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Withdraws Full-Year 2020 Guidance Due To COVID-19 Uncertainty
Clinical and Operating Response to COVID-19
Throughout the COVID-19 crisis, Acadia’s top priorities have been and continue to be the health and safety of our patients and employees. The Company’s 40,000 employees are providing care to approximately 75,000 patients daily across our network of 588 facilities in the
- The Company implemented recommended precautionary measures to ensure the ongoing safety and well-being of everyone in our facilities. These steps include applying robust screening procedures for all patients and employees, restricting or suspending visitor access to our facilities, and limiting group therapy, among many others.
-
All facilities are closely following infectious disease protocols, as well as recommendations by the
CDC and local health officials. - In support of stay-at-home orders, the Company increased utilization of technologies to better serve market demand, including telehealth options for patients and virtual visitations for families.
- The Company developed additional supply chain management processes, including extensive tracking and delivery of key personal protective equipment (PPE) and supplies, and sharing resources across all of our facilities.
- The Company established a taskforce of key leaders that meets daily to address concerns, develop action plans and monitor responses throughout our facilities.
- The Company commenced a national behavioral health crisis hotline designed to offer immediate assistance to anyone in need of mental health or addiction treatment. The centralized 24/7 crisis line, 1-833-TREATBH, offers immediate, no-charge, clinically approved assessments to support underserved communities and connect patients with the treatment they need.
First Quarter Results
Revenue was
Results for the first quarter of 2020 include transaction-related expenses of
Acadia’s consolidated adjusted EBITDA for the first quarter of 2020 was
For the
In April, the Company continued to experience declines in volumes that management believes resulted from a number of temporary factors related to the COVID-19 pandemic, including the impact of the pandemic on traditional referral sources such as emergency rooms and medical professionals; the stay-at-home orders implemented by many states; and various travel restrictions, which adversely affected certain facilities with national referral networks. In the month of April, our volumes declined 7% compared to last year, reflecting continuing deterioration in the first two weeks of the month with signs of stabilization and improvement during the last two weeks. The demand for our services remains strong across the portfolio, and we expect to see continued improvement as restrictions are lifted.
Beginning in late March, our
COVID-19 Guidance Update
The full impact of COVID-19 on the Company’s operations and financial results during 2020 will depend on, among other things, the length of time and severity of the pandemic, the lifting of stay-at-home orders and state restrictions, the timing and phasing of the economic reopening, and the willingness of patients to travel. We cannot reasonably estimate the impact that these factors will have on our financial results for 2020 at this time. As a result of these factors and the general uncertainty related to the COVID-19 pandemic, Acadia today is withdrawing its 2020 financial guidance previously issued in its earnings release dated
Cash and Liquidity
Acadia’s balance sheet remains strong with ample liquidity and capital to invest in and grow our business. As of
As announced in our current report on Form 8-K filed with the
As part of our ongoing review of the business and efforts to enhance our financial flexibility, the Company has taken a number of actions including implementing certain cost reduction initiatives at the facility and corporate level. Management also conducted a thorough evaluation of all capital expenditure projects planned for 2020. The Company has elected to decrease its 2020 expansion capital expenditures by
“We continue to make prudent investments to serve our patients’ needs, ensure the safety and well-being of everyone in our facilities, and prepare for the mental and emotional impacts that this pandemic could produce in the months ahead. We added 78 beds to our
The Coronavirus Aid, Relief, and Economic Security Act
The Company is closely monitoring the impact of legislative actions including the passing into law of the CARES Act in late March and believes it will benefit from the following portions of the recent legislation.
