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What changed in Acadia Healthcare Company, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Acadia Healthcare Company, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+293 added−325 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-28)

Top changes in Acadia Healthcare Company, Inc.'s 2024 10-K

293 paragraphs added · 325 removed · 232 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

65 edited+10 added−27 removed104 unchanged
Biggest changeIn 2022, 59.3 million adults in the U.S. aged 18 years or older suffered from a mental illness in the prior year and 15.4 million suffered from a serious mental illness. Further, adults with co-occurring serious mental illness and substance use disorder grew from 6.4 million to 7.4 million between 2021 to 2022, a 15% increase.
Biggest changeDepartment of Health and Human Services (the “HHS”), mental illness and substance use disorder prevalence continues to represent more than one in five U.S. adults. In 2023, 58.7 million adults in the U.S. aged 18 years or older suffered from a mental illness in the prior year and 14.6 million suffered from a serious mental illness.
There are ownership and compensation arrangement exceptions for many customary financial arrangements between physicians and facilities, including the employment exception, personal services exception, lease exception and certain recruitment exceptions. As part of CMS’s “regulatory sprint to coordinated care”, CMS finalized revisions to the exceptions and created new exceptions for value-based care that became effective on January 19, 2021.
There are ownership and compensation arrangement exceptions for many customary financial arrangements between physicians and facilities, including the employment exception, personal services exception, 6 lease exception and certain recruitment exceptions. As part of CMS’s “regulatory sprint to coordinated care”, CMS finalized revisions to the exceptions and created new exceptions for value-based care that became effective on January 19, 2021.
We also have a comprehensive post-acquisition strategic plan to facilitate the integration of acquired facilities that includes improving facility operations, retaining and recruiting psychiatrists and other healthcare professionals and expanding the breadth of services offered by the facilities. 3 Accelerate expansion across the care continuum, particularly for patients with opioid use and other substance use disorders.
We also have a comprehensive post-acquisition strategic plan to facilitate the integration of acquired facilities that includes improving facility operations, retaining and recruiting psychiatrists and other healthcare professionals and expanding the breadth of services offered by the facilities. Accelerate expansion across the care continuum, particularly for patients with opioid use and other substance use disorders.
We have not been notified of and management is otherwise currently not aware of any contamination at our currently or formerly operated facilities that could result in material liability or cost to us under environmental laws or regulations for the investigation and remediation of such contamination, and we currently are not undertaking any remediation or investigation activities 10 in connection with any such contamination conditions.
We have not been notified of and management is otherwise currently not aware of any contamination at our currently or formerly operated facilities that could result in material liability or cost to us under environmental laws or regulations for the investigation and remediation of such contamination, and we currently are not undertaking any remediation or investigation activities in connection with any such contamination conditions.
Our behavioral therapies are delivered in an array of treatment models that may include individual and group therapy, intensive outpatient, outpatient, partial hospitalization/day treatment, road to recovery and other programs that can be either abstinent or medication-assisted based. Comprehensive Treatment Centers Our CTCs specialize in providing medication-assisted treatment in an outpatient setting.
Our behavioral therapies are delivered in an array of treatment models that may include individual and group therapy, intensive outpatient, outpatient, partial hospitalization/day treatment, road to recovery and other programs that can be either abstinent or medication-assisted based. 4 Comprehensive Treatment Centers Our CTCs specialize in providing medication-assisted treatment in an outpatient setting.
The imposition of such penalties could have a material adverse effect on our business, financial condition or results of operations. 7 Federal False Claims Act and Other Fraud and Abuse Provisions The federal False Claims Act provides the government with a tool to pursue healthcare providers for submitting false claims or requests for payment for healthcare items or services.
The imposition of such penalties could have a material adverse effect on our business, financial condition or results of operations. Federal False Claims Act and Other Fraud and Abuse Provisions The federal False Claims Act provides the government with a tool to pursue healthcare providers for submitting false claims or requests for payment for healthcare items or services.
The initial and continued licensure of our facilities and certification to participate in government healthcare programs depends upon many factors including various state licensure regulations relating to quality of care, environment of care, equipment, services, staff training, personnel and the existence of adequate policies, procedures and controls.
The initial and continued licensure of our facilities and certification to participate in government healthcare programs depends upon many factors including various state 5 licensure regulations relating to quality of care, environment of care, equipment, services, staff training, personnel and the existence of adequate policies, procedures and controls.
Patients with the most severe dependencies are typically placed into 4 inpatient treatment, in which the patient resides at a treatment facility. If a patient’s condition is less severe, he or she will be offered day treatment, which allows the patient to return home in the evening.
Patients with the most severe dependencies are typically placed into inpatient treatment, in which the patient resides at a treatment facility. If a patient’s condition is less severe, he or she will be offered day treatment, which allows the patient to return home in the evening.
The MHPAEA has some 8 limitations because health plans that do not already cover mental health treatments are not required to do so, and health plans are not required to provide coverage for every mental health condition published in the Diagnostic and Statistical Manual of Mental Disorders by the American Psychiatric Association.
The MHPAEA has some limitations because health plans that do not already cover mental health treatments are not required to do so, and health plans are not required to provide coverage for every mental health condition published in the Diagnostic and Statistical Manual of Mental Disorders by the American Psychiatric Association.
There may, however, be environmental conditions currently unknown to us relating to our prior, existing or future sites or operations or those of predecessor companies whose liabilities we may have assumed or acquired which could have a material adverse effect on our business.
There may, however, be environmental conditions currently unknown to us 9 relating to our prior, existing or future sites or operations or those of predecessor companies whose liabilities we may have assumed or acquired which could have a material adverse effect on our business.
The MHPAEA also contains a cost exemption which operates to exempt a group health plan from the MHPAEA’s requirements if compliance with the MHPAEA becomes too costly. On December 13, 2016, then President Obama signed the 21 st Century Cures Act.
The MHPAEA also contains a cost exemption which operates to exempt a group health plan from the MHPAEA’s requirements if compliance with the MHPAEA becomes too costly. On December 13, 2016, President Obama signed the 21 st Century Cures Act.
On December 13, 2016, then President Obama signed the 21st Century Cures Act. The 21st Century Cures Act appropriates substantial resources for the treatment of behavioral healthcare and substance abuse disorders and contains measures intended to strengthen the MHPAEA.
On December 13, 2016, President Obama signed the 21st Century Cures Act. The 21st Century Cures Act appropriates substantial resources for the treatment of behavioral healthcare and substance abuse disorders and contains measures intended to strengthen the MHPAEA.
Financing Transactions On March 17, 2021, we entered into a credit agreement (as amended, the “Credit Facility”), which provides for a $600.0 million senior secured revolving credit facility (the “Revolving Facility”) and a senior secured term loan facility in an initial principal amount of $425.0 million (as increased by the Incremental Term Loans (as defined below), the “Term Loan Facility”), each maturing on March 17, 2026.
Financing Transactions On March 17, 2021, we entered into a credit agreement (as amended, the “Credit Facility”), which provided for a $600.0 million senior secured revolving credit facility (the “Revolving Facility”) and a senior secured term loan facility in an initial principal amount of $425.0 million (as increased by the Incremental Term Loans (as defined below), the “Term Loan Facility”), each maturing on March 17, 2026.
A key aspect of reform legislation is the extension of mental health parity protections established into law by the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (the “MHPAEA”). The MHPAEA requires employers who provide behavioral healthcare and addiction benefits to provide such coverage to the same extent as other medical conditions.
A key aspect of reform legislation was the extension of mental health parity protections established into law by the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (the “MHPAEA”). The MHPAEA requires employers who provide behavioral healthcare and addiction benefits to provide such coverage to the same extent as other medical conditions.
Medication is used to normalize brain chemistry to block the euphoric effects of alcohol and opioids allowing our professional staff to provide behavioral therapy. The length of treatment differs from patient to patient, but typically lasts longer than one year. Residential Treatment Centers Residential treatment centers treat patients with behavioral disorders in a non-hospital setting.
Medication is used to normalize brain chemistry to block the euphoric effects of opioids allowing our professional staff to provide behavioral therapy. The length of treatment differs from patient to patient, but typically lasts longer than one year. Residential Treatment Centers Residential treatment centers treat patients with behavioral disorders in a non-hospital setting.
On January 18, 2024, we entered into Amendment No.2 to the Credit Facility (the “Second Amendment”), which provides for the incurrence of additional senior secured term loans in an aggregate principal amount of $350.0 million (the “Incremental Term Loans”). Such Incremental Term Loans are structured as an increase of the Term Loan Facility.
On January 18, 2024, we entered into Amendment No. 2 to the Credit Facility (the “Second Amendment”), which provided for the incurrence of additional senior secured term loans in an aggregate principal amount of $350.0 million (the “Incremental Term Loans”). Such Incremental Term Loans are structured as an increase of the Term Loan Facility.
However, the possibility of billing or other errors can never be completely eliminated, and we cannot guarantee that the government or a qui tam plaintiff, upon audit or review, would not take the position that billing, the quality of patient care or other deficiencies or errors, should they occur, are violations of the False Claims Act.
However, the possibility of billing or other errors can never be completely eliminated, and we cannot guarantee that the government or a qui tam plaintiff, upon audit or review, would not take the position that billing, the quality of patient care or other deficiencies or errors, should they occur, are violations of the False Claims Act or other criminal laws.
Management expects to take advantage of several strategies that are more accessible as a result of our increased size and geographic scale, including continuing a national marketing strategy to attract new patients and referral sources, increasing our volume of out-of-state referrals, providing a broader range of services to new and existing patients and clients and selectively pursuing opportunities to expand our facility and bed count in the U.S. through acquisitions, wholly-owned de novo facilities, joint ventures and bed additions in existing facilities.
Management expects to take advantage of several strategies that are more accessible as a result of our increased size and geographic scale, including continuing a national marketing strategy to attract new patients and referral sources, increasing our volume of out-of-state referrals, providing a broader range of services to new and existing patients and clients and selectively pursuing opportunities to expand our facility and bed count through acquisitions, wholly-owned de novo facilities, joint ventures and bed additions in existing facilities.
For more information regarding risks of rising labor costs and its possible adverse impact on us, see 11 “Item 1A. Risk Factors — Human Capital Risks — Our facilities face competition for staffing, labor shortages and higher turnover rates that may increase our labor costs and reduce our profitability”.
For more information regarding risks of rising labor costs and its possible adverse impact on us, see 10 “Item 1A. Risk Factors — Human Capital Risks — Our facilities face competition for staffing, labor shortages and higher turnover rates that may increase our labor costs and reduce our profitability”.
Moreover, as the behavioral healthcare business does not typically require the procurement and replacement of expensive medical equipment, our maintenance capital expenditure requirements are generally less than that of other facility-based healthcare providers. For the year ended December 31, 2023, our maintenance capital expenditures amounted to approximately 3% of our revenue.
Moreover, as the behavioral healthcare 2 business does not typically require the procurement and replacement of expensive medical equipment, our maintenance capital expenditure requirements are generally less than that of other facility-based healthcare providers. For the year ended December 31, 2024, our maintenance capital expenditures amounted to approximately 3% of our revenue.
Competition The healthcare industry is highly competitive. Our principal competitors include other behavioral healthcare service companies, including Universal Health Services, Inc. (NYSE: UHS) and other acute inpatient psychiatric hospitals, other residential behavioral healthcare providers, other outpatient opioid treatment providers and general healthcare facilities that provide mental health services.
Competition The healthcare industry is highly competitive. Our principal competitors include other behavioral healthcare service companies, such as Universal Health Services, Inc. (NYSE: UHS) and other acute inpatient psychiatric hospitals, other residential behavioral healthcare providers, other outpatient opioid treatment providers and general healthcare facilities that provide mental health services.
The table below presents the percentage of our total revenue attributed to each category for the year ended December 31, 2023: Facility/Service Revenue for the Year Ended December 31, 2023 Acute inpatient psychiatric facilities 51 % Specialty treatment facilities 21 % Comprehensive treatment centers 17 % Residential treatment centers 11 % We receive payments from the following sources for services rendered in our facilities: (i) state governments under their respective Medicaid and other programs; (ii) commercial insurers; (iii) the federal government under the Medicare program administered by the Centers for Medicare and Medicaid Services (“CMS”) and other programs; and (iv) individual patients and clients.
The table below presents the percentage of our total revenue attributed to each category for the year ended December 31, 2024: Facility/Service Revenue for the Year Ended December 31, 2024 Acute inpatient psychiatric facilities 53 % Specialty treatment facilities 19 % Comprehensive treatment centers 17 % Residential treatment centers 11 % We receive payments from the following sources for services rendered in our facilities: (i) state governments under their respective Medicaid and other programs; (ii) commercial insurers; (iii) the federal government under the Medicare program administered by the Centers for Medicare and Medicaid Services (“CMS”) and other programs; and (iv) individual patients and clients.
No facility accounted for more than 4% of revenue for the year ended December 31, 2023, and no state or U.S. territory accounted for more than 14% of revenue for the year ended December 31, 2023.
No facility accounted for more than 4% of revenue for the year ended December 31, 2024, and no state or U.S. territory accounted for more than 14% of revenue for the year ended December 31, 2024.
Regulation The healthcare industry is subject to numerous laws, regulations and rules including, among others, those related to government healthcare program participation requirements, various licensure and accreditation standards, reimbursement for patient services, health information privacy and security rules, and government healthcare program fraud and abuse provisions.
Regulation The healthcare industry is subject to numerous laws, regulations and rules including, among others, those related to government healthcare program participation requirements, various licensure and accreditation standards, reimbursement for patient services from government healthcare programs and private payors, health information privacy and security rules, and government healthcare program fraud and abuse provisions.
At December 31, 2023, we had one facility with a labor union, which represented approximately 150 of our employees. Organizing activities by labor unions and certain potential changes in federal labor laws and regulations could increase the likelihood of employee unionization in the future.
At December 31, 2024, we had one facility with a labor union, which represented approximately 131 of our employees. Organizing activities by labor unions and certain potential changes in federal labor laws and regulations could increase the likelihood of employee unionization in the future.
We have obtained reinsurance coverage from a third-party to cover claims in excess of those limits. The reinsurance policy has a coverage limit of $75.0 million or $70.0 million in the aggregate for certain other claims through August 31, 2023 and $78.0 million or $75.0 million in the aggregate for certain other claims thereafter.
We have obtained reinsurance coverage from a third-party to cover claims in excess of those limits. The reinsurance policy has a coverage limit of $78.0 million or $75.0 million in the aggregate for certain other claims through August 31, 2024 and $80.0 million or $75.0 million in the aggregate for certain other claims thereafter.
EKRA also contains exceptions similar to the Anti-Kickback Statute safe harbors, but those exceptions are more narrow than the Anti-Kickback Statute safe harbors such that practices that would be permissible under the Anti-Kickback Statute may violate EKRA.
EKRA also contains exceptions similar to the Anti-Kickback Statute safe harbors, but those exceptions are narrower than the Anti-Kickback Statute safe harbors such that practices that would be permissible under the Anti-Kickback Statute may violate EKRA.
The maturity date, the leverage-based pricing grid, mandatory prepayment events and other terms applicable to the Incremental Term Loans are substantially identical to those applicable to the initial $425.0 million term loans incurred under the Term Loan Facility. 1 During the year ended December 31, 2023, we borrowed $40.0 million on the Revolving Facility and repaid $35.0 million of the balance outstanding.
The maturity date, the leverage-based pricing grid, mandatory prepayment events and other terms applicable to the Incremental Term Loans are substantially identical to those applicable to the initial $425.0 million term loans incurred under the Term Loan Facility. 1 During the year ended December 31, 2024, we borrowed $305.0 million on the Revolving Facility and repaid $15.0 million of the balance outstanding.
On March 30, 2023, we entered into Amendment No.1 to the Credit Facility (the “First Amendment”), which replaces LIBOR as the reference rate applicable to borrowings under the Credit Facility with the Secured Overnight Financing Rate as determined for a term of, at our option, one, three or six months, plus an adjustment of 0.10% (“Adjusted Term SOFR”).
On March 30, 2023, we entered into Amendment No. 1 to the Credit Facility (the “First Amendment”), which replaced the London Interbank Offered Rate (“LIBOR”) as the reference rate applicable to borrowings under the Credit Facility with the Secured Overnight Financing Rate as determined for a term of, at our option, one, three or six months, plus an adjustment of 0.10% (“Adjusted Term SOFR”).
We make available our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports free of charge on our website on the “Investors” webpage under the caption “SEC Filings” as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
We make available our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports free of charge on our website on the “Investors” webpage under the caption “SEC Filings” as soon as reasonably practicable after such material is electronically filed with, or furnished to, the United States Securities and Exchange Commission (the “SEC”).
Violations of the False Claims Act are punishable by significant penalties totaling $13,946 to $27,894 for each fraudulent claim plus three times the amount of damages sustained by the government. In addition, under the qui tam, or whistleblower, provisions of the False Claims Act, private parties may bring actions under the False Claims Act on behalf of the federal government.
Violations of the False Claims Act are punishable by significant penalties totaling $14,308 to $28,619 for each fraudulent claim plus three times the amount of damages sustained by the government. In addition, under the qui tam, or whistleblower, provisions of the False Claims Act, private parties may bring actions under the False Claims Act on behalf of the federal government.
