient day and a 1.8% increase in patient days. Total facility results showed similar trends, with a 9.2% revenue increase, reflecting strong underlying operational performance and demand Same Facility Results - Q2 2025 vs Q2 2024 (Revenue in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $851,223 | $777,680 | 9.5% | | Patient Days | 789,619 | 775,772 | 1.8% | | Revenue per Patient Day | $1,078 | $1,002 | 7.5% | | Adjusted EBITDA | $256,019 | $224,335 | 14.1% | Total Facility Results - Q2 2025 vs Q2 2024 (Revenue in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $869,232 | $796,040 | 9.2% | | Patient Days | 804,840 | 791,673 | 1.7% | | Revenue per Patient Day | $1,080 | $1,006 | 7.4% | | Adjusted EBITDA | $240,397 | $224,035 | 7.3% | [Reconciliation of Non-GAAP Financial Measures](index=10&type=section&id=Reconciliation_of_Non-GAAP_Financial_Measures) This section provides reconciliations of non-GAAP financial measures, including Adjusted EBITDA and Adjusted Income, to their most directly comparable GAAP financial measures [Reconciliation to Adjusted EBITDA](index=10&type=section&id=Reconciliation_to_Adjusted_EBITDA) Adjusted EBITDA for Q2 2025 was $201.8 million, an increase from $187.6 million in Q2 2024. The reconciliation from GAAP Net Income includes significant add-backs, most notably $64.4 million for 'Transaction, legal and other costs' and $10.5 million for equity-based compensation Reconciliation to Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income attributable to Acadia | $30,127 | $78,482 | | EBITDA | $134,136 | $171,685 | | Adjustments: | | | | Equity-based compensation expense | $10,549 | $8,869 | | Transaction, legal and other costs | $64,425 | $6,091 | | **Adjusted EBITDA** | **$201,847** | **$187,645** | [Reconciliation to Adjusted Income](index=11&type=section&id=Reconciliation_to_Adjusted_Income) For Q2 2025, Adjusted Income attributable to Acadia was $74.8 million, or $0.83 per diluted share. This is a decrease from $83.6 million, or $0.91 per diluted share, in the prior-year quarter, primarily due to the higher transaction and legal costs which are adjusted out of the non-GAAP measure Reconciliation to Adjusted Income (in thousands, except per share) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income attributable to Acadia | $30,127 | $78,482 | | Adjustments (Transaction, legal, etc.) | $57,162 | $7,091 | | **Adjusted income attributable to Acadia** | **$74,840** | **$83,573** | | **Adjusted income per diluted share** | **$0.83** | **$0.91** | [Appendix](index=3&type=section&id=Appendix) This appendix provides essential background information on Acadia Healthcare and important disclaimers regarding forward-looking statements and non-GAAP financial measures [About Acadia & Forward-Looking Statements](index=3&type=section&id=About_Acadia_and_Forward-Looking_Statements) Acadia is a leading US behavioral healthcare provider with 274 facilities and approximately 12,100 beds as of June 30, 2025. The report includes standard forward-looking statement disclaimers, highlighting risks such as integration of acquisitions, changes in payor reimbursement, patient incidents, and potential economic disruptions - As of June 30, 2025, Acadia operated **274 behavioral healthcare facilities** with approximately **12,100 beds** in **39 states** and Puerto Rico[15](index=15&type=chunk) - Key risks identified include difficulties integrating acquisitions, potential reductions in payments from payors, patient incidents, litigation, and cybersecurity risks[17](index=17&type=chunk) [Footnotes on Non-GAAP Measures and Adjustments](index=12&type=section&id=Footnotes_on_Non-GAAP_Measures_and_Adjustments) This section provides detailed definitions for non-GAAP financial measures like EBITDA and Adjusted EBITDA. It also offers a breakdown of significant adjustments, noting that the Q2 2025 'Transaction, legal and other costs' of $64.4 million were primarily composed of $53.5 million for government investigations and $10.1 million in termination and restructuring costs - The report defines non-GAAP measures used, such as EBITDA, Adjusted EBITDA, and Adjusted Income, to supplement GAAP-based performance evaluation[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) Breakdown of Transaction, Legal, and Other Costs (Q2 2025) (in thousands) | Category | Amount | | :--- | :--- | | Government investigations | $53,526 | | Termination and restructuring costs | $10,074 | | Legal, accounting and other acquisition-related costs | $825 | | **Total** | **$64,425** | - Other key adjustments excluded from non-GAAP measures include debt extinguishment costs, legal settlements related to the Desert Hills litigation, non-cash impairment charges, and gains on property sales[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)

