Acadia Healthcare Company Inc
For the period ended Mar 31, 2025. Filed May 12, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 12, 2025
ACHC$37.00+6.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-10-30.
0000950170-24-119044
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-12.
0000950170-25-069294
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 133 previous paragraphs and 127 current paragraphs.
71 unchanged; 37 reworded; 17 added; 17 removed; 8 previous and 2 current paragraphs rearranged.
Tables are not compared: 11 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
You should read the following discussion and analysis of our financial condition and results of operations with our unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.
Current report
Cautionary Note Regarding Forward-Looking Statements
Current report
the impact of the enactment, amendment or expiration of statutes and regulations affecting the healthcare industry, and potential reductions to Medicare and Medicaid payment rates, changes in reimbursement practices or funding levels, or modification of Medicaid supplemental payment programs;
Current report
the impact of the restructuring, consolidation, and elimination of federal agencies that regulate the healthcare industry, which could result in changes to federal agency reviews and enforcement activities, priorities, and guidance, and has the potential to cause delays in obtaining necessary or desired reviews and approvals for our facilities;
Current report
our ability to access capital on acceptable terms;
Current report
Same facility results include operating results only for facilities and services operated in both the current and prior year. These metrics exclude the operating results associated with facilities under operation for less than one year and facilities acquired during the current or prior year, as well as facilities divested or removed from service, and also exclude general and administrative costs related to our corporate functions. Such costs related to our corporate functions include, amongst others, costs for accounting and finance, information systems, human resources, legal and operational and executive leadership. General and administrative costs directly related to the facilities are included in same facility results. Such costs directly related to our facilities include, amongst others, labor at the facility level, insurance, including property, professional, legal and general liability insurance, hospital supplies, including medication, utilities and food service, and general maintenance costs for the facility. We determine which general and administrative costs to exclude and include in same facility results by ensuring those costs directly associated with facility operations are captured at the facility level for reporting.
Current report
We believe that providing results on a same facility basis is helpful to our investors as a measure of our financial and operating performance because it neutralizes the impact of corporate-level items that do not arise out of our core operations at our facilities and because it neutralizes the impact of new facilities that are in early stages of operation and facilities that we no longer operate, each of which may distort investors’ understanding of our underlying performance at our existing and continuing facilities. Further, we believe that providing same facility information is helpful to our investors as a measure of the financial and operating performance of our existing and continuing facilities on a comparable basis, and same facility results metrics provide investors with information useful in understanding underlying organic growth in such facilities. For these reasons, we believe that same facility results are particularly useful during periods of significant expansion or contraction.
Current report
Same facility results reflect adjustments that are intended to provide the specific presentation described above and that may be irregular in timing from period to period related to newly opened or acquired facilities or facilities that we no longer operate, and may omit certain results that investors may view as important. Same facility results may therefore not be indicative of the overall performance of our business and should be not be considered as an alternative for net income or any other performance measures derived in accordance with GAAP.
Current report
Debt extinguishment costs. Debt extinguishment costs were $1.3 million for the three months ended March 31, 2025 related to the refinancing of the Prior Credit Facility.
Current report
Government investigations include legal fees and settlement costs related to certain litigation, including the matters referenced in Note 9 — Commitments and Contingencies. Legal, accounting and other acquisition-related costs include costs incurred for the development of new facilities ($0.9 million and $0.6 million for the three months ended March 31, 2025 and 2024, respectively); legal and settlement costs incurred related to certain litigation not included in government investigations ($(3.0) million and $4.0 million for the three months ended March 31, 2025 and 2024, respectively); and direct costs associated with acquisitions ($0.2 million for the three months ended March 31, 2024). Management transition costs include certain costs associated with the transition of the leadership team, including the design and implementation of the revised organizational structure. Management transition costs incurred with the transition of our Chief Executive Officer beginning in the first quarter of 2022 concluded in the fourth quarter of 2024. Termination and restructuring costs include costs, net of gains, incurred related to the closure and disposition of certain facilities or contract amendments.
Current report
Provision for income taxes. For the three months ended March 31, 2025, the provision for income taxes was $4.4 million, reflecting an effective tax rate of 32.7%, compared to $20.1 million, reflecting an effective tax rate of 20.3%, for the three months ended March 31, 2024. The increase in the effective tax rate for the three months ended March 31, 2025 was primarily attributable to our lower pre-tax results for the three months ended March 31, 2025, which yields higher volatility in the items impacting the effective tax rate when compared to prior periods and decreased deductions related to equity-based compensation in the current year. In addition, the three months ended March 31, 2024 included a tax benefit related to a legal entity restructuring.
Current report
On the Credit Facility Closing Date, the full $650.0 million amount of the Term Loan Facility was funded, and $550.0 million was funded under the Revolving Facility, which amounts were used, among other things, to refinance the outstanding obligations under the Prior Credit Facility.
Current report
Prior Credit Facility
Current report
On March 17, 2021, we entered into the Prior Credit Facility, which provided for the Prior Revolving Facility and the Prior Term Loan Facility, each of which was scheduled to mature on March 17, 2026.
Current report
On February 28, 2025, we refinanced the Prior Credit Facility by using the proceeds of the Credit Facility to repay the outstanding balances of the Prior Term Loan Facility and the Prior Revolving Facility, which totaled $670.9 million and $485.0 million, respectively. In connection therewith, we recorded a loss on extinguishment of $1.3 million, which is included in debt extinguishment costs in the condensed consolidated statements of income.
