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.

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 ~~November 3, 2023,~~May 2, 2024, there were ~~92,216,476~~92,774,604 shares of the registrant’s common stock outstanding.


	Common Stock				Additional Paid-in			Retained Earnings (Accumulated						Common Stock				Additional Paid-in			Retained
	Shares		Amount		Capital			Deficit)			Total			Shares		Amount		Capital			Earnings			Total
Balance at December 31, 2021		89,028	$	890	$	2,636,350		$	(119,751	)	$	2,517,489
Common stock issued under stock incentive plans		633		7		3,742			—			3,749
Repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises		—		—		(15,490	)		—			(15,490	)
Equity-based compensation expense		—		—		7,925			—			7,925
Net income attributable to Acadia Healthcare Company, Inc.		—		—		—			60,837			60,837
Balance at March 31, 2022		89,661		897		2,632,527			(58,914	)		2,574,510
Common stock issued under stock incentive plans		113		1		3,147			—			3,148
Repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises		—		—		(1,275	)		—			(1,275	)
Equity-based compensation expense		—		—		6,580			—			6,580
Net income attributable to Acadia Healthcare Company, Inc.		—		—		—			80,079			80,079
Balance at June 30, 2022		89,774		898		2,640,979			21,165			2,663,042
Common stock issued under stock incentive plans		101		1		3,066			—			3,067
Repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises		—		—		(740	)		—			(740	)
Equity-based compensation expense		—		—		7,240			—			7,240
Net income attributable to Acadia Healthcare Company, Inc.		—		—		—			71,099			71,099
Balance at September 30, 2022		89,875		899		2,650,545			92,264			2,743,708
Common stock issued under stock incentive plans		39		—		1,649			—			1,649
Repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises		—		—		(287	)		—			(287	)
Equity-based compensation expense		—		—		7,890			—			7,890
Other		—		—		(1,357	)		—			(1,357	)
Net income attributable to Acadia Healthcare Company, Inc.		—		—		—			61,124			61,124
Balance at December 31, 2022		89,914		899		2,658,440			153,388			2,812,727			89,914	$	899	$	2,658,440		$	153,388		$	2,812,727
Common stock issued under stock incentive plans		1,039		11		1,192			—			1,203			1,039		11		1,192			—			1,203
Repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises		—		—		(48,874	)		—			(48,874	)		—		—		(48,874	)		—			(48,874	)
Equity-based compensation expense		—		—		7,629			—			7,629			—		—		7,629			—			7,629
Other		—		—		902			—			902			—		—		902			—			902
Net income attributable to Acadia Healthcare Company, Inc.		—		—		—			66,015			66,015			—		—		—			66,015			66,015
Balance at March 31, 2023		90,953		910		2,619,289			219,403			2,839,602			90,953		910		2,619,289			219,403			2,839,602
Common stock issued under stock incentive plans		176		1		3,783			—			3,784			176		1		3,783			—			3,784
Repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises		—		—		(2,017	)		—			(2,017	)		—		—		(2,017	)		—			(2,017	)
Equity-based compensation expense		—		—		7,348			—			7,348			—		—		7,348			—			7,348
Net income attributable to Acadia Healthcare Company, Inc.		—		—		—			72,299			72,299			—		—		—			72,299			72,299
Balance at June 30, 2023		91,129		911		2,628,403			291,702			2,921,016			91,129		911		2,628,403			291,702			2,921,016
Common stock issued under stock incentive plans		76		1		1,553			—			1,554			76		1		1,553			—			1,554
Repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises		—		—		(843	)		—			(843	)		—		—		(843	)		—			(843	)
Equity-based compensation expense		—		—		8,163			—			8,163			—		—		8,163			—			8,163
Other		—		—		382			—			382			—		—		382			—			382
Net loss attributable to Acadia Healthcare Company, Inc.		—		—		—			(217,710	)		(217,710	)		—		—		—			(217,710	)		(217,710	)
Balance at September 30, 2023		91,205	$	912	$	2,637,658		$	73,992		$	2,712,562			91,205		912		2,637,658			73,992			2,712,562
Common stock issued under stock incentive plans															59		1		1,655			—			1,656
Repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises															—		—		(798	)		—			(798	)
Equity-based compensation expense															—		—		9,149			—			9,149
Other															—		—		1,676			—			1,676
Net income attributable to Acadia Healthcare Company, Inc.															—		—		—			57,729			57,729
Balance at December 31, 2023															91,264		913		2,649,340			131,721			2,781,974
Common stock issued under stock incentive plans															310		3		4,099			—			4,102
Repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises															—		—		(5,115	)		—			(5,115	)
Equity-based compensation expense															—		—		8,678			—			8,678
Net income attributable to Acadia Healthcare Company, Inc.															—		—		—			76,383			76,383
Balance at March 31, 2024															91,574	$	916	$	2,657,002		$	208,104		$	2,866,022


	Nine Months Ended September 30,						Three Months Ended March 31,
	2023			2022			2024			2023
	(In thousands)						(In thousands)
Operating activities:
Net (loss) income	$	(75,418	)	$	216,888
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Net income							$	78,770		$	66,558
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		96,969			87,627			36,347			31,569
Amortization of debt issuance costs		2,485			2,440			1,016			824
Equity-based compensation expense		23,140			21,745			8,678			7,629
Deferred income taxes		(21,655	)		20,176			17,476			212
Legal settlements expense		394,181			—
Loss on impairment		8,694			—
Other		1,423			2,422			(4,094	)		1,089
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net		(40,227	)		(35,538	)		(22,930	)		(23,968	)
Other current assets		(77,165	)		(28,692	)		(15,629	)		(23,430	)
Other assets		309			3,373			696			(1,436	)
Accounts payable and other accrued liabilities		23,057			7,729			(403,340	)		13,633
Accrued salaries and benefits		(3,038	)		(8,831	)		(25,024	)		(30,386	)
Other liabilities		17,723			10,303			6,749			2,114
Government relief funds		(4,442	)		(32,617	)
Net cash provided by operating activities		346,036			267,025
Net cash (used in) provided by operating activities								(321,285	)		44,408
Investing activities:
Cash paid for acquisitions, net of cash acquired		(349	)		—			(50,353	)		—
Cash paid for capital expenditures		(285,410	)		(208,792	)		(142,410	)		(66,525	)
Proceeds from sale of property and equipment		633			1,784			9,056			409
Other		(1,925	)		(6,802	)		(907	)		(794	)
Net cash used in investing activities		(287,051	)		(213,810	)		(184,614	)		(66,910	)
Financing activities:
Borrowings on long-term debt								350,000			—
Borrowings on revolving credit facility		40,000			—			160,000			40,000
Principal payments on revolving credit facility		(35,000	)		(85,000	)		(15,000	)		—
Principal payments on long-term debt		(15,938	)		(13,281	)		(10,242	)		(5,313	)
Payment of debt issuance costs								(1,518	)		—
Repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises		(45,193	)		(7,541	)		(1,013	)		(47,671	)
Contributions from noncontrolling partners in joint ventures		2,538			13,178			2,280			1,655
Distributions to noncontrolling partners in joint ventures		(3,480	)		(1,004	)		(1,020	)		—
Other		30			39			(358	)		11
Net cash used in financing activities		(57,043	)		(93,609	)
Net increase (decrease) in cash and cash equivalents		1,942			(40,394	)
Net cash provided by (used in) financing activities								483,129			(11,318	)
Net decrease in cash and cash equivalents								(22,770	)		(33,820	)
Cash and cash equivalents at beginning of the period		97,649			133,813			100,073			97,649
Cash and cash equivalents at end of the period	$	99,591		$	93,419		$	77,303		$	63,829

Effect of acquisitions:
Assets acquired, excluding cash	$	6,766		$	—		$	55,309		$	—
Liabilities assumed		(128	)		—			(3,456	)		—
Redeemable noncontrolling interest resulting from an acquisition		(6,289	)		—
Contingent consideration issued in connection with an acquisition								(1,500	)		—
Cash paid for acquisitions, net of cash acquired	$	349		$	—		$	50,353		$	—

In the fall of 2017, the Office of Inspector General ~~(“OIG”~~(the “OIG”) issued subpoenas to three of the Company’s facilities requesting certain documents from January 2013 to the date of the subpoenas. The U.S. Attorney’s Office for the Middle District of Florida issued a civil investigative demand to one of the Company’s facilities in December 2017 requesting certain documents from November 2012 to the date of the demand. In April 2019, the OIG issued subpoenas relating to six additional facilities requesting certain documents and information from January 2013 to the date of the subpoenas. In June 2023, the State of Nevada issued a subpoena relating to one of the same facilities as part of the same investigation. The government’s investigation of each of these facilities is focused on claims not eligible for payment because of alleged violations of certain regulatory requirements relating to, among other things, medical necessity, admission eligibility, discharge decisions, length of stay and patient care issues. The Company has reached a tentative agreement to resolve the matter and the anticipated financial impact of such resolution is ~~cooperating~~$19.9 million and has been recorded within other accrued liabilities on the condensed consolidated balance sheets at March 31, 2024 and December 31, 2023, respectively.

15.

Equity-Based Compensation

Equity Incentive Plans

The Company issues stock-based awards, including stock options, restricted stock units and ~~restricted~~performance stock units, to certain officers, employees and non-employee directors under the Acadia Healthcare Company, Inc. Incentive Compensation Plan (the “Equity Incentive Plan”). At ~~September 30, 2023,~~March 31, 2024, a maximum of 12,700,000 shares of the Company’s common stock were authorized for issuance as stock options, restricted stock units and ~~restricted~~performance stock units or other share-based compensation under the Equity Incentive Plan, of which ~~2,667,821~~2,253,481 were available for future grant. Stock options may be granted for terms of up to ten years. The Company recognizes expense on all share-based awards on a straight-line basis over the requisite service period of the entire award. Grants to employees generally vest in annual increments of 25% or 33% each year, commencing one year after the date of grant. The exercise prices of stock options are equal to the most recent closing price of the Company’s common stock on the most recent trading date prior to the date of grant.

