Acadia Healthcare (ACHC) 8-K Revenue Increase of 66.8% to $756.5 Million Includes 8.1% Growth in Same Facility Revenue

Exhibit 99

Acadia Healthcare Reports Second Quarter GAAP EPS of $0.65 and Adjusted EPS of $0.73, up 28.1%

Revenue Increase of 66.8% to $756.5 Million Includes 8.1% Growth in Same Facility Revenue

Adjusts Financial Guidance for 2016

FRANKLIN, Tenn.--(BUSINESS WIRE)--July 29, 2016--Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced financial results for the second quarter and six months ended June 30, 2016. Revenue for the quarter increased 66.8% to $756.5 million from $453.7 million for the second quarter of 2015. Income from continuing operations attributable to Acadia stockholders was $56.4 million, or $0.65 per diluted share, compared with $33.8 million, or $0.49 per diluted share, for the second quarter of 2015. Adjusted income from continuing operations attributable to Acadia stockholders grew 60.0% to $63.2 million for the second quarter of 2016 from $39.5 million for the second quarter of 2015, and adjusted EPS increased 28.1% to $0.73 from $0.57. Weighted average diluted shares outstanding increased 26.4% for the second quarter of 2016 from the second quarter of 2015, primarily due to the issuance of common stock in May 2015, the net proceeds of which were primarily used to fund acquisitions, and in January and February 2016 related to the acquisition of Priory Group. A reconciliation of all non-GAAP financial results in this release appears on pages 8 and 9.

For the first six months of 2016, revenue was $1.4 billion, an increase of 67.6% from $819.4 million for the first six months of 2015. Income from continuing operations attributable to Acadia stockholders was $82.1 million, or $0.97 per diluted share, compared with $48.4 million, or $0.74 per diluted share, for the first six months of 2015. Adjusted income from continuing operations attributable to Acadia stockholders was $109.0 million for the first half of 2016, an increase of 63.7% from $66.6 million for the same period of 2015, and adjusted EPS increased 26.7% to $1.28 from $1.01. Weighted average diluted shares outstanding increased 29.3% for the first six months of 2016 from the first six months of 2015.

“Acadia continued its strong earnings momentum in the second quarter, with 28.1% growth in adjusted EPS on a 26.4% increase in shares outstanding,” commented Joey Jacobs, Chairman and Chief Executive Officer of Acadia. “This growth reflected a substantial increase in our beds during the last 12 months, primarily due to the completion of the Priory Group acquisition in the first quarter of 2016, which brought Acadia approximately 7,100 beds in 324 inpatient facilities. In total, we added approximately 8,800 beds and 369 inpatient behavioral healthcare facilities during this 12-month period. Approximately 680 of these beds were additions to existing facilities and 260 were added through three de novo acute inpatient facilities.

“During the second quarter, we added 125 new beds to existing facilities in the U.S. and U.K. and 60 beds through opening one de novo facility. We also completed three acquisitions with approximately 240 aggregate beds. The acquisitions included Trust Point Hospital, a 100-bed acute inpatient psychiatric facility in Murfreesboro, Tennessee, and two addiction treatment residential facilities: the 108-bed Pocono Mountain Recovery Center in Henryville, Pennsylvania, and 30-bed Serenity Knolls in Forrest Knolls, California. In addition, we added two comprehensive treatment centers during the quarter, one acquisition and one de novo. We continue to believe that the growth in our beds positions Acadia well to produce further significant profitable growth in 2016 and beyond.”

In addition to the impact of acquisitions, the Company’s revenue growth for the second quarter of 2016 reflected an increase in same facility revenue of 8.1% compared with the second quarter of 2015. Contributing to this increase, patient days expanded 7.7% for the quarter and revenue per patient day increased 0.4%. This increase was primarily due to new beds added to facilities in the same facility base, complemented by continuing initiatives at our facilities to grow their revenue. The operating leverage created by this revenue growth drove a 70 basis point improvement in consolidated same facility EBITDA margin to 28.1% versus 27.4% for the second quarter last year. Acadia’s consolidated adjusted EBITDA rose 62.8% to $172.2 million for the second quarter from $105.8 million for the same quarter last year, with consolidated adjusted EBITDA margin of 22.8% and 23.3%, respectively.

