ACHC - Earnings call transcript Q2 2018 | Acadia Healthcare Company, Inc.

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Operator

As a reminder, this call is being recorded. Please proceed.

Brent Turner

Good morning. I'm Brent Turner, President of Acadia Healthcare, and I'd like to welcome you to our Second Quarter 2018 Conference Call. To the extent any non-GAAP financial measures discussed in today's call, you will also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP on our website by viewing yesterday's news release under the Investors link. quarterly contain Litigation within including Reform others, Acadia's may the meaning statements, call performance regarding Securities financial Private Act expected conference forward-looking and the statements of among for This XXXX annual beyond. and of XXXX,

any limiting purpose, the during identify words and anticipates, the of foregoing, made not to be expects, call be plans expressions to fact the forward-looking may statements deemed are are and forward-looking statements this For that historical statements. intended similar Without statements. believes,

You statements. now these by are in the The discussed results of may the a as differ and undertakes Securities in Officer, At this statements important opening with release, actual company statements, forth Chief news and and and consequently, to time, events otherwise. filings Joey no may to cautioned result forward-looking materially set any Executive Jacobs. the update operations or hereby from turn the for in that conference I'll quarter forward-looking over publicly results be company's Exchange our Commission the factors, whether affected Chairman among Acadia's new future second the information, others, obligation and remarks,

Joey A. Jacobs

call. today you for morning with Good quarter conference and for being our thank us second

quarter. in each here some Officer, Then, with and members second going XXXX. produced I second for forward we'll for EPS growth questions. Financial and team. remarks in In other addition adjusted to about Brent, for I'm X.X% solid revenue the outlook X% Duckworth, have open David management Acadia quarter and today our your in of the line David and our Chief of executive the our

Tennessee. increase we year, adding including We opened including same driven beds organic facilities beds in added growth, months, with in for and of more to venture the in the quarter. XXX the add second result and operations was Health to mainly quarter an in XXX our through to primarily XXX Our the facilities and last XXX quarter during XX-bed expect Erlanger existing revenue new the XX the of second a in XXXX. continues beds growth Chattanooga, be This total our over to System than growth the facility joint by half first X.X% facility

day. Our day. and a EBITDA increase X.X% days included X.X% X.X% margin U.S. points X.X% X% increase facility same facility total declined per patient a revenue per in with quarter, revenue patient for revenue increase same facility days XX.X%. a increase patient growth in U.S. same patient in XX X.X% basis and the increased a in revenue to

an best revenue operations X.X% a X.X% in the the per increase declined Same revenue in Our of margin two quarter. increase growth XXX days facility their years and to in XX.X% UK X.X%, for consisting with increase day. in basis facility facility patient patient produced EBITDA a of same in same points

We your costs this to on Acadia. Thanks interest expect reliance of and time continued in shortage pressure labor your for available personnel labor. morning due the agency and on

in more guidance David our detail. increased financial Duckworth results discuss Now, here's and to

David M. Duckworth

up for adjusted to was and XXXX. of company's second an earnings Joey, of quarter The XXXX, of diluted Thanks, Adjusted increase the tax second of quarter for compared morning. the per We of XXXX. from the was quarter XX% rate for adjusted million continuing XXXX second second $XXX.X $XXX good share second for XX.X% the the of or EPS for The $XXX.X revenue before extinguishment XXXX to X% flows $XXX,XXX XXXX. increased income an Adjusted increased with of the quarter $X.XX for quarter million, $X.XX Acadia's revenue. well second of cost quarter quarter the consolidated $XXX.X XX.X% for quarter XX.X% the $X.X X.X% expenses second of taxes operating million XX.X% million for for effective project of quarter debt XXXX from from the for of excludes cash second XXXX, the of on million second EBITDA of operations as XXXX. the company's second from of approximately Acadia's tax quarter and XXXX remainder million for XXXX. quarter $XXX was million transaction-related the of quarter of XXXX for of second second approximately rate as $X.X for last the year. income

guidance, sterling and interest pound well XXXX guidance second half release, the news financial have XXXX. Turning dollar anticipated as than afternoon's to of as rates to the yesterday based impact U.S. we financial adjusted in decline exchange the in as rate, our higher for our on British announced recent of the

of rate and for per interest year. exchange be million approximately expense half sterling of pound to an expect the We $X.XX second the British $XX

diluted a Our guidance EBITDA million; adjusted million EPS $X.XX range a revenue billion; range $X.XX in $XXX to is billion as to of adjusted to $XXX follows: in range in $X.XX. $X.XX of of and a

financial include concludes floor from impact any to This with morning, thank open questions. your for for acquisitions prepared this and you expenses. Our transaction-related us. not guidance future and being now I'll the does remarks Sylvia the our ask

Operator

you, We'll our Please ahead. Jefferies. the Thank queue, go sir. Tanquilut take Brian from person first from

Your is line now open.

