雅虎香港財經 Acadia Healthcare Company, Inc. (NASDAQ:ACHC) Q1 2024 Earnings Call Transcript
Acadia Healthcare Company, Inc. (NASDAQ:ACHC) Q1 2024 Earnings Call Transcript May 3, 2024
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Operator: Good day, and welcome to Acadia Healthcare’s First Quarter of 2024 Earnings Call. [Operator Instructions] Also please be aware that today’s call is being recorded. I would now like to turn the call over to Patrick Feeley, Head of Investor Relations. Please go ahead.
Patrick Feeley: Thank you, and good morning. Yesterday after the market closed, we issued a press release announcing our first quarter 2024 financial results. This press release can be found in the Investor Relations section of the acadiahealthcare.com website. Here with me today to discuss the results are Chris Hunter, Chief Executive Officer; and Heather Dixon, Chief Financial Officer. To the extent any non-GAAP financial measures is discussed on today’s call, you will find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP in the press release that is posted on our website. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Acadia’s expected quarterly and annual financial performance for 2024 and beyond.
You are hereby cautioned that these statements may be affected by important factors, among others, set forth in Acadia’s filings with the Securities and Exchange Commission and the company’s first quarter news release and consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. At this time, I’d like to turn the conference call over to Chris for opening remarks.
Chris Hunter: Thank you, Patrick, and good morning, everyone. Thank you for being with us for Acadia’s first quarter 2024 conference call. Before we get to the results, I want to note some recent key additions to our leadership team. He just introduced this call, but I want to officially welcome Patrick Feeley to Acadia as our new Senior Vice President of Investor Relations. Patrick joins the company after leading Investor Relations for Teladoc Health. And prior to that, he spent several years in Health Care Equity Research covering the health care services sector. We want to also thank Gretchen Hommrich for her 8 years of dedicated service leading Investor Relations for Acadia. In early April, we announced Dr. Stephanie Eken as Acadia’s new Chief Medical Officer.
A triple board-certified physician, Dr. Eken brings more than two decades of behavioral health care experience in a variety of settings. She joins Acadia after spending 15 years at Rogers Behavioral Health, a not-for-profit nationwide independent provider of specialized mental health and addiction treatment. At Rogers, she most recently served as Chief Medical Officer partnering with the systems executive leadership to lead patient care quality and facilities expansion. We look forward to working with Dr. Eken and benefiting from her experience and expertise. We also want to thank Dr. Michael Genovese, who has served in this important role for Acadia since 2017. We’re grateful for his dedicated service and are pleased that he will continue in a consulting role for the company and work with Dr. Eken as we make this transition.
Now turning to our first quarter results. Total revenue increased 9.1% over the prior year’s first quarter to $768 million, driven by both rate improvement and patient day growth. Our top line growth, combined with strong operating leverage, drove adjusted EBITDA growth of 14.9% and adjusted EPS growth of 12.0%, as compared to the first quarter of 2023. We continue to be pleased with our progress on labor costs, improvements in the overall labor market combined with our continued efforts around hiring, retention and quality helped drive meaningful operating leverage and margin contribution in the first quarter. Those trends continue to give us a high level of confidence in our EBITDA outlook for the full year. On a same-store basis, revenue growth was strong, increasing 9.2% over the first quarter of last year.
During the quarter, we experienced slightly weaker-than-anticipated same-store patient volumes. This was primarily driven by greater than typical seasonality due to the timing of spring break in Easter, which occurred in March of this year compared to April of last year. While our first quarter outlook contemplated normal holiday seasonality around each of these events, the proximity of Easter to spring break resulted in an extended period of lower volumes through the back half of March. We also experienced weaker admissions towards the end of the quarter for our military specialty programs. Given the strong underlying demand for our services in the broader marketplace, we’re already well on our way towards rebuilding census at these facilities.