Current report
7.375% Senior Notes due 2033
Current report
On March 10, 2025, we issued $550.0 million of 7.375% Senior Notes. The 7.375% Senior Notes mature on March 15, 2033 and bear interest at a rate of 7.375% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 2025. The net proceeds from the issuance and sale of the 7.375% Senior Notes, together with cash on hand, were used to pay down $550.0 million of outstanding borrowings under the Revolving Facility.
Removed paragraphs (17)
Previous report
the impact of healthcare reform in the U.S.;
Previous report
the impact of Medicaid eligibility determinations associated with the end of COVID-19 related Medicaid continuing coverage requirements;
Previous report
infectious diseases, such as the COVID-19 pandemic;
Previous report
(c)
Previous report
Adjusted EBITDA is defined as income before provision for income taxes, equity-based compensation expense, loss on impairment, transaction, legal and other costs, interest expense, legal settlement expense and depreciation and amortization. Management uses Adjusted EBITDA as an analytical indicator to measure performance and to develop strategic objectives and operating plans. Adjusted EBITDA is commonly used as an analytical indicator within the health care industry, and also serves as a measure of leverage capacity and debt service ability. Adjusted EBITDA should not be considered as a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Because Adjusted EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue.
Previous report
Income from provider relief fund. For the three months ended September 30, 2023, we recorded $4.4 million in income from provider relief fund related to ARP funds received in 2022.
Previous report
Loss on impairment. During the third quarter of 2024, we recorded non-cash property impairment charges totaling $10.5 million related to certain closed facilities. The non-cash impairment charges included indefinite-lived intangible asset impairment of $0.3 million, property impairment of $8.8 million and operating lease right-of-use asset impairment of $1.4 million.
Previous report
Provision for (benefit from) income taxes. For the three months ended September 30, 2024, the provision for income taxes was $27.2 million, reflecting an effective tax rate of 27.6%, compared to a benefit from income taxes of $(71.9) million, reflecting an effective tax rate of 25.0%, for the three months ended September 30, 2023.
Previous report
Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023
Previous report
Salaries, wages and benefits. SWB expense was $1,265.4 million for the nine months ended September 30, 2024 compared to $1,172.0 million for the nine months ended September 30, 2023, an increase of $93.5 million. SWB expense included $27.0 million and $23.1 million of equity-based compensation expense for the nine months ended September 30, 2024 and 2023, respectively. Excluding equity-based compensation expense, SWB expense was $1,238.4 million, or 52.0% of revenue, for the nine months ended September 30, 2024, compared to $1,148.8 million, or 52.6% of revenue, for the nine months ended September 30, 2023. Same facility SWB expense was $1,113.3 million for the nine months ended September 30, 2024, or 47.7% of revenue, compared to $1,037.4 million for the nine months ended September 30, 2023, or 48.3% of revenue.
Previous report
Professional fees. Professional fees were $142.2 million for the nine months ended September 30, 2024, or 6.0% of revenue, compared to $130.5 million for the nine months ended September 30, 2023, or 6.0% of revenue. Same facility professional fees were $123.8 million for the nine months ended September 30, 2024, or 5.3% of revenue, compared to $117.0 million for the nine months ended September 30, 2023, or 5.4% of revenue.
Previous report
Income from provider relief fund. For the nine months ended September 30, 2023, we recorded $4.4 million in income from provider relief fund related to ARP funds received in 2022.
Previous report
Depreciation and amortization. Depreciation and amortization expense was $110.1 million for the nine months ended September 30, 2024, or 4.6% of revenue, compared to $97.0 million for the nine months ended September 30, 2023, or 4.4% of revenue.
Previous report
Loss on impairment. During the nine months ended September 30, 2024, we recorded non-cash property impairment charges totaling $11.5 million related to certain closed facilities. The non-cash impairment charges included indefinite-lived intangible asset impairment of $0.3 million, property impairment of $9.8 million and operating lease right-of-use asset impairment of $1.4 million. During the nine months ended September 30, 2023, we recorded non-cash impairment charges totaling $8.7 million related to the closure of certain facilities. The non-cash impairment charges included indefinite-lived intangible asset impairment of $4.7 million, property impairment of $2.0 million and operating lease right-of-use asset impairment of $2.0 million.
Previous report
Provision for (benefit from) income taxes. For the nine months ended September 30, 2024, the provision for income taxes was $72.9 million, reflecting an effective tax rate of 24.0%, compared to a benefit from income taxes of $(29.9) million, reflecting an effective tax rate of 28.4%, for the nine months ended September 30, 2023.
Previous report
As a part of the closing of the Credit Facility on March 17, 2021, we (i) refinanced and terminated our prior credit facilities under an amended and restated credit agreement, dated as of December 31, 2012 and (ii) financed the redemption of all of our outstanding 5.625% Senior Notes due 2023.
