Acadia Healthcare Company, Inc.
For the period ended Mar 31, 2026. Filed Apr 30, 2026.
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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, 2026 · Filed Apr 30, 2026
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 2025-09-30; filed 2025-11-05.
0001193125-25-267062
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-04-30.
0001193125-26-192508
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 147 previous paragraphs and 133 current paragraphs.
89 unchanged; 37 reworded; 7 added; 14 removed; 7 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 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 (7)
Current report
the impact from changes in expectations resulting from actuarial and other reviews of our liability reserves and other aspects of our business;
Current report
we have experienced, and may in the future experience, cybersecurity incidents that could have an adverse impact on our operations, could result in the unauthorized access or acquisition of data we maintain, and/or could result in disclosures and/or investigations under the laws and regulations regarding information privacy;
Current report
In addition, the OBBBA includes significant changes to Medicaid funding mechanisms by restricting federal matching funds received by state Medicaid programs. The law prohibits states from establishing new provider assessments or taxes, or increasing the rates of existing provider assessments, for state fiscal years beginning after October 1, 2026, while also limiting the structure and application of such assessments. Pursuant to the OBBBA, the HHS revised regulations governing state directed payment program arrangements to cap total payment rates paid by Medicaid managed care organizations for certain services at Medicare payment rates instead of average commercial rates and imposed lower caps in Medicaid expansion states, which impacts Medicaid payment rates for services rendered in our hospital facilities. The revised regulations apply to state directed payment programs established on or after July 4, 2025 unless the program meets certain grandfathering criteria. The OBBBA provides that payments under grandfathered programs will be reduced beginning January 1, 2028.
Current report
Because our facilities rely in part on reimbursement from federal health care programs, including Medicaid, for the reimbursement of services rendered, these changes may have a negative impact on our financial performance. Ongoing budgetary uncertainties and continued efforts to reduce the federal deficit may result in further payment reductions to both Medicaid and Medicare programs.
Current report
In addition to changes made to federal healthcare programs, the OBBBA contains policy changes that have decreased the number of individuals who obtain health insurance from Affordable Care Act (“ACA”) marketplace exchanges. For example, the OBBBA effectively ends automatic renewals of coverage by requiring pre-enrollment verification of eligibility. In addition to ending automatic renewals of ACA plans, the OBBBA eliminates federal enhanced subsidies of ACA marketplace exchange-based plans, which has resulted in significant cost increases for ACA plans.
Current report
Gain on sale of property, net. Gain on sale of property was $1.2 million for the three months ended March 31, 2026 related to the sale of several closed properties.
Current report
Cash provided by operating activities for the three months ended March 31, 2026 was $61.5 million compared to $11.5 million for the three months ended March 31, 2025. The increase in operating cash flows for the three months ended March 31, 2026 was primarily related to collection of the insurance proceeds for the 2019 Securities Litigation and an increase in funds received from certain state supplemental payment programs, offset by unfavorable changes in working capital and other liabilities. Days sales outstanding at March 31, 2026 was 51 days compared to 49 days at December 31, 2025 due primarily to new facilities that continue to ramp up during the start-up period, as well as identifiable payor delays with targeted actions underway to accelerate collections.
Removed paragraphs (14)
Previous report
the risk of a cybersecurity incident and any resulting adverse impact on our operations or violation of laws and regulations regarding information privacy;
Previous report
OBBBA also makes significant changes to Medicaid financing mechanisms beginning in 2028, including restrictions on provider tax arrangements that are intended to reduce the federal matching funds received by state Medicaid programs. The law prohibits states from establishing new provider taxes or increasing rates of existing provider taxes while also limiting the structure of such taxes. The law also directs the U.S. Department of Health and Human Services to revise regulations governing state directed payment programs, which many states have implemented to direct certain Medicaid managed care expenditures, to cap total payments rates for specified services including hospital services.
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
Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024
Previous report
Salaries, wages and benefits. SWB expense was $1,359.9 million for the nine months ended September 30, 2025 compared to $1,265.4 million for the nine months ended September 30, 2024, an increase of $94.4 million. SWB expense included $25.3 million and $27.0 million of equity-based compensation expense for the nine months ended September 30, 2025 and 2024. Excluding equity-based compensation expense, SWB expense was $1,334.6 million, or 53.6% of revenue, for the nine months ended September 30, 2025, compared to $1,238.4 million, or 52.0% of revenue, for the nine months ended September 30, 2024. Same facility SWB expense was $1,186.8 million for the nine months ended September 30, 2025, or 48.7% of revenue, compared to $1,118.9 million for the nine months ended September 30, 2024, or 48.2% of revenue.
