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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549



FORM 8-K



CURRENT REPORT

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

Date of report (Date of earliest event reported): February 23, 2017



Acadia Healthcare Company, Inc.
(Exact Name of Registrant as Specified in Its Charter)

   
Delaware 001-35331 45-2492228
(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

6100 Tower Circle, Suite 1000
(Address of Principal Executive Offices)

(615) 861-6000
(Registrant's Telephone Number, including Area Code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)




Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

⃞

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02

Results of Operations and Financial Condition.

On February 23, 2017, Acadia Healthcare Company, Inc. (“Acadia”) issued a press release announcing, among other things, Acadia’s operating and financial results for the fourth quarter and year ended December 31, 2016. The press release is furnished herewith as Exhibit 99 hereto and is incorporated herein by reference.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.
 
99 Press Release of Acadia Healthcare Company, Inc., dated February 23, 2017.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

ACADIA HEALTHCARE COMPANY, INC.

 

Date: February 23, 2017

 

By:

/s/ Christopher L. Howard
Christopher L. Howard

Executive Vice President and
General Counsel

EXHIBIT INDEX

 

Exhibit

No.

  Description
 
99 Press Release of Acadia Healthcare Company, Inc., dated February 23, 2017

Exhibit 99

Acadia Healthcare Reports Fourth Quarter GAAP EPS of $0.48 and Adjusted EPS of $0.59

Establishes Financial Guidance for 2017

FRANKLIN, Tenn.--(BUSINESS WIRE)--February 23, 2017--Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced financial results for the fourth quarter and year ended December 31, 2016. Revenue for the quarter increased 41.9% to $702.9 million from $495.3 million for the fourth quarter of 2015. Net income from continuing operations attributable to Acadia stockholders was $41.8 million, up 21.1% from $34.5 million for the fourth quarter of 2015. With a 22.1% increase in weighted average diluted shares outstanding, primarily due to the issuance of common stock in January and February 2016, related to the acquisition of Priory Group, net income from continuing operations attributable to Acadia stockholders per diluted share decreased 2.0% to $0.48 for the fourth quarter of 2016 from $0.49 for the fourth quarter of 2015. Adjusted income from continuing operations attributable to Acadia stockholders per diluted share was $0.59 for the fourth quarter of 2016 and 2015, on a 22.1% increase in weighted average diluted shares outstanding. A reconciliation of all non-GAAP financial results in this release appears beginning on page 8.

For the year ended December 31, 2016, revenue increased 56.6% to $2.8 billion from $1.8 billion for the year ended December 31, 2015. Net income from continuing operations attributable to Acadia stockholders was $6.1 million, or $0.07 per diluted share, for 2016 compared with $112.4 million, or $1.64 per diluted share, for 2015. Adjusted income from continuing operations attributable to Acadia stockholders per diluted share was $2.45 for 2016 compared with $2.23 for 2015, on a 25.7% increase in weighted average diluted shares outstanding.

“Acadia performed well during the fourth quarter and throughout 2016,” remarked Joey Jacobs, Chairman and Chief Executive Officer of Acadia. “We produced very strong growth in revenue and adjusted EBITDA, despite the headwinds represented by the decline in the exchange rate of the British Pound Sterling during the year, the unexpected delay in being able to integrate our February 2016 Priory acquisition and the disruption related to fulfilling our undertakings with the Competition and Markets Authority in the U.K. through the sale of 22 behavioral health facilities on November 30, 2016.

“As we indicate in our constant currency analysis on page 10 of this release, the decline in the exchange rate, alone, had a negative impact of $0.10 per diluted share on earnings for the fourth quarter of 2016 and $0.26 per diluted share for the year. We are working to complete the integration of Priory with our existing Partnerships in Care operations and expect to realize the anticipated cost synergies by the end of 2017.

“The Priory acquisition drove the majority of our revenue growth for 2016, as we gained nearly 6,200 net additional beds in the U.K. due to the combined effect of the acquisition and the subsequent facility sale. These beds represented a majority of the 71.7%, or over 7,100 bed, increase in total beds at the end of 2016 from the end of 2015. This increase includes 967 new beds added to existing or de novo facilities during the year, consisting of 827 beds to existing facilities and 140 beds to de novo facilities. During the fourth quarter, 279 new beds were added to existing facilities, and we expect to add more than 800 new beds during 2017, primarily to existing facilities.”

