Acadia Healthcare Company, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; comparisons are to Q1 2023 unless stated otherwise. Acadia operates behavioral healthcare facilities across the U.S. and Puerto Rico, with 258 facilities and approximately 11,300 beds at quarter-end.
Financial and operating performance
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | $768.1 million | $704.3 million; up 9.1% |
| Income before taxes | $98.8 million | $85.6 million |
| Net income attributable to Acadia | $76.4 million; diluted EPS $0.83 | $66.0 million; diluted EPS $0.72 |
| Net margin attributable to Acadia | 9.9% | 9.4% |
| Interest expense, net | $27.2 million | $20.0 million |
| Cash from operations | $(321.3) million | $44.4 million provided |
| Capital expenditures | $142.4 million | $66.5 million |
| Cash and cash equivalents | $77.3 million at March 31 | $100.1 million at December 31, 2023 |
| Debt, carrying value | $1.856 billion | $1.372 billion at December 31, 2023 |
Same-facility revenue grew 9.2%, with patient days up 2.2%, revenue per patient day up 6.9%, and average length of stay up 4.0%; admissions declined 1.7%. Same-facility Adjusted EBITDA margin increased 120 basis points, but the filing does not provide a clear dollar value for Adjusted EBITDA in the supplied text.
Revenue by service category: acute inpatient psychiatric $406.4 million; specialty treatment $143.8 million; comprehensive treatment centers $132.2 million; residential treatment centers $85.6 million. Medicaid represented 56.9% of revenue, compared with 51.8% a year earlier; commercial payors represented 25.5%, down from 28.9%.
Liquidity, debt and material period changes
- Operating cash outflow was driven principally by a $403.3 million decrease in accounts payable and other accrued liabilities. Acadia paid $400.0 million in January 2024 to settle three Desert Hills cases; the related accrued settlement balance was $393.7 million at year-end 2023 and zero at March 31, 2024.
- Investing cash outflow was $184.6 million, including $142.4 million of capital expenditures ($120.1 million expansion and $22.3 million routine/maintenance) and $50.4 million for acquisitions.
- Financing provided $483.1 million, including $350.0 million of incremental term loans and $160.0 million of revolver borrowings, partly offset by repayments. Revolver availability was $371.5 million, with $3.5 million of letters of credit outstanding.
- Debt comprised $939.5 million under the credit facility and $925.0 million principal amount of senior notes due 2028 and 2029. Approximately $939.5 million of debt was variable-rate and $916.3 million fixed-rate. Management estimated a 1% interest-rate increase would reduce annual pretax income by about $9.4 million.
- Acadia reported compliance with credit-facility financial covenants at quarter-end. Current assets were $610.8 million and current liabilities $482.3 million; year-end current liabilities were higher, including the Desert Hills settlement accrual.
- On February 22, Acadia acquired substantially all assets of Turning Point Centers, a 76-bed Utah specialty provider. It added 47 beds during the quarter, including 20 at a newly opened wholly owned facility.
Outlook, commentary and risks
Management expects to add approximately 1,200 beds and open up to 14 comprehensive treatment centers in 2024, excluding acquisitions. The filing gives no specific revenue, earnings or cash-flow guidance. Management cited continued tight labor conditions and recent wage inflation, while noting stable labor costs and ongoing efforts to staff facilities for demand.
Material risks include reliance on government reimbursement and Medicaid (56.9% of Q1 revenue), labor availability and costs, variable interest rates and indebtedness, acquisition integration, and regulatory and litigation exposure. The company is unable to quantify any ultimate liability, if any, in a newly filed sixth Desert Hills-related lawsuit. A separate government investigation has a tentative resolution with an anticipated $19.9 million impact, accrued at quarter-end. The filing also describes pending securities and derivative litigation and ongoing professional-liability exposure.
Important facts for investors to verify
- Whether operating cash flow normalizes after the $400.0 million settlement payment and related liability reduction, and how working capital develops.
- Progress toward the 2024 bed and center-opening targets, and the associated capital spending and returns.
- Growth and reimbursement trends by payor, particularly Medicaid concentration, alongside admissions and patient-day trends.
- Debt repayment capacity, variable-rate exposure, covenant headroom and the impact of higher interest expense.
- Developments in the sixth Desert Hills lawsuit, the tentative government-investigation resolution and other litigation or regulatory matters.