Previous report
Professional fees. Professional fees were $147.1 million for the nine months ended September 30, 2025, or 5.9% of revenue, compared to $142.2 million for the nine months ended September 30, 2024, or 6.0% of revenue. Same facility professional fees were $124.4 million for the nine months ended September 30, 2025, or 5.1% of revenue, compared to $122.0 million for the nine months ended September 30, 2024, or 5.3% of revenue.
Previous report
Depreciation and amortization. Depreciation and amortization expense was $143.5 million for the nine months ended September 30, 2025, or 5.8% of revenue, compared to $110.1 million for the nine months ended September 30, 2024, or 4.6% of revenue.
Previous report
Interest expense. Interest expense was $100.9 million for the nine months ended September 30, 2025 compared to $86.3 million for the nine months ended September 30, 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 report
Loss on impairment. During the nine months ended September 30, 2025, we recorded non-cash property impairment charges of $1.5 million related to certain closed facilities. During the nine months ended September 30, 2024, we recorded non-cash property impairment charges of $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.
Previous report
Gain on sale of property. During the nine months ended September 30, 2025, we recorded an $8.7 million gain on facility property sales.
Previous report
Provision for income taxes. For the nine months ended September 30, 2025, the provision for income taxes was $18.1 million, reflecting an effective tax rate of 17.5%, compared to $72.9 million, reflecting an effective tax rate of 24.0%, for the nine months ended September 30, 2024. The decrease in the effective tax rate for the nine months ended September 30, 2025 was primarily attributable to the Company’s lower pre-tax results for the nine months ended September 30, 2025, which yields higher volatility in the items impacting the effective tax rate when compared to prior periods and the release of uncertain tax positions in the current year.
Previous report
Cash provided by operating activities for the nine months ended September 30, 2025 was $218.2 million compared to $13.0 million for the nine months ended September 30, 2024. Days sales outstanding were 47 days for September 30, 2025 compared to 43 days at December 31, 2024.
Previous report
Desert Hills Litigation
Previous report
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 resolved 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.
Reworded paragraphs (37)
Previous wording
our dependence on key management personnel, key executives and local facility management personnel;
Current wording
our dependence on key management personnel, key executive and local facility management personnel, the failure to attract and retain such personnel, including our Chief Executive Officer and Chief Financial Officer, and the impact of any disruptions from the recent transition of various executives;
Previous wording
political conditions that are out of our control, including any effects that the ongoing U.S. government shutdown may have on financial markets and macroeconomic conditions;
Current wording
political conditions that are out of our control, including any effects that ongoing global conflicts, tariffs or trade disputes may have on financial markets and macroeconomic conditions;
Previous wording
the impact of class action and other claims brought against us or our facilities including claims for damages for personal injuries, medical malpractice, overpayments, breach of contract, securities law violations, tort and employee related claims;
Current wording
the impact of class action and other claims brought against us or our facilities including claims for damages for personal injuries, medical malpractice, overpayments, breach of contract, securities law violations and tort and employee related claims;
Previous wording
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 and coverage, changes in reimbursement practices or funding levels, or modification of Medicaid supplemental payment programs;
Current wording
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;
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, 2025, we operated 278 behavioral healthcare facilities with approximately 12,500 beds in 40 states and Puerto Rico. During the nine months ended September 30, 2025, we added 908 beds, consisting of 274 beds added to existing facilities and 634 beds added through the opening of one wholly-owned facility and four joint venture facilities, and we opened 14 CTCs.
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, 2026, we operated 275 behavioral healthcare facilities with approximately 12,400 beds in 40 states and Puerto Rico. During the three months ended March 31, 2026, we added 82 beds, consisting of 42 beds added to existing facilities and 40 beds added through the opening of one wholly-owned facility and one joint venture facility with Tufts Medicine. During the three months ended March 31, 2026, we closed four facilities with an aggregate of 251 beds.
