ACHC - Earnings call transcript Q4 2024 | Acadia Healthcare Company, Inc.

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Operator

Hello, and welcome to the Acadia Healthcare Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to hand the call to Patrick Feeley. Please go ahead.

Patrick Feeley

morning. good and you, Thank Yesterday, after announcing a release we market fourth quarter closed, our issued XXXX press the financial results. can acadiahealthcare.com This section release be the in press Investor of the website. found Relations

discuss Here with Executive and Dixon, Heather results Chris Financial Hunter, Officer; Officer. the Chief me Chief are to today

the measure to any comparable release measure today's to press most discussed directly call, GAAP reconciliation you on the extent is a that To will measure of according calculated financial in non-GAAP financial posted website. is in also find that the our

the call of forth Act operations among conference quarter by differ company's may statements results the in among filings factors, quarterly and This Exchange contain including actual for forward-looking with fourth financial materially and XXXX, forward-looking Private the Reform important others, discussed others, These statements consequently, the may and within Commission And Acadia's XXXX in Securities the the Litigation be annual results Acadia's beyond. statements. expected and meaning affected in from Securities may regarding news statements, the of release. performance and set

this call over the I would conference At Chris. like turn to time, to

Christopher Hunter

morning, for you Conference everyone. and being with for us Thank Patrick, you, Acadia's good XXXX Quarter Fourth Thank Call.

$XXX financial For X.X% increased over another solid fourth and the quarter, capping Acadia. we fourth Total revenue the to and off progress quarter results, operating million. reported year year's for of growth prior

year, XXXX. full we $X.X in over the For increase over a billion revenue, delivered X.X%

the the and month and fourth in remained quarter stable Same-facility throughout X% patient X% days X.X% between each in grew quarter.

in quarter. have of underperforming been of a above same-facility facilities, the handful growth impact would the X% Excluding

training has competitive by centered maintain our operators from talent a local in Working on market. XXXX, benefited in with recruitment, and and together helped markets. focus a our labor and us environment retention also facility a stable engagement, employee our We in initiatives strong around more supported attract

to strategy. in of we moment a and as why those our families serve us the we now reflect ever forward on and better. what take lives remain an company transforming I'd our a the core, organization At for communities the patients, as like to I confident to drives dedicated in are as

the Our treat health cases the gap high-acuity of of many evidence-based behavioral a most care and complex facilities in fill for care. continuum specialized critical

care safety quality. processes to What setting in needs commitment commitment a heavily apart to standards our and bar up investing enhance this care unwavering putting for skilled prioritizing led people and adopting effective sets in outcomes believe first, support patient We us safe, We have quality is attracting patient by high and and delivery. we compliance patient back to the technologies practitioners the and and scores. satisfaction technology practices positive us helping most to and deliver field, in the care with the industry clinical evidence-based latest

ensure For improve example, medical care behavioral quality health of support facilities required and by coordination, errors, we medication care delivery electronic are going above in which of reduce and records, the care. beyond evidence-based investing consistent what's

patient safety standard the that enhance mitigate believe in care patient industry lead underscoring across and we this Acadia which the of in the Acadia's sets our delivered added other metrics acute risk. devices have incident at We confidence use facilities, providers. the technology, monitoring We performance for

of staff We enables times potential safety that improved for devices have response implemented mitigation also risk. wearable and

to use significantly. advance Our continued has ability data to

into real-time experience hospitals, for into dashboard key visibility compliance-related integrated provides facility quality. creating now a regulatory performance of indicators. This leadership patient distinct insight gives real-time over culture our across Our safety, accountability quality performance XX and

and superior also continue initiatives, I to when we and strongly this driving approach remain will operational focused highly these across in and to of patient-centered necessary. unlocking believe patient expand effectiveness is As CEO Acadia, the them organization. I experience prioritize continue on them outcomes

XXXX, I turn XXXX, operational these progress beds growth like a fourth quarter. on the into new XXX to Before completed X,XXX during In beds have strategy. new discussion, beds of added beds our of acute I'd operational, deeper including additional over approximately facilities, first the Heather provide In X,XXX XXXX, XXX inpatient we dive months beds on opening update in the approximately licensed financial beds. during to the We to XXX it including completed construction became including XXX the quarter, and newly X XXX fourth hospitals. existing constructed new of X from became an to facilities.

of Joint venture our part partnerships important an strategy. growth to continue be

number growing Acadia that choosing partner gap are a behavioral care. between health the bridging to systems serve We and patients are of by well-respected with health fortunate better to physical

opened quarter, with XXX-bed Intermountain fourth Denver, Colorado. Health hospital venture in we the During our joint