Acadia completed the second quarter of 2016 with $30.7 million in cash and cash equivalents. Net cash provided by continuing operations increased 74.6% for the second quarter to $126.5 million compared with the second quarter of 2015. At the end of the second quarter, the Company had significant availability under its $300 million revolving credit facility and its leverage ratio at June 30, 2016 was approximately 5.3.

Yesterday, the Competition and Markets Authority (“CMA”) in the U.K. announced that it is considering Acadia’s undertakings to address the CMA’s concerns about competition in the provision of behavioral healthcare services in certain markets related to Acadia’s acquisition of Priory Group. As a result, and in lieu of a phase 2 investigation, Acadia intends to sell 19 of its U.K. healthcare facilities with approximately 750 beds. These facilities produced aggregate annual revenues of approximately $132 million and adjusted EBITDA of $39 million, before any overhead allocation and assuming an exchange rate of $1.30 per British Pound Sterling.

Acadia today updated its guidance for 2016 adjusted earnings per diluted share to $2.63 to $2.65, primarily as a result of the recent decline in the U.S. Dollar/British Pound Sterling exchange rate, as well as the delay in realizing cost synergies from the Priory Group transaction until the undertakings are approved and accepted by the CMA. Acadia’s guidance assumes an exchange rate of $1.30 per British Pound Sterling for the second half of 2016 and a tax rate of 23%. The Company’s guidance does not include any cost synergies in 2016 from the Priory Group transaction, the impact of any future acquisitions or transaction-related expenses.

Acadia will hold a conference call to discuss its second quarter financial results at 11:00 a.m. Eastern Time on Friday, July 29, 2016. 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 12, 2016.

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) the CMA’s acceptance of our undertakings to address its concerns relating to the Priory transaction, (ii) our ability to divest Priory facilities and fulfill our undertakings to the CMA on acceptable terms and within expected timeframes; (iii) potential difficulties operating our business in light of political and economic instability in the U.K. and globally following the referendum in the U.K. on June 23, 2016, in which voters approved an exit from the European Union, or Brexit; (iv) the impact of fluctuations in foreign exchange rates, including the recent devaluation of the GBP relative to the USD following the Brexit vote; (v) Acadia’s ability to complete acquisitions and successfully integrate the operations of acquired facilities, including Priory facilities; (vi) Acadia’s ability to add beds, expand services, enhance marketing programs and improve efficiencies at its facilities; (vii) potential reductions in payments received by Acadia from government and third-party payors; (viii) the occurrence of patient incidents, which could adversely affect the price of our common stock and result in incremental regulatory burdens and governmental investigations; (ix) 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 (x) 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 591 behavioral healthcare facilities with approximately 17,800 beds in 39 states, the United Kingdom and Puerto Rico. Acadia provides behavioral health and addiction services to its patients in a variety of settings, including inpatient psychiatric hospitals, residential treatment centers, outpatient clinics and therapeutic school-based programs.

Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
		2016			2015			2016			2015
	(In thousands, except per share amounts)
Revenue before provision for doubtful accounts	$	767,054		$	461,798		$	1,394,237		$	835,956
Provision for doubtful accounts		(10,506	)		(8,138	)		(20,876	)		(16,513	)
Revenue		756,548			453,660			1,373,361			819,443
Salaries, wages and benefits (including equity-based compensation expense of $6,888, $5,355, $13,844 and $9,249, respectively)		408,287			243,302			749,315			449,173
Professional fees		50,292			30,029			90,283			52,456
Supplies		31,209			20,542			57,894			36,796
Rents and leases		20,467			8,211			35,273			14,097
Other operating expenses		80,955			51,128			151,202			91,655
Depreciation and amortization		36,752			14,926			64,727			28,030
Interest expense, net		48,758			28,049			86,472			50,195
(Gain) loss on foreign currency derivatives		(98	)		961			(508	)		908
Transaction-related expenses		6,074			7,157			32,372			25,573
Total expenses		682,696			404,305			1,267,030			748,883
Income from continuing operations before income taxes		73,852			49,355			106,331			70,560
Provision for income taxes		18,261			15,512			25,371			22,125
Income from continuing operations		55,591			33,843			80,960			48,435
Income from discontinued operations, net of income taxes		-			1			-			3
Net income		55,591			33,844			80,960			48,438
Net loss attributable to noncontrolling interests		854			-			1,173			-
Net income attributable to Acadia Healthcare Company, Inc.	$	56,445		$	33,844		$	82,133		$	48,438
Basic earnings attributable to Acadia Healthcare Company, Inc. stockholders:
Income from continuing operations	$	0.65		$	0.50		$	0.97		$	0.74
Income from discontinued operations		-			-			-			-
Net income	$	0.65		$	0.50		$	0.97		$	0.74
Diluted earnings attributable to Acadia Healthcare Company, Inc. stockholders:
Income from continuing operations	$	0.65		$	0.49		$	0.97		$	0.74
Income from discontinued operations		-			-			-			-
Net income	$	0.65		$	0.49		$	0.97		$	0.74
Weighted-average shares outstanding:
Basic		86,553			68,296			84,748			65,429
Diluted		86,876			68,735			85,052			65,782