-
Reimbursement to Hospitals & Healthcare Providers: A “Public Health and Social Services Emergency Fund” of
$100 billion has been established to prevent, prepare for, and respond to COVID-19 by reimbursing, through grants or other mechanisms, eligible healthcare providers for expenses or lost revenues that are attributable to COVID-19. An additional$75 billion was approved inApril 2020 . Acadia received approximately$20 million of the initial funds distributed in April and is evaluating the impact of these and any additional payments. -
Medicare Accelerated and Advance Payment Program: Medicare has offered advance payments equal to our Medicare revenue for a three-month period. Acadia applied for and received approximately
$45 million of advance payments inApril 2020 , which the Company expects to repay over a three-month period from August toNovember 2020 . -
Temporary Suspension of Medicare Sequestration: Medicare claim reimbursements have been automatically reduced by 2% through Medicare sequestration. The lifting of the 2% reduction from
May 1, 2020 toDecember 31, 2020 results in an expected earnings and cash benefit of approximately$3 million in 2020. -
Delay of Payment of Employer Payroll Taxes: The employer portion of
Social Security payroll taxes for the period fromMarch 27, 2020 toDecember 31, 2020 can be deferred and paid in two equal installments at the end of 2021 and 2022, resulting in an expected cash benefit of approximately$39 million for 2020. -
Interest Deductibility Limitation: As part of The Tax Cuts and Jobs Act of 2017, the Company’s interest deduction was limited to 30% of the Adjusted Taxable Income. Within the CARES Act, this interest expense deduction threshold was increased to 50% of Adjusted Taxable Income for the 2019 and 2020 tax years, making Acadia's interest expense fully deductible. This change provides a cash flow benefit in the form of refunds and/or lower tax payments of approximately
$16 million related to our 2019 interest expense and between$15 million and$20 million for the related to the 2020 interest expense.
Acadia’s Commitment to Our Communities
“These are difficult times for everyone. Mental health and addiction issues have not subsided – and likely increased – during this crisis. Acadia will continue to answer the calls for help from our vulnerable and at‑risk populations, while taking all recommended precautions to keep everyone in our facilities safe. Looking ahead, we believe there will be a significant need for our services as the spread of this virus is curtailed and society begins to recover from the effects of the state and local shutdowns. We have the resources, care options and network to meet that demand. We have strong local leadership and staff in our facilities who continue to support and provide our patients with high-quality care every day. We remain well-positioned in the markets that we serve and will continue to make disciplined capital allocations to support market demand and grow our business in the future,” concluded Osteen.
Acadia will hold a conference call to discuss its first quarter financial results at
About Acadia
Acadia is a leading provider of behavioral healthcare services. As of
Forward-Looking Information
