Acadia Healthcare (ACHC) 1 Mar 192018 Q4 Earnings call transcript

Company Profile

Participants

Debra Osteen	CEO
David Duckworth	CFO
Brent Turner	President
A.J. Rice	Credit Suisse
Brian Tanquilut	Jefferies
John Ransom	Raymond James
Ralph Giacobbe	Citi
Whit Mayo	UBS
Frank Morgan	RBC Capital Markets
Kevin Fischbeck	Bank of America Merrill Lynch
Pito Chickering	Deutsche Bank
Ana Gupte	SVB Leerink
Gary Taylor	JPMorgan
Peter Costa	Wells Fargo

Call transcript

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Operator

Please standby, we are about to begin.

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

Unidentified Company Representative

Good morning, and welcome to Acadia's Fourth Quarter 2018 Conference Call. To the extent any non-GAAP financial measure is 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 Web site 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, this during forward-looking words expects, anticipates, the of foregoing made not to be and call be plans, are identify fact the statements. may statements deemed are intended similar forward-looking statements this For that historical statements. to expressions Without believes,

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

Debra Osteen

is with stakeholders, investor you had strong December, am opportunity in that first referral thank call I Good morning you many opportunity as this late our Acadia. talk in and our I've very Executive the today us sources, pleased have my and Since at place. the key quarter for arriving Chief Acadia, impressed platform employees, being of of to other with and for conference with fourth to I'm with call. to in Officer speak

Turner; open highly the patient Financial each fourth market. close the our Chief business evolving quarter. some relevant Brent additional and Officer, with today are providing healthcare care, remarks our I management Duckworth, and our David have David comments with questions. your I other and President, of We members then will and executive in excellent some line team. I'm here rapidly for about remains the

reflect we revenue the operational improvement for results throughout challenges, the in fourth quarter of Our XXXX the some primarily in U.K. spite consistent achieved

For the for up fourth was X.X%, X.X% XXXX. increased XXXX, and of quarter revenue

have to by facility organic expanding our We was services fourth bed X.X% revenue within adding for growth X.X% more the Same-facility drive continued for capacity. existing full-year. quarter, and our up and the

to to same per in days Our revenue patient increase into growth quarter acquire the a develop X.X% In and healthcare facility. X.X% and facility for patient facilities fourth revenue included X.X% and partnerships behavioral new opportunities additional increase look a for ventures we continued enter day. total XXXX, to in joint strategic

enhancing total During fourth our beds the X.X% of position leading further adjustment receivable and in for basis accounts same-facility patient flat the provide prior XX.X%. decreased day affected compared XXX U.S. more the quarter David patient these we the with provider and geographic increasing year comments. period. fourth our facility, scale, that his beds and to We and in for XXX to had was Revenue EBITDA U.S. a will the detail with existing increase results, as healthcare behavioral quarter, points increased services. added revenue days. XXX a in per margin X.X% size full-year, an same-facility quarter,

in third with Same-facility and day. quarter. the in X.X%, X.X% patient the increase the days, revenue our patient quarter, revenue per EBITDA up margin XXX the declined points, and to was a in X.X% our consisting facility expectations quarter, for For with consistent a of XX.X% fourth operations same basis U.K., for increase

and clinical labor. to the cost operating dependence increased agency ongoing nursing to U.K. staff shortage, continue results higher costs, Our be our due and by on impacted primarily

to ways U.K. staff shortage, challenges we continued operations. clinical related the to While on nursing identifying remain our and improve expect focused we

comprehensive as press that Pavilion. Mission Mission Treatment The is operates we inpatient Finally, previously and acquisitions California, and in provide nine February; two closed Haverhill, medication-assisted opioid with addiction Pavilion Arizona, people in Treatment Massachusetts. The Whittier located in centers noted and for Oklahoma. Nevada, psychiatric treatment counseling a Whittier struggling our in release, XX-bed announced treatment hospital

Ohio; in opened located Health, Carmel we Vista XX de novo February; facility XX-bed located Additionally, two Behavioral a in Behavioral in with Paso, novo beds, Texas. joint an facilities Health, Mount de venture Rio Columbus, El and

discuss over financial to detail. and call results I in will Now, David to more guidance our turn the Duckworth

David Duckworth

of $XXX.X of of fourth good and with stockholders increase compared for or Debbie, Net for financial share for $XXX.X fourth U.K. its $XXX.X recent loss share $XX.X In recorded quarter compared on $XXX.X operations. was the quarter U.K. revised of to completed was per attributable related of company Revenue the with for test quarter and goodwill million and impairment operations. fourth diluted of diluted net XXXX, the the income morning. challenges, Acadia's our million loss of million impairment fourth $X.XX a X.X%, XXXX. or non-cash the million, XXXX. fourth performance for XXXX, million an forecast Thanks, the per quarter $X.XX was based the This the market quarter our financial [ph] to on impairment

performed The following quarter concluded and West the third-party clinics fourth bill billing our primarily West do not third to legal locations the company's our government's of We include our in in requirements. in the of quarter internal not the during the for Virginia expense Virginia. settlement lab fourth quarter, permit services were to clinics notified were $XX.X billing Virginia which Our relates from regulations results lab that investigation lab. completed CTC West review services seven by for also million, the