Previous report
The interest rates and the unused line fee on unused commitments related to the Credit Facility are based upon the following pricing tiers:
Reworded paragraphs (37)
Previous wording
the impact of internal or governmental investigations, regulatory actions and whistleblower lawsuits;
Current wording
the impact of internal or governmental investigations, regulatory actions, whistleblower lawsuits and other legal proceedings;
Previous wording
the impact of inflation and interest rate volatility;
Current wording
the impact of inflationary pressure and interest rate volatility;
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the impact of general economic and employment conditions, including increased construction and other costs due to inflation, on our business and future results of operations;
Current wording
the impact of general economic and employment conditions on our business and future results of operations, including increased construction and other costs due to inflation, the imposition of tariffs or trade disputes;
Previous wording
the impact of disruptions on our inpatient and outpatient volumes caused by pandemics, epidemics or outbreaks of
Current wording
the impact of disruptions on our inpatient and outpatient volumes caused by pandemics, epidemics or outbreaks of infectious diseases;
Previous wording
our dependence on key management personnel, key executives and local facility management personnel, and the impact of any disruptions from the recent transition of various executives;
Current wording
our dependence on key management personnel, key executives and local facility management personnel;
Previous wording
the risk of a cyber-security incident and any resulting adverse impact on our operations or violation of laws and regulations regarding information privacy;
Current wording
the risk of a cybersecurity incident and any resulting adverse impact on our operations or violation of laws and regulations regarding information privacy;
Previous wording
changes in interpretations, assumptions and expectations regarding recent tax legislation, including provisions of the CARES Act and additional guidance that may be issued by federal and state taxing authorities;
Current wording
changes in interpretations, assumptions and expectations regarding tax legislation and policy, including provisions that may be issued by federal and state taxing authorities;
Previous wording
Our business strategy is to become the indispensable behavioral healthcare provider for the high-acuity and complex needs patient population. We are committed to providing the communities we serve with high-quality, cost-effective behavioral healthcare services, while growing our business, increasing profitability and creating long-term value for our stockholders. This strategy includes five growth pathways: expansions of existing facilities, joint venture partnerships, de novo facilities, acquisitions and expansion across our continuum of care. At September 30, 2024, we operated 260 behavioral healthcare facilities with approximately 11,300 beds in 38 states and Puerto Rico. During the nine months ended September 30, 2024, we added 275 beds, consisting of 67 beds to existing facilities and 208 beds added through the opening of four wholly-owned facilities.
Current wording
Our business strategy is to become the indispensable behavioral healthcare provider for the high-acuity and complex needs patient population. We are committed to providing the communities we serve with high-quality, cost-effective behavioral healthcare services, while growing our business, increasing profitability and creating long-term value for our stockholders. This strategy includes five growth pathways: expansions of existing facilities, joint venture partnerships, de novo facilities, acquisitions and expansion across our continuum of care. At March 31, 2025, we operated 270 behavioral healthcare facilities with approximately 12,000 beds in 39 states and Puerto Rico. During the three months ended March 31, 2025, we added 378 beds, consisting of 90 beds added to existing facilities and 288 beds added through the opening of one wholly-owned facility and one joint venture facility, and we opened seven CTCs.
Previous wording
We are the leading publicly traded pure-play provider of behavioral healthcare services in the U.S. Management believes that we are positioned as a leading platform in a highly fragmented industry under the direction of an experienced management team that has significant industry expertise. Management expects to take advantage of several strategies that are more accessible as a result of our increased size and geographic scale, including continuing a national marketing strategy to attract new patients and referral sources, increasing our volume of out-of-state referrals, providing a broader range of services to new and existing patients and clients and selectively pursuing opportunities to expand our facility and bed count in the U.S. through acquisitions, wholly-owned de novo facilities, joint ventures and bed additions in existing facilities.
Current wording
We are the leading publicly traded pure-play provider of behavioral healthcare services in the U.S. Management believes that we are positioned as a leading platform in a highly fragmented industry under the direction of an experienced management team that has significant industry expertise. Management expects to take advantage of several strategies that are more accessible as a result of our increased size and geographic scale, including continuing a national marketing strategy to attract new patients and referral sources, increasing our volume of out-of-state referrals, providing a broader range of services to new and existing patients and clients and selectively pursuing opportunities to expand our facility and bed count through acquisitions, wholly-owned de novo facilities, joint ventures and bed additions in existing facilities.
Previous wording
We believe that we are well positioned to help meet the growing demand for behavioral healthcare services and recorded revenue growth of 8.7% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Similar with many other healthcare providers and other industries across the country, we continue to navigate a tight labor market. While we experienced higher wage inflation recently compared to long-term historical averages, we have seen stability in our labor costs and our proactive focus helps us manage through this environment. We remain focused on ensuring that we have the level of staff to meet the demand in our markets across 38 states and Puerto Rico.
Current wording
We believe that we are well positioned to help meet the growing demand for behavioral healthcare services and recorded revenue growth of 0.3% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Similar with many other healthcare providers and other industries across the country, we continue to navigate a tight labor market. While we experienced higher wage inflation compared to historical averages in recent years, we continue to see stability in our labor costs and our proactive focus helps us manage through this environment. We remain focused on ensuring that we have the level of staff to meet the demand in our markets across 39 states and Puerto Rico.
Previous wording
The following table sets forth percent changes in same facility operating data for the three and nine months ended September 30, 2024 compared to the same periods in 2023:
Current wording
The following table sets forth percent changes in same facility operating data for the three months ended March 31, 2025 compared to the same period in 2024:
Previous wording
Revenue. Revenue increased $65.3 million, or 8.7%, to $815.6 million for the three months ended September 30, 2024 from $750.3 million for the three months ended September 30, 2023. Same facility revenue increased $63.2 million, or 8.6%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, resulting from an increase in same facility revenue per day of 3.6% and same facility growth in patient days of 4.7%. Consistent with same facility revenue growth in 2023, the growth in same facility patient days for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 resulted from the addition of beds to our existing facilities and ongoing demand for our services.
Current wording
Revenue. Revenue increased $2.5 million, or 0.3%, to $770.5 million for the three months ended March 31, 2025 from $768.1 million for the three months ended March 31, 2024. Same facility revenue increased $15.3 million, or 2.1%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, resulting from same facility growth in patient days of 2.2% slightly offset by a decrease in same facility revenue per day of -0.2%. Consistent with same facility revenue growth in 2024, the growth in same facility patient days for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 resulted from the addition of beds to our existing facilities and ongoing demand for our services.
