Acadia Healthcare (ACHC) 31 Jul 192019 Q2 Earnings call transcript

Company Profile

Participants

Gretchen Hommrich	Director, IR
Debra Osteen	CEO & Director
David Duckworth	CFO
Brian Tanquilut	Jefferies
Philip Chickering	Deutsche Bank
Matthew Gillmor	Robert W. Baird & Co.
Benjamin Mayo	UBS Investment Bank
Jason Cassorla	IR
Joanna Gajuk	Bank of America Merrill Lynch
Nicholas Spiekhout	William Blair & Company
John Ransom	Raymond James & Associates
Kevin Ellich	Craig-Hallum Capital Group
Albert J. Rice	Crédit Suisse
Joshua Harakal	BMO Capital Markets

Call transcript

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Operator

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

Gretchen Hommrich

Good morning and welcome to Acadia's Second Quarter 2019 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 website by viewing yesterday's news release under the Investors link. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Acadia's expected quarterly and annual financial performance for 2019 and beyond.

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

forward-looking may Commission cautioned factors, the company's and set in in statements others, the with quarter affected Acadia's by the results You statements. and are operations statements, filings results differ discussed these actual in result consequently, Securities the be hereby the forth that a future And important release. as among news information, events and second The otherwise. materially whether Exchange may new from of or

otherwise. undertakes a statements obligation no publicly update whether company result any information, as new forward-looking or The of to events future

remarks, turn for like Executive would Chief to time the over Debbie this Osteen. to Officer, At opening call I

Debra Osteen

of us I Good for and today Chief being Then second Financial today Officer, I'm then remarks your quarter David about have our we'll the some close. second members executive morning. for questions. Duckworth, here Thank line conference call. and for I the with our and you David open each will management team. with quarter other

solid quarter. We consistent line report operating to a the our growth second of and execution are our for expectations These pleased performance in were reflect results financial with and strategy.

XXXX the revenue facility of at margin the the in year Our U.S. same for operations with prior increase quarter increase patient operating quarter, metrics. key EBITDA growth days trends same performed top with U.S. and with revenue favorable consistent in well, X.X% consistent period. a second per XX.X%. with patient compared a and facility increased line X.X% in day X.X% was U.S. second

Center, XXX beds, the beds beds of health and located facility care Recovery These size quarter, included a second facilities of our position geographic expansions Millerton, services. and increasing acquisition in scale our resulting provider as behavioral the from in leading Pennsylvania. specialty existing XX a treatment XX During new we Bradford further enhancing and added

opened mentioned late the on we we in at earnings expansion call, XX-bed As Sierra the Tucson first quarter May.

that remain pleased the We the we have report beds, for achieve first XXX XXX our the that and of additions of will exceeded added we to approximately year, our are projections. confident expansion we the six Through goal census months bed year. has

of results rate day. U.K. and for payers patient the from patient our higher facility The and same our points increase from retooled decrease showed X.X% increased revenue a the by driven in consisting XXX X.X%, increase facility returns local margin was and of to a X.X% revenue operations beds. X.X% in basis XX.X% Same NHS from days per quarter. This sequentially EBITDA

to second respond During our quarter, needs of we the NHS. retooling the the accelerated to efforts

a they in region positioned take continue develop We identify the better deliver to believe that advantage commissioners work services demands require will future with and our are service a well to across lines. of We services return. to we

believe to that we've will growth. our have retooled, seen future With this and the results good beds contribute already we

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

David Duckworth

of income share an $XX.X second quarter of second morning. XX.X%. of stockholders income quarter a XXXX million attributable XXXX. of to or XXXX of for million was attributable $XX.X to income of tax Debbie, rate the net diluted adjustments XXXX. the per million diluted million second of quarter Acadia's per income the tax $X.XX $XX.X with to income compared of based share Revenue diluted with effect the share, Acadia's good and stockholders for or $X.X transaction-related quarter second X.X% $X.XX $XXX.X or for compared million for million, million excluding Thanks, of of $XXX.X increase the $X.X per on $X.XX for expenses second Net Adjusted an was and was quarter

last previously adjusted for was Acadia's six operating decrease XXXX This tax primarily or made of second second the million cash a same operations months payments $XXX.X XXXX relates year. announced $XXX.X of for cash period compared settlement revenue. consolidated flows the legal million received XX.X% the with million in of EBITDA compared of to the company's in were quarter XXXX to as XXXX higher and refund quarter first $XXX.X XXXX. the in The payments in from tax continuing

