424B5 1 d447815d424b5.htm 424B5 424B5
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FILED PURSUANT TO RULES 424(b)(5) AND 424(b)(7)
REGISTRATION NO. 333-184456

 

The information in this preliminary prospectus supplement is not complete and may be changed. This preliminary prospectus supplement and the accompanying prospectus are not an offer to sell these securities and they are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

Subject to Completion

Preliminary Prospectus Supplement dated December 4, 2012

PROSPECTUS    SUPPLEMENT

(To prospectus dated November 1, 2012)

9,576,624 Shares

 

LOGO

Acadia Healthcare Company, Inc.

Common Stock

 

 

We are selling 6,000,000 shares of our common stock, and the selling stockholders are selling 3,576,624 shares of our common stock. We will not receive any proceeds from the sale of shares to be offered by the selling stockholders. Certain of the selling stockholders are members of our senior management. See “Selling Stockholders” beginning on page S-35 of this prospectus supplement.

Our shares trade on The NASDAQ Global Market under the symbol “ACHC.” On November 30, 2012, the last sale price of the shares as reported on The NASDAQ Global Market was $22.95 per share.

Investing in the common stock involves risks that are described in the “Risk Factors” section beginning on page S-11 of this prospectus supplement.

 

 

 

      

Per Share

      

Total

 

Public offering price

     $           $     

Underwriting discount

     $           $     

Proceeds, before expenses, to us

     $           $     

Proceeds, before expenses, to the selling stockholders

     $           $     

The underwriters may also exercise their option to purchase up to an additional 900,000 shares from us and up to an additional 536,495 shares, collectively, from the selling stockholders, at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus supplement.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The shares will be ready for delivery on or about                     , 2012.

 

 

Joint Book-Running Managers

 

BofA Merrill Lynch    Citigroup    Jefferies

 

 

Co-Managers

 

Raymond James    RBC Capital Markets    Avondale Partners

 

 

The date of this prospectus supplement is                     , 2012.


Table of Contents

TABLE OF CONTENTS

 

    

Page

 
Prospectus Supplement   

ABOUT THIS PROSPECTUS SUPPLEMENT

     S-ii   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

     S-ii   

CAUTIONARY NOTE REGARDING FINANCIAL INFORMATION

     S-iv   

MARKET AND INDUSTRY DATA

     S-v   

TRADEMARKS AND TRADE NAMES

     S-v   

NON-GAAP FINANCIAL MEASURES

     S-v   

PROSPECTUS SUPPLEMENT SUMMARY

     S-1   

SUMMARY HISTORICAL CONDENSED CONSOLIDATED FINANCIAL DATA AND UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

     S-6   

RISK FACTORS

     S-11   

USE OF PROCEEDS

     S-17   

PRICE RANGE OF OUR COMMON STOCK

     S-18   

DIVIDEND POLICY

     S-18   

CAPITALIZATION

     S-19   

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     S-20   

SELLING STOCKHOLDERS

     S-35   

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

     S-37   

UNDERWRITING

     S-41   

LEGAL MATTERS

     S-47   

EXPERTS

     S-47   

WHERE YOU CAN FIND MORE INFORMATION

     S-48   

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

     S-49   
Prospectus   

ABOUT THIS PROSPECTUS

     2   

THE COMPANY

     3   

RISK FACTORS

     3   

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     3   

USE OF PROCEEDS

     5   

DESCRIPTION OF COMMON STOCK

     5   

SELLING STOCKHOLDERS

     9   

PLAN OF DISTRIBUTION

     9   

LEGAL MATTERS

     11   

EXPERTS

     11   

WHERE YOU CAN FIND MORE INFORMATION

     11   

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     12   

 

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ABOUT THIS PROSPECTUS SUPPLEMENT

This prospectus supplement is a supplement to the accompanying prospectus. This prospectus supplement and the accompanying prospectus are part of a registration statement that we filed with the Securities and Exchange Commission, or SEC, utilizing a shelf registration process. Under this shelf registration process, we and selling stockholders may sell from time to time the securities described in the accompanying prospectus in one or more offerings such as this offering. This prospectus supplement provides you with specific information about our common stock that we and the selling stockholders are selling in this offering. Both this prospectus supplement and the accompanying prospectus include important information about us, the selling stockholders and other information you should know before investing. This prospectus supplement also adds to, updates and changes information contained in the accompanying prospectus. To the extent the information in this prospectus supplement is different from that in the accompanying prospectus, you should rely on the information in this prospectus supplement. You should read both this prospectus supplement and the accompanying prospectus, together with the additional information described in the sections entitled “Where You Can Find More Information” and “Incorporation of Certain Information by Reference” of this prospectus supplement, before investing in our common stock.

You should rely only on the information contained in or incorporated by reference into this prospectus supplement and the accompanying prospectus and in any related free writing prospectus we prepare or authorize. We have not, and the selling stockholders and the underwriters have not, authorized any other person to provide you with different information. This prospectus supplement and the accompanying prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this prospectus supplement and the accompanying prospectus is complete and accurate as of the date on the front cover, but the information may have changed since that date.

You should not consider any information in this prospectus supplement or the accompanying prospectus to be investment, legal or tax advice. You should consult your own counsel, accountants and other advisers for legal, tax, business, financial and related advice regarding the purchase of shares of our common stock.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Some of the statements made in this prospectus supplement and the accompanying prospectus constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any statements that address future results or occurrences. In some cases you can identify forward-looking statements by terminology such as “may,” “might, “will,” “should,” “could” or the negative thereof. Generally, the words “anticipate,” “believe,” “continues,” “expect,” “intend,” “estimate,” “project,” “plan” and similar expressions identify forward-looking statements. In particular, statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance contained in this prospectus supplement under the headings “Prospectus Supplement Summary” and “Risk Factors” are forward-looking statements.

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors, many of which are outside of our control, which could cause our actual results, performance or achievements to differ materially from any results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to:

 

   

our ability to close our planned acquisitions of Behavioral Centers of America, LLC and AmiCare Behavioral Centers, LLC and to obtain the necessary financing on time;

 

   

our ability to amend our existing senior secured credit facility on time, on currently anticipated terms, or at all;

 

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the impact of payments received from the government and third-party payors on our revenues and results of operations;

 

   

our significant indebtedness, our ability to meet our debt obligations, and our ability to incur substantially more debt;

 

   

our future cash flow and earnings;

 

   

our restrictive covenants, which may restrict our business and financing activities;

 

   

our ability to make payments on our financing arrangements;

 

   

the impact of the economic and employment conditions in the United States on our business and future results of operations;

 

   

compliance with laws and government regulations;

 

   

the impact of claims brought against our facilities;

 

   

the impact of governmental investigations, regulatory actions and whistleblower lawsuits;

 

   

the impact of recent health care reform;

 

   

the impact of our highly competitive industry on patient volumes;

 

   

the impact of the trend by insurance companies and managed care organizations entering into sole source contracts;

 

   

the impact of recruitment and retention of quality psychiatrists and other physicians on our performance;

 

   

the impact of competition for staffing on our labor costs and profitability;

 

   

our dependence on key management personnel, key executives and our local facility management personnel;

 

   

our acquisition strategy, which exposes us to a variety of operational and financial risks;

 

   

difficulties in successfully integrating the operations of acquired facilities or realizing the potential benefits and synergies of these acquisitions;

 

   

the impact of state efforts to regulate the construction or expansion of health care facilities on our ability to operate and expand our operations;

 

   

our potential inability to extend leases at expiration;

 

   

the impact of controls designed to reduce inpatient services on our revenues;

 

   

the impact of different interpretations of accounting principles on our results of operations or financial condition;

 

   

the impact of environmental, health and safety laws and regulations, especially in states where we have concentrated operations;

 

   

the impact of an increase in uninsured and underinsured patients or the deterioration in the collectability of the accounts of such patients on our results of operations;

 

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the impact of legislative and regulatory initiatives relating to privacy and security of patient health information and standards for electronic transactions;

 

   

failure to achieve and maintain effective internal control over financial reporting;

 

   

the impact of fluctuations in our operating results, quarter to quarter earnings and other factors on the price of our common stock;

 

   

changes in our board and corporate governance as a result of our no longer qualifying as a “controlled company”;

 

   

the impact of our sponsor’s rights over certain company matters; and

 

   

the other risks described under the heading “Risk Factors” in this prospectus supplement and the accompanying prospectus and in similarly titled sections in our other reports that we file with the SEC.

Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. These risks and uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. These forward-looking statements are made only as of the date of this prospectus supplement. We do not undertake and specifically decline any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect future events or developments.

CAUTIONARY NOTE REGARDING FINANCIAL INFORMATION

We have incorporated by reference in this prospectus supplement two different sets of financial statements as of December 31, 2011 and 2010, and for each of the years in the three-year period ended December 31, 2011. Each of these two sets of financial statements has a different basis of presentation. The different presentations, required by generally accepted accounting principles in the United States, or GAAP, result from our June 2012 disposition of our PsychSolutions facility in Miami, Florida, or the PsychSolutions Disposition.

Financial Accounting Standards Board Accounting Standards Codification 205-20, “Discontinued Operations,” or ASC 205-20, requires that all components of an entity that has been disposed of (by sale, by abandonment or in a distribution to owners) or is held for sale, and whose cash flows can be clearly distinguished from the rest of the entity, be presented as discontinued operations. Our Quarterly Reports on Form 10-Q for the three months ended June 30, 2012 and September 30, 2012 were prepared in accordance with ASC 205-20. Under SEC requirements, the same reclassification to discontinued operations that is required by ASC 205-20 is also required for previously issued financial statements for each of the three years shown in our last Annual Report on Form 10-K, if those financial statements are incorporated by reference in subsequent filings with the SEC made under the Securities Act of 1933, as amended, or the Securities Act, such as the registration statement of which this prospectus supplement and the accompanying prospectus form a part, even though those financial statements relate to periods prior to the date the operations were exited or made available for sale. This reclassification had no effect on our reported net income and should not be read as a restatement of our Annual Report on Form 10-K for the fiscal year ended December 31, 2011. While our Quarterly Reports on Form 10-Q for the three months ended June 30, 2012 and September 30, 2012 reflected the PsychSolutions facility as a discontinued operation, the unaudited interim financial statements for the three months ended March 31, 2012 will not reflect the reclassification to discontinued operations until the inclusion of such period in our Quarterly Report on Form 10-Q for the three months ended March 31, 2013.

We have incorporated by reference in this prospectus supplement the financial statements and other financial information (including financial information under the captions “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) included in our

 

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Current Report on Form 8-K filed with the SEC on October 17, 2012. Those financial statements and other financial information, which supersede the corresponding information included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, give effect to the PsychSolutions Disposition. We refer to all financial statements and other financial information filed on the Current Report on Form 8-K described in this paragraph as the “Post Disposition Financials.”

In accordance with the rules and regulations of the SEC, we have also incorporated by reference in this prospectus supplement the financial statements and other financial information (including financial information under the captions “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and interim unaudited financial statements and other financial information (including financial information under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) included in our Quarterly Report on Form 10-Q for the three months ended March 31, 2012. The financial statements and other financial information in these reports do not include ASC 205-20 adjustments. We refer to all financial statements and other financial information described in this paragraph as the “Prior Financials.”

You should not rely on the Prior Financials in assessing our financial performance or making an investment decision with respect to this offering. You should instead review carefully and consider the Post Disposition Financials in assessing our financial performance or making an investment decision.

MARKET AND INDUSTRY DATA

Market data and other statistical information used throughout this prospectus supplement are based on independent industry publications, government publications, reports by market research firms or other published independent sources. Some data are also based on our good faith estimates, which are derived from management’s review of internal data and information, as well as the independent sources listed above. Although we believe these sources are reliable, we have not independently verified the information, and we have not ascertained the underlying economic assumptions relied upon therein, and cannot guarantee its accuracy and completeness. Statements as to our market position are based on market data currently available to us and, primarily, on management estimates as information regarding most of our major competitors is not publicly available. Our estimates involve risks and uncertainties, and are subject to change based on various factors, including those discussed under the heading “Risk Factors” in this prospectus supplement.

TRADEMARKS AND TRADE NAMES

This prospectus supplement includes our trademarks, which are protected under applicable intellectual property laws and are the property of Acadia Healthcare Company, Inc. or its subsidiaries. This prospectus supplement also contains trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus supplement may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks and trade names.

NON-GAAP FINANCIAL MEASURES

We have included certain financial measures in this prospectus supplement, including pro forma EBITDA and pro forma adjusted EBITDA, which are “non-GAAP financial measures” as defined under the rules and regulations promulgated by the SEC. We define pro forma EBITDA as pro forma net income (loss) adjusted for loss (income) from discontinued operations, net interest expense, income tax provision (benefit) and depreciation and amortization. We define pro forma adjusted EBITDA as pro forma EBITDA adjusted for equity-based compensation expense, cost savings, rent elimination, legal settlement, integration and

 

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closing costs, rate increases, startup losses, reimbursement adjustments, divestiture costs, bad debt accounting policy changes and Cedar Crest locum tenens adjustment. For a reconciliation of pro forma net income (loss) to pro forma adjusted EBITDA, see “Prospectus Supplement Summary–Summary Historical Condensed Consolidated Financial Data and Unaudited Pro Forma Condensed Combined Financial Data–Summary Unaudited Pro Forma Condensed Combined Financial Data.” We may not achieve all of the expected benefits from synergies, cost savings and recent improvements to our revenue base.