These referral sources may instead refer patients to hospitals that are able to provide a full suite of medical services or to other behavioral healthcare centers. Human Capital At December 31, 2023, we had approximately 23,500 employees, of which 17,000 were employed full-time.
These referral sources may instead refer patients to hospitals that are able to provide a full suite of medical services or to other behavioral healthcare centers. Human Capital At December 31, 2024, we had approximately 25,500 employees, of which 19,192 were employed full-time.
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 December 31, 2023, we operated 253 behavioral healthcare facilities with approximately 11,200 beds in 38 states and Puerto Rico.
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 December 31, 2024, we operated 262 behavioral healthcare facilities with approximately 11,850 beds in 39 states and Puerto Rico.
It also includes Individuals in Medicaid Deserve Care that is Appropriate and Responsible in its Execution Act, which suspends the current prohibition on using federal Medicaid funds to pay for substance use disorder treatment at inpatient treatment facilities with more than 16 beds and limits beneficiaries to no more than 30 days of inpatient treatment per 12-month period. 2 National footprint and scale with regional density and presence across multiple service lines .
It also includes Individuals in Medicaid Deserve Care that is Appropriate and Responsible in its Execution Act, which suspends the current prohibition on using federal Medicaid funds to pay for substance use disorder treatment at inpatient treatment facilities with more than 16 beds and limits beneficiaries to no more than 30 days of inpatient treatment per 12-month period.
While the growing awareness of mental health and substance abuse conditions is expected to accelerate demand for services, recent healthcare reform in the U.S. is expected to increase access to industry services as more people obtain insurance coverage.
While the growing awareness of mental health and substance abuse conditions is expected to accelerate demand for services, evolving healthcare legislation in the U.S. has increased, and is expected to further increase, access to industry services as more people obtain insurance coverage.
Diversity and Inclusion We are committed to maintaining a welcoming and inclusive environment that treats everyone with dignity and respect. Approximately 73% of our employees are women and approximately 48% are people of color.
Culture and Values We are committed to maintaining a welcoming and inclusive environment that treats everyone with dignity and respect. Approximately 73% of our employees are women and approximately 50% are people of color.
In addition to base salaries, we offer our employees a full spectrum of benefits, including medical, dental, vision and disability plans, health savings and flexible spending accounts, a 401(k) retirement savings plan that includes a matching contribution, paid time off and employee assistance programs.
We are committed to being an employer of choice and offer a compelling total rewards program. In addition to base salaries, we offer our employees a full spectrum of benefits, including medical, dental, vision and disability plans, health savings and flexible spending accounts, a 401(k) retirement savings plan that includes a matching contribution, paid time off and employee assistance programs.
During the year ended December 31, 2023, we added 595 beds, consisting of 302 added to existing facilities and 293 added through the opening of one wholly-owned facility and two joint venture facilities, and we opened six comprehensive treatment centers (“CTCs”). We are the leading publicly traded pure-play provider of behavioral healthcare services in the United States (the “U.S.”).
During the year ended December 31, 2024, we added 776 beds, consisting of 312 added to existing facilities and 464 added through the opening of four wholly-owned facilities and one joint venture facility, and we opened nine comprehensive treatment centers (“CTCs”). We are the leading publicly traded pure-play provider of behavioral healthcare services in the United States (the “U.S.”).
Diversified revenue and payor bases . At December 31, 2023, we operated 253 facilities in 38 states and Puerto Rico. Our payor, patient and geographic diversity mitigates the potential risk associated with any single facility.
Diversified revenue and payor bases . At December 31, 2024, we operated 262 behavioral healthcare facilities in 39 states and Puerto Rico. Our payor, patient and geographic diversity mitigates the potential risk associated with any single facility.
We have a number of potential acquisitions, joint ventures and wholly-owned de novo facilities in various stages of development and consideration in the U.S. During the year ended December 31, 2023, we added 293 beds through the opening of one wholly-owned facility and two joint venture facilities, and we opened six CTCs.
We have a number of potential acquisitions, joint ventures and wholly-owned de novo facilities in various stages of development and consideration. During the year ended December 31, 2024, we added 464 beds through the opening of four wholly-owned facilities and one joint venture facility, and we opened nine CTCs.
Providers that are found to have violated any of these laws and regulations may be excluded from participating in government healthcare programs, subjected to loss or limitation of licenses to operate, subjected to significant fines or penalties and/or required to repay amounts received from the government for previously billed patient services.
Providers that are found to have violated any of these laws and regulations may be suspended, terminated or excluded from participating in government healthcare programs, subjected to loss or limitation of licenses to operate, subjected to significant fines or penalties, subjected to corporate integrity agreements, deferred prosecution agreements, or other agreements that could subject providers to ongoing compliance obligations, and/or required to repay amounts received from the government for previously billed patient services.
Of our facilities that are not CTCs, 93% of our beds are at owned properties and 7% are at leased properties. For the years ended December 31, 2023 and 2022, our continuing operations generated revenue of $2,928.7 million and $2,610.4 million, respectively.
Of our facilities that are not CTCs, 91% of our beds are at owned properties and 9% are at leased properties. For the years ended December 31, 2024 and 2023, our operations generated revenue of $3,154.0 million and $2,928.7 million, respectively.
Further, Medicare and Medicaid regulations, as well as commercial payor contracts, also provide for withholding or suspending payments in certain circumstances, which could adversely affect our cash flow. 6 The Anti-Kickback Statute, the Stark Law and the Eliminating Kickbacks in Recovery Act The Anti-Kickback Statute prohibits healthcare providers and others from directly or indirectly soliciting, receiving, offering or paying any remuneration, in cash or in kind, as an inducement or reward for using, referring, ordering, recommending or arranging for referrals or orders of services or other items paid for by a government healthcare program.
The Anti-Kickback Statute, the Stark Law and the Eliminating Kickbacks in Recovery Act The Anti-Kickback Statute prohibits healthcare providers and others from directly or indirectly soliciting, receiving, offering or paying any remuneration, in cash or in kind, as an inducement or reward for using, referring, ordering, recommending or arranging for referrals or orders of services or other items paid for by a government healthcare program.
Under the terms and conditions for receipt of the payment, we were allowed to use the funds to cover lost revenues and healthcare costs related to COVID-19, and we were required to properly and fully document the use of these funds to the HHS.
Under the terms and conditions for receipt of the payment, we were allowed to use the funds to cover lost revenues and healthcare costs related to the novel coronavirus known as COVID-19 (“COVID-19”), and we were required to properly and fully document the use of these funds to the U.S. Department of Health and Human Services.
Our statutory workers’ compensation program is fully insured with a $0.5 million deductible per accident. A portion of our professional liability risks are insured through a wholly-owned insurance subsidiary providing coverage for up to $5.0 million per claim and $10.0 million for certain other claims through August 31, 2023 and $7.0 million and $10.0 million for certain other claims thereafter.
A portion of our professional liability risks are insured through a wholly-owned insurance subsidiary providing coverage for up to $7.0 million per claim and $10.0 million for certain other claims through August 31, 2024 and $10.0 million per claim, $15.0 million per claim for certain other claims and $25.0 million for certain batched claims thereafter.
We are a leading behavioral healthcare platform in an industry that is undergoing consolidation in an effort to better serve the growing need for acute behavioral healthcare services.
National footprint and scale with regional density and presence across multiple service lines . We are a leading behavioral healthcare platform in an industry that is undergoing consolidation in an effort to better serve the growing need for acute behavioral healthcare services.
During the year ended December 31, 2023, we recorded $6.4 million of income from provider relief fund related to ARP funds received and repaid the remaining balance of ARP funds received to eliminate the liability. At December 31, 2022, the unrecognized funds of $9.0 million were included in other accrued liabilities on the consolidated balance sheet.
During the year ended December 31, 2022, we recorded $21.5 million of income from provider relief fund related to ARP funds received. During the year ended December 31, 2023, we recorded $6.4 million of income from provider relief fund related to ARP funds received and repaid the remaining balance of ARP funds to eliminate the liability.
For the year ended December 31, 2023, we received 54% of our revenue from Medicaid, 28% from commercial payors, 15% from Medicare and 3% from other payors. At December 31, 2023, we operated 253 behavioral healthcare facilities with approximately 11,200 beds in 38 states and Puerto Rico.
For the year ended December 31, 2024, we received 56.5% of our revenue from Medicaid, 26.0% from commercial payors, 14.2% from Medicare and 3.3% from other payors. 3 At December 31, 2024, we operated 262 behavioral healthcare facilities with approximately 11,850 beds in 39 states and Puerto Rico.
The reporting of the funds is subject to future audit for compliance with the terms and conditions. We recognized PHSSE Fund amounts to the extent we had qualifying COVID-19 expenses or lost revenues as permitted under the terms and conditions. During 2020, we applied for and received approximately $45.2 million of payments from the CMS Accelerated and Advance Payment Program.
The reporting of these funds is subject to future audit for compliance with the terms and conditions. We recognized PHSSE Fund amounts to the extent it had qualifying COVID-19 expenses or lost revenues as permitted under the terms and conditions.
We leverage our management team’s expertise to identify and integrate acquisitions based on a disciplined acquisition strategy that focuses on quality of service, return on investment and strategic benefits.
Management believes our focus on behavioral healthcare and history of completing acquisitions provides us with a strategic advantage in sourcing, evaluating and closing acquisitions. We leverage our management team’s expertise to identify and integrate acquisitions based on a disciplined acquisition strategy that focuses on quality of service, return on investment and strategic benefits.
The ultimate goal is to reunite or place these children with their families or prepare them, when appropriate, for permanent placement with a relative or an adoptive family. 5 Sources of Revenue As of December 31, 2023, we received payments from the following sources for services rendered in our facilities: (i) state governments under their respective Medicaid and other programs; (ii) commercial insurers; (iii) the federal government under the Medicare program administered by CMS and other programs; and (iv) individual patients and clients.
Sources of Revenue As of December 31, 2024, we received payments from the following sources for services rendered in our facilities: (i) state governments under their respective Medicaid and other programs; (ii) commercial insurers; (iii) the federal government under the Medicare program administered by CMS and other programs; and (iv) individual patients and clients.
Of our facilities, excluding CTCs, approximately 56% are acute inpatient psychiatric facilities, approximately 34% are specialty treatment facilities and approximately 10% are residential treatment centers at December 31, 2023. 157 of our facilities are CTCs, 19 of which are owned properties and 138 of which are leased properties.
Of our facilities, excluding CTCs, approximately 56% are acute inpatient psychiatric facilities, approximately 35% are specialty treatment facilities and approximately 9% are residential treatment centers at December 31, 2024. We operate 163 CTCs, 21 of which are owned properties and 142 of which are leased properties.
In 2021, 42% of high school students reported persistent feelings of sadness, compared to 28% in 2011. Further, in 2021, 10% of high school students attempted suicide. Management believes the market for behavioral healthcare services will continue to grow due to increased awareness of mental health and substance abuse conditions and treatment options.
Further, in 2023, 20% of high school students seriously considered attempting suicide and 9% of high school students attempted suicide one or more times. Management believes the market for behavioral healthcare services will continue to grow due to increased awareness of mental health and substance abuse conditions and treatment options.
Acquisitions In July 2023, we signed a definitive agreement to acquire substantially all of the assets of Turning Point Centers (“Turning Point”), a 76-bed specialty provider of substance use disorder and primary mental health treatment services that supports the Salt Lake City, Utah, metropolitan market.
Acquisitions On February 22, 2024, we acquired substantially all of the assets of Turning Point Centers (“Turning Point”), a 76-bed specialty provider of substance use disorder and primary mental health treatment services that supports the Salt Lake City, Utah, metropolitan market. Turning Point provides a full continuum of treatment services, including residential, partial hospitalization and intensive outpatient services.
For the year ended December 31, 2023, we received 54% of our revenue from continuing operations from Medicaid, 28% from commercial payors, 15% from Medicare and 3% from other payors.
For the year ended December 31, 2024, we received 56.5% of our revenue from Medicaid, 26.0% from commercial payors, 14.2% from Medicare and 3.3% from other payors.
Fuel facility growth through accelerated joint venture partnerships and de novo builds and pursuing programmatic mergers and acquisitions. We have positioned the Company as a leading provider of behavioral healthcare services in the U.S.
Management believes the efficiencies can be realized by investing in growth in strong markets, addressing capital-constrained facilities that have underperformed and improving management systems. Fuel facility growth through accelerated joint venture partnerships and de novo builds and pursuing programmatic mergers and acquisitions. We are a leading provider of behavioral healthcare services in the U.S.
We have policies that strictly prohibit any discrimination on the basis of race, color, national origin, age, religion, disability, gender, marital status, veteran status or any other basis prohibited by federal, state or local law. We have also established a Diversity and Inclusion Council, a multidisciplinary group, to oversee and advance diversity and inclusion initiatives.
We have policies that strictly prohibit any discrimination on the basis of race, color, national origin, age, religion, disability, gender, marital status, veteran status or any other basis prohibited by federal, state or local law. Talent Acquisition, Development and Retention Our success is dependent on our ability to attract, develop and retain talented, dedicated employees.
The 21 st Century Cures Act appropriated substantial resources for the treatment of behavioral healthcare and substance abuse disorders and contained measures intended to strengthen the MHPAEA. CARES Act and Other Regulatory Matters On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law.
The 21 st Century Cures Act appropriated substantial resources for the treatment of behavioral healthcare and substance abuse disorders and contained measures intended to strengthen the MHPAEA.
Most states have also adopted generally applicable insurance fraud statutes and regulations that prohibit healthcare providers from submitting inaccurate, incorrect or misleading claims to private insurance companies. Management believes our healthcare facilities have implemented appropriate safeguards and procedures to complete claim forms and requests for payment in an accurate manner and to operate in compliance with applicable laws.
Management believes our healthcare 7 facilities have implemented appropriate safeguards and procedures to complete claim forms and requests for payment in an accurate manner and to operate in compliance with applicable laws.
The extensive national experience and operational expertise of our management team give us what management believes to be the premier leadership team in the behavioral healthcare industry. Our management team strives to use its years of experience operating behavioral healthcare facilities to generate strong cash flow and grow a profitable business. Legislative and favorable industry trends.
Our executive management team has over 225 combined years of experience in the healthcare industry. The extensive national experience and operational expertise of our management team give us what management believes to be the premier leadership team in the behavioral healthcare industry.
Management believes we can improve efficiencies and increase operating margins by utilizing our management’s expertise and experience within existing programs and their expertise in improving performance at underperforming facilities. Management believes the efficiencies can be realized by investing in growth in strong markets, addressing capital-constrained facilities that have underperformed and improving management systems.
In addition, management intends to increase bed counts in our existing facilities. We added 312 beds to existing facilities during the year ended December 31, 2024. Management believes we can improve efficiencies and increase operating margins by utilizing our management’s expertise and experience within existing programs and their expertise in improving performance at underperforming facilities.
Turning Point provides a full continuum of treatment services, including residential, partial hospitalization and intensive outpatient services. The transaction closed on February 22, 2024. On November 7, 2022, we acquired four CTCs located in Georgia from Brand New Start Treatment Centers (“Brand New Start”).
On November 7, 2022, we acquired four CTCs located in Georgia from Brand New Start Treatment Centers (“Brand New Start”).
Approximately 54.6 million people aged 12 or older in 2022 needed substance use treatment in the past year, but only 13.1 million of those received substance use treatment. According to a study by the Centers for Disease Control and Prevention (“CDC”), youth mental health continues to reach all-time highs.
Further, 6.8 million adults had co-occurring serious mental illness and substance use disorder in 2023. Approximately 54.2 million people aged 12 or older in 2023 needed substance use treatment in the past year, but only 12.8 million of those received substance use treatment.
Competitive Strengths Management believes the following strengths differentiate us from other providers of behavioral healthcare services: Premier operational management team with track record of success . Our management team has approximately 300 combined years of experience in the healthcare industry.
During the year ended December 31, 2023, we borrowed $40.0 million on the Revolving Facility and repaid $35.0 million of the balance outstanding. Competitive Strengths Management believes the following strengths differentiate us from other providers of behavioral healthcare services: Premier executive management team with track record of success .
The U.S. government initially announced it would offer $100 billion of relief to eligible healthcare providers through the PHSSE Fund. On April 24, 2020, then President Trump signed into law the Paycheck Protection Program and Health Care Enhancement Act (the “PPP Act”).
CARES Act and Other Regulatory Matters As part of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), the U.S. government announced it would offer $100 billion of relief to eligible healthcare providers.
Removed
On December 31, 2021, we acquired the equity of CenterPointe Behavioral Health System, LLC and certain related entities (“CenterPointe”) for cash consideration of approximately $140 million. The acquisition was funded through a combination of cash on hand and a $70.0 million draw on the Revolving Facility (as defined below).
Added
Our management team strives to use its years of experience operating behavioral healthcare facilities to generate strong cash flow and grow a profitable business. Legislative and favorable industry trends. According to a 2023 survey by the Substance Abuse and Mental Health Services Administration (“SAMHSA”) of the U.S.
Removed
At the time of the acquisition, CenterPointe operated four acute inpatient hospitals with 306 beds and ten outpatient locations primarily in Missouri.
