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 6, 2018,~~May 1, 2019, there were ~~88,256,115~~88,701,225 shares of the registrant’s common stock outstanding.

	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
	(In thousands, except share and per share amounts)						(In thousands, except share and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	48,928		$	67,290		$	43,684		$	50,510
Accounts receivable, net		345,659			296,925			331,851			318,087
Other current assets		96,146			107,335			76,979			81,820
Total current assets		490,733			471,550			452,514			450,417
Property and equipment, net		3,126,642			3,048,130			3,173,052			3,107,766
Goodwill		2,729,941			2,751,174			2,441,999			2,396,412
Intangible assets, net		91,259			87,348			89,796			88,990
Deferred tax assets		3,630			3,731			3,436			3,468
Derivative instrument assets		33,084			12,997			46,304			60,524
Operating lease right-of-use assets								506,787			—
Other assets		54,295			49,572			71,629			64,927
Total assets	$	6,529,584		$	6,424,502		$	6,785,517		$	6,172,504

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	33,264		$	34,830		$	36,503		$	34,112
Accounts payable		133,914			102,299			116,666			117,740
Accrued salaries and benefits		109,151			99,047			108,546			113,299
Current portion of operating lease liabilities								27,984			—
Other accrued liabilities		114,414			141,213			134,972			151,226
Total current liabilities		390,743			377,389			424,671			416,377
Long-term debt		3,181,962			3,205,058			3,221,709			3,159,375
Deferred tax liabilities		82,269			80,333			76,922			80,372
Operating lease liabilities								504,753			—
Other liabilities		165,663			166,434			122,188			154,267
Total liabilities		3,820,637			3,829,214			4,350,243			3,810,391
Redeemable noncontrolling interests		28,698			22,417			31,931			28,806
Equity:
Preferred stock, $0.01 par value; 10,000,000 shares authorized, no shares issued		—			—			—			—
Common stock, $0.01 par value; 180,000,000 shares authorized; 87,363,357 and 87,060,114 issued and outstanding at September 30, 2018 and December 31, 2017, respectively		874			871
Common stock, $0.01 par value; 180,000,000 shares authorized; 87,593,730 and 87,444,473 issued and outstanding at March 31, 2019 and December 31, 2018, respectively								876			874
Additional paid-in capital		2,535,377			2,517,545			2,546,759			2,541,987
Accumulated other comprehensive loss		(440,462	)		(374,118	)		(426,586	)		(462,377	)
Retained earnings		584,460			428,573			282,294			252,823
Total equity		2,680,249			2,572,871			2,403,343			2,333,307
Total liabilities and equity	$	6,529,584		$	6,424,502		$	6,785,517		$	6,172,504

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
	(In thousands, except per share amounts)												(In thousands, except per share amounts)
Revenue before provision for doubtful accounts	$	760,916		$	728,712		$	2,268,895		$	2,143,696
Provision for doubtful accounts		—			(11,998	)		—			(31,892	)
Revenue		760,916			716,714			2,268,895			2,111,804		$	760,617		$	742,241
Salaries, wages and benefits (including equity-based compensation expense of $5,225, $4,175, $19,273 and $19,007, respectively)		417,917			385,562			1,246,186			1,145,578
Salaries, wages and benefits (including equity-based compensation expense of $6,101 and $6,919, respectively)														429,579			411,528
Professional fees		59,509			53,042			166,988			142,772			57,007			54,018
Supplies		29,461			28,652			88,958			85,000			29,957			29,364
Rents and leases		19,866			19,049			60,390			57,455			20,307			20,288
Other operating expenses		90,464			82,328			265,977			249,161			93,865			88,231
Depreciation and amortization		39,659			36,442			119,360			105,256			40,580			39,773
Interest expense, net		46,651			44,515			137,706			130,777			48,130			45,243
Debt extinguishment costs		—			—			940			810			—			940
Transaction-related expenses		2,353			5,665			10,008			18,836			4,321			4,768
Total expenses		705,880			655,255			2,096,513			1,935,645			723,746			694,153
Income before income taxes		55,036			61,459			172,382			176,159			36,871			48,088
Provision for income taxes		8,757			15,970			16,339			46,259
Provision for (benefit from) income taxes														7,360			(2,786	)
Net income		46,279			45,489			156,043			129,900			29,511			50,874
Net (income) loss attributable to noncontrolling interests		(47	)		129			(156	)		306
Net income attributable to noncontrolling interests														(40	)		(55	)
Net income attributable to Acadia Healthcare Company, Inc.	$	46,232		$	45,618		$	155,887		$	130,206		$	29,471		$	50,819
Earnings per share attributable to Acadia Healthcare Company, Inc. stockholders:
Basic	$	0.53		$	0.52		$	1.79		$	1.50		$	0.34		$	0.58
Diluted	$	0.53		$	0.52		$	1.78		$	1.50		$	0.34		$	0.58
Weighted-average shares outstanding:
Basic		87,344			87,017			87,233			86,912			87,505			87,121
Diluted		87,537			87,172			87,386			87,038			87,694			87,294

	Common Stock				Additional Paid-in			Accumulated Other Comprehensive			Retained					Common Stock				Additional Paid-in			Accumulated Other Comprehensive			Retained
	Shares		Amount		Capital			Loss			Earnings		Total			Shares		Amount		Capital			Loss			Earnings			Total
Balance at December 31, 2017		87,060	$	871	$	2,517,545		$	(374,118	)	$	428,573	$	2,572,871			87,060	$	871	$	2,517,545		$	(374,118	)	$	428,573		$	2,572,871
Common stock issued under stock incentive plans																	228		2		94			—			—			96
Common stock withheld for minimum statutory taxes																	—		—		(2,126	)		—			—			(2,126	)
Equity-based compensation expense																	—		—		6,919			—			—			6,919
Other comprehensive income																	—		—		—			72,727			—			72,727
Other																	—		—		313			—			—			313
Net income attributable to Acadia Healthcare Company, Inc.																	—		—		—			—			50,819			50,819
Balance at March 31, 2018																	87,288		873		2,522,745			(301,391	)		479,392			2,701,619
Common stock issued under stock incentive plans																	42		—		128			—			—			128
Common stock withheld for minimum statutory taxes																	—		—		(232	)		—			—			(232	)
Equity-based compensation expense																	—		—		7,129			—			—			7,129
Other comprehensive loss																	—		—		—			(114,492	)		—			(114,492	)
Other																	—		—		313			—			—			313
Net income attributable to Acadia Healthcare Company, Inc.																	—		—		—			—			58,836			58,836
Balance at June 30, 2018																	87,330		873		2,530,083			(415,883	)		538,228			2,653,301
Common stock issued under stock incentive plans		303		3		241			—			—		244			33		1		19			—			—			20
Common stock withheld for minimum statutory taxes		—		—		(2,516	)		—			—		(2,516	)		—		—		(158	)		—			—			(158	)
Equity-based compensation expense		—		—		19,273			—			—		19,273			—		—		5,225			—			—			5,225
Other comprehensive loss		—		—		—			(66,344	)		—		(66,344	)		—		—		—			(24,579	)		—			(24,579	)
Other		—		—		834			—			—		834			—		—		208			—			—			208
Net income attributable to Acadia Healthcare Company, Inc.		—		—		—			—			155,887		155,887			—		—		—			—			46,232			46,232
Balance at September 30, 2018		87,363	$	874	$	2,535,377		$	(440,462	)	$	584,460	$	2,680,249			87,363		874		2,535,377			(440,462	)		584,460			2,680,249
Common stock issued under stock incentive plans																	81		—		130			—			—			130
Common stock withheld for minimum statutory taxes																	—		—		(1,265	)		—			—			(1,265	)
Equity-based compensation expense																	—		—		2,728			—			—			2,728
Other comprehensive loss																	—		—		—			(21,915	)		—			(21,915	)
Other																	—		—		5,017			—			—			5,017
Net loss attributable to Acadia Healthcare Company, Inc.																	—		—		—			—			(331,637	)		(331,637	)
Balance at December 31, 2018																	87,444		874		2,541,987			(462,377	)		252,823			2,333,307
Common stock issued under stock incentive plans																	149		2		291			—			—			293
Common stock withheld for minimum statutory taxes																	—		—		(1,620	)		—			—			(1,620	)
Equity-based compensation expense																	—		—		6,101			—			—			6,101
Other comprehensive income																	—		—		—			35,791			—			35,791
Net income attributable to Acadia Healthcare Company, Inc.																	—		—		—			—			29,471			29,471
Balance at March 31, 2019																	87,593	$	876	$	2,546,759		$	(426,586	)	$	282,294		$	2,403,343

	Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2019			2018
	(In thousands)						(In thousands)
Operating activities:
Net income	$	156,043		$	129,900		$	29,511		$	50,874
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation and amortization		119,360			105,256			40,580			39,773
Amortization of debt issuance costs		7,763			7,340			2,888			2,525
Equity-based compensation expense		19,273			19,007			6,101			6,919
Deferred income taxes		(1,738	)		29,416			(666	)		1,897
Debt extinguishment costs		940			810			—			940
Other		3,025			10,672			2,187			1,043
Change in operating assets and liabilities:
Accounts receivable, net		(43,252	)		(28,681	)		(11,980	)		(18,793	)
Other current assets		3,021			26,099			(5,875	)		(13,216	)
Other assets		3,868			(566	)		295			(1,268	)
Accounts payable and other accrued liabilities		9,230			(26,381	)		(15,701	)		(3,368	)
Accrued salaries and benefits		11,049			(7,937	)		(5,849	)		4,802
Other liabilities		149			7,677			2,182			509
Net cash provided by continuing operating activities		288,731			272,612			43,673			72,637
Net cash used in discontinued operating activities		(2,548	)		(1,261	)		—			(287	)
Net cash provided by operating activities		286,183			271,351			43,673			72,350
Investing activities:
Cash paid for acquisitions, net of cash acquired								(40,400	)		—
Cash paid for capital expenditures		(249,989	)		(193,817	)		(69,248	)		(70,327	)
Cash paid for real estate acquisitions		(9,391	)		(33,297	)		(1,066	)		(4,293	)
Other		(3,114	)		(6,062	)		613			(4,066	)
Net cash used in investing activities		(262,494	)		(233,176	)		(110,101	)		(78,686	)
Financing activities:
Borrowings on revolving credit facility								71,573			—
Principal payments on long-term debt		(31,492	)		(25,913	)		(8,246	)		—
Common stock withheld for minimum statutory taxes, net		(2,272	)		(3,278	)		(1,327	)		(2,030	)
Other		(6,973	)		1,649			(3,497	)		(2,704	)
Net cash used in financing activities		(40,737	)		(27,542	)
Net cash provided by (used in) financing activities								58,503			(4,734	)
Effect of exchange rate changes on cash		(1,314	)		7,965			1,099			1,588
Net (decrease) increase in cash and cash equivalents		(18,362	)		18,598
Net decrease in cash and cash equivalents								(6,826	)		(9,482	)
Cash and cash equivalents at beginning of the period		67,290			57,063			50,510			67,290
Cash and cash equivalents at end of the period	$	48,928		$	75,661		$	43,684		$	57,808
Effect of acquisitions:
Assets acquired, excluding cash								44,028			—
Liabilities assumed								(3,628	)		—
Cash paid for acquisitions, net of cash acquired							$	40,400		$	—

Acadia Healthcare Company, Inc. (the “Company”) develops and operates inpatient psychiatric facilities, residential treatment centers, group homes, substance abuse facilities and facilities providing outpatient behavioral healthcare services to serve the behavioral health and recovery needs of communities throughout the United States (“U.S.”), the United Kingdom (“U.K.”) and Puerto Rico. At ~~September 30, 2018,~~March 31, 2019, the Company operated ~~586~~593 behavioral healthcare facilities with approximately ~~18,000~~18,100 beds in 40 states, the U.K. and Puerto Rico.

The business of the Company is conducted through limited liability companies, partnerships and C-corporations. The Company’s consolidated financial statements include the accounts of the Company and all subsidiaries controlled by the Company through its’ direct or indirect ownership of majority interests and exclusive rights granted to the Company as the controlling member of an entity. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of our financial position and results of operations have been included. The Company’s fiscal year ends on December 31 and interim results are not necessarily indicative of results for a full year or any other interim period. The condensed consolidated balance sheet at December 31, ~~2017~~2018 has been derived from the audited financial statements as of that date. The information contained in these condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the fiscal year ended December 31, ~~2017~~2018 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on ~~February 27, 2018.~~March 1, 2019. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Certain reclassifications have been made to prior years to conform to the current year presentation.

In August ~~2017,~~2018, the Financial Accounting Standards Board (“FASB”) issued Accounting ~~Standards~~Standard Update (“ASU”) ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”). ASU 2018-15 requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-402 to determine which implementation costs to capitalize as assets. ASU 2018-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted. Management is evaluating the impact of ASU 2018-15 on the Company’s consolidated financial statements.

In August 2017, FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”). ASU 2017-12 amends the hedge accounting model to enable entities to better portray the economics of their risk management activities in the financial statements and simplifies the application of hedge accounting in certain situations. ASU 2017-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. ~~Management is evaluating the impact of ASU 2017-12 on the Company’s consolidated financial statements.~~

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~“Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”~~ (“ASU 2017-04”). ASU 2017-04 simplifies the measurement of goodwill by eliminating the requirement to calculate the implied fair value of goodwill (step 2 of the current impairment test) to measure the goodwill impairment charge. Instead, entities will record impairment charges based on the excess of a reporting unit’s carrying amount over its fair value. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company has elected to early adopt ASU 2017-04 on January 1, 2018, and there was no significant impact on the Company’s consolidated financial statements.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~“Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”~~ (“ASU 2016-15”). ASU 2016-15 addresses treatment of how certain cash receipts and cash payments are presented and classified in the statement of cash flows to reduce the diversity in practice. ASU 2016-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company adopted ASU ~~2016-15~~2017-02 on January 1, ~~2018.~~2019. There is no significant impact on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU 2016-02, “~~Leases”~~Leases” (“ASU 2016-02”). ASU 2016-02’s core principle is to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. ~~Additionally,~~ ASU 2016-02 would permit both public and nonpublic organizations to adopt the new standard early. Management believes the primary effect of adopting the new standard will be to record right-of-use assets and obligations for current operating leases. Management is continuing to evaluate the impact ASU 2016-02 will have on the Company’s consolidated financial statements, internal controls, policies and procedures.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~“Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities”~~ ~~(“ASU 2016-01”). ASU 2016-01 amends how entities recognize, measure, present and disclose certain financial assets and financial liabilities. It~~ requires entities to measure equity investments (except for those accounted for under equity method) at fair value and recognize any changes in fair value in net income. ASU 2016-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company adopted ASU 2016-01 on January 1, 2018. There was no significant impact on the Company’s consolidated financial statements.

~~In May 2014, the FASB and the International Accounting Standards Board issued ASU 2014-09,~~ ~~“Revenue from Contracts with Customers (Topic 606)”~~ (“ASU 2014-09”). ASU 2014-09’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company adopted ASU 2014-09 on January 1, 2018 as described in Note 3 – Revenue.

ASU 2014-09 requires companies to exercise more judgment and recognize revenue using a five-step process. The Company adopted ASU 2014-09 using the modified retrospective method for all contracts effective January 1, 2018 and is using a portfolio approach to group contracts with similar characteristics and analyze historical cash collections trends. Modified retrospective adoption requires entities to apply the standardapplication either retrospectively to ~~the most current~~each prior reporting period presented in the financial statements ~~requiring~~or retrospectively at the ~~cumulative effect~~beginning of the ~~retrospective application as an adjustment to the opening balance~~period of ~~retained earnings~~adoption. The Company adopted ASU 2016-02 retrospectively at the ~~date~~beginning of ~~initial application.~~the

period of adoption. Prior periods have not been adjusted. ~~No cumulative-effect adjustment in retained earnings was recorded as the adoption of ASU 2014-09 did not significantly impact the Company’s reported historical revenue.~~

As a result of certain changes required by ASU 2014-09, the majority of the Company’s provision for doubtful accounts are recorded as a direct reduction to revenue instead of being presented as a separate line item on the condensed consolidated statements of income. The adoption of ASU 2014-09 has no impact on the Company’s accounts receivable as it was historically recorded net of allowance for doubtful accounts and contractual adjustments, andOn January 1, 2019, the Company ~~has eliminated the presentation~~recorded right-of-use assets and lease liabilities of allowance for doubtful accounts on the condensed consolidated balance sheets. The adoption of ASU 2014-09 did not have a significant impact on the Company’s condensed consolidated statements of income. The impact of adopting ASU 2014-09 on the condensed consolidated statements of income for the three$509.8 million and ~~nine months ended September 30, 2018 was~~$536.7 million, respectively, as ~~follows (in thousands):~~

~~The Company evaluated the nature, amount, timing and uncertainty of revenue and cash flows using the five-step process provided within ASU 2014-09.~~

Revenue is primarily derived from services rendered to patients for inpatient psychiatric and substance abuse care, outpatient psychiatric care and ~~adolescent~~ residential treatment. The services provided by the Company have no fixed duration and can be terminated by the patient or the facility at any time, and therefore, each treatment is its own stand-alone contract.

Services ordered by a healthcare provider in an episode of care are not separately identifiable and therefore have been combined into a single performance obligation for each contract. The Company recognizes revenue as its performance obligations are completed. The performance obligation is satisfied over time as the customer simultaneously receives and consumes the benefits ofthe healthcare services provided. For inpatient services, the Company recognizes revenue equally over the patient stay on a daily basis. For outpatient services, the Company recognizes revenue equally over the number of treatments provided in a single episode of care. Typically, patients and third-party payors are billed within several days of the service being performed or the patient being discharged, and payments are due based on contract terms.

As our performance obligations relate to contracts with a duration of one year or less, the Company elected the optional exemption in Accounting Standards Codification (“ASC”) ASC 606-10-50-14(a). Therefore, the Company is not required to disclose the transaction price for the remaining performance obligations at the end of the reporting period or when the Company expects to recognize the revenue. The Company has minimal unsatisfied performance obligations at the end of the reporting period as our patients typically are under no obligation to remain admitted in our facilities.

The Company disaggregates revenue from contracts with customers by service type and by payor within each of the Company’s segments.

The Company’s facilities in the United States (the “U.S. Facilities”) and services provided by the U.S. Facilities can generally be classified into the following categories: acute inpatient psychiatric facilities; specialty treatment facilities; residential treatment centers; and outpatient community-based ~~services.~~facilities.

Acute inpatient psychiatric facilities. Acute inpatient psychiatric facilities provide a high level of care in order to stabilize patients that are either a threat to themselves or to others. The acute setting provides 24-hour observation, daily intervention and monitoring by psychiatrists.

