Financial Data and Key Metrics Changes - The company reported revenue of $821.5 million for Q4 2025, a 6.1% increase year-over-year [14] - Full year 2025 revenue reached $3.31 billion, reflecting a 5% increase over the previous year [15] - Adjusted EBITDA for Q4 was $99.8 million, with full year adjusted EBITDA at $608.9 million, near the upper end of guidance [15][16] - Same-facility revenue grew 4.4% year-over-year, driven by a 1.3% increase in revenue per patient day and a 3.1% increase in patient days [16] Business Line Data and Key Metrics Changes - The company added 181 beds in Q4 2025, totaling 1,089 beds added for the full year, exceeding guidance [17][18] - Startup losses related to new facilities were $12.8 million in Q4, compared to $11.2 million in Q4 2024 [16] - The company plans to add between 400 and 600 new beds in 2026, primarily through new facilities [18] Market Data and Key Metrics Changes - The company is facing a $25 million-$30 million annual EBITDA impact due to New York's decision to restrict Medicaid patients from receiving care in out-of-state facilities [21][72] - The company anticipates a 2%-3% increase in same-facility revenue per patient day for 2026, despite a decrease in Medicaid supplemental payment revenue [20] Company Strategy and Development Direction - The focus is on operational excellence and execution, with a commitment to quality management at all levels [7][10] - The company is expanding its presence through joint ventures with leading health systems, tailoring partnerships to local community needs [9] - Capital allocation will be disciplined, with a focus on projects that stand on their own merits [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for behavioral health services and the company's ability to meet that need [24] - The company is focused on improving operational discipline and leveraging data for better decision-making [56] - Management expects to generate positive free cash flow in 2026, with a significant reduction in CapEx [22][60] Other Important Information - The company has invested $93 million in CapEx in Q4 2025, totaling $572 million for the full year, which was nearly $50 million favorable to prior guidance [17] - The company is actively working to backfill occupancy in markets affected by regulatory changes [72] Q&A Session Summary Question: Update on the value creation review with outside advisors - Management confirmed that the review is ongoing and focused on immediate performance and long-term value creation [27][28] Question: Growth algorithm in the current environment - Management sees no change in the growth algorithm, with strong demand expected to continue [30] Question: Timeline for realizing embedded earnings from development activity - Management indicated that the realization of $200 million in incremental EBITDA is expected within five years [35] Question: Addressing pressure on average length of stay from managed Medicaid - Management stated that they maintain stable length of stay and advocate for patients to ensure appropriate care [42] Question: Plans to rebuild trust with referral sources - Management emphasized the importance of delivering high-quality care and maintaining strong relationships with referral sources [52] Question: Long-term CapEx strategy - Management plans to focus on existing facilities and be disciplined with capital expenditures moving forward [60][62] Question: Impact of California's new staffing requirements - Management expects a $4 million EBITDA impact from new staffing guidelines, which is embedded in guidance [78] Question: Performance of new facilities and ramp pacing - Management identified common themes affecting the ramp-up of new facilities and plans to improve processes for future openings [84]