The Company recognized $~~8.2~~8.7 million and $~~7.2~~7.6 million in equity-based compensation expense for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022 and $23.1~~ ~~million and $21.7~~ ~~million for the nine months ended September 30, 2023 and 2022,~~ respectively. Stock compensation expense for the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ is impacted by forfeiture adjustments and ~~restricted~~performance stock unit adjustments based on actual performance compared to vesting targets. At ~~September 30, 2023,~~March 31, 2024, there was $~~80.9~~87.9 million of unrecognized compensation expense related to unvested options, restricted stock units and ~~restricted~~performance stock units, which is expected to be recognized over the remaining weighted average vesting period of ~~1.4~~1.3 years.

The Company recognized a deferred income tax benefit of $~~2.2~~2.4 million and $~~2.0~~2.1 million for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively, related to equity-based compensation expense. ~~The Company recognized a deferred income tax benefit of $6.3~~ ~~million and $5.9~~ ~~million for the nine months ended September 30, 2023 and 2022, respectively.~~

1514

Stock Options

Stock option activity during ~~2022~~2023 and ~~2023~~2024 was as follows:


	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)		Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Options outstanding at January 1, 2022		1,106,069		$	42.07
Options outstanding at January 1, 2023											979,277		$	46.27
Options granted		334,260			55.73						296,340			78.94
Options exercised		(285,577	)		40.66						(198,527	)		41.29
Options cancelled		(175,475	)		46.98						(140,545	)		55.95
Options outstanding at December 31, 2022		979,277			46.27
Options outstanding at December 31, 2023											936,545			56.21
Options granted		271,740			79.32						1,000			84.18
Options exercised		(161,507	)		40.50						(90,178	)		45.49
Options cancelled		(99,990	)		56.68						(22,888	)		62.76
Options outstanding at September 30, 2023		989,520		$	55.24		7.39	$	20,815
Options exercisable at September 30, 2023		392,795		$	42.69		5.73	$	12,705
Options outstanding at March 31, 2024											824,479		$	57.24		7.10	$	18,435
Options exercisable at March 31, 2024											448,934		$	47.76		6.02	$	14,197

Fair values are estimated using the Black-Scholes option pricing model. The following table summarizes the grant-date fair value of options and the assumptions used to develop the fair value estimates for options granted during the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 and year ended December 31, ~~2022:~~2023:


	September 30, 2023			December 31, 2022			March 31, 2024			December 31, 2023
Weighted average grant-date fair value of options	$	31.11		$	20.72		$	30.99		$	30.99
Risk-free interest rate		4.1	%		2.0	%		4.0	%		4.2	%
Expected volatility		37	%		39	%		34	%		37	%
Expected life (in years)		5.0			5.0			5.0			5.0

The Company’s estimate of expected volatility for stock options is based upon the volatility of its stock price over the expected life of the award. The risk-free interest rate is the approximate yield on U.S. Treasury Strips having a life equal to the expected option life on the date of grant. The expected life is an estimate of the number of years an option will be held before it is exercised.

Other Stock-Based Awards

Restricted stock unit activity during ~~2022~~2023 and ~~2023~~2024 was as follows:


	Number of Shares			Weighted Average Grant-Date Fair Value		Number of Shares			Weighted Average Grant-Date Fair Value
Unvested at January 1, 2022		926,627		$	37.84
Unvested at January 1, 2023							1,045,202		$	54.89
Granted		650,396			64.65		587,239			76.32
Cancelled		(145,205	)		49.03		(198,740	)		57.21
Vested		(386,616	)		32.64		(403,223	)		50.48
Unvested at December 31, 2022		1,045,202		$	54.89
Unvested at December 31, 2023							1,030,478		$	68.38
Granted		515,202			76.53		366,652			79.36
Cancelled		(175,705	)		56.55		(20,668	)		65.79
Vested		(373,983	)		49.44		(192,282	)		57.59
Unvested at September 30, 2023		1,010,716		$	67.65
Unvested at March 31, 2024							1,184,180		$	73.57

1615

~~Restricted~~Performance stock unit activity during ~~2022~~2023 and ~~2023~~2024 was as follows:


	Number of Units			Weighted Average Grant-Date Fair Value		Number of Units			Weighted Average Grant-Date Fair Value
Unvested at January 1, 2022		1,504,420		$	23.20
Unvested at January 1, 2023							1,273,800		$	20.69
Granted		105,311			73.96		177,509			70.98
Performance adjustment		182,543			33.05		407,825			17.69
Cancelled		—			—		(114,908	)		69.07
Vested		(518,474	)		43.16		(1,408,195	)		10.60
Unvested at December 31, 2022		1,273,800		$	20.69
Unvested at December 31, 2023							336,031		$	69.35
Granted		177,509			70.98		—			—
Performance adjustment		388,124			15.47		(9,241	)		72.99
Cancelled		(114,908	)		69.07		(98,504	)		61.52
Vested		(1,408,195	)		10.60		—			—
Unvested at September 30, 2023		316,330		$	69.84
Unvested at March 31, 2024							228,286		$	72.58

Restricted stock unit awards are time-based vesting awards that vest over a period of three or four years and are subject to continuing service of the employee or non-employee director over the ratable vesting periods. The fair values of the restricted stock unit awards were determined based on the closing price of the Company’s common stock on the trading date immediately prior to the grant date.

~~Restricted~~Performance stock units are granted to employees and are subject to Company performance compared to pre-established targets. In addition to Company performance, these performance-based ~~restricted~~performance stock units are subject to the continuing service of the employee during the three-year period covered by the awards. The performance condition for the ~~restricted~~performance stock units is based on the Company’s achievement of annually established targets for diluted earnings per share. The number of shares issuable at the end of the applicable vesting period of restricted stock units ranges from 0% to 200% of the targeted units based on the Company’s actual performance compared to the targets.

The fair values of ~~restricted~~performance stock units were determined based on the closing price of the Company’s common stock on the trading date immediately prior to the grant date for units subject to performance conditions.

~~18.~~

~~Subsequent Events~~

~~See Note 12 – Commitments and Contingencies for a discussion of developments related to the Cases following September 30, 2023.~~

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

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any statements that address future results or occurrences. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “would,” “should,” “could” or the negative thereof. Generally, the words “anticipate,” “believe,” “continue,” “expect,” “intend,” “estimate,” “project,” “plan” and similar expressions identify forward-looking statements. In particular, statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are forward-looking statements.

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors, many of which are outside of our control, which could cause our actual results, performance or achievements to differ materially from any results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to:

•

the impact of competition for staffing, labor shortages and higher turnover rates on our labor costs and profitability;

•

the impact of ~~increases in~~ inflation and ~~rising~~ interest ~~rates;~~rate volatility;

•

compliance with laws and government regulations;

•

our indebtedness, our ability to meet our debt obligations, and our ability to incur substantially more debt;

•

the impact of payments received from the government and third-party payors on our revenue and results of operations;

•

the impact of volatility in the global capital and credit markets, as well as significant developments in macroeconomic and
political conditions that are out of our control;

•

the impact of general economic and employment conditions, including increased construction and other costs due to inflation, on our business and future results of operations;

•

difficulties in successfully integrating the operations of acquired facilities or realizing the potential benefits and synergies of our acquisitions and joint ventures;

•

our ability to recruit and retain quality psychiatrists and other physicians, nurses, counselors and other medical support personnel;

•

the occurrence of patient incidents, which could result in negative media coverage, adversely affect the price of our
securities and result in incremental regulatory burdens and governmental investigations;

•

the impact of claims brought against us or our facilities including claims for damages for personal injuries, medical malpractice, overpayments, breach of contract, securities law violations, tort and employee related claims;

•

the outcome of pending ~~litigation, including~~ litigation;

•

the ~~Desert Hills Litigation;~~impact of carrying a large self-insured retention, the possibilities of being responsible for significant amounts not covered by insurance, premium increases and insurance not being available on acceptable terms because of our claims experience;

•

the impact of governmental investigations, regulatory actions and whistleblower lawsuits;

•

any failure to comply with the terms of our corporate integrity agreement with the OIG;

•

the impact of healthcare reform in the U.S.;

•

our acquisition, joint venture and wholly-owned de novo strategies, which expose us to a variety of operational and financial risks, as well as legal and regulatory risks;

•

the impact of state efforts to regulate the construction or expansion of healthcare facilities on our ability to operate and expand our operations;

•

our ability to implement our business strategies;

•

the impact of Medicaid eligibility determinations associated with the end of ~~COVID-related~~COVID-19 related Medicaid continuing coverage requirements;

•

the impact of disruptions on our inpatient and outpatient volumes caused by pandemics, epidemics or outbreaks of
infectious diseases, such as the COVID-19 pandemic;

1918

•

our dependence on key management personnel, key executives and local facility management personnel, and the impact of any disruptions from the recent transition of various executives;

•

our restrictive covenants, which may restrict our business and financing activities;

•

the impact of adverse weather conditions and climate change, including the effects of hurricanes, wildfires and other natural
disasters, and any resulting outmigration;

•

the risk of a cyber-security incident and any resulting adverse impact on our operations or violation of laws and regulations regarding information privacy;

•

the impact on our business if our information systems fail or our databases are destroyed or damaged;

•

our future cash flow and earnings;

•

the impact of our highly competitive industry on patient volumes;

•

our ability to cultivate and maintain relationships with referral sources;

•

the impact of the trend for insurance companies and managed care organizations to enter into sole source contracts on our
ability to obtain patients;

•

the impact of value-based purchasing programs on our revenue;

•

our potential inability to extend leases at expiration;

•

the impact of controls designed to reduce inpatient services on our revenue;

•

the impact of different interpretations of accounting principles on our results of operations or financial condition;

•

the impact of environmental, health and safety laws and regulations, especially in locations where we have concentrated operations;

•

the impact of laws and regulations relating to privacy and security of patient health information and standards for electronic transactions;

•

the impact of a change in the mix of our earnings, adverse changes in our effective tax rate and adverse developments in tax laws generally;

•

changes in interpretations, assumptions and expectations regarding recent tax legislation, including provisions of the CARES Act and additional guidance that may be issued by federal and state taxing authorities;

•

failure to maintain effective internal control over financial reporting;

•

the impact of fluctuations in our operating results, quarter to quarter earnings and other factors on the price of our securities; and

•

those risks and uncertainties described from time to time in our filings with the SEC.

Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. These risks and uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. These forward-looking statements are made only as of the date of this Quarterly Report on Form 10-Q. We do not undertake and specifically decline any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect future events or developments.