Previous wording
The One Big Beautiful Bill Act (“OBBBA”), enacted on July 4, 2025, includes various healthcare policy changes, including changes to the Medicaid program. Among other changes, OBBBA includes work or community engagement requirements for adults under the age of 65 in the Medicaid expansion population. We do not expect a material impact on our operations as these requirements begin to be phased in during 2026, primarily due to exemptions for the populations we serve, including individuals with chronic substance use disorders and those with serious and complex medical conditions.
Current wording
On July 4, 2025, Congress passed the One Big Beautiful Bill Act (the “OBBBA”), its budget reconciliation act for fiscal year 2025. The OBBBA includes provisions that may impact our financial performance and may substantially modify certain state and federal statutes and regulations to which our operations are subject. The OBBBA provisions that may impact us have varying effective dates. We are unable to predict whether or how future legislation, rulemaking, or judicial action will impact implementation of the OBBBA. Of particular relevance to us, the OBBBA reduces the federal government’s overall Medicaid expenditures and tightens Medicaid eligibility requirements. The law limits eligibility for Medicaid by imposing work or community engagement requirements for adults under 65 years old in Medicaid expansion states, including states with waiver-based expansions, subject to limited exceptions, and requires eligibility redeterminations at least every six months for the Medicaid expansion state population. The potential for mid-year loss of coverage increases financial uncertainty and may disrupt ongoing treatment services, complicate eligibility and coverage verification, prior authorization processes, and exposure to uncompensated care or bad debt on patient accounts. State compliance is required by December 31, 2026. We do not expect a material impact on our operations as these requirements begin to be phased in during 2026, primarily due to exemptions for the populations we serve, including individuals with chronic substance use disorders and those with serious and complex medical conditions.
Previous wording
We believe that we are well positioned to help meet the growing demand for behavioral healthcare services and recorded revenue growth of 4.7% for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Consistent 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 40 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 7.6% for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Similar to many other healthcare providers and other industries across the country, we have been navigating 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 40 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, 2025 compared to the same periods in 2024:
Current wording
The following table sets forth percent changes in same facility operating data for the three months ended March 31, 2026 compared to the same period in 2025:
Previous wording
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 wording
Same facility results include operating results only for facilities and services operated in both the current and prior year periods. 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.
Previous wording
Revenue. Revenue increased $35.9 million, or 4.4%, to $851.6 million for the three months ended September 30, 2025 from $815.6 million for the three months ended September 30, 2024. Same facility revenue increased $29.5 million, or 3.7%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, resulting from same facility growth in revenue per day of 2.3%, same facility growth in patient days of 1.3% and same facility growth in admissions of 3.3%. Consistent with same facility revenue growth in 2024, the growth in same facility patient days for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 resulted from the addition of beds to our existing facilities and ongoing demand for our services.
Current wording
Revenue. Revenue increased $58.3 million, or 7.6%, to $828.8 million for the three months ended March 31, 2026 from $770.5 million for the three months ended March 31, 2025. Same facility revenue increased $55.0 million, or $7.3%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, resulting from same facility growth in revenue per day of 5.6%; same facility growth in patient days of 1.6%; and same facility growth in admissions of 6.5%. Consistent with same facility revenue growth in 2025, the growth in same facility patient days for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 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 $462.2 million for the three months ended September 30, 2025 compared to $428.1 million for the three months ended September 30, 2024, an increase of $34.1 million. SWB expense included $6.0 million and $9.5 million of equity-based compensation expense for the three months ended September 30, 2025 and 2024, respectively. Excluding equity-based compensation expense, SWB expense was $456.2 million, or 53.6% of revenue, for the three months ended September 30, 2025, compared to $418.6 million, or 51.3% of revenue, for the three months ended September 30, 2024. Same facility SWB expense was $404.0 million for the three months ended September 30, 2025, or 48.8% of revenue, compared to $380.0 million for the three months ended September 30, 2024, or 47.6% of revenue.
Current wording
Salaries, wages and benefits. Salaries, wages and benefits (“SWB”) expense was $467.0 million for the three months ended March 31, 2026 compared to $445.3 million for the three months ended March 31, 2025, an increase of $21.7 million. SWB expense included $8.0 million and $8.7 million of equity-based compensation expense for the three months ended March 31, 2026 and 2025, respectively. Excluding equity-based compensation expense, SWB expense was $459.0 million, or 55.4% of revenue, for the three months ended March 31, 2026, compared to $436.6 million, or 56.7% of revenue, for the three months ended March 31, 2025. Same facility SWB expense was $411.0 million for the three months ended March 31, 2026, or 50.5% of revenue, compared to $396.5 million for the three months ended March 31, 2025, or 52.3% of revenue.
