Acadia Healthcare Company, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone fourth-quarter filing. Results are presented with the U.K. business classified as discontinued operations following its sale.
Business context
Acadia operates behavioral healthcare facilities, including acute psychiatric hospitals, specialty treatment facilities and residential treatment centers. At year-end, it operated 238 facilities with 10,548 beds across 40 states and Puerto Rico. The company added 375 beds and opened 10 comprehensive treatment centers during 2021.
Financial performance and key metrics
| Metric | FY2021 | FY2020 |
|---|---|---|
| Continuing-operations revenue | $2,314.4 million | $2,089.9 million |
| Income from continuing operations | $208.2 million | $143.2 million |
| Continuing-operations diluted EPS | $2.24 | $1.58 |
| Net income (loss) attributable to Acadia | $190.6 million | $(672.1) million |
| Cash from continuing operating activities | $374.2 million | $502.8 million |
| Cash and cash equivalents at year-end | $133.8 million | $378.7 million |
- Revenue increased 10.7%. Same-facility revenue grew 10.9%, supported by 4.3% growth in patient days and 6.3% growth in revenue per patient day.
- Income from continuing operations before taxes was $275.8 million, or 12.0% of revenue; income from continuing operations was 8.9% of revenue. The effective tax rate was 24.5%, compared with 22.1% in 2020.
- Same-facility Adjusted EBITDA margin improved 150 basis points; excluding provider-relief-fund income, it improved 220 basis points. Adjusted EBITDA is a non-GAAP measure; the filing’s cited margin changes are for same-facility results.
- Interest expense fell to $77.0 million from $158.1 million, primarily reflecting debt repayment after the U.K. sale. Provider-relief-fund income was $17.9 million, down from $32.8 million.
- Continuing investing activities provided $1,017.6 million, mainly due to U.K. sale proceeds. Continuing financing activities used $1,641.1 million, principally reflecting debt repayment.
Debt and liquidity
- Year-end debt was approximately $1.5 billion, with $1.497 billion carrying value after unamortized issuance costs, discounts and premiums. It included $417.0 million of term-loan borrowings, $170.0 million drawn on the revolving facility, and $925.0 million of senior notes.
- The senior credit facility provides a $600 million revolver and a $425 million term loan, both maturing in March 2026. Revolver availability was $426.9 million at year-end; the company reported compliance with financial covenants.
- Cash declined by $244.9 million during 2021. Operating cash flow was lower than in 2020, which included substantial government relief, Medicare advances and payroll-tax deferrals.
- Cash capital expenditures were $244.8 million, including $41.8 million of routine spending and $203.0 million of expansion spending. Routine capital expenditures were approximately 2% of revenue.
Material changes, outlook and notable items
- U.K. divestiture: Completed January 19, 2021, for approximately $1.425 billion in net proceeds (excluding cash retained by the buyer). Together with balance-sheet cash, proceeds reduced debt by $1.64 billion during the first quarter. The 2020 loss from discontinued operations included an $867.3 million loss on sale; 2021 discontinued operations recorded a $12.6 million loss.
- Acquisition: Acquired CenterPointe on December 31, 2021, for approximately $139 million, partly funded with a $70 million revolver draw. CenterPointe has four hospitals with 306 beds and 10 outpatient locations, primarily in Missouri.
- 2022 plans: Management expected to add approximately 300 beds at existing facilities and 350 beds through two wholly owned and two joint-venture facilities, and to open at least six CTCs. These are plans, not assured results.
- Management cited favorable demand trends but also a tight labor market, describing staffing challenges as generally temporary and market-specific. COVID-19 continued to affect referrals and admissions and could raise staffing and supply costs or constrain volumes.
- Other unusual items included $24.7 million of debt-extinguishment costs and $24.3 million of impairment charges, including a $23.2 million charge for a replaced Pennsylvania facility and $1.1 million related to hurricane damage in Louisiana.
- Key exposures include reliance on government and commercial reimbursement, labor availability and costs, patient volumes and collections, variable-rate debt, regulatory compliance, quality-of-care claims, cybersecurity, and the terms of the corporate integrity agreement with the OIG. The filing also describes ongoing government inquiries and litigation; certain potential liabilities could not be quantified.
- CEO Debbie Osteen announced her retirement as CEO, anticipated to take effect after a transition through March 31, 2022; she was expected to remain on the board.
Most important facts for investors to verify
- Whether patient-day and revenue-per-day growth continues, and whether margin gains persist after excluding provider-relief income.
- Progress on 2022 bed additions, facility openings and CTC expansion, including capital needs and ramp-up timelines.
- Debt reduction, revolver usage, covenant headroom and exposure to floating interest rates.
- Cash conversion and collection quality, including the company’s estimates for implicit price concessions and government-payor settlements.
- Staffing costs and availability, COVID-related operating effects, and outcomes of government investigations, the OIG agreement and other contingencies.
- Acquisition integration and final purchase-accounting values for CenterPointe, which were preliminary in the filing.