Added
According to a 2023 study by the Centers for Disease Control and Prevention (“CDC”), youth mental health continues to reach all-time highs, and nearly all indicators of poor mental health and suicidal thoughts and behaviors worsened from 2013 to 2023. In 2023, 40% of high school students reported persistent feelings of sadness or hopelessness, compared to 30% in 2013.
Removed
During the year ended December 31, 2022, we repaid $95.0 million of the balance outstanding on the Revolving Facility.
Added
The ultimate goal is to reunite or place these children with their families or prepare them, when appropriate, for permanent placement with a relative or an adoptive family.
Removed
As a part of the closing of the Credit Facility on March 17, 2021, we (i) refinanced and terminated our prior credit facilities under an amended and restated credit agreement, dated as of December 31, 2012 (the “Prior Credit Facility”) and (ii) financed the redemption of all of our outstanding 5.625% Senior Notes due 2023 (the “5.625% Senior Notes”).
Added
Further, Medicare and Medicaid regulations, as well as commercial payor contracts, also provide for withholding or suspending payments in certain circumstances, which could adversely affect our cash flow.
Removed
In connection with the redemption of the 5.625% Senior Notes, we satisfied and discharged the indentures governing the 5.625% Senior Notes and recorded debt extinguishment costs of $3.3 million, including the write-off of deferred financing and premiums costs in the consolidated statement of operations.
Added
A determination that activities resulted in the submission of false claims could result in monetary liability, prison sentences, and/or exclusion from participation in any healthcare program funded in whole or in part by the U.S. government, including Medicare, Medicaid and TRICARE, as well as state healthcare programs.
Removed
On March 1, 2021, we satisfied and discharged the indentures governing the 6.500% Senior Notes due 2024 (the “6.500% Senior Notes”).
Added
Any allegations or findings that we have violated the False Claims Act and criminal laws could have a material adverse impact on our reputation, business, results of operations, and financial condition. Most states have also adopted generally applicable insurance fraud statutes and regulations that prohibit healthcare providers from submitting inaccurate, incorrect or misleading claims to private insurance companies.
Removed
In connection with the redemption of the 6.500% Senior Notes, we recorded debt extinguishment costs of $10.5 million, including $6.3 million cash paid for breakage costs and the write-off of deferred financing costs of $4.2 million in the consolidated statement of operations. U.K.
Added
Moreover, in response to the increasing number of cyberattacks targeting the healthcare sector, the HHS issued a Notice of Proposed Rulemaking on January 6, 2025, aimed at enhancing HIPAA security regulations. Should these proposed regulatory changes be enacted, our facilities will need to comply with the new security standards, potentially incurring significant costs associated with compliance.
Removed
Sale On January 19, 2021, we completed the sale of our operations in the United Kingdom (the “U.K.”) to RemedcoUK Limited, a company organized under the laws of England and Wales and owned by funds managed or advised by Waterland Private Equity Fund VII (the “U.K. Sale”). The U.K.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

75 edited+14 added−32 removed246 unchanged
Biggest changeThese provisions include: • a classified board of directors; • a prohibition on stockholder action through written consent; • a requirement that special meetings of stockholders be called only upon a resolution approved by a majority of our directors then in office; • advance notice requirements for stockholder proposals and nominations; and • the authority of the board of directors to issue preferred stock with such terms as the board of directors may determine. 30 Section 203 of the Delaware General Corporation Law (the “DGCL”) prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person that together with its affiliates owns or within the last three years has owned 15% of voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.
Biggest changeSection 203 of the Delaware General Corporation Law (the “DGCL”) prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person that together with its affiliates owns or within the last three years has owned 15% of voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.
Such restrictions affect, and in many respects limit or prohibit, among other things, our and our subsidiaries’ ability to: • incur or guarantee additional debt and issue certain preferred stock; • pay dividends on our common stock or redeem, repurchase or retire our equity interests or subordinated debt; • transfer or sell our assets; • make certain payments or investments; • make capital expenditures; • create certain liens on assets; • create restrictions on the ability of our subsidiaries to pay dividends or make other payments to us; • engage in certain transactions with our affiliates; and • merge or consolidate with other companies.
Such restrictions affect, and in many respects limit or prohibit, among other things, our and our subsidiaries’ ability to: • incur or guarantee additional debt and issue certain preferred stock; • pay dividends on our common stock or redeem, repurchase or retire our equity interests or subordinated debt; • transfer or sell our assets; 18 • make certain payments or investments; • make capital expenditures; • create certain liens on assets; • create restrictions on the ability of our subsidiaries to pay dividends or make other payments to us; • engage in certain transactions with our affiliates; and • merge or consolidate with other companies.
Although we evaluate the financial feasibility of construction projects by determining whether the projected cash flow return on investment exceeds our cost of capital and have implemented efforts to realize efficiencies in our design and construction processes, 22 such returns may not be achieved if the cost of construction continues to rise significantly or the expected patient volumes are not attained.
Although we evaluate the financial feasibility of construction projects by determining whether the projected cash flow return on investment exceeds our cost of capital and have implemented efforts to realize efficiencies in our design and construction processes, such returns may not be achieved if the cost of construction continues to rise significantly or the expected patient volumes are not attained.
Our ability to access the capital markets on acceptable terms may be severely restricted at a time when we would like, or need, access to those markets, which could have a negative impact on our growth plans, our flexibility to react to changing economic and business conditions and our ability to refinance existing debt (including debt under 17 the Credit Facility and the Senior Notes).
Our ability to access the capital markets on acceptable terms may be severely restricted at a time when we would like, or need, access to those markets, which could have a negative impact on our growth plans, our flexibility to react to changing economic and business conditions and our ability to refinance existing debt (including debt under the Credit Facility and the Senior Notes).
For the year ended December 31, 2023, we recorded non-cash impairment charges of $9.8 million related to the closure of certain facilities, which is recorded on our condensed consolidated statement of operations. The non-cash impairment charges included indefinite-lived asset impairments of $5.4 million, property impairments of $2.0 million and operating lease right-of-use asset impairments of $2.4 million.
For the year ended December 31, 2023, we recorded non-cash impairment charges of $9.8 million related to the closure of certain facilities, which is recorded on our consolidated statement of operations. The non-cash impairment charges included indefinite-lived asset impairments of $5.4 million, property impairments of $2.0 million and operating lease right-of-use asset impairments of $2.4 million.
Some of our for-profit competitors are local, independent operators or physician groups with 24 strong established reputations within the surrounding communities, which may adversely affect our ability to attract a sufficiently large number of patients in markets where we compete with such providers.
Some of our for-profit competitors are local, independent operators or physician groups with strong established reputations within the surrounding communities, which may adversely affect our ability to attract a sufficiently large number of patients in markets where we compete with such providers.
Property owners and local authorities have attempted, and may in the future attempt, to use or enact zoning ordinances to eliminate our ability to operate a given treatment facility or program. Local governmental authorities in some cases also have 28 attempted to use litigation and the threat of prosecution to force the closure of certain comprehensive treatment facilities.
Property owners and local authorities have attempted, and may in the future attempt, to use or enact zoning ordinances to eliminate our ability to operate a given treatment facility or program. Local governmental authorities in some cases also have attempted to use litigation and the threat of prosecution to force the closure of certain comprehensive treatment facilities.
Further, Medicare and Medicaid regulations, as well as commercial payor contracts, also provide for withholding or suspending payments in certain circumstances, which could adversely affect our cash flow. Our debt could adversely affect our financial health and prevent us from fulfilling our obligations under our financing arrangements.
Further, Medicare and Medicaid regulations, as well as commercial payor contracts, also provide for withholding or suspending payments in certain circumstances, which could adversely affect our cash flow. 17 Our debt could adversely affect our financial health and prevent us from fulfilling our obligations under our financing arrangements.
Further, the 21 cost of an acquisition could result in a dilutive effect on our results of operations, depending on various factors, including the amount paid for an acquired facility, the acquired facility’s results of operations, the fair value of assets acquired and liabilities assumed, effects of subsequent legislation and limits on rate increases.
Further, the cost of an acquisition could result in a dilutive effect on our results of operations, depending on various factors, including the amount paid for an acquired facility, the acquired facility’s results of operations, the fair value of assets acquired and liabilities assumed, effects of subsequent legislation and limits on rate increases.
If one or more of our facilities experiences an adverse patient incident in the future or is found to have failed to provide appropriate patient care, an admissions hold, loss of accreditation, license revocation or other adverse regulatory 19 action could be taken against us.
If one or more of our facilities experiences an adverse patient incident in the future or is found to have failed to provide appropriate patient care, an admissions hold, loss of accreditation, license revocation or other adverse regulatory action could be taken against us.
Our failure either to recruit and 25 retain qualified management, psychiatrists, therapists, counselors, nurses and other medical support personnel or control our labor costs could have a material adverse effect on our results of operations. Our performance depends on our ability to recruit and retain quality psychiatrists and other physicians.
Our failure either to recruit and retain qualified management, psychiatrists, therapists, counselors, nurses and other medical support personnel or control our labor costs could have a material adverse effect on our results of operations. Our performance depends on our ability to recruit and retain quality psychiatrists and other physicians, and nurses, counselors and other medical support personnel.
Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation. 31 Item 1B. Unresolv ed Staff Comments. None.
Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation. Item 1B. Unresolv ed Staff Comments. None.
Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. 15 We are subject to a number of restrictive covenants, which may restrict our business and financing activities.
Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. We are subject to a number of restrictive covenants, which may restrict our business and financing activities.
In the event of a security breach, sensitive personal data could become public. We are currently not aware of any material incidences of potential data breach; however, there can be no 27 assurance that such breaches will not arise in the future.
In the event of a security breach, sensitive personal data could become public. We are currently not aware of any material incidences of potential data breach; however, there can be no assurance that such breaches will not arise in the future.
Adverse developments in these tax laws or regulations, or any change in position regarding the application, administration or interpretation thereof, in any applicable jurisdiction, could have a material adverse effect on our business, financial condition or results of operations.
Adverse developments in these tax laws or regulations, or any 16 change in position regarding the application, administration or interpretation thereof, in any applicable jurisdiction, could have a material adverse effect on our business, financial condition or results of operations.
As public attention is drawn to the issues of the privacy and security of medical information, states may revise or expand their laws concerning the use and disclosure of health information, or may adopt new laws addressing these subjects.
As 15 public attention is drawn to the issues of the privacy and security of medical information, states may revise or expand their laws concerning the use and disclosure of health information, or may adopt new laws addressing these subjects.
Operational Risks • An incident involving one or more of our patients or the failure by one or more of our facilities to provide appropriate care could result in increased regulatory burdens, governmental investigations, litigation, negative publicity and adversely affect the trading price of our common stock. • Joint ventures may use significant resources, may be unsuccessful and could expose us to unforeseen liabilities. • Our business growth and acquisition strategies expose us to a variety of operational and financial risks. • We care for a large number of vulnerable individuals with complex needs and any care quality deficiencies could adversely impact our brand, reputation and ability to market our services effectively. • Our business could be disrupted if our information systems fail or if our databases are destroyed or damaged. • A cybersecurity incident could have a material adverse impact on the Company, including substantial sanctions, fines, and damages and civil and criminal penalties under federal and state privacy laws, in addition to reputational harm and increased costs. • Although we have facilities in 38 states and Puerto Rico, we have substantial operations in Pennsylvania, California, Tennessee, Massachusetts, and Arizona, which makes us especially sensitive to regulatory, economic, environmental and competitive conditions and changes in those states. • Our business and operations are subject to risks related to natural disasters and climate change. • If we fail to cultivate new or maintain established relationships with referral sources, our business, financial condition and results of operations could be adversely affected. • We operate in a highly competitive industry, and competition may lead to declines in patient volumes.
Operational Risks • An incident involving one or more of our patients or the failure by one or more of our facilities to provide appropriate care could result in increased regulatory burdens, governmental investigations, litigation, negative publicity and adversely affect the trading price of our common stock. • Joint ventures may use significant resources, may be unsuccessful and could expose us to unforeseen liabilities. • Our business growth and acquisition strategies expose us to a variety of operational and financial risks. • We care for a large number of vulnerable individuals with complex needs and any care quality deficiencies could adversely impact our brand, reputation and ability to market our services effectively. • Our business could be disrupted if our information systems fail or if our databases are destroyed or damaged. • A cybersecurity incident could have a material adverse impact on us, including substantial sanctions, fines, and damages and civil and criminal penalties under federal and state privacy laws, in addition to reputational harm and increased costs. • Although we have facilities in 39 states and Puerto Rico, we have substantial operations in Pennsylvania, California and Tennessee, which makes us especially sensitive to regulatory, economic, environmental and competitive conditions and changes in those states. • Our business and operations are subject to risks related to natural disasters and climate change. • If we fail to cultivate new or maintain established relationships with referral sources, our business, financial condition and results of operations could be adversely affected. • We operate in a highly competitive industry, and competition may lead to declines in patient volumes.
If these audits identify overpayments, we could be required to make substantial repayments, subject to various appeal rights. Our facilities are routinely subjected to claims audits in the ordinary 14 course of business.
If these audits identify overpayments, we could be required to make substantial repayments, subject to various appeal rights. Our facilities are routinely subjected to claims audits in the ordinary course of business.
That is because liability 29 for contamination under certain environmental laws can be imposed on current or past owners, lessors or operators of a site without regard to fault.
That is because liability for contamination under certain environmental laws can be imposed on current or past owners, lessors or operators of a site without regard to fault.
Failure to meet a safe harbor does not mean that the arrangement automatically violates the Anti-Kickback Statute, but may subject the arrangement to greater scrutiny. Even if our arrangements are found to be in compliance with the Anti-Kickback Statute, they may still face scrutiny under the newly enacted EKRA law.
Failure to meet a safe harbor does not mean that the arrangement automatically violates the Anti-Kickback Statute, but may subject the arrangement to greater scrutiny. Even if our arrangements are found to be in compliance with the Anti-Kickback Statute, they may still face scrutiny under EKRA.
A cybersecurity incident could have a material adverse impact on the Company, including substantial sanctions, fines, and damages and civil and criminal penalties under federal and state privacy laws, in addition to reputational harm and increased costs.
A cybersecurity incident could have a material adverse impact on us, including substantial sanctions, fines, and damages and civil and criminal penalties under federal and state privacy laws, in addition to reputational harm and increased costs.
Some of our employees are represented by labor unions and any work stoppage could adversely affect our business. Increased labor union activity could adversely affect our labor costs. At December 31, 2023, a labor union represented approximately 150 of our employees at one of our facilities. We cannot assure you that employee relations will remain stable.
Some of our employees are represented by labor unions and any work stoppage could adversely affect our business. Increased labor union activity could adversely affect our labor costs. At December 31, 2024, a labor union represented approximately 131 of our employees at one of our facilities. We cannot assure you that employee relations will remain stable.
A pandemic, epidemic or outbreak of an infectious disease in the markets in which we operate or that otherwise impacts our facilities could adversely impact our business. If a pandemic, epidemic, outbreak of an infectious disease, such as COVID-19, or other public health crisis were to occur in an area in which we operate, our operations could be adversely affected.
A pandemic, epidemic or outbreak of an infectious disease in the markets in which we operate or that otherwise impacts our facilities could adversely impact our business. If a pandemic, epidemic, outbreak of an infectious disease or other public health crisis were to occur in an area in which we operate, our operations could be adversely affected.
See Note 11 — Commitments and Contingencies in the accompanying notes to our consolidated financial statements beginning on Page F-1 of this Annual Report on Form 10-K for additional information about pending investigations.
See Note 11 — Commitments and Contingencies in the accompanying notes to our consolidated financial statements of this Annual Report on Form 10-K for additional information about pending investigations.
A sustained economic downturn or other economic conditions could also adversely affect the counterparties to our agreements, including the lenders under the Credit Facility, causing them to fail to meet their obligations to us. Increases in inflation and rising interest rates may adversely impact our business, financial condition and results of operations.
A sustained economic downturn or other economic conditions could also adversely affect the counterparties to our agreements, including the lenders under the Credit Facility, causing them to fail to meet their obligations to us. Increased inflationary pressure and rising interest rates may adversely impact our business, financial condition and results of operations.
General Risk Factors • Fluctuations in our operating results, quarter to quarter earnings and other factors, including factors outside our control, may result in significant decreases in the price of our common stock. 13 • Future sales of common stock by our existing stockholders may cause our stock price to fall. • If securities or industry analysts do not publish research or reports about our business, if they were to change their recommendations regarding our stock adversely or if our operating results do not meet their expectations, our stock price and trading volume could decline. • We incur substantial costs as a result of being a public company.
General Risk Factors • Fluctuations in our operating results, quarter to quarter earnings and other factors, including factors outside our control, may result in significant decreases in the price of our common stock. • Future sales of common stock by our existing stockholders may cause our stock price to fall. • If securities or industry analysts do not publish research or reports about our business, if they were to change their recommendations regarding our stock adversely or if our operating results do not meet their expectations, our stock price and trading volume could decline. • We incur substantial costs as a result of being a public company. 12 Risk Factors Any of the following risks could materially and adversely affect our business, financial condition or results of operations.
Human Capital Risks • Our facilities face competition for staffing, labor shortages and higher turnover rates that may increase our labor costs and reduce our profitability. • Our performance depends on our ability to recruit and retain quality psychiatrists and other physicians.