Overview

Our business strategy is to ~~acquire and develop~~become the indispensable behavioral healthcare ~~facilities~~provider for the high-acuity and ~~improve our operating results within our facilities and our other behavioral healthcare operations.~~complex needs patient population. We ~~strive~~are committed to ~~improve~~providing the ~~operating results of our facilities by providing~~communities we serve with high-quality, ~~services, expanding referral networks and marketing initiatives while meeting the increased demand for~~cost-effective behavioral healthcare services, ~~through~~while growing our business, increasing profitability and creating long-term value for our stockholders. This strategy includes five growth pathways: expansions of existing facilities, joint venture partnerships, de novo facilities, acquisitions and expansion across our continuum of ~~our current locations as well as developing new services within existing locations.~~care. At ~~September 30, 2023,~~March 31, 2024, we operated ~~253~~258 behavioral healthcare facilities with approximately ~~11,100~~11,300 beds in 3938 states and Puerto Rico. During the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, we added ~~396~~47 beds, consisting of ~~204~~27 beds to existing facilities and ~~192~~20 beds added through the opening of ~~two joint venture facilities, and we opened four CTCs.~~a wholly-owned facility. For the year ending December 31, ~~2023,~~2024, we expect to add approximately ~~300~~1,200 total beds ~~through additions~~and open up to ~~existing facilities, and we expect to open two wholly-owned facilities, two joint venture facilities and six CTCs.~~14 CTCs, excluding acquisitions.

2019

We are the leading publicly traded pure-play provider of behavioral healthcare services in the U.S. Management believes that we are positioned as a leading platform in a highly fragmented industry under the direction of an experienced management team that has significant ~~healthcare~~ industry expertise. Management expects to take advantage of several strategies that are more accessible as a result of our increased size and geographic scale, including continuing a national marketing strategy to attract new patients and referral sources, increasing our volume of out-of-state referrals, providing a broader range of services to new and existing patients and clients and selectively pursuing opportunities to expand our facility and bed count in the U.S. through acquisitions, wholly-owned de novo facilities, joint ventures and bed additions in existing facilities.

~~COVID-19~~

During March 2020, the global pandemic of COVID-19 began to affect our facilities, employees, patients, communities, business operations and financial performance, as well as the broader U.S. economy and financial market. At manyof our facilities, employees and/or patients have tested positive for COVID-19. We are committed to protecting the health of our communities and have been responding to the evolving COVID-19 situation while taking steps to provide quality care and protect the health and safety of our patients and employees. Over the last three years, all of our facilities have closely followed infectious disease protocols, as well as recommendations by the Centers for Disease Control and Prevention and local health officials.

~~CARES Act and Other Regulatory Matters~~

On March 27, 2020, the CARES Act was signed into law. The CARES Act is intended to provide over $2 trillion in stimulus benefits for the U.S. economy. Among other things, the CARES Act includes additional support for small businesses, expands unemployment benefits, makes forgivable loans available to small businesses, provides for certain federal income tax changes, and provides $500 billion for loans, loan guarantees, and other investments for or in U.S. businesses.

~~In addition, the CARES Act contains a number of provisions that are intended to assist healthcare providers as they combat the effects of the COVID-19 pandemic. Those provisions include, among others:~~

•

an appropriation to the PHSSE Fund, also known as the Provider Relief Fund, to reimburse, through grants or other mechanisms, eligible healthcare providers and other approved entities for COVID-19-related expenses or lost revenue;

•

~~the expansion of CMS’ Accelerated and Advance Payment Program;~~

•

the temporary suspension of Medicare sequestration from May 1, 2020 to March 31, 2022, which was reduced to 1% on
April 1, 2022 and was eliminated effective July 1, 2022; and

•

~~waivers or temporary suspension of certain regulatory requirements.~~

The U.S. government initially announced it would offer $100 billion of relief to eligible healthcare providers through the PHSSE Fund. On April 24, 2020, then President Trump signed into law the PPP Act. Among other things, the PPP Act allocated $75 billion to eligible healthcare providers to help offset COVID-19 related losses and expenses. The $75 billion allocated under the PPP Act was in addition to the $100 billion allocated to healthcare providers for the same purposes in the CARES Act and has been disbursed to providers under terms and conditions similar to the CARES Act funds. In 2020, we received approximately $34.9 million of the funds distributed from the PHSSE Fund. During the fourth quarter of 2020, we recorded approximately $32.8 million of income from provider relief fund related to PHSSE Fund amounts received in 2020.

In 2021, we received $24.2 million of additional funds from the PHSSE Fund. During the fourth quarter of 2021, we recorded $17.9 million of income from provider relief fund related to the PHSSE Fund amounts received. During the year ended December 31, 2022, we received $7.7 million of additional funds from the PHSSE Fund and $14.2 million from the ARP Rural Payments for Hospitals. During the year ended December 31, 2022, we recorded $21.5 million of income from provider relief fund related to PHSSE Fund and ARP funds received. During the third quarter of 2023, we recorded $4.4 million of income from provider relief fund related to ARP funds received. The remaining unrecognized funds of $4.5 million and $9.0 million are included in other accrued liabilities on the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively. We continue to evaluate our compliance with the terms and conditions to, and the financial impact of, these additional funds received, including potential repayment of the remaining balance.

Healthcare providers were required to sign an attestation confirming receipt of the PHSSE Fund amounts and agree to the terms and conditions of payment. Under the terms and conditions for receipt of the payment, we were allowed to use the funds to cover lost revenues and healthcare costs related to COVID-19, and we were required to properly and fully document the use of these funds to the U.S. Department of Health and Human Services. The reporting of the funds is subject to future audit for compliance with the terms

~~and conditions. We recognized PHSSE Fund amounts to the extent we had qualifying COVID-19 expenses or lost revenues as permitted under the terms and conditions.~~

During 2020, we applied for and received approximately $45.2 million of payments from the CMS Accelerated and Advance Payment Program. Of the $45.2 million of advance payments received in 2020, we repaid approximately $25.1 million of advance payments during 2021 and made additional repayments of approximately $20.1 million during the year ended December 31, 2022 to eliminate the liability.

Under the CARES Act, we received a 2% increase in our facilities’ Medicare reimbursement rate as a result of the temporary suspension of Medicare sequestration from May 1, 2020 to March 31, 2022, which was reduced to 1% on April 1, 2022 and was eliminated effective July 1, 2022.

The CARES Act also provided for certain federal income and other tax changes. We received a cash benefit of approximately $39.3 million for 2020 relating to the delay of payment of the employer portion of Social Security payroll taxes. We repaid half of the $39.3 million of payroll tax deferrals during the third quarter of 2021 and repaid the remaining portion in the third quarter of 2022 to eliminate the liability.

~~These regulatory changes were temporary and expired at the end of the COVID-19 public health emergency on May 11, 2023.~~

~~We are continuing to evaluate the terms and conditions and financial impact of funds received under the CARES Act and other government relief programs.~~

Results of Operations

The following table illustrates our consolidated results of operations for the respective periods shown (dollars in thousands):


	Three Months Ended September 30,												Nine Months Ended September 30,												Three Months Ended March 31,
	2023						2022						2023						2022						2024						2023
	Amount			%			Amount			%			Amount			%			Amount			%			Amount			%			Amount			%
Revenue	$	750,334			100.0	%	$	666,732			100.0	%	$	2,185,938			100.0	%	$	1,935,104			100.0	%	$	768,051			100.0	%	$	704,267			100.0	%
Salaries, wages and benefits		394,150			52.5	%		352,582			52.9	%		1,171,960			53.6	%		1,027,732			53.1	%		417,523			54.4	%		391,177			55.6	%
Professional fees		45,540			6.1	%		40,367			6.1	%		130,468			6.0	%		117,718			6.1	%		45,688			5.9	%		41,125			5.8	%
Supplies		27,147			3.6	%		25,570			3.8	%		79,312			3.6	%		74,291			3.8	%		26,652			3.5	%		26,021			3.7	%
Rents and leases		11,731			1.6	%		11,339			1.7	%		34,880			1.6	%		33,780			1.7	%		11,863			1.5	%		11,424			1.6	%
Other operating expenses		104,048			13.9	%		88,993			13.3	%		290,798			13.3	%		255,355			13.2	%		101,073			13.2	%		90,838			12.9	%
Income from provider relief fund		(4,442	)		-0.6	%		(7,656	)		-1.1	%		(4,442	)		-0.2	%		(16,206	)		-0.8	%
Depreciation and amortization		33,388			4.4	%		29,573			4.4	%		96,969			4.4	%		87,627			4.5	%		36,347			4.7	%		31,569			4.5	%
Interest expense, net		20,742			2.8	%		18,003			2.7	%		61,651			2.8	%		50,355			2.6	%		27,214			3.5	%		19,999			2.8	%
Legal settlements expense		394,181			52.5	%		—			0.0	%		394,181			18.0	%		—			0.0	%
Loss on impairment		—			0.0	%		—			0.0	%		8,694			0.4	%		—			0.0	%
Transaction-related expenses		11,247			1.5	%		10,859			1.6	%		26,792			1.2	%		18,381			0.9	%
Transaction, legal and other costs																										2,847			0.4	%		6,471			0.9	%
Total expenses		1,037,732			138.3	%		569,630			85.4	%		2,291,263			104.7	%		1,649,033			85.1	%		669,207			87.1	%		618,624			87.8	%
(Loss) income before income taxes		(287,398	)		-38.3	%		97,102			14.6	%		(105,325	)		-4.7	%		286,071			14.9	%
(Benefit from) provision for income taxes		(71,873	)		-9.6	%		24,056			3.6	%		(29,907	)		-1.3	%		69,183			3.6	%
Net (loss) income		(215,525	)		-28.7	%		73,046			11.0	%		(75,418	)		-3.5	%		216,888			11.3	%
Income before income taxes																										98,844			12.9	%		85,643			12.2	%
Provision for income taxes																										20,074			2.6	%		19,085			2.7	%
Net income																										78,770			10.3	%		66,558			9.5	%
Net income attributable to noncontrolling interests		(2,185	)		-0.3	%		(1,947	)		-0.3	%		(3,978	)		-0.2	%		(4,873	)		-0.3	%		(2,387	)		-0.4	%		(543	)		-0.1	%
Net (loss) income attributable to Acadia Healthcare Company, Inc.	$	(217,710	)		-29.0	%	$	71,099			10.7	%	$	(79,396	)		-3.6	%	$	212,015			11.0	%
Net income attributable to Acadia Healthcare Company, Inc.																									$	76,383			9.9	%	$	66,015			9.4	%

We believe that we are well positioned to help meet the growing demand for behavioral ~~health~~healthcare services and we recorded a revenue growth ~~rate~~ of ~~13.0%~~9.1% for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. Similar towith many other healthcare providers and other industries across the country, we continue to navigate a tight labor market. While we experienced higher wage inflation ~~in the nine months ended September 30, 2023~~recently compared to long-term historical averages, we have seen stability in our labor costs and our proactive focus helps us manage through this environment. We remain focused on ensuring that we have the level of staff to meet the demand in our markets across ~~our 39~~38 states and Puerto Rico.

