Business Wire | Oct 28, 2021 04:05PM EDT

Acadia Healthcare Reports Third Quarter 2021 Results

Oct. 28, 2021

FRANKLIN, Tenn.--(BUSINESS WIRE)--Oct. 28, 2021--Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced financial results for the third quarter ended September 30, 2021.

Third Quarter 2021 Results

The Company reported revenue of $587.6 million for the third quarter of 2021, compared with $548.0 million for the third quarter of 2020. Adjusted EBITDA was $141.9 million for the third quarter of 2021, compared with $116.0 million for the same period last year. Results for the third quarter of 2020 included a reversal of the $18.1 million in other income that had been recorded in the second quarter of 2020 related to the Provider Relief Fund established by the Coronavirus Aid, Relief, and Economic Security ("CARES") Act. Net income attributable to Acadia stockholders for the third quarter of 2021 was $66.1 million, or $0.73 per diluted share, compared to net income of $37.0 million, or $0.42 per diluted share, for the third quarter of 2020. Adjusted income from continuing operations attributable to Acadia stockholders was $0.72 per diluted share for the third quarter of 2021. Adjustments to income include transaction-related expenses, debt extinguishment costs, loss on impairment and the income tax effect of adjustments to income. A reconciliation of all non-GAAP financial results in this press release begins on page 9.

For the third quarter of 2021, Acadia's same facility revenue increased 7.9% compared with the third quarter of 2020, including an increase in revenue per patient day of 5.6% and an increase in patient days of 2.2%. Same facility adjusted EBITDA margin was 29.0%.

Debbie Osteen, Chief Executive Officer of Acadia Healthcare Company, remarked, "We continue to see favorable momentum in our business as demand for our behavioral health services remains strong, especially within our acute and specialty service lines. Our teams faced some challenges during the third quarter related to Hurricane Ida and the surge of the Delta variant of COVID-19. We are extremely proud of them and applaud their dedication and caring for our patients under extraordinary conditions. Above all, the safety of our patients is our top priority, and we remain focused on providing consistent care for those seeking treatment for mental health and substance use issues.

"Our financial results for the third quarter were adversely affected by disruptions from Hurricane Ida in Louisiana, including temporary evacuation of one facility. The hurricane had a negative 0.3% impact on our revenue growth rate and a $0.01 impact on Adjusted EPS. In addition, our facilities in certain markets managed through an elevated level of COVID-19 cases during the third quarter. Despite these challenges, we continued to manage our operations safely and efficiently while maintaining our same high standards of patient care."

Strategic Investments for Long-Term Growth

"We have made significant progress this year in executing on key strategic initiatives across our service lines as we have continued to make the right investments to support sustained, long-term growth. During the third quarter, we added 104 beds to our operations, bringing our total to 282 bed additions to existing facilities this year. We believe facility expansions offer the highest return on investment for Acadia, and we expect to meet our goal of adding approximately 300 beds to existing facilities by the end of the year.

"We also opened two new comprehensive treatment centers (CTCs) in the third quarter, located in Tennessee and Florida. CTCs are designed to address the growing and critical need for addiction treatment, especially for patients dealing with opioid use disorder. Through the end of the third quarter, we have opened five CTCs and expect to open six additional CTCs in underserved markets by the end of 2021.

"Forming strategic partnerships with leading healthcare systems across the country has been another important pathway for growth for Acadia. With the growing recognition and acceptance of behavioral health services driving demand, established providers are looking for ways to leverage their market presence and provide more treatment options in the communities they serve. We are proud of our 13 partnerships across the country, and we are excited about the opportunities to expand our reach into more communities. During the third quarter, we broke ground on new facilities with two of our JV partners - Geisinger and Lutheran Health Network of Indiana.

"Our success to date in 2021 confirms the strength of our operating model and our ability to execute our strategy. Looking ahead, we will continue to expand our network and serve more patients through our four distinct pathways for growth - bed expansions, wholly owned de novo facilities, strategic joint ventures and acquisitions," added Osteen.

Cash and Liquidity

Acadia's balance sheet remains strong with ample liquidity and capital to support its growth strategy. As of September 30, 2021, the Company had $196.3 million in cash and cash equivalents. During the third quarter, the Company repaid $25 million on its senior secured revolving credit facility, reducing the outstanding balance to $100 million as of September 30, 2021. The Company had $500 million available under its $600 million revolving credit facility as of September 30, 2021, and its net leverage ratio was approximately 2.2x.