Acadia’s revenue for the fourth quarter also benefitted from a consolidated 6.3% increase in same facility revenue compared with the fourth quarter of 2015. Same facility revenue in the U.S. grew 6.6%, on a 6.5% increase in patient days and a 0.1% increase in revenue per patient day. Same facility revenue in the U.K. grew 4.2%, on a 4.7% increase in patient days offset by a 0.5% decrease in revenue per patient day. Management believes that same facility results in the U.K. reflected disruption throughout the fourth quarter resulting from the focus, time and effort required to complete the divestiture in late November and to begin the integration of Priory’s operations into Acadia.

Acadia had $57.1 million in cash and cash equivalents at the end of 2016. Net cash provided by continuing operations increased 8.1% to $106.6 million for the fourth quarter and 53.5% to $371.7 million for 2016, compared with the same prior-year periods. At year-end, the Company had full availability under its $500 million revolving credit facility.

Acadia today established its financial guidance for 2017 and the first quarter of 2017, as follows:

The Company’s 2017 financial guidance assumes an exchange rate of $1.25 per British Pound Sterling and a tax rate of approximately 25%. The Company’s guidance does not include the impact of any future acquisitions or transaction-related expenses. EBITDA is defined as net income adjusted for income from discontinued operations, net loss attributable to noncontrolling interests, income tax provision, net interest expense and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for 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 is defined as net income adjusted for income from discontinued operations, provision for income taxes, debt extinguishment costs, loss on divestiture, (gain) loss on foreign currency derivatives, transaction-related expenses and income tax provision reflecting tax effect of adjustments attributable to Acadia.

Acadia will hold a conference call to discuss its fourth quarter financial results at 9:00 a.m. Eastern Time on Friday, February 24, 2017. A live webcast of the conference call will be available at www.acadiahealthcare.com in the “Investors” section of the website. The webcast of the conference call will be available through March 10, 2017.

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) 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; (ii) the impact of fluctuations in foreign exchange rates, including the recent devaluation of the British Pound Sterling (GBP) relative to the U.S. Dollar (USD) following the Brexit vote; (iii) Acadia’s ability to complete acquisitions and successfully integrate the operations of acquired facilities, including Priory facilities; (iv) Acadia’s ability to add beds, expand services, enhance marketing programs and improve efficiencies at its facilities; (v) potential reductions in payments received by Acadia from government and third-party payors; (vi) the occurrence of patient incidents and governmental investigations, which could adversely affect the price of our common stock and result in incremental regulatory burdens; (vii) 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 (viii) 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. At December 31, 2016, Acadia operated a network of 573 behavioral healthcare facilities with approximately 17,100 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.

 
Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
       
Three Months Ended December 31, Year Ended December 31,
2016 2015 2016 2015
(In thousands, except per share amounts)
 
Revenue before provision for doubtful accounts $ 713,784 $ 504,917 $ 2,852,823 $ 1,829,619
Provision for doubtful accounts   (10,896 )   (9,598 )   (41,909 )   (35,127 )
Revenue 702,888 495,319 2,810,914 1,794,492
 

Salaries, wages and benefits (including equity-based compensation expense of $7,356, $5,896, $28,345 and $20,472, respectively)

384,297 266,149 1,541,854 973,732
Professional fees 47,516 33,248 185,486 116,463
Supplies 28,976 22,233 117,425 80,663
Rents and leases 18,335 9,889 73,348 32,528
Other operating expenses 81,606 57,847 312,556 206,746
Depreciation and amortization 33,958 18,630 135,103 63,550
Interest expense, net 46,010 28,810 181,325 106,742
Debt extinguishment costs 842 839 4,253 10,818
Loss on divestiture 4,070 - 178,809 -
(Gain) loss on foreign currency derivatives - - (523 ) 1,926
Transaction-related expenses   14,840     5,156     48,323     36,571  
Total expenses   660,450     442,801     2,777,959     1,629,739  
Income from continuing operations before income taxes 42,438 52,518 32,955 164,753
Provision for income taxes   1,012     18,594     28,779     53,388  
Income from continuing operations 41,426 33,924 4,176 111,365
Income from discontinued operations, net of income taxes   -     28     -     111  
Net income 41,426 33,952 4,176 111,476
Net loss attributable to noncontrolling interests   392     614     1,967     1,078  
Net income attributable to Acadia Healthcare Company, Inc. $ 41,818   $ 34,566   $ 6,143   $ 112,554  
 