for prior to the billing to was XXXX. the methodology clinics Our lab submitted Acadia's services to to claims settlement lab that from utilize place in in third-party of XXXX acquisition XXXX. clinics, the relates according The

settlements the million be or Acadia of transaction $XX.X fourth was to for settlement U.S. payer. million, XXXX managed by treatment was $X.XX same-facility of loss impacted of Adjusted in and program quarter. Medicaid revenue specifically, stockholders were More company's the receivable second excluding $XXX.X its contracting Medicaid We for of expenses EBITDA attributable $XX.X of the million, related adjustment expense each and The approximately was diluted $X the million Wisconsin. the million, programs accounts $XX.X managed payers. requirements state fourth or finalized legal in impairment to Wisconsin of expect XXXX XXXX, services quarter debt organizations fourth state extinguishment $XXX,XXX, share Medicaid quarter nor implemented care Neither our medication-assisted of traditional $XXX.X per Medicaid the primarily prepared clinics in quarter a by XXXX revenue. moved XX from the XX% income of CTCs the on to billing for with million. state different consolidated related covering adjusted cost starting to the

XXXX, on our have successfully a processes For under we basis. we services implemented collected which and current for billed

to However, the state claims during first have with been accumulated working and we the XXXX. of in years review two that transition XXXX the

during While the collection fourth appropriate ongoing, adjustment $X we million an that the determined the and quarter the review discussions. on status are was of based

increased credit increase were Acadia's this day $XXX.X revenue of million EBITDA X.X% definitions recently increased stayed with at facility operations covenants. compared facility operating and a XX.X%. $XXX.X flows modify U.S. provide in cash U.S. patient We million continuing and X.X% Excluding our X.X%. same flexibility certain margin an from revenue last senior same per increase consistent XXXX in to adjustment, amended financial year, for terms with secured of our facility

XXXX, X.X. our XX, our December leverage approximately availability $XXX of significant credit facility As had ratio the was and company under million revolving

the first announced $XXX EBITDA quarter for XXXX as as and share full-year earnings guidance financial release, XXXX XXXX guidance And, per billion million. $XXX a in our per revenue range range a XXXX to Adjusted diluted to of earnings of of million to in $X.XX range our is in of a the share of for $X.XX Turning for first our quarter Adjusted adjusted XXXX billion. for to $X.XX a and of follows; $X.XX. $X.X the for in news range for $X.XX. to in diluted XXXX

British million, the $XXX of Our following approximately million, depreciation guidance million, for interest turn expense This and per of compensation for back approximately it XX%. I'll of of then stock comments. pound tax final approximately morning. prepared Debbie some XXXX, my of and $X.XX expense rate $XX rate concludes for sterling includes to cost exchange over this expense approximately non-operating $XXX remarks forecast effective

Debra Osteen

David. Thanks,

leverage results I in lead my joined I well company covered have Though the would the your to evaluating position, opportunities have we this am I over to questions, candid conversations before opportunities. facility. address developing time am better am to I future with saw my levels looking with of initial do. December at in to delivering we and there a strength is team it history and we And aspects to shareholder our Acadia's business priority recognize that come patient I a the our and impressions and see to as highest stakeholders strategies like can that ahead about talk company strong highest Acadia for impressed help. the morning challenges reinforced provide Now strategy. by for level care supporting for closely plans of Acadia. our I been belief to my increase the patients value take opportunity operation's heard take work some better that in I as because some of and the and is have difficulty] our with significant My [technical to driving facilities the team corporate all understand executing to we working team have that quality. deliver very Since joining, employees take performance. the more the and will also seriously. make have a for feedback where to I improvement value drive excellent shareholder time I and many

May. I engaging the would working your future am April floor and for on now my Although provide expect week. open expect, ask will strategy as on I the questions. our look direction with to coming to you to forward I in business, you I meantime, In evaluating the views over still

Operator

question Thank Rice take ahead. with you. go Suisse. our [Operator Credit we'll Instructions] first A.J. And Please from

A.J. Rice

Best to wishes Hello Debbie role. Thanks. the in new everybody.

Debra Osteen

Thank you, A.J.

A.J. Rice

reasonable other in don't mid about Acadia is to to what a know, be you it even question, thing, to labor Have it is growth. to had delivered be a that. chance you develop view single-digit maybe pipeline. public been do a view mix, develop a that been And to geographic single-digit they've little to same-store target you it operations, X.X% U.S. is peers growth. I able with mid First know revenue high you've as to is know you realizing a of opinion the it seems able U.S. a quarter-to-quarter quarter as done, did growth facility sometimes developed Have do if fluctuate? the a this able on have mix yet, this comparable you type lower how to And I consistently, think that long-term the could sort it an service is rate operations than not that? of but as

Debra Osteen

to A.J., able key company. joined I think things that of see couple been a since I've I mentioned the you've the