We joint also Health venture hospital partnership Ford Henry recently in opened with XXX-bed Detroit. in our

and have pipeline other add Looking and X,XXX this with beds work in to leading markets, forward, potential opportunities we XXX expect to a solid total of attractive year. between providers

of possible which proud not have without this are professionals work and employees, the progress, who Acadia. XX,XXX at health been over the of care We efforts clinicians would dedicated

to unprecedented and the care across crisis access needed. desperately suicide; rising addiction and continues communities disorders of States with health expanding that's specialized United continue As rates treatment the Acadia depression, use anxiety, and so mental to face providing an to be substance and committed

confident beyond, As for we set goals in XXXX we remain have look and strategy we our and ourselves. to

At turn results discuss quarter. financial this call the to time, to our the for now I will Heather over

Heather Dixon

good and Thanks, everyone. morning, Chris,

quarter last representing XXXX, per year. of trends the fourth day of growth revenue increase the of the an of X.X% Our included of revenue across compared reflects $XXX patient lines. over portfolio consistent health day growth financial in our fourth grew diversified X.X%. and X.X% with behavioral service an quarter X.X% for reported We increase in performance quarter, revenue Same-facility which patient of quarter fourth million

As each the to X% month growth in in range patient same-facility day quarter. Chris mentioned, X% the stabilized for

quarter, timing, trends impact stable remained members. due third versus continued growth payers a of emphasis revenue as to degree behavioral health high the their needs the to the payments. the supplemental of moderated of primarily Our pricing per of place on timing day Absent patient

for was EBITDA quarter was same-facility $XXX.X EBITDA $XXX.X with year, same fourth fourth XX.X% XX.X% XX.X% adjusted EBITDA year's XXXX compared for the Adjusted this for quarter EBITDA million, basis, the a and On XX.X% adjusted was margin of year. in and the margin was quarter prior quarter. of last million. fourth Adjusted the

professional we quarter revenue prior constructed This quarterly and third $XX also fourth sequentially a fourth the of the to liability facilities. quarter, experienced quarter relative due results as million the XXXX, of our to million increase fourth our the EBITDA part reflection to and of is million number claims. XXXX the million $X a million increase a ongoing a reflect portfolio management During facility to self-insured, to adjustment of were $X a general largely year-over-year for over is These in the the quarter million XXXX, the a decision fourth efforts. to impact $X quarter years the reserves by newly related and facilities to step-up and XXXX increase the of a $XX.X result years. in impact in of $X the industry close in unfavorable of broader losses recent related trends a new Start-up recorded

Consistent on provider to prior to periods, of with for was include diluted and of loss income income attributable other XXXX quarter year from previous for fourth the adjustments the XXXX. and of provision income transaction, XXXX for quarter legal fourth costs, impairment taxes. excluding fund the stockholders fourth the relief Acadia the for share period, $X.XX and quarter per in Adjusted the income $X.XX

right maintain strategic continued We position operations XXXX, to the a and to throughout make investments our enhance with providing growth support our to strong us the strategy. financial ability

As $XXX.X credit available our of of facility ratio cash X.X. with million a revolving in million $XXX XX, leverage cash $XX.X equivalents December approximately had XXXX, and under we net million and

to Moving on for outlook XXXX. our

as range release, As the in full are in of Revenue to expected million. range noted we billion. in million is $X.XX to be be EBITDA billion Adjusted to share guidance expected expected the $X.X $XXX $X.X to per our is to the in be of range to of $XXX is follows. $X.XX. providing earnings press Adjusted year

$XXX expect flows be cash range million in We operating to million. $XXX of to the

This million related million. the million in beds. in spending to capital of million We expect $XXX expansion $XXX to spending new $XXX range of $XXX the to construction be approximately includes to

full includes same-facility guidance year digits. day Our patient mid-single growth the low to in

to on volume continue focus handful facilities. at improving we mentioned, underperforming Chris a of As

would our our represent see However, potential outlook we a that to performance improvement material in the does material not Were of upside assume sooner, a improvement range. guidance more group. this to

