Acadia Healthcare (ACHC) 8-K Acadia Healthcare Reports 78.1% Growth in Second Quarter Adjusted EPS to $0.57

Exhibit 99

Acadia Healthcare Reports 78.1% Growth in Second Quarter Adjusted EPS to $0.57

Revenue More Than Doubles to $453.7 Million

Increases Guidance for 2015 Adjusted Earnings per Diluted Share to New Range of $2.15 to $2.18

FRANKLIN, Tenn.--(BUSINESS WIRE)--August 4, 2015--Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced financial results for the second quarter and six months ended June 30, 2015. For the quarter, revenue increased 112.2% to $453.7 million from $213.8 million for the second quarter of 2014. Income from continuing operations was $33.8 million, or $0.49 per diluted share, for the second quarter of 2015 compared with $22.5 million, or $0.43 per diluted share, for the second quarter of 2014. Adjusted income from continuing operations increased 137.8% to $39.5 million for the second quarter of 2015 from $16.6 million for the second quarter of 2014, while adjusted income from continuing operations per diluted share increased 78.1% to $0.57 from $0.32. The adjusted results exclude transaction-related expenses of $7.2 million and $3.0 million for the second quarter of 2015 and 2014, respectively, a $1.0 million loss on foreign currency derivatives for the second quarter of 2015 and a $13.7 million gain on foreign currency derivatives for the second quarter of 2014. Weighted average shares outstanding increased 32.6% for the second quarter of 2015 from the second quarter of 2014, primarily due to the issuance of common stock in June 2014 and February and May 2015, the net proceeds of which have primarily been used to fund acquisitions. A reconciliation of all non-GAAP financial results in this release appears on pages 8 and 9.

For the first six months of 2015, revenue grew 97.4% to $819.4 million from $415.2 million for the first six months of 2014. Income from continuing operations for the first half of 2015 was $48.4 million, or $0.74 per diluted share, compared with $35.5 million, or $0.69 per diluted share, for the same period in 2014. Adjusted income from continuing operations increased 117.5% to $66.6 million for the first six months of 2015 from $30.6 million for the first six months of 2014, while adjusted income from continuing operations per diluted share increased 68.3% to $1.01 from $0.60. The adjusted results exclude transaction-related expenses of $25.6 million and $4.6 million for the first half of 2015 and 2014, respectively, a $0.9 million loss on foreign currency derivatives for the first half of 2015 and a $13.7 million gain on foreign currency derivatives for the first half of 2014. Weighted average shares outstanding increased 28.5% for the first six months of 2015 compared with the same period in 2014.

“For the second quarter of 2015, Acadia’s organic growth and acquisition strategies continued to drive outstanding financial results,” said Joey Jacobs, Chairman and Chief Executive Officer of Acadia. “While the July 1, 2014, acquisition of Partnerships in Care (PiC) and the February 11, 2015, acquisition of CRC Health Group (CRC) were the primary drivers of our growth for the latest quarter, we completed a total of 11 acquisitions in the 12 months ended June 30, 2015, adding 82 facilities with more than 4,300 inpatient beds and 88 comprehensive treatment centers.

“During the second quarter, we contributed to these totals with five acquisitions in the United Kingdom, which added 21 facilities and over 500 beds to PiC’s operations. As a result, PiC celebrated its first year anniversary as part of Acadia with 45 facilities and over 1,800 beds compared with 23 facilities and approximately 1,200 beds at the time of the acquisition.

“In addition to the accretive impact of acquisitions, our second quarter financial results benefited from strong organic growth that drove revenues and margin improvement. This growth primarily reflected the addition of approximately 400 beds for the 12 months ended June 30, 2015, to existing facilities and one de novo facility, including approximately 250 new beds added in the first half of 2015.