During the third quarter, the Company continued its repayment of amounts received pursuant to the Medicare Accelerated and Advanced Payment Program under the CARES Act. In the third quarter of 2021, the Company repaid $10 million of the $45 million of advance payments received in 2020 under the Medicare Accelerated and Advanced Payment Program and will continue to repay the remaining balance on a monthly basis through September 2022. Also in the third quarter of 2021, the Company repaid half of the approximately $39 million of 2020 payroll tax deferrals with the remaining portion to be paid in 2022.

Financial Guidance

Acadia today narrowed its financial guidance for 2021, within previously announced ranges, as follows:

* Revenue in a range of $2.295 billion to $2.315 billion; * Adjusted EBITDA in a range of $537 million to $547 million; * Adjusted earnings per diluted share in a range of $2.51 to $2.59, which reflects a revised estimate of stock compensation expense for the fourth quarter of 2021 in a range of $11 million to $13 million; * Operating cash flows in a range of $290 million to $325 million; and * Total capital expenditures in a range of $210 million to $230 million, which includes approximately $45 million for maintenance capital expenditures.

The Company's guidance does not include the impact of any future acquisitions or transaction-related expenses.

Looking Ahead

"We are excited about the opportunities ahead for Acadia, as we focus on our primary objective to expand our market reach and support more patients with safe and quality care. We are especially pleased to see the growing acceptance and additional funding support for mental health and substance abuse issues. We have a unique opportunity to capitalize on these promising trends and meet the critical and growing demand for behavioral health services. Importantly, we have the capital structure to support our strategic growth initiatives and further enhance our position as the leading pure-play behavioral healthcare provider," concluded Osteen.

Acadia will hold a conference call to discuss its third quarter financial results at 9:00 a.m. Eastern Time on Friday, October 29, 2021. A live webcast of the conference call will be available at www.acadiahealthcare.com in the "Investors" section of the website. The webcast of the conference call will be available for 30 days.

About Acadia

Acadia is a leading provider of behavioral healthcare services across the United States. As of September 30, 2021, Acadia operated a network of 230 behavioral healthcare facilities with approximately 10,200 beds in 40 states and Puerto Rico. With more than 20,000 employees serving approximately 70,000 patients daily, Acadia is the largest stand-alone behavioral health company in the U.S. Acadia provides behavioral healthcare services to its patients in a variety of settings, including inpatient psychiatric hospitals, specialty treatment facilities, residential treatment centers and outpatient clinics.

Forward-Looking Information

This press release contains forward-looking statements. Generally, words such as "may," "will," "should," "could," "anticipate," "expect," "intend," "estimate," "plan," "continue," and "believe" or the negative of or other variation on these and other similar expressions identify forward-looking statements. These forward-looking statements are made only as of the date of this press release. We do not undertake to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements are based on current expectations and involve risks and uncertainties and our future results could differ significantly from those expressed or implied by our forward-looking statements. Factors that may cause actual results to differ materially include, without limitation, (i) the impact of the COVID-19 pandemic, including, without limitation, disruption to the U.S. economy and financial markets; reduced admissions and patient volumes; increased costs relating to labor, supply chain and other expenditures; and difficulty in collecting patient accounts receivable due to increases in the unemployment rate and the number of underinsured and uninsured patients; (ii) the impact of vaccine and other pandemic-related mandates imposed by local, state and federal authorities; (iii) potential difficulties in successfully integrating the operations of acquired facilities or realizing the expected benefits and synergies of our acquisitions, joint ventures and de novo transactions; (iv) Acadia's ability to add beds, expand services, enhance marketing programs and improve efficiencies at its facilities; (v) potential reductions in payments received by Acadia from government and third-party payors; (vi) the occurrence of patient incidents, governmental investigations, litigation and adverse regulatory actions, which could adversely affect the price of our common stock and result in substantial payments and incremental regulatory burdens; (vii) the risk that Acadia may not generate sufficient cash from operations to service its debt and meet its working capital and capital expenditure requirements; and (viii) potential operating difficulties, labor costs, client preferences, changes in competition and general economic or industry conditions that may prevent Acadia from realizing the expected benefits of its business strategies. These factors and others are more fully described in Acadia's periodic reports and other filings with the SEC.