Overall demand for our services remain strong, and we believe we are well positioned within our markets for continued growth, especially given the visibility we have with new beds coming online and ramping up over the course of the calendar year. Now I’d like to provide an update on each of our five defined growth pathways. For our first pathway Facility Expansions, we added 27 beds during the first quarter. We continue to expect to add more than 400 beds to existing facilities in 2024, a step up from our historical average of 300. These additions will be more heavily weighted toward the second half of the year. For our second pathway, we remain focused on developing wholly owned De Novo Facilities in underserved markets for behavioral health care services.
During the first quarter, we opened a 20-bed specialty facility, Sabal Palms Recovery Center located near Tampa, Florida, which will provide residential addiction treatment services. Additionally, planning is already underway for an expansion to this facility. Following the end of the first quarter, Acadia opened a 100-bed acute care hospital, Agave Ridge Behavioral Hospital in Mesa, Arizona. We continue to plan to open up to 14 additional comprehensive treatment centers or CTCs in 2024. As a reminder, our CTC service line offers comprehensive care for patients who are affected by opioid use disorder or OUD. For our third growth pathway, we are working to expand our reach through our Joint Ventures. We’re extremely proud to partner with premier health care systems across the country with a shared mission to expand behavioral health care in more communities.
During the first quarter, we commenced construction on two new hospitals with previously announced partners. Acadia held groundbreaking ceremonies for a 144-bed behavioral health hospital in Apopka, Florida, in partnership with Orlando Health, as well as another 144-bed behavioral health hospital in Malden, Massachusetts, in partnership with Tufts Medicine. These facilities will expand much needed access to life-saving behavioral health services in their respective communities. Today, Acadia has 21 joint venture partnerships for 22 hospitals, with 11 hospitals already in operation and 11 additional hospitals expected to open over the next few years. Joint Ventures will continue to play an important role in Acadia’s future growth and we are excited about the opportunities to work with other leading providers in attractive geographies.
For our fourth pathway, we continue to look for acquisitions that support our growth objectives and meet the criteria of our capital allocation strategy. During the quarter, we closed on the acquisition of Turning point Centers, a 76-bed specialty provider of substance abuse disorder and primary mental health care treatment services in Utah. At the end of the first quarter, we completed the acquisition of 3 CTCs in North Carolina, serving patients with OUD in Raleigh, Greenville, and Hillsborough and their respective surrounding communities. These acquisitions build upon our existing and strong clinical foundation within the state of North Carolina. North Carolina is a focus for Acadia to expand capacity and add additional sites of care given the state’s immense need and progressive approach to behavioral health care treatment programs.
With the addition of these 3 CTCs, Acadia now operates 10 CTC locations in North Carolina and 160 locations in 32 states across the country. As the opioid epidemic continues to intensify, we will continue to expand this important area of our business, as we see record demand for our CTC services. It’s estimated that 9 million Americans are suffering from OUD and only about 10% of this group is in treatment for medication-assisted therapy, which is considered the gold standard for treatment. As we have previously discussed, the increasing prevalence of fentanyl mixed with other potent drugs has escalated the complexity and severity of OUD. We remain focused on meeting the critical demand for treatment by improving access to treatment, driving favorable clinical outcomes and delivering an exceptional patient experience.
For our fifth growth pathway, extending the continuum of care remains important to our clinical strategy. One of the key focus areas of this pathway is expanding our partial hospitalization programs or PHPs in intensive outpatient programs, IOPs that can provide 4 to 6 hours of care per day. These programs not only improve clinical outcomes, but also enhance the overall patient experience. We added 15 outpatient programs during the first quarter of 2024, and we’ll continue to focus on this important clinical service. As we continue to extend our market reach, patient safety and quality – quality patient care remain top priorities for delivering the best possible outcome for our patients. Quality is foundational to every aspect of the work we do at Acadia and drives operational effectiveness.