Specialty treatment facilities. Specialty treatment facilities include residential recovery facilities, eating disorder facilities and comprehensive treatment centers. The Company provides a comprehensive continuum of care for adults with addictive disorders and co-occurring mental disorders. Inpatient, including detoxification and rehabilitation, partial hospitalization and outpatient treatment programs give patients access to the least restrictive level of care.

Residential treatment centers. Residential treatment centers treat patients with behavioral disorders in a non-hospital setting, including outdoor programs. The facilities balance therapy activities with social, academic and other activities.

Outpatient community-based ~~services~~facilities. Outpatient community-based programs are designed to provide therapeutic treatment to children and adolescents who have a clinically-defined emotional, psychiatric or chemical dependency disorder while enabling the youth to remain at home and within their community.

The table below presents total U.S. revenue attributed to each category (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Acute inpatient psychiatric facilities	$	208,885	$	187,497	$	608,311	$	566,173	$	216,597	$	195,891
Specialty treatment facilities		198,107		183,290		575,536		543,079		193,035		184,535
Residential treatment centers		72,351		72,677		218,041		213,300		73,224		71,557
Outpatient community-based services		9,283		10,214		30,613		32,763
Outpatient community-based facilities										5,104		10,422
Revenue	$	488,626	$	453,678	$	1,432,501	$	1,355,315	$	487,960	$	462,405

The Company receives payments from the following sources for services rendered in our U.S. Facilities: (i) state governments under their respective Medicaid and other programs; (ii) commercial insurers; (iii) the federal government under the Medicare program administered by the Centers for Medicare and Medicaid Services (“CMS”); and (iv) individual patients and clients. As the period between the time of service and time of payment is typically one year or less, the Company elected the practical expedient under ASC 606-10-32-18 and did not adjust for the effects of a significant financing component.

The Company determines 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. Most of our U.S. Facilities have contracts containing variable consideration. However, it is unlikely a significant reversal of revenue will occur when the uncertainty is resolved, and therefore, the Company has included the variable consideration in the estimated transaction price. Subsequent changes resulting from a patient’s ability to pay are recorded as bad debt expense, which is included as a component of other operating expenses in the condensed consolidating statements of income. Bad debt expense for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 was not significant.

The Company derives a significant portion of its revenue from Medicare, Medicaid and other payors that receive discounts from established billing rates. The Medicare and Medicaid regulations and various managed care contracts under which these discounts must be calculated are complex, subject to interpretation and adjustment, and may include multiple reimbursement mechanisms for different types of services provided in the Company’s inpatient facilities and cost settlement provisions. Management estimates the transaction price on a payor-specific basis given its interpretation of the applicable regulations or contract terms. The services authorized and provided and related reimbursement are often subject to interpretation that could result in payments that differ from the Company’s estimates. Additionally, updated regulations and contract renegotiations occur frequently, necessitating regular review and assessment of the estimation process by management.

Settlements under cost reimbursement agreements with third-party payors are estimated and recorded in the period in which the related services are rendered and are adjusted in future periods as final settlements are determined. Final determination of amounts earned under the Medicare and Medicaid programs often occurs in subsequent years because of audits by such programs, rights of appeal and the application of numerous technical provisions. In the opinion of management, adequate provision has been made for any adjustments and final settlements. However, there can be no assurance that any such adjustments and final settlements will not have a material effect on the Company’s financial condition or results of operations. The Company’s cost report receivables were $10.9 million at both September 30, 2018 and December 31, 2017, respectively, and were included in other current assets in the condensed consolidated balance sheets. Management believes that these receivables are properly stated and are not likely to be settled for a significantly different amount. The net adjustments to estimated cost report settlements were not significant for the three and nine months ended September 30, 2018.

Management believes that we comply in all material respects with applicable laws and regulations and is not aware of any material pending or threatened investigations involving allegations of wrongdoing. Compliance with such laws and regulations can be subject to future government review and interpretation, as well as significant regulatory action including fines, penalties and exclusion from the Medicare and Medicaid programs.

The Company provides care without charge to patients who are financially unable to pay for the healthcare services they receive based on Company policies and federal and state poverty thresholds. Such amounts determined to qualify as charity care are not reported as revenue. The cost of providing charity care services were $1.0 million and $1.3 million for the three months ended September 30, 2018 and 2017, respectively. The cost of providing charity care services were $3.8 million and $4.2 million for the nine months ended September 30, 2018 and 2017, respectively. The estimated cost of charity care services was determined using a ratio of cost to gross charges determined from our most recently filed Medicare cost reports and applying that ratio to the gross charges associated with providing charity care for the period.

The following table presents revenue ~~generated~~ by ~~each~~ payor type and as a percentage of revenue in our U.S. Facilities (in thousands):

											Three Months Ended March 31,
	Three Months Ended September 30,					Nine Months Ended September 30,					2019					2018
	2018		2017			2018		2017			Amount		%			Amount		%
Commercial	$	146,439	$	142,870		$	431,337	$	431,818		$	139,427		28.6	%	$	137,619		29.8	%
Medicare		73,528		73,593			210,307		212,992			72,616		14.9	%		67,214		14.5	%
Medicaid		229,390		199,592			668,236		587,705			239,191		49.0	%		213,336		46.1	%
Self-Pay		33,559		43,685			103,845		130,928			31,732		6.5	%		36,907		8.0	%
Other		5,710		5,936			18,776		23,758			4,994		1.0	%		7,329		1.6	%
Revenue before provision for doubtful accounts		488,626		465,676			1,432,501		1,387,201
Provision for doubtful accounts		—		(11,998	)		—		(31,886	)
Revenue	$	488,626	$	453,678		$	1,432,501	$	1,355,315		$	487,960		100.0	%	$	462,405		100.0	%

The Company’s facilities located in the United Kingdom (the “U.K. Facilities”) and services provided by the U.K. Facilities can generally be classified into the following categories: healthcare facilities, education and children’s services, adult care facilities and elderly care facilities.

Healthcare facilities. Healthcare facilities provide psychiatric treatment and nursing for sufferers of mental disorders, including for patients whose risk of harm to others and risk of escape from hospitals cannot be managed safely within other mental health settings. In order to manage the risks involved with treating patients, the facility is managed through the application of a range of security measures depending on the level of dependency and risk exhibited by the patient.

Education and children’s services. Education and children’s services provide specialist education for children and young people with special educational needs, including autism, Asperger’s Syndrome, social, emotional and mental health, and specific learning difficulties, such as dyslexia. The division also offers standalone children’s homes for children that require 52-week residential care to support complex and challenging behavior and fostering services.

Adult care facilities. Adult care focuses on care of individuals with a variety of learning difficulties, mental health illnesses and adult autism spectrum disorders. It also includes long-term, short-term and respite nursing care to high-dependency elderly individuals who are physically frail or suffering from dementia. Care is provided in a number of settings, including in residential care homes and through supported living.

The table below presents total U.K. revenue attributed to each category (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Healthcare facilities	$	150,871	$	146,264	$	464,731	$	419,549	$	151,708	$	154,615
Education and Children’s Services		46,966		42,441		145,609		124,337		46,122		48,085
Adult Care facilities		74,453		74,331		226,054		212,603		74,827		77,136
Revenue	$	272,290	$	263,036	$	836,394	$	756,489	$	272,657	$	279,836

~~The~~On an annual basis, the Company receives payments from approximately 500 public funded sources in the U.K. (including the National Health Service (“NHS”), Clinical Commissioning Groups (“CCGs”) and local authorities in England, Scotland and Wales) and individual patients and clients. The Company determines the transaction price based on established billing rates by payor and is reduced by implicit price concessions. Implicit price concessions are insignificant in ~~our~~the U.K. Facilities. ~~There is no significant variable consideration in our U.K. Facilities’ contracts. As the period between the time~~

The following table presents revenue ~~generated~~ by ~~each~~ payor type and as a percentage of revenue in our U.K. Facilities (in thousands):

										Three Months Ended March 31,
	Three Months Ended September 30,				Nine Months Ended September 30,					2019					2018
	2018		2017		2018		2017			Amount		%			Amount		%
U.K. public funded sources	$	245,919	$	236,778	$	756,094	$	678,623		$	245,413		90.0	%	$	253,294		90.5	%
Self-Pay		26,159		24,572		78,499		70,662			26,814		9.8	%		25,068		9.0	%
Other		212		1,686		1,801		7,210			430		0.2	%		1,474		0.5	%
Revenue before provision for doubtful accounts		272,290		263,036		836,394		756,495
Provision for doubtful accounts		—		—		—		(6	)
Revenue	$	272,290	$	263,036	$	836,394	$	756,489		$	272,657		100.0	%	$	279,836		100.0	%

The Company’s contract liabilities primarily consist of unearned revenue in our U.K. Facilities due to the timing of payments received mainly in our education and children’s services and healthcare facilities. Contract liabilities are included in other accrued liabilities on the condensed consolidated balance sheets. A summary of the activity in unearned revenue in the U.K. Facilities is as follows (in thousands):

The following table sets forth the computation of basic and diluted earnings per share for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ (in thousands, except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Numerator:
Net income attributable to Acadia Healthcare Company, Inc.	$	46,232	$	45,618	$	155,887	$	130,206	$	29,471	$	50,819
Denominator:
Weighted average shares outstanding for basic earnings per share		87,344		87,017		87,233		86,912		87,505		87,121
Effect of dilutive instruments		193		155		153		126		189		173
Shares used in computing diluted earnings per common share		87,537		87,172		87,386		87,038		87,694		87,294
Earnings per share attributable to Acadia Healthcare Company, Inc. stockholders:
Basic	$	0.53	$	0.52	$	1.79	$	1.50	$	0.34	$	0.58
Diluted	$	0.53	$	0.52	$	1.78	$	1.50	$	0.34	$	0.58

Approximately ~~1.6~~2.6 million and ~~1.0~~2.0 million shares of common stock issuable upon exercise of outstanding stock option awards were excluded from the calculation of diluted earnings per share for the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively, because their effect would have been anti-dilutive. Approximately 1.9 million and 1.5 million shares of common stock issuable upon exercise of outstanding stock option awards were excluded from the calculation of diluted earnings per share for the nine months ended September 30, 2018 and 2017, respectively, because their effect would have been anti-dilutive.

The Company’s strategy is to acquire and develop behavioral healthcare facilities and improve operating results within its facilities and its other behavioral healthcare operations.

On February 15, 2019, the Company completed the acquisition of Whittier Pavilion (“Whittier”), an inpatient psychiatric facility with 71 beds located in Haverhill, Massachusetts, for cash consideration of approximately $17.9 million. Also on February 15, 2019, the Company completed the acquisition of Mission Treatment (“Mission Treatment”) for cash consideration of approximately $22.5

million and a working capital settlement. Mission Treatment operated nine comprehensive treatment centers in California, Nevada, Arizona and Oklahoma.

Transaction-related expenses represent costs primarily related to our acquisitions, termination, restructuring and closure costs. Transaction-related expenses compromised the following cost for the three months ended March 31, 2019 and 2018 (in thousands):

Property and equipment consisted of the following at March 31, 2019 and December 31, 2018 (in thousands):

During the three months ended March 31, 2019, the Company closed a 168-bed residential treatment center in Albuquerque, New Mexico. The Company is currently evaluating options for the future use of this property. Additionally, the Company has recorded assets held for sale of $21.1 million and $17.0 million within other assets on the condensed consolidated balance sheets at March 31, 2019 and December 31, 2018, respectively.

Other identifiable intangible assets and related accumulated amortization consisted of the following at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 (in thousands):

	Gross Carrying Amount				Accumulated Amortization						Gross Carrying Amount				Accumulated Amortization
	September 30, 2018		December 31, 2017		September 30, 2018			December 31, 2017			March 31, 2019		December 31, 2018		March 31, 2019			December 31, 2018
Intangible assets subject to amortization:
Contract intangible assets	$	2,100	$	2,100	$	(2,100	)	$	(2,100	)	$	2,100	$	2,100	$	(2,100	)	$	(2,100	)
Non-compete agreements		1,147		1,147		(1,147	)		(1,147	)		1,147		1,147		(1,147	)		(1,147	)
		3,247		3,247		(3,247	)		(3,247	)		3,247		3,247		(3,247	)		(3,247	)
Intangible assets not subject to amortization:
Licenses and accreditations		12,766		12,266		—			—			12,259		12,343		—			—
Trade names		61,675		60,586		—			—			60,572		60,109		—			—
Certificates of need		16,818		14,496		—			—			16,965		16,538		—			—
		91,259		87,348		—			—			89,796		88,990		—			—
Total	$	94,506	$	90,595	$	(3,247	)	$	(3,247	)	$	93,043	$	92,237	$	(3,247	)	$	(3,247	)

All the Company’s ~~defined-lived~~definite-lived intangible assets are fully amortized. The Company’s licenses and accreditations, trade names and certificate of need intangible assets have indefinite lives and are, therefore, not subject to amortization.

~~Property~~The Company’s lease portfolio primarily consists of finance and operating real estate leases integral for facility operations. The original terms of the leases typically range from five to 30 years with optional renewal periods. A minimal portion of the Company’s lease portfolio consists of non-real estate leases, including copiers and equipment, ~~consists~~which generally have lease terms of one to three years and have insignificant lease obligations.

In March 2016, the FASB issued ASU 2016-02. ASU 2016-02’s core principle is to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information. The Company adopted ASU 2016-02 retrospectively at the beginning of the period of adoption. Prior periods have not been adjusted.

The Company has elected the package of practical expedients offered in the transition guidance which allows management not to reassess lease identification, lease classification and initial direct costs. The Company also elected the accounting policy practical expedients by class of underlying asset to: (i) combine associated lease and non-lease components into a single lease component; and (ii) exclude recording short-term leases as right-of-use assets and liabilities on the condensed consolidated balance sheets. Non-lease components, which are not significant overall, are combined with lease components.

On January 1, 2019, the Company recorded right-of-use assets and lease liabilities on the condensed consolidated balance sheet of $509.8 million and $536.7 million, respectively, for non-cancelable real estate operating leases with original lease terms in excess of one year. Finance leases remained on the condensed consolidating balance sheets as required by previous accounting guidance. The Company reviews service agreements for embedded leases and records right-of-use assets and liabilities as necessary.

Operating lease liabilities were recorded as the present value of remaining lease payments not yet paid for the lease term discounted using the incremental borrowing rate associated with each lease. Operating lease right-of-use assets represent operating lease liabilities adjusted for prepayments, accrued lease payments, lease incentives and initial direct costs. Certain of the Company’s leases include renewal or termination options. Calculation of operating lease right-of-use assets and liabilities include the initial lease term unless it is reasonably certain a renewal or termination option will be exercised. Variable components of lease payments fluctuating with a future index or rate, as well as those related to common area maintenance costs, are not included in determining lease payments and are expensed as incurred. Most of the Company’s leases do not contain implicit borrowing rates, and therefore, incremental borrowing rates were calculated based on information available at the later of the lease commencement date or January 1, 2019. Incremental borrowing rates reflect the Company’s estimated interest rates for collateralized borrowings over similar lease terms.

At March 31, 2019, the Company recorded the following ~~at September 30, 2018 and December 31, 2017~~on the condensed consolidated balance sheet (in thousands):

Weighted-average remaining lease terms and discount rates at March 31, 2019 were as follows:

The Company recorded the following lease costs for the three months ended March 31, 2019 (in thousands):

Undiscounted cash flows for finance and operating leases recorded on the condensed consolidated balance sheet were as follows at March 31, 2019 (in thousands):

Supplemental data for the three months ended March 31, 2019 was as follows (in thousands):

	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Amended and Restated Senior Credit Facility:
Senior Secured Term A Loans	$	370,500		$	380,000		$	361,000		$	365,750
Senior Secured Term B Loans		1,376,408			1,398,400			1,369,416			1,372,912
Senior Secured Revolving Line of Credit		—			—			71,573			—
6.125% Senior Notes due 2021		150,000			150,000			150,000			150,000
5.125% Senior Notes due 2022		300,000			300,000			300,000			300,000
5.625% Senior Notes due 2023		650,000			650,000			650,000			650,000
6.500% Senior Notes due 2024		390,000			390,000			390,000			390,000
9.0% and 9.5% Revenue Bonds		21,920			21,920
Other long-term debt								5,676			5,953
Less: unamortized debt issuance costs, discount and premium		(43,602	)		(50,432	)		(39,453	)		(41,128	)
		3,215,226			3,239,888			3,258,212			3,193,487
Less: current portion		(33,264	)		(34,830	)		(36,503	)		(34,112	)
Long-term debt	$	3,181,962		$	3,205,058		$	3,221,709		$	3,159,375

The Company entered into a senior secured credit facility (the “Senior Secured Credit Facility”) on April 1, 2011. On December 31, 2012, the Company entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) which amended and restated the Senior Secured Credit Facility (the “Amended and Restated Senior Credit Facility”). The Company has amended the Amended and Restated Credit Agreement from time to time as described in the Company’s prior filings with the SEC.

On May 10, 2017, the Company entered into a Third Repricing Amendment (the “Third Repricing Amendment”) to the Amended and Restated Credit Agreement. The Third Repricing Amendment reduced the Applicable Rate with respect to the Term Loan B facility Tranche B-1 (the “Tranche B-1 Facility”) and the Term Loan B facility Tranche B-2 (the “Tranche B-2 Facility”) from 3.00% to 2.75% in the case of Eurodollar Rate loans and from 2.00% to 1.75% in the case of Base Rate Loans. In connection with the Third Repricing Amendment, the Company recorded a debt extinguishment charge of $0.8 million, including the discount and write-off of deferred financing costs, which was recorded in debt extinguishment costs in the condensed consolidated statements of income.

On March 22, 2018, the Company entered into a Second Repricing Facilities Amendment (the “Second Repricing Facilities Amendment”) to the Amended and Restated Credit Agreement. The Second Repricing Facilities Amendment (i) replaced the Term Loan B Facility Tranche B-1 ~~Facility~~(the “Tranche B-1 Facility”) and the Term Loan B Facility Tranche B-2 ~~Facility~~(the “Tranche B-2 Facility”) with a new Term Loan B facility Tranche B-3 (the “Tranche B-3 Facility”) and a new Term Loan B facility Tranche B-4 (the “Tranche B-4 Facility”), respectively, and (ii) reduced the Applicable Rate from 2.75% to 2.50% in the case of Eurodollar Rate loans and reduced the Applicable Rate from 1.75% to 1.50% in the case of Base Rate Loans.

