Notes to Condensed Consolidated Financial Statements
March 31, 2017
(Unaudited)
1.
|
Description of Business and Basis of Presentation
|
Description of Business
Acadia Healthcare Company, Inc. (the Company) develops and operates inpatient psychiatric facilities, residential treatment
centers, group homes, substance abuse facilities and facilities providing outpatient behavioral healthcare services to serve the behavioral health and recovery needs of communities throughout the United States (U.S.), the United Kingdom
(U.K.) and Puerto Rico. At March 31, 2017, the Company operated 575 behavioral healthcare facilities with over 17,200 beds in 39 states, the U. K. and Puerto Rico.
Basis of Presentation
The
business of the Company is conducted through limited liability companies, partnerships and
C-corporations.
The Companys consolidated financial statements include the accounts of the Company and all
subsidiaries controlled by the Company through its direct or indirect ownership of majority interests and exclusive rights granted to the Company as the controlling member of an entity. All intercompany accounts and transactions have been
eliminated in consolidation.
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally
accepted accounting principles (GAAP) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for fair presentation of our financial position and results of operations have been included. The Companys fiscal year ends on December 31 and interim results are not
necessarily indicative of results for a full year or any other interim period. The condensed consolidated balance sheet at December 31, 2016 has been derived from the audited financial statements as of that date. The information contained in
these condensed consolidated financial statements should be read in conjunction with the Companys consolidated financial statements and notes thereto for the fiscal year ended December 31, 2016 included in the Companys Annual Report
on Form
10-K
filed with the Securities and Exchange Commission (the SEC) on February 24, 2017. The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Certain reclassifications have been made to prior years to conform to the current year presentation.
2.
|
Recently Issued Accounting Standards
|
In January 2017, the Financial Accounting
Standards Board (the FASB) issued Accounting Standards Update (ASU)
2017-04,
Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
(ASU
2017-04).
ASU
2017-04
simplifies the measurement of goodwill by eliminating the requirement to calculate the implied fair value of goodwill (step 2 of the current
impairment test) to measure the goodwill impairment charge. Instead, entities will record impairment charges based on the excess of a reporting units carrying amount over its fair value. ASU
2017-04
is
effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. Management is evaluating the impact of ASU
2017-04
on the Companys consolidated financial statements.
In March 2016, the FASB issued ASU
2016-09,
Improvements to Employee Share-Based Payment
Accounting
(ASU
2016-09).
ASU
2016-09
includes multiple provisions intended to simplify various aspects of the accounting for share-based payments.
ASU
2016-09
is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company adopted ASU
2016-09
as of
January 1, 2017 as described in Note 10 Income Taxes.
In March 2016, the FASB issued ASU
2016-02,
Leases
(ASU
2016-02).
ASU
2016-02s
core principle is to increase transparency and
comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information. ASU
2016-02
is effective for fiscal years, and interim periods within those
years, beginning after December 15, 2018. Additionally, ASU
2016-02
would permit both public and nonpublic organizations to adopt the new standard early. Management believes the primary effect of adopting
the new standard will be to record
right-of-use
assets and obligations for current operating leases.
7
In May 2014, the FASB and the International Accounting Standards Board issued ASU
2014-09,
Revenue from Contracts with Customers (Topic 606)
(ASU
2014-09).
ASU
2014-09s
core
principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU
2014-09
requires companies to exercise more judgment and recognize revenue in accordance with the standards core principle by applying the following five steps:
Step 1: Identify the contract with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
ASU
2014-09
also includes a cohesive set of quantitative and qualitative disclosure requirements about
the nature, amount, timing, and uncertainty of revenue and cash flows arising from the entitys contracts with customers.
ASU
2014-09
is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Additionally, ASU
2014-09
would permit both public and
nonpublic organizations to adopt the new revenue standard early, but not before the original public organization effective date (that is, annual periods beginning after December 15, 2016). ASU
2014-09
requires retrospective application using either a full retrospective adoption or a modified retrospective adoption approach. Full retrospective adoption requires entities to apply the standard as if it had been in effect since the inception of all
its contracts with customers presented in the financial statements. Modified retrospective adoption requires entities to apply the standard retrospectively to the most current period presented in the financial statements, requiring the cumulative
effect of the retrospective application as an adjustment to the opening balance of retained earnings at the date of adoption. Management anticipates that the Company will adopt the full retrospective method and does not plan to early adopt ASU
2014-09.
Additionally, the Company anticipates that, as a result of certain changes required by ASU
2014-09,
the majority of its provision for doubtful accounts will be recorded as a direct reduction to revenue instead of being presented as a separate line item. Management is continuing to evaluate the impact of
ASU
2014-09
on the Companys consolidated financial statements.
Basic and diluted earnings per share are calculated in accordance
with the FASB Standards Codification Topic 260,
Earnings Per Share
, based on the weighted-average number of shares outstanding in each period and dilutive stock options, unvested shares and warrants, to the extent such
securities have a dilutive effect on earnings per share.
The following table sets forth the computation of basic and diluted earnings per
share for the three months ended March 31, 2017 and 2016 (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Net income attributable to Acadia Healthcare Company, Inc.
|
|
$
|
34,958
|
|
|
$
|
25,688
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding for basic earnings per share
|
|
|
86,762
|
|
|
|
82,943
|
|
Effect of dilutive instruments
|
|
|
146
|
|
|
|
477
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing diluted earnings per common share
|
|
|
86,908
|
|
|
|
83,420
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to Acadia Healthcare Company, Inc. stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.40
|
|
|
$
|
0.31
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.40
|
|
|
$
|
0.31
|
|
|
|
|
|
|
|
|
|
|
Approximately 1.2 million and 0.8 million shares of common stock issuable upon exercise of
outstanding stock option awards were excluded from the calculation of diluted earnings per share for the three months ended March 31, 2017 and 2016, respectively, because their effect would have been anti-dilutive.
8
2016 U.S. Acquisitions
On June 1, 2016, the Company completed the acquisition of Pocono Mountain Recovery Center (Pocono Mountain), an inpatient
psychiatric facility with 108 beds located in Henryville, Pennsylvania, for cash consideration of approximately $25.4 million. In addition, the Company may be required to make a cash payment of up to $5.0 million under an
earn-out
agreement, contingent upon achievement by Pocono Mountain of certain operating performance targets for the
one-year
period ending May 31, 2017.
On May 1, 2016, the Company completed the acquisition of TrustPoint Hospital (TrustPoint), an inpatient psychiatric facility
with 100 beds located in Murfreesboro, Tennessee, for cash consideration of approximately $62.7 million.
On April 1, 2016, the
Company completed the acquisition of Serenity Knolls (Serenity Knolls), an inpatient psychiatric facility with 30 beds located in Forest Knolls, California, for cash consideration of approximately $9.7 million.
Priory
On February 16, 2016,
the Company completed the acquisition of Priory Group No. 1 Limited (Priory) for a total purchase price of approximately $2.2 billion, including cash consideration of approximately $1.9 billion and the issuance of
4,033,561 shares of its common stock to shareholders of Priory. Priory was the leading independent provider of behavioral healthcare services in the U.K. operating 324 facilities with approximately 7,100 beds at the acquisition date.
The Competition and Markets Authority (the CMA) in the U.K. reviewed the Companys acquisition of Priory. On July 14,
2016, the CMA announced that the Companys acquisition of Priory was referred for a phase 2 investigation unless the Company offered acceptable undertakings to address the CMAs competition concerns relating to the provision of behavioral
healthcare services in certain markets. On July 28, 2016, the CMA announced that the Company had offered undertakings to address the CMAs concerns and that, in lieu of a phase 2 investigation, the CMA would consider the Companys
undertakings.
On October 18, 2016, the Company signed a definitive agreement with BC Partners (BC Partners) for the sale
of 21 existing U.K. behavioral health facilities and one de novo behavioral health facility with an aggregate of approximately 1,000 beds (collectively, the U.K. Disposal Group). On November 10, 2016, the CMA accepted the
Companys undertakings to sell the U.K. Disposal Group to BC Partners and confirmed that the divestiture satisfied the CMAs concerns about the impact of the Companys acquisition of Priory on competition for the provision of
behavioral healthcare services in certain markets in the U.K. As a result of the CMAs acceptance of the undertakings, the Companys acquisition of Priory was not referred for a phase 2 investigation. On November 30, 2016, the Company
completed the sale of the U.K. Disposal Group to BC Partners for £320 million cash (the U.K. Divestiture).
Summary of
Acquisitions
The Company selectively seeks opportunities to expand and diversify its base of operations by acquiring additional
facilities. Approximately $31.5 million of the goodwill associated with domestic acquisitions completed in 2016 is deductible for federal income tax purposes. The fair values assigned to certain assets and liabilities assumed by the Company
have been estimated on a preliminary basis and are subject to change as new facts and circumstances emerge that were present at the date of acquisition. Specifically, the Company is further assessing the valuation of certain real property and
intangible assets and certain tax matters as well as certain receivables and assumed liabilities of Pocono Mountain, TrustPoint and Serenity Knolls.