2220

The following table sets forth percent changes in same facility operating data for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 compared to the same ~~periods~~period in ~~2022:~~2023:

Three Months Ended

Nine Months Ended
Same Facility Results (a)

Revenue growth

13.0%

12.5%
Patient days growth

6.0%

5.8%
Admissions growth

5.1%

6.0%
Average length of stay change (b)

0.9%

-0.1%
Revenue per patient day growth

6.6%

6.4%
Adjusted EBITDA margin change (c)

20 bps

30 bps
Adjusted EBITDA margin excluding income
from provider relief fund (d)

80 bps

90 bps


Same Facility Results (a)
Revenue growth		9.2%
Patient days growth		2.2%
Admissions growth		-1.7%
Average length of stay change (b)		4.0%
Revenue per patient day growth		6.9%
Adjusted EBITDA margin change (c)		120 bps

(a)

Results for the periods presented include facilities we have operated more than one year and exclude certain closed services.

(b)

Average length of stay is defined as patient days divided by admissions.

(c)

Adjusted EBITDA is defined as income before provision for income taxes, equity-based compensation expense, ~~loss on impairment, transaction-related expenses,~~transaction, legal and other costs, interest ~~expense, legal settlements~~ expense and depreciation and amortization. Management uses Adjusted EBITDA as an analytical indicator to measure performance and to develop strategic objectives and operating plans. Adjusted EBITDA is commonly used as an analytical indicator within the health care industry, and also serves as a measure of leverage capacity and debt service ability. Adjusted EBITDA should not be considered as a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Because Adjusted EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies.

~~(d)~~

For each of the three and nine months ended September 30, 2023, excludes income from provider relief fund of $4.4 million. For the three and nine months ended September 30, 2022, excludes income from provider relief fund of $7.7 million and $16.2 million, respectively. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue.

Three months ended ~~September 30, 2023~~March 31, 2024 compared to the three months ended ~~September 30, 2022~~March 31, 2023

Revenue. Revenue increased ~~$83.6~~$63.8 million, or ~~12.5%~~9.1%, to ~~$750.3~~$768.1 million for the three months ended ~~September 30, 2023~~March 31, 2024 from ~~$666.7~~$704.3 million for the three months ended ~~September 30, 2022.~~March 31, 2023. Same facility revenue increased ~~$85.5~~$63.8 million, or ~~13.0%~~9.2%, for the three months ended ~~September 30, 2023~~March 31, 2024 compared to the three months ended ~~September 30, 2022,~~March 31, 2023, resulting from an increase in same facility revenue per day of ~~6.6%,~~6.9% and same facility growth in patient days of ~~6.0% and same facility growth in admissions of 5.1%~~2.2%. Consistent with same facility revenue growth in ~~2022,~~2023, the growth in same facility patient days for the three months ended ~~September 30, 2023~~March 31, 2024 compared to the three months ended ~~September 30, 2022~~March 31, 2023 resulted from the addition of beds to our existing facilities and ongoing demand for our services.

Salaries, wages and benefits. Salaries, wages and benefits (“SWB”) expense was ~~$394.2~~$417.5 million for the three months ended ~~September 30, 2023~~March 31, 2024 compared to ~~$352.6~~$391.2 million for the three months ended ~~September 30, 2022,~~March 31, 2023, an increase of ~~$41.6~~$26.3 million. SWB expense included ~~$8.2~~$8.7 million and ~~$7.2~~$7.6 million of equity-based compensation expense for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively. Excluding equity-based compensation expense, SWB expense was ~~$386.0~~$408.8 million, or ~~51.4%~~53.2% of revenue, for the three months ended ~~September 30, 2023,~~March 31, 2024, compared to ~~$345.4~~$383.6 million, or ~~51.8%~~54.5% of revenue, for the three months ended ~~September 30, 2022. The increase in SWB expense relates to incremental staff to support volume growth as well as wage inflation.~~March 31, 2023. Same facility SWB expense was ~~$352.0~~$368.7 million for the three months ended ~~September 30, 2023,~~March 31, 2024, or ~~47.3%~~48.7% of revenue, compared to ~~$315.9~~$344.1 million for the three months ended ~~September 30, 2022,~~March 31, 2023, or ~~47.9%~~49.7% of revenue.

Professional fees. Professional fees were ~~$45.5~~$45.7 million for the three months ended ~~September 30, 2023,~~March 31, 2024, or ~~6.1%~~5.9% of revenue, compared to ~~$40.4~~$41.1 million for the three months ended ~~September 30, 2022,~~March 31, 2023, or ~~6.1%~~5.8% of revenue. Same facility professional fees were ~~$40.7~~$39.9 million for the three months ended ~~September 30, 2023,~~March 31, 2024, or ~~5.5%~~5.3% of revenue, compared to ~~$36.9~~$37.1 million for the three months ended ~~September 30, 2022,~~March 31, 2023, or ~~5.6%~~5.4% of revenue.

Supplies. Supplies expense was $27.1 million for the three months ended September 30, 2023, or 3.6% of revenue, compared to $25.6 million for the three months ended September 30, 2022, or 3.8% of revenue. Same facility supplies expense was $26.7 million for the three months ended ~~September 30, 2023,~~March 31, 2024, or ~~3.6%~~3.5% of revenue, compared to ~~$25.2~~$26.0 million for the three months ended ~~September 30, 2022,~~March 31, 2023, or ~~3.8%~~3.7% of revenue. Same facility supplies expense was $26.0 million for the three months ended March 31, 2024, or 3.4% of revenue, compared to $25.4 million for the three months ended March 31, 2023, or 3.7% of revenue.

Rents and leases. Rents and leases were ~~$11.7~~$11.9 million for the three months ended ~~September 30, 2023,~~March 31, 2024, or ~~1.6%~~1.5% of revenue, compared to ~~$11.3~~$11.4 million for the three months ended ~~September 30, 2022,~~March 31, 2023, or ~~1.7%~~1.6% of revenue. Same facility rents and leases were ~~$10.6~~$10.8 million for the three months ended ~~September 30, 2023,~~March 31, 2024, or 1.4% of revenue, compared to $10.5 million for the three months ended ~~September 30, 2022,~~March 31, 2023, or ~~1.6%~~1.5% of revenue.

Other operating expenses. Other operating expenses consisted primarily of purchased services, utilities, insurance, travel and repairs and maintenance expenses. Other operating expenses were ~~$104.0~~$101.1 million for the three months ended ~~September 30, 2023,~~March 31, 2024, or ~~13.9%~~

13.2% of revenue, compared to ~~$89.0~~$90.8 million for the three months ended ~~September 30, 2022,~~March 31, 2023, or ~~13.3%~~12.9% of revenue. Same facility other operating expenses were ~~$97.2~~$93.9 million for the three months ended ~~September 30, 2023,~~March 31, 2024, or ~~13.1%~~12.4% of revenue, compared to ~~$83.3~~$84.9 million for the three months ended ~~September 30, 2022,~~March 31, 2023, or ~~12.6%~~12.3% of revenue.

~~Income from provider relief fund.~~ ~~For the three months ended September 30, 2023,~~we recorded $4.4 million in income from provider relief fund related to ARP funds received in 2022, compared to $7.7 million in income from provider relief fund related to PHSSE Fund amounts received in 2022 for the three months ended September 30, 2022.

Depreciation and amortization. Depreciation and amortization expense was ~~$33.4~~$36.3 million for the three months ended ~~September 30, 2023,~~March 31, 2024, or ~~4.4%~~4.7% of revenue, compared to ~~$29.6~~$31.6 million for the three months ended ~~September 30, 2022,~~March 31, 2023, or ~~4.4%~~4.5% of revenue.

Interest expense. Interest expense was ~~$20.7~~$27.2 million for the three months ended ~~September 30, 2023,~~March 31, 2024 compared to ~~$18.0~~$20.0 million for the three months ended ~~September 30, 2022.~~March 31, 2023. The increase in interest expense was primarily athe result of ~~higher interest rates applicable to our variable rate debt.~~borrowings under the Credit Facility during the first quarter of 2024.

~~Legal settlements expense. Legal settlements expense for the three months ended September 30, 2023 was $394.2 million associated with the Desert Hills Litigation.~~

~~Transaction-related expenses.~~Transaction, legal and other costs. ~~Transaction-related expenses~~Transaction, legal and other costs were ~~$11.2~~$2.8 million for the three months ended ~~September 30, 2023,~~March 31, 2024, compared to ~~$10.9~~$6.5 million for the three months ended ~~September 30, 2022. Transaction-related expenses~~March 31, 2023. Transaction, legal and other costs represent legal, accounting, termination, restructuring, management transition, acquisition and other similar costs incurred in the respective period, as summarized below (in thousands).

Three Months Ended September 30,

2023

2022

Legal, accounting and other acquisition-related costs
$
4,196

$
2,020

Management transition costs

3,615

5,626

Termination and restructuring costs

3,436

3,213

$
11,247

$
10,859


	Three Months Ended March 31,
	2024			2023
Legal, accounting and other acquisition-related costs	$	5,238		$	1,640
Management transition costs		1,009			4,800
Termination and restructuring		(3,400	)		31
	$	2,847		$	6,471

~~(Benefit from) provision~~Provision for income taxes. For the three months ended ~~September 30, 2023,~~March 31, 2024, the ~~benefit from~~provision for income taxes was ~~$(71.9)~~$20.1 million, reflecting an effective tax rate of ~~25.0%~~20.3%, compared to ~~the provision for income taxes of $24.1~~$19.1 million, reflecting an effective tax rate of ~~24.8%~~22.3%, for the three months ended ~~September 30, 2022.~~

As we continue to monitor the implications of potential tax legislation in each of our jurisdictions, we may adjust our estimates and record additional amounts for tax assets and liabilities. Any adjustments to our tax assets and liabilities could materially impact our provision for income taxes and our effective tax rate in the periods in which they are made.

