Acadia Healthcare Company, Inc. Q2 FY2025 earnings call

• Solid top-line growth with total revenue up 9.2% and adjusted EBITDA up 7.5% year-over-year. - Discussed the One Big Beautiful Bill Act, noting provisions are manageable with carve-outs and extended timelines. - Added 479 beds in 2025, including 288 from newly constructed facilities and 101 to existing facilities. - Volumes: Same-facility patient days up 1.8%, with specialty and CTC lines growing mid-single digits, but some underperforming facilities and weaker Medicaid volumes in acute care. - Quality initiatives: Utilizing remote monitoring, wearable safety devices, and quality dashboards to improve patient safety and care coordination. - Heather Dixon stepping down as CFO, with Tim Sides as interim CFO.

Total revenue for the second quarter was $869.2 million, up 9.2% over the second quarter last year. Adjusted EBITDA was $201.8 million, a 7.5% increase over the same period a year ago. Same-facility revenue grew 9.5% year-over-year, including a 7.5% increase in revenue per patient day and 1.8% growth in patient days. On a same-facility basis, adjusted EBITDA was $256 million, and adjusted EBITDA margin was 30.1% in the second quarter. The Tennessee Supplemental Payment Program approval led to a favorable pretax benefit of $51.8 million in the quarter, with $12.3 million related to the second quarter of 2025.

• Adjusted EBITDA range for full year 2025 revised to $675 million to $700 million. - Same-facility volume growth range revised to 2% to 3% (prior low to mid-single digits). - Start-up losses expected $60 million to $65 million for full year, up $10 million due to accelerated bed opening. - Total beds added expected 950 to 1,000. - Net Medicaid supplementals expected to increase $30 million to $40 million in 2025, including $40 million to $45 million from the Tennessee program.

• Medicaid work requirements phasing in next year with potential impact, but populations served are exempt. - Potential revenue loss from Medicaid program changes, offset by reduced provider taxes in some states. - Underperforming facilities dragging on same-store metrics. - Government investigations with legal fees, expecting costs to decrease in second half of 2025. - Weaker Medicaid volumes in acute care as a payer issue with ongoing tension between providers and payers.

Q: Drill down on Medicaid volumes and if it's a payer issue or population shrinkage?

A: Chris Hunter said it's related to managed Medicaid plan dynamics with elevated cost pressures affecting admissions, and they'll engage constructively with partners on access and outcomes.

Q: On start-up costs increase, is it accelerated opening or slower ramp?

A: Heather Dixon said it's due to accelerated opening pace, pulling forward costs from 2026.

Q: Free cash flow outlook for 2026?

A: Chris Hunter said there's opportunity to accelerate free cash flow positive path by pausing some capital spending, with $100 million in CapEx savings identified from pausing two facilities.

Q: How do underperforming facilities drag on same-store patient days?

A: Chris Hunter said they had a negative impact of about 80 basis points on same-facility patient volume growth in Q2, with $20 million EBITDA headwind expected for full year, and they're monitoring and working through these daily.

Q: Wage spend and labor expense?

A: Heather Dixon said wage spend is in 3.5% range, down from prior, with stability seen.