Previews Third Quarter 2016 Financial Results
FRANKLIN, Tenn.--(BUSINESS WIRE)--Oct. 18, 2016--
Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced the
signing of a definitive agreement with BC Partners for the sale of 21
existing behavioral health facilities and one de novo behavioral health
facility not yet opened, which are located in the United Kingdom. Acadia
will receive £320 million (approximately $390 million) cash for the
sale. The sale is subject to the approval of the Competition and Markets
Authority (“CMA”) in the U.K. The facilities to be sold have
approximately 1,000 total beds and produce aggregate approximate annual
revenue of $162 million and adjusted EBITDA of $37 million, after
overhead allocation and assuming an exchange rate of $1.22 per British
Pound Sterling.
Joey Jacobs, Chairman and Chief Executive Officer of Acadia, remarked,
“We are very pleased to announce the signing of a definitive agreement
with BC Partners. Upon approval by the CMA, this sale will fulfill our
previously announced undertakings to address the CMA’s concerns about
the impact of our acquisition of Priory on competition for the provision
of behavioral healthcare services in certain markets. We currently
expect the CMA to approve the sale on or before November 18, 2016 and
expect to complete the sale transaction shortly thereafter.
“Though we expect the CMA to approve the sale, the CMA is continuing its
review process and could determine to reject the proposed sale and
proceed with a Phase 2 investigation. We cannot integrate Priory’s
business until the CMA completes its review process, including any
potential Phase 2 investigation.”
Acadia also today announced its preliminary summary financial results
for the third quarter ended September 30, 2016. These results are based
on information available to management as of the date of this press
release and are subject to revision upon finalization of the Company’s
quarterly accounting and financial reporting procedures.
The Company expects revenue for the quarter to be approximately $735
million compared with $479.7 million for the third quarter of 2015. Loss
from continuing operations attributable to Acadia stockholders is
expected to be approximately $118 million, or $1.36 per diluted share,
for the third quarter of 2016 compared with income of $29.5 million, or
$0.42 per diluted share, for the third quarter last year. Our expected
results include an anticipated loss on the U.K. divestiture of
approximately $175 million, which includes an allocation of the goodwill
related to our U.K. operations to the facilities held for sale of $107
million, estimated transaction-related expenses of $26 million, and a
loss on the sale of properties of $42 million. Adjusted income from
continuing operations attributable to Acadia stockholders is expected to
be approximately $50 million, or $0.58 per diluted share, for the third
quarter of 2016 compared with $43.9 million, or $0.62 per diluted share,
for the third quarter of 2015. Consolidated adjusted EBITDA for the
third quarter of 2016 is expected to be approximately $156 million
compared to $108.5 million for the third quarter last year.
Mr. Jacobs said, “Our adjusted EPS for the third quarter was lower than
expected due to certain challenges in both the U.K. and the U.S. In the
U.K., we believe that there was significant disruption to our operations
as a result of the July 14, 2016 announcement by the CMA that the Priory
acquisition would be referred for a Phase 2 investigation, unless we
offered undertakings to address the CMA’s competitive concerns. The
process of developing and implementing our proposed undertakings placed
substantial and immediate demands on the U.K. management team, including
many of the individual facility management teams, in addition to being a
significant distraction for our U.K. operations in general because of
the nature of the proposed undertakings. As one indication of the
pervasive impact we believe the event had on our operations in the U.K.,
those operations produced same facility revenue growth for the third
quarter of 5.1%, compared with 6.3% for the first half of 2016.
“Our U.S. operations were also affected by below-trend growth in same
facility revenue, which increased 6.5% for the third quarter compared
with 9.1% for the first half of 2016. While the growth rate for the
third quarter improved from 5.9% for the third quarter last year, it is
lower than we anticipated. In addition, our U.S. results for the third
quarter reflected the impact of a slower than expected ramping of
revenues from several de novo acute inpatient facilities that we have
opened in 2015 and 2016.”
Acadia expects to issue its third quarter earnings release after the
market closes on Tuesday, November 1, 2016 and to hold its conference
call the following morning. Based on its preliminary financial results,
the Company expects to adjust its financial guidance for 2016 and
provide additional detail on its results of operations for the quarter
in that news release and conference call.