Acadia Healthcare Company, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)



Three Months Ended Nine Months Ended September September 30, 30,

2021 2020 2021 2020

(In thousands, except per share amounts)

Revenue $ 587,559 $ 547,961 $ 1,720,914 $ 1,548,653

Salaries, wages andbenefits (includingequity-basedcompensation 309,118 290,619 922,684 852,864 expense of$8,923, $5,471,$24,988 and$16,258,respectively)Professional fees 35,602 29,372 101,915 91,009

Supplies 23,743 21,773 67,698 65,028

Rents and leases 9,658 9,365 28,690 27,975

Other operating 76,502 68,213 222,263 202,540 expensesOther income - 18,070 - -

Depreciation and 27,805 24,132 78,349 70,298 amortizationInterest expense, 15,706 37,315 61,420 118,398 netDebt extinguishment - - 24,650 3,271 costsLoss on impairment 1,079 - 24,293 -

Transaction-related 3,035 3,024 9,320 9,558 expensesTotal expenses 502,248 501,883 1,541,282 1,440,941

Income fromcontinuing 85,311 46,078 179,632 107,712 operations beforeincome taxesProvision for 17,411 9,191 42,948 24,174 income taxesIncome from 67,900 36,887 136,684 83,538 continuingoperationsIncome (loss) fromdiscontinued - 674 (12,641 ) 29,804 operations, net oftaxesNet income 67,900 37,561 124,043 113,342

Net incomeattributable to (1,774 ) (563 ) (3,686 ) (1,802 )noncontrollinginterestsNet incomeattributable to $ 66,126 $ 36,998 $ 120,357 $ 111,540 Acadia HealthcareCompany, Inc. Basic earnings pershare attributableto AcadiaHealthcare Company,Inc.stockholders:Income fromcontinuingoperations $ 0.74 $ 0.41 $ 1.50 $ 0.93 attributable toAcadia HealthcareCompany, Inc.Income (loss) from $ - $ 0.01 $ (0.14 ) $ 0.34 discontinuedoperationsNet incomeattributable to $ 0.74 $ 0.42 $ 1.36 $ 1.27 Acadia HealthcareCompany, Inc. Diluted earningsper shareattributable toAcadia HealthcareCompany, Inc.stockholders:Income fromcontinuingoperations $ 0.73 $ 0.41 $ 1.47 $ 0.92 attributable toAcadia HealthcareCompany, Inc.Income (loss) from $ - $ 0.01 $ (0.14 ) $ 0.34 discontinuedoperationsNet incomeattributable to $ 0.73 $ 0.42 $ 1.33 $ 1.26 Acadia HealthcareCompany, Inc. Weighted-averageshares outstanding:Basic 88,962 87,911 88,684 87,849

Diluted 90,889 88,856 90,604 88,449

Acadia Healthcare Company, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)



September 30, December 31,

2021 2020

(In thousands)

ASSETS

Current assets:Cash and cash equivalents $ 196,313 $ 378,697

Accounts receivable, net 282,161 273,551

Other current assets 88,685 61,332

Current assets held for sale - 1,809,815

Total current assets 567,159 2,523,395

Property and equipment, net 1,665,025 1,622,896

Goodwill 2,103,503 2,105,264

Intangible assets, net 69,366 68,535

Deferred tax assets 3,112 3,209

Operating lease right-of-use assets 103,162 96,937

Other assets 83,400 79,126

Total assets $ 4,594,727 $ 6,499,362

LIABILITIES AND EQUITY

Current liabilities:Current portion of long-term debt $ 15,938 $ 153,478

Accounts payable 85,924 87,815

Accrued salaries and benefits 124,164 124,912

Current portion of operating lease liabilities 20,062 18,916

Other accrued liabilities 157,204 178,453

Derivative instrument liabilities - 84,584

Current liabilities held for sale - 660,027

Total current liabilities 403,292 1,308,185

Long-term debt 1,413,407 2,968,948

Deferred tax liabilities 73,673 50,017

Operating lease liabilities 89,952 84,029

Other liabilities 117,883 133,412

Total liabilities 2,098,207 4,544,591

Redeemable noncontrolling interests 62,074 55,315

Equity:Common stock 890 880

Additional paid-in capital 2,623,585 2,580,327

Accumulated other comprehensive loss - (371,365 )