Pro forma EBITDA and pro forma adjusted EBITDA, as presented in this prospectus supplement, are supplemental measures of our performance and are not required by, or presented in accordance with, GAAP. Pro forma EBITDA and pro forma adjusted EBITDA are not measures of our financial performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as measures of our liquidity. Our measurements of pro forma EBITDA and pro forma adjusted EBITDA may not be comparable to similarly titled measures of other companies and are not measures of performance calculated in accordance with GAAP. We have included information concerning pro forma EBITDA and pro forma adjusted EBITDA in this prospectus supplement because we believe that such information is used by certain investors as measures of a company’s historical performance. We believe these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of issuers of equity securities, many of which present EBITDA and adjusted EBITDA when reporting their results. Our presentation of pro forma EBITDA and pro forma adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

 

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PROSPECTUS SUPPLEMENT SUMMARY

The information below is a summary of the more detailed information included elsewhere or incorporated by reference in this prospectus supplement and the accompanying prospectus. You should read carefully the following summary together with the more detailed information contained in this prospectus supplement, the accompanying prospectus and the information incorporated by reference into those documents, including the “Risk Factors” section beginning on page S-11 of this prospectus supplement and the “Risk Factors” section in the accompanying prospectus, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and in our other reports that we file with the SEC. This summary is not complete and does not contain all of the information you should consider when making your investment decision.

In this prospectus supplement, unless the context requires otherwise, references to “Acadia,” the “Company,” “we,” “us” or “our” refer to Acadia Healthcare Company, Inc. and its predecessor, Acadia Healthcare Company, LLC. When we refer to our operations or results “on a pro forma basis,” we mean the statement is made as if each of the listed acquisitions had been completed as of the date stated or as of the beginning of the period referenced.

Our Company

Overview. We are the leading publicly traded pure-play provider of inpatient behavioral health care services in the United States based upon number of licensed beds. Upon completion of the planned acquisitions described in this prospectus supplement, we expect we will operate 42 behavioral health care inpatient and outpatient facilities with over 3,100 licensed beds in 21 states. We believe that our primary focus on the provision of behavioral health care services allows us to operate more efficiently and provide higher quality care than our competitors. On a pro forma basis for the nine months ended September 30, 2012 and the year ended December 31, 2011, giving effect to the acquisitions of Youth and Family Centered Services, Inc., or YFCS, PHC Inc., or PHC, three inpatient behavioral health care facilities from Haven Behavioral Healthcare Holdings, LLC, or the Haven Facilities, Timberline Knolls, Behavioral Centers of America, LLC, or BCA, and AmiCare Behavioral Centers, LLC, or AmiCare, we would have generated pro forma revenue of approximately $415.7 million and approximately $508.8 million, respectively, and pro forma adjusted EBITDA of $88.6 million and $98.5 million, respectively. A reconciliation of all GAAP and non-GAAP financial results appears on pages S-9 and S-10 of this prospectus supplement.

Our inpatient facilities offer a wide range of inpatient behavioral health care services for children, adolescents and adults. We offer these services through a combination of acute inpatient behavioral facilities and residential treatment centers, or RTCs. Our acute inpatient behavioral facilities provide the most intensive level of care, including 24-hour skilled nursing observation and care, daily interventions and oversight by a psychiatrist and intensive, highly coordinated treatment by a physician-led team of mental health professionals. Our RTCs offer longer-term treatment programs primarily for children and adolescents with long-standing chronic behavioral health problems. Our RTCs provide physician-led, multi-disciplinary treatments that address the overall medical, psychiatric, social and academic needs of the patient. During the nine months ended September 30, 2012, we added 213 beds to existing facilities, and we expect to add approximately 70 more beds during the last quarter of 2012. As a result of our facility expansions and planned acquisitions, acute inpatient beds are expected to represent approximately 54% of total beds at the end of 2012 compared to 33% of total beds at the end of 2011.

Our outpatient community-based services provide therapeutic treatment to children and adolescents who have a clinically defined emotional, psychiatric or chemical dependency disorder while enabling patients to remain at home and within their community. Many patients who participate in community-based programs have transitioned out of a residential facility or have a disorder that does not require placement in a facility that provides 24-hour care.

 

 

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Our Competitive Strengths

We believe the following strengths differentiate us from our competitors:

Premier operational management team with track record of success. Our management team has approximately 158 combined years of experience in acquiring, integrating and operating a variety of behavioral health care facilities. Following the sale of Psychiatric Solutions, Inc., or PSI, to Universal Health Services, Inc., or UHS, in November 2010, certain of PSI’s key former executive officers joined Acadia in February 2011. The combination of the Acadia management team with the operational expertise of the former PSI management team gives us what we believe to be the premier leadership team in the behavioral health care industry. The management team intends to bring its years of experience operating behavioral health care facilities to generate strong cash flow and future growth.

Favorable industry and legislative trends. According to the National Institute of Mental Health, approximately 6% of people in the United States suffer from a serious mental illness and over 20% of youth, either currently or at some point during their life, have a mental disorder. We believe the market for behavioral services will continue to grow as a result of increased awareness of mental health and substance abuse conditions and treatment options. National expenditures on mental health and substance abuse treatment are projected to reach $239 billion in 2014, up from $121 billion in 2003, representing a compound annual growth rate of approximately 6.4%. While the growing awareness of mental health and substance abuse conditions is expected to accelerate demand for services, recent health care reform is expected to increase access to industry services as more people obtain insurance coverage. The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, or the MHPAEA, provides for equal coverage between psychiatric or mental health services and conventional medical health services and forbids employers and insurers from placing stricter limits on mental health care compared to other health conditions.

Leading platform in attractive health care niche. We are a leading behavioral health care platform in an industry that is undergoing consolidation in an effort to reduce costs and better negotiate with larger payor organizations. In addition, the behavioral health care industry has significant barriers to entry, including (i) significant initial capital outlays required to open new facilities, (ii) expertise required to deliver highly specialized services safely and effectively and (iii) high regulatory hurdles that require market entrants to be knowledgeable of state and federal laws and be licensed with local agencies at the facility level.

Diversified revenue and payor bases. The acquisitions of YFCS, PHC, the Haven Facilities, Timberline Knolls and Park Royal Hospital and the planned acquisitions of BCA and AmiCare will increase our payor, patient/client and geographic diversity, which mitigates the potential risk associated with any single facility. On a pro forma basis for the 12 months ended September 30, 2012, giving effect to these acquisitions, we received 57% of our revenue from Medicaid, 23% from commercial payors, 14% from Medicare and 6% from other payors. As we receive Medicaid payments from 27 states and the District of Columbia, we do not believe that we are significantly affected by changes in reimbursement policies in any one state. Substantially all of our Medicaid payments relate to the care of children and adolescents. Management believes that children and adolescents are a patient class that is less susceptible to reductions in reimbursement rates. On a pro forma basis, giving effect to the acquisitions, our largest facility would have accounted for approximately 6% of total revenue for the 12 months ended September 30, 2012, and no other facility would have accounted for more than 5% of total revenue for the same period. Additionally, on a pro forma basis, no state would have accounted for more than 21% of total revenue for the 12 months ended September 30, 2012. We believe that our increased geographic diversity will mitigate the impact of any financial or budgetary pressure that may arise in a particular state where we operate.

Strong cash flow generation and low capital requirements. We generate strong free cash flow by profitably operating our business and by actively managing our working capital. Moreover, as the behavioral health care business does not typically require the procurement and replacement of expensive medical

 

 

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equipment, our maintenance capital expenditure requirements are generally less than that of other facility-based health care providers. For the year ended December 31, 2011, our maintenance capital expenditures amounted to approximately 1.6% of our revenue. In addition, our accounts receivable management is less complex than medical/surgical hospital providers because there are fewer billing codes for inpatient behavioral health care facilities.

Our Business Strategy

We are committed to providing the communities we serve with high quality, cost-effective behavioral health care services, while growing our business, increasing profitability and creating long-term value for our stockholders. To achieve these objectives, we have aligned our activities around the following growth strategies:

Increase margins by enhancing programs and improving performance at existing facilities. We believe we can improve efficiencies and increase operating margins by utilizing our management’s expertise and experience within existing programs and their expertise in improving performance at underperforming facilities. We believe the efficiencies can be realized by investing in growth in strong markets, addressing capital-constrained facilities that have underperformed and improving management systems. Furthermore, our recent acquisitions give us an opportunity to develop a national marketing strategy in many markets, which should help to increase the geographic footprint from which our existing facilities attract patients and referrals.

Opportunistically pursue acquisitions. We have established a national platform for becoming the leading dedicated provider of high quality behavioral health care services in the United States. Our industry is highly fragmented, and we selectively seek opportunities to expand and diversify our base of operations by acquiring additional facilities. We believe there are a number of acquisition candidates available at attractive valuations, and we have a number of potential acquisitions in various stages of development and consideration. We believe our focus on inpatient behavioral health care and history of completing acquisitions provides us with a strategic advantage in sourcing, evaluating and closing acquisitions. We intend to focus our efforts on acquiring additional acute psychiatric facilities, which should increase the percentage of such facilities in our portfolio. We leverage our management team’s expertise to identify and integrate acquisitions based on a disciplined acquisition strategy that focuses on quality of service, return on investment and strategic benefits. We also have a comprehensive post-acquisition strategic plan to facilitate the integration of acquired facilities that includes improving facility operations, retaining and recruiting psychiatrists and expanding the breadth of services offered by the facilities.

Drive organic growth of existing facilities. We seek to increase revenue at our facilities by providing a broader range of services to new and existing patients and clients. Our acquisitions have presented us with opportunities to provide a wider array of behavioral health services (including adult services and acute-care services) to patients and clients in the markets serviced, without increasing the number of our licensed beds. We also intend to increase licensed bed counts in our existing facilities, with a focus on increasing the number of acute psychiatric beds. For example, we added 76 beds to existing facilities during 2011, 213 during the nine months ended September 30, 2012, and expect to add approximately 70 more new beds to existing facilities during the fourth quarter of 2012. Furthermore, we believe that opportunities exist to leverage out-of-state referrals to increase volume and minimize payor concentration, especially with respect to our youth and adolescent focused services and our substance abuse services.

Recent Developments

On August 31, 2012, we completed the acquisition of Timberline Knolls, a 122-bed inpatient behavioral health facility located outside of Chicago in Lemont, Illinois. The total consideration paid for the business and a related transaction to purchase the real estate was $89.8 million.

On November 11, 2012, we completed the acquisition of Park Royal Hospital, a 76-bed acute inpatient psychiatric hospital in Ft. Myers, Florida, for approximately $33.6 million in cash and assumed debt.

 

 

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On November 21, 2012, a subsidiary of Acadia entered into an agreement to acquire BCA, headquartered in Nashville, Tennessee, for total consideration of $145 million in cash, as adjusted for net indebtedness, transaction expenses and net working capital at closing. BCA operates three inpatient psychiatric facilities and one psychiatric hospital within a hospital. The facilities are located in Ohio, Michigan and Texas and have 278 licensed inpatient beds, over 90% of which are acute inpatient beds. We expect to close the transaction, subject to certain closing conditions, in late December 2012. We cannot assure you that this acquisition will close as expected or at all. See “Risk Factors–We may be unable to complete our planned acquisitions of BCA and AmiCare on currently anticipated terms, or at all.”

On November 23, 2012, a subsidiary of Acadia entered into an agreement to acquire AmiCare, headquartered in Fayetteville, Arkansas, for total consideration of $113 million in cash, as adjusted for net working capital at closing. AmiCare operates four inpatient psychiatric facilities in Arkansas that have 330 licensed inpatient beds, nearly 70% of which are acute inpatient beds. We expect to close the transaction, subject to certain closing conditions, in late December 2012. We cannot assure you that this acquisition will close as expected or at all. See “Risk Factors–We may be unable to complete our planned acquisitions of BCA and AmiCare on currently anticipated terms, or at all.”

We intend to fund the planned acquisitions of BCA and AmiCare in part through this financing and in part through the amendment of our senior secured credit facility, or the Senior Secured Credit Facility. As we do not currently have sufficient capacity under our Senior Secured Credit Facility, we are currently negotiating an amendment to provide for a credit facility of approximately $389.0 million. We anticipate that the amended Senior Secured Credit Facility will provide for a $75.0 million revolver, a $149.0 million Existing Term Loan and a $165.0 million Incremental Term Loan A. We expect this amendment to be effective commensurate with the closing of these acquisitions in late December. We cannot assure you that this amendment will be executed as anticipated or at all. See “Risk Factors–We may be unable to complete our planned acquisitions of BCA and AmiCare on currently anticipated terms, or at all.”

Equity Sponsor

Prior to this offering, Waud Capital Partners, L.L.C., or Waud Capital Partners, controlled approximately 43% of our common stock. Founded in 1993, Waud Capital Partners is a leading middle-market private equity firm that partners with management teams to create, acquire and grow companies that address significant, inefficient, highly fragmented and underserved industry segments. Waud Capital Partners invests primarily through control-oriented growth equity investments, industry consolidations, buyouts or recapitalizations and seeks companies that generate strong cash flow and can be grown both organically and through add-on acquisitions. Waud Capital Partners’ current and exited portfolio is composed of companies in the health care, business/consumer, logistics/specialty distribution and value-added industrial business segments. See “Selling Stockholders.”