9
The preliminary fair values of assets acquired and liabilities assumed, at the corresponding
acquisition dates, during the year ended December 31, 2016 in connection with the Priory, Serenity Knolls. TrustPoint and Pocono Mountain acquisitions (collectively the 2016 Acquisitions) were as follows (in thousands):
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|
|
|
|
|
|
|
|
|
|
|
|
|
Priory
|
|
|
Other
|
|
|
Total
|
|
Cash
|
|
$
|
10,253
|
|
|
$
|
2,488
|
|
|
$
|
12,741
|
|
Accounts receivable
|
|
|
57,832
|
|
|
|
4,076
|
|
|
|
61,908
|
|
Prepaid expenses and other current assets
|
|
|
7,921
|
|
|
|
143
|
|
|
|
8,064
|
|
Property and equipment
|
|
|
1,598,156
|
|
|
|
35,400
|
|
|
|
1,633,556
|
|
Goodwill
|
|
|
679,265
|
|
|
|
95,953
|
|
|
|
775,218
|
|
Intangible assets
|
|
|
23,200
|
|
|
|
338
|
|
|
|
23,538
|
|
Other assets
|
|
|
8,862
|
|
|
|
47
|
|
|
|
8,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets acquired
|
|
|
2,385,489
|
|
|
|
138,445
|
|
|
|
2,523,934
|
|
Accounts payable
|
|
|
24,203
|
|
|
|
805
|
|
|
|
25,008
|
|
Accrued salaries and benefits
|
|
|
39,588
|
|
|
|
902
|
|
|
|
40,490
|
|
Other accrued expenses
|
|
|
48,305
|
|
|
|
380
|
|
|
|
48,685
|
|
Deferred tax liabilities noncurrent
|
|
|
56,462
|
|
|
|
269
|
|
|
|
56,731
|
|
Debt
|
|
|
1,348,389
|
|
|
|
|
|
|
|
1,348,389
|
|
Other liabilities
|
|
|
61,311
|
|
|
|
30,242
|
|
|
|
91,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities assumed
|
|
|
1,578,258
|
|
|
|
32,598
|
|
|
|
1,610,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
$
|
807,231
|
|
|
$
|
105,847
|
|
|
$
|
913,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Other
The qualitative factors comprising the goodwill acquired in the 2016 Acquisitions include efficiencies derived through synergies expected by
the elimination of certain redundant corporate functions and expenses, the ability to leverage call center referrals to a broader provider base, coordination of services provided across the combined network of facilities, achievement of operating
efficiencies by benchmarking performance, and applying best practices throughout the combined companies.
Transaction-related expenses
comprised the following costs for the three months ended March 31, 2017 and 2016 (in thousands):
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|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
Legal, accounting and other costs
|
|
$
|
2,455
|
|
|
$
|
11,448
|
|
Severance and contract termination costs
|
|
|
1,664
|
|
|
|
|
|
Advisory and financing commitment fees
|
|
|
|
|
|
|
14,850
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,119
|
|
|
$
|
26,298
|
|
|
|
|
|
|
|
|
|
|
10
5.
|
Other Intangible Assets
|
Other identifiable intangible assets and related accumulated
amortization consisted of the following as of March 31, 2017 and December 31, 2016 (in thousands):
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Carrying Amount
|
|
|
Accumulated Amortization
|
|
|
|
March 31,
2017
|
|
|
December 31,
2016
|
|
|
March 31,
2017
|
|
|
December 31,
2016
|
|
Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract intangible assets
|
|
$
|
2,100
|
|
|
$
|
2,100
|
|
|
$
|
(2,100
|
)
|
|
$
|
(2,100
|
)
|
Non-compete
agreements
|
|
|
1,147
|
|
|
|
1,147
|
|
|
|
(1,147
|
)
|
|
|
(1,147
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,247
|
|
|
|
3,247
|
|
|
|
(3,247
|
)
|
|
|
(3,247
|
)
|
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Licenses and accreditations
|
|
|
12,233
|
|
|
|
12,228
|
|
|
|
|
|
|
|
|
|
Trade names
|
|
|
57,780
|
|
|
|
57,538
|
|
|
|
|
|
|
|
|
|
Certificates of need
|
|
|
13,705
|
|
|
|
13,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,718
|
|
|
|
83,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
86,965
|
|
|
$
|
86,557
|
|
|
$
|
(3,247
|
)
|
|
$
|
(3,247
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense related to definite-lived intangible assets was $0.1 million for the three months
ended March 31, 2016. As of December 31, 2016, all the Companys defined-lived intangible assets are fully amortized. The Companys licenses and accreditations, trade names and certificate of need intangible assets have
indefinite lives and are, therefore, not subject to amortization.
6.
|
Property and Equipment
|
Property and equipment consists of the following as of
March 31, 2017 and December 31, 2016 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
Land
|
|
$
|
417,369
|
|
|
$
|
411,331
|
|
Building and improvements
|
|
|
2,097,801
|
|
|
|
2,031,819
|
|
Equipment
|
|
|
335,944
|
|
|
|
318,020
|
|
Construction in progress
|
|
|
146,508
|
|
|
|
157,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,997,622
|
|
|
|
2,918,284
|
|
Less accumulated depreciation
|
|
|
(248,084
|
)
|
|
|
(214,589
|
)
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
$
|
2,749,538
|
|
|
$
|
2,703,695
|
|
|
|
|
|
|
|
|
|
|
Long-term debt consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
Amended and Restated Senior Credit Facility:
|
|
|
|
|
|
|
|
|
Senior Secured Term A Loans
|
|
$
|
395,000
|
|
|
$
|
400,000
|
|
Senior Secured Term B Loans
|
|
|
1,431,813
|
|
|
|
1,435,450
|
|
Senior Secured Revolving Line of Credit
|
|
|
|
|
|
|
|
|
6.125% Senior Notes due 2021
|
|
|
150,000
|
|
|
|
150,000
|
|
5.125% Senior Notes due 2022
|
|
|
300,000
|
|
|
|
300,000
|
|
5.625% Senior Notes due 2023
|
|
|
650,000
|
|
|
|
650,000
|
|
6.500% Senior Notes due 2024
|
|
|
390,000
|
|
|
|
390,000
|
|
9.0% and 9.5% Revenue Bonds
|
|
|
22,175
|
|
|
|
22,175
|
|
Less: unamortized debt issuance costs, discount and premium
|
|
|
(57,606
|
)
|
|
|
(59,816
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
3,281,382
|
|
|
|
3,287,809
|
|
Less: current portion
|
|
|
(34,805
|
)
|
|
|
(34,805
|
)
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
$
|
3,246,577
|
|
|
$
|
3,253,004
|
|
|
|
|
|
|
|
|
|
|
11
Amended and Restated Senior Credit Facility
The Company entered into a senior secured credit facility (the Senior Secured Credit Facility) on April 1, 2011. On
December 31, 2012, the Company entered into an Amended and Restated Credit Agreement (the Amended and Restated Credit Agreement) which amended and restated the Senior Secured Credit Facility (the Amended and Restated Senior
Credit Facility). The Company has amended the Amended and Restated Credit Agreement from time to time as described in the Companys prior filings with the SEC.
On January 25, 2016, the Company entered into the Ninth Amendment (the Ninth Amendment) to the Amended and Restated Credit
Agreement. The Ninth Amendment modified certain definitions and provided increased flexibility to the Company in terms of its financial covenants. The Companys baskets for permitted investments were also increased to provide increased
flexibility for it to invest in
non-wholly
owned subsidiaries, joint ventures and foreign subsidiaries. The Company may now invest in
non-wholly
owned subsidiaries and
joint ventures up to 10.0% of the Company and its subsidiaries total assets in any four consecutive fiscal quarter period, and up to 12.5% of the Company and its subsidiaries total assets during the term of the Amended and Restated
Credit Agreement. The Company may also invest in foreign subsidiaries that are not loan parties up to 10% of the Company and its subsidiaries total assets in any consecutive four fiscal quarter period, and up to 15% of the Company and its
subsidiaries total assets during the term of the Amended and Restated Credit Agreement. The foregoing permitted investments are subject to an aggregate cap of 25% of the Company and its subsidiaries total assets in any fiscal year.
On February 16, 2016, the Company entered into a Second Incremental Facility Amendment (the Second Incremental Amendment) to
the Amended and Restated Credit Agreement. The Second Incremental Amendment activated a new $955.0 million incremental Term Loan B facility (the New TLB Facility) and added $135.0 million to the Term Loan A facility (the
TLA Facility) to the Amended and Restated Senior Credit Facility, subject to limited conditionality provisions. Borrowings under the New TLB Facility were used to fund a portion of the purchase price for the acquisition of Priory and the
fees and expenses for such acquisition and the related financing transactions. Borrowings under the TLA Facility were used to pay down the majority of our $300.0 million revolving credit facility.
On May 26, 2016, the Company entered into a Tranche
B-1
Repricing Amendment (the Tranche
B-1
Repricing Amendment) to the Amended and Restated Credit Agreement. The Tranche
B-1
Repricing Amendment reduced the Applicable Rate with respect to the
$500.0 million incremental Term Loan B facility (the Existing TLB Facility) from 3.5% to 3.0% in the case of Eurodollar Rate loans and 2.5% to 2.0% in the case of Base Rate Loans.
On September 21, 2016, the Company entered into a Tranche
B-2
Repricing Amendment (the
Tranche
B-2
Repricing Amendment) to the Amended and Restated Credit Agreement. The Tranche
B-2
Repricing Amendment reduced the Applicable Rate with respect
to the New TLB Facility from 3.75% to 3.0% in the case of Eurodollar Rate loans and 2.75% to 2.0% in the case of Base Rate Loans. In connection with the Tranche
B-2
Repricing Amendment, the Company recorded a
debt extinguishment charge of $3.4 million, including the discount and
write-off
of deferred financing costs, which was recorded in debt extinguishment costs in the condensed consolidated statements of
income.