Human Capital Risks • Our facilities face competition for staffing, labor shortages and higher turnover rates that may increase our labor costs and reduce our profitability. • Our performance depends on our ability to recruit and retain quality psychiatrists and other physicians, and nurses, counselors and other medical support personnel.
The success and competitive advantage of our facilities depends, in part, on the number and quality of the psychiatrists and other physicians on the medical staffs of our facilities and our maintenance of good relations with those medical professionals.
The success and competitive advantage of our facilities depends, in part, on the number and quality of the psychiatrists and other physicians, and nurses, counselors and other medical support personnel on the medical staffs of our facilities and our maintenance of good relations with those medical professionals.
The most significant operating expense for our facilities is wage costs, which represent the staff costs incurred in providing our services and running our facilities, and which are primarily driven by the number of employees and pay rates.
Our operating costs are subject to increases in the wages and salaries of our staff. The most significant operating expense for our facilities is wage costs, which represent the staff costs incurred in providing our services and running our facilities, and which are primarily driven by the number of employees and pay rates.
Future sales of common stock by our existing stockholders may cause our stock price to fall. The market price of our common stock could decline as a result of sales by us or our existing stockholders, particularly our largest stockholders, our directors and executive officers, in the market, or the perception that these sales could occur.
The market price of our common stock could decline as a result of sales by us or our existing stockholders, particularly our largest stockholders, our directors and executive officers, in the market, or the perception that these sales could occur.
Continuing increases in inflation, have in the past, and could in the future, impact our costs of labor and services and the margins we are able to realize on the operation of our facilities and services, all of which could have an adverse impact on our business, financial position, results of operations and cash flows.
Continuing inflationary pressure, has in the past, and could in the future, impact our costs of labor and services and the margins we are able to realize on the operation of our facilities and services, all of which could have an adverse 20 impact on our business, financial position, results of operations and cash flows.
At December 31, 2023, we had approximately $1.4 billion of total debt (net of debt issuance costs, discounts and premiums of $10.4 million), which included approximately $457.2 million of debt under the Credit Facility, $450.0 million of debt under the 5.500% Senior Notes (as defined below) and $475.0 million of debt under the 5.000% Senior Notes (as defined below).
At December 31, 2024, we had approximately $2.0 billion of total debt (net of debt issuance costs, discounts and premiums of $8.9 million), which included approximately $1.0 billion of debt under the Credit Facility, $450.0 million of debt under the 5.500% Senior Notes (as defined below) and $475.0 million of debt under the 5.000% Senior Notes (as defined below).
These factors include certain of the risks discussed herein, outcomes of political elections, demographic changes, operating results of other healthcare companies, changes in our financial estimates or recommendations of securities analysts, speculation in the press or investment community, the possible effects of war, terrorist and other hostilities, adverse weather conditions, climate change, the impact of a pandemic, epidemic, or outbreak of an infectious disease, managed care contract negotiations and terminations, changes in general conditions in the economy or the financial markets or other developments affecting the healthcare industry.
These factors include certain of the risks discussed herein, outcomes of political elections, demographic changes, operating results of other healthcare companies, changes in our financial estimates or recommendations of securities analysts, speculation in the press or investment community, the possible effects of war, terrorist and other hostilities, adverse weather conditions, climate change, the impact of a pandemic, epidemic, or outbreak of an infectious disease, managed care contract negotiations and terminations, changes in general conditions in the economy or the financial markets or other developments affecting the healthcare industry. 29 Future sales of common stock by our existing stockholders may cause our stock price to fall.
We are required under U.S. generally accepted accounting principles (“GAAP”) to review annually, or more frequently if events indicate the carrying value of a reporting unit may not be recoverable, our goodwill and indefinite-lived intangible assets for impairment.
We may be required to record additional charges to future earnings if our goodwill, intangible assets and property and equipment become impaired. We are required under U.S. generally accepted accounting principles (“GAAP”) to review our goodwill and indefinite-lived intangible assets for impairment annually, or more frequently if events indicate the carrying value of a reporting unit may not be recoverable.
Any delays or stoppages in our projects, the unsatisfactory completion or construction of such projects or the failure of such projects to increase our occupancy levels could have a material adverse effect on our ADC, which would have a corresponding negative impact on our business, results of operations and financial condition.
Any delays or stoppages in our projects, the unsatisfactory completion or construction of such projects or the failure of such projects to increase our occupancy levels could have a material adverse effect on our ADC, which would have a corresponding negative impact on our business, results of operations and financial condition. 22 Our business growth and acquisition strategies expose us to a variety of operational and financial risks.
The storage and transportation of such waste is strictly regulated. Our waste disposal services are outsourced and should the relevant service provider fail to comply with relevant regulations, we could face sanctions or fines which 23 could adversely affect our brand, reputation, business or financial condition.
Our waste disposal services are outsourced and should the relevant service provider fail to comply with relevant regulations, we could face sanctions or fines which could adversely affect our brand, reputation, business or financial condition.
For the year ended December 31, 2023, we derived approximately 69% of our continuing operations revenue from the Medicare and Medicaid programs. Government payors in the U.S., such as Medicaid, generally reimburse us on a fee-for-service basis based on predetermined reimbursement rate schedules.
A significant portion of our revenue is derived from government healthcare programs. For the year ended December 31, 2024, we derived approximately 71% of our revenue from the Medicare and Medicaid programs. Government payors in the U.S., such as Medicaid, generally reimburse us on a fee-for-service basis based on predetermined reimbursement rate schedules.
Although we have disaster plans in place and operate pursuant to infectious disease protocols, the potential impact of a pandemic, epidemic or outbreak of an infectious disease with respect to our markets or our facilities is difficult to predict and could adversely impact our business, financial condition or results of operations.
Although we have disaster plans in place and operate pursuant to infectious disease protocols, the potential impact of a pandemic, epidemic or outbreak of an infectious disease with respect to our markets or our facilities is difficult to predict and could adversely impact our business, financial condition or results of operations. 26 If we fail to cultivate new or maintain established relationships with referral sources, our business, financial condition and results of operations could be adversely affected.
To the extent that a greater portion of our employee base unionizes and the terms of any collective bargaining agreements are significantly different from our current compensation arrangements, it is possible that our labor costs could increase materially and our business, financial condition or results of operations could be adversely affected.
To the extent that a greater portion of our employee base unionizes and the terms of any collective bargaining agreements are significantly different from our current compensation arrangements, it is possible that our labor costs could increase materially and our business, financial condition or results of operations could be adversely affected. 28 We depend on key management personnel, and the departure of one or more of our key executives or a significant portion of our local facility management personnel could harm our business.
We cannot predict the outcome of these lawsuits or the effect that findings in such lawsuits may have on us. We maintain liability insurance intended to cover service user, third-party and employee personal injury claims.
Some of these actions, such as the Desert Hills Litigation, may involve large claims, as well as significant defense costs. We cannot predict the outcome of these lawsuits or the effect that findings in such lawsuits may have on us. We maintain liability insurance intended to cover service user, third-party and employee personal injury claims.
Risks that we deem material are described under “Risk Factors” below and include, but are not limited to, the following: Financial Risks • Our revenue and results of operations are significantly affected by payments received from the government and third-party payors. • Our debt could adversely affect our financial health and prevent us from fulfilling our obligations under our financing arrangements. • Servicing our debt requires a significant amount of cash.
Financial Risks • Our revenue and results of operations are significantly affected by payments received from the government and third-party payors. • Our debt could adversely affect our financial health and prevent us from fulfilling our obligations under our financing arrangements. • Servicing our debt requires a significant amount of cash.
The risks and uncertainties described below are not the only ones we face and there may be additional risks that we are not presently aware of or that we currently consider not likely to have a significant impact.
These risks should be carefully considered before making an investment decision regarding us. The risks and uncertainties described below are not the only ones we face and there may be additional risks that we are not presently aware of or that we currently consider not likely to have a significant impact.
Legal Proceedings and Regulatory Risks • We are and in the future could become the subject of additional governmental investigations, regulatory actions and whistleblower lawsuits. • We could be subject to monetary penalties and other sanctions, including exclusion from federal healthcare programs, if we fail to comply with the terms of our existing CIA, or any similar agreements in the future. • We are and in the future may become involved in legal proceedings based on negligence or breach of a contractual or statutory duty from service users or their family members or from employees or former employees. • If we fail to comply with extensive laws and government regulations, we could suffer penalties or be required to make significant changes to our operations. • We could face risks associated with, or arising out of changing laws and regulations, including those involving environmental, health and safety laws and regulations.
Risks that we deem material are described under “Risk Factors” below and include, but are not limited to, the following: Legal Proceedings and Regulatory Risks • We are and in the future could become the subject of governmental investigations, regulatory actions, whistleblower lawsuits and other legal proceedings. • We are and in the future may become involved in legal proceedings based on negligence or breach of a contractual or statutory duty from service users or their family members or from employees or former employees. • If we fail to comply with extensive laws and government regulations, we could suffer penalties or be required to make significant changes to our operations. • We could face risks associated with, or arising out of changing laws and regulations, including those involving environmental, health and safety laws and regulations.
Any successful cybersecurity attack or other unauthorized attempt to access our systems or facilities could result in negative publicity which could damage our reputation or brand with our patients, referral sources, payors, or other third parties and could subject us to substantial sanctions, fines, and damages and civil and criminal penalties under federal and state privacy laws, in addition to litigation with those affected.
Any successful cybersecurity attack or other unauthorized attempt to access our systems or facilities could result in negative publicity which could damage our reputation or brand with our patients, referral sources, payors, or other third parties and could subject us to substantial sanctions, fines, and damages and civil and criminal penalties under federal and state privacy laws, in addition to litigation with those affected. 25 We may fail to deal with clinical waste in accordance with applicable regulations or otherwise be in breach of relevant medical, health and safety or environmental laws and regulations.
Certain of our individual facilities have received, and from time to time, other facilities may receive, subpoenas, civil investigative demands, audit reports and other inquiries from, and may be subject to investigation by, federal and state agencies.
Healthcare companies in the U.S. may be subject to investigations by various governmental agencies. The Company and certain of our individual facilities have received, and from time to time, other facilities may receive, subpoenas, civil investigative demands, audit reports and other inquiries from, and may be subject to investigation by, federal and state agencies and subject to whistleblower actions.
Operational Risks An incident involving one or more of our patients or the failure by one or more of our facilities to provide appropriate care could result in increased regulatory burdens, governmental investigations, litigation, negative publicity and adversely affect the trading price of our common stock.
As a result, capital appreciation, if any, of our common stock will be a stockholder’s sole source of gain for the foreseeable future. 21 Operational Risks An incident involving one or more of our patients or the failure by one or more of our facilities to provide appropriate care could result in increased regulatory burdens, governmental investigations, litigation, negative publicity and adversely affect the trading price of our common stock.
Our ability to generate sufficient cash to service our debt depends on many factors beyond our control. • We are subject to a number of restrictive covenants, which may restrict our business and financing activities. • Despite our current debt level, we may incur significant additional amounts of debt, which could further exacerbate the risks associated with our debt. • If we default on our obligations to pay our debt, we may not be able to make payments on our financing arrangements. • We are subject to volatility in the global capital and credit markets as well as significant developments in macroeconomic and political conditions that are out of our control. • Increases in inflation and rising interest rates may adversely impact our business, financial condition and results of operations. 12 • The industry trend on value-based purchasing may negatively impact our revenue. • Although the COVID-19 public health emergency expired in May 2023, our operations, business and financial condition, and our liquidity could be negatively impacted, particularly if the U.S. economy remains unstable for a significant amount of time or if patient volumes decline at our facilities. • An increase in uninsured or underinsured patients or the deterioration in the collectability of patient accounts receivables could harm our results of operation.
Our ability to generate sufficient cash to service our debt depends on many factors beyond our control. • We are subject to a number of restrictive covenants, which may restrict our business and financing activities. • Despite our current debt level, we may incur significant additional amounts of debt, which could further exacerbate the risks associated with our debt. • If we default on our obligations to pay our debt, we may not be able to make payments on our financing arrangements. 11 • We are subject to volatility in the global capital and credit markets as well as significant developments in macroeconomic and political conditions that are out of our control. • Increased inflationary pressure and rising interest rates may adversely impact our business, financial condition and results of operations. • The industry trend on value-based purchasing may negatively impact our revenue. • The trend by insurance companies and managed care organizations to enter into sole-source contracts may limit our ability to obtain patients. • An increase in uninsured or underinsured patients or the deterioration in the collectability of patient accounts receivables could harm our results of operations.
The incurrence of substantial legal fees, damage awards or other fines as well as the potential impact on our brand or reputation as a result of being involved in any legal proceedings could have a material impact on our business, results of operations and financial condition.
The incurrence of substantial legal fees, damage awards or other fines as well as the potential impact on our brand or reputation as a result of being involved in any legal proceedings could have a material impact on our business, results of operations and financial condition. 13 We carry a large self-insured retention and may be responsible for significant amounts not covered by insurance.
Because the indentures governing the Senior Notes and the agreement governing the Credit Facility have customary cross-default provisions, if the debt under the Senior Notes or the Credit Facility is accelerated, we may be unable to repay or refinance the amounts due. 16 We may be required to record additional charges to future earnings if our goodwill, intangible assets and property and equipment become impaired.
Because the indentures governing the Senior Notes and the agreement governing the Credit Facility have customary cross-default provisions, if the debt under the Senior Notes or the Credit Facility is accelerated, we may be unable to repay or refinance the amounts due.
Our business growth and acquisition strategies expose us to a variety of operational and financial risks. A principal element of our business strategy is to grow by acquiring other companies and assets in the behavioral healthcare industry. Growth through acquisitions exposes us to a variety of operational and financial risks.
A principal element of our business strategy is to grow by acquiring other companies and assets in the behavioral healthcare industry. Growth through acquisitions exposes us to a variety of operational and financial risks. We summarize the most significant of these risks below. Integration risks We must integrate our acquisitions with our existing operations.
These investigations can result in repayment obligations, and violations of the False Claims Act can result in substantial monetary penalties and fines, the imposition of a corporate integrity agreement and exclusion from participation in governmental health programs.
These investigations can result in repayment obligations, and violations of the False Claims Act, the Anti-Kickback Statute and other federal and state statutes can result in substantial monetary penalties and fines, the imposition of a corporate integrity agreement, loss of enrollment status, and exclusion from participation in governmental health programs, negative publicity and, in certain cases, criminal penalties.
Certain changes in the mix of our earnings between jurisdictions and assumptions used in the calculation of income taxes, among other factors, could have a material adverse effect on our overall effective tax rate.
Certain changes in the mix of our earnings between jurisdictions and assumptions used in the calculation of income taxes, among other factors, could have a material adverse effect on our overall effective tax rate. Financial Risks Our revenue and results of operations are significantly affected by payments received from the government and third-party payors.
Our business activities could be significantly disrupted by wildfires, hurricanes or other natural disasters, and our property insurance may not be adequate to cover losses from such wildfires, storms or other natural disasters.
Natural disasters have historically had a disruptive effect on the operations of facilities and the patient populations in such areas. Our business activities could be significantly disrupted by wildfires, hurricanes or other natural disasters, and our property insurance may not be adequate to cover losses from such wildfires, storms or other natural disasters.
Any failure to comply with any such agreements could have a material impact on our financial performance and our ability to operate our business. We are and in the future may become involved in legal proceedings based on negligence or breach of a contractual or statutory duty from service users or their family members or from employees or former employees.
We are and in the future may become involved in legal proceedings based on negligence or breach of a contractual or statutory duty from service users or their family members or from employees or former employees.
If we experience unexpected increases in the growth of uninsured and underinsured patients or in bad debt expenses, our results of operations will be harmed. Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) could have a material adverse effect on our business.
Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) could have a material adverse effect on our business. We are required to maintain internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act.
The expertise and efforts of our senior executives and the chief executive officer, chief financial officer, medical directors, physicians and other key members of our facility management personnel are important to the success of our business. During 2023, we hired a new chief financial officer and general counsel to replace executive officers who left the company during 2023.
The expertise and efforts of our senior executives and the chief executive officer, chief financial officer, medical directors, physicians and other key members of our facility management personnel are important to the success of our business. It may take time for new officers to be integrated into our business.
Our evaluation of goodwill and the need for any further impairment in subsequent periods is sensitive to revisions to our current projections. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Property and Equipment and other Long-Lived Assets” and “Item 7.
Our evaluation of goodwill and the need for any further impairment in subsequent periods is sensitive to revisions to our current projections. See “Item 7.
Revenue from Pennsylvania, California, Tennessee, Massachusetts and Arizona represented approximately 13%, 8%, 7%, 6% and 6% of our total revenue for the year ended December 31, 2023, respectively. This concentration makes us particularly sensitive to legislative, regulatory, economic, environmental and competition changes in those states.
Although we have facilities in 39 states and Puerto Rico, we have substantial operations in Pennsylvania, California and Tennessee, which makes us especially sensitive to regulatory, economic, environmental and competitive conditions and changes in those states. Revenue from Pennsylvania, California and Tennessee represented approximately 13%, 8% and 7% of our total revenue for the year ended December 31, 2024, respectively.