Waud Capital Partners currently is entitled to designate a majority of our directors and, so long as it owns at least 17.5% of our outstanding common stock, has consent rights to many corporate actions, such as issuing equity or debt securities, paying dividends, acquiring any interest in another company and materially changing our business activities. This means that we cannot engage in any of those activities without the consent of Waud Capital Partners. See “Risk Factors–We are party to a stockholders agreement with Waud Capital Partners which provides them with certain rights over Company matters.”

Company Information

Our principal executive offices are located at 830 Crescent Centre Drive, Suite 610, Franklin, Tennessee 37067. Our telephone number is (615) 861-6000. Our website is www.acadiahealthcare.com. The information contained on our website is not part of this prospectus supplement and is not incorporated by reference in this prospectus supplement.

 

 

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THE OFFERING

 

Common stock offered by us

6,000,000 shares

 

Common stock offered by the selling stockholders

3,576,624 shares

 

Underwriters’ option to purchase additional shares

1,436,495 shares (consisting of 900,000 shares from us and 536,495 shares, collectively, from the selling stockholders)

 

Common stock outstanding after this offering

47,824,800 shares

 

Use of proceeds

We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $131.3 million based on the assumed public offering price of $22.95 per share, which was the closing price of our common stock on November 30, 2012, as reported on The NASDAQ Global Market. We plan to use the proceeds from this offering principally to fund our acquisition strategy, particularly the planned acquisitions of BCA and AmiCare, and otherwise for general corporate purposes and the repayment of debt under the Senior Secured Credit Facility and our 12.875% senior notes due 2018, or the Senior Notes. We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders. See “Use of Proceeds.” Certain of the selling stockholders are members of our senior management. See “Selling Stockholders.”

 

Risk factors

You should carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page S-11 of this prospectus supplement, in the accompanying prospectus, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and in our other reports that we file with the SEC, which are incorporated by reference in this prospectus supplement, before making any decision to invest in our common stock.

 

Symbol for trading on The NASDAQ Global Market

ACHC

Unless otherwise indicated, all information in this prospectus supplement relating to the number of shares of our common stock outstanding immediately after the closing of this offering is based on 41,824,800 shares outstanding as of November 30, 2012, and:

 

   

gives effect to the issuance of 6,000,000 shares of our common stock to be sold by us in this offering;

 

   

assumes no exercise by the underwriters of their option to purchase up to 900,000 additional shares of our common stock from us; and

 

   

excludes:

 

  -  

552,972 shares issuable upon exercise of stock options outstanding as of November 30, 2012 at a weighted average exercise price of $13.09 per share;

 

  -  

380,402 shares issuable upon the vesting of restricted units outstanding as of November 30, 2012;

 

  -  

23,250 shares issuable upon exercise of warrants outstanding as of November 30, 2012 at a weighted average exercise price of $14 per share; and

 

  -  

an aggregate of 1,684,815 shares reserved for future grants under our 2011 Incentive Compensation Plan as of November 30, 2012.

 

 

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SUMMARY HISTORICAL CONDENSED CONSOLIDATED FINANCIAL DATA AND

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The table below sets forth:

 

   

our summary historical condensed consolidated financial data for the periods ended and at the dates indicated; and

 

   

our unaudited pro forma condensed combined financial data for the periods ended and at the dates indicated for Acadia, YFCS, PHC, HHC Delaware, Inc., or HHC Delaware, the Haven Facilities, BCA and AmiCare as a combined company.

We have derived the historical consolidated financial data for each of the three years in the period ended December 31, 2011 from our audited consolidated financial statements incorporated by reference in this prospectus supplement from our Current Report on Form 8-K filed with the SEC on October 17, 2012. We have derived the summary consolidated financial data as of and for the nine months ended September 30, 2012 from our unaudited interim condensed consolidated financial statements incorporated by reference in this prospectus supplement from our Quarterly Report on Form 10-Q for the three months ended September 30, 2012. The unaudited financial statements were prepared on a basis consistent with our audited financial statements and include, in the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of the financial information in those statements. The results for the nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the entire fiscal year.

The summary pro forma condensed combined financial information below as of and for the year ended December 31, 2011 and as of and for the nine months ended September 30, 2011 and 2012 gives pro forma effect, in each case as if they occurred on January 1, 2011, to (i) Acadia’s acquisition of YFCS and the related debt and equity financing transactions on April 1, 2011, (ii) PHC’s acquisition of HHC Delaware on July 1, 2011, (iii) Acadia’s acquisition of PHC and related debt and equity transactions on November 1, 2011, (iv) Acadia’s acquisition of the Haven Facilities and the related debt financing on March 1, 2012 and (v) Acadia’s planned acquisitions of BCA and AmiCare and the related debt financing and equity issuance.

The summary consolidated financial data below should be read in conjunction with “Unaudited Pro Forma Condensed Combined Financial Information” in this prospectus supplement and the consolidated financial statements and the notes thereto of Acadia, YFCS, PHC, HHC Delaware, the Haven Facilities, BCA and AmiCare incorporated by reference in this prospectus supplement. On May 13, 2011, we converted from a Delaware limited liability company (Acadia Healthcare Company, LLC) to a Delaware corporation (Acadia Healthcare Company, Inc.) in accordance with Delaware law.

 

 

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The unaudited as adjusted condensed combined balance sheet data presented below gives effect to the issuance and sale of 6,000,000 shares of common stock in this offering based on the assumed public offering price of $22.95 per share, which was the closing price of our common stock on November 30, 2012, as reported on The NASDAQ Global Market, and our receipt of the estimated net proceeds therefrom (excluding proceeds from the sale of shares of common stock by the selling stockholders), after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

 

   

Year Ended December 31,

   

Pro Forma
Year Ended
December 31,
2011

   

Nine Months Ended
September 30,

   

Pro Forma
Nine Months Ended
September 30,

 
  2009     2010     2011       2011     2012     2011     2012  
                          (Unaudited)     (Unaudited)              
 

(In thousands)

             

Income Statement Data:

               

Revenue before provision for doubtful accounts

  $ 51,821      $ 64,342      $ 219,704      $ 521,030      $ 142,797      $ 298,638      $ 388,500      $ 424,364   

Provision for doubtful accounts

    (2,424     (2,239     (3,206     (12,237     (1,654     (5,429     (9,176     (8,615
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

    49,397        62,103        216,498        508,793        141,143        293,209        379,324        415,749   

Salaries, wages and benefits(1)

    32,572        38,661        152,609        321,542        108,158        173,590        247,074        243,508   

Professional fees

    1,827        1,675        8,896        26,086        5,018        13,521        18,688        17,496   

Other operating expenses

    10,446        11,857        37,096        96,657        23,981        51,160        73,345        75,922   

Depreciation and amortization

    967        976        4,278        10,694        3,108        5,332        8,302        7,930   

Interest expense, net

    774        738        9,191        34,534        4,143        22,186        26,143        25,762   

Sponsor management fees

    —          120        1,347        —          1,135        —          —          —     

Transaction-related expenses

    —          918        41,547        —          10,595        2,097        —          —     

Legal settlement

    —          —          —          446        —          —          446        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations, before income taxes

    2,811        7,158        (38,466     18,834        (14,995     25,323        5,326        45,131   

Income tax (benefit) provision

    53        477        (5,272     14,011        3,426        9,307        9,597        12,228   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

    2,758        6,681        (33,194     4,823        (18,421     16,016        (4,271     32,903   

Income (loss) from discontinued operations, net of income taxes

    119        (471     (1,698     —          (562     22        —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

  $ 2,877      $ 6,210      $ (34,892   $ 4,823      $ (18,983   $ 16,038      $ (4,271   $ 32,903   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other Financial Data:

               

Pro forma EBITDA(2)

        $ 64,062          $ 39,771      $ 78,823   

Pro forma adjusted EBITDA(2)

        $ 98,520          $ 74,739      $ 88,580   

 

 

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As of September 30, 2012

 
  

Actual

    

As Adjusted(3)

 
  

(Unaudited)

(In thousands)

 

Unaudited As Adjusted Condensed Combined Balance Sheet Data:

     

Cash and cash equivalents

   $ 11,719       $ 142,999   

Total assets

     603,758         735,038   

Total debt

     296,632         296,632   

Total stockholders’ equity

     253,563         384,843   

 

 

(1) Salaries, wages and benefits include equity-based compensation expense of $17.3 million, $19.8 million and $1.7 million for the year ended December 31, 2011, nine months ended September 30, 2011 and nine months ended September 30, 2012, respectively.

 

(2) Pro forma EBITDA and pro forma adjusted EBITDA are reconciled to pro forma net income (loss) in the table below. Pro forma EBITDA and pro forma adjusted EBITDA are financial measures not recognized under GAAP. When presenting non-GAAP financial measures, we are required to reconcile the non-GAAP financial measures with the most directly comparable GAAP financial measure or measures. We define pro forma EBITDA as pro forma net income (loss) adjusted for loss (income) from discontinued operations, net interest expense, income tax provision (benefit) and depreciation and amortization. Pro forma adjusted EBITDA differs from “EBITDA” as that term may be commonly used. We define pro forma adjusted EBITDA as pro forma EBITDA adjusted for equity-based compensation expense, cost savings, rent elimination, legal settlement, integration and closing costs, rate increases, startup losses, reimbursement adjustments, divestiture costs, bad debt accounting policy changes and Cedar Crest locum tenens adjustment. See the table and related footnotes below for additional information.

 

     We present pro forma adjusted EBITDA because it is a measure management uses to assess financial performance. We believe that companies in our industry use measures of pro forma EBITDA as common performance measurements. We also believe that securities analysts, investors and other interested parties frequently use measures of pro forma EBITDA as financial performance measures and as indicators of ability to service debt obligations. While providing useful information, measures of pro forma EBITDA, including pro forma adjusted EBITDA, should not be considered in isolation or as a substitute for consolidated statement of operations and cash flows data prepared in accordance with GAAP and should not be construed as an indication of a company’s operating performance or as a measure of liquidity. Pro forma adjusted EBITDA may have material limitations as a performance measure because it excludes items that are necessary elements of our costs and operations. In addition, “EBITDA,” “Adjusted EBITDA” or similar measures presented by other companies may not be comparable to our presentation, because each company may define these terms differently. See “Non-GAAP Financial Measures.”

 

 

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Pro Forma

Year Ended
December 31,

   

Pro Forma

Nine Months Ended
September 30,

 
   2011     2011     2012  
  

(Unaudited)

 
  

(In thousands)

 

Reconciliation of Pro Forma Net Income (Loss) to Pro Forma Adjusted EBITDA:

      

Net income (loss)

   $ 4,823      $ (4,271   $ 32,903   

Interest expense, net

     34,534        26,143        25,762   

Income tax provision

     14,011        9,597        12,228   

Depreciation and amortization

     10,694        8,302        7,930   
  

 

 

   

 

 

   

 

 

 

Pro forma EBITDA

     64,062        39,771        78,823   

Adjustments:

      

Equity-based compensation expense(a)

     17,412        19,925        1,691   

Cost savings(b)

     9,840        7,657        4,133   

Rent elimination(c)

     4,650        4,050        2,220   

Legal settlement(d)

     446        446        —     

Integration and closing costs(e)

     947        947        —     

Rate increases(f)

     738        635        205   

Startup losses(g)

     1,187        914        668   

Reimbursement adjustments(h)

     (1,362     104        219   

Divestiture costs(i)

     438        290        —     

Bad debt accounting policy changes(j)

     162        —          305   

Cedar Crest locum tenens(k)

     —          —          316   
  

 

 

   

 

 

   

 

 

 

Pro forma adjusted EBITDA

   $ 98,520      $ 74,739      $ 88,580   
  

 

 

   

 

 

   

 

 

 

 

(a) Represents the equity-based compensation expense of Acadia, YFCS and PHC for the respective periods.
(b) We have realized and expect to realize further cost savings as a result of closing the corporate offices of certain acquired companies and eliminating redundant positions, professional services and other expenses. The cost savings adjustment is based on the corporate office costs of PHC, BCA and AmiCare of $3.4 million, $3.6 million and $3.7 million, respectively, for the year ended December 31, 2011, $2.5 million, $3.1 million and $2.7 million, respectively, for the nine months ended September 30, 2011 and $0, $2.0 million and $2.7 million, respectively, for the nine months ended September 30, 2012, less incremental corporate costs expected to be incurred by Acadia of $0.8 million, $0.6 million and $0.6 million for the year ended December 31, 2011, nine months ended September 30, 2011 and nine months ended September 30, 2012, respectively.
(c) Represents rent expense incurred prior to the purchase of the real estate of (1) PHC’s Capstone Academy, (2) the six facilities that were previously leased by Acadia and purchased in 2012, and (3) BCA’s Stonecrest facility purchased in December 2011, to reflect the rent expense of the combined companies as if the properties were owned throughout the periods presented.
(d) Represents legal settlement expenses recognized by PHC resulting from an employee wrongful termination suit against PHC that was settled in April 2011.
(e) Represents costs incurred by Acadia related to the closing of the YFCS corporate office, including the costs of temporarily retaining certain employees for a transitional period following the acquisition date.
(f) Represents rate increases as follows:

 

  (1) The increased revenue that would have resulted from an increased rate on one of PHC’s contracts that became effective in March 2011, assuming such increased rate had been effective throughout all periods presented. The increased rate was estimated by multiplying the historical plan enrollment by the newly-contracted rate, which resulted in an approximate $0.17 million increase in revenue and EBITDA for each month prior to March 2011 in which the rate was not effective.