Brian Gil Tanquilut

for question first Joey, guys. morning, you. Good Hey.

bed will want organic volume And that's you're just about adds you how growth? and that last to do would JVs think how XX in I disconnect have know you up the I the of has how and here over I novos. that, the the rate reported the the you've and catch bed a to your when XX months? U.S. little decelerated bit, de that as about adds done thinking and to that with between explain hear some organic So, think seemed organic growth organic

Joey A. Jacobs

our question. if X% that and We hurt that in I a the day expect had third there, and second in few quarter Brian, above improving thanks the we but continue. growth growth U.S. X% the trends they for patient in are speak. will today as growth the first approaching quarter facilities be the our

but growth – patient month growth the well know, the of And that. as about the you looks be the to think day expect X% I very the to for the third I to we're – range into in could right X% patient quarter. be is now, So, for month most seasonal mid-Xs would and us. But day patient like look careful That forward we it always growth August. day

So, ramping four we as joint of up ventures we have – speak. the up that that de novos, and are ramping those are we as

we and things had are quarter. hurt well, in that a those the So, going us facilities few second just

Brian Gil Tanquilut

cash think during lack good Does deployment Got then, of quarters? down for And M&A some How follow-up this you activity, you free you it. flow, about the free thinking save think quarter. the to about that? had for make me, sense are as at point flow few I generation it of do you have strategy, have coming Joey, up deals the the or pay and next debt think cash that given the as that the to that for, of of sort you cash

Joey A. Jacobs

we of an just is I that, The acquisition. that spent at to talk pipeline would October, by again this end cash. the and the active, expect hold continue the cash of have very we on we some would to time you

Brian Gil Tanquilut

I right. you. Thank All got it.

Operator

you. Thank

person Fargo go next from Securities. Now, ahead. we'll our Please the Peter from take Costa queue, Wells

now is line open. Your

Peter Heinz Costa

morning. Good

the this the this you stay like and continue it length what actually Can pressure it in in in the good, U.S. to relative both and to the increase of UK? caused first and admissions seemed U.S. length UK the of reasonably see more was quarter. but the pressure both average stay pressure look on describe Your quarter your quarter

Joey A. Jacobs

stay RT long really is of having In length a versus it or takes that a the you just if It of, and that so mix we're mix in where a admissions UK, so notice small to It's is the change numbers specialty discharges just issue the that that's that and are U.S., patients. handful their impact only number. acute driving patients their more of math.

the it high, happen. in a UK, just stay so doesn't was the purely length U.S., mix, in the here movement of so there. is the of there it and are that to lot make then Because small numbers take So,

beds U.S., UK, to a type length patient stay of on retrofitting average of their in compared a as take stay We are, would that to but long the length overall. shorter as the some to have a of different compared

Peter Heinz Costa

I much there of be so of but forward? the seen, sort trying particular. we've that trends would QX, as effect of aware QX not, I change it going if is should those I'm that think guess that from be long-term why a maybe should to And see to a about seasonal anything I it's figure we in there's out if

Joey A. Jacobs

that, the they're seasonal child and more discharges towards Well, RTC the kids summer, you – and the get the is population, in usually there adolescent facilities. the there effect is as

to as this occur. the But there too. the also So, here than total the it mix in beds beds to nothing that some percentage of causing that's acute the would impact is other a U.S.

Peter Heinz Costa

Okay. Thank you.

Operator

Thank you.

our Now, A.J. next ahead. from Please queue, go we'll take from Rice Credit the person Suisse.