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 impact of the COVID-19 pandemic, including, without limitation, the continuing reduction in our inpatient and outpatient volumes; increased costs relating to labor, supply chain and other expenditures; and increased difficulty in collecting patient accounts receivable as the unemployment rate and number of underinsured and uninsured patients rise; (ii) potential difficulties operating our business in light of political and economic instability in the
Condensed Consolidated Statements of Operations | ||||||
(Unaudited) | ||||||
Three Months Ended |
||||||
2020 |
2019 |
|||||
(In thousands, except per share amounts) | ||||||
Revenue |
$ |
782,810 |
$ |
760,617 |
||
Salaries, wages and benefits (including equity-based compensation expense of |
|
440,316 |
|
429,579 |
||
Professional fees |
|
63,300 |
|
57,007 |
||
Supplies |
|
31,971 |
|
29,957 |
||
Rents and leases |
|
20,824 |
|
20,307 |
||
Other operating expenses |
|
98,529 |
|
93,865 |
||
Depreciation and amortization |
|
41,680 |
|
40,580 |
||
Interest expense, net |
|
42,785 |
|
48,130 |
||
Transaction-related expenses |
|
3,549 |
|
4,321 |
||
Total expenses |
|
742,954 |
|
723,746 |
||
Income before income taxes |
|
39,856 |
|
36,871 |
||
Provision for income taxes |
|
5,789 |
|
7,360 |
||
Net income |
|
34,067 |
|
29,511 |
||
Net income attributable to noncontrolling interests |
|
(604) |
|
(40) |
||
Net income attributable to |
$ |
33,463 |
$ |
29,471 |
||
Earnings per share attributable to stockholders: |
||||||
Basic |
$ |
0.38 |
$ |
0.34 |
||
Diluted |
$ |
0.38 |
$ |
0.34 |
||
Weighted-average shares outstanding: | ||||||
Basic |
|
87,765 |
|
87,505 |
||
Diluted |
|
87,971 |
|
87,694 |
Condensed Consolidated Balance Sheets | ||||||
(Unaudited) | ||||||
|
2020 |
|
2019 |
|||
(In thousands) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents |
$ |
81,004 |
$ |
124,192 |
||
Accounts receivable, net |
|
339,505 |
|
339,775 |
||
Other current assets |
|
82,443 |
|
78,244 |
||
Total current assets |
|
502,952 |
|
542,211 |
||
Property and equipment, net |
|
3,151,739 |
|
3,224,034 |
||
|
2,426,700 |
|
2,449,131 |
|||
Intangible assets, net |
|
89,052 |
|
90,357 |
||
Deferred tax assets |
|
3,307 |
|
3,339 |
||
Operating lease right-of-use assets |
|
476,028 |
|
501,837 |
||
Other assets |
|
68,217 |
|
68,233 |
||
Total assets |
$ |
6,717,995 |
$ |
6,879,142 |
||
LIABILITIES AND EQUITY | ||||||
Current liabilities: | ||||||
Current portion of long-term debt |
$ |
196,072 |
$ |
43,679 |
||
Accounts payable |
|
134,693 |
|
127,045 |
||
Accrued salaries and benefits |
|
114,790 |
|
122,552 |
||
Current portion of operating lease liabilities |
|
29,671 |
|
29,140 |
||
Other accrued liabilities |
|
104,358 |
|
141,160 |
||
Total current liabilities |
|
579,584 |
|
463,576 |
||
Long-term debt |
|
2,944,820 |
|
3,105,420 |
||
Deferred tax liabilities |
|
85,405 |
|
71,860 |
||
Operating lease liabilities |
|
474,746 |
|
502,252 |
||
Derivative instrument liabilities |
|
9,015 |
|
68,915 |
||
Other liabilities |
|
126,767 |
|
128,587 |
||
Total liabilities |
|
4,220,337 |
|
4,340,610 |
||
Redeemable noncontrolling interests |
|
33,491 |
|
33,151 |
||
Equity: | ||||||
Common stock |
|
878 |
|
877 |
||
Additional paid-in capital |
|
2,561,218 |
|
2,557,642 |
||
Accumulated other comprehensive loss |
|
(493,138) |
|
(414,884) |
||
Retained earnings |
|
395,209 |
|
361,746 |
||
Total equity |
|
2,464,167 |
|
2,505,381 |
||
Total liabilities and equity |
$ |
6,717,995 |
$ |
6,879,142 |
Condensed Consolidated Statements of Cash Flows | ||||||
