Financial Information for the Company and Its Subsidiaries | 19. Financial Information for the Company and Its Subsidiaries 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 as of September 30, 2016 and December 31, 2015, and for the three and nine months ended September 30, 2016 and 2015. The information segregates the parent company (Acadia Healthcare Company, Inc.), the combined wholly-owned subsidiary guarantors, the combined non-guarantor subsidiaries and eliminations. Acadia Healthcare Company, Inc. Condensed Consolidating Balance Sheets September 30, 2016 (In thousands) Parent Combined Combined Consolidating Total Current assets: Cash and cash equivalents $ — $ 5,160 $ 22,591 $ — $ 27,751 Accounts receivable, net — 211,981 65,587 — 277,568 Other current assets — 65,136 22,492 — 87,628 Total current assets — 282,277 110,670 — 392,947 Property and equipment, net — 934,633 1,852,013 — 2,786,646 Goodwill — 1,938,368 763,641 — 2,702,009 Intangible assets, net — 56,653 27,732 — 84,385 Deferred tax assets – noncurrent 3,587 — 4,691 (4,487 ) 3,791 Derivative instruments 49,903 — — — 49,903 Investment in subsidiaries 4,985,674 — — (4,985,674 ) — Assets held for sale — — 392,483 — 392,483 Other assets 854,658 36,030 2,326 (852,200 ) 40,814 Total assets $ 5,893,822 $ 3,247,961 $ 3,153,556 $ (5,842,361 ) $ 6,452,978 Current liabilities: Current portion of long-term debt $ 77,363 $ — $ 235 $ — $ 77,598 Accounts payable — 58,984 33,835 — 92,819 Accrued salaries and benefits — 70,085 35,223 — 105,308 Other accrued liabilities 13,524 34,912 56,077 — 104,513 Total current liabilities 90,887 163,981 125,370 — 380,238 Long-term debt 3,560,814 — 875,265 (852,200 ) 3,583,879 Deferred tax liabilities – noncurrent — 8,684 77,246 (4,487 ) 81,443 Other liabilities — 104,586 42,564 — 147,150 Total liabilities 3,651,701 277,251 1,120,445 (856,687 ) 4,192,710 Redeemable noncontrolling interests — — 18,147 — 18,147 Total equity 2,242,121 2,970,710 2,014,964 (4,985,674 ) 2,242,121 Total liabilities and equity $ 5,893,822 $ 3,247,961 $ 3,153,556 $ (5,842,361 ) $ 6,452,978 Acadia Healthcare Company, Inc. Condensed Consolidating Balance Sheets December 31, 2015 (In thousands) Parent Combined Combined Consolidating Total Current assets: Cash and cash equivalents $ — $ 1,987 $ 9,228 $ — $ 11,215 Accounts receivable, net — 187,546 29,080 — 216,626 Other current assets — 57,968 8,927 — 66,895 Total current assets — 247,501 47,235 — 294,736 Property and equipment, net — 805,439 903,614 — 1,709,053 Goodwill — 1,835,339 292,876 — 2,128,215 Intangible assets, net — 57,024 2,551 — 59,575 Deferred tax assets – noncurrent 3,946 40,587 4,581 — 49,114 Investment in subsidiaries 3,495,067 — — (3,495,067 ) — Other assets 427,270 32,947 2,322 (424,024 ) 38,515 Total assets $ 3,926,283 $ 3,018,837 $ 1,253,179 $ (3,919,091 ) $ 4,279,208 Current liabilities: Current portion of long-term debt $ 45,125 $ — $ 235 $ — $ 45,360 Accounts payable — 75,015 16,326 — 91,341 Accrued salaries and benefits — 66,249 14,447 — 80,696 Other accrued liabilities 26,132 10,886 35,788 — 72,806 Total current liabilities 71,257 152,150 66,796 — 290,203 Long-term debt 2,171,998 — 447,410 (424,024 ) 2,195,384 Deferred tax liabilities – noncurrent — — 23,936 — 23,936 Other liabilities — 75,159 3,443 — 78,602 Total liabilities 2,243,255 227,309 541,585 (424,024 ) 2,588,125 Redeemable noncontrolling interests — — 8,055 — 8,055 Total equity 1,683,028 2,791,528 703,539 (3,495,067 ) 1,683,028 Total liabilities and equity $ 3,926,283 $ 3,018,837 $ 1,253,179 $ (3,919,091 ) $ 4,279,208 Acadia Healthcare Company, Inc. Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income Three Months Ended September 30, 2016 (In thousands) Parent Combined Combined Consolidating Total Revenue before provision for doubtful accounts $ — $ 420,061 $ 324,741 $ — $ 744,802 Provision for doubtful accounts — (9,383 ) (754 ) — (10,137 ) Revenue — 410,678 323,987 — 734,665 Salaries, wages and benefits 7,145 224,692 176,405 — 408,242 Professional fees — 21,140 26,547 — 47,687 Supplies — 19,467 11,088 — 30,555 Rents and leases — 8,759 10,981 — 19,740 Other operating expenses — 51,536 28,212 — 79,748 Depreciation and amortization — 15,105 21,313 — 36,418 Interest expense, net 13,388 19,258 16,197 — 48,843 Debt extinguishment costs 3,411 — — — 3,411 Loss on divestiture — — 174,739 — 174,739 Gain on foreign currency derivatives (15 ) — — — (15 ) Transaction-related expenses — — 1,111 — 1,111 Total expenses 23,929 359,957 466,593 — 850,479 (Loss) income from continuing operations before income taxes (23,929 ) 50,721 (142,606 ) — (115,814 ) Equity in earnings of subsidiaries (99,875 ) — — 99,875 — (Benefit from) provision for income taxes (5,594 ) 38,654 (30,664 ) — 2,396 (Loss) income from continuing operations (118,210 ) 12,067 (111,942 ) 99,875 (118,210 ) Income from discontinued operations, net of income taxes — — — — — Net (loss) income (118,210 ) 12,067 (111,942 ) 99,875 (118,210 ) Net loss attributable to noncontrolling interests — — 402 — 402 Net (loss) income attributable to Acadia Healthcare Company, Inc. $ (118,210 ) $ 12,067 $ (111,540 ) $ 99,875 $ (117,808 ) Other comprehensive loss: Foreign currency translation loss — — (89,645 ) — (89,645 ) Gain on derivative instruments 6,387 — — — 6,387 Other comprehensive income (loss) 6,387 — (89,645 ) — (83,258 ) Comprehensive (loss) income attributable to Acadia Healthcare Company, Inc. $ (111,823 ) $ 12,067 $ (201,185 ) $ 99,875 $ (201,066 ) Acadia Healthcare Company, Inc. Condensed Consolidating Statement of Comprehensive Income (Loss) Three Months Ended September 30, 2015 (In thousands) Parent Combined Combined Consolidating Total Revenue before provision for doubtful accounts $ — $ 377,582 $ 111,164 $ — $ 488,746 Provision for doubtful accounts — (8,531 ) (485 ) — (9,016 ) Revenue — 369,051 110,679 — 479,730 Salaries, wages and benefits 5,327 191,032 62,051 — 258,410 Professional fees — 21,551 9,208 — 30,759 Supplies — 17,349 4,285 — 21,634 Rents and leases — 7,624 918 — 8,542 Other operating expenses — 47,113 10,131 — 57,244 Depreciation and amortization — 10,578 6,312 — 16,890 Interest expense, net 15,934 6,036 5,767 — 27,737 Debt extinguishment costs 9,979 — — — 9,979 Loss on foreign currency derivatives 1,018 — — — 1,018 Transaction-related expenses — 2,831 3,011 — 5,842 Total expenses 32,258 304,114 101,683 — 438,055 (Loss) income from continuing operations before income taxes (32,258 ) 64,937 8,996 — 41,675 Equity in earnings of subsidiaries 50,840 — — (50,840 ) — (Benefit from) provision for income taxes (10,504 ) 21,383 1,790 — 12,669 Income (loss) from continuing operations 29,086 43,554 7,206 (50,840 ) 29,006 Income from discontinued operations, net of income taxes — 80 — — 80 Net income (loss) 29,086 43,634 7,206 (50,840 ) 29,086 Net loss attributable to noncontrolling interests — — 464 — 464 Net income (loss) attributable to Acadia Healthcare Company, Inc. $ 29,086 $ 43,634 $ 7,670 $ (50,840 ) $ 29,550 Other comprehensive income: Foreign currency translation gain — — (32,707 ) — (32,707 ) Other comprehensive income — — (32,707 ) — (32,707 ) Comprehensive income (loss) $ 29,086 $ 43,634 $ (25,037 ) $ (50,840 ) $ (3,157 ) Acadia Healthcare Company, Inc. Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income Nine Months Ended September 30, 2016 (In thousands) Parent Combined Combined Consolidating Total Revenue before provision for doubtful accounts $ — $ 1,245,227 $ 893,812 $ — $ 2,139,039 Provision for doubtful accounts — (28,318 ) (2,695 ) — (31,013 ) Revenue — 1,216,909 891,117 — 2,108,026 Salaries, wages and benefits 20,989 648,669 487,899 — 1,157,557 Professional fees — 66,967 71,003 — 137,970 Supplies — 57,456 30,993 — 88,449 Rents and leases — 25,857 29,156 — 55,013 Other operating expenses — 151,485 79,465 — 230,950 Depreciation and amortization — 42,072 59,073 — 101,145 Interest expense, net 37,452 57,394 40,469 — 135,315 Debt extinguishment costs 3,411 — — — 3,411 Loss on divestiture — — 174,739 — 174,739 Gain on foreign currency derivatives (523 ) — — — (523 ) Transaction-related expenses — 25,624 7,859 — 33,483 Total expenses 61,329 1,075,524 980,656 — 2,117,509 (Loss) income from continuing operations before income taxes (61,329 ) 141,385 (89,539 ) — (9,483 ) Equity in earnings of subsidiaries 8,937 — — (8,937 ) — (Benefit from) provision for income taxes (15,142 ) 62,247 (19,338 ) — 27,767 (Loss) income from continuing operations (37,250 ) 79,138 (70,201 ) (8,937 ) (37,250 ) Income from discontinued operations, net of income taxes — — — — — Net (loss) income (37,250 ) 79,138 (70,201 ) (8,937 ) (37,250 ) Net loss attributable to noncontrolling interests — — 1,575 — 1,575 Net (loss) income attributable to Acadia Healthcare Company, Inc. $ (37,250 ) $ 79,138 $ (68,626 ) $ (8,937 ) $ (35,675 ) Other comprehensive loss: Foreign currency translation loss — — (351,528 ) — (351,528 ) Gain on derivative instruments 30,306 — — — 30,306 Other comprehensive income (loss) 30,306 — (351,528 ) — (321,222 ) Comprehensive (loss) income attributable to Acadia Healthcare Company, Inc. $ (6,944 ) $ 79,138 $ (420,154 ) $ (8,937 ) $ (356,897 ) Acadia Healthcare Company, Inc. Condensed Consolidating Statement of Comprehensive Income (Loss) Nine Months Ended September 30, 2015 (In thousands) Parent Combined Combined Consolidating Total Revenue before provision for doubtful accounts $ — $ 1,029,198 $ 295,504 $ — $ 1,324,702 Provision for doubtful accounts — (23,516 ) (2,013 ) — (25,529 ) Revenue — 1,005,682 293,491 — 1,299,173 Salaries, wages and benefits 14,576 530,221 162,786 — 707,583 Professional fees — 60,615 22,600 — 83,215 Supplies — 47,287 11,143 — 58,430 Rents and leases — 20,143 2,496 — 22,639 Other operating expenses — 122,505 26,394 — 148,899 Depreciation and amortization — 29,840 15,080 — 44,920 Interest expense, net 46,988 17,639 13,305 — 77,932 Debt extinguishment costs 9,979 — — — 9,979 Loss on foreign currency derivatives 1,926 — — — 1,926 Transaction-related expenses — 24,193 7,222 — 31,415 Total expenses 73,469 852,443 261,026 — 1,186,938 (Loss) income from continuing operations before income taxes (73,469 ) 153,239 32,465 — 112,235 Equity in earnings of subsidiaries 