- Securities now Hello, line A.J. is Your Suisse (USA) LLC Hi. everybody. Credit open. Thanks. Rice

your all, sort of and you pipeline, year? a And third acquisition? to of and have pipeline on growth, an deal will capital mentioned deployment, are you us does couple First like in of then, be we a – that that on next Can JV the about that times. look hope in talking opportunity the the the update what quarter you mentioned announced to contributor of larger also just think, the on acquisition just you've JV a

Joey A. Jacobs

are the facilities. from acquisitions a single to multi A.J., facility

quarter, would in one would I more quarter. single the facility bring may in be we acquire comprehensive acquisition third third likely that there center quarter. acute that But think treatment the would a most a facility the in be it third facility us than

pipeline it is the every over pipeline It's strong. Monday. go – how that's So, the we –

a got second it's Carmel de coming know, Antonio the opened novo on coming the online online. in We've future. big ventures, a in up near quarter. us. joint We for you Erlanger we San the in Now, as positive got absolutely, And Mount

joint two partner. – joint many joint those the weeks to are we venture and have negotiations, venture of in the opportunities past go one the they on going took meet So, Actually, discussions out on. me tremendous, venture potential with

So, Miami to land University of joint we build venture its the selecting there. got down the

Credit So, XX de Suisse and expect labor the Rice de LLC cost, ventures And three the next and - were points. do we around was novos three to two about venture contained. the fees basis would Okay. joint A.J. five good. Professional you occasional on novos. my look follow-up (USA) front well Securities would that joint up still somewhere to year I

So, maybe there wasn't contract much labor.

that And NHS just as Brexit, it is that's what are in it think are Is U.S. you the pressure or underlying (XX:XX) you is drill still on mostly seeing more I line. more? bit down it, well? this attributing just market a little can UK you But or trend? the MOS

Joey A. Jacobs

recruit part that there the U.S., shortage, Credit it's is the and tight, up. and But it – right The UK. shortage the market U.S. the but is we're are obstacles of the can right, we that here you But to a staff X%, bring facilities. NHS have the for find more our working Securities labor acute Okay. all on and All LLC in open Brexit, tight. in and put countries and here of that up nurses when A.J. are able from the around to the when you where in and acute Rice our markets UK UK, - (USA) And Suisse UK, the U.S. tight in Overall, under Okay. thanks the is beds labor is working market the there that to have them Commonwealth both the as we're lot. into know, as the company personnel and towards place. you But you the certain allowing freeing now, labor the – In enter speak. many unemployment immigration workers are government is

Operator

Thank you.

next comes ahead. Ellich Please Craig-Hallum. Kevin question from from Our go

Your line open. now is

Kevin Ellich

more talked it beds, phasing morning. think evenly? Thanks or spread back remaining minute I be half. Good to the about could the of taking that the help out Wondering just with we just Joey, for Will XXX for should already. you weighted questions. last the QX the us (XX:XX) if

Joey A. Jacobs

and Once again, of same-store those when the the on. past build comes to as online, working we've several is or got several the that and we years, seen a so of de – the timing novo we're usually we most project a seems big be where for QX beds,

months, six timing have controls the completion of we're But next So, beds... of really that. the the a to going within lot

Kevin Ellich

Got it.

Joey A. Jacobs

finish Hopefully up.

Kevin Ellich

it interesting or That's the And has just seen if Okay. there pretty then, you been landscape competitive anything guys helpful. wondering in has the changes stayed any same. much have or

Joey A. Jacobs

run third don't the We've really we're the We with acquisition process there same. a doing none de the banker, for the the a basically into of The working novos. into that lot kind ventures. on on which competition it's wasn't facility, the have acute joint reasonable. did think They I there that we're of kept while competition any quarter, run transaction.

So, as a that new market enter aware competitor. that I'm there's the anybody not been – of

it's by way it far first the year So, are and of was we basically in part year, market. last the the the consolidator this

Kevin Ellich

you. Thank good. Sounds

Operator

Thank you.

comes John question from from Please Next go James. Ransom Raymond ahead.

line Your open. is now

John W. Ransom

Good morning. Hey. ones. had three quick I

these what of this up Medicaid any a to like I remind XX kind to get it months. Are of cycles? all, Secondly, year And maybe of could is versus, you're and compare to that First how us them thirdly, getting forward budget today ago? could next of there your to Thanks. rate are assume you then months six U.S. knowing economics – wrapping but wage still you over JVs profitability. wrong, long states the takes maybe looks close inflation the say,