On November 22, 2016, the Company entered into a Tenth Amendment (the Tenth Amendment) to the Amended and
Restated Credit Agreement. The Tenth Amendment, among other things, (i) amended the negative covenant regarding dispositions, (ii) modified the collateral package to release any real property with a fair market value of less than
$5.0 million and (iii) changed certain investment, indebtedness and lien baskets.
On November 30, 2016, the Company
entered into a Refinancing Facilities Amendment (the Refinancing Amendment) to the Amended and Restated Credit Agreement. The Refinancing Amendment increased the Companys line of credit on its revolving credit facility to
$500.0 million from $300.0 million and reduced its TLA Facility to $400.0 million from $600.6 million (together, the Refinancing Facilities). In addition, the Refinancing Amendment extended the maturity date for the
Refinancing Facilities to November 30, 2021 from February 13, 2019, and lowered the Companys effective interest rate on the line of credit on its revolving credit facility and TLA Facility by 50 basis points. In connection with the
Refinancing Amendment, the Company recorded a debt extinguishment charge of $0.8 million, including the
write-off
of deferred financing costs, which was recorded in debt extinguishment in the condensed
consolidated statements of income.
The Company had $493.4 million of availability under the revolving line of credit and had standby
letters of credit outstanding of $6.6 million related to security for the payment of claims required by its workers compensation insurance program as of March 31, 2017. Borrowings under the revolving line of credit are subject to
customary conditions precedent to borrowing. The Amended and Restated Credit Agreement requires quarterly term loan principal repayments of our TLA Facility of $5.0 million for March 31, 2017 to December 31, 2019, $7.5 million
for March 31, 2020 to December 31, 2020, and $10.0 million for March 31, 2021 to September 30, 2021, with the remaining principal balance of the TLA Facility due on the maturity date of November 30, 2021. The Company is
required to repay the Existing TLB Facility in equal quarterly installments of $1.3 million on the last business day of each
12
March, June, September and December, with the outstanding principal balance of the Existing TLB Facility due on February 11, 2022. The Company is required to repay the New TLB Facility in
equal quarterly installments of approximately $2.4 million on the last business day of each March, June, September and December, with the outstanding principal balance of the TLB Facility due on February 16, 2023.
Borrowings under the Amended and Restated Senior Credit Facility are guaranteed by each of the Companys wholly-owned domestic
subsidiaries (other than certain excluded subsidiaries) and are secured by a lien on substantially all of the assets of the Company and such subsidiaries. Borrowings with respect to the TLA Facility and the Companys revolving credit facility
(collectively, Pro Rata Facilities) under the Amended and Restated Credit Agreement bear interest at a rate tied to the Companys Consolidated Leverage Ratio (defined as consolidated funded debt net of up to $40.0 million of
unrestricted and unencumbered cash to consolidated EBITDA, in each case as defined in the Amended and Restated Credit Agreement). The Applicable Rate (as defined in the Amended and Restated Credit Agreement) for the Pro Rata Facilities was 2.75% for
Eurodollar Rate Loans (as defined in the Amended and Restated Credit Agreement) and 1.75% for Base Rate Loans (as defined in the Amended and Restated Credit Agreement) at March 31, 2017. Eurodollar Rate Loans with respect to the Pro Rata
Facilities bear interest at the Applicable Rate plus the Eurodollar Rate (as defined in the Amended and Restated Credit Agreement) (based upon the LIBOR Rate (as defined in the Amended and Restated Credit Agreement) prior to commencement of the
interest rate period). Base Rate Loans with respect to the Pro Rata Facilities bear interest at the Applicable Rate plus the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate and (iii) the Eurodollar Rate plus
1.0%. As of March 31, 2017, the Pro Rata Facilities bore interest at a rate of LIBOR plus 2.75%. In addition, the Company is required to pay a commitment fee on undrawn amounts under the revolving line of credit.
The Amended and Restated Credit Agreement requires the Company and its subsidiaries to comply with customary affirmative, negative and
financial covenants, including a fixed charge coverage ratio, consolidated leverage ratio and senior secured leverage ratio. The Company may be required to pay all of its indebtedness immediately if it defaults on any of the numerous financial or
other restrictive covenants contained in any of its material debt agreements. As of March 31, 2017, the Company was in compliance with such covenants.
Senior Notes
6.125% Senior
Notes due 2021
On March 12, 2013, the Company issued $150.0 million of 6.125% Senior Notes due 2021 (the 6.125%
Senior Notes). The 6.125% Senior Notes mature on March 15, 2021 and bear interest at a rate of 6.125% per annum, payable semi-annually in arrears on March 15 and September 15 of each year.
5.125% Senior Notes due 2022
On July 1, 2014, the Company issued $300.0 million of 5.125% Senior Notes due 2022 (the 5.125% Senior Notes). The 5.125%
Senior Notes mature on July 1, 2022 and bear interest at a rate of 5.125% per annum, payable semi-annually in arrears on January 1 and July 1 of each year.
5.625% Senior Notes due 2023
On February 11, 2015, the Company issued $375.0 million of 5.625% Senior Notes due 2023 (the 5.625% Senior Notes). On
September 21, 2015, the Company issued $275.0 million of additional 5.625% Senior Notes. The additional notes formed a single class of debt securities with the 5.625% Senior Notes issued in February 2015. Giving effect to this issuance,
the Company has outstanding an aggregate of $650.0 million of 5.625% Senior Notes. The 5.625% Senior Notes mature on February 15, 2023 and bear interest at a rate of 5.625% per annum, payable semi-annually in arrears on
February 15 and August 15 of each year.
6.500% Senior Notes due 2024
On February 16, 2016, the Company issued $390.0 million of 6.500% Senior Notes due 2024 (the 6.500% Senior Notes). The
6.500% Senior Notes mature on March 1, 2024 and bear interest at a rate of 6.500% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2016.
The indentures governing the 6.125% Senior Notes, 5.125% Senior Notes, 5.625% Senior Notes and 6.500% Senior Notes (together, the Senior
Notes) contain covenants that, among other things, limit the Companys ability and the ability of its restricted subsidiaries to: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional
debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; (vi) merge,
consolidate or sell substantially all of the Companys assets; and (vii) create liens on assets.
13
The Senior Notes issued by the Company are guaranteed by each of the Companys subsidiaries
that guarantee the Companys obligations under the Amended and Restated Senior Credit Facility. The guarantees are full and unconditional and joint and several.
The Company may redeem the Senior Notes at its option, in whole or part, at the dates and amounts set forth in the indentures.
9.0% and 9.5% Revenue Bonds
On November 11, 2012, in connection with the acquisition of The Pavilion at HealthPark, LLC (Park Royal), the Company assumed
debt of $23.0 million. The fair market value of the debt assumed was $25.6 million and resulted in a debt premium balance being recorded as of the acquisition date. The debt consisted of $7.5 million and $15.5 million of Lee
County (Florida) Industrial Development Authority Healthcare Facilities Revenue Bonds, Series 2010 with stated interest rates of 9.0% and 9.5% (9.0% and 9.5% Revenue Bonds), respectively. The 9.0% bonds in the amount of $7.5 million
have a maturity date of December 1, 2030 and require yearly principal payments beginning in 2013. The 9.5% bonds in the amount of $15.5 million have a maturity date of December 1, 2040 and require yearly principal payments beginning
in 2031. The principal payments establish a bond sinking fund to be held with the trustee and shall be sufficient to redeem the principal amounts of the 9.0% and 9.5% Revenue Bonds on their respective maturity dates. As of March 31, 2017 and
December 31, 2016, $2.3 million was recorded within other assets on the condensed consolidated balance sheets related to the debt service reserve fund requirements. The yearly principal payments, which establish a bond sinking fund, will
increase the debt service reserve fund requirements. The bond premium amount of $2.6 million is amortized as a reduction of interest expense over the life of the revenue bonds using the effective interest method.
Common Stock
On March 3, 2016, the Company held a Special Meeting of Stockholders, where the Companys stockholders approved an amendment to the
Companys Amended and Restated Certificate of Incorporation to increase the number of authorized shares of Common Stock from 90,000,000 to 180,000,000 (the Amendment). On March 3, 2016, the Company filed the Amendment with the
Secretary of State of the State of Delaware.
Equity Offerings
On January 12, 2016, the Company completed the offering of 11,500,000 shares of common stock (including shares sold pursuant to the
exercise of the over-allotment option that the Company granted to the underwriters as part of the offering) at a price of $61.00 per share. The net proceeds to the Company from the sale of the shares, after deducting the underwriting discount of
$15.8 million and additional offering-related costs of $0.7 million, were $685.0 million. The Company used the net offering proceeds to fund a portion of the purchase price for the acquisition of Priory.
On February 16, 2016, the Company completed its acquisition of Priory for a total purchase price of approximately $2.2 billion,
including total cash consideration of approximately $1.9 billion and the issuance of 4,033,561 shares of common stock.