 

 

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  (2) The increased revenue of AmiCare facilities for the Arkansas Medicaid rate increase effective July 1, 2012 for the periods prior to such rate increase.

 

(g) Represents the impact of startup losses during the respective periods for new programs and facilities opened by PHC, AmiCare and BCA, as follows:

 

  (1) PHC’s Seven Hills Behavioral Center was opened in the fourth quarter of 2008 and became certified by the Center for Medicare and Medicaid Services in July 2010. The adjustment of approximately $225,000 is based upon the difference between the actual operating income for the Seven Hills Behavioral Center in the nine months ended September 30, 2011 and the year ended December 31, 2011, respectively, and the operating income generated by the facility operating at expected levels.
  (2) AmiCare added 18 beds to the Fort Smith facility in September 2012. The adjustments of approximately $840,000, $630,000 and $581,000 in the year ended December 31, 2011, nine months ended September 30, 2011 and nine months ended September 30, 2012, respectively, are based upon the estimated incremental operating results had the 18 beds been in service during the respective periods.
  (3) During 2011, BCA began to develop a partial hospitalization program, or PHP, affiliated with the Shaker Clinic. BCA determined the PHP was not financially viable and terminated the program in 2012. The adjustments of approximately $122,000, $59,000 and $87,000 in the year ended December 31, 2011, nine months ended September 30, 2011 and nine months ended September 30, 2012, respectively, are based on the program losses incurred during the respective periods presented.

 

(h) Represents reimbursement adjustments as follows:

 

  (1) The elimination of out-of-period adjustments of ($1.5 million) and approximately $219,000 for the year ended December 31, 2011 and nine months ended September 30, 2012, respectively, related to payments received by AmiCare’s Texarkana facility under the Arkansas Medicaid program.
  (2) The elimination of out-of-period adjustments of approximately $104,000 and $104,000 for the year ended December 30, 2011 and nine months ended September 30, 2011, respectively, related to BCA’s settlement of Medicare cost reports.

 

(i) Represents transaction costs incurred by AmiCare in 2011 related to a divestiture of certain facilities.
(j) Represents the impact of changes in BCA’s bad debt accounting policies in December 2011 and June 2012 to eliminate the non-recurring impact of the charges recorded upon change in policies.
(k) Represents the elimination of temporary locum tenens costs incurred by BCA’s Cedar Crest facility in the nine months ended September 30, 2012 prior to the employment and credentialing of physician staffing in September 2012, at which point the costs associated with the physician services were offset by the billable revenue generated by the physicians.

We may not be able to achieve all of the expected benefits from the synergies and cost savings described in the table above. This information is inherently uncertain and is not intended to represent what our financial position or results of operations might be for any future period. See “Risk Factors–Our acquisition strategy exposes us to a variety of operational and financial risks–Benefits may not materialize.”

 

(3) Does not reflect (i) the debt assumed by Acadia in the acquisition of Park Royal Hospital on November 11, 2012, consisting of $23.0 million of industrial revenue bonds issued by the Lee County Industrial Development Authority, bearing interest at 9.34%, or (ii) approximately $10.6 million of cash used to pay for the acquisition. A $1.00 increase (decrease) in the assumed public offering price of $22.95 per share would increase (decrease) each of as adjusted cash and cash equivalents and total stockholders’ equity by approximately $5.8 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus supplement, remains the same, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

 

 

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RISK FACTORS

Investing in our common stock involves risks. Before making an investment in our common stock, you should carefully consider, among other factors, the risks described below and elsewhere in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference in this prospectus supplement. Please see “Cautionary Statement Regarding Forward-Looking Information” on page S-ii of this prospectus supplement. Please also see “Risk Factors” and “Special Note Regarding Forward-Looking Statements” beginning on page 3 of the accompanying prospectus and the risks described in the documents incorporated by reference in this prospectus supplement, including those identified under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and in our Quarterly Report on Form 10-Q for the three months ended June 30, 2012. The risks described in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference in this prospectus supplement are not the only ones we face. Additional risks not presently known or that we currently deem immaterial could also materially and adversely affect our financial condition, results of operations, business and prospects. You should consult your own financial and legal advisors as to the risks entailed by an investment in these shares and the suitability of investing in such shares in light of your particular circumstances. Our business, financial condition and results of operations could be materially adversely affected by the materialization of any of these risks. The trading price of our common stock could decline due to the materialization of any of these risks, and you may lose all or part of your investment.

We may be unable to complete our planned acquisitions of BCA and AmiCare on currently anticipated terms, or at all.

On November 21, 2012 and November 23, 2012, we entered into binding purchase agreements to acquire BCA and AmiCare, respectively, both of which acquisitions are subject to certain conditions set forth in the respective purchase agreements. We expect the closings for these acquisitions to occur in late December 2012. The total consideration for the BCA acquisition is approximately $145 million in cash, as adjusted for net indebtedness, transaction expenses and net working capital at closing. The total consideration for the AmiCare acquisition is approximately $113 million in cash, as adjusted for net working capital at closing. We plan to finance these acquisitions in part through this offering and in part through an amendment to our Senior Secured Credit Facility, as we do not currently have sufficient capacity under our Senior Secured Credit Facility. We are currently negotiating an amendment to our Senior Secured Credit Facility to provide for additional debt of approximately $165.0 million and expect the amendment to be effective commensurate with the closing of the planned acquisitions of BCA and AmiCare. If we are not able to complete the amendment to our Senior Secured Credit Facility on currently anticipated terms or at all or if this offering is not successful, we may be unable to successfully complete the pending acquisitions on time, or at all, which could have a material adverse effect on our results of operations, financial condition and the trading price of our common stock.

Our substantial debt could adversely affect our financial health and prevent us from fulfilling our obligations under our financing arrangements.

As of September 30, 2012, we had approximately $296.6 million of total debt, which included $148.9 million of debt under our Senior Secured Credit Facility and $147.7 million (net of a discount of $2.3 million) of debt under the Senior Notes. In connection with the planned acquisitions of BCA and AmiCare, we anticipate amending our Senior Secured Credit Facility to provide for additional debt of approximately $165.0 million. Our substantial debt could have important consequences to you. For example, it could:

 

   

increase our vulnerability to general adverse economic and industry conditions;

 

   

make it more difficult for us to satisfy our other financial obligations;

 

   

restrict us from making strategic acquisitions or cause us to make non-strategic divestitures;

 

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require us to dedicate a substantial portion of our cash flow from operations to payments on our debt (including scheduled repayments on our outstanding term loan borrowings under the Senior Secured Credit Facility), thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;

 

   

expose us to interest rate fluctuations because the interest on the debt relating to revolving borrowings under the Senior Secured Credit Facility is imposed at variable rates;

 

   

make it more difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such debt;

 

   

limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

 

   

place us at a competitive disadvantage compared to our competitors that have less debt;

 

   

limit our ability to borrow additional funds; and

 

   

limit our ability to pay dividends, redeem stock or make other distributions.

In addition, the terms of our financing arrangements contain restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our debts, including the Senior Secured Credit Facility and Senior Notes.

Our acquisition strategy exposes us to a variety of operational and financial risks.

A principal element of our business strategy is to grow by acquiring other companies and assets in the behavioral health industry. Growth, especially rapid growth, through acquisitions exposes us to a variety of operational and financial risks. Therefore, the risks described below may be acutely relevant. We summarize the most significant of these risks below.

Integration risks

We must integrate our acquisitions with our existing operations. This process includes the integration of the various components of our business and of the businesses we have acquired or may do so in the future, including the following:

 

   

additional psychiatrists, other physicians and employees who are not familiar with our operations;

 

   

patients who may elect to switch to another behavioral health care provider;

 

   

regulatory compliance programs; and

 

   

disparate operating, information and record keeping systems and technology platforms.

Integrating a new facility could be expensive and time consuming and could disrupt our ongoing business, negatively affect cash flow and distract management and other key personnel from day-to-day operations.

We may not be able to combine successfully the operations of recently acquired facilities with our operations, and, even if such integration is accomplished, we may never realize the potential benefits of the acquisition. The integration of acquisitions with our operations requires significant attention from management, may impose substantial demands on our operations or other projects and may impose challenges on the combined business including, but not limited to, consistencies in business standards, procedures, policies, business cultures

 

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and internal controls and compliance. Certain acquisitions involve a capital outlay, and the return that we achieved on any capital invested may be less than the return that we would achieve on our other projects or investments. If we fail to complete the integration of recently acquired facilities, we may never fully realize the potential benefits of the related acquisitions.

Benefits may not materialize

When evaluating potential acquisition targets, we identify potential synergies and cost savings that we expect to realize upon the successful completion of the acquisition and the integration of the related operations. We may, however, be unable to achieve or may otherwise never realize the expected benefits. Our ability to realize the expected benefits from potential cost savings and revenue improvement opportunities is subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control, such as changes to government regulation governing or otherwise impacting the behavioral health care industry, reductions in reimbursement rates from third-party payors, reductions in service levels under our contracts, operating difficulties, client preferences, changes in competition and general economic or industry conditions. If we are unsuccessful in implementing these improvements or if we do not achieve our expected results, it may adversely impact our results of operations.

Assumptions of unknown liabilities

Facilities that we acquire may have unknown or contingent liabilities, including, but not limited to, liabilities for failure to comply with health care laws and regulations. Although we typically attempt to exclude significant liabilities from our acquisition transactions and seek indemnification from the sellers of such facilities for at least a portion of these matters, we may experience difficulty enforcing those obligations or we may incur material liabilities for the past activities of acquired facilities. Such liabilities and related legal or other costs and/or resulting damage to a facility’s reputation could negatively impact our results of operations.

Competing for acquisitions

We face competition for acquisition candidates primarily from other for-profit health care companies, as well as from not-for-profit entities. Some of our competitors may have greater resources than we do. As a result, we may pay more to acquire a target business or may agree to less favorable deal terms than we would have otherwise. Our principal competitors for acquisitions have included UHS, Aurora Behavioral Health Care and Ascend Health Corporation. Also, suitable acquisitions may not be accomplished due to unfavorable terms.

Further, the cost of an acquisition could result in a dilutive effect on our results of operations, depending on various factors, including the amount paid for an acquired facility, the acquired facility’s results of operations, the fair value of assets acquired and liabilities assumed, effects of subsequent legislation and limits on rate increases. In addition, we may have to pay cash, incur debt, or issue equity securities to pay for any such acquisition, which could adversely affect our financial results, result in dilution to our stockholders, result in increased fixed obligations, or impede our ability to manage our operations.

Managing growth

Some of the facilities we have acquired or may acquire in the future may have had significantly lower operating margins prior to the time of our acquisition or may have had operating losses prior to such acquisition. If we fail to improve the operating margins of the facilities we acquire, operate such facilities profitably or effectively integrate the operations of the acquired facilities, our results of operations could be negatively impacted.

We are party to a stockholders agreement with Waud Capital Partners which provides them with certain rights over Company matters.

Prior to this offering, Waud Capital Partners controlled approximately 43% of the voting power of our common stock. In accordance with the terms of the stockholders agreement among Waud Capital

 

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Partners, Acadia and certain members of our management, for so long as Waud Capital Partners owns at least 17.5% of our outstanding common stock, it is able to elect a majority of our board of directors and has consent rights to many corporate actions, such as issuing equity or debt securities, paying dividends, acquiring any interest in another company and materially changing our business activities. Although Waud Capital Partners is selling shares of our common stock in this offering, it will continue to own at least 17.5% of our outstanding common stock after completion of the offering. It is possible that the interests of Waud Capital Partners may in some circumstances conflict with our interests and the interests of our other stockholders.

If securities or industry analysts do not publish research or reports about our business, if they were to change their recommendations regarding our stock adversely or if our operating results do not meet their expectations, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us. If one or more of these analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover us downgrade our stock or if our operating results do not meet their expectations, our stock price could decline.

Certain financial information incorporated by reference in this prospectus supplement is presented on a basis that is different from the basis on which our most recently published financial information is presented and is, therefore, not comparable.

We have incorporated by reference in this prospectus supplement financial statements and other financial information that do not include the adjustments required by ASC 205-20 and related SEC rules for discontinued operations in relation to the PsychSolutions Disposition. These financial statements complied with applicable accounting requirements when they were initially filed and are incorporated by reference in this prospectus supplement in accordance with the rules and regulations of the SEC. Our most recently published financial information complies with applicable accounting requirements and SEC rules. As a result of the different bases of presentation, however, the financial statements and other financial information published more recently are not comparable to the financial statements and other financial information that do not give retroactive effect to the PsychSolutions Disposition, and the latter should not be relied upon in assessing our financial performance or in making an investment decision with respect to this offering. For more information, see “Cautionary Note Regarding Financial Information.”

If you purchase our common stock in this offering, you will incur immediate and substantial dilution in the book value of your shares.

The public offering price of our common stock is substantially higher than the net tangible book value per share of our outstanding common stock immediately after this offering. As a result, you will suffer immediate and substantial dilution in the net tangible book value of the common stock you purchase in this offering. If the underwriters exercise their option to purchase additional shares, you will experience additional dilution.

We have broad discretion in the use of the net proceeds from this offering and may not use them effectively, which could cause the value of your investment to decline.

Although we currently intend to use the net proceeds from this offering in the manner described in “Use of Proceeds” elsewhere in this prospectus supplement, we will have broad discretion in the application of the net proceeds of this offering. The results and effectiveness of the use of proceeds are uncertain, and we could spend the proceeds in ways that you do not agree with or that do not improve our results of operations or enhance the value of our common stock. Our failure to apply these net proceeds effectively could adversely affect our ability to continue to develop and grow our business, which could cause the price of our common stock to decline.