Previous wording
Professional fees. Professional fees were $51.5 million for the three months ended September 30, 2025, or 6.0% of revenue, compared to $48.5 million for the three months ended September 30, 2024, or 5.9% of revenue. Same facility professional fees were $43.1 million for the three months ended September 30, 2025, or 5.2% of revenue, compared to $42.2 million for the three months ended September 30, 2024, or 5.3% of revenue.
Current wording
Professional fees. Professional fees were $53.2 million for the three months ended March 31, 2026, or 6.4% of revenue, compared to $45.7 million for the three months ended March 31, 2025, or 5.9% of revenue. Same facility professional fees were $44.9 million for the three months ended March 31, 2026, or 5.5% of revenue, compared to $40.2 million for the three months ended March 31, 2025, or 5.3% of revenue.
Previous wording
Supplies. Supplies expense was $30.4 million for the three months ended September 30, 2025, or 3.6% of revenue, compared to $29.6 million for the three months ended September 30, 2024, or 3.6% of revenue. Same facility supplies expense was $29.2 million for the three months ended September 30, 2025, or 3.5% of revenue, compared to $28.8 million for the three months ended September 30, 2024, or 3.6% of revenue.
Current wording
Supplies. Supplies expense was $29.5 million for the three months ended March 31, 2026, or 3.6% of revenue, compared to $28.3 million for the three months ended March 31, 2025, or 3.7% of revenue. Same facility supplies expense was $28.5 million for the three months ended March 31, 2026, or 3.5% of revenue, compared to $27.6 million for the three months ended March 31, 2025, or 3.6% of revenue.
Previous wording
Rents and leases. Rents and leases were $11.7 million for the three months ended September 30, 2025, or 1.4% of revenue, compared to $12.4 million for the three months ended September 30, 2024, or 1.5% of revenue. Same facility rents and leases were $10.5 million for the three months ended September 30, 2025, or 1.3% of revenue, compared to $11.1 million for the three months ended September 30, 2024, or 1.4% of revenue.
Current wording
Rents and leases. Rents and leases were $11.7 million for the three months ended March 31, 2026, or 1.4% of revenue, compared to $11.7 million for the three months ended March 31, 2025, or 1.5% of revenue. Same facility rents and leases were $10.0 million for the three months ended March 31, 2026, or 1.2% of revenue, compared to $10.3 million for the three months ended March 31, 2025, or 1.4% of revenue.
Previous wording
Other operating expenses. Other operating expenses consisted primarily of purchased services, utilities, insurance, provider taxes, travel and repairs and maintenance expenses. Other operating expenses were $128.8 million for the three months ended September 30, 2025, or 15.1% of revenue, compared to $112.1 million for the three months ended September 30, 2024, or 13.8% of revenue. Same facility other operating expenses were $116.2 million for the three months ended September 30, 2025, or 14.0% of revenue, compared to $105.2 million for the three months ended September 30, 2024, or 13.2% of revenue.
Current wording
Other operating expenses. Other operating expenses consisted primarily of purchased services, utilities, insurance, provider taxes, travel and repairs and maintenance expenses. Other operating expenses were $131.1 million for the three months ended March 31, 2026, or 15.8% of revenue, compared to $114.0 million for the three months ended March 31, 2025, or 14.8% of revenue. Same facility other operating expenses were $120.0 million for the three months ended March 31, 2026, or 14.7% of revenue, compared to $105.3 million for the three months ended March 31, 2025, or 13.9% of revenue.
Previous wording
Depreciation and amortization. Depreciation and amortization expense was $47.5 million for the three months ended September 30, 2025, or 5.6% of revenue, compared to $37.6 million for the three months ended September 30, 2024, or 4.6% of revenue.
Current wording
Depreciation and amortization. Depreciation and amortization expense was $52.4 million for the three months ended March 31, 2026, or 6.3% of revenue, compared to $47.0 million for the three months ended March 31, 2025, or 6.1% of revenue. The increase in depreciation and amortization was primarily due to the opening of new facilities and expansion of existing facilities.
