Acadia Healthcare Company, Inc.

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

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our dependence on payments from the government and other third-party payors, and the impact of such payments on our revenue and results of operations;

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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;

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potential reductions to Medicare, Medicaid and other program payment rates, changes in reimbursement practices or funding levels, the modification of Medicaid supplemental and other payment programs, or the denial or delay in payment of claims;

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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;

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we have experienced, and may in the future experience, cybersecurity incidents that could have an adverse impact on our operations, result in the unauthorized access or acquisition of data we maintain, and/or result in disclosures and/or investigations under the laws and regulations regarding information privacy;

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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 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 June 30, 2026, we operated 279 behavioral healthcare facilities with approximately 12,600 beds in 40 states and Puerto Rico. During the six months ended June 30, 2026, we added 322 beds, consisting of 42 beds added to existing facilities and 280 beds added through the opening of one wholly-owned facility and three joint venture facilities. The three joint venture facilities opened during the six months ended June 30, 2026, were through partnerships with Tufts Medicine, Orlando Heath, and Methodist Jennie Edmundson. During the six months ended June 30, 2026, we opened two CTCs.

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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 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, 2026, we operated 280 behavioral healthcare facilities with approximately 12,800 beds in 40 states and Puerto Rico. During the nine months ended September 30, 2026, we added 542 beds, consisting of 118 beds added to existing facilities and 424 beds added through the opening of two wholly-owned facilities and three joint venture facilities. The three joint venture facilities opened during the nine months ended September 30, 2026 were through partnerships with Tufts Medicine, Orlando Health, and Methodist Jennie Edmundson. During the nine months ended September 30, 2026, we opened three CTCs.

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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.

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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. States are required to implement the work and community engagement requirements no later than December 31, 2026, although states may implement such requirements earlier and the Secretary of the U.S. Department of Health and Human Services (“HHS”) may grant certain states good faith exemptions through December 31, 2028. We do not expect a material impact on our operations as these requirements are phased in, primarily due to exemptions for the populations we serve, including individuals who are medically frail, such as individuals with a substance use disorder or a disabling mental disorder, and individuals with serious or complex medical conditions. However, the scope and application of these exemptions will depend on federal implementing guidance and state implementation, and we may not realize their anticipated benefit.

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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 U.S. Department of Health and Human Services 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.

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In addition, the OBBBA includes significant changes to Medicaid funding mechanisms by restricting federal matching funds received by state Medicaid programs. Effective upon enactment, the law prohibits states from establishing new provider assessments or taxes, or increasing the rates of existing provider assessments, and, beginning in fiscal year 2028, progressively reduces the permissible provider tax threshold in Medicaid expansion states, while also limiting the structure and application of such assessments. The OBBBA also directs HHS to revise regulations governing state directed payment program arrangements to cap total payment rates paid by Medicaid managed care organizations for certain services at 100% of Medicare payment rates in Medicaid expansion states and 110% of Medicare payment rates in non-Medicaid expansion states, instead of average commercial rates, which impacts Medicaid payment rates for services rendered in our hospital facilities. These limits apply to state directed payment programs established on or after the date of enactment unless the program meets certain grandfathering criteria. The OBBBA provides that payments under grandfathered programs will be reduced by ten percentage points per year beginning with rating periods on or after January 1, 2028, until they reach the applicable cap.

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We believe that we are well positioned to help meet the growing demand for behavioral healthcare services and recorded revenue growth of 3.3% for the six months ended June 30, 2026 compared to the six months ended June 30, 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.

Current wording

We believe that we are well positioned to help meet the growing demand for behavioral healthcare services and recorded revenue growth of 4.0% for the nine months ended September 30, 2026 compared to the nine months ended September 30, 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.

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The following table sets forth percent changes in same facility operating data for the three and six months ended June 30, 2026 compared to the same periods in 2025:

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The following table sets forth percent changes in same facility operating data for the three and nine months ended September 30, 2026 compared to the same periods in 2025:

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Revenue. Revenue decreased $3.4 million, or 0.4%, to $865.8 million for the three months ended June 30, 2026 from $869.2 million for the three months ended June 30, 2025. The three months ended June 30, 2026, included $22.3 million of revenue from one state government program based on timing of program approval, all of which related to services rendered in prior periods. The three months ended June 30, 2025, included $65.6 million of revenue from one state government program based on timing of program approval, $48.7 million of which related to services rendered in prior periods. Same facility revenue decreased $0.4 million, or 0.1%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, resulting from same facility decline in revenue per day of 0.8%, partially offset by same facility growth in patient days of 0.8% and same facility growth in admissions of 6.4%. Consistent with same facility revenue growth in 2025, the growth in same facility patient days for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 resulted from the addition of beds to our existing facilities and ongoing demand for our services.