(Unaudited) | ||||||
Three Months Ended |
||||||
2020 |
|
2019 |
||||
(In thousands) | ||||||
Operating activities: | ||||||
Net income |
$ |
34,067 |
$ |
29,511 |
||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization |
|
41,680 |
|
40,580 |
||
Amortization of debt issuance costs |
|
3,050 |
|
2,888 |
||
Equity-based compensation expense |
|
4,979 |
|
6,101 |
||
Deferred income taxes |
|
11,286 |
|
(666) |
||
Other |
|
(107) |
|
2,187 |
||
Change in operating assets and liabilities: | ||||||
Accounts receivable, net |
|
(2,828) |
|
(11,980) |
||
Other current assets |
|
(19,131) |
|
(5,875) |
||
Other assets |
|
(1,096) |
|
295 |
||
Accounts payable and other accrued liabilities |
|
(21,755) |
|
(15,701) |
||
Accrued salaries and benefits |
|
(6,030) |
|
(5,849) |
||
Other liabilities |
|
1,431 |
|
2,182 |
||
Net cash provided by operating activities |
|
45,546 |
|
43,673 |
||
Investing activities: | ||||||
Cash paid for acquisitions, net of cash acquired |
|
- |
|
(40,400) |
||
Cash paid for capital expenditures |
|
(69,547) |
|
(69,248) |
||
Cash paid for real estate acquisitions |
|
(3,149) |
|
(1,066) |
||
Proceeds from sale of property and equipment |
|
207 |
|
928 |
||
Other |
|
(1,672) |
|
(315) |
||
Net cash used in investing activities |
|
(74,161) |
|
(110,101) |
||
Financing activities: | ||||||
Borrowings on revolving credit facility |
|
- |
|
71,573 |
||
Principal payments on long-term debt |
|
(10,621) |
|
(8,246) |
||
Common stock withheld for minimum statutory taxes, net |
|
(1,402) |
|
(1,327) |
||
Distributions to noncontrolling interests |
|
(264) |
|
- |
||
Other |
|
(1,143) |
|
(3,497) |
||
Net cash (used in) provided by financing activities |
|
(13,430) |
|
58,503 |
||
Effect of exchange rate changes on cash |
|
(1,143) |
|
1,099 |
||
Net decrease in cash and cash equivalents |
|
(43,188) |
|
(6,826) |
||
Cash and cash equivalents at beginning of the period |
|
124,192 |
|
50,510 |
||
Cash and cash equivalents at end of the period |
$ |
81,004 |
$ |
43,684 |
||
Effect of acquisitions: | ||||||
Assets acquired, excluding cash |
$ |
- |
$ |
44,028 |
||
Liabilities assumed |
|
- |
|
(3,628) |
||
Cash paid for acquisitions, net of cash acquired |
$ |
- |
$ |
40,400 |
Operating Statistics | ||||||||||
(Unaudited, Revenue in thousands) | ||||||||||
Three Months Ended |
||||||||||
2020 |
2019 |
% Change |
||||||||
Same Facility Results (a,c) | ||||||||||
Revenue |
$ |
750,454 |
$ |
725,999 |
3.4% |
|||||
|
1,138,733 |
|
1,125,625 |
1.2% |
||||||
Admissions |
|
44,672 |
|
44,466 |
0.5% |
|||||
Average Length of Stay (b) |
|
25.5 |
|
25.3 |
0.7% |
|||||
Revenue per |
$ |
659 |
$ |
645 |
2.2% |
|||||
EBITDA margin |
|
21.1% |
|
22.1% |
-100 bps | |||||
Revenue |
$ |
501,151 |
$ |
481,410 |
4.1% |
|||||
|
646,314 |
|
628,171 |
2.9% |
||||||
Admissions |
|
42,470 |
|
42,082 |
0.9% |
|||||
Average Length of Stay (b) |
|
15.2 |
|
14.9 |
1.9% |
|||||
Revenue per |
$ |
775 |
$ |
766 |
1.2% |
|||||
EBITDA margin |
|
24.1% |
|
25.0% |
-90 bps | |||||
Revenue |
$ |
249,303 |
$ |
244,589 |
1.9% |
|||||
|
492,419 |
|
497,454 |
-1.0% |
||||||
Admissions |
|
2,202 |
|
2,384 |
-7.6% |
|||||
Average Length of Stay (b) |
|
223.6 |
|
208.7 |
7.2% |
|||||
Revenue per |
$ |
506 |
$ |
492 |
3.0% |
|||||
EBITDA margin |
|
14.9% |
|
16.3% |
-140 bps | |||||
Revenue |
$ |
509,217 |
$ |
487,960 |
4.4% |
|||||
|
658,002 |
|
640,324 |
2.8% |