Accumulated deficit (190,029 ) (310,386 )

Total equity 2,434,446 1,899,456

Total liabilities and equity $ 4,594,727 $ 6,499,362

Acadia Healthcare Company, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



Nine Months Ended September 30,

2021 2020

(In thousands)

Operating activities:Net income $ 124,043 $ 113,342

Adjustments to reconcile net income to net cashprovided by continuing operating activities:Depreciation and amortization 78,349 70,298

Amortization of debt issuance costs 3,265 9,696

Equity-based compensation expense 24,988 16,258

Deferred income taxes 8,995 45,105

Loss (income) from discontinued operations, net 12,641 (29,804 )of taxesDebt extinguishment costs 24,650 3,271

Loss on impairment 24,293 -

Other 881 1,024

Change in operating assets and liabilities:Accounts receivable, net (8,610 ) 7,364

Other current assets (2,758 ) (4,942 )

Other assets (15,846 ) (880 )

Accounts payable and other accrued liabilities 6,358 19,854

Accrued salaries and benefits 18,820 14,150

Other liabilities (11,633 ) (2,256 )

Government relief funds (12,058 ) 103,908

Net cash provided by continuing operating 276,378 366,388 activitiesNet cash provided by discontinued operating 253 105,852 activitiesNet cash provided by operating activities 276,631 472,240

Investing activities:Cash paid for capital expenditures (156,624 ) (168,804 )

Proceeds from U.K. Sale 1,511,020 -

Settlement of foreign currency derivatives (84,795 ) -

Proceeds from sale of property and equipment 1,792 72

Cash paid for purchase of finance lease (31,401 ) -

Other 4,906 (10,734 )

Net cash provided by (used in) continuing 1,244,898 (179,466 )investing activitiesNet cash used in discontinued investing - (30,188 )activitiesNet cash provided by (used in) investing 1,244,898 (209,654 )activities Financing activities:Borrowings on long-term debt 425,000 450,000

Borrowings on revolving credit facility 430,000 100,000

Principal payments on revolving credit facility (330,000 ) (100,000 )

Principal payments on long-term debt (5,313 ) (31,863 )

Repayment of long-term debt (2,227,935 ) (450,000 )

Payment of debt issuance costs (7,964 ) (11,220 )

Common stock withheld for minimum statutory 16,072 (1,311 )taxes, netDistributions to noncontrolling interests (926 ) (653 )

Other (6,914 ) (1,291 )

Net cash used in continuing financing (1,707,980 ) (46,338 )activitiesNet cash used in discontinued financing - (2,226 )activitiesNet cash used in financing activities (1,707,980 ) (48,564 )

Effect of exchange rate changes on cash 4,067 488

Net (decrease) increase in cash and cash (182,384 ) 214,510 equivalents, including cash classified withincurrent assets held for saleLess: cash classified within current assets - (50,568 )held for saleNet (decrease) increase in cash and cash (182,384 ) 163,942 equivalentsCash and cash equivalents at beginning of the 378,697 124,192 periodCash and cash equivalents at end of the period $ 196,313 $ 288,134

Acadia Healthcare Company, Inc.

Operating Statistics

(Unaudited, Revenue in thousands)



Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 % 2021 2020 % Change Change

U.S. SameFacilityResults ^(1) Revenue $ 586,420 $ 543,402 7.9 % $ 1,708,389 $ 1,539,923 10.9 %

Patient 699,344 684,326 2.2 % 2,075,197 1,979,267 4.8 % Days Admissions 45,070 44,781 0.6 % 135,377 129,234 4.8 %

Average 15.5 15.3 1.5 % 15.3 15.3 0.1 % Length of Stay ^(2) Revenue per $ 839 $ 794 5.6 % $ 823 $ 778 5.8 % Patient Day Adjusted 29.0 % 25.4 % 360 28.3 % 25.5 % 280 EBITDA bps bps margin U.S.FacilityResults Revenue $ 587,559 $ 547,961 7.2 % $ 1,720,914 $ 1,548,653 11.1 %