I strong to generate real strong think of think across there's very I here. helpful platform has been the There's that growth. diversification a very growth geography very a services and

the team laid physician frankly, the really with the that I facilities I well good the very that and are I've they as that relationships shown the that's just with as seen job, and and think faces. and helped, out configured their respond have payers, way to a I've doing to opportunity. the industry ability staffing think I good challenges processes And really met think the have

A.J. Rice

prelude those, maybe fourth over to I about the Okay. a to breakeven repositioning related or about doing being comment that more there And potentially going XX that, minus operating the how significantly be question And facilities? the be quarter focused at question were a any could guess operations something discussion value. around that then look margins took Is operating other facilities targeted performance on forward? big charge plus I or and taking either help those fourth U.K. there little that quarter. there that eliminating you bit, even there I XX those the estate in my know closing in a if was charge or in the was with might those, a know much for real U.K. enhanced my would follow-up U.K. the

Debra Osteen

I Well, recently closed U.K. changing in and of the being And a I for revenue are is facilities closed think XXXX. but looking financial wasn't might There A.J., But they're retooled closely nine sites there. that the service possibility at services, facilities that at the team of appropriate be impact, also closure. in the lot I visited higher into looking the mix. think

evaluation has that think and it continues. I been ongoing the So,

A.J. Rice

And best appreciate wishes. a right, then lot. Thank that. I All again,

Debra Osteen

you. Thank

Operator

And Tanquilut Brian we'll ahead. take from go our next Jefferies. with question Please

Brian Tanquilut

guys. Acadia. to morning good Deb, And Hi, welcome

So, from And the guidance I or given about QX walk maybe guess a then bridge from it assume through my us you. first Brent. question Can David the guidance for you perspective, the numbers to you as would is, would XXXX? Thank how run think given? rate the that or for QX guidance guys ramp you've just the that you

David Duckworth

let impacting our Hey, We a first walk the then Brian, at guidance the we rest in good David. for do me those U.K. number that operations, these and morning, of the so in role look of our quarter. factors this improvement the see are factors. U.S. is play a also as that see year, through And factors you

in in XXXX in just the under that do see have operations. that number quarter have the And and really think, run U.K. rate in We through in first that lower February. our we beds as a the improvement in fourth online, year do will initiatives the improve. an play U.K., do initiatives, U.S., a two think in second-half But terms we first the with quarter, U.K. of XXXX First, role then The that novo we de a the facilities way brought the operations have continuing of the first the that EBITDA margin back have of part of the going XX%. other in occupancy, of margin. to opened for the the of but in increases will been we all and as number the rate well of quarter see six the

a de quarter, do first especially so of do with been very from beds be have ramping. we de see this the losses we end the the are the facilities, impact from in contribution two from see We're year have quarter have that a first those there's going facilities but of that but about novo novo a the $X.X facilities, contribution those So, number facilities, that around optimistic opened have to quarter affecting positive million we EBITDA from the facilities. that at of number those

fourth quarter. the U.S., in had closed two in Additionally, we facilities that the

those $X.X move be quarter, facilities There incurred that the we We at losses we of addition, million as per be this operations quarter had quarter about as and of will losses. first in as that from one will think in fourth the facilities. facility And the first the In wind first quarter, those down well quarter there some closing past that's year. of are complete. at those contribution

non-operating $X.XX the improvement impact more beds So, less also last is the a new and first that's in terms impacting of from the will did interest months and about the impact cost, we that the year. of a in the the be quarter and the or will results, operating U.S. throughout the improve reflective there of moderates in contribution, the provide year-over-year in And of stock then nine the and and has so around comp, depreciation, an guidance just year.

Brian Tanquilut

range it. you got right, the for XXX target my And you debt growth obviously initiatives, think came the as year, then this about I for I stepped follow-up, and openings down in noticed number All of that XXXX.

of thinking about is So, about or your we new growth? the targets this that down a be XXX on from Deb, previous bit way sort what's the rationing And little so? perspective should of

Debra Osteen

existing far really we as that bed facility. makes to think we to Brian, what identify think, our tried as I additions sense

relates the facility. to So, existing lot are projecting of that we in bed XXXX growth a

We the think looked really those aren't look going open novos any year just year. think to de We're to We, look beds added. for and like. previewed I we where think what additional at be we independently opportunities planning those each and can take

to just coming going makes a So, sense really for what year. I those think that don't tried but to we guided way in down, we think really project that's this continue,

Brian Tanquilut

Thank All you. appreciate right, I that.