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Revenue. Revenue increased $43.7 million, or 5.1%, to $895.3 million for the three months ended September 30, 2026 from $851.6 million for the three months ended September 30, 2025. Same facility revenue increased $43.6 million, or 5.2%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, resulting from same facility increase in revenue per day of 4.0%, same facility growth in patient days of 1.1% and same facility growth in admissions of 6.6%. Consistent with same facility revenue growth in 2025, the growth in same facility patient days for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 resulted from the addition of beds to our existing facilities and ongoing demand for our services.

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Salaries, wages and benefits. Salaries, wages and benefits (“SWB”) expense was $474.1 million for the three months ended June 30, 2026 compared to $452.4 million for the three months ended June 30, 2025, an increase of $21.7 million. SWB expense included $11.0 million and $10.5 million of equity-based compensation expense for the three months ended June 30, 2026 and 2025, respectively. Excluding equity-based compensation expense, SWB expense was $463.1 million, or 53.5% of revenue, for the three months ended June 30, 2026, compared to $441.9 million, or 50.8% of revenue, for the three months ended June 30, 2025. Same facility SWB expense was $421.2 million for the three months ended June 30, 2026, or 49.2% of revenue, compared to $403.4 million for the three months ended June 30, 2025, or 47.1% of revenue.

Current wording

Salaries, wages and benefits. Salaries, wages and benefits (“SWB”) expense was $490.3 million for the three months ended September 30, 2026 compared to $462.2 million for the three months ended September 30, 2025, an increase of $28.1 million. SWB expense included $9.2 million and $6.0 million of equity-based compensation expense for the three months ended September 30, 2026 and 2025, respectively. SWB increased primarily due to new facility openings as well as routine annual wage increases. Excluding equity-based compensation expense, SWB expense was $481.1 million, or 53.7% of revenue, for the three months ended September 30, 2026, compared to $456.2 million, or 53.6% of revenue, for the three months ended September 30, 2025. Same facility SWB expense was $435.6 million for the three months ended September 30, 2026, or 49.3% of revenue, compared to $417.7 million for the three months ended September 30, 2025, or 49.8% of revenue.

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Professional fees. Professional fees were $55.8 million for the three months ended June 30, 2026, or 6.4% of revenue, compared to $50.0 million for the three months ended June 30, 2025, or 5.7% of revenue. Same facility professional fees were $48.2 million for the three months ended June 30, 2026, or 5.6% of revenue, compared to $43.8 million for the three months ended June 30, 2025, or 5.1% of revenue.

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Professional fees. Professional fees were $58.7 million for the three months ended September 30, 2026, or 6.6% of revenue, compared to $51.5 million for the three months ended September 30, 2025, or 6.0% of revenue. Same facility professional fees were $51.6 million for the three months ended September 30, 2026, or 5.8% of revenue, compared to $45.0 million for the three months ended September 30, 2025, or 5.4% of revenue.

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Supplies. Supplies expense was $30.2 million for the three months ended June 30, 2026, or 3.5% of revenue, compared to $28.5 million for the three months ended June 30, 2025, or 3.3% of revenue. Same facility supplies expense was $29.5 million for the three months ended June 30, 2026, or 3.4% of revenue, compared to $27.9 million for the three months ended June 30, 2025, or 3.3% of revenue.

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Supplies. Supplies expense was $31.5 million for the three months ended September 30, 2026, or 3.5% of revenue, compared to $30.4 million for the three months ended September 30, 2025, or 3.6% of revenue. Same facility supplies expense was $30.7 million for the three months ended September 30, 2026, or 3.5% of revenue, compared to $29.8 million for the three months ended September 30, 2025, or 3.5% of revenue.

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Rents and leases. Rents and leases were $11.8 million for the three months ended June 30, 2026, or 1.4% of revenue, compared to $12.6 million for the three months ended June 30, 2025, or 1.5% of revenue. Same facility rents and leases were $10.2 million for the three months ended June 30, 2026, or 1.2% of revenue, compared to $11.2 million for the three months ended June 30, 2025, or 1.3% of revenue.