Joey A. Jacobs

Okay.

one, support got rate, increases the still some The health still state good. looks mental First good budget for are John, still We budgets. past The good. the budgets finishing year. – this up Medicaid their look states

So, to Medicaid, once pleased that we can be X% if again, range that. get in with X% we'll for

time wage X% saying as me wage last X% probably And were budget budgets on for wage model to this wage included if included the We a This I venture. the a is year, inflation, probably far was ventures, an next As our year, then, X% inflation. talking inflation. you budgets a inflation force. joint And I own labor preferred think the XX/XX joint our XX%. would we around year,

break-even (XX:XX) X% have we management fee other XX/XX. X% prorated services paid facility, then and the a on months, ours the How The seen up providing are for the partner a tracking that the after Medicare number. based we've earnings We of do your varies time lot starting the it XX%. of to be has here, end you to when some within is XX XX management get really of ramp key this months and and get

days numbers. get XXX ramping profitable of then to us you another centers XX XX So, take break-even days, your to but you provider get provider all usually once this up it'll you'll certificate or months. in get And get the numbers, occupancy, your your of

model So, that's working. how we see it, the

John W. Ransom

one talked sending of are that the I if And one seeing this keeping more of IMD of outcomes more week you competitors Okay. exclusion could and patients about just away up, unexpected your Medicaid patients. follow going was Are you referrals your commercial that? hospital

Joey A. Jacobs

provide. Medicaid some don't maybe acute just see all. analysis at at, in Medicaid Duckworth don't see we have for And that, our are on did occurring. and that's quite where services at not all. And reasonable our that we're that the then, at rates We David very lucky frankly, we the side, We looking good, facilities rates, an

the incremental – patient profitable. Medicaid Medicaid is So, patient the to us

John W. Ransom

Thank Great. you.

Operator

you. Thank

comes from question from William ahead. Ryan go Daniels Please Blair. Next

open. now is line Your

Ryan S. Daniels

for question. taking the Yeah, guys. Thanks

down? a your legislation, give update all kind funding? us focus ask me potential opioids of are a there on an can the thoughts one. Number increased for With for you the what Let one. on quick kind dollars Thanks. my follow-up space given of at would M&A focus is all, then, treatment hopes the and future flowing that And volume given more multiples more that in of there, be, increasing

Joey A. Jacobs

mom pops. the that consolidation think and with of space still is the I

there. So, the multiple pressures creep is not

for a than facilities, of business. a of want However, they higher you going then book to that these if say, has, get company are more that multiple to XX

far been now, as So, all it's positive. as legislation,

for are the is one state its to for of money and going MAT to some going they expand going not the their it have – use the but only use open to actually money up treatment or the CTC of to We the it, because Cures that has that state large they're surpluses centers. this state

this follow putting So, is there that stepping that up will money the lead, is hope state because states bellwether we where that's governor a doing there. be other some this, and will

meeting it what with population, was lives about state, then much talked him one Now, mental a very governor week also in save our privately, and opiates of to help doing they to need a in a I and that and he and with be was in larger population. past this health but

government it's patients. So, Bryan federal us, Kaegi, increasing – all their who the opiate heads for right for positive the the and affairs funding up now, it's for of government and state support

Ryan S. Daniels

in area more opportunities – do specific CTC tuck-in a space for de states, that as a given funding way of capacity is And opportunities you is really Okay. and deal an expand just there the the if where novo quick for follow-up, to that in a or saw opportunity? that you certain you look

Joey A. Jacobs

Ryan, that to No, Ryan de every space year. in novos we (XX:XX), do four six

with state come us of mid year. may novos have Now, other that bellwether facilities the this de our give opportunity online will double-digit next number

then, So on could on, there and tuck-in just is de – have and department his Steve our his acquisitions – we year. Davidson double-digit and Steve but work next that the own novos

Ryan S. Daniels

Okay, Thanks, guys. great.

Operator

Thank you.

Next Please Bank from go question ahead. of Fischbeck from America. Kevin comes

is now line Your open.