Operator

ahead. And James. Ransom we'll from Raymond with go John take Please our next question

John Ransom

add number asset whether welcome, people Deb. watch company is And U.K. who asset Hi, the strategic company. my good I'll question long-term A the your a morning. for of

review So, have something divesting that at still process this thinking you're strategic that point? you U.K. about of is in your the part potentially out ruled or

Debra Osteen

think U.S. haven't the as as Well, we John, a for be anything I we really the out ruled because U.K. of thorough assessment. really do and will to thoughtful want part well that And

to the evaluate I strategy more May. of I will concrete aspects the more about, in in business the potential and be strategies U.S. going as So And think, way, the we're talking for well U.K. all a hopefully as

John Ransom

it's state we secondly, at going and clear, structural assume down try labor the U.K. are and going that pay state year if improve the to to not are in what guys me, levers year-over-year. pay, which you pull XXX was least going margin, to as to is are is what bips the Okay, almost to to noted this the shortages the you

can So money? what you don't other shutting down make than facilities just that do

Debra Osteen

I They year back the facilities U.K. occupancy and of think last are the the really is retooled beds improving that the focused offline online. number few One were at in on team a is a brought now. open that areas.

are is wage focus environment really present the trying then the collaboration workers. areas. the they've to permanent to I work Another living area reducing area, employees, spend by costs some with just with in plans got increased in national I that needs And that obviously, and other the part fees, and there around the NHS and of and the think good other around nurses, more bringing agency

improving focus and a to to in than the of I improve rather adding lot really coming their is facilities. idea pipeline those, of existing around really to trying additional think patients beds, capacity, the so And plan and

John Ransom

for Thank it that's Okay, me. you.

Operator

take we'll next ahead. Ralph question go our with Giacobbe Please And from Citi.

Ralph Giacobbe

now, pressure some Good morning. cases single-digit revenue Great, has for while margin faced in even The business and growth. despite a thanks. high or obviously mid

So U.K., think margin sustain and U.S. what I sense of guess question the kind of organic you targets the is needed baseline in level? a sort top of sort the have any is to and in you of do line

David Duckworth

that do margin top some this the is is There compared improvement margin growth David. that's We Ralph, and just will X% and the between we of in retooled U.K., to X.X% that's the Yes, targeted see second-half growth XXXX. of X% of online, support revenue target U.K., U.K. improvement margin. line that the for back improvement, with as occupancy some that a in revenue the improves beds been come have the driving around margin on have XX%

For do improvement X% U.S. growth in support as U.S., in have operations margin some should revenue X% a that well. revenue the we to target our

optimistic think come online. the we're a U.S. number beds of in that online beds we also supports number XXXX have So The growth. revenue strong that continued about is coming

Ralph Giacobbe

Okay, Thanks. and to you you there will XQ. it on much then great, then just you flexibility the the if any and how gives as you? active point help leverage, follow-up, facility this target And on in well? of that's deals be at How in helpful. very the amendment can update maybe is credit mentioned leverage And sort managing versus

David Duckworth

Sure.

of expect. five our we the We step-downs out flexibility were there how that we we for just of can we'd think continue the risk create throughout leverage at We credit. to and to and a that just target there looked end year, did, better did some from existing we cushion to more at the our a the as take times, in add earnings year, access want that us growth the get of the have and credit agreement,

for the that, of a similar about added now the a was about any and a the our us, that term definitional impairment, six whereas so support a about and non-cash made were year. our add-back items, step-down were are the down the covenants And to the such stepping the covenants add-back, positive past debt on was we've credit to total to at There made X.X and that added a turn. feeling an mainly that There's The at remaining agreement, half-turn of the also that cushion around add an end EBITDA as to within for the to in positive half from then end that non-cash for of times facility leverage a to basis XXXX. we credit limited so, some lenders were And X.XX facility. there. amendments adjustments were did

Ralph Giacobbe

Okay, thank you.

Operator

with UBS. our take next ahead. Please we'll Mayo And question from go Whit

Whit Mayo

pivot not go-forward be that get be, you terribly strategy morning. of for strategy? the as good pivot the thanks, we to is Hey strategy, be within prepared do strategy today like see period, need terribly clear, do areas sense better and a maybe you to Debbie, the a opportunity but then what have do going improvement fair to we major of there the as once in to different, an is what May two for investment question, you is And envision implementation maybe a no an in organization?

Debra Osteen

and I I changes before I our complete assessment, it direction. When about I want to talking think start be thoughtful very about want in to

As think I think opportunity improvement very the there's in certainly I the for a there's do I earlier, both U.S. platform but and strong here, said U.K.

able that to be discuss in about May. I'll So, more

Whit Mayo

David, of you is the around have to Did as is give really you understanding some forward? year plays I'm that going more think opportunity everything, the pick back risk that the up so just maybe a how there about trying to left can right an off write-off Okay, an potentially anything of I is year. period, point that out there jumping Hey, for to dating And on? of we much color think XXXX what the I write-down, AR bit try. happened. to had was more little of

David Duckworth

opportunity appropriate, the XXXX the attribute that we in appropriate. the adjustment in to XXXX reserve upside is $X think specifically, we was expect prior we've do the Right. We're and reflecting amount feel to we that and to for any million established there. collect really our reserve We two all but through place that around of do years, therefore and put to the there those going for discussions years, much view final be not

Whit Mayo

the one just quarter. Okay. startup And I losses maybe $X.X expect in million to you first losses, last said, back you think of maybe the David, one,

disclosures, maybe months. had XX your at in looks like it about Looking $XX past you that million the

just $X.X how get first I'm reverses the in quickly sense so a for to XXXX? that quarter, million you're of trying And expecting itself contribution the what full-year in and