Previous wording
Salaries, wages and benefits. Salaries, wages and benefits (“SWB”) expense was $428.1 million for the three months ended September 30, 2024 compared to $394.2 million for the three months ended September 30, 2023, an increase of $33.9 million. SWB expense included $9.5 million and $8.2 million of equity-based compensation expense for the three months ended September 30, 2024 and 2023, respectively. Excluding equity-based compensation expense, SWB expense was $418.6 million, or 51.3% of revenue, for the three months ended September 30, 2024, compared to $386.0 million, or 51.4% of revenue, for the three months ended September 30, 2023. Same facility SWB expense was $377.7 million for the three months ended September 30, 2024, or 47.1% of revenue, compared to $352.4 million for the three months ended September 30, 2023, or 47.7% of revenue.
Current wording
Salaries, wages and benefits. Salaries, wages and benefits (“SWB”) expense was $445.3 million for the three months ended March 31, 2025 compared to $417.5 million for the three months ended March 31, 2024, an increase of $27.8 million. SWB expense included $8.7 million of equity-based compensation expense for both the three months ended March 31, 2025 and 2024. Excluding equity-based compensation expense, SWB expense was $436.6 million, or 56.7% of revenue, for the three months ended March 31, 2025, compared to $408.8 million, or 53.2% of revenue, for the three months ended March 31, 2024. Same facility SWB expense was $390.0 million for the three months ended March 31, 2025, or 51.3% of revenue, compared to $366.3 million for the three months ended March 31, 2024, or 49.2% of revenue.
Previous wording
Professional fees. Professional fees were $48.5 million for the three months ended September 30, 2024, or 5.9% of revenue, compared to $45.5 million for the three months ended September 30, 2023, or 6.1% of revenue. Same facility professional fees were $42.8 million for the three months ended September 30, 2024, or 5.3% of revenue, compared to $40.4 million for the three months ended September 30, 2023, or 5.5% of revenue.
Current wording
Professional fees. Professional fees were $45.7 million for the three months ended March 31, 2025, or 5.9% of revenue, compared to $45.7 million for the three months ended March 31, 2024, or 5.9% of revenue. Same facility professional fees were $39.2 million for the three months ended March 31, 2025, or 5.2% of revenue, compared to $38.4 million for the three months ended March 31, 2024, or 5.2% of revenue.
Previous wording
Supplies. Supplies expense was $29.6 million for the three months ended September 30, 2024, or 3.6% of revenue, compared to $27.1 million for the three months ended September 30, 2023, or 3.6% of revenue. Same facility supplies expense was $28.9 million for the three months ended September 30, 2024, or 3.6% of revenue, compared to $26.4 million for the three months ended September 30, 2023, or 3.6% of revenue.
Current wording
Supplies. Supplies expense was $28.3 million for the three months ended March 31, 2025, or 3.7% of revenue, compared to $26.7 million for the three months ended March 31, 2024, or 3.5% of revenue. Same facility supplies expense was $27.4 million for the three months ended March 31, 2025, or 3.6% of revenue, compared to $25.6 million for the three months ended March 31, 2024, or 3.4% of revenue.
Previous wording
Rents and leases. Rents and leases were $12.4 million for the three months ended September 30, 2024, or 1.5% of revenue, compared to $11.7 million for the three months ended September 30, 2023, or 1.6% of revenue. Same facility rents and leases were $10.9 million for the three months ended September 30, 2024, or 1.4% of revenue, compared to $10.6 million for the three months ended September 30, 2023, or 1.4% of revenue.
Current wording
Rents and leases. Rents and leases were $11.7 million for the three months ended March 31, 2025, or 1.5% of revenue, compared to $11.9 million for the three months ended March 31, 2024, or 1.5% of revenue. Same facility rents and leases were $10.2 million for the three months ended March 31, 2025, or 1.3% of revenue, compared to $10.5 million for the three months ended March 31, 2024, or 1.4% of revenue.
Previous wording
Other operating expenses. Other operating expenses consisted primarily of purchased services, utilities, insurance, travel and repairs and maintenance expenses. Other operating expenses were $112.1 million for the three months ended September 30, 2024, or 13.8% of revenue, compared to $104.0 million for the three months ended September 30, 2023, or 13.9% of revenue. Same facility other operating expenses were 103.6 million for the three months ended September 30, 2024, or 12.9% of revenue, compared to $97.1 million for the three months ended September 30, 2023, or 13.1% of revenue.
Current wording
Other operating expenses. Other operating expenses consisted primarily of purchased services, utilities, insurance, travel and repairs and maintenance expenses. Other operating expenses were $114.0 million for the three months ended March 31, 2025, or 14.8% of revenue, compared to $101.1 million for the three months ended March 31, 2024, or 13.2% of revenue. Same facility other operating expenses were $101.4 million for the three months ended March 31, 2025, or 13.3% of revenue, compared to $93.0 million for the three months ended March 31, 2024, or 12.5% of revenue.
Previous wording
Depreciation and amortization. Depreciation and amortization expense was $37.6 million for the three months ended September 30, 2024, or 4.6% of revenue, compared to $33.4 million for the three months ended September 30, 2023, or 4.4% of revenue.
Current wording
Depreciation and amortization. Depreciation and amortization expense was $47.0 million for the three months ended March 31, 2025, or 6.1% of revenue, compared to $36.3 million for the three months ended March 31, 2024, or 4.7% of revenue.
