Acadia Healthcare(ACHC) - 2025 Q2 - Quarterly Results

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 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] - 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] - 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] 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] - Four new comprehensive treatment centers (CTCs) were added, expanding the network to 174 CTCs across 33 states[7] - Acadia has 21 joint venture partnerships for 22 hospitals, with 13 operational and 9 more expected to open, including three later in 2025[7] - As of June 30, 2025, the company had $131.4 million in cash and $828.3 million available under its revolving credit facility[8] - 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] 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] - 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] 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] - Tim Sides, Senior Vice President, Operations Finance, will assume the role of interim Chief Financial Officer[11][13] 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 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 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 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 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 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 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 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 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 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] - Key risks identified include difficulties integrating acquisitions, potential reductions in payments from payors, patient incidents, litigation, and cybersecurity risks[17] 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][37][38] 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][51][52]