Basic earnings attributable to Acadia Healthcare Company, Inc. stockholders:

Income from continuing operations $ 0.48 $ 0.49 $ 0.07 $ 1.65
Income from discontinued operations   -     -     -     -  
Net income $ 0.48   $ 0.49   $ 0.07   $ 1.65  
 

Diluted earnings attributable to Acadia Healthcare Company, Inc. stockholders:

Income from continuing operations $ 0.48 $ 0.49 $ 0.07 $ 1.64
Income from discontinued operations   -     -     -     -  
Net income $ 0.48   $ 0.49   $ 0.07   $ 1.64  
 
Weighted-average shares outstanding:
Basic 86,668 70,731 85,701 68,085
Diluted 86,890 71,145 85,972 68,391
 
 
Acadia Healthcare Company, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
   
December 31,
2016 2015
(In thousands)
 
ASSETS
Current assets:
Cash and cash equivalents $ 57,063 $ 11,215

Accounts receivable, net of allowance for doubtful accounts of $38,916 and $29,332, respectively

263,327 216,626
Other current assets   107,537     66,895  
Total current assets 427,927 294,736
Property and equipment, net 2,703,695 1,709,053
Goodwill 2,681,188 2,128,215
Intangible assets, net 83,310 59,575
Deferred tax assets - noncurrent 3,780 49,114
Derivative instruments 73,509 -
Other assets   51,317     38,515  
Total assets $ 6,024,726   $ 4,279,208  
 
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 34,805 $ 45,360
Accounts payable 80,034 91,341
Accrued salaries and benefits 105,068 80,696
Other accrued liabilities   122,958     72,806  
Total current liabilities 342,865 290,203
Long-term debt 3,253,004 2,195,384
Deferred tax liabilities - noncurrent 78,520 23,936
Other liabilities   164,859     78,602  
Total liabilities 3,839,248 2,588,125
Redeemable noncontrolling interests 17,754 8,055
Equity:
Common stock 867 707
Additional paid-in capital 2,496,288 1,572,972
Accumulated other comprehensive loss (549,570 ) (104,647 )
Retained earnings   220,139     213,996  
Total equity   2,167,724     1,683,028  
Total liabilities and equity $ 6,024,726   $ 4,279,208  
 
 
Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
   
Year Ended December 31,
2016 2015
(In thousands)
Operating activities:
Net income $ 4,176 $ 111,476
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation and amortization 135,103 63,550
Amortization of debt issuance costs 10,324 6,709
Equity-based compensation expense 28,345 20,472
Deferred income tax expense 28,647 43,613
Income from discontinued operations, net of taxes - (111 )
Debt extinguishment costs 4,253 10,818
Loss on divestiture 178,809 -
(Gain) loss on foreign currency derivatives (523 ) 1,926
Other 4,715 1,615
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net (15,718 ) (24,954 )
Other current assets (20,648 ) (2,717 )
Other assets (4,354 ) (8,021 )
Accounts payable and other accrued liabilities 22,693 6,868
Accrued salaries and benefits (8,572 ) 1,658
Other liabilities   4,484     9,236  
Net cash provided by continuing operating activities 371,734 242,138
Net cash used in discontinued operating activities   (10,256 )   (1,735 )
Net cash provided by operating activities 361,478 240,403
 
Investing activities:
Cash paid for acquisitions, net of cash acquired (683,455 ) (574,777 )
Cash paid for capital expenditures (307,472 ) (276,047 )
Cash paid for real estate acquisitions (40,757 ) (26,622 )
Settlement of foreign currency derivatives 523 (1,926 )
Cash received on divestitures 373,266 -
Other   (2,470 )   (5,099 )
Net cash used in investing activities (660,365 ) (884,471 )
 