David Duckworth

Right. million to where through a survey number a results. take more we in And expect in We positive $X.X focus that have get year the in keep next are to have losses quarter. to licensing, breakeven of expect and do that on of just that. And period facilities two first have we that two We'll very three six to mind; the open going now other months close currently brand the to new, facilities been we nine-month than process.

positive of And six the in the losses $X see and of but so quarter, the or around even second so second-half contribution those the throughout way it the year is from expect second-half six probably months. in the $X million EBITDA million in those breakeven another will some year, hopefully in we facilities the year out be playing and of

the in be basis $X we So, $X with XXXX. loss negative on about impact expect a million XXXX, in year-over-year to to million

Whit Mayo

you. Thank

Operator

with Morgan next from Capital our take go Frank Markets. Please question ahead. We'll RBC

Frank Morgan

the labor to some company your out called is as employer. to always of what then be the into come lot what discussion business. terms Good length seems more knowledge I'm up attribute to on could the third stay then question. insights -- labor of is managed around managed otherwise differences go issue length glaring your you back I what of traditional shift Medicaid contrasting stay, has your a in this And some to from my you're differential give and you neighbors. some been same Medicare sorry, markets, in in to looking as side, pressure? the seeing you're former to related traditional specifically to the this and shortage in And A.J.'s always seeing differences Medicaid? that original first to That's Thanks. do been There's to also and are much morning. always for Hey, of But payer like point your you a know seems mix I'd question, comparing of difference seeing

Debra Osteen

I'll Okay. salary, the first, Frank. take wage piece

than that facilities the the neighbor UHS. think distribution geographically my I of different Acadia is

some I at competitive are the competition and different think been it's for in are And have markets UHS. those the when lot lot more facilities physicians, they a have of think I the the really but view where where not and Acadia also They you some of that markets. in, clearly are look that built, beds than lines that distribution. a has of also, different Acadia staff service a of that

CTC well and the I more portfolio use, think they the with are evenly distributed substance across RTC. the acute certainly behavioral as

direct different different lines comparison in it's be made geography and that a business. then the really it's because service not can So,

Medicaid in. called out concentrated the think been that we that that states We as have of don't Acadia by movement As in in overly any far the the UHS. movement, is I and markets haven't states an seen really have presence

of to days X.X Acadia that and so for consistent position. a stable. it's different It's stay XX. length us very in puts The And from is XX

So there pockets in where not Medicaid we pressure a has Acadia. the in not been that but way that from that meaningful way meaningful we see any clearly to managed have

everything, think that Frank. answered I

Frank Morgan

would know of And managed chance book in percentage just your by topic actually managed follow-up would Yes. Medicaid one Medicaid today? that you maybe of Medicaid, the that's you as on my more

David Duckworth

-- Medicaid. we last I'll Frank, payer David. Medicaid I that around report Medicaid within this as was see is it think Medicaid was U.S. The take managed time one. of managed the our we already in We what do with looked two-thirds

Debra Osteen

one gone I'll here already is just add, difference that is managed. Frank, have I in And states too that think Acadia

the And UHS as that's so states there of is there to conversion some in. much hasn't that taken straight from of Medicaid place the as moving in been been managed has

Frank Morgan

helpful. you. very thank That was Okay,

Operator

with America. question We'll from Kevin take Fischbeck our Please Bank of ahead. next go

Kevin Fischbeck

Great. Thanks.

clarify. want Just to

the a revenue in growth U.S., X% to that some Is or you there. that X% said deals but number same store is number? did you total think I a obviously

Brent Turner

that's de There also from That facilities additional Kevin. to an from the closures. contribution -- novo we X% a X%. But Hey, is some the announced. that as would number, be the the as impact facility acquisitions two some organic well

to growth same growth group. from and X% another outside just so organic X of revenue what's percent that X% or of So, facility

Kevin Fischbeck

about Okay, couple guess demand we that's that think lower to term? the the And reason see about Or, right is be number could drivers the years there way when think given over -- of where or a kind next X% that number, the helpful. think X% that in to the near of are? higher I you to is growth the

Brent Turner

perspective And I think any an expectations from that forward. enhancement number. provide that's an activity, M&A organic any to then ventures would going joint our

Kevin Fischbeck

had lot Acadia. Okay, just We to great. wanted confirm I versus discussion that. UHS a of about

much make going that that's All were to historical good wanted forward? going are thank we sure you. a going talking feeling -- we still number growth. as you about right, as Just about forward Are it talking relative

Brent Turner

Thanks, do. we Kevin. Yes,

Operator

with take next Deutsche go Please question Chickering We'll our ahead. Bank. from Pito

Pito Chickering

in rest Thank my Acadia, you. welcoming of And I will colleagues you Debbie. join the to

Debra Osteen

you. Thank

Pito Chickering

Great.