On March 29, 2018, the Company entered into a Third Repricing Facilities Amendment to the Amended and Restated Credit Agreement (the “Third Repricing Facilities Amendment”, and together with the Second Repricing Facilities Amendment, the “Repricing Facilities Amendments”). The Third Repricing Facilities Amendment replaced the existing revolving credit facility and Term Loan A facility (“TLA Facility”) with a new revolving credit facility and TLA Facility, respectively. The Company’s line ofcredit on its revolving credit facility remains at $500.0 million and the Third Repricing Facility Amendment reduced the size of the TLA Facility from $400.0 million to $380.0 million to reflect the then current outstanding principal. The Third Repricing Facilities Amendment reduced the Applicable Rate by 25 basis points for the revolving credit facility and the TLA Facility by amending the

In connection with the Repricing Facilities Amendments, the Company recorded a debt extinguishment charge of $0.9 million, including the discount and write-off of deferred financing costs, which was recorded in debt extinguishment costs in the condensed consolidated statements of income.

On February 6, 2019, the Company entered into the Eleventh Amendment (the “Eleventh Amendment”) to the Amended and Restated Credit Agreement. The Eleventh Amendment, among other things, amended the definition of “Consolidated EBITDA” to remove the cap on non-cash charges, losses and expenses related to the impairment of goodwill, which in turn provided increased flexibility to the Company in terms of the Company’s financial covenants.

On February 27, 2019, the Company entered into the Twelfth Amendment (the “Twelfth Amendment”) to the Amended and Restated Credit Agreement. The Twelfth Amendment, among other things, modified certain definitions, including “Consolidated EBITDA”, and increased our permitted Maximum Consolidated Leverage Ratio, thereby providing increased flexibility to the Company in terms of the Company’s financial covenants.

The Company had ~~$494.1~~$414.7 million of availability under the revolving line of credit and had standby letters of credit outstanding of ~~$5.9~~$13.7 million related to security for the payment of claims required by its workers’ compensation insurance program at ~~September 30, 2018.~~March 31, 2019. Borrowings under the revolving line of credit are subject to customary conditions precedent to borrowing. The Amended and Restated Credit Agreement requires quarterly term loan principal repayments of our TLA Facility of $4.8 million for ~~December 31, 2018~~June 30, 2019 to December 31, 2019, $7.1 million for March 31, 2020 to December 31, 2020, and $9.5 million for March 31, 2021 to September 30, 2021, with the remaining principal balance of the TLA Facility due on the maturity date of November 30, 2021. The Company is required to repay the Tranche B-3 Facility in equal quarterly installments of $1.2 million on the last business day of each March, June, September and December, with the outstanding principal balance of the Tranche B-3 Facility due on February 11, 2022. The Company is required to repay the Tranche B-4 Facility in equal quarterly installments of approximately $2.3 million on the last business day of each March, June, September and December, with the outstanding principal balance of the Tranche B-4 Facility due on February 16, 2023. On ~~December 29, 2017, the Company made an additional payment of $22.5 million, including $7.7 million on the Tranche B-1 Facility and $14.8 million on the Tranche B-2 Facility. On~~ April 17, 2018, the Company made an additional payment of $15.0 million, including $5.1 million on the Tranche B-3 Facility and $9.9 million on the Tranche B-4 Facility.

Borrowings under the Amended and Restated Senior Credit Facility are guaranteed by each of the Company’s wholly-owned domestic subsidiaries (other than certain excluded subsidiaries) and are secured by a lien on substantially all of the assets of the Company and such subsidiaries. Borrowings with respect to the TLA Facility and the Company’s revolving credit facility (collectively, “Pro Rata Facilities”) under the Amended and Restated Credit Agreement bear interest at a rate tied to Acadia’s Consolidated Leverage Ratio (defined as consolidated funded debt net of up to ~~$40.0~~$50.0 million of unrestricted and unencumbered cash to consolidated EBITDA, in each case as defined in the Amended and Restated Credit Agreement). The Applicable Rate (as defined in the Amended and Restated Credit Agreement) for the Pro Rata Facilities was 2.50% for Eurodollar Rate Loans (as defined in the Amended and Restated Credit Agreement) and 1.50% for Base Rate Loans (as defined in the Amended and Restated Credit Agreement) at ~~September 30, 2018.~~March 31, 2019. Eurodollar Rate Loans with respect to the Pro Rata Facilities bear interest at the Applicable Rate

plus the Eurodollar Rate (as defined in the Amended and Restated Credit Agreement) (based upon the LIBOR Rate (as defined in the Amended and Restated Credit Agreement) prior to commencement of the interest rate period). Base Rate Loans with respect to the Pro Rata Facilities bear interest at the Applicable Rate plus the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate and (iii) the Eurodollar Rate plus 1.00%. At ~~September 30, 2018,~~March 31, 2019, the Pro Rata Facilities bore interest at a rate of LIBOR plus 2.50%. In addition, the Company is required to pay a commitment fee on undrawn amounts under the revolving line of credit.

The Amended and Restated Credit Agreement requires the Company and its subsidiaries to comply with customary affirmative, negative and financial covenants, including a fixed charge coverage ratio, consolidated leverage ratio and senior secured leverage ratio. The Company may be required to pay all of its indebtedness immediately if it defaults on any of the numerous financial or other restrictive covenants contained in any of its material debt agreements. At ~~September 30, 2018,~~March 31, 2019, the Company was in compliance with such covenants.

On March 12, 2013, the Company issued $150.0 million of 6.125% Senior Notes due 2021 (the “6.125% Senior Notes”). The 6.125% Senior Notes mature on March 15, 2021 and bear interest at a rate of 6.125% per annum, payable semi-annually in arrears on March 15 and September 15 of each year.

On July 1, 2014, the Company issued $300.0 million of 5.125% Senior Notes due 2022 (the “5.125% Senior Notes”). The 5.125% Senior Notes mature on July 1, 2022 and bear interest at a rate of 5.125% per annum, payable semi-annually in arrears on January 1 and July 1 of each year.

On February 11, 2015, the Company issued $375.0 million of 5.625% Senior Notes due 2023 (the “5.625% Senior Notes”). On September 21, 2015, the Company issued $275.0 million of additional 5.625% Senior Notes. The additional notes formed a single class of debt securities with the 5.625% Senior Notes issued in February 2015. Giving effect to this issuance, the Company has outstanding an aggregate of $650.0 million of 5.625% Senior Notes. The 5.625% Senior Notes mature on February 15, 2023 and bear interest at a rate of 5.625% per annum, payable semi-annually in arrears on February 15 and August 15 of each year.

On February 16, 2016, the Company issued $390.0 million of 6.500% Senior Notes due 2024 (the “6.500% Senior Notes”). The 6.500% Senior Notes mature on March 1, 2024 and bear interest at a rate of 6.500% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2016.

The indentures governing the 6.125% Senior Notes, 5.125% Senior Notes, 5.625% Senior Notes and 6.500% Senior Notes (together, the “Senior Notes”) contain covenants that, among other things, limit the Company’s ability and the ability of its 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 the Company’s assets; and (vii) create liens on assets.

The Senior Notes issued by the Company are guaranteed by each of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Senior Credit Facility. The guarantees are full and unconditional and joint and several.

The Company may redeem the Senior Notes at its option, in whole or part, at the dates and amounts set forth in the indentures.

On November 11, 2012, in connection with the acquisition of The Pavilion at HealthPark, LLC (“Park Royal”), the Company assumed debt of $23.0 million. The fair market value of the debt assumed was $25.6 million and resulted in a debt premium balance being recorded as of the acquisition date. The debt consisted of $7.5 million and $15.5 million of Lee County (Florida) Industrial Development Authority Healthcare Facilities Revenue Bonds, Series 2010 with stated interest rates of 9.0% and 9.5% (“9.0% and

9.5% Revenue Bonds”), respectively. The 9.0% bonds in the amount of $7.5 million have a maturity date of December 1, 2030 and require yearly principal payments beginning in 2013. The 9.5% bonds in the amount of $15.5 million have a maturity date of December 1, 2040 and require yearly principal payments beginning in 2031. The principal payments establish a bond sinking fund to be held with the trustee and shall be sufficient to redeem the principal amounts of the 9.0% and 9.5% Revenue Bonds on their respective maturity dates. At September 30, 2018 and December 31, 2017, $2.3 million was recorded within other assets on the condensed consolidated balance sheets related to the debt service reserve fund requirements. The yearly principal payments, which establish a bond sinking fund, will increase the debt service reserve fund requirements. The bond premium amount of $2.6 million is amortized as a reduction of interest expense over the life of the revenue bonds using the effective interest method.

The Company issues stock-based awards, including stock options, restricted stock and restricted 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, 2018,~~March 31, 2019, a maximum of 8,200,000 shares of the Company’s common stock were authorized for issuance as stock options, restricted stock and restricted stock units or other share-based compensation under the Equity Incentive Plan, of which ~~3,233,738~~2,737,250 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% 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 ~~$5.2~~$6.1 million and ~~$4.2~~$6.9 million in equity-based compensation expense for the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017, respectively, and $19.3 million and $19.0 million for the nine months ended September 30, 2018 and 2017.~~respectively. At ~~September 30, 2018,~~March 31, 2019, there was ~~$47.8~~$40.9 million of unrecognized compensation expense related to unvested options, restricted stock and restricted stock units, which is expected to be recognized over the remaining weighted average vesting period of ~~1.2~~1.4 years.

At ~~September 30, 2018,~~March 31, 2019, there were no warrants ~~outstanding.~~outstanding and exercisable. The Company recognized a deferred income tax benefit of ~~$1.4~~$1.6 million and ~~$1.5~~$1.9 million for the three months ended ~~September 30,~~March 31, 2019 and 2018, and 2017, respectively, related to equity-based compensation expense. The Company recognized a deferred income tax benefit of $5.2 million and $7.3 million for the nine months ended September 30, 2018 and 2017, respectively, related to equity-based compensation expense.

Stock option activity during ~~2017~~2018 and ~~2018~~2019 was as follows (aggregate intrinsic value in thousands):

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value		Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Options outstanding at January 1, 2017		1,000,946		$	49.42		7.80	$	8,166
Options outstanding at January 1, 2018											974,566		$	47.89		7.46	$	3,802
Options granted		259,300			42.25		9.30		205		374,700			37.54		9.21		246
Options exercised		(87,367	)		25.92	N/A			1,636		(20,989	)		17.83	N/A			383
Options cancelled		(198,313	)		54.71	N/A		N/A			(128,737	)		50.83	N/A		N/A
Options outstanding at December 31, 2017		974,566			47.89		7.46		3,802
Options outstanding at December 31, 2018											1,199,540			44.64		7.26		2,717
Options granted		353,800			37.36		9.42		475		566,800			28.25		9.94		45
Options exercised		(9,889	)		24.67	N/A			165		(18,315	)		15.96	N/A			225
Options cancelled		(102,787	)		51.23	N/A		N/A			(118,707	)		42.43	N/A		N/A
Options outstanding at September 30, 2018		1,215,690		$	44.69		7.43	$	3,536
Options exercisable at December 31, 2017		405,634		$	41.20		6.05	$	3,549
Options exercisable at September 30, 2018		543,139		$	44.65		5.87	$	2,835
Options outstanding at March 31, 2019											1,629,318		$	39.39		8.14	$	762
Options exercisable at December 31, 2018											534,164		$	44.98		5.73	$	2,386
Options exercisable at March 31, 2019											611,099		$	46.73		6.29	$	717

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, 2018~~March 31, 2019 and year ended December 31, ~~2017:~~2018:

	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Weighted average grant-date fair value of options	$	13.61		$	14.39		$	10.45		$	13.67
Risk-free interest rate		2.2	%		2.0	%		2.4	%		2.2	%
Expected volatility		37	%		33	%		38	%		37	%
Expected life (in years)		5.0			5.5			5.0			5.1

The Company’s estimate of expected volatility for stock options is based upon the volatility of our 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.

	Number of Shares			Weighted Average Grant-Date Fair Value		Number of Shares			Weighted Average Grant-Date Fair Value
Unvested at January 1, 2017		844,419		$	55.76
Unvested at January 1, 2018							809,868		$	50.19
Granted		404,224			42.38		480,137			36.84
Cancelled		(145,981	)		55.03		(88,989	)		47.57
Vested		(292,794	)		53.07		(395,959	)		50.41
Unvested at December 31, 2017		809,868		$	50.19
Unvested at December 31, 2018							805,057		$	42.40
Granted		441,837			36.51		540,342			27.85
Cancelled		(71,067	)		48.36		(53,673	)		43.42
Vested		(283,077	)		53.24		(190,356	)		47.10
Unvested at September 30, 2018		897,561		$	42.64
Unvested at March 31, 2019							1,101,370		$	34.40

Restricted stock unit activity during ~~2017~~2018 and ~~2018~~2019 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, 2017		273,599		$	59.68
Unvested at January 1, 2018							360,909		$	50.04
Granted		219,840			43.23		285,358			42.26
Cancelled		—			—		(89,173	)		55.44
Vested		(132,530	)		58.67		(72,983	)		49.64
Unvested at December 31, 2017		360,909		$	50.04
Unvested at December 31, 2018							484,111		$	44.52
Granted		285,358			42.26		—			—
Cancelled		(87,173	)		55.44		(175,661	)		47.97
Vested		(72,983	)		49.64		—			—
Unvested at September 30, 2018		486,111		$	44.52
Unvested at March 31, 2019							308,450		$	42.55

Restricted stock 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 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 stock units are granted to employees and are subject to Company performance compared to pre-established targets and, in the case of the 2018 awards, Company performance compared to peers. In addition to Company performance, these performance-based restricted stock units are subject to the continuing service of the employee during the two- or three-year period

covered by the awards. The performance condition for the restricted stock units is based on the Company’s achievement of annually established targets for diluted earnings per share. Additionally, the number of shares issuable pursuant to restricted stock units granted during 2018 is subject to adjustment based on the Company’s three-year annualized total stockholder return relative to a peer group consisting of S&P 1500 companies within the Healthcare Providers & Services 6 digit GICS industry group and selected other companies deemed to be peers. 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 and, for 2018 awards, performance compared to peers.

The fair values of restricted 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, or at its Monte-Carlo simulation value for units subject to market conditions.

The provision for (benefit from) income taxes for the three months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ reflects effective tax rates of ~~15.9%~~20.0% and ~~26.0%~~(5.8)%, respectively. The ~~provision for income taxes for the nine months ended September 30, 2018 and 2017 reflects effective tax rates of 9.5% and 26.3%, respectively. The decrease~~increase in the effective tax rate for the three ~~and nine~~ months ended ~~September 30, 2018 and 2017~~March 31, 2019 was primarily attributable to the application of Public Law 115-97, informally referred to as the Tax Cuts and Jobs Act (the “Tax Act”) ~~and~~. The Company recorded a discrete benefit of $10.5 million ~~recorded in~~during the ~~nine~~three months ended ~~September 30,~~March 31, 2018 related to a change in the Company’s provisional amount recorded at December 31, 2017.

~~The Company adopted ASU 2016-09,~~ ~~“Improvements to Employee Share-Based Payment Accounting”~~ on January 1, 2017, which changed how the Company accounts for share-based awards for tax purposes. Income tax effects of share-based awards are recognized in the income statement, instead of through equity, when the awards vest. These changes resulted in an increase in our income tax provision of $1.2 million and $1.7 million, or an increase in the effective tax rate of 0.7% and 1.0% for the nine months ended September 30, 2018 and 2017, respectively.

On December 22, 2017, the Tax Act was enacted into law. The Tax Act provides for significant changes to the U.S. tax code that impact businesses. Effective January 1, 2018, the Tax Act reduces the U.S. federal tax rate for corporations from 35% to 21%, for U.S. taxable income. The Tax Act requires a one-time remeasurement of deferred taxes to reflect their value at a lower tax rate of 21%. The Tax Act includes other changes, including, but not limited to, requiring a one-time transition tax on certain repatriated earnings of foreign subsidiaries that is payable over eight years, a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries, a new provision designed to tax global intangible low-taxed income, a limitation of the deduction for net operating losses, elimination of net operating loss carrybacks, immediate deductions for depreciation expense for certain qualified property, additional limitations on the deductibility of executive compensation and limitations on the deductibility of interest.

~~Accounting Standards Codification (“ASC”) 740~~ ~~“Income Taxes”~~ (“ASC 740”) requires the Company to recognize the effect of tax law changes in the period of enactment. However, the SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”) which will allow the Company to record provisional amounts during a measurement period similarly to the measurement period used when accounting for business combinations. The Company will continue to assess the impact of the Tax Act on its business and consolidated financial statements.

At September 30, 2018, the Company had not completed its accounting for the tax effects of enactment of the Tax Act; however, in certain cases, as described below, the Company has made a reasonable estimate of the effects on its existing deferred tax balances. The Company has recognized a cumulative provisional amount of $19.3 million at September 30, 2018 related to the remeasurement of its deferred tax balance. In addition, the Company has recorded a one-time transition tax lability in relation to its foreign subsidiaries of $0.0 million at September 30, 2018. The amount may change when the calculation of post-1986 foreign earnings and profits previously deferred from U.S. federal taxation is finalized.

The Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. As a result of the reduction in the corporate income tax rate, the Company is required to revalue its net deferred tax assets and liabilities to account for the future impact of lower corporate tax rates on this deferred amount and record any change in the value of such asset or liability as a one-time non-cash charge or benefit on its income statement. However, the Company is still analyzing certain aspects of the Tax Act, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The Company has recognized a cumulative provisional amount of $19.3 million at September 30, 2018 related to the remeasurement of its deferred tax balance.

The one-time transition tax is based on total post-1986 earnings and profits that the Company previously deferred from U.S. income taxes. The Company has made sufficient progress on the earnings and profits analysis for its foreign subsidiaries to reasonably estimate the effects of the one-time transition tax and has recorded a provisional amount of $0.0 million at September 30, 2018. This amount may change when the Company finalizes the calculation of post-1986 foreign earnings and profit. As part of the analysis of the Tax Act, the Company made an adjustment regarding the treatment of foreign dividends of $10.9 million during the nine months ended September 30, 2018. The change in the provisional estimate recorded at December 31, 2017 was recognized under the law that existed prior to December 22, 2017.

The Company has estimated the impacts for Global Intangible Low-Taxed Income, Foreign-Derived Intangible Income, the Base Erosion and Anti-Abuse Tax and any remaining impacts of the foreign income provisions of the Tax Act. The Company has made sufficient progress to reasonably estimate the effects of the aforementioned items and has recorded a provisional amount of $0.0 million at September 30, 2018.

The Company entered into foreign currency forward contracts during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ in connection with certain transfers of cash between the U.S. and U.K. under the Company’s cash management and foreign currency risk management programs. Foreign currency forward contracts limit the economic risk of changes in the exchange rate between U.S. Dollars (“USD”) and British Pounds (“GBP”) associated with cash transfers.