Human Capital Risks Our facilities face competition for staffing, labor shortages and higher turnover rates that may increase our labor costs and reduce our profitability.
In addition, liabilities of any one or more of our subsidiaries could be imposed on us or our other subsidiaries. 27 Human Capital Risks Our facilities face competition for staffing, labor shortages and higher turnover rates that may increase our labor costs and reduce our profitability.
Inflation in the U.S. has recently accelerated and is currently expected to continue at an elevated level in the near-term. Current and future inflationary effects may be driven by, among other things, supply chain disruptions and governmental stimulus or fiscal policies, and geopolitical instability, including the ongoing conflicts between Ukraine and Russia and in Israel and Gaza.
We have experienced, and may continue to experience, increased inflationary pressure on our business, including increased personnel and supply chain costs. Current and future inflationary effects may be driven by, among other things, supply chain disruptions and governmental stimulus or fiscal policies, and geopolitical instability, including the ongoing conflicts between Ukraine and Russia and in Israel and Gaza.
Even in those acquisitions in which we have such rights, we may experience difficulty enforcing the sellers’ obligations, or we may incur material liabilities for the past activities of acquired facilities. Such liabilities and related legal or other costs and/or resulting damage to a facility’s reputation could negatively impact our business, financial condition or results of operations.
Even in those acquisitions in which we have such rights, we may experience difficulty enforcing the sellers’ obligations, or we may incur material liabilities for the past activities of acquired facilities.
Our principal competitors for acquisitions have included UHS and private equity firms. Also, suitable acquisitions may not be accomplished due to unfavorable terms.
As a result, we may pay more to acquire a target business or may agree to less favorable deal terms than we would have otherwise. Our principal competitors for acquisitions have included UHS and private equity firms. Also, suitable acquisitions may not be accomplished due to unfavorable terms.
Any material change in the current payment programs or regulatory, economic, environmental or competitive conditions in these locations could have a disproportionate effect on our overall business results. If our facilities in these locations are adversely affected by changes in regulatory and economic conditions, our business, financial condition or results of operations could be adversely affected.
This concentration makes us particularly sensitive to legislative, regulatory, economic, environmental and competition changes in those states. Any material change in the current payment programs or regulatory, economic, environmental or competitive conditions in these locations could have a disproportionate effect on our overall business results.
The cost of construction materials and labor has significantly increased, and we continue to grow our business through expansion of existing facilities and development of de novo and joint venture facilities.
Furthermore, the damage to our reputation or to the reputation of the relevant facility from any such incident could be exacerbated by any failure on our part to respond effectively to such incident. 24 The cost of construction materials and labor has significantly increased, and we continue to grow our business through expansion of existing facilities and development of de novo and joint venture facilities.
Price transparency initiatives like the No Surprises Act may impact our ability to obtain or maintain favorable contract terms, and may impact our competitive position and our relationships with patients and insurers. These laws and regulations are extremely complex, and, in many cases, we do not have the benefit of regulatory or judicial interpretation.
Price transparency initiatives like the No 14 Surprises Act and the Health Care PRICE Transparency Act may impact our ability to obtain or maintain favorable contract terms, and may impact our competitive position and our relationships with patients and insurers.
Collection of receivables from third-party payors and patients is critical to our operating performance. Our primary collection risks relate to uninsured patients and the portion of the bill that is the patient’s responsibility, which primarily includes co-payments and deductibles.
Our primary collection risks relate to uninsured patients and the portion of the bill that is the patient’s responsibility, which primarily includes co-payments and deductibles. We determine the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients and implicit price concessions.
We may fail to deal with clinical waste in accordance with applicable regulations or otherwise be in breach of relevant medical, health and safety or environmental laws and regulations. As part of our normal business activities, we produce and store clinical waste which may produce effects harmful to the environment or human health.
As part of our normal business activities, we produce and store clinical waste which may produce effects harmful to the environment or human health. The storage and transportation of such waste is strictly regulated.
Competing for acquisitions We face competition for acquisition candidates primarily from other for-profit healthcare companies, as well as from not-for-profit entities. Some of our competitors may have greater resources than we do. As a result, we may pay more to acquire a target business or may agree to less favorable deal terms than we would have otherwise.
Such liabilities and related legal or other costs and/or resulting damage to a facility’s reputation could negatively impact our business, financial condition or results of operations. 23 Competing for acquisitions We face competition for acquisition candidates primarily from other for-profit healthcare companies, as well as from not-for-profit entities. Some of our competitors may have greater resources than we do.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Goodwill and Indefinite-Lived Intangible Assets” for additional information. Our operating costs are subject to increases in the wages and salaries of our staff.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Property and Equipment and other Long-Lived Assets” and “Item 7. 19 Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Goodwill and Indefinite-Lived Intangible Assets” for additional information.
At December 31, 2023, our estimated implicit price concessions represented approximately 16% of our accounts receivable balance as of such date. Significant changes in business office operations, payor mix, economic conditions or trends in federal and state governmental health coverage could affect our collection of accounts receivable, cash flow and results of operations.
Significant changes in business office operations, payor mix, economic conditions or trends in federal and state governmental health coverage could affect our collection of accounts receivable, cash flow and results of operations. If we experience unexpected increases in the growth of uninsured and underinsured patients or in bad debt expenses, our results of operations will be harmed.
We have been in the past and will continue in the future to be subject to medical malpractice lawsuits and other legal actions in the ordinary course of business. Some of these actions, such as the Desert Hills Litigation, may involve large claims, as well as significant defense costs.
In addition, our insurance may be inadequate, premiums may increase and, if there is a significant deterioration in our claims experience, insurance may not be available on acceptable terms. We have been in the past and will continue in the future to be subject to medical malpractice lawsuits and other legal actions in the ordinary course of business.
Our business and operations are subject to risks related to natural disasters and climate change. Some of our facilities are located in areas prone to hurricanes or wildfires. Natural disasters have historically had a disruptive effect on the operations of facilities and the patient populations in such areas.
If our facilities in these locations are adversely affected by changes in regulatory and economic conditions, our business, financial condition or results of operations could be adversely affected. Our business and operations are subject to risks related to natural disasters and climate change. Some of our facilities are located in areas prone to hurricanes or wildfires.
We may also be subject to substantial reputational harm as a result of the public announcement of any investigation into such claims. 26 We could be subject to monetary penalties and other sanctions, including exclusion from federal healthcare programs, if we fail to comply with the terms of our existing CIA or any similar agreements in the future.
We may also be subject to substantial reputational harm as a result of the public announcement of any investigation into such claims.
If any of the following risks actually occur, our business, financial condition and operating results could suffer, and the trading price of our common stock could decline. Financial Risks Our revenue and results of operations are significantly affected by payments received from the government and third-party payors. A significant portion of our revenue is derived from government healthcare programs.
If any of the following risks actually occur, our business, financial condition and operating results could suffer, and the trading price of our common stock could decline. Legal Proceedings and Regulatory Risks We are and in the future could become the subject of governmental investigations, regulatory actions, whistleblower lawsuits and other legal proceedings.
Additionally, the COVID-19 pandemic (including governmental responses, broad economic impacts and market disruptions) has heightened the materiality of certain other risk factors described herein. An increase in uninsured or underinsured patients or the deterioration in the collectability of patient accounts receivables could harm our results of operation.
An increase in uninsured or underinsured patients or the deterioration in the collectability of patient accounts receivables could harm our results of operations. Collection of receivables from third-party payors and patients is critical to our operating performance.
Removed
Risk Factors Any of the following risks could materially and adversely affect our business, financial condition or results of operations. These risks should be carefully considered before making an investment decision regarding us.
Added
Responding to subpoenas, investigations and other lawsuits, claims and legal proceedings, as well as defending ourselves in and resolving such matters, has caused and will continue to cause us to incur significant costs, including legal expense and the diversion of management resources, which could have a material adverse effect on our business, financial condition and results of operations.
Removed
Although there were no impairment charges recorded for the 2023 annual impairment review, we may be required to record charges to earnings during any period in which an impairment of our goodwill, intangible assets and property and equipment is determined which could adversely affect our results of operations.
Added
In addition, governmental investigations, regulatory actions and other legal proceedings could result in us becoming the subject of negative publicity or unfavorable media attention, whether warranted or unwarranted, that could have a significant, adverse effect on the trading price of our common stock or adversely impact our reputation.
Removed
Although the COVID-19 public health emergency expired in May 2023, our operations, business and financial condition, and our liquidity could be negatively impacted, particularly if the U.S. economy remains unstable for a significant amount of time or if patient volumes decline at our facilities.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+0 added−0 removed8 unchanged
Biggest changeThe Audit and Risk Committee of the board of directors has responsibility of oversight for the Company’s enterprise risk assessment and risk management systems. Our Chief Information Officer (“CIO”), Senior Director of Information Security and other delegated positions are responsible for assessing and managing our material risks from cybersecurity risks.
Biggest changeThe Audit and Risk Committee of the board of directors has responsibility of oversight for our enterprise risk assessment and risk management systems. Our Chief Information Officer (“CIO”), Senior Director of Information Security and other delegated 30 positions are responsible for assessing and managing our material risks from cybersecurity risks.
Risks and potential threats are identified and measured through these monitoring, testing, and response processes procedures and significant risks, and threats are reported by the CIO to the Audit and Risk Committee. 32
Risks and potential threats are identified and measured through these monitoring, testing, and response processes procedures and significant risks, and threats are reported by the CIO to the Audit and Risk Committee . 31

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeThe following table lists, by state or country, the number of behavioral healthcare facilities directly or indirectly owned and operated by us at December 31, 2023: State Facilities Operated Beds Alaska 1 — Arizona 4 533 Arkansas 6 785 California 22 486 Delaware 4 130 Florida 13 509 Georgia 9 390 Illinois 3 353 Indiana 10 337 Iowa 2 — Kansas 1 — Kentucky 1 — Louisiana 6 467 Maine 6 — Maryland 3 — Massachusetts 14 263 Michigan 5 442 Mississippi 3 496 Missouri 6 580 Nevada 3 134 New Hampshire 2 — New Jersey 1 — North Carolina 10 376 Ohio 6 290 Oklahoma 4 108 Oregon 7 — Pennsylvania 31 1,836 Rhode Island 2 — South Carolina 1 63 South Dakota 1 126 Tennessee 14 1,049 Texas 5 607 Utah 6 147 Vermont 1 — Virginia 9 474 Washington 8 — West Virginia 7 — Wisconsin 15 35 Puerto Rico 1 172 253 11,188 See “Item 1.
Biggest changeThe following table lists, by state or country, the number of behavioral healthcare facilities directly or indirectly owned and operated by us at December 31, 2024: State Facilities Operated Beds Alaska 1 — Arizona 5 633 Arkansas 6 785 California 23 584 Colorado 1 144 Delaware 4 130 Florida 11 541 Georgia 9 413 Illinois 3 353 Indiana 10 337 Iowa 2 — Kansas 1 — Kentucky 1 — Louisiana 6 470 Maine 6 — Maryland 3 — Massachusetts 16 263 Michigan 5 442 Mississippi 3 499 Missouri 4 483 Nevada 4 134 New Hampshire 2 — New Jersey 1 — North Carolina 13 376 Ohio 6 290 Oklahoma 4 108 Oregon 7 — Pennsylvania 31 1,895 Rhode Island 2 — South Carolina 4 63 South Dakota 1 126 Tennessee 14 1,097 Texas 5 619 Utah 6 140 Vermont 1 — Virginia 9 601 Washington 8 — West Virginia 7 — Wisconsin 16 155 Puerto Rico 1 172 262 11,853 See “Item 1.
Business — Operations” for a summary description of the facilities that we own and lease. In addition, we currently lease approximately 61,000 square feet of office space at 6100 Tower Circle, Franklin, Tennessee, for our corporate headquarters. Our headquarters and facilities are generally well maintained and in good operating condition.
Business — Operations” for a summary description of the facilities that we own and lease. In addition, we currently lease approximately 61,000 square feet of office space at 6100 Tower Circle, Franklin, Tennessee, for our corporate headquarters. Our headquarters and facilities are generally well maintained and in good operating condition. 32

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+2 added−0 removed3 unchanged
Biggest changeIssuer Purchases of Equity Securities During the three months ended December 31, 2023, the Company withheld shares of Company common stock to satisfy employee minimum statutory tax withholding obligations payable upon the vesting of restricted stock units, as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1 – October 31 3,709 $ 74.54 — — November 1 – November 30 2,306 $ 73.18 — — December 1 – December 31 730 $ 74.96 — — Total 6,745 Dividends We have never declared or paid dividends on our common stock.
Biggest changeIssuer Purchases of Equity Securities During the three months ended December 31, 2024, we withheld shares of our common stock to satisfy employee minimum statutory tax withholding obligations payable upon the vesting of restricted stock units, as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1 – October 31 4,470 $ 51.73 — — November 1 – November 30 1,015 $ 42.29 — — December 1 – December 31 809 $ 39.09 — — Total 6,294 Purchases of Equity Securities by the Issuer and Affiliated Purchasers On February 25, 2025, our board of directors authorized a share repurchase program (the “share repurchase program”) pursuant to which we may, from time to time, acquire up to $300.0 million of outstanding shares of our common stock, exclusive of any fees, commissions, or other expenses related to such repurchases.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matter s and Issuer Purchases of Equity Securities. Our common stock is listed for trading on The NASDAQ Global Select Market under the symbol “ACHC.” Stockholders As of February 28, 2024, there were approximately 598 holders of record of our common stock. Recent Sales of Unregistered Securities None.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matter s and Issuer Purchases of Equity Securities. Our common stock is listed for trading on The NASDAQ Global Select Market under the symbol “ACHC.” Stockholders As of February 27, 2025, there were approximately 612 holders of record of our common stock. Recent Sales of Unregistered Securities None.
Added
Repurchases made pursuant to the share repurchase program will be made in accordance with applicable securities laws and may be made at management’s discretion from time to time in the open market, in privately negotiated transactions, or through block trades, derivatives transactions, or purchases made in accordance with Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Added
The share repurchase program has no termination date and may be modified, suspended or discontinued by our board of directors at any time. The authorization does not obligate us to repurchase any shares. Dividends We have never declared or paid dividends on our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

85 edited+35 added−34 removed50 unchanged
Biggest changeResults of Operations The following table illustrates our consolidated results of operations for the respective periods shown (dollars in thousands): Year Ended December 31, 2023 2022 2021 Amount % Amount % Amount % Revenue $ 2,928,738 100.0 % $ 2,610,399 100.0 % $ 2,314,394 100.0 % Salaries, wages and benefits 1,572,330 53.7 % 1,393,434 53.4 % 1,243,804 53.7 % Professional fees 176,013 6.0 % 158,013 6.1 % 136,739 5.9 % Supplies 105,992 3.6 % 100,200 3.8 % 90,702 3.9 % Rents and leases 46,552 1.6 % 45,462 1.7 % 38,519 1.7 % Other operating expenses 388,906 13.3 % 349,277 13.4 % 301,339 13.0 % Income from provider relief fund (6,419 ) (0.2 )% (21,451 ) (0.8 )% (17,900 ) (0.8 )% Depreciation and amortization 132,349 4.5 % 117,769 4.5 % 106,717 4.6 % Interest expense, net 82,125 2.8 % 69,760 2.7 % 76,993 3.3 % Debt extinguishment costs — 0.0 % — 0.0 % 24,650 1.1 % Legal settlements expense 394,181 13.5 % — 0.0 % — 0.0 % Loss on impairment 9,790 0.3 % — 0.0 % 24,293 1.0 % Gain on sale of property (9,747 ) (0.3 )% — 0.0 % — 0.0 % Transaction, legal and other costs 62,026 2.1 % 23,792 0.9 % 12,778 0.6 % Total expenses 2,954,098 100.9 % 2,236,256 85.7 % 2,038,634 88.0 % (Loss) income from continuing operations before income taxes (25,360 ) (0.9 )% 374,143 14.3 % 275,760 12.0 % (Benefit from) provision for income taxes (9,699 ) (0.3 )% 94,110 3.6 % 67,557 2.9 % (Loss) income from continuing operations (15,661 ) (0.6 )% 280,033 10.7 % 208,203 8.9 % Loss from discontinued operations, net of taxes — 0.0 % — 0.0 % (12,641 ) (0.5 )% Net (loss) income (15,661 ) (0.6 )% 280,033 10.7 % 195,562 8.4 % Net income attributable to noncontrolling interests (6,006 ) (0.2 )% (6,894 ) (0.3 )% (4,927 ) (0.2 )% Net (loss) income attributable to Acadia Healthcare Company, Inc. $ (21,667 ) (0.8 )% $ 273,139 10.4 % $ 190,635 8.2 % 37 We believe that we are well positioned to help meet the growing demand for behavioral healthcare services and recorded revenue growth of 12% for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Biggest changeResults of Operations The following table illustrates our consolidated results of operations for the respective periods shown (dollars in thousands): Year Ended December 31, 2024 2023 2022 Amount % Amount % Amount % Revenue $ 3,153,963 100.0 % $ 2,928,738 100.0 % $ 2,610,399 100.0 % Salaries, wages and benefits 1,691,024 53.6 % 1,572,330 53.7 % 1,393,434 53.4 % Professional fees 189,706 6.0 % 176,013 6.0 % 158,013 6.1 % Supplies 112,713 3.6 % 105,992 3.6 % 100,200 3.8 % Rents and leases 47,861 1.5 % 46,552 1.6 % 45,462 1.7 % Other operating expenses 440,788 14.0 % 388,906 13.3 % 349,277 13.4 % Income from provider relief fund — 0.0 % (6,419 ) (0.2 )% (21,451 ) (0.8 )% Depreciation and amortization 149,595 4.7 % 132,349 4.5 % 117,769 4.5 % Interest expense, net 116,368 3.7 % 82,125 2.8 % 69,760 2.7 % Legal settlements expense — 0.0 % 394,181 13.5 % — 0.0 % Loss on impairment 17,276 0.5 % 9,790 0.3 % — 0.0 % Gain on sale of property — 0.0 % (9,747 ) (0.3 )% — 0.0 % Transaction, legal and other costs 46,753 1.5 % 62,026 2.1 % 23,792 0.9 % Total expenses 2,812,084 89.1 % 2,954,098 100.9 % 2,236,256 85.7 % Income (loss) before income taxes 341,879 10.9 % (25,360 ) (0.9 )% 374,143 14.3 % Provision for (benefit from) income taxes 77,395 2.5 % (9,699 ) (0.3 )% 94,110 3.6 % Net income (loss) 264,484 8.4 % (15,661 ) (0.6 )% 280,033 10.7 % Net income attributable to noncontrolling interests (8,872 ) (0.3 )% (6,006 ) (0.2 )% (6,894 ) (0.3 )% Net income (loss) attributable to Acadia Healthcare Company, Inc. $ 255,612 8.1 % $ (21,667 ) (0.8 )% $ 273,139 10.4 % We believe that we are well positioned to help meet the growing demand for behavioral healthcare services and recorded revenue growth of 7.7% for the year ended December 31, 2024 compared to the year ended December 31, 2023.