I I I the is what of opportunity facilities is? asked talked modalities, market? sure that the to new U.K., focused ideal because reopening mix about that in want the And possibility at you on cost Looking what make just understand for

Debra Osteen

then the they elderly into with Well, -- there care, Prairie's and they the divided they have section, business hospital the adult. have sections education, business is the have then

patients have what has frequently focused management the those private sure HS send making facilities that the high because and are team sector. is been that on Prairie that the think acuity can treat that to we in the I

beds the at think well as opportunity acute. of retooled look are have the those as as beds back and online more specialty the some in areas we that the I So,

So U.K. they Prairie Those as leads and like CAMS specialty the disorder. adolescent child call in in. really market which the eating as well areas are that

those And looks private so areas where NHS to sector. -- the also and are

and available for So then try first those those occupancy services. also focus of beds to through are improve a but management specialty to have all

Pito Chickering

Got it.

behavioral forcing the checks collect, from U.S., to smokers in abuse substance to there you that? and recently care facilities the guys sending been about On losses impact any the managed see directly do have patients

David Duckworth

David. is This

seen that. pretty minimal. It's have We

or see where see we activity In minimal. there mainly pretty with facilities. abuse is substance it's any what again But terms of one there, two we

Pito Chickering

And it you to the new M&A is question in very be it. say deals announced last will until from for Got just that me again putting on clear perspective, brakes be fair May? talk then to we

Debra Osteen

I don't wouldn't that. it know -- whether I like characterize

continue going evaluated. hopefully, carefully will at this the is very that solid we think opportunities. look plan do remainder be still do want that a to for plan rollout we acquisitions. and anything in can full next called we we the get in. that have incorporate of And think growth to But but move we'll we want year, we May areas to a various year But we for I

Operator

next with our take go will SVB Ana question we And Gupte from ahead. Leerink. Please

Ana Gupte

Hi, Debbie thanks, again. Congrats good morning. welcome and to Acadia

Debra Osteen

Thank you.

Ana Gupte

of was little more and be out your challenges that's history where relative aggressive you that facing the hear deployment more of the now has line been will is, focus M&A, asset just squeezing from questions kind the assets before, very that helpful Acadia would Acadia novos, adding you you that de value beds to you on lean and into as capital to UHS of to of on address the follow-up of that your a view this right come here? -- company, broadly say where So, some this helped would questioning it's relative

Debra Osteen

in areas. to those improve have to going believe hopefully it's that assessment operations. I ability an be more to always a May there's think through various appropriate I'll I and more Ana, on lot happen

I shares view. the here that team think

the going about and of think be to as how far better growth, also I I will in as strategy we're able But U.S. on areas to So, the talk that U.K. to and May. focus improve. in

Ana Gupte

Okay, all right.

of better to challenges just again hit industry you So differentiated to of invested NSIC some focus staffing in that base of those you you the they have able those I on mix, -- peer being overcome to have like. in as already to compared Health pretty more stay, capabilities? on the again that -- hit outpatient Acadia see that all and as UHS on because secularly lengths can any of follow-up substance offer an mean color, abuse asset the and do say degree

Debra Osteen

being strong that, A here, across and has think around think been Acadia team the use just mean been I marketing. job I seeing a lines to lines. I portfolio the substance I we've configured I and in think the I've and and very really now staffing. service record that service got around stay. handle with And Well, growth a good real there with challenges the joined Acadia pleased I able am the the lot before are very and of a is certainly platform stability sales here And and states, track very for way strong the link all various does the to the

strong they think across do innovative support I growth some think for a and company. the it's I things

Ana Gupte

I Debbie. appreciate Good Thanks, it. luck.

Debra Osteen

you. Thank

Operator

We'll question go from next with Please JPMorgan. our Taylor take Gary ahead.

Gary Taylor

Hi. Good morning.

the clarifications presume U.S., breakdown you I but couple of on a the course are of XXX do a position? Just XXXX quick majority have on beds those of

David Duckworth

is opportunity More beds in is U.K. the occupancy. in the this of to David. U.S. course Gary, The Yes, the than are of mostly those XXX related

We does quarter. for number beds have two year and more than great facilities. first include add but and great the for already for a is the year the just in I key it's U.K. U.K. beds opened XXX of that will remainder this But we in U.S. the the under occupancy existing a the our XXX the that's the number the still to for think a

Gary Taylor

you. the Got XX% for margin of target 'XX? U.K. for And the second-half that full-year is a

David Duckworth

Gary. XXXX, second-half That's of for the

Gary Taylor

was none or Got of growth give would the with you talk for. qualitatively facility and then, can't ops come the help guidance but two bit I bed you. year-over-year would for you that just building. maybe CapEx can that down being CapEx if a I directionally down hoping I new And coming metrics? just cash imagine hoping little but about on from those CapEx and was

David Duckworth

spent in operating and range do of to million million $XXX XXXX We to similar similar see same are well of around to million it's a we see to range at $XXX million that be million and XXXX forecasting that million. as XXXX $XX XXXX as and $XXX to in is as in $XXX CapEx Sure, we expansion a see the well. $XXX XXXX, XXXX in level be cash XXXX flows in to The XXXX. maintenance and CapEx similar should

the of a what CapEx spending only of in flows XXXX would can't lot what's relate and the beds the number terms year use to but so lot You of look it's beds for 'XX. of very exactly also we of as activity to that at not year would and expansion. in so the in because cash the be opening and of 'XX in starts just advance a well XXXX, are bed added predict in in works the the it a was XXXX in similar flows as a cash