quarter in our the impact slowdown of our de the the novos, half cadence billion $XXX continuing million, initiatives, ramp of U.S. the believe $X.XX to two for for high $X.XX. range a from and number our reflect the ramp facilities adjusted of facilities. of XXXX share range the about to XXXX the $X.XX adjusted acceleration could beds of year in U.K., our the the of of earnings press bed the for we and XXXX U.K. a our full be million $XXX ramp-up our closed the additional $X.XXX XXXX range reduced including guidance in of U.K, factors, financial our back novo of a Turning our an the retooled we of in noted slower guidance for earnings in facility the release, continuing usual a recent revenue billion, EBITDA opened as of for remainder to additions first narrowed as guidance a to to We've existing closure the the XXXX to the the the retooling think second end of of of in due per as facilities in weighted and XXXX at we follows: diminishing towards end And in a seasonal year, diluted de timing

and some This concludes I'll this turn Debbie remarks morning, back over prepared my for comments. it to final

Debra Osteen

David. Thanks,

we on that to like you process. strategic covered take Now update results before your review I have questions, and we briefly the our would

primary strengths the highest and leverage scale our objective core in our As and with patient our working we initiatives, improvement shared deliver of call operational you are hard execute to we our quality on while meeting care. May, to

We the throughout organization. execute moved and identify have formed have teams into and to early these now improvements the stages internal fully

of improvement One identified and building oversee of a largest are team the is within to we procurement, this today area. areas

that on deliver to are But next two to we early a will material million the the until see we we over years. million in $XX since We expect are $XX savings XXXX. confident process, don't impact the

to potential sale our value an Regarding that expeditiously U.K., shareholders. alternatives advisors hired for in manner and moving the maximizes of we have the are organized evaluate

not further We reviews strategic commenting the Board will in be U.K. as the alternatives

all to business aspects Acadia's are where deliver we evaluating We see can of better closely performance.

provide our patients many continue Acadia greater to to help. deliver come the shareholders and excellent for care to is priority highest Our that to for value facilities

to will I the your ask operator now the questions. floor for open

Operator

comes question with Tanquilut [Operator from Instructions]. Brian Jefferies. And first our

Brian Tanquilut

talking also, about had slower of I plans call de the there we back What beds you it the novos highlighted, are terms guess out about in like think is for sounds anything the here, business U.K. your retooling the half, about? de as many you than effort first question is think we and And there? you'd also is my like, that you novos the expected. as the how are ramp

ramp that changes the don't in mind U.S.? beds thoughts walking in the projected us seeing de on just you if terms in novo you're any through So of

David Duckworth

I'll that. Brian, take

over it in all, facilities about Texas, been in two how of in the more and opened are quarter slower terms of did and payers have has the in facilities quarter. and year. XXXX, with really one last their I'll say of some over have accreditation the here Both survey And need the while and early they of are progress one and Ohio. first that of seeing First the we quarter the July, they second course we first the on now the the third Those the lot did start a de in in all of quarter completed pictured in novos, February, open we the the working recently progress the talk ramp month. made

de a would quarter, losses I was go. are going which million into see course how of second well the around in very we But exceed by we their the the did we we here think of had end thought of year, novos chance absolutely hit second that half year both have of operations. facilities goal year, So first from did to those the ramp-up the the $X the the over of that positioned breakeven losses the

optimistic So facilities year. ramp from continuing those over two on of half the the the second

beds and are retooled in offline that -- U.K., the just some those XX in great seeing On reopened. have getting we retooling around progress previously reopened had beds beds for the taken we

will a think now course tremendous going do looked term, that the with local opportunities further identified and XXX returns think for closely identify so have the be or We offline there's and very offline at beds further near be an to in are to especially with temporary these of operated. further from retooling. half retooling our do opportunities. earnings. We additional We that beds projects, the previous and better second the that just we over is opportunities. be the about optimistic additional demand service factor will the we quarter service than But the But quarter fourth the the third affecting return of those over year, and term, that aligned see early long it's really next the higher year, reopen a on a opportunities will work the commissioners, NHS, these those but we have at

Debra Osteen

said. Brian, add David I'll the said to retooling. what just I'll about add And to just what David

do mentioned. existing what in I exist needs provide are being not don't very they at to think these has is are also private the it think have the to we around are good the team I and David proactive XX areas XX collaboratives ones is facilities. sector. And reposition where a the But that visibility what for service higher partner and they in but acuity our the doing a of are in reimbursement, to which they higher the U.K. are very care. There and in tried facilities we

I think what with we patients. The and positioned. care the match those we to we is term, demand do in So is demand that there, will to take of ability want that long think our be

right of we and But so our we're better we come get ahead of that. it, can we these lot now, generate when return, focused beds beds. try but back. matching a more think with will pursue we I that well-positioned on retoolings, service those these And and very as we foresee will outcome don't needs be a And to

Brian Tanquilut

David, real quickly. a that's my great comment, guess Debbie. just Yes, I follow-up,

bit. late As think I was I think this little you've that closures last Arkansas the the performance done we for and modeling the think your and think quarter it the for with do how revenue about is that street I associated revenue mismodeled the facilities, same-store might Because year, just that of purposes? strong year about really some have a

you so if -- can model it, accurately. probably, give just color us we So more some can that

David Duckworth

yes. our Brian facility did facility, close that operations close decision the identified in winding during really a over its is strategic July. Yes, review. to and course we down it made additional an that of was June We

of the facilities. closures does we with these about facilities, As the XXXX that there -- growth. underperforming lot on and an we think EBITDA was associated was those there's were a $XX our QX obviously, revenue about not with have so But impact revenue, completed, it revenue there of million associated have

have But EBITDA And facilities. having we're better obviously, a from million so of quarterly much loss did those $XX revenue. an is positioned we going of around closed forward, perspective where

of incurred all over associated about of facilities, relating half year as the do the was mentioned, losses the operations. by of some the that And the activities, second wind-down hopefully, become end the with completed year. as less will those having the So wind-down significant closures. revenue to we of the think the We that we have

Operator

our next with from Pito Chickering comes question And Bank. Deutsche

Philip Chickering

reduced around can a put to put guess, guys sort it top can guidance closures little also just of of operationally, quantify here, of down it? sort sir, you, brought with lowering what From -- can -- back Just which guidance? you you numbers and to I why up end that bit some you parts the the FX, of you retooling, some U.K.

David Duckworth

a looking of But has at retooling that timing the couple we Pito. third of that, the the there's and that already We've the on identified, opportunities just Yes, quarter. U.K., an projects additional in the the discussed impact factors.

the the certainly talked those the update. that the U.S., are the the about the so to U.S. -- closures, guidance and in in that are that novo factors And we two reflected And then facility in drove update de our

the provide In it's second which -- to of quarter, the not that terms that FX, equally between split U.S. the initiatives. Through had was $X.XX. in our clarification. we of guidance very wanted rate forecast and to sort of U.K. quantifying the so $X.XXX, We the the for amount, the update close was did exchange

rate course decline the as rate not of of impact, updated half of the the seen July would volatility $X.XX period, for there. the on is about move second rate, each I'm, over the exchange a $X.XX much have aware we our for for certainly, annual have the exchange EPS. in than We very The exchange be but think less the guidance an in year.

value to want and you did did rate, around our about the the is investment to associated with provide that's exchange place those but So just hedged, information and for which guidance in of that do derivatives. have for update the that we We not the FX. to -- hedging continue translates XX%

Philip Chickering

beds you going was the also the than not retooling to up. pressure as lot that sort expected. longer the guys of retooled beds margins getting under And just the over to of impression looking what margin in are Okay. And you for then beds a of the be retooling beds XXXX, in part short was back of guys led terms the U.K., get online took follow-up, I at those back to that the

question So executed sort sort in why be XXXX I is of have how this And XXXX? you will was in differently? it now? than What the guess differently learned of

David Duckworth

part as getting is and we is Pito, being there's service that within and also commissioned Well, the were aware of uncertain. more is some This has timing a that agenda, and where, on a very NHS the different somewhat transition Transforming locally are Care of the of is happening lines focused that the that different beds to been part NHS of geography. it setting much of the

transition decision within part the was that So accelerated around has NHS so that. the of been and

that identified Additionally, we weren't for retooling opportunities identified. previously have

the forward are of timing those the making that earlier, think moving us the more and of them then we've Debbie and opportunities. we NHS most do with has As closures mentioned now of bed identified been some But retoolings. and changes and identifying

Debra Osteen

the move out what to in I is agenda. some acuity add acceleration Transforming the Care into I'll U.K. think lower levels. to higher process just -- we David's comments, patients of with settings And saw a it's their the of the fluid that these

the so doing So to is we in do what volume the we're and coming retool trying that move for patients those need. have then

that moving long we which want would we we'd be but those to prepared do if be patients had think I So the and out, term not done acuity for not anything still high term. we patients, is short what

as is other The -- had I'll least positive. revenue at very the as 'XX, we as result well that very the with thing look clear good it's we doing back to by a from say it's net so, and margin beds that retooled

benefit short-term a it U.K. operation but is on a to be it again, in the So pressure volume, long-term will the

Operator

Gillmor Matthew from comes Baird. question next our with And

Matthew Gillmor

on quarter? impact And volumes it Following volume how that had as bed quarter? should up the we the about talk can to the U.K., for then in impact on what about the think the relates you third retooling second

David Duckworth

reflected volume of growth. We Well, impact, is retooled our in do those beds the of not count. the course, take out bed year-over-year

it And increase currently they we when so do do get we the reflected were there higher think would occupancy are look we beds, now. overall as and beds retooled. close lead right what online But X% figures XXX that as they are being than of Those reporting about track. we online, to about that are an if internally, volume to back have that that, in we at

that have back the X% around they so going X% beds think forward, to absolutely, get in the back volume those will as we the to online, we U.K. for that is And which get target once We reflected volume. level. are

Debra Osteen

think I your question is is Matthew, And itself I one before a retooling say subject you ask process. this next thing would the just on

not and service. And of renovation the the so it's just change unit

there, placement are the what find has have ramp So for we them. we patients down to happen to is that and

they place. difficult Sometimes little patients, a if longer bit more are term to they're

volume. around is service. up. the block the then which basically received complete, some a there online ourselves be is ramp-up we ramping for number we is have down from then us protecting when they reconfiguring again as we're back negotiate certain more NHS, once is come And will retooling, retooled a beds there And back and and period contracts to reimbursed will for. have which will that we we're that those do ramping we trying protect So time just to of back of utilize of from we then that's bring And beds this more these

Matthew Gillmor

seems one a what on some ran very That's than indicated call, It margins. last better maybe then efforts. U.K. you retooling the And of more it. on even Got the that bit like little with helpful.

was about I and trend performance? within So the what drove U.K. the margin the sequential talk just you hoping stronger could

David Duckworth

and Yes. the noted progress we the for in in operations show recruiting The our revenue seen to quarter, second we benefit our has additionally, as stabilization the initiatives XX% improvement reflect retention of that that total. the Matt, costs. in continued And U.K. that saw, apply labor we the margin in have labor were around with the That had U.K. all about to sequential well. the rate to X very a increases pleased April does XX.X% made effective and our that improvement in labor then the we've costs.

both we contributing U.K. the labor, what margin. see the So the good in a is increases to rate improvement

Operator

with next UBS. And Whit Mayo question our comes from

Benjamin Mayo

over trending Can just you've some staffing and how you how put May the quarters? last around you're cost? more agency tracking on bit the elaborate be that on numbers just point. maybe and been last few David, little a

David Duckworth

year, improve. revenue then quarter, XX% revenue are compared than is of we've we've an labor see really, labor, result half a And as on stats, below the see as second improvement of as do about on labor of second total That compared half a both that we were first the XXXX. improvement less been the an last just our agency, well. of And labor on seen the to to percentage we compared And XX% We And well labor, again the additionally, prior. around that the quarter. an what a And Whit. to year. three cost. agency as as a agency of and cost stable our that's percentage improvement is total to to of continues lot the talking those compared Sure, we quarters the this improvement

Benjamin Mayo

helpful. that's No, Okay.

Just when we sort costs of the that in patient U.K., are feels growing high like back into per expenses same-store in operating single-digit range. the your it day still

And it pressure? with there of just you're where retooling transitions is some cost the area within other so seeing the any right structure that Or initiatives is your seeing you're some now?

David Duckworth

Well, think patients. do higher I acuity have we

that. with we of seen improvement. comparing if increases so as day because sequential second impact we to and some I cost second And associated would to more significant staffing quarter half think per XXXX, three of sequentially focused the see I think And compare don't the the year But really there quarters in on may we we've the you're costs U.K. the year-over-year we're see last

Benjamin Mayo

to you remind turn losses the maybe sure us second will for de that's turn those for what you great. back half? the they or Any on I facilities? losses have if Yes, were to your wasn't And novo budgeting for flat have positive be plan fair. in just second, exactly you help do a the can

David Duckworth

sure. Yes,

in in $X do to those they think We were the that million. $X we improve second the quarter and third we the million. I $X breakeven. hope that losses get I be quarter those in But range mentioned million quarter, to mentioned and losses think fourth the of around could I in had that

that's -- the we so that remainder for And de the for what novos. year the is have modeled of two

Debra Osteen

related our for is getting ramp-up Medicare. that this number Debbie. And certification and to to delay the in just Whit, emphasize the was I want

I longer to markets. lot So because really could there two the very of that and have chose do which it would than took expected. those But demand we everything was I they think did that expeditious both markets, manner, in -- good think facility in disappointing we they in, get a see was of

quickly that we'll we're place recover. optimistic to good as up to able be plans So in as we ramp have can. They

Benjamin Mayo

I in has of teams one changed the one the Yes. last No, it's just for the generally your reporting and understand, changes -- looking you, Maybe you're that's structure to curious helpful. like with strategy the within of all more Debbie, span just the out the how anything U.K.? making you're organization, Just holding at accountable. with control control.

if were the than that may Just last your strategic provided wasn't different update. you there developments any sharing in us sure worth today update be

Debra Osteen

Sure.

the had Ron of now value think I And to good Fincher a to a be U.K. several and and to report him everyone the we directly send-off Acadia, in overseeing really Ron Ron that is they his since that, will part left retirement. the started aware his as Fincher, closely previously is has and U.K. I more he trips have retired, reported new has had and but hopefully, contribution I've me. But than have life for past company. the couple that enjoying in really to already made of and

Operator

Giacobbe Ralph Citibank. our with comes from question And next

Jason Cassorla

this This is Ralph for morning. Cassorla Jason on

that? quick question, case remain Just you as that to you the move Or in you pieces of saw U.S. to stay get a is Do expect comfortable to length forward? kind with many of there moving the stabilize

Debra Osteen

we've that just stay And very that I'll change. say Jason, a stable we the seen length of in had U.S. here haven't

anticipate don't So changes over mix of to seen has differences of the acute. around any in been not stability change the future. RTC from that only change the any the But we've in more period and

Jason Cassorla

you each kind the expansion? what margin just of is now segment help U.K.? I as has just business can line a cases level U.S. mid-single-digit set for even or in that level, maybe top hold get here, the growth, targets follow-up of faced margin a so line And great. my in and the high pressure guess kind despite organic some needed in Okay, while margin and the

David Duckworth

U.S. -- The above That target we've Yes. for same second had at for our quarter facility XX%. a strong XX% our generally business, margin the is business.

XX% course the of -- XX% we've to year, performance in some U.S. underway we the XX% those those level. U.K., better long-term could quarter. We we to think retooling than would just the to us there that but In due but range. that. hesitate are just the we on opportunity provide above with the pleased target the of to Certainly XX% have think an projects get Over XX% to in some that targets seasonality, a be the the to see be a basis, with positive second the

XX% And with XX% quarter underway. the of initiatives U.K. are for retooling really, the above to that the range. target that the see will play out U.K. longer we in between the XX% and getting But in how that's target, second the typically seasonality year, XX% term and is that back second the the half just the with

the and needed to margin. see in terms growth of to get X% of U.S. to we have there, the the a in be order U.K. we X% growth that to single-digit, more then In X% X% to that is

Operator

Our from Fischbeck Bank America of with Lynch. comes Merrill next question Kevin

Joanna Gajuk

Kevin. Joanna This filling in actually Gajuk for is

very revenues the guess so So that up follow the almost in same-store X%. in strong, of last -- to segment, I were actually particular, terms comment, U.S. on

it flat at was will I I X%. year-over-year. above So but that X% the margin guess to was guess be target the XX%

keep about this margin margins growth stronger to a seems -- of think need flat your kind there top exceptionally was year-over-year to of rate is you what it but still like it terms way actually because in flat. was was quarter the line So it

color to dynamic? any think that about how So

David Duckworth

strong X.X% revenue the I growth, was U.S. we look longer in in volume that improvement. see year second And we a Yes. to improvement. XX.X% We If the in that term strong the course would XXXX think per day. and performance half do we strong expect the while do see see an would of over was see did we a and and the margin, on period, U.S., margin expansion it over of at a strong

margin. the are well Some driving the the revenue of as that the bed of that just the is and timing volume both growth as additions

longer And so see of I the time, coming beds online. think margins over as period we the will new improve

that some expansion was group. number, so U.S. And the we'll in I half in the strong think a the margin year do while of XX%, it see second same-facility

Joanna Gajuk

topic And or I you government. that areas the drill it? different across flowing the U.S. Were very was that if think segment, helpful. maybe to specialty geographic guess strong. on of That's pieces a any to Can talk which about the business was versus in guess, way the stay the there board? the business industry in about were inside there segment, And terms trends Was the of driving the of strength? particular RTC some acute? any it there there's Was I money from versus on there specialty, into more

you guess how position there that? for So I

Debra Osteen

had across one which adding think Massachusetts here we U.S., kind solid the very and think specialty beds focus highlight will a key Tennessee, Tucson, services our remarks which well. in I -- the demand and successful continuing Southcoast, performance beds across my is a I is is saw as I behavioral acute I of we we've at expansion. to mentioned from added really they for had that here strong very strong in here is in also get that performance and them. lines. saw I'll in in volume which demand are seen all beds, able service TrustPoint, just growth. our added strategic facilities we of strong that I for say areas main very and

states. We are starting to see some of the funding for to the opioid come through

services. largest because have take the of in to advantage a We provider fact, we that are large we such well are positioned for -- those

So business time. and I line, about to continue we're that in think the for that's going optimistic growth some potential

Operator

Ryan And from William comes next with our question Daniels Blair.

Nicholas Spiekhout

Ryan. for This Nick Spiekhout is in

wondering pricing announced regarding upcoming And I hearing next for on Medicaid the for anything an given if last rates year? year, are start, had the Outlook CMS rates Just states to was guys from you night. if you

David Duckworth

basis. longer-term we our to had or do which on So business, performance on most We in say the line I'll strong is was X% is see of in second we with Medicare, so there what U.S. the Medicare of the X% announcement in XX% U.S., a facilities. pricing acute growth our quarter. a at expected.

expectations. that in announced line was with that so increase our And there was

And on good a states to of seeing expect, across of to lot all rate and X% side, payers overall that and there's Medicaid basis We're increases comprise continue an X% different component. at the that our range. on there payers, that obviously,

Nicholas Spiekhout

then know goal calls, And previous shooting great. target. right, kind on of But a a you're of your I if in didn't on just target wondering I leverage for? you All was lowering of but mentioned a that ratio. guess you really have zeroed long-term kind related having follow-up, I not you the

David Duckworth

are that for leverage, we goal lower lower to our a the leverage, is talked shooting the and we accomplish about ways have We absolutely will that.

earnings at is last X.X%. do the be that is the second where the X.X% to project That of for level. couple to year. the down we've expect been will an the Some continue we that around through improvement the quarters, year, half we We of with growth of of by the end more

at time. initiatives the we target communicate yet looking not some to improvement us On the But number a of see leverage. the longer we and longer over a that target. get our basis, to are have by term there, of help Obviously, a there's lower communicated we'll term we'll end think year, we

Operator

John with Ransom Raymond from next And question James. our comes

John Ransom

$X.X real You was that said worth your billion. guys May in estate

initial kind million hypothetically, relooked that was rent and stream we to $X.X that did mid-Xs Are of you you if you I from rate, $XXX back thinking when that were -- okay, worth? cap at that that when ballpark, said, in review, did you what that a was your is line, and strategic if we basically with were billion. So mean, you math the you get telling getting -- that people -- about took

David Duckworth

comment with point, we John, part through affects math now estate on advisors, that are around analysis to we that how the real going not the we work don't a are value, of the our that think how about right U.K. is we there. just But at going potential this surrounding comment as have the

John Ransom

Okay.

of Second XXX memory question you've serves, be would about in margin U.K. points about, lost the if

improvement. back, that do you months now bps claw is or hand lost of you've that claw months? XX I to XX, over gotten so starting to around the XXX think could how that you your get mean, this, Debbie, back next the You're margins sequential six much

Debra Osteen

that I the initiatives I Well, the think that feel in good U.K. about place are in

margin I talking the retooled improvement the about been going to is we've through a volume and beds, on call to the think key getting which today. that be

I this to this at think think continue I the the was pleased improvement and see I improvement point, -- continue. from through that to quarter, last quarters see should we we the

we I think know it's about in demand, going I we I I think to those than to can here are how the depend quickly like the But and very seasonality good have that as get my in also higher But back to feel quarter. does there it. the U.K. prospects David on from mentioned, would which second know is we I third beds the quarter And what certainly and the interactions strong. about end just year, on.

reason that margin. can't improved see to we don't see any continue So I

John Ransom

Right.

So just two for others me.

of your So cadence David, think you a I I'm here XQ from the XQ? about versus we chance years, of talked proactive some last mix if do know will try what XQ. providing XQ engineer EBITDA XQ. to the way Or great. sequentially do versus to XQ? not miss about missed here terms current has half can maybe I be XQ another of qualitative back how to guidance the should to the few all it the want the want CSI, EBITDA of going sort in in in that it's give But avoidable you of ourselves. just Obviously, us terms save to you if another year company we to

David Duckworth

providing question. is The Yes. in novos, have John, trying some communicate that U.K. third to do de a any bringing What temporary up we're we're we for we we going see the is reason think the do what we're on in the that this quarter. that -- about. obviously, U.S., the factors. specific facility is, appreciate need quarter And we item to that not guidance closures the see

items way those back wanted highlight all level, is to we continuing that but hopefully hesitate I what So but improvement will to do go be in to we see towards that more the did XX the U.S. of really it this strong, in the mention specifically weighted the been XXX on to just facilities. what topic was has beds last the existing we bed And year. our that additions almost months added

have as third and contributes fourth coming as some online, come what continue on of census beds lot further see see additions stronger quarter already improvements a online, seeing we to will those a the well that than also being So quarter. ramp, we that to bed

John Ransom

I talking the novo million in So about you're $X improvement you, sequential CON a heard if delay. de with

or decline So for run we think -- if novo EBITDA, in add say, get and at your about? million that you improvement think like should to a me, year de level U.K. least same the of trying losses, sequential there of rate of the building at would the decline our couple XQ sequential as last terms we of look anything for expect about we should framework kind build in XQ at some excuse else Is took we models of quantitative that in XQ?

David Duckworth

third seasonality. say more don't expected than That that would the year. just is that we No. second U.K., to the the that we nothing not of else normal there other type just I than of the highlight in quarter -- was in quarter to XXXX this there's decline

that, is quarter range well of that -- we in to of the than the last what saw think margin track. I on are I was seasonality. type the right more pretty holding we while where to of a is we just earlier, the That year may we So expect see But seasonality mention XX% we did the that and in XX%, other second than you normal compared are XXXX.

John Ransom

pay Great. up to be of let's just the Gosh, you at is think can question, be saying, to of because -- there. right. assume that XX% on you to to XXXX, about you end going -- then if I get the tempt are of just close margin. the And Would we back a number, obvious say All make we could a I'm kind to we I think mean, hang us that plans on for we'll should are part people asset from long-term margin that value more I come. get the as going and would evaluate the this say all thinking maybe it we

Debra Osteen

we value. not certainly that brings unless U.K. to all sell and think I are we've said we can that And it alternatives. we are again, May and the validate in maximizes going I'll say considering our

of So think alternatives. the be part as about that our consideration will we

Operator

Ellich And our next Kevin question comes Craig-Hallum. from with

Kevin Ellich

Debbie, just for start any off, though, you comment enhancement on revenue to detail wanted update, the review progress you on initiative? if good had strategic gave wondering the

Debra Osteen

I side are think at more talked cost about to we what involves revenue. also what revenue. be things a with do and will we the payers realized on demonstrate of our as want part well contracting as than as the We That quickly looking of focused probably May, results. side and value our the in think preparing our cost to we

contracts reduction our going increase around on probably with payers. more short-term would we're our negotiations cost just and and expense think and later based to come of revenue reduction see our cadence or would the I probably So actually then

Kevin Ellich

of you much $XX and portion to then and shared procurement's I how Sure. it of said million of of versus savings, That's great. on for that. contracting come services the large And to guess going procurement will cost million $XX a things? the some other account from

David Duckworth

Yes.

been identified to we each of mobilizing address our as have initiatives working of initial review. the strategic and part teams that We

at practices implementing we for where scale, in But be facilities. cost but But of We area absolutely a savings. other to we point, and and do think each progress leverage have our apply We're part not share opportunities initiatives. being I we this estimates like precise best of process a of providing see percentage is good significant the a of there, plan significant procurement the are there's our of the do made targeted real procurement as will focus throughout our better procurement that. feel

Debra Osteen

to the the and these be able we more we'll see we think numbers forward implementation. detail actual that plans I and provide out develop move with breaking how as around

Kevin Ellich

well. I have as one David, Great. one for quick you

I U.S. lose with this, missed the so and an closures might and So many the bed how year-to-date? I count correct if did. -- me and have to Just in did the wanted But you U.K. the accurate in QX of kind in -- get guys closure beds

David Duckworth

Sure, sure.

bed we've about of closures it additional of -- that last in our closed quarter's a at second of a The facility. the have on was is end the count mentioned call. morning closure because July. second quarter, That XX-bed we that part this talked so did we the that our quarter closure is in The

around the a XX-bed facility. is XX- I there think count bed or

And but so yet our that's in reflected -- bed not count.

give right U.S. the to just end at piece case the count you, guys, information, in You you're is in wanting this the beds of bed at of X,XXX June

Operator

our with And A.J. Crédit next question Rice comes Suisse. from

Albert J. Rice

-- than U.K., impact couple the it pushed, when forward Is minister, had to talking rate, other on business once Brexit, which make in exchange is when it not plays difference A all. about generally. that there's related Brexit whether I whole a the the for anything the going your there? view quick labor see? and had changeover point with prime questions here coming Just much we've he's some probably here. perhaps at Brexit out already that know opportunity or how to on what's and started In this the moving we we've from obviously, an wondering, challenge of got first to

Debra Osteen

A.J., point. I management where minimal that team impact U.K. their they the from feels is this think that Brexit at business there are and to

while left I feel they that this. already the will there was think previously, think does it I when that has unsettled, around minimal feel have the But impact of that all day-to-day. of labor it on remain most that discussion the they

Albert J. Rice

situation. you if are you doing particularly guys to as comments those for anything that comment you what U.K. could know there's way? that of that Okay. well wondered health behavioral to Is in creates labor around there know I and here wage of about be seeing about you're And in as, more mainly any the offered productivity, then or may telemedicine the lot to that U.S. telemedicine opportunities buzz on turnover think I use the things rates at broadly. the look just were -- a that, I in ability rate, kind about you I I earlier get

Debra Osteen

an and initiative might around at looking where markets. have our that telehealth in do We fit

I in patients. to And markets, I where the greater be past really those getting shortages some do that is reimbursement starting might in of here settings see at where an there paid options But rural regard be provide services. think our issue to with think initiative that's been or has that access might I for change, they professionals. more areas and an for for Acadia a in to there

our So because something the and telehealth better yes, actually we several will at initiatives just in access. want have future that that's think we A.J., expand to that it be but place already think I facilities brings in we

really see labor think Acadia. do occur situation, time seen As pressure, stable. from think time, at there but changed I we the some nothing as here that fairly I markets that far it are where we've to isolated

on they recruitment good techs. want which do we a and have level do we health I be in of But the mental a to job there. retention, nursing think the as getting as well proactive staff at focus

even it's want we're prepared sure that meeting that and stable, though make we're out issues and to in competitive. market the we So the staying

Operator

Borsch Matt comes with BMO Markets. question next from Capital our And

Joshua Harakal

quarter. one about back This here for in the could about Matt. what of was of your if had that a talk the peers year? on I of and is Harakal treatment pressure the your seen is their addiction second in kind outlook question, seeing wondering quick trends you've half in talked just I just Josh you

Debra Osteen

Sure.

seen seen from our business. of very strong we some in negative not I performance think We've addiction actually trends have that addiction. the

marketing always We little referral but a competition, have that to about plan and very be specialty more business. platform. increased half. we see are through may added add base, We do XX the I sales place, about this our in a but beds think first year. good feel opened have bit a it's been our by now they We solid beds XXX actually have supported We've

network. yes, network of a than X% I We revenue job, out And think, with that the payers. We've rates we on have relationship that's the of with of less based done U.S. good negotiating quality out and -- good have service the in our just in of network.

Joshua Harakal

kind seen pressure if it of great. of question. U.S. are your Okay, transitioned Medicaid? you And from kind of Medicaid any you your speak And to any be in through stay? being just length average Have traditional then that you for seeing of of Can patients from another the managed that'll more me. to flow on

Debra Osteen

Well, our years. of length number a of stay for the It's is stable. been very same

some and the I movement in. the that, states, business of our lines that are in not in we think the states in managed-Medicaid change we have seen any

and managed far that's that see. seen the no into are an been -- have But We that's been in did Medicaid able the Medicaid CTC there's increase related total to that in, year. earlier to coming change the and in states we growth we've as as we that acquisition

Debra Osteen

few day work conclude everyone you. thank to They Acadia patients really provider health. the and and behavioral focus. for to to interest you like with just our a thank What Acadia is Thank I'd and I to of every in the provide clinicians us all for I quality our say today. want of with remarks. thank employees to families, in leading highest their a for their that's care the being I'll makes dedication what Healthcare. and

please additional have have questions you day. call If us good a directly. today, And

Operator

Thank your call. today's you conclude for participation. does This

now disconnect. may You

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