For the year ended December 31, 2023, the benefit from income taxes was $(9.7) million, reflecting an effective tax rate of 38.2%, compared to the provision for taxes of $94.1 million, reflecting an effective tax rate of 25.2%, for the year ended December 31, 2022.
For the year ended December 31, 2023, the benefit from income taxes was $(9.7) million, reflecting an effective tax rate of 38.2%, compared to the provision for income taxes of $94.1 million, reflecting an effective tax rate of 25.2%, for the year ended December 31, 2022.
Such Incremental Facilities may not exceed the sum of (i) the greater of $480.0 million and an amount equal to 100% of the Consolidated EBITDA (as defined in the Credit Facility) at the time of determination (the “Incremental Fixed Basket”), and (ii) the additional amounts that would not cause our consolidated senior secured net leverage ratio to exceed 3.5 to 1.0 (the “Incremental Ratio Basket”).
Such Incremental Facilities may not exceed the sum of (i) the greater of $480.0 million and an amount equal to 100% of the Consolidated EBITDA (as defined in the Credit Facility) at the time of determination (the “Incremental Fixed Basket”), and (ii) the additional amounts that would not cause our Consolidated Senior Secured Net Leverage Ratio (as defined in the Credit Facility) to exceed 3.5 to 1.0 (the “Incremental Ratio Basket”).
The indentures governing the 5.500% Senior Notes and the 5.000% Senior Notes (together, the “Senior Notes”) contain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; (vi) merge, consolidate or sell substantially all of our assets; and (vii) create liens on assets.
The indentures governing the 5.500% Senior Notes and the 5.000% Senior Notes (together, the “Senior Notes”) contain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: (i) pay dividends, redeem stock or 43 make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; (vi) merge, consolidate or sell substantially all of our assets; and (vii) create liens on assets.
The non-cash impairment charges included indefinite-lived intangible asset impairments of $5.4 million, property impairments of $2.0 million and operating lease right-of-use asset impairments of $2.4 million. Gain on sale of property. During the year ended December 31, 2023, we recorded a $9.7 million gain on facility property sale. Transaction, legal and other costs.
The non-cash impairment charges included indefinite-lived intangible asset impairments of $5.4 million, property impairments of $2.0 million and operating lease right-of-use asset impairments of $2.4 million. Gain on sale of property. During the year ended December 31, 2023, we recorded a $9.7 million gain on facility property sale. 40 Transaction, legal and other costs.
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. 42 5.000% Senior Notes due 2029 On October 14, 2020, we issued $475.0 million of 5.000% Senior Notes due 2029 (the “5.000% 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. 5.000% Senior Notes due 2029 On October 14, 2020, we issued $475.0 million of 5.000% Senior Notes due 2029 (the “5.000% Senior Notes”).
Generally, the words “anticipate,” “believe,” “continue,” “expect,” “intend,” “estimate,” “project,” “plan” and similar expressions identify forward-looking statements. In particular, statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance contained are forward-looking statements. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections.
Generally, the words “anticipate,” “believe,” “continue,” “expect,” “intend,” “estimate,” “project,” “plan” and similar expressions identify forward-looking statements. In particular, statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are forward-looking statements. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections.
Cash used in continuing investing activities for the year ended December 31, 2023 primarily consisted of payments of $424.1 million of cash paid for capital expenditures, $0.3 million of cash paid for acquisitions and $2.2 million of cash paid for other, offset by proceeds from the sale of property and equipment of $29.4 million.
Cash used in investing activities for the year ended December 31, 2023 primarily consisted of payments of $424.1 million of cash paid for capital expenditures, $0.3 million of cash paid for acquisitions and $2.2 million of cash paid for other, offset by proceeds from the sale of property and equipment of $29.4 million.
Credit Facility On March 17, 2021, we entered into the Credit Facility, which provides for a $600.0 million Revolving Facility and a Term Loan Facility in an initial principal amount of $425.0 million, each maturing on March 17, 2026. The Revolving Facility further provides for a $20.0 million subfacility for the issuance of letters of credit.
Credit Facility On March 17, 2021, we entered into the Credit Facility, which provided for a $600.0 million Revolving Facility and a Term Loan Facility in an initial principal amount of $425.0 million, each maturing on March 17, 2026. The Revolving Facility further provides for a $20.0 million subfacility for the issuance of letters of credit.
Although management believes that the positions taken on previously filed tax returns are reasonable, we nevertheless have established tax and interest reserves in recognition that various taxing authorities may challenge the positions taken by us resulting in additional liabilities for taxes and interest.
Although management believes that the positions taken on previously 47 filed tax returns are reasonable, we nevertheless have established tax and interest reserves in recognition that various taxing authorities may challenge the positions taken by us resulting in additional liabilities for taxes and interest.
The interest rates and the unused line fee on unused commitments related to the Credit Facility are based upon the following pricing tiers: Pricing Tier Consolidated Total Net Leverage Ratio SOFR Loans Base Rate Loans Commitment Fee 1 ≥ 4.50:1.0 2.250 % 1.250 % 0.350 % 2 ≥ 3.75:1.0 2.000 % 1.000 % 0.300 % 3 1.750 % 0.750 % 0.250 % 4 1.500 % 0.500 % 0.200 % 5 1.375 % 0.375 % 0.200 % On January 18, 2024, we entered into the Second Amendment, which provides for the incurrence of $350.0 million of Incremental Term Loans.
The interest rates and the unused line fee on unused commitments related to the Credit Facility are based upon the following pricing tiers: Pricing Tier Consolidated Total Net Leverage Ratio SOFR Loans Base Rate Loans Commitment Fee 1 ≥ 4.50:1.0 2.250 % 1.250 % 0.350 % 2 ≥ 3.75:1.0 2.000 % 1.000 % 0.300 % 3 1.750 % 0.750 % 0.250 % 4 1.500 % 0.500 % 0.200 % 5 1.375 % 0.375 % 0.200 % On January 18, 2024, we entered into the Second Amendment, which provided for the incurrence of $350.0 million of Incremental Term Loans.
In addition, the Credit Facility contains financial covenants requiring us on a consolidated basis to maintain, as of the last day of any consecutive four fiscal quarter period, a consolidated total net leverage ratio of not more than 4.5 to 1.0 (which may be increased to 5.0 to 1.0 for a period of up to four consecutive fiscal quarters following the consummation of certain material acquisitions) and an interest coverage ratio of at least 3.0 to 1.0.
In addition, the Credit Facility contains financial covenants requiring us on a consolidated basis to maintain, as of the last day of any consecutive four fiscal quarter period, a Consolidated Total Net Leverage Ratio of not more than 4.5 to 1.0 (which may be increased to 5.0 to 1.0 for a period of up to four consecutive fiscal quarters following the consummation of certain material acquisitions) and a Consolidated Interest Coverage Ratio (as defined in the Credit Facility) of at least 3.0 to 1.0.
Same facility professional fees were $156.0 million for the year ended December 31, 2023, or 5.4% of revenue, compared to $145.2 million, for the year ended December 31, 2022, or 5.6% of revenue. 38 Supplies.
Same facility professional fees were $156.0 million for the year ended December 31, 2023, or 5.4% of revenue, compared to $145.2 million, for the year ended December 31, 2022, or 5.6% of revenue. Supplies.
Revenue increased $318.3 million, or 12.2%, to $2,928.7 million for the year ended December 31, 2023 from $2,610.4 million for the year ended December 31, 2022.
Year Ended December 31, 2023 compared to the Year Ended December 31, 2022 Revenue. Revenue increased $318.3 million, or 12.2%, to $2,928.7 million for the year ended December 31, 2023 from $2,610.4 million for the year ended December 31, 2022.
Management expects to take advantage of several strategies that are more accessible as a result of our increased size and geographic scale, including continuing a national marketing strategy to attract new patients and referral sources, increasing our volume of out-of-state referrals, providing a broader range of services to new and existing patients and clients and selectively pursuing opportunities to expand our facility and bed count in the U.S. through acquisitions, wholly-owned de novo facilities, joint ventures and bed additions in existing facilities.
Management expects to take advantage of several strategies that are more accessible as a result of our increased size and geographic scale, including continuing a national marketing strategy to attract new patients and referral sources, increasing our volume of out-of-state referrals, providing a broader range of services to new and existing patients and clients and selectively pursuing opportunities to expand our facility and bed count through acquisitions, wholly-owned de novo facilities, joint ventures and bed additions in existing facilities.
The Medicare and Medicaid regulations and various managed care contracts under which these discounts must be calculated are complex, subject to interpretation and adjustment, and may include multiple reimbursement mechanisms for different types of services provided in the Company’s inpatient facilities and cost settlement provisions.
The Medicare and Medicaid regulations and various managed care contracts under which these discounts must be calculated are complex, subject to interpretation and adjustment, and may include multiple reimbursement mechanisms for different types of services provided in our inpatient facilities and cost settlement provisions.
A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. We report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return.
A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. We record a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return.
The projected interest payments reflect interest rates in place on our variable-rate debt at December 31, 2023. (b) Amounts exclude variable components of lease payments. Off-Balance Sheet Arrangements At December 31, 2023, we had standby letters of credit outstanding of $3.5 million related to security for the payment of claims as required by our workers’ compensation insurance program.
The projected interest payments reflect interest rates in place on our variable-rate debt at December 31, 2024. (b) Amounts exclude variable components of lease payments. 44 Off-Balance Sheet Arrangements At December 31, 2024, we had standby letters of credit outstanding of $3.5 million related to security for the payment of claims as required by our workers’ compensation insurance program.
After giving effect to the First Amendment, borrowings under the Credit Facility bear interest at a rate equal to, at our option, either (i) Adjusted Term SOFR plus a margin ranging from 1.375% to 2.250% or (ii) a 41 base rate plus a margin ranging from 0.375% to 1.250%, in each case, depending on our consolidated total net leverage ratio.
After giving effect to the First Amendment, borrowings under the Credit Facility bear interest at a rate equal to, at our option, either (i) Adjusted Term SOFR plus a margin ranging from 1.375% to 2.250% or (ii) a base rate plus a margin ranging from 0.375% to 1.250%, in each case, depending on our Consolidated Total Net Leverage Ratio (as defined in the Credit Facility).
On March 30, 2023, we entered into the First Amendment, which replaces LIBOR as the reference rate applicable to borrowings under the Credit Facility with Adjusted Term SOFR.
On March 30, 2023, we entered into the First Amendment, which replaced LIBOR as the reference rate applicable to borrowings under the Credit Facility with Adjusted Term SOFR.
The Company’s lower pre-tax results for the year yields higher volatility in the items impacting the effective tax rate for the year ended December 31, 2023 when compared to prior periods.
Our lower pre-tax results for the year ended December 31, 2023 yields higher volatility in the items impacting the effective tax rate for the year ended December 31, 2023 when compared to prior periods.
After giving effect to the Incremental Term Loans, the Credit Facility requires quarterly principal repayments for the Term Loan Facility of approximately $10.2 million for the quarter ending March 31, 2024, $15.4 million for each quarter ending from June 30, 2024 to March 31, 2025, and $20.5 million for each quarter ending from June 30, 2025 to December 31, 2025.
After giving effect to the Incremental Term Loans, the Credit Facility requires quarterly principal repayments for the Term Loan Facility of approximately $15.4 million for March 31, 2025, and $20.5 million for each quarter ending from June 30, 2025 to December 31, 2025.
During the year ended December 31, 2023, we borrowed $40.0 million on the Revolving Facility and repaid $35.0 million of the balance outstanding. During the year ended December 31, 2022, we repaid $95.0 million of the balance outstanding on the Revolving Facility.
During the year ended December 31, 2023, we borrowed $40.0 million on the Revolving Facility and repaid $35.0 million of the balance outstanding.
Same facility revenue increased by $309.3 million, or 12.0%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, resulting from same facility growth in patient days of 5.1%, an increase in same facility revenue per patient day of 6.5% and an increase in same facility admissions of 4.9%.
Same facility revenue increased by $309.3 million, or 12.0%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, resulting from same facility growth in patient days of 5.1%, an increase in same facility revenue per day of 6.5% and an increase in the average length of stay of 4.9%.
Routine or maintenance capital expenditures, including information technology capital expenditures, were approximately 3% of revenue for the year ended December 31, 2023.
Routine or maintenance capital expenditures, including information technology capital expenditures, were approximately 3% of revenue for the year ended December 31, 2024.
We have obtained reinsurance coverage from a third-party to cover claims in excess of those limits. The reinsurance policy has a coverage limit of $75.0 million or $70.0 million in the aggregate for certain other claims through August 31, 2023 and $78.0 million or $75.0 million in the aggregate for certain other claims thereafter.
We have obtained reinsurance coverage from a third-party to cover claims in excess of those limits. The reinsurance policy has a coverage limit of $78.0 million or $75.0 million in the aggregate for certain other claims through August 31, 2024 and $80.0 million or $75.0 million in the aggregate for certain other claims thereafter.
Salaries, wages and benefits (“SWB”) expense was $1,572.3 million for the year ended December 31, 2023 compared to $1,393.4 million for the year ended December 31, 2022, an increase of $178.9 million. SWB expense included $32.3 million and $29.6 million of equity-based compensation expense for the years ended December 31, 2023 and 2022, respectively.
SWB expense was $1,572.3 million for the year ended December 31, 2023 compared to $1,393.4 million for the year ended December 31, 2022, an increase of $178.9 million. SWB expense included $32.3 million and $29.6 million of equity-based compensation expense for the years ended December 31, 2023 and 2022, respectively.
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 or that may be asserted in the future.
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 such cases or that may be asserted in the future by the plaintiffs in those cases.
We had $516.5 million of availability under the Revolving Facility and had standby letters of credit outstanding of $3.5 million related to security for the payment of claims required by our workers’ compensation insurance program at December 31, 2023.
We had $226.5 million of availability under the Revolving Facility and had standby letters of credit outstanding of $3.5 million related to security for the payment of claims required by our workers’ compensation insurance program at December 31, 2024.
However, there can be no assurance that any such adjustments and final settlements will not have a material effect on the Company’s financial condition or results of operations. Our cost report payables were $9.3 million and $13.7 million as of December 31, 2023 and 2022, respectively, and were included in other current liabilities on the consolidated balance sheet.
However, there can be no assurance that any such adjustments and final settlements will not have a material effect on our financial condition or results of operations. Our cost report payables were $0.8 million and $9.3 million as of December 31, 2024 and 2023, respectively, and were included in other current liabilities on the consolidated balance sheet.
We recorded unfavorable adjustments of $5.3 million and $5.9 million to our estimated liability for self-insured professional and general liability claims during the years ended December 31, 2023 and 2022, respectively, relating to the settlement or expected settlement of certain prior year claims.
We recorded unfavorable adjustments of $10.1 million and $5.3 million to our estimated liability for self-insured professional and general liability claims during the years ended December 31, 2024 and 2023, respectively, relating to the settlement or expected settlement of certain prior year claims.
During the year ended December 31, 2023, we recorded non-cash indefinite-lived intangible asset impairment charges of $5.4 million related to the closure of certain facilities, which is included in loss on impairment in the condensed consolidated statements of operations.
During the year ended December 31, 2024, we recorded non-cash indefinite-lived intangible asset impairment charges of $3.5 million related to the closure of certain facilities, which is included in loss on impairment in the consolidated statements of operations.