Kevin Mark Fischbeck

Thanks. wage the some rate follow are per Great. still you this that Wanted day but number guys to up saw about comments. cost was guess quarter we talking and a your I above of margin kind X% inflation, pressure. labor on

same-store the So, what be backdrop? to growth maintain margins order in labor this do guys for has revenue you think to given you

Joey A. Jacobs

bit close the ever highest second the the XX.X%. we at recognize again Kevin, margin we've little margin got to U.S., it I'm was that a year in quarter Well, sure last you and have,

between to have much it's flow you the let though highest internally. the which and growth and to XXX the margin, EBITDA even seen. up it basis would Obviously, down earnings revenue growth like us to was be that margin as going accretive in that possible points against the of expense So, would slightly, we've

those So, and numbers, that XXX the if XXX spread maintains basis we point get I can or point between improves a spread think a basis two margin.

Kevin Mark Fischbeck

you is to kind Okay. about from And now them? make in for you're last cost down still And that out pay getting a revenue think things maybe or on labor following this XX% then, mentioned more just to? UK goal shortages target labor them, quarter, I up to seeing the in Is that of restrict of the in kind of you of I really XX% guess you that the get happen the more QX. that, then, seen Do expect based growth. find the you've or past, or have to you can to difficult

Joey A. Jacobs

if us away. – a to have is services, a if and the for if of unit, more which NHS and build use It's number, to that beds as a and latter knowing to to comes reimbursement year. we needed we of team And the be for expense hard and we've that can to on higher by CAMHS there's our creating more go have working we we achieving got get are as being we're people, no to and means our as wants and of us on goal XX week, our the this But one costs service up from to staffing own agency UK that, lot get however, will those XX% last eventually we're given that to do going that a online, that goal. going long-term, UK that our met effort beds we put with

Kevin Mark Fischbeck

great. Thanks. Okay,

Operator

go from Thank you. ahead. Please Citi. question next Ralph Giacobbe We'll from take our

line now is open. Your

Ralph Giacobbe

of the growth the you of cost sort continued the terms to volume or and us other implies tweaks from UK some back-half a U.S. details low the Good on we've what and I interest sort operational guidance cost all talking get and costs saw just confidence maybe single-digit to some give just lower FX of of pricing as there lot assumptions – of that back then, been quarter. the both pressures? and could, sort labor was the guess X% – for all if EBITDA you in of Thanks. morning. on this side first, sort related about to just related Thanks. were And the implied

Joey A. Jacobs

question. that There was a lot in

last $X.XX to may First, for deal at the for another $X.XX, There's $X.XX where expense months possibility the for we might interest months that only that have the with – at that was rate It interest be to six reflects six guidance wanted FX. might six the The reforecast interest risen. But change expense. last out then, be today. the be slightly be let's the adjusting Originally, starting today, that rates and the months, there is guidance. had last it year, the it's higher. and basically FX. the which hike And in we we're

part period. So, impacted items, of the only guidance was And the question (XX:XX). was? your those two other by

Ralph Giacobbe

half assumptions. Just the back

Joey A. Jacobs

Back half assumptions.

Now, as and to X% U.S. I day the get patient as much these bring growth go. maybe patient day staffed even I stated online ready the growth, beds get very X% and earlier, up them we want to into

So, that's our goal there.

a Now, I the UK coming think quarter. numbers revenue quarter second long that's for best growth the in it's patient off time and first on day, they've the and a better had

would all to those continue away them is do there So, chip to improve to numbers. we and want

would So better. hopefully, expense – a they way to and the and would agency manage find find we

those be So, our would expectations.

Ralph Giacobbe

talked of That's it one bit. length I a about squeeze Okay. If little in could stay, helpful. more, we've

mix of days. sort or insurers you hear about Didn't much really talked – squeezing Medicaid to attributed from You changes. managed on pressures

types significantly base? any the And seeing why Thanks. of pressures? of to are the the So, non-same-store is then, worse decline just you in of in that, stay related those length

Joey A. Jacobs

not and are services base, facilities the the have services few take stay that same-store a they asked And U.S., joint big then, here was just have whether The way. of ramping would in years. you numbers The ventures, that in and of specialize non-same-store But I admissions feeling so UK, a at up are it UK. it the service they're those de in it And or or numbers because than those that numbers it's doesn't once in for come length numbers And those of small, that length length to a small novo have are the base we a number mainly looked stay, NHS are and I something probably the we impacting movements more stable to us on mix. shorter the again, very has there building the many to needed where but similar of it that impact that's add are to some the somewhat still stay. us past have and in. the the it's of several discharges is what and

Ralph Giacobbe

Thank Okay. you.