Previous wording
Interest expense. Interest expense was $36.6 million for the three months ended September 30, 2025 compared to $29.9 million for the three months ended September 30, 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.
Current wording
Interest expense. Interest expense was $38.3 million for the three months ended March 31, 2026 compared to $29.2 million for the three months ended March 31, 2025. The increase in interest expense was primarily the result of increased borrowings.
Previous wording
Debt extinguishment costs. Debt extinguishment costs were $1.3 million for the nine months ended September 30, 2025 related to the refinancing of the Prior Credit Facility.
Current wording
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.
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Legal settlements expense. Legal settlements expense was $3.5 million for the nine months ended September 30, 2025 related to costs associated with the Desert Hills Litigation.
Current wording
Legal settlements expense. Legal settlements expense was $13.8 million for the three months ended March 31, 2026 related to costs associated with the Sandoval Litigation. 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 $42.9 million for the three months ended September 30, 2025, compared to $8.2 million for the three months ended September 30, 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).
Current wording
Transaction, legal and other costs. Transaction, legal and other costs were $22.0 million for the three months ended March 31, 2026, compared to $31.1 million for the three months ended March 31, 2025. 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
Government investigations include legal fees and settlement costs related to certain litigation, including the matters referenced in Note 9 — Commitments and Contingencies in the accompanying notes to our condensed consolidated financial statements. Termination and restructuring costs include costs, net of gains, incurred related to workforce reductions, contract amendments, and the closure and disposition of certain facilities, including related lease terminations. Legal, accounting and other acquisition-related costs include costs incurred for the development of new facilities ($0.5 million and $1.9 million for the three months ended September 30, 2025 and 2024, respectively); legal and settlement costs incurred related to certain litigation not included in government investigations ($0.4 million and $0.1 million for the three months ended September 30, 2025 and 2024, respectively); and direct costs associated with acquisitions ($0.1 million and $1.0 million for the three months ended September 30, 2025 and 2024, respectively). 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.
Current wording
Government investigations include legal fees and settlement costs related to certain litigation, including the matters referenced in Note 8 — Commitments and Contingencies in the accompanying notes to our condensed consolidated financial statements. Termination and restructuring costs include costs, net of gains, incurred related to workforce reductions, contract amendments, and the closure and disposition of certain facilities, including related lease terminations. Management transition costs during the three months ended March 31, 2026, consist primarily of severance benefits incurred with the departure of the Company’s former Chief Executive Officer, Christopher H. Hunter. Legal, accounting and other acquisition-related costs include costs incurred for the development of new facilities ($0.2 million and $0.9 million for the three months ended March 31, 2026 and 2025, respectively) and legal and settlement costs incurred related to certain litigation not included in government investigations ($0.5 million and $(3.0) million for the three months ended March 31, 2026 and 2025, respectively).
Previous wording
Provision for income taxes. For the three months ended September 30, 2025, the provision for income taxes was $1.7 million, reflecting an effective tax rate of 4.2%, compared to $27.2 million, reflecting an effective tax rate of 27.6%, for the three months ended September 30, 2024. The decrease in the effective tax rate for the three months ended September 30, 2025 was primarily attributable to the Company’s lower pre-tax results for the three months ended September 30, 2025, which yields higher volatility in the items impacting the effective tax rate when compared to prior periods and the release of uncertain tax positions in the current year.
Current wording
Provision for income taxes. For the three months ended March 31, 2026, the provision for income taxes was $6.5 million, reflecting an effective tax rate of 59.3%, compared to $4.4 million, reflecting an effective tax rate of 32.7%, for the three months ended March 31, 2025. The increase in the effective tax rate for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily attributable to an increase in nondeductible executive compensation and an increase in valuation allowances against certain state deferred tax assets in the current year.
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, 2025 and 2024 (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, 2026 and 2025 (dollars in thousands):
Previous wording
Cash used in investing activities for the nine months ended September 30, 2025 was $463.8 million compared to $533.1 million for the nine months ended September 30, 2024. Cash used in investing activities for the nine months ended September 30, 2025 primarily consisted of $478.6 million of cash paid for capital expenditures, $8.2 million of cash paid for acquisitions and $0.1 million of other, offset by $23.2 million of proceeds from sale of property and equipment. Cash paid for capital expenditures for the nine months ended September 30, 2025 was $478.6 million, consisting of routine or maintenance capital expenditures of $76.1 million and expansion capital expenditures of $402.5 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, 2025. 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.