Patient 701,352 689,402 1.7 % 2,088,477 1,995,922 4.6 % Days Admissions 45,246 44,877 0.8 % 136,384 129,638 5.2 %

Average 15.5 15.4 0.9 % 15.3 15.4 -0.5 % Length of Stay^ (2) Revenue per $ 838 $ 795 5.4 % $ 824 $ 776 6.2 % Patient Day Adjusted 28.3 % 25.3 % 300 27.7 % 25.4 % 230 EBITDA bps bps margin(1) Same facility results for the periods presented include facilities we have operated for more than one year and exclude certain closed services.(2) Average length of stay is defined as patient days divided by admissions.^(1) Same facility results for the periods presented include facilities we haveoperated for more than one year and exclude certain closed services.^(2) Average length of stay is defined as patient days divided by admissions.Acadia Healthcare Company, Inc.

Reconciliation of Net Income Attributable to Acadia Healthcare Company, Inc. toAdjusted EBITDA

(Unaudited)



Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

(in thousands)

Net income attributable $ 66,126 $ 36,998 $ 120,357 $ 111,540 to Acadia HealthcareCompany, Inc.Net income attributable 1,774 563 3,686 1,802 to noncontrollinginterests(Income) loss fromdiscontinued - (674 ) 12,641 (29,804 )operations, net oftaxesProvision for income 17,411 9,191 42,948 24,174 taxesInterest expense, net 15,706 37,315 61,420 118,398

Depreciation and 27,805 24,132 78,349 70,298 amortizationEBITDA 128,822 107,525 319,401 296,408

Adjustments:Equity-based 8,923 5,471 24,988 16,258 compensation expense(a)Transaction-related 3,035 3,024 9,320 9,558 expenses (b)Debt extinguishment - - 24,650 3,271 costs (c)Loss on impairment (d) 1,079 - 24,293 -

Adjusted EBITDA $ 141,859 $ 116,020 $ 402,652 $ 325,495

Adjusted EBITDA margin 24.1 % 21.2 % 23.4 % 21.0 %

See footnotes on page12. Acadia Healthcare Company, Inc.Reconciliation of Net Income Attributable to Acadia Healthcare Company, Inc.toAdjusted Income Attributable to Acadia Healthcare Company, Inc.(Unaudited) Three Nine Months Months Ended Ended September September 30, 2021 30, 2021 (in thousands, except per share amounts) Net income attributable to Acadia Healthcare $ 66,126 $ 120,357 Company, Inc.Loss from discontinued operations, net of taxes - 12,641

Adjustments to income:Transaction-related expenses (b) 3,035 9,320

Debt extinguishment costs (c) - 24,650

Loss on impairment (d) 1,079 24,293

Provision for income taxes 17,411 42,948

Adjusted income from continuing operations before 87,651 234,209 income taxes attributable toAcadia Healthcare Company, Inc.Income tax effect of adjustments to income (e) 22,508 62,709

Adjusted income from continuing operations $ 65,143 $ 171,500 attributable to Acadia Healthcare Company, Inc. Weighted-average shares outstanding - diluted 90,889 90,604

Adjusted income from continuing operations $ 0.72 $ 1.89 attributable to Acadia Healthcare Company, Inc.per diluted share Three Nine Months Months Ended Ended September September 30, 2020 30, 2020 (in thousands, except per share amounts)Net income attributable to Acadia Healthcare $ 36,998 $ 111,540 Company, Inc.Income from discontinued operations, net of taxes (674 ) (29,804 )

Adjustments to income:Transaction-related expenses (b) 3,024 9,558

Debt extinguishment costs (c) - 3,271

Provision for income taxes 9,191 24,174

Adjusted income from continuing operations before 48,539 118,739 income taxes attributable toAcadia Healthcare Company, Inc.Adjusted income from discontinued operations before 24,367 54,775 income taxesAdjusted income before income taxes attributable to 72,906 173,514 Acadia Healthcare Company, Inc.Income tax effect of adjustments to income (e) 12,562 28,372

Adjusted income attributable to Acadia Healthcare $ 60,344 $ 145,142 Company, Inc. Weighted-average shares outstanding - diluted 88,856 88,449