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Rents and leases. Rents and leases were $11.9 million for the three months ended September 30, 2026, or 1.3% of revenue, compared to $11.7 million for the three months ended September 30, 2025, or 1.4% of revenue. Same facility rents and leases were $10.4 million for the three months ended September 30, 2026, or 1.2% of revenue, compared to $10.6 million for the three months ended September 30, 2025, or 1.3% of revenue.

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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 $155.7 million for the three months ended June 30, 2026, or 18.0% of revenue, compared to $134.4 million for the three months ended June 30, 2025, or 15.5% of revenue. Same facility other operating expenses were $146.3 million for the three months ended June 30, 2026, or 17.1% of revenue, compared to $124.9 million for the three months ended June 30, 2025, or 14.6% of revenue. Other operating expenses for three months ended June 30, 2026 includes an unfavorable adjustment of $28.6 million to our estimated liability for self-insured professional and general liability claims relating to the settlement or expected settlement of certain prior year claims.

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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 $135.7 million for the three months ended September 30, 2026, or 15.2% of revenue, compared to $128.8 million for the three months ended September 30, 2025, or 15.1% of revenue. Same facility other operating expenses were $126.1 million for the three months ended September 30, 2026, or 14.3% of revenue, compared to $121.1 million for the three months ended September 30, 2025, or 14.4% of revenue.

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Depreciation and amortization. Depreciation and amortization expense was $50.4 million for the three months ended June 30, 2026, or 5.8% of revenue, compared to $49.0 million for the three months ended June 30, 2025, or 5.6% of revenue.

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Depreciation and amortization. Depreciation and amortization expense was $53.1 million for the three months ended September 30, 2026, or 5.9% of revenue, compared to $47.5 million for the three months ended September 30, 2025, or 5.6% of revenue.

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Interest expense. Interest expense was $38.2 million for the three months ended June 30, 2026 compared to $35.1 million for the three months ended June 30, 2025. The increase in interest expense was primarily the result of increased borrowings.

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Interest expense. Interest expense was $37.3 million for the three months ended September 30, 2026 compared to $36.6 million for the three months ended September 30, 2025. The increase in interest expense was primarily the result of increased borrowings.

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Loss on impairment. During the three months ended June 30, 2026, we recorded non-cash property impairment charges totaling $7.4 million. During the three months ended June 30, 2025, we recorded non-cash property impairment charges totaling $1.5 million.

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Loss on impairment. During the three months ended September 30, 2026, we recorded non-cash property impairment charges totaling $3.5 million. The 2026 non-cash impairment charges included property impairments of $2.4 million and operating lease right-of-use asset impairments of $1.1 million.

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Gain on sale of property, net. During the three months ended June 30, 2026, we recorded a $2.4 million gain on property sale related to the sale of several closed properties. During the three months ended June 30, 2025, we recorded an $8.7 million gain on property sale related to the sale of a facility.

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Loss (gain) on sale of property. During the three months ended September 30, 2026, we recorded a loss on property sale of $0.2 million related to the sale of closed properties.

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Transaction, legal and other costs. Transaction, legal and other costs were $22.6 million for the three months ended June 30, 2026, compared to $64.4 million for the three months ended June 30, 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).

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Transaction, legal and other costs. Transaction, legal and other costs were $23.7 million for the three months ended September 30, 2026, compared to $42.9 million for the three months ended September 30, 2025. Transaction, legal and other costs represent government investigation, legal, accounting, termination, restructuring, management transition, acquisition and other similar costs incurred in the respective period, as summarized below (in thousands).

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Legal, accounting and other acquisition-related costs include costs incurred for the development of new facilities ($0.2 million and $0.4 million for the three months ended June 30, 2026 and 2025, respectively); and legal and settlement costs incurred related to certain litigation not included in government investigations ($9.1 million and $0.4 million for the three months ended June 30, 2026 and 2025, respectively). 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.

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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. Legal, accounting and other acquisition-related costs include costs incurred for the development of new facilities ($0.1 million and $0.5 million for the three months ended September 30, 2026 and 2025, respectively); and legal and settlement costs incurred related to certain litigation not included in government investigations ($3.2 million and $0.4 million for the three months ended September 30, 2026 and 2025, respectively). 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.