We continue to make investments in our quality programs that drive greater efficiency, including electronic medical records, patient monitoring technology and employee safety technology. We also recognize the importance of having quality measures and the right technology in place to make sure we’re providing data that aligns with what our payers want to measure. We expect to compete on the strength of our clinical outcomes, and the ability to measure and demonstrate these outcomes is important for our collaborations with payers. We’re proud of the important work that we’re doing. The demand for our behavioral health services across our nation has never been greater. Every demographic is affected by the lack of affordable access to behavioral health services, especially for the poor and elderly populations.
While 1 in 5 adults have a mental illness, less than half of those received treatments. A recent report from the Office of the Inspector General or OIG found that about 1/3 of behavioral health providers in selected counties serve patients in the Medicare, Medicare Advantage or Medicaid programs. The shortage of providers also explains the lower use of the behavioral health system, with only 8% of Medicaid enrollees and less than 4% of Medicare and Medicare Advantage enrollees receiving behavioral health services. Acadia is dedicated to serving the needs of Medicare and Medicaid patients, as well as all other patients who come to us for care. For example, Acadia has 10 facilities that serve Medicare and Medicaid beneficiaries in the top 20 underserved counties cited by OIG in the study just referenced.
We believe there are significant opportunities ahead for Acadia to extend our market reach to serve even more patients in 2024. Our strategic priorities will focus on accelerating facility growth, expanding services across the care continuum, strengthening our core capabilities and strategically leveraging technology to enhance patient care and improve clinical outcomes, all with a focus on delivering the highest quality patient care. We’re well positioned to meet our objectives with our impressive scale and proven operating model across our network of 258 facilities. The financial strength to support our continued growth and over 23,500 committed employees and clinicians, who work hard every day to address the nation’s critical need for safe quality treatment for mental health and substance use issues.
At this time, I will now turn the call over to Heather to discuss our financial results for the quarter.
Heather Dixon: Thanks, Chris, and good morning, everyone. Our first quarter financial performance reflects continued growth across our business and a solid start to the year. We reported $768.1 million in revenue for the quarter, representing an increase of 9.1% over the first quarter of last year. As Chris discussed, we experienced certain headwinds in the quarter that affected our same-store revenue and patient day growth by approximately 150 basis points. Despite this, we drove same facility revenue growth of 9.2% over the first quarter of 2023, including a 6.9% increase in revenue per patient day and a 2.2% increase in patient days. Adjusted EBITDA for the first quarter of 2024 increased 14.9% over the prior year to $173.9 million.
Adjusted EBITDA margins expanded by over 100 basis points over the prior year’s first quarter to 22.6%, a reflection of strong cost control efforts particularly on the labor line. Adjusted income attributable to Acadia shareholders per diluted share was $0.84, up 12% from the prior year. Consistent with previous periods, adjustments to income for the first quarter of 2024 include transaction, legal and other costs and related income tax effects of all items. We continue to focus on maintaining a strong financial position, providing the flexibility to deploy capital and make strategic investments in our business that offer the greatest return. As of March 31, 2024, we had $77.3 million in cash and cash equivalents and $371.5 million available under our $600 million revolving credit facility, with a net leverage ratio of approximately 2.5x Moving on to our outlook for 2024, as noted in our press release, we have affirmed our previously announced 2024 guidance, which includes revenue in the range of $3.18 billion to $3.25 billion, adjusted EBITDA in the range of $730 million to $770 million, adjusted earnings per diluted share in the range of $3.40 to $3.70.
And total bed additions, excluding acquisitions, of approximately 1,200 beds. Please note that our guidance includes onetime payments from a state of approximately $10 million or $0.09 per diluted share for the year, of which approximately $7 million or $0.06 per diluted share was received in the first quarter of 2024, in line with our prior expectations. Also as a reminder, the company’s guidance does not include the impact of any future acquisitions, divestitures, transaction, legal and other costs or non-recurring legal settlements expense. With that, operator, we’re ready to open the call for questions.
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