In May 2016, the Company entered into multiple cross currency swap agreements with an aggregate notional amount of $650.0 million to manage foreign currency risk by effectively converting a portion of its fixed-rate USD-denominated senior notes, including the semi-annual interest payments thereunder, to fixed-rate GBP-denominated debt of £449.3 million. During the term of the swap agreements, the Company will receive semi-annual interest payments in USD from the counterparties at fixed interest rates, and the Company will make semi-annual interest payments in GBP to the counterparties at fixed interest rates. The interest payments under the cross-currency swap agreements result in £24.7 million of annual cash flows from the Company’s U.K. business being converted to $35.8 million (at a 1.45 exchange rate).

The Company has designated the cross currency swap agreements and forward contracts entered into during ~~2017~~2018 and the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 as qualifying hedging instruments and is accounting for these as net investment hedges. The fair value of these derivatives at March 31, 2019 and December 31, 2018 of ~~$33.1~~$46.3 million isand $60.5 million, respectively, are recorded as derivative instrument assets on the condensed consolidated balance sheets. The gains and losses resulting from fair value adjustments to the cross currency swap agreements are recorded in accumulated other comprehensive loss as the swaps are effective in hedging the designated risk. Cash flows related to the cross currency swap derivatives are included in operating activities in the condensed consolidated statements of cash flows.

The carrying amounts reported for cash and cash equivalents, accounts receivable, other current assets, accounts payable and other current liabilities approximate fair value because of the short-term maturity of these instruments.

The carrying amounts and fair values of the Company’s Amended and Restated Senior Credit Facility, 6.125% Senior Notes, 5.125% Senior Notes, 5.625% Senior Notes, 6.500% Senior Notes, ~~9.0% and 9.5% Revenue Bonds~~other long-term debt and derivative instruments at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 were as follows (in thousands):

	Carrying Amount				Fair Value				Carrying Amount				Fair Value
	September 30, 2018		December 31, 2017		September 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018
Amended and Restated Senior Credit Facility	$	1,722,010	$	1,749,185	$	1,722,010	$	1,749,185	$	1,779,357	$	1,715,338	$	1,779,537	$	1,715,338
6.125% Senior Notes due 2021	$	148,514	$	148,098	$	149,257	$	150,134	$	148,803	$	148,657	$	148,803	$	147,542
5.125% Senior Notes due 2022	$	296,750	$	296,174	$	296,008	$	296,914	$	297,147	$	296,946	$	297,890	$	283,583
5.625% Senior Notes due 2023	$	642,932	$	641,891	$	647,561	$	651,519	$	643,651	$	643,289	$	647,674	$	609,516
6.500% Senior Notes due 2024	$	383,033	$	382,251	$	395,960	$	397,541	$	383,577	$	383,304	$	394,125	$	369,888
9.0% and 9.5% Revenue Bonds	$	21,987	$	22,289	$	21,987	$	22,289
Other long-term debt									$	5,677	$	5,953	$	5,677	$	5,953
Derivative instrument assets	$	33,084	$	12,997	$	33,084	$	12,997	$	46,304	$	60,524	$	46,304	$	60,524

The Company’s Amended and Restated Senior Credit Facility, 6.125% Senior Notes, 5.125% Senior Notes, 5.625% Senior Notes, 6.500% Senior Notes and ~~9.0% and 9.5% Revenue Bonds~~other long-term debt were categorized as Level 2 in the GAAP fair value hierarchy. Fair values were based on trading activity among the Company’s lenders and the average bid and ask price as determined using published rates.

The fair values of the derivative instruments were categorized as Level 2 in the GAAP fair value hierarchy and were based on observable market inputs including applicable exchange rates and interest rates.

A portion of the Company’s professional liability risks are insured through a wholly-owned insurance subsidiary. The Company is self-insured for professional liability claims up to $3.0 million per claim and has obtained reinsurance coverage from a third party to cover claims in excess of the retention limit. The reinsurance policy has a coverage limit of $75.0 million in the aggregate. The Company’s reinsurance receivables are recognized consistent with the related liabilities and include known claims and any incurred but not reported claims that are covered by current insurance policies in place.

The Company is, from time to time, subject to various claims, lawsuits, governmental investigations and regulatory actions, including claims for damages for personal injuries, medical malpractice, overpayments, breach of contract, securities law violations, tort and employment related claims. In these actions, plaintiffs request a variety of damages, including, in some instances, punitive and other types of damages that may not be covered by insurance. In addition, healthcare companies are subject to numerous investigations by various governmental agencies. Certain of the Company’s individual facilities have received, and from time to time, other facilities may receive, subpoenas, civil investigative demands, audit requests and other inquiries from, and may be subject to investigation by, federal and state agencies. These investigations can result in repayment obligations, and violations of the False Claims Act can result in substantial monetary penalties and fines, the imposition of a corporate integrity agreement and exclusion from participation in governmental health programs. In addition, the federal False Claims Act permits private parties to bring qui tam, or ~~“whistleblower,~~

“whistleblower,” suits against companies that submit false claims for payments to, or improperly retain overpayments from, the government. Some states have adopted similar state whistleblower and false claims provisions.

On April 1, 2019, a consolidated complaint was filed against the Company and certain former and current officers in the lawsuit styled St. Clair County Employees’ Retirement System v. Acadia Healthcare Company, Inc., et al., Case No. 3:19-cv-00988, which is pending in the United States District Court for the Middle District of Tennessee. The complaint purports to be brought on behalf of a class consisting of all persons (other than defendants) who purchased securities of the Company between April 30, 2014 and November 15, 2018, and alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder. At this time, we are not able to quantify any potential liability in connection with this litigation because the case is in its early stages.

On February 21, 2019, a purported stockholder filed a related derivative action on behalf of the Company against certain former and current officers and directors in the lawsuit styled Davydov v. Joey A. Jacobs, et al., Case No. 3:19-cv-00167, which is pending in the United States District Court for the Middle District of Tennessee. The complaint alleges claims for violations of Section 10(b) and 14(a) of the Exchange Act, breach of fiduciary duty, waste of corporate assets, and unjust enrichment. On April 15, 2019, the Court entered an order staying the case pending a ruling on the motion to dismiss that will be filed in the St. Clair County v. Acadia Healthcare case described above. At this time, we are not able to quantify any potential liability in connection with this litigation because the case is in its early stages.

During the third quarter of 2018, the U.S. Attorney’s Office for the Southern District of West Virginia served subpoenas on seven of our comprehensive treatment centers located in West Virginia requesting various documents from January 2012 to present. The U.S. Attorney’s Office has advised us that the civil aspect of the investigation is a False Claims Act investigation focused on claims submitted by the centers for certain lab services. The Company is cooperating fully with the government’s investigation and established a reserve of $19.0 million during the fourth quarter of 2018 relating to the Company’s billing for lab services in West Virginia. In connection with the investigation, we expect to enter into a corporate integrity agreement with the Office of Inspector General imposing customary compliance obligations on our subsidiary, CRC Health. Changes in the reserve may be required in future periods as discussions with the government continue and additional information becomes available.

In the fall of 2017, the Office of Inspector General 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 Office of Inspector General issued subpoenas relating to six additional facilities requesting certain documents and information from January 2013 to the date of the subpoenas. 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 is cooperating with the government’s investigation but is not able to quantify any potential liability in connection with ~~this investigation.~~ these investigations.

the shareholders of PHC, Inc. d/b/a Pioneer Behavioral Health (“PHC”) related to the merger of the Company with PHC.

Noncontrolling interests in the consolidated financial statements represents the portion of equity held by noncontrolling partners in the Company’s non-wholly owned ~~subsidiaries~~subsidiaries. At March 31, 2019, the Company ~~controls. At September 30, 2018, certain of these non-wholly owned subsidiaries~~ operated ~~four facilities. The Company~~five facilities and owns between 60% and ~~80%~~85% of the equity interests, ~~in the entity that owns each facility,~~ and noncontrolling partners own the remaining equity interests. The initial value of the noncontrolling interests is based on the fair value of contributions, and the Company consolidates the operations of each facility based on its equity ownership and its control of the entity. The noncontrolling interests are reflected as redeemable noncontrolling interests on the condensed consolidated balance sheets based on put rights that could require the Company to purchase the noncontrolling interests upon the occurrence of a change in control.

The components of redeemable noncontrolling interests are as follows (in thousands):

	September 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Prepaid expenses	$	35,682	$	27,320	$	20,807	$	30,802
Other receivables		30,203		30,455		20,245		19,205
Income taxes receivable		11,326		15,056
Cost report receivable						10,752		10,340
Workers’ compensation deposits – current portion		10,000		10,000		10,000		10,000
Inventory		5,021		4,787		6,115		5,055
Insurance receivable-current portion		2,049		17,588
Income taxes receivable						5,119		2,380
Insurance receivable – current portion						2,049		2,049
Other		1,865		2,129		1,892		1,989
Other current assets	$	96,146	$	107,335	$	76,979	$	81,820

	September 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Unearned income					$	40,862	$	32,154
Accrued expenses	$	42,876	$	37,268		40,235		44,938
Unearned income		31,581		31,342
Accrued legal settlements						17,075		22,076
Accrued interest		12,835		36,370		11,917		32,838
Finance lease liabilities						7,210		445
Income taxes payable		11,312		1,012		6,053		3,041
Insurance liability – current portion		4,956		22,788		4,956		4,956
Accrued property taxes		5,570		3,945		4,641		4,136
Other		5,284		8,488		2,023		6,642
Other accrued liabilities	$	114,414	$	141,213	$	134,972	$	151,226

The Company operates in one line of business, which is operating acute inpatient psychiatric facilities, specialty treatment facilities, residential treatment centers and facilities providing outpatient behavioral healthcare services. As management reviews the operating results of its ~~facilities in the~~ U.S. Facilities and its ~~facilities in the~~ U.K. Facilities separately to assess performance and make decisions, the Company’s operating segments include our U.S. Facilities and U.K. Facilities. At ~~September 30, 2018,~~March 31, 2019, the U.S. Facilities segment included ~~215~~223 behavioral healthcare facilities with approximately ~~9,200~~9,300 beds in 40 states and Puerto Rico, and the U.K. Facilities segment included ~~371~~370 behavioral healthcare facilities with approximately 8,800 beds in the U.K.

The following tables set forth the financial information by operating segment, including a reconciliation of Segment EBITDA to income before income taxes (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Revenue:
U.S. Facilities	$	488,626		$	453,678		$	1,432,501		$	1,355,315		$	487,960		$	462,405
U.K. Facilities		272,290			263,036			836,394			756,489			272,657			279,836
Corporate and Other		—			—			—			—			—			—
	$	760,916		$	716,714		$	2,268,895		$	2,111,804		$	760,617		$	742,241
Segment EBITDA (1):
U.S. Facilities	$	128,537		$	118,744		$	375,663		$	359,250		$	119,008		$	117,124
U.K. Facilities		40,735			50,665			146,081			146,941			40,056			51,152
Corporate and Other		(20,348	)		(17,153	)		(62,075	)		(55,346	)		(23,061	)		(22,545	)
	$	148,924		$	152,256		$	459,669		$	450,845		$	136,003		$	145,731

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Segment EBITDA (1)	$	148,924		$	152,256		$	459,669		$	450,845		$	136,003		$	145,731
Plus (less):
Less:
Equity-based compensation expense		(5,225	)		(4,175	)		(19,273	)		(19,007	)		(6,101	)		(6,919	)
Transaction-related expenses		(2,353	)		(5,665	)		(10,008	)		(18,836	)		(4,321	)		(4,768	)
Debt extinguishment costs		—			—			(940	)		(810	)		—			(940	)
Interest expense, net		(46,651	)		(44,515	)		(137,706	)		(130,777	)		(48,130	)		(45,243	)
Depreciation and amortization		(39,659	)		(36,442	)		(119,360	)		(105,256	)		(40,580	)		(39,773	)
Income before income taxes	$	55,036		$	61,459		$	172,382		$	176,159		$	36,871		$	48,088

The components of accumulated other comprehensive loss are as follows (in thousands):

The Company conducts substantially all of its business through its subsidiaries. The 6.125% Senior Notes, 5.125% Senior Notes, 5.625% Senior Notes and 6.500% Senior Notes are jointly and severally guaranteed on an unsecured senior basis by all of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Senior Credit Facility. Presented below is condensed consolidating financial information for the Company and its subsidiaries at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, and for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017.~~2018. The information segregates the parent company (Acadia Healthcare Company, Inc.), the combined wholly-owned subsidiary guarantors, the combined non-guarantor subsidiaries and eliminations.

	Parent		Combined Subsidiary Guarantors		Combined Non- Guarantors		Consolidating Adjustments			Total Consolidated Amounts		Parent		Combined Subsidiary Guarantors		Combined Non- Guarantors		Consolidating Adjustments			Total Consolidated Amounts
Current assets:
Cash and cash equivalents	$	—	$	32,298	$	16,630	$	—		$	48,928	$	—	$	17,843	$	25,841	$	—			$	43,684
Accounts receivable, net		—		270,535		75,124		—			345,659		—		268,956		62,895		—				331,851
Other current assets		—		70,260		25,886		—			96,146		—		55,472		21,507		—				76,979
Total current assets		—		373,093		117,640		—			490,733		—		342,271		110,243		—				452,514
Property and equipment, net		—		1,197,218		1,929,424		—			3,126,642		—		1,263,982		1,909,070		—				3,173,052
Goodwill		—		1,936,057		793,884		—			2,729,941		—		1,989,900		452,099		—				2,441,999
Intangible assets, net		—		58,405		32,854		—			91,259		—		57,994		31,802		—				89,796
Deferred tax assets		2,296		—		3,630		(2,296	)		3,630		2,094		—		3,436		(2,094	)			3,436
Derivative instruments assets		33,084		—		—		—			33,084
Derivative instrument assets													46,304		—		—		—				46,304
Investment in subsidiaries		5,523,816		—		—		(5,523,816	)		—		5,340,603		—		—		(5,340,603	)			—
Operating lease right-of-use assets													—		98,419		408,368		—				506,787
Other assets		326,442		42,688		8,833		(323,668	)		54,295		284,470		58,157		9,755		(280,753	)			71,629
Total assets	$	5,885,638	$	3,607,461	$	2,886,265	$	(5,849,780	)	$	6,529,584	$	5,673,471	$	3,810,723	$	2,924,773	$	(5,623,450	)		$	6,785,517

Current liabilities:
Current portion of long-term debt	$	32,984	$	—	$	280	$	—		$	33,264	$	36,503	$	—	$	—	$	—			$	36,503
Accounts payable		—		90,497		43,417		—			133,914		—		80,486		36,180		—				116,666
Accrued salaries and benefits		—		80,156		28,995		—			109,151		—		77,320		31,226		—				108,546
Current portion of operating lease liabilities													—		17,040		10,944		—				27,984
Other accrued liabilities		12,150		34,908		67,356		—			114,414		11,916		35,492		87,564		—				134,972
Total current liabilities		45,134		205,561		140,048		—			390,743		48,419		210,338		165,914		—				424,671
Long-term debt		3,160,255		—		345,375		(323,668	)		3,181,962		3,221,709		—		280,753		(280,753	)			3,221,709
Deferred tax liabilities		—		31,180		53,385		(2,296	)		82,269		—		28,636		50,380		(2,094	)			76,922
Operating lease liabilities													—		78,042		426,711		—				504,753
Other liabilities		—		109,181		56,482		—			165,663		—		102,787		19,401		—				122,188
Total liabilities		3,205,389		345,922		595,290		(325,964	)		3,820,637		3,270,128		419,803		943,159		(282,847	)			4,350,243
Redeemable noncontrolling interests		—		—		28,698		—			28,698		—		—		31,931		—				31,931
Total equity		2,680,249		3,261,539		2,262,277		(5,523,816	)		2,680,249		2,403,343		3,390,920		1,949,683		(5,340,603	)			2,403,343
Total liabilities and equity	$	5,885,638	$	3,607,461	$	2,886,265	$	(5,849,780	)	$	6,529,584	$	5,673,471	$	3,810,723	$	2,924,773	$	(5,623,450	)		$	6,785,517

	Parent		Combined Subsidiary Guarantors		Combined Non- Guarantors		Consolidating Adjustments			Total Consolidated Amounts		Parent		Combined Subsidiary Guarantors		Combined Non- Guarantors		Consolidating Adjustments			Total Consolidated Amounts
Current assets:
Cash and cash equivalents	$	—	$	46,860	$	20,430	$	—		$	67,290	$	—	$	32,471	$	18,039	$	—		$	50,510
Accounts receivable, net		—		230,890		66,035		—			296,925		—		248,218		69,869		—			318,087
Other current assets		—		85,746		21,589		—			107,335		—		60,160		21,660		—			81,820
Total current assets		—		363,496		108,054		—			471,550		—		340,849		109,568		—			450,417
Property and equipment, net		—		1,086,802		1,961,328		—			3,048,130		—		1,219,803		1,887,963		—			3,107,766
Goodwill		—		1,936,057		815,117		—			2,751,174		—		1,936,057		460,355		—			2,396,412
Intangible assets, net		—		57,628		29,720		—			87,348		—		56,611		32,379		—			88,990
Deferred tax assets		2,370		—		3,731		(2,370	)		3,731
Derivative instruments assets		12,997		—		—		—			12,997
Deferred tax assets – noncurrent													1,841		—		3,468		(1,841	)		3,468
Derivative instruments													60,524		—		—		—			60,524
Investment in subsidiaries		5,429,386		—		—		(5,429,386	)		—		5,190,771		—		—		(5,190,771	)		—
Other assets		381,913		38,860		7,807		(379,008	)		49,572		306,495		52,824		9,548		(303,940	)		64,927
Total assets	$	5,826,666	$	3,482,843	$	2,925,757	$	(5,810,764	)	$	6,424,502	$	5,559,631	$	3,606,144	$	2,503,281	$	(5,496,552	)	$	6,172,504