Financing activities:
Borrowings on long-term debt 1,480,000 1,150,000
Borrowings on revolving credit facility 179,000 468,000
Principal payments on revolving credit facility (337,000 ) (310,000 )
Principal payments on long-term debt (49,941 ) (31,965 )
Repayment of assumed debt (1,348,389 ) (904,467 )
Repayment of long-term debt (200,594 ) (97,500 )
Payment of debt issuance costs (36,649 ) (26,421 )
Payment of premium on senior notes - (7,480 )
Issuance of common stock, net 685,097 331,308
Common stock withheld for minimum statutory taxes, net (8,846 ) (7,762 )
Excess tax benefit from equity awards - 309
Other   (3,837 )   (420 )
Net cash provided by financing activities   358,841     563,602  
 
Effect of exchange rate changes on cash   (14,106 )   (2,359 )
 
Net increase (decrease) in cash and cash equivalents 45,848 (82,825 )
Cash and cash equivalents at beginning of the period   11,215     94,040  
Cash and cash equivalents at end of the period $ 57,063   $ 11,215  
 
Effect of acquisitions:
Assets acquired, excluding cash $ 2,516,880 $ 1,988,634
Liabilities assumed (1,616,543 ) (1,024,515 )
Issuance of common stock in connection with acquisition (216,882 ) (380,210 )
Redeemable noncontrolling interest resulting from acquisitions   -     (9,132 )
Cash paid for acquisitions, net of cash acquired $ 683,455   $ 574,777  
 
 
Acadia Healthcare Company, Inc.
Operating Statistics
(Unaudited, Revenue in thousands)
             
Three Months Ended December 31, Year Ended December 31,
2016 2015 % Change 2016 2015 % Change
Same Facility Results (a,c)
Revenue $ 475,726 $ 447,663 6.3% $ 1,784,538 $ 1,661,148 7.4%
Patient Days 709,183 668,144 6.1% 2,637,646 2,460,988 7.2%
Admissions 33,459 30,903 8.3% 129,318 118,669 9.0%
Average Length of Stay (b) 21.2 21.6 -2.0% 20.4 20.7 -1.6%
Revenue per Patient Day $ 671 $ 670 0.1% $ 677 $ 675 0.2%
EBITDA margin 26.3% 26.0% 30 bps 27.1% 26.7% 40 bps
 
U.S. Same Facility Results (a)
Revenue $ 402,761 $ 377,667 6.6% $ 1,506,775 $ 1,398,340 7.8%
Patient Days 568,024 533,373 6.5% 2,149,810 2,009,954 7.0%
Admissions 33,147 30,608 8.3% 128,192 117,502 9.1%
Average Length of Stay (b) 17.1 17.4 -1.7% 16.8 17.1 -2.0%
Revenue per Patient Day $ 709 $ 708 0.1% $ 701 $ 696 0.7%
EBITDA margin 27.1% 26.3% 80 bps 27.7% 27.3% 40 bps
 
U.K. Same Facility Results (c)
Revenue $ 72,965 $ 69,996 4.2% $ 277,763 $ 262,808 5.7%
Patient Days 141,159 134,771 4.7% 487,836 451,034 8.2%
Admissions 312 295 5.8% 1,126 1,167 -3.5%
Average Length of Stay (b) 452.4 456.8 -1.0% 433.2 386.5 12.1%
Revenue per Patient Day $ 517 $ 519 -0.5% $ 569 $ 583 -2.3%
EBITDA margin 22.3% 24.4% -210 bps 23.6% 23.1% 50 bps
 
 
 
U.S. Facility Results
Revenue $ 428,531 $ 388,955 10.2% $ 1,698,525 $ 1,426,205 19.1%
Patient Days 593,653 541,157 9.7% 2,350,367 2,025,338 16.0%
Admissions 35,420 31,382 12.9% 143,139 119,048 20.2%
Average Length of Stay (b) 16.8 17.2 -2.8% 16.4 17.0 -3.5%
Revenue per Patient Day $ 722 $ 719 0.4% $ 723 $ 704 2.6%
EBITDA margin 25.5% 25.0% 50 bps 26.1% 26.5% -40 bps
 