“Second quarter same facility revenue increased 9.0%, due largely to new beds added to the same facility base over the previous 12 months, as well as to our continuing initiatives to build revenue at each facility. Same facility patient days increased 7.4% compared with the second quarter last year, and same facility revenue per patient day rose 1.5%. The increased operating leverage generated by significant same facility revenue growth, combined with our efforts to improve facility productivity and efficiency, produced a 120 basis point increase in same facility EBITDA margin to 26.1% for the quarter. Acadia’s consolidated adjusted EBITDA for the second quarter of 2015 increased 136.6% to $105.8 million from $44.7 million for the second quarter of 2014, while our consolidated adjusted EBITDA margin increased 240 basis points to 23.3%.

“Since the end of the second quarter, we have completed an additional transaction in the U.K., acquiring a 15-bed inpatient facility, which is our first U.K. facility focused on addiction treatment. In addition, we completed the acquisition of our first inpatient behavioral health facility in Philadelphia, Pennsylvania, which operates approximately 150 beds. We believe Acadia is well positioned to continue executing its acquisition and organic growth strategies, with $72.5 million of cash flow from continuing operations for the second quarter of 2015 and full availability under our $300 million revolving credit facility.”

Acadia today increased its guidance for 2015 adjusted earnings per diluted share to a range of $2.15 to $2.18 from the previous range of $2.12 to $2.15. The Company’s guidance does not include the impact of any future acquisitions or transaction-related expenses.

Acadia will hold a conference call to discuss its second quarter financial results at 9:00 a.m. Eastern Time on Wednesday, August 5, 2015. A live webcast of the conference call will be available at www.acadiahealthcare.com in the “Investors” section of the website. The webcast of the conference call will be available through August 21, 2015.

Risk Factors

This news release contains forward-looking statements. Generally words such as “may,” “will,” “should,” “could,” “anticipate,” “expect,” “intend,” “estimate,” “plan,” “continue,” and “believe” or the negative of or other variation on these and other similar expressions identify forward-looking statements. These forward-looking statements are made only as of the date of this news release. We do not undertake to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements are based on current expectations and involve risks and uncertainties and our future results could differ significantly from those expressed or implied by our forward-looking statements. Factors that may cause actual results to differ materially include, without limitation, (i) Acadia’s ability to complete acquisitions and successfully integrate the operations of acquired facilities, including the PiC and CRC facilities; (ii) Acadia’s ability to add beds, expand services, enhance marketing programs and improve efficiencies at its facilities; (iii) potential reductions in payments received by Acadia from the government and third-party payors; (iv) the occurrence of patient incidents, which could adversely affect the price of our common stock and result in incremental regulatory burdens and governmental investigations; (v) the risk that Acadia may not generate sufficient cash from operations to service its debt and meet its working capital and capital expenditure requirements; and (vi) potential operating difficulties, client preferences, changes in competition and general economic or industry conditions that may prevent Acadia from realizing the expected benefits of its business strategy. These factors and others are more fully described in Acadia’s periodic reports and other filings with the SEC.

About Acadia

Acadia is a provider of inpatient behavioral healthcare services. Acadia operates a network of 225 behavioral healthcare facilities with approximately 9,200 beds in 37 states, the United Kingdom and Puerto Rico. Acadia provides psychiatric and chemical dependency services to its patients in a variety of settings, including inpatient psychiatric hospitals, residential treatment centers, outpatient clinics and therapeutic school-based programs.

Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
	(In thousands, except per share amounts)
Revenue before provision for doubtful accounts	$	461,798		$	220,664		$	835,956		$	426,783
Provision for doubtful accounts		(8,138	)		(6,861	)		(16,513	)		(11,562	)
Revenue		453,660			213,803			819,443			415,221
Salaries, wages and benefits (including equity-based compensation expense of $5,355, $2,406, $9,249 and $4,170, respectively)		243,302			122,473			449,173			240,048
Professional fees		30,029			10,891			52,456			21,273
Supplies		20,542			10,596			36,796			20,660
Rents and leases		8,211			2,889			14,097			5,658
Other operating expenses		51,128			24,646			91,655			47,756
Depreciation and amortization		14,926			5,935			28,030			11,371
Interest expense, net		28,049			9,730			50,195			19,437
Loss (gain) on foreign currency derivatives		961			(13,735	)		908			(13,735	)
Transaction-related expenses		7,157			3,016			25,573			4,595
Total expenses		404,305			176,441			748,883			357,063
Income from continuing operations before income taxes		49,355			37,362			70,560			58,158
Provision for income taxes		15,512			14,905			22,125			22,680
Income from continuing operations		33,843			22,457			48,435			35,478
Income (loss) from discontinued operations, net of income taxes		1			(6	)		3			31
Net income	$	33,844		$	22,451		$	48,438		$	35,509
Basic earnings per share:
Income from continuing operations	$	0.50		$	0.43		$	0.74		$	0.70
Income (loss) from discontinued operations		-			-			-			-
Net income	$	0.50		$	0.43		$	0.74		$	0.70
Diluted earnings per share:
Income from continuing operations	$	0.49		$	0.43		$	0.74		$	0.69
Income (loss) from discontinued operations		-			-			-			-
Net income	$	0.49		$	0.43		$	0.74		$	0.69
Weighted-average shares outstanding:
Basic		68,296			51,616			65,429			50,872
Diluted		68,735			51,819			65,782			51,174

Acadia Healthcare Company, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
	June 30,			December 31,
	2015			2014
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	34,572		$	94,040
Accounts receivable, net of allowance for doubtful accounts of $26,233 and $22,449, respectively		182,315			118,378
Deferred tax assets		38,693			20,155
Other current assets		70,325			41,570
Total current assets		325,905			274,143
Property and equipment, net		1,455,390			1,069,700
Goodwill		1,946,028			802,986
Intangible assets, net		58,514			21,636
Deferred tax assets - noncurrent		33,966			13,141
Other assets		106,582			41,984
Total assets	$	3,926,385		$	2,223,590
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	38,652		$	26,965
Accounts payable		58,714			48,696
Accrued salaries and benefits		77,545			59,317
Other accrued liabilities		68,197			30,956
Total current liabilities		243,108			165,934
Long-term debt		1,914,555			1,069,305
Deferred tax liabilities - noncurrent		20,200			63,880
Other liabilities		82,218			43,506
Total liabilities		2,260,081			1,342,625
Equity:
Common stock		706			592
Additional paid-in capital		1,567,304			847,301
Accumulated other comprehensive loss		(51,586	)		(68,370	)
Retained earnings		149,880			101,442
Total equity		1,666,304			880,965
Total liabilities and equity	$	3,926,385		$	2,223,590

Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
	Six Months Ended June 30,
	2015			2014
	(In thousands)
Operating activities:
Net income	$	48,438		$	35,509
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation and amortization		28,030			11,371
Amortization of debt issuance costs		3,218			1,334
Equity-based compensation expense		9,249			4,170
Deferred income tax expense		24,682			9,097
Income from discontinued operations, net of taxes		(3	)		(31	)
Loss (gain) on foreign currency derivatives		908			(13,735	)
Other		692			25
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net		(10,442	)		(15,303	)
Other current assets		(13,048	)		(4,792	)
Other assets		(1,218	)		(578	)
Accounts payable and other accrued liabilities		(4,313	)		(1,300	)
Accrued salaries and benefits		(225	)		1,782
Other liabilities		4,619			1,701
Net cash provided by continuing operating activities		90,587			29,250
Net cash provided by (used in) discontinued operating activities		554			(11	)
Net cash provided by operating activities		91,141			29,239
Investing activities:
Cash paid for acquisitions, net of cash acquired		(286,734	)		(10,000	)
Cash paid for capital expenditures		(122,035	)		(43,323	)
Cash paid for real estate acquisitions		(3,428	)		(18,326	)
Settlement of foreign currency derivatives		(908	)		-
Other		(481	)		(439	)
Net cash used in investing activities		(413,586	)		(72,088	)
Financing activities:
Borrowings on long-term debt		875,000			7,500
Borrowings on revolving credit facility		180,000			59,500
Principal payments on revolving credit facility		(180,000	)		(113,000	)
Principal payments on long-term debt		(15,875	)		(3,750	)
Repayment of assumed CRC debt		(904,467	)		-
Payment of debt issuance costs		(22,775	)		(5,810	)
Issuance of common stock, net		331,530			374,336
Common stock withheld for minimum statutory taxes, net		(7,826	)		(2,981	)
Excess tax benefit from equity awards		6,327			3,479
Cash paid for contingent consideration		-			(3,250	)
Other		(150	)		-
Net cash provided by financing activities		261,764			316,024
Effect of exchange rate changes on cash		1,213			-
Net (decrease) increase in cash and cash equivalents		(59,468	)		273,175
Cash and cash equivalents at beginning of the period		94,040			4,569
Cash and cash equivalents at end of the period	$	34,572		$	277,744
Effect of acquisitions:
Assets acquired, excluding cash	$	1,636,164		$	10,500
Liabilities assumed		(1,009,944	)		-
Issuance of common stock in connection with acquisition		(380,210	)		-
Deposits paid for acquisitions		40,724			-
Prior year deposits paid for acquisitions		-			(500	)
Cash paid for acquisitions, net of cash acquired	$	286,734		$	10,000

Acadia Healthcare Company, Inc.
Operating Statistics
(Unaudited)
(Revenue in thousands)
	Three Months Ended June 30,							Six Months Ended June 30,
	2015			2014			% Change	2015			2014			% Change
Same Facility Results
Revenue	$	228,622		$	209,815		9.0%	$	444,147		$	407,182		9.1%
Patient Days		333,264			310,336		7.4%		655,709			602,096		8.9%
Admissions		21,369			18,408		16.1%		42,082			35,828		17.5%
Average Length of Stay (b)		15.6			16.9		-7.5%		15.6			16.8		-7.3%
Revenue per Patient Day	$	686		$	676		1.5%	$	677		$	676		0.2%
EBITDA margin		26.1	%		24.9	%	120 bps		25.3	%		24.3	%	100 bps
U.S. Facility Results
Revenue	$	366,886		$	212,834		72.4%	$	657,393		$	413,398		59.0%
Patient Days		517,423			315,710		63.9%		941,836			612,767		53.7%
Admissions		30,121			18,908		59.3%		55,565			36,826		50.9%
Average Length of Stay (b)		17.2			16.7		2.9%		17.0			16.6		1.9%
Revenue per Patient Day	$	709		$	674		5.2%	$	698		$	675		3.5%
EBITDA margin		27.9	%		24.9	%	300 bps		27.2	%		24.3	%	290 bps
U.K. Facility Results
Revenue	$	84,927						$	158,242
Patient Days		125,085							228,920
Admissions		336							585
Average Length of Stay (b)		372.3							391.3
Revenue per Patient Day	$	679						$	691
EBITDA margin		24.0	%						24.8	%
Total Facility Results
Revenue	$	451,813		$	212,834		112.3%	$	815,635		$	413,398		97.3%
Patient Days		642,508			315,710		103.5%		1,170,756			612,767		91.1%
Admissions		30,457			18,908		61.1%		56,150			36,826		52.5%
Average Length of Stay (b)		21.1			16.7		26.3%		20.9			16.6		25.3%
Revenue per Patient Day	$	703		$	674		4.3%	$	697		$	675		3.3%
EBITDA margin		27.2	%		24.9	%	230 bps		26.7	%		24.3	%	240 bps
(a) Same-facility results for the three and six months ended June 30, 2015 and 2014 exclude one facility that is converting its residential treatment beds to acute psychiatric treatment beds. The transition is expected to be completed in the fourth quarter of 2015.
(b) Average length of stay is defined as patient days divided by admissions.