~~Nine months ended September 30, 2023 compared to the nine months ended September 30, 2022~~

~~Revenue.~~ Revenue increased $250.8 million, or 13.0%, to $2,185.9 million for the nine months ended September 30, 2023 from $1,935.1 million for the nine months ended September 30, 2022. Same facility revenue increased $240.9 million, or 12.5%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, resulting from an increase in same facility revenue per day of 6.4%, same facility growth in admissions of 6.0% and same facility growth in patient days of 5.8%. Consistent with same facility revenue growth in 2022, the growth in same facility patient days for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 resulted from the addition of beds to our existing facilities and ongoing demand for our services.

~~Salaries, wages and benefits.~~ SWB expense was $1,172.0 million for the nine months ended September 30, 2023 compared to $1,027.7 million for the nine months ended September 30, 2022, an increase of $144.2 million. SWB expense included $23.1 million and $21.7 million of equity-based compensation expense for the nine months ended September 30, 2023 and 2022, respectively. Excluding equity-based compensation expense, SWB expense was $1,148.8 million, or 52.6% of revenue, for the nine months ended September 30, 2023, compared to $1,006.0 million, or 52.0% of revenue, for the nine months ended September 30, 2022. The increase in SWB expense relates to incremental staff to support volume growth as well as wage inflation. Same facility SWB expense was $1,040.6 million for the nine months ended September 30, 2023, or 48.2% of revenue, compared to $927.2 million for the nine months ended September 30, 2022, or 48.3% of revenue.

~~Professional fees.~~ Professional fees were $130.5 million for the nine months ended September 30, 2023, or 6.0% of revenue, compared to $117.7 million for the nine months ended September 30, 2022, or 6.1% of revenue. Same facility professional fees were $116.0 million for the nine months ended September 30, 2023, or 5.4% of revenue, compared to $108.2 million for the nine months ended September 30, 2022, or 5.6% of revenue.

~~Supplies.~~ Supplies expense was $79.3 million for the nine months ended September 30, 2023, or 3.6% of revenue, compared to $74.3 million for the nine months ended September 30, 2023, or 3.8% of revenue. Same facility supplies expense was $77.9 million for the nine months ended September 30, 2023, or 3.6% of revenue, compared to $73.5 million for the nine months ended September 30, 2022, or 3.8% of revenue.

~~Rents and leases.~~ Rents and leases were $34.9 million for the nine months ended September 30, 2023, or 1.6% of revenue, compared to $33.8 million for the nine months ended September 30, 2022, or 1.7% of revenue. Same facility rents and leases were $31.9 million for the nine months ended September 30, 2023, or 1.5% of revenue, compared to $31.5 million for the nine months ended September 30, 2022, or 1.6% of revenue.

~~Other operating expenses.~~ Other operating expenses consisted primarily of purchased services, utilities, insurance, travel and repairs and maintenance expenses. Other operating expenses were $290.8 million for the nine months ended September 30, 2023, or 13.3% of revenue, compared to $255.4 million for the nine months ended September 30, 2022, or 13.2% of revenue. Same facility other operating expenses were $270.5 million for the nine months ended September 30, 2023, or 12.5% of revenue, compared to $242.9 million for the nine months ended September 30, 2022, or 12.6% of revenue.

~~Income from provider relief fund.~~ ~~For the nine months ended September 30, 2023,~~we recorded $4.4 million in income from provider relief fund related to ARP funds received in 2022, compared to $16.2 million in income from provider relief fund related to PHSSE Fund amounts and ARP funds received in 2021 and 2022 for the nine months ended September 30, 2022.

~~Depreciation and amortization.~~ Depreciation and amortization expense was $97.0 million for the nine months ended September 30, 2023, or 4.4% of revenue, compared to $87.6 million for the nine months ended September 30, 2022, or 4.5% of revenue.

~~Interest expense.~~ Interest expense was $61.7 million for the nine months ended September 30, 2023 ,compared to $50.4 million for the nine months ended September 30, 2022. The increase in interest expense was primarily a result of higher interest rates applicable to our variable rate debt.

~~Legal settlements expense. Legal settlements expense for the nine months ended September 30, 2023 was $394.2 million associated with the Desert Hills Litigation.~~

~~Loss on impairment.~~ During the second quarter of 2023, we recorded non-cash impairment charges totaling $8.7 million related to the closure of certain facilities. The non-cash impairment charges include an indefinite-lived intangible asset impairment of $4.7 million, property impairment of $2.0 million and operating lease right-of-use asset impairment of $2.0 million.

~~Transaction-related expenses.~~ Transaction-related expenses were $26.8 million for the nine months ended September 30, 2023, compared to $18.4 million for the nine months ended September 30, 2022. Transaction-related expenses represent legal, accounting, termination, restructuring, management transition, acquisition and other similar costs incurred in the respective period, as summarized below (in thousands).

Nine Months Ended September 30,

2023

2022

Management transition costs
$
14,590

$
7,826

Legal, accounting and other acquisition-related costs

6,761

4,696

Termination and restructuring costs

5,441

5,859

$
26,792

$
18,381

~~(Benefit from) provision for income taxes.~~ For the nine months ended September 30, 2023, the benefit from income taxes was $(29.9) million, reflecting an effective tax rate of 28.4%, compared to the provision for income taxes of $69.2 million, reflecting an effective tax rate of 24.2%, for the nine months ended September 30, 2022.March 31, 2023.

Revenue

Our revenue is primarily derived from services rendered to patients for inpatient psychiatric and substance abuse care, outpatient psychiatric care and adolescent residential treatment. We receive payments from the following sources for services rendered in our facilities: (i) state governments under their respective Medicaid and other programs; (ii) commercial insurers; (iii) the federal government under the Medicare program administered by ~~CMS;~~CMS and other programs; and (iv) individual patients and clients. We determine the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients and implicit price concessions. Contractual adjustments and discounts are based on contractual agreements, discount policies and historical experience. Implicit price concessions are based on historical collection experience.

The following table presents revenue by payor type and as a percentage of revenue for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ (dollars in thousands):


	Three Months Ended September 30,										Nine Months Ended September 30,										Three Months Ended March 31,
	2023					2022					2023					2022					2024					2023
	Amount		%			Amount		%			Amount		%			Amount		%			Amount		%			Amount		%
Commercial	$	212,328		28.3	%	$	193,626		29.0	%	$	625,330		28.6	%	$	590,966		30.5	%	$	196,017		25.5	%	$	203,619		28.9	%
Medicare		117,348		15.6	%		101,246		15.2	%		335,819		15.4	%		293,339		15.2	%		109,388		14.2	%		108,640		15.4	%
Medicaid		400,483		53.4	%		343,067		51.5	%		1,156,766		52.9	%		970,591		50.2	%		436,422		56.9	%		364,306		51.8	%
Self-Pay		15,524		2.1	%		20,013		3.0	%		52,026		2.4	%		58,390		3.0	%		16,427		2.1	%		20,698		2.9	%
Other		4,651		0.6	%		8,780		1.3	%		15,997		0.7	%		21,818		1.1	%		9,797		1.3	%		7,004		1.0	%
Revenue	$	750,334		100.0	%	$	666,732		100.0	%	$	2,185,938		100.0	%	$	1,935,104		100.0	%	$	768,051		100.0	%	$	704,267		100.0	%

The following tables present a summary of our aging of accounts receivable at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:

~~September 30, 2023~~March 31, 2024

Current

30-90

90-150

>150

Total

Commercial

18.6
%

5.3
%

3.0
%

9.1
%

36.0
%
Medicare

9.4
%

1.4
%

0.6
%

1.3
%

12.7
%
Medicaid

33.7
%

3.8
%

2.5
%

4.9
%

44.9
%
Self-Pay

1.3
%

1.3
%

1.2
%

2.5
%

6.3
%
Other

0.0
%

0.0
%

0.0
%

0.1
%

0.1
%
Total

63.0
%

11.8
%

7.3
%

17.9
%

100.0
%


	Current			30-90			90-150			>150			Total
Commercial		19.1	%		4.7	%		2.8	%		9.1	%		35.7	%
Medicare		8.8	%		1.8	%		0.5	%		0.8	%		11.9	%
Medicaid		34.3	%		5.2	%		2.1	%		4.3	%		45.9	%
Self-Pay		1.3	%		1.6	%		1.1	%		2.3	%		6.3	%
Other		0.0	%		0.1	%		0.0	%		0.1	%		0.2	%
Total		63.5	%		13.4	%		6.5	%		16.6	%		100.0	%

December 31, ~~2022~~2023

Current

30-90

90-150

>150

Total

Commercial

18.0
%

5.3
%

2.8
%

8.4
%

34.5
%
Medicare

11.5
%

1.7
%

0.7
%

1.4
%

15.3
%
Medicaid

31.7
%

4.5
%

2.6
%

4.7
%

43.5
%
Self-Pay

1.2
%

1.4
%

1.2
%

2.6
%

6.4
%
Other

0.2
%

0.0
%

0.0
%

0.1
%

0.3
%
Total

62.6
%

12.9
%

7.3
%

17.2
%

100.0
%


	Current			30-90			90-150			>150			Total
Commercial		17.3	%		5.4	%		3.1	%		9.5	%		35.3	%
Medicare		9.3	%		1.4	%		0.5	%		1.1	%		12.3	%
Medicaid		33.4	%		5.4	%		2.5	%		4.7	%		46.0	%
Self-Pay		1.4	%		1.3	%		1.2	%		2.5	%		6.4	%
Other		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Total		61.4	%		13.5	%		7.3	%		17.8	%		100.0	%

Liquidity and Capital Resources

Cash used in operating activities for the three months ended March 31, 2024 was $321.3 million compared to cash provided by operating activities ~~for the nine months ended September 30, 2023 was $346.0 million compared to $267.0~~of $44.4 million for the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. Days sales outstanding ~~were 44~~at March 31, 2024 was 46 days compared to 45 days at ~~September 30, 2023 and~~ December 31, ~~2022.~~2023.

Cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 was ~~$287.1~~$184.6 million compared to ~~$213.8~~$66.9 million for the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. Cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 primarily consisted of ~~$285.4~~$142.4 million of cash paid for capital expenditures, ~~$1.9 million of other and $0.3~~$50.4 million of cash paid for acquisitions ~~net~~and $0.9 million of ~~cash acquired,~~other, offset by ~~$0.6~~$9.1 million of proceeds from sales of property and equipment. Cash paid for capital expenditures for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 was ~~$285.4~~$142.4 million, consisting of routine or maintenance capital expenditures of ~~$73.9~~$22.3 million and expansion capital expenditures of ~~$211.5~~$120.1 million. We define expansion capital expenditures as those that increase the capacity of our facilities or otherwise enhance revenue. Routine or maintenance capital expenditures, including information technology capital expenditures, were approximately 3% of revenue for the ~~nine~~three months ended ~~September 30, 2023.~~March 31, 2024. Cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 primarily consisted of ~~$208.8~~$66.5 million of cash paid for capital expenditures and ~~$6.8~~$0.8 million of other, offset by ~~$1.8~~$0.4 million of proceeds from ~~the sale~~sales of property and equipment. Cash paid for capital expenditures for the ~~nine~~three months ended ~~September 30, 2022 consisted of $47.0~~March 31, 2023 was $66.5 million, consisting of routine or maintenance capital expenditures ~~and $161.8~~of $18.0 million ofand expansion capital ~~expenditures.~~expenditures of $48.5 million.

Cash provided by financing activities for the three months ended March 31, 2024 was $483.1 million compared to cash used in financing activities of $11.3 million for the three months ended March 31, 2023. Cash provided by financing activities for the three months ended March 31, 2024 consisted of borrowings on long-term debt of $350.0 million, borrowings on revolving credit facility of $160.0 million and contributions from noncontrolling partners in joint ventures of $2.3 million, offset by principal payments on revolving credit facility of $15.0 million, principal payments on long-term debt of $10.2 million, payment of debt issuance costs of $1.5 million, distributions to noncontrolling partners in joint ventures of $1.0 million, repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises of $1.0 million and $0.4 million of other. Cash used in financing activities for the ~~nine~~three months ended ~~September 30, 2023 was $57.0 million compared to $93.6 million for the nine months ended September 30, 2022. Cash used in financing activities for the nine months ended September 30,~~March 31, 2023 consisted of repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises of ~~$45.2~~$47.7 million ~~principal payments on revolving credit facility of $35.0 million,~~and principal payments on long-term debt of ~~$15.9 million and distributions to noncontrolling partners in joint ventures of $3.5~~$5.3 million, offset by borrowings on revolving credit facility of $40.0 million and contributions from noncontrolling partners in joint ventures of ~~$2.5~~$1.7 million. Cash used in financing activities for the nine months ended September 30, 2022 primarily consisted of principal payments on revolving credit facility of $85.0 million, principal payments on long-term debt of $13.3 million, repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises of $7.5 million and distributions to noncontrolling partners in joint ventures of $1.0 million, offset by $13.2 million of contributions from noncontrolling partners in joint ventures.

We had total available cash and cash equivalents of ~~$99.6~~$77.3 million and ~~$97.6~~$100.1 million at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively, of which approximately ~~$8.5~~$13.5 million and ~~$3.7~~$11.3 million was held by our foreign subsidiaries, respectively. Our strategic plan does not require the repatriation of foreign cash in order to fund our operations in the U.S.

Desert Hills Litigation

As described in more detail in Note 1210 – Commitments and Contingencies in the accompanying notes to our consolidated financial statements, on October 30, 2023, we entered into settlement agreements in connection with the Cases. The settlement agreements were approved by the District Court in December 2023 and fully resolve each of the Cases ~~which are subject~~with no admission of liability or wrongdoing by us. On January 19, 2024, pursuant to ~~approval by~~ the District Court. We currently intend to pay the aggregate cash settlement of $400.0 million with a combination of insurance proceeds, cash on hand and our existing credit lines. The settlement amounts must be paid within 30 days of the District Court’s approvalterms of the settlement ~~agreements.~~agreements, we paid an aggregate amount of

~~Though we expect~~23

$400.0 million in exchange for the ~~payment~~release and discharge of all claims arising from, relating to, concerning or with respect to all harm, injuries or damages asserted or that may be asserted in the settlement amounts to have a material impact on our liquidity, we believe existing cash on hand, cash flows from operations and the availability under our revolving line of credit will be sufficient to meet our expected liquidity needs during the next 12 months and beyond.future.

Credit Facility

WeOn March 17, 2021, we entered into ~~a credit agreement establishing a new~~the Credit Facility, ~~on March 17, 2021. The Credit Facility~~which provides for a $600.0 million Revolving Facility and a ~~$425.0 million~~ Term Loan Facility ~~with~~in an initial principal amount of $425.0 million, each maturing on March 17, 2026. The Revolving Facility further provides for ~~(i) up to~~a $20.0 million ~~which may be utilized~~subfacility for the issuance of letters of credit.

As a part of the closing of the Credit Facility on March 17, 2021, we (i) refinanced and terminated our prior credit facilities under an amended and restated credit agreement, dated as of December 31, 2012 and (ii) financed the ~~availability~~redemption of

~~a swingline facility under which we may borrow up to $20.0 million.~~ all of our outstanding 5.625% Senior Notes due 2023.

On March 30, 2023, we entered into the First ~~Amendment. The First~~ Amendment, which replaced LIBOR as the reference rate applicable to borrowings under the Credit Facility with Adjusted Term SOFR. ~~Borrowings~~After giving effect to the First Amendment, borrowings under the Credit Facility bear interest at a rate equal to, at our option, either ~~(a) a base rate determined by reference to the highest of~~ (i) ~~the federal funds rate plus 0.50%, (ii) the prime rate of Bank of America or (iii)~~ Adjusted Term SOFR ~~for~~plus a ~~one month interest period or (b) Adjusted Term SOFR, in each case plus an applicable~~ margin ~~that varies according to our total leverage ratio from 0.375% to 1.250% in the case of base rate loans and~~ranging from 1.375% to 2.250% or (ii) a base rate plus a margin ranging from 0.375% to 1.250%, in ~~the~~each case, ~~of Adjusted Term SOFR loans.~~depending on our consolidated total net leverage ratio. In addition, an unused fee that varies according to our consolidated total net leverage ratio ranging from 0.200% to 0.350% is payable quarterly in arrears based on the average daily undrawn portion of the commitments in respect of the Revolving Facility.

~~During~~The interest rates and the ~~nine months ended September 30, 2023,~~unused line fee on unused commitments related to the Credit Facility are based upon the following pricing tiers:


Pricing Tier	Consolidated Total Net Leverage Ratio	SOFR Loans			Base Rate Loans			Commitment Fee
1	≥ 4.50:1.0		2.250	%		1.250	%		0.350	%
2	<4.50:1.0 but ≥ 3.75:1.0		2.000	%		1.000	%		0.300	%
3	<3.75:1.0 but ≥ 3.00:1.0		1.750	%		0.750	%		0.250	%
4	<3.00:1.0 but ≥ 2.25:1.0		1.500	%		0.500	%		0.200	%
5	<2.25:1.0		1.375	%		0.375	%		0.200	%

On January 18, 2024, we ~~borrowed $40.0 million on~~entered into the ~~Revolving Facility and repaid $35.0~~Second Amendment, which provides for the incurrence of $350.0 million of Incremental Term Loans. Such Incremental Term Loans are structured as an increase of the ~~balance outstanding. We had $516.5~~Term Loan Facility. The maturity date, the leverage-based pricing grid, mandatory prepayment events and other terms applicable to the Incremental Term Loans are substantially identical to those applicable to the initial $425.0 million ~~of availability~~term loans incurred under the ~~Revolving Facility and had standby letters of credit outstanding of $3.5 million related~~Term Loan Facility. After giving effect to ~~security for~~ the ~~payment of claims required by our workers’ compensation insurance program at September 30, 2023.~~

~~The~~Incremental Term Loans, the Credit Facility requires quarterly ~~term loan~~ principal repayments for ~~our~~the Term Loan Facility of ~~$5.3~~approximately $15.4 million for ~~December 31, 2023 to March 31, 2024, $8.0 million for~~each quarter ending from June 30, 2024 to March 31, 2025 and ~~$10.6~~$20.5 million for each quarter ending from June 30, 2025 to December 31, ~~2025, with the~~2025. The remaining outstanding principal balance of the Term Loan Facility is due on the maturity date of March 17, 2026.

We have the ability to increase the amount of the ~~Senior Facilities,~~Credit Facility, which may take the form of increases to the Revolving Facility or the Term Loan Facility or the issuance of ~~the~~one or more Incremental Facilities, upon obtaining additional commitments from new or existing lenders and the satisfaction of customary conditions precedent for such Incremental Facilities. Such Incremental Facilities may not exceed the sum of (i) the ~~greater of $480.0 million and an amount equal to 100% of our Consolidated EBITDA (as defined in the Credit Facility),~~Incremental Fixed Basket, and (ii) ~~additional amounts that would not cause~~ the ~~Consolidated Senior Secured Net Leverage~~Incremental Ratio ~~(as defined~~Basket. The Incremental Term Loans were incurred in reliance on the ~~Credit Facility) to exceed 3.5 to 1.0.~~Incremental Ratio Basket, leaving the full amount of the Incremental Fixed Basket available for any future Incremental Facilities.

Subject to certain exceptions, substantially all of our existing and subsequently acquired or organized direct or indirect wholly-owned U.S. subsidiaries are required to guarantee the repayment of our obligations under the Credit Facility. We and such guarantor subsidiaries have granted a security interest onin substantially all personal property assets as
collateral for the obligations under the Credit Facility.