9.
|
Equity-Based Compensation
|
Equity Incentive Plans
The Company issues stock-based awards, including stock options, restricted stock and restricted stock units, to certain officers, employees and
non-employee
directors under the Acadia Healthcare Company, Inc. Incentive Compensation Plan (the Equity Incentive Plan). As of March 31, 2017, a maximum of 8,200,000 shares of the
Companys common stock were authorized for issuance as stock options, restricted stock and restricted stock units or other share-based compensation under the Equity Incentive Plan, of which 4,281,213 were available for future grant. Stock
options may be granted for terms of up to ten years. The Company recognizes expense on all share-based awards on a straight-line basis over the requisite service period of the entire award. Grants to employees generally vest in annual increments of
25% each year, commencing one year after the date of grant. The exercise prices of stock options are equal to the most recent closing price of the Companys common stock on the date of grant.
The Company recognized $7.4 million and $7.0 million in equity-based compensation expense for the three months ended March 31,
2017 and 2016, respectively. As of March 31, 2017, there was $65.2 million of unrecognized compensation expense related to unvested options, restricted stock and restricted stock units, which is expected to be recognized over the remaining
weighted average vesting period of 1.4 years. The Company recognized a deferred income tax benefit of $2.9 million and $2.8 million for the three months ended March 31, 2017 and 2016, respectively, related to equity-based compensation
expense.
14
Stock option activity during 2016 and 2017 was as follows (aggregate intrinsic value in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of
Options
|
|
|
Weighted
Average
Exercise Price
|
|
|
Weighted
Average
Remaining
Contractual
Term (in years)
|
|
|
Aggregate
Intrinsic
Value
|
|
Options outstanding at January 1, 2016
|
|
|
694,743
|
|
|
$
|
42.87
|
|
|
|
7.70
|
|
|
$
|
20,717
|
|
Options granted
|
|
|
503,850
|
|
|
|
57.98
|
|
|
|
9.28
|
|
|
|
297
|
|
Options exercised
|
|
|
(57,397
|
)
|
|
|
31.92
|
|
|
|
N/A
|
|
|
|
1,530
|
|
Options cancelled
|
|
|
(140,250
|
)
|
|
|
57.13
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at December 31, 2016
|
|
|
1,000,946
|
|
|
|
49.42
|
|
|
|
7.80
|
|
|
|
8,166
|
|
Options granted
|
|
|
197,400
|
|
|
|
42.77
|
|
|
|
9.96
|
|
|
|
78
|
|
Options exercised
|
|
|
(11,350
|
)
|
|
|
20.50
|
|
|
|
N/A
|
|
|
|
228
|
|
Options cancelled
|
|
|
(52,888
|
)
|
|
|
54.87
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at March 31, 2017
|
|
|
1,134,108
|
|
|
$
|
48.08
|
|
|
|
8.00
|
|
|
$
|
4,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at December 31, 2016
|
|
|
288,959
|
|
|
$
|
42.81
|
|
|
|
6.22
|
|
|
$
|
6,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at March 31, 2017
|
|
|
466,320
|
|
|
$
|
46.59
|
|
|
|
6.52
|
|
|
$
|
4,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock activity during 2016 and 2017 was as follows:
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
|
Weighted
Average
Grant-Date
Fair Value
|
|
Unvested at January 1, 2016
|
|
|
944,562
|
|
|
$
|
52.74
|
|
Granted
|
|
|
387,347
|
|
|
|
55.38
|
|
Cancelled
|
|
|
(122,178
|
)
|
|
|
57.02
|
|
Vested
|
|
|
(365,312
|
)
|
|
|
47.18
|
|
|
|
|
|
|
|
|
|
|
Unvested at December 31, 2016
|
|
|
844,419
|
|
|
$
|
55.76
|
|
Granted
|
|
|
285,008
|
|
|
|
42.98
|
|
Cancelled
|
|
|
(34,026
|
)
|
|
|
59.89
|
|
Vested
|
|
|
(199,764
|
)
|
|
|
53.82
|
|
|
|
|
|
|
|
|
|
|
Unvested at March 31, 2017
|
|
|
895,637
|
|
|
$
|
51.97
|
|
|
|
|
|
|
|
|
|
|
Restricted stock unit activity during 2016 and 2017 was as follows:
|
|
|
|
|
|
|
|
|
|
|
Number of
Units
|
|
|
Weighted
Average
Grant-Date
Fair Value
|
|
Unvested at January 1, 2016
|
|
|
218,084
|
|
|
$
|
56.97
|
|
Granted
|
|
|
230,750
|
|
|
|
56.95
|
|
Cancelled
|
|
|
|
|
|
|
|
|
Vested
|
|
|
(175,235
|
)
|
|
|
52.71
|
|
|
|
|
|
|
|
|
|
|
Unvested at December 31, 2016
|
|
|
273,599
|
|
|
$
|
59.68
|
|
Granted
|
|
|
219,840
|
|
|
|
43.23
|
|
Cancelled
|
|
|
|
|
|
|
|
|
Vested
|
|
|
(132,530
|
)
|
|
|
58.67
|
|
|
|
|
|
|
|
|
|
|
Unvested at March 31, 2017
|
|
|
360,909
|
|
|
$
|
50.04
|
|
|
|
|
|
|
|
|
|
|
15
The grant-date fair value of the Companys stock options is estimated using the
Black-Scholes option pricing model. The following table summarizes the grant-date fair value of options and the assumptions used to develop the fair value estimates for options granted during the three months ended March 31, 2017 and year ended
December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
Weighted average grant-date fair value of options
|
|
$
|
14.57
|
|
|
$
|
18.96
|
|
Risk-free interest rate
|
|
|
2.0
|
%
|
|
|
1.4
|
%
|
Expected volatility
|
|
|
33
|
%
|
|
|
35
|
%
|
Expected life (in years)
|
|
|
5.5
|
|
|
|
5.5
|
|
The Companys estimate of expected volatility for stock options is based upon the volatility of guideline
companies given the lack of sufficient historical trading experience of the Companys common stock. The risk-free interest rate is the approximate yield on U. S. Treasury Strips having a life equal to the expected option life on the date of
grant. The expected life is an estimate of the number of years an option will be held before it is exercised.
The Company adopted ASU
2016-09
as
of January 1, 2017, which changes how the Company accounts for share-based awards for tax purposes. Income tax effects of share-based awards are now recognized in the income statement, instead of through equity, when the awards vest.
Excess tax benefits/deficiencies are generated when the deduction for tax purposes is greater/less than the compensation cost for financial
reporting purposes. Upon adoption of ASU
2016-09,
the Company no longer records excess tax benefits/deficiencies in additional
paid-in
capital as a component of equity.
Instead, excess tax benefits/deficiencies are included in the provision for income taxes on the condensed consolidated statements of income. These changes are recorded prospectively as of January 1, 2017, which resulted in an increase in our
income tax provision of $1.7 million, or an increase in the effective tax rate of 3.6%, for the three months ended March 31, 2017. Prior periods have not been adjusted. An adjustment for prior period excess tax benefits of
$8.6 million is recorded as a cumulative-effect adjustment in retained earnings at March 31, 2017 as the Company adopted this amendment using the modified transition method. Excess tax benefits were previously required to be included in
financing activities on the condensed consolidated statement of cash flows and are now required to be included in operating activities. The changes to the condensed consolidated statement of cash flows are recorded prospectively as of
January 1, 2017. Additionally, the Company has elected not to adjust its policy on accounting for forfeitures and will continue to estimate forfeiture rates.
The provision for income taxes for the three months ended March 31, 2017 and 2016 reflects effective tax rates of 28.3% and 21.9%,
respectively. The increase in the effective tax rate for the three months ended March 31, 2017 was primarily attributable to the adoption of ASU
2016-09,
the reduction in earnings related to the U.K.
Divestiture and the decline in the exchange rate between U.S. dollars (USD) and British pounds (GBP).
The Company entered into foreign currency forward contracts during the
three months ended March 31, 2017 and 2016 in connection with (i) acquisitions in the U.K. and (ii) transfers of cash between the U.S. and U.K. under the Companys cash management and foreign currency risk management programs.
Foreign currency forward contracts limit the economic risk of changes in the exchange rate between USD and GBP associated with cash transfers.
The foreign currency forward contracts entered into during the three months ended March 31, 2016 resulted in gains of $0.4 million
for the three months ended March 31, 2016, which have been recorded in the condensed consolidated statements of income.
In May 2016,
the Company entered into multiple cross currency swap agreements with an aggregate notional amount of $650.0 million to manage foreign currency risk by effectively converting a portion of its fixed-rate
USD-denominated
senior notes, including the semi-annual interest payments thereunder, to fixed-rate
GBP-denominated
debt of £449.3 million. The senior notes
effectively converted include $150.0 million aggregate principal amount of 6.125% Senior Notes, $300.0 million aggregate principal amount of 5.125% Senior Notes and $200.0 million aggregate principal amount of 5.625% Senior Notes.
During the term of the swap agreements, the Company will receive semi-annual interest payments in USD from the counterparties at fixed interest rates, and the Company will make semi-annual interest payments in GBP to the counterparties at fixed
interest rates. The interest payments under the cross-currency swap agreements result in £24.7 million of annual cash flows, from the Companys U.K. business being converted to $35.8 million (at a 1.45 exchange rate). The
interest rates applicable to the GBP interest payments are substantially the same as the interest rates in place for the existing
USD-denominated
debt. At maturity, the Company will repay the principal amounts
listed above in GBP and receive the principal amount in USD.
16
The Company has designated the cross currency swap agreements and certain forward contracts
entered into during 2016 and the three months ended March 31, 2017 as qualifying hedging instruments and is accounting for these as net investment hedges. The fair value of these derivatives of $59.3 million is recorded as derivative
instruments on the condensed consolidated balance sheets. The gains and losses resulting from fair value adjustments to these derivatives are recorded in accumulated other comprehensive loss as the swaps are effective in hedging the designated risk.
