Acadia Healthcare(ACHC) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements 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 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] Condensed Consolidated Statements of Income 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] Condensed Consolidated Statements of Cash Flows 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] Notes to Condensed Consolidated Financial Statements - As of June 30, 2025, the company operated 274 behavioral healthcare facilities with approximately 12,100 beds across 39 states and Puerto Rico[19] - 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] - 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][52][60] - 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][65] - 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] Management's Discussion and Analysis of Financial Condition and Results of Operations 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] 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] - 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][149] Quantitative and Qualitative Disclosures About Market Risk 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] - A hypothetical 1% increase in market interest rates would reduce the company's annual pretax income by an estimated $8.1 million[175] Controls and Procedures 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] - 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] PART II – OTHER INFORMATION Legal Proceedings 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][46] Risk Factors 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] Unregistered Sales of Equity Securities and Use of Proceeds 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] - As of June 30, 2025, $250.0 million remained authorized for purchase under the Share Repurchase Program, which has no termination date[184] Other Information 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] Exhibits 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]