Acadia Healthcare Company, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
	June 30, 2016			December 31, 2015
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	30,716		$	11,215
Accounts receivable, net of allowance for doubtful accounts of $36,246 and $29,332, respectively		285,132			216,626
Other current assets		76,519			66,895
Total current assets		392,367			294,736
Property and equipment, net		3,274,540			1,709,053
Goodwill		2,832,201			2,128,215
Intangible assets, net		84,996			59,575
Deferred tax assets - noncurrent		17,929			49,114
Derivative instruments		40,459			-
Other assets		42,007			38,515
Total assets	$	6,684,499		$	4,279,208
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	73,410		$	45,360
Accounts payable		108,211			91,341
Accrued salaries and benefits		113,392			80,696
Other accrued liabilities		124,788			72,806
Total current liabilities		419,801			290,203
Long-term debt		3,578,383			2,195,384
Deferred tax liabilities - noncurrent		85,526			23,936
Other liabilities		151,628			78,602
Total liabilities		4,235,338			2,588,125
Redeemable noncontrolling interests		12,881			8,055
Equity:
Common stock		865			707
Additional paid-in capital		2,481,897			1,572,972
Accumulated other comprehensive loss		(342,611	)		(104,647	)
Retained earnings		296,129			213,996
Total equity		2,436,280			1,683,028
Total liabilities and equity	$	6,684,499		$	4,279,208

Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
	Six Months Ended June 30,
		2016			2015
	(In thousands)
Operating activities:
Net income	$	80,960		$	48,438
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation and amortization		64,727			28,030
Amortization of debt issuance costs		4,956			3,218
Equity-based compensation expense		13,844			9,249
Deferred income tax expense		16,821			24,682
Income from discontinued operations, net of taxes		-			(3	)
(Gain) loss on foreign currency derivatives		(508	)		908
Other		704			692
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net		(18,982	)		(10,442	)
Other current assets		(7,256	)		(13,048	)
Other assets		1,582			(1,218	)
Accounts payable and other accrued liabilities		29,101			(4,313	)
Accrued salaries and benefits		(3,846	)		(225	)
Other liabilities		3,728			4,619
Net cash provided by continuing operating activities		185,831			90,587
Net cash (used in) provided by discontinued operating activities		(2,973	)		554
Net cash provided by operating activities		182,858			91,141
Investing activities:
Cash paid for acquisitions, net of cash acquired		(683,285	)		(286,734	)
Cash paid for capital expenditures		(177,718	)		(122,035	)
Cash paid for real estate acquisitions		(28,439	)		(3,428	)
Settlement of foreign currency derivatives		508			(908	)
Other		(1,084	)		(481	)
Net cash used in investing activities		(890,018	)		(413,586	)
Financing activities:
Borrowings on long-term debt		1,480,000			875,000
Borrowings on revolving credit facility		158,000			180,000
Principal payments on revolving credit facility		(166,000	)		(180,000	)
Principal payments on long-term debt		(29,869	)		(15,875	)
Repayment of assumed debt		(1,348,389	)		(904,467	)
Payment of debt issuance costs		(35,511	)		(22,775	)
Issuance of common stock, net		685,097			331,530
Common stock withheld for minimum statutory taxes, net		(7,365	)		(7,826	)
Excess tax benefit from equity awards		-			6,327
Other		(823	)		(150	)
Net cash provided by financing activities		735,140			261,764
Effect of exchange rate changes on cash		(8,479	)		1,213
Net increase (decrease) in cash and cash equivalents		19,501			(59,468	)
Cash and cash equivalents at beginning of the period		11,215			94,040
Cash and cash equivalents at end of the period	$	30,716		$	34,572
Effect of acquisitions:
Assets acquired, excluding cash	$	2,504,223		$	1,636,164
Liabilities assumed		(1,604,056	)		(1,009,944	)
Issuance of common stock in connection with acquisition		(216,882	)		(380,210	)
Deposits paid for acquisitions		-			40,724
Cash paid for acquisitions, net of cash acquired	$	683,285		$	286,734