~~The interest rates and the unused line fee on unused commitments related to the Senior Facilities are based upon the following pricing tiers:~~

Pricing Tier

Consolidated Total Net
Leverage Ratio

Term SOFR Loans, SOFR Daily Floating Rate Loans
and Letter of Credit Fees

Base Rate Loans

Commitment
Fee

1

≥ 4.50:1.0

2.250
%

1.250
%

0.350
%
2

<4.50:1.0 but ≥ 3.75:1.0

2.000
%

1.000
%

0.300
%
3

<3.75:1.0 but ≥ 3.00:1.0

1.750
%

0.750
%

0.250
%
4

<3.00:1.0 but ≥ 2.25:1.0

1.500
%

0.500
%

0.200
%
5

<2.25:1.0

1.375
%

0.375
%

0.200
%

The Credit Facility contains customary representations and affirmative and negative covenants, including limitations on our ability and our subsidiaries’ ability to incur additional debt, grant or permit additional liens, make investments and acquisitions, merge or consolidate with others, dispose of assets, pay dividends and distributions, pay junior indebtedness and enter into affiliate transactions, in each case, subject to customary exceptions. In addition, the Credit Facility contains financial covenants requiring us on a consolidated basis to maintain, as of the last day of any consecutive four fiscal quarter period, a consolidated total net leverage ratio of not more than 4.5 to 1.0 (which may be increased to 5.0 to 1.0 for a period of up to four consecutive fiscal quarters following the consummation of certain material acquisitions) and an interest coverage ratio of at least 3.0 to 1.0. The Credit Facility also includes events of default customary for facilities of this type and upon the occurrence of ~~any~~ such ~~event~~events of default, among other things, all outstanding loans under the Senior Facilities may be accelerated, the lenders’ commitments may be terminated, and/or the lenders may exercise collateral remedies. At September 30, 2023, we were in compliance with all financial covenants.

outstanding loans under the Credit Facility may be accelerated, the lenders’ commitments terminated, and/or the lenders may exercise collateral remedies. At March 31, 2024, we were in compliance with all financial covenants.

During the three months ended March 31, 2024, we borrowed $160.0 million on the Revolving Facility and repaid $15.0 million of the balance outstanding. During the three months ended March 31, 2023, we borrowed $40.0 million on the Revolving Facility. We had $371.5 million of availability under the Revolving Facility and had standby letters of credit outstanding of $3.5 million related to security for the payment of claims required by our workers’ compensation insurance program at March 31, 2024.

Senior Notes

5.500% Senior Notes due 2028

On June 24, 2020, we issued $450.0 million of 5.500% Senior Notes. The 5.500% Senior Notes mature on July 1, 2028 and bear interest at a rate of 5.500% per annum, payable semi-annually in arrears on January 1 and July 1 of each ~~year.~~year, commencing on January 1, 2021.

5.000% Senior Notes due 2029

On October 14, 2020, we issued $475.0 million of 5.000% Senior Notes. The 5.000% Senior Notes mature on April 15, 2029 and bear interest at a rate of 5.000% per annum, payable semi-annually in arrears on April 15 and October 15 of each ~~year.~~year, commencing on April 15, 2021.

The indentures governing the Senior Notes contain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; (vi) merge, consolidate or sell substantially all of our assets; and (vii) create liens on assets.

The Senior Notes issued by us are guaranteed by each of our subsidiaries that guaranteed our obligations under the Credit Facility. The guarantees are full and unconditional and joint and several.

We may redeem the Senior Notes at our option, in whole or part, at the dates and ~~in the~~ amounts set forth in the ~~applicable~~ indentures.

Supplemental Guarantor Financial Information

We conduct substantially all of our business through our subsidiaries. The Senior Notes are jointly and severally guaranteed on an unsecured senior basis by all of our subsidiaries that guarantee our obligations under the Credit Facility. The summarized financial information presented below is consistent with our condensed consolidated financial statements, except transactions between combining entities have been eliminated. Financial information for our combined non-guarantor entities has been excluded pursuant to SEC Regulation S-X Rule 13-01. Presented below is condensed financial information for our combined wholly-owned subsidiary guarantors at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, and for the ~~nine~~three months ended ~~September 30, 2023.~~March 31, 2024.

Summarized balance sheet information (in thousands):


	September 30, 2023		December 31, 2022		March 31, 2024		December 31, 2023
Current assets	$	537,028	$	396,553	$	484,365	$	442,813
Property and equipment, net		1,595,342		1,517,893		1,681,224		1,656,941
Goodwill		2,105,563		2,105,227		2,140,627		2,105,563
Total noncurrent assets		3,977,033		3,921,336		4,097,017		4,043,891

Current liabilities		789,090		345,606		461,731		827,648
Long-term debt		1,349,954		1,364,541		1,794,296		1,342,548
Total noncurrent liabilities		1,589,730		1,629,750		1,978,103		1,503,345
Redeemable noncontrolling interests		—		—		—		—
Total equity		2,135,241		2,342,533		2,141,548		2,155,711

Summarized operating results information (in thousands):

Nine Months Ended
September 30, 2023

Revenue

$
1,909,885

Loss before income taxes

(141,230
)
Net loss

(101,340
)
Net loss attributable to Acadia Healthcare Company, Inc.

(101,340
)


	Three Months Ended March 31, 2024
Revenue	$	652,725
Income before income taxes		79,905
Net income		64,400
Net income attributable to Acadia Healthcare Company, Inc.		64,400

Contractual Obligations

The following table presents a summary of contractual obligations at ~~September 30, 2023~~March 31, 2024 (in thousands):


	Payments Due by Period										Payments Due by Period
	Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years		Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years		Total
Long-term debt (a)	$	106,475	$	570,561	$	540,813	$	516,562	$	1,734,411	$	173,317	$	1,025,775	$	528,438	$	504,688	$	2,232,218
Operating lease liabilities (b)		32,855		51,708		27,407		58,978		170,948		33,644		49,235		27,314		72,074		182,267
Finance lease liabilities		990		2,170		2,178		21,005		26,343		1,031		2,178		2,178		20,460		25,847
Total obligations and commitments	$	140,320	$	624,439	$	570,398	$	596,545	$	1,931,702	$	207,992	$	1,077,188	$	557,930	$	597,222	$	2,440,332

(a)

Amounts include required principal and interest payments. The projected interest payments reflect the interest rates in place on our variable-rate debt at ~~September 30, 2023.~~March 31, 2024.

(b)

Amounts exclude variable components of lease payments.

Critical Accounting Policies

There have been no material changes in our critical accounting policies at ~~September 30, 2023~~March 31, 2024 from those described in our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our interest expense is sensitive to changes in market interest rates. Our long-term debt outstanding at ~~September 30, 2023~~March 31, 2024 was composed of ~~$915.5~~$916.3 million of fixed-rate debt and ~~$434.5~~$939.5 million of variable-rate debt with interest based on Adjusted Term SOFR plus an applicable margin. Based on our borrowing level at ~~September 30, 2023,~~March 31, 2024, a hypothetical 1% increase in interest rates would decrease our pretax income on an annual basis by approximately ~~$4.3~~$9.4 million.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, our management conducted an evaluation, with the participation of our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended ~~September 30, 2023,~~March 31, 2024 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

3026

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Information with respect to this item may be found in Note 1210 – Commitments and Contingencies in the accompanying notes to our consolidated financial statements of this Quarterly Report on Form 10-Q, which information is incorporated herein by reference.

Item 1A. Risk Factors

In addition to the other information set forth in this report, an investor should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022 and Part II, “Item 1A. Risk Factors”~~2023. The risks described in the Company’s ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K for the ~~quarter~~year ended ~~June 30,~~December 31, 2023, ~~(collectively,~~are not the ~~“Periodic Reports”). As of~~only risks facing the ~~date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in the Periodic Reports.~~Company. Additional risks and uncertainties not currently known to management or that management currently deems immaterial also may materially, adversely affect the Company’s business, financial condition, operating results or cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ~~and Issuer Repurchases of Equity Securities~~

During the three months ended ~~September 30, 2023,~~March 31, 2024, the Company withheld shares of Company common stock to satisfy employee minimum statutory tax withholding obligations payable upon the vesting of restricted stock, as follows:

Period

Total Number
of Shares
Purchased

Average Price
Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Number
of Shares that
May Yet Be
Purchased Under
the Plans
or Programs

July 1 - July 31

6,082

$
76.71

—

—

August 1 - August 31

3,542

76.89

—

—

September 1 - September 30

4,766

70.48

—

—

Total

14,390


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 - January 31		—	$	—		—		—
February 1 - February 29		53,344		84.00		—		—
March 1 - March 31		16,967		79.88		—		—
Total		70,311

Item 5. Other Information

From time to time, certain of our executive officers and directors may enter into, amend or terminate written trading arrangements pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934 or otherwise. During the three months ended ~~September 30, 2023,~~March 31, 2024, none of the ~~Company's~~Company’s directors or officersadopted or terminated any Rule 10b5-1 trading arrangement or ~~non-Rule~~non- Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

Item 6. Exhibits


Exhibit No.		Exhibit Description

3.1		Amended and Restated Certificate of Incorporation, as amended. (1)

3.2		Amended and Restated Bylaws of the Company, as amended. (1)

10.1		~~First~~ Amendment No. 2, dated as of January 18, 2024, to ~~Employment~~the Company’s Credit Agreement, dated as of ~~July 6, 2023, by and between Acadia Management Company, Inc. and Brian Farley.~~March 17, 2021. (2)

~~10.2~~		~~Separation and Transition Agreement, dated July 5, 2023, between Acadia Management Company, LLC. and Chris Howard. (3)~~

~~10.3~~		~~Transition Agreement, dated July 5, 2023, by and between Acadia Management Company, LLC and David Duckworth. (3)~~

22		List of Subsidiary Guarantors and Issuers of Guaranteed Securities. ~~(4)~~(3)

31.1*		Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32*		Certification of Chief Executive Officer and Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the ~~inline~~Inline XBRL document.

101.SCH**		Inline XBRL Taxonomy Extension Schema ~~Document.~~with embedded Linkbase Documents.

101.CAL**		~~Inline XBRL Taxonomy Calculation Linkbase Document.~~

101.DEF**		~~Inline XBRL Taxonomy Extension Definition Linkbase Document.~~

101.LAB**		~~Inline XBRL Taxonomy Label Linkbase Document.~~

101.PRE**		~~Inline XBRL Taxonomy Presentation Linkbase Document.~~

104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2023,~~March 31, 2024, has been formatted in Inline XBRL.

(1)

Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed May 25, 2017 (File No. 001-35331).