Previous wording
Interest expense. Interest expense was $29.9 million for the three months ended September 30, 2024 compared to $20.7 million for the three months ended September 30, 2023. The increase in interest expense was primarily the result of borrowings under the Credit Facility during 2024.
Current wording
Interest expense. Interest expense was $29.2 million for the three months ended March 31, 2025 compared to $27.2 million for the three months ended March 31, 2024. The increase in interest expense was primarily the result of interest on the 7.375% Senior Notes issued during the first quarter of 2025.
Previous wording
Legal settlements expense. Legal settlements expense for the three months ended September 30, 2023 was $394.2 million associated with the Desert Hills Litigation.
Current wording
Legal settlements expense. Legal settlements expense was $3.5 million for the three months ended March 31, 2025 related to costs associated with the Desert Hills Litigation.
Previous wording
Transaction, legal and other costs. Transaction, legal and other costs were $8.2 million for the three months ended September 30, 2024, compared to $11.2 million for the three months ended September 30, 2023. Transaction, legal and other costs represent legal, accounting, government investigation, termination, restructuring, management transition, acquisition and other similar costs incurred in the respective period, as summarized below (in thousands).
Current wording
Transaction, legal and other costs. Transaction, legal and other costs were $31.1 million for the three months ended March 31, 2025, compared to $2.8 million for the three months ended March 31, 2024. Transaction, legal and other costs represent legal, accounting, government investigation, termination, restructuring, management transition, acquisition and other similar costs incurred in the respective period, as summarized below (in thousands).
Previous wording
The following table presents revenue by payor type and as a percentage of revenue for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):
Current wording
The following table presents revenue by payor type and as a percentage of revenue for the three months ended March 31, 2025 and 2024 (dollars in thousands):
Previous wording
Cash provided by operating activities for the nine months ended September 30, 2024 was $13.0 million compared to $346.0 million for the nine months ended September 30, 2023. Days sales outstanding at September 30, 2024 was 43 days compared to 45 days at December 31, 2023.
Current wording
Cash provided by operating activities for the three months ended March 31, 2025 was $11.5 million compared to cash used in operating activities of $321.3 million for the three months ended March 31, 2024. Days sales outstanding at March 31, 2025 was 46 days compared to 43 days at December 31, 2024.
Previous wording
Cash used in investing activities for the nine months ended September 30, 2024 was $533.1 million compared to $287.1 million for the nine months ended September 30, 2023. Cash used in investing activities for the nine months ended September 30, 2024 primarily consisted of $486.9 million of cash paid for capital expenditures, $53.6 million of cash paid for acquisitions and $2.9 million of other, offset by $10.2 million of proceeds from sales of property and equipment. Cash paid for capital expenditures for the nine months ended September 30, 2024 was $486.9 million, consisting of routine or maintenance capital expenditures of $71.3 million and expansion capital expenditures of $415.6 million. We define expansion capital expenditures as those that increase the capacity of our facilities or otherwise enhance revenue. Routine or maintenance capital expenditures, including information technology capital expenditures, were approximately 3% of revenue for the nine months ended September 30, 2024. Cash used in investing activities for the nine months ended September 30, 2023 primarily consisted of $285.4 million of cash paid for capital expenditures, $1.9 million of other and $0.3 million of cash paid for acquisitions, net of cash acquired, offset by $0.6 million of proceeds from sales of property and equipment. Cash paid for capital expenditures for the nine months ended September 30, 2023 was $285.4 million, consisting of routine or maintenance capital expenditures of $73.9 million and expansion capital expenditures of $211.5 million.
Current wording
Cash used in investing activities for the three months ended March 31, 2025 was $183.2 million compared to $184.6 million for the three months ended March 31, 2024. Cash used in investing activities for the three months ended March 31, 2025 primarily consisted of $174.6 million of cash paid for capital expenditures and $8.6 million of cash paid for acquisitions. Cash paid for capital expenditures for the three months ended March 31, 2025 was $174.6 million, consisting of routine or maintenance capital expenditures of $22.2 million and expansion capital expenditures of $152.4 million. We define expansion capital expenditures as those that increase the capacity of our facilities or otherwise enhance revenue. Routine or maintenance capital expenditures, including information technology capital expenditures, were approximately 3% of revenue for the three months ended March 31, 2025. Cash used in investing activities for the three months ended March 31, 2024 primarily consisted of $142.4 million of cash paid for capital expenditures, $50.4 million of cash paid for acquisitions and $0.9 million of other, offset by $9.1 million of proceeds from sales of property and equipment. Cash paid for capital expenditures for the three months ended March 31, 2024 was $142.4 million, consisting of routine or maintenance capital expenditures of $22.3 million and expansion capital expenditures of $120.1 million.
Previous wording
Cash provided by financing activities for the nine months ended September 30, 2024 was $502.2 million compared to cash used in financing activities of $57.0 million for the nine months ended September 30, 2023. Cash provided by financing activities for the nine months ended September 30, 2024 consisted of borrowings on long-term debt of $350.0 million, borrowings on revolving credit facility of $210.0 million and contributions from noncontrolling partners in joint ventures of $3.5 million, offset by principal payments on long-term debt of $41.0 million, principal payments on revolving credit facility of $15.0 million, distributions to noncontrolling partners in joint ventures of $3.0 million, payment of debt issuance costs of $1.5 million and repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises of $0.8 million. Cash used in financing activities for the nine months ended September 30, 2023 consisted of repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises of $45.2 million, principal payments on revolving credit facility of $35.0 million, principal payments on long-term debt of $15.9 million and distributions to noncontrolling partners in joint ventures of $3.5 million, offset by borrowings on revolving credit facility of $40.0 million and contributions from noncontrolling partners in joint ventures of $2.5 million.