$XX As therefore, group guidance, a assumes million facilities. EBITDA from full result, an small year this of approximate headwind

to Tennessee in a This the the recognize includes supplemental same program, I $XX revenue facility per year would payments. in called to million outcomes approximately million year, day the nonrecurring range out related single Medicaid supplemental of in This that also EBITDA full throughout $XX payments year-over-year new as you the assumes contemplates to growth quarter low flat net of change increase. a subsequent digits. to a the last expects Our guidance the range in which first XXXX of company included remind XXXX. patient

to also guidance million newly of a XXXX, timing $XX across related reflection well approximately as losses a increase the recent the new reinsurance expense includes $XX costs start-up increase experienced Full to liability This start-up trends year-over-year $XX in million openings. related a of growth in industry, increase reflects believe position. million in year to $XX year-over-year a guidance includes This and including Full higher opened total as approximately in facilities. costs as of we million. of conservative more compared year significant professional to of pace bed represents increase is the facility the

revenue a approximately to consolidated EBITDA would headwinds facilities exited XX revenue of basis respectively. that point $XX out million growth basis and XXX that results were million point $X subsequently I or also of from XXXX EBITDA point XXXX and included and

the of first We financial guidance million. follows. issued and the of $XXX to million in the for range $XXX of Revenue as $XXX in adjusted XXXX quarter to million EBITDA $XXX million range also

guidance following quarter includes the First assumptions.

XXXX number be in large the disproportionately weighted early expected year. towards the the are to start-up end opened half XXXX, towards Given of of of the anticipated beds losses first and

approximately be an first increase First quarter quarter $XX million start-up $XX losses the over XXXX. are million, expected to approximately of of representing

First net quarter approximately in decrease guidance $XX of to million. Medicaid $XX assumes payments million supplemental a

closures million from nonrecurring also that XXX-basis-point would $X included a results facilities quarter that results $X first in consolidated headwind Facility in first million XXXX of be the supplemental reminder, quarter growth EBITDA XXXX approximately closed, quarter. note $XX I to expected payments. first to included first year-over-year a approximately a quarter As revenue headwind of million subsequently were growth. representing are to

first you quarter. year's modeling compared had for X year's this that Finally, extra first quarter purposes, would day last I remind to

future any divestitures, and other of As reflect transaction, settlements always, acquisitions, does company's the impact nonrecurring guidance not the expense. costs or legal

we to over on for Q&A, expect next move significant pace to the add have of will new I XXXX like materially EBITDA and beds positive we contribution this generating means outlook of go and XXXX, the We new Before over in X,XXX expect and to beyond. the to about few to bed X,XXX business losses accelerated to that in years. tailwinds another XXXX. beyond to would course XXXX growth a we This the we XXX from briefly X,XXX beds talk start-up roughly the

outlook Therefore, towards We expect generation. from XXXX growth, combined end long-term new benefit meaningful with in facilities free cash provided will growth time, with capital be decline to see towards and the point accelerating are beyond company EBITDA drive same an the of XXXX flow to in inflection XXXX. EBITDA start-up yesterday. growth losses the spending, decline high press the in of expected the range earnings the our At we anticipate release

little going to remainder a with new As about X% of towards construction CTC revenue, a to is IT reminder, CapEx over X% our spending of the annual maintenance and beds million and of $XXX or related facilities. the

to pace in material As the of from later again expenditures construction in current XXXX highs. such, year our we the bed anticipate recent a quarterly capital this and reduction moderates as rate relative run

we XXXX, to to beginning revenue XX%. Over X% and of EBITDA X% the years X% growth of growth expect X

power excellent still of of our bed growth additions into the We of historical per above visibility generating record-setting the have year, embedded allow XXXX and growth. bed this as will and our unlock we pace cash to throughout EBITDA Moderating more flow to beds bed growth of the free the added us level of XXX moderate to well pace beds annual of pace XXX XXXX.

generation strikes and Going flow. pace the forward, the investment believe in of we between bed business the balance investment the of growth new of the cash growth free in right

approach invest to returning of growth continue flow can while bottom and to We we a will meet forward also believe going free more end cash company and when flexibility comes cash to the free increased balanced to this growing deployment. pace drive we believe provide to generation healthy of XXXX. summary, In capital positive by demand flow growth the line and it top

in accordance press noted our to share of with are applicable and factors. release, has authorized other as our laws and made in be a new program. subject will repurchase market million $XXX Finally, Directors Board Repurchases conditions securities

With that, operator, call are the ready open questions. we for to

Operator

Instructions] from [Operator Today's Whit question Leerink Partners. first comes with Mayo

Benjamin Mayo

to last is Maybe, lot fund million that you of this up, Obviously, comment. you're Heather, interest might a some burning cash. the to capital maybe year. $XXX presumably include that Guidance required have follow up incremental on The expense growth. of debt commitment implies

And on exactly next Like us can sources how CapEx growth give the uses will and So, be year? one, you down in spending preliminary of plans there cash this idea in IT much are XXXX? an financing year?