 

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Future sales of common stock by our existing stockholders may cause our stock price to fall.

The market price of our common stock could decline as a result of sales by our existing stockholders in the market, or the perception that these sales could occur. These sales might also make it more difficult for us to sell equity securities at a time and price that we deem appropriate.

Waud Capital Partners and certain of its affiliates, along with certain members of our management, have certain demand and piggyback registration rights with respect to shares of our common stock beneficially owned by them. The presence of additional shares of our common stock trading in the public market, as a result of the exercise of such registration rights, may have an adverse effect on the market price of our securities.

Fluctuations in our operating results, quarter to quarter earnings and other factors, including incidents involving our patients and any negative media coverage, may result in decreases in the price of our common stock.

The stock markets experience volatility that is often unrelated to operating performance. These broad market fluctuations may adversely affect the trading price of our common stock and, as a result, there may be significant volatility in the market price of our common stock. If we are unable to operate our facilities as profitably as we have in the past or as our stockholders expect us to in the future, the market price of our common stock will likely decline as stockholders could sell shares of our common stock when it becomes apparent that the market expectations may not be realized. In addition to our operating results, many economic and seasonal factors outside of our control could have an adverse effect on the price of our common stock and increase fluctuations in our quarterly earnings. These factors include certain of the risks discussed in this prospectus supplement, demographic changes, operating results of other health care companies, changes in our financial estimates or recommendations of securities analysts, speculation in the press or investment community, the possible effects of war, terrorist and other hostilities, adverse weather conditions, the level of seasonal illnesses, managed care contract negotiations and terminations, changes in general conditions in the economy or the financial markets or other developments affecting the health care industry. An incident involving one or more of our patients could result in negative media coverage and adversely affect the trading price of our common stock.

Provisions of our charter documents or Delaware law could delay or prevent an acquisition of us, even if the acquisition would be beneficial to our stockholders, and could make it more difficult for you to change management.

Provisions of our amended and restated certificate of incorporation and amended and restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. This is because these provisions may prevent or frustrate attempts by stockholders to replace or remove our management. These provisions include:

 

   

a classified board of directors;

 

   

a prohibition on stockholder action through written consent;

 

   

a requirement that special meetings of stockholders be called only upon a resolution approved by a majority of our directors then in office;

 

   

advance notice requirements for stockholder proposals and nominations; and

 

   

the authority of the board of directors to issue preferred stock with such terms as the board of directors may determine.

 

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Section 203 of the Delaware General Corporation Law, or the DGCL, prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person that together with its affiliates owns or within the last three years has owned 15% of voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. Although we have elected not to be subject to Section 203 of the DGCL, our amended and restated certificate of incorporation contains provisions that have the same effect as Section 203, except that they provide that Waud Capital Partners, its affiliates and any investment fund managed by Waud Capital Partners and any persons to whom Waud Capital Partners sells at least five percent (5%) of our outstanding voting stock will be deemed to have been approved by our board of directors, and thereby not subject to the restrictions set forth in our amended and restated certificate of incorporation that have the same effect as Section 203 of the DGCL. Accordingly, the provision in our amended and restated certificate of incorporation that adopts a modified version of Section 203 of the DGCL may discourage, delay or prevent a change in control of us.

As a result of these provisions in our charter documents and Delaware law, the price investors may be willing to pay in the future for shares of our common stock may be limited.

We do not anticipate paying any cash dividends in the foreseeable future.

We intend to retain our future earnings, if any, for use in our business or for other corporate purposes and do not anticipate that cash dividends in respect to common stock will be paid in the foreseeable future. Any decision as to the future payment of dividends will depend on our results of operations, financial position and such other factors as our board of directors, in its discretion, deems relevant. In addition, the terms of our debt substantially limit our ability to pay dividends. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

 

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USE OF PROCEEDS

We estimate that our net proceeds from the issuance and sale of 6,000,000 shares of common stock in this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $131.3 million, based on the assumed public offering price of $22.95 per share, which was the closing price of our common stock on November 30, 2012, as reported on The NASDAQ Global Market.

If the underwriters exercise their option in full to purchase 900,000 additional shares of common stock from us, we estimate that our net proceeds from this offering will be approximately $151.1 million after deducting underwriting discounts and commissions and estimated offering expenses payable by us based on the public offering price of $22.95 per share, which was the closing price of our common stock on November 30, 2012, as reported on The NASDAQ Global Market. We intend to use the proceeds from this offering principally to fund our acquisition strategy, particularly the planned acquisitions of BCA and AmiCare.

To the extent not used for the planned acquisitions of BCA and AmiCare, we plan to use the proceeds for general corporate purposes and, in addition, we may use the proceeds to repay debt under the Senior Secured Credit Facility and the Senior Notes. The applicable rate for Eurodollar Rate Loans and Base Rate Loans under the Senior Secured Credit Facility was 4.25% and 3.25%, respectively, as of September 30, 2012. The maturity date of the Senior Secured Credit Facility is April 1, 2016. The Senior Notes bear interest at a rate of 12.875% per annum and mature on November 1, 2018.

As of the date of this prospectus supplement, we cannot predict with certainty all of the particular uses for the proceeds from this offering or the amounts that we will actually spend on the uses set forth above. Accordingly, we will retain broad discretion over the use of such proceeds. The uses, amounts and timing of our actual expenditures will depend on numerous factors, including the extent to which the closing conditions for the planned acquisitions of BCA and AmiCare are satisfied, our ability to obtain the consent of the lenders under the Senior Secured Credit Facility regarding the repayment of debt under the Senior Notes, the results of our ongoing integration efforts and the amount of cash generated or used by our operations. Under the terms of the Senior Secured Credit Facility, we are required to use 50% of the proceeds from this offering to repay outstanding debt thereunder unless such proceeds are used to finance permitted acquisitions (as defined in the Senior Secured Credit Facility) within 180 days of receipt thereof or, if we do not use all of such proceeds to finance permitted acquisitions, as described, we are required to use 50% of the remaining portion of the proceeds to repay outstanding debt thereunder. Pending application of the proceeds as described above, we intend to place the proceeds in interest bearing time deposits of a national banking association which are insured by the Federal Deposit Insurance Corporation or to invest the proceeds in bonds or other debt obligations issued or guaranteed by the United States government or one of its agencies or instrumentalities or money market funds solely invested in or collateralized by such bonds or debt obligations, to the extent the proceeds are not immediately used to fund our planned acquisitions.

We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders. We will, however, bear the costs, other than underwriting discounts and commissions, associated with the sale of shares of common stock by the selling stockholders. Certain of the shares being offered by the selling stockholders are being offered by our senior management. See “Selling Stockholders.”

 

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PRICE RANGE OF OUR COMMON STOCK

Our common stock began trading on The NASDAQ Global Market on November 1, 2011 under the symbol “ACHC.” Prior to that date, there was no public market for our common stock. The table below sets forth, for the quarters indicated, the high and low sales prices of our common stock as reported by The NASDAQ Global Market. As of November 30, 2012, there were 41,824,800 shares outstanding, held by 131 shareholders of record. On November 30, 2012, the last reported sale price of our common stock on The NASDAQ Global Market was $22.95 per share.

 

     Sale Price Per Share of Common Stock  
    

High

    

Low

 

2012

     

Fourth Quarter (through November 30, 2012)

   $ 24.83       $ 18.53   

Third Quarter

     24.12         15.08   

Second Quarter

     18.60         14.40   

First Quarter

     16.50         9.38   

2011

     

Fourth Quarter (from November 1, 2011)*

   $ 10.50       $ 5.43   

 

* Prior to November 1, 2011, there was no public market for our common stock.

DIVIDEND POLICY

We have never declared or paid dividends on our common stock. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and to repay indebtedness, and therefore we do not anticipate paying any cash dividends in the foreseeable future. Additionally, because we are a holding company, our ability to pay dividends on our common stock is limited by restrictions on the ability of our subsidiaries to pay dividends or make distributions to us, including restrictions under the terms of the agreements governing our indebtedness. Any future determination to pay dividends will be at the discretion of our board of directors, subject to compliance with covenants in current and future agreements governing our indebtedness (including our Senior Secured Credit Facility and the indenture governing our Senior Notes), and will depend upon our results of operations, financial condition, capital requirements and other factors that our board of directors deems relevant.

 

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CAPITALIZATION

The table below sets forth our cash and cash equivalents and our consolidated capitalization as of September 30, 2012:

 

   

on an actual basis; and

 

   

on an adjusted basis to give effect to the issuance and sale of 6,000,000 shares of common stock offered by us based on the assumed public offering price of $22.95 per share, which was the last reported sale price of our common stock on The NASDAQ Global Market on November 30, 2012, and our receipt of the estimated net proceeds therefrom, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

You should read this table in conjunction with “Use of Proceeds,” “Unaudited Pro Forma Condensed Combined Financial Information” and the financial information incorporated by reference in this prospectus supplement.

 

    

As of September 30, 2012

 
  

Actual

   

As Adjusted(1)

 
  

(Unaudited)

(Dollars in thousands, except per share data)

 

Cash and cash equivalents

   $ 11,719      $ 142,999   

Debt:

    

Senior secured credit facility:

    

Senior secured term loan

     148,938        148,938   

Revolving credit facility

     —          —     

Senior notes

     147,694        147,694   
  

 

 

   

 

 

 

Total debt (including current portion)

   $ 296,632      $ 296,632   

Stockholders’ Equity:

    

Common stock, $0.01 par value per share; 90,000,000 shares authorized and 41,773,053 shares issued and outstanding, actual; 90,000,000 shares authorized and 47,773,053 shares issued and outstanding, as adjusted

   $ 418      $ 478   

Preferred stock, $0.01 par value per share; 10,000,000 shares authorized; no shares issued and outstanding

     —          —     

Additional paid-in capital

     281,687        412,907   

Accumulated deficit

     (28,542     (28,542
  

 

 

   

 

 

 

Total equity

   $ 253,563      $ 384,843   
  

 

 

   

 

 

 

Total capitalization

   $ 550,195      $ 681,475   
  

 

 

   

 

 

 

 

(1) Does not reflect (i) the impact of the potential amendment to the Senior Secured Credit Facility to provide for additional debt, (ii) the debt assumed by Acadia in the acquisition of Park Royal Hospital on November 11, 2012, consisting of $23.0 million of industrial revenue bonds issued by the Lee County Industrial Development Authority, bearing interest at 9.34%, or (iii) approximately $10.6 million of cash used to pay for the acquisition.

A $1.00 increase (decrease) in the assumed public offering price of $22.95 per share would increase (decrease) each of as adjusted cash and cash equivalents and stockholders’ equity by approximately $5.8 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus supplement, remains the same, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The tables below set forth the unaudited pro forma condensed combined financial data for Acadia, YFCS, PHC, HHC Delaware, the Haven Facilities, BCA and AmiCare as a combined company, giving effect to:

 

   

Acadia’s acquisition of YFCS and the related debt and equity financing transactions on April 1, 2011;

 

   

PHC’s acquisition of MeadowWood on July 1, 2011;

 

   

Acadia’s acquisition of PHC and related debt and equity transactions on November 1, 2011;

 

   

Acadia’s acquisition of the Haven Facilities and the related debt financing on March 1, 2012; and

 

   

Acadia’s planned acquisitions of BCA and AmiCare and the related debt financing and equity issuance.

The unaudited pro forma condensed combined statements of operations give effect to each transaction as if it occurred on January 1, 2011. Acadia’s condensed consolidated statement of operations for the year ended December 31, 2011 reflects the results of operations for YFCS for the period from April 1, 2011 to December 31, 2011 and PHC for the period from November 1, 2011 to December 31, 2011. Acadia’s condensed consolidated statement of operations for the nine months ended September 30, 2012 reflects the results of operations for the Haven Facilities for the period from March 1, 2012 to September 30, 2012.

Acadia’s condensed consolidated balance sheet as of September 30, 2012 reflects the effect of the acquisitions of YFCS, PHC, HHC Delaware and the Haven Facilities. The unaudited pro forma condensed combined balance sheet at September 30, 2012 combines the condensed consolidated balance sheet of Acadia at September 30, 2012 with (a) the unaudited consolidated balance sheet of BCA at September 30, 2012 and (b) the unaudited consolidated balance sheet of AmiCare at September 30, 2012.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2011 combines the audited consolidated statement of operations of Acadia for that period with:

 

   

the unaudited condensed consolidated statement of operations of YFCS for the three months ended March 31, 2011;

 

   

the unaudited condensed consolidated statement of operations of HHC Delaware for the six months ended June 30, 2011;

 

   

the unaudited condensed consolidated statement of operations of PHC for the ten months ended October 31, 2011 (which was derived from the audited consolidated statement of operations of PHC for the fiscal year ended June 30, 2011 less the unaudited condensed consolidated statement of operations of PHC for the six months ended December 31, 2010 plus the unaudited condensed consolidated statement of operations of PHC for the three months ended September 30, 2011 plus the unaudited condensed consolidated statement of operations of PHC for the month ended October 31, 2011);

 

   

the audited consolidated statement of operations of the Haven Facilities for the year ended December 31, 2011;

 

   

the audited consolidated statement of operations of BCA for the year ended December 31, 2011; and

 

   

the audited consolidated statement of operations of AmiCare for the year ended December 31, 2011.