Current wording
Cash provided by financing activities for the three months ended March 31, 2025 was $186.7 million compared to $483.1 million for the three months ended March 31, 2024. Cash provided by financing activities for the three months ended March 31, 2025 consisted of borrowings on long-term debt of $1,200.0 million and borrowings on revolving credit facility of $760.0 million, offset by principal payments on revolving credit facility of $1,035.0 million, repayment of long-term debt of $670.9 million, payment of debt issuance costs of $18.6 million, repurchase of common stock of $46.9 million and repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises of $1.9 million. Cash provided by financing activities for the three months ended March 31, 2024 consisted of borrowings on long-term debt of $350.0 million, borrowings on revolving credit facility of $160.0 million and contributions from noncontrolling partners in joint ventures of $2.3 million, offset by principal payments on revolving credit facility of $15.0 million, principal payments on long-term debt of $10.2 million, payment of debt issuance costs of $1.5 million, distributions to noncontrolling partners in joint ventures of $1.0 million, repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises of $1.0 million and $0.4 million of other.
Previous wording
We had total available cash and cash equivalents of $82.1 million and $100.1 million at September 30, 2024 and December 31, 2023, respectively, of which approximately $5.9 million and $11.3 million, respectively, was held by our foreign subsidiaries. Our strategic plan does not require the repatriation of foreign cash in order to fund our operations in the U.S.
Current wording
We had total available cash and cash equivalents of $91.2 million and $76.3 million at March 31, 2025 and December 31, 2024, respectively, of which approximately $6.0 million and $7.7 million was held by our foreign subsidiaries, respectively. Our strategic plan does not require the repatriation of foreign cash in order to fund our operations in the U.S.
Previous wording
As described in more detail in Note 10 – Commitments and Contingencies in the accompanying notes to our condensed consolidated financial statements, on October 30, 2023, we entered into settlement agreements in connection with the Cases. The settlement agreements were approved by the District Court in December 2023 and fully resolve each of the Cases with no admission of liability or wrongdoing by us. On January 19, 2024, pursuant to the terms of the settlement agreements, we paid an aggregate amount of $400.0 million in exchange for the release and discharge of all claims arising from, relating to, concerning or with respect to all harm, injuries or damages asserted in the Cases or that may be asserted in the future by the plaintiffs in the Cases.
Current wording
As described in more detail in Note 9 – Commitments and Contingencies in the accompanying notes to our condensed consolidated financial statements, on October 30, 2023, we entered into settlement agreements in connection with the Cases. The settlement agreements for the Cases were approved by the District Court in December 2023 and fully resolve each of the Cases with no admission of liability or wrongdoing by us or Desert Hills. On January 19, 2024, pursuant to the terms of the settlement agreements, we paid an aggregate amount of $400.0 million in exchange for the release and discharge of all claims arising from, relating to, concerning or with respect to all harm, injuries or damages asserted in the Cases or that may be asserted in the future by the plaintiffs in the Cases.
Previous wording
On March 17, 2021, we entered into the Credit Facility, which provides for a $600.0 million Revolving Facility and a Term Loan Facility in an initial principal amount of $425.0 million, each maturing on March 17, 2026. The Revolving Facility further provides for a $20.0 million subfacility for the issuance of letters of credit.
Current wording
On the Credit Facility Closing Date, we entered into the Credit Agreement, which provides for the $1.0 billion Revolving Facility (including a $50.0 million sublimit for the issuance of letters of credit and a $50.0 million swingline subfacility) and the $650.0 million Term Loan Facility, each maturing on February 28, 2030.
Previous wording
On March 30, 2023, we entered into the First Amendment, which replaced LIBOR as the reference rate applicable to borrowings under the Credit Facility with Adjusted Term SOFR. After giving effect to the First Amendment, borrowings under the Credit Facility bear interest at a rate equal to, at our option, either (i) Adjusted Term SOFR plus a margin ranging from 1.375% to 2.250% or (ii) a base rate plus a margin ranging from 0.375% to 1.250%, in each case, depending on our consolidated total net leverage ratio. In addition, an unused fee that varies according to our consolidated total net leverage ratio ranging from 0.200% to 0.350% is payable quarterly in arrears based on the average daily undrawn portion of the commitments in respect of the Revolving Facility.
Current wording
Borrowings under the Credit Agreement bear interest at a floating rate equal to, at our option, either (i) a SOFR-based rate plus a margin ranging from 1.375% to 2.250% or (ii) a base rate plus a margin ranging from 0.375% to 1.250%, in each case, depending on our Consolidated Total Net Leverage Ratio. In addition, an unused fee that varies according to our Consolidated Total Net Leverage Ratio ranging from 0.200% to 0.350% is payable quarterly in arrears based on the average daily undrawn portion of the commitments in respect of the Revolving Facility. The Term Loan Facility requires quarterly principal repayments of $4.0 million from June 30, 2025 to March 31, 2026, $8.1 million from June 30, 2026 to March 31, 2028, $12.2 million from June 30, 2028 to March 31, 2029 and
Previous wording
On January 18, 2024, we entered into the Second Amendment, which provides for the incurrence of $350.0 million of Incremental Term Loans. Such Incremental Term Loans are structured as an increase of the Term Loan Facility. The maturity date, the leverage-based pricing grid, mandatory prepayment events and other terms applicable to the Incremental Term Loans are substantially identical to those applicable to the initial $425.0 million term loans incurred under the Term Loan Facility. After giving effect to the Incremental Term Loans, the Credit Facility requires quarterly principal repayments for the Term Loan Facility of approximately $15.4 million for each quarter ending from December 31, 2024 to March 31, 2025 and $20.5 million for each quarter ending from June 30, 2025 to December 31, 2025. The remaining outstanding principal balance of the Term Loan Facility is due on the maturity date of March 17, 2026.