Gary Taylor

this you including as on it -- then, obviously one quick you're characterized as last nature or that be not commented review operational alternatives fall out. think potentially is don't this going it. the characterization? you. think would conclusions May, alternatives as wide But as the operational when are the doing that strategic there company a refine a including had in by is to can rumors of a Got the And doing broad it is and potential was as ever or was for in strategic considering publicly strategic in a review present I care to Acadia just more lot Deb, we about of review primarily that you or

Debra Osteen

would, think that it's very I be to comprehensive. I going say

Gary Taylor

you. enough. Okay. Thank Fair

Operator

We'll take ahead. Costa with next question Please Fargo. from Wells our go Peter

Peter Costa

Good morning, on new role. congrats the and

Debra Osteen

Thank you.

Peter Costa

A look over had and you came couple you he that few questions to all in operational bad Acadia before presumably controls first you the that aboard feel was number you how of things, compared years -- issues one press really and and one since company last of has came the the from? here, saw do that of compliance did the a the about at presumably first where and

Debra Osteen

facilities. director I focused the on corporate think compliance Acadia the facility there's supporting team has quality efforts. very it's very medical robust here, and a the that very a strong supports quality who's at

what -- So very I've been very I've I've with been pleased seen.

and quality acute we really compliance ill evaluate there's hard always incidents seen and make very it room are sure think a side patients facilities keep the we that minimum. that and proactive that But I improvement. I've to I team and the sure think Acadia We what for to is we're any we're is working strong. on treat make the

Peter Costa

after going answer. that way think that about about is to review me should we a done forward So be your thinking spend big on is for

Debra Osteen

we're I but with going do so think, things need everything really to in other want up be that on comment I don't is one where end But we things a now, the of process again, I'm it's to I that there to that. assessing I will place doing. at think are solid look very

Peter Costa

Universal. we've a really Okay, couple although relative and spending increase come and year have, that not to my is at second of saw we a we perhaps performance we your lot to opioid clear of last funding, look question through seen it's bills for

abuse opioid sort money bit a yet you money to keeping same come? kind spending they or stronger your Is and opioid it and growth comment You're little that more substance still focus of where is that's growth higher on of today? more perhaps your rate have outpatient, the is from Can that

Brent Turner

needs recent treatment, also we to continue cover haven't over Yes, disorders and a fall which with, outpatient treatment in have There's recently bring IMD limitation. of substance again, been Turner. same most I'd the will act, fueled under growth. David is the Peter continued but comprehensive they of outpace few as the earlier couple opioid bills our diversity Say service of the treatment that years, Along that out the abuse covering additions to will market. inpatient support benefit been, the say, line really Medicaid the the Brent is facility it, supply this demand in last things centers, when the pointed to the bed Acadia

its but is in I'd some will the there's good That's finds So, that money to actually to doesn't around there's October there to opioid benefit fact demand providers a is just The until here. positivity way ultimate the future go coverage. that one say -- that of trying there's this bill headline effective I sure the goal year, referenced the continuing definitely focus so funding make on we're patients. what

positives we've some I think there. got So

Peter Costa

share us progress able with that so way, Are on some you can, of sort that to in track any that? you

Brent Turner

moved has might to over remember that. treatment for not of financial The again, Medicaid that were due treatment that. to it Medicaid historically cover states position outpatient themselves, we've these came doing you they and that and is monies they challenges began Well, XX impressive the huge months, are a population, unbelievably the cover. pay to the just this was beneficiary having cures because actually and And, their did change last that couple States, of seen for opioid some that a who to individuals

treatments access to able they're their Now the Medicaid through plans.

So I think couple forward. will think see we those examples I we are as of go and of more that a

Operator

follow-up John ahead. question, with next Please from our take James. go We'll Raymond Ransom

John Ransom

of even we for this the questions, a through progression bit think Hi, help a also, one you says could And but any could precisely of all maybe number the good -- there was Thanks. rate is run into but followed next strategic little tricky three more and the some after quarters? key I as way looking Is a the contributors this just the a David, about mentioned of of you year. things.

David Duckworth

the rate. the detail $XX growth the number as run the expenses, see EBITDA U.K. The U.S. remainder then $X other nine in the quarter as growth from second off the year-over-year and year-over-year the million year, the the of will be increases And for And somewhat of more improvement, the we facility novo the the In the impact see million XXXX the occupancy of somewhat Yes, comparing U.K. closures 'XX sure. to items big non-operating significant coming see as year-over-year. into cause the million clarify we EBITDA and losses does as quarter quarter of build there's rate on well first ahead of around of operations about de impact, the items. there quarter, the happy flat the the EBITDA with opportunity the quarter as the last the first in -- that's EBITDA we that quarter in of the around the number. to the growth in move be the we first reflecting the U.S. provide U.K., some as I there U.S., from John, do mentioned earlier some to the of improvement the margin and well around has those second-half where of into first matters. year-over-year the months the In retooling first to We that pricing the year. $X run the beds, by of and think initiatives, year. just flat

John Ransom

for that. Thanks

one, had change? to that if what at biggest look contributors top things are two, will say three you the EBITDA So three three, if the are versus the the you What XQ say XQ?