 

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The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2012 combines the unaudited consolidated statement of operations of Acadia for that period with:

 

   

the unaudited condensed consolidated statement of operations of the Haven Facilities for the period from January 1, 2012 to February 29, 2012;

 

   

the unaudited condensed consolidated statement of operations of BCA for the nine months ended September 30, 2012; and

 

   

the unaudited condensed consolidated statement of operations of AmiCare for the nine months ended September 30, 2012.

The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2011 combines the unaudited consolidated statement of operations of Acadia for that period with:

 

   

the unaudited condensed consolidated statement of operations of YFCS for the three months ended March 31, 2011;

 

   

the unaudited condensed consolidated statement of operations of HHC Delaware for the six months ended June 30, 2011;

 

   

the unaudited condensed consolidated statement of operations of PHC for the nine months ended September 30, 2011 (which was derived from the audited consolidated statement of operations of PHC for the fiscal year ended June 30, 2011 less the unaudited condensed consolidated statement of operations of PHC for the six months ended December 31, 2010 plus the unaudited condensed consolidated statement of operations of PHC for the three months ended September 30, 2011);

 

   

the unaudited consolidated statement of operations of the Haven Facilities for the nine months ended September 30, 2011;

 

   

the unaudited condensed consolidated statement of operations of BCA for the nine months ended September 30, 2011; and

 

   

the unaudited condensed consolidated statement of operations of AmiCare for the nine months ended September 30, 2011.

The unaudited pro forma condensed combined financial data has been prepared using the acquisition method of accounting for business combinations under GAAP. The adjustments necessary to fairly present the unaudited pro forma condensed combined financial data have been made based on available information and in the opinion of management are reasonable. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with this unaudited pro forma condensed combined financial data. The pro forma adjustments relating to the planned acquisitions of BCA and AmiCare are preliminary and revisions to the fair value of assets acquired and liabilities assumed may have a significant impact on the pro forma adjustments. A final valuation of assets acquired and liabilities assumed has not been completed and the completion of fair value determinations may result in changes in the values assigned to property and equipment and other assets (including intangibles) acquired and liabilities assumed.

The unaudited pro forma condensed combined financial data is for illustrative purposes only and does not purport to represent what our financial position or results of operations actually would have been had the events noted above in fact occurred on the assumed dates or to project our financial position or results of operations for any future date or future period.

The unaudited pro forma condensed combined financial data should be read in conjunction with the consolidated financial statements and notes thereto of Acadia, YFCS, PHC, HHC Delaware, the Haven Facilities, BCA and AmiCare incorporated by reference in this prospectus supplement.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of September 30, 2012

(In thousands)

 

   

ACADIA(1)

   

AMICARE(2)

   

BCA(3)

   

PRO FORMA

ADJUSTMENTS

   

NOTES

   

PRO FORMA

COMBINED

 

ASSETS

           

Current assets:

           

Cash and cash equivalents

  $ 11,719      $ 804      $ 44      $ (848     (4   $ 45,499   
          33,780        (8  

Accounts receivable, net

    54,777        4,405        8,177        (1,082     (10     66,277   

Deferred tax assets

    5,230        —          —          —            5,230   

Other current assets

    15,305        885        2,469        (521     (10     18,138   
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total current assets

    87,031        6,094        10,690        31,329          135,144   

Property and equipment, net

    155,188        20,694        23,334        229        (7a     200,058   
          613        (7b  

Property and equipment held for sale

    —          —          330        (330     (10     —     

Goodwill

    334,622        14,175        16,550        74,812        (7a     539,644   
          99,485        (7b  

Intangible assets, net

    12,534        —          —          1,790        (7a     16,249   
          1,925        (7b  

Other assets

    14,383        71        646        3,000        (8     17,642   
          (71     (6  
          (387     (10  
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total assets

  $ 603,758      $ 41,034      $ 51,550      $ 212,395        $ 908,737   
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

LIABILITIES AND EQUITY

           

Current liabilities:

           

Current portion of long-term debt

  $ 12,000      $ 4,283      $ 2,613      $ (11,046     (9   $ 7,850   

Accounts payable

    13,323        504        3,078        (235     (10     16,670   

Accrued salaries and benefits

    19,125        2,373        2,677        (141     (10     24,034   

Other accrued liabilities

    13,374        940        317        (14     (10     14,617   
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total current liabilities

    57,822        8,100        8,685        (11,436       63,171   

Long-term debt

    284,632        18,637        2,316        148,197        (9     453,782   

Deferred tax liabilities—noncurrent

    1,167        —          —          —            1,167   

Other liabilities

    6,574        173        958        (431     (10     7,274   
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total liabilities

    350,195        26,910        11,959        136,330          525,394   

Equity:

           

Common stock

    418        —          —          60        (8     478   

Additional paid-in capital

    281,687        —          —          131,220        (8     412,907   

Accumulated deficit

    (28,542     —          —          (1,500     (8     (30,042

Members’ equity

    —          14,124        39,591        (53,715     (5     —     
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total equity

    253,563        14,124        39,591        76,065          383,343   
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total liabilities and equity

  $ 603,758      $ 41,034      $ 51,550      $ 212,395        $ 908,737   
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

See accompanying notes to unaudited pro forma financial information.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2011

(In thousands, except per share amounts)

 

   

ACADIA(1)

   

COMPLETED

ACQUISITIONS(16)

   

AMICARE(2)

   

BCA(3)

   

PRO FORMA
ADJUSTMENTS

   

NOTES

   

PRO FORMA

COMBINED

 

Revenue before provision for doubtful accounts

  $ 219,704      $ 186,977      $ 59,842      $ 54,507          $ 521,030   

Provision for doubtful accounts

    (3,206     (6,207     (1,381     (1,443         (12,237
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Revenue

    216,498        180,770        58,461        53,064            508,793   

Salaries, wages and benefits

    152,609        102,044        37,969        28,920            321,542   

Professional fees

    8,896        12,043        1,948        3,199            26,086   

Supplies

    11,349        9,060        1,157        2,886            24,452   

Rents and leases

    5,576        4,558        2,041        1,152            13,327   

Other operating expenses

    20,171        20,395        8,543        9,769            58,878   

Depreciation and amortization

    4,278        3,655        925        955        147        (20e     10,694   
            734        (20f  

Interest expense, net

    9,191        21,114        1,794        135        2,300        (21b     34,534   

Sponsor management fees

    1,347        —          —          924        (2,271     (22     —     

Transaction-related expenses

    41,547        —          —          —          (41,547     (23     —     

Legal settlement

    —          446        —          —              446   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total expenses

    254,964        173,315        54,377        47,940        (40,637       489,959   

Income (loss) from continuing operations before income taxes

    (38,466     7,455        4,084        5,124        40,637          18,834   

Provision (benefit) for income taxes

    (5,272     3,349        —          219        (133     (25     14,011   
            15,848        (26  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Income (loss) from continuing operations

  $ (33,194   $ 4,106      $ 4,084      $ 4,905      $ 24,922        $ 4,823   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Earnings per share—income (loss) from continuing operations:

             

Basic

  $ (1.77             $ 0.10   
 

 

 

             

 

 

 

Diluted

  $ (1.77             $ 0.10   
 

 

 

             

 

 

 

Weighted average shares:

             

Basic

    18,757        13,342            9,488        (27c     47,587   
             

 

 

 
            6,000        (27d  

Diluted

    18,757        13,342            9,488        (27c     47,587   
             

 

 

 
            6,000        (27d  

See accompanying notes to unaudited pro forma financial information.

 

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Table of Contents

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2012

(In thousands, except per share amounts)

 

   

ACADIA(1)

   

COMPLETED
ACQUISITIONS(17)

   

AMICARE(2)

   

BCA(3)

   

PRO FORMA
ADJUSTMENTS

   

NOTES

    PRO FORMA
COMBINED
 

Revenue before provision for doubtful accounts

  $ 298,638      $ 30,079      $ 47,220      $ 48,427          $ 424,364   

Provision for doubtful accounts

    (5,429     (689     (1,340     (1,157         (8,615
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Revenue

    293,209        29,390        45,880        47,270            415,749   

Salaries, wages and benefits

    173,590        15,391        29,877        24,650            243,508   

Professional fees

    13,521        1,060        1,249        1,666            17,496   

Supplies

    14,148        1,328        813        2,223            18,512   

Rents and leases

    6,244        25        1,773        471            8,513   

Other operating expenses

    30,768        3,358        6,044        8,727            48,897   

Depreciation and amortization

    5,332        584        703        951        100        (20e     7,930   
            260        (20f  

Interest expense, net

    22,186        313        1,015        242        2,006        (21b     25,762   

Sponsor management fees

    —          —          —          524        (524     (22     —     

Transaction-related expenses

    2,097        —          —          —          (2,097     (23     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total expenses

    267,886        22,059        41,474        39,454        (255       370,618   

Income (loss) from continuing operations before income taxes

    25,323        7,331        4,406        7,816        255          45,131   

Provision (benefit) for income taxes

    9,307        2,827        —          (5     99        (26     12,228   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Income (loss) from continuing operations

  $ 16,016      $ 4,504      $ 4,406      $ 7,821      $ 156        $ 32,903   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Earnings per share—income (loss) from continuing operations:

             

Basic

  $ 0.44                $ 0.69   
             

 

 

 

Diluted

  $ 0.43                $ 0.69   
             

 

 

 

Weighted average shares:

             

Basic

    36,795              4,900        (27c     47,695   
             

 

 

 
            6,000        (27d  

Diluted

    37,006              4,900        (27c     47,906   
             

 

 

 
            6,000        (27d  

See accompanying notes to unaudited pro forma financial information.

 

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Table of Contents

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2011

(In thousands, except per share amounts)

 

   

ACADIA(1)

   

COMPLETED
ACQUISITIONS(18)

   

AMICARE(2)

   

BCA(3)

   

PRO FORMA
ADJUSTMENTS

   

NOTES

   

PRO FORMA
COMBINED

 

Revenue before provision for doubtful accounts

  $ 142,797      $ 161,249      $ 43,539      $ 40,915          $ 388,500   

Provision for doubtful accounts

    (1,654     (5,220     (951     (1,351         (9,176
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Revenue

    141,143        156,029        42,588        39,564            379,324   

Salaries, wages and benefits

    108,158        88,869        27,858        22,189            247,074   

Professional fees

    5,018        10,478        1,457        1,735            18,688   

Supplies

    7,645        7,792        865        2,117            18,419   

Rents and leases

    3,576        4,205        1,494        1,334            10,609   

Other operating expenses

    12,760        17,895        6,438        7,224            44,317   

Depreciation and amortization

    3,108        3,124        691        674        112        (20e     8,302   
            593        (20f  

Interest expense, net

    4,143        18,667        1,318        105        1,910        (21b     26,143   

Sponsor management fees

    1,135        —          —          813        (1,948     (22     —     

Transaction-related expenses

    10,595        —          —          —          (10,595     (23     —     

Legal settlement

    —          446        —          —              446   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total expenses

    156,138        151,476        40,121        36,191        (9,928       373,998   

Income (loss) from continuing operations before income taxes

    (14,995     4,553        2,467        3,373        9,928          5,326   

Provision (benefit) for income taxes

    3,426        2,272        —          160        (133     (25     9,597   
            3,872        (26  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Income (loss) from continuing operations

  $ (18,421   $ 2,281      $ 2,467      $ 3,213      $ 6,189        $ (4,271
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Earnings per share—income (loss) from continuing operations:

             

Basic

  $ (1.05             $ (0.09
             

 

 

 

Diluted

  $ (1.05             $ (0.09
             

 

 

 

Weighted average shares:

             

Basic

    17,633        14,475            9,488        (27c     47,596   
             

 

 

 
            6,000        (27d  

Diluted

    17,633        14,475            9,488        (27c     47,596   
             

 

 

 
            6,000        (27d  

See accompanying notes to unaudited pro forma financial information.

 

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Table of Contents

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

(Dollars in thousands, except per share amounts)

 

(1) The amounts in this column represent, for Acadia, actual results for the periods presented.
(2) The amounts in this column represent, for AmiCare, actual results for the periods presented.
(3) The amounts in this column represent, for BCA, actual results for the periods presented.
(4) Represents cash not acquired as part of the acquisitions.
(5) Reflects the elimination of equity accounts of AmiCare and BCA.
(6) Reflects the elimination of deferred financing costs in connection with the repayment of debt.
(7) Represents adjustments based on preliminary estimates of fair value and the adjustment to goodwill derived from the difference in the estimated total consideration to be transferred by Acadia and the estimated fair value of assets acquired and liabilities assumed by Acadia, calculated as follows:

 

  (a) AmiCare:

 

Estimated cash consideration

   $ 113,000   

Cash and cash equivalents

     —     

Accounts receivable

     4,405   

Other current assets

     885   

Property and equipment

     20,923   

Intangible assets

     1,790   

Other long-term assets

     —     

Accounts payable

     (504

Accrued salaries and benefits

     (2,373

Other accrued liabilities

     (940

Other long-term liabilities

     (173
  

 

 

 

Fair value of assets acquired less liabilities assumed

   $ 24,013   
  

 

 

 

Estimated goodwill

   $ 88,987   

Less: historical goodwill

     (14,175
  

 

 

 

Goodwill adjustment

   $ 74,812   
  

 

 

 

 

  (b) BCA:

 

Estimated cash consideration

   $ 145,000   

Cash and cash equivalents

     —     

Accounts receivable

     7,095   

Other current assets

     1,948   

Property and equipment

     23,947   

Intangible assets

     1,925   

Other long-term assets

     259   

Accounts payable

     (2,843

Accrued salaries and benefits

     (2,536

Other accrued liabilities

     (303

Other long-term liabilities

     (527
  

 

 

 

Fair value of assets acquired less liabilities assumed

   $ 28,965   
  

 

 

 

Estimated goodwill

   $ 116,035   

Less: historical goodwill

     (16,550
  

 

 

 

Goodwill adjustment

   $ 99,485   
  

 

 

 

The acquired assets and liabilities assumed will be recorded at their relative fair values as of the closing date of the acquisitions. Estimated goodwill is based upon a determination of the fair value of assets acquired and liabilities assumed that is preliminary and subject to revision as the value of total consideration is finalized and additional information related to the fair value of property and equipment and other assets (including intangible assets) acquired and liabilities assumed becomes available. The actual determination of the fair value of assets acquired and liabilities assumed will differ from that assumed in these unaudited pro forma condensed combined financial statements and such differences may be material. Qualitative factors comprising goodwill include efficiencies derived through synergies expected by the elimination of certain redundant corporate functions and expenses, the ability to leverage call center referrals to a broader provider base, coordination of services provided across the combined network of facilities, achievement of operating efficiencies by benchmarking performance and applying best practices throughout the combined company.