127,108 — — (127,108 ) — (Benefit from) provision for income taxes (23,885 ) 50,634 8,045 — 34,794 Income (loss) from continuing operations 77,524 102,605 24,420 (127,108 ) 77,441 Income from discontinued operations, net of income taxes — 83 — — 83 Net income (loss) 77,524 102,688 24,420 (127,108 ) 77,524 Net loss attributable to noncontrolling interests — — 464 — 464 Net income (loss) attributable to Acadia Healthcare Company, Inc. $ 77,524 $ 102,688 $ 24,884 $ (127,108 ) $ 77,988 Other comprehensive income: Foreign currency translation gain — — (15,923 ) — (15,923 ) Other comprehensive income — — (15,923 ) — (15,923 ) Comprehensive income (loss) $ 77,524 $ 102,688 $ 8,961 $ (127,108 ) $ 62,065 Acadia Healthcare Company, Inc. Condensed Consolidating Statement of Cash Flows Nine Months Ended September 30, 2016 (In thousands) Parent Combined Combined Consolidating Total Operating activities: Net (loss) income $ (37,250 ) $ 79,138 $ (70,201 ) $ (8,937 ) $ (37,250 ) Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities: Equity in earnings of subsidiaries (8,937 ) — — 8,937 — Depreciation and amortization — 42,072 59,073 — 101,145 Amortization of debt issuance costs 8,035 — (321 ) — 7,714 Equity-based compensation expense 20,989 — — — 20,989 Deferred income tax (benefit) expense — 26,381 (524 ) — 25,857 Loss from discontinued operations, net of taxes — — — — — Debt extinguishment costs 3,411 — — — 3,411 Loss on divestiture — — 174,739 — 174,739 Gain on foreign currency derivatives (523 ) — — — (523 ) Other — 826 (95 ) — 731 Change in operating assets and liabilities, net of effect of acquisitions: Accounts receivable, net — (26,055 ) 13,476 — (12,579 ) Other current assets — (4,901 ) (8,072 ) — (12,973 ) Other assets (2,780 ) (818 ) (316 ) 2,780 (1,134 ) Accounts payable and other accrued liabilities — 31,633 (29,566 ) — 2,067 Accrued salaries and benefits — 3,527 (14,286 ) — (10,759 ) Other liabilities — 5,975 (2,229 ) — 3,746 Net cash (used in) provided by continuing operating activities (17,055 ) 157,778 121,678 2,780 265,181 Net cash used in discontinued operating activities — (5,524 ) — — (5,524 ) Net cash (used in) provided by operating activities (17,055 ) 152,254 121,678 2,780 259,657 Investing activities: Cash paid for acquisitions, net of cash acquired — (103,189 ) (580,096 ) — (683,285 ) Cash paid for capital expenditures — (142,626 ) (107,335 ) — (249,961 ) Cash paid for real estate acquisitions — (26,146 ) (11,801 ) — (37,947 ) Settlement of foreign currency derivatives — 523 — — 523 Other — (1,135 ) — — (1,135 ) Net cash used in investing activities — (272,573 ) (699,232 ) — (971,805 ) Financing activities: Borrowings on long-term debt 1,480,000 — — — 1,480,000 Borrowings on revolving credit facility 179,000 — — — 179,000 Principal payments on revolving credit facility (166,000 ) — — — (166,000 ) Principal payments on long-term debt (46,069 ) — (2,780 ) 2,780 (46,069 ) Repayment of assumed debt (1,348,389 ) — — — (1,348,389 ) Payment of debt issuance costs (35,748 ) — — — (35,748 ) Issuance of common stock 685,097 — — — 685,097 Common stock withheld for minimum statutory taxes, net (7,917 ) — — — (7,917 ) Excess tax benefit from equity awards — — — — — Other — (1,821 ) — — (1,821 ) Cash (used in) provided by intercompany activity (722,919 ) 125,313 603,166 (5,560 ) — Net cash provided by (used in) financing activities 17,055 123,492 