Current wording
$16.2 million from June 30, 2029 to December 31, 2029, with the remaining outstanding principal balance of the Term Loan Facility due on the maturity date of February 28, 2030.
Previous wording
We have the ability to increase the amount of the Credit Facility, which may take the form of increases to the Revolving Facility or the Term Loan Facility or the issuance of one or more Incremental Facilities, upon obtaining additional commitments from new or existing lenders and the satisfaction of customary conditions precedent for such Incremental Facilities. Such Incremental Facilities may not exceed the sum of (i) the Incremental Fixed Basket and (ii) the Incremental Ratio Basket. The Incremental Term Loans were incurred in reliance on the Incremental Ratio Basket, leaving the full amount of the Incremental Fixed Basket available for any future Incremental Facilities.
Current wording
We have the ability to increase the amount of the Credit Facility, which may take the form of increases to the Revolving Facility or the Term Loan Facility or the issuance of one or more Incremental Facilities, upon obtaining additional commitments from new or existing lenders and the satisfaction of certain customary conditions precedent for such Incremental Facilities. Such Incremental Facilities may not exceed the sum of (i) the greater of $710.0 million and an amount equal to 100% of our LTM Consolidated EBITDA at the time of determination and (ii) additional amounts that would not cause our Consolidated Senior Secured Net Leverage Ratio to exceed 4.0 to 1.0.
Previous wording
Subject to certain exceptions, substantially all of our existing and subsequently acquired or organized direct or indirect wholly-owned U.S. subsidiaries are required to guarantee the repayment of our obligations under the Credit Facility. We and such guarantor subsidiaries have granted a security interest in substantially all personal property assets as collateral for the obligations under the Credit Facility.
Current wording
Subject to certain exceptions, substantially all of our existing and subsequently acquired or organized direct and indirect wholly-owned U.S. subsidiaries are required to guarantee the repayment of our obligations under the Credit Agreement. The obligations of us and such guarantor subsidiaries are secured by a pledge of substantially all of our and such guarantor subsidiaries’ assets (excluding all real property and certain other customarily excluded assets).
Previous wording
The Credit Facility contains customary representations and affirmative and negative covenants, including limitations on our ability and our subsidiaries’ ability to incur additional debt, grant or permit additional liens, make investments and acquisitions, merge or consolidate with others, dispose of assets, pay dividends and distributions, pay junior indebtedness and enter into affiliate transactions, in each case, subject to customary exceptions. In addition, the Credit Facility contains financial covenants requiring us on a consolidated basis to maintain, as of the last day of any consecutive four fiscal quarter period, a consolidated total net leverage ratio of not more than 4.5 to 1.0 (which may be increased to 5.0 to 1.0 for a period of up to four consecutive fiscal quarters following the consummation of certain material acquisitions) and an interest coverage ratio of at least 3.0 to 1.0. The Credit Facility also includes events of default customary for facilities of this type and upon the occurrence of such events of default, among other things, all outstanding loans under the Credit Facility may be accelerated, the lenders’ commitments terminated, and/or the lenders may exercise collateral remedies. At September 30, 2024, we were in compliance with all financial covenants.
Current wording
The Credit Agreement contains customary representations and warranties and affirmative and negative covenants, including limitations on the ability of us and our subsidiaries to: (i) incur debt; (ii) permit additional liens; (iii) make investments and acquisitions; (iv) merge or consolidate with others; (v) dispose of assets; (vi) pay dividends and distributions; (vii) pay junior indebtedness; and (viii) enter into affiliate transactions, in each case, subject to customary exceptions. In addition, the Credit Agreement contains financial covenants requiring us to maintain on a consolidated basis as of the last day of each quarterly period, a Consolidated Total Net Leverage Ratio of not more than 5.0 to 1.0 (which may be increased in connection with a material acquisition to 5.5 to 1.0 for a four quarter period up to three times during the term of the Credit Agreement) and a Consolidated Interest Coverage Ratio of at least 3.0 to 1.0. The Credit Agreement also includes events of default customary for facilities of this type and upon the occurrence of such events of default, among other things, all outstanding loans under the Credit Agreement may be accelerated, lenders commitments terminated, and/or lenders may exercise collateral remedies. At March 31, 2025, our Consolidated Total Net Leverage Ratio was 3.2x, and we were in compliance with all financial covenants. Consolidated Total Net Leverage Ratio is being reported as calculated under the Credit Agreement and not pursuant to GAAP. Investors should refer to the agreements governing the Credit Agreement attached as exhibits to our periodic reports for further information related to the calculation thereof, and should not consider Consolidated Total Net Leverage Ratio as an alternative for any measures derived in accordance with GAAP. For risks related to our indebtedness and compliance with these covenants, see “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Previous wording
During the nine months ended September 30, 2024, we borrowed $210.0 million on the Revolving Facility and repaid $15.0 million of the balance outstanding. During the nine months ended September 30, 2023, we borrowed $40.0 million on the Revolving Facility and repaid $35.0 million of the balance outstanding. We had $321.5 million of availability under the Revolving Facility and had standby letters of credit outstanding of $3.5 million related to security for the payment of claims required by our workers’ compensation insurance program at September 30, 2024.