U.K. Facility Results (c)
Revenue $ 274,357 $ 85,709 220.1% $ 1,110,361 $ 317,406 249.8%
Patient Days 740,571 160,039 362.7% 2,716,996 537,257 405.7%
Admissions 2,583 341 657.5% 9,978 1,387 619.4%
Average Length of Stay (b) 286.7 469.3 -38.9% 272.3 387.4 -29.7%
Revenue per Patient Day $ 370 $ 536 -30.8% $ 409 $ 591 -30.8%
EBITDA margin 21.6% 26.7% -510 bps 22.1% 25.0% -290 bps
 
Total Facility Results (c)
Revenue $ 702,888 $ 474,664 48.1% $ 2,808,886 $ 1,743,611 61.1%
Patient Days 1,334,224 701,196 90.3% 5,067,363 2,562,595 97.7%
Admissions 38,003 31,723 19.8% 153,117 120,435 27.1%
Average Length of Stay (b) 35.1 22.1 58.8% 33.1 21.3 55.5%
Revenue per Patient Day $ 527 $ 677 -22.2% $ 554 $ 680 -18.5%
EBITDA margin 24.0% 25.3% -130 bps 24.5% 26.2% -170 bps
 
(a) Same-facility results for the periods presented exclude the U.K. divestiture and other closed services.
(b) Average length of stay is defined as patient days divided by admissions.
(c) Revenue and revenue per patient day for the three months and year ended December 31, 2015 are adjusted to reflect the foreign currency exchange rate for the comparable period of 2016 in order to eliminate the effect of changes in the exchange rate. The exchange rate used in the adjusted revenue and revenue per patient day amounts for the three months and year ended December 31, 2015 is 1.24 and 1.36, respectively.
 
 
Acadia Healthcare Company, Inc.
Reconciliation of Net Income Attributable to Acadia Healthcare Company, Inc. to Adjusted EBITDA
(Unaudited)
       
Three Months Ended December 31, Year Ended December 31,
2016 2015 2016 2015
(in thousands)
 
Net income attributable to Acadia Healthcare Company, Inc. $ 41,818 $ 34,566 $ 6,143 $ 112,554
Income from discontinued operations, net of income taxes - (28 ) - (111 )
Net loss attributable to noncontrolling interests (392 ) (614 ) (1,967 ) (1,078 )
Provision for income taxes 1,012 18,594 28,779 53,388
Interest expense, net 46,010 28,810 181,325 106,742
Depreciation and amortization   33,958     18,630     135,103     63,550  
EBITDA 122,406 99,958 349,383 335,045
 
Adjustments:
Equity-based compensation expense (a) 7,356 5,896 28,345 20,472
Debt extinguishment costs (b) 842 839 4,253 10,818
Loss on divestiture (c) 4,070 - 178,809 -
(Gain) loss on foreign currency derivatives (d) - - (523 ) 1,926
Transaction-related expenses (e)   14,840     5,156     48,323     36,571  
Adjusted EBITDA $ 149,514   $ 111,849   $ 608,590   $ 404,832  
 
See footnotes on page 11.
 
 
Acadia Healthcare Company, Inc.
Reconciliation of Adjusted Income from Continuing Operations Attributable to Acadia Healthcare Company, Inc. to
Net Income Attributable to Acadia Healthcare Company, Inc.
(Unaudited)
     
Three Months Ended December 31, Year Ended December 31,
2016 2015 2016 2015
(in thousands, except per share amounts)
 
Net income attributable to Acadia Healthcare Company, Inc. $ 41,818 $ 34,566 $ 6,143 $ 112,554
Income from discontinued operations, net of income taxes - (28 ) - (111 )
Provision for income taxes   1,012     18,594     28,779     53,388  

Income from continuing operations attributable to Acadia Healthcare Company, Inc. before income taxes

42,830 53,132 34,922 165,831
 
Adjustments to income from continuing operations:
Debt extinguishment costs (b) 842 839 4,253 10,818
Loss on divestiture (c) 4,070 - 178,809 -
(Gain) loss on foreign currency derivatives (d) - - (523 ) 1,926
Transaction-related expenses (e) 14,840 5,156 48,323 36,571

Income tax provision reflecting tax effect of adjustments to income from continuing operations (f)

  (11,241 )   (16,834 )   (55,539 )   (62,392 )

Adjusted income from continuing operations attributable to Acadia Healthcare Company, Inc.