Acadia Healthcare Company, Inc.
Operating Statistics
(Unaudited, Revenue in thousands)
		Three Months Ended June 30,								Six Months Ended June 30,
			2016			2015		% Change			2016			2015		% Change
Same Facility Results (a,c)
	Revenue	$	478,360		$	442,346		8.1	%	$	869,772		$	800,939		8.6	%
	Patient Days		692,049			642,508		7.7	%		1,265,750			1,170,756		8.1	%
	Admissions		33,332			30,457		9.4	%		61,947			56,150		10.3	%
	Average Length of Stay (b)		20.8			21.1		-1.6	%		20.4			20.9		-2.0	%
	Revenue per Patient Day	$	691		$	688		0.4	%	$	687		$	684		0.4	%
	EBITDA margin		28.1	%		27.4	%	70 bps			27.7	%		26.9	%	80 bps
U.S. Same Facility Results (a)
	Revenue	$	393,592		$	362,868		8.5	%	$	711,578		$	652,166		9.1	%
	Patient Days		555,992			517,423		7.5	%		1,013,683			941,836		7.6	%
	Admissions		33,007			30,121		9.6	%		61,363			55,565		10.4	%
	Average Length of Stay (b)		16.8			17.2		-1.9	%		16.5			17.0		-2.5	%
	Revenue per Patient Day	$	708		$	701		0.9	%	$	702		$	692		1.4	%
	EBITDA margin		28.8	%		28.2	%	60 bps			28.2	%		27.4	%	80 bps
U.K. Same Facility Results (c)
	Revenue	$	84,768		$	79,478		6.7	%	$	158,194		$	148,773		6.3	%
	Patient Days		136,057			125,085		8.8	%		252,067			228,920		10.1	%
	Admissions		325			336		-3.3	%		584			585		-0.2	%
	Average Length of Stay (b)		418.6			372.3		12.5	%		431.6			391.3		10.3	%
	Revenue per Patient Day	$	623		$	635		-1.9	%	$	628		$	650		-3.4	%
	EBITDA margin		25.1	%		24.0	%	110 bps			25.2	%		24.8	%	40 bps
U.S. Facility Results
	Revenue	$	430,209		$	366,886		17.3	%	$	838,473		$	657,393		27.5	%
	Patient Days		590,919			517,423		14.2	%		1,152,242			941,836		22.3	%
	Admissions		36,215			30,121		20.2	%		70,680			55,565		27.2	%
	Average Length of Stay (b)		16.3			17.2		-5.0	%		16.3			17.0		-3.8	%
	Revenue per Patient Day	$	728		$	709		2.7	%	$	728		$	698		4.3	%
	EBITDA margin		27.6	%		27.9	%	-30 bps			26.9	%		27.2	%	-30 bps
U.K. Facility Results (c)
	Revenue	$	325,883		$	79,478		310.0	%	$	532,858		$	148,773		258.2	%
	Patient Days		756,687			125,085		504.9	%		1,210,702			228,920		428.9	%
	Admissions		2,808			336		735.7	%		4,399			585		652.0	%
	Average Length of Stay (b)		269.5			372.3		-27.6	%		275.2			391.3		-29.7	%
	Revenue per Patient Day	$	431		$	635		-32.2	%	$	440		$	650		-32.3	%
	EBITDA margin		22.4	%		24.0	%	-160 bps			22.1	%		24.8	%	-270 bps
Total Facility Results (c)
	Revenue	$	756,092		$	446,364		69.4	%	$	1,371,331		$	806,166		70.1	%
	Patient Days		1,347,606			642,508		109.7	%		2,362,944			1,170,756		101.8	%
	Admissions		39,023			30,457		28.1	%		75,079			56,150		33.7	%
	Average Length of Stay (b)		34.5			21.1		63.7	%		31.5			20.9		50.9	%
	Revenue per Patient Day	$	561		$	695		-19.2	%	$	580		$	689		-15.7	%
	EBITDA margin		25.3	%		27.2	%	-190 bps			25.0	%		26.7	%	-170 bps
(a) Same-facility results for the three and six months ended June 30, 2015 exclude six outpatient programs that have been closed.
(b) Average length of stay is defined as patient days divided by admissions.
(c) Revenue and revenue per patient day for the three and six months ended June 30, 2015 are adjusted to reflect the foreign currency exchange rate for the comparable period of 2016 in order to eliminate the effect of changes in the exchange rate. The exchange rate used in the adjusted revenue and revenue per patient day amounts for both the three and six months ended June 30, 2015 is 1.43.

