Acadia Healthcare Company, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. The filing reports annual results; it does not provide a clear standalone fourth-quarter financial summary. Acadia operates behavioral healthcare facilities in the U.S. and Puerto Rico. At year-end it operated 253 facilities with approximately 11,200 beds.
Financial and operating results
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $2,928.7 million | $2,610.4 million |
| Income (loss) from continuing operations | $(15.7) million | $280.0 million |
| Net income (loss) attributable to Acadia | $(21.7) million | $273.1 million |
| Diluted earnings (loss) per share | $(0.24) | $2.98 |
| Cash from continuing operating activities | $462.3 million | $380.6 million |
| Capital expenditures | $424.1 million | $296.1 million |
| Interest expense, net | $82.1 million | $69.8 million |
- Revenue grew 12.2%. Same-facility revenue rose 12.0%, supported by patient-day growth of 5.1%, admissions growth of 4.9%, and revenue per patient day growth of 6.5%.
- Same-facility Adjusted EBITDA margin improved 60 basis points; excluding provider-relief-fund income, it improved 120 basis points. Adjusted EBITDA is a non-GAAP measure; the filing does not provide an absolute Adjusted EBITDA figure in the supplied results summary.
- Wages and benefits were $1,572.3 million, or 53.7% of revenue, versus $1,393.4 million, or 53.4%, in 2022. Management cited wage inflation and a tight labor market, while describing labor-cost trends as stable.
- FY2023 included $394.2 million in legal settlements expense, principally related to Desert Hills, and $9.8 million in non-cash impairment charges. A $9.7 million property-sale gain partly offset expenses. Provider-relief-fund income declined to $6.4 million from $21.5 million.
- Cash and cash equivalents were $100.1 million at year-end. Revolving credit availability was $516.5 million, with $3.5 million of standby letters of credit outstanding. Days sales outstanding increased to 45 from 44.
- Reported debt at December 31, 2023 was $1,371.8 million, net of issuance costs, discounts and premiums; the filing also cites approximately $1.4 billion of total debt. Debt comprised $377.2 million of term loans, $80.0 million drawn on the revolver, and $925.0 million of senior notes. The company reported compliance with its credit-facility financial covenants.
Material changes and subsequent events
- Acadia reported a net loss in 2023 compared with substantial net income in 2022, primarily reflecting the Desert Hills settlement expense and higher interest, transaction and other costs, despite revenue growth.
- Cash provided by operations increased by $81.8 million, while capital spending rose by $128.0 million. Expansion capital expenditures were $324.5 million; maintenance capital expenditures were $99.6 million.
- After year-end, Acadia paid $400.0 million on January 19, 2024 to settle three Desert Hills cases. The settlement followed a jury award in one case of $80.0 million in compensatory damages and $405.0 million in punitive damages. The settlements resolved those cases without an admission of liability or wrongdoing.
- In January 2024, Acadia amended its credit facility to add $350.0 million of term loans. In February 2024, it completed its acquisition of Turning Point Centers, a 76-bed Utah provider; the filing does not state the purchase price.
Outlook, risks and contingencies
- Management expected to add approximately 1,200 beds and open up to 14 comprehensive treatment centers in 2024, excluding acquisitions. It also expected to add more than 400 beds to existing facilities.
- Key exposures include dependence on Medicaid and Medicare (about 69% of FY2023 revenue), reimbursement and utilization controls, labor availability and costs, patient-care incidents, regulatory compliance and government investigations, and the ability to execute facility expansions and acquisitions.
- A sixth lawsuit alleging similar Desert Hills-related claims was filed in January 2024. Acadia said it could not quantify any resulting liability. A separate government investigation had a tentative resolution with an anticipated $19.9 million impact accrued at year-end.
- The company has a corporate integrity agreement with the HHS Office of Inspector General. It also identifies cybersecurity, privacy, litigation and insurance exposure as material risks; it reported prior ransomware and other cyber events but no material business impact from those events to date.
- Auditors issued unqualified opinions on the financial statements and internal control over financial reporting. Revenue recognition was identified as a critical audit matter because estimating payor adjustments, discounts and implicit price concessions requires significant judgment.
Important facts for investors to verify
- Reconcile the $394.2 million legal-settlement expense and year-end accrual with the $400.0 million cash payment made in January 2024, and assess the remaining Desert Hills lawsuit exposure.
- Track actual 2024 bed additions, CTC openings, occupancy and same-facility growth against management’s stated plans.
- Monitor Medicaid and other payor mix, reimbursement rates, collections and the effect of the 45-day DSO and implicit price concessions on cash conversion.
- Assess debt and liquidity after the $350.0 million incremental term borrowing and $400.0 million settlement payment, including scheduled repayments and interest-rate sensitivity.
- Review the outcome and timing of the government investigation’s tentative resolution, along with any compliance, licensing or patient-care developments.