Acadia Healthcare Company, Inc.
Reconciliation of Net Income to Adjusted EBITDA
(Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
	(in thousands)
Net income	$	33,844		$	22,451		$	48,438		$	35,509
Income from discontinued operations		(1	)		6			(3	)		(31	)
Provision for income taxes		15,512			14,905			22,125			22,680
Interest expense, net		28,049			9,730			50,195			19,437
Depreciation and amortization		14,926			5,935			28,030			11,371
EBITDA		92,330			53,027			148,785			88,966
Adjustments:
Equity-based compensation expense (a)		5,355			2,406			9,249			4,170
Loss (gain) on foreign currency derivatives (b)		961			(13,735	)		908			(13,735	)
Transaction-related expenses (c)		7,157			3,016			25,573			4,595
Adjusted EBITDA	$	105,803		$	44,714		$	184,515		$	83,996
See footnotes on page 10.

Acadia Healthcare Company, Inc.
Reconciliation of Adjusted Income from Continuing Operations to Income from
Continuing Operations
(Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
	(in thousands, except per share amounts)
Income from continuing operations	$	33,843		$	22,457		$	48,435		$	35,478
Provision for income taxes		15,512			14,905			22,125			22,680
Income from continuing operations before income taxes		49,355			37,362			70,560			58,158
Adjustments to income from continuing operations:
Loss (gain) on foreign currency derivatives (b)		961			(13,735	)		908			(13,735	)
Transaction-related expenses (c)		7,157			3,016			25,573			4,595
Income tax provision reflecting tax effect of adjustments to income from continuing operations (d)		(18,006	)		(10,047	)		(30,470	)		(18,406	)
Adjusted income from continuing operations	$	39,467		$	16,596		$	66,571		$	30,612
Weighted-average shares outstanding - diluted		68,735			51,819			65,782			51,174
Adjusted income from continuing operations per diluted share	$	0.57		$	0.32		$	1.01		$	0.60
See footnotes on page 10.

Acadia Healthcare Company, Inc.

Footnotes

We have included certain financial measures in this press release, including EBITDA, Adjusted EBITDA and Adjusted income from continuing operations, which are “non-GAAP financial measures” as defined under the rules and regulations promulgated by the SEC. We define EBITDA as net income adjusted for loss from discontinued operations, net interest expense, income tax provision and depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted for equity-based compensation expense, debt extinguishment costs, gain on foreign currency derivatives and transaction-related expenses.

EBITDA, Adjusted EBITDA and Adjusted income from continuing operations are supplemental measures of our performance and are not required by, or presented in accordance with, generally accepted accounting principles in the United States (“GAAP”). EBITDA, Adjusted EBITDA and Adjusted income from continuing operations are not measures of our financial performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as measures of our liquidity. Our measurements of EBITDA, Adjusted EBITDA and Adjusted income from continuing operations may not be comparable to similarly titled measures of other companies. We have included information concerning EBITDA, Adjusted EBITDA and Adjusted income from continuing operations in this press release because we believe that such information is used by certain investors as measures of a company’s historical performance. We believe these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of issuers of equity securities, many of which present EBITDA, Adjusted EBITDA and Adjusted income from continuing operations when reporting their results. Our presentation of EBITDA, Adjusted EBITDA and Adjusted income from continuing operations should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

(a) Represents the equity-based compensation expense of Acadia.

(b) Represents the change in fair value of foreign currency derivatives purchased by Acadia related to acquisitions in the U.K. in April and June 2015 and July 2014.

(c) Represents transaction-related expenses incurred by Acadia related to acquisitions.

(d) Represents the income tax provision adjusted to reflect the tax effect of the adjustments to income from continuing operations based on tax rates of 31.3% and 37.7% for the three months ended June 30, 2015 and 2014, respectively, and 31.4% and 37.6% for the six months ended June 30, 2015 and 2014, respectively.

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