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Provision for income taxes. For the three months ended June 30, 2026, the provision for income taxes was $9.7 million, reflecting an effective tax rate of 44.3%, compared to $12.1 million, reflecting an effective tax rate of 24.1%, for the three months ended June 30, 2025. The increase in the effective tax rate for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily attributable to an increase in nondeductible legal settlements and an increase in valuation allowances against certain state deferred tax assets in the current year.

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Provision for income taxes. For the three months ended September 30, 2026, the provision for income taxes was $17.8 million, reflecting an effective tax rate of 31.6%, compared to $1.7 million, reflecting an effective tax rate of 4.2%, for the three months ended September 30, 2025. The increase in the effective tax rate for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 was primarily attributable to an increase in nondeductible legal settlements and an increase in valuation allowances against certain state deferred tax assets in the current year. In addition, the three months ended September 30, 2025 included a tax benefit related to the release of uncertain tax positions.

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Revenue. Revenue increased $54.9 million, or 3.3%, to $1,694.6 million for the six months ended June 30, 2026 from $1,639.7 million for the six months ended June 30, 2025. The six months ended June 30, 2026, included $34.0 million of revenue from two state government programs based on timing of program approval, all of which related to services rendered in prior periods. The six months ended June 30, 2025, included $65.6 million of revenue from one state government program based on timing of program approval, $34.4 million of which related to services rendered in prior periods. Same facility revenue increased $54.6 million, or 3.4%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, resulting from same facility growth in revenue per day of 2.2%, same facility growth in patient days of 1.2%, 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 six months ended June 30, 2026 compared to the six months ended June 30, 2025 resulted from the addition of beds to our existing facilities and ongoing demand for our services.

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Revenue. Revenue increased $98.6 million, or 4.0%, to $2,590.0 million for the nine months ended September 30, 2026 from $2,491.3 million for the nine months ended September 30, 2025. The nine months ended September 30, 2026, included $34.0 million of revenue from two state government programs based on timing of program approval, all of which related to services rendered in prior periods. The nine months ended September 30, 2025, included $65.6 million of revenue from one state government program based on timing of program approval, $34.4 million of which related to services rendered in prior periods. Same facility revenue increased $98.2 million, or 4.0%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, resulting from same facility growth in revenue per day of 2.8%, same facility growth in patient days of 1.2%, 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 nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 resulted from the addition of beds to our existing facilities and ongoing demand for our services.

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Salaries, wages and benefits. SWB expense was $941.1 million for the six months ended June 30, 2026 compared to $897.7 million for the six months ended June 30, 2025, an increase of $43.4 million. SWB expense included $18.9 million and $19.2 million of equity-based compensation expense for the six months ended June 30, 2026 and 2025. Excluding equity-based compensation expense, SWB expense was $922.2 million, or 54.4% of revenue, for the six months ended June 30, 2026, compared to $878.5 million, or 53.6% of revenue, for the six months ended June 30, 2025. Same facility SWB expense was $832.1 million for the six months ended June 30, 2026, or 49.8% of revenue, compared to $799.9 million for the six months ended June 30, 2025, or 49.5% of revenue.

Current wording

Salaries, wages and benefits. SWB expense was $1,431.4 million for the nine months ended September 30, 2026 compared to $1,359.9 million for the nine months ended September 30, 2025, an increase of $71.5 million. SWB expense included $28.2 million and $25.3 million of equity-based compensation expense for the nine months ended September 30, 2026 and 2025, respectively. SWB increased primarily due to new facility openings as well as routine annual wage increases. Excluding equity-based compensation expense, SWB expense was $1,403.2 million, or 54.2% of revenue, for the nine months ended September 30, 2026, compared to $1,334.6 million, or 53.6% of revenue, for the nine months ended September 30, 2025. Same facility SWB expense was $1,267.8 million for the nine months ended September 30, 2026, or 49.7% of revenue, compared to $1,217.6 million for the nine months ended September 30, 2025, or 49.6% of revenue.

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Professional fees. Professional fees were $109.0 million for the six months ended June 30, 2026, or 6.4% of revenue, compared to $95.7 million for the six months ended June 30, 2025, or 5.8% of revenue. Same facility professional fees were $93.1 million for the six months ended June 30, 2026, or 5.6% of revenue, compared to $84.1 million for the six months ended June 30, 2025, or 5.2% of revenue.