 

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(8) Represents a $33,780 increase in cash as a result of the planned acquisitions of BCA and AmiCare and relating financing transactions. Acadia expects to issue $165,000 of incremental term loans through an amendment to its existing senior credit facility, or Incremental Term Loans, and to issue additional common shares for estimated net proceeds of $131,280. Based on the assumed public offering price of $22.95, which was the closing price of our common stock on November 30, 2012 as reported on The NASDAQ Global Market, the number of shares to be issued is 6,000,000 with a par value of $0.01, which results in additional common stock of $60 and additional paid-in capital of $131,220 and includes estimated underwriting discounts and other offering expenses of $6,420. The sources and uses of cash in connection with the acquisitions are expected to be as follows:

 

Sources:

  

Incremental Term Loans

   $ 165,000   

Equity issuance

     131,280   

Uses:

  

AmiCare cash consideration

     (113,000

BCA cash consideration

     (145,000

Transaction-related expenses(a)

     (4,500
  

 

 

 

Cash adjustment

   $ 33,780   
  

 

 

 

 

  (a) Estimated costs to be incurred in connection with the BCA and AmiCare transactions include $3,000 of debt financing costs associated with the Incremental Term Loans and $1,500 of acquisition costs.

 

(9) Represents the issuance of Incremental Term Loans, the elimination of debt not assumed in the BCA and AmiCare acquisitions and the amendment to the credit agreement to adjust the payment schedule for existing loans, as follows:

 

    

CURRENT
PORTION

    

LONG-TERM
PORTION

    

TOTAL
DEBT

 

Elimination of AmiCare debt not assumed

   $ (4,283    $ (18,637    $ (22,920

Elimination of BCA debt not assumed

     (2,613      (2,316      (4,929

Incremental Term Loan

     4,125         160,875         165,000   

Amendment to credit agreement

     (8,275      8,275         —     
  

 

 

    

 

 

    

 

 

 

Adjustments

   $ (11,046    $ 148,197       $ 137,151   
  

 

 

    

 

 

    

 

 

 

 

(10) Represents the following adjustments to eliminate the assets and liabilities of BCA’s Permian Basin facility, which will be divested prior to the acquisition:

 

Accounts receivable, net

   $ 1,082   

Other current assets

     521   

Property and equipment held for sale

     330   

Other assets

     387   
  

 

 

 
   $ 2,320   
  

 

 

 

Accounts payable

   $ 235   

Accrued salaries and benefits

     141   

Other accrued liabilities

     14   

Other liabilities

     431   
  

 

 

 
   $ 821   
  

 

 

 

 

(11) The amounts in this column represent, for YFCS, actual results for the periods presented, up to the April 1, 2011 acquisition date. The condensed consolidated statements of operations of YFCS have been reclassified to present the provision for doubtful accounts as a deduction from revenue in accordance with Accounting Standards Update No. 2011-07, “Health Care Entities (Topic 954): Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care Entities,” or ASU 2011-07.
(12) The amounts in this column represent, for PHC, actual results for the periods presented, up to the November 1, 2011 acquisition date. The condensed consolidated statements of operations of PHC have been reclassified to conform to Acadia’s expense classification policies, including the reclassification of the provision for doubtful accounts from operating expenses to a deduction from revenue.
(13) The amounts in this column represent, for HHC Delaware, actual results for the periods presented, up to July 1, 2011, the date of PHC’s acquisition of HHC Delaware. The condensed consolidated statements of operations of HHC Delaware have been reclassified to present the provision for doubtful accounts as a deduction from revenue in accordance with ASU 2011-07.
(14) The amounts in this column represent, for the Haven Facilities, actual results for the periods presented, up to the March 1, 2012 acquisition date.

 

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Table of Contents
(15) The amounts in this column represent, for other acquisitions, actual results for the periods presented, up to the acquisition dates.
(16) The amounts in this column represent pro forma combined results of operations for acquisitions completed as of September 30, 2012 for the year ended December 31, 2011 as detailed below.

 

   

YFCS

(11)

   

PHC

(12)

   

HHC
DELAWARE

(13)

   

HAVEN
FACILITIES

(14)

   

OTHER
ACQUISITIONS

(15)

   

PRO FORMA
ADJUSTMENTS

   

NOTES

   

COMPLETED
ACQUISITIONS

 

Revenue before provision for doubtful accounts

  $ 45,686      $ 59,786      $ 7,541      $ 43,448      $ 30,516          $ 186,977   

Provision for doubtful accounts

    (208     (3,466     (339     (1,458     (736         (6,207
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Revenue

    45,478        56,320        7,202        41,990        29,780            180,770   

Salaries, wages and benefits

    29,502        31,569        4,747        21,391        14,835            102,044   

Professional fees

    —          6,365        454        1,374        1,949        1,901        (19     12,043   

Supplies

    —          2,299        469        2,819        1,269        2,204        (19     9,060   

Rents and leases

    —          3,048        19        171        —          1,320        (19     4,558   

Other operating expenses

    9,907        7,576        410        4,119        3,808        (5,425     (19     20,395   

Depreciation and amortization

    819        1,051        179        1,046        475        (294     (20a     3,655   
              430        (20b  
              (470     (20c  
              419        (20d  

Interest expense, net

    1,726        1,160        224        343        —          17,661        (21a     21,114   

Sponsor management fees

    —          —          226        —          —          (226     (22     —     

Transaction-related expenses

    —          3,374        —          —          —          (3,374     (23     —     

Change in fair value of derivatives

    —          —          —          (276     —          276        (24     —     

Legal settlement

    —          446        —          —          —              446   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total expenses

    41,954        56,888        6,728        30,987        22,336        14,422          173,315   

Income (loss) from continuing operations before income taxes

    3,524        (568     474        11,003        7,444        (14,422       7,455   

Provision (benefit) for income taxes

    1,404        403        193        4,071        2,903        (5,625     (26     3,349   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Income (loss) from continuing operations

  $ 2,120      $ (971   $ 281      $ 6,932      $ 4,541      $ (8,797     $ 4,106   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Weighted average shares:

               

Basic

              4,074        (27a     13,342   
               

 

 

 
              9,268        (27b  

Diluted

              4,074        (27a     13,342   
               

 

 

 
              9,268        (27b  

 

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Table of Contents
(17) The amounts in this column represent pro forma information for acquisitions completed as of September 30, 2012 for the nine months ended September 30, 2012.

 

    

HAVEN
FACILITIES

(14)

   

OTHER
ACQUISITIONS

(15)

   

PRO FORMA
ADJUSTMENTS

   

NOTES

   

COMPLETED
ACQUISITIONS

 

Revenue before provision for doubtful accounts

   $ 7,158      $ 22,921          $ 30,079   

Provision for doubtful accounts

     (233     (456         (689
  

 

 

   

 

 

   

 

 

     

 

 

 

Revenue

     6,925        22,465            29,390   

Salaries, wages and benefits

     3,694        11,697            15,391   

Professional fees

     222        838            1,060   

Supplies

     461        867            1,328   

Rents and leases

     25        —              25   

Other operating expenses

     687        2,671            3,358   

Depreciation and amortization

     172        341        (76     (20c     584   
         147        (20d  

Interest expense, net

     56        —          257        (21a     313   
  

 

 

   

 

 

   

 

 

     

 

 

 

Total expenses

     5,317        16,414        328          22,059   

Income (loss) from continuing operations before income taxes

     1,608        6,051        (328       7,331   

Provision (benefit) for income taxes

     595        2,360        (128     (26     2,827   
  

 

 

   

 

 

   

 

 

     

 

 

 

Income (loss) from continuing operations

   $ 1,013      $ 3,691      $ (200     $ 4,504   
  

 

 

   

 

 

   

 

 

     

 

 

 

 

(18) The amounts in this column represent pro forma information for acquisitions completed as of September 30, 2012 for the nine months ended September 30, 2011.

 

   

YFCS

(11)

   

PHC

(12)

   

HHC
DELAWARE

(13)

   

HAVEN
FACILITIES

(14)

   

OTHER
ACQUISITIONS

(15)

   

PRO FORMA
ADJUSTMENTS

   

NOTES

   

COMPLETED
ACQUISITIONS

 

Revenue before provision for doubtful accounts

  $ 45,686      $ 52,989      $ 7,541      $ 32,872      $ 22,161          $ 161,249   

Provision for doubtful accounts

    (208     (3,006     (339     (1,225     (442         (5,220
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Revenue

    45,478        49,983        7,202        31,647        21,719            156,029   

Salaries, wages and benefits

    29,502        27,840        4,747        16,097        10,683            88,869   

Professional fees

    —          5,630        454        1,024        1,469        1,901        (19     10,478   

Supplies

    —          2,062        469        2,128        929        2,204        (19     7,792   

Rents and leases

    —          2,736        19        130        —          1,320        (19     4,205   

Other operating expenses

    9,907        6,914        410        3,015        3,074        (5,425     (19     17,895   

Depreciation and amortization

    819        918        179        789        387        (294     (20a     3,124   
              397        (20b  
              (357     (20c  
              286        (20d  

Interest expense, net

    1,726        968        224        261        —          15,488        (21a     18,667   

Sponsor management fees

    —          —          226        —          —          (226     (22     —     

Transaction-related expenses

    —          2,896        —          —          —          (2,896     (23     —     

Change in fair value of derivatives

    —          —          —          (221     —          221        (24     —     

Legal settlement

    —          446        —          —          —              446   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total expenses

    41,954        50,410        6,728        23,223        16,542        12,619          151,476   

Income (loss) from continuing operations before income taxes

    3,524        (427     474        8,424        5,177        (12,619       4,553   

Provision (benefit) for income taxes

    1,404        459        193        3,118        2,019        (4,921     (26     2,272   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Income (loss) from continuing operations

  $ 2,120      $ (886   $ 281      $ 5,306      $ 3,158      $ (7,698     $ 2,281   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Weighted average shares:

               

Basic

              4,892        (27a     14,475   
               

 

 

 
              9,583        (27b  

Diluted

              4,892        (27a     14,475   
               

 

 

 
              9,583        (27b  

 

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(19) Reflects the reclassification from YFCS other operating expenses of: (a) professional fees of $1,901 for the three months ended March 31, 2011, (b) supplies expense of $2,204 for the three months ended March 31, 2011, and (c) rent expense of $1,320 for the three months ended March 31, 2011.
(20) Represents the adjustments to depreciation and amortization expense as a result of recording the property and equipment and intangible assets at preliminary estimates of fair value as of the respective dates of the acquisitions, as follows:

 

  (a) YFCS acquisition:

 

   

AMOUNT

   

USEFUL LIVES
(IN YEARS)

 

MONTHLY
DEPRECIATION

   

TWELVE
MONTHS ENDED
DECEMBER 31,
2011

   

NINE
MONTHS ENDED
SEPTEMBER 30,
2011

 

Land

  $ 5,122      N/A   $  —        $ —        $ —     

Land improvements

    2,694      10     22        66        66   

Building and improvements

    21,562      25, or lease term     73        219        219   

Equipment

    2,024      3-7     53        159        159   

Construction in progress

    239      N/A     —          —          —     
 

 

 

     

 

 

   

 

 

   

 

 

 
    31,641          148        444        444   

Indefinite-lived intangible assets

    3,835      N/A     —          —          —     

Non-compete intangible asset

    321      1     27        81        81   

Patient-related intangible asset

    1,200      0.25     400        —          —     
       

 

 

   

 

 

 

Total depreciation and amortization expense

          525        525   
       

 

 

   

 

 

 

Less: historical depreciation and amortization expense

          (819     (819
       

 

 

   

 

 

 

Depreciation and amortization expense adjustment

        $ (294   $ (294
       

 

 

   

 

 

 

The adjustment to decrease depreciation and amortization expense relates to the excess of the historical amortization of the pre-acquisition intangible assets of YFCS over the amortization expense resulting from the intangible assets identified by Acadia in its acquisition of YFCS.