Operator

you. Thank

Next Frank question Morgan comes from from RBC Capital ahead. Markets. Please go

now is open. line Your

Frank George Morgan

Good growth the morning. wanted and patients. back go discussions were I change to again, of the there the obviously, to rate around mix in

more components? curious, you're just then, think break rate That's I'm that first So, rate effect, terms where are by shift kind growth? meaning you much of between that will Like in – here, versus real think acute out you issue the mix I shift RTC. actual more site do the settle mix my remaining you of now? question. the could how the Where presumably, out versus increases the positive mix into of the And

Joey A. Jacobs

questions, with now this really Okay. me. the just well, Frank, but all I've detail stumped to answer able lies been David. you've

David So, here. I'm you the going to give answers ask to

David M. Duckworth

service rate that the there growth, a rate are as seeing line, in that we positive as that very a is see growth Yeah. we acute to by significant rate small. become range. X% growth I'll more growth some mix service do say the is effect look similar of And at the for very And company. our Frank, on rate we is

CTC total. been you that as at and effect, company. has revenue it look also increases part positive rate which the service of for our growth good then, seeing outpatient, mix And business, the the from So, very we see in by line is

Frank George Morgan

CFO, question. anything I'll reduce have a of or light increases? fact you. to off. And are exposure hedge to to debt that got I'll In you try your you rate to hop do plans that Thanks. rising, Got And rates the do I the since ask any either

David M. Duckworth

the very it's in course, we the have that historically Well, few of for years. had positive variable we company been conversation last a had. have have, rates The

an a have on don't interest lock As immediate and step-up benefit that. exposure step-up order we interest But expense our have that with fixed immediate economic conversation effect now, now, periodically. in that significant a look expense to analysis that based in don't we about we hedging we at think That is our is there there, we in do rate. Right in a the makes our associated right think of sense to the of that. the think

Frank George Morgan

Okay. Thanks.

Operator

Thank you.

Next question ahead. Leerink from Ana comes Gupte from go Partners. Please

Your is line open. now

Ana A. Gupte

Hey. Good morning. Thanks.

So, recovery the the that your you're repurposing again, UK much because how coming growth, beds and And eating disorder your and is on addiction admissions child to this adolescent? of you're to and the is that there you going process it their of the more strategy forward still the decentralized the that care demand pent-up kind that changed referral when NHS or is to about talked primary trusts? seeing

Joey A. Jacobs

request continue other to these from the the there mix that the pieces the business doing demand need and of services. – think have NHS we're changing where is one-off I the of

looks where So, try them. the we request it service it's But the with from that to reason the good getting the is time, retrofitting the retrofitting, in from more would a be such a we NHS request a a only a NHS of full when partner the we're due when that to care, patient And the line, continuum patient that comes one-off outcome, the positions and we to be the really us positive way for if and that our is know them can discharged. ourselves. all that NHS, to we able to to of we're continuum and we that also most taking be – well very a many demand services there's or their we're take the it's – but area end time do they patient that the for the facilities think of do care a and that in care, of not

Ana A. Gupte

Got it.

Okay.

case expectation there build Are additional will pent-up – to stance change of So patients admissions, treatment will that? some that the for point? beds that any NHS but demand toward at is resuming out their – get untreated in these to repurpose and and there you to waiting sitting

Joey A. Jacobs

– much the not that retrofit to high have the we give to pretty we we if patients fill facility. NHS are are that going service in they us guaranteed, a but We have confidence for confidence we're up that that

Ana A. Gupte

And X.X%, day, effect good more of again is everything? then, on that given revenue looked the and really just which patient per mix pressures with a Brexit at

Joey A. Jacobs

a rates. also It at is local negotiating little – done have it's the the is UK people in but a job very level it mix, good our in

positive very there is that too. So,

of both So, it's combination those. of a

Ana A. Gupte

And so as implemented second into XXXX in contract and X, three-year far pressure half, does is guidance (XX:XX)? April given that the as as I was the and XXXX assuming labor escalate that contract, a on understand included that's I'm which of

