Edgar Filing: Acadia Healthcare Company, Inc.

achc-10q_20190331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35331

ACADIA HEALTHCARE COMPANY, INC.

(Exact name of registrant as specified in its charter)

Delaware

45-2492228

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

6100 Tower Circle, Suite 1000

Franklin, Tennessee 37067

(Address, including zip code, of registrant’s principal executive offices)

(615) 861-6000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒		Accelerated filer	Non-accelerated filer	☐
Smaller reporting company	☐		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At May 1, 2019, there were 88,701,225 shares of the registrant’s common stock outstanding.


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $.01 par value	ACHC	NASDAQ Global Select Market

Table of contents

ACADIA HEALTHCARE COMPANY, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Condensed Consolidated Balance Sheets (Unaudited)	1

	Condensed Consolidated Statements of Income (Unaudited)	2

	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	3

	Condensed Consolidated Statement of Equity (Unaudited)	4

	Condensed Consolidated Statements of Cash Flows (Unaudited)	5

	Notes to Condensed Consolidated Financial Statements (Unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

Item 4.	Controls and Procedures	39

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41

Item 6.	Exhibits	42

SIGNATURES		43

Table of contents

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

Acadia Healthcare Company, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

	March 31, 2019			December 31, 2018
	(In thousands, except share and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	43,684		$	50,510
Accounts receivable, net		331,851			318,087
Other current assets		76,979			81,820
Total current assets		452,514			450,417
Property and equipment, net		3,173,052			3,107,766
Goodwill		2,441,999			2,396,412
Intangible assets, net		89,796			88,990
Deferred tax assets		3,436			3,468
Derivative instrument assets		46,304			60,524
Operating lease right-of-use assets		506,787			—
Other assets		71,629			64,927
Total assets	$	6,785,517		$	6,172,504

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	36,503		$	34,112
Accounts payable		116,666			117,740
Accrued salaries and benefits		108,546			113,299
Current portion of operating lease liabilities		27,984			—
Other accrued liabilities		134,972			151,226
Total current liabilities		424,671			416,377
Long-term debt		3,221,709			3,159,375
Deferred tax liabilities		76,922			80,372
Operating lease liabilities		504,753			—
Other liabilities		122,188			154,267
Total liabilities		4,350,243			3,810,391
Redeemable noncontrolling interests		31,931			28,806
Equity:
Preferred stock, $0.01 par value; 10,000,000 shares authorized, no shares issued		—			—
Common stock, $0.01 par value; 180,000,000 shares authorized; 87,593,730 and 87,444,473 issued and outstanding at March 31, 2019 and December 31, 2018, respectively		876			874
Additional paid-in capital		2,546,759			2,541,987
Accumulated other comprehensive loss		(426,586	)		(462,377	)
Retained earnings		282,294			252,823
Total equity		2,403,343			2,333,307
Total liabilities and equity	$	6,785,517		$	6,172,504

See accompanying notes.

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Acadia Healthcare Company, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

	Three Months Ended March 31,
	2019			2018
	(In thousands, except per share amounts)
Revenue	$	760,617		$	742,241
Salaries, wages and benefits (including equity-based compensation expense of $6,101 and $6,919, respectively)		429,579			411,528
Professional fees		57,007			54,018
Supplies		29,957			29,364
Rents and leases		20,307			20,288
Other operating expenses		93,865			88,231
Depreciation and amortization		40,580			39,773
Interest expense, net		48,130			45,243
Debt extinguishment costs		—			940
Transaction-related expenses		4,321			4,768
Total expenses		723,746			694,153
Income before income taxes		36,871			48,088
Provision for (benefit from) income taxes		7,360			(2,786	)
Net income		29,511			50,874
Net income attributable to noncontrolling interests		(40	)		(55	)
Net income attributable to Acadia Healthcare Company, Inc.	$	29,471		$	50,819
Earnings per share attributable to Acadia Healthcare Company, Inc. stockholders:
Basic	$	0.34		$	0.58
Diluted	$	0.34		$	0.58
Weighted-average shares outstanding:
Basic		87,505			87,121
Diluted		87,694			87,294

See accompanying notes.

Table of contents

Acadia Healthcare Company, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended March 31,
	2019			2018
	(In thousands)
Net income	$	29,511		$	50,874
Other comprehensive income:
Foreign currency translation gain		44,481			92,780
Loss on derivative instruments, net of tax of $(3.5) million and $(7.3) million, respectively		(8,690	)		(20,053	)
Other comprehensive income		35,791			72,727
Comprehensive income		65,302			123,601
Comprehensive income attributable to noncontrolling interests		(40	)		(55	)
Comprehensive income attributable to Acadia Healthcare Company, Inc.	$	65,262		$	123,546

See accompanying notes.