600,386 (2,780 ) 738,153 Effect of exchange rate changes on cash — — (9,469 ) — (9,469 ) Net increase in cash and cash equivalents — 3,173 13,363 — 16,536 Cash and cash equivalents at beginning of the period — 1,987 9,228 — 11,215 Cash and cash equivalents at end of the period $ — $ 5,160 $ 22,591 $ — $ 27,751 Acadia Healthcare Company, Inc. Condensed Consolidating Statement of Cash Flows Nine Months Ended September 30, 2015 (In thousands) Parent Combined Combined Consolidating Total Operating activities: Net income (loss) $ 77,524 $ 102,688 $ 24,420 $ (127,108 ) $ 77,524 Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities: Equity in earnings of subsidiaries (127,108 ) — — 127,108 — Depreciation and amortization — 29,840 15,080 — 44,920 Amortization of debt issuance costs 5,347 — (330 ) — 5,017 Equity-based compensation expense 14,576 — — — 14,576 Deferred income tax (benefit) expense (58 ) 27,035 1,948 — 28,925 Loss from discontinued operations, net of taxes — (83 ) — — (83 ) Debt extinguishment costs 9,979 — — — 9,979 Loss (gain) on foreign currency derivatives 1,926 — — — 1,926 Other — 1,088 34 — 1,122 Change in operating assets and liabilities, net of effect of acquisitions: Accounts receivable, net — (16,535 ) (12,370 ) — (28,905 ) Other current assets — (14,287 ) 2,086 — (12,201 ) Other assets (300 ) (4,881 ) 2 300 (4,879 ) Accounts payable and other accrued liabilities — (10,510 ) 2,194 — (8,316 ) Accrued salaries and benefits — 7,953 935 — 8,888 Other liabilities — 5,821 (750 ) — 5,071 Net cash (used in) provided by continuing operating activities (18,114 ) 128,129 33,249 300 143,564 Net cash provided by discontinued operating activities — (1,479 ) — — (1,479 ) Net cash (used in) provided by operating activities (18,114 ) 126,650 33,249 300 142,085 Investing activities: Cash paid for acquisitions, net of cash acquired — (88,308 ) (302,908 ) — (391,216 ) Cash paid for capital expenditures — (116,466 ) (84,375 ) — (200,841 ) Cash paid for real estate acquisitions — (21,976 ) — — (21,976 ) Settlement of foreign currency derivatives — (1,926 ) — — (1,926 ) Other — (887 ) — — (887 ) Net cash used in investing activities — (229,563 ) (387,283 ) — (616,846 ) Financing activities: Borrowings on long-term debt 1,150,000 — — — 1,150,000 Borrowings on revolving credit facility 310,000 — — — 310,000 Principal payments on revolving credit facility (310,000 ) — — — (310,000 ) Principal payments on long-term debt (23,813 ) — (300 ) 300 (23,813 ) Repayment of assumed CRC debt (904,467 ) — — — (904,467 ) Repayments of senior notes (88,331 ) — — — (88,331 ) Payment of debt issuance costs (25,584 ) — — — (25,584 ) Payment of premium on senior notes (6,890 ) — — — (6,890 ) Issuance of Common Stock — 331,360 — — 331,360 Common stock withheld for minimum statutory taxes, net (7,582 ) — — — (7,582 ) Excess tax benefit from equity awards 8,020 — — — 8,020 Other — (374 ) — — (374 ) Cash provided by (used in) intercompany activity (83,239 ) (257,037 ) 340,876 (600 ) — Net cash provided by (used in) financing activities 18,114 73,949 340,576 (300 ) 432,339 Effect of exchange rate changes on cash — (856 ) — — (856 ) Net (decrease) increase in cash and cash equivalents — (29,820 ) (13,458 ) — (43,278 ) Cash and cash equivalents at beginning of the period — 76,685 17,355 — 94,040 Cash and cash equivalents at end of the period $ — $ 46,865 $ 3,897 $ — $ 50,762 |