Current wording
Cash used in investing activities for the three months ended March 31, 2026 was $60.2 million compared to $183.2 million for the three months ended March 31, 2025. Cash used in investing activities for the three months ended March 31, 2026 primarily consisted of $76.6 million of cash paid for capital expenditures, offset by $16.4 million of proceeds from sale of property and equipment. Cash paid for capital expenditures for the three months ended March 31, 2026 was $76.6 million, consisting of routine or maintenance capital expenditures of $25.1 million and expansion capital expenditures of $51.5 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, 2026. 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.
Previous wording
Cash provided by financing activities for the nine months ended September 30, 2025 was $288.0 million compared to $502.2 million for the nine months ended September 30, 2024. Cash provided by financing activities for the nine months ended September 30, 2025 consisted of borrowings on long-term debt of $1,200.0 million, borrowings on revolving credit facility of $875.0 million and contributions from noncontrolling partners in joint ventures of $5.0 million, offset by principal payments on revolving credit facility of $1,035.0 million, repayment of long-term debt of $670.9 million, repurchase of common stock of $50.0 million, payment of debt issuance costs of $18.6 million, principal payments on long-term debt of $8.1 million, repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises, of $4.0 million, distributions to noncontrolling partners in joint ventures of $3.9 million, cash paid for contingent consideration of $1.5 million and $0.1 million of other. 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.
Current wording
Cash provided by financing activities for the three months ended March 31, 2026 was $23.9 million compared to $186.7 million for the three months ended March 31, 2025. Cash provided by financing activities for the three months ended March 31, 2026 consisted of borrowings on revolving credit facility of $85.0 million and contributions from noncontrolling partners in joint ventures of $0.7 million, offset by principal payments on revolving credit facility of $55.0 million, principal payments on long-term debt of $4.1 million and repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises, of $2.7 million. 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.
Previous wording
We had total available cash and cash equivalents of $118.7 million and $76.3 million at September 30, 2025 and December 31, 2024, respectively, of which approximately $10.7 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.
Current wording
We had total available cash and cash equivalents of $158.5 million and $133.2 million at March 31, 2026 and December 31, 2025, respectively, of which approximately $9.6 million and $8.0 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
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.
Current wording
On February 28, 2025, 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
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 through 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 $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.
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 $8.1 million from June 30, 2026 to March 31, 2028, $12.2 million from June 30, 2028 to March 31, 2029 and $16.3 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
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 September 30, 2025, our Consolidated Total Net Leverage Ratio was 3.4x, 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.
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, 2026, our Consolidated Total Net Leverage Ratio was 3.9x, 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, 2025.
Previous wording
During the nine months ended September 30, 2025, we borrowed $760.0 million on the Revolving Facility and repaid $550.0 million of the balance outstanding.
Current wording
During the three months ended March 31, 2026, we borrowed $85.0 million on the Revolving Facility and repaid $55.0 million of the balance outstanding.
Previous wording
At September 30, 2025, we had $786.7 million of availability under the Revolving Facility and had standby letters of credit outstanding of $3.3 million related to security for the payment of claims required by our workers’ compensation insurance program.
Current wording
At March 31, 2026, we had $564.8 million of availability under the Revolving Facility and had standby letters of credit outstanding of $1.2 million related to security for multiple development projects.
Previous wording
During the nine months ended September 30, 2025, we borrowed $115.0 million on the Prior Revolving Facility and repaid $485.0 million of the balance outstanding. During the nine months ended September 30, 2024, we borrowed $210.0 million on the Prior Revolving Facility and repaid $15.0 million of the balance outstanding.
Current wording
For 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 prior to February 28, 2025, when the Prior Credit Facility was refinanced in connection with entering into the Credit Facility.
Previous wording
On June 24, 2020, we issued $450.0 million of 5.500% Senior Notes. The 5.500% Senior Notes mature on July 1, 2028 and bear interest at a rate of 5.500% per annum, payable semi-annually in arrears on January 1 and July 1 of each year, commencing on January 1, 2021.