Group 1 - Acadia Healthcare Company, Inc. (ACHC) is experiencing significant attention from investors due to high implied volatility in its options market, particularly the Jun 20, 2025 $65 Call option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a substantial price change or an upcoming event that could trigger a rally or sell-off [2] - Acadia Healthcare currently holds a Zacks Rank 3 (Hold) in the Medical - Hospital industry, which is in the top 35% of the Zacks Industry Rank, but analysts have not increased earnings estimates for the current quarter, with a consensus estimate dropping from 77 cents to 71 cents per share [3] Group 2 - The high implied volatility surrounding Acadia Healthcare may indicate a developing trading opportunity, as options traders often seek to sell premium on options with high implied volatility to capture decay [4]

Acadia Healthcare Company (ACHC) 2025 Conference Summary Industry Overview - Acadia Healthcare is one of the largest behavioral health providers in the US, operating a network of 270 facilities with approximately 12,000 beds across 39 states and Puerto Rico, serving over 80,000 patients daily [6][7][8]. Key Financial Performance - The company reported that revenue, EBITDA, volume, revenue per day, and margins were all in line with guidance, with EBITDA at the high end of the range [2][3]. - Acadia added 378 newly licensed beds in Q1 and reaffirmed its full-year financial guidance for both revenue and adjusted EBITDA [3][4]. Demand and Growth Outlook - Consistent demand is observed across all four lines of business, with a significant opportunity in the behavioral health sector due to an estimated 75,000 additional beds needed in the US to meet demand [6][7]. - The company is in a period of record growth, expecting to add 800 to 1,000 beds in 2025, with nearly half already achieved in Q1 [10][11]. - The Comprehensive Treatment Centers (CTCs) segment is expected to grow mid-single digits over the next few years, with a strong demand for opioid use disorder treatment [9][15]. Operational Insights - The average cost per new facility bed is estimated at $500,000 to $550,000, with a target breakeven period of 12 to 13 months and expected maturity occupancy of 80% to 85% within three to five years [12][13]. - The company is focused on tuck-in M&A to acquire existing CTCs, which is a fragmented part of healthcare, enhancing growth and efficiency [18]. Policy and Regulatory Environment - Acadia is monitoring the implications of the opioid settlement funds, with $50 billion available but only a small percentage reaching states and counties [19][20]. - The company is optimistic about the potential impact of the reconciliation bill on access to high acuity mental health care, which could mitigate costs in other healthcare areas [24][25]. Pricing and Revenue Guidance - The company anticipates low single-digit pricing growth, with supplemental payments being a significant factor in revenue projections [46][47]. - For 2025, Acadia expects revenue growth of 6%, but EBITDA is projected to decline year-over-year due to various headwinds, including supplemental payment reductions and underperforming facilities [52][53]. Challenges and Risks - The company faces challenges from underperforming facilities, which are expected to impact EBITDA by approximately $20 million for the year [34][38]. - There is ongoing concern regarding potential policy changes and their impact on Medicaid access and reimbursement rates [26][30]. Conclusion - Acadia Healthcare is positioned for growth in the behavioral health sector, with strong demand and strategic plans for bed additions and acquisitions. However, it must navigate regulatory challenges and operational headwinds to achieve its financial targets [41][44].