Adjusted income attributable to Acadia Healthcare $ 0.68 $ 1.64 Company, Inc. per diluted share ^(3)(3) For the three and nine months ended September 30, 2020, Adjusted income attributable to Acadia Healthcare Company, Inc. per diluted share includes Adjusted income from discontinued operations before income taxes and is not directly comparable to Adjusted income from continuing operations attributable to Acadia Healthcare Company, Inc. per diluted share for the three and nine months ended September 30, 2021. Interest expense, which has been significantly reduced following debt repayments in the first quarter of 2021, is recorded in income from continuing operations and not allocated to discontinued operations because such allocation would not be meaningful. Therefore, 2020 reflects consolidated results inclusive of discontinued operations, and 2021 reflects only continuing operations.

See footnotes on page 12.

^(3) For the three and nine months ended September 30, 2020, Adjusted incomeattributable to Acadia Healthcare Company, Inc. per diluted share includesAdjusted income from discontinued operations before income taxes and is notdirectly comparable to Adjusted income from continuing operations attributableto Acadia Healthcare Company, Inc. per diluted share for the three and ninemonths ended September 30, 2021. Interest expense, which has been significantlyreduced following debt repayments in the first quarter of 2021, is recorded inincome from continuing operations and not allocated to discontinued operationsbecause such allocation would not be meaningful. Therefore, 2020 reflectsconsolidated results inclusive of discontinued operations, and 2021 reflectsonly continuing operations.



See footnotes on page 12.

Acadia Healthcare Company, Inc.

Discontinued Operations Supplemental Financial Information

(Unaudited)



Statements of Discontinued Operations



Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

(in thousands)

Revenue $ - $ 285,343 $ 62,520 $ 817,772

Salaries, wages and - 159,840 35,937 465,514 benefitsProfessional fees - 31,987 6,815 92,264

Supplies - 9,434 2,217 28,274

Rents and leases - 11,817 2,509 34,858

Other operating expenses - 28,880 6,682 85,682

Depreciation and - 18,780 - 55,739 amortizationInterest expense, net - 238 10 666

Loss on sale - - 14,254 -

Loss on impairment - 20,239 - 20,239

Transaction-related - 5,479 6,265 7,735 expensesTotal expenses - 286,694 74,689 790,971

(Loss) income from - (1,351 ) (12,169 ) 26,801 discontinued operationsbefore income taxes(Benefit from) provision - (2,025 ) 472 (3,003 )for income taxesIncome (loss) from - 674 (12,641 ) 29,804 discontinued operations,net of taxes Reconciliation of Income (Loss) from Discontinued Operations toAdjusted Income from Discontinued Operations before Income Taxes



Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

(in thousands)

Income (loss) from $ - $ 674 $ (12,641 ) $ 29,804 discontinued operations,net of taxes Adjustments to income:Transaction-related - 5,479 6,265 7,735 expenses (b)Loss on sale (f) - - 14,254 -