Current liabilities:
Current portion of long-term debt	$	34,550	$	—	$	280	$	—		$	34,830	$	34,112	$	—	$	—	$	—		$	34,112
Accounts payable		—		70,767		31,532		—			102,299		—		79,463		38,277		—			117,740
Accrued salaries and benefits		—		69,057		29,990		—			99,047		—		84,150		29,149		—			113,299
Other accrued liabilities		36,196		27,676		77,341		—			141,213		32,837		42,062		76,327		—			151,226
Total current liabilities		70,746		167,500		139,143		—			377,389		66,949		205,675		143,753		—			416,377
Long-term debt		3,183,049		—		401,017		(379,008	)		3,205,058		3,159,375		—		303,940		(303,940	)		3,159,375
Deferred tax liabilities		—		27,975		54,728		(2,370	)		80,333
Deferred tax liabilities – noncurrent													—		31,874		50,339		(1,841	)		80,372
Other liabilities		—		103,112		63,322		—			166,434		—		107,866		46,401		—			154,267
Total liabilities		3,253,795		298,587		658,210		(381,378	)		3,829,214		3,226,324		345,415		544,433		(305,781	)		3,810,391
Redeemable noncontrolling interests		—		—		22,417		—			22,417		—		—		28,806		—			28,806
Total equity		2,572,871		3,184,256		2,245,130		(5,429,386	)		2,572,871		2,333,307		3,260,729		1,930,042		(5,190,771	)		2,333,307
Total liabilities and equity	$	5,826,666	$	3,482,843	$	2,925,757	$	(5,810,764	)	$	6,424,502	$	5,559,631	$	3,606,144	$	2,503,281	$	(5,496,552	)	$	6,172,504

	Parent			Combined Subsidiary Guarantors		Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts			Parent			Combined Subsidiary Guarantors		Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Revenue	$	—		$	458,061	$	302,855		$	—		$	760,916		$	—		$	459,818	$	300,799		$	—		$	760,617
Salaries, wages and benefits		5,225			245,599		167,093			—			417,917			6,101			254,942		168,536			—			429,579
Professional fees		—			24,152		35,357			—			59,509			—			25,368		31,639			—			57,007
Supplies		—			19,139		10,322			—			29,461			—			19,384		10,573			—			29,957
Rents and leases		—			8,294		11,572			—			19,866			—			8,403		11,904			—			20,307
Other operating expenses		—			57,495		32,969			—			90,464			—			59,390		34,475			—			93,865
Depreciation and amortization		—			18,857		20,802			—			39,659			—			19,605		20,975			—			40,580
Interest expense, net		17,225			22,768		6,658			—			46,651			19,578			23,018		5,534			—			48,130
Transaction-related expenses		—			702		1,651			—			2,353			—			3,218		1,103			—			4,321
Total expenses		22,450			397,006		286,424			—			705,880			25,679			413,328		284,739			—			723,746
(Loss) income before income taxes		(22,450	)		61,055		16,431			—			55,036			(25,679	)		46,490		16,060			—			36,871
Equity in earnings of subsidiaries		62,854			—		—			(62,854	)		—			48,157			—		—			(48,157	)		—
(Benefit from) provision for income taxes		(5,875	)		11,666		2,966			—			8,757			(7,033	)		17,065		(2,672	)		—			7,360
Net income (loss)		46,279			49,389		13,465			(62,854	)		46,279			29,511			29,425		18,732			(48,157	)		29,511
Net gain attributable to noncontrolling interests		—			—		(47	)		—			(47	)
Net income attributable to noncontrolling interests																—			—		(40	)		—			(40	)
Net income (loss) attributable to Acadia Healthcare Company, Inc.	$	46,279		$	49,389	$	13,418		$	(62,854	)	$	46,232		$	29,511		$	29,425	$	18,692		$	(48,157	)	$	29,471
Other comprehensive (loss) income:
Foreign currency translation loss		—			—		(31,959	)		—			(31,959	)
Gain on derivative instruments		7,380			—		—			—			7,380
Other comprehensive income (loss)		7,380			—		(31,959	)		—			(24,579	)
Other comprehensive income:
Foreign currency translation gain																—			—		44,481			—			44,481
Loss on derivative instruments																(8,690	)		—		—			—			(8,690	)
Other comprehensive (loss) income																(8,690	)		—		44,481			—			35,791
Comprehensive income (loss) attributable to Acadia Healthcare Company, Inc.	$	53,659		$	49,389	$	(18,541	)	$	(62,854	)	$	21,653		$	20,821		$	29,425	$	63,173		$	(48,157	)	$	65,262

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts			Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Revenue before provision for doubtful accounts	$	—		$	440,423		$	288,289		$	—		$	728,712
Provision for doubtful accounts		—			(10,310	)		(1,688	)		—			(11,998	)
Revenue		—			430,113			286,601			—			716,714		$	—		$	435,625		$	306,616		$	—		$	742,241
Salaries, wages and benefits		4,175			225,001			156,386			—			385,562			6,919			239,052			165,557			—			411,528
Professional fees		—			24,385			28,657			—			53,042			—			24,271			29,747			—			54,018
Supplies		—			18,843			9,809			—			28,652			—			18,712			10,652			—			29,364
Rents and leases		—			8,127			10,922			—			19,049			—			8,239			12,049			—			20,288
Other operating expenses		—			55,077			27,251			—			82,328			—			56,170			32,061			—			88,231
Depreciation and amortization		—			16,963			19,479			—			36,442			—			18,172			21,601			—			39,773
Interest expense, net		15,933			19,304			9,278			—			44,515			14,617			23,584			7,042			—			45,243
Debt extinguishment costs																	940			—			—			—			940
Transaction-related expenses		—			2,211			3,454			—			5,665			—			4,009			759			—			4,768
Total expenses		20,108			369,911			265,236			—			655,255			22,476			392,209			279,468			—			694,153
(Loss) income before income taxes		(20,108	)		60,202			21,365			—			61,459			(22,476	)		43,416			27,148			—			48,088
Equity in earnings of subsidiaries		55,925			—			—			(55,925	)		—			67,598			—			—			(67,598	)		—
(Benefit from) provision for income taxes		(9,672	)		21,202			4,440			—			15,970			(5,752	)		(123	)		3,089			—			(2,786	)
Net income (loss)		45,489			39,000			16,925			(55,925	)		45,489			50,874			43,539			24,059			(67,598	)		50,874
Net loss attributable to noncontrolling interests		—			—			129			—			129			—			—			(55	)		—			(55	)
Net income (loss) attributable to Acadia Healthcare Company, Inc.	$	45,489		$	39,000		$	17,054		$	(55,925	)	$	45,618		$	50,874		$	43,539		$	24,004		$	(67,598	)	$	50,819
Other comprehensive (loss) income:
Foreign currency translation gain		—			—			69,622			—			69,622			—			—			92,780			—			92,780
Loss on derivative instruments		(9,402	)		—			—			—			(9,402	)		(20,053	)		—			—			—			(20,053	)
Other comprehensive (loss) income		(9,402	)		—			69,622			—			60,220			(20,053	)		—			92,780			—			72,727
Comprehensive income (loss) attributable to Acadia Healthcare Company, Inc.	$	36,087		$	39,000		$	86,676		$	(55,925	)	$	105,838		$	30,821		$	43,539		$	116,784		$	(67,598	)	$	123,546

Parent

Combined
Subsidiary
Guarantors

Combined
Non-
Guarantors

Consolidating
Adjustments

Total
Consolidated
Amounts

Revenue

$
—

$
1,347,468

$
921,427

$
—

$
2,268,895

Salaries, wages and benefits

19,273

724,650

502,263

—

1,246,186

Professional fees

—

73,100

93,888

—

166,988

Supplies

—

57,143

31,815

—

88,958

Rents and leases

—

24,844

35,546

—

60,390

Other operating expenses

—

168,923

97,054

—

265,977

Depreciation and amortization

—

55,640

63,720

—

119,360

Interest expense, net

47,307

69,954

20,445

—

137,706

Debt extinguishment costs

940

—

—

—

940

Transaction-related expenses

—

7,382

2,626

—

10,008

Total expenses

67,520

1,181,636

847,357

—

2,096,513

(Loss) income before income taxes

(67,520
)

165,832

74,070

—

172,382

Equity in earnings of subsidiaries

206,204

—

—

(206,204
)

—

(Benefit from) provision for income taxes

(17,359
)

22,985

10,713

—

16,339

Net income (loss)

156,043

142,847

63,357

(206,204
)

156,043

Net gain attributable to noncontrolling interests

—

—

(156
)

—

(156
)
Net income (loss) attributable to Acadia
Healthcare Company, Inc.

$
156,043

$
142,847

$
63,201

$
(206,204
)

$
155,887

Other comprehensive (loss) income:

Foreign currency translation loss

—

—

(82,778
)

—

(82,778
)
Gain on derivative instruments

16,434

—

—

—

16,434

Other comprehensive income (loss)

16,434

—

(82,778
)

—

(66,344
)
Comprehensive income (loss) attributable to Acadia Healthcare Company, Inc.

$
172,477

$
142,847

$
(19,577
)

$
(206,204
)

$
89,543

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Operating activities:
Net income (loss)	$	29,511		$	29,425		$	18,732		$	(48,157	)	$	29,511
Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities:
Equity in earnings of subsidiaries		(48,157	)		—			—			48,157			—
Depreciation and amortization		—			19,605			20,975			—			40,580
Amortization of debt issuance costs		2,888			—			—			—			2,888
Equity-based compensation expense		6,101			—			—			—			6,101
Deferred income taxes		(254	)		(678	)		266			—			(666	)
Other		1,993			253			(59	)		—			2,187
Change in operating assets and liabilities:
Accounts receivable, net		—			(15,693	)		3,713			—			(11,980	)
Other current assets		—			(5,484	)		(391	)		—			(5,875	)
Other assets		2,665			(353	)		648			(2,665	)		295
Accounts payable and other accrued liabilities		—			(7,100	)		(8,601	)		—			(15,701	)
Accrued salaries and benefits		—			(7,872	)		2,023			—			(5,849	)
Other liabilities		—			3,317			(1,135	)		—			2,182
Net cash (used in) provided by operating activities		(5,253	)		15,420			36,171			(2,665	)		43,673
Investing activities:
Cash paid for acquisitions, net of cash acquired		—			(40,400	)		—			—			(40,400	)
Cash paid for capital expenditures		—			(45,231	)		(24,017	)		—			(69,248	)
Cash paid for real estate acquisitions		—			(1,066	)		—			—			(1,066	)
Other		—			521			92			—			613
Net cash used in investing activities		—			(86,176	)		(23,925	)		—			(110,101	)
Financing activities:
Borrowings on revolving credit facility		71,573			—			—			—			71,573
Principal payments on long-term debt		(8,246	)		—			(2,665	)		2,665			(8,246	)
Common stock withheld for minimum statutory taxes, net		(1,327	)		—			—			—			(1,327	)
Other		(2,375	)		(442	)		(680	)		—			(3,497	)
Cash (used in) provided by intercompany activity		(54,372	)		56,570			(2,198	)		—			—
Net provided by (used in) in financing activities		5,253			56,128			(5,543	)		2,665			58,503
Effect of exchange rate changes on cash		—			—			1,099			—			1,099
Net (decrease) increase in cash and cash equivalents		—			(14,628	)		7,802			—			(6,826	)
Cash and cash equivalents at beginning of the period		—			32,471			18,039			—			50,510
Cash and cash equivalents at end of the period	$	—		$	17,843		$	25,841		$	—		$	43,684

Parent

Combined
Subsidiary
Guarantors

Combined
Non-
Guarantors

Consolidating
Adjustments

Total
Consolidated
Amounts

Revenue before provision for doubtful accounts

$
—

$
1,311,937

$
831,759

$
—

$
2,143,696

Provision for doubtful accounts

—

(28,007
)

(3,885
)

—

(31,892
)
Revenue

—

1,283,930

827,874

—

2,111,804

Salaries, wages and benefits

19,007

675,206

451,365

—

1,145,578

Professional fees

—

69,796

72,976

—

142,772

Supplies

—

56,502

28,498

—

85,000

Rents and leases

—

25,139

32,316

—

57,455

Other operating expenses

—

164,596

84,565

—

249,161

Depreciation and amortization

—

48,918

56,338

—

105,256

Interest expense, net

46,392

57,054

27,331

—

130,777

Debt extinguishment costs

810

—

—

—

810

Transaction-related expenses

—

6,219

12,617

—

18,836

Total expenses

66,209

1,103,430

766,006

—

1,935,645

(Loss) income before income taxes

(66,209
)

180,500

61,868

—

176,159

Equity in earnings of subsidiaries

163,931

—

—

(163,931
)

—

(Benefit from) provision for income taxes

(32,178
)

66,124

12,313

—

46,259

Net income (loss)

129,900

114,376

49,555

(163,931
)

129,900

Net loss attributable to noncontrolling interests

—

—

306

—

306

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

$
129,900

$
114,376

$
49,861

$
(163,931
)

$
130,206

Other comprehensive (loss) income:

Foreign currency translation gain

—

—

188,744

—

188,744

Loss on derivative instruments

(24,354
)

—

—

—

(24,354
)
Other comprehensive (loss) income

(24,354
)

—

188,744

—

164,390

Comprehensive income (loss) attributable to Acadia Healthcare Company, Inc.

$
105,546

$
114,376

$
238,605

$
(163,931
)

$
294,596

Parent

Combined
Subsidiary
Guarantors

Combined
Non-
Guarantors

Consolidating
Adjustments

Total
Consolidated
Amounts

Operating activities:

Net income (loss)

$
156,043

$
142,847

$
63,357

$
(206,204
)

$
156,043

Adjustments to reconcile net income (loss)
   to net cash (used in) provided by continuing
   operating activities:

Equity in earnings of subsidiaries

(206,204
)

—

—

206,204

—

Depreciation and amortization

—

55,640

63,720

—

119,360

Amortization of debt issuance costs

8,065

—

(302
)

—

7,763

Equity-based compensation expense

19,273

—

—

—

19,273

Deferred income taxes

74

(2,398
)

586

—

(1,738
)
Debt extinguishment costs

940

—

—

—

940

Other

1,948

1,219

(142
)

—

3,025

Change in operating assets and liabilities:

Accounts receivable, net

—

(39,644
)

(3,608
)

—

(43,252
)
Other current assets

—

7,898

(4,877
)

—

3,021

Other assets

4,596

3,763

105

(4,596
)

3,868

Accounts payable and other accrued liabilities

—

7,835

1,395

—

9,230

Accrued salaries and benefits

—

11,100

(51
)

—

11,049

Other liabilities

—

4,548

(4,399
)

—

149

Net cash (used in) provided by continuing operating
    activities

(15,265
)

192,808

115,784

(4,596
)

288,731

Net cash used in discontinued operating activities

—

(2,548
)

—

—

(2,548
)
Net cash (used in) provided by operating activities

(15,265
)

190,260

115,784

(4,596
)

286,183

Investing activities:

Cash paid for capital expenditures

—

(149,402
)

(100,587
)

—

(249,989
)
Cash paid for real estate acquisitions

—

(9,391
)

—

—

(9,391
)
Other

—

(5,718
)

2,604

—

(3,114
)
Net cash used in investing activities

—

(164,511
)

(97,983
)

—

(262,494
)
Financing activities:

Principal payments on long-term debt

(31,492
)

(169
)

(4,427
)

4,596

(31,492
)
Common stock withheld for minimum statutory taxes, net

(2,272
)

—

—

—

(2,272
)
Other

(1,742
)

(2,885
)

(2,346
)

—

(6,973
)
Cash provided by (used in) intercompany activity

50,771

(37,257
)

(13,514
)

—

—

Net provided by (used in) in financing activities

15,265

(40,311
)

(20,287
)

4,596

(40,737
)
Effect of exchange rate changes on cash

—

—

(1,314
)

—

(1,314
)
Net decrease in cash and cash equivalents

—

(14,562
)

(3,800
)

—

(18,362
)
Cash and cash equivalents at beginning of the period

—

46,860

20,430

—

67,290

Cash and cash equivalents at end of the period

$
—

$
32,298

$
16,630

$
—

$
48,928

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts			Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Operating activities:
Net income (loss)	$	129,900		$	114,376		$	49,555		$	(163,931	)	$	129,900		$	50,874		$	43,539		$	24,059		$	(67,598	)	$	50,874
Adjustments to reconcile net income (loss) to net cash provided by (used in) continuing operating activities:
Equity in earnings of subsidiaries		(163,931	)		—			—			163,931			—			(67,598	)		—			—			67,598			—
Depreciation and amortization		—			48,918			56,338			—			105,256			—			18,172			21,601			—			39,773
Amortization of debt issuance costs		7,652			—			(312	)		—			7,340			2,626			—			(101	)		—			2,525
Equity-based compensation expense		19,007			—			—			—			19,007			6,919			—			—			—			6,919
Deferred income taxes		156			22,401			6,859			—			29,416			942			1,104			(149	)		—			1,897
Debt extinguishment costs		810			—			—			—			810			940			—			—			—			940
Other		4,216			1,727			4,729			—			10,672			794			315			(66	)		—			1,043
Change in operating assets and liabilities:
Accounts receivable, net		—			(21,183	)		(7,498	)		—			(28,681	)		—			(21,049	)		2,256			—			(18,793	)
Other current assets		—			1,126			24,973			—			26,099			—			(7,980	)		(5,236	)		—			(13,216	)
Other assets		3,479			(705	)		139			(3,479	)		(566	)		4,432			(1,305	)		37			(4,432	)		(1,268	)
Accounts payable and other accrued liabilities		—			(22,372	)		(4,009	)		—			(26,381	)		—			(11,417	)		8,049			—			(3,368	)
Accrued salaries and benefits		—			(4,759	)		(3,178	)		—			(7,937	)		—			5,208			(406	)		—			4,802
Other liabilities		—			4,084			3,593			—			7,677			—			1,204			(695	)		—			509
Net cash provided by (used in) continuing operating activities		1,289			143,613			131,189			(3,479	)		272,612			(71	)		27,791			49,349			(4,432	)		72,637
Net cash used in discontinued operating activities		—			(1,261	)		—			—			(1,261	)		—			(287	)		—			—			(287	)
Net cash provided by (used in) operating activities		1,289			142,352			131,189			(3,479	)		271,351			(71	)		27,504			49,349			(4,432	)		72,350
Investing activities:
Cash paid for capital expenditures		—			(114,130	)		(79,687	)		—			(193,817	)		—			(40,879	)		(29,448	)		—			(70,327	)
Cash paid for real estate acquisitions		—			(33,297	)		—			—			(33,297	)		—			(4,293	)		—			—			(4,293	)
Other		—			(7,984	)		1,922			—			(6,062	)		—			(4,799	)		733			—			(4,066	)
Net cash used in investing activities		—			(155,411	)		(77,765	)		—			(233,176	)		—			(49,971	)		(28,715	)		—			(78,686	)
Financing activities:
Principal payments on long-term debt		(25,913	)		—			(3,479	)		3,479			(25,913	)		—			(169	)		(4,263	)		4,432			—
Common stock withheld for minimum statutory taxes, net		(3,278	)		—			—			—			(3,278	)		(2,030	)		—			—			—			(2,030	)
Other		—			1,649			—			—			1,649			(1,742	)		(962	)		—			—			(2,704	)
Cash provided by (used in) intercompany activity		27,902			39,443			(67,345	)		—			—			3,843			1,950			(5,793	)		—			—
Net (used in) provided by in financing activities		(1,289	)		41,092			(70,824	)		3,479			(27,542	)		71			819			(10,056	)		4,432			(4,734	)
Effect of exchange rate changes on cash		—			—			7,965			—			7,965			—			—			1,588			—			1,588
Net increase (decrease) in cash and cash equivalents		—			28,033			(9,435	)		—			18,598			—			(21,648	)		12,166			—			(9,482	)
Cash and cash equivalents at beginning of the period		—			15,681			41,382			—			57,063			—			46,860			20,430			—			67,290
Cash and cash equivalents at end of the period	$	—		$	43,714		$	31,947		$	—		$	75,661		$	—		$	25,212		$	32,596		$	—		$	57,808

On ~~October 22, 2018,~~April 1, 2019, the Company sent a notice of conditional redemption to the trustee of the 9.0% and 9.5% Revenue Bonds indicating that the Company is conditionally exercising its option to redeem in whole the 9.0% and 9.5% Revenue Bonds on December 1, 2018 (the “Redemption Date”) at a redemption price equal to the sum of 104% of the principal amount of the 9.0% and 9.5% Revenue Bonds plus accrued and unpaid interest (the “Redemption Price”). The redemption is expressly conditional on the Company depositing sufficient moneys with the trustee on or prior to the Redemption Date, which amounts, together with funds already on deposit with the trustee, are sufficient to satisfy the Redemption Price. The Company expects to borrow the funds needed for the redemption under its revolving line of credit pursuant to the Amended and Restated Credit Agreement.