Core Viewpoint - Acadia Healthcare Company, Inc. (ACHC) reported mixed financial results for the first quarter, with adjusted earnings per share beating estimates but showing a significant year-over-year decline, while total revenues showed slight growth [1][2]. Financial Performance - Adjusted first-quarter earnings were 40 cents per share, exceeding the Zacks Consensus Estimate by 14.3%, but down 52.4% year over year [1]. - Total revenues increased by 0.3% year over year to $770.5 million, aligning with consensus expectations [1]. - Same-facility revenues rose 2.1% year over year to $759.7 million, although this fell short of the estimated $763.1 million [3]. - Total adjusted EBITDA decreased by 22.8% year over year to $134.2 million, slightly below the estimate of $134.9 million [4]. Operational Metrics - Patient days improved by 2.2% year over year, contributing to increased admissions, which grew by 2.1% [3]. - Revenue per patient day declined by 0.2% year over year, missing the growth estimate of 2% [3][4]. - Total expenses rose by 13.1% year over year to $757 million, exceeding the estimate of $744.6 million, driven by higher salaries, wages, benefits, and operating costs [5]. Cash and Debt Position - As of March 31, 2025, cash and cash equivalents increased to $91.2 million from $76.3 million at the end of 2024 [5]. - Total assets grew to $6.1 billion, while long-term debt rose to $2.2 billion from $1.9 billion at the end of 2024 [6]. - Total equity decreased by 1% to $3 billion, with a net leverage ratio of approximately 3.2 [6]. Share Repurchase and Guidance - Management authorized a share repurchase program for up to $300 million, with $47.3 million worth of shares repurchased in the first quarter [7]. - The company reaffirmed its 2025 guidance, projecting revenues between $3.3 billion and $3.4 billion, adjusted EBITDA between $675 million and $725 million, and adjusted EPS between $2.50 and $2.80 [8]. Future Projections - Interest expenses are expected to remain between $130 million and $140 million, with depreciation and amortization expenses projected at $175 million to $185 million [9]. - Operating cash flows are forecasted to be in the range of $460 million to $510 million, with expansion capital expenditures anticipated between $525 million and $575 million [9]. - Management estimates bed additions between 800 and 1,000 in 2025 [10].

Financial Data and Key Metrics Changes - First quarter revenue was $770.5 million, slightly above the midpoint of the guidance range of $765 million to $775 million [6] - Adjusted EBITDA for the first quarter was $134.2 million, near the high end of the guidance range of $130 million to $135 million [6] - Same facility patient days grew by 2.2% in the first quarter, impacted by an unfavorable leap year effect of approximately 110 basis points [6][15] - Adjusted EBITDA margin was 17.4% for the first quarter [16] Business Line Data and Key Metrics Changes - Same facility revenue grew by 2.1% year-over-year, driven by patient day growth of 2.2% [15] - Same facility adjusted EBITDA was $191.6 million, with an adjusted EBITDA margin of 25.2% [17] - Start-up losses related to new facilities were higher year-over-year and sequentially, reflecting an increase in newly constructed facilities [16] Market Data and Key Metrics Changes - Acadia added 378 new beds in the first quarter, including 90 beds to existing facilities and 288 beds from two new facilities [7] - The company expects to add between 800 to 1,000 total beds for the full year 2025 [18] Company Strategy and Development Direction - Acadia's strategy focuses on high-quality care and clinical health outcomes, with a commitment to quality and safety as foundational elements [10] - The company aims to bridge the gap between physical and behavioral health care, enhancing relationships with referral sources and joint venture partners [7] - Acadia plans to continue expanding its market reach, with expectations to add between 600 to 800 beds annually from 2026 to 2028 [8][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand for behavioral health services, particularly for higher acuity patients [39] - The company remains engaged in policy discussions to strengthen the behavioral health care system and expects continued support for essential care [12] - Management acknowledged the challenges posed by underperforming facilities but indicated that improvements are expected over time [17][19] Other Important Information - As of March 31, 2025, Acadia had $91.2 million in cash and cash equivalents and approximately $900 million available under its revolving credit facility [18] - The company repurchased approximately 1.6 million shares during the first quarter for a total of $47.3 million [18] Q&A Session Summary Question: Can you provide perspective on the progression of EBITDA and seasonality of the business this year? - Management highlighted several moving parts affecting EBITDA, including the timing of supplemental payments and the impact of start-up costs from new beds [25][28] Question: What are you seeing in Medicaid rate updates? - Management noted stable underlying rate growth and a cautious approach to assumptions due to policy uncertainties [32][34] Question: How is the broader demand environment for behavioral health? - Management indicated consistent demand for services, particularly for higher acuity patients, and ongoing efforts to meet that demand through new facilities and bed additions [39][41] Question: What is the expected return target for new facilities? - Management emphasized a disciplined approach to capital deployment, ensuring returns exceed the cost of capital [65][66] Question: How should we think about legal expenses moving forward? - Management is actively cooperating with ongoing investigations, and while it's difficult to predict future legal costs, significant preliminary work is being undertaken [73][74] Question: Can you provide guidance on Q2's percentage of annual guidance? - Management refrained from providing specific Q2 guidance but noted that supplemental payments, particularly from the Tennessee program, would be a significant swing factor [79][80] Question: What is happening with specialty revenue? - Management acknowledged a year-over-year decline in specialty revenue and indicated ongoing efforts to address this issue [104]