Current wording
During the three months ended March 31, 2025, we borrowed $115.0 million on the Prior Revolving Facility and repaid $485.0 million of the balance outstanding. During the three months ended March 31, 2024, we borrowed $160.0 million on the Prior Revolving Facility and repaid $15.0 million of the balance outstanding.
Previous wording
The Senior Notes issued by us are guaranteed by each of our subsidiaries that guaranteed our obligations under the Credit Facility. The guarantees are full and unconditional and joint and several.
Current wording
The Senior Notes issued by us are guaranteed by each of our subsidiaries that guarantee our obligations under the Credit Agreement. The guarantees are full and unconditional and joint and several.
Previous wording
We may redeem the Senior Notes at our option, in whole or part, at the dates and amounts set forth in the indentures.
Current wording
We may redeem the Senior Notes at our option, in whole or part, at the dates and amounts set forth in the applicable indentures.
Previous wording
We conduct substantially all of our business through our subsidiaries. The Senior Notes are jointly and severally guaranteed on an unsecured senior basis by all of our subsidiaries that guarantee our obligations under the Credit Facility. The summarized financial information presented below is consistent with our condensed consolidated financial statements, except transactions between combining entities have been eliminated. Financial information for our combined non-guarantor entities has been excluded pursuant to SEC Regulation S-X Rule 13-01. Presented below is condensed financial information for our combined wholly-owned subsidiary guarantors at September 30, 2024 and December 31, 2023, and for the nine months ended September 30, 2024.
Current wording
We conduct substantially all of our business through our subsidiaries. The Senior Notes are jointly and severally guaranteed on an unsecured senior basis by all of our subsidiaries that guarantee our obligations under the Credit Agreement. The summarized financial information presented below is consistent with our condensed consolidated financial statements, except transactions between combining entities have been eliminated. Financial information for our combined non-guarantor entities has been excluded pursuant to SEC Regulation S-X Rule 13-01. Presented below is condensed financial information for our combined wholly-owned subsidiary guarantors at March 31, 2025 and December 31, 2024, and for the three months ended March 31, 2025.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
During three months ended March 31, 2025, we borrowed $645.0 million on the Revolving Facility and repaid $550.0 million of the balance outstanding.
Current report — wording carried from elsewhere
At March 31, 2025, we had $901.6 million of availability under the Revolving Facility and had standby letters of credit outstanding of $3.4 million related to security for the payment of claims required by our workers’ compensation insurance program.
Rearranged previous paragraphs (8)
Previous report — wording carried elsewhere
Revenue. Revenue increased $193.8 million, or 8.9%, to $2,379.7 million for the nine months ended September 30, 2024 from $2,185.9 million for the nine months ended September 30, 2023. Same facility revenue increased $186.5 million, or 8.7%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, resulting from an increase in same facility revenue per day of 5.3% and same facility growth in patient days of 3.2%. Consistent with same facility revenue growth in 2023, the growth in same facility patient days for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 resulted from the addition of beds to our existing facilities and ongoing demand for our services.
Previous report — wording carried elsewhere
Supplies. Supplies expense was $84.2 million for the nine months ended September 30, 2024, or 3.5% of revenue, compared to $79.3 million for the nine months ended September 30, 2023, or 3.6% of revenue. Same facility supplies expense was $82.0 million for the nine months ended September 30, 2024, or 3.5% of revenue, compared to $77.2 million for the nine months ended September 30, 2023, or 3.6% of revenue.
Previous report — wording carried elsewhere
Rents and leases. Rents and leases were $36.1 million for the nine months ended September 30, 2024, or 1.5% of revenue, compared to $34.9 million for the nine months ended September 30, 2023, or 1.6% of revenue. Same facility rents and leases were $32.4 million for the nine months ended September 30, 2024, or 1.4% of revenue, compared to $31.7 million for the nine months ended September 30, 2023, or 1.5% of revenue.
Previous report — wording carried elsewhere
Other operating expenses. Other operating expenses consisted primarily of purchased services, utilities, insurance, travel and repairs and maintenance expenses. Other operating expenses were $322.9 million for the nine months ended September 30, 2024, or 13.6% of revenue, compared to $290.8 million for the nine months ended September 30, 2023, or 13.3% of revenue. Same facility other operating expenses were $298.6 million for the nine months ended September 30, 2024, or 12.8% of revenue, compared to $270.4 million for the nine months ended September 30, 2023, or 12.6% of revenue.
Previous report — wording carried elsewhere
Interest expense. Interest expense was $86.3 million for the nine months ended September 30, 2024 compared to $61.7 million for the nine months ended September 30, 2023. The increase in interest expense was primarily the result of borrowings under the Credit Facility during 2024.
Previous report — wording carried elsewhere
Legal settlements expense. Legal settlements expense for the nine months ended September 30, 2023 was $394.2 million associated with the Desert Hills Litigation.
Previous report — wording carried elsewhere
Transaction, legal and other costs. Transaction, legal and other costs were $17.2 million for the nine months ended September 30, 2024, compared to $26.8 million for the nine months ended September 30, 2023. Transaction, legal and other costs represent legal, accounting, government investigation, termination, restructuring, management transition, acquisition and other similar costs incurred in the respective period, as summarized below (in thousands).
Previous report — wording carried elsewhere
As we continue to monitor the implications of potential tax legislation in each of our jurisdictions, we may adjust our estimates and record additional amounts for tax assets and liabilities. Any adjustments to our tax assets and liabilities could materially impact our provision for income taxes and our effective tax rate in the periods in which they are made.