~~On October 23, 2018 the Company signed a definitive agreement for~~completed the acquisition of ~~Mission Treatment~~Bradford Recovery Center (“~~Mission Treatment”~~Bradford”), a specialty treatment facility with 46 beds located in Millerton, Pennsylvania for cash consideration of approximately ~~$22.5 million and a working capital settlement. Mission Treatment operates nine comprehensive treatment centers in California, Nevada, Arizona and Oklahoma.~~$4.5 million.

On October 31, 2018 the Company signed a definitive agreement for the acquisition of Whittier Pavilion (“Whittier”), an inpatient psychiatric facility with 71 beds located in Haverhill, Massachusetts, for cash consideration of approximately $17.9 million. Whittier is part of the Whitter Health Network, a family owned and operated healthcare system that has provided hospital and community services since 1982.

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 contained 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:

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.

Our business strategy is to acquire and develop behavioral healthcare facilities and improve our operating results within our facilities and our other behavioral healthcare operations. We strive to improve the operating results of our facilities by providing high-quality services, expanding referral networks and marketing initiatives while meeting the increased demand for behavioral healthcare services through expansion of our current locations as well as developing new services within existing locations. At ~~September 30, 2018,~~March 31, 2019, we operated ~~586~~593 behavioral healthcare facilities with approximately ~~18,000~~18,100 beds in 40 states, the U.K. and Puerto Rico. During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, we acquired 10 facilities and added ~~408~~260 beds (exclusive of acquisitions), including ~~256~~100 added to existing facilities and ~~152~~160 added through the opening of two de novo facilities. For the year ending December 31, ~~2018,~~2019, we expect to add ~~more than 800~~approximately 700 total beds exclusive of acquisitions.

We are the leading publicly traded pure-play provider of behavioral healthcare services, with operations in the U.S. and the U.K. 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 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 and U.K. though acquisitions, joint ventures and bed additions in existing facilities.

On April 1, 2019, the Company completed the acquisition of Bradford, a specialty treatment facility with 46 beds located in Millerton, Pennsylvania for cash consideration of approximately $4.5 million.

On February 15, 2019, the Company completed the acquisition of Whittier, an inpatient psychiatric facility with 71 beds located in Haverhill, Massachusetts, for cash consideration of approximately $17.9 million. Also on February 15, 2019, the Company completed the acquisition of Mission Treatment for cash consideration of approximately $22.5 million and a working capital settlement. Mission Treatment operated nine comprehensive treatment centers in California, Nevada, Arizona and Oklahoma.

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,
	2018					2017						2018					2017						2019						2018
	Amount		%			Amount			%			Amount		%			Amount			%			Amount			%			Amount			%
Revenue before provision for doubtful accounts	$	760,916				$	728,712					$	2,268,895				$	2,143,696
Provision for doubtful accounts		—					(11,998	)					—					(31,892	)
Revenue		760,916		100.0	%		716,714			100.0	%		2,268,895		100.0	%		2,111,804			100.0	%	$	760,617			100.0	%	$	742,241			100.0	%
Salaries, wages and benefits		417,917		54.9	%		385,562			53.8	%		1,246,186		54.9	%		1,145,578			54.2	%		429,579			56.5	%		411,528			55.4	%
Professional fees		59,509		7.8	%		53,042			7.4	%		166,988		7.4	%		142,772			6.8	%		57,007			7.5	%		54,018			7.3	%
Supplies		29,461		3.9	%		28,652			4.0	%		88,958		3.9	%		85,000			4.0	%		29,957			3.9	%		29,364			4.0	%
Rents and leases		19,866		2.6	%		19,049			2.6	%		60,390		2.7	%		57,455			2.7	%		20,307			2.7	%		20,288			2.7	%
Other operating expenses		90,464		11.9	%		82,328			11.5	%		265,977		11.7	%		249,161			11.8	%		93,865			12.3	%		88,231			11.9	%
Depreciation and amortization		39,659		5.2	%		36,442			5.1	%		119,360		5.3	%		105,256			5.0	%		40,580			5.3	%		39,773			5.4	%
Interest expense		46,651		6.1	%		44,515			6.2	%		137,706		6.1	%		130,777			6.2	%		48,130			6.3	%		45,243			6.1	%
Debt extinguishment costs		—		0.0	%		-			0.0	%		940		0.0	%		810			0.1	%		—			0.0	%		940			0.1	%
Transaction-related expenses		2,353		0.3	%		5,665			0.8	%		10,008		0.4	%		18,836			0.9	%		4,321			0.6	%		4,768			0.6	%
Total expenses		705,880		92.7	%		655,255			91.4	%		2,096,513		92.4	%		1,935,645			91.7	%		723,746			95.1	%		694,153			93.5	%
Income before income taxes		55,036		7.3	%		61,459			8.6	%		172,382		7.6	%		176,159			8.3	%		36,871			4.9	%		48,088			6.5	%
Provision for income taxes		8,757		1.2	%		15,970			2.2	%		16,339		0.7	%		46,259			2.1	%
Provision for (benefit from) income taxes																								7,360			1.0	%		(2,786	)		-0.4	%
Net income	$	46,279		6.1	%	$	45,489			6.4	%	$	156,043		6.9	%	$	129,900			6.2	%		29,511			3.9	%		50,874			6.9	%
Net income attributable to noncontrolling interest																								(40	)		0.0	%		(55	)		0.0	%
Net income attributable to Acadia Healthcare Company, Inc.																							$	29,471			3.9	%	$	50,819			6.9	%

At ~~September 30, 2018,~~March 31, 2019, the U.S. Facilities segment included ~~215~~223 behavioral healthcare facilities with approximately ~~9,200~~9,300 beds in 40 states and Puerto Rico, and the U.K. Facilities segment included ~~371~~370 behavioral healthcare facilities with approximately 8,800 beds in the U.K.

The following table sets forth percent changes in same facility operating data for our U.S. Facilities for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 compared to the same ~~periods~~period in ~~2017:~~2018:

(c) Segment EBITDA is defined as income before provision for income taxes, equity-based compensation expense, transaction-related expenses, debt extinguishment costs, interest expense and depreciation and amortization. Management uses Segment EBITDA as an analytical indicator to

measure the performance of our segments and to develop strategic objectives and operating plans for those segments. Segment 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. Segment EBITDA should not be considered as a measure of financial performance under GAAP, and the items excluded from Segment EBITDA are significant components in understanding and assessing financial performance. Because Segment EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, Segment EBITDA, as presented, may not be comparable to other similarly titled measures of other companies.

The following table sets forth percent changes in same facility operating data for our U.K. Facilities for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 compared to the same ~~periods~~period in ~~2017:~~2018:

Three months ended ~~September 30, 2018~~March 31, 2019 compared to the three months ended ~~September 30, 2017~~March 31, 2018

Revenue. Revenue increased ~~$44.2~~$18.4 million, or ~~6.2%~~2.5%, to ~~$760.9~~$760.6 million for the three months ended ~~September 30, 2018~~March 31, 2019 from ~~$716.7~~$742.2 million for the three months ended ~~September 30, 2017~~March 31, 2018 resulting from same facility revenue growth of ~~6.2%~~5.6% and offset by the ~~slight~~ decrease in the exchange rate between USD and GBP of ~~$1.2~~$17.9 million. During the three months ended ~~September 30, 2018,~~March 31, 2019, we generated ~~$488.6~~$488.0 million of revenue, or 64.2% of our total revenue, from our U.S. Facilities and ~~$272.3~~$272.7 million of revenue, or 35.8% of our total revenue, from our U.K. Facilities. During the three months ended ~~September 30, 2017,~~March 31, 2018, we generated ~~$453.7~~$462.4 million of revenue, or ~~63.3%~~62.3% of our total revenue, from our U.S. Facilities and ~~$263.0~~$279.8 million of revenue, or ~~36.7%~~37.7% of our total revenue, from our U.K. Facilities.

U.S. same facility revenue increased by ~~$32.1~~$27.4 million, or ~~7.2%~~6.1%, for the three months ended ~~September 30, 2018~~March 31, 2019 compared to the three months ended ~~September 30, 2017,~~March 31, 2018, resulting from same facility growth in patient days of ~~3.3%~~4.3% and an increase in same facility revenue per day of ~~3.8%~~1.7%. U.K. same facility revenue increased by ~~$10.3~~$11.1 million, or ~~4.4%~~4.7%, for the three months ended ~~September 30, 2018~~March 31, 2019 compared to the three months ended ~~September 30, 2017,~~March 31, 2018, resulting from same facility growth in patient days of ~~1.3%~~0.9% and an increase in same facility revenue per day of ~~3.1%~~3.7%. Consistent with the same facility patient day growth in ~~2017,~~2018, the growth in same facility patient days for the three months ended ~~September 30, 2018~~March 31, 2019 compared to the three months ended ~~September 30, 2017,~~March 31, 2018, 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 ~~$417.9~~$429.6 million for the three months ended ~~September 30, 2018~~March 31, 2019 compared to ~~$385.6~~$411.5 million for the three months ended ~~September 30, 2017,~~March 31, 2018, an increase of ~~$32.3~~$18.1 million. SWB expense included ~~$5.2~~$6.1 million and ~~$4.2~~$6.9 million of equity-based compensation expense for the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively. Excluding equity-based compensation expense, SWB expense was ~~$412.7~~$423.5 million, or ~~54.2%~~55.7% of revenue, for the three months ended ~~September 30, 2018,~~March 31, 2019, compared to ~~$381.4~~$404.6 million, or ~~53.2%~~54.5% of revenue, for the three months ended ~~September 30, 2017.~~March 31, 2018. Same facility SWB expense was ~~$372.7~~$379.2 million for the three months ended ~~September 30, 2018,~~March 31, 2019, or ~~51.5%~~52.4% of revenue, compared to ~~$348.1~~$352.7 million for the three months ended ~~September 30, 2017,~~March 31, 2018, or ~~51.0%~~51.5% of revenue.

Professional fees. Professional fees were ~~$59.5~~$57.0 million for the three months ended ~~September 30, 2018,~~March 31, 2019, or ~~7.8%~~7.5% of revenue, compared to ~~$53.0~~$54.0 million for the three months ended ~~September 30, 2017,~~March 31, 2018, or ~~7.4%~~7.3% of revenue. The ~~$6.5~~$3.0 million increase was primarily attributable to higher contract labor costs in our U.K. Facilities. Contract labor costs in our U.K. Facilities were higher primarily due

to the ongoing nursing and clinical labor shortage and our dependence on higher cost agency labor. Same facility professional fees were ~~$51.5~~$49.2 million for the three months ended ~~September 30, 2018,~~March 31, 2019, or ~~7.1%~~6.8% of revenue, compared to ~~$44.9~~$44.3 million, for the three months ended ~~September 30, 2017,~~March 31, 2018, or ~~6.6%~~6.5% of revenue.

Supplies. Supplies expense was ~~$29.5~~$30.0 million for the three months ended ~~September 30, 2018,~~March 31, 2019, or 3.9% of revenue, compared to ~~$28.7~~$29.4 million for the three months ended ~~September 30, 2017,~~March 31, 2018, or 4.0% of revenue. Same facility supplies expense was ~~$27.4~~$27.8 million for the three months ended ~~September 30, 2018,~~March 31, 2019, or 3.8% of revenue, compared to ~~$26.7~~$26.6 million for the three months ended ~~September 30, 2017,~~March 31, 2018, or 3.9% of revenue.

Rents and leases. Rents and leases were ~~$19.9~~$20.3 million for both the three months ended ~~September 30,~~March 31, 2019 and 2018, or ~~2.6% of revenue, compared to $19.0 million for the three months ended September 30, 2017, or 2.6%~~2.7% of revenue. Same facility rents and leases were ~~$16.0~~$16.4 million for the three months ended ~~September 30, 2018,~~March 31, 2019, or ~~2.2%~~2.3% of revenue, compared to ~~$15.2~~$15.6 million for the three months ended ~~September 30, 2017,~~March 31, 2018, or ~~2.2%~~2.3% 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 ~~$90.5~~$93.9 million for the three months ended ~~September 30, 2018,~~March 31, 2019, or ~~11.9%~~12.3% of revenue, compared to ~~$82.3~~$88.2 million for the three months ended ~~September 30, 2017,~~March 31, 2018, or ~~11.5%~~11.9% of revenue. Same facility other operating expenses were ~~$83.9~~$86.6 million for the three months ended ~~September 30, 2018,~~March 31, 2019, or ~~11.6%~~12.0% of revenue, compared to ~~$77.1~~$80.2 million for the three months ended ~~September 30, 2017,~~March 31, 2018, or ~~11.3%~~11.7% of revenue.

Depreciation and amortization. Depreciation and amortization expense was ~~$39.7~~$40.6 million for the three months ended ~~September 30, 2018,~~March 31, 2019, or ~~5.2%~~5.3% of revenue, compared to ~~$36.4~~$39.8 million for the three months ended ~~September 30, 2017,~~March 31, 2018, or ~~5.1%~~5.4% of revenue. ~~The increase in depreciation and amortization was attributable to depreciation associated with capital expenditures and real estate acquisitions during 2017 and 2018.~~

Interest expense. Interest expense was ~~$46.7~~$48.1 million for the three months ended ~~September 30, 2018~~March 31, 2019 compared to ~~$44.5~~$45.2 million for the three months ended ~~September 30, 2017.~~March 31, 2018. The increase in interest expense was primarily a result of higher interest rates applicable to our ~~variable rate~~variable-rate debt slightly offset by the lower interest rates ~~in connection with amendments to~~as a result of the Repricing Facilities to the Amended and Restated Credit Agreement.

~~Transaction-related expenses.~~ ~~Transaction-related expenses were $2.4 million~~Debt extinguishment costs. Debt extinguishment costs for the three months ended ~~September 30,~~March 31, 2018 ~~compared to $5.7 million for the three months ended September 30, 2017. Transaction-related expenses~~ represent ~~costs incurred in the respective periods primarily related to our acquisitions and related integrated efforts, as summarized below (in thousands):~~

~~Provision for income taxes.~~ For the three months ended September 30, 2018, the provision for income taxes was $8.8 million, reflecting an effective tax rate of 15.9%, compared to $16.0 million, reflecting an effective tax rate of 26.0%, for the three months ended September 30, 2017. The decrease in the effective tax rate for the three months ended September 30, 2018 was primarily attributable to the application of the Tax Act.

~~Nine months ended September 30, 2018 compared to the nine months ended September 30, 2017~~

~~Revenue.~~ Revenue increased $157.1 million, or 7.4%, to $2.3 billion for the nine months ended September 30, 2018 from $2.1 billion for the nine months ended September 30, 2017 resulting from same facility revenue growth of 5.7% and the increase in the exchange rate between USD and GBP of $44.5 million. During the nine months ended September 30, 2018, we generated $1.4 billion of revenue, or 63.1% of our total revenue, from our U.S. Facilities and $836.4 million of revenue, or 36.9% of our total revenue, from our U.K. Facilities. During the nine months ended September 30, 2017, we generated $1.4 billion of revenue, or 64.2% of our total revenue, from our U.S. Facilities and $756.5 million of revenue, or 35.8% of our total revenue, from our U.K. Facilities.

U.S. same facility revenue increased by $81.0 million, or 6.1%, for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017, resulting from same facility growth in patient days of 2.4% and an increase in same facility revenue per day of 3.6%. U.K. same facility revenue increased by $34.8 million, or 4.8%, for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017, resulting from same facility growth in patient days of 1.6% and an increase in same facility revenue per day of 3.2%. Consistent with the same facility patient day growth in 2017, the growth in same facility patient days for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 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 $1.2 billion for the nine months ended September 30, 2018 compared to $1.1 billion for the nine months ended September 30, 2017, an increase of $100.6 million. SWB expense included $19.3 million and $19.0 million of equity-based compensation expense for the nine months ended September 30, 2018 and 2017, respectively. Excluding equity-based compensation expense, SWB expense was $1.2 billion, or 54.1% of revenue, for the nine months ended September 30, 2018, compared to $1.1 billion, or 53.3% of revenue, for the nine months ended September 30, 2017. Same facility SWB expense was $1.1 billion for the nine months ended September 30, 2018, or 51.3% of revenue, compared to $1.0 billion for the nine months ended September 30, 2017, or 51.0% of revenue.

~~Professional fees.~~ Professional fees were $167.0 million for the nine months ended September 30, 2018, or 7.4% of revenue, compared to $142.8 million for the nine months ended September 30, 2017, or 6.8% of revenue. The $24.2 million increase was primarily attributable to higher contract labor costs in our U.K. Facilities. Contract labor costs in our U.K. Facilities were higher primarily due to the ongoing nursing and clinical labor shortage and our dependence on higher cost agency labor. Same facility professional fees were $143.6 million for the nine months ended September 30, 2018, or 6.6% of revenue, compared to $124.6 million, for the nine months ended September 30, 2017, or 6.1% of revenue.

~~Supplies.~~ Supplies expense was $89.0 million for the nine months ended September 30, 2018, or 3.9% of revenue, compared to $85.0 million for the nine months ended September 30, 2017, or 4.0% of revenue. Same facility supplies expense was $82.7 million for the nine months ended September 30, 2018, or 3.8% of revenue, compared to $80.5 million for the nine months ended September 30, 2017, or 3.9% of revenue.