$ 51,341 $ 42,293 $ 210,245 $ 152,754
 
Weighted-average shares outstanding - diluted 86,890 71,145 85,972 68,391
 

Adjusted income from continuing operations attributable to Acadia Healthcare Company, Inc. per diluted share

$ 0.59   $ 0.59   $ 2.45   $ 2.23  
 
See footnotes on page 11.
 
 
Acadia Healthcare Company, Inc.
Constant Currency Condensed Consolidated Statements of Operations (g)
(Unaudited)
       
Three Months Ended December 31, Year Ended December 31,
2016 2015 2016 2015
(In thousands, except per share amounts)
 
Revenue before provision for doubtful accounts $ 774,584 $ 504,917 $ 3,002,366 $ 1,829,619
Provision for doubtful accounts   (10,896 )   (9,598 )   (41,917 )   (35,127 )
Revenue 763,688 495,319 2,960,449 1,794,492
 

Salaries, wages and benefits (including equity-based compensation expense of $7,356, $5,896, $28,345 and $20,472, respectively)

417,375 266,149 1,623,629 973,732
Professional fees 52,644 33,248 197,452 116,463
Supplies 31,019 22,233 122,438 80,663
Rents and leases 20,404 9,889 78,462 32,528
Other operating expenses 86,927 57,847 325,240 206,746
Depreciation and amortization 37,685 18,630 144,771 63,550
Interest expense, net 46,119 28,810 181,485 106,742
Debt extinguishment costs 842 839 4,253 10,818
Loss on divestiture 4,706 - 208,670 -
(Gain) loss on foreign currency derivatives - - (523 ) 1,926
Transaction-related expenses   16,496     5,156     50,751     36,571  
Total expenses   714,217     442,801     2,936,628     1,629,739  
Income from continuing operations before income taxes 49,471 52,518 23,821 164,753
Provision for income taxes   (1,493 )   18,594     24,864     53,388  
Income from continuing operations 50,964 33,924 (1,043 ) 111,365
Income from discontinued operations, net of income taxes   -     28     -     111  
Net income 50,964 33,952 (1,043 ) 111,476
Net loss attributable to noncontrolling interests   392     614     1,967     1,078  
Net income attributable to Acadia Healthcare Company, Inc. $ 51,356   $ 34,566   $ 924   $ 112,554  
 
 
Constant Currency Reconciliation of Adjusted Income from Continuing Operations Attributable to Acadia Healthcare Company, Inc. to
Net Income Attributable to Acadia Healthcare Company, Inc. (g)
(Unaudited)
 
Net income attributable to Acadia Healthcare Company, Inc. $ 51,356 $ 34,566 $ 924 $ 112,554
Income from discontinued operations, net of income taxes - (28 ) - (111 )
Provision for income taxes   (1,493 )   18,594     24,864     53,388  

Income from continuing operations attributable to Acadia Healthcare Company, Inc. before income taxes

$ 49,863 $ 53,132 $ 25,788 $ 165,831
 
Adjustments to income from continuing operations:
Debt extinguishment costs (b) 842 839 4,253 10,818
Loss on divestiture (c) 4,706 - 208,670 -
(Gain) loss on foreign currency derivatives (d) - - (523 ) 1,926
Transaction-related expenses (e) 16,496 5,156 50,751 36,571

Income tax provision reflecting tax effect of adjustments to income from continuing operations (f)

  (11,738 )   (16,834 )   (56,230 )   (62,392 )

Adjusted income from continuing operations attributable to Acadia Healthcare Company, Inc.

$ 60,169 $ 42,293 $ 232,709 $ 152,754
 
Weighted-average shares outstanding - diluted 86,890 71,145 85,972 68,391
 

Adjusted income from continuing operations attributable to Acadia Healthcare Company, Inc. per diluted share

$ 0.69   $ 0.59   $ 2.71   $ 2.23  
 
See footnotes on page 11.
 
