ACHC

Business Context and Reporting Period

Company: Acadia Healthcare Company, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: February 28, 2025
Event: Entry into a new Material Definitive Agreement (Credit Agreement) and termination of the existing Credit Agreement.

Key Financial Metrics and Debt Structure

This filing details a refinancing transaction rather than operational financial results. Key debt metrics include:

• New Senior Facilities: Total capacity of $1.65 billion.
• Revolving Facility: $1.0 billion (includes $50 million sublimit for letters of credit and $50 million swingline).
• Term Loan Facility: $650 million.
• Funding at Closing: Full $650 million Term Loan funded; $550 million of Revolving Facility funded.
• Use of Proceeds: Refinancing outstanding obligations under the Existing Credit Agreement (approx. $485 million revolver and $671 million term loan).
• Maturity Date: February 28, 2030.
• Interest Rates: Floating rate based on SOFR plus 1.375% to 2.250% or Base Rate plus 0.375% to 1.250%.
• Unused Fee: 0.20% to 0.35% on undrawn revolver commitments.

Material Changes Versus Prior Period

The Company replaced its March 17, 2021 Credit Agreement with the new facility effective February 28, 2025. Material changes include:

• Increased Capacity: Revolver increased from $600 million to $1.0 billion; Term Loan increased from approx. $671 million outstanding to $650 million new facility (with higher total capacity).
• Extended Maturity: Maturity extended from March 17, 2026, to February 28, 2030.
• Amortization Schedule: New Term Loan requires quarterly amortization starting at 2.5% annually in Year 1, increasing to 5.0% (Years 2-3), 7.5% (Year 4), and 10% (Year 5).
• Administrative Agent: Changed from Bank of America, N.A. to JPMorgan Chase Bank, N.A.

Guidance, Covenants, and Risks

Financial Covenants:

• Consolidated Total Net Leverage Ratio: Maximum 5.0 to 1.0 (may increase to 5.5 to 1.0 for four quarters following a material acquisition, up to three times).
• Consolidated Interest Coverage Ratio: Minimum 3.0 to 1.0.

Incremental Facilities:

• Option to increase facilities up to the greater of $710 million or 100% of Consolidated EBITDA.
• Additional increases permitted if the Consolidated Senior Secured Net Leverage Ratio does not exceed 4.0 to 1.0.

Risks and Contingencies:

• Standard events of default apply; acceleration of loans and collateral remedies may be triggered upon default.
• Collateral includes a pledge of substantially all assets of the Company and Guarantors, excluding real property and certain customarily excluded assets.
• Covenants restrict additional debt, liens, investments, acquisitions, mergers, asset dispositions, and dividends.

Management Commentary: The filing text does not provide specific management commentary beyond the description of the transaction terms.

Investor Verification Checklist

• Verify the exact amount of cash proceeds used to pay down the prior $1.156 billion in debt versus the new $1.2 billion drawn.
• Confirm the Company's current Consolidated Total Net Leverage Ratio to ensure compliance with the 5.0 to 1.0 covenant.
• Review the full text of the Credit Agreement (Exhibit 10.1) for specific definitions of "Consolidated EBITDA" and "Consolidated Interest Coverage Ratio."
• Monitor the amortization schedule impact on future quarterly cash flows, specifically the step-up in payments starting in Year 2.
• Check for any subsequent filings regarding the utilization of the remaining $450 million revolver capacity.