Current wording

Professional fees. Professional fees were $167.6 million for the nine months ended September 30, 2026, or 6.5% of revenue, compared to $147.1 million for the nine months ended September 30, 2025, or 5.9% of revenue. Same facility professional fees were $144.7 million for the nine months ended September 30, 2026, or 5.7% of revenue, compared to $129.0 million for the nine months ended September 30, 2025, or 5.3% of revenue.

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Supplies. Supplies expense was $59.7 million for the six months ended June 30, 2026, or 3.5% of revenue, compared to $56.9 million for the six months ended June 30, 2025, or 3.5% of revenue. Same facility supplies expense was $58.0 million for the six months ended June 30, 2026, or 3.5% of revenue, compared to $55.6 million for the six months ended June 30, 2025, or 3.4% of revenue.

Current wording

Supplies. Supplies expense was $91.2 million for the nine months ended September 30, 2026, or 3.5% of revenue, compared to $87.3 million for the nine months ended September 30, 2025, or 3.5% of revenue. Same facility supplies expense was $88.7 million for the nine months ended September 30, 2026, or 3.5% of revenue, compared to $85.3 million for the nine months ended September 30, 2025, or 3.5% of revenue.

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Rents and leases. Rents and leases were $23.6 million for the six months ended June 30, 2026, or 1.4% of revenue, compared to $24.3 million for the six months ended June 30, 2025, or 1.5% of revenue. Same facility rents and leases were $20.2 million for the six months ended June 30, 2026, or 1.2% of revenue, compared to $21.5 million for the six months ended June 30, 2025, or 1.3% of revenue.

Current wording

Rents and leases. Rents and leases were $35.5 million for the nine months ended September 30, 2026, or 1.4% of revenue, compared to $36.0 million for the nine months ended September 30, 2025, or 1.4% of revenue. Same facility rents and leases were $30.6 million for the nine months ended September 30, 2026, or 1.2% of revenue, compared to $32.0 million for the nine months ended September 30, 2025, or 1.3% of revenue.

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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 $286.8 million for the six months ended June 30, 2026, or 16.9% of revenue, compared to $248.4 million for the six months ended June 30, 2025, or 15.1% of revenue. Same facility other operating expenses were $265.9 million for the six months ended June 30, 2026, or 15.9% of revenue, compared to $230.1 million for the six months ended June 30, 2025, or 14.2% of revenue. Other operating expenses for six months ended June 30, 2026 includes an unfavorable adjustment of $28.6 million to our estimated liability for self-insured professional and general liability claims relating to the settlement or expected settlement of certain prior year claims.

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 $422.6 million for the nine months ended September 30, 2026, or 16.3% of revenue, compared to $377.2 million for the nine months ended September 30, 2025, or 15.1% of revenue. Same facility other operating expenses were $392.0 million for the nine months ended September 30, 2026, or 15.4% of revenue, compared to $351.2 million for the nine months ended September 30, 2025, or 14.3% of revenue. Other operating expenses for the nine months ended September 30, 2026 includes an unfavorable adjustment of $28.6 million to our estimated liability for self-insured professional and general liability claims relating to the settlement or expected settlement of certain prior year claims.

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Depreciation and amortization. Depreciation and amortization expense was $102.9 million for the six months ended June 30, 2026, or 6.1% of revenue, compared to $96.0 million for the six months ended June 30, 2025, or 5.9% of revenue.

Current wording

Depreciation and amortization. Depreciation and amortization expense was $156.0 million for the nine months ended September 30, 2026, or 6.0% of revenue, compared to $143.5 million for the nine months ended September 30, 2025, or 5.8% of revenue.

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Interest expense. Interest expense was $76.5 million for the six months ended June 30, 2026 compared to $64.3 million for the six months ended June 30, 2025. The increase in interest expense was primarily the result of increased borrowings.

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Interest expense. Interest expense was $113.8 million for the nine months ended September 30, 2026 compared to $100.9 million for the nine months ended September 30, 2025. The increase in interest expense was primarily the result of increased borrowings.

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Debt extinguishment costs. Debt extinguishment costs were $1.3 million for the six months ended June 30, 2025 related to the refinancing of the Prior Credit Facility.

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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.