||||||
Admissions |
|
43,603 |
|
42,252 |
3.2% |
|||||
Average Length of Stay (b) |
|
15.1 |
|
15.2 |
-0.4% |
|||||
Revenue per |
$ |
774 |
$ |
762 |
1.6% |
|||||
EBITDA margin |
|
23.6% |
|
24.4% |
-80 bps | |||||
Revenue |
$ |
273,593 |
$ |
268,059 |
2.1% |
|||||
|
657,269 |
|
664,393 |
-1.1% |
||||||
Admissions |
|
2,618 |
|
2,758 |
-5.1% |
|||||
Average Length of Stay (b) |
|
251.1 |
|
240.9 |
4.2% |
|||||
Revenue per |
$ |
416 |
$ |
403 |
3.2% |
|||||
EBITDA margin |
|
13.2% |
|
14.7% |
-150 bps | |||||
Total Facility Results (c) | ||||||||||
Revenue |
$ |
782,810 |
$ |
756,019 |
3.5% |
|||||
|
1,315,271 |
|
1,304,717 |
0.8% |
||||||
Admissions |
|
46,221 |
|
45,010 |
2.7% |
|||||
Average Length of Stay (b) |
|
28.5 |
|
29.0 |
-1.8% |
|||||
Revenue per |
$ |
595 |
$ |
579 |
2.7% |
|||||
EBITDA margin |
|
20.0% |
|
20.9% |
-90 bps | |||||
(a) Results for the periods presented exclude the elderly care division of our |
||||||||||
(b) Average length of stay is defined as patient days divided by admissions. | ||||||||||
(c) Revenue and revenue per patient day for the three months ended |
Reconciliation of Net Income Attributable to |
||||||
(Unaudited) | ||||||
Three Months Ended |
||||||
2020 |
2019 |
|||||
(in thousands) | ||||||
Net income attributable to |
$ |
33,463 |
$ |
29,471 |
||
Net income attributable to noncontrolling interests |
|
604 |
|
40 |
||
Provision for income taxes |
|
5,789 |
|
7,360 |
||
Interest expense, net |
|
42,785 |
|
48,130 |
||
Depreciation and amortization |
|
41,680 |
|
40,580 |
||
EBITDA |
|
124,321 |
|
125,581 |
||
Adjustments: | ||||||
Equity-based compensation expense (a) |
|
4,979 |
|
6,101 |
||
Transaction-related expenses (b) |
|
3,549 |
|
4,321 |
||
Adjusted EBITDA |
$ |
132,849 |
$ |
136,003 |
||
See footnotes on page 12. |
Reconciliation of Adjusted Income Attributable to |
||||||||
Net Income Attributable to |
||||||||
(Unaudited) | ||||||||
Three Months Ended |
||||||||
2020 |
2019 |
|||||||
(in thousands, except per share amounts) | ||||||||
Net income attributable to |
$ |
33,463 |
$ |
29,471 |
||||
Adjustments to income: | ||||||||
Transaction-related expenses (b) |
|
3,549 |
|
4,321 |
||||
Income tax effect of adjustments to income (c) |
|
(344) |
|
549 |
||||
Adjusted income attributable to |
$ |
36,668 |
$ |
34,341 |
||||
Weighted-average shares outstanding - diluted |
|
87,971 |
|
87,694 |
||||
Adjusted income attributable to per diluted share |
$ |
0.42 |
$ |
0.39 |
||||
See footnotes on page 12. |
Footnotes | |||||||||||
We have included certain financial measures in this press release, including EBITDA, Adjusted EBITDA, and Adjusted income, which are “non-GAAP financial measures” as defined under the rules and regulations promulgated by the |
|||||||||||
EBITDA, Adjusted EBITDA, and Adjusted income are supplemental measures of our performance and are not required by, or presented in accordance with, generally accepted accounting principles in |
|||||||||||
(a) Represents the equity-based compensation expense of Acadia. | |||||||||||
(b) Represents transaction-related expenses incurred by Acadia primarily related to termination, restructuring, |
|||||||||||
(c) Represents the income tax effect of adjustments to income based on tax rates of 14.3% and 16.6% for the three months ended |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200504005676/en/
Director, Investor Relations
(615) 861-6000
Source: