ACHC - Earnings call transcript Q3 2021 | Acadia Healthcare Company, Inc.

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Operator

Good morning, and welcome to the Acadia Healthcare's Third Quarter 2021 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Gretchen Hommrich. Please go ahead.

Gretchen Hommrich

Good morning, and welcome to Acadia's Third Quarter 2021 Conference Call. of for Director Hommrich, Gretchen Investor Acadia. Relations I'm our before Executive, turning first Osteen. provide call harbor with you Chief I'll the safe over Debbie to To GAAP to the the in directly is release comparable find the under calculated financial Investors by most reconciliation call, according viewing measure to news a measure you will site extent discussed that of financial non-GAAP on any link. today's measure yesterday's Act for Private of contain may statements the Securities forward-looking others Litigation the Acadia's annual Reform beyond. including This quarterly conference call regarding XXXX, meaning within among XXXX statements, and of expected financial and performance

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

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

Debbie Osteen

Officer, about and of executive will David XXXX members quarter here guidance today I XXXX. third provide team. with David today for third Financial our I'm XXXX operating you and some quarter conference being for morning, the Chief other management call. financial our remarks of Duckworth; and and thank for our results us and Good our with for

for the we comments, our open will your line questions. Following

We see business in XXXX. our to continue in favorable momentum

health behavioral for lines. within strong, and services a specialty especially operating solid our Acadia performance. our financial delivered acute has As service Demand and remained

increased For X.X% X.X% the third day revenue quarter third the increase same-facility XXXX, patient and a per a in with of compared revenue patient in quarter of XXXX, X.X% increase day. our including

pleased are which challenging we especially the Hurricane certain surge Ida markets conditions third in experienced volume solid the under see trends, in We include variant COVID. Delta of these to quarter, and of the

patients highest priority, and substance of We across the and team extraordinary our providing all, proud and support for our top who care Above our for under to exceptional dedicated remain continue the seeking our are clinicians focused care we extremely mental level of conditions. operations is issues. our patients employees treatment health on of of safety with those use consistent

adversely majority financial facility, the from an results for damage by disruptions We from quarter had affected be sustain the Our Louisiana. acute in patients of had third Ida and hurricane the to Hurricane were evacuated.

to units repaired, is to damage With gradually facility the up. we are the the As started has currently units. open, ramp census opening three

the quarter. We over expect X units course reopen the fourth to the of remaining

to their impact Additionally, adjusted In on had negative impact temporary on in a admissions. $X.XX rate a a growth X.X% another EPS. we revenue located the that facility experienced total, and Louisiana had impact brief hurricane our

the in third cases level markets COVID-XX an facilities of certain our saw addition, In elevated during quarter.

with volumes patient COVID have since of We the had minimal protocols wave, to XXXX disruption or in using operations. see place facilities through we continue to vast majority the the managed our that

to had past patient have a and We've use health continue Despite the high safely pleased standards to stigma corporate attention we for Acadia's efficiently, same gaining help physicians, spotlight. COVID clinicians, issues deal in those in around of pleased pandemic. XX proven positive our all stress to a maintaining We while own mental surrounding challenges, are a see see providing be health their and have to months and Health continued athletes, operations other not on for more who Many influencers the same to staff, treatment patients and with we manage who patients the on have extraordinary The substance illness. needed. top mental share have care. social to individuals, our effect mental continue personal the the fortunate and and critical essential behavioral reduce the anxiety come these are been leaders help factors The we issues been, us as COVID-related note, of At disorders. the national profound efforts to Mental global disrupt pandemic and to many that and come many, with cases, their health allow lives temporary. nurses of the already care to related forward most professional especially difficult struggles struggling to time, our

XXXX, we health On behavioral diversified needs strategy. and is push As a calls, seek opportunities to seeking for reach behavioral have and significant proven believe to strategy coverage we more new will societal greater and service operating previous for growth those our executing and positioned seeing we progress in investor have treatment Throughout demand that centered markets. through of to made access Acadia around increases model. a options on distinct those we pathways Acadia in provide result, who treatment existing are the for X Acadia's shared meet treatment. patients that acceptance additional expanded well this with lines of is higher our

continued sustained have across We lines make the right support growth. investments initiatives in to our service long-term to

for this to beds believe additions total facility quarter, the third of to the the facilities our investment facilities XXX end we our And offer year. meet goal XXX to the highest year. beds by return Acadia. expansions on to approximately existing bed We of XXX we bringing to adding operations, expect During added our

by CTCs patients for open to health the country, meet integrate X with the and physical and opened use opioid address looking the health the to end also and end systems designed to we the growing care third joint through growing with quality options are of the services to able opened across innovative in expect treatment markets Tennessee have for XXXX. and health quarter in Throughout CTCs to additional new X demand. of we CTCs need programs. X hospitals the We Through and disorder. systems integrate comprehensive the to By in expand are third treatment quarter, especially treatment, critical and country dealing centers located underserved Florida. partnering ventures, are mental develop addiction

X that the have successfully joint country. past years. the venture We opened venture across are has track operating a joint few XX facilities over the of Acadia strong partnerships proud record our of

also X communities are expand Lutheran our excited partners, on reach ground facilities of We with into about Network Health more Indiana grow and the Geisinger new JV during third the to opportunities quarter. or

providing that We acquisitions, We to market the positioned opportunities. our opportunities prospects industry extend for offers we well reach, health are to also continue growth. acquisition and attractive profile important believe and that future these additional pursue fit identify our capital another pathway to with fragmented behavioral care sufficient

operating the our Our ability success strength XXXX to strategy. model of our and date to execute our in confirms

extensive four of expand His in and Acadia, further in the focus our deep of named and extend been healthcare and market support and development. welcome distinct mergers Development look expand together to relations and Chief Officer, on governmental David policymakers experience in bringing Osei David X and to strategy. we and nearly understanding Keys will the in to growth relations and policy named mental our market Relations, and families de and services our efforts to Mevs Government the has more health President healthcare has important to patients oversee forward support acquisitions our through management awareness policy key and who mission our network been We reach strategies. each and of decades ahead, funding. working novo patients will and team, we'll in we to serve execution our additions X public and government will Looking serve. the industry role our announced experience Osei We will communities pathways raise about to recently play continue functions government for of growth. educate shared more an we public and our Vice

the business capitalize on we health expected demand well the growth for to in believe encouraged and positioned We behavioral by are our are in trends services. favorable

currently As are a with country, many other labor health market. the dealing care providers we with and industries other across tight

are we temporary we our diversity level Generally, and the that of service faced XX focus demand specific, and this that we However, the meet through proactive our believe the our lines market manage helps on states. markets markets staff have have our of we to in challenge ensuring across focused remain the and environment. us

support to meet is As patients always, we our this primary and the communities serve. and demand mission

leading position of quality highest and the providing extending healthcare behavioral on focus market our care to a our advancing reach continue will We patient while provider. as

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

David Duckworth

provider Thanks, same the Act. income Revenue quarter was last Debbie, to year. third $XXX the adjusted of Results million XXXX quarter a and established million, the for XXXX. relief good for the the of third quarter million to for third of third increased $XX.X million morning. the last included period compared of EBITDA $XXX.X $XXX the for with million related of CARES reversal for with Acadia's year $XXX.X fund quarter by compared

share was income adjusted $X.XX. quarter per For attributable the stockholders of XXXX, third Acadia diluted to

earnings our costs, adjusted to current in tax For excludes of release, position extinguishment XXXX. debt adjustments on these transaction-related prior Strengthening been have presented for debt effect income and in reducing our financial loss and periods Acadia and our expenses, priorities top impairment the income the year income.

the XX. its credit ample repaid secured on million growth million of of Our support capital as revolver the strategy. we $XX XX, with The $XXX reducing facility outstanding revolving revolving XXXX. company balance credit balance third to sheet as September senior In facility, our remains had million million under available $XXX September strong and $XXX our to liquidity quarter,

quarter ratio Our at the third $XXX.X approximately was end net X.Xx of and million. the cash our balance was leverage

under of During quarter. continued the the $XX million the received of Act repaid Medicare having third repayment second million CARES advanced paid after $X and quarter, we in amounts payments

$XX paid will remaining remaining tax of monthly a We the deferrals September third the with payroll be quarter repay XXXX XXXX, the approximately basis of XXXX. company on through in of million balance to Also the to half in portion repaid XXXX. of the continue

operating our range of within $XXX announced earnings we to results previously cash expectations, in fourth which to estimate which third range capital a a $X.XXX range guidance stock $XXX includes $XXX on for adjusted of of to a revised a in range EBITDA ranges, ranges. $XXX million; a now which compensation to share per $XX narrowed quarter now to of million based in in turning and $XXX million the million million; total our of $XXX a adjusted flows a in Revenue have range $X.XX XXXX million financial $X.XX, $XX following diluted billion reflects now approximately and to quarter to expenditures. for now of the capital to fourth million our million; $X.XXX million, guidance XXXX in $XX of our of maintenance Now range quarter are billion, expenditures

guidance now I will future a impact back not operations any include for the or Debbie this acquisitions, As reminder, does additional expenses. to of turn comments. divestitures it discontinued some or transaction-related

Debbie Osteen

Thank you, David.

Acadia, have continuing Board coming we with have of Acadia. in health of with who retire quality, our forward supporting am my to as helping Most employees this all leverage I behavioral on care. growth provided and since and the every a commitment Acadia Acadia behavioral the period. X the we the people to critical look many proud day involvement am month, to unique need years. opportunity Directors. a extremely importantly, past experience I earlier I The what lead of I while proud in health me who at I CEO plan joined announced As to Acadia's through remaining demonstrate Acadia their accomplished of team years my by

be person experienced team. joining actively of XXXX to the and This Acadia to in and balance our pursue we largest U.S. leadership With of has to beyond. us firm, recruiting the in for as The stand-alone the strong questions. position identify are I company a and pipelines that and very talented strategy behavioral Jason, opportunities. right robust company person are the a healthcare working a sheet positioned that national and many lead Directors help allow open has will the to executing company well the call solidifying is the With to growth growth continue that, ready Acadia Board our

Operator

comes [Operator from Our Brian Jefferies. Instructions] question first from Tanquilut

Brian Tanquilut

you quarter. years prepared wondering for and Debbie, the it maybe on like guess about wondering that differentiates hit a if remarks. But I of terms congrats on on just congrats you over of and bit from and share there's some also for your terms bigger in little the in retirement the the help can thank internally everyone's in good been the seems, labor your peers thoughts what on your with some my on upcoming of you anything maybe metrics us seeing? labor Acadia you or question, they're all guys and challenges, first it competitors

Debbie Osteen

been at really but recruitment. Well, think I a we that it's our us that also we've I -- not had really And consistent lines, help here. that, what’s since And robust our during it's we look of I've we does COVID, as differ. and I say company. managing we're We're and will focused because service think efforts look labor. very started markets do been around at very happened certainly, a unique not with

filling to in at think that think supports I you added have as that how and And we’ve I to retention. And with around successful also, think that we that been market. those what And competitive, if recruiting has look able we've that's we facilities. resources. We in team efforts been corporate then and together is corporate and staying have our local proactive have think the we our at I I recruiting openings. look team they recruiting but And what approach both do achieve. that a -- tried that as but to challenges, very approach it's a individualize I labor, we think certainly have

in to navigate. a I where think us has been situation put that we've able

geographies company to hire quarter And the that and think was with The different third are competitors. certainly we what is environment. the a our of COVID meet the seen But some our resurgence staff in difficult ability across I to I've than demand.

need deal on if centralized as problem them off positive nurses hands that We sure are they supporting approach also, a I to with make think, them as very helping and might solve. to have COVID, we even trying are we be and

is this bit. proof I of do those So salaries, been XX.X%, clear. -- been a is we I And if have and do We think that a efforts. I then, just to strategies, wages navigate and what our was market. And we've earlier, helping look at centralized metrics, is navigate team I think benefits which that efforts, at actually percent what of by able this. our to lot facilities markets. I of And as our it's you they our pay we've at down able as little supported you by as But think the everything -- results, look look think mentioned this because that’s our to tailored also a

Brian Tanquilut

is question, know follow-up new quickly. I my then And it. see. a just Got person, you development which really hired to good

what with this share you assets development market? what for What or in new And just of what is like. types us on looks if the any environment are curious are M&A directive person? the the the can So color assets

Debbie Osteen

is as number is is underserved will and going We that financial lot finding what de think opportunity there's of at smaller us a facility still a David with that opportunities. a And his we we also be of think I we think novo believe of our same David And at that a presents multifacility on still meet those market. single number also operators very lot would of that a future there still think helping looking number systems, then still for And opportunity. brought focus the see then build, fragmented what I markets. we Keys, and framework Well, it of I on that a our be opportunities, fits has framework. think strategic here be time, which to the

that of advance staying help And So providers gone to health certainly that, he's to I behavioral in going the support efforts. as to part think as we the industry and want seek those owners. have alternatives that may through, they think

for are in poised platforms, And an that to then And for also present are we've that our take have how grown to improve opportunities with looking has to and of done. acquisitions past various through the us be operations, that but think we bed additions. going Acadia the so we advantage ability to I that's

think, be already busy, to I and received by going do here, he's the So very in been, to well future. he's Acadia what the and team he look forward can we for

Operator

Rice A.J. question next Credit from comes Our from Suisse.

A.J. Rice

everybody. Hi,

more you been quarter second versus strong. was know year, mix wishes, care? of probably had what you the run Can my patient of have just what why also in more there. was you're terms this Any quarter may Let strong? the about offer number I to comment it day Maybe normalized thing ago. managed it? I'm but a thinking respect change comparison you seeing great the best think was a revenue the Debbie, sustainability And And Do just a rates? on year to last first was per so with third a in me of tough ask

Debbie Osteen

take on I'll it let payer we increases. And I'll did been frankly, and a of think we've rate that talk that, then years. for I little David bit. see X.X part last the do Well, focused But strong

had a payer and mix We also service strong also a mix. we had positive

of at facilities. and demand really, as So our we've we commercial a frankly, for payers specialty about look have that think we generally specialty mix the strong volumes the strength there, our that, we and seen higher

going and demand They both specialty sustainable and services, strong when our is revenue specialty but in facilities, We acute, were that the before COVID, that, forward. ever. the acute We day. now do think are in I think our even been larger which that volumes stronger stronger. for these really per strengthens strong so that, a than are think And have they

payers as end it, look outcomes. are I very higher think add, years to have offer want and think I rate the we payer working And hard higher think coming X So specialized willing I been. to recognized our have also we've earlier we our Do you But at of the ago. sure maybe where then increases we I that also over, see at we they've guess, make in been have projections our David? normally, services, increases in and seen to

David Duckworth

Yes.

sustainable is do reflected We that that guidance. As growth. per Debbie is that, service forward. fourth our mentioned, mix believe day do believe our we quarter the outlook to to day updated and will That revenue that going the contribute for continue revenue in per

So seen even recover service did the range. the quarter will increase very also There's while and quarter see the payers service compared high really with end dynamic stronger strong and line, continue. that we've investments at second will weighted continue. from rate towards acute quarter, we more this mix last a And of acute service to year, is has We or expected third -- of a component that of last we specialty acute believe think, that especially our last third mix made been specialty year performing with well. the but above being

A.J. Rice

Interesting.

just that? have them potentially what patients there’s they referral in Let up in it’s my units were say way site about also showing up they discussions units longer, you, the seeing dynamics you the you’re to often anything free ER? the source but about and any joint their COVID of me as compete site in around I what acute you there pattern you I your would surge with wondered helped whether trying that they’re changed an in important care about know Was enthusiasm also referral And hospitals. the ventures ask that have you. that follow-up with with space taking or as whether about work for or have may

Debbie Osteen

of patterns the I'll I -- take we've real don't any noticed Well, that. the our in first the Med-Surg referral think part hospitals. change from

on to referring ERs to a important the and the in the their the we them see responsiveness ago in June because they timely patients pandemic ERs. been home. started we that And it steady these, year really And again. started had a care get in it's focused June, have the that I height stay get they after We very the very from referrals here at of and know and We've company way. to in that get think

that's that think I ER helpful So been our to referrals.

a the very I Med-Surg other COVID to certainly, And just but ventures about and been stable surprised do I think latest and -- pipeline I think of that by a have we've that. that record. the they've partnerships. active they've very service they focus think steady. said that accelerated. of strong the And I not track I want And and have If I actually had, before, actually see think joint we do resurgence, within certainly, impact little this But that was areas on I slowed, they they do a systems. think,

quarter. most be times. It’s strong So I that of. in are we’re announcements think to We be coming proud fourth the they going a out Acadia. are pleased that hope the of actually again, reaching partnerships to we’re and these choosing making they’re a competitive process, And up few

going So think forward. those and else probably do accelerate to we continue, as go nothing if I are

Operator

comes question Bank. from next Pito from Chickering Deutsche Our

Pito Chickering

turnover to third running beds, And labor recruit wage give Any are what these A employees? you of Can during for our on beds? you on those you as days new open full-time saw quickly on able you is here. color us any follow-up quarter color a to for few inflation fourth you fill quarter? sort questions up and what and

David Duckworth

our Yes, have stability seen Pito, turnover. we in

we as years, seen we not a change think I there. several significant over look have back

we that through our appropriate average company seen vary as tends inflation, jobs. we on really proactive have on rate analysis take continue of across that's across around a around it job a And increases our go but pay. terms be X%, to the different depending markets. approach focused we wages specific different market our specific the that can strategies our to is In and It a a wage analysis

and total pretty recently of X% pay course, it's us and is line been much still labor our with labor. pretty agency time in actually where been has, for of been and element stable I of premium in historically terms that's over the think around

are facility, the in and facilities as we planning be new we our staff centralized seen advance hiring mentioned we the resources significant the so recruiting need right any Debbie growth. On been local CEO as impact as and the a around well our projects and for question recruiting, So efforts have our track not the there for adding have and open that do resources a strong to the continue and a have our that our growth well ramp we have teams market, a record then we bring new our staffing of approach And team our to able we as support that approach to different given third new great volume that we to especially across job and our we volume enterprise we provide beds, facilities. significant your as there. to as we a staff staffing existing recruiting, we as do up have new

Pito Chickering

Okay.

As we the just the the business – facilities? revenue your per margins look is And the curious different those occupancy centers? centers, acute centers? at your is than treatment day for comprehensive standard are what and the the subsidy What of

David Duckworth

U.S. line -- our just many revenue they have facilities level of It filings we of but past in because for very the our dynamics market, detailed over and by months, Pito, groups very performed that’s similar. the some provide per performed at we are a our differ are XX don’t total especially and well the And we the detail depends overall, provided the service on course geographically operations. margins our and I’ll margin really included line the day within information of metrics year. across do program, and have can run the we services the say specialty those service factors last specialty. more report size over the facility other well even the do

similar the to being just see total be we can the we to margins for line, the our tends the average The average. service what occupancy the our we’ve you strong. for volumes we a within that units facilities. really that across depend talked specialty XX% for If to has see occupancy, are report. stable, on been average at The facilities about range that’s facility, on another specialty the XX% metric in that look programs, That’s but the

Debbie Osteen

that started specialty programs And we we to pull our say, all people Delta just I’ll States. the areas see -- And I that from really think very and of travel facilities. you do larger as Pito, this that United of And and know, quarter the really They’re wave. even throughout the consistent saw in stayed first variant specialized we year, return last there. that the

some are that individuals our have so are supported has of and they specialized We larger, seeking care traveling and still that more facilities.

Pito Chickering

Okay.

for view Just think that you for to accelerating. is sneak the here, long in imbalance beds the supply-demand one behavioral follow-up A.J.’s take question. we do If

pricing modeling be the or slows years you high increases? demand managed until X of would So either end care something supply

David Duckworth

certainly expectations. underlying We believe believe are the certainly line. there sorry factors for there -- on the growth our that we support strong volume So, static are there

You mentioned the demand.

are people pursuing more there’s the and there stigma, insurance better treatment. coverage for with think also that reduced treatment We

dynamics. a some factor be think the there in So that are positive that do could And we’re rate we seeing. increases

range. So care. expected growth in above, rate high payer model a have terms very growth. mix rate of seeing as our how of what managed we mentioned we into the factors you earlier, do -- we But that We end model, we are mentioned diversified you

going we dynamics positive dynamics. well volume we will forward continue as that So reimbursement as as see think do

Operator

Mok question next Andrew from Our from comes UBS.

Andrew Mok

to from Or by in consolidated And basis? to service about our the you line mask Can the QX quarter or I’ll by $XXX echo results a underlying congratulations steady either market on portfolio as consistent per your that as on QX, talk retirement, the variability? remarkably Debbie. appear diversification guidance The implies million of EBITDA. they underlying revised variability geography, results does

David Duckworth

results from fairly quarter U.S. a X see of to do are consistent not in amount significant The seasonality business. and month another. We

with occupancy is just holidays to pleased be of as management and EBITDA the the this about degree, other business. end tends the fourth short the see the first revenue of around -- our the acute to execution period been there third I’ve our talk the quarter, really beginning and projections, that, we think our a for and we year. fourth the in the cost the That’s trends the than that business and about just we time, specialty quarter think trends and around But seasonality throughout notice typically that do the reimbursement, really see may and quarter. some of of sustainability the year to some be consistency I projection and you quarter around for to consistent

Andrew Mok

it. on was year reduced CapEx. postponements the your cut Got CapEx full beginning had the the projects? you looks like just there million follow-up what capital in What’s of targeted by year. investment And at number a from driving $XX there? It here any to CapEx Is

David Duckworth

about then into at the ground XXXX. that that Debbie out we right play line make we those for there’s up would conservative stepping mention Andrew, factored second half and the as Yes, mentioned, on timing on estimate and in, in will that ground did projects. we a projection I’ll some occurring when pipeline see CapEx various up the basis. how very joint broke over somewhat CapEx assumptions step-up time the ventures. that pipeline and And announcements those, joint feed for that think potentially say, stepping our of the of a the our this The did excited X quarterly year. breaking we guidance the were of about that we’re recently current construction year, other have around for the established initial we We around end ventures And we

So next timing revised our when that and now data and a somewhat step a report. and we’ll of beginning reflects that year, provide next there the in that happen happening quarter’s of up will change around of our delay was in of guidance the that, more year, around end

Debbie Osteen

not decided as that to or And say, I’ll work pursue expected. they’re not just did projects not we that

point As breaking the ground. it’s more around getting of David really it, to has already explained just

being least and at great I do and demand. have well fast can aware, Some partners managing for there very we has is we team the design our issues want to And of of place they’re a pushing think pace us right to anxious some -- patients. out do that’s where refer everyone which as have are that now expanded move that to beds we that construction online in really they just we as but to get and are construction, with because there construction, in have trying want as the as to hospitals

Operator

Fischbeck Kevin Bank from comes America. question Next from of

Kevin Fischbeck

to eat print been in demand necessary, meet So suggests although guys haven’t are you’d have year-to-date really the into able underscoring labor afford suggests I focused your guess be margins you that the you that willing being on be to able which if you needed communities, how to to. to

be can wage your angle, think you maybe tech are supply mental approach nurse driver So of of cost and health corporate to inflation? that maybe I shortages, the you and Brian’s among abuse lower try inflation to cancer population? seeing of guess some labor Do fewer exposure population substance to less part and the the therapists, like compared

Debbie Osteen

and for expertise a is if the us others, I I need that in is I does, do being but for service looking to think, who we’re environment that our bring I and that out various those lines. think the trying an really therapists we’re to the it’s don’t guess, our easy recruiting factor think compare of just service any there think you lines really I on it one. workers, change

each facilities for our look X need As service we the at we what of lines. just across

are, we’ve we are looking obviously the retention we’ve I and think that other certainly we -- that been been able those think and that. I think to don’t recruit part of that is But people locally same the are we’ve able for those I centrally as hand, workers get found to other as various companies physicians successful but other that and on start-ups the of some through fill we do the to of service what all lines. across other been well

Kevin Fischbeck

just then quick guess That’s Okay. helpful. I And a follow-up.

the a did that you those remarks few the COVID which out of in mentioned were? call see Can pressures. markets prepared You your markets

Debbie Osteen

experienced COVID, I our that towards make the could a have, done. are then has facilities I think pressures treat the and the middle that And in isolate we to country, we around taken seeing, just some focus follow that’s they have and for sure provide sure cases, health for I a the think, mental We’ve that varied. let’s but certainly, able a the other data We think we it really I in think, end condition, that. if trying focused South frankly. are for almost if August, in health initially real We protocols them. make really And more environment, the different had able them. mental all parts through It when positive of to some of started you team take pressure And that someone of what also really essential testing on to was care that to towards approach very test do come country, the COVID of had we reason. our and of presents we a safe hospital September. They

decline of into I part, gone the So a have patients. an outstanding of We a for in we managed, that markets staff. of positive taken our for as still few by But have September think, the the the They’re an on. way most I end hands being variant. a many we’ve have also, approach think, October have here, Delta into seen

we’ve our that difference out leadership Medical as think daily because Corporate Nursing that, I I they’re a don’t able Director, – to manage Compliance Chief think help our and So feel facilities made on that’s Officer our the as their operators well own. there and the been

We’re them. help trying to

tested that recovered. that had we’ve have came had COVID were we manage in they that after the that some So positive, overall, still to staff work able results we quarter. back But in been facilities and patients, markets we have third and and they to and the several did did

Operator

The next Leerink. question SVB Mayo from comes from Whit

Whit Mayo

David, year? novo the couple maybe start-up just the are, given the versus a how us your ones to remind And de expectations think what tracking quick of how this plan costs are about here. Just activity in ‘XX?

David Duckworth

to $XX the $X.X a through start-up already X about incur are do through now. of of We months had the year. process have million year. facilities going for couple around the We We’ve tracking million

expectation that’s this year. for So the

a expect will have CTC new number ventures X and to inpatient talked As very do year CTC about novo joint and year We novos. we X we coming having next facilities next look de think look of de year online, we de this similar. ahead, novo opportunities, and

we more sort we And we of would would on about million put depending did new process facilities rate around year timing, our number of level, that And have growth build need as timing determine really we and long-term like. be the will those will with timing losses will little and will because year year’s it But similar next open at what to the go what in look so the next that us next opening. of that to facilities look budgeting $XX on but think that somewhat thought the through depending look we investment the start-up for of precision when million a $XX like.

Whit Mayo

No, And non-labor-related on question. maybe that’s helpful.

the on and and like. months ago Just, that Debbie, you initiatives procurement number of focused supplies XX into place a put

maybe Just an update.

based good any how I targeting the opportunities surprised going And/or are or field? you’re you’re having off $XX that think in tracking? there you do and of non-labor-related feel conversations you, bad? like your forward you’re million, Anything

Debbie Osteen

did the when and team were we really million an the to reducing $XX last realize that. trying think performance job because was outstanding of I Well, that expense year, improvement

were be. we sole have the year, better focus identify opportunities. terms. year, here. we a Their contract think how I can they we think by And is end the where This on continued of team And so we’ve wanted to to really get

GPO We have the field. a out much improved in with our compliance

meetings opportunities, I are, mentioning, think do you’re have at but we we to that thing every also other on have this as very quarter look we where here. to say what

are looking for we the I we of those I more think that just made way in at pulled contracts say contracts, that But very we more to have favorable I the inflation like process that’s we ways our areas to the initiatives are initiatives. previous think because that’s field do this some well always taking helped some that year opportunities. that in as, I as responded field in as have place. food a see a team lot in that a around implementing And also, other and of we’re we we those the more as of in and those. things things, contracts think We there central. us and some that can our do And has configurations I think have of already advantage And looking ways said, efficiently.

if we some So seen of think, those inflation have that’s to given we have us, a that benefit I not the did would initiatives.

Operator

Markets. Frank The next from from RBC Capital Morgan question comes

Frank Morgan

year, to advantage are more or beyond state able out there as lapsing lines. to specific labor that particular are going those to challenging? to then time. Within sequester be any think take any And second the of your programs one within recruit, across one that And with areas called then programs, I’m if go you especially more unique is area the staff where question you year? we’ll of difficult of levels, the whether each different return last back next more it’s lines, segments, my there been service any can next being the it’s just difficult other service --

Debbie Osteen

who Well, Frank, a on end we I recruiting think have our certainly hospitals. about in as I our efforts, our our and mental work CAPS, think focus health

to back positions industry. that able across what think and we’ve around this therapists, it’s and middle also, doing want focus to think as and I retention call, a there’s we health sure think certainly vary I by through lot of focus make talking recruiting. been but But are that that to we have I during a RNs then facility. are as going we about techs fill, Those we’re to the well the

have we’re have programs, trying facility, it the diversity to therapist all to could if that obviously, And RNs, So whether have be ratios about we meet place you by in vary frankly, just a pieces that or we such that think sure that we make we maintain. a our demand.

us prevent So will with I lot making just visibility one, have treating do that concentrated I’m and of nothing sure name that but a from think we the demand. leadership, a local I wouldn’t focus

David Duckworth

there question, no traditional sequestration now, put perspective, we would items to are we’ve that does think just And that the is on of out apply to item your And Medicare throughout only as called of XXXX would about the reimbursement about structured we Medicare. it’s the which that sequestration, is portion our XX% be to XX% The is nature. into our XX% that second highlight, be Frank, onetime Medicare, would that revenue. in that total other

Frank Morgan

Is people anything one just anything that the paying quick Maybe that else a than higher you bit. more going are to used quite basically term on? retention wages follow-up. When just

Debbie Osteen

an making are about health like you’re RNs And in, of is certainly, think think make feel onboarding think do elements to that But I them. and advancement very techs, think think I competitive. as part stay they’re the when programs And lot sure wage sure trained I that that our we also focus are career have that valued. I organization, and we staff, come of people at important. that’s this -- they to a active why a we’ve making that they to some do want think thought that, and they’re around And wages with individuals but stay us. mental to are for are for particularly flexibility related X I important for given not

think pieces as But we is the important. have don’t the yes, of and with so stay leadership the about that about making they are sure leave we why about CNO. individuals we work for that And We then think wages right so us why obviously, just salary. talk people retention, trained, the people, other

into play facilities. of elements, retention think, All I our at those

Operator

Sarah Our from next from question Barclays. comes James

Sarah James

the some to of trying here. put just together So pieces

managed of high end range. talked rates about being the You expected above care

steady is at wave labor and X. X at steady holding agency While

arbitrage, a almost those it positive I expansion putting like margin a Am talking correctly? So like together about opportunity. sounds you’re pieces

David Duckworth

mute you can -- we Okay. line? we’re your Sarah, Sarah, an talked about getting echo. if

away. went that think I

our X% above increases would being X%. So over high end put that rate and the of to we range,

Of pricing course, increases not mix. other mix and seeing the the just the service payers we’re revenue from reflects per day around that payer factors,

a of but Our dynamics comparable this rate think, pay mentioned premium we other inflation, little our to wage similar average bit we an pay increases. of to is X%, average seen higher quarter. and And premium have be course,

a be even little base may in that average. X% would that average, than line with we be though X% So the higher

one be revenue So increases, this day wage we we’re per would quarter the is of our would fairly that say the growth component which inflation seeing. pricing similar to

Sarah James

that And churn for labor quantify churn, that there then like you on is guys you looks today any what can way versus COVID level?

David Duckworth

prior As the seeing and if temporary stablity is there from historical metrics to than other certain differently labor about for talked brief that we’ve time. of and at we there, look markets, the periods period comparing a trend back challenge where metric, pandemic throughout pandemic some in the our a of

really any we not have seen seeing this or before significant We what changes, the month. as pandemic, look we’re back throughout pandemic,

Debbie Osteen

stable been tracking and those, XX of the the other difference to in we've want operators without, we thinking frankly, turnover pressure a about health give certainly just is local the at in of take at we turnover now stability facility, we that think, of do look fact care environment but patients that that's as think everyone something environment and it, in We and with that we don't see months. all important big we the credit stable an -- for the bring factor I is that been it's I for within turnover that all lot COVID the with on levels. of the they see turnover, our everything just a And down, mental because pretty rates. think and to things despite And but Sarah,

Operator

from question next comes Our Borsch Matthew from BMO.

Ben Rossi

Ben for Matt have filling Rossi here. actually in It’s

acuity, a in patient same-facility reported length on stay. slight Regarding average sequentially basis, of increase a you

effect. this that if whether curious and quarter Just XQ into increasing reflection going of case takes of this acuity full you saw load a anticipate the is with type seasonality as you trend

Debbie Osteen

bit. programs have it and we at service lines. pretty was think service and of really I stay a is really length that there, Ben, a of as our that it's across stable up subservices our But little I think lot lines across our look that we

X around of length been acute stable days. stay has Our very actually

So there. we haven't seen a big change

across acuity, there are if it’s it’s looked prevalent seeing facilities a higher look the slightly but you I'm company, and where a I think impact services and we more across – we those really really higher sure been that, are instances stay of we not the the around a as within length on mix company. just then been the also an It’s and that have. that have not programs

Operator

session. in the any our I'd question-and-answer like call queue. for the turn Debbie more no remarks. Osteen concludes over questions to are closing to There This

Debbie Osteen

under Healthcare. being the by our dedication our of I our for and we They’ve on appreciate with us today extraordinary for of for these all employees this Acadia all and done Thanks to patients efforts. circumstances clinicians and your quality care and families. to providing thanking interest their like highest their again focus and would conclude in

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

Operator

concluded. today's Thank now has you conference attending presentation. The for

You may now disconnect.

Acadia Healthcare (ACHC) 29 Oct 212021 Q3 Earnings call transcript