Heather Dixon

give yes, information of a Whit, little just regards mentioned. financing to that to in you you option bit the

XX-K, refinanced we the $X we revolver just are you about a look about to bank that upsizing facilities that disclosure in have you If see It included our up. existing refinancing will mentions and the we to regarding billion. that wrap also will be our

in contemplated So coming what's in the disclosed be and there is should about that shortly. that XX-K, more

that and in XXXX. to the couple of positive free a we we that think things. that messaged of that, release see by -- how out and about terms expect disclosures back In flow a of cash cash we in would cash flow is have press largely came be flow you seen end the our to have result of And

of XXXX. Those would contribution new is, The One, the that have the beds should that two, preopening of And that EBITDA cessation with we result associated as to things. of been in to the the first from a know, the the facilities. you see couple generate XXXX. really we those of start expect And in level contribution the be adding. costs of nice EBITDA elevated beginning

generate X cash should things those at So nice confluence a flows operating in rate.

that for the in The CapEx 'XX decline but see at moderate as watermark start down of of you'll come CapEx addition, continue well. that that have that of the in and pace rate high sort and will end of with In will came beginning then of we to the as decline and in 'XX high beds to continue half opening, 'XX XXXX. then should to back continue

Benjamin Mayo

much number decline that how share range CapEx can Is to there you a within a year? going for next is the

Heather Dixon

over want I and XXXX. into to of ballpark would don't expect down but to materially around million. on point, $XXX at XXXX we run CapEx mean, the provide rate 'XX again I come this maybe then guidance

Benjamin Mayo

just Can quarter just help full maybe earn, year? we're the Okay. question implies the And from the here, follow-up first going then first to of a to you're through a you that the full is XX% getting. bridge guide a think certainly think, year, quarter that like which I us

be half, dollars I the more back fewer supplemental losses, maybe should growth expectation mean, is an the in start-up better. there

numbers of around Just the walk would frame to forward that be kind helpful. any

Heather Dixon

Yes.

take Let hopefully, I'll and you were pieces all me that the looking hit at. that,

what year-over-year. anticipate things. than factors driven the by a That's So we we full of a the also timing a well the less to than to quarter as year full couple be you to would in of and that typical expected likely similar would can year second first is the certainly the year. the full see due largely year less first in to see as But percentage typical is contribute quarter quarter guidance looking

been of the that talking we've timing costs start-up supplemental also is then payments. and about first The

be the We the to with the full expect start-up for of guiding start-up for the for we're high $XX quarter first losses losses watermark in total to $XX about million that the million $XX out to year. million quarter

costs the the And to So quarter taper down landing costs course year. year expected think full XX% roughly of are to start-up the first the XX% of in start-up about over alone.

depends So timing But several are also the to predict the with hard to is any factors, likely that of second again, precision. elevated. on be quarter which

factor the guidance I what to they precision. net is is our supplemental will taxes, the million But predict be million first payments can to be supplemental the would $XX full other assumes about mention, for to supplemental as and down with and hard The for those Whit, payments, related that associated payments, $XX including swing cadence you the up but quarterly will lumpy quarter be year. year-over-year, know,

quarter down purposes, well. would I as you modeling payments are supplemental net for assume second year-over-year So suggest

Operator

from is with Brian question Jefferies. next Tanquilut The

Brian Tanquilut

drill comments on growth to algorithm just the of made into longer-term Heather, or down Maybe, the growth some outlook. you

curious, years know XXXX, you as said the think we I and and end few of bed in a mean, high the adds Just in past about range comp I soft XX% 'XX.

be higher than XXXX? should thinking margin the be number range, have that and post XX% about one? So shouldn't pricing you that And that assumptions we to how X%

Heather Dixon

by X% Yes. after things. reiterating several to and just at beginning X% growth maybe year X% years a couple this revenue EBITDA those of of XX%. start growth I'll The for to

So we those out expansion, just we've and how delta headlined. feel to about to question X point numbers your about in margin that the should margin

out more to would on mid-single-digit we're the We range Whit's we'd to asked. the in at you course, expect that in just question end volume in average, all that bit be that more just I beds thing. and answer expect based one XXXX that growth pulls the question. to to little of high that granularity, on A to and be of I'll the And that response point talked things range adding,

normalize outlook that in we the in to see some won't years the mid-single-digit in we point at future. rates we'd And towards our growth rate doesn't past, back historical we area. to assumes That said low range outperform. mean that long-term when the have we as But average expect

As of normalized prudent conservatism I to case room high for leaves and that But outpace XXXX, we're range. mentioned, our approach that the us base a assumes be see for rate, and growth at going more to and a that's end we that.

to just stepping granular of say the we're has Maybe that that continue the of long-term demand changed is to strategy opportunity meeting need. terms a a Nothing meet significant have continue here, the the with to guide. in couple thinking detail. unmet capacity, about at level, that back I we about a was and want We'll higher that just same. of little things how we'll expand bit lot

we're meet today And time. bottom what still doing same bed those a growth remains and long-term needs. footprint of balancing away and from But with shift add growth beds the We business drive guide. that be much clear, growth expanding flow. at focused a sort done is the that's I'm any company suggesting the not growth balanced approach. on To strategy at efficiently taking faster than deploying rate more And historically primarily to and capital our top the towards and can this of has free CapEx, cash line

to beds opportunistic talking we power as the pace perspective. the a recognize flow give been from these more and to spending, free us the about, of growth the moderate continue capital unlock and to business also more to allocation going of ramp as But that's embedded we've ability be a the opportunity then in the bit smooth out bed cash

look This and look forward when sure So that's are building in putting refreshed being back look our the making a is and that targets we appropriately reflection reflection. prudent we and we're market. a assumptions as

lot, growth things. those a would we've that visibility significant level the high supported of a by really summarize, adding. outlook power and X So been the in maybe said confidence to our this a of that add embedded have just of is I EBITDA beds combination thousands from we it's I've

Brian Tanquilut

weather, or as I follow-up, I about issues QX, fire appreciate that. whether California And about a there's then my think snowstorms. of lot in it's chatter

in baked you you've if terms of that? guide, that And of Just the curiosity? same-store kind like just out assumptions curious what QX then can seeing into the of share you're

Heather Dixon

just little of any to a questions I just sort bridge address here and on clarity. bit just of give you the color that maybe don't in Why then for general, knock-on

terms for to start-up with So QX I'll I'll specifically but be start just I reiterate QX, costs. this, complete. here of in mentioned

for quarter in to We XXXX, high of the expect versus start-up first and costs year. that about million $XX higher be expect we the the watermark

payments terms due to $XX in down million payments, year-over-year that quarter first to first year. had And timing. be supplemental In $XX will we million quarter $X of the recall out-of-period around last the million in

the an $X in And mentioned your QX. press that volume, we a to on at material a assume we've handful for small facilities on We on estimate group then QX about. to for had improvement turnaround XXXX. million of timing release drag about our right for That's that not those to a of of facilities. It's beginning talked does facility the outlook a our closure of 'XX the difficult previously us coming point put

And it's guidance. when believe conservative take setting approach more so just we're we to prudent a

full few or always would So EBITDA just for to focused the There's to year just other underperforming with of handful And those facilities. related in XXXX, a the I as any events that $XX there. out course, facilities. nothing normal seasonality not that question, but weather, headwind your it's of It's directly roughly fires specifically a from result here. assumes on that QX, million call of of

the quarter impacted One just spread be the in year-over-year point the quarters would have reminder, over been XXXX. year, the would as first that, already on a of fourth X headwind because

And see so comp results. we as quarter tailwind of we 'XX should fourth the a over

the then So year, first distributed in that's starting in and QX. total really but quarters $XX to X the million

for is liability bridge mention as last that going through we QX, professional talked that completeness, One expense. I'll about thing haven't I'm just for the

incremental have charge assuming a also XXXX, for year. for the million and took we in in that You $XX we're QX, guidance would full year-over-year seen an the

of that what to this obviously, piece be of just we in more to reserve So year. believe approach a a there's a QX as claims going reflection conservative well. is That's

Operator

comes Rice from A.J. question UBS. next with The

Albert Rice

like you're out QX, to from more it trying day X.X% I single-digit which low the there's know just growth for And moving But -- something on the rates apparent. that's are is come for the some understand giving impacting revenue year. I you on you're So side the QX, is rate X.X% commercial in was is think maybe leeway and moderated more otherwise -- growth, or growth I'm the rather it seeing per 'XX. or calling side, moderate? parts that down full could to that what than yourself Medicaid Or in pricing moderate? just

Heather Dixon

Yes, A.J., maybe little of when I'll on about what thinking go a guidance. just go detail we're we through through and bit rates the

First, -- said will I've payments I of assumes just again, up million 'XX saying it think times, it but want know to to guidance this supplemental be I the for a $XX couple year. bears flat I

guidance get years little past. less a assumes a So tailwind to the the we'll essentially 'XX of relative

then timing predict. timing swing magnitude positive those that and revenue visibility upside, that shifts, us improves, day. or be reported see can a payments factor and The will could the we per of more have And for very we then the difficult be to if in

of that growth And environment on the Second to specific closer in the commercial the rate then level an up we're horizon the proves have a just finally, would our given but given unnecessary, conservative policy given conservatism rate taken on approach this round perspective, maybe level the then thing could the wind stable. broader the about more about on rate year the a just policy it's front. cautious believe concerning, noise remains we slightly XXXX out point overall to more this say early seeing to prudent is mid-single-digit nothing If of thinking we uncertainty range. from we There's it incorporate I think assuming at front, in environment. approach the rate we're as updates is,

Albert Rice

looking for Okay. moving dynamics. lot the And there's a margin my again, of then I different know, parts. at follow-up,

I gave XX.X%. the EBITDA full think you about margin were you quarter, year fourth XX.X%. That

I XX.X%. last been that, X prior like years think for you've more to the

core about in those it that what what Is liability that away and Is underperforming, look peel it in you margin? saying cluster assuming If at does facilities stable? down? your -- of I you're are 'XX are portfolio

going below the at higher think X-year 'XX, look you can't which margin back prior? get to -- to envelope implied you probably last you're years, sort a out growth while. the of you the I for going about X of than Are quite for couple the see if years I And of is a thinking in XX.X% is that the

the is for likely of even underlying 'XX? higher hundred it, now? years X the in the what's essence couple basis assumption years portfolio get So you're assumption what margin couple points that than the the last And of ex callouts a for is the to a to of from

Heather Dixon

A.J. Okay,

Let me to that. try answer

about a 'XX, year do and expect compression. that the So we QX pointing you to point let a then and of what level, specifically of moving couple at couple to into of full I would things talk high just impact just me a very things the talked margin about 'XX and

specifically and the additional result professional That the was closure liability QX was the margin in compression very reserve reserve for a X the facility things. of of quarter.

well. full that. obviously, that's So the as it what And impacted drove year

for we that said, when a just would we the to expecting And a and higher giving a out of got liability prudent have those to to we've have the few As of couple and trying guidance. point rate I cautious I material are and expense is for about I'm won't that's this felt will belabor upside things. over at costs, not And XXXX. we 'XX, will improve, the but was assuming But continuation these, conservative a headwind million throughout calling more we and we we're that as move the million If the improvement, items XXXX. point. just set we out we about at we're those professional that then be to have better us a we think volume, start-up as tailwind in we $XX be facilities, it look when approach XXXX, just $XX take then EBITDA about I a year.

a margin we've from on what's But as the perspective, we stable specifically be stable. of range calling just look It's seen underlying the these question like your the historically. to things continuing business top. we're that out we To is see that that underlying few see in business

Operator

Next question comes from Ben Hendrix Markets. with RBC Capital

Benjamin Hendrix

your Last of quarter, the headlines some service last you give referral press has progressed on activity us difficult about depressed activity an your XXXX? referral Can lot lines you talked year. update into across on a how back various

that that year And mid-single-digit should impact growth to pacing through you've the should low your then expect volume how the guidance? put same-store the we of in

Christopher Hunter

start as Why maybe Ben. can well. don't some add I Heather and This Chris. is commentary

say I that just key be engaged these just on other important external the source including all to to continue and front would sources stakeholders, our referral outreach with referral partners. very we

last been really any them created And that that, substantial provide, misunderstandings we were is in correct We continue think we've about the quality reporting. the that emphasized care and very safety outreach the very, for of making we're consistently from we have as years that the the make, media the consistent to quality intentional of and we X resonating. compliance over that investments and that to

has commentary do focus We that of been and ensuring understand detail our well put the on clearly very a some important that facts have most that our website particular I on received. think put has referral we've lot sources

our be referenced are to that on facilities And entire so challenge, smaller the now. of and it our right referral the you and look number across to performing a just still focus continues allows Heather below base, us when facility of expectation less issue less

anything add? would you Heather, So

Heather Dixon

a about, down and the of on in QX. things facilities that to Just headwinds in handful We talked a January, maybe there, majority couple that coming back the were from began double of of Chris.

and through turning mentioned, the around work continuing As to just process group the are of we facilities. small Chris

of just performing we're period, But any overperform facilities of would as in portfolio if the size spent understand we number expectations. to now really I that referrals look some our where below and in I the we're not appropriate. our But widespread and business, note focused just across getting that the feel that issue. this are small of at are you it well And to referral book months point on some going mitigate And the a where a that several issue pattern noticed, have underperform. we're last as that good entire we've

Operator

with The Ransom question comes from John next James. Raymond

John Ransom

bed look like beyond, 'XX to the years? versus adds. does of up crept adds, the What we facility it's of look de that novos in out out mix and terms in As

Heather Dixon

John, just novo look in be based the in as we'll focused as out JV say I on the well, would pipeline think those years, focused on partners, acute I out we de novos, continue of we have space. facilities de some that but to heavily the

John Ransom

up is team probably So the that was our by out construction old or so gone costs 'XX. management X/X the plan have since in laid math the

So looks unless XX% returns maybe the the returns EBITDA in range. are have improved, to like the like it us

make of know, a novo still just these all sense is kind in current of projects And rethinking there do light I didn't So the the environment? de math? of

Heather Dixon

we mean, I have no, So before. terms in talk times how the to capital. to expectations facilities. very a that sort those multiple rigorous apply the it's And that don't approach of or profitability many we've there's clear think deploy about about I we of for talked options of returns anything there

those We're we've benefit looking to are novos the And hospitals, whenever And volume. big continue nice we'll contribute years. have improvement, We've models see really last way we for rate a to that And see seen seen adding. happening. and several I sure in that that de those making the those that from our returns returns. see think at that in the over XXXX we have seen we're constantly we We information. right updated we

rates we confident that's with at that up what the construction about whenever pockets, kept the construction, that we construction cost time. up So same growth feel rate in some cost of see the going has the

we from about feel returns returns. good So those perspective, still a

John Ransom

more two MAT growth, in Okay. for And just bit mid-single-digit seeing business number ones quick the quarter. We're me. The one. a slowed

of and the scrutiny? left, ones that two, media And these question going markets on underperforming referral subject the in are then Or the there were markets? are back facilities. number the to Are just other the are patterns that mostly

Heather Dixon

strength XX down that because over So of that great months. that past The have in comp that growth. of would expected XX lot will rate months, There you we the the maybe recall, even just prior And come a is business, substantially significant as has as XX, years over experienced a growth grown growth. business.

record to continue We see that volumes associated business. with

just pattern would normal comp the growth we point apart significant periods So from to as there's [indiscernible] growth. nothing of I

mid-single-digit a as see about still a think strong as that we it and We business, future periods. grower for

Operator

The comes Matthew Gillmor from next question with KeyBanc.

Matthew Gillmor

there? on So us ground for you a sense called you're results the just can give you've the the out, underperforming for to improve facilities that doing maybe what

Christopher Hunter

with I is No, Matt. local. would Yes. health care start

that going facility. competitive at specific look it of the with of on we're review the us, number starts a for We closely facility, make a as and we very dig factors. an look really to at at programming a individual then in So And really comprehensive really assessment specific landscape.

So It sources, be can the in admissions, not work We'll on to look inquiries. what's but function. related and to deflections we'll to a there. the gaps of staffing team, and identify team, look on look We're leadership going the the one and any really quality team. at clearly We're and at gaps of current look the assessment coverage also at We going referral that business at an needs any only look would team funnel. that the with the plan include development there. closely do can going at

from to specifically in comprehensive and We've We'll platforms technology. place and in place ensure as invested the put the to the remote adoption technology, obviously monitoring heavily, but want EMR, is look well. strong patient to the put we dashboards that there adherence we that at really that we quality of safety the

that that, place. is sure make also to want we in So

the any maybe even say an final are there We thing the would at, that I facility is would improvements just physical impediment. And look would be then plant.

So it's our closely that the of working we're operational getting very with at, granular on looking a very suite comprehensive and ground level. things leadership

Matthew Gillmor

And the would quarter? with consistent facilities, X% follow-up, think you the a be of we what improvement about should a drag drag no from assuming kind then as fourth term, near that it. over those there's Got saw in the

Heather Dixon

Yes, Matt. about right that's ballpark, the

Operator

The with Scott Fidel question Stephens. from next comes

Scott Fidel

you just volumes -- the ultimately flexibility last wanted question, you update moderate bit year full some saw down First you flex sort potentially the around quarters around know few talked of in about to your start had that that I get the to of lower it. of to costs. frame a volume that have labor The would assume bit staffing-related guidance a a does

you breakdown around about So your hoping to but flexing potentially. you or some I sort seem much guidance doesn't sort thinking into like cost down of embedded get just curious the have options that are the of guys was It that, of of lever. you option have how around

Heather Dixon

That's a good question.

If you $XX implied we recall, EBITDA the a were the revenue related guide, that disproportionately pressure we than the down higher that EBITDA QX when seeing, we in of headwind for down brought 'XX. guide about brought QX, to guide the million and

As for group same of 'XX. of we think about $XX into headwind facilities, that about XXXX, small we million anticipating are built

we to on factoring to things that the we have cost cost facilities. that $XX the rightsizing is for million So versus alone the and cost yes. in X of in for started those are your and we're year measures relation quarter to question $XX focus levers the structure, doing full taking million

hard perspective were facilities and begin in a not for improves, throughout expectations and a that But Just this of to the the that we're those for approach. facility at turn year. that as from volume facilities or a upside But point, take any prudent timing cautious predict upside, we course, built tailwind of we because volume was would, for if the us be around on, to is to more facilities thought on working handful have it those as a we to any the reminder, year. move

Scott Fidel

to the my framing $XXX buyback the wanted the going or there's maximum pressure the program, target against million that whether current follow-up, to of that, that any as sort like announced around a know as stock? to, to of you're go and then willing sort Board type inputs buybacks approaching you'd be And valuation to the whether comparing terms announced methodical I be of you've leverage Okay. as or in expansion this of sort in fund of of

around improve? of that the in leverage the given you just us want And to then have thinking you give cash get have revolver is you where until would free some 'XX, maybe increase front, flow what fund expected to FCS that maximum accessible on to the be the the projects negative that you if clarity you're in some to

Christopher Hunter

Heather wants is Chris. This I'll anything. go if and see to add ahead Scott. and start

would specific few line. by grows chime been comment to can place not inflection do right and it I put we point as cash We're any about free in in to approved delever deliberately from But clearly Board so. saying, to a would now, just EBITDA and place, next time an authorization anticipating I we by that's naturally years flow with the think start mean, I Heather have in this expect going we over and in, leverage to talked 'XX. planning we're respect and on was standpoint, the utilize to

would what there? add so you And from

Heather Dixon

effectively leverage, have market point when point being in in that for that actually and of we will I about, we exact the of, comfortable come about add. That's If terms your a and fund are a expecting Chris' being think the point, an to that 'XX perspective, significant growth think from how we us would would back and to down. To about leverage down ratio, bring talked leverage EBITDA that naturally. year we naturally and we've

think well. we down beyond then reductions, that, the that's CapEx to going bring And leverage you if even about that think as

And comfortable taking leverage need do fund so up would to what given perspective. be share from in looking order a that, to we we at repurchase

power there. cash of business, flow comfort we'd the given the see Just

Operator

with from question Barclays. Andrew Mok The comes next

Andrew Mok

lot of lately. a attention Obviously, state-directed payments on

to area get investors understand risk that I to the think you appreciate of comfortable that want concern. around can

So payments to us for exposure total can you XXXX? state-directed your disclose for

Heather Dixon

Yes, sure be Andrew. We'd happy to.

pay of be And before those the into So gross than the we total course, million. that's, programs. payments less $XXX supplemental taxes that provider would

Andrew Mok

Okay.

X/X a in benefit? So net good of about terms about of is that think to ballpark

Heather Dixon

than expect good different rest industry. to That's of a ballpark. wouldn't pretty any I be the that ours the for

Andrew Mok

'XX fiscal digit when especially half I'm I of And then in up from digit, there carrying to think supplementals revenue drop-off and low first such year patient calendar be significant being year could about Understood. rates still understand day struggling into mid-single overall. a 'XX the state to single how per

of but of quarters the against go kind booking seems to the you're like pointing X of area supplementals seems conservatism, being Tennessee. It state that of philosophy to

if anything Is state-directed reconcile CTC or revenue. overall, either core there payments how can that it there's share moderation it help up a you So are might feels comments? rate like in these

Heather Dixon

Yes.

Let of me on a hit things. couple

the compared tailwind us to for The less of will and that talked about a recent supplemental in first, tailwind, payments that they've been certainly nice relative years, it we've prior years. be

that just The at that second And to the seeing, there conservative this in noise we point take feel thing all the I we the has to of thing our -- do approach that like better certainly, sort is right it's a just there given it's that everything year, we're that conservative prudent feel proven be reiterate if will to approach. be upside will just wrong.

see basis tailwind and And a prior XXX line to in of our And tailwind. early the become And of moderate was the the then less service delivered comp, 'XX. that obviously, early part just rates directly over to we regarding as that's your that CTC, just question rate a of 'XX growth from growth, naturally in above-trend would growth year points perspective. XXXX a about that

just not 'XX, swing wouldn't had the be we in XXXX. In factor early service expect line direction. It's we tailwind that to a either material that in

Operator

I the now closing question-and-answer over Mr. like call would concludes to This Hunter remarks. session. our for back turn to

Christopher Hunter

safe again to across dedicated clinicians our Thank in you. country want employees effective needs tirelessly meet leaders, I manner. and and to patients the XX,XXX continued In closing, of thank the a committed facility who've to over work

for being and growth patients our and shareholders. you us strong we driving a a with value interest in a great for foundation serve Have for proven strategy delivering morning this both day. Thank Acadia. have the and your We to greater and

Operator

has you your now conference Thank The concluded. participation. for

lines. your You may now disconnect

Acadia Healthcare (ACHC) 28 Feb 252024 Q4 Earnings call transcript