Cash flows related to these derivatives are included in operating activities in the condensed consolidated statements of cash flows.
12.
|
Fair Value Measurements
|
The carrying amounts reported for cash and cash equivalents,
accounts receivable, other current assets, accounts payable and other current liabilities approximate fair value because of the short-term maturity of these instruments.
The carrying amounts and fair values of the Companys Amended and Restated Senior Credit Facility, 6.125% Senior Notes, 5.125% Senior
Notes, 5.625% Senior Notes, 6.500% Senior Notes, 9.0% and 9.5% Revenue Bonds, derivative instruments and contingent consideration liabilities as of March 31, 2017 and December 31, 2016 were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying Amount
|
|
|
Fair Value
|
|
|
|
March 31,
2017
|
|
|
December 31,
2016
|
|
|
March 31,
2017
|
|
|
December 31,
2016
|
|
Amended and Restated Senior Credit Facility
|
|
$
|
1,792,800
|
|
|
$
|
1,799,993
|
|
|
$
|
1,792,800
|
|
|
$
|
1,799,993
|
|
6.125% Senior Notes due 2021
|
|
$
|
147,701
|
|
|
$
|
147,574
|
|
|
$
|
151,024
|
|
|
$
|
152,186
|
|
5.125% Senior Notes due 2022
|
|
$
|
295,622
|
|
|
$
|
295,442
|
|
|
$
|
298,578
|
|
|
$
|
293,595
|
|
5.625% Senior Notes due 2023
|
|
$
|
640,896
|
|
|
$
|
640,574
|
|
|
$
|
663,725
|
|
|
$
|
640,574
|
|
6.500% Senior Notes due 2024
|
|
$
|
381,507
|
|
|
$
|
381,268
|
|
|
$
|
401,536
|
|
|
$
|
389,847
|
|
9.0% and 9.5% Revenue Bonds
|
|
$
|
22,855
|
|
|
$
|
22,959
|
|
|
$
|
22,855
|
|
|
$
|
22,959
|
|
Derivative instruments
|
|
$
|
59,257
|
|
|
$
|
73,509
|
|
|
$
|
59,257
|
|
|
$
|
73,509
|
|
Contingent consideration liabilities
|
|
$
|
|
|
|
$
|
107
|
|
|
$
|
|
|
|
$
|
107
|
|
The Companys Amended and Restated Senior Credit Facility, 6.125% Senior Notes, 5.125% Senior Notes,
5.625% Senior Notes, 6.500% Senior Notes and 9.0% and 9.5% Revenue Bonds were categorized as Level 2 in the GAAP fair value hierarchy. Fair values were based on trading activity among the Companys lenders and the average bid and ask price
as determined using published rates.
The fair values of the derivative instruments were categorized as Level 2 in the GAAP fair
value hierarchy and were based on observable market inputs including applicable exchange rates and interest rates.
The fair value of the
contingent consideration liabilities were categorized as Level 3 in the GAAP fair value hierarchy. The contingent consideration liabilities were valued using a probability-weighted discounted cash flow method. This analysis reflected the
contractual terms of the purchase agreements and utilized assumptions with regard to future earnings, probabilities of achieving such future earnings and a discount rate.
13.
|
Commitments and Contingencies
|
Professional and General Liability
Effective September 1, 2016, a portion of the Companys professional liability risks is insured through a wholly-owned insurance
subsidiary. The Companys wholly-owned insurance subsidiary insures the Company for professional liability losses up to $52.0 million in the aggregate. The insurance subsidiary has obtained reinsurance with unrelated commercial insurers
for professional liability risks of $50.0 million in excess of a retention level of $2.0 million.
17
Legal Proceedings
The Company is, from time to time, subject to various claims and legal actions that arise in the ordinary course of the Companys
business, including claims for damages for personal injuries, medical malpractice, breach of contract, tort and employment related claims. In these actions, plaintiffs request a variety of damages, including, in some instances, punitive and other
types of damages that may not be covered by insurance. In the opinion of management, the Company is not currently a party to any proceeding that would individually or in the aggregate have a material adverse effect on the Companys business,
financial condition or results of operations.
14.
|
Noncontrolling Interests
|
On May 2, 2016, the Company opened Crestwyn
Behavioral Health, a de novo inpatient psychiatric facility located in Memphis, Tennessee. The Company owns 60% of the equity interests in the entity that owns this facility, and two noncontrolling partners each own 20%. The value of the 40%
noncontrolling interests is approximately $6.0 million and is based on the fair value of contributions. The Company consolidates the operations of the facility based on its 60% equity ownership and its control of the entity. The noncontrolling
interests are reflected as redeemable noncontrolling interests on the accompanying consolidated balance sheets based on a put right that could require the Company to purchase the noncontrolling interests upon the occurrence of a change in control.
Other current assets consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
|
December 31,
2016
|
|
Other receivables
|
|
$
|
45,766
|
|
|
$
|
44,975
|
|
Prepaid expenses
|
|
|
28,423
|
|
|
|
27,455
|
|
Workers compensation deposits current portion
|
|
|
10,000
|
|
|
|
10,000
|
|
Income taxes receivable
|
|
|
7,182
|
|
|
|
11,714
|
|
Insurance receivable-current portion
|
|
|
6,472
|
|
|
|
6,472
|
|
Inventory
|
|
|
4,723
|
|
|
|
4,633
|
|
Other
|
|
|
2,271
|
|
|
|
2,288
|
|
|
|
|
|
|
|
|
|
|
Other current assets
|
|
$
|
104,837
|
|
|
$
|
107,537
|
|
|
|
|
|
|
|
|
|
|
16.
|
Other Accrued Liabilities
|
Other accrued liabilities consisted of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
|
December 31,
2016
|
|
Accrued expenses
|
|
$
|
41,887
|
|
|
$
|
37,323
|
|
Unearned income
|
|
|
22,260
|
|
|
|
28,805
|
|
Accrued interest
|
|
|
12,350
|
|
|
|
33,616
|
|
Insurance liability current portion
|
|
|
11,672
|
|
|
|
11,672
|
|
Income taxes payable
|
|
|
7,542
|
|
|
|
527
|
|
Accrued property taxes
|
|
|
2,658
|
|
|
|
2,732
|
|
Other
|
|
|
7,677
|
|
|
|
8,283
|
|
|
|
|
|
|
|
|
|
|
Other accrued liabilities
|
|
$
|
106,046
|
|
|
$
|
122,958
|
|
|
|
|
|
|
|
|
|
|
The Company operates in one line of business, which is operating
acute inpatient psychiatric facilities, specialty treatment facilities, residential treatment centers and facilities providing outpatient behavioral healthcare services. As management reviews the operating results of its facilities in the United
States (the U.S. Facilities) and its facilities in the United Kingdom (the U.K. Facilities) separately to assess performance and make decisions, the Companys operating segments include its U.S. Facilities and U.K.
Facilities. At March 31, 2017, the U.S. Facilities included 208 behavioral healthcare facilities with approximately 8,500 beds in 39 states and Puerto Rico, and the U.K. Facilities included 367 behavioral healthcare facilities with
approximately 8,700 beds in the U.K.
18
The following tables set forth the financial information by operating segment, including a
reconciliation of Segment EBITDA to income before income taxes (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2017
|
|
|
2016
|
|
Revenue:
|
|
|
|
|
|
|
|
|
U.S. Facilities
|
|
$
|
440,223
|
|
|
$
|
408,264
|
|
U.K. Facilities
|
|
|
238,971
|
|
|
|
206,975
|
|
Corporate and Other
|
|
|
|
|
|
|
1,574
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
679,194
|
|
|
$
|
616,813
|
|
|
|
|
|
|
|
|
|
|
Segment EBITDA (1):
|
|
|
|
|
|
|
|
|
U.S. Facilities
|
|
$
|
112,145
|
|
|
$
|
106,840
|
|
U.K. Facilities
|
|
|
44,186
|
|
|
|
44,931
|
|
Corporate and Other
|
|
|
(19,962
|
)
|
|
|
(20,759
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
136,369
|
|
|
$
|
131,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2017
|
|
|
2016
|
|
Segment EBITDA (1)
|
|
$
|
136,369
|
|
|
$
|
131,012
|
|
Plus (less):
|
|
|
|
|
|
|
|
|
Equity-based compensation expense
|
|
|
(7,396
|
)
|
|
|
(6,956
|
)
|
Gain on foreign currency derivatives
|
|
|
|
|
|
|
410
|
|
Transaction-related expenses
|
|
|
(4,119
|
)
|
|
|
(26,298
|
)
|
Interest expense, net
|
|
|
(42,757
|
)
|
|
|
(37,714
|
)
|
Depreciation and amortization
|
|
|
(33,613
|
)
|
|
|
(27,975
|
)
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
$
|
48,484
|
|
|
$
|
32,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Facilities
|
|
|
U.K. Facilities
|
|
|
Corporate
and Other
|
|
|
Consolidated
|
|
Goodwill:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2017
|
|
$
|
2,041,795
|
|
|
$
|
639,393
|
|
|
$
|
|
|
|
$
|
2,681,188
|
|
Foreign currency translation gain
|
|
|
|
|
|
|
8,782
|
|
|
|
|
|
|
|
8,782
|
|
Prior year purchase price adjustments
|
|
|
700
|
|
|
|
(6,883
|
)
|
|
|
|
|
|
|
(6,183
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2017
|
|
$
|
2,042,495
|
|
|
$
|
641,292
|
|
|
$
|
|
|
|
$
|
2,683,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
Assets (2):
|
|
|
|
|
|
|
|
|
U.S. Facilities
|
|
$
|
3,417,655
|
|
|
$
|
3,382,167
|
|
U.K. Facilities
|
|
|
2,465,671
|
|
|
|
2,441,018
|
|
Corporate and Other
|
|
|
182,464
|
|
|
|
201,541
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,065,790
|
|
|
$
|
6,024,726
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Segment EBITDA is defined as income before provision for income taxes, equity-based compensation expense, gain on foreign currency derivatives, transaction-related expenses, interest expense and depreciation and
amortization. The Company uses Segment EBITDA as an analytical indicator to measure the performance of the Companys segments and to develop strategic objectives and operating plans for those segments. Segment EBITDA is commonly used as an
analytical indicator within the health care industry, and also serves as a measure of leverage capacity and debt service ability. Segment EBITDA should not be considered as a measure of financial performance under GAAP, and the items excluded from
Segment EBITDA are significant components in understanding and assessing financial performance. Because Segment EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, Segment EBITDA, as
presented, may not be comparable to other similarly titled measures of other companies.