Acadia Healthcare Company, Inc.
Reconciliation of Net Income Attributable to Acadia Healthcare Company, Inc. to Adjusted EBITDA
(Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
		2016			2015			2016			2015
	(in thousands)
Net income attributable to Acadia Healthcare Company, Inc.	$	56,445		$	33,844		$	82,133		$	48,438
Income from discontinued operations, net of income taxes		-			(1	)		-			(3	)
Net loss attributable to noncontrolling interests		(854	)		-			(1,173	)		-
Provision for income taxes		18,261			15,512			25,371			22,125
Interest expense, net		48,758			28,049			86,472			50,195
Depreciation and amortization		36,752			14,926			64,727			28,030
EBITDA		159,362			92,330			257,530			148,785
Adjustments:
Equity-based compensation expense (a)		6,888			5,355			13,844			9,249
(Gain) loss on foreign currency derivatives (b)		(98	)		961			(508	)		908
Transaction-related expenses (c)		6,074			7,157			32,372			25,573
Adjusted EBITDA	$	172,226		$	105,803		$	303,238		$	184,515
See footnotes on page 10.

Acadia Healthcare Company, Inc.
Reconciliation of Adjusted Income from Continuing Operations Attributable to Acadia Healthcare Company, Inc. to
Net Income Attributable to Acadia Healthcare Company, Inc.
(Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
		2016			2015			2016			2015
	(in thousands, except per share amounts)
Net income attributable to Acadia Healthcare Company, Inc.	$	56,445		$	33,844		$	82,133		$	48,438
Income from discontinued operations, net of income taxes		-			(1	)		-			(3	)
Provision for income taxes		18,261			15,512			25,371			22,125
Income from continuing operations attributable to Acadia Healthcare Company, Inc. before income taxes		74,706			49,355			107,504			70,560
Adjustments to income from continuing operations:
(Gain) loss on foreign currency derivatives (b)		(98	)		961			(508	)		908
Transaction-related expenses (c)		6,074			7,157			32,372			25,573
Income tax provision reflecting tax effect of adjustments to income from continuing operations (d)		(17,530	)		(18,006	)		(30,382	)		(30,470	)
Adjusted income from continuing operations attributable to Acadia Healthcare Company, Inc.	$	63,152		$	39,467		$	108,986		$	66,571
Weighted-average shares outstanding - diluted		86,876			68,735			85,052			65,782
Adjusted income from continuing operations attributable to Acadia Healthcare Company, Inc. per diluted share	$	0.73		$	0.57		$	1.28		$	1.01
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 income from discontinued operations, net loss attributable to noncontrolling interests, net interest expense, income tax provision and depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted for equity-based compensation expense, (gain) loss 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.

The Company is not able to provide a reconciliation of projected adjusted earnings per diluted share, where provided, to expected results due to the unknown effect, timing and potential significance of transaction-related expenses and the tax effect of such expenses.

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

(b) Represents the change in fair value of foreign currency derivatives purchased by Acadia related to (i) acquisitions in the U.K. and (ii) transfers of cash between the U.S. and U.K. under the Company’s cash management and foreign currency risk management programs.

(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 21.7% and 31.3% for the three months ended June 30, 2016 and 2015, respectively, and 21.8% and 31.4% for the six months ended June 30, 2016 and 2015, respectively.

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