Joey A. Jacobs

I'm to this on defer have going to David again answer. to

David M. Duckworth

not a there and employee employees. company NHS side. Well, our That's the on is our contract, more between

no, into We that increases as directly in given with remainder us half projections we second have XXXX. year. our well the employees the our impact that does annually. have factored not of That the as year the So, do is pay of for

Ana A. Gupte

it. the Got color. Thanks for

Operator

Matthew Baird. the We'll take next question you. Please Gillmor go Robert from from Thank ahead.

open. Your line now is

Matthew D. Gillmor

issues? rate macro is to supply labor immigration mentioned of come Thanks. in more itself labor terms barriers important UK of the the and on Brexit willing the labor One does Okay. on clinicians of issues. as to UK improving impact being in What you the terms factors. exchange and some Joey, how the that have

Joey A. Jacobs

the hurts coming UK. continent the there, of to Well, them value the obviously, lower the for pound

going have I solution mentioned mix be UK. possible Commonwealth in the there, think for labor to our earlier my to to them we to opened a as Now, they are countries the barriers come up the because comments,

So, we're optimistic about that.

that some can – barriers level independent were work there's the the would pound is. Brexit the be you if rather naturally there pound in. will employees But on having the removed, in the was the removed what the or come UK continent of Europeans Now, immigration hurt level from

Matthew D. Gillmor

over time? hospitals versus with multiple And systems Ascension? those one a looking of the curious large multiple partner seeing characterize in Okay. pipeline. market in you level you're terms are to smaller I activity for contemplate sort from do in then, of of JV one And typically systems could sort markets the systems those JVs single was larger two relationships on a JV or if like that

Joey A. Jacobs

the all one would become is sizes a them, And with joint you We to venture throughout then system. started which would give are think system, that I venture you with larger discussions preferred get I and well, of it you opportunities their their partner deals more what joint think systems. if systems, with do having on could more goes do

Matthew D. Gillmor

Thank you. Okay.

Operator

Thank you.

Next from Dana ahead. question go Please comes Stephens. from Hambly

is line open. now Your

Dana Hambly

questions. Yeah. Good Thanks taking for morning. the

to be expectations into the I that's the number second of just UK we Just follow there? Should good so high, on to because pricing, year. wonder using number was up temper the half if a the

David M. Duckworth

year. Dana, well is this to again, that more than that see, rate healthcare seen are expect a in we the some that reflects David. second mix as we as other think is it I service have already the service we do half are and continue And of where the for number lines. we growing of the increases in

have we for expectation an year. is the that So,

Dana Hambly

the in that some mentioned you Joey, issues then, And there's facilities. helpful. some U.S. the That's in Okay. at same-store

I quarter think handful growth that the a in dragging well. as you mentioned on of first were facilities

facilities the of talking the we quarter? that newer Just curious, about group are there newer in with or second up same facilities issues are popped

Joey A. Jacobs

of but about facilities the getting smaller. number talking same the much still is group, We're those

Dana Hambly

for That's me. Last Okay. helpful. one

the Just it, uptick construction on call year? costs, construction a seen have last, the material in you costs in

Joey A. Jacobs

cost that gone country no the Well, across there's construction up. has doubt

Dana Hambly

Right.

Joey A. Jacobs

than usually now range And in we're more low-$XX all-in, can XX-bed can tell bed. you around think it costs, million an I it's $XXX,XXX that. we construction in for hospital brand-new facility. some a costs a using in less, some the same-store somewhere for but do I places, land, places, that

range. So, cost that know I do

Dana Hambly

much. very Thanks Okay.

Operator

Thank you.

from Please question go Ann Securities. ahead. Hynes Mizuho from comes Next

Your line now is open.

Ann Hynes

morning. Good Hi.

to to get back the... just So,

Joey A. Jacobs

Hi, Ann.

Ann Hynes

How you? are

Joey A. Jacobs

Good.

Ann Hynes

high the single-digit to ramp, get of think reach Just you in second to or of back clarify, that's back growth EBITDA can half you that you so kind to get day think if X%, you implied plus that to control X% same-store the guidance patient U.S. to that just mid labor, guidance? can

Joey A. Jacobs

Yes.

