Financial Data and Key Metrics Changes - The company reported revenue of $851.6 million for Q3 2025, a 4.4% increase compared to the same quarter last year [5][20] - Adjusted EBITDA was $173 million, down from $194.3 million in the prior year period, reflecting lower volumes and increased expenses [5][20] - Same facility volume growth was 1.3%, which was approximately 100 basis points below internal expectations [5][6] - Adjusted EBITDA guidance for 2025 was reduced to $650-$660 million from a previous range of $675 million-$700 million [6][24] Business Line Data and Key Metrics Changes - Same facility revenue grew 3.7% year over year, driven by a 2.3% increase in revenue per patient day and a 1.3% growth in patient days [20] - The company faced increased pressure on volumes, particularly in the Medicaid segment, impacting overall performance [6][30] Market Data and Key Metrics Changes - The company added 83 beds to existing facilities in Q3, bringing the year-to-date total to 274 beds added through expansions [22] - The company expects to add 500-700 beds in 2026, following the addition of over 1,700 beds in 2024 and 2025 [8][23] Company Strategy and Development Direction - The company is focusing on optimizing growth investments and its existing portfolio to improve financial performance amid increasing headwinds [7][12] - A comprehensive portfolio and capital allocation review led to a pause on several development projects that no longer projected acceptable returns [11][39] - The company aims to ensure a portfolio that meets patient demand while maximizing returns on investments [12][46] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increasing headwinds in the operating environment, particularly regarding pressures on managed care companies and Medicaid funding uncertainty [6][7] - The company remains confident in its strategy to deliver strong clinical outcomes and expects to see benefits from recent investments in quality and technology [26][52] Other Important Information - The company expects full-year 2025 startup losses to be in the range of $60 million-$65 million, with a modest decrease anticipated in 2026 [21][24] - Legal expenses related to government investigations were $39 million in Q3, down 28% from the previous quarter, with expectations for continued moderation [22][43] Q&A Session Summary Question: Can you provide more color on the challenges with payers, particularly in Medicaid? - Management noted that payer friction is more pronounced in Medicaid-heavy markets, with increased scrutiny on discharge criteria and more frequent utilization reviews [30][31] Question: How should we think about the durability of bad debts and denials as we move into 2026? - Management indicated that Q4 is seasonally slow, and while some pressures may persist, they expect a reduction in startup losses and other costs in 2026 [33][34] Question: Can you clarify the CapEx reduction and its implications for future bed openings? - The company plans to reduce CapEx by at least $300 million in 2026 while still opening multiple large facilities, as much of the capital for these projects has already been spent [39][41] Question: What is the expected impact of the five facility closures on EBITDA? - Management anticipates a mid-single-digit tailwind in 2026 from the closures, with a focus on ensuring returns on capital [45][46] Question: Can you provide insight into the $22 million in Medicaid supplemental benefits? - The company highlighted that Florida is a key state for these benefits, which could provide a significant run rate going forward [49]

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].