Non-GAAP Financial Measures
We have included certain financial measures in this press release,
including Adjusted income from continuing operations and Adjusted
EBITDA, which are “non-GAAP financial measures” as defined under the
rules and regulations promulgated by the SEC. We define Adjusted income
from continuing operations as net income adjusted for income from
discontinued operations, provision for income taxes, debt extinguishment
costs, loss on divestiture, transaction-related expenses, (gain) loss on
foreign currency derivative and income tax provision reflecting tax
effect of adjustments attributable to Acadia. We define Adjusted EBITDA
as net income adjusted for income from discontinued operations, net loss
attributable to noncontrolling interests, income tax provision, net
interest expense, depreciation and amortization, equity-based
compensation expense, debt extinguishment costs, loss on divestiture,
(gain) loss on foreign currency derivatives and transaction-related
expenses.
Adjusted income from continuing operations and Adjusted EBITDA are
supplemental measures of our performance and are not required by, or
presented in accordance with, generally accepted accounting principles
in the United States (“GAAP”). Adjusted income from continuing
operations and Adjusted EBITDA are not measures of our financial
performance under GAAP and should not be considered as alternatives to
net income or any other performance measures derived in accordance with
GAAP or as an alternative to cash flow from operating activities as
measures of our liquidity. Our measurements of Adjusted income from
continuing operations and Adjusted EBITDA may not be comparable to
similarly titled measures of other companies. We have included
information concerning Adjusted income from continuing operations and
Adjusted EBITDA in this press release because we believe that such
information is used by certain investors as measures of a company’s
historical performance. We believe these measures are frequently used by
securities analysts, investors and other interested parties in the
evaluation of issuers of equity securities, many of which present
EBITDA, Adjusted EBITDA and Adjusted income from continuing operations
when reporting their results. Our presentation of EBITDA, Adjusted
EBITDA and Adjusted income from continuing operations should not be
construed as an inference that our future results will be unaffected by
unusual or nonrecurring items. A reconciliation of Adjusted income from
continuing operations and Adjusted EBITDA to net income attributable to
Acadia Healthcare Company, Inc. will be provided as part of the
Company’s reporting of its full third quarter financial results.
Risk Factors
This news release contains forward-looking statements. Generally words
such as “may,” “will,” “should,” “could,” “anticipate,” “expect,”
“intend,” “estimate,” “plan,” “continue,” and “believe” or the negative
of or other variation on these and other similar expressions identify
forward-looking statements. These forward-looking statements are made
only as of the date of this news release. We do not undertake to update
or revise the forward-looking statements, whether as a result of new
information, future events or otherwise. Forward-looking statements are
based on current expectations and involve risks and uncertainties and
our future results could differ significantly from those expressed or
implied by our forward-looking statements. Factors that may cause actual
results to differ materially include, without limitation, (i) the CMA’s
acceptance of our undertakings to address its concerns relating to the
Priory transaction and approval of the sale to BC Partners; (ii) our
ability to divest facilities and fulfill our undertakings to the CMA on
acceptable terms and within expected timeframes; (iii) potential
difficulties operating our business in light of political and economic
instability in the U.K. and globally following the referendum in the
U.K. on June 23, 2016, in which voters approved an exit from the
European Union, or Brexit; (iv) the impact of fluctuations in foreign
exchange rates, including the recent devaluation of the GBP relative to
the USD following the Brexit vote; (v) Acadia’s ability to complete
acquisitions and successfully integrate the operations of acquired
facilities, including Priory facilities; (vi) Acadia’s ability to add
beds, expand services, enhance marketing programs and improve
efficiencies at its facilities; (vii) potential reductions in payments
received by Acadia from government and third-party payors; (viii) the
occurrence of patient incidents, which could adversely affect the price
of our common stock and result in incremental regulatory burdens and
governmental investigations; (ix) the risk that Acadia may not generate
sufficient cash from operations to service its debt and meet its working
capital and capital expenditure requirements; and (x) potential
operating difficulties, client preferences, changes in competition and
general economic or industry conditions that may prevent Acadia from
realizing the expected benefits of its business strategy. These factors
and others are more fully described in Acadia’s periodic reports and
other filings with the SEC.
About Acadia
Acadia is a provider of inpatient behavioral healthcare services. Acadia
operates a network of 591 behavioral healthcare facilities with
approximately 17,800 beds in 39 states, the United Kingdom and Puerto
Rico. Acadia provides behavioral health and addiction services to its
patients in a variety of settings, including inpatient psychiatric
hospitals, residential treatment centers, outpatient clinics and
therapeutic school-based programs.
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Source: Acadia Healthcare Company, Inc.
Acadia Healthcare Company, Inc.
Brent Turner, 615-861-6000
President