~~Rents and leases.~~ Rents and leases were $60.4 million for the nine months ended September 30, 2018, or 2.7% of revenue, compared to $57.5 million for the nine months ended September 30, 2017, or 2.7% of revenue. Same facility rents and leases were $48.4 million for the nine months ended September 30, 2018, or 2.2% of revenue, compared to $47.5 million for the nine months ended September 30, 2017, or 2.3% 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 $266.0 million for the nine months ended September 30, 2018, or 11.7% of revenue, compared to $249.2 million for the nine months ended September 30, 2017, or 11.8% of revenue. Same facility other operating expenses were $247.0 million for the nine months ended September 30, 2018, or 11.4% of revenue, compared to $237.7 million for the nine months ended September 30, 2017, or 11.6% of revenue.

~~Depreciation and amortization.~~ Depreciation and amortization expense was $119.4 million for the nine months ended September 30, 2018, or 5.3% of revenue, compared to $105.3 million for the nine months ended September 30, 2017, or 5.0% of revenue. The increase in depreciation and amortization was attributable to depreciation associated with capital expenditures and real estate acquisitions during 2017 and 2018.

~~Interest expense.~~ Interest expense was $137.7 million for the nine months ended September 30, 2018 compared to $130.8 million for the nine months ended September 30, 2017. The increase in interest expense was primarily a result of higher interest rates applicable to our variable rate debt slightly offset by the lower interest rates in connection with amendments to the Repricing Facilities Amendments to the Amended and Restated Credit Agreement.

~~Debt extinguishment costs.~~ ~~Debt extinguishment costs for the nine months ended September 30, 2018 represented~~ $0.6 million of cash charges and $0.3 million of non-cash charges recorded in connection with the Repricing Facilities Amendments to the Amended and Restated Credit Agreement. Debt extinguishment costs for the nine months ended September 30, 2017 represented $0.5 million of cash charges and $0.3 million of non-cash charges recorded in connection with the Third Repricing Amendment to the Amended and Restated Credit Facility.

Transaction-related expenses. Transaction-related expenses were ~~$10.0~~$4.3 million for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 compared to ~~$18.8~~$4.8 million for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018. Transaction-related expenses represent costs incurred in the respective periods primarily related to our acquisitions, termination, restructuring and ~~related integrated efforts,~~closure costs, as summarized below (in thousands):

Provision for (benefit from) income taxes. For the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, the provision for income taxes was ~~$16.3~~$7.4 million, reflecting an effective tax rate of ~~9.5%~~20.0%, compared to ~~$46.3~~the benefit from income taxes of $(2.8) million, reflecting an effective tax rate of ~~26.3%~~(5.8)%, for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018. The ~~decrease~~increase in the effective tax rate for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 was primarily attributable to the application of the Tax ~~Act and~~Act. The Company recorded a discrete benefit of $10.5 million ~~recorded in~~during the ~~nine~~three months ended ~~September 30,~~March 31, 2018 related to athe change in the Company’s provisional amount recorded at December 31, 2017.

In May 2014, the FASB and the International Accounting Standards Board issued ASU 2014-09. ASU 2014-09’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. We adopted ASU 2014-09 using the modified retrospective method effective January 1, 2018. As a result of certain changes required by ASU 2014-09, the majority of our provision for doubtful accounts are recorded as a direct reduction to revenue instead of being presented as a separate line item on the condensed consolidated statements of income. The adoption of ASU 2014-09 did not have a significant impact on our consolidated financial statements.

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; (iv) publicly funded sources in the U.K. (including the NHS, CCGs and local authorities in England, Scotland and Wales) and (v) 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 in our U.S. Facilities for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ (dollars in thousands):

	Three Months Ended September 30,											Nine Months Ended September 30,											Three Months Ended March 31,
	2018					2017						2018					2017						2019					2018
	Amount		%			Amount			%			Amount		%			Amount			%			Amount		%			Amount		%
Commercial	$	146,439		30.0	%	$	142,870			30.7	%	$	431,337		30.1	%	$	431,818			31.1	%	$	139,427		28.6	%	$	137,619		29.8	%
Medicare		73,528		15.0	%		73,593			15.8	%		210,307		14.7	%		212,992			15.4	%		72,616		14.9	%		67,214		14.5	%
Medicaid		229,390		46.9	%		199,592			42.9	%		668,236		46.6	%		587,705			42.4	%		239,191		49.0	%		213,336		46.1	%
Self-Pay		33,559		6.9	%		43,685			9.3	%		103,845		7.3	%		130,928			9.4	%		31,732		6.5	%		36,907		8.0	%
Other		5,710		1.2	%		5,936			1.3	%		18,776		1.3	%		23,758			1.7	%		4,994		1.0	%		7,329		1.6	%
Revenue before provision for doubtful accounts		488,626		100.0	%		465,676			100.0	%		1,432,501		100.0	%		1,387,201			100.0	%
Provision for doubtful accounts		—					(11,998	)					—					(31,886	)
Revenue	$	488,626				$	453,678					$	1,432,501				$	1,355,315					$	487,960		100.0	%	$	462,405		100.0	%

The following table presents revenue by payor type and as a percentage of revenue in our U.K. Facilities for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ (dollars in thousands):

	Three Months Ended September 30,										Nine Months Ended September 30,											Three Months Ended March 31,
	2018					2017					2018					2017						2019					2018
	Amount		%			Amount		%			Amount		%			Amount			%			Amount		%			Amount		%
U.K. public funded sources	$	245,919		90.3	%	$	236,778		90.0	%	$	756,094		90.4	%	$	678,623			89.7	%	$	245,413		90.0	%	$	253,294		90.5	%
Self-Pay		26,159		9.6	%		24,572		9.4	%		78,499		9.4	%		70,662			9.3	%		26,814		9.8	%		25,068		9.0	%
Other		212		0.1	%		1,686		0.6	%		1,801		0.2	%		7,210			1.0	%		430		0.2	%		1,474		0.5	%
Revenue before provision for doubtful accounts		272,290		100.0	%		263,036		100.0	%		836,394		100.0	%		756,495			100.0	%
Provision for doubtful accounts		—					—					—					(6	)
Revenue	$	272,290				$	263,036				$	836,394				$	756,489					$	272,657		100.0	%	$	279,836		100.0	%

The following tables present a summary of our aging of accounts receivable at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017:~~2018:

	Current			30-90			90-150			>150			Total			Current			30-90			90-150			>150			Total
Commercial		16.8	%		6.0	%		2.2	%		5.0	%		30.0	%		16.7	%		5.4	%		2.2	%		5.3	%		29.6	%
Medicare		10.8	%		1.5	%		0.4	%		0.8	%		13.5	%		10.8	%		1.6	%		0.5	%		1.1	%		14.0	%
Medicaid		23.3	%		5.8	%		2.6	%		6.1	%		37.8	%		23.2	%		6.3	%		2.6	%		6.8	%		38.9	%
U.K. public funded sources		7.2	%		1.4	%		0.1	%		0.2	%		8.9	%		5.1	%		3.0	%		0.1	%		-0.1	%		8.1	%
Self-Pay		1.9	%		1.8	%		1.6	%		3.2	%		8.5	%		1.9	%		1.9	%		1.4	%		2.6	%		7.8	%
Other		0.5	%		0.2	%		0.2	%		0.4	%		1.3	%		0.6	%		0.3	%		0.1	%		0.6	%		1.6	%
Total		60.5	%		16.7	%		7.1	%		15.7	%		100.0	%		58.3	%		18.5	%		6.9	%		16.3	%		100.0	%

	Current			30-90			90-150			>150			Total			Current			30-90			90-150			>150			Total
Commercial		15.3	%		8.7	%		3.2	%		6.9	%		34.1	%		14.8	%		6.3	%		2.7	%		5.3	%		29.1	%
Medicare		9.4	%		1.6	%		0.5	%		1.1	%		12.6	%		9.8	%		1.8	%		0.6	%		0.9	%		13.1	%
Medicaid		19.8	%		6.4	%		2.5	%		5.2	%		33.9	%		22.4	%		6.4	%		3.4	%		7.4	%		39.6	%
U.K. public funded sources		7.0	%		3.4	%		0.2	%		0.0	%		10.6	%		6.0	%		2.4	%		0.0	%		0.0	%		8.4	%
Self-Pay		1.8	%		1.4	%		1.4	%		3.2	%		7.8	%		1.8	%		1.7	%		1.7	%		3.2	%		8.4	%
Other		0.3	%		0.3	%		0.2	%		0.2	%		1.0	%		0.4	%		0.3	%		0.2	%		0.5	%		1.4	%
Total		53.6	%		21.8	%		8.0	%		16.6	%		100.0	%		55.2	%		18.9	%		8.6	%		17.3	%		100.0	%

Cash provided by continuing operating activities for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 was ~~$288.7~~$43.7 million compared to ~~$272.6~~$72.6 million for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018. The ~~increase~~decrease in cash provided by continuing operating activities was primarily attributable to the ~~growth~~decline in ~~same facility operations.~~earnings in our U.K. Facilities and changes in salaries, wages and benefits accruals. Days sales outstanding were 4239 days at ~~September 30, 2018 compared to 38 days at December~~both March 31, ~~2017. At September 30, 2018~~2019 and December 31, ~~2017,~~2018, respectively. At March 31, 2019 and December 31, 2018, we had working capital of ~~$100.0~~$27.8 million and ~~$94.2~~$34.0 million, respectively.

Cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 was ~~$262.5~~$110.1 million compared to ~~$233.2~~$78.7 million for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018. Cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 primarily consisted of ~~$250.0~~cash paid for acquisitions of $40.4 million, $69.2 million of cash paid for capital expenditures and ~~$9.4~~$1.1 million of cash paid for real estate. Cash paid for capital expenditures for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 consisted of ~~$53.0~~$18.5 million of routine capital expenditures and ~~$197.0~~$50.7 million of expansion capital expenditures. We define expansion capital expenditures as those that increase the capacity of our facilities or otherwise enhance revenue. Routine or maintenance capital expenditures were ~~2.3%~~2.4% of revenue for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019. Cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 primarily consisted of ~~$52.0~~$70.3 million of cash paid for capital expenditures and $4.3 million of cash paid for real estate. Cash paid for capital expenditures for the three months ended March 31, 2018 consisted of $18.1 million of cash paid for routine capital expenditures ~~$141.8~~and $52.2 million of ~~cash paid for~~ expansion capital ~~expenditures and $33.3 million of cash paid for real estate.~~expenditures.

Cash ~~used in~~provided by financing activities for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 was ~~$40.7~~$58.5 million compared to cash used in financing activities of ~~$27.5~~$4.7 million for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018. Cash ~~used in~~provided by financing activities for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 consisted of borrowings on revolving credit facility of $71.6 million offset by principal payments of long-term debt of ~~$31.5~~$8.2 million, common stock withheld for minimum statutory taxes of ~~$2.3~~$1.3 million and other of ~~$7.0~~$3.5 million. Cash used in financing activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 primarily consisted of ~~principal payments on long-term debt of $25.9 million and~~ common stock withheld for minimum statutory taxes of ~~$3.3~~$2.0 million and other of $2.7 million.

We had total available cash and cash equivalents of ~~$48.9~~$43.7 million and ~~$67.3~~$50.5 million at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively, of which approximately ~~$16.6~~$25.8 million and ~~$20.4~~$18.0 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., and it is our current intention to permanently reinvest our foreign cash and cash equivalents outside of the U.S. While we are still evaluating the full impact of the Tax Act on the Company, we expect the substantial reduction of the federal corporate tax rate to benefit our financial results and cash flow in future periods. We believe the change will not result in a U.S. tax liability on those foreign earnings

~~which have not previously been repatriated to the U.S., with future foreign earnings potentially not subject to U.S. income taxes when repatriated.~~

We entered into the Senior Secured Credit Facility on April 1, 2011. On December 31, 2012, we entered into the Amended and Restated Credit Agreement which amended and restated the Senior Secured Credit Facility. We have amended the Amended and Restated Credit Agreement from time to time as described in our prior filings with the SEC.

On May 10, 2017, we entered into a Third Repricing Amendment to the Amended and Restated Credit Agreement. The Third Repricing Amendment reduced the Applicable Rate with respect to the Tranche B-1 Facility and the Tranche B-2 Facility from 3.0% to 2.75% in the case of Eurodollar Rate loans and from 2.0% to 1.75% in the case of Base Rate Loans. In connection with the Third Repricing Amendment, we recorded a debt extinguishment charge of $0.8 million, including the discount and write-off of deferred financing costs, which was recorded in debt extinguishment costs in the condensed consolidated statements of income.

On March 22, 2018, we entered into a Second Repricing Facilities Amendment to the Amended and Restated Credit Agreement. The Second Repricing Facilities Amendment (i) replaced the Tranche B-1 Facility and the Tranche B-2 Facility with a new Tranche B-3 Facility and a new Tranche B-4 Facility, respectively, and (ii) reduced the Applicable Rate from 2.75% to 2.50% in the case of Eurodollar Rate loans and reduced the Applicable Rate from 1.75% to 1.50% in the case of Base Rate Loans.

On March 29, 2018, we entered into a Third Repricing Facilities Amendment to the Amended and Restated Credit Agreement. The Third Repricing Facilities Amendment replaced the existing revolving credit facility and TLA Facility with a new revolving credit facility and TLA Facility, respectively. Our line of credit on the revolving credit facility remains at $500.0 million and the Third Repricing Facility Amendment reduced the size of the TLA Facility from $400.0 million to $380.0 million to reflect the then current outstanding principal. The Third Repricing Facilities Amendment reduced the Applicable Rate for the revolving credit facility and the TLA Facility by amending the definition of “Applicable Rate” and replacing the rate table therein with the table set forth below.

In connection with the Repricing Facilities Amendments, we recorded a debt extinguishment charge of $0.9 million, including the discount and write-off of deferred financing costs, which was recorded in debt extinguishment costs in the condensed consolidated statements of income.

On February 6, 2019, we entered into the Eleventh Amendment to the Amended and Restated Credit Agreement. The Eleventh Amendment, among other things, amended the definition of “Consolidated EBITDA” to remove the cap on non-cash charges, losses and expenses related to the impairment of goodwill, which in turn provided increased flexibility to us in terms of our financial covenants.

On February 27, 2019, we entered into the Twelfth Amendment to the Amended and Restated Credit Agreement. The Twelfth Amendment, among other things, modified certain definitions, including “Consolidated EBITDA”, and increased our permitted Maximum Consolidated Leverage Ratio, thereby providing increased flexibility to us in terms of our financial covenants.

We had ~~$494.1~~$414.7 million of availability under the revolving line of credit and had standby letters of credit outstanding of ~~$5.9~~$13.7 million related to security for the payment of claims required by our workers’ compensation insurance program at ~~September 30, 2018.~~March 31, 2019. Borrowings under the revolving line of credit are subject to customary conditions precedent to borrowing. The Amended and Restated Credit Agreement requires quarterly term loan principal repayments of our TLA Facility of $4.8 million for ~~December 31, 2018~~June 30, 2019 to December 31, 2019, $7.1 million for March 31, 2020 to December 31, 2020, and $9.5 million for March 31, 2021 to September 30, 2021, with the remaining principal balance of the TLA Facility due on the maturity date of November 30, 2021. We are required to repay the Tranche B-3 Facility in equal quarterly installments of $1.2 million on the last business day of each March, June, September and December, with the outstanding principal balance of the Tranche B-3 Facility due on February 11, 2022. We are required to repay the Tranche B-4 Facility in equal quarterly installments of approximately $2.3 million on the last business day of each March, June, September and December, with the outstanding principal balance of the Tranche B-4 Facility due on February 16, 2023. On ~~December 29, 2017, we made an additional payment of $22.5 million, including $7.7 million on the Tranche B-1 Facility and $14.8 million on the Tranche B-2 Facility. On~~ April 17, 2018, we made an additional payment of $15.0 million, including $5.1 million on the Tranche B-3 Facility and $9.9 million on the Tranche B-4 Facility.

Borrowings under the Amended and Restated Credit Agreement are guaranteed by each of our wholly-owned domestic subsidiaries (other than certain excluded subsidiaries) and are secured by a lien on substantially all of the Company and such subsidiaries’ assets. Borrowings with respect to the TLA Facility and our revolving credit facility (collectively, “Pro Rata Facilities”) under the Amended and Restated Credit Agreement bear interest at a rate tied to our Consolidated Leverage Ratio (defined as consolidated funded debt net of up to ~~$40.0~~$50.0 million of unrestricted and unencumbered cash to consolidated EBITDA, in each case as defined in the Amended and Restated Credit Agreement). The Applicable Rate (as defined in the Amended and Restated Credit Agreement) for the Pro Rata Facilities was 2.50% for Eurodollar Rate Loans (as defined in the Amended and Restated Credit Agreement) and 1.50% for Base Rate Loans (as defined in the Amended and Restated Credit Agreement) at ~~September 30, 2018.~~March 31, 2019. Eurodollar Rate Loans with respect to the Pro Rata Facilities bear interest at the Applicable Rate plus the Eurodollar Rate (as defined in the Amended and Restated Credit Agreement) (based upon the LIBOR Rate (as defined in the Amended and Restated Credit Agreement) prior to commencement of the interest rate period). Base Rate Loans with respect to the Pro Rata Facilities bear interest at the Applicable Rate plus the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate and (iii) the Eurodollar Rate plus 1.0%.

At ~~September 30, 2018,~~March 31, 2019, the Pro Rata Facilities bore interest at a rate of LIBOR plus 2.50%. In addition, we are required to pay a commitment fee on undrawn amounts under our revolving credit facility.

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

Eurodollar Rate Loans with respect to the Tranche B-3 Facility bear interest at the Tranche B-3 Facility Applicable Rate (as defined below) plus the Eurodollar Rate (subject to a floor of 0.75% and based upon the LIBOR Rate prior to commencement of the interest rate period). Base Rate Loans bear interest at the Tranche B-3 Facility Applicable Rate plus the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate and (iii) the Eurodollar Rate plus 1.0%. As used herein, the term “Tranche B-3 Facility Applicable Rate” means, with respect to Eurodollar Rate Loans, 2.50%, and with respect to Base Rate Loans, 1.50%. The Tranche B-4 Facility bears interest as follows: Eurodollar Rate Loans bear interest at the Applicable Rate (as defined in the Amended and Restated Credit Agreement) plus the Eurodollar Rate (subject to a floor of 0.75% and based upon the LIBOR Rate prior to commencement of the interest rate period) and Base Rate Loans bear interest at the Applicable Rate plus the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate and (iii) the Eurodollar Rate plus 1.0%. As used herein, the term “Applicable Rate” means, with respect to Eurodollar Rate Loans, 2.50%, and with respect to Base Rate Loans, 1.50%.