 

  (b) PHC acquisition:

 

   

AMOUNT

   

USEFUL LIVES
(IN YEARS)

 

MONTHLY
DEPRECIATION

   

TWELVE
MONTHS ENDED
DECEMBER 31,
2011

   

NINE
MONTHS ENDED
SEPTEMBER 30,
2011

 

Land

  $ 2,940      N/A   $  —        $ —        $ —     

Building and improvements

    12,194      25, or lease term     102        1,020        918   

Equipment

    1,751      3-7     29        290        261   
 

 

 

     

 

 

   

 

 

   

 

 

 
    16,885          131        1,310        1,179   

Indefinite-lived intangible assets

    1,425      N/A     —          —          —     

Customer contract intangibles

    2,100      5     35        350        315   
       

 

 

   

 

 

 

Total depreciation and amortization expense

          1,660        1,494   
       

 

 

   

 

 

 

Less: PHC and MeadowWood historical depreciation and amortization expense

          (1,230     (1,097
       

 

 

   

 

 

 

Depreciation and amortization expense adjustment

        $ 430      $ 397   
       

 

 

   

 

 

 

 

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  (c) Haven Facilities acquisition:

 

   

AMOUNT

   

USEFUL LIVES
(IN YEARS)

 

MONTHLY
DEPRECIATION

   

TWELVE
MONTHS ENDED
DECEMBER 31,
2011

   

NINE
MONTHS ENDED
SEPTEMBER 30,
2012

   

NINE
MONTHS ENDED
SEPTEMBER 30,
2011

 

Land

  $ 2,960      N/A   $ —        $ —        $ —        $ —     

Building and improvements

    8,840      25, or lease term     29        348        58        261   

Equipment

    871      3-7     15        180        30        135   

Construction in progress

    52      N/A     —          —          —          —     
 

 

 

     

 

 

   

 

 

   

 

 

   

 

 

 
    12,723          44        528        88        396   

Indefinite-lived intangible assets

    1,050      N/A     —          —          —          —     

Non-compete intangible asset

    150      3     4        48        8        36   
       

 

 

   

 

 

   

 

 

 

Total depreciation and amortization expense

          576        96        432   
       

 

 

   

 

 

   

 

 

 

Less: historical depreciation and amortization expense

          (1,046     (172     (789
       

 

 

   

 

 

   

 

 

 

Depreciation and amortization expense adjustment

        $ (470   $ (76   $ (357
       

 

 

   

 

 

   

 

 

 

 

  (d) Other acquisitions:

 

   

AMOUNT

   

USEFUL LIVES
(IN YEARS)

 

MONTHLY
DEPRECIATION

   

TWELVE
MONTHS ENDED
DECEMBER 31,
2011

   

NINE
MONTHS ENDED
SEPTEMBER 30,
2012

   

NINE
MONTHS ENDED
SEPTEMBER 30,
2011

 

Land

  $ 1,137      N/A   $ —        $ —        $ —        $ —     

Land improvements

    2,601      10     22        260        176        198   

Building and improvements

    9,296      25, or lease term     31        372        248        279   

Equipment

    481      3-7     8        96        64        72   

Construction in progress

    109      N/A     —          —          —          —     
 

 

 

     

 

 

   

 

 

   

 

 

   

 

 

 
    13,624          61        728        488        549   

Indefinite-lived intangible assets

    3,151      N/A     —          —          —          —     

Non-compete intangible asset

    166      1     14        166        —          124   
       

 

 

   

 

 

   

 

 

 

Total depreciation and amortization expense

          894        488        673   
       

 

 

   

 

 

   

 

 

 

Less: historical depreciation and amortization expense

          (475     (341     (387
       

 

 

   

 

 

   

 

 

 

Depreciation and amortization expense adjustment

        $ 419      $ 147      $ 286   
       

 

 

   

 

 

   

 

 

 

 

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  (e) AmiCare acquisition:

 

   

AMOUNT

   

USEFUL LIVES
(IN YEARS)

 

MONTHLY
DEPRECIATION

   

TWELVE
MONTHS ENDED
DECEMBER 31,
2011

   

NINE

MONTHS ENDED
SEPTEMBER 30,
2012

   

NINE
MONTHS ENDED
SEPTEMBER 30,
2011

 

Land

  $ 1,381      N/A   $ —        $ —        $ —        $ —     

Building and improvements

    16,930      25, or lease term     56        677        508        508   

Equipment

    1,723      3-7     29        345        258        258   

Construction in progress

    889      N/A     —          —          —          —     
 

 

 

     

 

 

   

 

 

   

 

 

   

 

 

 
    20,923          85        1,022        766        766   

Indefinite-lived intangible assets

    1,640      N/A     —          —          —          —     

Non-compete intangible asset

    150      3     4        50        37        37   
       

 

 

   

 

 

   

 

 

 

Total depreciation and amortization expense

          1,072        803        803   
       

 

 

   

 

 

   

 

 

 

Less: historical depreciation and amortization expense

          (925     (703     (691
       

 

 

   

 

 

   

 

 

 

Depreciation and amortization expense adjustment

        $ 147      $ 100      $ 112   
       

 

 

   

 

 

   

 

 

 

 

  (f) BCA acquisition:

 

   

AMOUNT

   

USEFUL LIVES
(IN YEARS)

 

MONTHLY
DEPRECIATION

   

TWELVE
MONTHS ENDED
DECEMBER 31,
2011

   

NINE

MONTHS ENDED
SEPTEMBER 30,
2012

   

NINE
MONTHS ENDED
SEPTEMBER 30,
2011

 

Land

  $ 1,301      N/A   $ —        $ —        $ —        $ —     

Building and improvements

    15,073      25, or lease term     50        603        452        452   

Equipment

    5,057      3-7     84        1,011        759        759   

Construction in progress

    2,516      N/A     —          —          —          —     
 

 

 

     

 

 

   

 

 

   

 

 

   

 

 

 
    23,947          134        1,614        1,211        1,211   

Indefinite-lived intangible assets

    1,850      N/A     —          —          —          —     

Non-compete intangible asset

    75      1       75        —          56   
       

 

 

   

 

 

   

 

 

 

Total depreciation and amortization expense

          1,689        1,211        1,267   
       

 

 

   

 

 

   

 

 

 

Less: historical depreciation and amortization expense

          (955     (951     (674
       

 

 

   

 

 

   

 

 

 

Depreciation and amortization expense adjustment

        $ 734      $ 260      $ 593   
       

 

 

   

 

 

   

 

 

 

 

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Table of Contents
(21)

 

  (a) Represents adjustments to interest expense to give effect to the Senior Secured Credit Facility entered into by Acadia on April 1, 2011, the issuance of $150,000 of Senior Notes on November 1, 2011, the amendment to the interest rate applicable to the Senior Secured Credit Facility on November 1, 2011, and the amendment to the Senior Secured Credit Facility on March 1, 2012 to issue incremental term loans of $25,000 and increase the revolving line of credit from $30,000 to $75,000 and to the borrowing of $7,000 under the revolving line of credit. Interest expense includes related amortization of $1,000 of deferred financing cost and debt discounts for the year ended December 31, 2011 and $900 for the nine months ended September 30, 2011. The interest expense calculation for the amendment to the Senior Secured Credit Facility on March 1, 2012 assumes the 4.5% rate in effect as of such date was in place throughout the period.

 

   

TWELVE MONTHS
ENDED

DECEMBER 31, 2011

   

NINE MONTHS
ENDED
SEPTEMBER 30, 2012

   

NINE MONTHS

ENDED

SEPTEMBER 30, 2011

 

Interest related to Senior Secured Credit Facility entered into on April 1, 2011

  $ 1,992      $ —        $ 1,992   

Interest related to Senior Notes issued on November 1, 2011

    17,100        —          15,390   

Interest related to amendment to the Senior Secured Credit Facility on November 1, 2011

    331        —          249   

Interest related to amendment to the Senior Secured Credit Facility on March 1, 2012

    1,914        313        1,036   

Less: historical interest expense of Acadia (for the period prior to April 1, 2011), YFCS, PHC, MeadowWood, and Haven as to which the related debt has been repaid

    (3,676     (56     (3,179
 

 

 

   

 

 

   

 

 

 

Interest expense adjustment

  $ 17,661      $ 257      $ 15,488   
 

 

 

   

 

 

   

 

 

 

 

  (b) Represents adjustments to interest expense to give effect to the Incremental Term Loans based on an estimated interest rate of 3.25% and to adjust historical interest expense on the Senior Secured Credit facility entered on April 1, 2011 from the interest rate that was in effect for that period to 3.25%. Interest expense includes related amortization of $650 of deferred financing cost and debt discounts for the year ended December 31, 2011 and $450 for the nine months ended September 30, 2011 and 2012. The interest expense calculation for the Senior Secured Credit Facility assumes the 3.25% rate was in place throughout the period.

 

   

TWELVE MONTHS
ENDED

DECEMBER 31, 2011

   

NINE MONTHS
ENDED
SEPTEMBER 30, 2012

   

NINE MONTHS

ENDED

SEPTEMBER 30, 2011

 

Interest related to Incremental Term Loans

  $ 5,916      $ 4,449      $ 4,358   

Effect of amendment to lower interest rate on Senior Secured Credit Facility

    (1,687     (1,186     (1,025

Less: historical interest expense of BCA and AmiCare as to which the related debt will not be assumed

    (1,929     (1,257     (1,423
 

 

 

   

 

 

   

 

 

 

Interest expense adjustment

  $ 2,300      $ 2,006      $ 1,910   
 

 

 

   

 

 

   

 

 

 

An increase or decrease of 0.125% in the assumed interest rate would result in a change in interest expense of $395 for the year ended December 31, 2011 and $269 and $304 for the nine month periods ended September 30, 2012 and 2011.

 

(22) For Acadia, represents the elimination of advisory fees paid to Waud Capital Partners pursuant to Acadia’s professional services agreement, which was terminated on November 1, 2011 in connection with the PHC acquisition. For BCA, represents management fees paid to its equity sponsor and parent company. For HHC Delaware, represents management fees paid to its parent company.
(23) Reflects the removal of acquisition-related expenses included in the historical statements of operations relating to Acadia’s acquisition of YFCS, PHC, the Haven Facilities and other acquisitions and PHC’s acquisition of HHC Delaware and sale to Acadia.
(24) Reflects the elimination of the change in fair value associated with interest rate swap agreements, which were not assumed by Acadia in the acquisition of the Haven Facilities.
(25) Reflects a decrease in income taxes of $133 for the three months ended March 31, 2011 to give effect to the election by Acadia Healthcare Company, LLC to be treated as a taxable corporation effective April 1, 2011.
(26) Reflects adjustments to income taxes to reflect the impact of the above pro forma adjustments applying combined federal and state statutory tax rates for the respective periods.

 

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Table of Contents
(27) Represents adjustments to weighted average shares used to compute basic and diluted earnings (loss) per share to reflect the following:

 

  (a) The effect of the 4,892,000 shares of common stock of Acadia issued to PHC stockholders on November 1, 2011, which resulted in an increase in weighted average shares outstanding of 4,074,000 shares for the year ended December 31, 2011 and 4,892,000 shares for the nine months ended September 30, 2011.
  (b) The effect of the 9,583,000 shares of common stock issued by Acadia on December 20, 2011, which resulted in an increase in weighted average shares outstanding of 9,268,000 shares for the year ended December 31, 2011and 9,583,000 shares for the nine months ended September 30, 2011. The proceeds from such offering of common stock were used to partially fund Acadia’s acquisition of the Haven Facilities.
  (c) The effect of the 9,488,000 shares of common stock issued by Acadia on May 9, 2012, which resulted in an increase in weighted average shares outstanding of 9,488,000 shares for the year ended December 31, 2011, 4,900,000 shares for the nine months ended September 30, 2012 and 9,488,000 shares for the nine months ended September 30, 2011. The proceeds from such offering of common stock were used to partially fund Acadia’s acquisition of the Haven Facilities.
  (d) The effect of an estimated 6,000,000 shares of common stock to be issued by Acadia in this offering, which resulted in an increase in weighted average shares outstanding of 6,000,000 shares for the year ended December 31, 2011, 6,000,000 shares for the nine months ended September 30, 2012 and 6,000,000 shares for the nine months ended September 30, 2011. The proceeds from such offering of common stock are to be used to partially fund Acadia’s planned acquisition of BCA and AmiCare.

 

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SELLING STOCKHOLDERS

The table below sets forth information with respect to the selling stockholders and the shares of our common stock beneficially owned by the selling stockholders as of November 30, 2012. The percentages of shares owned prior to and after the offering are based on the 41,824,800 shares of our common stock outstanding as of November 30, 2012. The information regarding shares beneficially owned after the offering assumes the sale of all shares offered by the selling stockholders, in the aggregate, and that the selling stockholders do not acquire any additional shares. Information in the table below with respect to beneficial ownership has been furnished by each of the selling stockholders, and we have not sought to verify such information

The amounts and percentage of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed a beneficial owner of the same securities and a person may be deemed a beneficial owner of securities as to which he or she has no economic interest. The number of shares of common stock outstanding used in calculating the percentage for each listed person includes the shares of common stock underlying options or warrants held by such person that are exercisable within 60 days after November 30, 2012, but excludes shares of common stock underlying options or warrants held by any other person.

Except as indicated by footnote, the stockholders named in the table below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.

 

Name

  Shares Beneficially
Owned Before the
Offering
    Number of
Shares
Offered
    Shares Beneficially Owned After the Offering  
      Assuming the
Underwriters’ Option is

Not Exercised
    Number of
Shares
Offered in
Underwriters’
Option
    Assuming the
Underwriters’ Option is
Exercised in Full
 
  Number     Percentage       Number     Percentage       Number     Percentage