|
(2)
|
Assets include property and equipment for the U.S. Facilities of $1.0 million, U.K. Facilities of $1.7 billion and corporate and other of $35.1 million at March 31, 2017. Assets include property and
equipment for the U.S. Facilities of $1.0 billion, U.K. Facilities of $1.7 billion and corporate and other of $27.1 million at December 31, 2016.
|
19
18.
|
Accumulated Other Comprehensive Loss
|
The components of accumulated other comprehensive
loss are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency
Translation
Adjustments
|
|
|
Change in Fair
Value of
Derivative
Instruments
|
|
|
Pension Plan
|
|
|
Total
|
|
Balance at December 31, 2016
|
|
|
(584,081
|
)
|
|
|
40,598
|
|
|
|
(6,087
|
)
|
|
|
(549,570
|
)
|
Foreign currency translation gain
|
|
|
27,046
|
|
|
|
|
|
|
|
|
|
|
|
27,046
|
|
Loss on derivative instruments, net of tax of $(5.6) million
|
|
|
|
|
|
|
(5,868
|
)
|
|
|
|
|
|
|
(5,868
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2017
|
|
$
|
(557,035
|
)
|
|
$
|
34,730
|
|
|
$
|
(6,087
|
)
|
|
$
|
(528,392
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19.
|
Financial Information for the Company and Its Subsidiaries
|
The Company conducts
substantially all of its business through its subsidiaries. The 6.125% Senior Notes, 5.125% Senior Notes, 5.625% Senior Notes and 6.500% Senior Notes are jointly and severally guaranteed on an unsecured senior basis by all of the Companys
subsidiaries that guarantee the Companys obligations under the Amended and Restated Senior Credit Facility. Presented below is condensed consolidating financial information for the Company and its subsidiaries as of March 31, 2017 and
December 31, 2016, and for the three months ended March 31, 2017 and 2016. The information segregates the parent company (Acadia Healthcare Company, Inc.), the combined wholly-owned subsidiary guarantors, the combined
non-guarantor
subsidiaries and eliminations.
20
Acadia Healthcare Company, Inc.
Condensed Consolidating Balance Sheets
March 31, 2017
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Combined
Subsidiary
Guarantors
|
|
|
Combined
Non-
Guarantors
|
|
|
Consolidating
Adjustments
|
|
|
Total
Consolidated
Amounts
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
|
|
|
$
|
2,929
|
|
|
$
|
40,158
|
|
|
$
|
|
|
|
$
|
43,087
|
|
Accounts receivable, net
|
|
|
|
|
|
|
219,325
|
|
|
|
56,764
|
|
|
|
|
|
|
|
276,089
|
|
Other current assets
|
|
|
|
|
|
|
59,283
|
|
|
|
45,554
|
|
|
|
|
|
|
|
104,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
|
|
|
281,537
|
|
|
|
142,476
|
|
|
|
|
|
|
|
424,013
|
|
Property and equipment, net
|
|
|
|
|
|
|
964,605
|
|
|
|
1,784,933
|
|
|
|
|
|
|
|
2,749,538
|
|
Goodwill
|
|
|
|
|
|
|
1,935,960
|
|
|
|
747,827
|
|
|
|
|
|
|
|
2,683,787
|
|
Intangible assets, net
|
|
|
|
|
|
|
56,837
|
|
|
|
26,881
|
|
|
|
|
|
|
|
83,718
|
|
Deferred tax assets noncurrent
|
|
|
13,692
|
|
|
|
|
|
|
|
4,548
|
|
|
|
(14,490
|
)
|
|
|
3,750
|
|
Derivative instruments
|
|
|
59,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,257
|
|
Investment in subsidiaries
|
|
|
4,942,294
|
|
|
|
|
|
|
|
|
|
|
|
(4,942,294
|
)
|
|
|
|
|
Other assets
|
|
|
490,873
|
|
|
|
49,539
|
|
|
|
8,726
|
|
|
|
(487,411
|
)
|
|
|
61,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
5,506,116
|
|
|
$
|
3,288,478
|
|
|
$
|
2,715,391
|
|
|
$
|
(5,444,195
|
)
|
|
$
|
6,065,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
$
|
34,550
|
|
|
$
|
|
|
|
$
|
255
|
|
|
$
|
|
|
|
$
|
34,805
|
|
Accounts payable
|
|
|
|
|
|
|
66,085
|
|
|
|
26,588
|
|
|
|
|
|
|
|
92,673
|
|
Accrued salaries and benefits
|
|
|
|
|
|
|
71,053
|
|
|
|
31,280
|
|
|
|
|
|
|
|
102,333
|
|
Other accrued liabilities
|
|
|
11,656
|
|
|
|
24,319
|
|
|
|
70,071
|
|
|
|
|
|
|
|
106,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
46,206
|
|
|
|
161,457
|
|
|
|
128,194
|
|
|
|
|
|
|
|
335,857
|
|
Long-term debt
|
|
|
3,223,977
|
|
|
|
|
|
|
|
510,011
|
|
|
|
(487,411
|
)
|
|
|
3,246,577
|
|
Deferred tax liabilities noncurrent
|
|
|
|
|
|
|
28,435
|
|
|
|
49,913
|
|
|
|
(14,490
|
)
|
|
|
63,858
|
|
Other liabilities
|
|
|
|
|
|
|
103,897
|
|
|
|
62,098
|
|
|
|
|
|
|
|
165,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
3,270,183
|
|
|
|
293,789
|
|
|
|
750,216
|
|
|
|
(501,901
|
)
|
|
|
3,812,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
17,570
|
|
|
|
|
|
|
|
17,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
2,235,933
|
|
|
|
2,994,689
|
|
|
|
1,947,605
|
|
|
|
(4,942,294
|
)
|
|
|
2,235,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
5,506,116
|
|
|
$
|
3,288,478
|
|
|
$
|
2,715,391
|
|
|
$
|
(5,444,195
|
)
|
|
$
|
6,065,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
Acadia Healthcare Company, Inc.
Condensed Consolidating Balance Sheets
December 31, 2016
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Combined
Subsidiary
Guarantors
|
|
|
Combined
Non-
Guarantors
|
|
|
Consolidating
Adjustments
|
|
|
Total
Consolidated
Amounts
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
|
|
|
$
|
15,681
|
|
|
$
|
41,382
|
|
|
$
|
|
|
|
$
|
57,063
|
|
Accounts receivable, net
|
|
|
|
|
|
|
209,124
|
|
|
|
54,203
|
|
|
|
|
|
|
|
263,327
|
|
Other current assets
|
|
|
|
|
|
|
61,724
|
|
|
|
45,813
|
|
|
|
|
|
|
|
107,537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
|
|
|
286,529
|
|
|
|
141,398
|
|
|
|
|
|
|
|
427,927
|
|
Property and equipment, net
|
|
|
|
|
|
|
940,880
|
|
|
|
1,762,815
|
|
|
|
|
|
|
|
2,703,695
|
|
Goodwill
|
|
|
|
|
|
|
1,935,260
|
|
|
|
745,928
|
|
|
|
|
|
|
|
2,681,188
|
|
Intangible assets, net
|
|
|
|
|
|
|
56,676
|
|
|
|
26,634
|
|
|
|
|
|
|
|
83,310
|
|
Deferred tax assets noncurrent
|
|
|
13,522
|
|
|
|
|
|
|
|
4,606
|
|
|
|
(14,348
|
)
|
|
|
3,780
|
|
Derivative instruments
|
|
|
73,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,509
|
|
Investment in subsidiaries
|
|
|
4,885,865
|
|
|
|
|
|
|
|
|
|
|
|
(4,885,865
|
)
|
|
|
|
|
Other assets
|
|
|
493,294
|
|
|
|
40,480
|
|
|
|
7,189
|
|
|
|
(489,646
|
)
|
|
|
51,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
5,466,190
|
|
|
$
|
3,259,825
|
|
|
$
|
2,688,570
|
|
|
$
|
(5,389,859
|
)
|
|
$
|
6,024,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
$
|
34,550
|
|
|
$
|
|
|
|
$
|
255
|
|
|
$
|
|
|
|
$
|
34,805
|
|
Accounts payable
|
|
|
|
|
|
|
49,205
|
|
|
|
30,829
|
|
|
|
|
|
|
|
80,034
|
|
Accrued salaries and benefits
|
|
|
|
|
|
|
72,835
|
|
|
|
32,233
|
|
|
|
|
|
|
|
105,068
|
|
Other accrued liabilities
|
|
|
33,616
|
|
|
|
24,375
|
|
|
|
64,967
|
|
|
|
|
|
|
|
122,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
68,166
|
|
|
|
146,415
|
|
|
|
128,284
|
|
|
|
|
|
|
|
342,865
|
|
Long-term debt
|
|
|
3,230,300
|
|
|
|
|
|
|
|
512,350
|
|
|
|
(489,646
|
)
|
|
|
3,253,004
|
|
Deferred tax liabilities noncurrent
|
|
|
|
|
|
|
40,574
|
|
|
|
52,294
|
|
|
|
(14,348
|
)
|
|
|
78,520
|
|
Other liabilities
|
|
|
|
|
|
|
101,938
|
|
|
|
62,921
|
|
|
|
|
|
|
|
164,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
3,298,466
|
|
|
|
288,927
|
|
|
|
755,849
|
|
|
|
(503,994
|
)
|
|
|
3,839,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
17,754
|
|
|
|
|
|
|
|
17,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
2,167,724
|
|
|
|
2,970,898
|
|
|
|
1,914,967
|
|
|
|
(4,885,865
|
)
|
|
|
2,167,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
5,466,190
|
|
|
$
|
3,259,825
|
|
|
$
|
2,688,570
|
|
|
$
|
(5,389,859
|
)
|
|
$
|
6,024,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
Acadia Healthcare Company, Inc.