 
Acadia Healthcare Company, Inc.
Footnotes
   
We have included certain financial measures in this press release, including EBITDA, Adjusted EBITDA, Adjusted income from continuing operations, and constant currency adjusted income from continuing operations, which are “non-GAAP financial measures” as defined under the rules and regulations promulgated by the SEC. We define EBITDA as net income adjusted for income from discontinued operations, net loss attributable to noncontrolling interests, income tax provision, net interest expense and depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted for equity-based compensation expense, debt extinguishment costs, loss on divestiture, (gain) loss on foreign currency derivatives and transaction-related expenses. 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, (gain) loss on foreign currency derivatives, transaction-related expenses and income tax provision reflecting tax effect of adjustments attributable to Acadia.
 
EBITDA, Adjusted EBITDA, Adjusted income from continuing operations and constant currency adjusted income from continuing operations 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”). EBITDA, Adjusted EBITDA, Adjusted income from continuing operations and constant currency adjusted income from continuing operations 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 EBITDA, Adjusted EBITDA, Adjusted income from continuing operations and constant currency adjusted income from continuing operations may not be comparable to similarly titled measures of other companies. We have included information concerning EBITDA, Adjusted EBITDA, Adjusted income from continuing operations and constant currency adjusted income from continuing operations 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, Adjusted income from continuing operations and constant currency adjusted income from continuing operations when reporting their results. Our presentation of EBITDA, Adjusted EBITDA, Adjusted income from continuing operations and constant currency adjusted income from continuing operations should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.
 
Foreign currency exchange rate fluctuations affect the amounts reported from translating U.K. revenues and expenses into USD. These rate fluctuations can have a significant effect on our reported operating results. As a supplement to our reported operating results, we present constant currency financial information. We use constant currency financial information to provide a framework to assess how our business performed excluding the effects of changes in foreign currency translation rates. Management believes this information is useful to investors to facilitate comparison of operating results and better identify trends in our businesses. To calculate financial information on a constant currency basis, financial information in the current period for amounts recorded in GBP is translated into USD at the average exchange rates that were in effect during the comparable period of the prior year (rather than the actual exchange rates in effect during the current year period).
 
The Company is not able to provide a reconciliation of projected Adjusted EBITDA and adjusted earnings per diluted share, where provided, to expected results due to the unknown effect, timing and potential significance of transaction-related expenses and the tax effect of such expenses.
 
(a) Represents the equity-based compensation expense of Acadia.
 
(b) For the three months and year ended December 31, 2016, represents debt extinguishment costs recorded in connection with the Tranche B-2 Repricing Amendment and the Refinancing Amendment, including the write-off of $3.2 million of deferred financing costs. For the three months and year ended December 31, 2015, represents debt extinguishment costs related to the repayment of $97.5 million of the Company's 12.875% Senior Notes due 2018, including a prepayment premium of $7.5 million and the write-off of $3.3 million of deferred financing costs.
 
(c) As part of divestitures in the U.K. and U.S., the loss on divestiture includes an allocation of goodwill to the disposal groups of approximately $106.9 million, loss on the sale of properties of approximately $45.0 million, transaction-related expenses of approximately $26.8 million and write-off of intangible assets of approximately $0.1 million.
 
(d) Represents the change in fair value of foreign currency derivatives purchased by Acadia related to (i) acquisitions in the U.K. and (ii) transfers of cash between the U.S. and U.K. under the Company’s cash management and foreign currency risk management programs.
 
(e) Represents transaction-related expenses incurred by Acadia related to acquisitions.
 
(f) Represents the income tax provision adjusted to reflect the tax effect of the adjustments to income from continuing operations based on tax rates of 18.0% and 28.5% for the three months ended December 31, 2016 and 2015, respectively, and 20.9% and 29.0% for the year ended December 31, 2016 and 2015, respectively.
 
(g) Calculated on a constant currency basis whereby financial information in the current period for amounts recorded GBP is translated into USD at the average exchange rates in effect during the comparable period of the prior year (rather than the actual exchange rates in effect during the current year period). The exchange rate used for the three months and year ended December 31, 2016 is 1.52 and 1.53, respectively.

CONTACT:
Acadia Healthcare Company, Inc.
Brent Turner, 615-861-6000
President