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Legal settlements expense. Legal settlements expense was $13.8 million for the six months ended June 30, 2026 related to costs associated with the Sandoval Litigation. Legal settlements expense was $3.5 million for the six months ended June 30, 2025 related to costs associated with the Desert Hills Litigation.

Current wording

Legal settlements (gain) expense. Legal settlements expense was $6.6 million for the nine months ended September 30, 2026 related to costs associated with the Sandoval Litigation, partially offset by the receipt of insurance proceeds in excess of payments of attorneys’ fees and expenses to plaintiffs’ counsel in connection with the settlement of derivative cases against the Company during the three months ended September 30, 2026. Legal settlements expense was $3.5 million for the nine months ended September 30, 2025 related to costs associated with the Desert Hills Litigation.

Previous wording

Loss on impairment. During the six months ended June 30, 2026, we recorded non-cash property impairment charges totaling $7.4 million. During the six months ended June 30, 2025, we recorded non-cash property impairment charges of $1.5 million.

Current wording

Loss on impairment. During the nine months ended September 30, 2026, we recorded non-cash property impairment charges totaling $10.9 million. The 2026 non-cash impairment charges included property impairments of $9.8 million and operating lease right-of-use asset impairments of $1.1 million. During the nine months ended September 30, 2025, we recorded non-cash property impairment charges of $1.5 million.

Previous wording

Transaction, legal and other costs. Transaction, legal and other costs were $44.6 million for the six months ended June 30, 2026, compared to $95.5 million for the six months ended June 30, 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).

Current wording

Transaction, legal and other costs. Transaction, legal and other costs were $68.3 million for the nine months ended September 30, 2026, compared to $138.4 million for the nine months ended September 30, 2025. Transaction, legal and other costs represent government investigation, legal, accounting, 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 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. Legal, accounting and other acquisition-related costs include costs incurred for the development of new facilities ($0.3 million and $1.3 million for six months ended June 30, 2026 and 2025, respectively); and legal and settlement costs incurred related to certain litigation not included in government investigations ($9.7 million and $(2.6) million for the six months ended June 30, 2026 and 2025, respectively). Management transition costs during the six months ended June 30, 2026, consist primarily of severance benefits incurred with the departure of the Company’s former Chief Executive Officer, Christopher H. Hunter.

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. 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 nine months ended September 30, 2026 and 2025, respectively); and legal and settlement costs incurred related to certain litigation not included in government investigations ($12.9 million and $(2.3) million for the nine months ended September 30, 2026 and 2025, respectively). 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 nine months ended September 30, 2026, consist primarily of severance benefits incurred with the departure of the Company’s former Chief Executive Officer, Christopher H. Hunter.

Previous wording

Provision for income taxes. For the six months ended June 30, 2026, the provision for income taxes was $16.2 million, reflecting an effective tax rate of 49.3%, compared to $16.5 million, reflecting an effective tax rate of 26.0%, for the six months ended June 30, 2025. The increase in the effective tax rate for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily attributable to an increase in nondeductible legal settlements and an increase in valuation allowances against certain state deferred tax assets in the current year.

Current wording

Provision for income taxes. For the nine months ended September 30, 2026, the provision for income taxes was $34.1 million, reflecting an effective tax rate of 38.1%, compared to $18.1 million, reflecting an effective tax rate of 17.5%, for the nine months ended September 30, 2025. The increase in the effective tax rate for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 was primarily attributable to an increase in nondeductible legal settlements and an increase in valuation allowances against certain state deferred tax assets in the current year. In addition, the nine months ended September 30, 2025 included a tax benefit related to the release of uncertain tax positions.

Previous wording

The table below presents revenue by payor type and as a percentage of revenue (dollars in thousands) and includes an immaterial revision of amounts for the three months ended June 30, 2025, and the six months ended June 30, 2026 and 2025, to correct the classification of certain revenue among payors.

Current wording

The table below presents revenue by payor type and as a percentage of revenue (dollars in thousands) and includes an immaterial revision of amounts for the three months ended September 30, 2025, and the nine months ended September 30, 2026 and 2025, to correct the classification of certain revenue among payors.

Previous wording

Cash provided by operating activities for the six months ended June 30, 2026 was $223.6 million compared to $145.0 million for the six months ended June 30, 2025. The increase in operating cash flows for the six months ended June 30, 2026 was primarily related to collection of the insurance proceeds for the 2019 Securities Litigation, an increase in funds received from certain state supplemental payment programs and favorable changes in working capital and other liabilities. Days sales outstanding were 49 days at both June 30, 2026 and December 31, 2025.