Condensed Consolidating Statement of Comprehensive Income (Loss)
Three Months Ended March 31, 2017
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Combined
Subsidiary
Guarantors
|
|
|
Combined
Non-
Guarantors
|
|
|
Consolidating
Adjustments
|
|
|
Total
Consolidated
Amounts
|
|
Revenue before provision for doubtful accounts
|
|
$
|
|
|
|
$
|
426,796
|
|
|
$
|
262,545
|
|
|
$
|
|
|
|
$
|
689,341
|
|
Provision for doubtful accounts
|
|
|
|
|
|
|
(9,214
|
)
|
|
|
(933
|
)
|
|
|
|
|
|
|
(10,147
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
417,582
|
|
|
|
261,612
|
|
|
|
|
|
|
|
679,194
|
|
Salaries, wages and benefits
|
|
|
7,396
|
|
|
|
224,430
|
|
|
|
144,595
|
|
|
|
|
|
|
|
376,421
|
|
Professional fees
|
|
|
|
|
|
|
22,074
|
|
|
|
21,335
|
|
|
|
|
|
|
|
43,409
|
|
Supplies
|
|
|
|
|
|
|
18,609
|
|
|
|
9,100
|
|
|
|
|
|
|
|
27,709
|
|
Rents and leases
|
|
|
|
|
|
|
8,511
|
|
|
|
10,460
|
|
|
|
|
|
|
|
18,971
|
|
Other operating expenses
|
|
|
|
|
|
|
55,031
|
|
|
|
28,680
|
|
|
|
|
|
|
|
83,711
|
|
Depreciation and amortization
|
|
|
|
|
|
|
15,551
|
|
|
|
18,062
|
|
|
|
|
|
|
|
33,613
|
|
Interest expense, net
|
|
|
15,368
|
|
|
|
18,485
|
|
|
|
8,904
|
|
|
|
|
|
|
|
42,757
|
|
Transaction-related expenses
|
|
|
|
|
|
|
1,438
|
|
|
|
2,681
|
|
|
|
|
|
|
|
4,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
22,764
|
|
|
|
364,129
|
|
|
|
243,817
|
|
|
|
|
|
|
|
630,710
|
|
(Loss) income before income taxes
|
|
|
(22,764
|
)
|
|
|
53,453
|
|
|
|
17,795
|
|
|
|
|
|
|
|
48,484
|
|
Equity in earnings of subsidiaries
|
|
|
46,553
|
|
|
|
|
|
|
|
|
|
|
|
(46,553
|
)
|
|
|
|
|
(Benefit from) provision for income taxes
|
|
|
(10,984
|
)
|
|
|
21,070
|
|
|
|
3,625
|
|
|
|
|
|
|
|
13,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
34,773
|
|
|
|
32,383
|
|
|
|
14,170
|
|
|
|
(46,553
|
)
|
|
|
34,773
|
|
Net loss attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
185
|
|
|
|
|
|
|
|
185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Acadia Healthcare
Company, Inc.
|
|
$
|
34,773
|
|
|
$
|
32,383
|
|
|
$
|
14,355
|
|
|
$
|
(46,553
|
)
|
|
$
|
34,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gain
|
|
|
|
|
|
|
|
|
|
|
27,046
|
|
|
|
|
|
|
|
27,046
|
|
Loss on derivative instruments
|
|
|
(5,868
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,868
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
(5,868
|
)
|
|
|
|
|
|
|
27,046
|
|
|
|
|
|
|
|
21,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
28,905
|
|
|
$
|
32,383
|
|
|
$
|
41,401
|
|
|
$
|
(46,553
|
)
|
|
$
|
56,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
Acadia Healthcare Company, Inc.
Condensed Consolidating Statement of Comprehensive Income (Loss)
Three Months Ended March 31, 2016
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Combined
Subsidiary
Guarantors
|
|
|
Combined
Non-
Guarantors
|
|
|
Consolidating
Adjustments
|
|
|
Total
Consolidated
Amounts
|
|
Revenue before provision for doubtful accounts
|
|
$
|
|
|
|
$
|
402,934
|
|
|
$
|
224,249
|
|
|
$
|
|
|
|
$
|
627,183
|
|
Provision for doubtful accounts
|
|
|
|
|
|
|
(9,342
|
)
|
|
|
(1,028
|
)
|
|
|
|
|
|
|
(10,370
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
393,592
|
|
|
|
223,221
|
|
|
|
|
|
|
|
616,813
|
|
Salaries, wages and benefits
|
|
|
6,956
|
|
|
|
211,033
|
|
|
|
123,039
|
|
|
|
|
|
|
|
341,028
|
|
Professional fees
|
|
|
|
|
|
|
22,677
|
|
|
|
17,314
|
|
|
|
|
|
|
|
39,991
|
|
Supplies
|
|
|
|
|
|
|
18,462
|
|
|
|
8,223
|
|
|
|
|
|
|
|
26,685
|
|
Rents and leases
|
|
|
|
|
|
|
8,577
|
|
|
|
6,229
|
|
|
|
|
|
|
|
14,806
|
|
Other operating expenses
|
|
|
|
|
|
|
48,849
|
|
|
|
21,398
|
|
|
|
|
|
|
|
70,247
|
|
Depreciation and amortization
|
|
|
|
|
|
|
12,751
|
|
|
|
15,224
|
|
|
|
|
|
|
|
27,975
|
|
Interest expense, net
|
|
|
13,433
|
|
|
|
16,093
|
|
|
|
8,188
|
|
|
|
|
|
|
|
37,714
|
|
Gain on foreign currency derivatives
|
|
|
(410
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(410
|
)
|
Transaction-related expenses
|
|
|
|
|
|
|
21,435
|
|
|
|
4,863
|
|
|
|
|
|
|
|
26,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
19,979
|
|
|
|
359,877
|
|
|
|
204,478
|
|
|
|
|
|
|
|
584,334
|
|
(Loss) income before income taxes
|
|
|
(19,979
|
)
|
|
|
33,715
|
|
|
|
18,743
|
|
|
|
|
|
|
|
32,479
|
|
Equity in earnings of subsidiaries
|
|
|
40,869
|
|
|
|
|
|
|
|
|
|
|
|
(40,869
|
)
|
|
|
|
|
(Benefit from) provision for income taxes
|
|
|
(4,479
|
)
|
|
|
7,407
|
|
|
|
4,182
|
|
|
|
|
|
|
|
7,110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
25,369
|
|
|
|
26,308
|
|
|
|
14,561
|
|
|
|
(40,869
|
)
|
|
|
25,369
|
|
Net loss attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
319
|
|
|
|
|
|
|
|
319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Acadia Healthcare
Company, Inc.
|
|
$
|
25,369
|
|
|
$
|
26,308
|
|
|
$
|
14,880
|
|
|
$
|
(40,869
|
)
|
|
$
|
25,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation loss
|
|
|
|
|
|
|
|
|
|
|
(48,415
|
)
|
|
|
|
|
|
|
(48,415
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
(48,415
|
)
|
|
|
|
|
|
|
(48,415
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
25,369
|
|
|
$
|
26,308
|
|
|
$
|
(33,535
|
)
|
|
$
|
(40,869
|
)
|
|
$
|
(22,727
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
Acadia Healthcare Company, Inc.
Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2017
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Combined
Subsidiary
Guarantors
|
|
|
Combined
Non-
Guarantors
|
|
|
Consolidating
Adjustments
|
|
|
Total
Consolidated
Amounts
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
34,773
|
|
|
$
|
32,383
|
|
|
$
|
14,170
|
|
|
$
|
(46,553
|
)
|
|
$
|
34,773
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) continuing
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries
|
|
|
(46,553
|
)
|
|
|
|
|
|
|
|
|
|
|
46,553
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
15,551
|
|
|
|
18,062
|
|
|
|
|
|
|
|
33,613
|
|
Amortization of debt issuance costs
|
|
|
2,500
|
|
|
|
|
|
|
|
(104
|
)
|
|
|
|
|
|
|
2,396
|
|
Equity-based compensation expense
|
|
|
7,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,396
|
|
Deferred income tax (benefit) expense
|
|
|
(171
|
)
|
|
|
2,754
|
|
|
|
(576
|
)
|
|
|
|
|
|
|
2,007
|
|
Other
|
|
|
2,732
|
|
|
|
506
|
|
|
|
587
|
|
|
|
|
|
|
|
3,825
|
|
Change in operating assets and liabilities, net of effect of acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
|
|
|
|
(10,412
|
)
|
|
|
(2,047
|
)
|
|
|
|
|
|
|
(12,459
|
)
|
Other current assets
|
|
|
|
|
|
|
5,097
|
|
|
|
789
|
|
|
|
|
|
|
|
5,886
|
|
Other assets
|
|
|
2,927
|
|
|
|
(1,778
|
)
|
|
|
68
|
|
|
|
(2,927
|
)
|
|
|
(1,710
|
)
|
Accounts payable and other accrued liabilities
|
|
|
|
|
|
|
(9,224
|
)
|
|
|
(7,769
|
)
|
|
|
|
|
|
|
(16,993
|
)
|
Accrued salaries and benefits
|
|
|
|
|
|
|
(1,961
|
)
|
|
|
(1,476
|
)
|
|
|
|
|
|
|
(3,437
|
)
|
Other liabilities
|
|
|
|
|
|
|
(304
|
)
|
|
|
2,446
|
|
|
|
|
|
|
|
2,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) continuing operating activities
|
|
|
3,604
|
|
|
|
32,612
|
|
|
|
24,150
|
|
|
|
(2,927
|
)
|
|
|
57,439
|
|
Net cash used in discontinued operating activities
|
|
|
|
|
|
|
(425
|
)
|
|
|
|
|
|
|
|
|
|
|
(425
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
3,604
|
|
|
|
32,187
|
|
|
|
24,150
|
|
|
|
(2,927
|
)
|
|
|
57,014
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for capital expenditures
|
|
|
|
|
|
|
(30,018
|
)
|
|
|
(20,531
|
)
|
|
|
|
|
|
|
(50,549
|
)
|
Cash paid for real estate acquisitions
|
|
|
|
|
|
|
(2,495
|
)
|
|
|
|
|
|
|
|
|
|
|
(2,495
|
)
|
Other
|
|
|
|
|
|
|
(6,531
|
)
|
|
|
1,480
|
|
|
|
|
|
|
|
(5,051
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
|
|
|
(39,044
|
)
|
|
|
(19,051
|
)
|
|
|
|
|
|
|
(58,095
|
)
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal payments on long-term debt
|
|
|
(8,638
|
)
|
|
|
|
|
|
|
(2,927
|
)
|
|
|
2,927
|
|
|
|
(8,638
|
)
|
Common stock withheld for minimum statutory taxes, net
|
|
|
(4,234
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,234
|
)
|
Other
|
|
|
|
|
|
|
(865
|
)
|
|
|
|
|
|
|
|
|
|
|
(865
|
)
|
Cash provided by (used in) intercompany activity
|
|
|
9,268
|
|
|
|
(5,030
|
)
|
|
|
(4,238
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (used in) provided by in financing activities
|
|
|
(3,604
|
)
|
|
|
(5,895
|
)
|
|
|
(7,165
|
)
|
|
|
2,927
|
|
|
|
(13,737
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
|
|
|
|
|
|
|
|
842
|
|
|
|
|
|
|
|
842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
|
|
|
|
(12,752
|
)
|
|
|
(1,224
|
)
|
|
|
|
|
|
|
(13,976
|
)
|
Cash and cash equivalents at beginning of the period
|
|
|
|
|
|
|
15,681
|
|
|
|
41,382
|
|
|
|
|
|
|
|
57,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of the period
|
|
$
|
|
|
|
$
|
2,929
|
|
|
$
|
40,158
|
|
|
$
|
|
|
|
$
|
43,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
Acadia Healthcare Company, Inc.
Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2016
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Combined
Subsidiary
Guarantors
|
|
|
Combined
Non-
Guarantors
|
|
|
Consolidating
Adjustments
|
|
|
Total
Consolidated
Amounts
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
25,369
|
|
|
$
|
26,308
|
|
|
$
|
14,561
|
|
|
$
|
(40,869
|
)
|
|
$
|
25,369
|
|
Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries
|
|
|
(40,869
|
)
|
|
|
|
|
|
|
|
|
|
|
40,869
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
12,751
|
|
|
|
15,224
|
|
|
|
|
|
|
|
27,975
|
|
Amortization of debt issuance costs
|
|
|
2,254
|
|
|
|
|
|
|
|
(107
|
)
|
|
|
|
|
|
|
2,147
|
|
Equity-based compensation expense
|
|
|
6,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,956
|
|
Deferred income tax expense
|
|
|
|
|
|
|
8,846
|
|
|
|
239
|
|
|
|
|
|
|
|
9,085
|
|
Gain on foreign currency derivatives
|
|
|
(410
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(410
|
)
|
Other
|
|
|
|
|
|
|
896
|
|
|
|
(14
|
)
|
|
|
|
|
|
|
882
|
|
Change in operating assets and liabilities, net of effect of acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
|
|
|
|
(13,560
|
)
|
|
|
9,811
|
|
|
|
|
|
|
|
(3,749
|
)
|
Other current assets
|
|
|
|
|
|
|
(3,596
|
)
|
|
|
(4,479
|
)
|
|
|
|
|
|
|
(8,075
|
)
|
Other assets
|
|
|
|
|
|
|
(1,992
|
)
|
|
|
(410
|
)
|
|
|
|
|
|
|
(2,402
|
)
|
Accounts payable and other accrued liabilities
|
|
|
|
|
|
|
7,564
|
|
|
|
(66
|
)
|
|
|
|
|
|
|
7,498
|
|
Accrued salaries and benefits
|
|
|
|
|
|
|
6,388
|
|
|
|
(12,735
|
)
|
|
|
|
|
|
|
(6,347
|
)
|
Other liabilities
|
|
|
|
|
|
|
4,416
|
|
|
|
(4,062
|
)
|
|
|
|
|
|
|
354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by continuing operating activities
|
|
|
(6,700
|
)
|
|
|
48,021
|
|
|
|
17,962
|
|
|
|
|
|
|
|
59,283
|
|
Net cash used in discontinued operating activities
|
|
|
|
|
|
|
(619
|
)
|
|
|
|
|
|
|
|
|
|
|
(619
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
|
|
(6,700
|
)
|
|
|
47,402
|
|
|
|
17,962
|
|
|
|
|
|
|
|
58,664
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for acquisitions, net of cash acquired
|
|
|
|
|
|
|
|
|
|
|
(580,096
|
)
|
|
|
|
|
|
|
(580,096
|
)
|
Cash paid for capital expenditures
|
|
|
|
|
|
|
(64,272
|
)
|
|
|
(25,817
|
)
|
|
|
|
|
|
|
(90,089
|
)
|
Cash paid for real estate acquisitions
|
|
|
|
|
|
|
(2,998
|
)
|
|
|
(11,801
|
)
|
|
|
|
|
|
|
(14,799
|
)
|
Settlement of foreign currency derivatives
|
|
|
|
|
|
|
745
|
|
|
|
|
|
|
|
|
|
|
|
745
|
|
Other
|
|
|
|
|
|
|
(1,208
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,208
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
|
|
|
(67,733
|
)
|
|
|
(617,714
|
)
|
|
|
|
|
|
|
(685,447
|
)
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings on long-term debt
|
|
|
1,480,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,480,000
|
|
Borrowings on revolving credit facility
|
|
|
58,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,000
|
|
Principal payments on revolving credit facility
|
|
|
(166,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(166,000
|
)
|
Principal payments on long-term debt
|
|
|
(13,669
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,669
|
)
|
Repayment of assumed debt
|
|
|
(1,348,389
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,348,389
|
)
|
Payment of debt issuance costs
|
|
|
(34,167
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,167
|
)
|
Issuance of common stock
|
|
|
685,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
685,097
|
|
Common stock withheld for minimum statutory taxes, net
|
|
|
(6,679
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,679
|
)
|
Other
|
|
|
|
|
|
|
(224
|
)
|
|
|
|
|
|
|
|
|
|
|
(224
|
)
|
Cash (used in) provided by intercompany activity
|
|
|
(647,493
|
)
|
|
|
35,637
|
|
|
|
611,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
6,700
|
|
|
|
35,413
|
|
|
|
611,856
|
|
|
|
|
|
|
|
653,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
|
|
|
|
|
|
|
|
(1,819
|
)
|
|
|
|
|
|
|
(1,819
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
|
|
|
|
15,082
|
|
|
|
10,285
|
|
|
|
|
|
|
|
25,367
|
|
Cash and cash equivalents at beginning of the period
|
|
|
|
|
|
|
1,987
|
|
|
|
9,228
|
|
|
|
|
|
|
|
11,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of the period
|
|
$
|
|
|
|
$
|
17,069
|
|
|
$
|
19,513
|
|
|
$
|
|
|
|
$
|
36,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26