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Acadia Healthcare Company, Inc.

Condensed Consolidated Statement of Equity

(Unaudited)

(In thousands)

	Common Stock				Additional Paid-in			Accumulated Other Comprehensive			Retained
	Shares		Amount		Capital			Loss			Earnings			Total
Balance at December 31, 2017		87,060	$	871	$	2,517,545		$	(374,118	)	$	428,573		$	2,572,871
Common stock issued under stock incentive plans		228		2		94			—			—			96
Common stock withheld for minimum statutory taxes		—		—		(2,126	)		—			—			(2,126	)
Equity-based compensation expense		—		—		6,919			—			—			6,919
Other comprehensive income		—		—		—			72,727			—			72,727
Other		—		—		313			—			—			313
Net income attributable to Acadia Healthcare Company, Inc.		—		—		—			—			50,819			50,819
Balance at March 31, 2018		87,288		873		2,522,745			(301,391	)		479,392			2,701,619
Common stock issued under stock incentive plans		42		—		128			—			—			128
Common stock withheld for minimum statutory taxes		—		—		(232	)		—			—			(232	)
Equity-based compensation expense		—		—		7,129			—			—			7,129
Other comprehensive loss		—		—		—			(114,492	)		—			(114,492	)
Other		—		—		313			—			—			313
Net income attributable to Acadia Healthcare Company, Inc.		—		—		—			—			58,836			58,836
Balance at June 30, 2018		87,330		873		2,530,083			(415,883	)		538,228			2,653,301
Common stock issued under stock incentive plans		33		1		19			—			—			20
Common stock withheld for minimum statutory taxes		—		—		(158	)		—			—			(158	)
Equity-based compensation expense		—		—		5,225			—			—			5,225
Other comprehensive loss		—		—		—			(24,579	)		—			(24,579	)
Other		—		—		208			—			—			208
Net income attributable to Acadia Healthcare Company, Inc.		—		—		—			—			46,232			46,232
Balance at September 30, 2018		87,363		874		2,535,377			(440,462	)		584,460			2,680,249
Common stock issued under stock incentive plans		81		—		130			—			—			130
Common stock withheld for minimum statutory taxes		—		—		(1,265	)		—			—			(1,265	)
Equity-based compensation expense		—		—		2,728			—			—			2,728
Other comprehensive loss		—		—		—			(21,915	)		—			(21,915	)
Other		—		—		5,017			—			—			5,017
Net loss attributable to Acadia Healthcare Company, Inc.		—		—		—			—			(331,637	)		(331,637	)
Balance at December 31, 2018		87,444		874		2,541,987			(462,377	)		252,823			2,333,307
Common stock issued under stock incentive plans		149		2		291			—			—			293
Common stock withheld for minimum statutory taxes		—		—		(1,620	)		—			—			(1,620	)
Equity-based compensation expense		—		—		6,101			—			—			6,101
Other comprehensive income		—		—		—			35,791			—			35,791
Net income attributable to Acadia Healthcare Company, Inc.		—		—		—			—			29,471			29,471
Balance at March 31, 2019		87,593	$	876	$	2,546,759		$	(426,586	)	$	282,294		$	2,403,343

See accompanying notes.

Table of contents

Acadia Healthcare Company, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended March 31,
	2019			2018
	(In thousands)
Operating activities:
Net income	$	29,511		$	50,874
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation and amortization		40,580			39,773
Amortization of debt issuance costs		2,888			2,525
Equity-based compensation expense		6,101			6,919
Deferred income taxes		(666	)		1,897
Debt extinguishment costs		—			940
Other		2,187			1,043
Change in operating assets and liabilities:
Accounts receivable, net		(11,980	)		(18,793	)
Other current assets		(5,875	)		(13,216	)
Other assets		295			(1,268	)
Accounts payable and other accrued liabilities		(15,701	)		(3,368	)
Accrued salaries and benefits		(5,849	)		4,802
Other liabilities		2,182			509
Net cash provided by continuing operating activities		43,673			72,637
Net cash used in discontinued operating activities		—			(287	)
Net cash provided by operating activities		43,673			72,350
Investing activities:
Cash paid for acquisitions, net of cash acquired		(40,400	)		—
Cash paid for capital expenditures		(69,248	)		(70,327	)
Cash paid for real estate acquisitions		(1,066	)		(4,293	)
Other		613			(4,066	)
Net cash used in investing activities		(110,101	)		(78,686	)
Financing activities:
Borrowings on revolving credit facility