Financial Data and Key Metrics Changes - First quarter revenue for 2025 was $770.5 million, slightly above the midpoint of the guidance range of $765 million to $775 million [5][14] - Adjusted EBITDA for the first quarter was $134.2 million, near the high end of the guidance range of $130 million to $135 million, reflecting an adjusted EBITDA margin of 17.4% [5][15] - Same facility patient days grew by 2.2% in the first quarter, with same facility revenue growth of 2.1% compared to the first quarter of 2024 [5][14] Business Line Data and Key Metrics Changes - The company added 378 new beds in the first quarter, including 90 beds to existing facilities and 288 beds from two new facilities [6] - Same facility adjusted EBITDA was $191.6 million, with an adjusted EBITDA margin of 25.2% [16] - Start-up losses related to new facilities were higher year-over-year and sequentially, reflecting an increase in newly constructed facilities [15] Market Data and Key Metrics Changes - The company expects to add between 800 to 1,000 total beds for the full year 2025, with a solid pipeline of potential opportunities in attractive markets [7][18] - The company anticipates Medicaid supplemental payments to be flat to up $15 million in 2025 on a net basis [19] Company Strategy and Development Direction - Acadia's strategy focuses on high-quality care and clinical health outcomes, with a commitment to quality and safety as foundational elements [10][12] - The company aims to bridge the gap between physical and behavioral health care, maintaining strong relationships with referral sources and joint venture partners [6] - The company is engaged in policy advocacy to strengthen the behavioral health care system, emphasizing the importance of government support for underserved populations [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand for behavioral health services, particularly for higher acuity patients, and noted consistent demand across various lines of business [38] - The company acknowledged challenges from underperforming facilities but expects to see improvements as they comp over headwinds in the fourth quarter of 2025 [19] - Management remains cautious about rate growth due to uncertainties in the policy environment but noted stable underlying rate growth [35] Other Important Information - As of March 31, 2025, the company had $91.2 million in cash and cash equivalents and approximately $900 million available under its revolving credit facility [18] - The company repurchased approximately 1.6 million shares during the first quarter for a total of $47.3 million [18] Q&A Session Summary Question: Can you provide perspective on the progression of EBITDA and seasonality this year? - Management highlighted several moving parts affecting Q1, including the timing of supplemental payments and the highest level of start-up costs, leading to a steeper ramp in EBITDA as the year progresses [25][28] Question: What are you seeing in Medicaid rate updates? - Management noted ongoing positive discussions with payer partners and maintained a conservative outlook on rate growth due to policy uncertainties, but underlying rate growth has been stable [33][35] Question: How is the broader demand environment for behavioral health? - Management indicated consistent demand for higher acuity patients across various business lines, with ongoing efforts to meet that demand through new facilities and bed additions [38] Question: What is the expected return target for new facilities? - The company applies a disciplined approach to capital deployment, ensuring that all projects meet required return thresholds, with sensitivity analyses incorporated for future projects [63][66] Question: How should we think about legal expenses moving forward? - Management is actively cooperating with ongoing investigations and anticipates that legal costs may normalize as preliminary work is completed [70][72] Question: What is happening with specialty revenue? - Management acknowledged that closures of specialty facilities have contributed to a decline in specialty revenue, but they are working to stabilize and grow this line moving forward [97][98]

Core Viewpoint - Acadia Healthcare reported quarterly earnings of $0.40 per share, exceeding the Zacks Consensus Estimate of $0.35 per share, but down from $0.84 per share a year ago [1][2] Financial Performance - The company achieved revenues of $770.51 million for the quarter ended March 2025, aligning with the Zacks Consensus Estimate and showing a slight increase from $768.05 million year-over-year [3] - Acadia Healthcare has surpassed consensus EPS estimates three times over the last four quarters, but has only topped revenue estimates once in the same period [2][3] Stock Performance - The stock has declined approximately 39.9% since the beginning of the year, contrasting with the S&P 500's decline of 3.8% [4] - The current Zacks Rank for Acadia Healthcare is 4 (Sell), indicating expectations of underperformance in the near future [7] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $0.77 on revenues of $852.98 million, and for the current fiscal year, it is $2.68 on revenues of $3.33 billion [8] - The trend of estimate revisions for Acadia Healthcare has been unfavorable leading up to the earnings release [7] Industry Context - The Medical - Hospital industry, to which Acadia Healthcare belongs, is currently ranked in the top 40% of over 250 Zacks industries, suggesting a favorable environment compared to the bottom 50% [9]