Ann Hynes

And know think UK? QX to of quarter seasonality. your has especially fully and the summer with been in a seasonality, of do months? it has into with going the I couple Are a you, past you assumptions the comfortable Do for reflects years, guidance lot rough the you

Joey A. Jacobs

the operations we some quarter second that earnings Ann, I did the quarter, to we've looking your answer. there second little our the share I wish that in that the can were that. best quarter quarter. concern can and from believe we We done quarter We employment had to per you the a make how and deliver think and of the at tax on third that still sure trying had that how first didn't at issue the third that increase bit worked

crossed. every third have day, that fingers will at our operations know don't got is to we August bring look what us and I'm terrific quarter. yet. a We hopeful we've But going the So, census

Ann Hynes

enough. Fair Okay.

I all have. Thanks. that's Okay,

Joey A. Jacobs

Thanks, Ann.

Operator

you. Thank

Next question ahead. Ransom John from James. Raymond comes Please from go

now Your line open. is

Joey A. Jacobs

John, the you're (XX:XX) (XX:XX) one. last

John W. Ransom

back said in queue permitted with got queue the I the fine. courtesy, I is it and was my a question. in got checked this back – I they and follow-up as everybody,

Joey A. Jacobs

Okay.

John W. Ransom

myself... all So, right. with Actually, I checked

Joey A. Jacobs

You realize...

John W. Ransom

it with I and just Uh-huh? fine. checked myself was

Joey A. Jacobs

are realize your that old Bulldogs play big MTSU going You to my Raiders.

John W. Ransom

right. go I'll money, go money. even All (XX:XX). even Joey. I'll

Joey A. Jacobs

going to seat? me you Are XX-yard-line give

John W. Ransom

for Well, the box best. you, the nothing but

is this question. So, a numbers

Joey, is tailwind? go to any is that versus can David. contribution potential going to in came half, my I'm think The first there and this take man, beds So, way one – online, a terms half off, about new you just that second to of

David M. Duckworth

the very do quarter one a fourth in that We the numbers. four opened fourth Yes. year. quarter over facilities think will opened have the ones second second we've did But we half The that. in are of recent improve since the the think on to opening that about We June. do drag our quarter start new

John W. Ransom

Okay.

David M. Duckworth

that new are the have new second year. but So, online. of at a think improve facilities this I coming as making we those we the great facilities point, But also progress, some over some have group will half

John W. Ransom

ever losses? that. some might get know guys these, out of That your you I breaking helpful. more you novo companies be do de consider, Would just as

Joey A. Jacobs

that take absolutely. for we'll XXXX, advisement under John,

John W. Ransom

you. Thank Perfect.

Joey A. Jacobs

right. All

Operator

session. the concludes This question-and-answer

Jacobs would like any or Now, I to Mr. turn for the additional closing call back remarks. to

Joey A. Jacobs

the hard. We is for that. and numbers, acquisitions continue operations you to showing Thank Thank about great a The had pleased operator. very so in you, hit worked did the We quarter. throughout team second interest all your company our us before grow got to to there the for opportunity and just metrics We And also this make do. then, our very company hit us. job very, all Acadia.

and once in you again, So, third quarter listening for the on you we'll thank call. see again

Operator

Thank that participation. Thank you. conference Ladies for gentlemen, you your will conclude call. today's and

disconnect. now may You

Brent Turner	Acadia Healthcare Co., Inc.
Joey A. Jacobs	Acadia Healthcare Co., Inc.
David M. Duckworth	Acadia Healthcare Co., Inc.
Brian Gil Tanquilut	Jefferies LLC
Peter Heinz Costa	Wells Fargo Securities LLC
A.J. Rice	Credit Suisse Securities (NYSE:USA) LLC
Kevin Ellich	Craig-Hallum Capital Group LLC
John W. Ransom	Raymond James & Associates, Inc.
Ryan S. Daniels	William Blair & Co. LLC
Kevin Mark Fischbeck	Bank of America Merrill Lynch
Ralph Giacobbe	Citigroup Global Markets, Inc.
Frank George Morgan	RBC Capital Markets LLC
Ana A. Gupte	Leerink Partners LLC
Matthew D. Gillmor	Robert W. Baird & Co., Inc.
Dana Hambly	Stephens, Inc.
Ann Hynes	Mizuho Securities USA LLC

Acadia Healthcare (ACHC) 31 Jul 182018 Q2 Earnings call transcript