Current wording

Cash provided by operating activities for the nine months ended September 30, 2026 was $321.5 million compared to $218.2 million for the nine months ended September 30, 2025. The increase in operating cash flows for the nine months ended September 30, 2026 was primarily related to collection of the insurance proceeds for the 2019 Securities Litigation, an increase in funds received from certain state supplemental payment programs and favorable changes in working capital and other liabilities. Days sales outstanding were 52 days at September 30, 2026 compared to 49 days at December 31, 2025.

Previous wording

Cash used in investing activities for the six months ended June 30, 2026 was $92.9 million compared to $334.0 million for the six months ended June 30, 2025. Cash used in investing activities for the six months ended June 30, 2026 primarily consisted of $115.1 million of cash paid for capital expenditures and $4.3 million of other, offset by $26.5 million of proceeds from the sale of property and equipment. Cash paid for capital expenditures for the six months ended June 30, 2026 was $115.1 million, consisting of routine or maintenance capital expenditures of $34.9 million and expansion capital expenditures of $80.2 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 2% of revenue for the six months ended June 30, 2026. Cash used in investing activities for the six months ended June 30, 2025 primarily consisted of $342.4 million of cash paid for capital expenditures, $8.2 million of cash paid for acquisitions and $0.1 million of other, offset by $16.6 million of proceeds from sales of property and equipment. Cash paid for capital expenditures for the six months ended June 30, 2025 was $342.4 million, consisting of routine or maintenance capital expenditures of $51.2 million and expansion capital expenditures of $291.2 million.

Current wording

Cash used in investing activities for the nine months ended September 30, 2026 was $135.4 million compared to $463.8 million for the nine months ended September 30, 2025. Cash used in investing activities for the nine months ended September 30, 2026 primarily consisted of $165.9 million of cash paid for capital expenditures and $3.4 million of other, offset by $33.9 million of proceeds from the sale of property and equipment. Cash paid for capital expenditures for the nine months ended September 30, 2026 was $165.9 million, consisting of routine or maintenance capital expenditures of $71.1 million and expansion capital expenditures of $94.8 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 2% of revenue for the nine months ended September 30, 2026. 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 sales 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.

Previous wording

Cash used in financing activities for the six months ended June 30, 2026 was $92.7 million compared to cash provided by financing activities of $244.2 million for the six months ended June 30, 2025. Cash used in financing activities for the six months ended June 30, 2026 consisted of principal payments on revolving credit facility of $160.0 million, principal payments on long-term debt of $12.2 million, repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises, of $3.8 million, distributions to noncontrolling partners in joint ventures of $2.6 million and $0.1 million of other, offset by borrowings on revolving credit facility of $85.0 million and contributions from noncontrolling partners in joint ventures of $1.0 million. Cash provided by financing activities for the six months ended June 30, 2025 consisted of borrowings on long-term debt of $1,200.0 million and borrowings on revolving credit facility of $830.0 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 $4.1 million, repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises, of $3.7 million, distributions to noncontrolling partners in joint ventures of $2.0 million, cash paid for contingent consideration of $1.5 million and $0.1 million of other.

Current wording

Cash used in financing activities for the nine months ended September 30, 2026 was $156.0 million compared to cash provided by financing activities of $288.0 million for the nine months ended September 30, 2025. Cash used in financing activities for the nine months ended September 30, 2026 consisted of principal payments on revolving credit facility of $215.0 million, principal payments on long-term debt of $20.3 million, repurchase of shares for payroll tax withholding, net of proceeds from stock option exercises, of $4.2 million, distributions to noncontrolling partners in joint ventures of $4.2 million and $0.1 million of other, offset by borrowings on revolving credit facility of $85.0 million and contributions from noncontrolling partners in joint ventures of $2.8 million. 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.

Previous wording

We had total available cash and cash equivalents of $171.3 million and $133.2 million at June 30, 2026 and December 31, 2025, respectively, of which approximately $12.4 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.

Current wording

We had total available cash and cash equivalents of $163.3 million and $133.2 million at September 30, 2026 and December 31, 2025, respectively, of which approximately $14.2 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.