(2)

Incorporated by reference to exhibits filed with the Company’s ~~Quarterly~~Current Report on Form ~~10-Q~~8-K filed ~~for the quarter ended June 30, 2023~~January 19, 2024 (File No. 001-35331).

(3)

~~Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed July 5, 2023 (File No. 001-35331).~~

~~(4)~~

Incorporated by reference to exhibits filed with the Company’s Annual Report on Form 10-K for year ended December 31, ~~2022~~2023 (File No. 001-35331).

* Filed herewith.

** The XBRL related information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

3228

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 thereunto duly authorized.


	Acadia Healthcare Company, Inc.

	By:		/s/ Heather Dixon
			Heather Dixon
			Chief Financial Officer

Dated: ~~November 3, 2023~~May 2, 2024

3329



Delaware		45-2492228
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


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


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


	September 30, 2023		December 31, 2022		March 31, 2024		December 31, 2023
	(In thousands, except share and per share amounts)				(In thousands, except share and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	99,591	$	97,649	$	77,303	$	100,073
Accounts receivable, net		362,666		322,439		386,191		361,451
Other current assets		241,218		86,037		147,312		134,476
Total current assets		703,475		506,125		610,806		596,000
Property and equipment, net		2,145,599		1,952,045		2,376,059		2,266,610
Goodwill		2,225,962		2,222,805		2,261,026		2,225,962
Intangible assets, net		73,811		76,041		73,352		73,278
Deferred tax assets		2,850		2,950		2,777		6,658
Operating lease right-of-use assets		122,090		135,238		121,346		117,780
Other assets		72,431		92,697		71,881		72,553
Total assets	$	5,346,218	$	4,987,901	$	5,517,247	$	5,358,841

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	26,563	$	21,250	$	61,452	$	29,219
Accounts payable		149,874		104,723		156,130		156,132
Accrued salaries and benefits		122,264		125,298		118,005		141,901
Current portion of operating lease liabilities		26,242		26,463		26,815		26,268
Other accrued liabilities		539,947		110,592		119,911		532,261
Total current liabilities		864,890		388,326		482,313		885,781
Long-term debt		1,349,954		1,364,541		1,794,296		1,342,548
Deferred tax liabilities		70,450		92,588		15,527		1,931
Operating lease liabilities		104,873		116,429		103,352		100,808
Other liabilities		145,907		125,033		146,404		140,113
Total liabilities		2,536,074		2,086,917		2,541,892		2,471,181
Redeemable noncontrolling interests		97,582		88,257		109,333		105,686
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; 91,204,474 and 89,913,659 issued and outstanding at September 30, 2023 and December 31, 2022, respectively		912		899
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; 91,573,596 and 91,263,989 issued and outstanding at March 31, 2024 and December 31, 2023, respectively						916		913
Additional paid-in capital		2,637,658		2,658,440		2,657,002		2,649,340
Retained earnings		73,992		153,388		208,104		131,721
Total equity		2,712,562		2,812,727		2,866,022		2,781,974
Total liabilities and equity	$	5,346,218	$	4,987,901	$	5,517,247	$	5,358,841


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2023		2022		2023		2022		2024		2023
Acute inpatient psychiatric facilities	$	382,406	$	340,929	$	1,113,632	$	984,224	$	406,422	$	361,811
Specialty treatment facilities		158,705		145,799		462,916		419,764		143,832		147,303
Comprehensive treatment centers		129,645		106,679		368,618		310,080		132,167		115,501
Residential treatment centers		79,578		73,325		240,772		221,036		85,630		79,652
Revenue	$	750,334	$	666,732	$	2,185,938	$	1,935,104	$	768,051	$	704,267


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


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


PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Condensed Consolidated Balance Sheets (Unaudited)	1

	Condensed Consolidated Statements of ~~Operations~~Income (Unaudited)	2

	Condensed Consolidated Statements of Equity (Unaudited)	3

	Condensed Consolidated Statements of Cash Flows (Unaudited)	4

	Notes to Condensed Consolidated Financial Statements (Unaudited)	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1918

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3026

Item 4.	Controls and Procedures	3026

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	3127

Item 1A.	Risk Factors	3127

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds ~~and Issuer Repurchases of Equity Securities~~	3127

Item 5.5	Other Information	3127

Item 6.	Exhibits	3228

SIGNATURES		3329


Balance at January 1, 2022	$	2,199,937
Increase from acquisitions		9,488
Adjustments related to 2021 acquisitions		8,761
Increase from contributions of redeemable noncontrolling interests		4,619
Balance at December 31, 2022		2,222,805
Increase from acquisitions		336
Increase from contributions of redeemable noncontrolling interests		2,821
Balance at September 30, 2023	$	2,225,962


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Legal, accounting and other acquisition-related costs	$	4,196	$	2,020	$	6,761	$	4,696
Management transition costs		3,615		5,626		14,590		7,826
Termination and restructuring costs		3,436		3,213		5,441		5,859
	$	11,247	$	10,859	$	26,792	$	18,381


Balance at January 1, 2023	$	2,222,805
Increase from acquisitions		337
Increase from contributions of redeemable noncontrolling interests		2,820
Balance at December 31, 2023		2,225,962
Increase from acquisitions		35,064
Balance at March 31, 2024	$	2,261,026


	September 30, 2023			December 31, 2022
Land	$	182,393		$	169,137
Building and improvements		1,997,522			1,797,809
Equipment		345,873			292,200
Construction in progress		353,001			349,473
		2,878,789			2,608,619
Less: accumulated depreciation		(733,190	)		(656,574	)
Property and equipment, net	$	2,145,599		$	1,952,045


	Gross Carrying Amount				Accumulated Amortization						Gross Carrying Amount				Accumulated Amortization
	September 30, 2023		December 31, 2022		September 30, 2023			December 31, 2022			March 31, 2024		December 31, 2023		March 31, 2024			December 31, 2023
Intangible assets subject to amortization:
Non-compete agreements	$	1,131	$	1,131	$	(1,131	)	$	(1,131	)	$	1,131	$	1,131	$	(1,131	)	$	(1,131	)

Intangible assets not subject to amortization:
Licenses and accreditations		11,651		11,512		—			—			11,721		11,681		—			—
Trade names		43,210		45,935		—			—			42,588		42,588		—			—
Certificates of need		18,950		18,594		—			—			19,043		19,009		—			—
		73,811		76,041		—			—			73,352		73,278		—			—
Total	$	74,942	$	77,172	$	(1,131	)	$	(1,131	)	$	74,483	$	74,409	$	(1,131	)	$	(1,131	)


	September 30, 2023		December 31, 2022
Accrued legal settlements	$	394,181	$	—
Insurance liability – current portion		38,690		12,128
Accrued expenses		35,000		26,699
Cost report payable		20,527		13,738
Accrued interest		17,400		17,596
Accrued property taxes		11,684		9,009
Government relief funds		4,534		8,975
Contract liabilities		2,585		6,653
Finance lease liabilities		990		990
Income taxes payable		696		1,338
Other		13,660		13,466
Other accrued liabilities	$	539,947	$	110,592


	September 30, 2023			December 31, 2022
Credit Facility:
Term Loan A	$	382,500		$	398,438
Revolving Line of Credit		80,000			75,000
5.500% Senior Notes due 2028		450,000			450,000
5.000% Senior Notes due 2029		475,000			475,000
Less: unamortized debt issuance costs, discount and premium		(10,983	)		(12,647	)
		1,376,517			1,385,791
Less: current portion		(26,563	)		(21,250	)
Long-term debt	$	1,349,954		$	1,364,541


Balance at January 1, 2022	$	65,388
Contributions from noncontrolling partners in joint ventures		21,162
Net income attributable to noncontrolling interests		6,894
Acquisition of ownership interests from noncontrolling partners		(4,183	)
Distributions to noncontrolling partners in joint ventures		(1,004	)
Balance at December 31, 2022		88,257
Balance at January 1, 2023				$	88,257
Contributions from noncontrolling partners in joint ventures		8,827			16,530
Net income attributable to noncontrolling interests		3,978			6,006
Distributions to noncontrolling partners in joint ventures		(3,480	)		(5,107	)
Balance at September 30, 2023	$	97,582
Balance at December 31, 2023					105,686
Contributions from noncontrolling partners in joint ventures					2,280
Net income attributable to noncontrolling interests					2,387
Distributions to noncontrolling partners in joint ventures					(1,020	)
Balance at March 31, 2024				$	109,333


	Carrying Amount				Fair Value				Carrying Amount				Fair Value
	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022		March 31, 2024		December 31, 2023		March 31, 2024		December 31, 2023
Credit Facility	$	461,033	$	471,489	$	461,033	$	471,489	$	939,450	$	455,880	$	939,450	$	455,880
5.500% Senior Notes due 2028	$	445,325	$	444,694	$	416,379	$	422,459	$	445,760	$	445,539	$	433,502	$	436,628
5.000% Senior Notes due 2029	$	470,159	$	469,609	$	423,754	$	433,214	$	470,538	$	470,348	$	444,658	$	451,534


	Three Months Ended	Nine Months Ended
Same Facility Results (a)
Revenue growth	13.0%	12.5%
Patient days growth	6.0%	5.8%
Admissions growth	5.1%	6.0%
Average length of stay change (b)	0.9%	-0.1%
Revenue per patient day growth	6.6%	6.4%
Adjusted EBITDA margin change (c)	20 bps	30 bps
Adjusted EBITDA margin excluding income from provider relief fund (d)	80 bps	90 bps


Pricing Tier	Consolidated Total Net Leverage Ratio	Term SOFR Loans, SOFR Daily Floating Rate Loans and Letter of Credit Fees			Base Rate Loans			Commitment Fee
1	≥ 4.50:1.0		2.250	%		1.250	%		0.350	%
2	<4.50:1.0 but ≥ 3.75:1.0		2.000	%		1.000	%		0.300	%
3	<3.75:1.0 but ≥ 3.00:1.0		1.750	%		0.750	%		0.250	%
4	<3.00:1.0 but ≥ 2.25:1.0		1.500	%		0.500	%		0.200	%
5	<2.25:1.0		1.375	%		0.375	%		0.200	%


	Nine Months Ended September 30, 2023
Revenue	$	1,909,885
Loss before income taxes		(141,230	)
Net loss		(101,340	)
Net loss attributable to Acadia Healthcare Company, Inc.		(101,340	)