Fair value estimates are based on independent appraisals, market values of comparable assets or internal evaluations of future net cash flows. During the year ended December 31, 2023, we recorded non-cash property impairment charges of $2.0 million related to the closure of certain facilities, which is included in loss on impairment in the condensed consolidated statements of operations.
Fair value estimates are based on independent appraisals, market values of comparable assets or internal evaluations of future net cash flows. During the year ended December 31, 2024, we recorded non-cash property impairment charges of $12.4 million related to the closure of certain facilities, which is included in loss on impairment in the consolidated statements of operations.
These risks, uncertainties and other factors include, but are not limited to, the following: • the impact of competition for staffing, labor shortages and higher turnover rates on our labor costs and profitability; • the impact of increases in inflation and rising interest rates; • compliance with laws and government regulations; • our indebtedness, our ability to meet our debt obligations, and our ability to incur substantially more debt; • the impact of payments received from the government and third-party payors on our revenue and results of operations; • the impact of volatility in the global capital and credit markets, as well as significant developments in macroeconomic and political conditions that are out of our control; • the impact of general economic and employment conditions, including increased construction and other costs due to inflation, on our business and future results of operations; • difficulties in successfully integrating the operations of acquired facilities or realizing the potential benefits and synergies of our acquisitions and joint ventures; • our ability to recruit and retain quality psychiatrists and other physicians, nurses, counselors and other medical support personnel; • the occurrence of patient incidents, which could result in negative media coverage, adversely affect the price of our securities and result in incremental regulatory burdens and governmental investigations; • the impact of 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; • the outcome of pending litigation; • the impact of carrying a large self-insured retention, the possibilities of being responsible for significant amounts not covered by insurance, premium increases and insurance not being available on acceptable terms because of our claims experience; • the impact of governmental investigations, regulatory actions and whistleblower lawsuits; • any failure to comply with the terms of our corporate integrity agreement with the OIG; • the impact of healthcare reform in the U.S.; • our acquisition, joint venture and wholly-owned de novo strategies, which expose us to a variety of operational and financial risks, as well as legal and regulatory risks; • the impact of state efforts to regulate the construction or expansion of healthcare facilities on our ability to operate and expand our operations; • our ability to implement our business strategies; 35 • the impact of Medicaid eligibility determinations associated with the end of COVID-19 related Medicaid continuing coverage requirements; • the impact of disruptions on our inpatient and outpatient volumes caused by pandemics, epidemics or outbreaks of infectious diseases, such as the COVID-19 pandemic; • our dependence on key management personnel, key executives and local facility management personnel, and the impact of any disruptions from the recent transition of various executives; • our restrictive covenants, which may restrict our business and financing activities; • the impact of adverse weather conditions and climate change, including the effects of hurricanes, wildfires and other natural disasters, and any resulting outmigration; • the risk of a cybersecurity incident and any resulting adverse impact on our operations or violation of laws and regulations regarding information privacy; • the impact of our business if our information systems fail or our databases are destroyed or damaged; • our future cash flow and earnings; • the impact of our highly competitive industry on patient volumes; • our ability to cultivate and maintain relationships with referral sources; • the impact of the trend for insurance companies and managed care organizations to enter into sole source contracts on our ability to obtain patients; • the impact of value-based purchasing programs on our revenue; • our potential inability to extend leases at expiration; • the impact of controls designed to reduce inpatient services on our revenue; • the impact of different interpretations of accounting principles on our results of operations or financial condition; • the impact of environmental, health and safety laws and regulations, especially in locations where we have concentrated operations; • the impact of laws and regulations relating to privacy and security of patient health information and standards for electronic transactions; • the impact of a change in the mix of our earnings, adverse changes in our effective tax rate and adverse developments in tax laws generally; • changes in interpretations, assumptions and expectations regarding recent tax legislation, including provisions of the CARES Act and additional guidance that may be issued by federal and state taxing authorities; • failure to maintain effective internal control over financial reporting; • the impact of fluctuations in our operating results, quarter to quarter earnings and other factors on the price of our securities; and • those risks and uncertainties described from time to time in our filings with the SEC.
These risks, uncertainties and other factors include, but are not limited to, the following: • the impact of internal or governmental investigations, regulatory actions, whistleblower lawsuits and other legal proceedings; • the impact of competition for staffing, labor shortages and higher turnover rates on our labor costs and profitability; • the impact of inflationary pressure and interest rate volatility; • compliance with laws and government regulations; • our indebtedness, our ability to meet our debt obligations, and our ability to incur substantially more debt; • the impact of payments received from the government and third-party payors on our revenue and results of operations; • the impact of volatility in the global capital and credit markets, as well as significant developments in macroeconomic and political conditions that are out of our control; • the impact of general economic and employment conditions on our business and future results of operations, including increased construction and other costs due to inflation, the imposition of tariffs or trade disputes; • difficulties in successfully integrating the operations of acquired facilities or realizing the potential benefits and synergies of our acquisitions and joint ventures; • our ability to recruit and retain quality psychiatrists and other physicians, nurses, counselors and other medical support personnel; • the occurrence of patient incidents, which could result in negative media coverage, adversely affect the price of our securities and result in incremental regulatory burdens and governmental investigations; • the impact of 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; • the outcome of pending litigation; • the impact of carrying a large self-insured retention, the possibilities of being responsible for significant amounts not covered by insurance, premium increases and insurance not being available on acceptable terms because of our claims experience; • 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; • our acquisition, joint venture and wholly-owned de novo strategies, which expose us to a variety of operational and financial risks, as well as legal and regulatory risks; • the impact of state efforts to regulate the construction or expansion of healthcare facilities on our ability to operate and expand our operations; 35 • our ability to implement our business strategies; • the impact of disruptions on our inpatient and outpatient volumes caused by pandemics, epidemics or outbreaks of infectious diseases; • our dependence on key management personnel, key executives and local facility management personnel; • our restrictive covenants, which may restrict our business and financing activities; • the impact of adverse weather conditions and climate change, including the effects of hurricanes, wildfires and other natural disasters, and any resulting outmigration; • the risk of a cybersecurity incident and any resulting adverse impact on our operations or violation of laws and regulations regarding information privacy; • the impact of our business if our information systems fail or our databases are destroyed or damaged; • our ability to access capital on acceptable terms; • our future cash flow and earnings; • the impact of our highly competitive industry on patient volumes; • our ability to cultivate and maintain relationships with referral sources; • the impact of the trend for insurance companies and managed care organizations to enter into sole source contracts on our ability to obtain patients; • the impact of value-based purchasing programs on our revenue; • our potential inability to extend leases at expiration; • the impact of controls designed to reduce inpatient services on our revenue; • the impact of different interpretations of accounting principles on our results of operations or financial condition; • the impact of environmental, health and safety laws and regulations, especially in locations where we have concentrated operations; • the impact of laws and regulations relating to privacy and security of patient health information and standards for electronic transactions; • the impact of a change in the mix of our earnings, adverse changes in our effective tax rate and adverse developments in tax laws generally; • changes in interpretations, assumptions and expectations regarding tax legislation and policy, including provisions that may be issued by federal and state taxing authorities; • failure to maintain effective internal control over financial reporting; • the impact of fluctuations in our operating results, quarter to quarter earnings and other factors on the price of our securities; and • those risks and uncertainties described from time to time in our filings with the SEC.
Consistent with the same 39 facility patient day growth in 2021, the growth in same facility patient days for the year ended December 31, 2022 compared to the year ended December 31, 2021 resulted from the addition of beds to our existing facilities and ongoing demand for our services. Salaries, wages and benefits.
Consistent with the same facility patient day growth in 2023, the growth in same facility patient days for the year ended December 31, 2024 compared to the year ended December 31, 2023 resulted from the addition of beds to our existing facilities and ongoing demand for our services. Salaries, wages and benefits.
Depreciation expense was $132.3 million, $117.8 million and $106.7 million for the years ended December 31, 2023, 2022 and 2021, respectively. 46 The carrying values of long-lived assets are reviewed for possible impairment whenever events, circumstances or operating results indicate that the carrying amount of an asset may not be recoverable.
Depreciation expense was $149.6 million, $132.3 million and $117.8 million for the years ended December 31, 2024, 2023 and 2022, respectively. The carrying values of long-lived assets are reviewed for possible impairment whenever events, circumstances or operating results indicate that the carrying amount of an asset may not be recoverable.
Based on our borrowing level at December 31, 2023, a hypothetical 1% increase in interest rates would decrease our pretax income on an annual basis by approximately $4.3 million. 44 Critical Accounting Policies Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S.
Based on our borrowing level at December 31, 2024, a hypothetical 1% increase in interest rates would decrease our pretax income on an annual basis by approximately $9.6 million. Critical Accounting Policies Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S.
A portion of our professional liability risks are insured through a wholly-owned insurance subsidiary providing coverage for up to $5.0 million per claim and $10.0 million for certain other claims through August 31, 2023 and $7.0 million and $10.0 million for certain other claims thereafter.
A portion of our professional liability risks are insured through a wholly-owned insurance subsidiary providing coverage for up to $7.0 million per claim and $10.0 million for certain other claims through August 31, 2024 and $10.0 million per claim, $15.0 million per claim for certain other claims and $25.0 million for certain batched claims thereafter.
As of our annual impairment tests on October 1, 2023, October 1, 2022 and October 1, 2021, we had one reporting unit, behavioral healthcare services. The fair value of our behavioral healthcare services reporting unit substantially exceeded its carrying value, and therefore no impairment was recorded.
As of our annual impairment test on October 1, 2024, we had one reporting unit, behavioral healthcare services. The fair value of our behavioral healthcare services reporting unit substantially exceeded its carrying value, and therefore no impairment was recorded.
The workers’ compensation liability was $26.8 million at December 31, 2023, of which $12.0 million was included in accrued salaries and benefits and $14.8 million was included in other long-term liabilities, and such liability was $24.2 million at December 31, 2022, of which $12.0 million was included in accrued salaries and benefits and $12.2 million was included in other long-term liabilities.
The workers’ compensation liability was $30.7 million at December 31, 2024, of which $12.0 million was included in accrued salaries and benefits and $18.7 million was included in other long-term liabilities, and such liability was $26.8 million at December 31, 2023, of which $12.0 million was included in accrued salaries and benefits and $14.8 million was included in other long-term liabilities.
Similar with many other healthcare providers and other industries across the country, we continue to navigate a tight labor market. While we experienced higher wage inflation in 2023 compared to long-term historical averages, we have seen stability in our labor costs and our proactive focus helps us manage through this environment.
Similar with 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.
Same facility rents and leases were $37.0 million for the year ended December 31, 2022, or 1.5% of revenue, compared to $35.0 million for the year ended December 31, 2021, or 1.5% of revenue. Other operating expenses. Other operating expenses consisted primarily of purchased services, utilities, insurance, travel and repairs and maintenance expenses.
Same facility rents and leases were $42.7 million for the year ended December 31, 2024, or 1.4% of revenue, compared to $42.0 million for the year ended December 31, 2023, or 1.5% of revenue. Other operating expenses. Other operating expenses consisted primarily of purchased services, utilities, insurance, travel and repairs and maintenance expenses.
Market Risk Our interest expense is sensitive to changes in market interest rates. Our long-term debt outstanding at December 31, 2023 was composed of $915.9 million of fixed-rate debt and $426.7 million of variable-rate debt with interest based on Adjusted Term SOFR plus an applicable margin.
Market Risk Our interest expense is sensitive to changes in market interest rates. Our long-term debt outstanding at December 31, 2024 was composed of $917.6 million of fixed-rate debt and $962.5 million of variable-rate debt with interest based on Adjusted Term SOFR plus an applicable margin.
The professional and general liability reserve was $103.6 million at December 31, 2022, of which $12.1 million was included in other accrued liabilities and $91.5 million was included in other long-term liabilities. We estimate receivables for the portion of professional and general liability reserves that are recoverable under our insurance policies.
The professional and general liability reserve was $109.4 million at December 31, 2023, of which $12.5 million was included in other accrued liabilities and $96.9 million was included in other long-term liabilities. We estimate receivables for the portion of professional and general liability reserves that are recoverable under our insurance policies.
We have the ability to increase the amount of the Credit Facility, which may take the form of increases to the Revolving Facility or the Term Loan Facility or the issuance of one or more incremental term loan facilities (collectively, the “Incremental Facilities”), upon obtaining additional commitments from new or existing lenders and the satisfaction of customary conditions precedent for such Incremental Facilities.
The remaining outstanding principal balance of the Term Loan Facility is due on the maturity date of March 17, 2026. 42 We have the ability to increase the amount of the Credit Facility, which may take the form of increases to the Revolving Facility or the Term Loan Facility or the issuance of one or more incremental term loan facilities (collectively, the “Incremental Facilities”), upon obtaining additional commitments from new or existing lenders and the satisfaction of customary conditions precedent for such Incremental Facilities.
The Credit Facility also includes events of default customary for facilities of this type and upon the occurrence of such events of default, among other things, all outstanding loans under the Credit Facility may be accelerated, the lenders’ commitments terminated, and/or the lenders may exercise collateral remedies. At December 31, 2023, we were in compliance with all financial covenants.
The Credit Facility also includes events of default customary for facilities of this type and upon the occurrence of such events of default, among other things, all outstanding loans under the Credit Facility may be accelerated, the lenders’ commitments terminated, and/or the lenders may exercise collateral remedies.
Acquisitions In July 2023, we signed a definitive agreement to acquire substantially all of the assets of Turning Point, a 76-bed specialty provider of substance use disorder and primary mental health treatment services that supports the Salt Lake City, Utah, metropolitan market. Turning Point provides a full continuum of treatment services, including residential, partial hospitalization and intensive outpatient services.
Acquisitions On February 22, 2024, we acquired substantially all of the assets of Turning Point, a 76-bed specialty provider of substance use disorder and primary mental health treatment services that supports the Salt Lake City, Utah, metropolitan market. Turning Point provides a full continuum of treatment services, including residential, partial hospitalization and intensive outpatient services.
Cash used in continuing financing activities for the year ended December 31, 2023 primarily consisted of repurchase of shares for payroll tax withholdings, net of proceeds from stock option exercises of $44.3 million, principal payments on revolving credit facility of $35.0 million, principal payments on long-term debt of $21.3 million and distributions to noncontrolling partners in joint ventures of $5.1 million, offset by borrowing on revolving credit facility of $40.0 million and contributions from noncontrolling partners in joint ventures of $3.0 million.
Cash provided by financing activities for the year ended December 31, 2024 primarily consisted of borrowings on long-term debt of $350.0 million, borrowings on revolving credit facility of $305.0 million and contributions from noncontrolling partners in joint ventures of $5.2 million, offset by principal payments on long-term debt of $56.3 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 withholdings, net of proceeds from stock option exercises of $1.3 million.
The professional and general liability reserve was $109.4 million at December 31, 2023, of which $12.5 million was included in other accrued liabilities and $96.9 million was included in other long-term liabilities.
The professional and general liability reserve was $87.5 million at December 31, 2024, of which $12.5 million was included in other accrued liabilities and $75.0 million was included in other long-term liabilities.
Management believes that we are positioned as a leading platform in a highly fragmented industry under the direction of an experienced management team that has significant industry expertise.
We are the leading publicly traded pure-play provider of behavioral healthcare services in the U.S. Management believes that we are positioned as a leading platform in a highly fragmented industry under the direction of an experienced management team that has significant industry expertise.
Cash paid for capital expenditures for the year ended December 31, 2023 was $424.1 million, consisting of routine or maintenance capital expenditures of $99.6 million and expansion capital expenditures of $324.5 million. We define expansion capital expenditures as those that increase the capacity of our facilities or otherwise enhance revenue.
Cash paid for capital expenditures for the year ended December 31, 2024 was $690.4 million, consisting of routine or maintenance capital expenditures of $104.0 million and expansion capital expenditures of $586.4 million. We define expansion capital expenditures as those that increase the capacity of our facilities or otherwise enhance revenue.
The following table presents revenue by payor type and as a percentage of revenue for continuing operations for the years ended December 31, 2023, 2022 and 2021 (in thousands): Year Ended December 31, 2023 2022 2021 Amount % Amount % Amount % Commercial $ 820,701 28.0 % $ 788,895 30.2 % $ 684,292 29.6 % Medicare 441,761 15.1 % 394,227 15.1 % 364,598 15.8 % Medicaid 1,578,518 53.9 % 1,319,600 50.6 % 1,147,884 49.6 % Self-Pay 67,583 2.3 % 76,050 2.9 % 93,425 4.0 % Other 20,175 0.7 % 31,627 1.2 % 24,195 1.0 % Revenue $ 2,928,738 100.0 % $ 2,610,399 100.0 % $ 2,314,394 100.0 % 45 The following tables present a summary of our aging of accounts receivable at December 31, 2023 and 2022: December 31, 2023 Current 30-90 90-150 >150 Total Commercial 17.3 % 5.4 % 3.1 % 9.5 % 35.3 % Medicare 9.3 % 1.4 % 0.5 % 1.1 % 12.3 % Medicaid 33.4 % 5.4 % 2.5 % 4.7 % 46.0 % Self-Pay 1.4 % 1.3 % 1.2 % 2.5 % 6.4 % Other 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Total 61.4 % 13.5 % 7.3 % 17.8 % 100.0 % December 31, 2022 Current 30-90 90-150 >150 Total Commercial 18.0 % 5.3 % 2.8 % 8.4 % 34.5 % Medicare 11.5 % 1.7 % 0.7 % 1.4 % 15.3 % Medicaid 31.7 % 4.5 % 2.6 % 4.7 % 43.5 % Self-Pay 1.2 % 1.4 % 1.2 % 2.6 % 6.4 % Other 0.2 % 0.0 % 0.0 % 0.1 % 0.3 % Total 62.6 % 12.9 % 7.3 % 17.2 % 100.0 % Insurance We are subject to medical malpractice and other lawsuits due to the nature of the services we provide.
