Acadia Healthcare Company, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. Although the request identifies 2022 Q4, this filing reports annual results; the supplied text does not provide a standalone fourth-quarter income statement or cash-flow summary.
Business context
Acadia operates behavioral healthcare facilities in the U.S. and Puerto Rico. At year-end, it operated 250 facilities with approximately 11,000 beds across 39 states and Puerto Rico, including 151 comprehensive treatment centers (CTCs). The U.K. business, sold in January 2021, is reported as discontinued operations for prior periods.
Financial performance and liquidity
| Metric | FY2022 | FY2021 | Change / context |
|---|---|---|---|
| Revenue | $2,610.4 million | $2,314.4 million | Up 12.8% |
| Income from continuing operations | $280.0 million | $208.2 million | Up 34.5% |
| Net income attributable to Acadia | $273.1 million | $190.6 million | Up 43.3% |
| Diluted EPS | $2.98 | $2.10 | Up $0.88 |
| Cash from continuing operating activities | $380.6 million | $374.2 million | Up $6.3 million |
| Capital expenditures | $296.1 million | $244.8 million | $60.5 million maintenance; $235.6 million expansion in 2022 |
| Cash and cash equivalents | $97.6 million | $133.8 million | Down $36.2 million |
| Debt, net of issuance costs, discounts and premiums | $1,385.8 million | $1,497.2 million | Down $111.4 million |
Cash used in investing activities was $305.8 million, primarily reflecting capital spending; cash used in financing activities was $110.9 million. Operating cash flow less capital expenditures was approximately $84.4 million in 2022 (a simple calculation, not a company-reported free-cash-flow measure). Year-end current assets were $506.1 million and current liabilities $388.3 million. The company had $521.6 million of Revolving Facility availability and was in compliance with its credit covenants.
Continuing-operations pretax income was $374.1 million, or 14.3% of revenue, versus $275.8 million, or 12.0%, in 2021. Continuing-operations net income was 10.7% of revenue versus 9.0% in 2021. Same-facility revenue grew 9.2%; patient days rose 2.5%, revenue per patient day increased 6.5%, and average length of stay rose 3.6%. Same-facility Adjusted EBITDA margin improved 70 basis points, or 60 basis points excluding provider-relief income; the filing does not provide the actual same-facility margin in this excerpt.
Medicaid contributed 50.6% of revenue, commercial payors 30.2%, Medicare 15.1%, self-pay 2.9%, and other payors 1.2%. By service line, acute inpatient psychiatric facilities generated 51% of revenue, specialty treatment 22%, CTCs 16%, and residential treatment 11%.
Material changes versus prior year
- Revenue and earnings increased, with same-facility growth and facility expansion supporting performance.
- Interest expense declined to $69.8 million from $77.0 million, primarily reflecting lower debt following the 2021 U.K. sale and debt reduction.
- Provider-relief income was $21.5 million, up from $17.9 million. The filing reports $9.0 million of remaining ARP rural-payment funds as a liability pending evaluation of eligibility and possible repayment.
- Transaction-related expenses increased to $23.8 million from $12.8 million, including $11.6 million of management-transition costs. FY2021 also included $24.7 million of debt-extinguishment costs and $24.3 million of impairment charges; neither was recorded in FY2022.
- Same-facility admissions declined 1.0% in FY2022 despite patient-day growth, while wage and other operating costs remained significant.
Outlook, risks and unusual items
- Management expected approximately 300 additional beds at existing facilities in 2023, two wholly owned facility openings, two joint-venture openings, and at least six new CTCs. These are development plans, not earnings guidance; no clear revenue, EPS, or EBITDA forecast is provided in the filing text.
- Management cited continued demand for behavioral healthcare and a tight labor market. It noted higher wage inflation in 2022 and the use of more expensive contract labor at certain facilities.
- Key business risks include reimbursement changes and utilization controls, heavy Medicaid exposure, labor shortages and inflation, rising interest rates on variable-rate debt, acquisition and construction execution, patient-care incidents, cyberattacks, and regulatory scrutiny.
- Acadia had approximately $1.4 billion of debt at year-end, including variable-rate borrowings. The company estimated that a 1% rate increase would reduce annual pretax income by about $4.5 million, and expected its variable-rate debt to transition from LIBOR to SOFR during 2023.
- The company remains subject to a 2019 Corporate Integrity Agreement with the OIG. Government inquiries involving facility claims and patient-care-related requirements are disclosed; the company said it could not quantify potential liabilities. A securities class action had been certified, and related derivative cases were pending or stayed; potential liability was not quantifiable.
- Professional and general liability reserves were $103.6 million at year-end, compared with $87.8 million a year earlier. FY2022 included a $5.9 million unfavorable reserve adjustment related primarily to older claims.
- Provider-relief funding is subject to documentation and future audit. The company also faces potential repayment risk for the remaining $9.0 million balance.
The independent auditor issued unqualified opinions on the financial statements and internal control over financial reporting; management also concluded internal controls were effective at December 31, 2022.
Important facts for investors to verify
- Whether planned 2023 bed additions, facility openings, and CTC launches proceeded on schedule and generated expected utilization and returns.
- Whether patient admissions and volumes recover, and whether revenue growth continues to outpace labor, inflation, and other operating-cost increases.
- How much of earnings and cash generation depends on government relief funds, and whether the remaining $9.0 million ARP balance is retained or repaid.
- Debt maturity, variable-rate exposure, covenant headroom, and the effect of the LIBOR-to-SOFR transition on interest expense.
- Developments in government investigations, the Corporate Integrity Agreement, litigation, payor audits, and professional-liability reserves.