Current wording
On June 24, 2020, we issued $450.0 million of 5.500% Senior Notes. The 5.500% Senior Notes mature on July 1, 2028 and bear interest at a rate of 5.500% per annum, payable semi-annually in arrears on January 1 and July 1 of each year.
Previous wording
On October 14, 2020, we issued $475.0 million of 5.000% Senior Notes. The 5.000% Senior Notes mature on April 15, 2029 and bear interest at a rate of 5.000% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, commencing on April 15, 2021.
Current wording
On October 14, 2020, we issued $475.0 million of 5.000% Senior Notes. The 5.000% Senior Notes mature on April 15, 2029 and bear interest at a rate of 5.000% per annum, payable semi-annually in arrears on April 15 and October 15 of each year.
Previous wording
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.
Current wording
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. 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.
Previous 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.
Current wording
The Senior Notes issued by us are guaranteed by each of our subsidiaries that guarantee our obligations under the Credit Facility. The guarantees are full and unconditional and joint and several.
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 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 September 30, 2025 and December 31, 2024, and for the nine months ended September 30, 2025.
Current wording
We conduct 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 March 31, 2026 and December 31, 2025, and for the three months ended March 31, 2026. The information presented below as of December 31, 2025 has been revised to correct an immaterial error included in the Supplemental Guarantor Financial Information in Part I, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Rearranged previous paragraphs (7)
Previous report — wording carried elsewhere
Revenue. Revenue increased $111.6 million, or 4.7%, to $2,491.3 million for the nine months ended September 30, 2025 from $2,379.7 million for the nine months ended September 30, 2024. The nine months ended September 30, 2025, included $65.6 million of revenue for one state government program based on timing of program approval. Same facility revenue increased $118.3 million, or 5.1%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, resulting from same facility growth in revenue per day of 3.3%, same facility growth in patient days of 1.8%, and same facility growth in admissions of 2.3%. Consistent with same facility revenue growth in 2024, the growth in same facility patient days for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 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 $87.3 million for the nine months ended September 30, 2025, or 3.5% of revenue, compared to $84.2 million for the nine months ended September 30, 2024, or 3.5% of revenue. Same facility supplies expense was $84.2 million for the nine months ended September 30, 2025, or 3.5% of revenue, compared to $81.4 million for the nine months ended September 30, 2024, or 3.5% of revenue.
Previous report — wording carried elsewhere
Rents and leases. Rents and leases were $36.0 million for the nine months ended September 30, 2025, or 1.4% of revenue, compared to $36.1 million for the nine months ended September 30, 2024, or 1.5% of revenue. Same facility rents and leases were $31.8 million for the nine months ended September 30, 2025, or 1.3% of revenue, compared to $32.1 million for the nine months ended September 30, 2024, or 1.4% of revenue.
Previous report — wording carried elsewhere
Other operating expenses. Other operating expenses consisted primarily of purchased services, utilities, insurance, provider taxes, travel and repairs and maintenance expenses. Other operating expenses were $377.2 million for the nine months ended September 30, 2025, or 15.1% of revenue, compared to $322.9 million for the nine months ended September 30, 2024, or 13.6% of revenue. Same facility other operating expenses were $339.2 million for the nine months ended September 30, 2025, or 13.9% of revenue, compared to $300.5 million for the nine months ended September 30, 2024, or 12.9% of revenue.
Previous report — wording carried elsewhere
Transaction, legal and other costs. Transaction, legal and other costs were $138.4 million for the nine months ended September 30, 2025, compared to $17.2 million for the nine months ended September 30, 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 report — wording carried elsewhere
Government investigations include legal fees and settlement costs related to certain litigation, including the matters referenced in Note 9 — Commitments and Contingencies in the accompanying notes to our condensed consolidated financial statements. Termination and restructuring costs include costs, net of gains, incurred related to workforce reductions, contract amendments, and the closure and disposition of certain facilities, including related lease terminations. Legal, accounting and other acquisition-related costs include costs incurred for the development of new facilities ($1.9 million and $3.9 million for the nine months ended September 30, 2025 and 2024, respectively); legal and settlement costs incurred related to certain litigation not included in government investigations ($(2.3) million and $4.5 million for the nine months ended September 30, 2025 and 2024, respectively); and direct costs associated with acquisitions ($0.1 million and $1.4 million for the nine months ended September 30, 2025 and 2024, respectively). 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.
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.