The net adjustments to estimated cost report settlements resulted in an increase to revenue of $0.2 million, $1.8 million and $0.1 million for the years ended December 31, 2024, 2023 and 2022, respectively. 45 The following table presents revenue by payor type and as a percentage of revenue for the years ended December 31, 2024, 2023 and 2022 (in thousands): Year Ended December 31, 2024 2023 2022 Amount % Amount % Amount % Commercial $ 820,828 26.0 % $ 820,701 28.0 % $ 788,895 30.2 % Medicare 447,078 14.2 % 441,761 15.1 % 394,227 15.1 % Medicaid 1,781,615 56.5 % 1,578,518 53.9 % 1,319,600 50.6 % Self-Pay 60,101 1.9 % 67,583 2.3 % 76,050 2.9 % Other 44,341 1.4 % 20,175 0.7 % 31,627 1.2 % Revenue $ 3,153,963 100.0 % $ 2,928,738 100.0 % $ 2,610,399 100.0 % The following tables present a summary of our aging of accounts receivable at December 31, 2024 and 2023: December 31, 2024 Current 30-90 90-150 >150 Total Commercial 17.0 % 4.7 % 2.5 % 8.2 % 32.4 % Medicare 9.0 % 1.6 % 0.6 % 1.2 % 12.4 % Medicaid 33.9 % 5.6 % 2.9 % 5.2 % 47.6 % Self-Pay 1.5 % 1.7 % 1.5 % 2.9 % 7.6 % Total 61.4 % 13.6 % 7.5 % 17.5 % 100.0 % December 31, 2023 Current 30-90 90-150 >150 Total Commercial 17.3 % 5.4 % 3.1 % 9.5 % 35.3 % Medicare 9.3 % 1.4 % 0.5 % 1.1 % 12.3 % Medicaid 33.4 % 5.4 % 2.5 % 4.7 % 46.0 % Self-Pay 1.4 % 1.3 % 1.2 % 2.5 % 6.4 % Total 61.4 % 13.5 % 7.3 % 17.8 % 100.0 % Insurance We are subject to medical malpractice and other lawsuits due to the nature of the services we provide.
At December 31, 2023, we operated 253 behavioral healthcare facilities with approximately 11,200 beds in 38 states and Puerto Rico. During the year ended December 31, 2023, we added 595 beds, consisting of 302 added to existing facilities 36 and 293 added through the opening of one wholly-owned facility and two joint venture facilities, and we opened six CTCs.
At December 31, 2024, we operated 262 behavioral healthcare facilities with approximately 11,850 beds in 39 36 states and Puerto Rico. During the year ended December 31, 2024, we added 776 beds, consisting of 312 added to existing facilities and 464 added through the opening of four wholly-owned facilities and one joint venture facility, and we opened nine CTCs.
Same facility SWB expense was $1,208.4 million for the year ended December 31, 2022, or 48.3% of revenue, compared to $1,112.4 million for the year ended December 31, 2021, or 48.5% of revenue. Professional fees.
Same facility SWB expense was $1,491.9 million for the year ended December 31, 2024, or 48.1% of revenue, compared to $1,393.6 million for the year ended December 31, 2023, or 48.4% of revenue. Professional fees.
Same facility revenue increased by $210.9 million, or 9.2%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, resulting from same facility growth in patient days of 2.5%, an increase in same facility revenue per day of 6.5% and an increase in the average length of stay of 3.6%.
Same facility revenue increased by $220.7 million, or 7.7%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, resulting from same facility growth in patient days of 3.2%, an increase in same facility revenue per patient day of 4.3% and an increase in same facility admissions of 1.3%.
Cash used in continuing investing activities for the year ended December 31, 2022 primarily consisted of payments of $296.1 million of cash paid for capital expenditures, $9.5 million of cash paid for acquisitions and $7.2 million of cash paid for other, offset by proceeds from the sale of property and equipment of $7.1 million.
Cash used in investing activities for the year ended December 31, 2024 primarily consisted of payments of $690.4 million of cash paid for capital expenditures, $53.6 million of cash paid for acquisitions and $3.0 million of cash paid for other, offset by proceeds from the sale of property and equipment of $10.4 million.
Same facility other operating expenses were $314.9 million for the year ended December 31, 2022, or 12.6% of revenue, compared to $290.0 million for the year ended December 31, 2021, or 12.6% of revenue. Income from provider relief fund.
Same facility other operating expenses were $408.3 million for the year ended December 31, 2024, or 13.2% of revenue, compared to $361.8 million for the year ended December 31, 2023, or 12.6% of revenue. Income from provider relief fund.
The following table sets forth percent changes in same facility operating data for our continuing operations for the years ended December 31, 2023 and 2022 compared to the previous years: Year Ended December 31, 2023 2022 Same Facility Results (a) Revenue growth 12.0% 9.2% Patient days growth 5.1% 2.5% Admissions growth 4.9% (1.0)% Average length of stay change (b) 0.2% 3.6% Revenue per patient day growth 6.5% 6.5% Adjusted EBITDA margin change (c) 60 bps 70 bps Adjusted EBITDA margin excluding income from provider relief fund (d) 120 bps 60 bps (a) Results for the periods presented include facilities we have operated more than one year and exclude certain closed services.
We remain focused on ensuring that we have the level of staff to meet the demand in our markets across 39 states and Puerto Rico. 37 The following table sets forth percent changes in same facility operating data for the years ended December 31, 2024 and 2023 compared to the previous years: Year Ended December 31, 2024 2023 Same Facility Results (a) Revenue growth 7.7% 12.0% Patient days growth 3.2% 5.1% Admissions growth 1.3% 4.9% Average length of stay change (b) 1.9% 0.2% Revenue per patient day growth 4.3% 6.5% (a) Results for the periods presented include facilities we have operated more than one year and exclude certain closed services.
Same facility supplies expense was $94.7 million for the year ended December 31, 2022, or 3.8% of revenue, compared to $89.8 million for the year ended December 31, 2021, or 3.9% of revenue. Rents and leases.
Same facility supplies expense was $109.9 million for the year ended December 31, 2024, or 3.5% of revenue, compared to $103.1 million for the year ended December 31, 2023, or 3.6% of revenue. Rents and leases.
The Senior Notes issued by us are guaranteed by each of our subsidiaries that guaranteed our obligations under the Credit Facility. The guarantees are full and unconditional and joint and several.
The Senior Notes issued by us are guaranteed by each of our subsidiaries that guaranteed our obligations under the Credit Facility. The guarantees are full and unconditional and joint and several. We may redeem the Senior Notes at our option, in whole or part, at the dates and amounts set forth in the indentures.
Professional fees were $158.0 million for the year ended December 31, 2022, or 6.1% of revenue, compared to $136.7 million for the year ended December 31, 2021, or 5.9% of revenue.
Professional fees were $189.7 million for the year ended December 31, 2024, or 6.0% of revenue, compared to $176.0 million for the year ended December 31, 2023, or 6.0% of revenue.
Rents and leases were $45.5 million for the year ended December 31, 2022, or 1.7% of revenue, compared to $38.5 million for the year ended December 31, 2021, or 1.7% of revenue.
Rents and leases were $47.9 million for the year ended December 31, 2024, or 1.5% of revenue, compared to $46.6 million for the year ended December 31, 2023, or 1.6% of revenue.
Desert Hills Litigation As described in more detail in Note 11 – Commitments and Contingencies in the accompanying notes to our consolidated financial statements, on October 30, 2023, we entered into settlement agreements in connection with three of the lawsuits in our Desert Hills Litigation styled Inman v. Garcia, et al, Case No. D-117-CV-2019-00136 , Rael v.
Desert Hills Litigation As described in more detail in Note 11 — Commitments and Contingencies in the accompanying notes to our consolidated financial statements, on October 30, 2023, we entered into settlement agreements in connection with the three lawsuits related to our subsidiary Youth and Family Centered Services of New Mexico.
Other operating expenses were $349.3 million for the year ended December 31, 2022, or 13.4% of revenue, compared to $301.3 million for the year ended December 31, 2021, or 13.0% of revenue.
Other operating expenses were $440.8 million for the year ended December 31, 2024, or 14.0% of revenue, compared to $388.9 million for the year ended December 31, 2023, or 13.3% of revenue.
Salaries, wages and benefits (“SWB”) expense was $1,393.4 million for the year ended December 31, 2022 compared to $1,243.8 million for the year ended December 31, 2021, an increase of $149.6 million. SWB expense included $29.6 million and $37.5 million of equity-based compensation expense for the years ended December 31, 2022 and 2021, respectively.
Salaries, wages and benefits (“SWB”) expense was $1,691.0 million for the year ended December 31, 2024 compared to $1,572.3 million for the year ended December 31, 2023, an increase of $118.7 million. SWB expense included $37.1 million and $32.3 million of equity-based compensation expense for the years ended December 31, 2024 and 2023, respectively.
Same facility professional fees were $132.6 million for the year ended December 31, 2022, or 5.3% of revenue, compared to $124.1 million, for the year ended December 31, 2021, or 5.4% of revenue. Supplies.
Same facility professional fees were $166.0 million for 38 the year ended December 31, 2024, or 5.4% of revenue, compared to $156.2 million, for the year ended December 31, 2023, or 5.4% of revenue. Supplies.
Excluding equity-based compensation expense, SWB expense was $1,363.8 million, or 52.2% of revenue, for the year ended December 31, 2022, compared to $1,206.3 million, or 52.1% of revenue, for the year ended December 31, 2021.
Excluding equity-based compensation expense, SWB expense was $1,653.9 million, or 52.4% of revenue, for the year ended December 31, 2024, compared to $1,540.0 million, or 52.6% of revenue, for the year ended December 31, 2023.
Cash used in continuing investing activities for the year ended December 31, 2023 was $397.2 million compared to $305.8 million for the year ended December 31, 2022.
Days sales outstanding at December 31, 2024 was 43 compared to 45 at December 31, 2023. Cash used in investing activities for the year ended December 31, 2024 was $736.5 million compared to $397.2 million for the year ended December 31, 2023.
For the year ended December 31, 2022, we recorded $21.5 million of income from provider relief fund related to PHSSE Fund and ARP funds received in 2021 and 2022. For the year ended December 31, 2021, we recorded $17.9 million of income from provider relief fund related to PHSSE Fund funds received in 2021 and 2020. Depreciation and amortization.
For the year ended December 31, 2023, we recorded $6.4 million of income from provider relief fund related to ARP funds received in 2022. Depreciation and amortization. Depreciation and amortization expense was $149.6 million for the year ended December 31, 2024, or 4.7% of revenue, compared to $132.3 million for the year ended December 31, 2023, or 4.5% of revenue.
Cash used in continuing financing activities for the year ended December 31, 2022 primarily consisted of principal payments on revolving credit facility of $95.0 million, principal payments on long-term debt of $18.6 million, repurchase of shares for payroll tax withholdings, net of proceeds from stock option exercises of $6.2 million, acquisition of ownership interests from noncontrolling partners of $5.5 million and distributions to noncontrolling partners in joint ventures of $1.0 million, offset by contributions from noncontrolling partners in joint ventures of $15.4 million and other of $0.1 million.
Cash used in financing activities for the year ended December 31, 2023 primarily consisted of repurchase of shares for payroll tax withholdings, net of proceeds from stock option exercises of $44.3 million, principal payments on revolving credit facility of $35.0 million, principal payments on long-term debt of $21.3 million and distributions to noncontrolling partners in joint ventures of $5.1 million, offset by borrowing on revolving credit facility of $40.0 million and contributions from noncontrolling partners in joint ventures of $3.0 million. 41 We had total available cash and cash equivalents of $76.3 million, $100.1 million and $97.6 million at December 31, 2024, 2023 and 2022, respectively, of which approximately $7.7 million, $11.3 million and $3.7 million, respectively, was held by our foreign subsidiaries.
Supplies expense was $100.2 million for the year ended December 31, 2022, or 3.8% of revenue, compared to $90.7 million for the year ended December 31, 2021, or 3.9% of revenue.
Supplies expense was $112.7 million for the year ended December 31, 2024, or 3.6% of revenue, compared to $106.0 million for the year ended December 31, 2023, or 3.6% of revenue.
Cash paid for capital expenditures for the year ended December 31, 2022 was $296.1 million, consisting of routine or maintenance capital expenditures of $60.5 million and expansion capital expenditures of $235.6 million. Cash used in continuing financing activities for the year ended December 31, 2023 was $62.7 million compared to $110.9 million for the year ended December 31, 2022.
Cash paid for capital expenditures for the year ended December 31, 2023 was $424.1 million, consisting of routine or maintenance capital expenditures of $99.6 million and expansion capital expenditures of $324.5 million.
Financial information for our combined non-guarantor entities has been excluded pursuant to SEC Regulation S-X Rule 13-01.
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.
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 consolidated financial statements, except transactions between combining entities have been eliminated.
Supplemental Guarantor Financial Information 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.
Transaction, legal and other costs represent legal, accounting, termination, restructuring, management transition, acquisition and other similar costs incurred in the respective periods, as summarized below (in thousands): Year Ended December 31, 2023 2022 Legal, accounting and other acquisition-related costs $ 31,335 $ 5,741 Management transition costs 23,283 11,575 Termination and restructuring costs 7,408 6,476 $ 62,026 $ 23,792 (Benefit from) provision for income taxes.
Transaction, legal and other costs represent legal, accounting, government investigation, termination, restructuring, management transition, acquisition and other similar costs incurred in the respective periods, as summarized below (in thousands): Year Ended December 31, 2023 2022 Management transition costs $ 23,283 $ 11,575 Government investigations 18,796 504 Legal, accounting and other acquisition-related costs 12,705 5,778 Termination and restructuring costs 7,242 5,935 $ 62,026 $ 23,792 Government investigations include legal fees and settlement costs related to certain litigation, including the matters referenced in Note 11 — Commitments and Contingencies.
Loss from discontinued operations for the year ended December 31, 2021 was $12.6 million. 40 Provision for income taxes. For the year ended December 31, 2022, the provision for income taxes was $94.1 million, reflecting an effective tax rate of 25.2%, compared to $67.6 million, reflecting an effective tax rate of 24.5%, for the year ended December 31, 2021.
For the year ended December 31, 2024, the provision for income taxes was $77.4 million, reflecting an effective tax rate of 22.6%, compared to the benefit from taxes of $(9.7) million, reflecting an effective tax rate of 38.2%, for the year ended December 31, 2023.
Garcia, et al, Case No. D-117-CV-2019-00135 and Endicott-Quinones v. Garcia, et al, Case No. D-117-CV-2019-00137 (collectively the “Cases”). The settlement agreements were approved by the District Court in December 2023 and fully resolve each of the Cases with no admission of liability or wrongdoing by us.
The settlement agreements were approved by the New Mexico State District Court in December 2023 and fully resolved such cases with no admission of liability or wrongdoing by us.
Such receivable was $62.3 million at December 31, 2023, of which $33.6 million was included in other current assets and $28.7 million was included in other assets, and such receivable was $37.8 million at December 31, 2022, of which $10.2 million was included in other current assets and $27.6 million was included in other assets.
Such receivable was $9.3 million at December 31, 2024, of which $0.5 million was included in other current assets and $8.8 million was included in other assets, and such receivable was $62.3 million at December 31, 2023, of which $33.6 million was included in other current assets and $28.7 million was included in other assets. 46 Our statutory workers’ compensation program is fully insured with a $0.5 million deductible per accident.
Liquidity and Capital Resources Cash provided by continuing operating activities for the year ended December 31, 2023 was $462.3 million compared to $380.6 million for the year ended December 31, 2022. Days sales outstanding at December 31, 2023 was 45 compared to 44 at December 31, 2022.
Liquidity and Capital Resources Cash provided by operating activities for the year ended December 31, 2024 was $129.7 million compared to $462.3 million for the year ended December 31, 2023. The decline in cash provided by operating activities was primarily due to the Desert Hills Litigation payments made during the year ended December 31, 2024.
Our strategic plan does not require the repatriation of foreign cash in order to fund our operations in the U.S.
Our strategic plan does not require the repatriation of foreign cash in order to fund our operations in the U.S. We actively manage our capital structure and regularly evaluate the availability of capital in the public and private markets that could strengthen our long-term financial profile.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitat ive Disclosures About Market Risk Information with respect to this Item is provided under the caption “Market Risk” under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 47 Item 8.
Biggest changeItem 7A. Quantitative and Qualitat ive Disclosures About Market Risk Information with respect to this Item is provided under the caption “Market Risk” under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Item 8.

Other ACHC 10-K year-over-year comparisons