David Duckworth

resetting see of fourth to the $X just an quarter first fourth about of taxes, have million Well, $X million and quarter quarter that first we impact quarter. every in impact every the the quarter course the have payroll fewer that to first that's we year, quarter, going or -- first has days you the from

quarter. would first that from fourth going the the So factor quarter key be to the just

John Ransom

biggest that is like this to -- are guess, is -- number is look quarter improvement 'XX just you the I driver? saying the -- first really biggest the know, factor. in -- the census, model, was And really that I is your the one EBITDA, 'XX, U.S. improved fourth is sorry, the you I'm this quarter what XQ the what's in at if

David Duckworth

been end Yes, filling 'XX [indiscernible] the be and up the in to improvement would number seeing then in of the U.S. sorry, also absolutely, the the the run number the quarter improvement XXXX the novo by I'm that have de rate contribution one beds, beds, the XXXX, U.S. new 'XX, factor, added from first of one.

John Ransom

Okay.

David Duckworth

see the in in U.K., a the second-half improvement do we the just it's And secondly, headwind while quarter, in the year. of first see opportunity we that do

John Ransom

the of pricing? U.K. just much the how And is

David Duckworth

happen on the detail most the Well, provide the part for for that in really April. does of revenue pricing pricing. The much we don't

year. a the lot of do quarter. will happen it the throughout that's be So why positive increases A cost in more second the

better. one quarter a get reason that's second little bit does So why the

John Ransom

do Deb, you And your out to for figured of be have guys to just what roll to And are kind Is later review, it call, the going in Okay. you down is of you road how going presentation, month, middle the message a out? a lastly this then to planning to not month, the or be the on? plan enough when up wrap market? there that

Debra Osteen

can as working the down we're around enough and investors articulate to have but think plan quickly team get we and direct how also diligently the about when, as a to to detail a so we I'm don't road can to and our I very strategies.

John Ransom

in call. down me mark a Well, of favor

I think will an be that interesting…

Debra Osteen

a made I note.

John Ransom

[indiscernible] but matter, it for but you. time. was doesn't Thanks That a thank the

Operator

from question you. go Thank ahead. final And Mayo. we'll Whit take Please our

Whit Mayo

on need just XX% currency to just I to the It looking year. the back last few the basis U.K. at EBITDA Hey, mean, years in same-store I second-half the of for about a a go second. constant X%. fell declined the has

I line to to this on believe expected just quarter, struggling we flatten around XX% think get visualize trend and and -- in in out first how you reversal to a same-store turn be you the basis XX% decline then which I'm really an another abrupt positive. stated margins are the of implies

of confidence that these initiatives? some on trajectory David, give actually can So been anything it's that to that itself there it from given increased is else us reverse say to the

David Duckworth

that saying that always Yes, the the see impact year. do for saw in this starting that labor but pricing we're more some we've in haven't improvement where second-half the to it's will necessarily from XXXX decline increases, on of employee the been saw increases, mentioned. margin the cost the that cost The retooling, increases the affected and for have that by we number of anniversary been offline and and we covered Whit, in initiatives of quarter reversal maybe items beds positive the we previous I'll a the just margin third by of margins, not start back decline the the

that occupancy the more increases So those appropriate the getting just comparison the first-half based pricing facilities, and I the past we and from see have the on cost just been increases XXXX. hopefully be retooled, that that from margin in will seeing a think progress stronger that beds

Whit Mayo

Okay. And and the up there a two was margin you quick then quarter. questions, we million EBITDA an so annualized Virginia, just clarification business anything that $XX and put any of implications headwinds tailwinds consider in bought other to think or way tailwinds, on there sort I of on first the thanks? acquisitions, you said understand number EBITDA the year, this then are West to lab the in about Any

David Duckworth

associated Yes, with million. for trailing those, and purchase and let two treatment. acquisitions and with the to in around million was do assisted lab, think me clarify, -- bundled for on $X of Most The $X.X approximately of $XX the for combined the price revenue million those revenue states million respect your was acquisitions $XX West payers to rate a we pay of medication Virginia the unique. EBITDA, the question our EBITDA

services. lab for Virginia unique of there the terms was in situation billing And so a West pretty being a separate

Whit Mayo

Okay, thanks.

Operator

to like to for I turn back would time, conference closing the this or additional At Debbie remarks. any

Debra Osteen

Thank you. Thanks and again for today welcome. us being for the with

for clinicians leader As care months. and I'm of what and will very company Acadia. with I I've programs also quality future success believe growth foundation treatment employees which of health The and the new a Acadia past pleased few has dedicated solid these be seen the

have you a not and please Thank good day. additional do to directly have you. us today, If contact questions hesitate

Operator

presentation. gentlemen, this conclude your and does for We participation. today's thank Ladies you

You may now disconnect.

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