The lenders who provided the Tranche B-3 Facility and Tranche B-4 Facility are not entitled to benefit from our maintenance of its financial covenants under the Amended and Restated Credit Agreement. Accordingly, if we fail to maintain its financial covenants, such failure shall not constitute an event of default under the Amended and Restated Credit Agreement with respect to the Tranche ~~B-3~~B-

3 Facility or Tranche B-4 Facility until and unless the Amended and Restated Senior Credit Facility is accelerated or the commitment of the lenders to make further loans is terminated.

The Amended and Restated Credit Agreement requires us and our subsidiaries to comply with customary affirmative, negative and financial covenants, including a fixed charge coverage ratio, consolidated leverage ratio and consolidated senior secured leverage ratio. We may be required to pay all of our indebtedness immediately if we default on any of the numerous financial or other restrictive covenants contained in any of our material debt agreements. Set forth below is a brief description of such covenants, all of which are subject to customary exceptions, materiality thresholds and qualifications:

At ~~September 30, 2018,~~March 31, 2019, we were in compliance with all of the above covenants.

On March 12, 2013, we issued $150.0 million of 6.125% Senior Notes due 2021. The 6.125% Senior Notes mature on March 15, 2021 and bear interest at a rate of 6.125% per annum, payable semi-annually in arrears on March 15 and September 15 of each year.

On July 1, 2014, we issued $300.0 million of 5.125% Senior Notes due 2022. The 5.125% Senior Notes mature on July 1, 2022 and bear interest at a rate of 5.125% per annum, payable semi-annually in arrears on January 1 and July 1 of each year.

On February 11, 2015, we issued $375.0 million of 5.625% Senior Notes due 2023. On September 21, 2015, we issued $275.0 million of additional 5.625% Senior Notes. The additional notes formed a single class of debt securities with the 5.625% Senior Notes issued in February 2015. Giving effect to this issuance, we have outstanding an aggregate of $650.0 million of 5.625% Senior Notes. The 5.625% Senior Notes mature on February 15, 2023 and bear interest at a rate of 5.625% per annum, payable semi-annually in arrears on February 15 and August 15 of each year.

On February 16, 2016, we issued $390.0 million of 6.500% Senior Notes due 2024. The 6.500% Senior Notes mature on March 1, 2024 and bear interest at a rate of 6.500% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2016.

The indentures governing the Senior Notes contain covenants that, among other things, limit our ability and the ability of its 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 guarantee our obligations under the Amended and Restated Senior Credit Facility. The guarantees are full and unconditional and joint and several.

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

On November 11, 2012, in connection with the acquisition of Park Royal, we assumed debt of $23.0 million. The fair market value of the debt assumed was $25.6 million and resulted in a debt premium balance being recorded as of the acquisition date. The debt consisted of $7.5 million and $15.5 million of Lee County (Florida) Industrial Development Authority Healthcare Facilities Revenue Bonds, Series 2010 with stated interest rates of 9.0% and 9.5%, respectively. The 9.0% bonds in the amount of $7.5 million have a maturity date of December 1, 2030 and require yearly principal payments beginning in 2013. The 9.5% bonds in the amount of $15.5 million have a maturity date of December 1, 2040 and require yearly principal payments beginning in 2031. The principal

payments establish a bond-sinking fund to be held with the trustee and shall be sufficient to redeem the principal amounts of the 9.0% and 9.5% Revenue Bonds on their respective maturity dates. At September 30, 2018 and December 31, 2017, $2.3 million was recorded within other assets on the condensed consolidated balance sheets related to the debt service reserve fund requirements. The yearly principal payments, which establish a bond sinking fund, will increase the debt service reserve fund requirements. The bond premium amount of $2.6 million is amortized as a reduction of interest expense over the life of the 9.0% and 9.5% Revenue Bonds using the effective interest method.

On October 22, 2018, we sent a notice of conditional redemption to the trustee of the 9.0% and 9.5% Revenue Bonds indicating that we are conditionally exercising our option to redeem in whole the 9.0% and 9.5% Revenue Bonds on December 1, 2018 at a redemption price equal to the sum of 104% of the principal amount of the 9.0% and 9.5% Revenue Bonds plus accrued and unpaid interest. The redemption is expressly conditional on the Company depositing sufficient moneys with the trustee on or prior to the Redemption Date, which amounts, together with funds already on deposit with the trustee, are sufficient to satisfy the Redemption Price. We expect to borrow the funds needed for the redemption under our revolving line of credit pursuant to the Amended and Restated Credit Agreement.

The following table presents a summary of contractual obligations at ~~September 30, 2018~~March 31, 2019 (dollars 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)	$	206,331	$	575,872	$	2,772,767	$	444,547	$	3,999,517	$	211,704	$	1,374,837	$	2,349,099	$	—	$	3,935,640
Operating leases		66,201		119,325		99,178		782,538		1,067,242
Purchase and other obligations (b)		4,132		37,357		1,980		26,342		69,811
Operating lease liabilities (b)												61,078		111,516		95,580		712,138		980,312
Finance lease liabilities												7,879		40,527		2,619		25,847		76,872
Total obligations and commitments	$	276,664	$	732,554	$	2,873,925	$	1,253,427	$	5,136,570	$	280,661	$	1,526,880	$	2,447,298	$	737,985	$	4,992,824

At ~~September 30, 2018,~~March 31, 2019, we had standby letters of credit outstanding of ~~$5.9~~$13.7 million related to security for the payment of claims as required by our workers’ compensation insurance program.

Our interest expense is sensitive to changes in market interest rates. Our long-term debt outstanding at ~~September 30, 2018~~March 31, 2019 was composed of $1.5 billion of fixed-rate debt and ~~$1.7~~$1.8 billion of variable-rate debt with interest based on LIBOR plus an applicable margin. A hypothetical 10% increase in interest rates (which would equate to a ~~0.47%~~0.49% higher rate on our variable rate debt) would decrease our net income and cash flows by ~~$6.5~~$5.9 million on an annual basis based upon our borrowing level at ~~September 30, 2018.~~March 31, 2019.

LIBOR and certain other interest “benchmarks” may be subject to regulatory guidance and/or reform that could cause interest rates under our current or future debt agreements to perform differently than in the past or cause other unanticipated consequences. The U.K.’s Financial Conduct Authority, which regulates LIBOR, has announced that it intends to stop encouraging or requiring banks to submit rates for the calculation of LIBOR rates after 2021, and it is unclear if LIBOR will cease to exist or if new methods of calculating LIBOR will evolve. If LIBOR ceases to exist or if the methods of calculating LIBOR change from their current form, interest rates on our current or future debt obligations may be adversely affected.

The functional currency for our U.K. facilities is the British pound or GBP. Our revenue and earnings are sensitive to changes in the GBP to USD exchange rate from the translation of our earnings into USD at exchange rates that may fluctuate. Based upon the

level of our U.K. operations relative to the Company as a whole, a hypothetical 10% change in the exchange rate (which would equate to an increase or decrease in the exchange rate of 0.13) would cause a change in our net income of ~~$9.5~~$7.7 million on an annual basis.

In May 2016, we entered into multiple cross currency swap agreements with an aggregate notional amount of $650.0 million to manage foreign currency exchange risk by effectively converting a portion of our fixed-rate USD denominated senior notes, including the semi-annual interest payments thereunder, to fixed-rate, GBP-denominated debt of £449.3 million. The cross currency swap agreements limit the impact of changes in the exchange rate on our cash flows and leverage.

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 ~~Securities~~ Exchange ~~Act of 1934 (the “Exchange Act”))~~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.

The Company adopted the new lease accounting guidance in ASU 2016-02 on January 1, 2019 and began using new lease accounting software. The implementation of the new lease accounting standard and lease accounting software included additions to our internal controls, policies and procedures. There have been no other changes in our internal control over financial reporting during the three months ended ~~September 30, 2018~~March 31, 2019 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

We are, from time to time, subject to various claims, lawsuits, governmental investigations and regulatory actions, including claims for damages for personal injuries, medical malpractice, overpayments, breach of contract, securities law violations, tort and employment related claims. In these actions, plaintiffs request a variety of damages, including, in some instances, punitive and other types of damages that may not be covered by insurance. In addition, healthcare companies are subject to numerous investigations by various governmental agencies. Certain of our individual facilities have received, and from time to time, other facilities may receive, subpoenas, civil investigative demands, audit ~~reports~~requests and other inquiries from, and may be subject to investigation by, federal and state agencies. These investigations can result in repayment obligations, and violations of the False Claims Act can result in substantial monetary penalties and fines, the imposition of a corporate integrity agreement and exclusion from participation in governmental health programs. In addition, the federal False Claims Act permits private parties to bring qui tam, or “whistleblower,” suits against companies that submit false claims for payments to, or improperly retain overpayments from, the government. Some states have adopted similar state whistleblower and false claims provisions.

On April 1, 2019, a consolidated complaint was filed against the Company and certain former and current officers in the lawsuit styled St. Clair County Employees’ Retirement System v. Acadia Healthcare Company, Inc., et al., Case No. 3:19-cv-00988, which is pending in the United States District Court for the Middle District of Tennessee. The complaint purports to be brought on behalf of a class consisting of all persons (other than defendants) who purchased securities of the Company between April 30, 2014 and November 15, 2018, and alleges that defendants violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. At this time, we are not able to quantify any potential liability in connection with this litigation because the case is in its early stages.

During the third quarter of 2018, the U.S. Attorney’s Office for the Southern District of West Virginia served subpoenas on seven of our comprehensive treatment centers located in West Virginia requesting various documents from January 2012 to ~~present.~~the date of the subpoena. The U.S. Attorney’s Office has advised us that the civil aspect of the investigation is a False Claims Act investigation focused on claims submitted by the centers for certain lab services. We are cooperating fully with the government’s investigation and established a reserve of $19.0 million during the fourth quarter of 2018 relating to our billing for lab services in West Virginia. In connection with the investigation, we expect to enter into a corporate integrity agreement with the Office of Inspector General imposing customary compliance obligations on our subsidiary, CRC Health. At this time, we cannot predict the potential liability, and changes in the reserve may be required in future periods as discussions with the government continue and additional information becomes available.

In the fall of 2017, Office of Inspector General issued subpoenas to three of our 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 our facilities in December 2017 requesting certain documents from November 2012 to the date of the demand. In April 2019, the Office of Inspector General issued subpoenas relating to six additional facilities requesting certain documents and information from January 2013 to the date of the subpoenas. 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. We are cooperating with the government’s investigation but are not able to quantify any potential liability in connection with ~~this investigation.~~these investigations.

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, ~~2017.~~2018. The risks, as described in in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, are not the only risks facing the 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.

During the three months ended ~~September 30, 2018,~~March 31, 2019, 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:

** 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.

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


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

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Condensed Consolidated Balance Sheets (Unaudited) ~~at September 30, 2018 and December 31, 2017~~	1

	Condensed Consolidated Statements of Income (Unaudited) ~~for the Three and Nine Months Ended September 30, 2018 and 2017~~	2

	Condensed Consolidated Statements of Comprehensive Income (Unaudited) ~~for the Three and Nine Months Ended September 30, 2018 and 2017~~	3

	Condensed Consolidated Statement of Equity (Unaudited) ~~for the Nine Months Ended September 30, 2018~~	4

	Condensed Consolidated Statements of Cash Flows (Unaudited) ~~for the Nine Months Ended September 30, 2018 and 2017~~	5

	Notes to Condensed Consolidated Financial Statements (Unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3229

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4338

Item 4.	Controls and Procedures	4439

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	4540

Item 1A.	Risk Factors	4540

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4541

Item 6.	Exhibits	4642

SIGNATURES		4743

Balance at December 31, 2017	$	30,812
Payments received		126,506
Revenue recognized		(124,894	)
Foreign currency translation loss		(1,687	)
Balance at September 30, 2018	$	30,737

Balance at December 31, 2018	$	31,239
Payments received		48,216
Revenue recognized		(39,736	)
Foreign currency translation gain		480
Balance at March 31, 2019	$	40,199

	March 31, 2019			December 31, 2018
Land	$	451,157		$	430,771
Building and improvements		2,565,195			2,423,594
Equipment		456,369			444,538
Construction in progress		216,075			294,848
		3,688,796			3,593,751
Less: accumulated depreciation		(515,744	)		(485,985	)
Property and equipment, net	$	3,173,052		$	3,107,766

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

	Three Months Ended September 30, 2018					Nine Months Ended September 30, 2018
	As Reported		Prior to Adopting ASU 2014-09			As Reported		Prior to Adopting ASU 2014-09
Revenue before provision for doubtful accounts	$	760,916	$	772,380		$	2,268,895	$	2,298,084
Provision for doubtful accounts		—		(11,464	)		—		(29,189	)
Revenue	$	760,916	$	760,916		$	2,268,895	$	2,268,895

Right-of-Use Assets	Balance Sheet Classification	March 31, 2019
Finance lease right-of-use assets	Property and equipment, net	$	45,547
Operating lease right-of-use assets	Operating lease right-of-use assets		506,787
Total		$	552,334

Lease Liabilities	Balance Sheet Classification	March 31, 2019
Current:
Finance lease liabilities	Other accrued liabilities	$	7,210
Operating lease liabilities	Current portion of operating lease liabilities		27,984
Noncurrent:
Finance lease liabilities	Other liabilities		44,445
Operating lease liabilities	Operating lease liabilities		504,753
Total		$	584,392


Weighted-average remaining lease term (in years):
Finance	7.4
Operating	19.9

Weighted-average discount rate:
Finance		6.4	%
Operating		6.4	%

	Three Months Ended March 31, 2019
Finance lease costs:
Depreciation of leased assets		1,123
Interest of lease liabilities		997
Total finance lease costs	$	2,120

Operating lease costs		16,529
Variable lease costs		886
Short term lease costs		1,447
Other lease costs		1,445
Total rents and leases	$	20,307

Total lease costs	$	22,427

	Finance Leases		Operating Leases
For the nine months ending December 31, 2019	$	6,078	$	46,252
2020		6,785		58,573
2021		34,922		55,048
2022		1,984		50,272
2023		1,007		46,774
Thereafter		26,096		723,393
Total minimum lease payments		76,872		980,312
Less: amount of lease payments representing interest		25,217		447,575
Present value of future minimum lease payments		51,655		532,737
Less: Current portion of lease liabilities		7,210		27,984
Noncurrent lease liabilities	$	44,445	$	504,753

	Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	15,809
Operating cash flows for finance leases	$	997
Financing cash flows for finance leases	$	846

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	3,662
Finance leases	$	1,027

Balance at December 31, 2017	$	22,417
Contribution of redeemable noncontrolling interests		6,125
Net income attributable to noncontrolling interests		156
Balance at September 30, 2018	$	28,698

Balance at December 31, 2018	$	28,806
Acquisition of redeemable noncontrolling interests		3,085
Net income attributable to noncontrolling interests		40
Balance at March 31, 2019	$	31,931

	U.S. Facilities		U.K. Facilities			Corporate and Other		Consolidated
Goodwill:
Balance at January 1, 2018	$	2,042,592	$	708,582		$	—	$	2,751,174
Increase from contribution of redeemable noncontrolling interests		2,244		—			—		2,244
Foreign currency translation loss		—		(24,239	)		—		(24,239	)
Prior year purchase price adjustments		—		762			—		762
Balance at September 30, 2018	$	2,044,836	$	685,105		$	—	$	2,729,941

	March 31, 2019		December 31, 2018
Assets (2):
U.S. Facilities	$	3,950,684	$	3,779,040
U.K. Facilities		2,633,347		2,175,809
Corporate and Other		201,486		217,655
	$	6,785,517	$	6,172,504

	Foreign Currency Translation Adjustments			Change in Fair Value of Derivative Instruments		Pension Plan			Total
Balance at December 31, 2017	$	(376,740	)	$	7,167	$	(4,545	)	$	(374,118	)
Foreign currency translation (loss) gain		(82,935	)		—		157			(82,778	)
Gain on derivative instruments, net of tax of $5.6 million		—			16,434		—			16,434
Balance at September 30, 2018	$	(459,675	)	$	23,601	$	(4,388	)	$	(440,462	)

	Three Months Ended September 30, 2018	Nine Months Ended September 30, 2018
U.S. Same Facility Results (a)
Revenue growth	7.2%	6.1%
Patient days growth	3.3%	2.4%
Admissions growth	5.9%	3.9%
Average length of stay change (b)	-2.5%	-1.5%
Revenue per patient day growth	3.8%	3.6%
EBITDA margin change (c)	60 bps	20 bps

	Three Months Ended September 30, 2018	Nine Months Ended September 30, 2018
U.K. Same Facility Results (a,c)
Revenue growth	4.4%	4.8%
Patient days growth	1.3%	1.6%
Admissions growth	-1.4%	1.7%
Average length of stay change (b)	2.7%	-0.1%
Revenue per patient day growth	3.1%	3.2%
EBITDA margin change (d)	-450 bps	-180 bps

U.K. Same Facility Results (a,c)
Revenue growth		4.7%
Patient days growth		0.9%
Admissions growth		-2.1%
Average length of stay change (b)		3.1%
Revenue per patient day growth		3.7%
EBITDA margin change (d,e)		-430 bps

Pricing Tier	Consolidated Leverage Ratio	Eurodollar Rate Loans			Base Rate Loans			Commitment Fee
1	< 3.50:1.0		1.50	%		0.50	%		0.20	%
2	>3.50:1.0 but < 4.00:1.0		1.75	%		0.75	%		0.25	%
3	>4.00:1.0 but < 4.50:1.0		2.00	%		1.00	%		0.30	%
4	>4.50:1.0 but < 5.25:1.0		2.25	%		1.25	%		0.35	%
5	>5.25:1.0		2.50	%		1.50	%		0.40	%

	March 31	June 30	September 30	December 31
~~2018~~2019	~~6.50x~~6.25x	6.25x	6.25x	6.00x
2020	~~6.00x~~
~~2019~~5.75x	5.75x	5.75x	5.50x	~~5.50x~~
~~2020~~	~~5.25x~~2021	5.25x	5.25x	5.00x	5.00x

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		4,163	$	41.49		—		—
August 1 – August 31		1,044		39.69		—		—
September 1 – September 30		175		37.30		—		—
Total		5,382

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	Eleventh Amendment, dated February 6, 2019, to the Credit Agreement. (2)
10.2	Twelfth Amendment, dated February 27, 2019, to the Credit Agreement. (2)
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.

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Acadia Healthcare Company, Inc.

By:		/s/ David M. Duckworth
		David M. Duckworth
		Chief Financial Officer