Loss on impairment (g) - 20,239 - 20,239

Provision for (benefit - (2,025 ) 472 (3,003 )from) income taxesAdjusted income from $ - $ 24,367 $ 8,350 $ 54,775 discontinued operationsbefore income taxes See footnotes on page 12. Acadia Healthcare Company, Inc.Footnotes We have included certain financial measures in this press release, includingEBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted income fromcontinuing operations before income taxes attributable to Acadia HealthcareCompany, Inc., Adjusted income from continuing operations attributable toAcadia Healthcare Company, Inc., Adjusted income from discontinued operationsbefore income taxes and Adjusted income attributable to Acadia HealthcareCompany, Inc., which are "non-GAAP financial measures" as defined under therules and regulations promulgated by the SEC. We define EBITDA as net income adjusted for net income attributable tononcontrolling interests, loss (income) from discontinued operations, net oftaxes, provision for income taxes, net interest expense and depreciation andamortization. We define Adjusted EBITDA as EBITDA adjusted for equity-basedcompensation expense, transaction-related expenses, debt extinguishment costsand loss on impairment. We define Adjusted EBITDA margin as Adjusted EBITDAdivided by revenue. We define Adjusted income from continuing operations beforeincome taxes attributable to Acadia Healthcare Company, Inc. as net incomeadjusted for loss from discontinued operations, net of taxes,transaction-related expenses, debt extinguishment costs, loss on impairment andprovision for income taxes. We define Adjusted income from continuingoperations attributable to Acadia Healthcare Company, Inc. as net incomeattributable to Acadia Healthcare Company, Inc. adjusted for loss fromdiscontinued operations, net of taxes, transaction-related expenses, debtextinguishment costs, loss on impairment, provision for income taxes and incometax effect of adjustments to income. We define Adjusted income fromdiscontinued operations before income taxes as (loss) income from discontinuedoperations, net of taxes, adjusted for transaction-related expenses, loss onsale, loss on impairment and provision for (benefit from) income taxes. We define Adjusted income attributable to Acadia Healthcare Company, Inc. asthe sum of Adjusted income from continuing operations before income taxesattributable to Acadia Healthcare Company, Inc., Adjusted income fromdiscontinued operations before income taxes and income tax effect ofadjustments to income. The non-GAAP financial measures presented herein are supplemental measures ofour performance and are not required by, or presented in accordance with,generally accepted accounting principles in the United States ("GAAP"). Thenon-GAAP financial measures presented herein are not measures of our financialperformance under GAAP and should not be considered as alternatives to netincome or any other performance measures derived in accordance with GAAP or asan alternative to cash flow from operating activities as measures of ourliquidity. Our measurements of these non-GAAP financial measures may not becomparable to similarly titled measures of other companies. We have includedinformation concerning the non-GAAP financial measures in this press releasebecause we believe that such information is used by certain investors asmeasures of a company's historical performance. We believe these measures arefrequently used by securities analysts, investors and other interested partiesin the evaluation of issuers of equity securities, many of which presentsimilar non-GAAP financial measures when reporting their results. Because thenon-GAAP financial measures are not measurements determined in accordance withGAAP and are thus susceptible to varying calculations, the non-GAAP financialmeasures, as presented, may not be comparable to other similarly titledmeasures of other companies. Our presentation of these non-GAAP financialmeasures should not be construed as an inference that our future results willbe unaffected by unusual or nonrecurring items. (a) Represents the equity-based compensation expense of Acadia. (b) Represents transaction-related expenses incurred by Acadia primarilyrelated to termination, restructuring, strategic review, acquisition and othersimilar costs. (c) Represents debt extinguishment costs recorded during the first quarter of2021 in connection with the redemption of the 5.625% Senior Notes and 6.500%Senior Notes and the termination of the Prior Credit Facility and during thesecond quarter of 2020 in connection with the redemption of the 6.125% SeniorNotes and 5.125% Senior Notes. (d) The Company opened a 260-bed replacement hospital in Pennsylvania andrecorded a non-cash property impairment charge of $23.2 million for theexisting facility during the second quarter of 2021. Additionally, during thethird quarter of 2021, the Company recorded a $1.1 million non-cash propertyimpairment charge for one facility in Louisiana resulting from hurricanedamage. (e) Represents the income tax effect of adjustments to income based on taxrates of 25.7% and 17.2% for the three months ended September 30, 2021 and2020, respectively, and 26.8% and 16.4% for the nine months ended September 30,2021 and 2020, respectively. During the three and nine months ended September30, 2021, the Company recorded a tax benefit of $0.2 million and $1.9 million,respectively, from ASU 2016-09 "Improvements to Employee Share-Based PaymentAccounting". During the three and nine months ended September 30, 2021, theCompany recorded a tax benefit of $3.1 million related to the release of avaluation allowance placed on capital gains for certain facilities disposed ofin prior periods. Both tax benefits were excluded from the adjusted taxprovision for the three and nine months ended September 30, 2021. (f) Represents the adjustments to the loss on sale recorded in connection withthe sale of our U.K. operations in January 2021 to reflect an increase in theU.K. carrying value. (g) For the three and nine months ended September 30, 2020, represents anon-cash lease impairment charge of $16.4 million and a non-cash long-livedasset impairment charge of $3.8 million related to the decision to closecertain U.K. elderly care facilities. View source version on businesswire.com: https://www.businesswire.com/news/home/20211028006111/en/

CONTACT: Gretchen Hommrich Director, Investor Relations (615) 861-6000